Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 31, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | STERLING CONSTRUCTION CO INC | |
Entity Central Index Key | 874,238 | |
Trading Symbol | strl | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 27,063,932 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 66,585 | $ 83,953 |
Receivables, including retainage | 164,465 | 133,931 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 36,388 | 37,112 |
Inventories | 1,613 | 4,621 |
Receivables from and equity in construction joint ventures | 11,766 | 11,380 |
Other current assets | 9,066 | 7,529 |
Total current assets | 289,883 | 278,526 |
Property and equipment, net | 51,726 | 54,406 |
Goodwill | 85,231 | 85,231 |
Intangibles, net | 43,618 | 44,818 |
Other assets, net | 227 | 317 |
Total assets | 470,685 | 463,298 |
Current liabilities: | ||
Accounts payable | 96,384 | 97,457 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 58,304 | 62,374 |
Current maturities of long-term debt | 826 | 3,978 |
Income taxes payable | 88 | 81 |
Accrued compensation | 13,096 | 9,054 |
Other current liabilities | 7,063 | 9,348 |
Total current liabilities | 175,761 | 182,292 |
Long-term liabilities: | ||
Long-term debt, net of current maturities | 85,749 | 86,160 |
Members' interest subject to mandatory redemption and undistributed earnings | 47,837 | 47,386 |
Other long-term liabilities | 1,246 | 1,271 |
Total long-term liabilities | 134,832 | 134,817 |
Commitments and contingencies (Note 9) | ||
Sterling stockholders’ equity: | ||
Preferred stock, par value $0.01 per share; 1,000,000 shares authorized, none issued | 0 | 0 |
Common stock, par value $0.01 per share; 38,000,000 shares authorized, 27,064,428 and 27,051,468 shares issued | 271 | 271 |
Additional Paid in Capital | 232,265 | 231,183 |
Retained Earnings (Accumulated Deficit) | (79,458) | (90,121) |
Total Sterling common stockholders’ equity | 153,078 | 141,333 |
Total equity | 160,092 | 146,189 |
Total liabilities and equity | $ 470,685 | $ 463,298 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 38,000,000 | 38,000,000 |
Common Stock | ||
Common stock, shares issued (in shares) | 27,064,428 | 27,051,468 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 268,734 | $ 246,412 | $ 491,226 | $ 399,828 |
Cost of revenues | (237,269) | (221,207) | (439,240) | (365,336) |
Gross profit | 31,465 | 25,205 | 51,986 | 34,492 |
General and administrative expenses | (13,622) | (12,812) | (26,649) | (23,416) |
Other operating expense, net | (5,693) | (4,037) | (6,509) | (4,508) |
Operating income | 12,150 | 8,356 | 18,828 | 6,568 |
Interest income | 201 | 44 | 330 | 85 |
Interest expense | (3,111) | (2,984) | (6,199) | (3,096) |
Loss on extinguishment of debt | 0 | (755) | 0 | (755) |
Income before income taxes and noncontrolling interests in earnings | 9,240 | 4,661 | 12,959 | 2,802 |
Income tax expense | (98) | (98) | (138) | (125) |
Net income | 9,142 | 4,563 | 12,821 | 2,677 |
Noncontrolling interests in earnings | (966) | (901) | (2,158) | (1,272) |
Net income attributable to Sterling common stockholders | $ 8,176 | $ 3,662 | $ 10,663 | $ 1,405 |
Net income per share attributable to Sterling common stockholders: | ||||
Basic (USD per share) | $ 0.30 | $ 0.14 | $ 0.40 | $ 0.05 |
Diluted (USD per share) | $ 0.30 | $ 0.13 | $ 0.39 | $ 0.05 |
Weighted average number of common shares outstanding used in computing per share amounts: | ||||
Basic (in shares) | 26,887 | 26,978 | 26,881 | 25,972 |
Diluted (in shares) | 27,125 | 27,336 | 27,162 | 26,409 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid in Capital | Retained Deficit | Noncontrolling Interests |
Stockholders' Equity Attributable to Noncontrolling Interest | $ 4,856 | ||||
Beginning balance (in shares) at Dec. 31, 2017 | 27,051,468 | ||||
Beginning balance at Dec. 31, 2017 | $ 146,189 | $ 271 | $ 231,183 | $ (90,121) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) available to common stockholders, basic | 10,663 | 10,663 | |||
Plus: Noncontrolling interests in earnings | 2,158 | 2,158 | |||
Net income | 12,821 | ||||
Stock-based compensation (in shares) | 36,000 | ||||
Stock-based compensation | 1,383 | 1,383 | |||
Other (in shares) | (23,000) | ||||
Other | (301) | $ 0 | (301) | ||
Ending balance (in shares) at Jun. 30, 2018 | 27,064,428 | ||||
Ending balance at Jun. 30, 2018 | $ 160,092 | $ 271 | $ 232,265 | $ (79,458) | |
Stockholders' Equity Attributable to Noncontrolling Interest | $ 7,014 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income attributable to Sterling common stockholders | $ 10,663 | $ 1,405 | |
Plus: Noncontrolling interests in earnings | 2,158 | 1,272 | |
Net income | 12,821 | 2,677 | |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Depreciation and amortization | 8,307 | 8,387 | |
Gain on disposal of property and equipment | (470) | (396) | |
Stock-based compensation expense | 1,977 | ||
Impairment on building held-for-sale | 0 | 895 | |
Changes in operating assets and liabilities: | |||
Contracts receivable | (30,534) | (40,163) | |
Costs and estimated earnings in excess of billings on uncompleted contracts | 724 | (4,939) | |
Inventories | 3,008 | 1,405 | |
Receivables from and equity in construction joint ventures | (386) | (333) | |
Other assets | (1,446) | (2,429) | |
Accounts payable | (1,073) | 12,922 | |
Billings in excess of costs and estimated earnings on uncompleted contracts | (4,070) | 12,513 | |
Accrued compensation and other liabilities | 1,761 | (5,968) | |
Members' interest subject to mandatory redemption and undistributed earnings | 451 | 1,116 | |
Net cash used in operating activities | (9,524) | (12,336) | |
Cash flows from investing activities: | |||
Tealstone acquisition, net of cash acquired | 0 | (55,000) | |
Additions to property and equipment | (5,263) | (5,870) | |
Proceeds from sale of property and equipment | 1,307 | 1,907 | |
Net cash used in investing activities | (3,956) | (58,963) | |
Cash flows from financing activities: | |||
Cash received – Oaktree Facility | 0 | 85,000 | |
Repayments – equipment-based term loan and other | (665) | (3,953) | |
Repayments – Oaktree Facility | (4,679) | 0 | |
Debt issuance costs | 0 | 6,889 | |
Loss on debt extinguishment | 0 | 755 | |
Other | 1,456 | (119) | |
Net cash (used in) provided by financing activities | (3,888) | 88,572 | |
Net (decrease) increase in cash and cash equivalents | (17,368) | 17,273 | |
Cash and cash equivalents at beginning of period | 83,953 | 42,785 | $ 42,785 |
Cash and cash equivalents at end of period | 66,585 | 60,058 | 83,953 |
Supplemental disclosures of cash flow information: | |||
Cash paid during the period for interest | 5,712 | 3,096 | |
Cash paid during the period for income taxes | 279 | 78 | |
Non-cash items: | |||
Share consideration given for Tealstone acquisition (1,882,058 shares) | 0 | 17,061 | |
Notes and deferred payments to sellers | 0 | 11,647 | |
Warrants issued to lenders (1,000,000 Warrants) | 0 | $ 3,500 | |
Transportation and construction equipment acquired through financing arrangements | $ 0 | $ 70 | |
Statement of Cash Flows Parenthetical [Abstract] | |||
Business acquisition, equity interest issued or issuable, number of shares | 1,882,000 | ||
Class of warrant or right, issued during the period | 1,000,000 |
Summary of Business and Signifi
Summary of Business and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Business and Significant Accounting Policies | 1. Summary of Business and Significant Accounting Policies Business Summary Sterling Construction Company, Inc. (“Sterling” or “the Company”), a Delaware corporation, is a construction company that specializes in heavy civil construction and residential construction projects, primarily in Arizona, California, Colorado, Hawaii, Nevada, Texas, Utah and other states in which there are feasible construction opportunities. Our heavy civil construction projects include highways, roads, bridges, airfields, ports, light rail, water, wastewater and storm drainage systems, foundations for multi-family homes, commercial concrete projects and parking structures. Our residential construction projects include concrete foundations for single-family homes. Presentation The condensed consolidated financial statements included herein have been prepared by Sterling, without audit, in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2017 (“ 2017 Form 10-K”). Certain information and note disclosures prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been either condensed or omitted pursuant to SEC rules and regulations. The condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly the Company’s financial position at June 30, 2018 and the results of operations and cash flows for the periods presented. The December 31, 2017 condensed consolidated balance sheet data herein was derived from audited financial statements, but as discussed above, does not include all disclosures required by GAAP. Interim results may be subject to significant seasonal variations and the results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results expected for the full year or subsequent quarters. Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Certain of the Company’s accounting policies require higher degrees of judgment than others in their application. These include the recognition of revenue and earnings from construction contracts over time, the valuation of long-term assets, income taxes, and purchase accounting, including intangibles and goodwill. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. Significant Accounting Policies The Company’s significant accounting policies are more fully described in Note 1 of the Notes to Consolidated Financial Statements in the 2017 Form 10-K. There have been no material changes to significant accounting policies since December 31, 2017 . Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of subsidiaries and construction joint ventures in which the Company has 50% or greater ownership interest or otherwise exercises control over such entities. For investments in construction joint ventures that are not wholly-owned, but where the Company exercises control, the equity held by the remaining owners and their portions of net income are reflected in the balance sheet line item “ Noncontrolling interests ” in “Equity” and the statement of operations line item “ Noncontrolling interests in earnings ,” respectively. For investments in subsidiaries that are not wholly-owned, but where the Company exercises control and where the Company has a mandatorily redeemable interest, the equity held by the remaining owners and their portion of net income (loss) is reflected in the balance sheet line item “ Members' interest subject to mandatory redemption and undistributed earnings ” and the statement of operations line item “ Other operating expense, net ” respectively. All significant intercompany accounts and transactions have been eliminated in consolidation. Where the Company is a noncontrolling joint venture partner, and is otherwise not required to consolidate the joint venture entity, its share of the earnings of such construction joint venture is accounted for on a pro rata basis in the condensed consolidated statements of operations and as a single line item (“ Receivables from and equity in construction joint ventures ”) in the condensed consolidated balance sheets. This method is a permissible modification of the equity method of accounting which is a common practice in the construction industry. Revenue Recognition Heavy Civil Construction The Company engages in various types of heavy civil construction projects principally for public (government) owners. Revenues are recognized as performance obligations are satisfied over time (also known as percentage-of-completion method), measured by the ratio of costs incurred up to a given date to estimated total costs for each contract. This cost to cost measure is used because management considers it to be the best available measure of progress on these contracts. Contract costs include all direct material, labor, subcontract and other costs and those indirect costs determined to relate to contract performance, such as indirect salaries and wages, equipment repairs and depreciation, insurance and payroll taxes. Administrative and general expenses are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and associated change orders and claims, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Residential Construction Residential construction revenue and related profit are recognized when construction on the concrete foundation unit is completed (i.e., at a point in time). The time from starting construction to finishing is typically less than one month. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-9, “Revenue from Contracts with Customers”, which provides a single comprehensive accounting standard for revenue recognition for contracts with customers and supersedes current industry-specific guidance, including ASC 605-35. The new standard requires companies to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services. The new model requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time (formerly known as percentage-of-completion method) for each of these obligations. The new standard also significantly expands disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the new standard on January 1, 2018, for all contracts using the modified retrospective method that is described in the following paragraph. The adoption of the new revenue standard had no material impact on our condensed consolidated financial statements as it did not require a change in revenue recognition for either of our segments. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We implemented the new standard's transitional rules as follows: ASC 606-10-65-1 permits the omission of prior-period information about our performance obligations that were not complete at the time of our new adoption of the new standard. Further, rather than applying the new recognition policy on a contract by contract bases, ASC 606-10-32-18 allows the new standard to be applied against a portfolio of contracts (or performance obligations) with similar characteristics. As the majority of our significant contracts are with government entities and major homebuilders that utilize contracts of a similar structure and nature, this new accounting policy will not yield a material difference for the Company than applying the guidance on a contract by contract basis. In addition to the foregoing, ASC 606-10-32-18 allows entities to waive the requirement to adjust the consideration amount for the effects of a significant financing component if the entity expects, at contract inception, that the period between its fulfillment of the performance obligation and receipt of the customer's payment is less than one year. Further ASC 606-10-32-2A allows entities to make an accounting policy election to exclude taxes assessed by and collected on behalf of government authorities from the transaction price allocated to the performance obligation. We have historically excluded such amounts from our revenues and will continue to do so under the new revenue standard. See Note 3 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard. Recently Issued Accounting Pronouncements In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-2, “Leases” (Topic 842). Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The standard is effective for us for interim and annual reporting periods beginning after December 15, 2018. In January 2018, the FASB issued an exposure draft proposing an amendment to the standard that, if approved, would permit companies the option to apply the provisions of the new lease standard either prospectively as of the effective date, without adjusting comparative periods presented, or using a modified retrospective transition applicable to all prior periods presented. If approved, we intend to apply the new guidance prospectively to leases that exist and those entered into on or after January 1, 2019 without adjusting comparative periods in the financial statements. We are assessing the potential impact on our Financial Statements and related disclosures. |
Tealstone Acquisition
Tealstone Acquisition | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Tealstone Acquisition | 2. Tealstone Acquisition General On April 3, 2017, the Company consummated the acquisition (the “Tealstone Acquisition”) of 100% of the outstanding stock of Tealstone Residential Concrete, Inc. and Tealstone Commercial, Inc. (collectively, “Tealstone”) from the stockholders thereof (the “Sellers”) for consideration consisting of $55,000,000 in cash, 1,882,058 shares of the Company’s common stock, and $5,000,000 of promissory notes issued to the Sellers. In addition, the Company will make $2,426,000 and $7,500,000 of deferred cash payments on the second and third anniversaries of the closing date, respectively, and up to an aggregate of $15,000,000 in earn-out payments if specified financial performance levels are achieved (subject to annual maximums) on each of the first, second, third and fourth anniversaries of the closing date to continuing Tealstone management or their affiliates. Tealstone focuses on concrete construction of residential foundations, parking structures, elevated foundations and other concrete work for leading homebuilders, multi-family developers and general contractors in both residential and commercial markets. This acquisition enables expansion into adjacent markets and diversification of revenue streams and customer base with higher margin work. Supplemental Pro Forma Information (Unaudited) The following unaudited pro forma condensed combined financial information (“the pro forma financial information”) gives effect to the acquisition of Tealstone by Sterling, accounted for as a business combination using the purchase method of accounting. The pro forma financial information reflects the Tealstone Acquisition and related events as if they occurred at the beginning of the period covered by the pro formas, and gives effect to pro forma events that are: directly attributable to the acquisition, factually supportable, and expected to have a continuing impact on the combined results of Sterling and Tealstone following the acquisition. The pro forma financial information includes adjustments to: (1) exclude transaction costs that were included in Sterling’s and Tealstone’s historical results and are expected to be non-recurring; and (2) include additional intangibles amortization and net interest expense associated with the Tealstone Acquisition. This pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on the dates indicated. Further, the pro forma financial information does not purport to project the future operating results of the combined company following the Tealstone Acquisition. The pro forma for the six months ended June 30, 2017 (amounts in thousands): Six months ended June 30, 2017 Pro forma revenue $ 444,957 Pro forma net income attributable to Sterling $ 1,716 |
Revenue From Contracts With Cus
Revenue From Contracts With Customers | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue From Contracts With Customers | 3. Revenue from Contracts with Customers Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product life cycle (design and construction). For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service. Performance Obligations Satisfied Over Time Revenue for our Heavy Civil Construction segment contracts that satisfy the criteria for over time recognition (formerly known as percentage-of-completion method) is recognized as the work progresses. The majority of our revenue is derived from long-term, heavy civil construction contracts and projects that typically span between 12 to 36 months . Our heavy civil construction contracts will continue to be recognized over time because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being constructed. This continuous transfer of control to the customer is further supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. Under the new revenue standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as we incur costs. Contract costs include labor, material, and indirect costs. Revenue from products and services transferred to customers over time accounted for 83% and 84% of our revenue for the three and six months ended June 30, 2018 , respectively. Revenue from products and services transferred to customers over time accounted for 85% and 91% of our revenue for the three and six months ended June 30, 2017 , respectively. Performance Obligations Satisfied at a Point in Time Revenue for our Residential Construction segment contracts that do not satisfy the criteria for over time recognition is recognized at a point in time. Substantially all of our revenue recognized at a point in time is for work performed by our residential construction segment. Unlike our heavy civil construction segment that uses a cost-to-cost input measure for performance, the residential construction segment utilizes an output measure for performance based on the completion of a unit of work (e.g., foundation). The typical time frame for completion of a residential foundation is less than one month. Upon fulfillment of the performance obligation, the customer is provided an invoice (or equivalent) demonstrating transfer of control to the customer. We believe that point in time recognition remains appropriate for this segment and will continue to recognize revenues upon completion of the performance obligation and issuance of an invoice. Revenue from goods and services transferred to customers at a point in time accounted for 17% and 16% of our revenue for the three and six months ended June 30, 2018 , respectively. Revenue from goods and services transferred to customers at a point in time accounted for 15% and 9% of our revenue for the three and six months ended June 30, 2017 , respectively. Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. Assurance-type warranties are the only warranties provided by the Company and, as such, we do not recognize revenue on warranty-related work. We generally provide a one to two year warranty for workmanship under our contracts when completed. Warranty claims historically have been insignificant. Pre-contract costs are generally charged to expense as incurred, but in certain cases their recognition may be deferred if specific probability criteria are met. We had no significant deferred pre-contract costs at June 30, 2018 . Backlog On June 30, 2018 , we had $885 million of remaining performance obligations in our heavy civil construction segment, which we also refer to as backlog. We expect to recognize approximately 70% of our backlog as revenue during the next twelve months, and the balance thereafter. Contract Estimates Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Changes in estimated revenues and gross margin resulted in a net gain of $0.3 million and $1.7 million for the three and six months ended June 30, 2018 , respectively, and a net charge of $1.8 million and $1.1 million for the three and six months ended June 30, 2017 , respectively, included in “Operating income” on the condensed consolidated statements of operations. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Variable Consideration Transaction price for our contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Change orders, claims and incentives are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. Change orders may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Either we or our customers may initiate change orders. Change orders that are unapproved as to both price and scope are evaluated as claims. We estimate variable consideration for a performance obligation at the most likely amount to which we expect to be entitled (or the most likely amount we expect to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which we will be entitled (or will be incurred in the case of liquidated damages). We include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. The Company considers claims to be amounts in excess of approved contract prices that we seek to collect from our customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in our favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. The Company has projects where we are in the process of negotiating, or awaiting final approval of, unapproved change orders and claims with our customers. The Company is proceeding with its contractual rights to recoup additional costs incurred from its customers based on completing work associated with change orders, including change orders with pending change order pricing, or claims related to significant changes in scope which resulted in substantial delays and additional costs in completing the work. Unapproved change order and claim information has been provided to our customers and negotiations with the customers are ongoing. If additional progress with an acceptable resolution is not reached, legal action will be taken. Based upon our review of the provisions of our contracts, specific costs incurred and other related evidence supporting the unapproved change orders and claims, together in some cases as necessary with the views of the Company’s outside claim consultants, we concluded that it was appropriate to include in project price amounts of $8.7 million and $10.0 million , at June 30, 2018 and December 31, 2017 , respectively, in “Costs and estimated earnings in excess of billings on uncompleted contracts” on our condensed consolidated balance sheets. We expect these matters will be resolved without a material adverse effect on our financial statements. However, unapproved change order and claim amounts are subject to negotiations which may cause actual results to differ materially from estimated and recorded amounts. Revenue by Heavy Civil Construction Category Our heavy civil construction segment's portfolio of products and services consists of over 150 active contracts. The following series of tables presents our heavy civil construction revenue disaggregated by several categories. Revenue by major end market (amounts in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Heavy Highway $ 126,554 $ 149,749 $ 233,962 $ 259,135 Commercial 29,110 8,733 57,628 11,840 Aviation 27,832 22,857 51,084 33,447 Water Containment and Treatment 15,521 13,274 30,516 22,870 Other 24,267 14,581 37,334 35,318 Heavy Civil Construction Revenue $ 223,284 $ 209,194 $ 410,524 $ 362,610 Revenue by contract type (amounts in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Fixed Unit Price $ 194,486 $ 190,435 $ 354,721 $ 334,795 Lump Sum and Other 28,798 18,759 55,803 27,815 Heavy Civil Construction Revenue $ 223,284 $ 209,194 $ 410,524 $ 362,610 Each of these contract types presents advantages and disadvantages. Typically, we assume more risk with lump-sum contracts. However, these types of contracts offer additional profits when we complete the work for less than originally estimated. Under fixed-unit price contracts, our profit may vary if actual labor-hour costs vary significantly from the negotiated rates. Also, because some contracts can provide little or no fee for managing material costs, the components of contract cost can impact profitability. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) on the condensed consolidated balance sheet. In our heavy civil construction segment, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, before revenue is recognized, resulting in billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities). These assets and liabilities are reported on the condensed consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the six month period ended June 30, 2018 , were not materially impacted by any other factors. The table below reconciles the net excess billings to the amounts included in the condensed consolidated balance sheets at those dates (amounts in thousands): June 30, December 31, Costs and estimated earnings in excess of billings on uncompleted contracts $ 36,388 $ 37,112 Billings in excess of costs and estimated earnings on uncompleted contracts (58,304 ) (62,374 ) Net amount of costs and estimated earnings on uncompleted contracts below billings $ (21,916 ) $ (25,262 ) Revenues recognized and billings on uncompleted contracts include cumulative amounts recognized as revenues and billings in prior periods. This revenue primarily represents progress on our construction jobs. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Text Block [Abstract] | |
Cash and Cash Equivalents | 4. Cash and Cash Equivalents The Company considers all highly liquid investments with original or remaining maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents include cash balances held by our consolidated subsidiaries and our majority controlled construction joint ventures. At June 30, 2018 and December 31, 2017 , cash and cash equivalents included $17.6 million and $31.1 million , respectively, belonging to our consolidated 50% owned subsidiaries. At June 30, 2018 and December 31, 2017 , cash and cash equivalents included $12.3 million and $18.9 million , respectively, belonging to our construction joint ventures. Construction joint venture cash balances are limited to joint venture activities and are not available for other projects, general cash needs or distribution to us without approval of the board of directors, or equivalent body, of the respective joint ventures. Restricted cash of approximately $3.6 million is included in “ Other current assets ” on the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 and represents $3.0 million of cash designated as collateral for a standby letter of credit and approximately $0.6 million represents cash deposited by a customer, for the benefit of the Company, in an escrow account which is restricted until the customer releases the restriction upon the completion of the job. The Company holds cash on deposit in U.S. banks, at times, in excess of federally insured limits. Management does not believe that the risk associated with keeping cash deposits in excess of federal deposit insurance limits represents a material risk. |
Consolidated 50% Owned Subsidia
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE") | 6 Months Ended |
