With the stock market decline over the past two months, this earnings season promises to hold a few extra surprises.

Whether you paid your taxes early, or you’re still tearing your hair out looking for that one last receipt, there’s something aggravating about April 15^th.

To take your mind off things, I’ve dug up some information on a special kind of tax-free investment: real estate investment trusts, or REITs.

REITs are special companies that pay ZERO corporate taxes as long as they pay out over 90% of their profits to shareholders in the form of dividends. Obviously, you have to pay tax on the dividends – but as a shareholder, that’s the only tax you’ll pay. Non-REIT shareholders get dinged twice: once as an owner (corporate tax) and again as a shareholder (capital gains and dividend taxes).

Okay, I know what you’re thinking: what does a REIT have to do with commodities?

The sound of hammers may have slowed to a thud in the United States, but there is no shortage of building booms worldwide. With a global construction market estimated at $4.8 trillion in 2008, Hill International (NYSE:HIL) has benefited from a highly diverse group of customers, from Europe to the Middle East, and North Africa to the Asia/Pacific region.

At a market cap of $583 million, the New Jersey-based company provides project management and construction claims services to a worldwide base of clients. Founded in 1976 by the company’s current CEO, Irvin E. Richter, Hill does business with the U.S. federal government, state and local governments, foreign governments and the private sector. It has also provided consulting services on major projects that have included the construction of the Comcast Center in Philadelphia, Penn. and the modernization of the U.S. Supreme Court Building in Washington, D.C.

But its international presence is really where Hill’s efforts have paid off. The company has emerged from a slowdown in the United States largely unscathed due to the global diversity built into its portfolio of clients. The company does a significant amount of work in Iraq and other Middle Eastern countries and has allowed it to cash in on economies such as Dubai, which have been experiencing rapid growth in recent years. Among Hill’s recent wins is a project with the Dubai Department of Civil Aviation. The Middle East and North Africa now account for approximately 37.5% of the company’s consulting fee revenue.

In terms of an operational breakdown, Hill’s project management business accounted for approximately two-thirds of the company’s consulting fee revenue in 2007. Its construction claims services accounted for the other third. The project management segment aims to help its clients identify, avoid and correct potential difficulties that might arise in a construction project. It also helps clients manage all phases of construction projects from the pre-design phase up through completion.

The construction claims business has slightly higher margins and has been growing in size. In 2006, the company made acquisitions that tripled the size of the construction claims business segment. This segment assists its clients in preventing and resolving disputes that arise over the course of the construction process such as delays . . .

Matrix Service Co. (Nasdaq:MTRX) CEO Mike Bradley said he anticipates fiscal 2009 to be a “strong turnaround year” for the Tulsa, Okla.-based company, which provides construction and maintenance services to the energy industry. Bradley made the comments during a midday conference call with investors and analysts.

“We are starting to see key clients commit to substantial turnaround work,” Bradley said. “We expect to see a strong finish to our fiscal year. We are focused on carrying through on our existing contracts and strengthening our underlying business.”

Bradley said the firm is pleased with its quarterly performance and with its future opportunities.

In a statement released before Thursday’s opening, Matrix said it projects fiscal 2008 revenue between $720 million and $740 million. Analysts expect $748 million. The firm’s revenue in fiscal 2007 totaled $639.8 million.

Before the opening, Matrix posted third-quarter net income of $6 million, or $0.22 per share, down 3% from $6.2 million, or $0.24 per share, a year earlier. Wall Street analysts, on average, anticipated earnings of $0.28 per share.

The quarterly results included a pre-tax charge of $0.06 per share related to construction project costs in the Gulf Coast. In response to an . . .

America is crumbling, and we’re not talking the economy here.

The U.S. infrastructure needs upgrading worse than that old computer running Windows 98. Just a few of the problems faced by state and municipal governments are packed roads that can’t handle 21st-century traffic, century-old water and sewer lines continually springing leaks, and airports lacking the long runways needed to handle the biggest jets leaping to the skies.

Even with budget shortfalls knocking on the doors of government at all levels, elected officials know they must keep the customer satisfied by paving the potholes and keeping the water and sewage flowing for consumers and businesses. Sterling Construction Company, Inc. (Nasdaq: STRL) has been lending its expertise to all sorts of public projects in the building and rebuilding of Texas and the Southwest.

