Sterling Construction Co. Inc.
) posted loss of 93 cents per share in the second quarter of 2013
compared with the prior-year earnings of 15 cents a share. The
loss per share was narrower than the Zacks Consensus Estimate of
a loss per share of $1.10. Loss per share was less than the
recent management guidance of $1.07-$1.13 a share.
Sterling reported loss in the quarter due to negative impact of
three legacy projects, two in Texas and one in Arizona, where
costs unexpectedly exceeded initial project estimates.
Revaluation of the liability to non controlling interest owners
reduced net loss per share by 9 cents per share in the reported
Sales decreased 21% year over year to $133 million in the
quarter, missing the Zacks Consensus Estimate of $177 million.
Gross loss during the quarter was $16.6 million compared to gross
profit of $15.2 million in the prior-year quarter. Gross deficit
was 12.5% compared to gross margin of 9% a year ago, due to the
adverse impact of the low margin contracts.
General and administrative expenses increased 12.3% year over
year to $9.5 million due to new hires to enhance the leadership
of the information systems management team and certain
non-recurring costs related to the implementation of process
enhancements. Operating loss in the reported quarter was $26
million compared with operating profit $8 million in the
Bookings and Backlog
Backlog as of Jun 30, 2013 increased to $714 million from $656
million as of Dec 31, 2012. Bookings were $154 million, up
133% from the second quarter of 2012.
Cash and cash equivalents were $1 million as of Jun 30, 2013,
compared with $3.1 million as of Dec 31, 2012. Long-term debt
amounted to $29.7 million as of Jun 30, 2013, compared with $24.2
million as of Dec 31, 2012. The debt-to-capitalization ratio
improved to 13.5% as of Jun 30, 2013, from 10.2% as of Dec 31,
2012. For the second quarter of 2013, capital expenditures fell
to $1.8 million from $11.9 million in the prior-year quarter.
Sterling Construction expects revenues to remain flat or slightly
down for the second half of 2013 compared to 2012. The company
also expects improvement in bookings, both in terms of comparable
quarter growth and profitability. General and administrative
expense will remain higher due to the ongoing investments for
integration and future growth. It is anticipated that capital
expenditure will be significantly lower for the second half as
the current fleet will offer more than adequate capacity to
support growth in 2014 and beyond.
Houston, Tex.-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, Nevada, Arizona, California and other
states. Its transportation infrastructure projects include
highways, roads, bridges and light rail and its water
infrastructure projects constitute water, wastewater and storm
Sterling Construction currently retains a Zacks Rank #3 (Hold).
One of Sterling Construction's peers
Chicago Bridge & Iron Company N.V.
) reported second-quarter adjusted earnings of $1.04 per share,
in line with the Zacks Consensus Estimate. Adjusted net income
was up 38.6% year over year on the back of strong project
activities and a robust backlog.
Other stocks in the building and heavy construction industry with
a favorable Zacks rank are
Primoris Services Corporation
). Both carry a Zacks Rank #2 (Buy).
CHICAGO BRIDGE (CBI): Free Stock Analysis
MASTEC INC (MTZ): Free Stock Analysis Report
PRIMORIS SERVCS (PRIM): Free Stock Analysis
STERLING CONSTR (STRL): Free Stock Analysis
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