Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 27, 2017 | |
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 | 27,051,143 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 66,541 | $ 42,785 |
Contracts receivable, including retainage | 149,052 | 84,132 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 43,384 | 32,705 |
Inventories | 2,093 | 3,708 |
Receivables from and equity in construction joint ventures | 9,069 | 7,130 |
Other current assets | 9,654 | 5,448 |
Total current assets | 279,793 | 175,908 |
Property and equipment, net | 59,464 | 68,127 |
Goodwill | 85,277 | 54,820 |
Intangibles | 45,200 | 0 |
Other assets, net | 3,301 | 2,968 |
Total assets | 473,035 | 301,823 |
Current liabilities: | ||
Accounts payable | 100,565 | 67,097 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 63,368 | 64,100 |
Current maturities of long-term debt | 986 | 3,845 |
Income taxes payable | 280 | 78 |
Accrued compensation | 14,566 | 5,322 |
Other current liabilities | 15,188 | 6,150 |
Total current liabilities | 194,953 | 146,592 |
Long-term liabilities: | ||
Long-term debt, net of current maturities | 88,619 | 1,549 |
Members' interest subject to mandatory redemption and undistributed earnings | 46,329 | 45,230 |
Other long-term liabilities | 595 | 362 |
Total long-term liabilities | 135,543 | 47,141 |
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, 27,023,143 and 24,987,306 shares issued | 270 | 250 |
Additional paid in capital | 231,848 | 208,922 |
Retained deficit | (93,201) | (101,738) |
Total Sterling common stockholders’ equity | 138,917 | 107,434 |
Noncontrolling interests | 3,622 | 656 |
Total equity | 142,539 | 108,090 |
Total liabilities and equity | $ 473,035 | $ 301,823 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
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 | 28,000,000 |
Common stock, shares issued (in shares) | 27,023,143 | 24,987,306 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenues | $ 304,219 | $ 205,629 | $ 704,047 | $ 521,778 |
Cost of revenues | (273,588) | (189,007) | (638,924) | (486,065) |
Gross profit | 30,631 | 16,622 | 65,123 | 35,713 |
General and administrative expenses | (13,129) | (9,146) | (36,545) | (27,888) |
Other operating expense, net | (4,863) | (3,804) | (9,371) | (7,238) |
Operating income | 12,639 | 3,672 | 19,207 | 587 |
Interest income | 107 | 15 | 192 | 19 |
Interest expense | (3,576) | (491) | (6,672) | (2,176) |
Loss on extinguishment of debt | 0 | 0 | (755) | 0 |
Income (loss) before income taxes and earnings attributable to noncontrolling interests | 9,170 | 3,196 | 11,972 | (1,570) |
Income tax expense | (344) | (41) | (469) | (68) |
Net income (loss) | 8,826 | 3,155 | 11,503 | (1,638) |
Noncontrolling owners’ interests in earnings of subsidiaries and joint ventures | (1,694) | (740) | (2,966) | (1,252) |
Net income (loss) attributable to Sterling common stockholders | $ 7,132 | $ 2,415 | $ 8,537 | $ (2,890) |
Net income (loss) per share attributable to Sterling common stockholders: | ||||
Basic (USD per share) | $ 0.27 | $ 0.10 | $ 0.33 | $ (0.12) |
Diluted (USD per share) | $ 0.26 | $ 0.10 | $ 0.33 | $ (0.12) |
Weighted average number of common shares outstanding used in computing per share amounts: | ||||
Basic (in shares) | 26,486 | 25,003 | 25,787 | 23,915 |
Diluted (in shares) | 26,920 | 25,365 | 26,260 | 23,915 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Equity (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid in Capital | Retained Deficit | Noncontrolling Interest |
Beginning balance (in shares) at Dec. 31, 2016 | 24,987 | ||||
Beginning balance at Dec. 31, 2016 | $ 108,090 | $ 250 | $ 208,922 | $ (101,738) | $ 656 |
Net income | 11,503 | 8,537 | 2,966 | ||
Stock-based compensation (in shares) | 154 | ||||
Stock-based compensation | 2,534 | $ 1 | 2,533 | ||
Stock issued for Tealstone acquisition (in shares) | 1,882 | ||||
Stock issued for Tealstone acquisition | 17,061 | $ 19 | 17,042 | ||
Warrants issued to lenders | 3,500 | 3,500 | |||
Other | (149) | (149) | |||
Ending balance (in shares) at Sep. 30, 2017 | 27,023 | ||||
Ending balance at Sep. 30, 2017 | $ 142,539 | $ 270 | $ 231,848 | $ (93,201) | $ 3,622 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) attributable to Sterling common stockholders | $ 8,537 | $ (2,890) |
Plus: Noncontrolling owners’ interests in earnings of subsidiaries and joint ventures | 2,966 | 1,252 |
Net income (loss) | 11,503 | (1,638) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 13,140 | 12,097 |
Loss (gain) on disposal of property and equipment | 204 | (255) |
Stock-based compensation expense | 2,534 | 1,211 |
Changes in operating assets and liabilities: | ||
Contracts receivable | (45,044) | (23,303) |
Costs and estimated earnings in excess of billings on uncompleted contracts | (7,735) | (5,084) |
Inventories | 2,833 | (1,465) |
Receivables from and equity in construction joint ventures | (1,939) | 3,461 |
Other assets | (4,487) | (1,246) |
Accounts payable | 16,687 | 17,902 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (1,035) | 31,340 |
Accrued compensation and other liabilities | 5,289 | 6,662 |
Members' interest subject to mandatory redemption and undistributed earnings | 1,099 | (3,972) |
Net cash (used in) provided by operating activities | (6,951) | 35,710 |
Cash flows from investing activities: | ||
Tealstsone acquisition, net of cash acquired | (54,861) | 0 |
Additions to property and equipment | (8,305) | (8,852) |
Proceeds from sale of property and equipment | 5,830 | 2,187 |
Net cash used in investing activities | (57,336) | (6,665) |
Cash flows from financing activities: | ||
Cash received–term loan | 85,000 | 0 |
Cumulative repayments – equipment-based term loan and other | (4,449) | (9,546) |
Cumulative drawdowns – equipment-based revolver | 0 | 19,000 |
Cumulative repayments – equipment-based revolver | 0 | (19,000) |
Net proceeds from stock issued | 0 | 19,142 |
Debt issuance costs | 6,889 | 0 |
Loss on debt extinguishment | 755 | 0 |
Distributions to noncontrolling interest owners | 0 | 0 |
Other | (152) | (46) |
Net cash provided by financing activities | 88,043 | 9,550 |
Net increase in cash and cash equivalents | 23,756 | 38,595 |
Cash and cash equivalents at beginning of period | 42,785 | 4,426 |
Cash and cash equivalents at end of period | 66,541 | 43,021 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 6,139 | 2,426 |
Cash paid during the period for income taxes | 145 | 5 |
Non-cash items: | ||
Share consideration given for Tealstone acquisition (1,882,058 shares) | 17,061 | 0 |
Notes and deferred payments to sellers | 11,588 | 0 |
Warrants issued to lenders (1,000,000 Warrants) | 3,500 | 0 |
Transportation and construction equipment acquired through financing arrangements | $ 70 | $ 735 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Cash Flows [Abstract] | ||
Shares issued for Tealstone acquisition (in shares) | 1,882,058 | 0 |
Warrants issued to lenders (in shares) | 1,000,000 | 0 |
Business Summary and Significan
Business Summary and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Business Summary and Significant Accounting Policies | 1. Business Summary and Significant Accounting Policies Business Summary Sterling Construction Company, Inc. (“Sterling” or “the Company”), a Delaware corporation, is a leading heavy civil construction company that specializes in the building and reconstruction of transportation infrastructure, water infrastructure, and residential and commercial concrete projects in Texas, Utah, Nevada, Colorado, Arizona, California, Hawaii and other states in which there are construction opportunities. Its heavy civil construction projects include highways, roads, bridges, airfields, ports, light rail, water, wastewater and storm drainage systems, multi-family homes, commercial projects and parking structures. Its 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, 2016 (“ 2016 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 September 30, 2017 and the results of operations and cash flows for the periods presented. The December 31, 2016 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 nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full year or subsequent quarters. On April 3, 2017, the Company consummated the acquisition of 100% of the outstanding stock of Tealstone Residential Concrete, Inc. and Tealstone Commercial, Inc. (collectively, “ Tealstone ”) and entered into a Loan and Security Agreement providing for a term loan of $85,000,000 with a maturity date of April 4, 2022, which replaced the then existing debt facility. We have determined that with the acquisition of Tealstone there are two reportable segments: heavy civil construction and residential construction. Refer to Note 13 for a discussion of reportable segments and related financial information. 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 2016 Form 10-K. These accounting policies include, but are not limited to, those related to: • revenue recognition • contracts receivable, including retainage • valuation of property and equipment, goodwill and other long-lived assets • income taxes • segment reporting There have been no material changes to significant accounting policies since December 31, 2016 . Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of subsidiaries and construction joint ventures in which the Company has a greater than 50% ownership interest or otherwise controls such entities. For investments in subsidiaries and 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 (loss) are reflected in the balance sheet line item “Noncontrolling interests” in “Equity” and the statement of operations line item “Noncontrolling owners’ interests in earnings of subsidiaries and joint ventures,” 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. For all years presented, the Company had no subsidiaries where its ownership interests were less than 50% . Refer to Note 4 for further information regarding the Company’s Subsidiaries and Joint Ventures with Noncontrolling Owners’ Interest. Where the Company is a noncontrolling joint venture partner, and otherwise not required to consolidate the joint venture entity, its share of the operations 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 an acceptable modification of the equity method of accounting which is a common practice in the construction industry. Refer to Note 5 for further information regarding the Company’s construction joint ventures. Under GAAP, the Company must determine whether each entity, including joint ventures in which it participates, is a variable interest entity (“VIE”). This determination focuses on identifying which owner or joint venture partner, if any, has the power to direct the activities of the entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity disproportionate to its interest in the entity, which could have the effect of requiring the Company to consolidate the entity in which it has a noncontrolling variable interest. Refer to Note 6 for further information regarding the Company’s consolidated VIE. 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 under the percentage-of-completion method, the valuation of long-term assets, purchase accounting, including intangibles and goodwill, and income taxes. