New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Business News and Headlines
SEC Filings, Earing Reports, Press Releases
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
Sterling Construction Company Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 8, 2012 05:29PM

Sterling Construction Company Inc (STRL) filed Quarterly Report for the period ended 2012-06-30. Sterling Construction Company, Inc. has a market cap of $170.9 million; its shares were traded at around $10.03 with a P/E ratio of 17.2 and P/S ratio of 0.3. Sterling Construction Company, Inc. had an annual average earning growth of 2.9% over the past 10 years.



Highlight of Business Operations:

Gains and losses realized on short-term investment securities are included in “Gains (losses) on sale of securities and other” in the accompanying statements of operations. Unrealized gains (losses) on short-term investments are included in accumulated other comprehensive income in stockholders equity, net of tax, as the gains and losses may be temporary. For the six months ended June 30, 2012, total proceeds from sales of short-term investments were $14.7 million with gross realized gains of $501,000 and gross realized losses of $0. The unrealized gains (losses) on short-term investments included in accumulated other comprehensive income, net of taxes of $338,000, was $627,000 at June 30, 2012. Upon the sale of short-term investments, the cost basis used to determine the gain or loss is based on the specific identification of the security sold. All items included in accumulated other comprehensive income are at the corporate level, and no portion is attributable to noncontrolling interests.

Gains and losses realized on short-term investment securities are included in “Gains (losses) on sale of securities and other” in the accompanying statements of operations. Unrealized gains (losses) on short-term investments are included in accumulated other comprehensive income in stockholders equity, net of tax, as the gains and losses may be temporary. For the six months ended June 30, 2012, total proceeds from sales of short-term investments were $14.7 million with gross realized gains of $501,000 and gross realized losses of $0. The unrealized gains (losses) on short-term investments included in accumulated other comprehensive income, net of taxes of $338,000, was $627,000 at June 30, 2012. Upon the sale of short-term investments, the cost basis used to determine the gain or loss is based on the specific identification of the security sold. All items included in accumulated other comprehensive income are at the corporate level, and no portion is attributable to noncontrolling interests.

In connection with the August 1, 2011, acquisition of J. Banicki Construction, Inc. (“JBC”) by 80% owned Ralph L. Wadsworth Construction Company, LLC (“RLW”), RLW agreed to additional purchase price payments of up to $5 million to be paid over a five-year period. The additional purchase price is in the form of an earn-out which is classified as a Level 3 fair value measurement. In making this valuation, the unobservable input consisted of forecasted earnings before interest, taxes and depreciation and amortization (“EBITDA”) for the periods after the period being reported on through July 31, 2016. The additional purchase price is calculated generally as 50% of the amount by which earnings before interest, taxes, depreciation and amortization (“EBITDA”) exceeds $2 million for each of the calendar years 2011 through 2015 and $1.2 million for the seven months ended July 31, 2016. The yearly excess forecasted EBITDA in our calculation ranged from 39% to 77% of the minimum EBITDA threshold for the years 2012 through 2016. The discounted present value of the additional purchase price was estimated to be $2.4 million as of August 1, 2011, the acquisition date and $2.2 million as of June 30, 2012. The undiscounted earn-out liability as of June 30, 2012 is estimated at $2.4 million and could increase by $2.6 if EBITDA during the earn-out period increases $5.2 million or more and could decrease by the full amount of the liability if EBITDA does not exceed the minimum threshold in any of the periods during the earn-out period. Any significant increase or decrease in actual EBITDA compared to the forecasted amounts would result in a significantly higher or lower fair value measurement of the additional purchase price. This liability is included in other long-term liabilities in the accompanying condensed consolidated balance sheets.

In the Current Quarter and Current Period, the Company had operating income of $8.2 million and $3.7 million, respectively, and net income (loss) attributable to Sterling common stockholders of $3.3 million and $(4.2) million, respectively. Included in the net loss attributable to Sterling common stockholders for the Current Period is additional earnings allocated to noncontrolling interest owners of $6.7 million, or $4.4 million net of tax, resulting from an amendment to the RLW member agreement to change the treatment of goodwill impairments for purposes of determining net income distributable to RLW s members. This is discussed further in Note 8.

The increase in net income attributable to noncontrolling interest owners in the Current Quarter compared with the Prior Quarter is primarily related to net income attributable to the 20% noncontrolling interest owners in RLW, our 80% owned subsidiary. As discussed further in Note 8 to the condensed consolidated financial statements, the members of RLW, including the Company, agreed to amend RLW s operating agreement effective January 1, 2012 to provide that any goodwill impairment, including the 2011 fourth quarter goodwill impairment, is not to be allocated to RLW for the purpose of calculating the distributions to be made to the RLW noncontrolling interest holders. This amendment resulted in an increase in the net income attributable to RLW s noncontrolling interests of $6,717,000 during the three months ended March 31, 2012. This increase is included in “Noncontrolling owners interests in earnings of subsidiaries and joint ventures” in the accompanying condensed consolidated statement of operations with an increase in the “Current obligation for noncontrolling owners interests in subsidiaries and joint ventures” in the condensed consolidated balance sheet. This increase has a related tax impact of $2,351,000 which increased the tax benefit for the period.

Read the The complete Report



Stocks Discussed: STRL,
Rate this post:




Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't




Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial