STERLING INFRASTRUCTURE, INC. Q1 FY2026 earnings call

Sterling Infrastructure is off to a fantastic start with strong revenue and adjusted EPS growth. Adjusted EBITDA more than doubled with margins expanding. Signed backlog at the end of the quarter totaled $3.8 billion, a 78% year-over-year increase, and combined backlog grew 131% to reach $5.2 billion. Visibility into high-probability future phase opportunities totaled over $1.3 billion. Focus on pursuing projects with attractive returns. In E-Infrastructure, data center demand continues strong, secured first phase of a multi-phase semiconductor fabrication campus. Transportation Solutions benefited from favorable weather in Rocky Mountain region. Building Solutions expects residential market headwinds but has long-term growth potential. Continue to look for acquisitions that are strategic fit.

In E-Infrastructure, first quarter revenue grew 174%, including organic growth of over 100%. The data center market was the primary growth driver. E-Infrastructure adjusted operating income increased 177% with margins expanding. CEC delivered 78% revenue growth. Revenue for site development operations more than doubled and operating margins expanded. At the end of the quarter, E-Infrastructure signed backlog, unsigned electrical awards, and future phase site development opportunities exceeded $5.0 billion. For Transportation Solutions, first quarter revenue grew 10% driven by activity in the Rocky Mountain region. Adjusted operating income grew 26%. Ended the quarter with Transportation Solutions backlog at $1.04 billion, a 20% year-over-year increase. In Building Solutions, first quarter segment revenue grew 3% driven by a pickup in homebuilder activity. Adjusted operating margins were 8.7%. Anticipate residential market will face strong headwinds throughout 2026.

2026 revenue expected $3.7 billion to $3.8 billion, midpoint 20% increase over previous guidance and over 50% growth over 2025. Diluted EPS $16.50 to $17.15; adjusted diluted EPS $18.40 to $19.05, midpoint 36% increase from previous guidance and 72% growth over 2025. EBITDA $800 million to $831 million; adjusted EBITDA $843 million to $873 million. Increased guidance ranges for 2026 showing strong growth

Analyst from KeyBanc asked about what went better in 1Q vs expectations and M&A targets definition. Joseph A. Cutillo responded on weather helping transportation, E-Infrastructure project size and vertical integration boosting margins, and M&A criteria. Analyst from William Blair asked about Texas presence in site development, margin profile, and CEC backlog vs combined backlog. Joseph A. Cutillo responded on Texas growth, margin profiles, and explanation of CEC backlog. Analyst from Brian with Stifel asked about new work bidding, semiconductor opportunities. Joseph A. Cutillo responded on bidding, semiconductor project timeline. Analyst from Julio with Sidoti asked about competitive positioning, risk discipline, capacity expansion levers. Joseph A. Cutillo responded on pricing philosophy, risk aversion, capacity expansion ways. Analyst from Adam with Thompson Davis asked about CEC continued awards, margin improvement, M&A scope expansion. Joseph A. Cutillo responded on exit of low-Margin work freeing people, M&A scope expansion. Analyst from Julio asked about E-Infrastructure margin sustainability, segment long-term positioning. Joseph A. Cutillo responded on margin sustainability, segment positioning. Analyst from Louis with William Blair asked about semiconductor project division and Northwest, Midwest expansion. Joseph A. Cutillo responded on semiconductor project division, expansion timeline. Analyst from Julio asked about legacy E-Infrastructure growth rate. Joseph A. Cutillo responded on growth rate variables