THE
WOODLANDS, Texas, Jan. 7, 2025
/PRNewswire/ -- Sterling Infrastructure, Inc. (NasdaqGS: STRL)
("Sterling" or "the Company") today announced that it executed an
amendment to its Road and Highway Builders, LLC ("RHB") Operating
agreement on December 31, 2024. This
amendment changes the way that RHB results are reported under
Generally Accepted Accounting Principles ("GAAP"), but does not
change RHB's historical or future contribution to Sterling's
consolidated net income.
Since 2012, Sterling has held a 50% ownership interest in
Road and Highway Builders, LLC ("RHB"), with Rich Buenting holding the remaining 50%
ownership interest. On December 31,
2024, both parties executed an amendment to the operating
agreement to ensure the continuation of this mutually beneficial
relationship while addressing the evolving needs and interests of
both parties. This amendment modified the way RHB would be
dispositioned in the event of the death or disability of Mr.
Buenting and provides that in such event, Sterling and Mr.
Buenting's estate must agree with one of four alternatives: (1)
continuation of the existing ownership structure; (2) acquisition
of Sterling's 50% interest by Mr. Buenting's estate at fair value;
(3) acquisition of Mr. Buenting's 50% interest by Sterling at fair
value; or (4) the joint sale of RHB to a third party at fair market
value.
Prior to the amendment, Sterling fully consolidated RHB with all
of RHB's assets and liabilities included in Sterling's Consolidated
Balance Sheets on a line by line basis and with Mr. Buenting's
interest reported as a liability within "Members' interest subject
to mandatory redemption and undistributed earnings". Additionally,
all of RHB's Revenue, Cost of Revenue, and General and
administrative expense were included in Sterling's Consolidated
Statements of Operations with Mr. Buenting's 50% share of RHB's
operating income included as an other operating expense.
Under GAAP, this contractual change requires that Sterling no
longer consolidate RHB's results. Therefore, Sterling's interest in
RHB's balance sheet will be presented in Sterling's 2024
Consolidated Balance Sheet on one line. Sterling anticipates
recognizing a significant non-cash net gain on the transaction in
its 2024 Consolidated Statement of Operations in accordance with
the accounting requirements.
Starting in 2025, 50% of RHB's operating income will be
presented on one line in Sterling's Consolidated Statements of
Operations. RHB's revenue, which is expected to be between
$230 million and $240 million in 2024, will no longer be included
in Sterling's consolidated revenue in 2025. Additionally, Sterling
consolidated backlog figures as of December
31, 2024 will no longer include RHB backlog, which on a
stand alone basis is estimated to be between $425 million to $475
million at the end of the year.
CEO Remarks
"Rich Buenting is an excellent
business leader and has been a trusted and valued joint venture
partner for more than a decade," stated Joe
Cutillo, Sterling's Chief Executive Officer. "RHB
consistently delivers strong growth and profitability and we look
forward to continuing this mutually beneficial relationship in the
years ahead."
About Sterling
Sterling operates through a variety of subsidiaries within three
segments specializing in E-Infrastructure, Transportation and
Building Solutions in the United
States, primarily across the Southern, Northeastern,
Mid-Atlantic and Rocky Mountain regions and the Pacific Islands.
E-Infrastructure Solutions provides advanced, large-scale site
development services for manufacturing, data centers, e-commerce
distribution centers, warehousing, power generation and more.
Transportation Solutions includes infrastructure and rehabilitation
projects for highways, roads, bridges, airports, ports, rail and
storm drainage systems. Building Solutions includes residential and
commercial concrete foundations for single-family and multi-family
homes, parking structures, elevated slabs, other concrete work and
plumbing services for new single-family residential builds. From
strategy to operations, we are committed to sustainability by
operating responsibly to safeguard and improve society's quality of
life. Caring for our people and our communities, our customers and
our investors – that is The Sterling Way.
Joe Cutillo,
CEO, "We build and service the infrastructure that enables our
economy to run,
our people to move and our country to grow."
Important Information for Investors and Stockholders
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements that are considered
forward-looking statements within the meaning of the federal
securities laws. Any such statements are subject to risks and
uncertainties, including those risks identified in the Company's
filings with the Securities and Exchange Commission. Accordingly,
such statements should be considered in light of these risks. The
forward-looking statements speak only as of the date 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, changed
circumstances, or otherwise, notwithstanding any changes in our
assumptions, changes in business plans, actual experience or other
changes. These cautionary statements qualify all forward-looking
statements attributable to us or persons acting on our behalf.
Sterling Infrastructure Contacts:
Noelle Dilts, VP of Investor Relations and
Corporate Strategy
281-214-0795
noelle.dilts@strlco.com
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SOURCE Sterling Infrastructure, Inc.
