Sterling Construction Company, Inc. Aktie

All right. Thank you, everyone, for attending. We are very pleased to have Joe Cutillo, the CEO of Sterling Infrastructure, for a one-on-one discussion. We're going to talk about something we haven't discussed the entire conference, AI and data centers.

Joe, you're obviously a leader in the space and you have a lot of forward visibility being part of what's become an ever-increasing bottleneck around advanced facilities. So it's great to have you on. Would love a brief introduction and then we can get into some Q&A.

Yes. So I appreciate everybody taking the time. Joe Cutillo, CEO of Sterling Infrastructure. We focus, when we talk about the AI space, in the site development and the electrical aspects of the build-out. And as we get into the questions, I can tell you right upfront, we've had a lot of questions around slowdowns, delays, pauses, all the political rhetoric. I can tell you firsthand, we've seen no delays, no pauses, no pushouts, no cancellations. Every week, we hear from our customer base, which is the biggest hyperscalers in the U.S., along with the second tier below them. How do we do more faster? And so it's interesting in today's world in today's market. I read the newspaper, and I hear and see one thing, and I talk to our teams and I talk to our customers, and it's 180 degrees from what we're reading.

Yes. Well, you stole my first question, but there's a lot of nimbyism and it's manifested itself in a lot of different ways. It's moratoriums, power constraint, just general community uproar. What are your clients telling you about it?

Yes. I think the hyperscalers will admit one thing. They have not done a good job of getting ahead of, what I'll call, the public perception of what they're doing. I think there's a lot of myths that are very different from the realities. We're talking earlier with some groups on water consumption, what they're doing with the grid. There's very little water used in these. They're closed systems. So once you fill them, they're not using a lot of water. They're actually building out or funding a lot of the grid build-out to get power to them, et cetera, et cetera.

So they haven't done a great job. But there's a very different reality versus the political rhetoric that we see in the newspaper every day. We're in the state of Texas and they hear the Governor of Texas come out and talk about slowing down data centers. I don't know who had a heart attack first in the state. But the reality is what they've put in place, I think, is more guardrails and stuff around small projects. It's had no impact on the large hyperscalers or the projects that are coming out in the fourth quarter, first quarter, for sure, and we don't see anything happening in the future on that.

Yes, that -- and a lot of these projects would you say are like building 2 of a 10-building campus. You have a lot of the elements of feasibility already available, power, et cetera. So a lot of this rhetoric is related to things that are in the comment to your point, there's more form than substance.

Yes, it is. And the projects, which people don't realize, is 2 things. One, we're in a unique situation that we have 3 to 5 years of visibility of what's coming. So we're working with these customers for multiple years on projects before they even come out. We haven't seen any of those slowdown. And when we start a project, all the permitting is done, power is there, everything is completed. So it's not going to necessarily stop. It's done.

The one thing we are seeing with the projects is the size and the scope of them continue to get significantly larger. A few years ago, when we got into this, we got interested in when they were around 100 acres. We were really excited when they got up to 300 or 400 acres and said if they could just stay there for the rest of our lives, we'd be the happiest people in the world. I'd tell you, we're working on jobs right now that are 10,000 acres plus. And when you start putting self-power generation on '28, '29, they're talking jobs. They're talking campuses north of 30,000, 40,000, 50,000 acres.

And touch on that because you usually think of other folks like engineers having sort of the front-end part and that level of visibility. But in some ways, you're an N of 1 in terms of a service provider. And so you're working directly with the hyperscalers to kind of plan out some of the work they're doing. We've had this panacea of 2030 and then a cutoff. And now we're seeing data that supports not only growth over that period to 2030, but that continued sort of evolution beyond. What gives you that sort of demand outlook confidence over the next 3 to 5 years?

Yes. As I tell people, we're the canary in the coal mine. What most people don't understand is for the next generation of data campuses to start and break ground 5 years from now, they're working on them today. They're literally spending hundreds of millions of dollars upfront to get those ready. So we work with the hyperscalers on their 5-year plan. So we know what's coming out, approximately where it's coming out, and obviously, the timing. And people will say, well, why is that? Well, it takes 5 years today. First, you got to get land, you have to permit the land, you got to either run power or get utilities there in some way, shape or form. On the self-power generation, you have to order a turbine, which now has a 5- or 6-year lead time. So they're ordering this stuff upfront. So the time it takes from the decision point of spending money to actually breaking ground used to be about 3 years. It's now up to 5 years.

Semiconductors, similarly, we started doing the facility in New York. And I remember -- I tell the story, I remember when Micron announced, they're going to spend $110 billion or $150 billion on this facility. Our phone was ringing off the hook. Did you get the job? Are you going to do the job? And I said, there's not a job, right, first of all. And a couple of months go by and everybody says, you got the job, you're going to do the job. We said there's not going to be a job for 5 years, and 1 year into it, people said, "Well, you must have lost the job. You're not talking about this job," and I said, "In 5 years, call me and we'll talk about the job." And they were right, I was wrong. It was 4 years and 6 months from the time the funding was announced until the time we broke ground. So I was off 6 months.

But the reality is it takes that long to do it. And they're also worried about capacity because the size and amount that is coming at us, they finally realized that there is a capacity constraint coming down the road to build these. So they're trying to give us a much longer look at it so we can build capacity in parallel with them.

Yes, and part of that is even just alliance agreements with some of these hyperscalers because it's almost like mutually self-assured destruction. You need them as much as they need you. And so in some ways, they're trying to help you plan in phase so that you can execute for that.

Yes. No, it's absolutely. They have -- we -- it took us a couple of years of trying to explain to them that this was coming, but they've got it. And as a result, it's interesting because in a lot of cases, we're actually working on projects directly for the hyperscaler before a general contractor or electrical contractor is even picked just to get speed or reduce the total cycle time of the project. At the end of the day, time is money for these guys, and they are really worried about how to speed up these projects and get more done faster. That's all we hear every day from them.

So that sort of business model, structure, visibility, alliance agreements, if you think contractually in terms of your backlog or what I'd call shadow backlog with next phase opportunities related to existing backlog, what kind of visibility do you have there?

Yes. So first, the great thing with how we do this is our jobs are phased. So we're not stuck into one large long-term contract. For us, that's the greatest thing. It reduces risk significantly, allows us to adjust pricing along the way as necessary and doesn't enable us to get into a lot of risk on the project. To the outside world, it's challenging for us because none of it shows up as backlog, only a small piece does.

So we're going through with the groups today an example of a job that we're currently on. And when we talk about our backlog and future phase work of being $7 billion, I will tell you that, that number is extremely low relative to what it really is. And I'll give you one real-life example of a project that we're on. The project starts out, the hyperscaler -- or it wasn't hyperscalers, another group, bought 600 acres of land. And they said, we're going to build the data campus on 300 acres. So we start the 300 acres. That 300 acres, approximately $300 million to complete. We knew that it was going to be the minimum. However, we put $10 million or $15 million in backlog. We only talk about future phase where we have 30% of the design complete. So there's probably another $50 million of backlog or a future phase, but we know it's going to be $300 million. So we're off there by a fair amount to what's going to happen.

However, what we don't talk about is that other 300 acres. As soon as they're finished with the first 300 acres, they're going to develop. So that's roughly another $300 million that's not in future phase, not in backlog. In addition, they have purchased 800 incremental acres attached to that. So that will be, call it, another $700 million or $800 million of work there. So instead of a 3-year project, that's going to be an 8- to 10-year project.

Now to put it in perspective, the projects we're bidding today are 5 to 10x bigger than that project in totality. So as we talk about is 2030 or 2032, we're sitting there today looking at projects that we're starting or getting ready to work on over the next 12 months, there will be 8-, 10-, 12-year projects. And that doesn't include the electrical spend that comes on the back end of it, which will extend it out another 2 to 4 years. So if you take a look at it, everybody is worried about the slowing down or stopping, worst-case scenario, which wouldn't happen. But if it stopped tomorrow, we'd still be working for at least 5, probably 7-plus years on some of these projects. So it's really, really fascinating how big they are in that.

Our challenge is how do we articulate to the outside world that we have that much work in front of us that we still have to do that's not technically backlog or under contract.

Right. But in some ways, you have proof points with historical work that you've done that sort of [ leads ] off into.

We have 100%. When we plant our flag, as we say, when we plant our flag and start a project, we have a 100% hit rate to complete everything that's done on it. Just in this year alone, we've picked up 4 major campuses that we didn't start that we're in [ bailing ] the customer out because it's either in a geographic footprint we weren't in or was in the time frame that we didn't have the capacity to start.

You touched on a good point. So what is the bottleneck? Is it customer demand? Or is it just the ability in terms of labor, resources, capital to prosecute the work that they had?

Yes, a little different for site versus electrical. Site is more around project management skills. Though equipment is going to start getting tight towards the end of this year and next year, that will be a challenge. We've done some stuff with CAT to get our fair share or maybe more of the equipment coming up.

On the electrical side, it's labor, it's pure electrician. But the piece that gets a little confusing is as a country, we finally have started more technical schools, getting folks into trades, young kids and even some middle age adults actually going back for career changes. But the problem is, it takes 4 years to get an electrician certified. So we have now hundreds, if not thousands, or thousands, if not tens of thousands, of young people in apprentices going through the electrical program, which is great. However, there's just one fundamental flaw with that is you have to have a journeyman for apprentices.

So in the state of Texas, as an example, every journeyman can have a maximum of 4 apprentices. So if I don't have enough journeymen, it doesn't matter how many apprentices I have. And it's going to take 4 to 5 years to get these folks to become journeymen. So we have this 4-year window that's going to be very challenging until those classes start to graduate and become journeymen to really build the population of electricians that we can use in the industry.

So what's to solve? Is it modular work? Is it guest worker programs like -- you can look at the Bureau of Labor Statistics. And by 2030, we're going to have something like a 30% shortage in electricians. So what's going to solve for it? Or is that just going to constrain the cadence of activity?

What we're going to see is there's going to be a couple of things that happen. First, no question, we just tripled the size of our modular and prefabrication facility. Anything we can build in the factory and get out, we can save 15%, 20% of the cost and labor. So that's a piece of it, right? That's one piece. How do we continue to grow? Two, what we're going to see -- and what we're doing, we're hiring -- and just in Texas alone, we hire 80 electricians a week. And it's not that we're losing 80 electricians a week. We grew that business 140% year-over-year. We're using 80 more electricians a week.

How are we able to do that? What's going to happen is if you think of the electrical business, there's a lot of small electrical companies out there today. And they may do work on maybe a hotel like this or a small office building or a small industrial building, highly competitive and not high dollars in revenue. Those crews are mostly traveling crews. And what we need are traveling crews to go out to these facilities are not in metropolitan areas. They're in pretty rural areas.

What we're able to do is take those electricians, we can pay them more, $5, $10, $20, depending on where it is, an hour or more. They get 60 hours of work. And instead of moving from project to project every 6 months, they're out on a project for 2 or 3 years, right? So they got more stability in their life, they're making a lot more money, and we can kind of rob them.

Now what's going to happen is the small electricians or the small electrical businesses are really going to start struggling to get labor. So the big guys will be successful, more so than the small guys until you deplete that pool, right? And then you have a whole other problem. So there's a few things. The challenge is to get through this next 3 to 4 years until the graduating classes start, but we believe that there really needs to be some immigration reform on top of it. That's the fastest way for us to bring in skilled certified electricians from around the world that can help us out.

Yes. And that's after data centers have created a huge sucking sound for any other form of infrastructure development. You talked about the Micron project. How does that change your view around semiconductor facility and other sort of derivative forms of advanced facilities in the U.S.? And then we talk about reindustrialization of the country. But if these data centers are sucking up all the craft labor because they're paying better prevailing wage rates, how is that going to marry with all the other work that's yet to be done?

Yes. I think in some ways, look, data centers are the hottest thing. But I think people are actually too fixated on just data centers. When we look at the macro of what's happening, data center is the biggest piece today, but it may not be the biggest piece forever. And there's a lot of other big stuff coming. So in '28, we'll start seeing pharma being built. Those are going to be big, big factories and big projects. 2030, we got semiconductors coming, right?

In parallel to this, you've got the grid being built out. You got 3 or so, at least 3, there's I think 5 or 6 that have been permitted, but 3 LNG plants are probably going to go in the Gulf Coast. We keep getting asked about the 8 nuclear plants that they're looking at, starting around 2030 to 2032 coming on.

What -- the whole point of this is an electrician is an electrician is an electrician. A pipe fitter is a pipe fitter is a pipe fitter, right? And it's not just data centers that's fighting for these, it's completely different end markets that are all growing very rapidly that are going to be fighting for the same skills and these same trades. So it's going to get more challenging. The bottom line is who pays the most is going to get them. So it's really, I think, that's simple at the end of the day.

And that speaks to project selection that this audience will appreciate being selecting amongst a variety of opportunity sets in front of them. Are you sort of essentially -- have you become effectively like a fund manager and you're saying, who are the guys that are giving me the best terms, the best multipliers, which are the best clients, and I'm going to work for them and everyone else.

Yes. We have. I mean, we're very selective. We turned down a lot more projects than people realize, either end customer contractual terms, we're not willing to do that. But we're not beholden to data centers. If chip plants come out and they're much better margins and much better customer base, we'll move to them. We've moved multiple times through our journey. We focus on margin growth and cash flow, right? For us, that's the most important thing. And as we look at the market, not only today but over the next 7 to 10 years, the opportunities are only going to get better. They're not going to get worse. So why would we go, as we say, practice with someone when we can make real money somewhere else? And we're not going to be alone on that. I think that's going to be the interesting movement of resources and assets and capital on how that all plays out.

And are you sort of locking in sort of like what some of the memory providers are doing and saying, hyperscaler, I have this kind of pricing mechanism. I'm going to select the projects that I'm going to do for you, but I'll give you capacity. Are you -- is that the next iteration?

Yes. We're staying away from any long-term commitments. We've been asked multiple times to make some long-term commitments. We don't want to do that. This thing is going to continue to play out. You could have expansion by customer A in a geography you're not in versus customer B in a geography, and we want to stay in certain geographies and stay away from some as well. So we're a believer that if we can deliver projects faster than anybody else on time, every time, we can pick who we go to versus getting locked into that.

Especially you're not fungible that labor pool is.

Yes. It doesn't matter for us. It doesn't matter if it's a semiconductor plant or a data center plant or a pharma plant or a battery plant. It's irrelevant.

You touched on margins. I think there was some investor focus on the E-Infrastructure margins. Operating margins were around 24%. What -- walk me through or color what that margin profile looks going forward. You're obviously integrating CEC and what structurally supports this sort of margin profile and how is this sort of competitive environment evolving? I know that's a loaded question.

Yes. No, we see margins continuing to improve. If you take a look at what we've done when we bought our Plateau business is kind of our foray into the site development side of the E-Infrastructure. Their margins were 15% to 18%. Today, they're double that, right?

We are very focused on margin expansion and cash flow, and we're very good at growing those margins. So as we look at the recipe that we've built for Plateau is directly applicable as we expand geographically, whether that's in Texas or the Rocky Mountain or the Pacific Northwest. And that is, we take a business that's around 15%. We do vertical integration with that. We improve the equipment suite to have the biggest, best equipment. And as a result, we come close to doubling the margins in those businesses. So we know we can do it, we'll continue to do that. So everywhere that we've expanded, we have that opportunity for significant margin expansion in those.

On the CEC side, we told the world that 18 to 24 months, we'd expand margins 300 to 500 basis points, which is pretty good in the electrical world. We're on track. We feel very confident that we've got the map and the equation to get us there. What's holding us back a little bit right now is we've got 2 legacy businesses there that when we bought it, we knew we were getting rid of. They don't make money. As a matter of fact, they lose money. So they -- every good thing we do is we're trying to accelerate getting out of those that drags us back down. We'll be out of those by the end of '27. We'll figure out a way to communicate what the margin improvement is on CEC along the way because it's very good. We're very happy with that. And they've doubled in size. It's pretty hard to improve the margins like we have, while doubling, adding all the electricians that they've done a great job.

The challenge we have is our each business margins will continue to go up as we make acquisitions and throw in another electrical business for $500 million, $600 million of revenue at 10% or 12% before we get it up to 15% or 18% or 20%. You have kind of a sine curve of margins along the way and trying to explain that to people that, no, it's good overall, margins are continuing to go up. It's just the mix that can get confusing to people.

The mix contribution, not a sort of same-store sales margin...

No. Margins aren't going backwards, I can...

In fact, they're getting better as you integrate these, right? And the core business, obviously on the site development front, just walk us through -- your margins are fantastic for an infrastructure services provider playing in data centers. Why is that? Why can't someone else compete with you? Why do these hyperscalers try to lock you up for delivering service for the rest of their portfolio?

Well, I think the first thing that people grossly misunderstand on the site side, I can say this now that we own site and electrical, the electricians are, I joke with them, they're prima donnas, and they think their stuff is really complicated. I will tell you, at the end of the day, we have both businesses. Site is exponentially more complicated than electrical. What people don't realize is there's an entire city with thousands of miles of pipe in some instances.

One job we did, we looked at the conduit, and I forget it went up to the moon and back like twice or something. There's like some unbelievable thing. I didn't believe the guys. I mean then they showed me, like, they're actually right. People don't understand what's going on under the ground. And the potential risks and conflicts and complexity of that is much, much more than the average person can do. We do 3D modeling. We use LIDAR. We have drone technologies. The stuff that our guys do relative to somebody who's just moving dirt, it's night and day. That's...

So you're sort of N of 1 in terms of scale and sophistication.

That's right. There's nobody that has the scale we do. Nobody has the sophistication. And then the vertical integration, people grossly underestimate the value of the vertical integration, not only what I can take out in time, which is the most important thing to my customer, but what I can drive through productivity and margin improvement. We control our destiny, but we can do things within the vertical integration that literally take out millions of dollars of cost that everybody else has to do. And when I bid that, I bid that cost in like everybody else does, I just know I'll never use them, right? So that helps us on the margin.

And saving them on time means much more than...

