Large accelerated filer
|
[ ]
|
Accelerated filer
|
[√]
|
Non-accelerated filer
|
[ ]
|
Smaller reporting company
|
[ ]
|
|
|
Emerging growth company
|
[ ]
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
89,336
|
|
|
$
|
83,953
|
|
Receivables, including retainage
|
160,247
|
|
|
133,931
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
40,275
|
|
|
37,112
|
|
||
Inventories
|
3,140
|
|
|
4,621
|
|
||
Receivables from and equity in construction joint ventures
|
11,521
|
|
|
11,380
|
|
||
Other current assets
|
8,857
|
|
|
7,529
|
|
||
Total current assets
|
313,376
|
|
|
278,526
|
|
||
Property and equipment, net
|
52,196
|
|
|
54,406
|
|
||
Goodwill
|
85,231
|
|
|
85,231
|
|
||
Intangibles, net
|
43,018
|
|
|
44,818
|
|
||
Other assets, net
|
343
|
|
|
317
|
|
||
Total assets
|
$
|
494,164
|
|
|
$
|
463,298
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable
|
$
|
106,271
|
|
|
$
|
97,457
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
63,964
|
|
|
62,374
|
|
||
Current maturities of long-term debt
|
3,014
|
|
|
3,978
|
|
||
Income taxes payable
|
279
|
|
|
81
|
|
||
Accrued compensation
|
14,866
|
|
|
9,054
|
|
||
Other current liabilities
|
6,275
|
|
|
9,348
|
|
||
Total current liabilities
|
194,669
|
|
|
182,292
|
|
||
Long-term liabilities:
|
|
|
|
|
|
||
Long-term debt, net of current maturities
|
78,424
|
|
|
86,160
|
|
||
Members' interest subject to mandatory redemption and undistributed earnings
|
48,844
|
|
|
47,386
|
|
||
Deferred taxes
|
1,299
|
|
|
—
|
|
||
Other long-term liabilities
|
1,230
|
|
|
1,271
|
|
||
Total long-term liabilities
|
129,797
|
|
|
134,817
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
||
Equity:
|
|
|
|
|
|||
Sterling stockholders’ equity:
|
|
|
|
|
|||
Preferred stock, par value $0.01 per share; 1,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01 per share; 38,000,000 shares authorized, 27,068,353 and 27,051,468 shares issued
|
271
|
|
|
271
|
|
||
Additional paid in capital
|
233,056
|
|
|
231,183
|
|
||
Retained deficit
|
(70,544
|
)
|
|
(90,121
|
)
|
||
Total Sterling common stockholders’ equity
|
162,783
|
|
|
141,333
|
|
||
Noncontrolling interests
|
6,915
|
|
|
4,856
|
|
||
Total equity
|
169,698
|
|
|
146,189
|
|
||
Total liabilities and equity
|
$
|
494,164
|
|
|
$
|
463,298
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
$
|
291,266
|
|
|
$
|
304,219
|
|
|
$
|
782,492
|
|
|
$
|
704,047
|
|
Cost of revenues
|
(259,735
|
)
|
|
(273,588
|
)
|
|
(698,975
|
)
|
|
(638,924
|
)
|
||||
Gross profit
|
31,531
|
|
|
30,631
|
|
|
83,517
|
|
|
65,123
|
|
||||
General and administrative expenses
|
(11,707
|
)
|
|
(13,129
|
)
|
|
(38,356
|
)
|
|
(36,545
|
)
|
||||
Other operating expense, net
|
(5,452
|
)
|
|
(4,863
|
)
|
|
(11,960
|
)
|
|
(9,371
|
)
|
||||
Operating income
|
14,372
|
|
|
12,639
|
|
|
33,201
|
|
|
19,207
|
|
||||
Interest income
|
274
|
|
|
107
|
|
|
604
|
|
|
192
|
|
||||
Interest expense
|
(3,067
|
)
|
|
(3,576
|
)
|
|
(9,265
|
)
|
|
(6,672
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(755
|
)
|
||||
Income before income taxes and noncontrolling interests in earnings
|
11,579
|
|
|
9,170
|
|
|
24,540
|
|
|
11,972
|
|
||||
Income tax expense
|
(1,413
|
)
|
|
(344
|
)
|
|
(1,551
|
)
|
|
(469
|
)
|
||||
Net income
|
10,166
|
|
|
8,826
|
|
|
22,989
|
|
|
11,503
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Noncontrolling interests in earnings
|
(1,251
|
)
|
|
(1,694
|
)
|
|
(3,409
|
)
|
|
(2,966
|
)
|
||||
Net income attributable to Sterling common stockholders
|
$
|
8,915
|
|
|
$
|
7,132
|
|
|
$
|
19,580
|
|
|
$
|
8,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income per share attributable to Sterling common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.33
|
|
|
$
|
0.27
|
|
|
$
|
0.73
|
|
|
$
|
0.33
|
|
Diluted
|
$
|
0.33
|
|
|
$
|
0.26
|
|
|
$
|
0.72
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding used in computing per share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
26,908
|
|
|
26,486
|
|
|
26,893
|
|
|
25,787
|
|
||||
Diluted
|
27,295
|
|
|
26,920
|
|
|
27,174
|
|
|
26,260
|
|
|
STERLING CONSTRUCTION COMPANY, INC.