Mom and Pop might suck it up and put off some of those big home improvements during the current economic downturn, but they’re going to give government officials an earful if they’re repeatedly sitting in traffic jams or finding a sewage backup in their basement.

That’s where Sterling Construction comes in. Primarily operating through its Texas Sterling Construction business, which traces its lineage back more than half a century, Sterling has been winning a healthy stream of contracts from state and municipal government for transportation and water infrastructure projects in the Longhorn state.

Last month, the company announced its latest deals: it was the low bidder on a $26 million road project in Collin County, Texas, north of Dallas, with completion expected in the fall of 2010, and it was the apparent low bidder on a $55 million rebuilding project for the North Texas Toll Road Authority that will continue into the summer of 2010.

Three analysts surveyed by Thomson Financial have a favorable view of Sterling Construction with either a “strong buy” or “buy” rating on the stock. The recent median 12-month price target from Thomson is $26.50. On Thursday, Sterling closed at $18.40.

Hill International Inc. (Nasdaq: HINT)
Marlton, N.J.
http://www.hillintl.com/

52-week low / high: $8.07 / $13.10
Shares Outstanding: 36.13 million
Market Capitalization: $384.39 million

If you spend time surfing the Web, you may have seen the incredible pictures of recent Dubai construction projects. One of the most striking is a series of artificial islands that, when viewed through satellite pictures, form the shape of a palm tree. When completed, the Palm Jumeirah will be home to 32 five-star hotels, a monorail, four marinas, 60,000 residents and ample entertainment and retail offerings. As an investor, you might be thinking, “Who is making money off this amazing project?”

Hill International Inc. (Nasdaq: HINT), a small-cap based in New Jersey, is among the many companies profiting from Dubai’s explosive growth. The international construction manager is currently managing the construction of 1,300 villas on the Palm Jumeirah, among several other Dubai-based projects.

A wide geographic and client-type mix keeps Hill’s revenue diversified. About 20% of revenue comes from the U.S. government, 14% from foreign governments and the rest from private-sector companies. In terms of geography, about 18% of the firm’s sales come from Europe, 38% from the Middle East and 43% from the Americas.

Much of Hill’s income comes from contracts that have terms of three to five years. On Jan. 9, the company said at a CJS Securities conference that the “predictable nature of these contracts provides a stable base of recurring revenue and provides increased visibility of future performance.” At the end of fourth quarter of 2007, Hill’s 12-month order backlog had increased to $179 million, from $95 million a year earlier.

Over the last 52 weeks, Hill’s stock price has ranged from $6.60 to $14.35. The recent momentum has been positive, in spite of the overall market turmoil. The 52-week low was set a year ago on Jan. 24 while the year-high was established on Dec. 31, after Hill announced it received a four-year, $9.8 million contract to provide project management services for a tower construction project in Abu Dhabi.

The 32-year-old company is moderately owned by insiders. Fifty-two percent of Hill’s shares are held by insiders and 20% of 28.59 million outstanding shares are held by institutional owners.

In the most recent quarter, Hill posted net income of $3.8 million, or $0.13 per share, up from $2.9 million, or $0.12 per share, a year earlier. Revenue for the three months ended Sept. 30 rose to $72.2 million, from $49.9 million during the same period of 2006.

“We are extremely pleased with our excellent financial performance in the third quarter, having achieved record revenue, profits and backlog,” CEO Irvin E. Richter said in a statement. “We expect continued strong performance during the remainder of 2007 and beyond.”

The company’s fourth quarter ends in December. Last year, Hill reported its fourth quarter results in March.

At the Jan. 9 investors conference, Hill made a pitch to investors. Executives said the firm has high margins, low risk, a proven management team and is the only pure-play project management company. Additionally, Hill management mentioned that the company has an attractive valuation below its peer group.

Although this company’s stock price had a significant run-up in the fall, Hill International has kept announcing new, and lucrative, contracts and considerable upside may still exist.

Note: Hill International (Nasdaq: HINT) is on the “Watch List” of Growth Report, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Hill displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Growth Report portfolio at a later date.

