Sterling Infrastructure, Inc. · NASDAQ:STRL
Sterling Infrastructure — Sterling Construction — Q4 2019 Earnings Presentation
20 slides from Sterling Infrastructure's earnings presentation, Mar 3, 2020
Slide 1: Q4'19 Earnings Call
Sterling Construction Company, Inc. Q4’19 Earnings Call March, 3 2020
Slide 2: Disclosure: Forward-Looking Statements
Disclosure: Forward-Looking Statements This presentation contains, and the officers and directors of the Company may from time to time make, statements that are considered forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forwa
Slide 3: Strategy Driving Profitable Growth
Strategy Driving Profitable Growth Revenue $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2015 2016 2017 2018 2019 cage: 343% Record Combined Backlog with Improving Margins % cAGR: 2015 2016 2017 2018 2019 Mm Combined Backlog = —<Gross Margin in Combined Backlog 3 Dollar amounts in millions 2020
Slide 4: Stock is Outperforming Market and Peers...and is Attractively Valued
Stock is Outperforming Market and Peers...and is Attractively Valued Ry Nas 3 Year Cumulative Return vs. Peers ro Ss og? v? 140% 120% 100% 20% 0% -20% 3 Year Cumulative Return vs. Market se PP DO SS th Sh oh & PP SP GP WP - = FPP FP FF PP PP PS oS Ph PPh PPP PS PPS PH PPP PP Pewee Pe Cee ps Fo Pwr w
Slide 5: Revenue Composition Shifting Towards Higher Margin Business
Revenue Composition Shifting Towards Higher Margin Business 2016 2019 Actual 2019 Proforma () = Heavy Highway = Heavy Highway = Heavy Highway = Other Heavy Civil, Specialty Services, and Residential = Other Heavy Civil, Specialty Services, and Residential = Other Heavy Civil, Specialty Services, and
Slide 6: Backlog Growth And Margin Improvement
Backlog Growth And Margin Improvement December 31, 2019 December 31, 2018 Book to Burn EE AE Ego Backlog $1,068 million 11.5% $850.7 million 8.5% 1.06X Combined Backlog $1,342 million 11.0% $1,143 million 8.9% 1.04Xx = Backlog reaches record $1.1 billion and Combined Backlog which includes unsigned
Slide 7: Fourth Quarter 2019 Overview
Fourth Quarter 2019 Overview = Revenues increased to $346.5 million from $255.2 million in Q4’18 largely as a result of an $84.6 million incremental contribution from the Plateau Excavation acquisition completed on October 2, 2019. Plateau accretive by $0.30 in the quarter (excluding transaction rel
Slide 8: Q4 2019 Income Statement
Q4 2019 Income Statement Revenue $346.5 $255.2 Gross Margin 9.7% 11.0% Adjusted Net Income to STRL ®) $6.3 $5.6 Adjusted EBITDA 2) $20.2 $12.7 ( Adjusted basis excludes costs related to the acquisition of Plateau (including related refinancing) and non-cash taxes. See Non-GAAP Reconciliation on page
Slide 9: FY 2019 Income Statement
FY 2019 Income Statement m FY 2019 revenue growth of 8.5% was primarily due to the Plateau acquisition. The increase was partially offset by unfavorable mix shift and the delayed start of several large projects in Heavy. = Gross margin declined as a result of the aforementioned $10.2 million Revenue
Slide 10: Segment Results
Segment Results Q42019 Q4 2018 FY 2019 FY2018 a Revenue Operating Income Operating Margin Revenue Operating Income Operating Margin Revenue Operating Income Operating Margin NM — Not meaningful $190.7 S(7.7) NM $34.5 $4.7 13.5% $121.4 $14.9 12.3% Heavy Civil $190.4 $4.2 2.2% Residential $34.3 $4.2 1
Slide 11: 2020 Guidance Highlights
2020 Guidance Highlights * Expect FY 2020 revenues of between $1.375 billion and $1.4 billion. * This ~23% projected revenue growth is derived from a full year of our record backlog including the recent announcement of large design-build joint venture projects, and a full year of Plateau Contributio
Slide 12: Increased EBITDA and Free Cash Flow Drives De-levering Strategy
Increased EBITDA and Free Cash Flow Drives De-levering Strategy As of December 31, 2019 (S in millions) Cash and equivalents Current Assets Working Capital Total Assets Current Liabilities Total Debt Total Liabilities Shareholder's Equity $45.7 $357.5 $64.0 $961.9 $293.5 $433.1 $740.7 $221.2 12 Adju
Slide 13: Modeling Considerations
Modeling Considerations* Adjusted EPS Revenue $1,375 - $1,400 $1.40 $1.39 Gross Margin 13% - 14% $1.20 G&A Expense as % of Revenue ~5.5% $1.00 Other Expense Net $11-$12 $0.80 JV Non-Controlling Interest Expense $1.5 -$2 $0.60 Adjusted Net Income** $38 - $41 $0.40 Adjusted EPS** $1.33 - $1.44 an Expe
Slide 14: Modeling Considerations (Continued)
Modeling Considerations* (Continued) Depreciation and Amortization $34 - $37 Adjusted EBITDA CAPEX (net of disposals) $25 - $30 $140 sors Adjusted EBITDA** $125-$130 $120 Effective Income Tax Rate*** 26% $100 $80 Three Year Revenue Growth Expectations: $60 Heavy Civil — Hard Bid 2%-3% $40 Heavy Civi
Slide 15: Positioned for Continued Strong Growth in 2020
Positioned for Continued Strong Growth in 2020 " Beginning Combined Backlog $1,341.5 million, Up 17% Beginning Combined Backlog Margin 11%, Up 210 bps Midpoint Revenue Guidance $1,387.5 million, Up 23% Midpoint Adjusted Net Income Guidance $39.5 million, Up 61% Midpoint Adjusted EPS Guidance $1.39 P
Slide 16: Contact Us
Contact Us Company Representative Investor Relations Advisors Sterling Construction Company, Inc. The Equity Group 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 17: Appendix
Appendix Sterling 17 Construction Company, Inc.
Slide 18: Non-GAAP Reconciliation: Three Months Ended December 31, 2019
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS. Reconciliation of Non-GAAP Supplemental Adjusted Financial Data® thousands, except per share data) (Unaudited) The Company reports ial results in AAP. Thi ease also includes several Non-GAAP financial
Slide 19: Non-GAAP Reconciliation: Twelve Months Ended December 31, 2019
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Reconciliation of Non-GAAP Supplemental Adjusted Financial Data® (In thousands, except per share data) (Unaudited) tneasures as defined under the SEC's tion G. The fol. cis cova Nom GAAD Ban lowing abi
Slide 20: EBITDA Reconciliation
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES EBITDA Reconciliation in thousands) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2019 2018 2019 2018 Net income attributable to Sterling common stockholders $ 22301 $ 5607 $ 39.901 $ 25,187 Depreciation and amortizati
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