ConDig (06-Mar-18). Sterling Construction Co returned to profit in the fourth quarter as the Texas-based civil contractor booked a 50.8% rise in revenue.
The Woodlands, Texas-based company posted net income of $3.1 million in the quarter ended December 31 last year compared with a loss of $6.3 million in the same period a year earlier.
Revenues shot up to $253.9 million compared with $168.3 million in the year-ago period.
Sterling Construction expects full-year revenue in the range of $1 billion to $1.03 billion as the company said the quality of its backlog is the healthiest it has been in years. Sterling expects its full year 2018 diluted average common shares outstanding to be about 27.5 million.
The rise in group revenue in the fourth quarter comes as revenue in the heavy civil construction division jumped $55.7 million or 33.1% over the fourth quarter amid large construction projects in the Rocky Mountain region.
Residential construction revenues totaled $29.8 million after Sterling acquired residential builder Tealstone in April last year.
Sterling noted that residential markets in its primary geographies continue to see steady growth.Texas new housing starts increased 6% year-over-year in 2017, with Houston posting the most new housing starts followed by ongoing steady growth in Dallas.
The company’s combined backlog is comprised of about 70% from heavy highway construction projects.
For the year, Sterling’s net income was $11.6 million compared with a loss of $9.2 million in 2016, while revenues increased 38.8% to $958 million from $690.1 million.
“Given the favorable infrastructure environment, we believe we are well-positioned to win further economically compelling heavy civil project opportunities across our geographies,” said Joe Cutillo, Sterling’s chief executive officer.
“In addition, our main residential business end-markets in the Dallas – Fort Worth Metroplex and the Houston area continue to grow at low double-digit percentages. When combined with our shift towards higher margin markets, our ability to generate cash has significantly improved our balance sheet, which we anticipate will allow us to reinvest in our business and pursue attractive growth opportunities in the coming years.”
He added that the company has been shifting the mix of its project backlog towards a portfolio of projects that are limited risk and higher margins.
“In our heavy civil business, our operations in the Rocky Mountain region continue to perform very well, while our Texas heavy highway business, which represents less than 20% of our revenues,” he said.
Last month, a subsidiary of Sterling Construction Co secured a $136 million deal to upgrade sections of the I-15 highway in Utah.