Jun. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities (VIE) | 5. Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE") The Company has a 50% interest in two subsidiaries (Myers and RHB); both subsidiaries have individual provisions which obligate the Company to purchase each partner's 50% interests for $20.0 million ( $40.0 million in the aggregate), due to circumstances outlined in the partner agreements that are certain to occur. Therefore, the Company has consolidated these two entities and classified these obligations as mandatorily redeemable and has recorded a liability in “ Members' interest subject to mandatory redemption and undistributed earnings ” on the condensed consolidated balance sheets. In addition, all undistributed earnings at the time of the noncontrolling owners’ death or permanent disability are also mandatorily payable. In the event of either Mr. Buenting’s or Mr. Myers's death, the Company purchased two separate $20.0 million death and permanent total disability insurance policies to mitigate the Company’s cash draw if such events were to occur. The liability consists of the following (amounts in thousands): June 30, December 31, Members’ interest subject to mandatory redemption $ 40,000 $ 40,000 Net accumulated earnings 7,837 7,386 Total liability $ 47,837 $ 47,386 Fifty percent of the earnings of these consolidated 50% owned subsidiaries for the three and six months ended June 30, 2018 were $4.7 million , and $5.3 million , respectively and for the three and six months ended June 30, 2017 were $2.6 million and $2.5 million , respectively. These amounts were included in “ Other operating expense, net ” on the Company’s condensed consolidated statements of operations. The Company must determine whether any of its entities, including these two 50% owned subsidiaries, in which it participates, is a VIE. The Company determined Myers is a VIE, as we are the primary beneficiary, as pursuant to the terms of the Myers Operating Agreement we are exposed to the majority of potential losses of the partnership. As such, the following table presents the condensed financial information of Myers, which is reflected in the Company’s condensed consolidated balance sheets and statements of operations, as follows (amounts in thousands): June 30, December 31, Assets: Current assets: Cash and cash equivalents $ — $ 8,590 Contracts receivable, including retainage 27,557 26,844 Other current assets 11,629 15,672 Total current assets 39,186 51,106 Property and equipment, net 8,107 9,001 Goodwill 1,501 1,501 Total assets $ 48,794 $ 61,608 Liabilities: Current liabilities: Accounts payable $ 21,753 $ 28,448 Other current liabilities 9,715 11,798 Total current liabilities 31,468 40,246 Long-term liabilities: Other long-term liabilities 104 3,491 Total liabilities $ 31,572 $ 43,737 Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenues $ 45,795 $ 38,783 $ 85,970 $ 62,067 Operating income 1,632 2,246 2,740 2,640 Net income attributable to Sterling common stockholders 816 1,121 1,370 1,316 |
Construction Joint Ventures
Construction Joint Ventures | 6 Months Ended |
Jun. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Construction Joint Ventures | 6. Construction Joint Ventures We participate in joint ventures with other major construction companies and other partners, typically for large, technically complex projects, including design-build projects, when it is desirable to share risk and resources in order to seek a competitive advantage. Joint venture partners typically provide independently prepared estimates, furnish employees and equipment, enhance bonding capacity and often also bring local knowledge and expertise. These projects generally have joint and several liability. We select our joint venture partners based on our analysis of their construction and financial capabilities, expertise in the type of work to be performed and past working relationships with us, among other criteria. For these joint ventures, the equity held by the remaining owners and their portions of net income (loss) are reflected in the balance sheet line item “ Noncontrolling interests ” in “Equity” and the statement of operations line item “ Noncontrolling interests in earnings ,” respectively. Refer to Note 6 of the Notes to Consolidated Financial Statements in the 2017 Form 10-K for further information about our joint ventures. The following table summarizes the changes in noncontrolling interests (amounts in thousands): Six Months Ended June 30, 2018 2017 Balance, beginning of period $ 4,856 $ 656 Net income attributable to noncontrolling interest included in equity 2,158 1,272 Distributions to noncontrolling interest owners — — Balance, end of period $ 7,014 $ 1,928 Where we are a noncontrolling venture partner, we account for our share of the operations of such construction joint ventures on a pro-rata basis using proportionate consolidation on our condensed consolidated statements of operations and as a single line item (“ Receivables from and equity in construction joint ventures ”) in the condensed consolidated balance sheets. This method is an acceptable modification of the equity method of accounting which is a common practice in the construction industry. Condensed combined financial amounts of joint ventures in which the Company has a noncontrolling interest and the Company’s share of such amounts which are included in the Company’s condensed consolidated financial statements are shown below (amounts in thousands): June 30, December 31, Total combined: Current assets $ 62,050 $ 64,574 Less current liabilities (70,502 ) (78,349 ) Net liabilities $ (8,452 ) $ (13,775 ) Sterling’s receivables from and equity in noncontrolling construction joint ventures $ 11,766 $ 11,380 Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Total combined: Revenues $ 25,463 $ 18,897 $ 56,820 $ 33,507 Income before tax 2,192 1,497 5,596 2,670 Sterling’s noncontrolling interest: Revenues $ 12,564 $ 8,674 $ 27,629 $ 15,163 Income before tax 1,167 718 2,858 1,271 The caption “ Receivables from and equity in construction joint ventures ” includes undistributed earnings and receivables owed to the Company. Undistributed earnings are typically released to the joint venture partners after the customer accepts the project as complete and the warranty period, if any, has passed. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 7. Property and Equipment Property and equipment are summarized as follows (amounts in thousands): June 30, December 31, Construction equipment $ 120,857 $ 118,868 Transportation equipment 17,758 17,511 Buildings 9,738 9,577 Office equipment 2,706 3,339 Leasehold Improvement 914 914 Construction in progress 279 258 Land 2,348 2,348 Water rights — 200 154,600 153,015 Less accumulated depreciation (102,874 ) (98,609 ) Total property and equipment, net $ 51,726 $ 54,406 |
Intangibles
Intangibles | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | 8. Intangibles The following table presents our acquired finite-lived intangible assets at June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Weighted Gross Gross Customer relationships 23 years $ 40,823 $ (2,256 ) $ 40,823 $ (1,353 ) Trade name 13 years 5,307 (656 ) 5,307 (394 ) Noncompetition agreements 7 years 487 (87 ) 487 (52 ) Total (1) 22 years $ 46,617 $ (2,999 ) $ 46,617 $ (1,799 ) Our intangible expense was $0.6 million and $1.2 million for the three and six months ended June 30, 2018 and $1.8 million for the year ended December 31, 2017 . |
Secured Credit Facility and Oth
Secured Credit Facility and Other Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Secured Credit Facility and Other Debt | 9. Secured Credit Facility and Other Debt Debt consists of the following (in thousands): June 30, December 31, Loans $ 80,321 $ 85,000 Notes and deferred payments to sellers, Tealstone acquisition 12,967 12,393 Notes payable for transportation and construction equipment and other 1,063 1,557 Total debt 94,351 98,950 Less - Current maturities of long-term debt (826 ) (3,978 ) Less - Unamortized deferred loan costs (7,776 ) (8,812 ) Total long-term debt $ 85,749 $ 86,160 On April 3, 2017, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into a Loan and Security Agreement with Wilmington Trust, National Association, as agent, and the lenders party thereto (the “Oaktree Facility”), providing for a term loan of $85,000,000 (the “Loan”) with a maturity date of April 4, 2022, which replaced the then existing debt facility. The Loan is secured by substantially all of the assets of the Company and its subsidiaries. Interest on the Loan is equal to the one-, two-, three- or six-month London interbank rate, or LIBOR, plus 8.75% per annum on the unpaid principal amount of the Loan, subject to adjustment under certain circumstances. Interest on the Loan is generally payable monthly. There are no amortized principal payments; however, the Company is required to prepay the Loan, and in certain cases pay a prepayment premium thereon, with proceeds received from the issuances of debt or equity, transfers, events of loss and extraordinary receipts. The Company is required to make an offer quarterly to the lenders to prepay the Loan in an amount equal to 75% of its excess cash flow, plus accrued and unpaid interest thereon and a prepayment premium. The Oaktree Facility contains various covenants that limit, among other things, the Company’s ability and certain of its subsidiaries’ ability to incur certain indebtedness, grant certain liens, merge or consolidate, sell assets, make certain loans, enter into acquisitions, incur capital expenditures, make investments, and pay dividends. In addition, the Company is required to maintain the following principal financial covenants: • a ratio of secured indebtedness to EBITDA of not more than 2.20 to 1.00 for the trailing four consecutive fiscal quarters ending June 30, 2018, reducing to 1.80 to 1.00 for the four consecutive quarters ending September 30, 2019 through maturity in 2022; • daily cash collateral of not less than $15,000,000 ; • gross margin in contract backlog of not less than $65,000,000 for the average of the trailing four consecutive fiscal quarters ending June 30, 2018, increasing to $70,000,000 by March 31, 2019; • net capital expenditures during the trailing four consecutive fiscal quarters shall not exceed $15,000,000 ; • bonding capacity shall be maintained at all times in an amount not less than $1,000,000,000 ; and • the EBITDA of Tealstone Residential Concrete, Inc. shall not be less than $12,000,000 for each of the trailing four consecutive fiscal quarters. The Company is in compliance with these covenants at June 30, 2018 . The Oaktree Facility also includes customary events of default, including events of default relating to non-payment of principal or interest, inaccuracy of representations and warranties, breaches of covenants, cross-defaults, bankruptcy and insolvency events, certain unsatisfied judgments, loan documents not being valid, calls under the Company’s bonds, failure of specified individuals to remain employed by the Company, and a change of control. If an event of default occurs, the lenders will be able to accelerate the maturity of the Oaktree Facility and exercise other rights and remedies. Deferred loan costs and discounts totaled $10.4 million , which included attorney fees, investment bank fees as well as amounts paid to the lenders and which were discounted from the loan amount. Warrants valued at $3.5 million were included as well. The total amount is amortized on a straight-line basis, which approximates the effective interest method, over the five -year life of the Loan. Total amortization expense of $0.5 million and $1.0 million , respectively has been recorded for the three and six months ended June 30, 2018 . Total amortization expense of $0.5 million was recorded for the three and six months ended June 30, 2017 . The fair value of the Oaktree Facility approximates its book value. Notes and Deferred Payments to Sellers As part of the Tealstone Acquisition, the Company issued $5,000,000 of Promissory Notes to the Sellers and agreed to make $2,426,000 and $7,500,000 of deferred cash payments on the second and third anniversaries of the closing date, respectively. Based on a 12% discount rate, the Company recorded $11.6 million as notes and deferred payments to sellers in long-term debt on our condensed consolidated balance sheet at the acquisition closing date. Accreted interest for the period was $0.3 million and $0.6 million for the three and six months ended June 30, 2018 , respectively, and was recorded as interest expense. Notes Payable for Transportation and Construction Equipment The Company has purchased and financed various transportation and construction equipment to enhance the Company’s fleet of equipment. The total long-term notes payable related to the purchase of financed equipment was $1.1 million and $1.6 million at June 30, 2018 and December 31, 2017 , respectively. The purchases have payment terms ranging from 2 to 5 years and the associated interest rates range from 3.15% to 6.92% . The fair value of these notes payable approximates their book value. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies The Company is required by our former insurance provider to obtain and hold a standby letter of credit. This letter of credit serves as a guarantee by the banking institution to pay our former insurance provider the incurred claim costs attributable to our general liability, workers compensation and automobile liability claims, up to the amount stated in the standby letter of credit, in the event that these claims were not paid by the Company. We have cash collateralized the letter of credit, resulting in the cash being designated as restricted. The Company is the subject of certain other claims and lawsuits occurring in the normal course of business. Management, after consultation with legal counsel, does not believe that the outcome of these actions will have a material impact on the condensed consolidated financial statements of the Company. |
Income Taxes and Deferred Tax A
Income Taxes and Deferred Tax Asset/Liability | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes and Deferred Tax Asset/Liability | 11. Income Taxes and Deferred Tax Asset/Liability The Company and its subsidiaries file U.S. federal and various U.S. state income tax returns. Current income tax expense (benefit) represents federal and state taxes based on tax paid or expected to be payable or receivable for the periods shown in the condensed consolidated statements of operations. Due to net operating loss carryforwards, the Company is not expecting a current federal liability. The Company may incur current state tax liabilities in states in which the Company does not have sufficient net operating loss carry forwards. Income tax expense of $98 thousand and $138 thousand was recorded for the three and six months ended June 30, 2018 , respectively. Income tax expense of $98 thousand and $125 thousand was recorded for the three and six months ended June 30, 2017 , respectively. The effective income tax rate varied from the statutory rate primarily as a result of the change in the valuation allowance, net income attributable to noncontrolling interest owners which is taxable to those owners rather than to the Company, state income taxes and other permanent differences. For interim periods, the Company estimates an annual effective tax rate and applies that rate to year-to-date operating results. The Company’s deferred tax expense reflects the change in deferred tax assets or liabilities. The Company performs an analysis at the end of each reporting period to determine whether it is more likely than not the deferred tax assets are expected to be realized in future years. Based upon this analysis, a full valuation allowance has been applied to our net deferred tax assets as of June 30, 2018 and December 31, 2017 . Therefore, there has been no change in net deferred taxes for the three and six months ended June 30, 2018 . As a result of the Company’s analysis, management has determined that the Company does not have any material uncertain tax positions. |
Stockholder's Equity
Stockholder's Equity | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholder's Equity | 12. Stockholder's Equity Stock-Based Compensation The Company has a stock-based incentive plan that is administered by the Compensation Committee of the Board of Directors. Refer to Note 14 of the Notes to Consolidated Financial Statements included in the 2017 Form 10-K for further information. During the three and six months ended June 30, 2018 , the Company awarded, subject to vesting restrictions, a total of 44,424 and 371,875 common stock awards, respectively. The Company recorded stock-based compensation expense of $0.8 million and $1.4 million for the three and six months ended June 30, 2018 , respectively. During the three and six months ended June 30, 2017 , the Company awarded, subject to vesting restrictions, a total of 102,571 and 166,410 common stock awards, respectively. The Company recorded stock-based compensation expense of $1.4 million and $2.0 million for the three and six months ended June 30, 2017 , respectively. At June 30, 2018 and 2017 , total unrecognized compensation cost related to unvested common stock awards was $6.1 million and $1.5 million , respectively. This cost is expected to be recognized over a weighted average period of 2.3 years . |
Net Income Per Share Attributab
Net Income Per Share Attributable to Sterling Common Stockholders | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income Per Share Attributable to Sterling Common Stockholders | 13. Net Income Per Share Attributable to Sterling Common Stockholders The following table reconciles the numerators and denominators of the basic and diluted per common share computations for net income attributable to Sterling common stockholders (amounts in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Net income attributable to Sterling common stockholders $ 8,176 $ 3,662 $ 10,663 $ 1,405 Weighted average common shares outstanding — basic 26,887 26,978 26,881 25,972 Shares for dilutive unvested stock and warrants 238 358 281 437 Weighted average common shares outstanding and incremental shares assumed repurchased— diluted 27,125 27,336 27,162 26,409 Basic income per share attributable to Sterling common stockholders $ 0.30 $ 0.14 $ 0.40 $ 0.05 Diluted income per share attributable to Sterling common stockholders $ 0.30 $ 0.13 $ 0.39 $ 0.05 In accordance with the treasury stock method, for the three and six months ended June 30, 2017 , our Warrants were excluded from the diluted weighted average common shares outstanding as the shares were considered anti-dilutive. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | 14. Segment Information Due to the April 3, 2017 acquisition of Tealstone, the Company has reviewed its reportable segments, operating segments and reporting units. Based on our review, we have concluded that our operations consist of two reportable segments, two operating segments and two reporting unit components: heavy civil construction and residential construction. Segment reporting is aligned based upon the services offered by our two operating groups, which represent our reportable segments: Heavy Civil Construction and Residential Construction. Our Chief Operating Decision Maker (“CODM”) evaluates the performance of the aforementioned operating groups based upon revenue and income from operations. Each operating group’s income from operations reflects corporate costs, allocated based primarily upon revenue. The following table presents total revenue and income from operations by reportable segment for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenue Heavy Civil Construction $ 223,284 $ 209,194 $ 410,524 $ 362,610 Residential Construction 45,450 37,218 80,702 37,218 Total Revenue $ 268,734 $ 246,412 $ 491,226 $ 399,828 Operating Income Heavy Civil Construction $ 6,380 $ 3,141 $ 8,340 $ 1,667 Residential Construction 5,770 5,215 10,488 4,901 Total Operating Income $ 12,150 $ 8,356 $ 18,828 $ 6,568 The following table presents total assets by reportable segment at June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, Assets Heavy Civil Construction $ 343,559 $ 354,090 Residential Construction 127,126 109,208 Total Assets $ 470,685 $ 463,298 |
Summary of Business and Signi21
Summary of Business and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Presentation | Presentation The condensed consolidated financial statements included herein have been prepared by Sterling, without audit, in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2017 (“ 2017 Form 10-K”). Certain information and note disclosures prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been either condensed or omitted pursuant to SEC rules and regulations. The condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly the Company’s financial position at June 30, 2018 and the results of operations and cash flows for the periods presented. The December 31, 2017 condensed consolidated balance sheet data herein was derived from audited financial statements, but as discussed above, does not include all disclosures required by GAAP. Interim results may be subject to significant seasonal variations and the results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results expected for the full year or subsequent quarters. |
