CONSTRUCTION

Sterling Acquires Petillo, an Industry Leading Specialty Site Development Company

Sterling | January 06, 2022

Sterling Acquires Petillo, an Industry Leading
Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) entered into a Stock Purchase Agreement and closed on the acquisition of Petillo Incorporated and its related operating entities (collectively “Petillo”), on December 30, 2021. Petillo is a leading specialty site development solution provider in the Northeast and Mid-Atlantic. Founded in 1994 by owner and CEO Michael Petillo, Petillo has seen compound revenue growth from 2017 to 2021 of 29% through continued expansion of its geographic footprint

“We are excited to welcome the Petillo team, its culture and capabilities into our E-infrastructure solutions sector,Their entrepreneurial spirit focused on delivering customer-centric solutions coupled with their geographic footprint will enable us to service our key blue-chip e-commerce customers up and down the entire East Coast with even more offerings than we had before. Petillo’s capabilities along with our current Plateau capabilities will not only create one of the largest specialty site development companies in the U.S. but will also add broader capabilities and service offerings to both end markets.”

-Joe Cutillo, Sterling’s Chief Executive Officer

The aggregate consideration of $195 million paid on the Closing Date (the “Base Purchase Price”) consisted of $175 million of cash and 759,447 shares of Sterling common shares valued at $20 million. Additionally, under the purchase agreement, upon the satisfaction of achieving the specified annual operating income growth thresholds, and certain other conditions, the sellers are entitled to earn-out payments not to exceed $20 million over the next five years. The Company also entered into a five-year employment agreement with Michael Petillo, which provides for five equal annual retention payments totaling $15 million.

Effective December 29, 2021, Sterling entered into a Third Amendment to it’s Credit Agreement (the “Amendment”) which, among other provisions, increased the Company’s Existing Term Loans through a new incremental $140 million term loan with the same maturity as the Existing Term Loans to fund a portion of the Petillo acquisition. The Amendment was led by BMO Capital Markets Corp, as Joint Lead Arranger and Joint Book Runner, and BMO Harris Bank N.A., as Administrative Agent. The balance of the Base Purchase Price, together with acquisition related costs, was funded from Sterling’s cash balance.

Stifel served as exclusive financial advisor and Jones Walker LLP served as legal advisor to Sterling on this transaction.

About Sterling
Sterling Construction Company, Inc. operates through a variety of subsidiaries within three segments specializing in Heavy Civil, Specialty Services and Residential projects in the United States (the “U.S.”), primarily across the southern U.S., the Rocky Mountain States, California and Hawaii, as well as other areas with strategic construction opportunities. Heavy Civil includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail, water, wastewater and storm drainage systems. Specialty Services projects include site development activities, foundations for multi-family homes, parking structures and other commercial concrete projects. Residential projects include concrete foundations for single-family homes. 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 communities, our customers and our investors – that is The Sterling Way., customer base and service offerings. Petillo’s 2021 revenues and income from operations are expected to be approximately $212 million and $29 million, respectively.

Spotlight

The proportion of electronic and electromechanical components in engineering is constantly growing. This affects numerous sectors: from the production of construction machines, special vehicles , industrial automation, shipbuilding, medical equipment , electrical power generation and traffic technology right up to the consumer goods industry.


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ENGINEERING TECH

RI Locals Launch National App to Disrupt the Construction Industry

Dibbs Technology | February 24, 2022

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CONSTRUCTION

Extracker, Ryvit Partner to Supercharge Construction Companies' Financial Workflows

Extracker | January 06, 2022

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ENGINEERING TECH

Theorem, LLC Announces Rebrand to TheoremOne with the Acquisition of Formula Partners, Launch of Lemma

Theorem | January 25, 2022

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ENGINEERING TECH

Warehouse/Distribution Centers Leverage Connected Technologies to Meet Surging Demand

Dodge Construction Network | March 11, 2022

Dodge Construction Network, in partnership with LiftMaster® today released a new SmartMarket Brief entitled The Connected Warehouse that focuses on the rapidly growing market for sophisticated and technologically connected warehouse/distribution centers in the US. Dodge is currently forecasting $53 billion of construction starts in the US warehouse/distribution center market in 2022, up 1400% since 2010 and representing over one-third (36%) of the entire US commercial construction sector this year. Driven by strong consumer demand in the economy and the explosion of e-commerce retailing, these facilities are deploying sophisticated technologies to optimize performance and respond to changing demands. In addition, they are round-the-clock workplaces for a growing number of employees and require increasing levels of energy, security and safety management. 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Spotlight

The proportion of electronic and electromechanical components in engineering is constantly growing. This affects numerous sectors: from the production of construction machines, special vehicles , industrial automation, shipbuilding, medical equipment , electrical power generation and traffic technology right up to the consumer goods industry.

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