Core Insights - The article emphasizes a value-focused investment strategy, highlighting the importance of fundamental research in sectors such as chemicals, homebuilders, building materials, industrials, and metals & mining [1] Investment Strategy - The investment approach prioritizes stocks that are undervalued and have potential catalysts in the near future, indicating a focus on identifying opportunities for growth [1] - The investment horizon is defined as ranging from one quarter to two years, suggesting a medium-term perspective on investment returns [1] Experience and Background - The individual has over three years of active investing experience, having worked as a buy-side analyst at a boutique research firm and family offices, which adds credibility to the investment insights provided [1]

Core Insights - Sterling Infrastructure, Inc. (STRL) reported strong third-quarter 2025 results, with adjusted earnings and revenues exceeding the Zacks Consensus Estimate, and both metrics showing year-over-year growth [1][3]. Financial Performance - Adjusted earnings per share (EPS) reached $3.48, surpassing the Zacks Consensus Estimate of $2.79 by 24.7%, and increased from $2.20 in the same quarter last year [3][9]. - Revenues totaled $689 million, exceeding the consensus mark of $612 million by 12.5%, and reflecting a 16% increase from $594 million in the prior year [3][9]. - Adjusted EBITDA rose 47% year over year to $155.8 million, with gross margin expanding by 280 basis points to 24.7% [6][9]. Segment Performance - E-Infrastructure Solutions generated revenues of $417.1 million, a 58% increase from $263.9 million year-over-year, with adjusted operating income rising 56.8% to $111.7 million [4]. - Transportation Solutions reported revenues of $170.5 million, up 10% from $155.1 million in the previous year, with adjusted operating income increasing to $26.7 million from $19.1 million [5]. - Building Solutions saw revenues of $101.4 million, a slight decline of 1.1% from $102.6 million year-over-year, but adjusted operating income increased by 9.6% to $12.6 million [5]. Outlook - The company raised its adjusted EPS guidance for 2025 to a range of $10.35 to $10.52, up from the previous expectation of $9.21 to $9.47 [8][9]. - Adjusted net income for the full year 2025 is now projected to be between $321 million and $326 million, compared to the prior estimate of $285 million to $294 million [8]. - Adjusted EBITDA for the year is expected to be between $486 million and $491 million, an increase from the previous forecast of $438 million to $453 million [10].

Group 1 - Sterling Infrastructure, Inc. (STRL) provides a range of infrastructure services including e-infrastructure, transportation, residential, and commercial building [1] - The e-infrastructure segment is particularly lucrative as it involves foundational civil and electrical infrastructure for U.S. data centers [1]

Financial Data and Key Metrics Changes - Revenue grew by 32% year-over-year, driven by a 58% increase in the e-infrastructure solutions segment and a 10% increase in the transportation segment [6][7] - Adjusted earnings per share increased by 58% to $3.48, while adjusted EBITDA rose by 47% to $156 million [6][7] - Gross profit margins expanded by 280 basis points to 24.7% [6] - Operating cash flow for the quarter was strong at $84 million, with a backlog totaling $2.6 billion, a 64% year-over-year increase [6][7] Business Line Data and Key Metrics Changes - E-infrastructure solutions revenue grew by 58% year-over-year, with a 42% organic growth rate [6][8] - Transportation solutions revenue increased by 10%, with adjusted operating profit growing by 40% [9] - Building solutions segment revenue declined by 1%, with adjusted operating income down by 10% due to challenges in the housing market [10][19] Market Data and Key Metrics Changes - E-infrastructure backlog reached $1.8 billion, up 97% year-over-year, with a 45% increase excluding contributions from the recent acquisition of CEC [7][11] - Transportation solutions backlog was $733 million, a 23% year-over-year increase [9] - Building solutions faced a decline in revenue due to affordability challenges in the housing market [10][19] Company Strategy and Development Direction - The company aims to leverage its expanded service portfolio following the CEC acquisition, focusing on large mission-critical projects [8][17] - The strategy includes a commitment to sustainability and community engagement, referred to as "The Sterling Way" [7] - The company is exploring small to mid-size acquisitions to enhance service offerings and geographic