Use of Estimates | Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Certain of the Company’s accounting policies require higher degrees of judgment than others in their application. These include the recognition of revenue and earnings from construction contracts over time, the valuation of long-term assets, income taxes, and purchase accounting, including intangibles and goodwill. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of subsidiaries and construction joint ventures in which the Company has 50% or greater ownership interest or otherwise exercises control over such entities. For investments in construction joint ventures that are not wholly-owned, but where the Company exercises control, the equity held by the remaining owners and their portions of net income are reflected in the balance sheet line item “ Noncontrolling interests ” in “Equity” and the statement of operations line item “ Noncontrolling interests in earnings ,” respectively. For investments in subsidiaries that are not wholly-owned, but where the Company exercises control and where the Company has a mandatorily redeemable interest, the equity held by the remaining owners and their portion of net income (loss) is reflected in the balance sheet line item “ Members' interest subject to mandatory redemption and undistributed earnings ” and the statement of operations line item “ Other operating expense, net ” respectively. All significant intercompany accounts and transactions have been eliminated in consolidation. Where the Company is a noncontrolling joint venture partner, and is otherwise not required to consolidate the joint venture entity, its share of the earnings of such construction joint venture is accounted for on a pro rata basis in the condensed consolidated statements of operations and as a single line item (“ Receivables from and equity in construction joint ventures ”) in the condensed consolidated balance sheets. This method is a permissible modification of the equity method of accounting which is a common practice in the construction industry. |
Revenue Recognition | Revenue Recognition Heavy Civil Construction The Company engages in various types of heavy civil construction projects principally for public (government) owners. Revenues are recognized as performance obligations are satisfied over time (also known as percentage-of-completion method), measured by the ratio of costs incurred up to a given date to estimated total costs for each contract. This cost to cost measure is used because management considers it to be the best available measure of progress on these contracts. Contract costs include all direct material, labor, subcontract and other costs and those indirect costs determined to relate to contract performance, such as indirect salaries and wages, equipment repairs and depreciation, insurance and payroll taxes. Administrative and general expenses are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and associated change orders and claims, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Residential Construction Residential construction revenue and related profit are recognized when construction on the concrete foundation unit is completed (i.e., at a point in time). The time from starting construction to finishing is typically less than one month. |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-9, “Revenue from Contracts with Customers”, which provides a single comprehensive accounting standard for revenue recognition for contracts with customers and supersedes current industry-specific guidance, including ASC 605-35. The new standard requires companies to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services. The new model requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time (formerly known as percentage-of-completion method) for each of these obligations. The new standard also significantly expands disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the new standard on January 1, 2018, for all contracts using the modified retrospective method that is described in the following paragraph. The adoption of the new revenue standard had no material impact on our condensed consolidated financial statements as it did not require a change in revenue recognition for either of our segments. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We implemented the new standard's transitional rules as follows: ASC 606-10-65-1 permits the omission of prior-period information about our performance obligations that were not complete at the time of our new adoption of the new standard. Further, rather than applying the new recognition policy on a contract by contract bases, ASC 606-10-32-18 allows the new standard to be applied against a portfolio of contracts (or performance obligations) with similar characteristics. As the majority of our significant contracts are with government entities and major homebuilders that utilize contracts of a similar structure and nature, this new accounting policy will not yield a material difference for the Company than applying the guidance on a contract by contract basis. In addition to the foregoing, ASC 606-10-32-18 allows entities to waive the requirement to adjust the consideration amount for the effects of a significant financing component if the entity expects, at contract inception, that the period between its fulfillment of the performance obligation and receipt of the customer's payment is less than one year. Further ASC 606-10-32-2A allows entities to make an accounting policy election to exclude taxes assessed by and collected on behalf of government authorities from the transaction price allocated to the performance obligation. We have historically excluded such amounts from our revenues and will continue to do so under the new revenue standard. See Note 3 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard. Recently Issued Accounting Pronouncements In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-2, “Leases” (Topic 842). Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The standard is effective for us for interim and annual reporting periods beginning after December 15, 2018. In January 2018, the FASB issued an exposure draft proposing an amendment to the standard that, if approved, would permit companies the option to apply the provisions of the new lease standard either prospectively as of the effective date, without adjusting comparative periods presented, or using a modified retrospective transition applicable to all prior periods presented. If approved, we intend to apply the new guidance prospectively to leases that exist and those entered into on or after January 1, 2019 without adjusting comparative periods in the financial statements. We are assessing the potential impact on our Financial Statements and related disclosures. |
Tealstone Acquisition (Tables)
Tealstone Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of Proforma Information | The pro forma for the six months ended June 30, 2017 (amounts in thousands): Six months ended June 30, 2017 Pro forma revenue $ 444,957 Pro forma net income attributable to Sterling $ 1,716 |
Revenue From Contracts With C23
Revenue From Contracts With Customers (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Revenue by major end market (amounts in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Heavy Highway $ 126,554 $ 149,749 $ 233,962 $ 259,135 Commercial 29,110 8,733 57,628 11,840 Aviation 27,832 22,857 51,084 33,447 Water Containment and Treatment 15,521 13,274 30,516 22,870 Other 24,267 14,581 37,334 35,318 Heavy Civil Construction Revenue $ 223,284 $ 209,194 $ 410,524 $ 362,610 Revenue by contract type (amounts in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Fixed Unit Price $ 194,486 $ 190,435 $ 354,721 $ 334,795 Lump Sum and Other 28,798 18,759 55,803 27,815 Heavy Civil Construction Revenue $ 223,284 $ 209,194 $ 410,524 $ 362,610 |
Costs in Excess of Billings and Billings in Excess of Costs | The table below reconciles the net excess billings to the amounts included in the condensed consolidated balance sheets at those dates (amounts in thousands): June 30, December 31, Costs and estimated earnings in excess of billings on uncompleted contracts $ 36,388 $ 37,112 Billings in excess of costs and estimated earnings on uncompleted contracts (58,304 ) (62,374 ) Net amount of costs and estimated earnings on uncompleted contracts below billings $ (21,916 ) $ (25,262 ) |
Consolidated 50% Owned Subsid24
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE") (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Schedule of Components of Agreement Obligation | The liability consists of the following (amounts in thousands): June 30, December 31, Members’ interest subject to mandatory redemption $ 40,000 $ 40,000 Net accumulated earnings 7,837 7,386 Total liability $ 47,837 $ 47,386 |
Summary of Financial Information of Variable Interest Entities | As such, the following table presents the condensed financial information of Myers, which is reflected in the Company’s condensed consolidated balance sheets and statements of operations, as follows (amounts in thousands): June 30, December 31, Assets: Current assets: Cash and cash equivalents $ — $ 8,590 Contracts receivable, including retainage 27,557 26,844 Other current assets 11,629 15,672 Total current assets 39,186 51,106 Property and equipment, net 8,107 9,001 Goodwill 1,501 1,501 Total assets $ 48,794 $ 61,608 Liabilities: Current liabilities: Accounts payable $ 21,753 $ 28,448 Other current liabilities 9,715 11,798 Total current liabilities 31,468 40,246 Long-term liabilities: Other long-term liabilities 104 3,491 Total liabilities $ 31,572 $ 43,737 Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenues $ 45,795 $ 38,783 $ 85,970 $ 62,067 Operating income 1,632 2,246 2,740 2,640 Net income attributable to Sterling common stockholders 816 1,121 1,370 1,316 |
Construction Joint Ventures (Ta
Construction Joint Ventures (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Change in non-controlling interest | The following table summarizes the changes in noncontrolling interests (amounts in thousands): Six Months Ended June 30, 2018 2017 Balance, beginning of period $ 4,856 $ 656 Net income attributable to noncontrolling interest included in equity 2,158 1,272 Distributions to noncontrolling interest owners — — Balance, end of period $ 7,014 $ 1,928 |
Condensed Balance Sheet | June 30, December 31, Total combined: Current assets $ 62,050 $ 64,574 Less current liabilities (70,502 ) (78,349 ) Net liabilities $ (8,452 ) $ (13,775 ) Sterling’s receivables from and equity in noncontrolling construction joint ventures $ 11,766 $ 11,380 |
Condensed Income Statement | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Total combined: Revenues $ 25,463 $ 18,897 $ 56,820 $ 33,507 Income before tax 2,192 1,497 5,596 2,670 Sterling’s noncontrolling interest: Revenues $ 12,564 $ 8,674 $ 27,629 $ 15,163 Income before tax 1,167 718 2,858 1,271 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment are summarized as follows (amounts in thousands): June 30, December 31, Construction equipment $ 120,857 $ 118,868 Transportation equipment 17,758 17,511 Buildings 9,738 9,577 Office equipment 2,706 3,339 Leasehold Improvement 914 914 Construction in progress 279 258 Land 2,348 2,348 Water rights — 200 154,600 153,015 Less accumulated depreciation (102,874 ) (98,609 ) Total property and equipment, net $ 51,726 $ 54,406 |
