Conference call with accompanying slide presentation, Thursday, January 6, 2022 at 9:00 a.m. ET
THE WOODLANDS, Texas, January 05, 2022–(BUSINESS WIRE)–Sterling Construction Company, Inc. (NasdaqGS:STRL) (“Sterling” or “the Company”) has entered into a stock 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 Mid-Atlantic. Founded in 1994 by owner and CEO Michael Petillo, Petillo has experienced compound revenue growth of 29% from 2017 to 2021 through the continued expansion of its geographic footprint, customer base and service offerings. Petillo’s 2021 revenue and operating profit are expected to be approximately $212 million and $29 million, respectively.
“We are thrilled to welcome the Petillo team, their culture and their capabilities to our Electronic Infrastructure Solutions business,” said Joe Cutillo, CEO of Sterling. “Their entrepreneurial spirit focused on delivering customer-centric solutions, coupled with their geographic footprint, will allow us to serve our key, blue-chip e-commerce customers across the East Coast with even more offerings than 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, upon satisfaction of meeting specified annual operating profit growth thresholds and certain other conditions, the sellers are entitled to additional payments not to exceed $20 million. over the 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 with a new additional term of $140 million with the same maturity as the existing term loan. Loans to finance part of the acquisition of Petillo. The amendment was led by BMO Capital Markets Corp, as joint lead arranger and joint bookrunner, and BMO Harris Bank NA, as administrative agent. The balance of the base purchase price, as well as acquisition-related costs, was funded from Sterling’s cash balance.
Stifel acted as exclusive financial advisor and Jones Walker LLP acted as legal advisor to Sterling on this transaction.
Sterling management will hold a conference call to discuss this transaction on Thursday, January 6and 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, which can be viewed at www.strlco.com, where a simultaneous webcast of 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, specialty service and residential projects in the United States (the “United States”), primarily in the southern United States, the Rocky Mountain States, California and Hawaii. , as well as other areas with strategic construction opportunities. Heavy civil engineering includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail, water, wastewater and storm drainage systems. 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 sustainability by operating responsibly to preserve and improve society’s quality of life. Caring for our people and our communities, our customers and our investors – that’s The Sterling Way.
Joe Cutillo, CEO, “We build and maintain the infrastructure that allows our economy to function, 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 qualify as forward-looking statements within the meaning of the 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 the synergies and other benefits of the transaction; our business strategy; our financial strategy; our industry outlook; and our plans, objectives, expectations, forecasts, outlook and intentions. All of these types of statements, other than statements of historical facts 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”, “project”, “has intention to”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “target”, “continue”, the negative of these terms or any other comparable terminology. The forward-looking statements contained in this press release are based largely 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, management’s assumptions 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 that forward-looking events and circumstances will occur. Although we believe these estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties 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 Petillo’s business may be greater than anticipated, and our ability to hire and retain Petillo’s employees. Actual results may differ materially from those anticipated or implied by the forward-looking statements due to these and other factors included in the “Risk Factors” section of our filings with the United States Securities and Exchange Commission. States and elsewhere in these documents. Other factors or risks that we currently believe are not material, that are not presently known to us, or that occur in the future could also cause our actual results to differ materially from our expected results. Given 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 made, and we undertake 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, change in 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.
See the source version on businesswire.com: https://www.businesswire.com/news/home/20220105005969/en/
Sterling Construction Company, Inc.
Ron Ballschmiede, Chief Financial Officer
Contact with Investor Relations:
Equity Group Inc.
Jeremy Hellman, CFA