STOCKHOLDERS
|
|
|
|||||||||||||||||||
|
Common Stock
|
|
Additional
Paid in
Capital
|
|
Retained
Deficit
|
|
Noncon-trolling
Interests
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
Balance at January 1, 2018
|
27,051
|
|
|
$
|
271
|
|
|
$
|
231,183
|
|
|
$
|
(90,121
|
)
|
|
$
|
4,856
|
|
|
$
|
146,189
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
19,580
|
|
|
3,409
|
|
|
22,989
|
|
|||||
Stock-based compensation
|
40
|
|
|
—
|
|
|
2,181
|
|
|
—
|
|
|
—
|
|
|
2,181
|
|
|||||
Distributions to owners
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,350
|
)
|
|
(1,350
|
)
|
|||||
Other
|
(23
|
)
|
|
—
|
|
|
(308
|
)
|
|
(3
|
)
|
|
—
|
|
|
(311
|
)
|
|||||
Balance at September 30, 2018
|
27,068
|
|
|
$
|
271
|
|
|
$
|
233,056
|
|
|
$
|
(70,544
|
)
|
|
$
|
6,915
|
|
|
$
|
169,698
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income attributable to Sterling common stockholders
|
$
|
19,580
|
|
|
$
|
8,537
|
|
Plus: Noncontrolling interests in earnings
|
3,409
|
|
|
2,966
|
|
||
Net income
|
22,989
|
|
|
11,503
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
12,511
|
|
|
13,140
|
|
||
(Gain) loss on disposal of property and equipment
|
(466
|
)
|
|
204
|
|
||
Stock-based compensation expense
|
2,181
|
|
|
2,534
|
|
||
Deferred tax expense
|
1,299
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Contracts receivable
|
(26,316
|
)
|
|
(45,044
|
)
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
(3,163
|
)
|
|
(7,735
|
)
|
||
Inventories
|
1,481
|
|
|
2,833
|
|
||
Receivables from and equity in construction joint ventures
|
(141
|
)
|
|
(1,939
|
)
|
||
Other assets
|
(1,354
|
)
|
|
(4,487
|
)
|
||
Accounts payable
|
8,814
|
|
|
16,687
|
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
1,590
|
|
|
(1,035
|
)
|
||
Accrued compensation and other liabilities
|
2,936
|
|
|
18,028
|
|
||
Members' interest subject to mandatory redemption and undistributed earnings
|
1,458
|
|
|
1,099
|
|
||
Net cash provided by operating activities
|
23,819
|
|
|
5,788
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Tealstone acquisition, net of cash acquired
|
—
|
|
|
(54,861
|
)
|
||
Additions to property and equipment
|
(9,533
|
)
|
|
(8,305
|
)
|
||
Proceeds from sale of property and equipment
|
1,499
|
|
|
5,830
|
|
||
Net cash used in investing activities
|
(8,034
|
)
|
|
(57,336
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Cash received – Oaktree Facility
|
—
|
|
|
85,000
|
|
||
Repayments – equipment-based term loan and other
|
(869
|
)
|
|
(4,449
|
)
|
||
Repayments – Oaktree Facility
|
(10,429
|
)
|
|
—
|
|
||
Debt issuance costs
|
—
|
|
|
(6,889
|
)
|
||
Loss on debt extinguishment
|
—
|
|
|
755
|
|
||
Distributions to noncontrolling interest owners
|
(1,350
|
)
|
|
—
|
|
||
Other
|
2,246
|
|
|
887
|
|
||
Net cash (used in) provided by financing activities
|
(10,402
|
)
|
|
75,304
|
|
||
Net increase in cash and cash equivalents
|
5,383
|
|
|
23,756
|
|
||
Cash and cash equivalents at beginning of period
|
83,953
|
|
|
42,785
|
|
||
Cash and cash equivalents at end of period
|
$
|
89,336
|
|
|
$
|
66,541
|
|
1.
