Sterling Infrastructure, Inc. · NASDAQ:STRL
Sterling Infrastructure — Sterling Construction — Investor Presentation (May 2019)
19 slides from Sterling Infrastructure's investor presentation, May 29, 2019
Slide 1: Investor Presentation May 2019
Sterling Construction 2 Company, Inc. Investor Presentation May 2019
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: Company Overview
Company Overview Sterling Construction is a leading heavy civil and residential construction company with strong competitive positions in the Western U.S. HEAVY CIVIL CONSTRUCTION - 80% of Q1’19 Revenues Heavy highway, commercial concrete projects, aviation, and water containment/treatment Ba Steady
Slide 4: Investment Considerations
Investment Considerations Vo slg | Organic diversification of end-markets driving significant margin and EPS growth. Attractive geographic footprint with favorable funding environment. Strong balance sheet positions the Company for accretive M&A and debt restructuring. Disciplined project execution
Slide 5: Enhanced Business Model & Attractive Valuation
Enhanced Business Model & Attractive Valuation Enhanced Business Model As Sterling continues to evolve into a more diversified specialty E&C company, our differentiated strategy allows the Company to be less dependent on lower margin heavy highway work and capture the upside in end-markets that have
Slide 6: Geographic Footprint Supported by Growth & Migration
Geographic Footprint Supported by Growth & Migration The South and West have the strongest construction growth rates in the U.S. as people are migrating into the Sterling footprint more than anywhere else in the country Population Change by State Sterling Footprint Sterling 6 Construction Company, I
Slide 7: Residential Growth Continues Despite Housing Narrative
Residential Growth Continues Despite Housing Narrative Strong Market Dynamics Dallas/Fort Worth ‘Austin/San Antonio Houston = Dallas/Fort Worth Metroplex and Houston homebuilders anticipate continued 10% growth =o Unique Business Model Only participate in developments where we have 100% of the slab
Slide 8: Margin Expansion in Core Heavy Civil
Margin Expansion in Core Heavy Civil \ Pricing \ Efficiency BID DAY STRATEGY Ensure all project bids have a strategy to maximize profit margins. LEVERAGE COST WITH GROWTH Maximize existing cost structure for profit growth | opportunities. Integrate SG&A and indirect cost reductions into business uni
Slide 9: Continued Focus on Adjacent Market Expansion
Continued Focus on Adjacent Market Expansion We can make $1 doing Heavy Highway work for a DOT with: = More risk = Lower margin = Customer does NOT value relationships We can make $2-$3 in areas such as Residential, Aviation, Commercial, Rail, Port & Industrial with: = Less risk = Higher margins = C
Slide 10: Our Vision: Strategy Execution Leads to 12%+
Our Vision: Strategy Execution Leads to 12%+ Blended Margin & 50/50 Revenue Mix Expansion into djacent Markets Heavy Civil % of Revenue Trend 15%+ margins 100% = Grow High 30% ‘Margin Business 80% 50/50 Split at 12%+ 70% one margin 60% 12% the Base 50% 90% Expand margin from j 7-8% to 9-10% . 50% 4%
Slide 11: Recent Project Awards Validate Strategy
Recent Project Awards Validate Strategy 1-15 Exit 16 Utah Logan Regional Wastewater Facility Utah I-15 Express Lane Extension Utah SH 34 Bridge Reconstruction Texas Lanai Airport Runway Hawaii = Our RHB subsidiary leverages its highway expertise to also pave airport runways at a higher margin Our RL
Slide 12: Financial Overview — Foundation for Continued Growth
Financial Overview — Foundation for Continued Growth Revenue ($ in mm) 12% Gross Margin 2016 2017 2018 Net Income ($ in mm) 2018 $2.0. $$$ A $0.80 $0.60 $0.40 $0.20 s $(0.20) 2016 2017 EPS 2018 2018 i 2017 $(0.40) $(0.60), $$ __________ Sterling Construction Company, Inc.
Slide 13: Strong Liquidity Position Provides Flexibility
Strong Liquidity Position Provides Flexibility Sinmm Cash and Cash Equivalents 2015 2016 2017 2018 Strong balance sheet allows for enhanced shareholder value through multiple actions: = Dry powder for accretive M&A = Debt repayment and future debt restructuring to lower our cost of capital = Further
Slide 14: M&A Could Further Enhance Earnings Power
M&A Could Further Enhance Earnings Power Key Criteria = Serves non-heavy highway end markets with high margins = Growth at a reasonable price = Managementteam stays onboard and grows with us = Is NOT undergoing or in need of a turnaround = Immediately accretive Successful M&A Track Record Acquired T
Slide 15: Recent Quarter’s Results
Recent Quarter’s Results = Q1’'19 results reflect difficult weather conditions across our significant geographies. = Tealstone Residential delivereda record quarter witha iS in mllign GeESUERS] me a 21% year-over-year increase in revenue. Revenue $223.9 $222.5 =~ While project timing transitions imp
Slide 16: FY’2019 Guidance & Modeling Considerations
FY’2019 Guidance & Modeling Considerations* Revenue Net Income EPS EBITDA Gross Margin G&A Expense as % of Revenue Other Expense Net Net Interest Expense Tax Expense JV Non-Controlling Interest Expense Expected Shares Outstanding $1,075 - $1,095 $29- $32 $1.07 - $1.18 $58-$61 10% - 10.5% ~5% $13-$14
Slide 17: Investment Considerations
Investment Considerations = Organic diversification of end-markets driving significant margin and EPS growth. = Attractive geographic footprint with favorable funding environment. = Strong balance sheet positions the Company for accretive M&A and debt restructuring. = Disciplined project execution w
Slide 18: Contact Us
Contact Us Company Representative Sterling Construction Company, Inc. Investor Relations Advisors The Equity Group Inc. Ron Ballschmiede Chief Financial Officer 281-214-0800 Fred Buonocore, CFA Senior Vice President 212-836-9607 fbuonocore@equityny.com Kevin Towle Senior Associate 212-836-9620 ktowl
Slide 19: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Calculation Netincome attributable to Sterling common stockholders Income tax expense Interest expense Interest income Depreciation and amortization Calculated EBITDA ‘TIM EBITDA Rollforward FY 2018 EBITDA Qi 2018 EBITDA Q1 2019 EBITDA TIM EBITDA (Q1 2019) Qi 2019 $1815
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