Saving them on time. I mean just with the addition of electrical, now doing the external electrical as part of the site package. In some instances, we can take out months of project time. Real-life scenario, we talked about -- we're talking about data centers, but let's -- talking about semiconductors. We started the Micron facility up in New York around April, May. We delivered the September package in July.

So they're actually building the first building, they thought they would start that next year. We'll deliver the January package in September. They've never been that far ahead on a project, neither one of the two GCs or the end customer. For them to start the building 6 months early, especially if you're a GC and you've got liquidated damages of $250,000, $300,000, $400,000 a day, if I can build 3 months into your schedule of free money, that's the greatest thing in the world. They don't call anybody else. Why would you?

That's fantastic. And for the end client, getting up and running that much faster is a factor more meaningful...

Yes. I'll tell you that the end clients asked us to come look at another job they have and see if we can get it back on track.

So I mean you have this crown jewel with E-Infrastructure. You obviously have other attractive segments. How do these -- how does sort of federal, the Transportation side fit into the equation? How does that part of the portfolio evolve relative to what's now become the core?

Yes. So I think the Transportation segment, first of all, it's, I'll call it, the Rodney Dangerfield of the company because they don't get enough respect, right? We took that business, which was a losing business, lost money.

We got a pretty young group here, so you're going to have to update your...

My analogies. The -- but they're best-in-class on margins as a Transportation business. Any other transportation guys would love to have our margins. However, it shows our strategy, our philosophy, we're not stuck to anything. So even though we've got best-in-class margins, we've done a great job with that business. In the second quarter, our largest Transportation business for the first time did more E-Infrastructure work than Transportation.

So we started 2 years ago to shift those assets and resources to start providing support to customers in the footprint that we couldn't get to out of our Southeast business. And as a result, that business has taken off and grew 700% year-over-year, which is pretty good and is now a major part of that. If we could shift 100% of Transportation assets and resources to the infrastructure, we do it, we'll never get there, but we're continuing to move more and more there to pick up the capacity.

All right. That's helpful. You're an asset-light business, you generated a lot of free cash flow. Even the assets you buy like CECO generated a lot of free cash flow. So that's a cash compounding effect. So you've got, I guess, a best-in-class problem with earnings and cash flow and your balance sheet, how are you prioritizing capital allocation today?

Yes. So it's a good problem to have but it's a problem. So acquisitions is, by far, our best return, right? So acquisitions around site development, electrical or some ancillary services that we can provide. Our E-Infrastructure customers are our first priority. We're very opportunistic. We think the stock is underpriced. We have a fairly robust buyback program in place. We'll take full advantage of that and buy back shares. And then after that, we don't really have a lot of debt to buy down. We theoretically could pay off what little debt we have at any given time. But acquisitions is our primary focus, stock buybacks are [ second ].

Got it. And how is the opportunity set looking right now?

So the good news is it's better than it was last year. Last year was a pretty poor market for acquisitions, not a lot of high-quality stuff out there. And the stuff we saw was just grossly overpriced. We're particular. We're very picky. We'll look at 200 or 300 acquisitions a year before we do a couple. But this year's market is definitely better. Better quality businesses. We're starting to see conversations with both electrical and site where especially on the electrical side, this bifurcation of the big are going to get really big, the middle guys are going to find themselves in kind of no man's land and actually become smaller, where they are starting to talk for the first time how to be part of a bigger team.

On the site side, we just -- our challenge is, there's not a lot of big players out there. So we're starting to look at midsized players more aggressively and see if we can't pull them in for incremental capacity. Part of the challenge is with the owners, they've all grown a lot over the last 2 or 3 years. And like us, they're bullish about the market over the next 3 to 5 years. So they say, "Well, if I hold on 1 more year, I'm going to grow another 30%, right? If I hold on 2 more years, I'll double, and I'll get twice the money." So getting up to the altar is a little challenging right now.

I can only imagine because the -- most of these institutions have never seen the level of demand they've seen over the last couple of years. So it's hard for them to sort of capitulate and transact.

Yes. I think what ultimately drives them is they can't invest the capital fast enough to keep up. And at some point, what they're going to find, they don't realize it yet today, what they're going to find is they're going to be on the outside looking in because they can't do the job, so they can't take on enough and the customers are going to find the big guys to step in and do that.

Got it. We're at the hour. One last question. You talked about being valued very cheaply today. I think the market has taken a breath, but it's come pretty far from where it was 3 or 5 years ago. As you look out to 2030, what do you think the investors should really sort of think about as they think about the Sterling investment thesis?

Yes. So when I look at the business, it's interesting how the world changes. But we put together what we thought was a pretty aggressive growth plan. Growth, 20% to 30% organically over the next 5 years. And then on top of it, add 20% to 30% growth through acquisitions. So growing the bottom line, 50% a year is pretty good, especially with the debt ratios we have and throwing off the cash, a pretty nice business to have. And why our stock isn't right, I don't know. You guys know that stuff better than I do, but it makes no sense to me.

Our problem isn't the market to do that. Our problem is the exact opposite. Our customers are coming at us at a much faster rate with more work than that plan. And we are sitting back every day trying to figure out how do we become more aggressive with that plan, grow more organically, grow more acquisitively or else we're going to be giving up a lot more work. So 50% growth on the bottom line is not going to be good enough to keep up with what's happening.

Well, that's off a large base.

It's off a large base.

Well, thank you for your time. This is very informative. Appreciate you investing time with us.

Appreciate it.

Good morning, ladies and gentlemen, and welcome to the Sterling Infrastructure Second Quarter Webcast and Conference Call. [Operator Instructions] As a reminder, this call is being recorded on Tuesday, August 4, 2026.

I would now like to turn the conference call over to Noelle Dilts, Vice President of Investor Relations and Corporate Strategy. Please go ahead.

Good morning to everyone joining us, and welcome to Sterling Infrastructure's Second Quarter 2026 Earnings Conference Call and Webcast. I'm pleased to be here today to discuss our results with Joe Cutillo, Sterling's Chief Executive Officer; Nick Grindstaff, Sterling's Chief Financial Officer; and Dan Govin, Sterling's Chief Operating Officer. As a reminder, there are accompanying slides on the Investor Relations section of our website. These slides include details on our full year 2026 financial guidance.

Before turning the call over to Joe, I will read the safe harbor statement. The discussion today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events or otherwise.

Please also note that management may reference EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income or adjusted earnings per share on this call, which are all financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures on our earnings release issued yesterday afternoon.

I'll now turn the call over to our CEO, Joe Cutillo.

Thanks, Noelle. Good morning, everyone, and thank you for joining Sterling's Second Quarter 2026 Earnings Call. Sterling delivered another outstanding quarter with revenue growth of 90% and adjusted diluted EPS growth of 116% from $2.69 to $5.80. These results reflect the strength of our strategy, accelerating demand across our markets and the exceptional execution by our teams. Adjusted EBITDA more than doubled in the quarter with margins expanding 150 basis points year-over-year to reach 22%. The current market demand allows us to be selective. Rather than chasing every opportunity, we are concentrating on the projects that strengthen our customer relationships, position us for future growth and enhance our margins.

Signed backlog at quarter end totaled $4.3 billion, up 116% year-over-year and combined backlog increased 150% to reach $5.6 billion. In addition, we have visibility into high probability future phase opportunities that exceed $1.4 billion. Together, our signed backlog, unsigned awards and future phase opportunities provide visibility into a total addressable pool of work of more than $7 billion, an increase of more than $2.5 billion since year-end. The growth in our backlog and future phase work in the quarter, together with our visibility into customers' multiyear capital plans further strengthens our confidence in our multiyear outlook.

Now I'd like to discuss our segment results for the quarter in more detail. In E-Infrastructure, second quarter revenue grew 192%. Mission-critical activity, including work on data centers and semiconductor campuses, was the primary growth driver in the quarter. E-Infrastructure adjusted operating income increased 148% and adjusted operating margins remained strong at 24%. Margins continue to benefit from our strong execution on large time-sensitive mission-critical projects.

Revenue for our site development operations more than doubled on an organic basis, and adjusted operating margins expanded both year-over-year and sequentially. We saw robust growth across each of our geographies with particular strength in our Rocky Mountain division, where revenue increased nearly 700%. We also saw strong increases in our Northeast business as work on our large semiconductor campus ramped up. CEC delivered 140% revenue growth compared to its prior year second quarter with margins strengthening both year-over-year and sequentially. The Texas market remains exceptionally strong.

During the quarter, CEC secured several additional project wins contributing to a $1.7 billion increase in its combined backlog since year-end 2025. Additionally, we are seeing continued success on winning projects where we are performing electrical and site work in an integrated manner. We continue to see tremendous opportunities ahead in both electrical and site development. In aggregate, our E-Infrastructure signed backlog, unsigned electrical awards and future phase site development opportunities now exceed $6 billion, representing an increase of $2.7 billion since year-end. Mission-critical work, including data centers, large manufacturing projects and semiconductor represented more than 92% of E-Infrastructure signed backlog at the end of the quarter. Future phase work is predominantly related to mission-critical projects.

Moving to Transportation Solutions. Second quarter revenue declined 20%, reflecting our ongoing reallocation of resources from transportation projects to higher-margin E-Infrastructure projects. This shift is now taking place at an accelerated pace as activity on our E-Infrastructure projects in the Rocky Mountain and Texas regions has increased. This was the first quarter that our Rocky Mountain operation generated more E-Infrastructure revenue than transportation revenue. In addition, we are continuing to wind down our low-bid heavy highway work in Texas, which is nearing completion.

Transportation Solutions adjusted operating margins reached 19.5% in the quarter, up more than 500 basis points from the prior year period, and adjusted operating income grew 8%. The strength in margins and profitability was driven by our focus on pursuing the most attractive opportunities within the transportation market. We ended the quarter with Transportation Solutions backlog at $969 million, a 35% year-over-year increase. This primarily reflects the conversion of unsigned backlog to signed backlog. On a combined backlog basis, Transportation Solutions is up 8% from second quarter 2025 and is down 11% from year-end 2025.

Shifting to Building Solutions. Segment revenue declined 1% in the quarter, driven by relatively flat homebuilder activity and adjusted operating margins were 9.9%. We continue to anticipate that the residential market will face strong headwinds throughout 2026. The strength of Sterling's diversified portfolio and strategy to focus on growth in high-margin end markets enabled us to deliver another fantastic quarter.

With that, I'd like to turn it over to Nick to give you more details on some of our financial metrics and 2026 guidance. Nick?

Thanks, Joe, and good morning. I'll begin with our consolidated backlog metrics. Our second quarter backlog totaled $4.3 billion, a 116% year-over-year increase. Backlog increased 50% year-over-year on an organic basis despite the strong revenue burn in the quarter. Combined backlog of $5.6 billion increased 150% or 36% on an organic basis. Second quarter 2026 book-to-burn ratios were 1.4x for backlog and 1.3x for combined backlog, exclusive of the impact of the Stone Ridge acquisition.

Turning to cash flow. Cash flow from operating activities for the first half of 2026 was $328 million. We expect continued strength in operating cash flow for the full year. Cash flow used in investing activities included $70 million of CapEx. Given the significant increase in our full year 2026 revenue expectation over the past 6 months and our visibility into future demand, we are increasing our CapEx guidance to $130 million to $140 million, which is a $30 million increase from prior guidance. These incremental investments in our fleet will drive productivity and expand capacity.

First half 2026 cash flow from financing activities was a $48 million outflow, including share repurchases of $35 million at an average price of $511.18 per share. Remaining availability under the existing repurchase authorization was $339 million at the end of the quarter. We will remain opportunistic in our approach to share repurchases.

Moving to our balance sheet. We ended the quarter with $464 million of cash and debt of $284 million for a cash net of debt balance of $181 million. On July 2, we closed on the extension and expansion of our revolving facilities to $1.5 billion and extended the maturity to July 2031. We used this facility to pay off our existing term loan. The amended facility provides additional flexibility as we look to grow the business, both organically and through M&A.

Our current backlog, visibility, and strong market tailwinds position us for an even better year than we originally anticipated. We are increasing our guidance ranges for 2026 to reflect both the improved outlook for the core business as well as the addition of Stone Ridge. Our guidance ranges are revenue of $4 billion to $4.15 billion, diluted EPS of $17.25 to $17.85, adjusted diluted EPS of $19.70 to $20.30, EBITDA of $829 million to $854 million, adjusted EBITDA of $891 million to $916 million.

Now, I will turn the call back to Joe.

Thanks, Nick. Positive trends we've been talking about over the past several quarters have continued to accelerate. We're seeing projects become larger, more complex, and longer in duration, which reflects both the scale of what's being built and the importance of these assets to our customers. Our customers are asking us to do more. We are continuing to get pulled into new geographies because they know Sterling can deliver complex projects faster and safer than anyone else.

Our customers' recognition of our critical contribution to their success has allowed us to participate in their long-term planning process. What we're seeing ahead is going to be far greater than we originally anticipated. Our focus today is making sure we stay ahead of what's coming. Internally, we are working to ensure that we have the right people, resources and capacity in place to support sustained strong growth in the years ahead.

I'm going to hand the call over to Dan Govin, our Chief Operating Officer, to discuss some of these key areas of focus. Dan?

Thanks, Joe. Planning for the future is a core part of our strategy. We aren't just focused on meeting today's demand. We're making the investments now in our people, equipment and capabilities that will support sustained growth for years to come. Our people remain our greatest competitive advantage. As our customers undertake larger, time-sensitive, mission-critical projects across the country, our experienced project managers and operating teams are setting us apart through exceptional operational execution. That's why we are increasing our investments in developing, attracting and retaining the industry's best talent.

Through expanded recruiting efforts and training programs like Sterling Academy and CEC University, we're building the workforce skill sets that will support our accelerated growth. Combined with our strong reputation for safety, quality and execution, these investments position Sterling as the employer of choice, helping us to attract talent as we enter into new markets. We're also investing strategically in our equipment fleet. As we grow and upsize our fleet, we're increasing our capacity and improving productivity and operational efficiency in new geographies. This creates benefits that support margin expansion over time.

At CEC, we are making great progress in ramping up production at our prefabrication facilities, which will drive productivity with our field electricians and provide cost savings. And finally, we're complementing these organic investments with tuck-in acquisitions. These acquisitions bring us strong local leadership while expanding our presence in attractive markets. The recent Stone Ridge acquisition is a great example of this strategy in action as it positions us well for coming activity in the Pacific Northwest. Together, these strategic investments ensure we're well positioned to capitalize on significant opportunities ahead.

Now I will hand the call back to Joe.

Thanks, Dan. Turning to our segment expectations for 2026. In E-Infrastructure Solutions, we continue to see exceptionally strong demand for large mission-critical infrastructure, and we believe this will support meaningful growth for many years to come. In the data center market, customer activity is stronger than ever. Projects are becoming larger, lasting longer and expanding into more markets across the country. Not only are we seeing more new projects, we're seeing many of our existing projects grow well beyond their original scope. Much of this incremental opportunity is not yet reflected in our backlog or future phase opportunities, giving us additional confidence in the runway ahead.

With the CEC acquisition, we have broadened our capabilities and are even better positioned to serve our data center customers. In the semiconductor market, we are making very good progress on our Northeast project and are running ahead of schedule. We expect to generate significant revenue on this project in the third quarter with a weather-related slowdown in the fourth quarter. We believe our exceptional performance on this project will position us in the semiconductor market as the go-to solution for large complex projects, just like we have done in the data center market. In addition to the data centers and semiconductors, we are seeing some momentum in the broader manufacturing market.

During the second quarter, we were awarded the initial scope of work on an electric vehicle plant in Atlanta. In addition, there are still several opportunities we believe could be awarded in 2026 or early 2027. For full year 2026, we now expect to deliver E-Infrastructure segment revenue growth of over 100%, including the contribution from CEC and Stone Ridge. We anticipate that the legacy site development business will grow at rates approaching 70% or higher as several of our large projects accelerate. Adjusted operating profit margins for E-Infrastructure are expected to be in the mid-20% range.

In Transportation Solutions, we are in the final year of the current federal funding cycle, which concludes September 2026. We have built over 2 years of backlog and are continuing to pursue select attractive opportunities. For 2026, we are now anticipating a decline in Transportation Solutions revenue in the 7% to 10% range as we are shifting resources towards e-infrastructure work at a faster pace. We expect significant year-over-year adjusted operating margin expansion, roughly in the range of 150 to 200 basis points.

In Building Solutions, we anticipate that revenue will decline modestly in 2026 and that adjusted operating margin will be in the high single to low double digits. We continue to see opportunities for share gain coming out of the down cycle.

Shifting gears, as we look forward to the second half of the year and early 2027, we believe that the strong levels of bid activity we are seeing today will translate into strong awards. However, given the lumpiness in timing, we could see softer third quarter awards with higher levels in the fourth quarter and early 2027. This, coupled with our forecast for strong revenue burn in the third quarter could result in a sequential backlog decline in the third quarter. This would reflect award timing, not a change in demand.

On the acquisition front, we are continuing to look for acquisitions that are the right strategic fit to enhance our service offering, expand our geographic footprint and add capacity. We are seeing more high-quality acquisition targets in the market today than a year ago.

Moving to our full year 2026 guidance, the midpoints of our ranges versus prior year would represent a 64% revenue growth, an 84% adjusted EPS growth and a 79% adjusted EBITDA growth.

With that, I'd like to turn it over for questions.

[Operator Instructions] Our first question is from Brent Thielman from Oppenheimer.

Congrats on a great quarter. Joe, maybe first question, if I look at the backlog, you're up 2x where you were a year ago. You have Stone Ridge also contributing here in the back half. Maybe a little surprised you wouldn't see a bigger step-up in revenue in the second half. And I guess I'm wondering, are there longer than usual lead times associated with some of the backlog? Or just more work start kind of later in the year or 2027? Maybe you could just flesh that out.

Yes. No, we feel very confident in the backlog that's there, Brent, and the projects are happening on schedule and taking place. I will tell you, we're being very conservative in the fourth quarter right now. We never know what the weather is going to be in the fourth quarter. If we have weather like last year, I think we'll have a much stronger fourth quarter than we have in our forecast. But frankly, we're just being conservative on the outlook. We got plenty of work ahead of us and plenty of opportunities coming, especially as we get into the fourth and first quarter, we see some really strong bid activity that's going to take place there.