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. Reclassification Reclassifications have been made to historical financial data on our condensed consolidated financial statements to conform to our current year presentation. Revenue Recognition Heavy Civil Construction The Company engages in various types of heavy civil construction projects principally for public (government) owners. Credit risk is minimal with public owners since the Company ascertains that funds have been appropriated by the governmental project owner prior to commencing work on such projects. While most public contracts are subject to termination at the election of the government entity, in the event of termination the Company is entitled to receive the contract price for completed work and reimbursement of termination-related costs. Credit risk with private owners is minimized because of statutory mechanic’s liens, which give the Company high priority in the event of lien foreclosures following financial difficulties of private owners. Our contracts generally take 12 to 36 months to complete. The Company generally provides a one to two -year warranty for workmanship under its contracts when completed. Warranty claims historically have been insignificant. Revenues are recognized on the 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 related 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 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 $1.3 million and $0.2 million during the three and nine months ended September 30, 2017 , respectively, included in “operating income” on the condensed consolidated statements of operations. Changes in estimated revenues and gross margin resulted in a net charge of $0.6 million and $1.1 million during the three and nine months ended September 30, 2016 , respectively, included in “operating income” on the condensed consolidated statements of operations. Change orders are modifications of an original contract that effectively change the existing provisions of the contract without adding new provisions or terms. 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. The Company considers unapproved change orders to be contract variations for which we have customer approval for a change of scope but a price change associated with the scope change has not yet been agreed upon. Costs associated with unapproved change orders are included in the estimated costs to complete the contracts and are treated as project costs as incurred. The Company recognizes revenue equal to costs incurred on unapproved change orders when realization of price approval is probable. Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers. Change orders that are unapproved as to both price and scope are evaluated as claims. The Company considers claims to be amounts in excess of agreed 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. Claims are included in the calculation of revenue when realization is probable and amounts can be reliably determined to the extent costs are incurred. To support these requirements, the existence of the following items must be satisfied: (i) The contract or other evidence provides a legal basis for the claim; or a legal opinion has been obtained, stating that under the circumstances there is a reasonable basis to support the claim; (ii) Additional costs are caused by circumstances that were unforeseen at the contract date and are not the result of deficiencies in the contractor’s performance; (iii) Costs associated with the claim are identifiable or otherwise determinable and are reasonable in view of the work performed; and (iv) The evidence supporting the claim is objective and verifiable, not based on management’s feel for the situation or on unsupported representations. Revenue in excess of contract costs incurred on claims is recognized when an agreement is reached with customers as to the value of the claims, which in some instances may not occur until after completion of work under the contract. Costs associated with claims are included in the estimated costs to complete the contracts and are treated as project costs when incurred. 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, claims and our entitled unpaid project price, together in some cases as necessary with the views of the Company’s outside claim consultants, we concluded that including the unapproved change order, claim and entitled unpaid project price amounts of $0.3 million , $10.5 million and $3.9 million , respectively, at September 30, 2017 , and $2.2 million , $9.2 million and $3.9 million , respectively, at December 31, 2016 , in “Costs and estimated earnings in excess of billings on uncompleted contracts” on our condensed consolidated balance sheets was in accordance with GAAP. 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. Residential Construction Residential construction revenue and related profit are recognized when construction on the concrete foundation unit is completed. The time from starting construction to finishing is typically one month or less. Financial Instruments and Fair Value The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The Company’s financial instruments are cash and cash equivalents, restricted cash used as collateral for a letter of credit and restricted cash maintained in an escrow account, contracts receivable, accounts payable, notes payable, and a term loan (the “Loan”) with Oaktree Capital Management, L.P. The recorded values of cash and cash equivalents, restricted cash, contracts receivable and accounts payable approximate their fair values based on their liquidity and/or short-term nature. Refer to Note 8 regarding the fair value of the Loan and notes payable. The Company does not have any off-balance sheet financial instruments other than operating leases (refer to Note 10 of the Notes to Consolidated Financial Statements in the 2016 Form 10-K). In order to assess the fair value of the Company’s financial instruments, the Company uses the fair value hierarchy established by GAAP which prioritizes the inputs used in valuation techniques into the following three levels: Level 1 Inputs – Based upon quoted prices for identical assets in active markets that the Company has the ability to access at the measurement date. Level 2 Inputs – Based upon quoted prices (other than Level 1) in active markets for similar assets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset such as interest rates, yield curves, volatilities and default rates and inputs that are derived principally from or corroborated by observable market data. Level 3 Inputs – Based on unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset based on the best information available. For each financial instrument, the Company uses the highest priority level input that is available in order to appropriately value that particular instrument. In certain instances, Level 1 inputs are not available and the Company must use Level 2 or Level 3 inputs. In these cases, the Company provides a description of the valuation techniques used and the inputs used in the fair value measurement. Recently Adopted Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance in Accounting Standards Update (“ASU”) No. 2017-4 “Intangibles-Goodwill and Other” (Topic 350) which simplifies and eliminates step 2 of the current two step goodwill impairment test. This guidance is effective for public business entities for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted this ASU on January 1, 2017. The adoption did not have a material impact on our consolidated financial statements or related disclosures. Recently Issued Accounting Pronouncements In May 2017, the FASB issued guidance in ASU No. 2017-9 “Compensation—Stock Compensation” (Topic 718): Scope of Modification Accounting, which provides guidance to assist entities with evaluating which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update provide certain thresholds that must be met in order to determine when an entity should account for the effects of a modification. This guidance is effective for all entities for annual periods and interim periods within those annual periods, beginning after December 15, 2017. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements. In January 2017, the FASB issued guidance in ASU No. 2017-1 “Business Combinations” (Topic 805): Clarifying the Definition of a Business, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update provide a screen to determine when a set of assets and activities is not a business, provide a framework to assist entities in evaluating whether both an input and a substantive process are present and narrow the definition of the term output to be consistent with Topic 606. This guidance is effective for public business entities for annual periods beginning after December 15, 2017 including interim periods within those periods. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements. In November 2016, the FASB issued guidance in ASU No. 2016-18 “Statement of Cash Flows” (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements other than to the presentation of restricted cash on our consolidated statements of cash flows. In August 2016, the FASB issued guidance in ASU No. 2016-15 (Topic 230): “Classification of Certain Cash Receipts and Cash Payments.” This update addresses specific cash flow issues with the objective of reducing existing diversity in practice. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements. 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 new standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of this ASU to the Company’s consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-9, “Revenue from Contracts with Customers.” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-9 by one year. As a result, the amendments in ASU 2014-9 are effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Additional ASUs have been issued that are part of the overall new revenue guidance, including: ASU No. 2016-8, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Identifying Performance Obligations and Licensing,” and ASU 2016-12, “Narrow Scope Improvements and Practical Expedients.” The new revenue recognition standard prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. 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 for each of these obligations. We expect that revenue generated from our fixed unit price contracts, which represent a significant portion of our total contracts, will continue to be recognized over time utilizing the cost-to-cost measure of progress consistent with our current practice. Therefore, we do not expect a material impact to the Company’s consolidated financial statements related to fixed unit price contracts. We also expect our revenue recognition disclosures to significantly expand due to the new qualitative and quantitative requirements under the new standard. The Company is currently determining the impact of the new standard on our lump-sum, cost-plus and other than fixed unit price contracts. Although, our assessment has not yet been finalized as of September 30, 2017, our contract review has not identified any significant changes that would materially affect the Company's consolidated financial statements. Because the standards will impact our business processes, systems and controls, the Company has developed a comprehensive change management project plan to guide the implementation. We will adopt the requirements of the new standard effective January 1, 2018 and intend to use the modified retrospective adoption approach. |
