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Sterling Construction Company Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2011 07:17AM
Sterling Construction Company Inc (STRL) filed Quarterly Report for the period ended 2011-03-31.
Highlight of Business Operations:
In 2007, the voters of the State of Texas approved $5.0 billion in bonds for highway construction to be repaid out of the State's general funds; the State's budget for the biennium 2010-2011 for highways and bridges includes $1.9 billion of proceeds from these bonds (“Prop 12 Bonds”).
The estimated Texas Department of Transportation (“TXDOT”) lettings (contract awards) for transportation construction projects are $4.8 billion for the state s fiscal year ending August 31, 2011, including stimulus funds and a portion of the Prop 12 Bonds discussed above versus approximately $4.2 billion of lettings in 2010 including stimulus funds and a portion of the Prop 12 Bonds. Due to the uncertainty regarding federal funding and expected constraints of the Texas budget, TXDOT is forecasting lettings of only $2.7 billion for 2012 before any appropriations from the Prop 12 Bonds discussed above. TXDOT was instructed by the last session of the Texas legislature to move forward on projects with the expectation that additional Prop 12 Bonds would be enabled, which would increase the forecasted lettings for 2012. In April 2011, the Texas State Senate approved the use of the remaining $3.0 billion of the Prop 12 Bonds for highway and bridge construction, rehabilitation and maintenance in the 2012-2013 budget. Such use still requires the approval of the Texas House of Representatives and the Governor.
Utah s Long Range Transportation Plan for 2007-2030 projects spending for highway and bridge construction of $18.9 billion during that period of time. The Utah Governor s budget recommends $750 million for transportation capital projects in 2012 versus authorization of $1.2 billion for 2011. Information we have received indicates that there will be a substantial reduction of highway and bridge construction projects in 2013 versus 2012.
Based on press statements by officials of the Nevada Department of Transportation (“NDOT”), and the Nevada legislative website, we estimate NDOT expenditures in 2010 and 2011 will be between $300 million and $400 million in each of those fiscal years, including economic stimulus funds for highways and bridges.
The City of San Antonio adopted a six-year capital improvement plan for its fiscal years 2011 through 2016, which includes $322.5 million for streets and $165.6 million for drainage. The expenditures will be partially funded by the $550 million bond program that the voters of the City of San Antonio approved in May 2007. San Antonio s budget for such projects is $313 million and $156 million for its fiscal years 2011 and 2012, respectively.
Backlog is our estimate of the revenues that we expect to earn in future periods on our construction projects which are typically completed in 12 to 36 months. At March 31, 2011, our backlog was $740 million as compared to $660 million as of December 31, 2010 and $618 million at March 31, 2010. Our backlog at March 31, 2011 included approximately $223 million of expected revenues for which the contracts had not yet been officially awarded, including two projects totaling $184 million on which the customers have deferred executing and starting the contract pending the sale of bonds or the resolution of other funding issues; we expect these issues to be resolved by the end of June 2011. Historically, subsequent non-awards of contracts or finalization of contract price have not materially affected our backlog, results of operations or financial condition. Backlog at March 31, 2011, includes $38 million applicable to consolidated joint ventures where we have a controlling interest, which is the entire amount of such joint ventures backlog, and $184 million where we have a noncontrolling interest, which represents our proportionate share of such joint ventures backlog. We were awarded or apparent low bidder on contracts of $179 million during the first quarter of 2011 versus $57 million in the first quarter of 2010. Most of the increase in backlog has been in our Texas market. The increase in backlog is in addition to $473 million of new awards during the last nine months of 2010.