So no, nothing of a slowdown, more of a cautious behavior on us. We've raised guidance a couple of times. We've come up significantly in all the areas. We would have never expected CEC. We've had them about a year now, and we've doubled that business already. So we're seeing great progress, just the conservative nature we have.

Yes. Understood. Okay. And then on that point on CEC, Joe, maybe just the profile of the new work awarded or pending. It seems like you've seen a huge step-up in award activity at the electrical business. Just talk about maybe how the size and scope has changed of some of the pursuits, maybe the profile of margins you're starting to see come through and kind of your thought process on how margins evolve for the business going forward?

Yes. We're tickled to death with CEC and what they're doing. If we step back and think when we made the acquisition, we thought it would take us a year to fill their capacity, and we actually had talked about shifting some resources to the Southeast. We filled their capacity up in about 90 days. And as a result, they've grown nicely. I think what you don't see in the numbers is kind of what's happening and what's coming from CEC. One of the strategic things we said we're going to do is they're in some end markets with some services that we said we were going to get out of.

We're in the process of getting out of those. It takes a little time. So when we look at the business, we look at it from the old pieces that we're getting out of and then the remaining business as it goes forward. And when we look at that piece, the margins are going up very, very nicely in that area. But also the job size is going up significantly. And I think one of the really rewarding things for us in the quarter, again, that doesn't show up is CEC is now getting the second buildings on data centers that they're at, which says they're performing at or above customer expectations and they're giving them the next phases and the next levels of work.

So everything is coming together exactly as we had hoped. They're doing a great job. They're growing very, very rapidly and adding capacity. And we see, candidly, if we had 1,000 or 2,000 more electricians, we'd be growing it even faster. So we've got a lot of programs in place on not only developing the electricians, but we got a full recruiting team that's recruiting every week to bring those electricians in. So -- it's been great. The only downside, which is the only reason I could see that our stock is not up exponentially today and looks like it's down is the mix makes our margin look like it's lower.

And if you look at every element of E-Infrastructure, margins were up in every single piece of it. The only thing that drove the difference in margin is mix. When we have CEC grow 140%, we love that. We'll take that all day long. When we have our Rocky Mountain business and we convert it from transportation to E-Infrastructure and they grow 700% in a year, we'll take that.

Yes. Understood, Joe. I appreciate the clarification there. Just the last one, maybe an update on the cross-selling opportunities between for CEC and the legacy site development business and how that's progressing?

Yes. So we're on more sites today than we were on in the second quarter. And as we look forward, a lot of the data centers that will be coming out, we've had -- let me step back. Let me just say this, we've had more opportunities to have joint efforts than we have capacity in the electrical side. So as we're building up that capacity, Brent, that number will grow. The reason it's not growing even faster than it is, it's growing faster than we thought. We thought it would take us until this time to be on our first one. We're on 3 or 4 now. It's just pure capacity.

Our customers are asking us for it. If we had a union operation, I would tell you, we'd be on a semiconductor plant up in New York right now with the electrical side. So we're getting asked. They see the value proposition. Frankly, it's even stronger than we anticipated. We're pretty bullish on it. So we're very happy with that. The faster we can ramp up additional capacity or as you know, we're looking at -- continue to look at acquisitions in and around the space. We can add some capacity there, the more joint projects we'll be on.

And our next question is from Louie DiPalma from William Blair.

Joe, you mentioned how the CEC has lower margins relative to site development and how the CEC margins should grow very nicely. From a high level, can you discuss like where like CEC margins could grow to in the long term? And just in general, explain why is there such a significant variation between the margins for site development versus electrical services? And could those margins converge over time?

Yes. So let me make sure people don't get too delusional. We don't ever expect electrical margins to be up at the peak of our site development. There are so many more complexities and differences with the site development and things we can do to truly change the scope and drive productivity in those projects versus an electrical project that's pretty laid out, right? I mean the design is there, the amount of wire, et cetera, et cetera, I'm overly simplifying it, but it's laid out. So there's only so much you can get there.

However, we're not happy with the margins nor CEC with where they are today. And as we move to a better mix of projects, we see 300 to 500 basis points on top of some things we're doing internally of margin improvement and we've said over 12 to 18 months. I think we'll see some of that sooner. The faster we get out of some of this other stuff, the faster that's going to come through. We're watching that very closely. We watch it every month, Louie, and we have seen great progress. The team is doing a fantastic job there.

If I step back and think 3 to 5 years, I don't know why. Today, the electrical world is kind of low double-digit margins, call it, 10% to 12% EBITDA margins. I don't know why we can't get that close to 20%. I really don't. Based on the project size, scopes and the quality of the projects, that's our goal is over a long period of time to get there. And we've been pretty successful at driving margins in our businesses much higher than anybody else, and we feel like we can do the same.

Excellent color. And I was also wondering, could you provide more detail in terms of why the future phase work metric doesn't always capture the full visibility that you have in terms of your pipeline?

Yes. Great question. One of the things is you spend enough time with us and most of the people on the phone spend enough time with us, we're pretty conservative. And if anything, we want to overperform and make people happy. But one of the things we do not include, and we're thinking about how we should be communicating this better is we're on a lot of projects today that have a defined scope to build out a piece of property. So let's just say we have 600 acres of land and they say we're going to build 5 buildings on the first 300 acres, and then we're going to build 5 buildings on the next 300 acres. We only talk about the first 300 acres, okay?

We know that when they're finished with that, we're going to move the equipment to the next one. But that project hasn't been perfectly defined and articulated. But we know that on other projects we've been on, that happens. But the other thing that's happening, Louie, that it is a relatively new dynamic, is we are seeing them purchase incremental property on projects that we're on. So let's just say we're on a 300-acre project today. There happens to be one that's close to that. They have now purchased another 600 acres touching that property that they're going to expand and grow that. That's not in any of our numbers.

Now we're there. We're working with the customers. We're working with them on plans. We're working with that on the future. These projects we historically have said have been 3 years. We just got out of our executive leadership team meeting, and we're looking at projects with our team. And a number of projects we're going to be on for 5 to 8 to 12 years if they continue to expand on this property is unbelievable. So we don't put any of that into right now our future phase book.

And we're trying to figure out a way to still remain extremely conservative, but I don't feel like we're painting adequate picture for the outside community to understand when our guys say they're going to be on a job for 5 to 8 years, we don't talk about that a lot. We talk about the 3 years because that's the project scope we're doing. The people just don't understand the size and scope of these jobs and the duration. It is getting significantly bigger, which is perfect for us.

Now remember, not only do we have the site side, now we have the electrical side that stays there after the site is done for another couple of years. So our visibility keeps getting better and better. Project size keeps growing. So we feel very confident the opportunity is much bigger than we've been talking about. But what it's also done strategically for us, is we had a very, very aggressive organic growth strategy put in place, we felt and a strategy to build that capacity. When we step back and we started looking at these projects and the size of the ones we're just on in addition to the ones that are coming, we said, my goodness, we've got to really accelerate the rate in which we're adding capacity just to keep up with this.

So that's all exciting stuff. It's a challenge for us, obviously. We've always felt comfortable with 20% to 30% organic growth. This year, we're growing a hell of a lot more than that. And we've got to figure out how to keep up with that pace.

Your next question is from Brian Brophy from Stifel.

Nice quarter. Can you give us a sense for how pricing and terms and conditions are trending within your E-Infra backlog today versus a year ago?

We're not seeing anything fundamentally shift. We've seen a few attempts on the electrical side to add some terms and conditions into some things that we have not accepted, frankly. But we haven't really seen a fundamental shift in any of that, right? Nick, are you aware of that?

No.

Appreciate it. And then just touching on the capacity comments. Maybe a little bit more color on spare capacity that you have at the moment. Where are things tightest for you? How are you thinking about your ability to add project managers and equipment if we remain in this healthy demand environment that you're seeing?

Yes. So definitely, the tightest is around electricians. I'll start there. That's always the tightest part of the market. Our teams have done a really good job at making sure we have an adequate supply or adequate number of electricians to do the jobs we have. It certainly has curtailed us from taking on more jobs than we could, frankly. There's more opportunities out there, some of the joint opportunities we talked about earlier. So we're working hard on that.

As you get into the site side, we've done a really good job. But I will tell you, for the first time, we're getting really tight on the capacity piece. We've been able to flex up proactively. We've done some stuff proactively several years ago to make sure we're preparing for some of this. And as we're stretching further and further geographically, and let me remind everybody, geographic expansion for us historically when we had Plateau and Petillo was kind of one state further from where they were to maybe 2 states.

Now we're serving the East part of Texas out of Atlanta and the west part of Texas out of Utah. That's a much further stretch than moving 1 or 2 states. So as a result, it requires a few more resources. You can't lever local resources as much if you can bounce around. So we're getting tight on the capacity there. So we're doing -- as Dan talked about, we're doing stuff on the equipment side. We're doing stuff on the people side. But another big part of this is we are going to have to make more acquisitions in and around the geographic expansions that we are, that we can add that pure human capital resource to execute these jobs.

So I think as we go forward, we're starting to look at a little bit smaller players where we would like to have really large players, but unfortunately, there's really not that many out there and augmenting them with some of our resources. So we don't have to put a full team in Texas. We can put a partial team with an acquisition in Texas or in New Mexico or Oklahoma, wherever that may be. And that helps us build that capacity quicker and faster and it's a little bit of what we're doing with Stone Ridge, frankly, and why we made that acquisition.

And your next question is from Alex Rygiel from Texas Capital.

Very nice quarter, gentlemen. When additional phases of work come out, are these being competitively bid? Or do you find Sterling just basically directly negotiating on these additional phases? And kind of same question, but are you seeing an increase in competition for additional phases of work?

Yes. So if we perform, which we have on every month, I'm not aware of anything where we've lost future phase of it. We generally are negotiating those prices with the customer on the future phase work. Unless it's an extreme change of scope, let's just say it's not part of our project and they want something else added to that project that's outside our normal scope, that would be a normal bid. We give them a number would not be atypical for them to maybe get another number. A perfect example of that is they need to put a road through to get to a new phase and they need paving and curbs and a bunch of stuff like that. They may ask us to give them a bid on that. We may subcontract that or they may bid it out to somebody else.

But for the most part, once we're on the job, and this is really important, and I'll talk strategically on what we're doing and why we're advancing so quickly in Texas and some of the other markets is, the way our teams would tell you is once we plant our flag, we are there. We're not leaving. And that gives us an opportunity to drive project productivity along the way, as you've seen, our future phase work margins tend to get better than our early phase work, right? So we're going to be incredibly competitive to plant that flag. And then we're going to use productivity and technology to drive margins up through the rest of that project and get better margins for each of the phases as we go on.

And secondly, can you speak to some of the other end markets that are seeing green shoots like pharma and semi and other factories?

Yes. And then just back, the one thing I didn't answer is on the competition side. We always see local competition, especially when we go into a new market. There's a lot of small players. But generally, after we do one job, that gets a lot smaller. The first one is always the hardest one for us to get, frankly. But we have not seen an influx of major new players or anything along those lines, especially on these large jobs. Somebody wins a $20 million or $30 million data center in one of our markets, probably. We don't even generally look at those unless the customer forces us to. So those sort of things are going to continue to happen. But we haven't seen any major influx of large competitors in our markets. I'm sorry, what was the next question, please?

Other end markets like pharma, semi and other factories, any progress there?

Yes. So we're -- we still see all of that progressing. We think pharma is '28. Semis are around 2030. I will tell you the team up in New York is doing an outstanding job. I mean they've made -- not by name, but they've made all the local and some of the national news up there on how far ahead of schedule they are on this project. I will tell you that the general contractors on the job and the end customer on this job is extremely happy and frankly, has never seen progress like these guys are making. I think that's going to be the entry point to a lot more semiconductor plants for us coming around 2030.

But I think there might be some intermediate opportunities on some facilities that are being built today in regions and geographies we have historically not been in that we may get pulled into. In addition, we saw the start of the EV plant in Atlanta, just outside of Atlanta this quarter. So we're seeing some mixed activities in the manufacturing space, one-off, two-offs, those sort of things. But we haven't seen any delays in the pharma or the next generation of semiconductors so far.

And your next question is from Manish Somaiya from Cantor.

Congrats on the quarter. Joe, a couple of questions. One, from a big picture standpoint, obviously, we're seeing a lot of news about data centers being banned in a lot of new markets. I guess there was an article yesterday on Texas on Greg Abbott banning new data center approvals. Maybe if you could just help us understand the dynamics of what's going on, on the ground because obviously, you're closer to what's happening. Are things really getting delayed? Or is it just politics as usual? That's my first question.

Yes. We haven't -- we certainly -- we haven't seen anything that's impacted any of our schedules at this time. There's going to be states. I think people have to realize, there's going to be states and geographies that will never have data centers or will have very few in New York, seems to be against everything that brings revenue to the state and they have banned the data centers is one of those. In Texas, they're moving forward very quickly. I think we'll continue to see like anything new and anything big, there's always the political side that's raising ruckus, I guess, is the best way to put it. But so far, we have not seen any issues or delays with the projects we're on nor the projects coming.

Do I think realistically down the road, could there be other supply chain delays once the build starts out on some of these projects? I think some of the upstream or downstream, however you want to look at it, supply chain elements or the companies are getting pressured on capacity and stuff. You certainly could see some of that stuff. But on the site side, they want to get that done as soon as possible. It's the only place they can pick up time and be prepared. So we have not seen any delays there. And candidly, on the electrical side, our teams have not seen any -- they may see a week delay or a couple of days, but I have not seen anything of significance that's concerned us.

That's helpful, Joe. And then just on the E-Infrastructure margins, obviously, in the second quarter, we had about 24.1%. I think you addressed some of the factors there. Mix was a big factor. But how should we think about normalized margins at least for this year and possibly into '27? And perhaps if you can just kind of help us understand where the margin improvement for CEC is coming from? I think you mentioned 12 to 18 months. But if you can just kind of help us understand the different buckets of margin improvement. And then finally, on Stone Ridge, I guess, the margins there are mid-teens. If you can also kind of frame that same pathway for us.

Yes. So let me step back a little bit in time when we bought Plateau, who has fantastic margins today, their margins were in that 15% to 18% range. And it's taken us a few years, and we've moved those margins up significantly. If you take a look at the Plateau business, they're getting close to peak margins. They'll still have some small incremental gains, but we're not going to see the monumental gains in that business that we've seen projects change to a further degree. But in the rest of our E-Infrastructure pieces, the Petillo business has always been a lower-margin business. As they're getting into bigger and bigger jobs, data centers, chip plants, those margins will come up. Margins on bigger jobs are better.

Our Rocky Mountain Transportation business that we've shifted, grown 700% into E-Infrastructure. E-Infrastructure margins there, even with their small equipment suite, even with what they're doing from not being vertically integrated as an example, are still significantly better than transportation. But it's going to take us a little time to do some vertical integration. We don't have enough critical mass in the market to make vertical integration worth its while, right? So as we build enough critical mass, as we build up their equipment suite and the really simple way to think of it is, if I have a bucket that's 3x the size of an existing bucket for every scoop, I scoop 3x as much dirt. It's really that simple, right? So it takes me 1/3 the time to move the dirt. So we'll continue to improve and grow their equipment suites, their margins have come up.

On CEC, there's really 2 big drivers here. One is we're getting out of some legacy business segments that have relatively low margin, that will improve their margin, right? It's just portfolio management. The second piece is, as they're getting more and more engaged on these data centers and the data centers are getting bigger, we're watching their margins go up as job sizes go up. So it's a combination of things. So we'll continue to see those go up. Where people are going to get confused every single quarter because it's not perfect math, is the mix of that is going to change.

And when CEC grows at a much greater rate than E-Infrastructure, it's going to appear our margins are going down, even though their margins are going up and site development margins are going up, it's -- that's just mix. There's nothing we can do. But if you look at the returns we're getting on the dollars and the growth, I think most people would take that any day of the week.

So just quickly then, Joe, if you can just help us frame what the legacy E-Infrastructure margins are versus what the CEC margins are?

Do you have the exact numbers, Nick, on what that is?

[indiscernible] in the second quarter on an adjusted basis were on the high 20s [indiscernible]

Yes. So you're looking at -- if you take the site side, you're in upper 20s and the CEC side, roughly 12%. So there's a big difference. It's over 2x the margin profile. So it doesn't take a lot of mix shift or incremental growth in CEC to dilute the overall margin. That's just for the quarter.

And your next question is from Sangita Jain from KeyBanc Capital Markets.

Can I follow up on the margin question? I kind of just want to understand the go-forward guidance and whether it's a function of CEC growing a lot faster than you had anticipated, let's say, a few months ago when you gave us this guidance?

Yes. So the easy way to think of margins is if you take E-Infrastructure, you break it down into site development and electrical, right? We'll keep it that simple. In the quarter, we saw improved margins in site and electrical. But the revenue mix of the electrical being growing at a much faster rate brings down that overall margin. As we go to the rest of the year, the margin is diluted by the accelerated growth rate of CEC, okay? So it's really -- this is purely mix, we're not losing margin in our businesses. I want to make sure everybody understands that. This is purely a mix of revenue that drives that.

And then the other piece you have on the site side, where we saw the increase -- the trajectory of growth in margins slow down is we have, 1, new projects where the beginning phases of new projects are lower. But 2, we also have that 700% growth in the Rocky Mountains transportation business, which has that smaller equipment suite that isn't vertically integrated, grow at a faster rate than our Southeast business. So when that happens, their margins are lower. I will tell you that. Their margins are improving, but they're still lower than our Southeast margins. So that blend makes it appear that the total margin is down, but the individual elements are all going in the right direction.

So relative to our previous expectations, yes, the growth at CEC has been higher and the ramp on some of those newer projects have been faster.

Your next question is from Adam Thalhimer from Thompson, Davis.

Great quarter. Joe, the E-Infrastructure orders came in at a record level, and I couldn't believe that they're even up sequentially. Can you give more color about what was in there and maybe how much Stone Ridge added?

