Sterling Infrastructure NASDAQ: STRL reported a strong start to 2026, citing record first-quarter profitability, sharply higher backlog, and improving visibility tied primarily to mission-critical work such as data centers, manufacturing projects, and a newly awarded semiconductor fabrication campus project.
First-quarter performance and backlog growth
Chief Executive Officer Joe Cutillo said the company delivered “strong revenue growth of 92% and adjusted diluted EPS growth of 120%” in the first quarter. He added that adjusted EBITDA more than doubled and that adjusted EBITDA margin expanded by more than 150 basis points year over year to a first-quarter record of 20%.
Cutillo emphasized selectivity amid strong demand. “We’re not looking to win all projects. We are looking to win the best projects,” he said.
Backlog increased materially during the quarter. Cutillo said signed backlog ended the quarter at $3.8 billion, up 78% year over year, while combined backlog rose 131% to $5.2 billion. He also highlighted “high probability future phase opportunities” totaling more than $1.3 billion. Taken together, signed backlog, unsigned awards, and future phase opportunities provided “visibility into a total pool of work approaching $6.5 billion,” which Cutillo said grew by about $2 billion since year-end.
A notable award during the quarter was the first phase of a multi-phase semiconductor fabrication campus. Cutillo said the first phase totals more than $500 million, will be executed through a joint venture, and is expected to be completed in late 2027 or early 2028. He described the overall campus build as a multi-decade opportunity with potential additional scopes through 2027 and beyond.
Segment results: E-Infrastructure led growth
In E-Infrastructure, Cutillo said first-quarter revenue grew 174%, including organic growth of more than 100%, with data centers again the primary driver. Adjusted operating income rose 177% as margins expanded “despite the dilutive impact of the CEC acquisition,” he said.
Cutillo said site development revenue more than doubled and operating margins improved both year over year and sequentially, helped by execution on “large, time sensitive, mission critical projects.” He added that CEC delivered 78% revenue growth versus its prior-year first quarter, with margins in line with expectations. The Texas market “remains exceptionally strong,” he said, noting robust award activity early in 2026 and several large wins at CEC that contributed to a $1.2 billion increase in its combined backlog since year-end 2025.
Cutillo said E-Infrastructure signed backlog, unsigned electrical awards, and future phase site development opportunities now exceed $5 billion, up $2 billion since year-end. He also said mission-critical work represented more than 90% of E-Infrastructure signed backlog at quarter-end.
In Transportation Solutions, Cutillo said first-quarter revenue grew 10%, driven by strong activity in the Rocky Mountain region aided by favorable weather and earlier-than-expected project starts. Adjusted operating income rose 26% on execution and a mix shift toward higher-margin projects. Transportation Solutions backlog ended the quarter at $1.04 billion, up 20% year over year.
In Building Solutions, Cutillo said revenue grew 3% on a pickup in home builder activity, with adjusted operating margins of 8.7%. However, he reiterated that Sterling expects “strong headwinds throughout 2026” in residential markets.
Cash flow, balance sheet, and capital allocation
Chief Financial Officer Nick Grindstaff reported operating cash flow of $166 million in the first quarter and said management expects continued strength for the full year. The company spent $20 million on capital expenditures in the quarter and maintained its full-year CapEx forecast of $100 million to $110 million.
Financing cash flow was a $27 million outflow, including $12 million of share repurchases at an average price of $305.14 per share, Grindstaff said. He added that remaining availability under the share repurchase authorization is $362 million and that the company will remain “opportunistic” on buybacks.
On liquidity, Grindstaff said Sterling ended the quarter with $512 million of cash and $287 million of debt, resulting in “a cash net of debt balance of $224 million.” He added the company’s $150 million revolving credit facility was undrawn.
Guidance raised as demand accelerates
Grindstaff said Sterling increased its full-year 2026 guidance, citing backlog, visibility, and market tailwinds. The updated ranges were:
- Revenue: $3.7 billion to $3.8 billion
- Diluted EPS: $16.50 to $17.15
- Adjusted diluted EPS: $18.40 to $19.05
- EBITDA: $801 million to $831 million
- Adjusted EBITDA: $843 million to $873 million
Cutillo said customers are asking for “more,” with projects increasing in “size, complexity, and duration,” and said Sterling is being pulled into new geographies with urgency. For 2026, he said the company expects E-Infrastructure revenue growth of “80% or higher,” including CEC’s full-year contribution, while the legacy E-Infrastructure business is expected to grow “approaching 60% or higher.” He said adjusted operating profit margins for E-Infrastructure are expected to be in the “mid 20% range.”
For Transportation Solutions, Cutillo noted the company is in the final year of the current federal funding cycle ending in September 2026 and expects low- to mid-single-digit revenue growth in 2026, with growth moderating after the strong first quarter due to earlier project starts, resource allocation to E-Infrastructure, and the wind-down of low-bid heavy highway work in Texas. For Building Solutions, he said the company expects revenue to be modestly down in 2026 and adjusted operating margins to be in the low double digits.
Management commentary: Texas, CEC “assimilation,” and capacity
In Q&A, Cutillo attributed the stronger-than-typical first quarter partly to favorable weather in the Rockies and to benefits from larger, more complex projects where Sterling’s “vertical integration” is improving productivity and margins.
Discussing Texas, Cutillo said Sterling is approaching the state with CEC based in Dallas while leveraging teams from the Rocky Mountains and the Southeast to “meet in the middle.” He characterized the Atlanta/Southeast data center market as more mature and larger today, but said Texas is in the “early innings” and could become significantly larger over the next four to five years, with projects that are “extremely big” and increasingly multi-year in duration.
On the CEC acquisition, Cutillo said the company refers to the process as “assimilation, not integration,” and said cross-selling between site development and electrical services is occurring sooner than expected. He said Sterling is actively executing two data center projects where it is providing both services together, roughly “six to eight months” ahead of internal expectations.
Cutillo reiterated an expectation for “300 to 500 basis points” of margin improvement at CEC over the next 12 to 18 months, driven in part by exiting two lower-margin end markets and by improving core performance. He also said Sterling signed a lease to triple its modular-build capacity and is building a manufacturing site to support modular capabilities, with potential expansion to additional U.S. locations over the next 18 months.
On pricing and risk, Cutillo said Sterling’s philosophy is to earn returns through execution rather than pushing price. “The answer is no, we’re not getting more price,” he said when asked about margin drivers, attributing improvements to “effectiveness and efficiency.” He also said the company is willing to say no to projects that are too small, too low-margin, or too risky, emphasizing that Sterling is “incredibly risk-averse.”
Cutillo also outlined how capacity constraints differ by business, noting that electrical work is constrained primarily by the availability of electricians, while site development has “a waiting list of operators” but is more limited by project managers. He said a recent internal AI initiative increased project manager capacity by about 15% and described a combination of internal development programs, acquisitions, and modularization as levers to expand capacity.
Looking longer term, Cutillo said Transportation Solutions has become a “cash cow” with improved margins and increasing operational overlap with E-Infrastructure, including shifting certain underground assets. For Building Solutions, he said Sterling remains focused on growth, citing its positions in Dallas-Fort Worth, Houston, and Phoenix, while acknowledging near-term residential market pressure.
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.
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