footprint, primarily in e-infrastructure [19][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the multi-year growth opportunities across all markets, particularly in e-infrastructure and transportation solutions [16][18] - The company anticipates continued strong demand in the data center market and expects e-infrastructure revenue growth of 30% or higher on an organic basis for 2025 [17] - Transportation solutions are expected to grow in the low teens, with improved margins due to a shift towards higher-margin services [18] Other Important Information - The company has a strong liquidity position with $306.4 million in cash and $294.6 million in debt, resulting in a net cash position of $11.8 million [13] - Full-year guidance for 2025 has been increased, projecting revenue between $2.375 billion and $2.39 billion, representing over 5% growth at the midpoint [14][20] Q&A Session Summary Question: Growth in CEC signed and unsigned work - Management noted strong bookings in the data center sector and expressed excitement about the reception from customers regarding the CEC acquisition [25][26] Question: Margin expansion opportunities - Management highlighted that larger project sizes and improved productivity from recent acquisitions contribute to expected margin expansion [27][28] Question: Composition of the $4 billion forward pipeline - The majority of the pipeline is in e-infrastructure, primarily driven by data center projects [43] Question: Impact of government shutdown on transportation funding - Management confirmed no impact from the government shutdown, as funding for current jobs has already been allocated [61][62] Question: Data center growth breakdown - Growth is attributed to both new projects and the conversion of future phases into backlog [66]

Financial Data and Key Metrics Changes - Revenue grew by 32% year-over-year, driven by a 58% increase in the e-infrastructure solutions segment and a 10% increase in the transportation segment [6][7] - Adjusted earnings per share increased by 58% to $3.48, while adjusted EBITDA rose by 47% to $156 million [6][7] - Gross profit margins expanded by 280 basis points to 24.7% [6] - Operating cash flow for the quarter was strong at $84 million, with backlog totaling $2.6 billion, a 64% year-over-year increase [6][7] Business Line Data and Key Metrics Changes - E-infrastructure solutions revenue grew by 58% year-over-year, with a 42% organic growth rate [6][8] - Transportation solutions revenue increased by 10%, with adjusted operating profit growing by 40% [9] - Building solutions segment revenue declined by 1%, with adjusted operating income down by 10% due to challenges in the housing market [10][19] Market Data and Key Metrics Changes - E-infrastructure backlog reached $1.8 billion, up 97% year-over-year, with a 45% increase excluding contributions from the recent acquisition of CEC [7][11] - Transportation solutions backlog was $733 million, a 23% year-over-year increase [9] - Building solutions faced a decline in revenue due to affordability challenges in the housing market [10][19] Company Strategy and Development Direction - The company aims to leverage its expanded service portfolio following the CEC acquisition, focusing on large mission-critical projects [8][17] - The strategy includes a commitment to sustainability and community engagement, referred to as "The Sterling Way" [7] - The company is looking for small to mid-size acquisitions to enhance service offerings and geographic footprint, primarily in e-infrastructure [19][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the multi-year growth opportunities across all markets, particularly in e-infrastructure and transportation solutions [16][18] - The company anticipates continued strong demand in the data center market and plans to align with partners for multi-year capital deployment [16][17] - Management noted that while the building solutions segment faces short-term challenges, long-term growth is expected due to population growth in key geographies [19] Other Important Information - The company increased its full-year guidance for 2025, projecting revenue between $2.375 billion and $2.39 billion, representing over 5% growth at the midpoint [14][20] - Adjusted diluted EPS guidance was raised to a range of $10.35 to $10.52, indicating a 9% increase at the midpoint [14] Q&A Session Summary Question: Growth in CEC signed and unsigned work - Management noted strong bookings in the data center sector and expressed excitement about the reception from customers regarding the CEC acquisition [25][26] Question: Margin expansion opportunities - Management highlighted that larger project sizes and improved productivity from recent acquisitions contribute to expected margin expansion [27][28] Question: Composition of the $4 billion forward pipeline - Management indicated that $3 billion of the pipeline is in e-infrastructure, primarily driven by data center projects [43] Question: Impact of government shutdown on transportation funding - Management confirmed no impact from the government shutdown, as funding for current jobs has already been allocated [61][62] Question: Data center growth breakdown - Management explained that data center growth is a combination of new projects and the conversion of future phases into backlog [66]

