Earnings Call Insights: Sterling Infrastructure, Inc. (STRL) Q4 2025
Management View
- Joseph Cutillo, CEO, highlighted that Sterling achieved “strong revenue growth of over 32% and adjusted diluted EPS growth of over 53%.” He noted, “Full year gross margins reached 23% and adjusted EBITDA margins exceeded 20% for the first time in our history.” Cutillo emphasized that “operating cash generation remained strong at $440 million” and described 2025 as the fifth consecutive year of over 35% adjusted EPS growth.
- Cutillo reported fourth quarter revenue growth of 69%, driven by “123% growth in E-Infrastructure Solutions and 24% growth in our Transportation Solutions.” Organic growth for the quarter was 36%. He stated, “We grew adjusted earnings per share by 78% to $3.08 and adjusted EBITDA by 70% to $142 million.”
- The signed backlog at quarter-end reached $3 billion, a 78% increase from year-end 2024. Including unsigned awards and pipeline, visibility extends to “a pool of work approaching $4.5 billion.”
- In the E-Infrastructure segment, full year revenue grew 59% and adjusted operating income grew 67%. Cutillo said, “Our Rocky Mountain site development operation… grew more than 150% from the prior year period.” The CEC acquisition is “performing very well,” with fourth quarter CEC revenue up 21% over the prior year.
- Transportation Solutions reported full year revenue growth of 17% and adjusted operating profit growth of 66%. Backlog for this segment rose 81% year-over-year to $1.1 billion. Building Solutions faced challenges, with full year revenue down 6% and adjusted operating profit down 23%.
- CFO Nicholas Grindstaff stated, “Our year-end backlog totaled $3 billion, a 78% increase from year-end 2024 or 49%, excluding CEC.” He added, “Cash flow from operating activities for 2025 was a strong $440 million.” Grindstaff reported share repurchases of $74 million for the year and a remaining authorization of $374 million.
- Grindstaff provided 2026 guidance: “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.”
Outlook
- The company is initiating 2026 guidance with revenue projected between $3.05 billion and $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, and adjusted EBITDA of $626 million to $659 million.
- Cutillo indicated, “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 E-Infrastructure are forecast in the 23% to 24% range. Transportation Solutions revenue is expected to grow in the “low to mid-single digits” with continued margin expansion, while Building Solutions revenue is anticipated to “decline in the high single to low double digits.”
Financial Results
- Fourth quarter revenue grew 69%, with E-Infrastructure Solutions up 123% and Transportation Solutions up 24%. Adjusted EPS for the quarter was $3.08 and adjusted EBITDA reached $142 million.
- Full year operating cash flow was $440 million. Capital expenditures were $77 million, and $482 million was deployed for acquisitions.
- Share repurchases totaled $74 million at an average price of $168.72 per share. The company ended the quarter with $391 million in cash and $291 million in debt.
- Building Solutions saw a 9% revenue decline in the fourth quarter and operating margins of 10%.
Q&A
- Brian Brophy, Stifel: “I just wanted to ask about transportation awards and backlog… Anything notable to call out there?” CEO Cutillo: “Nothing in particular. There wasn’t one big giant project or anything… we will continue to see good bid activity through that September time frame as projects are continuing to be let.”
- Brent Thielman, Davidson: “How the pipeline has evolved at CEC since you’ve acquired it?” Cutillo: “The jobs are getting a lot bigger… These aren’t data centers anymore, they’re data campuses.” He noted, “We see margin improvements in a couple of areas… as we’re combining the exterior electric with the site development.”
- Manish Somaiya, Cantor: “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?” Cutillo: “That $1 billion-plus is tied to projects we’re actively working on today… The lion’s share of that are with the big name hyperscalers.”
- Adam Thalhimer, Thompson Davis: “Talk more about the CEC modular expansion?” Cutillo: “The new facility is over 300,000 square feet… we’re looking at does it or does it make sense to have multiple facilities throughout the U.S. that can make these components.”
- Julio Romero, Sidoti: “As these mission-critical projects get bigger, more complex, is the mix of above-ground work versus underground infrastructure changing at all?” Cutillo: “I wouldn’t say we’ve seen any significant shift on above ground versus below ground… the size and scope of these projects… will get bigger, but the amount of stuff that we will touch will continue to grow.”
Sentiment Analysis
- Analysts focused on margin sustainability, growth in Texas and other geographies, backlog quality, and capital allocation. Their tone was generally positive, with curiosity about capital deployment, CEC integration, and the outlook for key markets. The mood remained constructive, seeking details on execution and market evolution.
- Management’s prepared remarks conveyed strong confidence, using phrases such as “We are pleased to discuss these results… but even more excited about the opportunities ahead of us,” and “Our strong backlog, future phase opportunities and conversations with our core customers… contribute to our confidence.” During Q&A, management reiterated optimism and provided clear responses, occasionally referencing being “ahead of schedule” and “very bullish.”
- Compared to the previous quarter, management’s tone remained confident, though with increased emphasis on scale and execution in new geographies, and more discussion of integrating acquisitions and modular construction. Analyst sentiment was consistently positive across both quarters, with ongoing interest in margin expansion and growth drivers.
Quarter-over-Quarter Comparison
- Guidance for 2026 is more ambitious, with a higher revenue range and targets for adjusted EPS and EBITDA reflecting expected 25%+ year-over-year growth in key metrics.
- Management’s tone remains confident, with a greater emphasis on multiyear visibility, geographic expansion (notably Texas and the Pacific Northwest), and the size of upcoming projects.
- Analysts continued to focus on growth drivers, backlog conversion, and capital allocation, with new questions centered on modular construction and scalability.
- Key metrics such as backlog, E-Infrastructure and Transportation Solutions revenue, and margins all showed substantial increases compared to Q3, while Building Solutions remained challenged.
- Strategic priorities shifted towards integrating acquisitions, expanding modular capabilities, and leveraging the CEC platform for growth.
Risks and Concerns
- Management cited ongoing softness in Building Solutions, with revenue anticipated to decline further in 2026.
- There are challenges ramping up new geographies, with management stating that margins in new markets may initially be lower but are expected to improve with scale and integration.
- Execution risk remains around integrating acquisitions and scaling modular construction.
- Some margin pressure may be present in early phases of large projects, as noted in management’s remarks.
Final Takeaway
Management expressed confidence in Sterling’s ability to capture multiyear growth opportunities driven by a record backlog, robust demand in E-Infrastructure and Transportation Solutions, and expanding capabilities through acquisitions and modular construction. The company targets significant revenue and margin growth in 2026, underpinned by visibility into a substantial pipeline of high-probability future work, geographic expansion, and strategic investments in both organic and inorganic growth.