Sterling Construction Company Inc has a market cap of $215.3 million; its shares were traded at around $13.29 with a P/E ratio of 11.6 and P/S ratio of 0.6. Sterling Construction Company Inc had an annual average earning growth of 33.9% over the past 10 years.STRL is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: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 September 30, 2010, our backlog was $575 million as compared to $648 million as of December 31, 2009 and $371 million at September 30, 2009. Our backlog at September 30, 2010 included approximately $23 million of expected revenues for which the contracts had not yet been officially awarded or finalized as to price. 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 September 30, 2010, includes $52 million applicable to consolidated joint ventures where we have a controlling interest and $110 million (our portion) where we have a non-controlling interest. Subsequent to September 30, 2010, we have been the apparent low bidder on approximately $134 million of construction contracts.
Gross profit decreased by $3.5 million and $13.0 million during the three and nine months ended September 30, 2010, respectively, versus gross profit for the three and nine months ended September 30, 2009. Such decrease was due to less revenue as a result of fewer crews and lower equipment utilization, and reduced margin due to competitive pressures in bidding in recent years for backlog that was burned off in 2010 offset by the gross profit earned by our Utah operations. Additionally, lower equipment utilization resulted in under absorption of depreciation and related costs of $2.4 million for the nine months ended September 30, 2010. Management believes such equipment will be used when the market returns to a normalized level of activity and, consequently, there is no impairment in the value of such equipment. The gross margin of 10.5% during the first nine months of 2010 decreased from 14.7% in the comparable 2009 period for the same reasons as the absolute gross profit amount decreased.
For the three and nine months ended September 30, 2010, the Company realized gains of $80,000 and $1,044,000, respectively, on sale of securities, versus realized gains of zero and $141,000 for the comparable periods in 2009. The increase in realized gains for both the three and nine month periods in 2010 was primarily due to a larger amount of invested funds sold throughout the 2010 periods and also the result of better returns on our municipal bond mutual fund investments than last year.
Interest income for the quarter and nine months ended September 30, 2010, increased to $0.6 million and $1.3 million, respectively, or $0.5 million and $0.9 million over the comparable 2009 periods due primarily to a larger amount of invested funds in 2010.
· depreciation and amortization, totaled $11.8 million in 2010, which increased $1.5 million from 2009 primarily as a result of depreciation in 2010 on equipment purchased in the RLW acquisition in December 2009;
· deferred tax expense was $2.0 million in 2010, mainly attributable to amortization for tax return purposes of goodwill and accelerated tax depreciation arising in the acquisition of RHB and RLW versus deferred tax expense of $5.0 million in 2009. The decline in deferred tax expense between the two years is due to the decline in the difference between accelerated tax depreciation over book depreciation in 2010 versus 2009.
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