Sterling Infrastructure, Inc. announced an amendment to its Road and Highway Builders, LLC (RHB) Operating Agreement, executed on December 31, 2024. This amendment changes the accounting treatment for RHB under Generally Accepted Accounting Principles (GAAP), moving from full consolidation to the equity method of accounting, effective January 1, 2025. The change does not alter RHB's historical or future contribution to Sterling's consolidated net income.
As a result of this contractual change, RHB's revenue, which was projected to be between $230 million and $240 million in 2024, will no longer be included in Sterling's consolidated revenue starting in 2025. Additionally, Sterling's consolidated backlog figures as of December 31, 2024, will no longer incorporate RHB's backlog, estimated to be between $425 million and $475 million at year-end 2024. Sterling anticipates recognizing a significant non-cash net gain on the transaction in its 2024 Consolidated Statement of Operations.
Starting in 2025, 50% of RHB's operating income will be presented on a single line in Sterling's Consolidated Statements of Operations. CEO Joe Cutillo affirmed the continuation of the mutually beneficial relationship with RHB, highlighting Rich Buenting as an excellent business leader and trusted joint venture partner.
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