Yes. So what makes it even more impressive is that we're able to do that on a really strong revenue quarter, which is always tough to do. Nick, do you want to go through some of the backlog numbers? Stone Ridge certainly added some of that. CEC had a great quarter with their bookings on that. I don't know, Nick, if you have the detailed numbers there.

Yes. So CEC was at about $2.4 billion combined backlog for the quarter, June. Stone Ridge was then at about $140 million for committed backlog signed and I think it's $140 million for signed backlog.

Yes. The biggest driver, though, for the quarter, CEC has some great bookings. And Adam, what they are, that's the next phases and next sets of buildings of projects that they're currently on. So for us, everybody likes to look at just the pure raw number, but what's really encouraging for us is the fact that they are winning those next phases and winning those next level of projects, which is just proof in the pudding that they're executing well. They're delivering to the customer. They're doing what they need. And as part of the portfolio, we see the same thing happening with them as we have with Plateau or RLW or Petillo.

Got it. Okay. And then, Joe, your comment about the potential for softer Q3 awards. I think you talked about the stock being down. That's probably the biggest reason. Can you provide additional color on what you meant by that and maybe more color on what you're seeing in the bidding?

It's just timing. I wish we could get our customers to bid equal amounts every quarter through the year and make our lives a lot easier. But the reality is they don't. We can have a quarter where they bid 3 or 4 new projects and we look like the greatest things and sliced spread. In the next quarter, they bid one or none. It's just the timing of their cycle when it comes out. The important thing for us, and I get if you're not kind of in the mix of things, people are looking for indicators. But for us, we're in conversations with them all the time. We know what's coming. As long as we know what's coming, we feel good.

When it hits, less of a concern for us, right, whether it's third quarter or fourth quarter. But we see really strong activity that's going to take place in the fourth quarter and first quarter of next year. And there's just a little bit of a lull in the third quarter. So we're trying to give people a heads up that we see that coming. We know it's coming. Don't panic. It's not a problem. But instead of telling people after the facts, when we know it's -- that's just going to probably happen. Could something slip in the third quarter and we look like idiots and it comes in early, possibly, but I wouldn't plan that.

And your next question is from Julio Romero from Sidoti & Company.

Maybe starting off here, you recently upsized the revolver to $1.5 billion. You're carrying a net cash position. How should we think about that? Should we read that larger facility as kind of the M&A acquisition candidate size moving up? Is it purely optionality? Just help us think about that here.

Yes. Nick, do you want to answer that?

Yes, sure. I mean we upsized the facility certainly to take advantage of opportunities for acquisitions and to have that dry powder to be able to execute on those. Also, we paid off our existing term loan and moved to an all-revolver structure. And so we enhanced pricing. We added some key relationship banks to the mix. And so overall, I feel really good about our revolver and how it positions us going forward.

On the uses, there's no question, we've always been acquisitive. Our acquisitions turned out pretty good. If we could double every acquisition like CEC in a year, I think we get the acquisition price of a year. I don't know if that is. So we've been very good. We're going to need to add more acquisitions for capacity. With what we're seeing, the part that everybody is missing, put down the newspapers, reading the craziness that's out there. What we are seeing just from our top hyperscalers, the amount of work that is coming, we have to add capacity significantly faster just to keep up with them. That's not including all the other players that are entering the market and building stuff. It is unbelievable what is coming down the tracks. And so we are going to have to make more acquisitions, not only just from a strategic geographic standpoint, but from a pure capacity add standpoint to keep up with that demand that's coming.

Excellent. And kind of relates to my follow-up here is just CEC is running well ahead of the revenue expectations you set at the announcement. Obviously, it's making up more of the infrastructure mix as we've talked about today. And I'm curious how that and your comments about more capacity needed related to your M&A priorities, kind of ranking them today, where do your priorities kind of sit at with regards to geographical, electrical versus specialty mechanical, more site development? Just help us think about those priorities here.

Yes. The answer is a little bit of all of the above. But if you would ask me kind of in the third quarter last year after we purchased CEC, would you look for more electrical capacity in the Texas market? I would have said no, we're probably going to focus more on the Southeast. Today, if the right opportunities came up, I would add 2 or 3 more CECs to the Texas market. That's how big we believe that market is going to be. We certainly would like to add the electrical capabilities in the Southeast. We think that's obviously a large market for us and the value proposition is the same. So we continue to look hard for the right acquisition in that market.

And then on the site side, especially as we're moving further and further from the west east and from the east west to Texas and some of the surrounding markets, the Texas market is going to be bigger in the next 3 years than any other market related to data centers, everything else. It is coming. And I guess there's always something that could stop it, but I don't know what that is right now. And so we're working really, really hard on what do we need to do to add that incremental capacity today to start getting ahead of that curve, just like we did with Stone Ridge because we believe in '20 -- late '27, '28, some of the upper Pacific Northwest areas are going to start taking off as well.

I sound like a broken record, but we have great visibility to multiyear projects that are coming and we are continuing to position ourselves to be there. So we look really smart when they come out, but it's just our customers telling us where they're going.

Thank you. That concludes our question-and-answer session for today. I would now like to turn the conference call back over to Joe Cutillo for the closing remarks.

Great. I want to thank everybody again for joining our call today. If you have any follow-up questions, please feel free to contact Noelle Dilts. Our contact information can be found in the press release. Thanks, everybody, and have a great day.

Thank you. Ladies and gentlemen, the conference call has now ended. Thank you all for joining. You may now disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Sterling Infrastructure First Quarter Webcast and Conference Call.

[Operator Instructions] As a reminder, this call is being recorded on Tuesday, May 5, 2026.

I would now like to turn the conference call over to Noelle Dilts, Vice President of Investor Relations and Corporate Strategy. Please go ahead.

Good morning to everyone joining us, and welcome to Sterling Infrastructure's 2026 First Quarter Earnings Conference Call and Webcast. I'm pleased to be here today to discuss our results with Joe Cutillo, Sterling's Chief Executive Officer; and Nick Grindstaff, Sterling's Chief Financial Officer. Joe will open the call with an overview of the company and its performance in the quarter. Nick will then discuss our financial results and 2026 guidance, after which Joe will provide some additional commentary on our markets and outlook. We will then open the call up for questions.

As a reminder, there are accompanying slides on the Investor Relations section of our website. These slides include details on our full year 2026 financial guidance. Before turning the call over to Joe, I will read the safe harbor statement. The discussion today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events or otherwise.

Please also note that management may reference EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income or adjusted earnings per share on this call, which are all financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon.

I'll now turn the call over to our CEO, Joe Cutillo.

Thanks, Noelle. Good morning, everyone, and thank you for joining Sterling's First Quarter 2026 Earnings Call. Sterling is off to a fantastic start, delivering strong revenue growth of 92% and adjusted diluted EPS growth of 120%. Adjusted EBITDA more than doubled with margins expanding over 150 basis points year-over-year to reach a new first quarter record of 20%. During this period of unprecedented demand, our focus remains on pursuing projects that offer the most attractive returns. We're not looking to win all projects. We are looking to win the best projects.

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. Additionally, we have visibility into high probability future phase opportunities that now total over $1.3 billion. Together, our signed backlog, unsigned awards and future phase opportunities provide visibility into a total pool of work approaching $6.5 billion. This has grown by approximately $2 billion since year-end.

Notably, during the quarter, we were awarded the first phase of a multiphase semiconductor fabrication campus. This first phase, which will be executed under a joint venture, totals over $0.5 billion and is expected to be completed in late 2027 or early 2028. The campus build is expected to span a multi-decade period and presents opportunities for additional scopes of work through 2027 and beyond. The growth in our backlog and future phase work in the quarter, combined with our visibility into our customers' multiyear plans, strengthen our confidence in our outlook. We believe we are perfectly positioned to continue to deliver strong earnings growth and return for our shareholders for many years to come. The Sterling Way, which is our commitment to take care of our people, our environment, our investors and our communities, while we work to build America's infrastructure, remains our guiding principle as we execute our strategy and grow the company.

Now I'd like to discuss our segment results for the quarter in more detail. In E-Infrastructure, first quarter revenue grew 174%, including organic growth of over 100%. The data center market was again the primary growth driver in the quarter. E-Infrastructure adjusted operating income increased 177% as margins expanded despite the dilutive impact of the CEC acquisition. Revenue for our site development operations more than doubled and operating margins expanded both year-over-year and sequentially.

Margins continue to benefit from our strong execution on large time-sensitive mission-critical projects. CEC delivered 78% revenue growth compared to its prior year first quarter, with margins performing in line with our expectations. The Texas market remains exceptionally strong with robust award activity in early 2026.

During the quarter, CEC secured several large project wins, contributing to a $1.2 billion increase in its combined backlog since year-end 2025. We continue to see tremendous opportunities ahead for both electrical and site development. In aggregate, our E-Infrastructure signed backlog, unsigned electrical awards and future phase site development opportunities now exceeds $5 billion, representing an increase of $2 billion since year-end. Mission-critical work, including data centers, large manufacturing projects and semiconductor represented over 90% of E-Infrastructure signed backlog at the end of the quarter. Future phase work is predominantly related to mission-critical projects.

Moving to Transportation Solutions. First quarter revenue grew 10%, driven by strong activity in the Rocky Mountain region, which benefited from favorable weather conditions and some earlier-than-anticipated project starts. Adjusted operating income grew 26%, reflecting strong execution and mix shift towards higher-margin projects. We ended the quarter with Transportation Solutions backlog at $1.04 billion, a 20% year-over-year increase. Shifting to Building Solutions. In the first quarter, segment revenue grew 3%, driven by a pickup in homebuilder activity and adjusted operating margins were 8.7%.

While we're encouraged by the slight revenue increase in the quarter, we continue to anticipate that the residential market will face strong headwinds throughout 2026. The strength of Sterling's diversified portfolio and strategy to focus on high-growth and high-margin end markets enabled us to deliver another fantastic quarter.

With that, I'd like to turn it over to Nick to give you more details on some of our financial metrics and 2026 guidance. Nick?

Thanks, Joe, and good morning. I'll begin with our consolidated backlog metrics. Our first quarter backlog totaled $3.8 billion, a 78% year-over-year increase or 51% excluding CEC. Combined backlog of $5.2 billion increased 131% or 46% excluding CEC. First quarter 2026 book-to-burn ratios were 2.1x for backlog and 3.5x for combined backlog.

Moving to our cash flow metrics. Cash flow from operating activities for the first quarter of 2026 was a strong $166 million. We expect continued strength in operating cash flow for the full year. Cash flow used in investing activities included $20 million of CapEx. For 2026, we are forecasting CapEx in the range of $100 million to $110 million, which is unchanged from prior guidance. Cash flow from financing activities was a $27 million outflow, including share repurchases of $12 million at an average price of $305.14 per share. Remaining availability under the existing repurchase authorization is $362 million.

We will remain opportunistic in our approach to share repurchases. We are in great shape from a balance sheet perspective. We ended the quarter with $512 million of cash and debt of $287 million for a cash net of debt balance of $224 million. Additionally, our $150 million revolving credit facility remained undrawn during the period. Given our strong liquidity, we are in an excellent position to continue to take advantage of both organic and inorganic growth opportunities in the years ahead.

Our current backlog visibility and strong market tailwinds position us for an even better year than we originally anticipated. We're increasing our guidance ranges for 2026 as follows: Revenue of $3.7 billion to $3.8 billion, which at the midpoint is a 20% increase over previous guidance and represents more than 50% growth over 2025. Diluted EPS of $16.50 to $17.15. Adjusted diluted EPS of $18.40 to $19.05, which at the midpoint is a 36% increase from previous guidance and represents 72% growth over 2025. EBITDA of $801 million to $831 million, adjusted EBITDA of $843 million to $873 million.

Now I will turn the call back to Joe.

Thanks, Nick. For quite some time, we've been communicating a bullish view on our markets and outlook. As we sit here today, that outlook is stronger than ever and continues to surpass our expectations. Customers are continuing to ask for more with projects growing in size, complexity and duration. At the same time, we're being pulled into new geographies with urgency as customers prioritize alignment with partners who have the capability and capacity to execute over the long term. Together, these dynamics reinforce our conviction in the multiyear opportunities across our markets.

Moving to our segment expectations for 2026. In E-Infrastructure Solutions, we anticipate that the current strength in data center demand will continue for the foreseeable future. We continue to have conversations with our customers regarding how we can best support their strong multiyear capital deployment programs. As part of this, we are getting pulled more rapidly into new geographies, including Texas, the Pacific Northwest and the Midwest.

In the semiconductor market, our industry-leading capabilities enabled us to be selected as the site development partner for a mega-fab semiconductor campus. This award highlights how Sterling's highly differentiated capabilities make the company the partner of choice for large mission-critical projects in the U.S. We believe that this is just the beginning of a wave of semiconductor fabrication activity that will begin to accelerate at the end of the decade. In addition, there are still several opportunities in the broader manufacturing market that we believe could be awarded in 2026 or early 2027.

We're gaining meaningful traction in our cross-selling efforts between site development and electrical services. We are currently in active construction on 2 data center projects where we are executing both services in an integrated capacity. These joint awards have materialized approximately 6 to 8 months ahead of our original expectations. For the full year 2026, we expect to deliver E-Infrastructure revenue growth of 80% or higher, including the full year contribution of CEC. We anticipate that the legacy business will grow at rates approaching 60% or higher as several of our larger projects accelerate. Adjusted operating profit margins for E-Infrastructure are expected to be in the mid-20% range.

In Transportation Solutions, we're in the final year of the current federal funding cycle, which concludes in September of '26. We have built over 2 years of backlog and continue to see good levels of bid activity. For 2026, we anticipate continued growth in our core Rocky Mountain market. The downsizing of our low bid heavy highway business in Texas is progressing according to plan, resulting in some moderation of Transportation Solutions top line and backlog but should continue to drive margin improvement as we move through the year. We expect Transportation Solutions revenue to grow in the low to mid-single-digit range in 2026.

After the strong first quarter, we anticipate a moderation of growth rates in the remaining quarters. This is driven by 3 factors: The early start of projects in the first quarter that we originally expected to start in the second quarter; the allocation of resources towards E-Infrastructure projects; and the final wind down of our Texas low bid work.

In Building Solutions, we believe the business is well positioned for growth over a multiyear period. Our key geographies of Dallas-Fort Worth, Houston and Phoenix are expected to see population growth driving new home demand. Additionally, there is an opportunity for share gain coming out of the down cycle. We anticipate that Building Solutions revenue will be modestly down in 2026 and that adjusted operating margins will be in the low double digits.

On the acquisition front, we continue to look for acquisitions that are the right strategic fit to enhance our service offering and geographic footprint. We are seeing more high-quality acquisition targets in the market today than a year ago. Our significant balance sheet firepower positions us to take advantage of these opportunities.

Moving to our full year 2026 guidance. The midpoint of our guidance ranges would represent a 51% revenue growth, a 72% adjusted EPS growth and a 70% adjusted EBITDA growth.

With that, I'd like to turn it over for questions.

[Operator Instructions] Your first question comes from Sangita with KeyBanc.

Maybe, Joe, you can help us understand what you think went a lot better in 1Q versus expectations maybe on revenue and margins since usually we consider 1Q to be a seasonally slower quarter.

Yes, sure. Yes. Q1 is historically and will probably be consistently our lowest quarter. A couple of things helped us. We certainly had some very good weather in the Rocky Mountains and some of the other regions, which enabled us in the Transportation segment to start some projects a little earlier and execute projects through the winter months when we normally shut down. So that definitely helped us. But more importantly, as we look at E-Infrastructure, we're really starting to see the impact of the new projects that are coming in larger and more complex and what the added values of our vertical integration are adding to the margin profile and productivity through the build of these projects. So we're far enough along.

Again, a little bit of history. We started this journey when data centers became really data centers and data campuses and hit 100 acres. Now we're doing projects that are north of 1,000 acres and the future projects coming out look like they're multi-thousand acres. So the larger they get, the more complex they get, the more we can leverage our vertical integration and our size and our scope, which drives more productivity. And that's why we've said all along and we feel even more confident as we're executing, we'll continue to see nice margin growth in E-Infrastructure.

Great. And then if I can ask a follow-up on the comment you made on M&A targets and the fact that you're seeing better targets now. Can you tell us how you define these targets as being better than what you saw before?

Yes. So we have some significant criteria that we look at. We always say we buy people, we don't buy businesses. So it's absolutely critical on the caliber of the talent and the willingness of the key team to stay. But our primary focus is in the infrastructure. If we take a look in kind of a couple of different areas, either geographic expansion of capabilities that we have, more focus on the site development from a geographic expansion standpoint.

And then on the electrical side, a combination of geographic expansion and incremental services or products that we can offer. I'll tell you, we're looking beyond electrical as well. So we're looking at the whole portfolio. We really spend a lot of time with our customers and understand what are their needs and what are driving the success or the complexity of these projects, and we'll constantly look for those services to add to our portfolio. It's how we moved into electrical.

Your next question comes from Noah with William Blair.

Great quarter. You highlighted a robust bidding environment in Texas. Can you walk us through your current presence in that state as it relates to capacity, project manager availability and how you would characterize Texas' data center market today versus where, say, the Atlanta or Greater Georgia market is at today and your ability to gain share over there in Texas?

Yes. So our approach in Texas is we have CEC located up in Dallas, we'll call that North Central Texas. And we're attacking Texas from the West, and we're attacking Texas from the East. We're using our Rocky Mountain assets and businesses to come from the West to hit the Western Texas, even into New Mexico, there's a little bit of activity there. And then we're leveraging the Atlanta folks and Southeast team to come east. They'll make it all the way to Dallas and both of those teams are kind of meet in the middle. So we've got current capabilities and capacity to do that. We're constantly looking for acquisitions that could be in the upper Pacific Northwest, also in Texas that we can add capacity as we move along the way. So we'll continue to do that.

If I look at the market, I would tell you that the Atlanta Southeast market is more mature, has a longer runway and today is probably a larger market. As I look forward the next 4 to 5 years, I think people will be shocked with the size and scope and quantity of data centers along with some other stuff being built in the Texas market.

