Sterling Infrastructure(US:STRL)2025-11-04 14:10Backlog 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]