8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

CURRENTREPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 7, 2007

STERLING CONSTRUCTION COMPANY, INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	001-31993 (Commission File Number)	25-1655321 (IRS Employer Identification Number)
	20810 Fernbush Lane Houston, Texas  77073 (Address of principal executive offices)
(281) 821-9091 (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On August 10, 2007, Maarten D. Hemsley, who has been the Chief Financial Officer of Sterling Construction Company, Inc. (the "Company") for almost twenty years, resigned as Chief Financial Officer, reflecting the culmination of a long-term goal agreed by Mr. Hemsley and the Company's Board of Directors to transition to a full-time, Houston-based chief financial officer.  Mr. Hemsley remains a director of the Company and will remain an employee through October 31, 2007 to assist in the transition.

On August 7, 2007, the Board of Directors of the Company elected James H. Allen, Jr. a Senior Vice President and, effective with Mr. Hemsley's resignation on August 10, 2007, Chief Financial Officer and Chief Accounting Officer of the Company.

From August 1966 to December 1996, Mr. Allen was at Arthur Andersen & Co. including 19 years as a partner.  In January 1997 he retired, but came out of retirement from August 1999 to May 2002, to act as a business consultant to investor groups, startups and small companies and again from May 2002 to November 2005, to take the position of Vice President and Chief Financial Officer of Continental Carbon Company, a privately-held manufacturer of carbon black used primarily in the tire industry.  None of the companies of which Mr. Allen was an employee has any affiliation with the Company.  Mr. Allen is 66 years old and is a Certified Public Accountant.

On August 7, 2007, the Compensation Committee of the Board of Directors of the Company approved a compensation package for Mr. Allen (contingent on his election by the Board of Directors of the Company as a Senior Vice President and, effective August 10, 2007, Chief Financial and Chief Accounting Officer as described above) that consists of $250,000 plus bonus to be subject to the achievement of personal goals and Company financial goals yet to be determined, and a five-year stock option to acquire 13,707 shares of the Company's common stock that vests in three substantially equal annual installments on the first three anniversaries of August 7, 2007 and is exercisable at a price per share equal to the closing price per share of the Company's common stock on August 7, 2007 on the NASDAQ Global Select Market ($18.99).  Mr. Allen will also be reimbursed $1,000 a month for the cost to him of his existing health insurance plan that he maintains on his own behalf.  Mr. Allen's compensation will be included in a formal, written employment agreement not yet finalized that will be disclosed in a subsequent report filed under the Securities Exchange Act of 1934.

Item 9.01  Financial Statements and Exhibits.

(c)           Exhibits

Exhibit No.  Description

99.1 Press release dated August 9, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Sterling Construction Company, Inc.
By:
	Patrick T. Manning
	President & Chief Executive Officer

Dated: August 10, 2007

EX-99.1

FOR IMMEDIATE RELEASE

STERLING CONSTRUCTION COMPANY, INC. REPORTS

RECORD SECOND QUARTER OPERATING RESULTS

REAFFIRMS 2007 GUIDANCE

APPOINTS JAMES H. ALLEN, JR. AS CHIEF FINANCIAL OFFICER

HOUSTON, TX – August 9, 2007 – Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) today announced record revenues and net income for both the second quarter and the first half of 2007.

Second Quarter 2007 Compared to Second Quarter 2006 (Continuing Operations)

§   Revenues rose 19% to a record $71.3 million from $60.0 million, despite very wet weather in the quarter;

§   Operating income increased to a record $5.3 million from $4.5 million in the second quarter last year;

§   Net income from continuing operations was $3.8 million, as compared with $3.2 million for the second quarter of 2006;

§   Diluted earnings per share from continuing operations were $0.32 compared with $0.27 in the second quarter last year.

First Half 2007 Compared to First Half 2006 (Continuing Operations)

§   Revenues rose 20% to a record $140.2 million from $116.5 million, despite the very wet weather in both the first and second quarters;

§   Operating income was $8.6 million compared with $8.8 million last year, reflecting the lower income in the first quarter this year;

§   Net income from continuing operations was a record $6.3 million, as compared with $6.2 million for the first half of 2006;

§   Diluted earnings per share from continuing operations were $0.54 compared with $0.53 in the first half last year.