|
Summary of Business and Significant Accounting Policies
|
2.
|
Tealstone Acquisition
|
|
Nine Months Ended
|
||
|
September 30, 2017
|
||
Pro forma revenue
|
$
|
749,176
|
|
Pro forma net income attributable to Sterling
|
$
|
8,848
|
|
3.
|
Revenue from Contracts with Customers
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Heavy Highway
|
$
|
151,882
|
|
|
$
|
179,608
|
|
|
$
|
385,843
|
|
|
$
|
438,741
|
|
Commercial
|
32,261
|
|
|
15,209
|
|
|
89,890
|
|
|
27,050
|
|
||||
Aviation
|
30,587
|
|
|
22,863
|
|
|
81,671
|
|
|
56,310
|
|
||||
Water Containment and Treatment
|
18,457
|
|
|
20,518
|
|
|
48,973
|
|
|
43,388
|
|
||||
Other
|
21,357
|
|
|
25,080
|
|
|
58,691
|
|
|
60,398
|
|
||||
Heavy Civil Construction Revenue
|
$
|
254,544
|
|
|
$
|
263,278
|
|
|
$
|
665,068
|
|
|
$
|
625,887
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Fixed Unit Price
|
$
|
208,070
|
|
|
$
|
230,002
|
|
|
$
|
562,791
|
|
|
$
|
564,797
|
|
Lump Sum and Other
|
46,474
|
|
|
33,276
|
|
|
102,277
|
|
|
61,090
|
|
||||
Heavy Civil Construction Revenue
|
$
|
254,544
|
|
|
$
|
263,278
|
|
|
$
|
665,068
|
|
|
$
|
625,887
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
40,275
|
|
|
$
|
37,112
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
(63,964
|
)
|
|
(62,374
|
)
|
||
Net amount of billings in excess of costs and estimated earnings on uncompleted contracts
|
$
|
(23,689
|
)
|
|
$
|
(25,262
|
)
|
4.
|
Cash and Cash Equivalents
|
5.
|
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE")
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Members’ interest subject to mandatory redemption
|
$
|
40,000
|
|
|
$
|
40,000
|
|
Net accumulated earnings
|
8,844
|
|
|
7,386
|
|
||
Total liability
|
$
|
48,844
|
|
|
$
|
47,386
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Assets:
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
4,580
|
|
|
$
|
8,590
|
|
Contracts receivable, including retainage
|
31,158
|
|
|
26,844
|
|
||
Other current assets
|
16,054
|
|
|
15,672
|
|
||
Total current assets
|
51,792
|
|
|
51,106
|
|
||
Property and equipment, net
|
7,696
|
|
|
9,001
|
|
||
Goodwill
|
1,501
|
|
|
1,501
|
|
||
Total assets
|
$
|
60,989
|
|
|
$
|
61,608
|
|
Liabilities:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
28,561
|
|
|
$
|
28,448
|
|
Other current liabilities
|
13,150
|
|
|
11,798
|
|
||
Total current liabilities
|
41,711
|
|
|
40,246
|
|
||
Long-term liabilities:
|
|
|
|
||||
Other long-term liabilities
|
67
|
|
|
3,491
|
|
||
Total liabilities
|
$
|
41,778
|
|
|
$
|
43,737
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
$
|
56,816
|
|
|
$
|
64,266
|
|
|
$
|
142,786
|
|
|
$
|
126,333
|
|
Operating income
|
2,488
|
|
|
3,666
|
|
|
5,227
|
|
|
6,307
|
|
||||
Net income attributable to Sterling common stockholders
|
1,245
|
|
|
1,834
|
|
|
2,615
|
|
|
3,149
|
|
6.
