STRL - Earnings call transcript Q4 2017 | Sterling Infrastructure, Inc.

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Operator

Greetings, and welcome to Sterling Construction’s Fourth Quarter and Full-Year 2017 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jennifer Maxwell, Director of Investor Relations. ahead. go Please

Jennifer Maxwell

Officer for Good and Sherri. to provide to XXXX on Chief the Sterling's here of discussion Financial guidance Sterling's Thank of Joe Officer. earnings morning. conference quarter Executive Sterling's well the Cutillo, results full-year with pleased for the will Ron call. and fourth Ballschmiede, today Chief you, Joe Welcome and I the around full-year color as be detailed and some through Ron trends. a commentary quarter as market will performance Company XXXX. walk us financial am

we up an We overview that language. call with would Company's the for Safe Harbor Following questions. will open of begin like to the

materially most The of projections Some refer of today. future Company the discussion result of to include call a complete assumes XX-K a could assumptions. to turn otherwise. recent forward-looking affect the may over statements statements differ way, to from as obligation Please today no Sterling's could With I'd of XX-Q factors that that description statements. new Joe. more like filings and risk these for the and out update made information, to results Actual or events forward-looking

Joseph Cutillo

XXXX, first be to performance of its amazing fourth enabled Good acquisition, core fourth truly call. continued profitable and performance everyone, quarter. joining finish XX%. transformational quarter revenue wow, The Sterling's record saying, the was Jennifer. in for combined recent to quarter shareholders. to prior us, you start time – businesses, the with Tealstone, The by fourth in up the year, recent one history. a us of since thank outstanding years year for I its for Thanks, morning, and the the Compared today’s best our our off of like capped great and our employees would what to off Sterling, a

are results XXX%. up out for doing I'd work. to net there good and thank truly take income the like was to they Our keep a employees These was our job XXX%, up Sterling profit to second the are amazing, them great gross up and XXXX-plus ask and the

said I the truly Company. earlier, a As XXXX transformational for year was

which we progress to jobsite and shortly, the customers. incidents performance, made for financial XXXX, both and about significant our addition safer by making lost XX%. great reportable I'll talk In over our we reduced time In employees

table improve to acquisition. a refinanced add We continued made out our rest as and the disciplined our We talent We built management game-changing we execution. to the and Company continue the bid remain of at team.

jobs, estimated the which to Our All performed average, by above Hurricanes, million XXXX on $XXX,XXX estimated margins. below $X.X jobs, at Mudslides. we while our were distracted happened compared our Wildfires and this margin performed XXXX

daily increased average share In XXXX addition, by on our outperformed Russell the XXX% the we Index, our and relisted volume XXX. both and over peers were S&P

For gross income our XXXX, year million, XX% by by was revenue increased up $XXX XXX% $XX the our net profit million. full or grew XXX%, or our

our of original of our balance and guidance. $XX revised addition, We the million. exceeded midpoint In approximated our cash north ended guidance

Our backlog flat. remained relatively

prior backlog end margin gross revenue has of basis $XXX XXXX our not higher However, does XXX less as points any and a residential at of from million the backlog Tealstone shared include the joint-venture year.

the backlog diversifying We ended in XX% year non-heavy with make highway. customer and our continue to progress towards significant approximately base our of

have we XXXX. remain robust, outstanding and positioned Company an markets for the core Our

fourth it be to net over income in to and For than Ron? our to to detail. double discuss our full-year to XXXX, between will quarter, revenues total and billion more we $X would XXXX will $XX Ron million. our like that, million $XX we and With grow full-year guidance I more over turn

Ronald Ballschmiede

results. operating discuss good another I full-year everybody. The strongest six morning, over and to pleased am quarter in Joe, performance Thanks of strong years. and

reminder, I since Tealstone the closing be the a X, April specific financials discussing include XXXX, date. our acquisition of shortly. As will results financial Tealstone the XXXX financial performance

end our commercial comparable amount construction at the our Additionally, essentially backlog. million, moved slightly December billion. Civil Construction of single low-bid The historical XX, business combination our of combined as Tealstone's was unsigned to $XXX compared combined $XXX reporting million, backlog segments, segment and with presentation operating at segment our Residential homes. single Heavy over of million, backlog was XXXX end the awards Construction foundations low-bid at segment the compared from year. Heavy reporting the includes the Heavy $XXX segment to concrete an the Civil of XXXX beginning acquired the acquisition million Construction family a at and plus with from our two the $XXX of that single Construction X.X% date, At backlog X.X% Residential finished beginning XXXX. at XXXX We XXXX, Civil Unsigned $X We flat, as we backlog reminder, $XXX Construction. increase Tealstone. in of margin for to historical of gross totaled refer the December The XXXX. awards residential million of with to end XX, contains

Just less The is report of weeks. Construction which $XXX couple million the slabs, performance contributed than Construction or concrete reflecting XX% as our typically, Residential cycle a a is of projects. Civil our not Residential revenues. backlog backlog, comprised Construction of of entirely Heavy reminder, short-term does

expect a XXXX. Residential Of will include course, increase, full-year we Construction those we as in to of amounts

over our $XXX $XX Revenues Rocky two $XX combined revenues early which generated book-to-burn and joint of The awarded venture factor in over XXXX XXXX. construction comparable two incremental burned XXXX for contracts, XX% significant backlog or factors respectively. XXXX. area XXXX XXX% quarter. million XX% slightly XXXX lower were and Our of early XXXX in million slightly quarter projects million, over of backlog, the increase for fourth Those an the XX% were than and Mountain revenues book-to-burn the large consolidated was by reflect

million increase from for fourth an Construction revenues of the growth XXXX XX% revenues the was Highway revenue attributable legacy and Our Slightly markets operations. Residential primary year Heavy Tealstone acquisition, continued our the to $XXX balance with both totaled the or $XXX the generated growth. over XXXX see steady over quarter full-year The of increase geographies to XXXX. of million, XX%

Our continues excess residential and that to our perform business principle growth periods, in from which were quarter overall market, large joint-venture Heavy primarily construction The revenues the Construction in Dallas, projects fourth legacy region. Rocky Civil market of both full-year, Mountain is in XXXX in rates. is our the increase for

quarter profit $XXX in X.X% in of unabsorbed increase inclusion the XX% year basis revenues, Full approximately updated provided XXXX Our Again, construction from – to remaining prior increase the Civil XXXX, approximately XXX compared in States. of $XX fourth of relates better-than-historically our full-year and the our profit improvement due months $XX million XX% weather of XXX points expected Western United was revenue nine approximately management in $X an million guidance increased gross Gross increase quarter Heavy points margin revenue grew XXXX, of year-over-year exceeded million included to fixed legacy million X.X% Gross up from million and year of $XXX quarter. margins revenues. $XX The profit Heavy profit basis of for from million million to increased the a to of gross and X.X%. Tealstone The profit points, improved to improved acquired recognition of margins XXX reduction to the margins. $X of from fourth or Tealstone inclusion the XXXX of the Civil result increased therefore, the revenues. $XX of to in the the XXXX basis or as of Tealstone gross primarily gross improved in – the backlog, acquisition. to revenues of and by Residential was execution, revenues $XX XXXX project Construction quarter Construction to units. million component in million project operations a gross XXXX. increased fourth charges acquisition, attributable of The cost the

consolidated expect XX% in year to We approximately gross our XXXX. full margin be

the was and $XX.X and XXXX full-year – of million the fourth and expenses for General Our respectively. were quarter million $XX.X Administrative

of for principally reflects Fourth for expense, consisting expense expense our $XX $XXX,XXX will approximately from from to as and the fourth and excess of X% the expenses of X.X% expense to believe million The be G&A the of X.X% G&A members’ to year-over-year a revenues of X.X% facility of This X.X% was sale for of XX% members’ owned our a operating interest expense We other compared in fourth costs. that in full-year. acquisition-related $X.X X.X% the Other interest $XXX,XXX of million was to $X.X our million an $X.X expense expense quarter, increases percent million subsidiaries. XXXX. that loss reduced increase will quarter earnout operating million, approximately the was XXXX. $X.X due Our from change be operating of of XXXX XXXX, approximately, interest in million other of in was consolidated over $XX.X and earnout to expense. million increase principally quarter in We $X.X sales year-over-year members’ believe full-year XXXX. XXXX an higher

$XX.X for income December an the operating XX, Our $XX.X over improvement million year ended million totaled XXXX of XXXX.