Tealstone Acquisition
Tealstone Acquisition | 9 Months Ended |
Sep. 30, 2017 | |
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 (the “ Placement Shares ”), 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 may be made on the first, second, third and fourth anniversaries of the closing date to continuing Tealstone management or their affiliates if specified financial performance levels are achieved. Tealstone focuses on concrete construction of residential foundations, parking structures, elevated slabs 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. The preliminary acquisition-date fair value of the consideration transferred totaled $83.7 million , which consisted of the following: Fair value of consideration transferred (amounts in thousands): Cash $ 55,000 Common stock (1,882,058 shares) 17,061 Promissory notes 4,436 Deferred payments 7,153 Total $ 83,650 The fair value of the 1,882,058 common shares issued was determined based on the average market price of the Company’s common shares on the acquisition date. The promissory notes and deferred payments have been discounted using a preliminary 12% fair value discount rate. The earn-out arrangement requires the Company to pay up to an aggregate of $15,000,000 in earn-out payments on the first, second, third and fourth anniversaries of the closing date to continuing Tealstone management or their affiliates if specified financial performance levels are achieved. The Company’s preliminary analysis indicates that the compensation is tied to the continuing employment of certain key employees and executives of Tealstone and will be treated as additional compensation and not as additional contingent consideration. Preliminary Purchase Price Allocation The aggregate purchase price noted above was allocated to the major categories of assets and liabilities acquired based upon their estimated fair values at the acquisition closing date, which were based, in part, upon outside preliminary appraisals for certain assets, including specifically-identified intangible assets. The excess of the purchase price over the preliminary estimated fair value of the net tangible and identifiable intangible assets acquired totaling $30.5 million , was recorded as goodwill. The following table summarizes our preliminary goodwill addition (in thousands): Balance at January 1, 2017 $ 54,820 Additional goodwill related to acquisition 30,457 Balance at September 30, 2017 $ 85,277 Goodwill decreased from June 30, 2017 by $5.7 million as a result of an increase in our identified intangible assets of $6.6 million , offset by a working capital adjustment of $0.9 million . The following table summarizes our preliminary purchase price allocation at the acquisition closing date (in thousands): Cash $ 139 Accounts receivable 19,876 Costs and estimated earnings in excess of billings on uncompleted contracts 2,944 Inventory 1,218 Other current assets 54 Property, plant and equipment 565 Other assets, net 1 Identifiable intangible assets and Goodwill 77,028 Accounts payable (16,781 ) Billings in excess of costs and estimated earnings on uncompleted contracts (303 ) Accrued expenses (823 ) State income tax payable (268 ) Total Consideration $ 83,650 The purchase price allocation and related amortization periods are based upon preliminary information and are subject to change when additional information concerning final asset and liability valuations is obtained. We have not completed our final assessment of the fair value of purchased intangible assets, property and equipment, inventory, tax balances, contingent liabilities, long-term leases or acquired contracts. Our final purchase price allocation may result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill. Based on our preliminary appraisal report, we have assigned an asset value of $46.6 million for identified intangible assets and have amortized $0.9 million and $1.4 million , which is included in general and administrative expenses on our statement of operations for the three and nine months ended September 30, 2017 , respectively. We believe that a majority of the intangible amount will be allocated to customer relationships. A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the balance of goodwill and annual amortization expense of approximately $4.7 million and $0.3 million respectively. 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. To give effect to the Tealstone Acquisition for pro forma financial information purposes, Tealstone’s commercial historical results were brought to within one month of Sterling’s interim results for the three and nine month periods ended September 30, 2017 , and included the three and nine months ended August 31, 2017, respectively. The pro forma financial information reflects the Tealstone Acquisition and related events as if they occurred at the beginning of the period, 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; (2) include additional intangibles amortization and net interest expense associated with the Tealstone Acquisition; and (3) include the pro forma results of Tealstone for the three and nine month periods ended September 30, 2017 . 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 consists of the following (amounts in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Pro forma revenue $ 304,219 $ 255,002 $ 749,176 $ 657,773 Pro forma net income attributable to Sterling $ 7,132 $ 4,659 $ 8,848 $ 7,705 |
Cash and Cash Equivalents and R
Cash and Cash Equivalents and Restricted Cash | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Cash and Cash Equivalents and Restricted Cash | 3. Cash and Cash Equivalents and Restricted Cash 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 wholly-owned and less than wholly-owned subsidiaries and majority-owned joint ventures, as well as the Company’s VIE. Refer to Note 6 for more information regarding the Company’s consolidated VIE. At September 30, 2017 and December 31, 2016 , cash and cash equivalents included $15.1 million and $24.1 million , respectively, belonging to our less than wholly-owned subsidiaries. At September 30, 2017 and December 31, 2016 , cash and cash equivalents included $20.7 million and $10.9 million , respectively, belonging to majority-owned construction joint ventures. 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 $3.0 million is included in “other assets, net” on the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 and represents cash deposited by the Company into a separate account and designated as collateral for a standby letter of credit in the same amount in accordance with contractual agreements. Refer to Note 9 for more information about our standby letter of credit. In addition, restricted cash of approximately $2.0 million is included in “other current assets” on the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 and 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. |
Subsidiaries and Joint Ventures
Subsidiaries and Joint Ventures With Noncontrolling Owners' Interests | 9 Months Ended |
Sep. 30, 2017 | |
Noncontrolling Interest [Abstract] | |
Subsidiaries and Joint Ventures With Noncontrolling Owners' Interests | 4. Subsidiaries and Joint Ventures with Noncontrolling Owners’ Interests The amended agreements, as described in Note 4 of the Notes to Consolidated Financial Statements in the 2016 Form 10-K, resulted in an obligation to purchase Mr. Buenting’s and Mr. Myers’ 50% members’ interest that the Company is certain to incur, either because of Mr. Buenting’s or Mr. Myers’ death; therefore, the Company has classified the noncontrolling interest 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 total disability are also mandatorily payable. In the event of either Mr. Buenting’s or Mr. Myers’ death, the Company has purchased death and permanent total disability insurance of $40.0 million to mitigate the Company’s cash draw if such events were to occur. The liability consists of the following (amounts in thousands): September 30, December 31, Members’ interest subject to mandatory redemption $ 40,000 $ 40,000 Net accumulated earnings 6,329 5,230 Total liability $ 46,329 $ 45,230 Earnings, which were included in net accumulated earnings and represent 50% of total earnings, for the three and nine months ended September 30, 2017 were $4.5 million and $7.0 million , respectively, and were $3.4 million and $7.3 million for the three and nine months ended September 30, 2016 . These amounts were included in “other operating expense, net” on the Company’s condensed consolidated statements of operations. Changes in Noncontrolling Interests The following table summarizes the changes in the noncontrolling owners’ interests in subsidiaries and construction joint ventures (amounts in thousands): Nine Months Ended 2017 2016 Balance, beginning of period $ 656 $ (91 ) Net income attributable to noncontrolling interest included in equity 2,966 1,252 Distributions to noncontrolling interest owners — — Balance, end of period $ 3,622 $ 1,161 The increase in net income attributable to noncontrolling interest included in equity is due to the Company’s addition of a Rocky Mountain region majority-owned construction joint venture which was not ongoing during the same prior year period. |
Construction Joint Ventures
Construction Joint Ventures | 9 Months Ended |
Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Construction Joint Ventures | 5. Construction Joint Ventures The Company participates in various construction joint ventures. Generally, each construction joint venture is formed to construct a specific project and is jointly controlled by the joint venture partners. Refer to Note 5 of the Notes to Consolidated Financial Statements in the 2016 Form 10-K for further information about our joint ventures. 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): September 30, December 31, Total combined: Current assets $ 42,129 $ 32,592 Less current liabilities (61,079 ) (57,598 ) Net liabilities $ (18,950 ) $ (25,006 ) Backlog $ 51,110 $ 107,333 Sterling’s noncontrolling interest in backlog $ 26,659 $ 52,992 Sterling’s receivables from and equity in construction joint ventures $ 9,069 $ 7,130 Three Months Ended Nine Months Ended 2017 2016 2017 2016 Total combined: Revenues $ 27,703 $ 15,520 $ 61,210 $ 44,074 Income before tax (6,281 ) 1,925 (3,611 ) 3,838 Sterling’s noncontrolling interest: Revenues $ 13,664 $ 6,103 $ 28,826 $ 17,567 Income before tax (1,629 ) 519 (358 ) 1,370 Approximately $26.7 million of the Company’s backlog at September 30, 2017 was attributable to projects performed by joint ventures. The majority of this amount is attributable to the Company’s joint venture with Steve P. Rados, Inc., where the Company has a 50% interest. 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. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | 6. Variable Interest Entities The Company owns a 50% interest in Myers & Sons Construction, L.P. (“Myers”), of which it is the primary beneficiary and has consolidated Myers into the Company’s financial statements. Because the Company exercises primary control over activities of the partnership and it is exposed to the majority of potential losses of the partnership, the Company has consolidated Myers within the Company’s financial statements since August 1, 2011, the date of acquisition. Refer to Note 6 of the Notes to Consolidated Financial Statements included in the 2016 Form 10-K for additional information on the acquisition of this limited partnership. The condensed financial information of Myers, which is reflected in the Company’s condensed consolidated balance sheets and statements of operations, is as follows (amounts in thousands): September 30, December 31, Assets: Current assets: Cash and cash equivalents $ 2,588 $ 9,655 Contracts receivable, including retainage 30,134 15,046 Other current assets 13,936 10,208 Total current assets 46,658 34,909 Property and equipment, net 8,996 9,824 Goodwill 1,501 1,501 Total assets $ 57,155 $ 46,234 Liabilities: Current liabilities: Accounts payable $ 27,109 $ 21,274 Other current liabilities 14,667 8,782 Total current liabilities 41,776 30,056 Long-term liabilities: Other long-term liabilities 271 5,373 Total liabilities $ 42,047 $ 35,429 Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenues $ 64,266 $ 50,739 $ 126,333 $ 121,649 Operating income 3,666 2,720 6,307 4,894 Net income 1,834 1,357 3,149 2,440 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 7. Property and Equipment Property and equipment are summarized as follows (amounts in thousands): September 30, December 31, Construction equipment $ 121,364 $ 121,441 Transportation equipment 18,275 19,017 Buildings 9,547 12,771 Office equipment 3,339 3,108 Leasehold improvement 914 914 Construction in progress 1,432 313 Land 2,348 3,509 Water rights 200 200 157,419 161,273 Less accumulated depreciation (97,955 ) (93,146 ) Total property and equipment, net $ 59,464 $ 68,127 During the nine months ended September 30, 2017 , we sold one of our Texas subsidiary’s office, equipment shop and yard facilities, located in Texas. The property had a net book value of $4.1 million , and we received $3.0 million , after selling costs. As such, we recorded a loss of approximately $1.1 million in “other operating expense, net” for the nine months ended September 30, 2017 . |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 8. Debt Debt consists of the following (in thousands): September 30, December 31, Loan $ 85,000 $ 3,532 Less deferred loan costs and discount (9,350 ) (803 ) Total Loan, net 75,650 2,729 Notes and deferred payments to sellers, Tealstone acquisition 12,118 — Notes payable for transportation and construction equipment and other 1,837 2,665 89,605 5,394 Current maturities of long-term debt 986 4,648 Less current deferred loan costs — (803 ) Less current maturities of long-term debt, net (986 ) (3,845 ) Total long-term debt $ 88,619 $ 1,549 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 “Loan Agreement”), 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 Loan Agreement 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 3.10 to 1.00 for four consecutive quarters, reducing to 1.80 to 1.00 by the four consecutive quarters ending September 30, 2019; • daily cash collateral of not less $15,000,000 , potentially further increasing to $18,000,000 beginning on April 4, 2018; • a rolling four quarter gross margin in contract backlog of not less than $60,000,000 , increasing to $70,000,000 by March 31, 2019; • the incurrence of net capital expenditures during each 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 during each four consecutive fiscal quarters. The Company is in compliance with these covenants at September 30, 2017 . The Loan Agreement 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 Loan Agreement 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. Refer to Note 11 for additional information on the warrants. The total amount will be amortized on a straight-line basis over the five -year life of the Loan. Amortization expense of $0.5 million and $1.0 million , respectively has been included in interest expense for the three and nine months ended September 30, 2017 . As part of the extinguishment of our prior credit facility, $0.8 million in debt extinguishment costs was expensed and included as a “loss on extinguishment of debt” on our statement of operations for the nine months ended September 30, 2017 . Fair Value The Company’s debt is recorded at its carrying amount in the condensed consolidated balance sheets. As of September 30, 2017 and December 31, 2016 , the carrying values of our debt outstanding approximated the fair values and were $85.0 million and $3.5 million , respectively for the Loan. There was no revolver as of September 30, 2017 and no amounts outstanding on the prior revolver as of December 31, 2016 . 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 preliminary 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 $0.5 million for the three and nine months ended September 30, 2017 , 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 $1.8 million and $2.7 million at September 30, 2017 and December 31, 2016 , respectively. The purchases have payment terms ranging from 3 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. Interest Expense Interest expense related to our Loan and prior credit facility and other debt for the three and nine months ended September 30, 2017 was $3.6 million and $6.7 million , respectively, and $0.5 million and $2.2 million for the three and nine months ended September 30, 2016 , respectively. The increase in interest cost for both periods is due to our new Loan that has a higher amount of principal outstanding. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. 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. Since we have now replaced our insurance provider, the amount required will diminish as claims are processed. Refer to Note 3 for more information on our restricted cash. 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
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes The Company and its subsidiaries file U.S. federal and various U.S. state income tax returns. Current income tax expense or (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. The Company is expecting a current federal liability for alternative minimum tax. 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 $0.3 million and $0.5 million was recorded for the three and nine months ended September 30, 2017 , respectively. A minimal tax expense was recorded for the three and nine months ended September 30, 2016 . 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 or (benefit) 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 September 30, 2017 and December 31, 2016 . Therefore, there has been no change in net deferred taxes for the three and nine months ended September 30, 2017 . 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 | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholder's Equity | 11. Stockholder’s Equity Stock Offering On April 3, 2017, in connection with the Tealstone Acquisition, the Company issued 1,882,058 shares of the Company’s stock as consideration paid to the sellers. The value of the shares issued was $17.1 million based on the average fair value of the shares on the date of acquisition. On May 9, 2016, the Company completed an underwritten public offering of 5,175,000 shares of the Company’s common stock, which included the full exercise of the sole underwriter’s over-allotment option, at a price to the public of $4.00 per share ( $3.77 per share net of underwriting discounts). The net proceeds from the offering of $19.1 million , after deducting underwriting discounts and other offering expenses, were used for working capital, repayment of our indebtedness under the revolving loan portion of our then existing equipment-based credit facility and for general corporate purposes. Warrants On April 3, 2017, the Company issued warrants (the “Warrants”) to the lenders under the Loan Agreement (the “Holders”) pursuant to which such holders have the right to purchase, for a period of five years from the date of issuance, up to an aggregate of 1,000,000 shares of the Company’s common stock (the “Warrant Shares”) at an initial exercise price of $10.25 per share, subject to adjustment for stock splits, combinations and similar recapitalization events and weighted-average anti-dilution upon the issuance by the Company of shares of common stock or rights, options or convertible securities exercisable for common stock in the future at a price below the exercise price of the Warrants. The Company valued these Warrants using the Black-Scholes model, which is a type 3 fair value measurement. The key assumptions used in the Black-Scholes Model with respect to these valuations are summarized in the following table: At April 3, Current stock price $ 8.88 Exercise option price $ 10.25 Expected term of warrants (in years) 5 Expected volatility rate 48.29 % Risk-free rate 1.88 % Expected dividend yield — % Based on these inputs, the total fair value of the warrants was $3.5 million , which was recorded as a Loan discount and netted against our new Loan and included in “additional paid in capital” on our balance sheet. 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 2016 Form 10-K for further information. During the three and nine months ended September 30, 2017 , the Company awarded a total of 8,000 and 174,410 shares of common stock, respectively. The Company recorded stock-based compensation expense of $0.6 million and $2.5 million for the three and nine months ended September 30, 2017 , respectively. The nine months ended September 30, 2017 included costs for the acceleration of unvested shares related to the departure of our former CEO of $0.7 million . The Company recorded stock-based compensation expense of $0.4 million and $1.2 million for the three and nine months ended September 30, 2016 , respectively. At September 30, 2017 and 2016 , total unrecognized compensation cost related to unvested common stock awards was $1.1 million and $2.3 million , respectively. This cost is expected to be recognized over a weighted average period of 1.6 years . At September 30, 2017 , there were 0.5 million shares of common stock covered by outstanding unvested common stock. |
Net Income (Loss) Per Share Att