Financial Data and Key Metrics Changes - Revenue grew by 32% year-over-year, driven by a 58% increase in the e-infrastructure solutions segment and a 10% increase in the transportation segment [5][6] - Adjusted earnings per share increased by 58% to $3.48, while adjusted EBITDA rose by 47% to $156 million [5][6] - Gross profit margins expanded by 280 basis points to 24.7% [5] - Operating cash flow for the quarter was strong at $84 million, with backlog totaling $2.6 billion, a 64% year-over-year increase [5][6] Business Line Data and Key Metrics Changes - E-infrastructure solutions revenue grew by 58% year-over-year, with a 42% organic growth rate [5][6] - Transportation solutions revenue increased by 10%, with adjusted operating profit growing by 40% [9] - Building solutions segment revenue declined by 1%, with adjusted operating income down by 10% due to challenges in the housing market [10][18] Market Data and Key Metrics Changes - E-infrastructure backlog reached $1.8 billion, up 97% year-over-year [6] - Transportation solutions backlog was $733 million, a 23% year-over-year increase [9] - The overall demand for homes has been impacted by affordability challenges, leading to a 17% decline in revenue from the legacy residential business [10][18] Company Strategy and Development Direction - The company is focused on expanding its service portfolio and leveraging the recent CEC acquisition to enhance growth opportunities [8][16] - The strategy emphasizes a commitment to infrastructure development while maintaining a focus on high-margin end markets [6][18] - The company anticipates continued growth in e-infrastructure, particularly in data centers and semiconductor fabrication facilities [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the multi-year opportunities across markets, particularly in e-infrastructure and transportation solutions [14][17] - The company expects e-infrastructure revenue growth of 30% or higher on an organic basis for 2025, with adjusted operating profit margins approximating 25% [16] - Transportation solutions are projected to grow in the low teens on an adjusted basis, with margins expected to improve significantly [17][18] Other Important Information - The company has a strong liquidity position with $306.4 million in cash and $294.6 million in debt, resulting in a net cash position of $11.8 million [12] - Full-year guidance for 2025 has been increased, projecting revenue between $2.375 billion and $2.39 billion, representing over 5% growth at the midpoint [12][19] Q&A Session Summary Question: Growth in CEC signed and unsigned work - Management noted strong bookings in the data center market and expressed excitement about the reception from customers regarding the CEC acquisition [23][24] Question: Margin expansion opportunities - Management highlighted that larger project sizes and improved productivity from recent acquisitions contribute to expected margin expansion [26][27] Question: Composition of the $4 billion forward pipeline - The majority of the forward pipeline is in e-infrastructure, particularly data centers, which are expected to drive significant growth [43] Question: Impact of government shutdown on transportation funding - Management confirmed no impact from the government shutdown, as funding for current jobs has already been allocated [60] Question: Data center growth breakdown - Growth is attributed to a combination of new projects and the successful conversion of future phases into backlog [64]