Commenting on the results, Joe Harper, Sterling’s President and Chief Operating Officer, said, “In the second quarter we once again achieved record revenues, reflecting the expansion of our equipment fleet and the addition of new plant and work-crews, all of which enabled us to take advantage of our strong backlog.  Revenues and profits in the second quarter would have been even higher but for the above-average number of days of heavy rainfall in May and June.

“This brings our first half revenue growth to 20%,” he continued.  “As in the first quarter, however, lower average margins in backlog combined with the heavy rainfall led to lower gross margins, but we achieved gross profit gains in the second quarter on several contracts nearing completion, and by reducing costs through re-designing certain other projects.  As a result, gross margins improved in the second quarter to 11.3% compared with 8.2% in the first quarter, and operating income rose to a new quarterly record.”

Sterling Construction News Release August 9, 2007 Page 2

Outlook

Pat Manning, the Company’s Chairman and Chief Executive Officer, noted that approximately $66 million of construction contracts were added to backlog in the second quarter, with backlog at the end of the quarter standing at $394 million, unchanged from the beginning of the quarter.

“The bidding climate in our markets continues to be strong, and we are very pleased with our 20% organic growth rate,” he said.  “As we have said previously, we also continue to actively pursue potential acquisition opportunities.”

Manning noted that there has been a continuation through July of the very wet weather that affected Sterling’s markets in the first half. “Because of the variability of results in our industry from quarter-to-quarter, especially as the result of weather,” Mr. Manning said, “investors are encouraged to view quarterly results in the overall context of our annual results and guidance, and are reminded that the Company’s policy is to provide guidance only on annual results; we do not issue guidance about quarterly results.”

In light of the good second quarter performance, management is affirming its 2007 guidance for revenues of $285 million to $310 million, pre-tax income of $20.3 million to $22.8 million, and net income of $13.4 million to $15.0 million, representing earnings per share, on a diluted basis, of between $1.13 and $1.26.

Election of Chief Financial Officer

Mr. Manning also announced that Maarten Hemsley, who has been the Company's Chief Financial Officer for almost twenty years, is stepping down as CFO, reflecting the culmination of a long-term goal agreed by Mr. Hemsley and the Board to transition to a full-time, Houston-based CFO, in light of the Company’s rapid growth.  Mr. Hemsley will remain a director of the Company and will assist in the transition.

Mr. Manning thanked Mr. Hemsley for his long and valuable service to the Company and said that he is pleased that Mr. Hemsley's expertise and experience will remain available to the Company through his continued service as a director.

In Mr. Hemsley's place, the Board has elected James H. Allen, Jr., 66, as the Company’s new Chief Financial Officer, effective August 10^th.  Mr. Allen is a CPA and was formerly with the Houston office of Arthur Andersen & Co., including 19 years as a partner, where he headed that office’s construction accounting and business advisory practice for a number of years.  From 2002 until 2005, Mr. Allen was Chief Financial Officer of Continental Carbon Company in Houston.

Sterling is a leading heavy civil construction company that specializes in the building, reconstruction and repair of transportation and water infrastructure in large and growing markets in Texas.  Its transportation infrastructure projects include highways, roads, bridges and light rail and its water infrastructure projects include water, wastewater and storm drainage systems.

This press release includes certain statements that fall within the definition of "forward-looking statements" under the Private Securities Litigation Reform Act of 1995.  Any such statements are subject to risks and uncertainties, including overall economic and market conditions, competitors' and customers' actions, and weather conditions, which could cause actual results to differ materially from those anticipated, including those risks identified in the Company's filings with the Securities and Exchange Commission.  Accordingly, such statements should be considered in light of these risks.  Any prediction by the Company is only a statement of management's belief at the time the prediction is made.  There can be no assurance that any prediction once made will continue thereafter to reflect management's belief, and the Company does not undertake to update publicly its predictions, whether as a result of new information, future events or otherwise.

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Sterling Construction News Release August 9, 2007 Page 3

Conference Call

Sterling’s management will hold a conference call to discuss second quarter results and recent corporate developments, at 10:00 am EDT/ 9:00 am CDT today, August 9^th.  The call will be hosted by Patrick Manning, Chairman and CEO, with Joe Harper, President and COO, Maarten Hemsley, retiring CFO, and Jim Allen, CFO-designate, participating.  Interested parties may participate in the call by dialing 706-679-0858 ten minutes before the conference is scheduled to begin, and asking for the Sterling Construction call.