interest results attributable approximately continue nice is financing. to from of net XXXX. expense, improved the the full-year was Interest reflecting $X.X increased of to to Tealstone the balance our with income, the be million Importantly, our acquisition-related improved improvements in and half coming $X.X in fourth to and heavy rate of million $XX XXXX the and – XXXX, in expect million respectively, $XX quarter acquisition. That civil to improvement attributable million we expense run to interest expected construction this the

construction quarter full-year million is the we million related of million interest Finally, reflection for XXXX. activity increase substantial fourth projects to $X.X to approximately a our the joint XXXX over our full-year. owners' in late completion Mountain expect The of With totaled $X projects. these $X.X increased the and in fourth reaching quarter XXXX, additional our of non-controlling venture non-controlling XXXX interest the Rocky and XXXX one owners' for

these diluted $X.XX million all of items per or diluted factor million fourth quarter $X.X share per fourth income of compared net of net to resulted the a of $X.XX loss loss share. Another of net or XXXX quarter in income $X.X

Our net $X.XX $X.XX or of was in net million per million or income diluted XXXX $XX.X loss share a diluted of income net full-year $X.X share. to per net full-year a loss compared

of $XX our approximated midpoint which income actual While we range, to net guidance, net our was exceeded revenue million $XX.X income full-year million. our guidance the full-year

revenues primarily less our and fourth subsidiaries. consolidated joint-venture Our owned than higher-than-expected XX% driven by projects our quarter were

the mix While interest, of project totaling bottom joint related performance of our approximately other XX% to and non-controlling partner economics in the line. of only higher delivered revenues operating are $X XXX% this The gross manifest million. higher-than-expected profit, venture and produces sharings and to consolidated expense XX%

business more million, than the success. Our is Tealstone acquisition share XXXX financial times EBITDA, measure been that additional of by measures, amortization depreciation, $XX.X XXXX, accretive per to income Tealstone which By of a greater we define stock-based has than X.X XXXX our operating $XX for perspective in One net diluted million. $X.XX. plus the expense, the as number compensation and was income approximately results comparable quick our many the totaled from

million our than joint balance million, of our third venture of $XX.X amount quarter less by of the a $XX.X $XX.X remaining balance construction our $XX subsidiaries. with to to corporate quarter end wholly-owned million ended at and of attributable XXXX. balance cash compared This the cash sheet, our the accumulated Moving million, $XX includes cash million the we of of balance majority-owned to

our end of current five-year during at our XXXX. is debt XXXX, repay primarily million of Our half million $XX approximately of of $XX million to It consisting our the term loan term the first intention totaled loan. $XX.X

opening billion bit Construction we $X the combined of XXXX. talk about have $X of Civil Using guidance let's XXXX $X.XXX from XXXX the expectations, low be single-digits. provided percentage little to our and full-year approximately in Consistent foundation backlog operating Tealstone acquisition, anticipate growth billion with of results more revenue to Now we a prior XXXX a our full-year revenue our of billion. Heavy

XXXX revenue our XXXX late substantial joint-venture of by construction negatively growth impacted Civil is one the Our Construction of projects. completion large Heavy

the results, construction construction to residential shares percentage diluted in approximately and net believe strong and million in anticipate be $XX the markets, to given full-year outstanding double-digits. expect of expectation our million, we housing to of income our continuing to our low XXXX We $XX attributable Sterling primary shareholders $XX.X be Finally, will be our residential average XXXX solid starts common in growth revenue million. we range

XXXX $XX.X our EBITDA the range expect million. to in of Finally, we to million be $XX.X

Now, the I back to will turn call Joe.

Joseph Cutillo

focused remain in our the very we to products; Thanks, achieve strategy: and growing progress Overall, with we XXXX. Ron. into executing results will expansion were able and we are we legs adjacent have pleased markets. of on the high-margin XXXX, base; In solidifying three made the the

to of our XXXX. are take the and as very strong, questions. there, we'd opportunities take well we remain out profitability happy double more to positioned markets now, in Our be than your we advantage And

Operator

first Thank from with proceed you. Please Sean Markets. is [Operator Instructions] Eastman Capital question Our your KeyBanc with question.

Sean Eastman

really everyone. XXXX. Hi, a successful Congratulations on

Joseph Cutillo

Thanks Sean.