Financial Data and Key Metrics Changes - Revenue grew by 32% year-over-year, driven by a 58% increase in the e Infrastructure Solutions segment and a 10% increase in the Transportation segment [7][12] - Adjusted earnings per share increased by 58% to $3.48, while adjusted EBITDA rose by 47% to $156 million [8][17] - Gross profit margins expanded by 280 basis points to 24.7%, and operating cash flow was strong at $84 million [8][15] - Backlog at the end of the quarter totaled $2.6 billion, a 64% year-over-year increase [8][14] Business Line Data and Key Metrics Changes - **e Infrastructure Solutions**: Revenue grew by 58% year-over-year, with a 42% organic growth rate. The data center market was a primary growth driver, with revenue from this market increasing by over 125% year-over-year [10][19] - **Transportation Solutions**: Revenue increased by 10%, and adjusted operating profit grew by 40%, driven by strong market demand and a shift towards higher-margin services [12][23] - **Building Solutions**: Revenue declined by 1%, with adjusted operating income down by 10%. The legacy residential business saw a 17% decline due to affordability challenges in the housing market [13][24] Market Data and Key Metrics Changes - The e Infrastructure segment backlog reached $1.8 billion, up 97% year-over-year, with a 45% increase excluding contributions from recent acquisitions [9][14] - Transportation Solutions backlog was $733 million, a 23% year-over-year increase, while Building Solutions faced headwinds from a soft housing market [12][13] Company Strategy and Development Direction - The company remains committed to its guiding principle, "The Sterling Way," focusing on taking care of people, the environment, investors, and communities while building America's infrastructure [9] - The company anticipates continued strong demand in the e Infrastructure segment, particularly in data centers and manufacturing, with expectations for significant growth in 2026 and beyond [19][20] - The company is actively seeking small to mid-sized acquisitions to enhance service offerings and geographic footprint, with a focus on infrastructure-related opportunities [25][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the multiyear opportunities across markets, with strong backlog and customer discussions contributing to this outlook [19][20] - The company expects e Infrastructure revenue growth of 30% or higher on an organic basis for 2025, with adjusted operating profit margins approximating 25% [22][23] - In Transportation Solutions, revenue growth is anticipated in the low teens, with adjusted operating profit margins expected to improve significantly [23][24] - Building Solutions is projected to face a mid to high single-digit decline in revenue for the full year, with adjusted operating margins in the low double digits [24] Other Important Information - The company ended the quarter with a strong liquidity position, including $306.4 million in cash and $294.6 million in debt [16] - The company has a combined backlog of $3.44 billion, an 88% increase year-over-year, indicating strong future revenue visibility [15] Q&A Session Summary Question: What is driving the momentum in CEC's signed and unsigned work? - Management noted strong bookings primarily around data center projects, with excitement about customer reception and future projects [27][28] Question: What drives margin expansion opportunities? - Management highlighted the increasing size of projects and productivity gains from combining electrical and site development services as key drivers for margin expansion [31][32] Question: What is the mix of end markets driving the growth of the forward pipeline? - The majority of the $4 billion forward pipeline is in e Infrastructure, with data centers making up 75-80% of that segment [42][47] Question: Has there been any impact from the government shutdown on transportation funding? - Management confirmed no impact from the government shutdown, as funding for current jobs has already been allocated [68][69] Question: Are there any signs of improvement in Building Solutions for 2026? - Management indicated no expected improvement until at least 2026, with current market conditions remaining flat [87]

Backlog and Awards - As of September 30, 2025, the Company's Backlog was $2.58 billion, up from $1.69 billion at December 31, 2024, with a book-to-burn ratio of 1.6X for the nine months ended September 30, 2025[93] - The Company's margin in Backlog increased to 18.0% at September 30, 2025, from 16.7% at December 31, 2024, driven by a greater mix of E-Infrastructure Solutions backlog[93] - Unsigned Awards reached $868.8 million at September 30, 2025, compared to $137.9 million at December 31, 2024, with $335.3 million contributed from the recently acquired electrical and mechanical business[94] - Combined Backlog totaled $3.44 billion at September 30, 2025, significantly higher than $1.83 billion at December 31, 2024, with a book-to-burn ratio of 2.1X for the nine months ended September 30, 2025[94] Acquisitions - The Company