Monday, Sterling Construction Company, Inc. (STRL) reported an increase in profit for the third quarter, which topped analysts' estimates, helped by better productivity and favorable mix in the stage of completion and profitability of contracts. However, the company said its 2010 revenues and net income attributable to common stockholders could be substantially below its expected 2009 revenues and net income and, given the uncertainty in the markets, it is discontinuing guidance.
Net income for the quarter rose to $8.8 million from $6.3 million a year earlier. Net income attributable to the common stockholders increased to $8.1 million from $6 million in the corresponding period last year. Earnings per share rose to $0.59 from $0.44 in the same period last year and came in above the $0.27 projected by seven analysts polled by Thomson Reuters. Analysts' estimates typically exclude special items.
The Houston, Texas headquartered civil construction company's revenues declined to $103.9 million from $114.1 million in the year-ago quarter. Five Street analysts expected the company to report revenues of $109.02 million for the quarter.
Gross profit surged to $16.5 million from $12.6 million in the year-ago quarter. Gross margin was 15.9%, up from 11% a year earlier. Operating income rose to $13 million from $9.4 million in the year-ago quarter.
For the nine-month period, net income attributable to common stockholders rose to $22.9 million or $1.67 per share from $14.2 million or $1.04 per share in the year-ago period. Revenues increased to $319.2 million from $305.8 million in the same period last year.
The company closed the current third quarter with backlog of about $371 million, compared to $511 million at September 30, 2008.
The company cautioned that its 2009 revenues will be below the range of its previously issued guidance.
Discussing the outlook for 2010, Pat Manning, Sterling's Chairman and Chief Executive Officer said, "our 2010 revenues and net income attributable to common stockholders could be below, and may be substantially below, those expected for 2009. We have taken appropriate action including reducing headcount, and we will continue to monitor headcount and discretionary expenses and make adjustments as appropriate. Given the current level of difficulty in forecasting in our industry and the funding uncertainties in our markets, we have decided to discontinue guidance. We believe the ranges we would have to provide in 2010 to reflect these uncertainties would not be meaningful to investors."
STRL is currently down $0.76 or 4.7% and trades at $15.43.
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