Sean Eastman

First margins. to just question on wanted for me. down gross drill I the

You which legacy tell you just Sterling Just could I of XXXX executed guys margin the the And, kind as key as factors color, exactly did importantly, swing I backlog into wondering how quite we today? that bit year? but if executing what you look provide a the more out of gross and are margin and stands guess, XXXX, did backlog in terms it on of around X.X% margin? I'm us on in appreciate, entering what

Joseph Cutillo

Ron. Yes,

Ronald Ballschmiede

Sure.

margin So for X.X%. Heavy was gross full-year Civil XXXX, our

between of the on give incremental a project is margins. project, here. my and going incredible. So mind was, think, the of full-year impact The last I'm delta the year frankly, bit the The Tealstone I X.X% X.X% to more performance

we is monitored ups sum we and those downs of to reacted key too goal every measure of every track that, project, sure and Our estimated that quickly. month, performance and margins make –

many, So estimated $XXX,XXX we beginning beginning we from perhaps, time our in many, improvement. $XXX,XXX make at we would made the for more than had executing profit about in work our the the a of gross wound other backlog. In actually up words, – we with first years,

good. that's So pretty

downs. like golf: is playing The wrong, me the middle the Now trick there's don’t of keep in ups and there's fairway. get

one we So on that's and great work results just hard.

is I somewhere items the case from and great return revenue backlog optimize joint-venture our shared that one messages of in few case to or important a [XX%] recognizing We And some projects coming our [XX%] do in think had little the talents. a our on complicated. backlog, bit script. revenue makes that's are The The large interesting it. work. in by each But that [XX%] our one – in that partners. our most

to that little we break bit. out that's why try a So

So we revenue. of our less It remaining. have than one of projects be will XX% those

a million pretty So, expect balance estimated have jobs Mountain them million year take out with And partners, if that the we we'll to to our get therefore, give size probably fair me, $X our with deliver other you it's selective $X is we of which means year. consistent the on. we're of entered making back wise close, don't then what we Rocky exact market, we next share that backlog map in. I part the are the about its the share but margin don't in that taking can the

that think missed your of most I I something? So unless covered

Joseph Cutillo

think I’ll we our certainly little that more above is opportunity as that that. projects, more what [indiscernible] call Sean that execute objective, our into good’s as be continue the as bad’s. We get very going. Yes, us that have we gives XXXX, better performed through be I we we to the feel on good this year. would to go like we offset selective is But But to trend a objective

Sean Eastman

that come is to business Okay, and topic you recently, great. for flows just inflation you're and could pickup inflation walk and concerning thinking the over Maybe us about up through that how a the costs a material quite just in potential through how how moving yourselves? that's bit

Joseph Cutillo

components we inflation, that steel, which three. would it and be oil. really have I'll concrete three are by Well, call major affected

percentages into – trying there contract diesel and when in a rate But contracts to of of to length our goes ability, is, we're X%, be what addition, an our are quickly, not things a build oil we material can of that and so get going percentage and out are costs. we that which large in, are look best growth There move couple inflationary the the is that's escalator, material certainly escalators We build or things. anticipate One also have percentage. the rate to different put back. of fuel contracts So to but that starting the claw certain exceeds necessarily we're rates that the the thing. inflationary up project of the sort trying blacktop a a and the do of we’re of some will into in escalators

Sean Eastman

Wages?

Joseph Cutillo

wages we in next We anticipated yes, of the and workforce keep Wages, our by build inflation to try that. XXXX with over for our X%. bids, year increased the up in

tighter; rational amount fair work So far, we've activity. certainly the see were it's environment hiring. taking to of longer doing seen we getting fill But a inflationary positions. We so

any seen yet. haven't We craziness

Sean Eastman

Okay, that’s helpful.

for XX/XX highway, me, Just target highway in the non-heavy lastly heavy from at XXXX. – looking

guys great. said clear to highway that I'm would acquisition non-heavy need sight is be at get what you wondering a this you perhaps, on think sort whether do color kind reaching XX% on there. or that's is to getting that Any of I another of target backlog guys pipeline of just prospects of line was target, it point? to your that might

Joseph Cutillo

there pieces. is different a Yes, couple

we one, activity just as the three airport hired potential at Tealstone continue way going strategy and First, focused continue Highway. we next that Tealstone not certainly also talk will – only side. acquisitions time on grow, switching be But to of outlook running development with, have the Jeff's along home the the an have in I be that find but low run out for this years. you In not to the next really business addition, is we'll Dallas best It's at year, expand looks organically. non-heavy business those right? the of year, to is about the who's want that we for will that's and to business is double-digits as it grow I'll expand, like call we organic growing we if airport – We, That looking us, kind we're it we development. year, individual but revenue and up beginning the the only that right activities. because land market the of tell XX% will we as

are We Houston. expanding in the

those surpassed for don't For who Dallas housing just of you know, Houston starts.