|
Construction Joint Ventures
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Balance, beginning of period
|
$
|
4,856
|
|
|
$
|
656
|
|
Net income attributable to noncontrolling interest included in equity
|
3,409
|
|
|
2,966
|
|
||
Distributions to noncontrolling interest owners
|
(1,350
|
)
|
|
—
|
|
||
Balance, end of period
|
$
|
6,915
|
|
|
$
|
3,622
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Total combined:
|
|
|
|
|
|||
Current assets
|
$
|
64,957
|
|
|
$
|
64,574
|
|
Less current liabilities
|
(72,617
|
)
|
|
(78,349
|
)
|
||
Net liabilities
|
$
|
(7,660
|
)
|
|
$
|
(13,775
|
)
|
|
|
|
|
||||
Sterling’s receivables from and equity in noncontrolling construction joint ventures
|
$
|
11,521
|
|
|
$
|
11,380
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total combined:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues
|
$
|
29,557
|
|
|
$
|
27,703
|
|
|
$
|
89,010
|
|
|
$
|
61,210
|
|
Income before tax
|
1,728
|
|
|
(6,281
|
)
|
|
7,324
|
|
|
(3,611
|
)
|
||||
Sterling’s noncontrolling interest:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
12,820
|
|
|
$
|
13,664
|
|
|
$
|
41,739
|
|
|
$
|
28,826
|
|
Income before tax
|
858
|
|
|
(1,629
|
)
|
|
3,716
|
|
|
(358
|
)
|
7.
|
Property and Equipment
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Construction equipment
|
|
$
|
123,551
|
|
|
$
|
118,868
|
|
Transportation equipment
|
|
18,285
|
|
|
17,511
|
|
||
Buildings
|
|
9,770
|
|
|
9,577
|
|
||
Office equipment
|
|
2,715
|
|
|
3,339
|
|
||
Leasehold Improvement
|
|
914
|
|
|
914
|
|
||
Construction in progress
|
|
327
|
|
|
258
|
|
||
Land
|
|
2,720
|
|
|
2,348
|
|
||
Water rights
|
|
—
|
|
|
200
|
|
||
|
|
158,282
|
|
|
153,015
|
|
||
Less accumulated depreciation
|
|
(106,086
|
)
|
|
(98,609
|
)
|
||
Total property and equipment, net
|
|
$
|
52,196
|
|
|
$
|
54,406
|
|
8.
|
Intangibles
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Weighted
Average Life |
|
Gross
Carrying Amount |
|
Accumulated Amortization |
|
Gross
Carrying Amount |
|
Accumulated Amortization |
||||||||
Customer relationships
|
23 years
|
|
$
|
40,823
|
|
|
$
|
(2,707
|
)
|
|
$
|
40,823
|
|
|
$
|
(1,353
|
)
|
Trade name
|
13 years
|
|
5,307
|
|
|
(788
|
)
|
|
5,307
|
|
|
(394
|
)
|
||||
Noncompetition agreements
|
7 years
|
|
487
|
|
|
(104
|
)
|
|
487
|
|
|
(52
|
)
|
||||
Total
|
22 years
|
|
$
|
46,617
|
|
|
$
|
(3,599
|
)
|
|
$
|
46,617
|
|
|
$
|
(1,799
|
)
|
9.
|
Secured Credit Facility and Other Debt
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Loan
|
$
|
74,571
|
|
|
$
|
85,000
|
|
Notes and deferred payments to sellers, Tealstone acquisition
|
13,265
|
|
|
12,393
|
|
||
Notes payable for transportation and construction equipment and other
|
859
|
|
|
1,557
|
|
||
Total debt
|
88,695
|
|
|
98,950
|
|
||
|
|
|
|
||||
Less - Current maturities of long-term debt
|
(3,014
|
)
|
|
(3,978
|
)
|
||
Less - Unamortized deferred loan costs
|
(7,257
|
)
|
|
(8,812
|
)
|
||
Total long-term debt
|
$
|
78,424
|
|
|
$
|
86,160
|
|
•
|
a ratio of secured indebtedness to EBITDA of not more than
2.00
to 1.00 for the trailing four consecutive fiscal quarters ending September 30, 2018, reducing to
1.80
to 1.00 for the four consecutive quarters ending September 30, 2019 through maturity in 2022;
|
•
|
daily cash collateral of not less than
$15,000,000
;
|
•
|
gross margin in contract backlog of not less than
$65,000,000
for the average of the trailing four consecutive fiscal quarters ending September 30, 2018, increasing to
$70,000,000
on March 31, 2019;
|
•
|
net capital expenditures during the trailing four consecutive fiscal quarters shall not exceed
$15,000,000
;
|
•
|
bonding capacity shall be maintained at all times in an amount not less than
$1,000,000,000
; and
|
•
|
the EBITDA of Tealstone Residential Concrete, Inc. shall not be less than
$12,000,000
for each of the trailing four consecutive fiscal quarters.
