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    STRL
    Earnings call· Mar 2026(Q1 FY26)

    STERLING INFRASTRUCTURE Q1 FY26 earnings call STRL

    May 5, 2026 Source

    Executive summary

    Sterling Infrastructure Q1 FY26 — Record E-Infrastructure Growth and Strong Backlog

    Sterling Infrastructure delivered a robust Q1 FY26, driven by exceptional growth in E-Infrastructure, particularly from data center demand and a significant semiconductor fab award. The company is strategically prioritizing high-return projects and expanding its capabilities, including modular construction, while navigating residential market headwinds and managing resource allocation across segments. Management is confident in its multi-year outlook, supported by strong backlog and customer pull into new geographies.

    Highlights

    5

    • Strong revenue growth of 92% in Q1 FY26.

    • Adjusted diluted EPS growth of 120% in Q1 FY26.

    • Adjusted EBITDA more than doubled with margins expanding over 150 basis points to a new Q1 record of 20%.

    • Combined backlog grew 131% to $5.2 billion, with total pool of work approaching $6.5 billion.

    • Awarded first phase of a multi-phase semiconductor fabrication campus, valued over $0.5 billion.

    Concerns

    2

    • Residential market expected to face strong headwinds throughout 2026, with Building Solutions revenue anticipated to be modestly down.

    • Transportation Solutions growth rates expected to moderate in remaining quarters due to early project starts, resource allocation to e-infrastructure, and wind down of Texas low-bid work.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $3.7 billion to $3.8 billion
    high materiality
    High
    Full-year 2026 Diluted EPS
    $16.50 to $17.15
    high materiality
    High
    Full-year 2026 Adjusted Diluted EPS
    $18.40 to $19.05
    high materiality
    High
    Full-year 2026 EBITDA
    $801 million to $831 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $843 million to $873 million
    high materiality
    High
    Full-year 2026 Capital Expenditures
    $100 million to $110 million
    medium materiality
    High
    Full-year 2026 E-Infrastructure Revenue Growth
    80% or higher
    high materiality
    High
    Full-year 2026 E-Infrastructure Legacy Business Revenue Growth
    60% or higher
    high materiality
    High
    Full-year 2026 E-Infrastructure Adjusted Operating Profit Margins
    mid-20% range
    high materiality
    High
    Full-year 2026 Transportation Solutions Revenue Growth
    low to mid-single-digit range
    medium materiality
    Medium
    Full-year 2026 Building Solutions Revenue
    modestly down
    medium materiality
    Medium
    Full-year 2026 Building Solutions Adjusted Operating Margins
    low double digits
    medium materiality
    Medium
    CEC Margin Expansion
    300 to 500 basis points
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    E-Infrastructure
    Primary growth driver was the data center market. Margins expanded despite dilutive impact of CVC acquisition. Future phase work predominantly related to mission-critical projects.
    Organic growth: over 100%Adjusted operating income: 177% increaseMission-critical work (data centers, large manufacturing, semiconductor): >90% of signed backlogCEC revenue growth: 78%CEC combined backlog increase: $1.2B since YE25E-Infrastructure signed backlog, unsigned awards, future phase opportunities: >$5B (+$2B since YE)
    		174% growth174%—mid-20% range (FY26 guide)
    Transportation Solutions
    Benefited from strong activity in the Rocky Mountain region due to favorable weather and earlier-than-anticipated project starts. Mix shift towards higher-margin projects drove margin improvement.
    Backlog: $1.04BBacklog YoY increase: 20%Rocky Mountain region: strong activityTexas low bid heavy highway business: downsizing progressing
    		10% growth10%—26% growth (adjusted operating income)
    Building Solutions
    Encouraged by slight revenue increase, but anticipates residential market headwinds throughout 2026. Adjusted operating margins expected to be in the low double digits for FY26.
    Homebuilder activity: pickupKey geographies: Dallas-Fort Worth, Houston, Phoenix
    		3% growth3%—8.7% (adjusted operating margins)

    Operational metrics

    12
    Adjusted EBITDA Margin
    20%expanded over 150 basis points year-over-year
    Q1 FY26
    Capital Expenditures
    $20 million
    Q1 FY26
    Share Repurchases
    $12 million
    Q1 FY26
    Remaining Share Repurchase Authorization
    $362 million
    Q1 FY26 end

    Company will remain opportunistic in its approach.

    Cash Balance
    $512 million
    Q1 FY26 end
    Debt Balance
    $287 million
    Q1 FY26 end
    Cash Net of Debt
    $224 million
    Q1 FY26 end
    Revolving Credit Facility
    $150 million
    Q1 FY26
    CEC Margin Expansion Target
    300 to 500 basis points
    next 12-18 months

    Expected from exiting lower-margin work and leveraging combined offerings.

    Project Manager Capacity Increase
    15%
    current
    Modular Build Capabilities Expansion
    triple the size
    current

    Locked down a lease for expansion, with plans to build a world-class manufacturing site and expand to other U.S. locations.

    Electricians Needed
    2,000 or 3,000
    current

    Needed to grow the electrical and site side even faster.