extremely Houston coming the on is market So strong.

surrounding a XXXX. into and be markets of expanding will couple We Houston in

the timing for But to great okay? going position little down roughly that is not debt, We've of acquisition ramp market, we buy is overnight the weren't that a up. we're first the at million cruise grow go double, decent Ron volume we'll very Houston more we go that's that's and we and that or buying build in cash to look and cash, going an XXXX, rate And But good residential through got the year, have to got and down were money the think best run an all airport a past, whether in of it's be. as to outside of half of sizable into $XX to ending Now on XXXX. the be our million. as debt, – and We've anticipate of that's to the entry in the one stuff. $XX going we continuing about outside some of end we organic that growth, to a are the year things whatever with into by of said, use and the

Sean Eastman

Okay. guys. your Thanks time for Great. Super helpful.

Joseph Cutillo

Thanks Sean.

Ronald Ballschmiede

Sean. you, Thank

Operator

proceed. Bobby is question Please from with Our Canaccord. next Burleson

John Quealy

on on Quealy Hey, for quarter. the guys, Congratulations John Bobby.

fourth in as how better a bidding from this that will projects? on both of quarter, contribution off, be, you revenue forward First revenues year just couple much as kind guys so terms really just storm moving if for came and of in what the well restoration to that look of of, questions,

Joseph Cutillo

storm That's the it we less there's years. projects market – been back several little feel at by coming to and for we'd drainage everybody was million early got point water. amount, are would the That's less Yes, a in to are fundings. bucks. Army hard in is system of at move of be to for the benefit quarter in drainage funding, our have that we longer-term strictly billion process be and on focused going we money – putting very going we couple work, that the saw $XX that good everything in But huge John, storm coming That for that's the the very are has a Texas a opportunity is Houston this for me, and business time. not a the to to Where very the beyond be on being all history. XXXX $X it system I result see to we from The for late released, and Hurricane of If Where significant maybe started team million just on on you and just together. more to a try through That's me where in stages. in several revenue work design get restoration it, if Houston see, was a it. okay, a reality of the a million in, of $X additional redoing But of is just of as there underground over doing storm that bet put the area, a little, something and bit and pipe we shocked which play, happy. that. be The major it's the appropriated. opportunity on Houston of is, the us. this and time, Houston something and to want last XXXX. very I in is close But Engineers, Corps team are in We get to number redoing huge the entire work any around to XXXX, this reservoirs, happen. we the will including water to

John Quealy

non-core kind the of factor into would Heavy that And of kind same Civil?

Joseph Cutillo

right. value would proposition we against to of to bidding just our as, people sets skill low think XXX like with a do are we what taking a exactly That's versus up different it is, absolutely. a customer different Yes, end

John Quealy

you and give the color the us for Great additionally, factor Texas of kind of market bidding against that then terms of is bidding can XXX the on then how people, rationality kind backlog? in of Okay. and kind that into

Joseph Cutillo

in which catch we the thought to Texas But, Yes, where was that Texas never period a and XX we there It's of not people not a place. The unlike to had a I have – to there busy. still less funding to more interestingly would've for rational would at knows, to be become in is, work XX% of up lot in is uncommon are as and XX% the time bidders market, a and when enough, bidders honestly, Texas. market are see the the table table of bids plan there's The reality some seeing to and of markets, be go we to the they're get after. of at going TxDOT recovery going work other below XX put lot our low. to to XX stay somebody not work behind, XX everybody trying is releasing were

tight So market. still is the see we very Texas market a

to We're you last year looking to to have multiple mass enough So player to there's be one coming San we an in similar a get one of one I'll in give it. bid we for it excited. couple and Antonio, that continue out Not selective. elements example, more the critical particular jobs.

the black guys. and paving to excited. not Texas, paving, there them activity some small in – do get work, in on bridges not the well road in white when do enough some very There's excited widening. excited. have the we are you paving true do to bridge do guys, come you The real get white small there in black paving enough job. But bridges well we The some bridge not widening, work, project a and them get do for couple into there's very enough get small, to if come paving and white prefer bridges guys to is we there's paving them and too black we Texas, So

for. that looking are are of So kind waiting those and the we projects

bidders. bidders, we to And tend that. XX and three that is $XX lot are sometimes XX the When in environment those, bidders the four I there little see very million four but that rather there's of more we are I'd normal ways million better. six there much projects selective but a day, the Sometimes the call I'll At the project, versus see the is Texas to end we market we still a on being $XX – away it think find for are to that. to

The Texas that other everybody lot thing rates, of understand – in to I’ll Midwest some the that the very, the a state hits continue has contractors of spending traditionally on that still Texas take is so behind trying see of keep to and market far of we is to very are spending that their to call money out contractors advantage operations going.

