strl-20240630

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 June 30, 2024


☐						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	☐
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 August 2, 2024 – 30,732,967

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



Balance Sheets			4

Statements of Cash Flows			5

Statements of Changes in Stockholders’ Equity			6

Notes to the Condensed Consolidated Financial Statements			7

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk			25

Item 4. Controls and Procedures			26

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			27

Item 1A. Risk Factors			27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			27





Item 5. Other Information			27

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues	$	582,822	$	522,325	$	1,023,182	$	925,904
Cost of revenues	(470,079)		(430,051)		(833,535)		(771,888)
Gross profit	112,743		92,274		189,647		154,016
General and administrative expense	(27,856)		(24,034)		(55,154)		(47,355)
Intangible asset amortization	(4,280)		(3,737)		(8,577)		(7,473)
Acquisition related costs	(101)		(59)		(137)		(249)
Other operating expense, net	(7,772)		(4,181)		(10,920)		(6,049)
Operating income	72,734		60,263		114,859		92,890
Interest income	6,305		2,203		12,207		4,177
Interest expense	(6,513)		(7,731)		(13,177)		(15,259)

Income before income taxes	72,526		54,735		113,889		81,808
Income tax expense	(17,952)		(14,505)		(25,556)		(21,538)
Net income, including noncontrolling interests	54,574		40,230		88,333		60,270
Less: Net income attributable to noncontrolling interests	(2,695)		(750)		(5,406)		(1,141)
Net income attributable to Sterling common stockholders	$	51,879	$	39,480	$	82,927	$	59,129

Net income per share attributable to Sterling common stockholders:
Basic	$	1.68	$	1.28	$	2.68	$	1.93
Diluted	$	1.67	$	1.27	$	2.66	$	1.91

Weighted average common shares outstanding:
Basic	30,914		30,780		30,945		30,699
Diluted	31,145		31,000		31,158		30,886

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)


	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents ($56,934 and $24,325 related to variable interest entities (“VIEs”))	$	539,985	$	471,563
Accounts receivable ($27,823 and $1,771 related to VIEs)	374,771		252,435
Contract assets	77,034		88,600
Receivables from and equity in construction joint ventures	5,467		17,506
Other current assets	19,511		17,875
Total current assets	1,016,768		847,979
Property and equipment, net	268,185		243,648
Operating lease right-of-use assets, net	58,970		57,235
Goodwill	281,363		281,117
Other intangibles, net	319,820		328,397

Other non-current assets, net	19,444		18,808
Total assets	$	1,964,550	$	1,777,184

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable ($16,887 and $2,973 related to VIEs)	$	163,841	$	145,968
Contract liabilities ($50,295 and $15,741 related to VIEs)	556,134		444,160
Current maturities of long-term debt	26,428		26,520
Current portion of long-term lease obligations	19,831		19,641
Accrued compensation	29,768		27,758
Other current liabilities	24,854		14,121
Total current liabilities	820,856		678,168
Long-term debt	302,459		314,996
Long-term lease obligations	39,180		37,722
Members’ interest subject to mandatory redemption and undistributed earnings	23,811		29,108
Deferred tax liability, net	80,304		76,764
Other long-term liabilities	16,926		16,573
Total liabilities	1,283,536		1,153,331
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, par value $0.01 per share; 58,000 shares authorized, 31,164 and 30,926 shares issued and 30,876 and 30,926 shares outstanding	312		309
Additional paid in capital	291,401		293,570
Treasury stock, at cost: 288 and 0 shares	(29,006)		—
Retained earnings	407,961		325,034

Total Sterling stockholders’ equity	670,668		618,913
Noncontrolling interests	10,346		4,940
Total stockholders’ equity	681,014		623,853
Total liabilities and stockholders’ equity	$	1,964,550	$	1,777,184

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

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	88,333	$	60,270
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,183		27,672
Amortization of debt issuance costs and non-cash interest	597		877
Gain on disposal of property and equipment	(2,964)		(2,631)


Deferred taxes	3,517		6,790
Stock-based compensation	9,382		7,003

Changes in operating assets and liabilities (Note 14)	38,513		81,126
Net cash provided by operating activities	170,561		181,107
Cash flows from investing activities:
Acquisitions, net of cash acquired	(1,016)		—
Disposition proceeds	—		14,000
Capital expenditures	(51,309)		(38,859)
Proceeds from sale of property and equipment	6,944		8,525
Net cash used in investing activities	(45,381)		(16,334)
Cash flows from financing activities:
Repayments of debt	(13,324)		(67,589)

Repurchase of common stock	(30,142)		—
Withholding taxes paid on net share settlement of equity awards	(13,264)		(4,328)
Other	(28)		—
Net cash used in financing activities	(56,758)		(71,917)
Net change in cash, cash equivalents, and restricted cash	68,422		92,856
Cash, cash equivalents and restricted cash at beginning of period	471,563		185,265
Cash, cash equivalents and restricted cash at end of period	539,985		278,121
Less: restricted cash	—		—
Cash and cash equivalents at end of period	$	539,985	$	278,121

Non-cash items:
Capital expenditures	$	1,325	$	705

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

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Six Months Ended June 30, 2024
	Common Stock			Additional Paid in Capital		Treasury Stock			Retained Earnings		Total Sterling Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2023	30,926	$	309	$	293,570	—	$	—	$	325,034	$	618,913	$	4,940	$	623,853
Net income	—	—		—		—	—		31,048		31,048		2,711		33,759
Stock-based compensation	—	—		7,248		—	—		—		7,248		—		7,248

Issuance of stock	358	2		370		—	—		—		372		—		372
Shares withheld for taxes	(124)	—		(13,015)		—	—		—		(13,015)		—		(13,015)

Balance at March 31, 2024	31,160	$	311	$	288,173	—	$	—	$	356,082	$	644,566	$	7,651	$	652,217
Net income	—	—		—		—	—		51,879		51,879		2,695		54,574
Stock-based compensation	—	—		4,273		—	—		—		4,273		—		4,273

Repurchase of common stock	(299)	—		—		299	(30,142)		—		(30,142)		—		(30,142)
Issuance of stock	17	1		(1,016)		(13)	1,385		—		370		—		370
Shares withheld for taxes	(2)	—		—		2	(249)		—		(249)		—		(249)
Other	—	—		(29)		—	—		—		(29)				(29)
Balance at June 30, 2024	30,876	$	312	$	291,401	288	$	(29,006)	$	407,961	$	670,668	$	10,346	$	681,014

SEC Form 10-Q filed by Sterling Infrastructure Inc.