Myers & Sons Construction, L.P., an affiliate of Sterling Construction Company, Inc. (STRL), is the selected contractor for the San Mateo Bridge project for the counties of San Mateo and Alameda. Construction on the project, worth around $25.3 million, is expected to commence in the first quarter of 2015.
The project is a joint venture between Myers & Sons and American Civil Constructors (ACC). Myers and Sons, in association with ACC, will remove the existing asphalt surfacing on the steel bridge and place 3,860 cubic yards of polyester concrete overlay. The work will require three full weekend closures. Myers & Sons and ACC will also place 2,808,000 square feet of methacrylate and replace eight substations.
This project will add to Sterling Construction’s backlog. As of Sep 30, 2014, the company’s total backlog was $759 million, up 4% sequentially and 9% year over year. The total backlog, however, excluded $82 million worth of projects where Sterling Construction was apparently a low bidder and was not awarded the contract.
Sterling Construction’s backlog has expanded to record high levels as it continues to book attractive construction opportunities in its core markets, such as the CalTrans Route 101 award and the Phoenix Sky Harbor Airport win. This bodes well for its fourth-quarter performance.
For the fourth quarter of 2014, Sterling Construction anticipates growth in revenues, based on the execution of existing projects and new awards. Gross margin is expected to return to first half 2014 levels on the back of the much improved margin profile of its backlog. Sterling Construction continues to take actions to negate the effects of spot shortages of commodities, over-stretched sub-contractors and vendors, and heavy competition for craft labor, particularly in its Texas market.
In addition, Sterling Construction is facing significant wage inflation in some of its Texas sub-markets. The company forecasts general and administrative expenses to remain in the mid 5% of revenues.
Houston, TX-based Sterling Construction is a leading heavy civil construction company engaged in building and reconstruction of transportation and water infrastructure projects in Texas, Utah, Nevada, Arizona, California and other states. Its transportation infrastructure projects include highways, roads, bridges, and light rail; and its water infrastructure projects comprise water, wastewater, and storm drainage systems.
Sterling Construction currently carries a Zacks Rank #4 (Sell). However, some better-ranked stocks in the sector include NVR, Inc. (NVR), The Sherwin-Williams Company (SHW) and Trex Co. Inc. (TREX). All these stocks carry a Zacks Rank #2 (Buy).
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