Sterling Construction to Acquire Plateau Excavation, Inc.; a Leading Site Infrastructure Improvement Contractor

Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) today announced that it has signed a definitive agreement to purchase Austell, GA-based Plateau Excavation, Inc. and its related entities (collectively “Plateau”), a leading specialty contractor, for $400 million; $375 million in cash and $25 million in Sterling Common Stock and seller notes. Sterling plans to finance the transaction and replace its current borrowing facility with a new $400 million term loan together with a $75 million revolving credit facility, for which it has received a financing commitment from BMO Harris Bank N.A., and its available cash balance. The transaction is expected to close near the end of the third quarter of 2019, subject to customary closing conditions and regulatory approvals.

Plateau serves large, blue-chip customers in the e-commerce, data center, distribution center and warehousing, and energy sectors. They are a leading provider of large-scale site infrastructure improvement contracting services and are the largest excavating contractor in the Southeastern U.S. Plateau has approximately 800 employees throughout its region of operation.

Acquisition Highlights

• Provides Sterling with diversification of revenue streams, a broad range of high-quality customers in rapidly growing end markets, increasing profitability and cash flow, and reduced execution risk for the Company overall.
• Geographic expansion into growing Southeast U.S. market where Sterling has no presence, in addition to opportunities created by Plateau’s newfound exposure to the South and West regions where Sterling has a strong foothold.
• Highly scalable footprint and infrastructure with a focus on fast paced, time sensitive projects requiring a variety of services, capabilities and types of equipment.
• Three-year revenue growth CAGR of 12% with accretive EBITDA margins and Free Cash Flow Conversion of approximately 80%.
• Plateau’s experienced and highly effective management team will stay on and continue leading the business.
• Excluding transaction related costs, the acquisition is expected to be accretive to EPS and generate free cash flow in the fourth quarter of 2019.

“Sterling’s acquisition of Plateau aligns directly with our strategic growth plan as it meets our key criteria of expansion into adjacent markets, diversification of revenue sources and customer base, and enhancement of our overall margin mix while reducing our risk,” said Joe Cutillo, Sterling’s Chief Executive Officer. “Plateau is a transformational acquisition in that it not only complements our core heavy civil construction and commercial concrete businesses, but also gives Sterling access to new geographies and rapidly growing end markets. Given the similarities in project execution experience and capabilities, and the opportunity to leverage both our existing fleet of equipment and current geographic footprint, we are highly enthusiastic about Plateau’s ability to drive increased value for our shareholders.”