THE WOODS, Texas – (COMMERCIAL THREAD) – Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) entered into a share purchase agreement and completed the acquisition of Petillo Incorporated and its related operating entities ( collectively “Petillo”) on December 30, 2021. Petillo is a leading provider of specialty site development solutions in the Northeast and Central Atlantic. Founded in 1994 by owner and CEO Michael Petillo, Petillo has experienced 29% compound revenue growth from 2017 to 2021 through continued expansion of its geographic footprint, customer base and service offerings. Petillo’s revenue and operating income in 2021 is expected to be approximately $ 212 million and $ 29 million, respectively.
“We are delighted to welcome the Petillo team, their culture and their capabilities to our electronics infrastructure solutions industry,” said Joe Cutillo, CEO of Sterling. “Their entrepreneurial spirit of delivering customer-centric solutions, coupled with their geographic footprint, will allow us to serve our major leading e-commerce customers across the East Coast with even more offerings than ever before. . Petillo’s capabilities along with our current Plateau capabilities will not only create one of the largest specialty site development companies in the United States, but will also add broader capabilities and service offerings to both end markets.
The aggregate consideration of $ 195 million paid on the Closing Date (the “Base Purchase Price”) consisted of $ 175 million in cash and 759,447 common shares of Sterling valued at $ 20 million. In addition, under the purchase agreement, if they have met the specified annual operating income growth thresholds and certain other conditions, the sellers are entitled to top-up payments not to exceed $ 20 million over the course of the years. next five years. The Company also entered into a five-year employment contract with Michael Petillo, which provides for five equal annual retention payments totaling $ 15 million.
Effective December 29, 2021, Sterling entered into a third amendment to its credit agreement (the “Amendment”) which, among other provisions, increased the Company’s existing term loans through a new additional term loan of $ 140 million with the same maturity as the existing term. Loans to finance part of the acquisition of Petillo. The amendment was led by BMO Capital Markets Corp, as principal arranger and joint bookrunner, and by BMO Harris Bank NA, as administrative agent. The balance of the base purchase price, as well as the costs associated with the acquisition, were funded from Sterling’s cash balance.
Stifel served as exclusive financial advisor and Jones Walker LLP served as legal counsel to Sterling on this transaction.
Sterling management will hold a conference call to discuss this transaction on Thursday, January 6e at 9:00 a.m. ET / 8:00 a.m. CT. Interested parties can participate in the call by dialing (201) 493-6744 or (877) 445-9755. Please call ten minutes before the start of the conference call and request the Sterling call. Following the opening remarks from management, there will be a question and answer session. In addition, a slide presentation that will accompany management’s comments will be posted in the Investor Relations section of the Company’s website, available at www.strlco.com, where a simultaneous webcast of the Company is available. The call will also be available. If you are unable to listen live, the webcast of the conference call will be archived on the Company’s website for thirty days.
Sterling Construction Company, Inc. operates through a variety of subsidiaries in three segments specializing in heavy civil engineering, specialty services and residential projects in the United States (the “United States”), primarily in the southern United States. United States, Rocky Mountain States, California and Hawaii. , as well as other areas with strategic construction opportunities. Heavy Civil includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, streetcars, water supply systems, sewage and stormwater drainage. Specialty service projects include site development activities, multi-family home foundations, parking structures and other commercial concrete projects. Residential projects include concrete foundations for single family homes. From strategy to operations, we are committed to sustainable development by acting responsibly to protect and improve the quality of life of society. Caring for our employees and communities, customers and investors is The Sterling Way.
Joe Cutillo, CEO, “We build and maintain the infrastructure that allows our economy to run, our people to move, and our country to grow. “
Important information for investors and shareholders
Caution regarding forward-looking statements
This press release contains statements that are considered to be forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements regarding: our projections or expectations regarding synergies and other benefits of the transaction; our business strategy; our financial strategy; our industry outlook; and our plans, goals, expectations, forecasts, outlook and intentions. All of these types of statements, other than the statements of historical fact included in this press release, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “may”, “will”, “could”, “should”, “expect”, “plan”, “plan”, “have the intention “,” “believe”, “estimate”, “predict”, “potential”, “pursue”, “target”, “continue”, the negative of these or other comparable terms. press release are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. In addition, the assumptions management regarding future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this press release are not guarantees of future performance, and we cannot assure any reader that such statements will materialize or forward-looking events and circumstances will occur. Although we believe these estimates and assumptions are reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control, including the possibility that the expected benefits of the transaction may not be fully realized. or may take longer to materialize than expected, the possibility that the costs or difficulties of integrating the Petillo business are greater than expected and our ability to hire and retain Petillo employees. Actual results may differ materially from those anticipated or implied in forward-looking statements because of these factors as well as other factors included in the “Risk Factors” section in our documents filed with the United States Securities and Exchange Commission and elsewhere in these documents. Other factors or risks that we currently believe are immaterial, that are not currently known to us, or that arise in the future could also cause our actual results to differ materially from our expected results. In light of these uncertainties, investors are cautioned that many of the assumptions on which our forward-looking statements are based are subject to change after the date on which the forward-looking statements are made. Forward-looking statements speak only as of the date they are posted, and we assume no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances or otherwise, notwithstanding any change in our assumptions, changes in business plans, actual experience or other changes. These cautionary statements qualify all forward-looking statements attributable to us or to persons acting on our behalf.