STERLING INFRASTRUCTURE, INC. Q3 FY2025 earnings call

Sterling delivered strong revenue growth, expanded margins, grew backlog, and generated excellent cash flow. In E-Infrastructure, third quarter revenue grew 58% YOY, driven by a 125%+ YOY growth in the data center market. Closed the CEC acquisition, which contributed $41.4M in September with adjusted operating margins in line with expectations. Transportation Solutions saw 10% revenue growth and 40% adjusted operating profit growth, with $733M backlog. Building Solutions faced soft housing market, but diversified portfolio helped maintain strong overall performance. Backlog totaled $2.6B at quarter end, with over $4B in work in excess of current backlog.

E-Infrastructure Solutions: Third quarter revenue grew 58% over prior year, with over 34% sequential growth. Excluding CEC, revenue grew over 42% YOY and 21% sequentially. Data center market revenue grew over 125% YOY. Adjusted segment operating income grew 57%, or 48% excluding CEC. Backlog was $1.8B, up 97% total and 45% excluding CEC. Transportation Solutions: Third quarter revenue grew 10%, adjusted operating profit grew 40%. Backlog was $733M, a 23% YOY increase. Building Solutions: Third quarter segment revenue declined 1%, adjusted operating income declined 10%. Revenue from legacy residential business declined 17% due to soft housing market.

Increased 2025 guidance: revenue $2.375B - $2.390B (midpoint 27% YOY growth), diluted EPS $8.73 - $8.87 (47% adjusted EPS growth), adjusted EBITDA $486M - $491M (42% adjusted EBITDA growth). E-Infrastructure: organic growth 30%+ in 2025, adjusted operating profit margins ~25% including CEC. Transportation: revenue growth low teens, adjusted operating profit margins 13.5%-14%. Building Solutions: mid to high single-digit decline in revenue, adjusted operating margins low double digits.

• Permitting issues can delay project starts, taking longer than pre-COVID. - Government shutdowns or delays in successor bills to IIJA could affect grant projects, though current transportation funding not impacted. - Soft market conditions in Building Solutions due to affordability challenges.

Q: Brent Thielman asks about CEC's momentum and award activity.

A: Joe Cutillo talks about strong bookings in data centers and other projects, excitement about reception and future projects in Texas.

Q: Julio Romero asks about forward pipeline mix and conversion.

A: Joseph Cutillo breaks down backlog, unsigned projects, and timeline.

Q: Adam Thalhimer asks about prioritizing megaprojects and Texas site prep.

A: Joe Cutillo says no impact from shutdown, data center growth is a combination of new projects and shifting future phase to backlog.

Q: Noah Levitz asks about transportation funding and data center growth.

A: Joe Cutillo says no impact from shutdown, data center growth is a combination of new projects and shifting future phase to backlog.

Q: Alexander Rygiel asks about permitting and Building Solutions green shoots.

A: Joe Cutillo talks about permitting delays and no immediate improvement in Building Solutions