Net Income (Loss) Per Share Attributable to Sterling Common Stockholders | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share Attributable to Sterling Common Stockholders | 12. Net Income (Loss) per Share Attributable to Sterling Common Stockholders Basic net income (loss) per share attributable to Sterling common stockholders is computed by dividing net income (loss) attributable to Sterling common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share attributable to Sterling common stockholders is the same as basic net income (loss) per share attributable to Sterling common stockholders but includes dilutive unvested stock and warrants using the treasury stock method. The following table reconciles the numerators and denominators of the basic and diluted per common share computations for net income (loss) attributable to Sterling common stockholders (amounts in thousands, except per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net income (loss) attributable to Sterling common stockholders $ 7,132 $ 2,415 $ 8,537 $ (2,890 ) Weighted average common shares outstanding — basic 26,486 25,003 25,787 23,915 Shares for dilutive unvested stock and warrants 434 362 473 — Weighted average common shares outstanding and incremental shares assumed repurchased— diluted 26,920 25,365 26,260 23,915 Basic income (loss) per share attributable to Sterling common stockholders $ 0.27 $ 0.10 $ 0.33 $ (0.12 ) Diluted income (loss) per share attributable to Sterling common stockholders $ 0.26 $ 0.10 $ 0.33 $ (0.12 ) In accordance with the treasury stock method, approximately 0.3 million shares of unvested common stock were excluded from the diluted weighted average common shares outstanding for the nine months ended September 30, 2016 , as the Company incurred a loss during that period and the impact of such shares would have been anti-dilutive. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 13. 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. In making this determination, the Company considered the discrete financial information used by our Chief Operating Decision Maker (“CODM”). Based on this approach, the Company noted that the CODM organizes, evaluates and manages the financial information of our aggregated heavy civil construction projects and the entire residential construction division separately when making operating decisions and assessing the Company’s overall performance. Furthermore, we considered the differences between the types of work performed in each reporting unit. Each heavy civil construction project has similar characteristics, includes similar services, has similar types of customers and is subject to similar economic and regulatory environments. Projects in our heavy civil construction segment typically last for several years, involve several subtasks and are accounted for using the percentage of completion method. Conversely, our residential construction projects typically consist of a high volume of independent units performed for customers that are billed, paid and accounted for as the individual units are completed. Each job performed in our residential construction segment typically takes less than one month to complete. 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, as mentioned above. Our chief operating decision maker 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 nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue Heavy Civil Construction $ 263,278 $ 205,629 $ 625,887 $ 521,778 Residential Construction 40,941 — 78,160 — Total Revenue $ 304,219 $ 205,629 $ 704,047 $ 521,778 Operating Income Heavy Civil Construction $ 6,960 $ 3,672 $ 8,627 $ 587 Residential Construction 5,679 — 10,580 — Total Operating Income $ 12,639 $ 3,672 $ 19,207 $ 587 From the acquisition closing date of April 3, 2017, through September 30, 2017 , revenue and income from operations associated with the Tealstone Acquisition totaled approximately $92.9 million and $13.2 million , respectively. The following table presents total assets by reportable segment at September 30, 2017 and December 31, 2016 : September 30, December 31, Assets Heavy Civil Construction $ 365,178 $ 301,823 Residential Construction 107,857 — Total Assets $ 473,035 $ 301,823 The Company is in the process of finalizing the purchase accounting, which will affect the allocation of goodwill by reportable segments. Refer to Note 2. However, of the newly acquired goodwill, with a preliminarily amount of $30.5 million , we believe that almost all will be allocated to the Residential Construction segment. |
Business Summary and Signific21
Business Summary and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
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 a greater than 50% ownership interest or otherwise controls such entities. For investments in subsidiaries and 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 (loss) are reflected in the balance sheet line item “Noncontrolling interests” in “Equity” and the statement of operations line item “Noncontrolling owners’ interests in earnings of subsidiaries and joint ventures,” 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. For all years presented, the Company had no subsidiaries where its ownership interests were less than 50% . Refer to Note 4 for further information regarding the Company’s Subsidiaries and Joint Ventures with Noncontrolling Owners’ Interest. Where the Company is a noncontrolling joint venture partner, and otherwise not required to consolidate the joint venture entity, its share of the operations 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 an acceptable modification of the equity method of accounting which is a common practice in the construction industry. Refer to Note 5 for further information regarding the Company’s construction joint ventures. Under GAAP, the Company must determine whether each entity, including joint ventures in which it participates, is a variable interest entity (“VIE”). This determination focuses on identifying which owner or joint venture partner, if any, has the power to direct the activities of the entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity disproportionate to its interest in the entity, which could have the effect of requiring the Company to consolidate the entity in which it has a noncontrolling variable interest. Refer to Note 6 for further information regarding the Company’s consolidated VIE. |
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 under the percentage-of-completion method, the valuation of long-term assets, purchase accounting, including intangibles and goodwill, and income taxes. Management continually evaluates all of its estimates and judgments based on available information and experience; however, actual results could differ from these estimates. |
Reclassification | Reclassification Reclassifications have been made to historical financial data on our condensed consolidated financial statements to conform to our current year presentation. |
Revenue Recognition | Revenue Recognition Heavy Civil Construction The Company engages in various types of heavy civil construction projects principally for public (government) owners. Credit risk is minimal with public owners since the Company ascertains that funds have been appropriated by the governmental project owner prior to commencing work on such projects. While most public contracts are subject to termination at the election of the government entity, in the event of termination the Company is entitled to receive the contract price for completed work and reimbursement of termination-related costs. Credit risk with private owners is minimized because of statutory mechanic’s liens, which give the Company high priority in the event of lien foreclosures following financial difficulties of private owners. Our contracts generally take 12 to 36 months to complete. The Company generally provides a one to two -year warranty for workmanship under its contracts when completed. Warranty claims historically have been insignificant. Revenues are recognized on the 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 related 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 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 $1.3 million and $0.2 million during the three and nine months ended September 30, 2017 , respectively, included in “operating income” on the condensed consolidated statements of operations. Changes in estimated revenues and gross margin resulted in a net charge of $0.6 million and $1.1 million during the three and nine months ended September 30, 2016 , respectively, included in “operating income” on the condensed consolidated statements of operations. Change orders are modifications of an original contract that effectively change the existing provisions of the contract without adding new provisions or terms. 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. The Company considers unapproved change orders to be contract variations for which we have customer approval for a change of scope but a price change associated with the scope change has not yet been agreed upon. Costs associated with unapproved change orders are included in the estimated costs to complete the contracts and are treated as project costs as incurred. The Company recognizes revenue equal to costs incurred on unapproved change orders when realization of price approval is probable. Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers. Change orders that are unapproved as to both price and scope are evaluated as claims. The Company considers claims to be amounts in excess of agreed 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. Claims are included in the calculation of revenue when realization is probable and amounts can be reliably determined to the extent costs are incurred. To support these requirements, the existence of the following items must be satisfied: (i) The contract or other evidence provides a legal basis for the claim; or a legal opinion has been obtained, stating that under the circumstances there is a reasonable basis to support the claim; (ii) Additional costs are caused by circumstances that were unforeseen at the contract date and are not the result of deficiencies in the contractor’s performance; (iii) Costs associated with the claim are identifiable or otherwise determinable and are reasonable in view of the work performed; and (iv) The evidence supporting the claim is objective and verifiable, not based on management’s feel for the situation or on unsupported representations. Revenue in excess of contract costs incurred on claims is recognized when an agreement is reached with customers as to the value of the claims, which in some instances may not occur until after completion of work under the contract. Costs associated with claims are included in the estimated costs to complete the contracts and are treated as project costs when incurred. 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, claims and our entitled unpaid project price, together in some cases as necessary with the views of the Company’s outside claim consultants, we concluded that including the unapproved change order, claim and entitled unpaid project price amounts of $0.3 million , $10.5 million and $3.9 million , respectively, at September 30, 2017 , and $2.2 million , $9.2 million and $3.9 million , respectively, at December 31, 2016 , in “Costs and estimated earnings in excess of billings on uncompleted contracts” on our condensed consolidated balance sheets was in accordance with GAAP. 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. Residential Construction Residential construction revenue and related profit are recognized when construction on the concrete foundation unit is completed. The time from starting construction to finishing is typically one month or less. |
