UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2020
STERLING CONSTRUCTION COMPANY, INC. 
(Exact name of registrant as specified in its charter)
Delaware001-3199325-1655321
(State or other jurisdiction of incorporation
or organization)
(Commission File Number)(I.R.S. Employer
Identification No.)
  
1800 Hughes Landing Blvd.
The Woodlands, Texas
 
77380
(Address of principal executive offices)(Zip Code)
  
Registrant’s telephone number, including area code:  (281) 214-0800
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value per shareSTRLThe NASDAQ Stock Market LLC
(Title of Class)(Trading Symbol)(Name of each exchange on which registered)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR § 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨





Item 2.02 Results of Operations and Financial Condition.

On August 3, 2020, Sterling Construction Company, Inc. (the “Company") issued a press release announcing financial results for the three and six months ended June 30, 2020 and an update of 2020 guidance. The copy of the press release is being furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
 
The information provided in this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act nor shall it be incorporated by reference in any filing made by the Company pursuant to the Exchange Act or the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Item 7.01 Regulation FD Disclosure.

On August 4, 2020, the Company will host a conference call to discuss the second quarter 2020 results as well as corporate developments. The slides used in the conference call are being furnished with this Current Report on Form 8-K as Exhibit 99.2 and are hereby incorporated herein by reference.
 
The information provided in this Item 7.01 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act nor shall it be incorporated by reference in any filing made by the Company pursuant to the Exchange Act or the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibit Index
Exhibit Number Description
99.1
99.2









SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 STERLING CONSTRUCTION COMPANY, INC.
   
Date:August 3, 2020By:/s/ Ronald A. Ballschmiede
  Ronald A. Ballschmiede
  Chief Financial Officer




Document

Exhibit 99.1
NEWS RELEASE
For Immediate Release:
August 3, 2020

Sterling Reports 2020 Second Quarter Results
Recent Acquisition and Base Business Performance Drive Record Results
Raises Full Year Revenues and Income Outlook

THE WOODLANDS, TX – August 3, 2020 – Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) today announced financial results for the second quarter 2020.
Consolidated Second Quarter 2020 Financial Results Compared to Second Quarter 2019:
Revenues were $400.0 million compared to $264.1 million;
Gross margin was 14.9% of revenues compared to 9.7%;
Net Income was $18.3 million compared to $7.8 million;
EPS was $0.65 compared to $0.29; and,
EBITDA was $41.2 million compared to $15.3 million.
Consolidated Financial Position and Liquidity:
Cash and Cash Equivalents were $70.6 million at June 30, 2020 compared to $45.7 million at December 31, 2019;
Cash flows from operations were $52.3 million for the six months ended June 30, 2020 compared to $(4.3) million for the comparable prior year period;
Payments of scheduled Term Loan Facility debt and the seller notes totaled $22.5 million for the six months ended June 30, 2020;
Debt, net of cash totaled $351.4 million at June 30, 2020 compared to $387.4 million at December 31, 2019; and,
Our $75 million Revolving Credit Facility has $55 million of availability, reflecting a $30 million repayment in the quarter.
Heavy Civil and Specialty Services Backlog Highlights
Combined Backlog at June 30, 2020 was $1.57 billion, up from $1.34 billion at December 31, 2019. Combined Backlog consists of $1.13 billion of Backlog and $437 million of unsigned contracts as of June 30, 2020 compared to $1.07 billion and $273 million at December 31, 2019, respectively. No residential construction contracts are included in Backlog.
Total margin in Backlog has increased approximately 140 basis points, from 11.5% at December 31, 2019 to 12.9% at June 30, 2020. Combined Backlog gross margin improved from 11.0% at December 31, 2019 to 11.7% at June 30, 2020.
Full Year Revenue and Income Guidance
Revenue: $1.415 billion to $1.430 billion.
Net Income: $41 million to $44 million, excluding acquisition related costs of $1 million to $2 million.




CEO Remarks and Outlook
“I am extremely proud of what our employees were able to accomplish in one of the most challenging times in our Company’s history” stated Joe Cutillo, Sterling’s Chief Executive Officer. “Our bottom-line results were the best ever achieved by the Company, which reflects the benefits of our strategy to transform our business portfolio and our overall project mix towards higher value add, lower risk, and more profitable work. Most importantly, we delivered this performance while maintaining the health and safety of our team across all of our operating geographies, which is a testament to the attentiveness, discipline and professionalism of our nearly 3,000 employees in the face of our nation’s ongoing battle against the COVID-19 pandemic.”