Intangibles (Tables)
Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The following table presents our acquired finite-lived intangible assets at June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Weighted Gross Gross Customer relationships 23 years $ 40,823 $ (2,256 ) $ 40,823 $ (1,353 ) Trade name 13 years 5,307 (656 ) 5,307 (394 ) Noncompetition agreements 7 years 487 (87 ) 487 (52 ) Total (1) 22 years $ 46,617 $ (2,999 ) $ 46,617 $ (1,799 ) |
Secured Credit Facility and O28
Secured Credit Facility and Other Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Debt consists of the following (in thousands): June 30, December 31, Loans $ 80,321 $ 85,000 Notes and deferred payments to sellers, Tealstone acquisition 12,967 12,393 Notes payable for transportation and construction equipment and other 1,063 1,557 Total debt 94,351 98,950 Less - Current maturities of long-term debt (826 ) (3,978 ) Less - Unamortized deferred loan costs (7,776 ) (8,812 ) Total long-term debt $ 85,749 $ 86,160 |
Net Income Per Share Attribut29
Net Income Per Share Attributable to Sterling Common Stockholders (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles the numerators and denominators of the basic and diluted per common share computations for net income attributable to Sterling common stockholders (amounts in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Net income attributable to Sterling common stockholders $ 8,176 $ 3,662 $ 10,663 $ 1,405 Weighted average common shares outstanding — basic 26,887 26,978 26,881 25,972 Shares for dilutive unvested stock and warrants 238 358 281 437 Weighted average common shares outstanding and incremental shares assumed repurchased— diluted 27,125 27,336 27,162 26,409 Basic income per share attributable to Sterling common stockholders $ 0.30 $ 0.14 $ 0.40 $ 0.05 Diluted income per share attributable to Sterling common stockholders $ 0.30 $ 0.13 $ 0.39 $ 0.05 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table presents total assets by reportable segment at June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, Assets Heavy Civil Construction $ 343,559 $ 354,090 Residential Construction 127,126 109,208 Total Assets $ 470,685 $ 463,298 The following table presents total revenue and income from operations by reportable segment for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenue Heavy Civil Construction $ 223,284 $ 209,194 $ 410,524 $ 362,610 Residential Construction 45,450 37,218 80,702 37,218 Total Revenue $ 268,734 $ 246,412 $ 491,226 $ 399,828 Operating Income Heavy Civil Construction $ 6,380 $ 3,141 $ 8,340 $ 1,667 Residential Construction 5,770 5,215 10,488 4,901 Total Operating Income $ 12,150 $ 8,356 $ 18,828 $ 6,568 |
Tealstone Acquisition - Narrati
Tealstone Acquisition - Narrative (Details) - Notes and deferred payments to sellers, Tealstone acquisition - USD ($) | Apr. 03, 2020 | Apr. 03, 2019 | Apr. 03, 2017 | Jun. 30, 2018 |
Business Acquisition [Line Items] | ||||
Percentage of outstanding stock | 100.00% | |||
Cash | $ 55,000,000 | |||
Stock issued for Tealstone acquisition (in shares) | 1,882,058 | |||
Promissory notes issued to the sellers | $ 5,000,000 | $ 5,000,000 | ||
Business combination, contingent consideration, liability | $ 15,000,000 | |||
Scenario, Forecast | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 7,500,000 | $ 2,426,000 |
Tealstone Acquisition - Supplem
Tealstone Acquisition - Supplemental Pro Forma Information (Unaudited) (Details) - Notes and deferred payments to sellers, Tealstone acquisition $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Pro forma revenue | $ 444,957 |
Pro forma net loss attributable to Sterling | $ 1,716 |
Revenue From Contracts With C33
Revenue From Contracts With Customers - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Disaggregation of Revenue [Line Items] | |||||
Remaining performance obligation | $ 884,611 | $ 884,611 | |||
Remaining performance obligation expected to be recognize the remainder of 2018 | 70.00% | 70.00% | |||
Minimum | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue recognition, contract term | 12 months | ||||
Maximum | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue recognition, contract term | 36 months | ||||
Transferred over Time | Product Concentration Risk | Revenue from Contract with Customer | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk, percentage | 83.00% | 85.00% | 84.00% | 91.00% | |
Transferred at Point in Time | Product Concentration Risk | Revenue from Contract with Customer | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk, percentage | 17.00% | 15.00% | 16.00% | 9.00% | |
Heavy Civil Construction | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of contracts (more than) | contract | 150 | 150 | |||
Operating income (Loss) | |||||
Disaggregation of Revenue [Line Items] | |||||
Estimated construction gain (loss) before tax | $ 300 | $ 1,800 | $ 1,700 | $ 1,100 | |
Costs and Estimated Earnings in Excess of Billings | |||||
Disaggregation of Revenue [Line Items] | |||||
Unapproved change orders, amount | $ 8,700 | $ 8,700 | |||
Contracts receivable unpaid project contract price | $ 10,000 |
Revenue From Contracts With C34
Revenue From Contracts With Customers - Revenue By Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 268,734 | $ 246,412 | $ 491,226 | $ 399,828 |
Heavy Civil Construction | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 223,284 | $ 209,194 | $ 410,524 | $ 362,610 |
Revenue From Contracts With C35
Revenue From Contracts With Customers - Revenue By Major Market End (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 268,734 | $ 246,412 | $ 491,226 | $ 399,828 |
Heavy Civil Construction | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 223,284 | 209,194 | 410,524 | 362,610 |
Heavy Civil Construction | Heavy Highway | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 126,554 | 149,749 | 233,962 | 259,135 |
Heavy Civil Construction | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 29,110 | 8,733 | 57,628 | 11,840 |
Heavy Civil Construction | Aviation | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 27,832 | 22,857 | 51,084 | 33,447 |
Heavy Civil Construction | Water Containment and Treatment | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 15,521 | 13,274 | 30,516 | 22,870 |
Heavy Civil Construction | Other Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 24,267 | $ 14,581 | $ 37,334 | $ 35,318 |
Revenue From Contracts With C36
Revenue From Contracts With Customers - Revenue By Contract Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 268,734 | $ 246,412 | $ 491,226 | $ 399,828 |
Heavy Civil Construction | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 223,284 | 209,194 | 410,524 | 362,610 |
Heavy Civil Construction | Fixed Unit Price | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 194,486 | 190,435 | 354,721 | 334,795 |
Heavy Civil Construction | Lump Sum and Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 28,798 | $ 18,759 | $ 55,803 | $ 27,815 |
Revenue From Contracts With C37
Revenue From Contracts With Customers - Net Excess Billings (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Revenue from Contract with Customer [Abstract] | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 36,388 | $ 37,112 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (58,304) | (62,374) |
Net amount of costs and estimated earnings on uncompleted contracts below billings | $ (21,916) | $ (25,262) |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | $ 3.6 | |
Other assets | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | 3 | |
Other current assets | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | 0.6 | |
Less than wholly-owned subsidiaries | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | 17.6 | $ 31.1 |
Majority-owned Joint Ventures | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | $ 12.3 | $ 18.9 |
Consolidated 50% Owned Subsid39
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE") - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Noncontrolling Interest [Line Items] | |||||
Members’ interest subject to mandatory redemption | $ 40,000 | $ 40,000 | $ 40,000 | ||
Net accumulated earnings | 4,700 | $ 2,600 | 5,300 | $ 2,500 | |
Myers | |||||
Noncontrolling Interest [Line Items] | |||||
Cash Surrender Value of Life Insurance | 20,000 | 20,000 | |||
Variable Interest Entity, Primary Beneficiary | |||||
Noncontrolling Interest [Line Items] | |||||
Members’ interest subject to mandatory redemption | 40,000 | 40,000 | |||
Variable Interest Entity, Primary Beneficiary | Myers | |||||
Noncontrolling Interest [Line Items] | |||||
Members’ interest subject to mandatory redemption | $ 20,000 | $ 20,000 |
Consolidated 50% Owned Subsid40
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE") - Components of Noncontrolling Interest Subject to Mandatory Redemption (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Noncontrolling Interest [Abstract] | ||
Members’ interest subject to mandatory redemption | $ 40,000 | $ 40,000 |
Net accumulated earnings | 7,837 | 7,386 |
Total liability | $ 47,837 | $ 47,386 |
Consolidated 50% Owned Subsid41
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE") Consolidated 50% Owned Subsidiaries, including Variable Interest Entities - Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Equity Method Investments [Line Items] | ||||
Cash and cash equivalents | $ 66,585 | $ 83,953 | $ 60,058 | $ 42,785 |
Receivables, including retainage | 164,465 | 133,931 | ||
Other current assets | 9,066 | 7,529 | ||
Total current assets | 289,883 | 278,526 | ||
Property and equipment, net | 51,726 | 54,406 | ||
Goodwill | 85,231 | 85,231 | ||
Total assets | 470,685 | 463,298 | ||
Accounts payable | 96,384 | 97,457 | ||
Other current liabilities | 7,063 | 9,348 | ||
Total current liabilities | 175,761 | 182,292 | ||
Other long-term liabilities | 1,246 | 1,271 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Cash and cash equivalents | 0 | 8,590 | ||
Receivables, including retainage | 27,557 | 26,844 | ||
Other current assets | 11,629 | 15,672 | ||
Total current assets | 39,186 | 51,106 | ||
Property and equipment, net | 8,107 | 9,001 | ||
Goodwill | 1,501 | 1,501 | ||
Total assets | 48,794 | 61,608 | ||
Accounts payable | 21,753 | 28,448 | ||
Other current liabilities | 9,715 | 11,798 | ||
Total current liabilities | 31,468 | 40,246 | ||
