Provides 2023 Full Year Guidance

Sterling Infrastructure, Inc. (NASDAQ:STRL) ("Sterling" or the "Company") today announced financial results for the fourth quarter and full year 2022 and provided full year 2023 guidance.

Fourth Quarter 2022 Results (compared with prior year period)

(The financial information herein is from continuing operations unless otherwise noted)

Revenues of $448.6 million, an increase of 26%
Gross margin of 15.4%, an increase from 14.8%
Net Income was $20.2 million, or $0.66 per diluted share, an increase of 80% and 74%, respectively
EBITDA⁽¹⁾ of $49.9 million, an increase of 78%; Adjusted EBITDA⁽¹⁾ of $50.1 million, an increase of 58%
Cash flows from operations⁽²⁾ of $88.5 million and $219.1 million for the fourth quarter and year ended December 31, 2022, respectively
Cash and Cash Equivalents totaled $181.5 million at December 31, 2022
Backlog at December 31, 2022 was $1.41 billion, an increase of 7% over December 31, 2021
Combined backlog⁽³⁾ at December 31, 2022 was $1.69 billion, an increase of 25% over December 31, 2021

Continuing Operations–For the full year ended December 31, 2022, the Company reported net income of $96.7 million, or $3.16 per diluted share, versus $61.5 million, or $2.11 per diluted share, for 2021. Revenue increased by 25% over 2021. EBITDA⁽¹⁾ increased 51% to $208.7 million in 2022, versus $138.1 million in 2021. Adjusted EBITDA⁽¹⁾ increased 49% to $209.5 million in 2022, versus $140.9 million in 2021.

Discontinued Operations–For the full year ended December 31, 2022, the Company reported net income of $9.7 million, or $0.32 per diluted share, versus $1.2 million, or $0.04 per diluted share, for 2021. The increase was primarily driven by a pretax gain of $16.7 million, as the result of the disposition of the Company's 50% ownership interest in its partnership with Myers & Sons Construction L.P.

For the full year ended December 31, 2022, the Company reported net income attributable to Sterling common stockholders⁽²⁾ of $106.5 million, or $3.48 per diluted share, versus $62.6 million, or $2.15 per diluted share, for 2021.

⁽¹⁾The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. The Company defines Adjusted EBITDA as EBITDA excluding the impact of the net gain on extinguishment of debt and acquisition related costs. See the "Non-GAAP Measures" and "EBITDA Reconciliation" sections below for more information.

⁽²⁾ Includes both Continuing and Discontinued Operations.

⁽³⁾ Combined Backlog includes Unsigned Low-bid Awards of $275.0 million and $22.5 million at December 31, 2022 and December 31, 2021, respectively.

CEO Remarks and Outlook

"2022 marked another year of significant progress in transforming the company into a leading Infrastructure Service Provider. During a time of increased inflation and supply chain disruptions, our team's ability to grow revenue 25% and improve margins 110 basis points over the prior year is truly amazing," stated Joe Cutillo, Sterling's Chief Executive Officer.

"Our E-Infrastructure Solutions segment delivered remarkable top-line growth of 93% compared to the prior year and remained our largest revenue, fastest-growing and highest-margin segment. E-Infrastructure organic growth was 31% while 62% was from the acquisition of Petillo. In our Building Solutions and Transportation Solutions segments we saw slower growth but significant operating income improvements. In Building Solutions, our operating income improved 13% and in Transportation Solutions, our operating income improved 34%," continued Mr. Cutillo.

"We enter 2023 stronger than ever. With our record backlog and strong demand in E-Infrastructure and Transportation Solutions, we are confident in our ability to deliver another year of record earnings and value to our customers and investors," Mr. Cutillo concluded.

Full Year 2023 Guidance:

Revenue of $1.9 billion to $2.0 billion
Net Income of $104 million to $110 million
EPS of $3.33 to $3.53
EBITDA⁽¹⁾ of $220 million to $235 million

Conference Call

Sterling's management will hold a conference call to discuss these results and recent corporate developments on Tuesday, February 28, 2023 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 10 minutes before the conference call is scheduled to begin and ask for the Sterling Infrastructure call. To coincide with the conference call, Sterling will post a slide presentation at www.strlco.com on the Events & Presentations section of the Investor Relations tab. 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 15 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 30 days.

