Sterling Infrastructure, Inc. · NASDAQ:STRL
Sterling Infrastructure — Investor Presentation (May 2023)
40 slides from Sterling Infrastructure's investor presentation, May 31, 2023
Slide 1: Investor Presentation May 2023
We build and service the infrastructure that enables our economy to run, our people to move, and our country to grow. INVESTOR PRESENTATION MAY 2023
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 forw
Slide 3: Why Invest in Sterling?
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Why Invest in Sterling? + What was once a low-margin, heavy-civil business is now a diversified business with strong growth, profitability and cash flow. + E-Infrastructure Solutions is benefiting from onshoring, and fed
Slide 4: Strategic Transformation
Strategic Transformation Sterling has successfully transformed over the past six years, and we continue to evolve. Diversified portfolio Secular, multi-year growth drivers Significant margin expansion Strengthened FCF profile S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t
Slide 5: Sterling's Business Strategy
+Through our strategic elements: + Solidify the base + Grow high-margin products and services + Expansion into adjacent markets +We achieve our strategic objectives: + Risk reduction + Bottom-line growth + Exceed peer performance + Build a platform for future accretive growth Sterling’s Business Str
Slide 6: Strategic Transformation at a Glance
Strategic Transformation at a Glance S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n 6
Slide 7: With Continued Operating Margin Improvement
With Continued Operating Margin Improvement S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Strategic Execution 2022 Revenue and Operating Margin reflect Continuing Operations. 2016 includes operations that have since been divested. Solidify the base Prioritized risk
Slide 8: Sterling's Business Segments
Sterling’s Business Segments Leaders in their fields geographically positioned in the right markets, forging a new path for success with proven performance and solid returns through a customer-centric culture. S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n 8
Slide 9: Segments
E-Infrastructure Solutions + Fastest-growing, highest-margin segment + Successfully engineering and executing large, complex, schedule-intensive projects Transportation Solutions + Driving margin expansion through focus on high-return opportunities + Infrastructure Bill beneficiary Building Solution
Slide 10: E-Infrastructure
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n E-Infrastructure Highest-growth, highest-margin segment. Markets + Next Generation Manufacturing + Data Centers + E-Commerce Distribution Centers + Warehousing What We Do: We are a leading provider of large-scale special
Slide 11: E-Infrastructure Solutions Strong Multi-Year Organic Revenue Growth
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n E-Infrastructure Solutions Strong Multi-Year Organic Revenue Growth, Poised to Continue Highest Segment Margins with Opportunity for Expansion 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% $0 $50 $100 $150 $200 $250 $300 O rg an
Slide 12: E-Infrastructure Solutions Key Projects
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n E-Infrastructure Solutions Key Projects + Hyundai Engineering, Inc. Site development project in Georgia encompassing over 600 acres + Rivian $45 million design-bid-build project awarded by The Joint Development Authority
Slide 13: Transportation
Markets Low-Bid Heavy Highway 36% Alternative Delivery Heavy Highway 36% Aviation 15% Other 13% S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Transportation Improved bid discipline and reduced risk What We Do: Transportation Solutions includes infrastructure and reh
Slide 14: Transportation Solutions
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Transportation Solutions All figures reflect continuing operations. In November 2022, Sterling divested its ownership with Myers & Sons construction LP Focus is on maximizing profitability rather than revenue Consistent,
Slide 15: Transportation Solutions Outlook
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Transportation Solutions Source: ARTBA April 2023 Data Outlook Considerations + Gross margin in backlog continues to trend upward + Seeing awards and activities driven by the Infrastructure Bill + Aviation, which is hist
Slide 16: Building Solutions
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Building Solutions Low Risk, Low CAPEX, Fast cash cycles Primary Markets + Dallas/ Fort Worth + Houston + Phoenix What We Do: Residential and Commercial concrete slabs in the Dallas/ Fort Worth, Houston, and Phoenix mark
Slide 17: Building Solutions
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Building Solutions All figures reflect continuing operations. In November 2022, Sterling divested its ownership with Myers & Sons Construction LP 1Q23 growth of 7%, including flat residential revenue, significantly outpe
Slide 18: Building Solutions Geographic Footprint
Sterling’s Building Solutions Geographic Footprint S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Building Solutions Dallas/ Fort Worth Residential 1Q23 Revenue Trends: Mid-single digit volume decline offset by price Slab volume started the quarter slow, picked up in
Slide 19: Financial Performance
Financial Performance Through tremendous dedication and exceptional execution by our teams, Sterling delivered another outstanding year of record results and, for the 1st time, exceeded a market capitalization of $1 billion. S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i
Slide 20: Sterling's 2022 Results at a Glance
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Sterling’s 2022 Results at a Glance 2022 Results from Continuing Operations unless otherwise noted The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net
Slide 21: Sterling's 1Q 2023 Results at a Glance
