Sterling Construction (NASDAQ: STRL) reported Q4 EPS of $0.21, $0.02 better than the analyst estimate of $0.19. Revenue for the quarter came in at $255.2 million versus the consensus estimate of $233.1 million.

• Revenues were $255.2 million compared to $253.9 million;
• Gross margin was 10.5% of revenues compared to 9.4%;
• Operating income was $9.4 million compared to $7.0 million;
• Net income attributable to Sterling common stockholders was $5.6 million compared to $3.1 million; and,
• Net income per diluted share attributable to common stockholders was $0.21 compared to $0.11.

CEO Remarks and Outlook:

“Sterling delivered yet another record setting year in 2018, highlighted by the strongest fourth quarter results in the Company’s history,” stated Joe Cutillo, Sterling’s Chief Executive Officer. “Our strategy, which focuses on growing the bottom line at a greater rate than the top line while reducing risk, continued to deliver and as a result our full year net income grew 117% while our revenues grew a solid 8.3%, meeting or exceeding guidance in all metrics. The results of our focused efforts have also translated well to our balance sheet, where we have now gone from a net debt to a net cash position.”

Mr. Cutillo continued, “Demand across our end-markets in all business segments remains robust. In our heavy civil business, a combination of our large joint-venture projects in the Rocky Mountains along with our increased discipline at the bid table, particularly in our Texas operation has led to significant operating margin expansion. Our residential business is running strong as evidenced by this segment’s 15% revenue growth for the fourth quarter over the prior quarter. Despite the narrative surrounding rising interest rates and the impact that might have on the future of the U.S. residential construction market, our core markets, Dallas-Fort Worth and Houston remain the number one and number three housing markets in the U.S. and continue to have very strong growth projections. These trends support our current strategy of focusing on the strong Texas market and homebuilders\' developments that are primarily composed of entry level and first-move home buyers.”

Mr. Cutillo concluded, “Based on booking trends, market strength, continued mix shift and improved execution, we expect to generate full year 2019 revenues of between $1.075 billion and $1.095 billion. This continued momentum into 2019 leads us to anticipate net income attributable to Sterling common stockholders to be in the range of $29 million to $32 million, which implies greater than 20% year-over-year growth at the midpoint of the range. We expect our full year 2019 diluted average common shares outstanding to be approximately 27 million. Our outlook does not assume any major positive changes in government investment in infrastructure, which would likely enhance our growth forecast as we are well-positioned to win further economically compelling heavy civil project opportunities across our geographies. In addition, our main residential end-markets in the Dallas - Fort Worth Metroplex and the Houston area continue to grow at low double-digit percentages. From a capital allocation perspective, our significantly improved balance sheet provides us the flexibility to reinvest in our business and pursue attractive M&A opportunities along with possible debt reduction or further share repurchases. Considering all of these factors, we remain confident in our ability to deliver continued value to our shareholders and look forward to providing updates on our progress over the course of 2019.”

GUIDANCE:

Sterling Construction sees FY2019 revenue of $1.075-1.095 billion, versus the consensus of $1.08 billion.

For earnings history and earnings-related data on Sterling Construction (STRL) click here.