acquired Drake Concrete, LLC for $25 million in cash, enhancing its presence in the Dallas-Fort Worth market[86] - The acquisition of CEC Facilities Group, LLC was completed for $561 million, including $445 million in cash and $79 million in common stock, with an earn-out opportunity of up to $80 million[87] Market and Segment Insights - The Infrastructure Investments and Jobs Act (IIJA) provides approximately $643 billion in funding for transportation programs, significantly increasing federal funding for infrastructure projects[90] - The E-Infrastructure Solutions segment is expected to benefit from multi-year capital deployment plans by data center customers, driven by cloud computing and AI applications[89] - Demand in the Building Solutions segment is anticipated to remain muted in the near term due to affordability challenges, but long-term growth is supported by population growth and housing shortages[91] - The Company aims to improve margins across all segments while focusing on growth in E-Infrastructure Solutions and expanding market share in Building Solutions[88] Financial Performance - Revenues for Q3 2025 were $689.0 million, a 16.0% increase from $593.7 million in Q3 2024, driven by a $153.2 million increase in E-Infrastructure Solutions[96] - Gross profit for Q3 2025 was $170.2 million, up $40.4 million or 31.1% from Q3 2024, with a gross margin increase to 24.7% from 21.9%[98] - General and administrative expenses were $37.6 million for Q3 2025, representing 5.5% of revenue, compared to $30.7 million or 5.2% of revenue in Q3 2024[100] - E-Infrastructure Solutions revenues increased by 58.1% to $417.1 million in Q3 2025, with operating income of $106.6 million, or 25.6% of revenue[106][107] - Transportation Solutions revenues were $170.5 million in Q3 2025, a 9.9% increase excluding prior year RHB revenue, with operating income of $24.4 million, or 14.3% of revenue[108][109] - Building Solutions revenues decreased by 1.1% to $101.4 million in Q3 2025, reflecting lower commercial volume and a slowdown in residential markets[110] - Net income attributable to Sterling common stockholders for Q3 2025 was $92.1 million, compared to $61.3 million in Q3 2024[96] - Interest income for the nine months ended September 30, 2025, was $5.0 million, significantly up from $0.3 million in the same period of 2024[102] - The effective income tax rate was 24.1% for Q3 2025, with an anticipated full-year rate of approximately 25%[103] - The company expects general and administrative expenses to be approximately 6.3% of revenue for the full year 2025[100] - Operating income for Q3 2025 was $10.8 million, or 10.6% of revenue, down from $12.2 million, or 11.9% of revenue in Q3 2024[111] Cash Flow and Financial Position - Total cash and cash equivalents decreased to $306.4 million as of September 30, 2025, from $664.2 million as of December 31, 2024[112] - Net cash provided by operating activities was $253.9 million for the nine months ended September 30, 2025, compared to $322.8 million for the same period in 2024[113] - Net cash used in investing activities was $531.1 million for the nine months ended September 30, 2025, significantly higher than $62.3 million in 2024, primarily due to $484.2 million for acquisitions[115] - Net cash used in financing activities was $80.7 million for the nine months ended September 30, 2025, slightly lower than $84.0 million in 2024[116] - The change in Contract Capital was a negative $113.6 million for the nine months ended September 30, 2025, driven by the E-Infrastructure Solutions segment[114] - As of September 30, 2025, the company had $296 million of variable rate debt, with a potential interest expense fluctuation of approximately $3 million per year for a 100-basis point change in interest rates[122] - The company plans to explore additional revenue growth and capital alternatives to strengthen its financial position and leverage trends in civil infrastructure and E-infrastructure markets[117] Operational Challenges - Inflation and supply chain volatility since 2021 have increased operational costs, negatively impacting financial results[124] - Approximately $10 million of construction work remains to be completed on unconsolidated construction joint venture contracts, with the company's share being about $4 million[119]

November 4, 2025 Q3 2025 EARNINGS CALL DISCLOSURE: Forward-Looking Statements This presentation contains, and the officers and directors of the Company may from time to time make, statements that are considered forward- looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about: our business strategy; o ...