To listen to a simultaneous webcast of the call, please go to the Company’s website at www.sterlingconstructionco.com at least 15 minutes early to download and install any necessary audio software.  If you are unable to listen live, the conference call webcast will be archived on the Company’s website for 30 days.  We suggest listeners use Microsoft Explorer as their web browser.

Contact:
Sterling Construction Company, Inc.	Investor Relations Counsel
Maarten Hemsley, 781-934-2219	The Equity Group Inc.
or	Linda Latman, 212-836-9609
Joseph Harper, 281-821-9091	Lena Cati, 212-836-9611
www.sterlingconstructionco.com	www.theequitygroup.com

(See Accompanying Tables)

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STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share and per share data)

(Unaudited)

	Three months ended				Six months ended
	June 30, 2007		June 30, 2006		June 30, 2007			June 30, 2006
Revenues	$	71,275	$	60,010	$	140,163		$	116,490
Cost of revenues		63,229		52,700		126,485			102,494
Gross profit		8,046		7,310		13,678			13,996
General and administrative expenses, net		2,876		2,882		5,451			5,309
Other income		108		40		416			158
Operating income		5,278		4,468		8,643			8,845
Interest income		475		384		941			664
Interest expense		42		20		42			114
Income from continuing operations before income taxes		5,711		4,832		9,542			9,395
Income taxes		1,914		1,676		3,209			3,218
Net income from continuing operations		3,797		3,156		6,333			6,177
Income (loss) from discontinued operations, net of income taxes of $0, $144, $0 and $245, respectively		--		208		(25	)		379
Net income	$	3,797	$	3,364	$	6,308		$	6,556
Basic net income per share:
Net income from continuing operations	$	0.35	$	0.30	$	0.58		$	0.60
Net income from discontinued operations	$	0.00	$	0.02	$	0.00		$	0.04
Net income per share	$	0.35	$	0.32	$	0.58		$	0.64
Weighted average number of shares outstanding used in computing basic per share amounts		10,969,513		10,576,649		10,944,654			10,302,716
Diluted net income per share:
Net income from continuing operations	$	0.32	$	0.27	$	0.54		$	0.53
Net income from discontinued operations	$	0.00	$	0.02	$	0.00		$	0.03
Net income per share	$	0.32	$	0.29	$	0.54		$	0.56
Weighted average number of shares outstanding used in computing diluted per share amounts		11,783,284		11,799,809		11,768,881			11,579,436

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STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

 (Unaudited)

	June 30,			December 31,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	15,596		$	28,466
Short-term investments		29,706			26,169
Contracts receivable		50,816			42,805
Costs and estimated earnings in excess of billings on uncompleted contracts		6,561			3,157
Inventories		1,037			965
Deferred tax asset		1,246			4,297
Other		1,952			1,549
Total current assets		106,914			107,408
Property and equipment, net		58,121			46,617
Goodwill		12,735			12,735
Note receivable, long-term		116			325
Other assets		666			687
		13,517			13,747
Total assets	$	178,552		$	167,772
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,073		$	17,373
Billings in excess of costs and estimated earnings on uncompleted contracts		24,796			21,536
Current maturities of long term obligations		123			123
Other accrued expenses		4,016			5,502
Total current liabilities		53,008			44,534
Long-term obligations:
Long-term debt, net of current maturities		25,597			30,659
Deferred tax liability		1,615			1,588
		27,212			32,247
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 14,000,000 shares authorized, 10,997,680 issued and outstanding at June 30, 2007; 10,875,438 issued and outstanding at December 31, 2006		110			109
Preferred stock, $0.01 par value; 1,000,000 shares authorized, no shares issued and outstanding at June 30, 2007 and December 31, 2006		--			--
Additional paid-in capital		115,662			114,630
Accumulated deficit		(17,440	)		(23,748	)
Total stockholders’ equity		98,332			90,991
Total liabilities and stockholders’ equity	$	178,552		$	167,772