What Sterling Infrastructure (STRL) Said on Its Q3 Earnings Call

Key Points

• Sterling Infrastructure delivered explosive third-quarter growth, with revenue up 127%, adjusted diluted EPS up 118% to $7.58, and adjusted EBITDA more than doubling. Total scoped work nearly reached $8 billion, supported by strong demand for data centers, semiconductors and other mission-critical infrastructure.
• E-Infrastructure was the primary growth engine. Segment revenue rose 212%, including $426 million from CEC, whose full-year revenue could exceed $1 billion; Texas and large hyperscaler, semiconductor and co-location projects offer additional expansion potential.
• Management raised its 2026 outlook to $4.63 billion-$4.73 billion in revenue, $21.70-$21.96 in adjusted EPS and $970 million-$981 million in adjusted EBITDA. Sterling ended the quarter with $122 million in net cash and is targeting 20%-30% annual organic profitability growth over the next several years.

Sterling Infrastructure NASDAQ: STRL reported sharply higher third-quarter results, fueled by demand for data center, semiconductor and other mission-critical projects, while management raised its full-year 2026 financial outlook.

Adjusted diluted earnings per share rose 118% year over year to $7.58, Chief Executive Officer Joe Cutillo said on the company’s third-quarter earnings call. Revenue increased 127%, while adjusted EBITDA more than doubled. The company’s total scoped work—comprising signed backlog, unsigned awards and future project phases in design—approached $8 billion, up about 90% from a year earlier.

Cutillo said the company sees a multiyear U.S. investment cycle extending beyond data centers to semiconductors, advanced manufacturing and energy infrastructure. He said the projects Sterling is already serving encompass campuses with hundreds or thousands of acres, supported by land, permits and power commitments, and that the development potential beyond currently scoped work represents more than five years of additional activity.

E-Infrastructure Drives Growth

E-Infrastructure Solutions revenue increased 212% in the quarter, led by data center and semiconductor campus activity. Chief Operating Officer Dan Govin said site-development operations more than doubled revenue organically, with growth across the company’s geographies.

In the Southeast, projects are expanding in acreage, phases and complexity, Govin said. The company also remains ahead of schedule on a large semiconductor campus project in the Northeast. In the Rocky Mountain region, recently awarded large projects supported growth, and Sterling has been redeploying Transportation Solutions resources toward E-Infrastructure work.

Texas is expected to become a meaningful growth driver over the next several years, according to management. Cutillo said Sterling has more opportunities in Texas than it currently has capacity to serve, and the company is evaluating ways to add labor and operational capacity.

Electrical contractor CEC generated $426 million in quarterly revenue, more than quadrupling its pro forma full-quarter revenue in the prior-year period. Govin said accelerated activity on hyperscaler and large co-location projects drove the increase. Management now expects CEC’s full-year revenue could exceed $1 billion.

E-Infrastructure adjusted operating income rose 171%, while adjusted operating margin was 23%. The segment’s margin declined from a year earlier because CEC represented roughly one-third of segment revenue, compared with 10% in the prior-year period. Management said site-development margins remained at first-half levels despite several large projects being in early construction stages, when margins tend to be lower.

CEC’s operating margins improved both sequentially and year over year. Sterling said it is winding down non-core CEC businesses, a process expected to be completed by the end of 2027. Those operations are expected to reduce full-year 2026 CEC margins by approximately 160 basis points, masking what management described as a roughly equivalent improvement in its core operations.

Transportation Profits Rise Despite Lower Revenue

Transportation Solutions revenue declined 3% as the company shifted resources toward higher-margin E-Infrastructure work. Still, adjusted operating income increased 22% and adjusted operating margin reached 19.7%, reflecting more selective project choices.

Transportation backlog ended the quarter at $964 million, up 31% from a year earlier, primarily due to unsigned backlog converting to signed work. On a combined backlog basis, however, the segment declined 22% as resource allocation moved toward E-Infrastructure.

Building Solutions revenue fell 5% as homebuilder activity slowed, and its adjusted operating margin was 8%. Govin said Sterling expects residential conditions to remain under pressure through the rest of 2026 and into 2027.

Cash Flow, Capital Spending and Outlook

For the first nine months of 2026, operating cash flow was $427 million, up 68% from the comparable prior-year period. Chief Financial Officer Nick Grindstaff said receivables increased due to E-Infrastructure growth and collection timing, though the company had already collected a major portion of the outstanding funds in early October.

Investing activities used $276 million of cash year to date, including $115 million in capital expenditures. Sterling now expects approximately $140 million in full-year capital expenditures. Financing activities used $325 million, including $107 million of share repurchases. At quarter-end, $267 million remained available under the company’s repurchase authorization.

On July 2, Sterling expanded its revolving credit facilities to $1.5 billion and extended their maturity to July 2031. The company used the facility and cash on hand to repay its existing term loan. It ended the quarter with $217 million in cash and $95 million in debt, resulting in a net cash position of $122 million.

Sterling raised its 2026 guidance to the following ranges:

• Revenue of $4.63 billion to $4.73 billion
• Diluted EPS of $19.16 to $19.42
• Adjusted diluted EPS of $21.70 to $21.96
• EBITDA of $905 million to $916 million
• Adjusted EBITDA of $970 million to $981 million

At the midpoint of its revised outlook, Sterling expects 88% revenue growth, 101% adjusted EPS growth and 94% adjusted EBITDA growth for 2026. The company’s guidance assumes a more pronounced weather effect in the fourth quarter than it experienced in 2025.

Looking beyond 2026, Cutillo said Sterling is targeting annual organic profitability growth of 20% to 30% over the next several years, with acquisitions providing an additional avenue for expansion. Management said it believes 2027 could meet or exceed that organic-growth framework, supported by continued mission-critical project demand, though the company noted its acquisition activity will depend on finding suitable opportunities.

About Sterling Infrastructure (NASDAQ:STRL)

Sterling Infrastructure, Inc is a U.S.-based infrastructure services company that provides construction and specialty contracting solutions through three principal business segments: E-Infrastructure Solutions, Transportation Solutions and Building Solutions.

Its E-Infrastructure Solutions segment supports the development of data centers, advanced manufacturing facilities, energy and power infrastructure, and other large-scale industrial projects. Transportation Solutions provides construction and rehabilitation services for highways, roads, bridges, airports, rail and transit systems, and related public infrastructure.

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