About Sterling

Sterling operates through a variety of subsidiaries within three segments specializing in E-Infrastructure, Transportation and Building Solutions in the United States (the "U.S."), primarily across the Southern, Northeastern and Mid-Atlantic U.S., the Rocky Mountain States, and Hawaii, as well as other areas with strategic construction opportunities. E-Infrastructure Solutions projects include advanced, large-scale site development systems and services for data centers, e-commerce distribution centers, warehousing, transportation, energy and more. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail and storm drainage systems. Building Solutions projects include residential and commercial concrete foundations for single-family and multi-family homes, parking structures, elevated slabs and other concrete work. From strategy to operations, we are committed to sustainability by operating responsibly to safeguard and improve society's quality of life. Caring for our people and our communities, our customers and our investors – that is The Sterling Way.

Joe Cutillo, CEO, "We build and service the infrastructure that enables our economy to run, our people to move and our country to grow."

⁽¹⁾The Company defines EBITDA as GAAP net income attributable to Sterling's common stockholders, adjusted for depreciation and amortization, net interest expense and taxes. See the "Non-GAAP Measures" and "EBITDA Reconciliation" sections below for more information.

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 may include adjusted net income, adjusted EPS, EBITDA 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 and 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 Non-GAAP financial measures to the most comparable GAAP measures are provided in the tables included within 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: our business strategy; our financial strategy; our industry outlook; our guidance; and our 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 and elsewhere in those filings. Additional factors or risks that we currently deem immaterial, that are not presently known to us or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made. The forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise, notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021
Continuing Operations:
Revenues	$	448,607		$	355,375		$	1,769,436		$	1,414,374
Cost of revenues		(379,641	)		(302,863	)		(1,494,869	)		(1,210,842	)
Gross profit		68,966			52,512			274,567			203,532
General and administrative expense		(23,104	)		(22,971	)		(86,480	)		(69,153	)
Intangible asset amortization		(3,509	)		(2,866	)		(14,100	)		(11,464	)
Acquisition related costs		(265	)		(3,877	)		(827	)		(3,877	)
Other operating expense, net		(5,045	)		(2,740	)		(13,290	)		(12,027	)
Operating income		37,043			20,058			159,870			107,011
Interest income		684			12			885			45
Interest expense		(6,329	)		(3,675	)		(20,591	)		(19,311	)
Gain on extinguishment of debt, net		—			—			—			1,064
Income before income taxes		31,398			16,395			140,164			88,809
Income tax expense		(10,741	)		(4,552	)		(41,707	)		(24,874	)
Net income, including noncontrolling interests		20,657			11,843			98,457			63,935
Less: Net income attributable to noncontrolling interests		(424	)		(573	)		(1,740	)		(2,478	)
Net income from Continuing Operations	$	20,233		$	11,270		$	96,717		$	61,457

Discontinued Operations:
Pretax (loss) income	$	(1,561	)	$	(289	)	$	(4,848	)	$	1,214
Pretax gain on disposition		16,687			—			16,687			—
Income tax expense		(3,634	)		(73	)		(2,095	)		(26	)
Net income (loss) from Discontinued Operations	$	11,492		$	(362	)	$	9,744		$	1,188

Net income attributable to Sterling common stockholders	$	31,725		$	10,908		$	106,461		$	62,645

Net income per share from Continuing Operations:
Basic	$	0.67		$	0.39		$	3.20		$	2.15
Diluted	$	0.66		$	0.38		$	3.16		$	2.11

Net income (loss) per share from Discontinued Operations:
Basic	$	0.38		$	(0.01	)	$	0.32		$	0.04
Diluted	$	0.37		$	(0.01	)	$	0.32		$	0.04

Net income per share attributable to Sterling common stockholders:
Basic	$	1.05		$	0.38		$	3.53		$	2.19
Diluted	$	1.03		$	0.37		$	3.48		$	2.15

Weighted average common shares outstanding:
Basic		30,324			28,818			30,199			28,600
Diluted		30,739			29,756			30,564			29,101

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES SEGMENT INFORMATION (In thousands) (Unaudited)

	Three Months Ended December 31,								Twelve Months Ended December 31,
Revenues	2022			% of Revenue	2021			% of Revenue	2022			% of Revenue	2021			% of Revenue
E-Infrastructure Solutions	$	247,272		55%	$	127,183		36%	$	905,277		51%	$	468,784		33%
Transportation Solutions		126,545		28%		149,517		42%		542,550		31%		628,190		45%
Building Solutions		74,790		17%		78,675		22%		321,609		18%		317,400		22%
Total Revenues	$	448,607			$	355,375			$	1,769,436			$	1,414,374

