Sterling Infrastructure (NASDAQ:STRL) reported sharply higher second-quarter results as demand for mission-critical infrastructure work, including data centers and semiconductor campuses, drove growth in its E-Infrastructure Solutions segment. Management also raised its full-year outlook to reflect improved expectations for its core operations and contributions from the StoneRidge acquisition.
Chief Executive Officer Joe Cutillo said second-quarter revenue rose 90% from a year earlier, while adjusted diluted earnings per share increased 116% to $5.80 from $2.69. Adjusted EBITDA more than doubled, and its margin expanded 150 basis points year over year to 22%.
Backlog Expands as Mission-Critical Demand Accelerates
Signed backlog totaled $4.3 billion at quarter-end, up 116% from the prior-year period. Combined backlog, which includes unsigned awards, reached $5.6 billion, a 150% year-over-year increase. Sterling also cited more than $1.4 billion in high-probability future-phase opportunities.
Together, signed backlog, unsigned awards and future-phase opportunities represented more than $7 billion of potential work, up more than $2.5 billion since year-end, according to management. Excluding the StoneRidge acquisition, signed backlog grew 50% year over year and combined backlog increased 36%.
E-Infrastructure signed backlog, unsigned electrical awards and future site-development phases exceeded $6 billion, an increase of $2.7 billion from year-end. Mission-critical work, including data centers, manufacturing projects and semiconductor projects, accounted for more than 92% of E-Infrastructure signed backlog.
Management said future phases are not necessarily a full measure of the company’s visibility. Cutillo said some customers are expanding projects beyond initially defined property or building plans, and that Sterling is seeing potential assignments that could last five to 12 years. The company does not currently include all such potential expansions in its future-phase figures.
E-Infrastructure Drives Growth; Transportation Mix Shifts
E-Infrastructure revenue climbed 192% in the second quarter, led by data-center and semiconductor-campus work. Adjusted operating income in the segment grew 148%, while adjusted operating margin remained at 24%.
Sterling’s site-development operations more than doubled revenue organically, with particularly strong growth in the Rocky Mountain division, where revenue increased nearly 700%. The Northeast business also benefited from a ramp-up in work on a large semiconductor campus.
CEC, the company’s electrical-services business, delivered 140% revenue growth from the prior-year quarter. Management said CEC has continued to win additional buildings and phases at data-center projects where it is already working. The company is also pursuing projects that combine electrical and site-development services, though Cutillo said the availability of electricians has limited the pace at which it can expand those integrated assignments.
Management said E-Infrastructure margins were affected by business mix, as CEC’s rapid growth increased the proportion of electrical work. Noelle Dilts, vice president of investor relations and corporate strategy, said adjusted second-quarter margins were in the high-20% range for E-Infrastructure site development and 11.4% for CEC. Cutillo said Sterling sees 300 to 500 basis points of potential CEC margin improvement over 12 to 18 months through a better project mix and the exit from lower-margin legacy business lines, although he said electrical margins are not expected to reach site-development levels.
Transportation Solutions revenue declined 20%, reflecting the reallocation of labor and equipment to higher-margin E-Infrastructure work. The Rocky Mountain operation generated more E-Infrastructure revenue than transportation revenue for the first time, while Sterling continued to wind down low-bid heavy-highway work in Texas. Despite the revenue decline, Transportation Solutions adjusted operating margin rose by more than 500 basis points to 19.5%, and adjusted operating income increased 8%.
Building Solutions revenue declined 1%, as home-builder activity remained relatively flat. The segment’s adjusted operating margin was 9.9%, and management said it expects residential-market headwinds to continue through 2026.
Higher Investment and Raised 2026 Outlook
Chief Financial Officer Nick Grindstaff said cash flow from operating activities totaled $328 million during the first half of 2026. Sterling raised its full-year capital expenditure forecast by $30 million to a range of $130 million to $140 million, citing the need to expand its fleet, increase capacity and improve productivity.
The company ended the quarter with $464 million in cash and $284 million in debt, producing a cash net of debt position of $181 million. Sterling also expanded and extended its revolving credit facilities to $1.5 billion, with a maturity of July 2031, and used the facility to repay its existing term loan.
During the first half, Sterling repurchased $35 million of shares at an average price of $511.18 per share. It had $339 million remaining under its repurchase authorization at quarter-end.
- Revenue guidance: $4.0 billion to $4.15 billion
- Diluted EPS guidance: $17.25 to $17.85
- Adjusted diluted EPS guidance: $19.70 to $20.30
- EBITDA guidance: $829 million to $854 million
- Adjusted EBITDA guidance: $891 million to $916 million
At the midpoints of those ranges, management said the outlook would represent 64% revenue growth, 84% adjusted EPS growth and 79% adjusted EBITDA growth from the prior year.
Management Flags Award Timing and Capacity Constraints
For 2026, Sterling expects E-Infrastructure revenue to grow more than 100%, including contributions from CEC and StoneRidge. Legacy site-development revenue is expected to grow at rates approaching 70% or more, while E-Infrastructure adjusted operating margins are projected in the mid-20% range.
Transportation Solutions revenue is expected to fall 7% to 10% as resources are shifted toward E-Infrastructure, though adjusted operating margin is expected to expand by roughly 150 to 200 basis points. Building Solutions revenue is projected to decline modestly, with margins in the high-single-digit to low-double-digit range.
Cutillo cautioned that awards could be softer in the third quarter before increasing in the fourth quarter and early 2027, based on the timing of customer bid activity. Combined with expected strong third-quarter revenue burn, this could result in a sequential decline in backlog. Management said such a decline would reflect award timing rather than weaker demand.
Sterling said it is investing in recruiting, training, equipment and prefabrication capacity while considering tuck-in acquisitions to expand geographically and add labor capacity. Cutillo identified electricians as the tightest resource and said the company may need additional acquisitions to meet anticipated demand, particularly in Texas and other markets where it is expanding.
About Sterling Infrastructure (NASDAQ:STRL)
Sterling Infrastructure, Inc (NASDAQ: STRL) is a diversified manufacturer and distributor of essential infrastructure products serving municipal, utility and industrial customers across North America. Through its network of wholly owned subsidiaries, the company designs, engineers and produces a wide range of cast and fabricated solutions tailored to the needs of the waterworks, natural gas, telecommunications, electric, traffic safety and parks & recreation markets.
The company’s product portfolio encompasses ductile iron and composite fittings, valve boxes, manhole frames and covers, water and gas meter sets, street light poles and mounting accessories, traffic sign posts with breakaway systems, bollards and related system components.
