ConDig (06-Aug-18). Texas-based civil contractor Sterling Construction Co has upped its full-year profit and revenue outlook on robust end market demand.
The Woodlands-based company said it expected revenues of between $1.030 billion and $1.045 billion this year and net income attributable to Sterling common stockholders of between $24 million and $26.5 million.
It comes as the company said it expected growth in its residential division of greater than 10% and mid-single digit growth in its heavy civil business, while its overall revenue mix
continued to migrate towards higher margin work.
“Our outlook does not assume any major positive changes in government investment in infrastructure, which would likely enhance our growth forecast,” Joe Cutillo, Sterling’s chief executive officer, said.
The improved outlook comes as the company posted net income of $8.2 million in the second quarter of this year compared with $3.7 million in the year-ago period.
Revenue surged 9.1% to $268.7 million compared with $246.4 million in the second quarter of last year, while gross margin was 11.7% of revenues compared with 10.2%.
The improvement in margins followed a pick up in heavy civil construction gross margins along with continued strong profitability from its residential construction division.
Heavy civil construction revenues grew 6.7% to $14.1 million driven mainly by an increase in commercial and aviation projects. Second quarter residential construction revenues totaled $45.5 million, an increase of 22% over the second quarter of 2017, driven by increasing demand from the Dallas-Fort Worth market along with initial projects in the Houston area.
The latest results from Sterling underline the continued strength in the US construction industry, with latest figures from Dodge Data & Analytics showing that construction starts jumped up 11% in June to a seasonally adjusted annual rate of $896.3 billion.
The increase marked the second double-digit gain in a row, following the 15% hike that was reported for May.
The rise in June follows a 57% surge in nonresidential building, which benefitted from the start of two large manufacturing plant projects and two substantial office building projects.
Residential building rose 4%, while nonbuilding construction (public works and electric utilities) declined 28% in June.
In June, a subsidiary of Sterling Construction Co bagged a $28 million contract to revamp and widen a portion of FM 664 in Ellis County, Texas.