STERLING INFRASTRUCTURE, INC. Q4 FY2025 earnings call

• Joe Cutillo thanked the team for an outstanding 2025 with strong revenue and adjusted EPS growth, and discussed fourth quarter results with revenue growth, adjusted earnings per share and EBITDA growth, and backlog. - Nick Grindstaff discussed consolidated backlog metrics, cash flow metrics, and 2026 guidance on CapEx, share repurchases, and balance sheet. - Joe Cutillo talked about bullish outlook on multiyear opportunities in markets, details on E-Infrastructure, Transportation Solutions, Building Solutions, acquisition focus, and seasonality. - Discussed progress in Texas, CEC pipeline, site development margins, future phase work, capital allocation priorities, manufacturing and high-tech market opportunities, geographic expansion, CEC modular expansion, residential bid, project size and complexity, and AI-driven tools.

E-Infrastructure: Full year revenue grew 59% including 40% organic growth and adjusted operating income grew 67%. Fourth quarter revenue grew 123% including 67% organic growth. Adjusted E-Infrastructure operating income grew 91%. Transportation Solutions: Full year revenue grew 17% and adjusted operating profit grew 66%. Fourth quarter revenue grew 24% and adjusted operating profit grew over 100%. Ended quarter with Transportation Solutions backlog at $1.1 billion, an 81% year-over-year increase. Building Solutions: Full year revenue declined 6% and adjusted operating profit declined 23%. Fourth quarter segment revenue declined 9% and adjusted operating margins were 10%.

Initiated guidance ranges for 2026: Revenue $3.05 billion to $3.2 billion; diluted EPS $11.65 to $12.25; adjusted diluted EPS $13.45 to $14.05; EBITDA $587 million to $620 million; adjusted EBITDA $626 million to $659 million. Midpoints reflect strong year-over-year growth. Expect continued strength in operating cash flow in 2026. Forecast CapEx in 2026 range of $100 million to $110 million. Remaining availability under share repurchase authorization is $374 million.

Q: About transportation awards and backlog, anything notable?

A: No one big project, but good bid activity as only 50%-60% of funding spent, will continue through September.

Q: Update on Texas site prep and CEC joint awards?

A: Excited about Texas market, will see nice awards in first half.

Q: Pipeline evolution at CEC since acquisition?

A: Jobs getting bigger, data centers becoming data campuses, margin improvements through mix shift and combining services.

Q: Legacy site development margins?

A: Not going negative, investing in capital to drive margins up, will see progress in 12-18 months.

Q: $1 billion high probability future phase work?

A: Tied to existing customers, lion's share with big name hyperscalers, not slowing down.

Q: Working capital and free cash flow conversion for E-Infrastructure?

A: Expect strong free cash flow conversion, conservatively in 80% range to EBITDA.

Q: Capital allocation priorities?

A: Focus on growth, expansion of services and geographic footprint in infrastructure, looking for strategic acquisitions.

Q: Manufacturing and high-tech market opportunity?

A: Semiconductor plants could be 7-10 year projects, pharma plants have lead times, data center customers not slowing down.

Q: Geographic expansion in 2026?

A: Lion's share in Southeast, Texas, some in Northeast, Pacific Northwest, Ohio, Indiana.

Q: Profitability in new markets?

A: Depending on equipment suite, acquisitions' margins can be improved by introducing processes, projects start at lower margins and improve.

Q: CEC modular expansion?

A: New facility over 300,000 sq ft, doing components in prefab to reduce electricians needed, improve productivity and margins.

Q: Residential bid and acquisition?

A: Tough first half 2026, if right acquisition with depressed multiples, could pick up market share.

Q: Mix of above-ground vs underground with bigger projects?

A: No significant shift, next gen projects may have self-power generation, opening new opportunities.

Q: AI-driven tools vs competitors?

A: Doing 3 pilots last year, saw 15%-20% incremental capacity on project managers, 6 AI projects underway, using for estimating, project execution, safety.