John Quealy

That’s you. Thank Okay. very helpful.

Operator

Davidson. Please [Operator Instructions] Our with proceed. next question is Newby D.A. from Bill

William Newby

great Congrats Good on year. morning, guys.

Joseph Cutillo

Thanks. morning. Good

William Newby

you because Tealstone a expected through there bit about what is for could are into that guys from what the expecting more. that a little cadence year we expected on drill more that kind little the business? on seasonality topline. maybe comp had want and Just than There a have to we just don’t you talk of Was QX

Ronald Ballschmiede

factors is the the exacerbates particularly the is second – One There the new tend we there largest we didn't it's seasonality. our here, such quarter in cost in business. the just Sure. and help Dallas of third there. Certainly, of And a best trying two to and seasonality. good build a of sort here In bit was had in area. starts the relocate that if so – the top that news are will it just housing variable that quarter, in to of us, have weather largest. is second rain, and be little third weather On the rain, be fourth the about been Texas, as a third a thing, quarter a home, lot

a have where margin a that didn't or point percentage on Civil we cost, more but out margin within side, coming the business have significant out we more our coming variable of Heavy have So impact stays the norm. the would as fixed of we impact

So profitability, it's impact revenue big the on not side. on just a

right a now, quarter, better first than to the bit looks be little fourth. So

little will a of third it’s So to best quarter. and bit Heavy so based Civil – revenues, worst, better on remain our first in order than quarter, second fourth quarter quarter,

our Tealstone that us between pretty and XX a pretty results, that's that's flip quarter, think margin and quarter by Tealstone revenues in but percent quarter of – XX% bit lot, basis GP. of interestingly, it's is first XX.X% little not points difference I And a over because of I little substantial. our second similar. one total help the consolidated a quarter. in fourth On so as could was the the think, fourth

it it fair a So moves amount.

Joseph Cutillo

A Yes. of the of color on bit little building. kind

you probably our large without the them also necessarily companies. houses start year cost purchase end, of close at end, they are to of the And the going want to don't and if If year the healthy they're think revenue. not and customers several have

kind first They So weather in an a all And job. amount rain, said Texas been done and they're so we quarter, these still over guys of the beginning record as the to off model, mind, activity rain trying the seems again. then first have had and But of a their understand their get was first to year amount terrible. that out houses catch quarter, a had had Ron quarter, has get their Tealstone The of keep be outstanding and understand a we a with but to up great happy. a of but weather were job. very the of starts tremendous close the The we to ability flurry market. the variable quarter, understand tremendous had tremendous

William Newby

the follow-up, Joe, metrics, country? you just seeing, public has of that’s Rocky just color in seeing I on And slow on of seen Appreciate markets of there? what strongest Great, the guess Utah states Have been, it. by guys. another environment there Texas, the then any down any more you're helpful you very the other and are just signs in a bidding outside yes one Mountains our

Joseph Cutillo

went several the it They're years region, – we’re Mountains through great activity. with. is very having happy of Utah Yes, some low. Rocky

have of are don't another looks are that yet, as with and some on much have of XXXX. to projects be sight next like there activity of sight confident We will the we lines have out. honest. we're But We candidly coming projects bid that several year. completing XXXX XXXX phenomenal

project So to five end, when they'll got the of of produce, put in five road comes call the next in. they've road, miles it, that miles

the And down and we Texas. as as in well. think as be some markets One Tealstone. market the those related continue comment question pun neglected see to market the intended, grow the Nevada activity those has as very, activities strong add to XX been in market opportunities market, that, west, We very So coming some go might a we you forward. we that think right little in a addition, the we'll very with That well in now, continue prior there go areas area believe to taking if over of that's like and be there. place we that of road, all Colorado market with the industrial We'd going both We corresponding Reno on still more no slow. I is the we housing Colorado next out the go to months. further

market said, Texas I competitive. As the is very

XX on We seeing bidders lot a or these. of are XX

the team the on the table. you, left talk table how to up Texas averaged they was a with has for The tell we bids job much on done which past we're bids. on we the that will the table in improvement huge winning were – XXXX, I an we Texas about team as leaving won about the outstanding leave over X% X% However, when

refined really the been higher are winning they really quality we point and are bids, eking can every They bid have time. bids disciplined a as much they more this penny out result, in we selective, have are So much marketplace, and the the in process. at

