Sterling Construction Co. Inc.
) swung to profit in the fourth quarter of 2012 with earnings of
1 cent per share, compared with a loss of $2.72 per share in the
year-ago quarter. However, reported earnings fell short of the
Zacks Consensus Estimate of 4 cents.
Sales increased 39% year over year to $158 million in the
quarter, missing the Zacks Consensus Estimate of $162 million.
The year-over-year improvement was driven by higher activity
levels in most of the geographic regions, particularly Calif. and
Gross profit during the quarter increased almost fourfold to
$16.3 million from $3.9 million in the prior-year quarter. Gross
margin expanded 690 basis points to 10.3% in the quarter, banking
on Utah and Texas projects.
General and administrative expenses surged 71% to $9.1
million, driven by higher revenues as well as higher compensation
expense related to recent executive appointments and higher
professional fees. Operating income was $7.2 million compared
with an operating loss of $1.5 million in the prior-year quarter.
Operating margin plunged 180 basis points to 2.3% in the quarter.
Including direct costs of acquisitions, provision for loss on
lawsuit and goodwill impairment, operating income in the quarter
was $7.1 million compared with an operating loss of $69 million
in the prior-year quarter.
Fiscal 2012 Performance
Sterling Construction reported loss per share of 26 cents in
2012, narrower than the year-ago loss per share of $2.24.
Revenues increased 26% year over year to $631 million.
As of 2012 end, Sterling Construction had cash and cash
equivalents of $3.1 million, down from $16.4 million as of 2012
end. Long-term debt increased to $24.2 million as of 2012-end
from $0.2 million as of 2011-end. Capital expenditures increased
to $37.4 million in 2012 from $24.0 million in 2011, driven by
Sterling Construction's investments to support higher level of
operations and to replace older equipments. Sterling Construction
continues to dispose underutilized and aging equipment, and has
generated proceeds of $12.5 million from the sale of property and
equipment in 2012.
During the fourth quarter, Sterling Construction had been
awarded contracts worth $131 million, compared with $119 million
in prior-year quarter. Awards in 2012 (excluding acquired
contracts) totaled $643 million, up 8% from 2011 awards. Total
backlog as of 2012-end stood at $704 million compared with $616
million as of 2011 end.
Sterling Construction expects organic revenue growth in 2013
to be constrained due to concerns regarding government funding.
Completion of certain projects in Texas, which had dragged
margins in 2012 due to operational issues, will lead to
improvement in margins through 2013. For 2013, SG&A, as a
percentage of revenues, should be comparable to 2012, but higher
in dollars. 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
include 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
Orion Marine Group Inc.
) with a Zacks Rank #1 (Strong Buy), and
Chicago Bridge & Iron
AECOM Technology Corporation
) with a Zacks Rank #2 (Buy).
AECOM TECH CORP (ACM): Free Stock Analysis
CHICAGO BRIDGE (CBI): Free Stock Analysis
ORION MARINE GP (ORN): Free Stock Analysis
STERLING CONSTR (STRL): Free Stock Analysis
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