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Sterling’s 1Q 2023 Results at a Glance First Quarter 2023 Results from Continuing Operations unless otherwise noted The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and
Slide 22: Balance Sheet
Balance Sheet Sterling ended 1Q23 with cash of $202.6 million and a forward-looking debt-to-EBITDA coverage ratio of 1.7x. S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n 22
Slide 23: Balance Sheet
1.9 1.7 0.0 0.5 1.0 1.5 2.0 12/31/2022 3/31/2023 Forward Looking EBITDA Debt Coverage Ratio Sterling | STRL: First Quarter 2023 23 Balance Sheet (1) The Company defines EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest ex
Slide 24: Outlook
Outlook “The strong demand for infrastructure services across the country has helped us get off to a great start and gives us high confidence in our full-year outlook. More importantly, we believe this demand is going to continue over the next three years to five years and will provide us with even
Slide 25: Strong and Significant Market Opportunities Continue in Our Markets
E-Infrastructure Solutions + Government investment initiatives and incentives + End-user multi-year capital deployment plan implementation + US manufacturing, electric vehicles, solar + Multiphase hyper-scale data center development + Data center efficiencies redeployment + New customers for warehou
Slide 26: Sterling markets spending >50B
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o nSource: Second Quarter 2023 North American Engineering and Construction Outlook Sterling markets spending >50B + Transportation + Manufacturing + Highway and street + Commercial 26
Slide 27: Market Dynamics: US Construction Spending Forecast
S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n Market Dynamics US Construction Spending Forecast Source: Second Quarter 2023 North American Engineering and Construction Outlook Bold: Sterling Markets Up 5%+ Multifamily Lodging Commercial Office Health Care Amusement
Slide 28: Market Position by Segment
E-Infrastructure Solutions + $65B Infrastructure Bill (IIJA) investment further contributes to growth and demand for data centers, manufacturing, logistics and distribution centers + Continued growth in warehouse, distribution, larger big-box stores investments in e-commerce and manufacturing develo
Slide 29: Full Year 2023 Guidance
Full Year 2023 Guidance 2023 started strong + Solid first quarter results + Record backlog + New high-value E-Infrastructure project awards + Increased transportation funding + Emerging improvement in housing starts + Favorable growth opportunities across our markets All of these combined, give us c
Slide 30: The Sterling Way
Taking care of our people, our customers, our investors, our community and the environment, that’s The Sterling Way. 30S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n In 2022, we published Building a Better Tomorrow, The Sterling Way – 2022 Sustainability Report to sh
Slide 31: Sustainability
Protecting Our Environment + Sound governance + Environmentally responsible construction services and solutions for today and tomorrow Taking Care of Our People + Sterling’s safety rating consistently ranks 10X better than the industry average + Employee Wellness programs through extensive benefit o
Slide 32: Appendix
Appendix S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n 32
Slide 33: 2023 Modeling Considerations
33 Revenue $1,900 to $2,000 Gross Margin 15% to 16% G&A Expense as % of Revenue (Excluding Intangible Amortization) ~5% Intangible Amortization $15 Other Operating Expense Net $12 to $13 JV Non-Controlling Interest Expense $2 to $3 Effective Income Tax Rate 28% to 29% Net Income $104 to $110 Diluted
Slide 34: 2023 Modeling Considerations Continued
Non-Cash Items FY 2023 Expectations FY 2022 Depreciation $40 to $44 $38.0 Intangible Amortization $15 $14.1 Debt Issuance Cost Amortization $2 to $3 $2.2 Stock-based Compensation $12 to $14 $10.3 Deferred Taxes $17 to $18 $36.5 Other Cash Flow Items FY 2023 Expectations FY 2022 Interest expense, net
Slide 35: Quarterly Consolidated Results
($ in millions) 1Q 2023 1Q 2022 Revenues $ 403.6 $ 366.0 Gross Profit 61.7 55.1 G&A Expense (23.3) (20.3) Intangible Amortization (3.7) (3.6) Acquisition Related Costs (0.2) (0.3) Other Operating Expense, Net (1.9) (1.7) Operating Income 32.6 29.4 Interest, Net (5.6) (4.6) Income Tax Expense (7.0) (
Slide 36: Quarterly Consolidated Results by Segment
($ in millions) 1Q 2023 1Q 2022 E-Infrastructure Solutions Revenue $ 205.8 $ 168.9 Operating Income $ 24.3 $ 21.3 Operating Margin 11.8 % 12.6 % Transportation Solutions Revenue $ 111.1 $ 116.1 Operating Income $ 5.3 $ 4.4 Operating Margin 4.8 % 3.8 % Building Solutions Revenue $ 86.6 $ 80.9 Operati
Slide 37: EBITDA Reconciliation
Three Months Ended March 31, 2023 2022 Net income from Continuing Operations $ 19,649 $ 17,672 Depreciation and amortization 13,692 11,363 Interest expense, net of interest income 5,554 4,642 Income tax expense 7,033 6,778 EBITDA from Continuing Operations(1) 45,928 40,455 Acquisition related costs
Slide 38: EBITDA Guidance Reconciliation
Full Year 2023 Guidance Low High Net income attributable to Sterling common stockholders $ 104 $ 110 Depreciation and amortization 55 59 Interest expense, net of interest income 21 24 Income tax expense 40 42 EBITDA (1) $ 220 $ 235 STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES EBITDA GUIDANCE RECONCI
Slide 39: STRL 5-Year Stock Price Performance
STRL 5-Year Stock Price Performance Source: FactSet '18 '19 '20 '21 '22 5 10 15 20 25 30 35 40 45 Closing Price 25-May-2018 to 25-May-2023 (Daily) Price (Local Currency) Sterling Infrastructure, Inc. S t e r l i n g I n f r a s t r u c t u r e I n c . I R P r e s e n t a t i o n 39
Slide 40: Thank You
We build and service the infrastructure that enables our economy to run, our people to move, and our country to grow. THANK YOU
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