“Our Specialty Services segment, which includes our recent acquisition of Plateau, more than doubled its operating profit relative to the first quarter of 2020. Plateau entered the quarter with record backlog and executed flawlessly for its blue chip customer base. Our Residential segment rebounded from the pandemic-related headwinds of the first quarter, and also solidly outperformed the prior year quarter driven by a faster than anticipated recovery of the Texas housing market and our expansion into the Houston market. Our Heavy Civil business has remained stable as we executed on substantial heavy highway work during the quarter while maintaining our backlog at near record levels. We are yet to see significant project delays or cancellations in the geographies in which we perform heavy civil work and have no reason to anticipate that this will be the case for the foreseeable future. Additionally, as yet, no states in the geographies in which we operate have stopped or reduced project lettings due to funding challenges. In fact, despite the uncertainty and general social and economic disruption caused by the pandemic crisis, we remain optimistic about the outlook for all of our businesses for the balance of the year given our Combined Backlog, the pending new awards we expect to realize in the coming months, and the sizeable quantity of new project opportunities that we’ve identified.”

Mr. Cutillo continued, “In addition to record earnings, we further enhanced our liquidity position in the second quarter. We are comfortable with our capital structure which provides us with the financial flexibility to continue to generate profitable growth. For the first six months of 2020 we generated $52.3 million of operating cash flow, an increase of $56.6 million compared to last year. In addition, we reduced our net debt by $36.0 million during the year. We expect to continue paying down debt over the remainder of 2020, putting us in an increasingly strong financial position going into 2021.”

Mr. Cutillo concluded, “Based on our year-to-date performance, the anticipated contribution from Plateau and our record high Combined Backlog and associated margin, along with our view on market strength and diversification of our business, we are providing updated guidance for 2020. We now expect to generate full year 2020 revenues of between $1.415 billion and $1.430 billion. Our expectation for 2020 net income attributable to Sterling common stockholders is between $41 million to $44 million, excluding acquisition related costs of $1 million to $2 million, representing a 73% increase from adjusted net income in 2019. We expect our full year 2020 diluted average common shares outstanding to be approximately 28.0 million. This guidance assumes no significant increase in COVID-19 pandemic impacts on our operations during the remainder of the year. However, with the continuing volatility of the COVID-19 pandemic, significant incremental pandemic impacts could keep us from achieving our 2020 guidance.”



Conference Call
Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, August 4, 2020 at 9:00 a.m. ET/8:00 a.m. CT. Interested parties may participate in the call by dialing (201) 493-6744 or (877) 445-9755. Please call in ten minutes before the conference call is scheduled to begin and ask for the Sterling Construction call. To coincide with the conference call, Sterling will post a slide presentation at www.strlco.com on the Investor Presentations & Webcast section of the Investor Relations tab, which includes additional 2020 financial modeling considerations. Following management’s opening remarks, there will be a question and answer session.
To listen to a simultaneous webcast of the call, please go to the Company’s website at www.strlco.com at least fifteen minutes early to download and install any necessary audio software. If you are unable to listen live, the conference call webcast will be archived on the Company’s website for thirty days.
About Sterling
Sterling Construction Company, Inc., (“Sterling” or “the Company”), a Delaware corporation, is a construction company that has been involved in the construction industry since its founding in 1955. The Company operates through a variety of subsidiaries within three operating groups specializing in heavy civil, specialty services, and residential projects in the United States (the “U.S.”), primarily across the southern U.S., the Rocky Mountain States, California and Hawaii, as well as other areas with strategic construction opportunities. Heavy civil includes infrastructure and rehabilitation projects for highways, roads, bridges, airfields, ports, light rail, water, wastewater and storm drainage systems. Specialty services projects include construction site excavation and drainage, drilling and blasting for excavation, foundations for multi-family homes, parking structures and other commercial concrete projects. Residential projects include concrete foundations for single-family homes.