Financial Instruments and Fair Value | Financial Instruments and Fair Value The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The Company’s financial instruments are cash and cash equivalents, restricted cash used as collateral for a letter of credit and restricted cash maintained in an escrow account, contracts receivable, accounts payable, notes payable, and a term loan (the “Loan”) with Oaktree Capital Management, L.P. The recorded values of cash and cash equivalents, restricted cash, contracts receivable and accounts payable approximate their fair values based on their liquidity and/or short-term nature. Refer to Note 8 regarding the fair value of the Loan and notes payable. The Company does not have any off-balance sheet financial instruments other than operating leases (refer to Note 10 of the Notes to Consolidated Financial Statements in the 2016 Form 10-K). In order to assess the fair value of the Company’s financial instruments, the Company uses the fair value hierarchy established by GAAP which prioritizes the inputs used in valuation techniques into the following three levels: Level 1 Inputs – Based upon quoted prices for identical assets in active markets that the Company has the ability to access at the measurement date. Level 2 Inputs – Based upon quoted prices (other than Level 1) in active markets for similar assets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset such as interest rates, yield curves, volatilities and default rates and inputs that are derived principally from or corroborated by observable market data. Level 3 Inputs – Based on unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset based on the best information available. For each financial instrument, the Company uses the highest priority level input that is available in order to appropriately value that particular instrument. In certain instances, Level 1 inputs are not available and the Company must use Level 2 or Level 3 inputs. In these cases, the Company provides a description of the valuation techniques used and the inputs used in the fair value measurement. |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance in Accounting Standards Update (“ASU”) No. 2017-4 “Intangibles-Goodwill and Other” (Topic 350) which simplifies and eliminates step 2 of the current two step goodwill impairment test. This guidance is effective for public business entities for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted this ASU on January 1, 2017. The adoption did not have a material impact on our consolidated financial statements or related disclosures. Recently Issued Accounting Pronouncements In May 2017, the FASB issued guidance in ASU No. 2017-9 “Compensation—Stock Compensation” (Topic 718): Scope of Modification Accounting, which provides guidance to assist entities with evaluating which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update provide certain thresholds that must be met in order to determine when an entity should account for the effects of a modification. This guidance is effective for all entities for annual periods and interim periods within those annual periods, beginning after December 15, 2017. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements. In January 2017, the FASB issued guidance in ASU No. 2017-1 “Business Combinations” (Topic 805): Clarifying the Definition of a Business, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update provide a screen to determine when a set of assets and activities is not a business, provide a framework to assist entities in evaluating whether both an input and a substantive process are present and narrow the definition of the term output to be consistent with Topic 606. This guidance is effective for public business entities for annual periods beginning after December 15, 2017 including interim periods within those periods. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements. In November 2016, the FASB issued guidance in ASU No. 2016-18 “Statement of Cash Flows” (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements other than to the presentation of restricted cash on our consolidated statements of cash flows. In August 2016, the FASB issued guidance in ASU No. 2016-15 (Topic 230): “Classification of Certain Cash Receipts and Cash Payments.” This update addresses specific cash flow issues with the objective of reducing existing diversity in practice. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company expects to adopt this guidance as required and does not expect a material impact to the Company’s consolidated financial statements. 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 new standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of this ASU to the Company’s consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-9, “Revenue from Contracts with Customers.” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-9 by one year. As a result, the amendments in ASU 2014-9 are effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Additional ASUs have been issued that are part of the overall new revenue guidance, including: ASU No. 2016-8, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Identifying Performance Obligations and Licensing,” and ASU 2016-12, “Narrow Scope Improvements and Practical Expedients.” The new revenue recognition standard prescribes a five-step model that focuses on transfer of control and entitlement to payment when determining the amount of revenue to be recognized. 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 for each of these obligations. We expect that revenue generated from our fixed unit price contracts, which represent a significant portion of our total contracts, will continue to be recognized over time utilizing the cost-to-cost measure of progress consistent with our current practice. Therefore, we do not expect a material impact to the Company’s consolidated financial statements related to fixed unit price contracts. We also expect our revenue recognition disclosures to significantly expand due to the new qualitative and quantitative requirements under the new standard. The Company is currently determining the impact of the new standard on our lump-sum, cost-plus and other than fixed unit price contracts. Although, our assessment has not yet been finalized as of September 30, 2017, our contract review has not identified any significant changes that would materially affect the Company's consolidated financial statements. Because the standards will impact our business processes, systems and controls, the Company has developed a comprehensive change management project plan to guide the implementation. We will adopt the requirements of the new standard effective January 1, 2018 and intend to use the modified retrospective adoption approach. |
Tealstone Acquisition (Tables)
Tealstone Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Summary of Fair Value Consideration Transferred | Fair value of consideration transferred (amounts in thousands): Cash $ 55,000 Common stock (1,882,058 shares) 17,061 Promissory notes 4,436 Deferred payments 7,153 Total $ 83,650 |
Summary of Preliminary Goodwill Additions | The following table summarizes our preliminary goodwill addition (in thousands): Balance at January 1, 2017 $ 54,820 Additional goodwill related to acquisition 30,457 Balance at September 30, 2017 $ 85,277 |
Summary of Preliminary Purchase Price Allocation | The following table summarizes our preliminary purchase price allocation at the acquisition closing date (in thousands): Cash $ 139 Accounts receivable 19,876 Costs and estimated earnings in excess of billings on uncompleted contracts 2,944 Inventory 1,218 Other current assets 54 Property, plant and equipment 565 Other assets, net 1 Identifiable intangible assets and Goodwill 77,028 Accounts payable (16,781 ) Billings in excess of costs and estimated earnings on uncompleted contracts (303 ) Accrued expenses (823 ) State income tax payable (268 ) Total Consideration $ 83,650 |
Summary of Proforma Information | The pro forma consists of the following (amounts in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Pro forma revenue $ 304,219 $ 255,002 $ 749,176 $ 657,773 Pro forma net income attributable to Sterling $ 7,132 $ 4,659 $ 8,848 $ 7,705 |
Subsidiaries and Joint Ventur23
Subsidiaries and Joint Ventures With Noncontrolling Owners' Interests (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Noncontrolling Interest [Abstract] | |
Schedule of Components of Agreement Obligation | The liability consists of the following (amounts in thousands): September 30, December 31, Members’ interest subject to mandatory redemption $ 40,000 $ 40,000 Net accumulated earnings 6,329 5,230 Total liability $ 46,329 $ 45,230 |
Schedule of Changes in Noncontrolling Interests and Joint Ventures | The following table summarizes the changes in the noncontrolling owners’ interests in subsidiaries and construction joint ventures (amounts in thousands): Nine Months Ended 2017 2016 Balance, beginning of period $ 656 $ (91 ) Net income attributable to noncontrolling interest included in equity 2,966 1,252 Distributions to noncontrolling interest owners — — Balance, end of period $ 3,622 $ 1,161 |
Construction Joint Ventures (Ta
Construction Joint Ventures (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Condensed Balance Sheet | 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): September 30, December 31, Total combined: Current assets $ 42,129 $ 32,592 Less current liabilities (61,079 ) (57,598 ) Net liabilities $ (18,950 ) $ (25,006 ) Backlog $ 51,110 $ 107,333 Sterling’s noncontrolling interest in backlog $ 26,659 $ 52,992 Sterling’s receivables from and equity in construction joint ventures $ 9,069 $ 7,130 |
Condensed Income Statement | Three Months Ended Nine Months Ended 2017 2016 2017 2016 Total combined: Revenues $ 27,703 $ 15,520 $ 61,210 $ 44,074 Income before tax (6,281 ) 1,925 (3,611 ) 3,838 Sterling’s noncontrolling interest: Revenues $ 13,664 $ 6,103 $ 28,826 $ 17,567 Income before tax (1,629 ) 519 (358 ) 1,370 Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenues $ 64,266 $ 50,739 $ 126,333 $ 121,649 Operating income 3,666 2,720 6,307 4,894 Net income 1,834 1,357 3,149 2,440 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities, Summary of Condensed Consolidated Balance Sheets | The condensed financial information of Myers, which is reflected in the Company’s condensed consolidated balance sheets and statements of operations, is as follows (amounts in thousands): September 30, December 31, Assets: Current assets: Cash and cash equivalents $ 2,588 $ 9,655 Contracts receivable, including retainage 30,134 15,046 Other current assets 13,936 10,208 Total current assets 46,658 34,909 Property and equipment, net 8,996 9,824 Goodwill 1,501 1,501 Total assets $ 57,155 $ 46,234 Liabilities: Current liabilities: Accounts payable $ 27,109 $ 21,274 Other current liabilities 14,667 8,782 Total current liabilities 41,776 30,056 Long-term liabilities: Other long-term liabilities 271 5,373 Total liabilities $ 42,047 $ 35,429 |
Variable Interest Entities, Summary of Condensed Consolidated | Three Months Ended Nine Months Ended 2017 2016 2017 2016 Total combined: Revenues $ 27,703 $ 15,520 $ 61,210 $ 44,074 Income before tax (6,281 ) 1,925 (3,611 ) 3,838 Sterling’s noncontrolling interest: Revenues $ 13,664 $ 6,103 $ 28,826 $ 17,567 Income before tax (1,629 ) 519 (358 ) 1,370 Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenues $ 64,266 $ 50,739 $ 126,333 $ 121,649 Operating income 3,666 2,720 6,307 4,894 Net income 1,834 1,357 3,149 2,440 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment are summarized as follows (amounts in thousands): September 30, December 31, Construction equipment $ 121,364 $ 121,441 Transportation equipment 18,275 19,017 Buildings 9,547 12,771 Office equipment 3,339 3,108 Leasehold improvement 914 914 Construction in progress 1,432 313 Land 2,348 3,509 Water rights 200 200 157,419 161,273 Less accumulated depreciation (97,955 ) (93,146 ) Total property and equipment, net $ 59,464 $ 68,127 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Debt consists of the following (in thousands): September 30, December 31, Loan $ 85,000 $ 3,532 Less deferred loan costs and discount (9,350 ) (803 ) Total Loan, net 75,650 2,729 Notes and deferred payments to sellers, Tealstone acquisition 12,118 — Notes payable for transportation and construction equipment and other 1,837 2,665 89,605 5,394 Current maturities of long-term debt 986 4,648 Less current deferred loan costs — (803 ) Less current maturities of long-term debt, net (986 ) (3,845 ) Total long-term debt $ 88,619 $ 1,549 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Summary of Key Assumptions Used in the Black-Scholes Model | The key assumptions used in the Black-Scholes Model with respect to these valuations are summarized in the following table: At April 3, Current stock price $ 8.88 Exercise option price $ 10.25 Expected term of warrants (in years) 5 Expected volatility rate 48.29 % Risk-free rate 1.88 % Expected dividend yield — % |
