Sterling Infrastructure, Inc. · NASDAQ:STRL
Sterling Infrastructure — Sterling Construction — Q3 2020 Earnings Presentation
22 slides from Sterling Infrastructure's earnings presentation, Nov 3, 2020
Slide 1: Q3 2020 Earnings Call
Sterling Construction Company, Inc. Q3 2020 Earnings Call November 3, 2020
Slide 2: Disclosure: Forward-Looking Statements
Disclosure: Forward-Looking Statements ji i inti f whi control, whii y i plans, objectives, expectations, forecast: In “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” a <ranticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target, “continue,” i H fs ; . managemen
Slide 3: Third Quarter 2020 Highlights
Third Quarter 2020 Highlights ¢ Our Strategy continues to drive increased margins, reduce risk and diversify our end markets. e 48% of revenue came from outside our Heavy Civil segment. ¢ Operating income and EBITDA are more than double the prior year. e Record Backlog of $1.238 billion. e = Signifi
Slide 4: Third Quarter 2020 Results
Third Quarter 2020 Results e Revenues increased 31.5% or $91.8 million from Q3 2019. ¢ Gross margin was 13.0%, a 300 basis point increase from Q3 2019. e EBITDA was $36.7 million, a 139% increase from Q3 2019. e Year-to-date generated $90.9 million in cash from operations, compared to cash generated
Slide 5: Backlog Growth And Margin Improvement
Backlog Growth And Margin Improvement September 30, 2020 December 31, 2019 Book to Burn Amount Margin % Amount Margin% In 2020 Backlog $1,238 million 12.4% $1,068 million 11.5% 1.18X Combined Backlog $1,508 million 11.6% $1,342 million 11.0% 1.17X e Backlog reaches $1.24 billion, up 16% from the end
Slide 6: Consolidated Results
Consolidated Results ($m) Q3 2020 Q2 2020 Q3 2019 Revenues $383.5 $400.0 $291.7 . erall variations from 2019 were driven by the October 2, 2019 Gross Profit 49.9 59.6 292 acquisition of Plateau and the elated acquisition refinancing and Gross Margin 13.0% 14.9% 10.0% SG&A (15.2) (18.5) (10.2) * The
Slide 7: Segment Results
Segment Results ry ry Revenue Heavy Civil $201.1 52% $218.9 75% Specialty Services $140.0 37% $32.9 11% Residential $42.4 11% $39.9 14% Total Revenue $383.5 $291.7 Operating Income Heavy Civil $2.4 1.2% $7.4 3.4% Specialty Services $21.5 15.3% $1.4 4.2% Residential $5.4 12.6% $5.2 13.1% Subtotal $29
Slide 8: Increased EBITDA and Cash Flow Drives De-levering Strategy
Increased EBITDA and Cash Flow Drives De-levering Strategy E dl ooking EBITDA Deht Coverage Ratio October 2019 Five Year Credit Facility (the "Facility") ¢ $400M Term Loan Facility 3.5X . $75M Revolving Credit Facility i I , 2019 amt 29x . os . Fact structured to reduce total funded debt EBITDA cove
Slide 9: Forward Looking Business Fundamentals Remain Strong
Forward Looking Business Fundamentals Remain Strong e Elevated Combined Backlog and margin in Backlog at quarter end. e Solid liquidity position that continues to strengthen throughout the remainder of the year with continued strong EBITDA and cash flow generation. e A resilient team that has shown
Slide 10: Reiterating 2020 Guidance
Reiterating 2020 Guidance e We continue to expect FY 2020 revenues of between $1.415 billion and $1.430 billion. e 2020 adjusted net income mid-point guidance of $42.5 million, growing 73% or $18.0 million over 2019. ¢ Mid-point expected adjusted EBITDA of $130.0 million. © Mid-point expected adjust
Slide 11: Contact Us