    Industry KPIs

    5
    MetricValueDetails
    Total backlog$3.8 billionUSD
    Book to bill ratio2.1x
    End market pipelineover 90%%
    Same store organic revenue growthover 100%%
    Craft skilled labor headcount capacity2,000 or 3,000 moreelectricians

    Orderbook & backlog

    8
    Signed Backlog$3.8 billionQ1 FY26 end

    78% year-over-year increase

    Combined Backlog$5.2 billionQ1 FY26 end

    131% increase

    Future Phase Opportunities$1.3 billionQ1 FY26 end
    Total Pool of Work (Signed Backlog + Unsigned Awards + Future Phase Opportunities)approaching $6.5 billionQ1 FY26 end

    grown by approximately $2 billion since year-end

    Book-to-Burn Ratio (Backlog)2.1xQ1 FY26
    Book-to-Burn Ratio (Combined Backlog)3.5xQ1 FY26
    Semiconductor Fabrication Campus Award (First Phase)over $0.5 billionQ1 FY26

    Expected to be completed in late 2027 or early 2028.

    Transportation Solutions Backlog$1.04 billionQ1 FY26 end

    20% year-over-year increase

    Deals & partnerships

    1
    Unnamed semiconductor companyAwarded first phase of a multi-phase semiconductor fabrication campus.over $0.5 billionmulti-decade period (campus build)

    This first phase, which will be executed under a joint venture, totals over $0.5 billion and is expected to be completed in late 2027 or early 2028. The campus build is expected to span a multi-decade period and presents opportunities for additional scopes of work through 2027 and beyond.

    Risks & headwinds

    2
    Residential Market Headwindsthroughout 2026

    Building Solutions revenue expected to be modestly down in 2026.

    Mitigation: Diversified portfolio, focus on high-growth/high-margin end markets, opportunity for share gain coming out of down cycle.

    Moderation of Transportation Solutions Growthremaining quarters of 2026

    Transportation Solutions revenue expected to grow in the low to mid-single-digit range in 2026.

    Mitigation: Driven by early project starts in Q1, resource allocation towards e-infrastructure projects, and final wind down of Texas low-bid work.

    What to watch in Q2 FY26

    5

    E-Infrastructure Margin Trajectory

    next quarter and beyond
    Current20% (Q1 record)
    Targetcontinued tick up

    Why it matters

    E-Infrastructure margins are a key driver of overall profitability, and management expects continued expansion due to complexity and vertical integration.

    Our margins will improve, and they will improve for a couple of reasons. As these jobs become more complex, we drive better productivity... we will continue to see margins tick up in E-Infrastructure as we go forward.

    Q&A highlights

    6

    What drove better-than-expected Q1 revenue and margins, especially in a seasonally slower quarter? And how are current M&A targets "better" than before?

    Favorable weather in Rocky Mountains helped Transportation, but E-Infrastructure's strong performance was due to larger, more complex projects leveraging vertical integration, driving productivity and margin expansion. M&A focuses on talent, geographic expansion (site development) and incremental services (electrical), with a broader look at customer needs.

    “The larger they get, the more complex they get, the more we can leverage our vertical integration and our size and our scope, which drives more productivity. And that's why we've said all along and we feel even more confident as we're executing, we'll continue to see nice margin growth in eIfrastructure.”

    asked by Sangita Jain · answered by Joseph Cutillo

    2 min read6 chapters

    Detailed Narrative

    01

    E-Infrastructure Growth Drivers

    The E-Infrastructure segment saw significant growth, with revenue up 174% (over 100% organic), primarily driven by the data center market. The company is being pulled into new geographies like Texas, Pacific Northwest, and Midwest by hyperscaler customers, with projects growing in size, complexity, and duration, now reaching multi-thousand acres and 4-5 year durations. This trend reinforces confidence in multi-year opportunities.

    02

    Strategic Project Selection and Vertical Integration

    Sterling is focused on "the best projects" rather than all projects, leveraging its vertical integration and scale to drive productivity and margin expansion. This approach has led to margins expanding despite the dilutive impact of the CVC acquisition, with E-Infrastructure adjusted operating income increasing 177%. The company believes margins will continue to tick up due to increased project complexity, vertical integration, and combined electrical/site civil packages.

    03

    Semiconductor Market Entry

    The company was awarded the first phase of a multi-phase semiconductor fabrication campus, valued over $0.5 billion, to be executed under a joint venture in the Northeast by its Pilla union operation. This marks Sterling's entry into the semiconductor market, which is expected to accelerate significantly from 2029-2030, positioning Sterling as a key supplier.

    04

    CEC Integration and Expansion

    The integration of CEC (electrical services) is progressing ahead of schedule, with joint data center projects materializing 6-8 months earlier than expected. The company is bullish on CEC's margin expansion, targeting 300-500 basis points in 12-18 months by exiting lower-margin work and leveraging combined offerings. Sterling is also tripling its modular build capabilities and plans to expand to other locations.

    05

    Transportation and Building Solutions Outlook

    Transportation Solutions, despite being a "cash cow" with strong margins, is seeing assets shifted towards E-Infrastructure. Its low-bid heavy highway business in Texas is winding down, with underground assets being converted to support E-Infrastructure. Building Solutions, while showing a slight revenue increase, is expected to be modestly down for FY26 due to residential market headwinds🌐, but the company sees long-term growth potential in its key markets.

    06

    M&A Strategy and Capacity

    Sterling is actively seeking high-quality acquisition targets, particularly for geographic expansion in site development and incremental services in electrical. The focus is on acquiring talent and capabilities that enhance its portfolio and support customer needs, with a strong balance sheet to capitalize on opportunities. The company acknowledges the challenge of finding suitable site development acquisitions due to its unique scale.

    AI-generated summary of the company’s earnings call. Not investment advice.