Net Income (Loss) Per Share A29
Net Income (Loss) Per Share Attributable to Sterling Common Stockholders (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 (loss) attributable to Sterling common stockholders (amounts in thousands, except per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net income (loss) attributable to Sterling common stockholders $ 7,132 $ 2,415 $ 8,537 $ (2,890 ) Weighted average common shares outstanding — basic 26,486 25,003 25,787 23,915 Shares for dilutive unvested stock and warrants 434 362 473 — Weighted average common shares outstanding and incremental shares assumed repurchased— diluted 26,920 25,365 26,260 23,915 Basic income (loss) per share attributable to Sterling common stockholders $ 0.27 $ 0.10 $ 0.33 $ (0.12 ) Diluted income (loss) per share attributable to Sterling common stockholders $ 0.26 $ 0.10 $ 0.33 $ (0.12 ) |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table presents total revenue and income from operations by reportable segment for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue Heavy Civil Construction $ 263,278 $ 205,629 $ 625,887 $ 521,778 Residential Construction 40,941 — 78,160 — Total Revenue $ 304,219 $ 205,629 $ 704,047 $ 521,778 Operating Income Heavy Civil Construction $ 6,960 $ 3,672 $ 8,627 $ 587 Residential Construction 5,679 — 10,580 — Total Operating Income $ 12,639 $ 3,672 $ 19,207 $ 587 The following table presents total assets by reportable segment at September 30, 2017 and December 31, 2016 : September 30, December 31, Assets Heavy Civil Construction $ 365,178 $ 301,823 Residential Construction 107,857 — Total Assets $ 473,035 $ 301,823 |
Business Summary and Signific31
Business Summary and Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | Apr. 03, 2017USD ($) | Dec. 31, 2016USD ($) | |
Business Acquisition [Line Items] | |||||||
Number of reportable segments | segment | 2 | 2 | |||||
Ownership interest in joint venture | 50.00% | ||||||
Costs and estimated earnings in excess of billings | |||||||
Business Acquisition [Line Items] | |||||||
Unapproved change orders, amount | $ 300,000 | $ 300,000 | $ 300,000 | $ 2,200,000 | |||
Contracts receivable, claims and uncertain amounts | 10,500,000 | 10,500,000 | 10,500,000 | 9,200,000 | |||
Contracts receivable, unpaid project contract price | 3,900,000 | $ 3,900,000 | 3,900,000 | $ 3,900,000 | |||
Operating income (Loss) | |||||||
Business Acquisition [Line Items] | |||||||
Estimated construction loss before tax | $ 1,300,000 | $ (600,000) | $ 200,000 | $ (1,100,000) | |||
Minimum | |||||||
Business Acquisition [Line Items] | |||||||
Ownership interest in joint venture | 50.00% | ||||||
Revenue recognition, contract term | 12 months | ||||||
Warranty term | 1 year | ||||||
Maximum | |||||||
Business Acquisition [Line Items] | |||||||
Revenue recognition, contract term | 36 months | ||||||
Warranty term | 2 years | ||||||
Loan and security agreement | Term loan | Senior secured term loans | |||||||
Business Acquisition [Line Items] | |||||||
Debt instrument face amount | $ 85,000,000 | ||||||
Tealstone | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of outstanding stock | 100.00% |
Tealstone Acquisition - Narrati
Tealstone Acquisition - Narrative (Details) - USD ($) | Apr. 03, 2020 | Apr. 03, 2019 | Apr. 03, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 85,277,000 | $ 85,277,000 | $ 54,820,000 | |||
Decrease in goodwill | 5,700,000 | |||||
Reclassification from Goodwill to intangible assets | 6,600,000 | |||||
Working capital adjustments | 900,000 | |||||
Tealstone | ||||||
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 | |||||
Business combination, contingent consideration, liability | 15,000,000 | |||||
Business combination, consideration transferred | $ 83,650,000 | |||||
Fair value inputs, discount rate | 12.00% | |||||
Goodwill | $ 30,500,000 | |||||
Business combination, recognized identifiable assets acquired and liabilities assumed, intangible assets, other than goodwill | $ 46,600,000 | |||||
Amortization of intangible assets | 900,000 | $ 1,400,000 | ||||
Goodwill, purchase accounting adjustments, with 10% change in valuation of intangible assets | 4,700,000 | |||||
Business combination, provisional information, amortization expense adjustment, with 10% change in valuation of intangible assets | $ 300,000 | |||||
Tealstone | Scenario, Forecast | ||||||
Business Acquisition [Line Items] | ||||||
Cash | $ 7,500,000 | $ 2,426,000 |
Tealstone Acquisition - Conside
Tealstone Acquisition - Consideration Transfered and Purchase Price Allocation (Details) - USD ($) $ in Thousands | Apr. 03, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Business Combination, Consideration Transferred [Abstract] | |||
Common stock (1,882,058 shares) | $ 17,061 | $ 0 | |
Business acquisition, number of shares issued | 1,882,058 | ||
Tealstone | |||
Business Combination, Consideration Transferred [Abstract] | |||
Cash | $ 55,000 | ||
Common stock (1,882,058 shares) | 17,061 | ||
Promissory notes | 4,436 | ||
Deferred payments | 7,153 | ||
Total | $ 83,650 | ||
Business acquisition, number of shares issued | 1,882,058 | ||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |||
Cash | $ 139 | ||
Accounts receivable | 19,876 | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | 2,944 | ||
Inventory | 1,218 | ||
Other current assets | 54 | ||
Property, plant and equipment | 565 | ||
Other assets, net | 1 | ||
Identifiable intangible assets and Goodwill | 77,028 | ||
Accounts payable | (16,781) | ||
Billings in excess of costs and estimated earnings on uncompleted contracts | (303) | ||
Accrued expenses | (823) | ||
State income tax payable | (268) | ||
Total Consideration | $ 83,650 |
Tealstone Acquisition - Prelimi
Tealstone Acquisition - Preliminary Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Goodwill [Roll Forward] | |
Balance at January 1, 2017 | $ 54,820 |
Additional goodwill related to acquisition | 30,457 |
September 30, 2017 | $ 85,277 |
Tealstone Acquisition - Supplem
Tealstone Acquisition - Supplemental Pro Forma Information (Unaudited) (Details) - Tealstone - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Pro forma revenue | $ 304,219 | $ 255,002 | $ 749,176 | $ 657,773 |
Pro forma net income attributable to Sterling | $ 7,132 | $ 4,659 | $ 8,848 | $ 7,705 |
Cash and Cash Equivalents and36
Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Other assets | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | $ 3 | $ 3 |
Other current assets | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | 2 | 2 |
Less than wholly-owned subsidiaries | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | 15.1 | 24.1 |
Majority-owned Joint Ventures | ||
Cash and Cash Equivalents [Line Items] | ||
Restricted cash and cash equivalents | $ 20.7 | $ 10.9 |
Subsidiaries and Joint Ventur37
Subsidiaries and Joint Ventures With Noncontrolling Owners' Interests - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Noncontrolling Interest [Line Items] | |||||
Members’ interest subject to mandatory redemption | $ 40,000 | $ 40,000 | $ 40,000 | ||
Myers | |||||
Noncontrolling Interest [Line Items] | |||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 50.00% | 50.00% | |||
Net accumulated earnings | $ 4,500 | $ 3,400 | $ 7,000 | $ 7,300 |
Subsidiaries and Joint Ventur38
Subsidiaries and Joint Ventures with Noncontrolling Owners' Interests - Components of Noncontrolling Interest Subject to Mandatory Redemption (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Noncontrolling Interest [Abstract] | ||
Members’ interest subject to mandatory redemption | $ 40,000 | $ 40,000 |
Net accumulated earnings | 6,329 | 5,230 |
Total liability | $ 46,329 | $ 45,230 |
Subsidiaries and Joint Ventur39
Subsidiaries and Joint Ventures With Noncontrolling Owners' Interests - Changes In Noncontrolling Owners' Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Balance, beginning of period | $ 656 | $ (91) | ||
Net income attributable to noncontrolling interest included in equity | $ 1,694 | $ 740 | 2,966 | 1,252 |
Distributions to noncontrolling interest owners | 0 | 0 | ||
Balance, end of period | $ 3,622 | $ 1,161 | $ 3,622 | $ 1,161 |
Construction Joint Ventures - C
Construction Joint Ventures - Construction Joint Ventures - Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of Equity Method Investments [Line Items] | ||
Current assets | $ 279,793 | $ 175,908 |
Less current liabilities | (194,953) | (146,592) |
Sterling’s receivables from and equity in construction joint ventures | 9,069 | 7,130 |
Joint Ventures | ||
Schedule of Equity Method Investments [Line Items] | ||
Current assets | 42,129 | 32,592 |
Less current liabilities | (61,079) | (57,598) |
Net liabilities | (18,950) | (25,006) |
Backlog | 51,110 | 107,333 |
Sterling’s noncontrolling interest in backlog | 26,659 | 52,992 |
Sterling’s receivables from and equity in construction joint ventures | $ 9,069 | $ 7,130 |
Construction Joint Ventures -41
Construction Joint Ventures - Construction Joint Ventures - Income Statement Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Equity Method Investments [Line Items] | ||||
Revenues | $ 304,219 | $ 205,629 | $ 704,047 | $ 521,778 |
Revenues | 2,966 | 1,252 | ||
Joint Ventures | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Revenues | 27,703 | 15,520 | 61,210 | 44,074 |
Income before tax | (6,281) | 1,925 | (3,611) | 3,838 |
Revenues | 13,664 | 6,103 | 28,826 | 17,567 |
Income before tax | $ (1,629) | $ 519 | $ (358) | $ 1,370 |
Construction Joint Ventures - N
Construction Joint Ventures - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Joint Ventures | ||
Schedule of Equity Method Investments [Line Items] | ||
Sterling’s noncontrolling interest in backlog | $ 26,659 | $ 52,992 |
Granite Construction Corporation | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, ownership percentage | 50.00% |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Myers | |
Variable Interest Entity [Line Items] | |
Variable interest entity, ownership percentage | 50.00% |
Variable Interest Entities - Co
Variable Interest Entities - Consolidated Balance Sheet - Myers (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||||
Cash and cash equivalents | $ 66,541 | $ 42,785 | $ 43,021 | $ 4,426 |
Contracts receivable, including retainage | 149,052 | 84,132 | ||
Other current assets | 9,654 | 5,448 | ||
Total current assets | 279,793 | 175,908 | ||