|
10.
|
Commitments and Contingencies
|
11.
|
Income Taxes and Deferred Tax Asset/Liability
|
12.
|
Stockholder's Equity
|
13.
|
Net Income Per Share Attributable to Sterling Common Stockholders
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Sterling common stockholders
|
$
|
8,915
|
|
|
$
|
7,132
|
|
|
$
|
19,580
|
|
|
$
|
8,537
|
|
Weighted average common shares outstanding — basic
|
26,908
|
|
|
26,486
|
|
|
26,893
|
|
|
25,787
|
|
||||
Shares for dilutive unvested stock and warrants
|
387
|
|
|
434
|
|
|
281
|
|
|
473
|
|
||||
Weighted average common shares outstanding and incremental shares assumed repurchased— diluted
|
27,295
|
|
|
26,920
|
|
|
27,174
|
|
|
26,260
|
|
||||
Basic income per share attributable to Sterling common stockholders
|
$
|
0.33
|
|
|
$
|
0.27
|
|
|
$
|
0.73
|
|
|
$
|
0.33
|
|
Diluted income per share attributable to Sterling common stockholders
|
$
|
0.33
|
|
|
$
|
0.26
|
|
|
$
|
0.72
|
|
|
$
|
0.33
|
|
14.
|
Segment Information
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||
Heavy Civil Construction
|
$
|
254,544
|
|
|
$
|
263,278
|
|
|
$
|
665,068
|
|
|
$
|
625,887
|
|
Residential Construction
|
36,722
|
|
|
40,941
|
|
|
117,424
|
|
|
78,160
|
|
||||
Total Revenue
|
$
|
291,266
|
|
|
$
|
304,219
|
|
|
$
|
782,492
|
|
|
$
|
704,047
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Heavy Civil Construction
|
$
|
9,191
|
|
|
$
|
6,960
|
|
|
$
|
17,488
|
|
|
$
|
8,627
|
|
Residential Construction
|
5,181
|
|
|
5,679
|
|
|
15,713
|
|
|
10,580
|
|
||||
Total Operating Income
|
$
|
14,372
|
|
|
$
|
12,639
|
|
|
$
|
33,201
|
|
|
$
|
19,207
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Assets
|
|
|
|
||||
Heavy Civil Construction
|
$
|
363,058
|
|
|
$
|
354,090
|
|
Residential Construction
|
131,106
|
|
|
109,208
|
|
||
Total Assets
|
$
|
494,164
|
|
|
$
|
463,298
|
|
•
|
changes in general economic conditions, including recessions, reductions in federal, state and local government funding for infrastructure services and changes in those governments’ budgets, practices, laws and regulations;
|
•
|
delays or difficulties related to the completion of projects, including additional costs, reductions in revenues or the payment of liquidated damages, or delays or difficulties related to obtaining required governmental permits and approvals;
|
•
|
actions of suppliers, subcontractors, design engineers, joint venture partners, customers, competitors, banks, surety companies and others which are beyond the control of the Company, including suppliers’, subcontractors’ and joint venture partners’ failure to perform;
|
•
|
factors that affect the accuracy of estimates inherent in the bidding for contracts, estimates of backlog, over time recognition accounting policies, including onsite conditions that differ materially from those assumed in the original bid, contract modifications, mechanical problems with machinery or equipment and effects of other risks discussed in this document;
|
•
|
design/build contracts which subject Sterling to the risk of design errors and omissions;
|
•
|
cost escalations associated with contracts, including changes in availability, proximity and cost of materials such as steel, cement, concrete, aggregates, oil, fuel and other construction materials and cost escalations associated with subcontractors and labor;
|
•
|
dependence on a limited number of significant customers;
|
•
|
adverse weather conditions;
|
•
|
the presence of competitors with greater financial resources or lower margin requirements than Sterling and the impact of competitive bidders on the Companies ability to obtain new backlog at reasonable margins acceptable to Sterling;
|
•
|
ability to successfully identify, finance, complete and integrate acquisitions;
|
•
|
citations issued by any governmental authority, including the Occupational Safety and Health Administration;
|
•
|
federal, state and local environmental laws and regulations where non-compliance can result in penalties and/or termination of contracts as well as civil and criminal liability;
|
•
|
adverse economic conditions in Sterling's markets; and
|
•
|
the other factors discussed in more detail in Sterling's Annual Report on Form 10-K for the year ended
December 31, 2017
(“
2017
Form 10-K”) under “Part I, Item 1A. Risk Factors.”
