Sterling Infrastructure(US:STRL)2024-08-06 13:21Financial Performance - Revenues for Q2 2024 were $582.8 million, an increase of $60.5 million, or 11.6%, compared to Q2 2023, driven by an $81.7 million increase in Transportation Solutions[83] - Gross profit for Q2 2024 was $112.7 million, a 22.2% increase from Q2 2023, with a gross margin of 19.3% compared to 17.7% in the prior year[84] - Total revenues for Q2 2024 were $582.8 million, an increase of 11.6% compared to $522.3 million in Q2 2023[94] - Operating income for Q2 2024 was $72.7 million, or 12.5% of revenue, compared to $60.3 million, or 11.5% of revenue in Q2 2023[94] - Gross profit for the six months ended June 30, 2024, was $189.6 million, a 23.1% increase compared to the same period in 2023, with a gross margin of 18.5%[85] Backlog and Contracts - Backlog as of June 30, 2024, was $2.10 billion, up from $2.07 billion at December 31, 2023, with a backlog margin increase to 16.0% from 15.2%[81] - Combined Backlog, including Unsigned Awards, totaled $2.45 billion as of June 30, 2024, compared to $2.37 billion at December 31, 2023[82] - Unsigned Awards increased to $347.2 million at June 30, 2024, from $303.2 million at December 31, 2023[82] - Contracts in progress totaled approximately 220 as of June 30, 2024, with varying expected profitability and stages of completion[87] Segment Performance - The Transportation Solutions segment benefits from federal funding, with the Infrastructure Investments and Jobs Act providing approximately $643 billion for transportation programs[78] - The E-Infrastructure Solutions segment anticipates growth driven by investments in data centers and electric vehicle manufacturing, despite a decline in e-commerce distribution center activity in 2023[77] - Building Solutions experienced volume growth in residential activity through 2023, supported by population growth and housing shortages, with expectations for continued growth in 2024[79] - E-Infrastructure Solutions revenues decreased by $18.8 million, or 7.2%, to $241.3 million in Q2 2024, primarily due to lower volume from warehouses and delays from inclement weather[95] - Transportation Solutions revenues increased by $81.7 million, or 54.1%, to $232.8 million in Q2 2024, driven by higher revenue from heavy highway and aviation services[97] - Building Solutions revenues were $108.7 million in Q2 2024, a decrease of $2.4 million, or 2.1%, primarily due to lower commercial volume in Texas[98] Cash Flow and Financial Position - Net cash provided by operating activities was $170.6 million for the six months ended June 30, 2024, compared to $181.1 million for the same period in 2023[102] - Total cash and cash equivalents increased to $539.9 million as of June 30, 2024, compared to $471.6 million at December 31, 2023[101] - Net cash used in investing activities for the six months ended June 30, 2024, was $45.4 million, an increase from $16.3 million in the same period of 2023, driven by $51.3 million for capital equipment purchases[104] - Net cash used in financing activities for the six months ended June 30, 2024, was $56.8 million, a decrease from $71.9 million in the same period of 2023, primarily due to $30.1 million for common stock repurchase[104] - The company plans to explore additional revenue growth and capital alternatives to improve leverage and strengthen its financial position, including strategic cash investments and share repurchases[105] Expenses and Taxation - General and administrative expenses were $27.9 million, or 4.8% of revenue, for Q2 2024, up from $24.0 million, or 4.6% of revenue in Q2 2023[88] - The effective income tax rate was 24.8% for Q2 2024, with an anticipated rate of approximately 25% for the full year 2024[91] Risks and Economic Factors - Inflation has led to increased costs in operations, affecting prices for oil, fuel, lumber, concrete, steel, and labor, which may continue to negatively impact the company's financial results[110] - The company's variable rate debt under its Credit Facility amounted to $330.3 million as of June 30, 2024, with a potential interest expense fluctuation of approximately $3.3 million per year for a 100-basis point change in interest rates[109] - The company held $540.0 million in cash and cash equivalents as of June 30, 2024, with a potential interest income fluctuation of approximately $5.4 million per year for a 100-basis point change in interest rates[109] Other Information - The fair value of the company's outstanding debt approximated its carrying value as of June 30, 2024, due to interest being based on Term SOFR plus an applicable margin[110] - The company is not aware of any situations requiring it to fulfill responsibilities of joint venture partners under joint and several liability as of June 30, 2024[106] - There have been no material changes to the company's critical accounting estimates from those described in the 2023 Form 10-K[108]