Important Information for Investors and Stockholders
Non-GAAP Measures
This press release contains “Non-GAAP” financial measures as defined under Regulation G of the amended U.S. Securities Exchange Act of 1934. The Company reports financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), but the Company believes that certain Non-GAAP financial measures provide useful supplemental information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and are useful for period-over-period comparisons of those operations.
Non-GAAP measures include adjusted net income, adjusted EPS, and adjusted EBITDA, in each case excluding the impacts of certain identified items. The excluded items represent items that the Company does not consider to be representative of its normal operations. The Company believes that these measures are useful for investors to review, because they provide a consistent measure of the underlying financial results of the Company’s ongoing business and, in the Company’s view, allow for a supplemental comparison against historical results and expectations for future performance. Furthermore, the Company uses each of these to measure the performance of the Company’s operations for budgeting, forecasting, as well as employee incentive compensation. However, Non-GAAP measures should not be considered as substitutes for net income, EPS, or other data prepared and reported in accordance with GAAP and should be viewed in addition to the Company’s reported results prepared in accordance with GAAP.
Reconciliations of these Non-GAAP financial measures to the most comparable GAAP measures are provided in the tables included in this press release.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements that are considered forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about: the scope and duration of the COVID-19 pandemic and its continuing impact on national and global economic conditions; and our business strategy; financial strategy; and plans, objectives, expectations, forecasts, outlook and intentions. All of these types of statements, other than statements of historical fact included in this press release, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology. The forward-looking statements contained in this press release are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this press release are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors listed in the “Risk Factors” section in our filings with the U.S. Securities and Exchange Commission (“SEC”) and elsewhere in those filings. The forward-looking statements speak only as of the date made, and other than as required by law, we do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
Contact:
Sterling Construction Company, Inc.
Ron Ballschmiede, Chief Financial Officer
281-214-0800
Investor Relations Counsel:
The Equity Group Inc.
Fred Buonocore, CFA  212-836-9607



STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Revenues$400,038  $264,086  $696,726  $488,035  
Cost of revenues(340,439) (238,590) (601,882) (443,036) 
Gross profit59,599  25,496  94,844  44,999  
General and administrative expense(18,451) (10,174) (36,055) (22,063) 
Intangible asset amortization(2,866) (600) (5,703) (1,200) 
Acquisition related costs(139) (262) (612) (262) 
Other operating expense, net(5,097) (3,276) (7,325) (5,570) 
Operating income33,046  11,184  45,149  15,904  
Interest income24  291  123  655  
Interest expense(7,557) (2,904) (15,360) (5,964) 
Income before income taxes25,513  8,571  29,912  10,595  
Income tax expense(7,248) (706) (8,432) (869) 
Net income 18,265  7,865  21,480  9,726  
Less: Net income attributable to noncontrolling interests(55) (37) (155) (83) 
Net income attributable to Sterling common stockholders$18,210  $7,828  $21,325  $9,643  
Net income per share attributable to Sterling common stockholders:
Basic$0.65  $0.30  $0.77  $0.37  
Diluted$0.65  $0.29  $0.76  $0.36  
Weighted average common shares outstanding:
Basic27,941  26,338  27,794  26,357  
Diluted27,957  26,623  27,887  26,657  




STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2020% of
Revenue
2019% of
Revenue
2020% of
Revenue
2019% of
Revenue
Revenue
Heavy Civil$220,448  55%$200,236  75%$376,063  53%$350,741  72%
Specialty Services135,703  34%27,894  11%240,426  35%58,573  12%
Residential43,887  11%35,956  14%80,237  12%78,721  16%
Total Revenue$400,038  $264,086  $696,726  $488,035  
Operating Income
Heavy Civil$3,896  1.8%$5,747  2.9%$274  0.1%$3,600  1.0%
Specialty Services23,246  17.1%865  3.1%34,360  14.3%1,913  3.3%
Residential6,043  13.8%4,834  13.4%11,127  13.9%10,653  13.5%
Subtotal33,185  8.3%11,446  4.3%45,761  6.6%16,166  3.3%
Acquisition related costs(139) (262) (612) (262) 
Total Operating Income$33,046  8.3%$11,184  4.2%$45,149  6.5%$15,904  3.3%




STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
June 30,
2020
December 31,
2019
Assets
Current assets:
Cash and cash equivalents$70,612  $45,733  
Accounts receivable, including retainage269,406  248,247  
Costs and estimated earnings in excess of billings52,068  42,555  
Receivables from and equity in construction joint ventures12,396  9,196  
Other current assets11,965  11,790  
Total current assets416,447  357,521  
Property and equipment, net119,596  116,030  
Operating lease right-of-use assets17,076  13,979  
Goodwill192,014  191,892  
Other intangibles, net250,620  256,323  
Deferred tax asset, net21,604  26,012  
Other non-current assets, net153  183  
Total assets$1,017,510  $961,940  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$131,098  $137,593  
Billings in excess of costs and estimated earnings110,934  85,011  
Current maturities of long-term debt54,979  42,473  
Current portion of long-term lease obligations7,423  7,095  
Income taxes payable3,594  1,212  
Accrued compensation19,075  13,727  
Other current liabilities10,589  6,393  
Total current liabilities337,692  293,504  
Long-term debt367,028  390,627  
Long-term lease obligations9,733  6,976  
Members’ interest subject to mandatory redemption and undistributed earnings53,751  49,003  
Other long-term liabilities8,221  619  
Total liabilities776,425  740,729  
Stockholders’ equity:
Common stock, par value $0.01 per share; 38,000 shares authorized, 28,280 and 28,290 shares issued, 28,034 and 27,772 shares outstanding283  283  
Additional paid in capital253,820  251,019  
Treasury Stock, at cost: 246 and 518 shares(3,435) (6,142) 
Retained deficit(3,708) (25,033) 
Accumulated other comprehensive loss(7,323) (209) 
Total Sterling stockholders’ equity239,637  219,918  
Noncontrolling interests1,448  1,293  
Total stockholders’ equity241,085  221,211  
Total liabilities and stockholders’ equity$1,017,510  $961,940  



STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
 20202019
Cash flows from operating activities:
Net income$21,480  $9,726  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization16,541  8,473  
Amortization of debt issuance costs and non-cash interest1,762  1,602  
Gain on disposal of property and equipment(598) (441) 
Deferred taxes6,223  761  
Stock-based compensation expense6,196  1,670  
Loss on interest rate hedge272  —  
Changes in operating assets and liabilities385  (26,116) 
Net cash provided by (used in) operating activities52,261  (4,325) 
Cash flows from investing activities:
Capital expenditures(14,574) (4,854) 
Proceeds from sale of property and equipment769  802  
Net cash used in investing activities(13,805) (4,052) 
Cash flows from financing activities:
Repayments of debt(22,644) (5,763) 
Distributions to noncontrolling interest owners—  (5,100) 
Purchase of treasury stock—  (3,201) 
Other9,067  76  
Net cash used in financing activities(13,577) (13,988) 
Net change in cash and cash equivalents24,879  (22,365) 
Cash and cash equivalents at beginning of period45,733  94,095  
Cash and cash equivalents at end of period$70,612  $71,730  



STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1)
(In thousands, except per share data)
(Unaudited)
The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.
 Three Months Ended June 30, 2020
 As Reported (GAAP)AdjustmentAdjusted
(Non-GAAP)
Revenues$400,038  $—  $400,038  
Cost of revenues(340,439) —  (340,439) 
Gross profit59,599  —  59,599  
General and administrative expense(18,451) —  (18,451) 
Intangible asset amortization(2,866) (2,866) 
Acquisition related costs(139) 139  —  
Other operating expense, net(5,097) —  (5,097) 
Operating income33,046  139  33,185  
Interest income24  —  24  
Interest expense(7,557) —  (7,557) 
Income before income taxes25,513  139  25,652  
Income tax expense (2)
(7,248) (39) (7,287) 
Net income 18,265  100  18,365  
Less: Net income attributable to noncontrolling interests(55) —  (55) 
Net income attributable to Sterling common stockholders$18,210  $100  $18,310  
Net income per share attributable to Sterling common stockholders:
Basic$0.65  $0.01  $0.66  
Diluted$0.65  $—  $0.65  
Weighted average common shares outstanding:
Basic27,941  27,941  
Diluted27,957  27,957  
(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.
(2) Adjusted Non-GAAP income tax expense of $7,287 includes non-cash federal income tax expense of $5,349.




STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1)
(In thousands, except per share data)
(Unaudited)
The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.
 Three Months Ended June 30, 2019
 As Reported (GAAP)AdjustmentAdjusted
(Non-GAAP)
Revenues$264,086  $—  $264,086  
Cost of revenues(238,590) —  (238,590) 
Gross profit25,496  —  25,496  
General and administrative expense(10,174) —  (10,174) 
Intangible asset amortization(600) (600) 
Acquisition related costs(262) 262  —  
Other operating expense, net(3,276) —  (3,276) 
Operating income11,184  262  11,446  
Interest income291  —  291  
Interest expense(2,904) —  (2,904) 
Income before income taxes8,571  262  8,833  
Income tax expense(706) —  (706) 
Net income 7,865  262  8,127  
Less: Net income attributable to noncontrolling interests(37) —  (37) 
Net income attributable to Sterling common stockholders$7,828  $262  $8,090  
Net income per share attributable to Sterling common stockholders:
Basic$0.30  $0.01  $0.31  
Diluted$0.29  $0.01  $0.30  
Weighted average common shares outstanding:
Basic26,338  26,338  
Diluted26,623  26,623  
(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.



STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1)
(In thousands, except per share data)
(Unaudited)
The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.
 Six Months Ended June 30, 2020
 As Reported (GAAP)AdjustmentAdjusted
(Non-GAAP)
Revenues$696,726  $—  $696,726  
Cost of revenues(601,882) —  (601,882) 
Gross profit94,844  —  94,844  
General and administrative expense(36,055) —  (36,055) 
Intangible asset amortization(5,703) (5,703) 
Acquisition related costs(612) 612  —  
Other operating expense, net(7,325) —  (7,325) 
Operating income45,149  612  45,761  
Interest income123  —  123  
Interest expense(15,360) —  (15,360) 
Income before income taxes29,912  612  30,524  
Income tax expense (2)
(8,432) (173) (8,605) 
Net income 21,480  439  21,919  
Less: Net income attributable to noncontrolling interests(155) —  (155) 
Net income attributable to Sterling common stockholders$21,325  $439  $21,764  
Net income per share attributable to Sterling common stockholders:
Basic$0.77  $0.01  $0.78  
Diluted$0.76  $0.02  $0.78  
Weighted average common shares outstanding:
Basic27,794  27,794  
Diluted27,887  27,887  
(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.
(2) Adjusted Non-GAAP income tax expense of $8,605 includes non-cash federal income tax expense of $6,396.




STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1)
(In thousands, except per share data)
(Unaudited)
The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.
 Six Months Ended June 30, 2019
 As Reported (GAAP)AdjustmentAdjusted
(Non-GAAP)
Revenues$488,035  $—  $488,035  
Cost of revenues(443,036) —  (443,036) 
Gross profit44,999  —  44,999  
General and administrative expense(22,063) —  (22,063) 
Intangible asset amortization(1,200) (1,200) 
Acquisition related costs(262) 262  —  
Other operating expense, net(5,570) —  (5,570) 
Operating income15,904  262  16,166  
Interest income655  —  655  
Interest expense(5,964) —  (5,964) 
Income before income taxes10,595  262  10,857  
Income tax expense(869) —  (869) 
Net income 9,726  262  9,988  
Less: Net income attributable to noncontrolling interests(83) —  (83) 
Net income attributable to Sterling common stockholders$9,643  $262  $9,905  
Net income per share attributable to Sterling common stockholders:
Basic$0.37  $0.01  $0.38  
Diluted$0.36  $0.01  $0.37  
Weighted average common shares outstanding:
Basic26,357  26,357  
Diluted26,657  26,657  
(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.




STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1)
(In thousands, except per share data)
(Unaudited)
The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.
 Year Ended December 31, 2019
 
As Reported (GAAP) (2)
AdjustmentAdjusted
(Non-GAAP)
Revenues$1,126,278  $—  $1,126,278  
Cost of revenues(1,018,484) —  (1,018,484) 
Gross profit107,794  —  107,794  
General and administrative expense(49,200) —  (49,200) 
Intangible asset amortization(4,695) (4,695) 
Acquisition related costs(4,311) 4,311  —  
Other operating expense, net(11,837) —  (11,837) 
Operating income37,751  4,311  42,062  
Interest income1,142  —  1,142  
Interest expense(16,686) —  (16,686) 
Loss on extinguishment of debt(7,728) 7,728  —  
Income before income taxes14,479  12,039  26,518  
Income tax expense26,216  (27,398) (1,182) 
Net income 40,695  (15,359) 25,336  
Less: Net income attributable to noncontrolling interests(794) —  (794) 
Net income attributable to Sterling common stockholders$39,901  $(15,359) $24,542  
Net income per share attributable to Sterling common stockholders:
Basic$1.50  $(0.58) $0.92  
Diluted$1.47  $(0.57) $0.90  
Weighted average common shares outstanding:
Basic26,671  26,671  
Diluted27,119  27,119  
(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau (including related refinancing) and non-cash taxes. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.
(2) Includes a fourth quarter charge for a legacy project of $10.2 million or $0.36 per diluted share based on 28,201 weighted average common shares outstanding in the quarter.



STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
EBITDA Reconciliation
(In thousands)
(Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net income attributable to Sterling common stockholders$18,210  $7,828  $21,325  $9,643  
Depreciation and amortization8,256  4,171  16,541  8,473  
Interest expense, net of interest income7,533  2,613  15,237  5,309  
Income tax (benefit) expense7,248  706  8,432  869  
EBITDA (1)
41,247  15,318  61,535  24,294  
Acquisition related costs139  262  612  262  
Adjusted EBITDA (2)
$41,386  $15,580  $62,147  $24,556  
(1) The Company defines EBITDA as GAAP net income (loss) attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense, taxes, and loss on extinguishment of debt.
(2) Adjusted EBITDA excludes the impact of acquisition related costs.




Document
Exhibit 99.2