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
$
|
291,266
|
|
|
$
|
304,219
|
|
|
$
|
782,492
|
|
|
$
|
704,047
|
|
Gross profit
|
31,531
|
|
|
30,631
|
|
|
$
|
83,517
|
|
|
$
|
65,123
|
|
||
General and administrative expenses
|
(11,707
|
)
|
|
(13,129
|
)
|
|
(38,356
|
)
|
|
(36,545
|
)
|
||||
Other operating expense, net
|
(5,452
|
)
|
|
(4,863
|
)
|
|
(11,960
|
)
|
|
(9,371
|
)
|
||||
Operating income
|
14,372
|
|
|
12,639
|
|
|
33,201
|
|
|
19,207
|
|
||||
Interest, net
|
(2,793
|
)
|
|
(3,469
|
)
|
|
(8,661
|
)
|
|
(6,480
|
)
|
||||
Income tax expense
|
(1,413
|
)
|
|
(344
|
)
|
|
(1,551
|
)
|
|
(469
|
)
|
||||
Noncontrolling interests in earnings
|
(1,251
|
)
|
|
(1,694
|
)
|
|
(3,409
|
)
|
|
(2,966
|
)
|
||||
Net income attributable to Sterling common stockholders
|
$
|
8,915
|
|
|
$
|
7,132
|
|
|
$
|
19,580
|
|
|
$
|
8,537
|
|
Gross margin
|
10.8
|
%
|
|
10.1
|
%
|
|
10.7
|
%
|
|
9.2
|
%
|
||||
Operating margin
|
4.9
|
%
|
|
4.2
|
%
|
|
4.2
|
%
|
|
2.7
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
2018
|
|
% of
Total
|
|
2017
|
|
% of
Total
|
|
2018
|
|
% of
Total
|
|
2017
|
|
% of
Total
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Heavy Civil Construction
|
$
|
254,544
|
|
|
87%
|
|
$
|
263,278
|
|
|
87%
|
|
$
|
665,068
|
|
|
85%
|
|
$
|
625,887
|
|
|
89%
|
Residential Construction
|
36,722
|
|
|
13%
|
|
40,941
|
|
|
13%
|
|
117,424
|
|
|
15%
|
|
78,160
|
|
|
11%
|
||||
Total Revenue
|
$
|
291,266
|
|
|
|
|
$
|
304,219
|
|
|
|
|
$
|
782,492
|
|
|
|
|
$
|
704,047
|
|
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Heavy Civil Construction
|
$
|
9,191
|
|
|
64%
|
|
$
|
6,960
|
|
|
55%
|
|
$
|
17,488
|
|
|
53%
|
|
$
|
8,627
|
|
|
45%
|
Residential Construction
|
5,181
|
|
|
36%
|
|
5,679
|
|
|
45%
|
|
15,713
|
|
|
47%
|
|
10,580
|
|
|
55%
|
||||
Total Operating Income
|
$
|
14,372
|
|
|
|
|
$
|
12,639
|
|
|
|
|
$
|
33,201
|
|
|
|
|
$
|
19,207
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net cash (used in) provided by:
|
|
|
|
|
|
||
Operating activities
|
$
|
23,819
|
|
|
$
|
5,788
|
|
Investing activities
|
(8,034
|
)
|
|
(57,336
|
)
|
||
Financing activities
|
(10,402
|
)
|
|
75,304
|
|
||
Total increase (decrease) in cash and cash equivalents
|
$
|
5,383
|
|
|
$
|
23,756
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Cash and cash equivalents
|
$
|
89,336
|
|
|
$
|
83,953
|
|
Working capital
|
$
|
118,707
|
|
|
$
|
96,234
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Generally Available
|
$
|
51,169
|
|
|
34,031
|
|
|
Consolidated 50% Owned Subsidiaries
|
25,262
|
|
|
31,056
|
|
||
Construction Joint Ventures
|
12,905
|
|
|
18,866
|
|
||
Total Cash
|
$
|
89,336
|
|
|
$
|
83,953
|
|
|
September 30, 2018
|
|
September 30, 2017
|
||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
(3,163
|
)
|
|
$
|
(7,735
|
)
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
1,590
|
|
|
(1,035
|
)
|
||
Contracts in progress, net
|
(1,573
|
)
|
|
(8,770
|
)
|
||
Contracts receivable, including retainage
|
(26,316
|
)
|
|
(45,044
|
)
|
||
Receivables from and equity in construction joint ventures
|
(141
|
)
|
|
(1,939
|
)
|
||
Inventories
|
1,481
|
|
|
2,833
|
|
||
Accounts payable
|
8,814
|
|
|
16,687
|
|
||
Contract Capital, net
|
$
|
(17,735
|
)
|
|
$
|
(36,233
|
)
|
Period
|
|
Total Number of
Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of Shares (or Units) Purchased as Part of
Publicly- Announced
Plans or Program
|
|
Maximum Number (or
Approximate Dollar
Value) of Shares (or Units)
that May Yet Be
Purchased Under the
Plans or Programs
|
||||||
July 1 - July 31, 2018
|
|
—
|
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
August 1 - August 31, 2018
|
|
445
|
|
(1)
|
|
$
|
15.23
|
|
|
—
|
|
|
—
|
|
September 1 - September 30, 2018
|
|
—
|
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
These shares were repurchased from employees holding shares of the Company's common stock that had been awarded to them by the Company and that were released from Company-imposed transfer restrictions. The repurchase was to enable the employees to satisfy the Company's tax withholding obligations occasioned by the release of the restrictions. The repurchase was made at the election of the employees pursuant to a procedure adopted by the Compensation Committee of the Board of Directors.
|
Exhibit No.
|
Exhibit Title
|
||
3.1
|
|||
3.2
|
|||
10.1.1#* **
|
|||
31.1*
|
|||
31.2*
|
|||
32.1+
|
|||
101.INS*
|
XBRL Instance Document
|
||
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase Document
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STERLING CONSTRUCTION COMPANY, INC.
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Date: November 6, 2018