So we're in the early innings, but the projects are extremely big. They're coming out extremely quickly. And we see not only this year, next year, but what our core customers and key customers are talking about starting '28, '29. These projects on top of being large, will obviously take longer in time frame to complete. So a typical project today is more like 3 years. These will be pushing out more like 4- and 5-year projects.

And one other thing, Noah, just to add here is we're getting pulled into these new geographies by our customers. So it's not like we're just going into these new geographies cold. They're looking for partners that can support their builds in these new areas. And that's really a continuation of the geographic expansion strategy we've had since the beginning. So it's just kind of taking that one step further.

Yes. And just to add to that, I think that's a great point. Our customers, if you look at our geographic expansion from the beginning of this, going back to when we started this, we've let the major hyperscalers pull us into new markets. I will tell you, we generally take our time to do that. They're more than pulling now. They're kind of screaming to get into these markets faster with what they see coming in capital spending they're going to do.

So it's really -- it's exciting times for us. Our challenge is how do we grow as fast as we can and still deliver at the same levels in caliber. But it also allows us to be extremely picky on the projects we decide to do and the projects we're not going to do. And that only helps us long term on margins and capacity planning.

Fantastic. That was great color. And then just a follow-up. As it relates to CEC, can you walk us through your current level of integration with the business as it relates to what you're seeing with revenue and cost synergies? You mentioned the 2 active projects that are involved -- are involving both the legacy site development work with CEC's Electrical. But how much of their collective bidding pipeline is collaborative with this cross-selling? And then what's the progress on CEC's margin expansion opportunity?

Yes. So we call it assimilation, not integration. But we've been really happy with the progress made with CEC. As I said on the call, we're 6 to 8 months. We really didn't think we would see a joint opportunity or joint effort take place until late second quarter, early third quarter of this year. We started those in the first quarter, which is fantastic. We've got great reception from the hyperscalers, and they will quickly and are seeing the benefit of combining these together and what it does to the cycle time of the build process. So we're really happy with that. Integration is going great.

On the margin expansion piece, we're still extremely bullish that we're going to see 300 to 500 basis points of margin in really 12 to 18 months. One of the things that people need to realize that CEC is, there's a couple of end markets and products that we knew they were doing to have much lower margin. We are exiting those. And as we exit those, those margins will come up. I will tell you on the core business ex those markets, we saw a really nice margin expansion in the quarter. I would tell you that it was actually ahead of what we anticipated. So we're very confident in where those margins will go over the next 12 to 18 months and feel really good about what the business is bringing to us and what we can do jointly with that business as we go forward.

In addition, it's taken off so quickly. We talked about expanding or growing our modular capabilities. We just locked down a lease to triple the size of our modular build capabilities. We're building a world-class manufacturing site to do that. And we think we'll ultimately expand that to other locations in the U.S. over the next 18 months. So we're excited about it. I feel very good about what it's bringing. I just wish I had 2,000 or 3,000 more electricians, and we would grow it even faster.

Your next question comes from Manish with Cantor.

Manish? We lost him.

Your next question comes from Brian with Stifel.

Congrats on a great quarter here. Just a follow-up on Texas in your traditional site development business. How much do you expect Texas to account for as a percentage of revenue there, kind of putting CEC aside? And can you remind us where about it was last year? And then is there any notable differences in margin profile in the site development business in Texas relative to some of your other regions?

Yes. So it's really hard to say where Texas will be as a percent of revenue. I will tell you, it is growing extremely quickly. But so is -- people forget the Southeast is still growing incredibly fast, too, right? And we've just got pulled into the Midwest by one of our customers, and so there's another market there. So it's hard for me to -- I'll only be wrong if I try to give you an answer.

Margin profile, as legacy things are getting bigger and more complex, margin profiles will be fine. We certainly have seen in some of the far Pacific Northwest projects early on where we've got a little smaller equipment group, and we're not as fully vertically integrated as we are in the Southeast. Those margins are a little lower. but they would be margins everybody would love to have. So we're not worried about that.

Part of our acquisition strategy is to look at how do we start putting in those elements or even organically adding those elements of vertical integration. We are really, really seeing the benefits of these ancillary goods and services, not only from time reduction of the project because we control more of it, but that's what's really helping drive these margins. Everybody keeps asking us if we're getting more price. The answer is no, we're not getting more price. This is all around effectiveness and efficiency and what we're able to drive through the execution of these projects for our customers.

Yes. That's great. And then just a follow-up on CEC. In the release, you guys talked about $600 million-ish contribution to backlog, but a $1.9 billion contribution to combined backlog. Can you help us understand the delta here? Is that some underground electrical work that you won that hit RPOs and maybe some of the inside work is coming later? Or how should we think about that?

Yes, it's a combination. It's both external and internal electrical work, and that will be on upcoming centers and existing centers. The contracts with CEC are very similar to what we've talked about in our site development where this stuff is phased. So they'll release a small phase. We know the scope of the project. Internal electrical package is $300 million to $500 million generally. So we know kind of the total scope of the project but they'll release those in small pieces along the way. So that's why you see kind of some backlog, some in that future phase work. But those are projects that we're either actively working on or getting ready to work on.

Brian, this is -- sorry, just one thing to add. We've actually -- within some of that work that fell into combined backlog, they have -- and again, the terms and conditions are kind of already finalized on that piece of the contract that would -- is maybe unsigned, but would fall into combined backlog. And some of that has subsequently moved into signed here as we've moved into the second quarter, a pretty big chunk of it.

Your next call comes from Alex with Texas Capital.

How should we think about your new work being competitively bid versus negotiated? And how has that changed or how might that change?

Well, in theory, everything is bid. The question is, in certain instances, we're asked to go work on specific projects with the customer. I guess you could consider that negotiated. Our pricing -- what people don't understand, we've done a tremendous amount of work for these customers in the past. So it's not like we can raise our prices 20% or 30% even if we're negotiating it. They know what the price range is going to be. It's our ability at the end of the day to execute this stuff faster than anybody else and be on time every single time with our customers that gets us pulled into these jobs. So that's really where we're at.

I think as we go forward, we're looking at these multiyear programs of our core customers and the size and scope of these and it's really causing us to look harder at those. And we'll be passing up on more jobs as we go forward that may be smaller in size or scope or may have lower margin profiles because they're not as complex as some of these bigger jobs, and we'll just keep moving assets to where the most money is. I will tell you, with the combination of electrical and the site side, it really gives us a whole another avenue on some of these extremely large projects coming out in the future.

And congratulations on the semi-fab campus. It sounds really exciting. Do you see other opportunities developing sort of outside the data center market this calendar year? Or is that more of a 2027 event?

Yes. So let's talk about the semi fab for a little bit. here's a job that's going to be one of the bigger jobs in the U.S. It's the biggest semi-fab plant in the U.S. And I will tell you, it was fun. We actually participated in the process, and I say we, some of us in corporate because we didn't know if we wanted to do the project or not, to be honest. We went through the process and it was really fascinating to see the differentiation that we had over anybody else that spoke to the customer about doing this project. It was just so blindingly evident. There was no one else in the room that was going to have a chance at this.

But more importantly, it's the first semiconductor project we've done. It's not a market we've been in, in the past. It's not a market that's really existed in the U.S. But a lot of the GCs in that space, the engineering firms in that space are not people we deal with every day. Now we're dealing with them every day. And when we show them the capabilities of what we're able to do, we feel very confident that just like in data centers, we will be the supplier of choice for every chip plant that comes out in the future. We don't see the huge rush of chip plants coming out until '29, 2030 kind of looks like the timeline, but we're positioned perfectly for that as we go forward with that.

I'm sorry, what was the second part of the question?

That covered it.

Your next question comes from Julio with Sidoti.

I wanted to ask about how your competitive positioning is evolving due to these shifting and increasing customer needs. As you said, these customers are no longer asking you to scale, but kind of screaming for you to go into other geographies. And as they act with more urgency, are you realizing a better pricing environment? Are you negotiating better payment terms? And kind of related to that, how do you maintain risk discipline and essentially not allow these large customers to force your hand for lack of a better word, into taking on more work than you would typically handle?

Yes. I think if we were going to get criticized for something it would be that we're probably not aggressive enough on price. And we just -- we have a philosophy that we have a fair price and we make our money on execution. If we take care of customers, they'll have us back. There's no reason for us to try to take advantage of the situation. My history says at some point in time, that comes back, too. So if somebody wanted to be critical of us, it would be that we're probably not pushing price hard enough, but we keep -- we will keep growing margins with vertical integration and the productivity.

On the risk profile, the beauty of all of this stuff coming at us is we're not afraid to say no. And sometimes our biggest customers may not like that. There may be a geography or something that takes place. It could be a real small job that, frankly, just for the time, effort and energy would take away significant capacity from doing their bigger jobs. So what we try to do is work with them and say, here's the jobs we're going to do. Here's the jobs proactively we're going to pass on. We'll even help them in some cases if they need help try to find somebody to get that done. So that's where we go.

On the risk profile, we are incredibly risk averse. It's another reason why our margins are where they are. We won't take on high-risk jobs that are going to get us in trouble. So we don't see that as an issue. Right now, our biggest challenge is they would like to have us in 2 or 3 or 4 new markets tomorrow. We've had to say no to some of those. We really have. And some days, it kills us because we'd like to be in all those markets, but we've just had to say no. And over the long term, that enhances or continues to build our credibility with them because we'll never let them down. So that's important to us.

Very helpful. And that kind of dovetails into my next kind of question is about expanding production capacity. I know you discussed earlier expanding your modular build capabilities. I think last call, we talked about AI deployment internally to improve production capacity for product managers. And then obviously, you have a joint venture with the first phase of the semiconductor facility project here. How would you kind of rank order the levers you have to pull to expand production capacity to continue to grow, both in the near term and in the longer term?

Well, I think it's different in each area. So electrical is very different than site development. Electrical comes down to electricians. It really does. And so as we said before, we've got the university, it's great. We're graduating people as we speak. The downside of the university is it's a 4-year program to get somebody from start through apprenticeship into a certified electrician. That doesn't mean they can't work along the way as an apprentice, but it's a long, lengthy process, and we can't put out thousands of people a year. So that's one avenue.

Second avenue, as we get these larger multiyear jobs, you can actually attract electricians from smaller shops that may be on small jobs that are moving every 3 or 4 months to where they can be some place for 18, 24, 36 months, depending on the size and scope of the project. So there's an attractive piece of that.

And then the third piece is acquisitions. And that's a combination of can we buy something -- someone larger that gives us a nice geographic expansion element? Or are there some small tuck-in smaller shop electrical contractors that don't have the size and scope to do data centers or large mission-critical projects, but they've got 150 or 200 electricians. We can buy those and we can convert those electricians to work on mission-critical stuff. So that's kind of how we're going at it in the electrical space.

And then the last piece of the modular, which is anything I can build in a factory where I don't have to have a certified electrician doing 100% of the work, saves me that electrical work in the field, okay? Plus there's some added quality and other advantages of doing it in a factory, quite frankly. So we have that.

On the site development side, we have a waiting list of operators. It's really about project managers. We've talked about that in the past. The AI project we did first was focused on project managers. We picked up about 15% capacity in project managers. We've got the apprenticeship program or internship program, I should say. So we're literally hiring people in their sophomore year. We run them all through college, and then we got a program that they go into right after that. We're graduating for, I think, a year -- 4 or 5 a year right now that are not only through college, but through the program itself and are becoming real project managers in the field for us. So we'll continue to do that.

And we're looking hard for acquisitions. It's challenging on the site development side, candidly, for us to find the right acquisitions for a couple of reasons. One, the size and scale that we have is so much bigger than anybody else. There's a lot of small players out there. They tend to have either small equipment fleet or most of them have no equipment at all, they rent and lease it. And I would tell you that the rental and lease market right now is extremely tight. So they're going to be highly limited on capacity and capabilities. So we're looking hard. And if we can find the right ones, we will buy them. It's just hard for us to find that. But that's our strategy on that front on top of, I'll call it, the internal development.

Your next question comes from Adam with Thompson, Davis.

Congrats on putting up one of the best earnings reports I've ever seen.

Thanks, Adam.

You had some large awards, you said, recently for CEC. What should our expectation be for continued awards from those guys? And as they get out of some of their lower-margin ventures, you talked about that, does that free up electricians that you can move back and take on more mission-critical work?

Yes. So we get kind of a double benefit from the low-margin stuff we want to exit. You free up people and your margins move pretty significantly when you do that. So we get 2 benefits of that as we go forward. We have more opportunities than we have capacity to get to with CEC. So just like we've talked about with everything else, we'd like to focus more on where we get joint opportunities because we can really lever that on the total project scope and take out some significant time and drive some significant productivity. So our net margins will go up as well. So that's kind of where we're focusing their growth activities on as we go forward.

And we'll continue to look at it's been really fun to watch. We've had CEC for 8 months now or so, watching them kind of transform as well from where they were, which is a great business to with all these opportunities and what's happening in these joint opportunities, watching them quickly trying to shift and move more and more resources, assets and capabilities there because they really see the benefit of what that brings to them as well. So it's fun to watch. Like I said, if I had 2,000 more electricians, I can tell you we can put them to work in a quarter for sure out there right now. It's a really good time on the electrical insight side.

And then on the M&A side, you -- since your electrical deal has worked out so well, you said that you would go to where they're asking you to add scope. So I guess my question is where are they asking you to add more scope? And could that include maybe something just purely on the manufacturing side?

Yes. Well, it's interesting you say that because there's a lot more to these projects than people realize. And there are underground components that are manufactured by others that we purchase and put in that may make sense for us to do. As we look at this modular capability piece, we're kind of starting out with the basic stuff, but there's no reason that we can't go to whole modules of these being built in a factory and put on site. So we see that expanding and growing very rapidly as an opportunity. And for 2 reasons. One, just pure electrical capacity; and two, it could open up other end markets for us that we're not in today.

Your next question comes from Manish with Cantor.

Congrats again. Joe, 2 questions for you. One is on E-Infrastructure. The margins that we're seeing, are they structurally sustainable? And should we think of them as peak margins? Or is there more room to be had?

Well, when you ask if they're sustainable, I will tell you, if you consider them going up higher than they are now, then they're not sustainable because they will continue to go up. Our margins will improve, and they will improve for a couple of reasons. As these jobs become more complex, we drive better productivity. As we vertically integrate through the Rocky Mountains and add larger equipment suites, they will get further productivity. Those will both drive margins.

As we combine the electrical packages and the site civil packages, there's another element of productivity that we can drive, which helps the margins. And then the inherent margin of that is actually better for our CEC business on top of it. When you couple all those together on top of the end markets that we'll get out of with CEC, what that does with the margin profile, we will continue to see margins tick up in E-Infrastructure as we go forward.

So we're very bullish that we're certainly not at the top and feel like we've still got a long way to go before we're peaking out on this thing. So you may see some variability quarter-over-quarter because of volumes. But if you take the trend line of margins, we're going to -- we'll continue to grow.

And Joe, how should we think about margins, risk profile between data center and advanced manufacturing work?

Fundamentally the same. Margins are -- again, size matters to us. So I'll tell you a 50-acre data center is not going to have the margins that a 1,000-acre data center has, just like a 50-acre mission-critical plant is not going to have the margins of a 1,000-acre mission-critical plant is. But I will tell you, there's opportunity for some large manufacturing projects either late this year or early next year that we're on top of, and they will have similar margin profiles.

And then if I can just squeeze -- go ahead, sir.

The only variable that we see is that if you look geographically, historically, our Northeast region has had lower margins than the others. The driver of that is size of their projects is generally smaller and some of their projects mandate vertical integration more than others with the union base. But other than that, really not a big differentiation. Think of it in size, not end market.

Right. Okay. That's super helpful. And then, Joe, one last question. Residential and Transportation segments, we don't really talk about those 2 segments a whole lot. Obviously, all the thunder is on E-Infrastructure for all the right reasons. But how should we think about those 2 segments long term? I mean, are they core, noncore? Would you monetize them if you found a bigger acquisition that gives you more scale in E-Infrastructure?

Well, let's start with transportation. If you asked me 7 years ago, I probably would have answered this differently. But today, we turned transportation -- first, Transportation is like the Rodney Dangerfield of our business. They don't get enough respect. If you take a look at their margins, they are now almost 2x better than best-in-class in margins. So they've got great margins. They've done a phenomenal job. We've turned that into a cash cow that really we work off customers' money and that throws off great cash for us that we can then use to grow our high-margin, high-growth project -- product lines, E-Infrastructure and at one time it was Residential. So when we look at it, great solid business today.

But in addition, what we've been able to do is start shifting those assets towards E-Infrastructure. And I'll give you a couple of perfect examples. We started with a pilot with Meta, as a matter of fact, who asked us to go to the upper Northwest, Pacific Northwest, and we used the yellow iron and assets out of our highway business in Utah with our project management teams and stuff out of Atlanta, and they executed a project level. They've got 5 or 6 projects out of that between the customers and the GCs with their ability to execute.

So we continue to shift assets there. We've talked about closing down our low bid heavy highway business in Texas. We're coming into the final innings of that. However, what we've been able to do is we've started shifting their underground assets to E-Infrastructure. So now we're helping with underground utilities and some of the underground duct bank work by leveraging those assets and converting them into E-Infrastructure. So we've taken lemons and we're making lemonade out of it and the lemonade keeps getting better and better. So there's not really, one, a reason for us to do anything different with Transportation. And two, it will be really hard even if we wanted to because it's now so intertwined with our E-Infrastructure business, it's not an easy thing you can break out. So that's where we are with that.

Building Solutions, it's been a great business for us. It's been a great cash cow business for us. We'll continue to look for opportunities to grow it. We look at everything every day, is it or is it not a strategic fit for us. Right now, we believe it's still got long-term -- great long-term growth potential. We're in the best 3 markets in the U.S. So we have no different plans for Building Solutions, but to grow it out as we move.

Your next question comes from Louie with William Blair.

Following up, is your large semi-fab project for your Petillo division? And secondly, what is the timing for the expansions into the Northwest and the Midwest? I think you just referenced how you were doing a trial project with Meta in the Northwest but has that already started?

