Sterling Construction Co. Inc.
) posted adjusted loss of 28 cents per share in the first quarter
of 2013 compared with the prior-year loss of 46 cents a share.
The loss per share was wider than the Zacks Consensus Estimate of
a loss per share of 10 cents.
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Adjusted loss in the quarter excludes revaluation of the
liability to non controlling interest owners of 11 cents while
there was a benefit of 2 cents in the year-ago quarter. On a
reported basis, loss was 39 cents per share in the quarter versus
a loss of 44 cents in the year-ago quarter.
Sales increased 12.8% year over year to $111 million in the
quarter, exceeding the Zacks Consensus Estimate of $103 million.
Gross profit during the quarter decreased 26% to $1.4 million
from $1.8 million in the prior-year quarter. Consequently, gross
margin contracted 70 basis points to 1.2% in the quarter, due to
the adverse impact of the low margin contracts.
General and administrative expenses surged 25% to $9.6 million,
driven by new hires to enhance the leadership of the information
systems management team. Operating loss in the reported quarter
was $7.9 million compared with $4.5 million in the prior-year
Bookings and Backlog
Backlog as of Mar 31, 2013 increased to $693 million compared
with $656 million as of Dec 31, 2012. During the first quarter,
Sterling booked contracts aggregating about $148 million.
Cash and cash equivalents were $4.1 million as of Mar 31, 2013
compared with $3.1 million as of Dec 31, 2012. Long-term debt
amounted to $12.1 million as of Mar 31, 2013, compared with $24.2
million as of Dec 31, 2012. The debt-to-capitalization ratio
improved to 5.5% as of Mar 31, 2013 from 10.2% as of Dec 31,
2012. For the first quarter of 2013, capital expenditures fell to
$4.9 million compared with $5.9 million in the prior-year
Sterling Construction maintains that its full year 2013 organic
revenue growth guidance would be constrained due to concerns
regarding government funding. The company also expects
improvement in bookings, both in terms of dollars and margins.
Gross margin for the year is supposed to expand based on the
restart of the operationally challenged projects. General and
administrative expense for 2013 is expected to be higher than in
2012, reflecting the investments to create a scalable platform
for long-term growth. Capital expenditures are projected to be
similar to the 2011 levels.
Houston, Texas-based Sterling Construction is a leading heavy
civil construction company engaged in the building and
reconstruction of transportation and water infrastructure
projects in Texas, Utah, Nev., Ari., Calif. and other states. Its
transportation infrastructure projects include highways, roads,
bridges and light rail and its water infrastructure projects
constitute water, wastewater and storm drainage systems.
Sterling Construction currently retains a Zacks Rank #3 (Hold).
Other stocks to consider in the same industry with favorable
Zacks Ranks are
Primoris Services Corporation
) with a Zacks Rank #1 (Strong Buy), and
Orion Marine Group Inc.
Chicago Bridge & Iron
) with a Zacks Rank #2 (Buy).