UPDATE 2-Sterling Construction Q1 misses Street, sees weak 2010
* Q1 EPS $0.09 vs est $0.19
* Revenue $86.2 mln vs est $96.6 mln
* Sees 2010 profit below last year (Adds conference call details)
May 10 (Reuters) - Civil construction firm Sterling Construction Co Inc (STRL.O) posted a lower-than-expected quarterly profit, hurt by weakness in its key Texas and Nevada markets, and said it continued to expect a weak year. The company said it expected 2010 profit to be "substantially below" last year's, due to reduced bidding opportunities, intense competition and lower margins on new projects.
However, Sterling said it was hopeful about the extension of the federal funding for highways to Dec. 31, which was pegged at $1.55 billion for the rest of the fiscal.
"There will be more visibility to future spending flow, and that this will add some normalcy to the marketplace," a company executive said on a conference call with analysts.
The highway bill authorizes long-term federal funding for state highway projects. The law concerned expired in September 2009, but U.S. Congress has kept up the flow of money through short-term extensions.
With plans to overhaul the $286 billion highway bill -- one of the richest and most popular legislative undertakings for states -- on hold, fewer states are putting out projects to bid, which has led to intense competition and margin pressure.
Sterling's gross margin for the quarter fell to 9.6 percent from 12.5 percent a year earlier.
"The bidding climate and competition in our markets remain challenging and we have worked off backlog without fully replacing it," Chief Operating Officer Joseph Harper said.
"The lower revenues in Texas and Nevada in the first quarter of 2010 were due to our reduction of the number of crews working as a result of the decrease in backlog and to wetter weather than in the first quarter of 2009," Harper said.
For the first quarter, the company reported a net income of $1.6 million, or 9 cents a share, compared with $5.6 million, or 41 cents a share a year earlier. Revenue fell 9 percent to $86.2 million.
Analysts on average were expecting earnings of 19 cents a share on revenue of $96.6 million, according to Thomson Reuters I/B/E/S.
Shares of the company were trading up 3 percent at $16.46 in the afternoon session Monday on Nasdaq.
The Dow Jones Industrial average .DJI jumped more than 4 percent Monday as an agreement on a $1 trillion emergency rescue package quelled fears that Greece's debt crisis would spread. The Nasdaq composite index also rose 4 percent. (Reporting by Megha Mandavia in Bangalore; Editing by Ratul Ray Chaudhuri and Don Sebastian)