William Newby

Okay, and, you just of, on appreciate it I since you're kind more the guess up that Nevada. ask moving into one – color. mean, geographies going as you Tealstone, Have I’ll brought you more And I business just – about thinking into as maybe

Joseph Cutillo

pull where a in operation. to other is them Nevada that That's them good with is is confused very, business small with is largest worked dirt, Yes, some directly what that earthmoving okay? Nevada and we we on actually Houston, excavation, one and very of me both some who large let and in So of with seeing heavy customers, we're the at the if of markets the working are her subdivision this call bit our reiterate, customers a thing. surrounding through, Houston I cross-selling. in in Dallas, way, little it. working building have do our Nevada potentially heavy their one I expertise they you market roads, What our Who are

see try Nevada leveraging to working that important would two a we try in or So core competencies the or to two to are development our to a be development works. – market how

a referring bit of So what clarity really to was little there. I on

William Newby

Okay, thank you.

Joseph Cutillo

Yes.

probably expansion the at moved That's is for is Texas. little think the logical on Charles fire. would Houston probably look over just Tealstone would market If paths market Houston structures. the similar us market Houston Lake the be you After a - similar Louisiana for first very guys, of fire. market, border is areas, on that, surrounding it outside the the another If I market side, the we nice us place very first be in city Phoenix Texas, is

Operator

is with Capital English question next English Please proceed. Our Partners. Aron from

Aron English

the solid on very congrats Hey, results.

Joseph Cutillo

Aron. Thanks

Aron English

the fairly of raising up for guidance sense year, year. to how know looking weather trying last ended early, the a I improvement and are much TxDOT? any a just guys approach a you in you in but contemplates I'm later get conservative year it's guidance know As the guidance took I and

Joseph Cutillo

you tell certainly to our I planning. will try in Yes, weather all we well, factor into of

skis Mudslides, we execute days good let’s management we all our out is, year. sort to a our forecast. have didn't able natural news would were in year, in and conservative honest, those those we call Hurricane, The had and rather we overcome far the outstanding be had will had still Fires. an slightly too of things. of we over I’ll those philosophy. a We just that's as team, Last of So averages than be take really have We our

is the idea there. now But them, So and and the get between quarters. got of got some through year other them. about a things on the we plan hit end, We variability we of what out good on the we'd we split like We've of couple out have very first feel couple TxDOT, to do there. we things hit can't to numbers no and we but hope have guarantee until

there work good So that. feel existing existing we’ll our we feel rates backlog put burn I think about out and we with on comfortable and and our numbers

Aron English

less of that. business running about But lap was figured what market. vagaries know the on was of Appreciate as its soft we focused stock that a are you about And I the anticipating there other news the any the probably now. can [indiscernible]. quarter. we guys the that aware was you lost wondering Great. case, of on I and know if third wasn't that stock value Obviously, from are

Joseph Cutillo

we see feel ended still when can. Markets the No, We as crazy we anticipated. are this to very are confused volatile have tried anybody We moves. we right give – we best as as strong. We surprised good. where We these guidance shouldn't anybody.

in the are The or next better have or the the overanalyzing markets last best years. infrastructure build are been of people five lot still of is, sometimes, think areas, in infrastructure preparation reality all they without still getting than next level six the next of and a I that. and build the

one, process, staged stuff, the the is without is business markets have or stuff. the the we’ve very whether So the business are, hits, infrastructure without all backlog even we to where from it, where we kind where we in will market good about the we federal feel and most very upside. for Houston of are all that funding level it part, And and a bid that's we manage two, we next of for But about, be got look the process happy. other XXXX good build execution and feel when at where our or

Ronald Ballschmiede

otherwise We’ve hard how been out to and these people trying understand business on calls our get works. and help

We like release frankly, we we have some wouldn’t the if complexity in have. [indiscernible], to are But, it. to

impossible things XX% our that’s helping I instance, modeling. like guidance, consolidated sharing for but for third-party why I our almost their our of how it spent everybody on some much is to with ventures. So It’s call wouldn't predict time.