China Architectural Engineering, Inc. (AMEX: RCH) shares are jumping after the construction company announced it was awarded a contract to build the façade for the China Water Conservancy Museum in Hangzhou, China. The company said this contract and the Hangzhou International Conference Center contract announced earlier this week are worth more than $8 million.

“As an important representation of China’s ancient architecture, the ‘Xiaoshan International Water City’ has finished construction in Hangzhou, China, and we are proud to announce that our company has been awarded the contract to install the external facade of the China Water Conservancy Museum,” CEO Ken Yi Luo said in a statement.

The museum will be built on the shore of the Qiantang River in the form of a traditional Chinese tower.

In pre-market trading, RCH shares are up 10.01%, or $0.70, at $7.69. Over the last 52 weeks, shares have ranged from $4.80 to $27.25.

Beacon Roofing Supply, Inc. (Nasdaq: BECN) CEO Bob Buck said the distributor of roofing material’s business decline has slowed but will not make a specific prediction. Buck made the comments during a morning conference call.

“It seems to have slowed but we’d rather not make a prediction and that’s why we are so focused on cost reductions for fiscal 2008,” Buck said.

Buck said gross margins remain pressured in most regions and across all of Beacon’s product groups, but that gross margins have “settled down somewhat” sequentially, as compared to the third quarter. Beacon’s non-residential segment is the most stable, he said.

“[The commercial segment] is still stronger than residential and our suppliers remain optimistic about 2008 on their various earnings calls that have occurred over the last several months,” Buck said.

Beacon believes it can achieve the midpoint of current sales and profit estimates for fiscal 2008. Analysts, on average, expect fiscal 2008 earnings of $0.60 per share on $1.76 billion in revenue.
 
“Please understand our nature is optimism but our business plan is based upon realism,” Buck said. “By that, I mean this: we really believe we can achieve the midpoint of current sales and profit estimates for 2008. It could be achieved with an industry recovery in the second half of the year or it could be achieved by watching every expense, every day, particularly at our shelter regions.”

Before the opening, Beacon recorded fourth-quarter net income of $11.3 million, or $0.25 per share, in line with analyst estimates and compared with $14.6 million, or $0.32 per share, a year earlier. Quarterly sales rose 14.5% to $493.8 million, above Wall Street projections of $480.11 million and from $431.3 million during the year-ago period.

Beacon Roofing Supply, Inc. (Nasdaq: BECN) reported fourth-quarter earnings in line with analyst expectations.

For the three months ended Sept. 30, the Peabody, Mass.-based company recorded net income of $11.3 million, or $0.25 per share, in line with the consensus of nine analysts polled by Thomson Financial. For the fourth quarter last year, the small cap earned net income of $14.6 million, or $0.32 per share.

Sales increased 14.5% to $493.8 million from $431.3 million in the fourth quarter of last 2006. The reported quarter’s sales were above the $480.11 million six analysts polled by Thomson Financial were on average forecasting.

Beacon attributed the increase to acquisitions completed since last year's fourth quarter, including North Coast Commercial Roofing Systems—acquired at the beginning of the third quarter. The company noted, however, that the positive impact from the acquisitions was partially offset by a decline of 8.3% in internal sales primarily caused by a 16.4% decline in residential roofing sales, complementary product sales down 1.6% and existing markets non-residential (commercial) roofing unchanged.

Shares of Beacon Roofing Supply (BECN) were halted in pre-market trading.

As lackluster economic data surrounding housing continues to roll out, the homebuilders industry group continues to take a battering and Standard Pacific Corp. (NYSE: SPF) is no exception.

UBS initiated a “sell” rating late Monday on the constructor and seller of single-family attached and detached homes, citing greater risk perceived in comparison to its peer group.

UBS analyst David Goldberg gave the small-cap three strikes. The analyst said he believes that Standard Pacific will incur higher land-related charges as a percentage of tangible book value in comparison with peers who have older land positions, as the homebuilder has expanded geographically over the past ten years. 

“[Standard Pacific has] significant entry-level and first move-up exposure outside California ... and we expect liquidity constraints for these segments to be more severe in the future,” Goldberg wrote in a research note. Excluding California, the analyst said he estimates that approximately 50% of Standard Pacific’s sales were to entry-level and first move-up buyers.

Adding insult to injury, according to Goldberg, Standard Pacific has greater leverage than its peers, which in Goldberg’s opinion could drive an increase in advertising expenditures as the firm attempts to generate greater sales and free cash flow.