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By:
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/s/ Joseph A. Cutillo
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Joseph A. Cutillo
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Chief Executive Officer
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Date: November 6, 2018
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By:
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/s/ Ronald A. Ballschmiede
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Ronald A. Ballschmiede
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Chief Financial Officer
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Annual Fees--Each Non-Employee Director
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•
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$75,000 cash (paid in monthly installments)
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An award on the date of each Annual Meeting of Stockholders of shares of restricted common stock valued at $85,000.
(1)
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Annual Fees
: -
Board and Committee Chairs
(paid in monthly installments)
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Chairman of the Board of Directors
(2)
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$100,000
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Chair of the Audit Committee
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$25,000
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Chair of the Compensation Committee
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$15,000
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Chair of the Corporate Governance & Nominating Committee
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$10,000
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(1
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The award agreements provide that the awards are subject to the following basic terms:
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Restrictions:
The shares may not be sold, assigned, transferred, pledged or otherwise disposed of until they vest. The retention of the shares is subject to the Company‘s Stock Ownership & Hedging Guidelines.
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Vesting:
The restrictions on the restricted stock lapse on the trading day immediately preceding the following year's Annual Meeting of Stockholders, but earlier upon the death of the director; upon the director becoming permanently disabled; or upon a change in control of the Company as defined in the Company's 2018 Stock Incentive Plan.
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Forfeiture:
The shares of restricted stock are forfeited in the event that prior to vesting, the director ceases to be a director other than by reasons of his or her death, permanent disability or a change in control of the Company.
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(2
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This annual Chairman's fee constitutes compensation for service as Chairman; attendance at all Board and committee meetings; and for service as chair of any committee of the Board other than the Audit Committee. In the event the Chairman is also the Chair of the Audit Committee, the Audit Committee Chair fee will also be paid.
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_______________________________________
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Sterling Construction Company, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Joseph A. Cutillo
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Joseph A. Cutillo
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Sterling Construction Company, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Ronald A. Ballschmiede
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Ronald A. Ballschmiede
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Chief Financial Officer
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Dated: November 6, 2018
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/s/ Joseph A. Cutillo
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Joseph A. Cutillo
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Chief Executive Officer
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Dated: November 6, 2018
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/s/ Ronald A. Ballschmiede
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Ronald A. Ballschmiede
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Chief Financial Officer
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