strl-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___


Commission File Number			1-31993



STERLING INFRASTRUCTURE, INC.
(Exact name of registrant as specified in its charter)

Delaware			25-1655321
(State or other jurisdiction of incorporation or organization)			(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) 214-0777


Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value per share	STRL	The NASDAQ Stock Market LLC
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. þYes ¨ No


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer	¨	Accelerated filer	þ
Non-accelerated filer	¨	Smaller reporting company	☐
		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.			¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No

The number of shares outstanding of the registrant’s common stock as of April 28, 2023 – 30,789,675

STERLING INFRASTRUCTURE, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


			Page
PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements			3

Statements of Operations			3

Statements of Comprehensive Income			4

Balance Sheets			5

Statements of Cash Flows			6

Statements of Changes in Stockholders’ Equity			7

Notes to the Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19

Item 3. Quantitative and Qualitative Disclosures About Market Risk			27

Item 4. Controls and Procedures			27

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			28

Item 1A. Risk Factors			28











Item 6. Exhibits			28

Signatures			29

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
		2023		2022
Continuing Operations:
Revenues		$	403,579	$	365,962
Cost of revenues		(341,837)		(310,813)
Gross profit		61,742		55,149
General and administrative expense		(23,321)		(20,297)
Intangible asset amortization		(3,736)		(3,568)
Acquisition related costs		(190)		(255)
Other operating expense, net		(1,868)		(1,666)
Operating income		32,627		29,363
Interest income		1,974		8
Interest expense		(7,528)		(4,650)

Income before income taxes		27,073		24,721
Income tax expense		(7,033)		(6,778)
Net income, including noncontrolling interests		20,040		17,943
Less: Net income attributable to noncontrolling interests		(391)		(271)
Net income from Continuing Operations		$	19,649	$	17,672

Discontinued Operations (Note 3):
Pretax income		$	—	$	1,399

Income tax expense		—		181
Net income from Discontinued Operations		$	—	$	1,580

Net income attributable to Sterling common stockholders		$	19,649	$	19,252

Net income per share from Continuing Operations:
Basic		$	0.64	$	0.59
Diluted		$	0.64	$	0.59

Net income per share from Discontinued Operations:
Basic		$	—	$	0.05
Diluted		$	—	$	0.05

Net income per share attributable to Sterling common stockholders:
Basic		$	0.64	$	0.64
Diluted		$	0.64	$	0.64

Weighted average common shares outstanding:
Basic		30,618		29,964
Diluted		30,789		30,112

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended March 31,
		2023		2022
Net income from Continuing Operations, including noncontrolling interests		$	20,040	$	17,943
Net income from Discontinued Operations		—		1,580
Net income, including noncontrolling interests		20,040		19,523
Other comprehensive income, net of tax
Change in interest rate swap, net of tax (Note 12)		—		1,563
Total comprehensive income		20,040		21,086
Less: Comprehensive income attributable to noncontrolling interests		(391)		(271)
Comprehensive income attributable to Sterling common stockholders		$	19,649	$	20,815

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents ($25,186 and $25,014 related to variable interest entities (“VIEs”))	$	202,576	$	181,544
Accounts receivable ($1,916 and $0 related to VIEs)	230,148		262,646
Contract assets	125,494		109,803
Receivables from and equity in construction joint ventures	13,648		14,122
Other current assets	16,094		29,139
Total current assets	587,960		597,254
Property and equipment, net	215,217		215,482
Operating lease right-of-use assets, net	62,278		59,415
Goodwill	262,671		262,692
Other intangibles, net	295,387		299,123

Other non-current assets, net	7,615		7,654
Total assets	$	1,431,128	$	1,441,620

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable ($4,070 and $

SEC Form 10-Q filed by Sterling Infrastructure Inc.