Yes. So let's talk about the semiconductor fab. It is being done in the Northeast, and it is being done by a union operation. And that would be Petillo that's doing that. So that's an exciting project for us. It's right in our backyard and it should be a great project. The Pacific Northwest, Louie, I have confused everyone. That's one we did. We started 2 years ago. That was our foray into kind of transitioning RLW into E-Infrastructure site development, and we've got multiple through there.

What we're seeing is we believe, based on conversations with our customers, in '27, '28, there will be some nice projects coming out in the Pacific Northwest. And believe it or not, the Pacific Northwest and Western Texas are a lot closer than people think from our Salt Lake City office to our West Texas job is plus or minus 200 miles difference than us driving from Houston, right? So Texas is a pretty big state. It goes pretty far west. So we're using those resources to come further east as well. But we believe in '27, '28 is going to be the start of some really nice projects in the Pacific Northwest. So you'll see us adding capacity and capabilities in that area over the next 6 to 12 months, and we'll be able to talk more about that probably in the second or third quarter.

Your next question comes from Julio with Sidoti.

You guided to legacy business E-Infrastructure growth of 60% for '26. I think that implies some moderation of the year-over-year growth rates above the 102% that was this quarter. That makes sense. But just given the larger order intake this quarter, which I assume has some timing variability, how would you have us think about the year-over-year legacy growth rates expected in the E-Infrastructure over the remaining 3 quarters of the year to get to that 60%.

I haven't laid it out in that level of detail. The question around the big wins and all that, it's timing, right? It's when do these kick off, when do they start, how fast do they go. If we get great weather through the rest of the year and projects kick off earlier, we'll be really happy and we'll beat those numbers. There's just a lot of variables left from now to the rest of the year. Julio, we can lay that out exactly for you and talk more about what that does quarter-by-quarter. I just don't -- I don't have that.

Thank you. There are no further questions at this time. I'll turn the call back over to Joe Cutillo. Please go ahead.

Thank you, Melissa. I want to thank everybody again for joining today's call. We're off to a great start, and we're going to have an amazing year. If you have any follow-up questions or want to schedule further calls, feel free to contact Noelle Dilts. Her contact information is in the press release. Hope everybody has a great day. And again, thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Sterling Infrastructure Fourth Quarter and Full Year Webcast and Conference Call. [Operator Instructions] As a reminder, this call is being recorded on Thursday, February 26, 2026. I would now like to turn the call over to Noelle Dilts, Vice President, Investor Relations and Corporate Strategy. Please go ahead.

Good morning to everyone joining us, and welcome to Sterling Infrastructure's Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. I'm pleased to be here today to discuss our results with Joseph Cutillo, Sterling's Chief Executive Officer; and Nick Grindstaff, Sterling's Chief Financial Officer.

Joe will open the call with an overview of the company and its performance in the quarter. Nick will then discuss our financial results and 2026 guidance, after which Joe will provide some additional commentary on our markets and outlook. We will then open the call up for questions.

As a reminder, there are accompanying slides on the Investor Relations section of our website. These slides include details on our full year 2026 financial guidance. Before turning the call over to Joe, I'll read the safe harbor statement. The discussion today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions.

The company assumes no obligations to update forward-looking statements as a result of new information, future events or otherwise. Please also note that management may reference EBITDA, adjusted EBITDA, adjusted net income or adjusted earnings per share on this call, which are all financial measures not recognized under U.S. GAAP.

As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon. Our discussion of all results today, including revenue and backlog, refer to figures that adjust prior period results to conform to the current accounting of our RHB JV, unless otherwise noted. I'll now turn the call over to our CEO, Joe Cutillo.

Thanks, Noelle. Good morning, everyone, and thank you for joining Sterling's Fourth Quarter and Full Year 2025 Earnings Call. I'd like to start by thanking our team for delivering another outstanding year in 2025. We achieved strong revenue growth of over 32% and adjusted diluted EPS growth of over 53%. This is the fifth consecutive year we have achieved adjusted EPS growth of over 35%. Full year gross margins reached 23% and adjusted EBITDA margins exceeded 20% for the first time in our history.

The strength of our margins reflect our continued focus on pursuing opportunities that offer the most attractive returns. Additionally, our operating cash generation remained strong at $440 million. We are pleased to discuss these results with you today, but even more excited about the opportunities ahead of us. The Sterling Way, which is our commitment to take care of our people, our environment, our investors and our communities, while we work to build America's infrastructure remains our guiding principle as we execute our strategy and grow the company.

Moving to the fourth quarter results. Revenue grew 69%, fueled by 123% growth in Infrastructure Solutions and 24% growth in our Transportation Solutions. Organic growth in the quarter was 36%. We grew adjusted earnings per share by 78% to $3.08 and adjusted EBITDA by 70% to $142 million. Additionally, operating cash flow generation in the quarter was again very strong at $186 million. Our backlog position and strong visibility drive our confidence in the future.

Signed backlog at the end of the quarter totaled $3 billion, a 78% increase from year-end 2024. On a same-store basis, backlog increased approximately 50%. When you layer in our unsigned awards of $301 million, and pipeline of future phase opportunities, which now exceeds $1 billion, we have visibility into a pool of work approaching $4.5 billion for Sterling.

Now I'd like to discuss our segment results for the full year and fourth quarter in more detail. In infrastructure, full year revenue grew 59% including 40% organic growth and adjusted operating income grew 67%. Adjusted operating margins reached nearly 25% and an increase of more than 120 basis points. This was driven by our shift towards large mission-critical projects where our superior project management and ability to finish jobs on or ahead of schedule is extremely valuable to our customers.

In the fourth quarter, revenue grew 123%, including 67% organic growth. The data center market, again, was the primary growth driver in the quarter. Additionally, our geographic expansion efforts are really paying off. Our Rocky Mountain site development operation, which is solely focused on mission-critical work, grew more than 150% from the prior year period. Adjusted infrastructure operating income grew 91%. Operating margin for the legacy e-infrastructure site development business were flat with prior year levels. Margins continue to benefit from our focus on large mission-critical projects and strong execution.

The CBC acquisition is performing very well. In the quarter, CBC revenue increased 21% from its prior year fourth quarter, and margins were in line with our expectations. The Texas market, in particular, is very strong, and we continue to see tremendous opportunities ahead for both electrical and site development. Our multiyear visibility and the infrastructure business remains excellent. The aggregate of our e-infrastructure signed backlog, unsigned electrical awards and future phased site development opportunities totaled more than $3 billion.

Mission-critical work, including data centers, large manufacturing projects and semiconductor represented 84% of e-infrastructure signed backlog at the end of the year. Future phase work is predominantly related to mission-critical projects.

Moving to Transportation Solutions. For the full year, revenue grew 17% and adjusted operating profit grew 66%, driven by strong market demand and the benefit of mix towards higher margin services. Fourth quarter revenue grew 24% and adjusted operating profit grew over 100%. We ended the quarter with Transportation Solutions backlog at $1.1 billion, and 81% year-over-year increase, driven by strong award activity and the conversion of unsigned backlog to sign backlog.

Shifting to Building Solutions, Full year revenue declined 6%, and adjusted operating profit declined 23%. In the fourth quarter, segment revenue declined 9% and adjusted operating margins were 10%. Overall demand for homes has been impacted as potential buyers struggle with affordability challenges. Even with the headwinds in Building Solutions, the strength of Sterling's diversified portfolio and strategy to focus on growth in high-margin end markets enabled us to deliver another fantastic year. With that, I'd like to turn it over to Nick to give you more details on some of our financial metrics and the 2026 guidance. Nick?

Thanks, Joe, and good morning. I'll begin with our consolidated backlog metrics. Our year-end backlog totaled $3 billion, a 78% increase from year-end 2024 or 49%, excluding CEC. Combined backlog of $3.3 billion increased 81% from prior year-end or 42%, excluding CEC. Fourth quarter 2025 book-to-burn ratios were 1.64x for backlog and 0.81x for combined backlog.

Moving to our cash flow metrics. Cash flow from operating activities for 2025 was a strong $440 million. We expect continued strength in operating cash flow in 2026 in both the legacy and recently acquired businesses. Cash flow used in investing activities for 2025 included $77 million of CapEx and $482 million for acquisitions, including CEC. For 2026, we are forecasting CapEx in the range of $100 million to $110 million, with the increase driven by investments to support growth and productivity.

Cash flow from financing activities was $162 million outflow, primarily driven by share repurchases of $74 million at an average price of $168.2 per share. In the quarter, we deployed $26 million into share repurchases at an average price of $310.09 per share. Remaining availability under the existing repurchase authorization is $374 million. We will remain opportunistic in our approach to share repurchases. We are in great shape from a balance sheet perspective. We ended the quarter with $391 million of cash and debt of $291 million for a cash net of debt balance of $100 million.

Additionally, our $150 million revolving credit facility remained undrawn during the period. Given our strong liquidity, we are in an excellent position to continue to take advantage of both organic and inorganic growth opportunities in the years ahead. Now I'd like to discuss our guidance. Our current backlog, visibility and strong market tailwinds position us well for another great year ahead. We are initiating the following guidance ranges for 2026.

Revenue of $3.05 billion to $3.2 billion; diluted EPS of $11.65 to $12.25. Adjusted diluted EPS of $13.45 to $14.05, EBITDA of $587 million to $620 million. Adjusted EBITDA of $626 million to $659 million. The midpoint of these ranges reflect strong year-over-year growth of 25% or higher for each of these metrics.

Now I will turn the call back to Joe.

Thanks, Nick. As we look to the future, we remain very bullish on the multiyear opportunity in each of our markets. Our strong backlog, future phase opportunities. and conversations with our core customers on the size and number of future projects contribute to our confidence.

In e-infrastructure, site development, we anticipate that the current strength in data center demand will continue for the foreseeable future. We have discussed for some time that we're in conversations with our customers regarding how we can best support their strong multiyear capital deployment programs. As part of this, we are getting pulled more rapidly into new geographies, including Texas and the Pacific Northwest.

Additionally, our projects are getting larger and are spanning longer time periods. In the semiconductor and manufacturing markets, there remains a very big pool of mega projects on the horizon for the later part of the decade. This would include planned semiconductor fabrication facilities. We believe that some of these projects are close to shore and will be awarded in 2026.

In e-commerce distribution, award strengthened significantly in 2025 as large customers restarted their investment programs following the post-COVID build-out and correction. We believe that, that momentum will continue into 2026 as these programs accelerate. Together, these dynamics across our end markets support strong growth opportunities over a multiyear period. We have very good momentum in our Electrical business for 2026. Customer demand is very strong, particularly in the Texas data center market. We have a high degree of confidence in our ability to leverage the combination of our site development and electrical services to drive growth and margin expansion across the platform. For 2026, we expect to deliver e-infrastructure revenue growth of 40% or higher. This includes 20% growth or higher in the legacy business.

Adjusted operating profit margins for the e-infrastructure are expected to be in the 23% to 24% range. In Transportation Solutions, we're in the final year of the current federal funding cycle, which concludes in September of 2026. We have built over 2 years of backlog and continue to see good levels of this activity. For 2026, we anticipate continued growth in our core Rocky Mountain market. The downsizing of our low bid heavy highway business in Texas is progressing according to plan, resulting in some moderation of Transportation Solutions top line and backlog which should continue to drive margin improvement as we move through the year.

We expect Transportation Solutions revenue growth in the low to mid-single digits in 2026 and continued margin expansion. In Building Solutions, we believe the business is well positioned for growth over a multiyear period. Our key geographies of Dallas Fort Worth, Houston and Phoenix are all expected to see population growth, driving new home demand. Additionally, there is an opportunity for share gain coming out of the down cycle.

In the near term, we believe the current soft market conditions will continue. We anticipate that Building Solutions revenue will decline in the high single to low double digits in 2026 and that adjusted operating margins will remain in the low double digits.

As a reminder, from a seasonality perspective, our fourth quarter and first quarter tend to be slower than our second and third quarter, with the first quarter typically our lowest of the year. On the acquisition front, we are continuing to look for acquisitions that are the right strategic fit to enhance our service offering and geographic footprint. We are seeing more high-quality acquisition targets in the market today than we did a year ago.

Moving to our full year 2026 guidance. The midpoint of our guidance range would represent 25% revenue growth 26% adjusted EPS growth and 28% adjusted EBITDA growth. With that, I'd like to turn it over for questions.

[Operator Instructions] And your first question comes from Brian Baffi from Stifel.

I guess I just wanted to ask about transportation awards and backlog. It seems like it was a lot stronger than folks were expecting. Anything notable to call out there? Were there any large awards worth highlighting?

Yes. Thanks, Brian. Nothing in particular. There wasn't one big project or anything. I think what people tend to get confused with is even though we're coming to the end of a funding cycle, only about 50% to 60% of the total funding has been spent. So we will continue to see good bid activity through that September time frame as projects are continuing to be let, which will obviously be built for a time period after that. So we feel very good of where we're positioned, and we like the bid activity. Nothing major, just kind of good singles, doubles and maybe a little triple now and then. -- as we go forward. But I also want to just remind you and everybody that at the end of the funding cycle, the world doesn't stop. This isn't a toggle switch. Generally, what happens if they don't have the next funding bill in place is they will do an extension of the existing funding bill. They have generally historically adjusted that for inflation. And as a result, bids will continue to come up.

Yes, that's helpful. And then I guess just as a follow-up, you touched on this a bit in your opening comments, but hoping you could expand a little bit more. But just an update on some of the progress entering in Texas on the site prep side? And how is progress going kind of marrying that with some of the joint awards at CEC?

Yes. We're really excited about the Texas market, one from the CEC side on what we're seeing for data center expansion, electrical. But two, we're getting pulled very rapidly on the site development side. And I think in the first half of this year, we're going to be able to talk about some very nice awards that take place in Texas. And we have been, I will tell you what I believe, ahead of schedule and more optimistic about the strength of putting these 2 together and the responses that we're receiving from customers. So we're very pleased on the thesis is coming true. And I think we'll see some very good activity in the first half of this year that will make everybody happy.

And your next question comes from Brent Thielman from Davidson.

Joe, maybe just to tack on to Brian's question, to get out a little bit more about how the pipeline has evolved at CEC since you've acquired it? Are the award opportunities getting a lot bigger. And maybe if you could comment on kind of what you're doing or seeing already that might support a higher threshold for margins for that business going forward?

Yes. We are -- the jobs are getting a lot bigger. These data centers in Texas, we were joking at our recent leadership meeting our team said, remember when we were so excited, we got the first 100-acre data center. And this is just a few years ago. And we said, yes, we thought it was the biggest project and all that kind of stuff. And they said, "Yes, we just started one in Texas, in the parking lot is 100 acres, right? To kind of put it in perspective. .

These things keep getting larger and larger, or having more and more -- these aren't data centers anymore the data campuses. I think people get confused about that, and we'll have multiple buildings on them. CEC has got great traction and combined, the site development CEC are getting great traction. We see margin improvements in a couple of areas. Obviously, as CEC moves for the mix shift towards data center. That margin is historically better than the smaller kind of industrial commercial jobs. But also is we're combining the exterior electric with the site development. We have already seen significant margin improvements with the small dry utility business we bought in Georgia last year. And the exact same thing will happen with CEC over a period of time. So we're in the early phases of getting into those projects. That's where I say, I think we'll see some great progress in the first half of this year, and we'll start seeing some of that impact as we get to the second half of this year.

Okay. All right. And then maybe just on the legacy site development margins, as you mentioned, sort of flat here, obviously, at great levels. maybe, Joe, you could just comment on why we shouldn't think they peaked at this point.

Sorry, Brent. I misheard you. You're asking about site margin site development margins in the quarter. We don't see them going negative. That's for sure, especially as we're seeing larger and larger jobs come out, we're also seeing some opportunities in the Northeast for some larger jobs that will help their margins improve significantly.

One of the things we'll begin talking about more and more -- as we said in the script, our Rocky Mountain site development business grew 150% year-over-year. We're really excited about that. But one of the things we have that hurts our margins out in that area is we tend to have a little bit smaller and different equipment suite than we use on the East Coast. So we're going to be investing in some capital and doing some different capital planning that we think we can drive their margins up a fair amount as well, just by duplicating exactly what we do in the Southeast and the East Coast. And then strategically, we'll continue to look at more vertical integration. There's some leverage and productivity we can get out of vertical integration. As we move to a new geography, that's not where we start. We kind of get our feet wet, get into the site development, execute that. gives us time to evaluate some of those players around the vertical integration, pick the best ones.

And you'll see over the next 12 to 18 months. tucking in some of those around the U.S. I do want to add one more comment, though, on your CEC question on how rapid they're growing and everything else. I would tell you if I had another 1,000 electricians in Texas, and I have a much bigger number. I think we could put them to work in 30 days or less.

But when we bought CEC, they had a small modular build facility. We just are in the progress -- the process of signing a lease that triple the size of that -- that will also help their margins so we can start prebuilding more in a factory condition and ship those to the field.

And your next question comes from Manish Somaiya from Cantor.

Good morning. Noel Joe, Nick. Congrats on the quarter. A couple of questions for me. Maybe beginning with Joe. You talked about $1 billion of high probability future phase work. Can you give us a sense if that's tied to existing customers or programs? Or is it completely new? And how should we think about the expected conversion window?

Well, first, that $1 billion-plus is tied to projects we're actively working on today. So that's real work. That's what it's going to take in a minimum to finish out those projects. If you remember, as they continue to design, they release that work in a package, we did that next phase of work and then we execute it. So it's very solid. We can't technically call it backlog, but internally for capacity planning and everything else, it's a backlog for us.

It's tied to existing customers, but we're always getting a new customer here and there. So we're not just fixated on 1 or 2. But the lion's share of that are with the big name hyperscalers that everybody knows that have all announced their budget plans and future forecasts, which are all up significantly. I will tell you, as we look ahead in the next 3 to 5 years, and work with them on their planning. We don't see anything slowing down. If anything, we continue to see it accelerate.

And then a question for Nick. As you guys scale up the e-intra business, how should we think about investments in working capital and free cash flow conversion?

Yes. So we expect to continue to have strong free cash flow conversion. I mean, conservatively, we're seeing free cash flow version in the -- to EBITDA in the 80% range or so and that's a conservative number, and we expect that to continue as we move further into the infrastructure space throughout the year. .