Other long-term liabilities | 104 | 3,491 | ||
Total liabilities | $ 31,572 | $ 43,737 |
Consolidated 50% Owned Subsid42
Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE") Consolidated 50% Owned Subsidiaries, including Variable Interest Entities - Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Schedule of Equity Method Investments [Line Items] | ||||
Operating income | $ 12,150 | $ 8,356 | $ 18,828 | $ 6,568 |
Net income attributable to Sterling common stockholders | 8,176 | 3,662 | 10,663 | 1,405 |
Variable Interest Entity, Primary Beneficiary | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Revenues | 45,795 | 38,783 | 85,970 | 62,067 |
Operating income | 1,632 | 2,246 | 2,740 | 2,640 |
Net income attributable to Sterling common stockholders | $ 816 | $ 1,121 | $ 1,370 | $ 1,316 |
Construction Joint Ventures - R
Construction Joint Ventures - Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance, beginning of period | $ 4,856 | $ 656 | ||
Net income attributable to noncontrolling interest included in equity | $ 966 | $ 901 | 2,158 | 1,272 |
Distributions to noncontrolling interest owners | 0 | 0 | ||
Balance, end of period | $ 7,014 | $ 1,928 | $ 7,014 | $ 1,928 |
Construction Joint Ventures - B
Construction Joint Ventures - Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule of Equity Method Investments [Line Items] | ||
Current assets | $ 289,883 | $ 278,526 |
Less current liabilities | (175,761) | (182,292) |
Sterling’s receivables from and equity in noncontrolling construction joint ventures | 11,766 | 11,380 |
Joint Ventures | ||
Schedule of Equity Method Investments [Line Items] | ||
Current assets | 62,050 | 64,574 |
Less current liabilities | (70,502) | (78,349) |
Net liabilities | (8,452) | (13,775) |
Sterling’s receivables from and equity in noncontrolling construction joint ventures | $ 11,766 | $ 11,380 |
Construction Joint Ventures - I
Construction Joint Ventures - Income Statement Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Sterling’s noncontrolling interest: | ||||
Revenues | $ 2,158 | $ 1,272 | ||
Joint Ventures | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Revenues | $ 25,463 | $ 18,897 | 56,820 | 33,507 |
Income before tax | 2,192 | 1,497 | 5,596 | 2,670 |
Sterling’s noncontrolling interest: | ||||
Revenues | 12,564 | 8,674 | 27,629 | 15,163 |
Income before tax | $ 1,167 | $ 718 | $ 2,858 | $ 1,271 |
Property and Equipment - Summar
Property and Equipment - Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 154,600 | $ 153,015 |
Less accumulated depreciation | (102,874) | (98,609) |
Total property and equipment, net | 51,726 | 54,406 |
Construction equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 120,857 | 118,868 |
Transportation equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 17,758 | 17,511 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 9,738 | 9,577 |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,706 | 3,339 |
Leasehold Improvement | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 914 | 914 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 279 | 258 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,348 | 2,348 |
Water rights | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 0 | $ 200 |
Intangibles (Details)
Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Weighted Average Life | 22 years | ||
Gross Carrying Amount | $ 46,617 | $ 46,617 | $ 46,617 |
Accumulated Amortization | (2,999) | (2,999) | (1,799) |
Amortization of intangible assets | 600 | $ 1,200 | 1,800 |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted Average Life | 23 years | ||
Gross Carrying Amount | 40,823 | $ 40,823 | 40,823 |
Accumulated Amortization | (2,256) | $ (2,256) | (1,353) |
Trade Names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted Average Life | 13 years | ||
Gross Carrying Amount | 5,307 | $ 5,307 | 5,307 |
Accumulated Amortization | (656) | $ (656) | (394) |
Noncompete Agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted Average Life | 7 years | ||
Gross Carrying Amount | 487 | $ 487 | 487 |
Accumulated Amortization | $ (87) | $ (87) | $ (52) |
Secured Credit Facility and O48
Secured Credit Facility and Other Debt - Long-term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Total debt | $ 94,351 | $ 98,950 |
Less - Current maturities of long-term debt | (826) | (3,978) |
Less - Unamortized deferred loan costs | (7,776) | (8,812) |
Total long-term debt | 85,749 | 86,160 |
Notes and deferred payments to sellers, Tealstone acquisition | ||
Debt Instrument [Line Items] | ||
Notes payable | 12,967 | 12,393 |
Notes payable for transportation and construction equipment and other | ||
Debt Instrument [Line Items] | ||
Notes payable | 1,063 | 1,557 |
Oaktree facility | Senior secured term loans | Equipment-based facility | ||
Debt Instrument [Line Items] | ||
Loans | $ 80,321 | $ 85,000 |
Secured Credit Facility and O49
Secured Credit Facility and Other Debt - Narrative (Details) | Apr. 03, 2020USD ($) | Apr. 03, 2019USD ($) | Apr. 03, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||||||
Amortization of debt issuance costs | $ 500,000 | $ 500,000 | $ 1,000,000 | $ 500,000 | ||||
Notes and deferred payments to sellers | 0 | $ 11,647,000 | ||||||
Notes payable for transportation and construction equipment and other | ||||||||
Debt Instrument [Line Items] | ||||||||
Notes payable, noncurrent | $ 1,100,000 | $ 1,100,000 | $ 1,600,000 | |||||
Notes payable for transportation and construction equipment and other | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 2 years | |||||||
Debt instrument, interest rate, stated percentage | 3.15% | 3.15% | ||||||
Notes payable for transportation and construction equipment and other | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 5 years | |||||||
Debt instrument, interest rate, stated percentage | 6.92% | 6.92% | ||||||
Warrants to the Lenders Under the Loan Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants and rights outstanding | $ 3,500,000 | $ 3,500,000 | ||||||
Notes and deferred payments to sellers, Tealstone acquisition | ||||||||
Debt Instrument [Line Items] | ||||||||
Promissory notes issued to the sellers | $ 5,000,000 | 5,000,000 | ||||||
Cash payments to the seller | $ 55,000,000 | |||||||
Fair value inputs, discount rate | 12.00% | |||||||
Notes and deferred payments to sellers | $ 11,600,000 | |||||||
Accretion expense | $ 300,000 | $ 600,000 | ||||||
Notes and deferred payments to sellers, Tealstone acquisition | Scenario, Forecast | ||||||||
Debt Instrument [Line Items] | ||||||||
Cash payments to the seller | $ 7,500,000 | $ 2,426,000 | ||||||
Term loan | Senior secured term loans | Loan and security agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 85,000,000 | |||||||
Loan prepayment offer required to make quarterly, percentage | 75.00% | |||||||
Debt instrument, financial covenants, maximum ratio of secured indebtedness to EBITDA, period one | 2.2 | |||||||
Debt Instrument, financial covenants, maximum ratio of secured indebtedness to EBITDA, period two | 1.8 | |||||||
Debt Instrument, financial covenants, minimum daily cash collateral, period two | $ 15,000,000 | |||||||
Debt instrument, financial covenants, minimum rolling four quarter gross margin in contract backlog, period one | 65,000,000 | |||||||
Debt Instrument, financial covenants, minimum rolling four quarter gross margin in contract backlog, period two | 70,000,000 | |||||||
Debt instrument, financial covenants, maximum incurrence of net capital expenditures during each of four consecutive fiscal quarters | 15,000,000 | |||||||
Debt instrument, financial covenants, minimum bonding capacity | 1,000,000,000 | |||||||
Debt instrument, financial covenants, minimum EBITDA during each four consecutive fiscal quarters | 12,000,000 | |||||||
Debt issuance costs, net | $ 10,400,000 | |||||||
Debt instrument, term | 5 years | |||||||
Term loan | Senior secured term loans | Loan and security agreement | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, basis spread on variable rate | 8.75% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 98,000 | $ 98,000 | $ 138,000 | $ 125,000 |
Changes in net deferred taxes | $ 0 |
Stockholder's Equity - Narrativ
Stockholder's Equity - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Subsidiary, Sale of Stock [Line Items] | ||||
Allocated share-based compensation expense | $ 0.8 | $ 1.4 | $ 1.4 | $ 2 |
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized | $ 6.1 | $ 1.5 | $ 6.1 | $ 1.5 |
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 2 years 3 months 18 days | |||
Restricted stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, grants in period (in shares) | 44,424 | 102,571 | 371,875 | 166,410 |
Net Income Per Share Attribut52
Net Income Per Share Attributable to Sterling Common Stockholders - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||||
Net income attributable to Sterling common stockholders | $ 8,176 | $ 3,662 | $ 10,663 | $ 1,405 |
Weighted average common shares outstanding, basic (in shares) | 26,887 | 26,978 | 26,881 | 25,972 |
Shares for dilutive unvested stock and warrants (in shares) | 238 | 358 | 281 | 437 |
Weighted average common shares outstanding and incremental shares assumed repurchased, diluted (in shares) | 27,125 | 27,336 | 27,162 | 26,409 |
Basic income (loss) per share attributable to Sterling common stockholders (USD per share) | $ 0.30 | $ 0.14 | $ 0.40 | $ 0.05 |
Diluted income (loss) per share attributable to Sterling common stockholders (USD per share) | $ 0.30 | $ 0.13 | $ 0.39 | $ 0.05 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 6 Months Ended |
Jun. 30, 2018reporting_unitsegment | |
Business Acquisition [Line Items] | |
Number of reportable segments | segment | 2 |
Number of reporting units | reporting_unit | 2 |
Segment Information - Revenue,
Segment Information - Revenue, Operating Income, and Assets, By Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||
Total Revenue | $ 268,734 | $ 246,412 | $ 491,226 | $ 399,828 | |
Operating income | 12,150 | 8,356 | 18,828 | 6,568 | |
Assets | 470,685 | 470,685 | $ 463,298 | ||
Heavy Civil Construction | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 223,284 | 209,194 | 410,524 | 362,610 | |
Operating income | 6,380 | 3,141 | 8,340 | 1,667 | |
Assets | 343,559 | 343,559 | 354,090 | ||
Residential Construction | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 45,450 | 37,218 | 80,702 | 37,218 | |
Operating income | 5,770 | $ 5,215 | 10,488 | $ 4,901 | |
Assets | $ 127,126 | $ 127,126 | $ 109,208 |