Sterling Infrastructure, Inc. · NASDAQ:STRL
Sterling Infrastructure — Sterling Construction — Investor Presentation (March 2017)
24 slides from Sterling Infrastructure's investor presentation, Mar 16, 2017
Slide 1: Investor Presentation March 2017
Investor Presentation March 2017
Slide 2: Disclosure Regarding Forward-Looking Statements
DISCLOSURE REGARDING FORWARD - LOOKING STATEMENTS This presentation contains, and the officers and directors of the Company may from time to time make, statements that are considered forward – looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934
Slide 3: Company Overview
Heavy Highway 72% Rail/Airport 13% [CATEGORY NAME] [VALUE] Port 3% [CATEGORY NAME] [VALUE] Backlog by Project Type COMPANY OVERVIEW Leading heavy civil construction firm with strong competitive positions in the Western U.S. (1) Excludes ~1.9 mm of shares to be issued for pending Tealstone acquisitio
Slide 4: Investment Highlights
4 INVESTMENT HIGHLIGHTS STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 4 New management team has made major progress with turnaround over past 24 months; expect continued operational improvement in 2017 Well positioned in attractive, project - rich geographies Broad range of capabiliti
Slide 5: Attractive Geographic Footprint
Population growth, aging infrastructure and greater funding driving increased project activity Sources – US Census Bureau and ESRI WA OR ID MT WY NV UT CO AZ CA N TX FL HI Salt Lake City Reno Sacramento Phoenix Las Vegas Dallas/Ft. Worth Austin Houston San Antonio FL ATTRACTIVE GEOGRAPHIC FOOTPRINT
Slide 6: Broad Range of Capabilities/End Markets
Broad Range of Capabilities Transportation Airport/Rail Specialty Structural Ports Water BROAD RANGE OF CAPABILITIES/END MARKETS
Slide 7: Turnaround Nearly Complete
2012 - 2015 financial performance impacted by: > Very competitive markets 2010 - 2012; 10+ bidders per project > Poor execution on 4 large projects beyond capability; eroded gross profit by $75 million over 4 years > Inadequate systems/processes to support increasing size and capability Recent resul
Slide 8: Progress Towards Profitability
-2.0% 1.0% 2014 2015 2016 Gain/(Erosion) in Margin by Vintage (1) (1) “Gain/(Erosion)” analysis represents increase or decrease in estimated gross margin as compared to original contract for proj ect s in backlog as of 3/31/16, categorized by the year the project was contracted. 0.0% 2.0% 4.0% 6.0%
Slide 9: Recent Awards Enhance Backlog
RECENT AWARDS ENHANCE BACKLOG Backlog of $823 mm with embedded gross margin of ~8.2% at 12/31/16 STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 9 > Shift in project mix towards higher margin, non - heavy highway contracts, such as airport and rail work; non - heavy highway exceeded 25%
Slide 10: Differentiated Project Capabilities
I - 80 11 TH EAST IN UTAH > Accelerated Bridge Construction (ABC) > 3M lb bridge on SPMT rollers > Installed in 24 hours with minimal traffic delays TWO MEDICINE BRIDGE – MONTANA > 15 foot deck segments poured to balance bridge > Over Two Medicine Gorge on the Blackfeet Indian Reservation DIFFERENTI
Slide 11: Favorable Funding Environment
POSITIVE TRENDS IN STATE AND LOCAL INITIATVES FOR TRANSPORTATION INFRASTRUCTURE > Proposition 7 provides TxDOT $2.5 billion per year > Proposition 1 provides $1.5 to $2 billion per year in 2016 - 2017 > Governor Brown’s “Senate Bill 1,” a $6 billion state transportation funding plan expected to pass
Slide 12: Tealstone Acquisition
Sterling Construction Company, Inc. TEALSTONE ACQUISITION
Slide 13: Tealstone - Strategic Rationale
TEALSTONE - STRATEGIC RATIONALE STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 13 Expansion into adjacent markets. Diversifies revenue streams. Broadens customer base. Attractive margins. Provides operational synergies. Expertise presents expanded and attractive project opp
Slide 14: Tealstone Overview
TEALSTONE OVERVIEW STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 14 Tealstone Commercial, Inc. (“TC”) Tealstone Residential Concrete, Inc. (“TRC”) “ Tealstone ” Outsourced business model that sub - contracts concrete foundation work Segments: Tealstone Residential Concrete, Inc. (“TRC
Slide 15: Tealstone Residential Concrete, Inc.
STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 15 TEALSTONE RESIDENTIAL CONCRETE, INC. (“TRC”) > Largest residential concrete contractor in DFW Metroplex > Estimated market share 15 - 20% > Strong reputation among leading residential homebuilders > Turnkey concrete contracting > Founda
Slide 16: Tealstone Commercial, Inc.
STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 16 TEALSTONE COMMERCIAL, INC. (“TC”) > Serves multi - family developers and general contractors > Foundations > Flatwork, parking lots > Garages, podiums > Rarely needed to “bond” work > Primarily serves DFW Metroplex > Full TX service foo
Slide 17: Tealstone - Key Benefits
TEALSTONE - KEY BENEFITS STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 17 > Transaction expected to be accretive to EPS and generate substantial free cash flow in 2017. > Enables acceleration of refinancing efforts, providing greater liquidity at a reduced interest rate. > Opportunity
Slide 18: Sterling Financial Summary
Sterling Construction Company, Inc. STERLING FINANCIAL SUMMARY
Slide 19: Targeting Balance Sheet Improvement
TARGETING BALANCE SHEET IMPROVEMENT May 9, 2016 Equity Offering: > Raised $20 million to fund working capital needs and reduce expensive debt > Provides improved financial flexibility and foundation for growth Debt: > Financing Commitment Letter with the Strategic Credit Group at Oaktree Capital Man
Slide 20: 2016 Improvement Over 2015
2016 IMPROVEMENT OVER 2015 FY 2015 FY 2016 Revenues $623.6 mm $690.1 mm Gross Margin 4.6% 6.4% SG&A as % of Revenues 6.7% 5.6% - $14.4 mm - $4.7 mm - $2.02 - $ 0.40 20 - $39.2 mm - $9.2 mm Net Income Net Income Per Diluted Share Operating Income STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTAT
Slide 21: 2017 Outlook
21 2017 OUTLOOK* Revenues $700 mm - $735 mm EPS SG&A Capex STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 21 $0.15 - $0.30 ~5.5% of sales ~$10 mm *Excludes expected contribution from pending Tealstone acquisition
Slide 22: Three Legs of Strategic Plan
THREE LEGS OF STRATEGIC PLAN STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 22 1. Solidifying the based: > Focus on improving execution, particularly in Texas, and further reducing costs in all business units. > Drive improved sourcing efforts and further reduce under - performing asse
Slide 23: Investment Highlights
4 INVESTMENT HIGHLIGHTS STERLING CONSTRUCTION COMPANY, INC. INVESTOR PRESENTATION // 23 New management team has made major progress with turnaround over past 24 months; expect continued operational improvement in 2017 Well positioned in attractive, project - rich geographies Broad range of capabilit
Slide 24: Contact Us
CONTACT US Jennifer Maxwell Director of Investor Relations 281 - 951 - 3560 [email protected] Fred Buonocore, CFA Senior Vice President 212 - 836 - 9607 [email protected] Kevin Towle Associate 212 - 836 - 9620 [email protected] www.strlco.com Company Representative Sterling Constru
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