Okay. And then back to Joe. As we think about capital allocation, Joe, you mentioned obviously, you have an active share buyback program, $400 million initiated back in November of last year. You talked about M&A. You're talking about good assets coming on the market, which is interesting because I haven't heard that in a while. Obviously, multiples are high. But maybe if you can just give us your sense of your priorities. Is that a fourth leg that we should be thinking about to the Sterling business. So how do you sort of think about allocation -- capital allocation, M&A, fourth leg and why this whole abundance of good acquisitions because we've heard that on a couple of calls, and it's been a little bit surprising. But if you can please help us understand that.

Yes, our focus won't be necessarily on a fourth leg. It's really around when we step back and we look at data centers, semiconductors, pharmas coming some other manufacturing that we see along with longer-term projects. Right now, for the next 5 to 7 years, the best returns for us are going to be how do we grow, expand good services and geographic footprint within the infrastructure. Now that's not to say we won't -- if the right fourth leg came along, we wouldn't aggressively go after it. But right now, the opportunities that are ahead of us and what our core customers are asking us for in asking locations that go to services to provide for the next 3 to 5 years, really has us focused on continuing to look for that geographic expansion of site development and then also incremental electrical footprint and services and skills, and we will be looking at mechanical along the way as well as kind of a natural progression.

So that's where we're focusing. Why do I think there's more quality businesses on the market. I think 2 things. Mobiles are certainly up some on the businesses. But two, I think a lot of these owners see this tremendous opportunity ahead of them, and they're not able to capitally fund the growth and they feel like they're going to miss the opportunity. And frankly, if they don't team up with somebody big, they're going to be on the outside looking into this and they're going to ultimately lose that work.

So they've been around this world a long time, and this is something that none of us have seen in our career. -- from a standpoint of the -- it's not billions. I think it will get the trillions of dollars of infrastructure spend that's coming in front of us that whether it's our yellow iron or our electrical skills or some of our other things that ride into.

And your next question comes from Alex Rygiel from Texas Capital.

When you talk about manufacturing and high tech and fab plants, can you just sort of help us to maybe understand how big that market opportunity could be sort of in the coming years?

Well, when you -- let's start -- we can start with the semiconductor stuff. And I'm a believer that we are -- we're at the early innings of semiconductor. I don't think we're going to see a major phase of semiconductor come on until 2030 or so just with the length of time of the announced capital spend that it takes to get a project ready to break ground.

But in the meantime, there are a few projects that are going to be hitting here in the near future. Put it in perspective, a data center job for us is kind of a 3-year average, I would say, semiconductor plants that are coming out will be closer to 7- to 10-year projects instead of hundreds of millions of dollars, the total scope of those projects could approach $1 billion. So that's pretty sizable for us. The pharma plants have announced multiple facilities around the country. Again, don't get confused when they announce it. From the time they announced that the time if anything happens, it's going to be 3 to 5 years. It's just the cycle by the time you get the land, you permit it, you get utilities run they have to purchase equipment. Usually, that's specialty equipment and it's not a quick turnaround. So there's anywhere from 2 to 5 years of lead times depending on the parts and components of the industry.

So we see all of that coming. In parallel, I would tell you, our data center customers over that same time horizon are not slowing down. They're talking about bigger builds, more builds and working with us to try to commit capacity and capabilities, but also when you see our geographic expansion taking place over the next 18 months, it's not necessarily because there's something there today. It's because we know something is coming in the future, and we're working with our customers to be prepared for that.

And the Texas market is on fire to say the least. It is unbelievable what is happening in Texas. And we're attacking that from the east, and we're attacking from the West, and then we've got our CEC business right in the middle of Dallas. We feel very, very good about what Texas will add to our company over the next 3 to 5 years.

And your next question comes from ouie DiPalma from William Blair.

Joe, you previously on past calls, you've discussed Sterling's entry into West Texas. Are you able to further expand into Texas to cover other key markets? I know you said that you're attacking it from the East and attacking it from the West, have you already won jobs on the east side of Texas and in other markets across the state.

Yes. Let me talk about the attacking from the east, attacking from the west and in the market, okay, just to make sure I don't create more confusion. So West Texas is growing very rapidly. And I would tell you, we're actively working and winning jobs in West Texas that we'll be able to announce in the first quarter. What we consider East is kind of Dallas, Houston, that corridor, not East Texas is the pine forest. There's not a lot going on there yet. Maybe there will be.

But when I say we're attacking it from the east and taking from the West, we're using our plateau business to come and start hitting what we call East Texas. So that Dallas market, there's stuff going on up in Oklahoma in the near future that's coming out. And then believe it or not, what most people don't realize is it's almost the same distance from Houston to West Texas as it is from Salt Lake City to West Texas. That's how big the state is we're attacking the West using our Rocky Mountain resources and assets.

And we'll be looking for strategic acquisitions obviously, within Texas or closer proximity to continue to add assets and resources and capability and capacity. Does that help?

Yes. That was great, Joe. And so should investors view 2026 as a year for -- in which you're focused in terms of your geographic expansion, you're focused mostly on Texas? Or are there other data center and mission-critical geographies outside of the Southeast and outside of Texas that you can potentially expand into for 2026?

Yes. I think in 2026, the lion's share of the data center growth will come in those areas. But there's some good activity taking place now in the Northeast. It's early. We're excited about some projects up there. We will -- the 2 other markets that are out there in one, I think, in 2026, you'll see us start moving more assets and resources to the Pacific Northwest. And again, there are several projects that will probably be released in '27 up there that could be very exciting for us. The market we haven't figured out how to get into yet is kind of the Ohio, Indiana market. That's always a potential for us. I won't tell you we're on the 10-yard line of getting in there or anything else but that's another fairly sizable market.

But when I step back and I just look at the Southeast, a few of the projects up in the Northeast and Texas, and you got the lion's share of the new stuff coming out, at least with our core customers and the size of those projects really fit our profile versus when you get into mid-Atlantic there's a lot of number of data centers, but they're small and just don't necessarily fit our profile.

One final one related to this discussion for your entry into new markets. Is it reasonable to assume that the profitability in terms of the operating margins will be lower than like the profitability for your core infrastructure mission-critical business such that as investors and the sell-side as we're modeling should there be any negative impact from expanding into Texas and expanding into the Northwest? Or how should we consider that?

Yes. I think depending on if we move equipment suite as an example from the Southeast to Texas, we're going to see the exact same margins. We've seen a little lower margins the same pricing, same kind of process, a little bit lower margins in our Rocky Mountain, not because of the market just because we're ramping up that equipment profile.

Remember, we kind of converted highway assets plus some large assets to get them underway as we continue to build that out, those margins will grow. Where we would see -- where I think we will see when we look at acquisitions, as an example, most acquisitions, margins are a little bit lower than ours, right? But we believe that after we get those acquisitions in our footprint, introduce our processes, our procedures, our technology and do those sort of things, we can continue to grow those margins up to where we are.

And just the other thing to keep in mind, Louie is our margins -- I'm sorry, our projects remember, the multiphase is anywhere 3, 5 7. They always start out at a lower margin and those margins improved based on productivity and what we're able to do staging earlier phases to help productivity on the future basis.

Your next question comes from Adam Thalhimer from Thomson Davidson. .

Nice quarter. Joe, can you talk more about the CEC modular expansion? Curious what that will take you to on a square footage basis? And what exactly are you doing modularly versus in the field?

Yes. So our simple take on that is we're not -- the other one is doing milder, but anything we can take out of the field and prefab to move into the field reduces the number of electricians we need on that site, right? But it also improves productivity and cost. So the new facility is over 300,000 square feet. I would tell you that we're looking at does it or does it make sense to have multiple facilities throughout the U.S. that can make these components. So we're doing everything from the exterior piping and conduit around the banks to the actual cabinets that go into these centers. And we're looking at how do we continue to expand that capability and growth. It's pretty exciting because it really -- when you run the numbers, it's significant, would it frees up for capacity and how it positively impacts your margins.

Future of construction. .

What's that? .

I guess it's the future of construction?

Yes, I think we will see, regardless of us or our space or other spaces, you're going to continue to see modular activities grow, is the labor pool just gets tighter and tighter. It's the most logical thing to do.

And then just lastly, I wanted to see where your head was at on the residential bussiness. And does it make sense to do an acquisition there when multiples might be more depressed? Or does it just make sense to let that play out?

Yes. And we don't -- I'd like to tell you there is light on the horizon. I think it's going to be tough, certainly first half of 2026. Things are just there's nothing positive that's happening to spark or drive the residential business to turn around and I'll also warn everybody that once it does turn around, there's 3 or 4 months of inventory on the ground that these builders are going to sell before we start seeing new builds start, right? I think that's just a fact -- but you're not far off. I will tell you, if the right acquisition came along in residential and multiples are down. And by the way, their earnings are down we feel optimistic long term because the last time when we went back and looked at Tealstone coming out of the last downturn, they picked up significant market share on the back half of this, and we think we'll pick up market share coming out of this, especially in the Houston and Arizona markets.

So if we found the right acquisitions, we would shy away from them, but we get them at a huge discount. And we look really smart 18 months from that.

And your last question comes from Julio Romero from Sidoti & Company. .

Wanted to stay on the topic of these projects getting bigger. As you said, Joe, they're not even data centers anymore their data center campuses. As these mission-critical projects get bigger, more complex, is the mix of above ground work versus underground infrastructure changing at all? And if so, is that mix shift margin accretive?

Yes. We -- I wouldn't say we've seen any significant shift on above ground versus below ground. I think what we will see kind of the next generation of these projects are going to have self power generation on them. That will create more development opportunities on these because if you have a power plant, you got all the underground, whether it's water utilities, you got the electric bill coming in, all that stuff. So we think that the size and scope of these projects, not only in physical size will get bigger, but the amount of stuff that we will touch will continue to grow.

Those projects really won't start getting until '27 or '28 we may see one this year, but that's the lion's share. But it also opens up opportunities to look at other goods and services that we can add to those projects.

Got it. And does that change at all if the mix within mission-critical begins -- does skew over time to semiconductor and advanced manufacturing.

Yes. No, there's not -- -- there's not a tremendous difference. Obviously, you got in the data centers, but there's a -- what people don't realize is any of these facilities, literally as thousands of miles, underground pipe and wire and everything else, it's an underground city. So for us, we're not concerned if the mix shifts more towards semiconductors and away from data centers or more towards manufacturing we've historically seen -- we've got more data on the site development side, obviously, but we've seen comparable margins. That's the beauty of the model we have. And now with electrical and as we continue to expand the footprint of electrical and capabilities. Our stuff is fungible. We really -- we -- big projects, obviously, are much better for us. but we don't really care if it's a data center or a chip plant or a large automotive facility or a battery plan.

Very helpful. And I wanted to ask how Sterling is positioned amongst other specialty contractors with regards to AI-driven tools as these tools kind of become more adopted across the industry, Joe, how are you thinking about staying ahead of competitors? I'm sure some of those competitors would say they're probably using AI to narrow the gap of reliability or maybe scale versus sterling. How do you see sterling position in that context? And could you be using tools to maybe widen your differentiation versus some of these peers?

Yes. Well, I certainly would not be able to speed. I don't know where our peers are. I can tell you what we are. I think people would be shocked what we've done and what we're doing in and around AI and how we're tying that to not only the estimating and bid process, but the project execution, we did 3 pilots last year. to say the teams were excited when we first -- when we first started them, everybody said, how is AI applicable to what we do.

Remember, we're running drones. We're running all kinds of analytics of our equipment. We're now tying all that into project management and making things happen faster. We picked up just in, remember, our capacity constraint in site development is project managers. And we picked up somewhere between 15% to 20% of incremental capacity on project managers just from our first AI project. We've got 6 AI projects underway right now.

So I will tell you, it's when people talk about, well, is AI real and all that, I would say if guys like us are running very quickly at this and our guys, every time they touch it, they come up with 4 or 5 other things that we can incorporate which will improve the efficiency, the effectiveness, the quality, and just as importantly, there's some really cool things we're doing on the safety side with this that will help think our employees even safer than they are today.

And there are no further questions at this time. Mr. Joe Cutillo, you may continue

Thank you. I want to thank everybody for joining today's call. If you have any follow-up questions, please contact Noelle Dilts. Her contact information is in the press release. I appreciate it, I appreciate what our team did another great quarter, and have a great day.

Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day.

Good morning, ladies and gentlemen, and welcome to the Sterling Infrastructure Third Quarter Webcast and Conference Call. [Operator Instructions] As a reminder, this call is being recorded on Tuesday, November 4, 2025.

And I would now like to turn the conference over to Noelle Dilts, Vice President of Investor Relations and Corporate Strategy. Please go ahead.

Good morning to everyone joining us, and welcome to Sterling Infrastructure's 2025 Third Quarter Earnings Conference Call and Webcast.

I'm pleased to be here today to discuss our results with Joe Cutillo, Sterling's Chief Executive Officer; and Nick Grindstaff, Sterling's Chief Financial Officer. Joe will open the call with an overview of the company and its performance in the quarter. Nick will then discuss our financial results and guidance, after which Joe will provide a market and full year outlook. We will then open the call up for questions. As a reminder, there are accompanying slides on the Investor Relations section of our website. These slides include details on our full year 2025 financial guidance.

Before turning the call over to Joe, I will read the safe harbor statement. The discussion today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events or otherwise.

Please also note that management may reference EBITDA, adjusted EBITDA, adjusted net income or adjusted earnings per share on this call, which are all financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon. Our discussion of all results today, including revenue and backlog, refer to figures that adjust prior period results to conform to the current accounting for RHB JV, unless otherwise noted. Additionally, all comparisons are to the prior year quarter unless otherwise noted.

I'll now turn the call over to our CEO, Joe Cutillo.

Thanks, Noelle. Good morning, everyone, and thank you for joining today's call. Sterling delivered another outstanding quarter as we achieved strong revenue growth, expanded margins, grew backlog and generated excellent cash flow. We are pleased to discuss these results today with you, but even more excited about the opportunities ahead of us.

Beginning with the third quarter results, revenue grew 32%, fueled by 58% growth in our E-Infrastructure Solutions segment, including 42% organic growth. In addition, our Transportation segment grew 10% in the quarter. We grew adjusted earnings per share by 58% to $3.48 and delivered adjusted EBITDA of $156 million, an increase of 47%. Our gross profit margins expanded 280 basis points from the prior year to reach 24.7%. Additionally, operating cash flow generation in the quarter was again very strong at $84 million.

Our backlog position and strong visibility drive our confidence in the future. Backlog at the end of the quarter totaled $2.6 billion, a 64% year-over-year increase. Excluding the contribution from the recent acquisition of CEC, backlog increased a strong 34% year-over-year. E-Infrastructure Solutions backlog of $1.8 billion was up 97% in total and 45%, excluding the contributions from CEC. When you layer in our unsigned awards and pipeline of future phase opportunities, we have visibility into a pool of work in excess of $4 billion for Sterling. The Sterling Way, which is our commitment to take care of our people, our environment, our investors and our communities while we work to build America's infrastructure, remains our guiding principle as we execute our strategy and grow the company.

Now I'd like to discuss our segment results in more detail. In E-Infrastructure, third quarter revenue grew 58% over prior year and over 34% sequentially. Excluding CEC, revenue grew more than 42% over prior year and 21% sequentially. The data center market, again, was a primary growth driver in the quarter, as revenue from this market grew more than 125% year-over-year. Adjusted segment operating income grew 57%, or 48%, excluding CEC.

Adjusted operating margins for the legacy E-Infrastructure Site Development business were 28.4% and increased over 140 basis points from prior year levels and 10 basis points sequentially. This was driven by our continued shift towards large mission-critical projects, including data centers, where our superior project management and ability to finish jobs on or as scheduled are extremely valuable to our customers.

We are pleased to have closed the CEC acquisition during the quarter. We see tremendous opportunities ahead to leverage our expanded service portfolio and are seeing early positive reception from our customers. CEC contributed $41.4 million of revenue in September and adjusted operating margins that were in line with our expectations. We continue to have very good visibility in the E-Infrastructure business. With the recent CEC acquisition, the aggregate of our E-Infrastructure signed backlog, unsigned electrical awards and future phase site development opportunities total approximately $3 billion.

Moving to Transportation Solutions. Third quarter revenue grew 10% and adjusted operating profit grew 40%, driven by strong market demand and the benefits of the mix shift towards higher margin services. We ended the quarter with Transportation Solutions backlog of $733 million, a 23% year-over-year increase. Sequentially, segment backlog was roughly flat, with awards keeping pace with burn. As a reminder, the wind down of our Texas low-bid heavy highway operation is impacting backlog to some extent this year, but will ultimately benefit segment margins.

Shifting to Building Solutions. In the third quarter, segment revenue declined 1% and adjusted operating income declined 10%. Adjusted operating margins in the quarter were 12%. Overall demand for homes has been impacted as potential buyers struggle with affordability challenges. Revenue from our legacy residential business declined 17%, driven by softness in the overall housing market. Even with these headwinds in Building Solutions, the strength of Sterling's diversified portfolio and strategy to focus on growth in high-margin end markets enabled us to deliver another record quarter.

With that, I'd like to turn it over to Nick to give you more details on some of our financial metrics and full year guidance. Nick?

Thanks, Joe, and good morning. I'll begin with our consolidated backlog metrics, all of which are adjusted to exclude RHB for the prior year. Our third quarter backlog totaled $2.58 billion, a 64% increase from the prior year second quarter. CEC contributed $475 million to backlog. Excluding CEC, backlog increased 33.8% year-over-year. We closed the quarter with combined backlog of $3.44 billion, which was up 88%. Excluding CEC, combined backlog increased 43.5% year-over-year. Third quarter 2025 book-to-burn ratios excluding CEC were 1.23x for backlog and 1.76x for combined backlog. Year-to-date, book-to-burn ratios excluding CEC were 1.31x for backlog and 1.58x for combined backlog.

Moving to our cash flow metrics. Cash flow from operating activities for the first 9 months of 2025 was a strong $253.9 million compared to $322.8 million in prior year period. Cash flow used in investing activities for the first 9 months of 2025 included $46.9 million of net CapEx and $484.2 million for acquisitions, including CEC. Year-to-date cash flow from financing activities was a $80.7 million outflow, primarily driven by share repurchases of $48.5 million at an average price of $135.96 per share. Remaining availability under the existing repurchase authorization is $80.9 million.

We are in great shape with the balance sheet perspective. We ended the quarter with a very strong liquidity position consisting of $306.4 million of cash and debt of $294.6 million for a cash net of debt balance of $11.8 million. Our $150 million revolving credit facility remained undrawn during the period.

Now I'd like to discuss our guidance. The strong tailwinds behind our business position us for another record year at Sterling in 2025. We are increasing our guidance ranges to: revenue of $2.375 billion to $2.390 billion, which is a more than 5% increase at the midpoint relative to our previous guidance range; diluted EPS of $8.73 to $8.87; adjusted diluted EPS of $10.35 to $10.52; this represents a 9% increase at the midpoint over our previous guidance range; EBITDA of $448 million to $453 million; adjusted EBITDA of $486 million to $491 million, a 6% increase at the midpoint over our previous guidance range.

From a financial standpoint, we are in an excellent position to continue to take advantage of both organic and inorganic growth opportunities in the years ahead. Now I will turn the call back to Joe.

Thanks, Nick. As we look to the future, we remain very bullish on the multiyear opportunity in each of our markets. Our strong backlog, future phase opportunities and discussions with our customers contribute to our confidence. First, in E-Infrastructure site development, we anticipate that the current strength in data center demand will continue for the foreseeable future. Our customers are discussing multiyear capital deployment plans and our focus on how to align with the right partners to support these plans. We are getting pulled into new geographies by our customers, including Texas, where we are now performing site development work.

In the manufacturing market, we are seeing a fairly steady pace of activity in 2025. As we look out to 2026 and 2027, there remains a very big pool of [ mega projects ] on the horizon. This would include planned semiconductor fabrication facilities. The e-commerce market has strengthened significantly in 2025. We have built a sizable level of backlog and believe we should continue to see momentum in 2026. Together, these dynamics support strong growth opportunities over a multiyear period.

Moving to CEC. We have very good momentum heading into 2026. Customer demand is very strong, particularly in the data center market, and the organization has booked several large projects in recent months. We continue to see opportunities for margin expansion over the next couple of years. We have a high degree of confidence in our ability to leverage the combination of site development and electrical services as we head into the new year. For 2025, we expect to deliver E-Infrastructure revenue growth of 30% or higher on an organic basis and approaching 50%, including CEC. Adjusted operating profit margins for E-Infrastructure should approximate 25% for the full year including CEC, as compared to 23.7% in 2024.

In Transportation Solutions, we are approaching the final year of the current federal funding cycle, which concludes September 2026. We have built over 2 years of backlog and continue to see good levels of bid activity. For 2025, we anticipate continued growth in our core Rocky Mountain and Arizona markets. The downsizing of our low-bid heavy highway business in Texas is progressing according to plan, resulting in some moderation of Transportation Solutions top line and backlog, but should drive meaningful margin improvements as we move through the year. We expect Transportation Solutions revenue growth in the low teens on an adjusted basis in 2025. We forecast adjusted operating profit margins in the 13.5% to 14% range compared to 9.6% in 2024.

In Building Solutions, we continue to believe the business is well positioned for growth over a multiyear period. Our key geographies of Dallas-Fort Worth, Houston and Phoenix are expected to see continued population growth, driving new home demand. Additionally, there is a significant opportunity for share gain in Houston and Phoenix. In the near term, we are anticipating a continuation of soft market conditions driven by affordability challenges.

For full year Building Solutions revenue, we forecast a mid- to high single-digit decline. We anticipate adjusted operating margins in the low double digits as compared to 14.8% in 2024. As a reminder, from a seasonality perspective, our fourth quarter and first quarter tend to be slower than our second and third quarter, with the first quarter typically our lowest of the year.

On the acquisition front, we are continuing to look for small to midsized acquisitions that are the right strategic fit to enhance our service offerings and geographic footprint. Moving to our full year guidance. The midpoint of our increased 2025 guidance range would represent 27% revenue growth year-over-year as adjusted for RHB, 47% adjusted EPS growth and 42% adjusted EBITDA growth.

With that, I'd like to turn it over for questions.

[Operator Instructions] The first question comes from Brent Thielman at D.A. Davidson.

Joe, yes, maybe just a first question. It looks -- I mean, it looks like CEC signed and unsigned work has substantially grown since the June deal announcement. So again, I would just be sort of interested on kind of what's behind the momentum and award activity there. And how do we think about -- sounds like some large data center projects. But how do we think about them converting that over the next sort of 12-plus months?

Yes. So they had very good and strong bookings and wins in the quarter. It's mostly around the data center front as that continues to move forward, along with a couple of other big projects that are a little outside of the data center front. We are -- here's what I'll tell you, they had a great bookings quarter. We're excited about that. But we're really excited about the reception that we're getting from our end customers in our end markets from this combination and are in the early stages of talking about several 2026 projects and how do we do those as a joint package instead of an individual package. So we're very excited about that.

As we said in the call, we have started doing site development in Texas. We think that is going to grow very aggressively as we go into 2026. And I will tell you, the teams are working diligently together to pull each other into that market into these next big future-based jobs. So we're -- man, I'm tickled to death with where we are. The team spent 2 weeks together right out of the chute, working on stuff, and I was excited about the deal before. I came away even more excited after that 2 weeks together on the opportunities they saw between the site development and the electrical teams.

And Joe, you [ sending ] you're optimistic around some margin expansion opportunities [ there are some ] specific things that you're seeing in the award activity that gives you some confidence there? What drives that margin expansion [indiscernible]?

Yes. So a combination of things. Certainly, on just the pure site development, the size of these projects continue to get bigger and bigger. And what our customers are talking to us about the next level of projects that are coming out, again, they just -- they're getting bigger, which is fantastic for us.

On the combination of the electrical and site development side, we've proven significant productivity gains with the small dry conduit business tuck-in we did at the beginning of January. We've seen their margins improve 40% just by combining that with the site development. We think there's certainly some opportunities to [ lever that larger ] with CEC. But also as CEC continues to move further and further into data center space, those margins are accretive to their average margin. So if we can build their portfolio and backlog stronger in that area, their margins will continue to increase as well. So we feel very good on continued margin enhancement across the segment.

Okay. Just last one, I think, along those lines on the E-Infrastructure business and that the current backlog, I guess, for the legacy Site Development side. Joe, could you talk about maybe how the size of projects even within mission-critical has evolved over the last 12-plus months? I know mission-critical is bigger for you now, but how is that sort of being redefined with the projects you're putting in backlog now?

I don't know that we're really redefining it. The only incremental add to E-Infrastructure is obviously the CEC acquisition [ piece ]. But the base business was up, it was at 34%, I think in backlog. And so for us, mission-critical, again, is data centers, manufacturing, e-commerce distribution is kind of what I'll call the 3 core elements of it. Did I miss anything?

45%.

45? Yes. So we're up 45% in that area. So we haven't redefined anything. Just the project size of these data centers. And when the chip plants come out, those are pretty sizable as well, will continue to help us on the margin front.

One of the things we really don't talk about in the script that I think is important that everybody understands is -- we said we're in Texas. I will tell you that there's some other geographic footprints that we are aggressively looking at expanding into. Not because there's large projects there today, but we believe there's going to be large projects there based on our customers telling us that over the next 2 to 3 years. So we're trying to get in early, get our footprint established and be ready for those to come up.

Yes, Brent, this is Noelle. I would just say we're now over 80% of our work is mission-critical in backlog, looking at kind of data centers, manufacturing, et cetera. So that continues to move higher. And then to Joe's point, even within that bucket of mission-critical, the projects are getting larger and more complex than that there's underground infrastructure, which is great for us. And so that intensity of the work we're doing continues to expand.

Yes. And just to add to that, I think it's part -- kind of the pot. If you think -- not only -- we talk about data centers getting bigger. But I will tell you that every piece of mission-critical jobs are getting bigger in size. As we talk about e-commerce distribution coming back, and I think we're up 150% in backlog growth in e-commerce distribution. Those jobs are about 2x to 2.5x the size of historical ones. Not only are the footprints getting bigger, but Noelle mentioned, the infrastructure associated with these -- an e-commerce distribution center is starting to look a little bit more like a data center. And what I mean by that is with all the EVs that are being used by an Amazon, all the underground utilities that now have to be run to these charging stations and everything else look like a mini [ duck bank ]. So it just continues to add to the complexity, the size and the scope, which is perfect for us. And now adding the electrical piece, you can quickly, in your head, see how we can integrate those two together and make that part of the package.

The next question comes from Julio Romero of Sidoti Company.

I wanted to hone in on the combined backlog plus the forward pipeline of future phase work of $4 billion plus that you mentioned. Help us think about the mix of end markets or customers that are driving the growth of that forward pipeline? And then secondly, what's your estimation of when that forward pipeline begins to convert into orders?

Well, I think you got to break it down into the pieces. The backlog, we're either converting or we'll be converting shortly into work. The low unsigned, those are projects that we either have letters of intent or we have won the physical job or negotiating terms of contracts or there's a final design work that's taking place. Those are likely to start in '26. Depending on the actual project, when in '26 could vary. And some may start first quarter, second quarter, third quarter.

A lot of the big design-build highway projects, I will tell you are going to start second and third quarter of next year, kind of in the process there. And then that future phase work, the way to look at it is as we burn off current backlog, the work we're working on today, that then flows into current backlog. So that spreads out over what I'll call a '26, '27 and into '28 time frame in which that will hit.

Got it. Very helpful there. And then just -- go ahead, sorry.

I'm sorry. I just want to make sure I answered everything you're looking for there, really.

I would say -- in terms of the composition of...

Well, if you take a look at it, $3 billion of the $4 billion is in E-Infrastructure. And the highest percentage of that is going to be data center, which would probably be 75% or 80% of that piece there.

Got it. Extremely helpful there. And then maybe just turning to Transportation Solutions, really notable margin strength there, here in the third quarter. If you could help us unpack the drivers there? I don't think the impact of low-bid phase is starting to come through, unless I'm mistaken. And then just talk about the margin profile of what you have in Transportation backlog and unsigned awards.

Yes. I think people grossly underestimate the progress that Transportation Group has really made. We have best-in-class margins, and they continue to get better. It's really -- again, it's really around what I'll call project selection and focus as we continue to do more design-build or alternative delivery-type projects, along with aviation and rail, continue to diversify that portfolio, the margins will continue to increase.

We haven't seen a significant part of that, though we've seen a little from the wind down of our Texas low-bid business. And we'll see that impact more in 2026 as we weed out or weaned out, I should say, that backlog. But that will continue. So probably the first -- most of that will be burned off in the first half of 2026.

The next question comes from Adam Thalhimer at Thompson Davis.

Joe, I wanted to ask you about -- so you said '26 and '27, big pool of mega projects. Obviously, your ability to bid on mega projects isn't -- your capacity to bid isn't infinite. So how do you think about how you prioritize what you're bidding on? And how do you price that work?

Yes. I think that's a good question, Adam. We do have a fair more capacity. We've been planning for this. We've been in conversations on some of these projects for a couple of years now with our customers. So we have been doing stuff internally to plan for this. As we've said, generally, our biggest limitation to capacity is around project management and the program we put in place to develop future project managers. We've been doing it for, I think, 4 or 5 years now, is really starting to pay off to add some increased capacity.

But at the end of the day, I don't want anybody to be surprised if we pass on one of these mega projects because if the pricing is not right, the margins are not right or the complexity of the contracts don't make sense for us, we're okay to pass on that with the visibility we have in data centers and the rest of mission-critical stuff coming out. But I will tell you, we're looking at those and we will continue to build capacity as needed to do those.

Just keep in mind, if we have a year runway to build capacity, we can build a lot. If somebody comes in tomorrow and says, "I've got $300 million, $500 million jobs," it may be tough for us -- and they need to start 60 days, that would be a challenge for us. But we've got -- our customers have been very good, the hyperscalers, and even these big chip plants have been very good, kind of forward looking and anticipating what's coming out. The other good thing on the chip plants is they've taken much longer than I think the builders have anticipated for them to hit the ground running with all the upfront work that's had to be done. So we've seen these coming now for 2 years. So we'll be ready.

And then I was curious, you talked about entering Texas for site prep. I guess you're doing that organically. And I was curious if -- or kind of what you're doing with the assets from the Texas highway work that's winding down?

Yes. Another good question. Well, you may see those on a site development job or 2. The smaller assets that we have there are very capable of doing some of the utility and underground work. With CEC and those assets combined, now we can start doing [ DUC ] banks in Texas. So I think over the next 6 to 12 months, if you go to one of our sites, you may see some stuff that has a [ TSC ] logo on.

Cool. And then lastly, you said you were -- you continue to look at small and midsized deals. Was that just a comment in the residential segment? Or is that for the whole company?

No, no. Yes, we're looking -- the vast majority of deals we're looking at are in and around E-Infrastructure. It's not that we won't look at stuff and be opportunistic in Building Solutions. But I would tell you right now, about 95% of everything we're looking at or folks we're talking to isn't around added either capabilities, geographic expansion or just pure assets in and around E-Infrastructure.

The next question comes from Noah Levitz at William Blair.

To start off on the Transportation side, has there been any impact from the government shutdown on Transportation funding? And you've also mentioned in the past about a potential successor bill to the IIJA. Can you give any update as to -- do you still think that's moving along? Should it be bigger? Anything you can add there.

Yes. So first, no impacts from government shutdown. The funding that's on these jobs has already been allocated. It's out there. So no impact at all on that. That's not to say there may be some grant projects or grant programs that somebody has out there, they could be delayed. Good news is, I'm not aware that we have anything tied to that. I haven't heard a single word from our business units in a few or so, not an issue there.

On the next bill, the existing bill ends at the end of September of 2026. I will say that I was with the DC team. It's probably been 4 weeks ago now or 5. Things have been progressing very well. I always use the caveat, it is DC, and it is the government, and we can see the functions or dysfunctions of things. But they're probably 6 months ahead of where they have been historically. And I'm optimistic that something will happen in a timely manner.

However, keep in mind that why we are not losing any sleep over this is we will go into September with roughly 2 years of backlog. Second, if there is not a resolution or a new bill passed is probably how I should phrase it, they will put an extension in place generally. Or historically, the extensions have been the current kind of spend rates plus an inflation adjustment. So we don't stop. We continue at that.

The thing that does generally happen in that year where there's a gap or that 6 months or whatever time frame it takes to bridge to the new bill is the states tend to do more smaller projects than the big multiyear projects because they're unsure of how much funding they'll have over a multiyear period. But the reality is the world doesn't shut down. Our projects don't stop. The bid activity projects change a little bit.

But what we're seeing, the thing that people don't understand is that there is spending that will continue to take place on this current bill. There's still 2 years of spending left approximately on the current bill that they have to get out before the end. So today, we're anticipating going in with 2 years of backlog, we can go in with more backlog than that, depending on what projects get squeezed into this last, call it, 18 months or less now, I guess it's almost a year until the next.

Great. That's helpful. And then just my last question. You said that data center growth was greater than 125%, which is exceptional, and it comes after last quarter, which was more than doubled. Can you break that down a bit more? Just -- is that growth in existing projects? Is that new projects coming online? Is it the current phases that the work was being done during the quarter being bigger phases? Like...

Yes, it's a combination. I think if you talk to our teams out in the field, one of the things we're most proud about in the quarter isn't the great quarter they had and the results they were able to deliver. But it was really impressive for them to grow total backlog with the burn rates that they have. But some of that is new projects. And the way to look at it is if we didn't get new projects and we just shifted from a future phase to backlog, our total would have decreased, right? So we not only shifted future phase to backlog, but we won enough new projects to offset that burn rate and grow that total backlog.

The next question comes from [ Alex Rigel ] at Texas Capital.

Very nice quarter. A lot of good answers here so far on the call, but I've got a few here, questions for you. Do you generally experience any permitting issues that possibly delay project starts historically?

Well, what I will tell you is -- the permitting process certainly is longer today than it was pre-COVID.and I would have told you, pre-COVID, that it sucked and was really long, okay? It definitely takes longer for permits to happen. But we -- generally, on the site development side, where we see the delay is it from the time we get the contracts to start, it's more waiting to get the contracts. So we know the projects are coming. We know that it's going to -- we're going to win them. But we may not win them in this month and maybe a month later, it may not be this quarter, maybe the next quarter.

We haven't seen historically where we've got equipment ready to go, we're ready -- or on the site and we have delays. So we're fortunate in that where it takes place in our process tends to be before we start. However, I will tell you that from historical numbers, it certainly is -- what used to take 6 weeks for a permit now takes 3 months. Maybe 5 in certain markets.

So that upfront piece is delaying stuff. It's also why some of these mega projects are taking so long to hit the ground, these chip plants. We know they're there. We know they're coming, but they're still going through a lot of the permitting, getting utilities, required permits and everything else, right? So it kind of cascades. So it's definitely a long pole in the tent.

I will tell you -- and I have told everybody this. If the U.S. wants to accelerate onshoring, reshoring chip plants, whatever it is out of build, if they can get through the regulatory and permitting issues, it would speed up these projects and spending and funding exponentially.

And then within Building Solutions, are you seeing any signs of green shoots?

I'm sorry. Say that again?

Within Building Solutions, are you seeing any signs that 2026 could start to improve again?

No. I think we don't believe, honestly, that anything would happen until the second half of '26 at the earliest. Certainly, interest rates continue to creep down, builders have a lot of programs in place. We have not seen -- we've flattened, okay? It's not getting worse. That's the good news. But we have not seen anything that would tell us we're going to see an uptick here anytime soon.

Thank you. We have no further questions. I will turn the call back over to Joe Cutillo for closing comments.

Thank you. Thanks again, everybody, for joining today's call. If you have any further follow-up questions or would like to set up a call, please contact Noelle Dilts. Or if -- contact information is in our earnings release. I hope everybody has a great day, and I appreciate you taking the time. Thanks.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask you that you please disconnect your lines.