Property and equipment, net | 59,464 | 68,127 | ||
Goodwill | 85,277 | 54,820 | ||
Total assets | 473,035 | 301,823 | ||
Current liabilities: | ||||
Accounts payable | 100,565 | 67,097 | ||
Total current liabilities | 194,953 | 146,592 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Current assets: | ||||
Cash and cash equivalents | 2,588 | 9,655 | ||
Contracts receivable, including retainage | 30,134 | 15,046 | ||
Other current assets | 13,936 | 10,208 | ||
Total current assets | 46,658 | 34,909 | ||
Property and equipment, net | 8,996 | 9,824 | ||
Goodwill | 1,501 | 1,501 | ||
Total assets | 57,155 | 46,234 | ||
Current liabilities: | ||||
Accounts payable | 27,109 | 21,274 | ||
Other current liabilities | 14,667 | 8,782 | ||
Total current liabilities | 41,776 | 30,056 | ||
Long-term liabilities: | ||||
Other long-term liabilities | 271 | 5,373 | ||
Total liabilities | $ 42,047 | $ 35,429 |
Variable Interest Entities - 45
Variable Interest Entities - Consolidated Statements of Operations - Myers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Variable Interest Entity [Line Items] | ||||
Revenues | $ 304,219 | $ 205,629 | $ 704,047 | $ 521,778 |
Operating income | 12,639 | 3,672 | 19,207 | 587 |
Net income | 7,132 | 2,415 | 8,537 | (2,890) |
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Revenues | 64,266 | 50,739 | 126,333 | 121,649 |
Operating income | 3,666 | 2,720 | 6,307 | 4,894 |
Net income | $ 1,833,889 | $ 1,357 | $ 3,149 | $ 2,440 |
Property and Equipment - Summar
Property and Equipment - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 157,419 | $ 161,273 |
Less accumulated depreciation | (97,955) | (93,146) |
Total property and equipment, net | 59,464 | 68,127 |
Construction equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 121,364 | 121,441 |
Transportation equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 18,275 | 19,017 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 9,547 | 12,771 |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 3,339 | 3,108 |
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 | 1,432 | 313 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,348 | 3,509 |
Water rights | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 200 | $ 200 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($)disposal | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Net book value | $ 59,464 | $ 59,464 | $ 68,127 | |
Proceeds from sale of property and equipment | 5,830 | $ 2,187 | ||
Loss on disposal of property, plant, and equipment | $ 204 | $ (255) | ||
TEXAS | Office Equipment And Land | ||||
Property, Plant and Equipment [Line Items] | ||||
Number of assets disposed of | disposal | 1 | |||
Net book value | 4,100 | $ 4,100 | ||
Proceeds from sale of property and equipment | $ 3,000 | |||
Loss on disposal of property, plant, and equipment | $ 1,100 |
Debt - Long-term Debt (Details)
Debt - Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Total Loan, net | $ 89,605 | $ 5,394 |
Long, term debt, net | 89,605 | 5,394 |
Current maturities of long-term debt | 986 | 4,648 |
Less current deferred loan costs | 0 | (803) |
Less current maturities of long-term debt, net | (986) | (3,845) |
Total long-term debt | 88,619 | 1,549 |
Tealstone | ||
Debt Instrument [Line Items] | ||
Notes and deferred payments | 12,118 | 0 |
Notes payable for transportation and construction equipment | ||
Debt Instrument [Line Items] | ||
Notes and deferred payments | 1,837 | 2,665 |
Nations | Senior secured term loans | Equipment-based Facility [Member] | ||
Debt Instrument [Line Items] | ||
Loan | 85,000 | 3,532 |
Less deferred loan costs and discount | (9,350) | (803) |
Total Loan, net | 75,650 | 2,729 |
Long, term debt, net | $ 75,650 | $ 2,729 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Apr. 03, 2020USD ($) | Apr. 03, 2019USD ($) | Apr. 03, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | ||||||||
Payment for debt extinguishment or debt prepayment cost | $ 800,000 | |||||||
Notes and deferred payments to sellers | 11,588,000 | $ 0 | ||||||
Interest expense | $ 3,576,000 | $ 491,000 | 6,672,000 | $ 2,176,000 | ||||
Notes payable for transportation and construction equipment | ||||||||
Debt Instrument [Line Items] | ||||||||
Notes payable, noncurrent | $ 1,800,000 | $ 1,800,000 | $ 2,700,000 | |||||
Notes payable for transportation and construction equipment | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 3 years | |||||||
Debt instrument, interest rate, stated percentage | 3.15% | 3.15% | ||||||
Notes payable for transportation and construction equipment | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 5 years | |||||||
Debt instrument, interest rate, stated percentage | 6.92% | 6.92% | ||||||
Senior secured term loans | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt, fair value | $ 85,000,000 | $ 85,000,000 | 3,500,000 | |||||
Warrants to the Lenders Under the Loan Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants and rights outstanding | $ 3,500,000 | 3,500,000 | 3,500,000 | |||||
Tealstone | ||||||||
Debt Instrument [Line Items] | ||||||||
Promissory notes issued to the sellers | 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 | 500,000 | ||||||
Tealstone | 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 | 3.10 | |||||||
Debt Instrument, financial covenants, maximum ratio of secured indebtedness to EBITDA, period two | 1.80 | |||||||
Debt Instrument, financial covenants, minimum daily cash collateral, period two | $ 15,000,000 | |||||||
Debt instrument, financial covenants, minimum daily cash collateral, potential additional period | 18,000,000 | |||||||
Debt instrument, financial covenants, minimum rolling four quarter gross margin in contract backlog, period one | 60,000,000 | |||||||
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 | $ 10,400,000 | ||||||
Debt instrument, term | 5 years | |||||||
Amortization of debt issuance costs | $ 500,000 | $ 1,000,000 | ||||||
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% | |||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term line of credit | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 344,000 | $ 41,000 | $ 469,000 | $ 68,000 |
Changes in net deferred taxes | $ 0 | $ 0 |
Stockholder's Equity - Narrativ
Stockholder's Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 03, 2017 | May 09, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Subsidiary, Sale of Stock [Line Items] | ||||||
Business acquisition, equity interest issued or issuable, number of shares | 1,882,058 | |||||
Share consideration given for Tealstone acquisition (1,882,058 shares) | $ 17,061 | $ 0 | ||||
Allocated share-based compensation expense | $ 600 | $ 400 | 2,500 | 1,200 | ||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized | $ 1,100 | $ 2,300 | $ 1,100 | $ 2,300 | ||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 1 year 7 months 6 days | |||||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, nonvested, number | 500,000 | 500,000 | ||||
Former chief executive officer | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Allocated share-based compensation expense | $ 700 | $ 700 | ||||
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) | 8,000 | 174,410 | ||||
Warrants to the Lenders Under the Loan Agreement | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Warrants and rights outstanding | $ 3,500 | $ 3,500 | $ 3,500 | |||
Warrants to the Lenders Under the Loan Agreement | Loan and security agreement | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Class of warrant or right, term | 5 years | |||||
Class of warrant or right, number of securities called by warrants or rights (in shares) | 1,000,000 | |||||
Class of warrant or right, exercise price of warrants or rights (USD per share) | $ 10.25 | |||||
D.A. davidson and co. | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Stock issued during period, shares, new issues | 5,175,000 | |||||
Share price (USD per share) | $ 4 | |||||
Share price, net (USD per share) | $ 3.77 | |||||
Net proceeds from stock issued | $ 19,100 | |||||
Tealstone | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Business acquisition, equity interest issued or issuable, number of shares | 1,882,058 | |||||
Share consideration given for Tealstone acquisition (1,882,058 shares) | $ 17,061 |
Stockholders' Equity - Fair Val
Stockholders' Equity - Fair Valuation Techniques of Warrants (Details) - Warrants to the Lenders Under the Loan Agreement | Apr. 03, 2017$ / shares |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Current stock price (USD per share) | $ 8.88 |
Exercise option price (USD per share) | $ 10.25 |
Expected term of warrants (in years) | 5 years |
Expected volatility rate | 48.29% |
Risk-free rate | 1.88% |
Expected dividend yield | 0.00% |
Net Income (Loss) Per Share A53
Net Income (Loss) 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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Sterling common stockholders | $ 7,132 | $ 2,415 | $ 8,537 | $ (2,890) |
Weighted average common shares outstanding, basic (in shares) | 26,486 | 25,003 | 25,787 | 23,915 |
Shares for dilutive unvested stock and warrants (in shares) | 434 | 362 | 473 | 0 |
Weighted average common shares outstanding and incremental shares assumed repurchased, diluted (in shares) | 26,920 | 25,365 | 26,260 | 23,915 |
Basic income (loss) per share attributable to Sterling common stockholders (USD per share) | $ 0.27 | $ 0.10 | $ 0.33 | $ (0.12) |
Diluted income (loss) per share attributable to Sterling common stockholders (USD per share) | $ 0.26 | $ 0.10 | $ 0.33 | $ (0.12) |
Net Income (Loss) Per Share A54
Net Income (Loss) Per Share Attributable to Sterling Common Stockholders (Details Textual) - shares shares in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1 | 0.3 |
Segment Information (Details)
Segment Information (Details) | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)segment | Sep. 30, 2017USD ($)reporting_unitsegment | Apr. 03, 2017USD ($) | Dec. 31, 2016USD ($) | |
Business Acquisition [Line Items] | ||||
Number of reportable segments | segment | 2 | 2 | ||
Number of operating segments | segment | 2 | |||
Number of reporting units | reporting_unit | 2 | |||
Goodwill | $ 85,277,000 | $ 85,277,000 | $ 54,820,000 | |
Tealstone | ||||
Business Acquisition [Line Items] | ||||
Business combination, pro forma information, revenue of acquiree since acquisition date, actual | 92,900,000 | |||
Business combination, pro forma information, earnings or loss of acquiree since acquisition date, actual | $ 13,200,000 | |||
Goodwill | $ 30,500,000 | |||
Residential Construction | ||||
Business Acquisition [Line Items] | ||||
Revenue recognition, contract term | 1 month |
Segment Information - Revenue,
Segment Information - Revenue, Operating Income, and Assets, By Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Revenues | $ 304,219 | $ 205,629 | $ 704,047 | $ 521,778 | |
Operating Income | 12,639 | 3,672 | 19,207 | 587 | |
Assets | 473,035 | 473,035 | $ 301,823 | ||
Heavy Civil Construction | |||||
Revenues | 263,278 | 205,629 | 625,887 | 521,778 | |
Operating Income | 6,960 | 3,672 | 8,627 | 587 | |
Assets | 365,178 | 365,178 | 301,823 | ||
Residential Construction | |||||
Revenues | 40,941 | 0 | 78,160 | 0 | |
Operating Income | 5,679 | $ 0 | 10,580 | $ 0 | |
Assets | $ 107,857 | $ 107,857 | $ 0 |