Contact Us Investor Relations Advisors Company Representative The Equity Group Inc. Sterling Construction Company, Inc. Ron Ballschmiede Fred Buonocore, CFA Chief Financial Officer Senior Vice President 281-214-0777 212-836-9607 fbuonocore@equityny.com Mike Gaudreau Associate 212-836-9620 mg@equityn
Slide 12: Appendix
Appendix
Slide 13: Strategy Driving Profitable Growth
Strategy Driving Profitable Growth Revenue Gross Margin vs. Revenue Growth $1,600 $1,400 $1,200 479% $1,000 cack $800 $600 $400 on $200 | 0% $0 (2015 2016 2017 2018 2 2020E 2015 2016 2017 2018 2019 2020 Tr Revenus Growth = Grosses Grows . . . . Adjusted EBITDA Combined Backlog Growth with Improving
Slide 14: Modeling Considerations
Modeling Considerations* Revenue Gross Margin G&A Expense as % of Revenue Other Expense Net JV Non-Controlling Interest Expense Adjusted Net Income** Adjusted Diluted EPS** Expected Dilutive Shares Outstanding **Excludes $1 $1,415 - $1,430 13% - 14% 5% $14-$16 $0.5-$1 $41 - $44 $1.46 - $1.57 28.1 mi
Slide 15: Modeling Considerations (Continued)
Modeling Considerations* (Continued) Depreciation and Amortization $33 - $35 CAPEX (net of disposals) $25 - $30 Adjusted EBITDA : $140 $130.0 Adjusted EBITDA** $125-$135 $120 Effective Income Tax Rate 28.5% $100 $80 Three Year Revenue Growth Expectations: - $62.0 0 Heavy Civil — Hard Bid 2%-3% $a0 H
Slide 16: Modeling Considerations (Continued)
Modeling Considerations (Continued) ($MM) NON-CASH ITEMS Q32020YTD Q32019 YTD Depreciation $16.1 $10.5 $22 to $23 $15.9 Intangible Amortization $8.6 $1.8 $11 to $12 $4.8 $2.5 $2.4 $3-S4. $3.4 Stock-based Compensation $8.0 $2.5 $10 to $12 $3.8 Income Tax Expense $11.4 $1.6 22% of Pretax Income Nil OT
Slide 17: Sterling Construction Company, Inc. & Subsidiaries
CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Reconciliation of Non-GAAP Supplement ited Financial Data” (in thousands. except per share data) (Unaudited) The Company repors its financial results in accordance with GAAP. This press release also includes se
Slide 18: Sterling Construction Company, Inc. & Subsidiaries
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES. CONDENSED CONSOLIDATED STATEMENTS 0 OF OF OPERATIONS Reconciliation of ‘Supplemental Adjus' incial Data"? (nee ‘oosand, except per share data (Unaudited) The Company reports its financial ests in accordance with GAAP. This press release also includ
Slide 19: Sterling Construction Company, Inc. & Subsidiaries
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES. CONDENSED CONSOLINATED STATEMENTS OF OPERATIONS, .P Supplemental Adjusted Financial Data” \intne {mowsandss except pe ber share data) ‘The Company reports its financial results in accordance with GAAP. This press release also includes several Non-
Slide 20: Sterling Construction Company, Inc. & Subsidiaries
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS, Reconciliation of Non-GAAP Supplemental Adj Adjust usted Financial Data ita) also includes several Non- in accordance with ress release GKAS teamal entuies ct defined under the SECs Regilsion G. The f
Slide 21: Sterling Construction Company, Inc. & Subsidiaries
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ‘of Non-GAAP Supplemental Adjusted Financial Data (In thousands, except per share data) (Unaudited) ‘ompany reports its financial results in accordance with GAAP. This press release also includes sever
Slide 22: Nine Months Ended
‘Nine Months Ended o 2020 2019 2020 19 15,187 $ 7,957 S$ 36,482 $ 17,600 8,098 3,815 24,639 12,2 3, 88 7,154 2,693 22,391 8,002 6,280 913 14, 1,782 36,689 15,378 39,672
Sterling Construction — Q3 2020 Earnings Presentation on 6ix