strl-20240930

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 September 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	NASDAQ
(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 November 5, 2024 – 30,713,105

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			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20

Item 3. Quantitative and Qualitative Disclosures About Market Risk			26

Item 4. Controls and Procedures			27

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			28

Item 1A. Risk Factors			28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28





Item 5. Other Information			28

Item 6. Exhibits			29

Signatures			30

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues	$	593,741	$	560,347	$	1,616,923	$	1,486,251
Cost of revenues	(463,942)		(468,480)		(1,297,477)		(1,240,368)
Gross profit	129,799		91,867		319,446		245,883
General and administrative expense	(30,672)		(25,237)		(85,826)		(72,592)
Intangible asset amortization	(4,280)		(3,736)		(12,857)		(11,209)
Acquisition related costs	(72)		(103)		(209)		(352)
Other operating expense, net	(7,283)		(5,654)		(18,203)		(11,703)
Operating income	87,492		57,137		202,351		150,027
Interest income	7,591		4,150		19,798		8,327
Interest expense	(6,286)		(7,257)		(19,463)		(22,516)

Income before income taxes	88,797		54,030		202,686		135,838
Income tax expense	(23,404)		(13,891)		(48,960)		(35,429)
Net income, including noncontrolling interests	65,393		40,139		153,726		100,409
Less: Net income attributable to noncontrolling interests	(4,072)		(786)		(9,478)		(1,927)
Net income attributable to Sterling common stockholders	$	61,321	$	39,353	$	144,248	$	98,482

Net income per share attributable to Sterling common stockholders:
Basic	$	2.00	$	1.28	$	4.67	$	3.20
Diluted	$	1.97	$	1.26	$	4.63	$	3.17

Weighted average common shares outstanding:
Basic	30,735		30,800		30,875		30,733
Diluted	31,070		31,217		31,184		31,048

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)


	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents ($69,549 and $24,325 related to variable interest entities (“VIEs”))	$	648,127	$	471,563
Accounts receivable ($8,749 and $1,771 related to VIEs)	329,882		252,435
Contract assets ($5,317 and $0 related to VIEs)	79,736		88,600
Receivables from and equity in construction joint ventures	7,814		17,506
Other current assets	18,086		17,875
Total current assets	1,083,645		847,979
Property and equipment, net	270,532		243,648
Operating lease right-of-use assets, net	54,748		57,235
Goodwill	281,363		281,117
Other intangibles, net	315,540		328,397

Other non-current assets, net	17,757		18,808
Total assets	$	2,023,585	$	1,777,184

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable ($22,229 and $2,973 related to VIEs)	$	160,199	$	145,968
Contract liabilities ($30,122 and $15,741 related to VIEs)	563,531		444,160
Current maturities of long-term debt	26,425		26,520
Current portion of long-term lease obligations	19,531		19,641
Accrued compensation	43,198		27,758
Other current liabilities	26,152		14,121
Total current liabilities	839,036		678,168
Long-term debt	296,185		314,996
Long-term lease obligations	35,445		37,722
Members’ interest subject to mandatory redemption and undistributed earnings	23,417		29,108
Deferred tax liability, net	82,894		76,764
Other long-term liabilities	15,666		16,573
Total liabilities	1,292,643		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 30,693 and 30,926 shares outstanding	312		309
Additional paid in capital	295,831		293,570
Treasury stock, at cost: 471 and 0 shares	(48,901)		—
Retained earnings	469,282		325,034

Total Sterling stockholders’ equity	716,524		618,913
Noncontrolling interests	14,418		4,940
Total stockholders’ equity	730,942		623,853
Total liabilities and stockholders’ equity	$	2,023,585	$	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)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net income	$	153,726	$	100,409
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,546		42,529
Amortization of debt issuance costs and non-cash interest	877		1,334
Gain on disposal of property and equipment	(3,280)		(4,102)


Deferred taxes	6,107		10,188
Stock-based compensation	13,753		10,975

Changes in operating assets and liabilities (Note 14)	101,106		169,882
Net cash provided by operating activities	322,835		331,215
Cash flows from investing activities:
Acquisitions, net of cash acquired	(4,827)		—
Disposition proceeds	—		14,000
Capital expenditures	(65,309)		(49,244)
Proceeds from sale of property and equipment	7,834		9,607
Net cash used in investing activities	(62,302)		(25,637)
Cash flows from financing activities:
Repayments of debt	(19,931)		(76,850)

Repurchase of common stock	(50,596)		—
Withholding taxes paid on net share settlement of equity awards	(13,408)		(4,579)
Other	(34)		(16)
Net cash used in financing activities	(83,969)		(81,445)
Net change in cash, cash equivalents, and restricted cash	176,564		224,133
Cash, cash equivalents and restricted cash at beginning of period	471,563		185,265
Cash, cash equivalents and restricted cash at end of period	648,127		409,398
Less: restricted cash	—		—
Cash and cash equivalents at end of period	$	648,127	$