Sterling Construction Company, Inc. (NasdaqGS:STRL) (“Sterling” or “the
Company”) today announced that it expects to report pre-tax losses for
the three months and twelve months ended December 31, 2013 in the range
of $36 million to $38 million, and $68 million to $70 million,
respectively. The Company attributed the losses primarily to additional
write-downs on three large projects booked prior to 2012 in Texas, that
continued to have a negative impact on profitability. These projects,
which are expected to be substantially complete by the end of the second
quarter of 2014, have been encountering unanticipated net revisions to
contract “cost to complete” estimates that became apparent and
quantifiable during the 2013 fourth quarter.
Despite issues with these projects, bookings have been improving, both
in terms of dollar amounts and gross margins, as has been reported by
Sterling in its quarterly financial results throughout 2013. As Sterling
continues to work through these projects and win new awards, gross
margins are expected to improve. For the full year 2013, new contracted
backlog was approximately $600 million and carried an average gross
margin in the high single-digit percentage range.
Peter MacKenna, President and Chief Executive Officer of Sterling said,
“The challenges associated with these three projects have been ongoing
for much of 2013; however, our visibility into the extent of their
financial impact did not become entirely clear until late in the fourth
quarter. While we are not pleased with the bottom-line results, we
believe that they represent the final resolution of a very difficult
period for our Texas operations. The recognition of these losses in the
final quarter of 2013, in combination with the numerous managerial and
operational enhancements we’ve made over the past year, should translate
into a significantly improved financial performance in 2014.”
The Company also reported that due to the fourth quarter loss, Sterling
is in breach of certain financial covenants contained in its credit
facility. Based upon initial conversations with its primary lender,
management is confident that it will negotiate a satisfactory resolution
of this matter.
The Company plans to issue results for the fourth quarter and year ended
December 31, 2013 on or about March 17, 2014.
Sterling is a leading heavy civil construction company that specializes
in the building and reconstruction of transportation and water
infrastructure projects in Texas, Utah, Nevada, Arizona, California,
Hawaii, and other states where there are construction opportunities. Its
transportation infrastructure projects include highways, roads, bridges
and light rail and its water infrastructure projects include water,
wastewater and storm drainage systems.
This press release includes certain statements that fall within the
definition of “forward-looking statements” under the Private Securities
Litigation Reform Act of 1995. Any such statements are subject to risks
and uncertainties, including overall economic and market conditions,
federal, state and local government funding, competitors’ and customers’
actions, and weather conditions, which could cause actual results to
differ materially from those anticipated, including those risks
identified in the Company’s filings with the Securities and Exchange
Commission. Accordingly, such statements should be considered in light
of these risks. Any prediction by the Company is only a statement of
management’s belief at the time the prediction is made. There can be no
assurance that any prediction once made will continue thereafter to
reflect management’s belief, and the Company does not undertake to
update publicly its predictions or to make voluntary additional
disclosures of nonpublic information, whether as a result of new
information, future events or otherwise.
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