UBS maintains a pessimistic outlook on the macroeconomic environment, as the investment bank cited rising supply levels and reduced demand. Today the National Association of Realtors reported that total existing-home sales fell 4.3% to a seasonally adjusted annual rate of 5.50 million units in August. Economists had projected a more modest decline to 5.55 million from a level of 5.75 million in July.

Three strikes coupled with a continued gloomy macroeconomic outlook for the sector could lead investors to think that shares of Standard Pacific may just be out. However, while there are legitimate risks that Goldberg cited, there are a couple of mitigating factors. Goldberg says the company’s decentralized operating structure allows for greater flexibility, as more control is put in the hands of local management and renders such management more adept to responding to changes in the market. Additionally, Goldberg noted that the firm’s experience in improvement projects allows Standard Pacific access “unique opportunities.”

Shares of Standard Pacific (SPF) fell $0.74, or 10.50%, to $6.31 in midday trading Tuesday.

Until the housing market finds its footing, demand for Gehl Company’s (Nasdaq: GEHL) building equipment will continue to slide. Take the skid loader...please.

Auguring a rocky rest of 2007, Gehl (Nasdaq: GEHL), which makes compact equipment for residential and industrial markets, said last week with second quarter results that housing demand was worse than expected. Gehl’s order backlog as of June 30 was 40% below last year’s level and down 34% sequentially. Dealer inventories also grew by about ten days in the second quarter. The West Bend, Wis., company is now working off of large orders placed in the first quarter and expects its backlog to decline through the year.
 
As sales slowed, Gehl’s earnings fell to $0.71 per diluted share for the quarter, down from $0.75 in the same quarter of 2006. Revenues also were down, at $135.3 million, from $139.5 million. Because of its shallow backlog and weak North American housing market, Gehl cut back on guidance for the year, now looking for earnings of $2.05 to $2.25 per share, compared with previous guidance of $2.15 to $2.35, and compared with $2.26 in 2006. The company is now pegging sales at $465 million to $485 million, down from its earlier range of $475 million to $500 million, compared with $486 million in 2006.

Maneuverability is at the heart of Gehl’s business: it makes skid loaders, telescopic handlers and other compact earth-moving equipment used where space and utility are at a premium. Maneuverability is a quality Gehl needs badly, as well, for the company is trying to navigate the rotten foundation of an ongoing housing slump.

Although Gehl serves agricultural needs, its outlook is firmly tethered to residential and industrial demand. And the outlook there—barring those who believe in quick fixes—is daunting. From the Census Bureau for June: building permits for housing units were down 7.5% from May and were 25.2% below those of a year earlier. Housing starts were up 2.3% from May but down 19.4% from June 2006.

Global provider of specialized polymer materials PolyOne Corp. (NYSE: POL) announced that it expects to see second quarter sales rebound sequentially by 4% to 6% over the first quarter of 2007.

For the second quarter, which ends this month, the Cleveland, Ohio, company said despite weakness in construction-related and automotive end markets, it expects sales will be flat to slightly up compared with the second quarter of 2006.
  
PolyOne said income performance from its vinyl chain business segments is projected to be weak as a result of poor demand in construction-related end markets and escalating raw materials.

Although second quarter sales for PolyOne’s vinyl business segment are forecasted to increase sequentially, significant raw material cost increases are anticipated to materially decrease segment earnings results compared with the first quarter of 2007.
 
While PolyOne expects to see weakness in its vinyl business segment, the company said it anticipates strong year-over-year sales and earnings increases for its international color and engineered materials segment, with double-digit growth in both Europe and Asia.

The Russell 2000 is in the red while the Dow is looking to yet another record close following news of mixed economic data and a lower-than-expected rise in construction spending.  Among small caps, news of a restructuring plan is hurting shares of Delta Galil Industries Ltd. (Nasdaq: DELT), while strong quarterly results lifted Datawatch Corporation (Nasdaq: DWCH).

At 11:57 a.m. ET the Russell 2000 had lost 2.15 points, or 0.26 percent, to 827.55.  The Dow Jones Industrial Average was up 11.70 points, or 0.09 percent, to 13,132.64.  That’s above Friday’s record close of 13.120.94.