Operating Income (Loss)
E-Infrastructure Solutions	$	29,811		12.1%	$	18,734		14.7%	$	121,453		13.4%	$	80,478		17.2%
Transportation Solutions		5,070		4.0%		4,238		2.8%		26,623		4.9%		19,888		3.2%
Building Solutions		8,260		11.0%		9,175		11.7%		36,693		11.4%		32,564		10.3%
Segment Operating Income		43,141		9.6%		32,147		9.0%		184,769		10.4%		132,930		9.4%
Corporate		(5,833	)			(8,212	)			(24,072	)			(22,042	)
Acquisition Related Costs		(265	)			(3,877	)			(827	)			(3,877	)
Total Continued Operating Income	$	37,043		8.3%	$	20,058		5.6%	$	159,870		9.0%	$	107,011		7.6%

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited)

	December 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	181,544	$	60,945
Accounts receivable		262,646		200,185
Contract assets		109,803		75,796
Receivables from and equity in construction joint ventures		14,122		9,839
Current assets of Discontinued Operations		—		71,886
Other current assets		29,139		16,040
Total current assets		597,254		434,691
Property and equipment, net		215,482		193,896
Operating lease right-of-use assets, net		59,415		19,473
Goodwill		262,692		258,290
Other intangibles, net		299,123		303,223
Non-current assets of Discontinued Operations		—		20,746
Other non-current assets, net		7,654		4,455
Total assets	$	1,441,620	$	1,234,774
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	121,887	$	112,746
Contract liabilities		239,297		118,672
Current maturities of long-term debt		32,610		23,373
Current portion of long-term lease obligations		19,715		6,557
Accrued compensation		24,136		20,415
Current liabilities of Discontinued Operations		—		51,914
Other current liabilities		8,966		18,083
Total current liabilities		446,611		351,760
Long-term debt		398,735		428,507
Long-term lease obligations		40,103		13,068
Members' interest subject to mandatory redemption and undistributed earnings		21,597		19,322
Deferred tax liability, net		51,659		18,434
Long-term liabilities of Discontinued Operations		—		38,637
Other long-term liabilities		5,116		4,819
Total liabilities		963,821		874,547
Stockholders' equity:
Common stock		306		298
Additional paid in capital		287,914		280,274
Retained earnings		186,379		79,918
Accumulated other comprehensive loss		—		(1,723	)
Total Sterling stockholders' equity		474,599		358,767
Noncontrolling interests		3,200		1,460
Total stockholders' equity		477,799		360,227
Total liabilities and stockholders' equity	$	1,441,620	$	1,234,774

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Years Ended December 31,
	2022			2021
Cash flows from operating activities:
Net income	$	108,201		$	65,123
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		52,066			34,201
Amortization of debt issuance costs and non-cash interest		2,136			2,242
Gain on disposal of property and equipment		(2,637	)		(1,396	)
Gain on debt extinguishment, net		(2,428	)		(2,032	)
Gain on disposition of Myers		(16,687	)		—
Deferred taxes		36,492			21,428
Stock-based compensation		12,726			11,771
Change in fair value of interest rate swap		(203	)		(32	)
Changes in operating assets and liabilities		29,450			27,627
Net cash provided by operating activities		219,116			158,932
Cash flows from investing activities:
Acquisitions, net of cash acquired		(18,004	)		(180,911	)
Disposition, net of cash disposed		(15,789	)		—
Capital expenditures		(60,909	)		(46,651	)
Proceeds from sale of property and equipment		4,947			4,113
Net cash used in investing activities		(89,755	)		(223,449	)
Cash flows from financing activities:
Cash received from credit facility		—			140,000
Repayments of debt		(23,373	)		(48,273	)
Distributions to noncontrolling interest owners		—			(2,477	)
Withholding taxes paid on net share settlement of equity awards		(9,416	)		(7,338	)
Debt issuance costs		—			(1,340	)
Other		—			(4	)
Net cash used in financing activities		(32,789	)		80,568
Net change in cash, cash equivalents, and restricted cash		96,572			16,051
Cash, cash equivalents and restricted cash at beginning of period		88,693			72,642
Cash, cash equivalents and restricted cash at end of period		185,265			88,693
Less: restricted cash (other current assets) - Continuing Operations		(3,721	)		(3,821	)
Less: cash, cash equivalents and restricted cash - Discontinued Operations		—			(23,927	)
Cash and cash equivalents at end of period - Continuing Operations	$	181,544		$	60,945

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES HISTORICAL QUARTERLY SEGMENT INFORMATION (In thousands) (Unaudited)

The following tables present our 2022, 2021 and 2020 quarterly revenue and income from operations by segment adjusted to conform to our 2022 continuing operations presentation:

	2022 Quarters Ended (unaudited)
Revenues	March 31			June 30			September 30			December 31			Total
E-Infrastructure Solutions	$	168,927		$	233,548		$	255,530		$	247,272		$	905,277
Transportation Solutions		116,141			142,640			157,224			126,545			542,550
Building Solutions		80,894			85,639			80,286			74,790			321,609
Revenues	$	365,962		$	461,827		$	493,040		$	448,607		$	1,769,436

Operating Income (Loss)
E-Infrastructure Solutions	$	21,285		$	32,824		$	37,533		$	29,811		$	121,453
Transportation Solutions		4,443			7,410			9,700			5,070			26,623
Building Solutions		9,358			9,751			9,324			8,260			36,693
Segment Operating Income		35,086			49,985			56,557			43,141			184,769
Corporate		(5,468	)		(5,766	)		(7,005	)		(5,833	)		(24,072	)
Acquisition related costs		(255	)		(230	)		(77	)		(265	)		(827	)
Operating Income	$	29,363		$	43,989		$	49,475		$	37,043		$	159,870

	2021 Quarters Ended (unaudited)
Revenues	March 31			June 30			September 30			December 31			Total
E-Infrastructure Solutions	$	96,572		$	123,743		$	121,286		$	127,183		$	468,784
Transportation Solutions		119,097			160,017			199,559			149,517			628,190
Building Solutions		71,690			74,769			92,266			78,675			317,400
Revenues	$	287,359		$	358,529		$	413,111		$	355,375		$	1,414,374

Operating Income (Loss)
E-Infrastructure Solutions	$	17,812		$	24,714		$	19,218		$	18,734		$	80,478
Transportation Solutions		2,300			4,414			8,936			4,238			19,888
Building Solutions		7,361			6,790			9,238			9,175			32,564
Segment Operating Income		27,473			35,918			37,392			32,147			132,930
Corporate		(5,044	)		(3,404	)		(5,382	)		(8,212	)		(22,042	)
Acquisition related costs		—			—			—			(3,877	)		(3,877	)
Operating Income	$	22,429		$	32,514		$	32,010		$	20,058		$	107,011

	2020 Quarters Ended (unaudited)
Revenues	March 31			June 30			September 30			December 31			Total
E-Infrastructure Solutions	$	78,574		$	103,310		$	114,961		$	100,408		$	397,253
Transportation Solutions		108,924			168,413			143,512			132,301			553,150
Building Solutions		64,828			73,951			67,419			70,137			276,335
Revenues	$	252,326		$	345,674		$	325,892		$	302,846		$	1,226,738

Operating Income (Loss)
E-Infrastructure Solutions	$	13,630		$	23,573		$	22,416		$	16,903		$	76,522
Transportation Solutions		(1,387	)		6,739			3,714			2,932			11,998
Building Solutions		7,438			8,950			7,687			6,366			30,441
Segment Operating Income		19,681			39,262			33,817			26,201			118,961
Corporate		(7,195	)		(6,589	)		(5,529	)		(6,007	)		(25,320	)
Acquisition related costs		(473	)		(139	)		(401	)		(13	)		(1,026	)
Operating Income	$	12,013		$	32,534		$	27,887		$	20,181		$	92,615

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES EBITDA FROM CONTINUING OPERATIONS RECONCILIATION (In thousands) (Unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2022		2021		2022		2021
Net income from Continuing Operations	$	20,233	$	11,270	$	96,717	$	61,457
Depreciation and amortization		13,253		8,456		50,575		32,503
Interest expense, net of interest income		5,645		3,663		19,706		19,266
Income tax expense		10,741		4,552		41,707		24,874
EBITDA from Continuing Operations⁽¹⁾		49,872		27,941		208,705		138,100
Gain on extinguishment of debt, net		—		—		—		(1,064	)
Acquisition related costs		265		3,877		827		3,877
Adjusted EBITDA from Continuing Operations ⁽²⁾	$	50,137	$	31,818	$	209,532	$	140,913

⁽¹⁾The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes.

⁽²⁾Adjusted EBITDA excludes the impact of the net gain on extinguishment of debt and acquisition related costs.

STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES EBITDA GUIDANCE RECONCILIATION (In millions) (Unaudited)

	Full Year 2023 Guidance
	Low		High
Net income attributable to Sterling common stockholders	$	104	$	110
Depreciation and amortization		55		59
Interest expense, net of interest income		21		24
Income tax expense		40		42
EBITDA⁽¹⁾	$	220	$	235

⁽¹⁾The Company defines EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense, and taxes.

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Sterling Reports Record Fourth Quarter and Full Year 2022 Results