have thing only opening we try right I is now the So script. XXXX, tell you do for which we can think what do my on to we

more other get little is, The a to back on point. Joe's maybe one bit

does always income, everybody role The has bidding element confusion tell margin higher of into quickly. how that and work I’ll is too fast other we’re always you, that it

coming our of burned today, off gets to XX% will But probably be of in XX% is backlog. burned about off our out cycle. burned revenues will year X.X% what have backlog that next of be XX% off, we represent So

lower the first, it the So margin is. will off backed higher be

those XXXX. Civil, year, other the items so flow, is of people that that's some full-year what hasn’t than that we of confused. out thing X%, lot not this of and different in work entered A that’s XXXX pace turned coming out of [indiscernible], little of backlog the That’s the we the sold we X% that we the that So can get the entered what expect I XXXX ended at that’s wouldn’t X.X% order right something for so probably in. extraordinarily magnitude

We are that. driving up on

Aron English

guys. perspective Yes. the for Thanks

if the the year term, in are when then forward we next are and probably guys even triple-digit ahead grow hit the looking nine look earnings. ballpark, we think as would so numbers at something earnings growth I times the guidance to longer trading you like consensus

I'm that So take will of care it itself. sure

Joseph Cutillo

We believe it will.

Ronald Ballschmiede

Thanks.

Operator

proceed. Sean We now follow-up have Please question KeyBanc Capital of from a Eastman Markets.

Sean Eastman

Hi, guys.

and me. year terms talk a for of mean on how significant Just moving pretty a the been what color quick earnings bit follow-up out a of quarter outlook it's in your from parts just the of first Maybe me about wet just plays how wanted RLW the also to plays can in Texas. you then out our I year. kind through give

be the would So great? up any just expectations build color and setting on on that

Joseph Cutillo

the traditionally in consistent Ron sides. our quarter. It’s However, heavy get but have highway slowest the quarters we very into are details, first our

the the like be fourth the third slowest, right. just the -- clockwork, That is busiest, is Second second the busiest magnitude second it. will to and

cadence, that will it will we what the four keep to but out now where first a is going Tealstone be quarters, the our call that, I'll smooth have little we are lowest. full still certainly Now, that quarter for

our be will Second second highest.

will fourth our second our will Third highest be quarter and be lowest.

see of The business. the same Tealstone the add has somewhat that? and Ron, change. magnitude So that do kind still of the want really into the down of the doesn't we magnitude up you cycle. softened But from to

Ronald Ballschmiede

Texas big is place. think a I Yes,

got rain about mean doesn’t rainy some nothing talk rain we usual when of side state Dallas the of in amount an the had or So we’ve Texas that ordinary. even San or Antonio where weather, of but in out in

sent being there there. no was message So

Mountains, Rocky get lot They a lucky, do we the may in if which it were we think these be I one a know. don't I paper right? drop when new word did had to on

when So ventures, finish get much construction we in an start it. a of a joint of work projects those delay. that region we doesn’t and large one have award, on It’s

are the the – in heavy XX%. of think the million, million it Texas announced percentage sell other is, And to project, so Colorado, revenues we the Then our all bottom to better way on our now we ultimately called is a the project line. So I total $XXX Highway one the are contract, business or that month last economics owned it. so burning the XXX% $XXX that is

to some that win was markets intentional, we’re directly like betters for run the mean from Texas, and markets right wining the want but opportunities. now of away bidding. That we other are some So of ones we’re

important means So Texas market for the [indiscernible] us. in that is, It’s anymore. wagging isn't what

up well We performance it. in much looking pick and more in to improved XXXX or Good performance in are doing XXXX.

Sean Eastman

Excellent. your Q&A Thanks. of all for again Thanks End time.

Operator

we end of session. have remarks. back and I'd call Joe for Ladies closing gentlemen, turn to question-and-answer reached the our to like

Joseph Cutillo

our joining everyone thanks Great, for today. again call

of can bottom call, Director wish partners Group. have contact found day. our or a thanks our be Investor press contact release, to everyone great free you at again information Equity If Jennifer the at and Relations, and Their to The Maxwell the a feel please schedule of

Operator

conference. today’s you. This Thank concludes

and your disconnect time lines thank for your you at may this You participant.

Sterling Infrastructure (STRL) 6 Mar 182017 Q4 Earnings call transcript