Financial Performance - Third quarter 2025 revenue reached $689.0 million, a 32% increase year-over-year, excluding RHB[5] - Adjusted diluted earnings per share for the quarter were $3.48, reflecting a 58% increase[4] - Gross profit margin improved to 24.7%, up from 21.9% in the prior year[5] - Net income for the quarter was $92.1 million, a 50% increase compared to the previous year[5] - Revenues for Q3 2025 reached $689.0 million, a 16.0% increase from $593.7 million in Q3 2024[21] - Gross profit for Q3 2025 was $170.2 million, up 31.1% from $129.8 million in Q3 2024[21] - Operating income for Q3 2025 increased to $125.3 million, representing a 43.2% rise compared to $87.5 million in Q3 2024[21] - Net income attributable to Sterling common stockholders for Q3 2025 was $92.1 million, a 50.3% increase from $61.3 million in Q3 2024[21] - Adjusted net income attributable to Sterling common stockholders for Q3 2025 was $107.7 million, compared to $68.5 million in Q3 2024, representing a 57.3% increase[29] - Total revenues for Q3 2025, excluding RHB, reached $689.0 million, a 32.2% increase from $521.6 million in Q3 2024[33] - Adjusted EBITDA for Q3 2025 was $155.8 million, up 46.6% from $106.2 million in Q3 2024[31] Backlog and Acquisitions - Signed backlog at the end of the quarter was $2.6 billion, a 34% year-over-year growth[4] - Combined backlog reached over $3 billion for the first time, growing 44% year-over-year[4] - The CEC acquisition contributed $41.4 million to revenue and $475.3 million to backlog[5][7] - The backlog at the end of 2024 was $2,184,478 million, excluding RHB backlog, which was $491,255 million[47] Guidance and Projections - Full year 2025 guidance was raised to reflect a projected revenue of $2.375 billion to $2.390 billion, representing a 27% year-over-year growth[12] - Adjusted EBITDA for the full year is expected to be between $486 million and $491 million, indicating a 42% growth[12] - Full year 2025 guidance for net income attributable to Sterling common stockholders is projected between $270.0 million and $275.0 million, compared to $257.5 million in 2024[36] - Adjusted net income per share for 2025 is expected to be between $10.35 and $10.52, significantly higher than $7.09 in 2024[36] Segment Performance - E-Infrastructure Solutions revenue grew by 58%, while Transportation Solutions revenue increased by 10%[6][8] - E-Infrastructure Solutions contributed $417.1 million in revenues for Q3 2025, accounting for 60% of total revenues[23] - The E-Infrastructure Solutions segment generated revenues of $417.1 million in Q3 2025, accounting for 60% of total revenues[33] - Transportation Solutions revenue for 2024 was $547,783 million, showing a significant contribution to total revenues[40] Assets and Liabilities - Total assets as of September 30, 2025, were $2.56 billion, up from $2.02 billion at the end of 2024[25] - Cash and cash equivalents decreased to $306.4 million from $664.2 million at the end of 2024[27] - Total liabilities increased to $1.48 billion as of September 30, 2025, compared to $1.19 billion at the end of 2024[25] Operating Expenses - The company incurred $5.3 million in acquisition-related costs in Q3 2025, compared to $72,000 in Q3 2024[31] - Non-cash stock-based compensation for Q3 2025 was $6.0 million, up from $4.4 million in Q3 2024[31] - Corporate G&A expenses for 2024 totaled $38,268 million, impacting overall operating income[42] - Adjusted operating income for 2024 was $305,839 million, reflecting adjustments for non-cash stock-based compensation and other costs[42] Historical Performance - Net income attributable to Sterling common stockholders for 2024 was $257 million, with guidance for 2025 set between $270 million and $275 million[38] - Total revenues for 2024 reached $2,115,756 million, with E-Infrastructure Solutions contributing $923,728 million, Transportation Solutions $783,659 million, and Building Solutions $408,369 million[40] - Adjusted EBITDA for 2024 was $343 million, with guidance for 2025 projected between $486 million and $491 million[38] - The total operating income for 2024 was $264,622 million, with segment operating income from E-Infrastructure Solutions at $203,359 million[42] - The company reported a gain on deconsolidation of subsidiary, netting a loss of $91 million in 2024[38]