* Q4 adj EPS $0.17 vs est $0.23 - Thomson Reuters I/B/E/S
* Revenue falls 34 pct
* Shares fall as much as 19 pct
(Recasts; adds analyst comments, updates share movement)
By Fareha Khan
BANGALORE, March 15 Sterling Construction Co
Inc's (STRL.O) quarterly profit came in below expectations,
hurt by expenses related to an acquisition and provision for
loss related to a lawsuit, sending the civil construction
firm's shares down as much as 19 percent.
The company also reiterated that it expects net income and
earnings per share for 2010 to be substantially below 2009
"While budgeted and proposed contract awards in our markets
in 2010 generally approximate those in 2009, the lack of
visibility in the renewal or extension of federal highway
appropriations may cause state and local governmental units to
slow or defer spending," Chief Executive Pat Manning said.
Sterling, whose two key markets are Texas and Nevada,
undertakes transportation and water infrastructure projects.
The law authorizing long-term federal funding for state
highway projects expired in September, but Congress has kept up
the flow of money through short-term extensions.[ID:nN11208676]
This makes the states more conservative in committing to
larger projects as there remains uncertainty over funding,
analyst Richard Rossi of Wunderlich Securities Inc said.
"This bill does not have the highest priority in Congress
right now. I would not be surprised if I do not see a new
highway bill at all this year," Rossi added.
The company said recession and increased competition have
also reduced bidding opportunities to replace backlog as well
as hurt margins on new projects.
Sterling shares, which were one of the top losers on Nasdaq
on Monday, were down 16 percent at $17.77. They had earlier
touched a low of $17.22.
For the fourth quarter, Sterling reported net income
attributable to common stockholders of $762,000, or 3 cents a
share, compared with $3.8 million, or 28 cents a share, a year
According to Thomson Reuters I/B/E/S, excluding items, the
company earned 17 cents a share, missing analysts' expectations
of 23 cents a share.
Sterling recorded $1.2 million in expenses related to the
acquisition of Utah-based Ralph L. Wadsworth Construction Co
(RLW) and a provision for loss of $1.0 million on a lawsuit in
Revenue fell 34 percent to $71.7 million. Analysts on
average were expecting $100.3 million.
Revenue was hurt by increased competition and weakness in
Texas, where the company reported the lowest revenue for the
market since the first quarter of 2005, Sterling said.
Wunderlich Securities' Rossi, however, said the acquisition
of RLW will make money for Sterling in 2010, though the big
improvement will come in 2011.
The analyst expects Sterling's earnings in 2011 and 2012 to
rebound sharply from where it is going to be this year.
Rossi, who has a "buy" rating on the stock, expects orders
to improve for the company through the latter part of the
(Additional reporting by Bhaswati Mukhopadhyay; Editing by
Anne Pallivathuckal and Maju Samuel)