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Sterling Infrastructure Reports Strong First Quarter Results for 2025

Sterling Infrastructure, Inc., listed on the NasdaqGS under the ticker STRL, has recently disclosed its financial results for the first quarter of 2025, marking a notable milestone in its growth journey. In the announcement made on May 5, 2025, the company reported revenues of $430.9 million, showing a 7% increase when adjusted to exclude the deconsolidated RHB joint venture, which was no longer counted in consolidated revenue and backlog.

Financial Highlights

The financial metrics for Q1 2025 compared to the previous year are noteworthy:

• - Gross margin improved to 22.0%, up from 17.5%.
• - Net income reached $39.5 million, translating to $1.28 per diluted share, reflecting increases of 27% and 28%, respectively.
• - The adjusted net income stood at $50.2 million or $1.63 per diluted share, indicating growths of 28% and 29%.
• - Meanwhile, EBITDA was recorded at $72.1 million, marking a 30% increase, while adjusted EBITDA surged to $80.3 million, a 31% increase compared to the previous year.
• - The operating cash flows amounted to $84.9 million, with cash reserves totaling $638.6 million by the end of March.
• - As of the same date, the backlog totaled $2.13 billion, with a combined backlog reaching $2.23 billion.

Strategic Acquisition

In a significant strategic move, Sterling completed the acquisition of Drake Concrete, LLC during this quarter. This acquisition, valued at $25 million in cash plus a four-year earn-out opportunity, aims to bolster Sterling's presence in the competitive residential construction market of the Dallas-Fort Worth area. Drake Concrete is anticipated to contribute approximately $55 million in revenue and $6.5 million in adjusted EBITDA for 2025.

CEO's Insights

Joe Cutillo, CEO of Sterling, expressed optimism regarding the company's trajectory for 2025, stating, "Sterling is off to a great start in 2025, as we grew our first quarter adjusted net income by 28% to deliver adjusted diluted EPS of $1.63. Revenue growth in the quarter was a solid 7%, on a pro forma basis, fueled by strong 18% growth in E-Infrastructure Solutions and 9% growth in Transportation Solutions. Gross profit margins in the quarter of 22% remained extremely strong, as we have shifted the business toward higher-margin service offerings."

Furthermore, during the first quarter, the E-Infrastructure Solutions segment witnessed remarkable performance with a 18% growth in revenue, supported by an impressive 61% increase in adjusted operating income. On the other hand, the Transportation Solutions segment also demonstrated a healthy 9% revenue growth and 60% increase in adjusted operating income. However, the Building Solutions segment saw a 14% decline in revenue due to challenges in the housing market linked to affordability issues and adverse weather conditions.

Future Outlook

Looking ahead, Sterling Infrastructure anticipates a strong continuation of its financial success through 2025. The company updated its guidance for the full year to reflect its positive first-quarter performance and robust backlog:

• - Projected Revenue: Between $2.05 billion and $2.15 billion.
• - Projected Net Income: Between $222 million and $239 million.
• - Diluted EPS: Estimated between $7.15 and $7.65.
• - EBITDA: Projected between $381 million and $403 million.

The continuous growth mindset and strategic acquisitions signal Sterling's commitment to sustaining its market position while effectively navigating through economic uncertainties.

Conclusion

Sterling Infrastructure's impressive first quarter results, driven by strong segment performances and strategic decisions, reaffirm the company’s position in the market. As they look to the future, the raised 2025 guidance reflects confidence in continued growth and success amidst evolving market conditions. Investors and stakeholders will be monitoring the upcoming conference call on May 6 for further insights into the company's strategic direction and performance expectations.