#United States #The Woodlands #Building Solutions #Sterling Infrastructure #E-Infrastructure Solutions

Sterling Infrastructure Reports Exceptional Second Quarter 2025 Results

Sterling Infrastructure, Inc. (NasdaqGS: STRL), has announced outstanding financial results for the second quarter of 2025, marking significant achievements compared to the previous year. The company saw a remarkable revenue climb and substantial expansion in gross margins in this period, prompting an upbeat revision of its full-year financial guidance.

Financial Highlights

For the second quarter of 2025, Sterling Infrastructure reported revenues of approximately $614.5 million, reflecting a 21% increase when adjusted for the prior year's figures, particularly excluding the deconsolidated RHB joint venture. Gross margins also saw a notable upswing, increasing to 23.3%, a substantial jump from 19.3% in the corresponding period of the previous year. These adjustments reflect the company's strategic shift to higher-margin service offerings.

The results also indicated that the company's net income surged to $71 million, corresponding to $2.31 per diluted share, marking increases of 37% and 38%, respectively, as compared to last year's second quarter. When adjusted, the net income stands at $82.8 million, or $2.69 per diluted share, demonstrating a 39% and 41% increase, respectively. Furthermore, EBITDA reached a record of $116.2 million, registering a 34% increase.

Cash Flow and Backlog

Cash flows from operations totaled an impressive $170.3 million for the first half of the year, culminating in cash and cash equivalents of $699.4 million at the end of June. The backlog stood at $2.01 billion, showing strong performance with a book-to-burn ratio of 1.4x during the same timeframe. Combined backlog figures reveal a robust $2.25 billion, further emphasizing Sterling’s strong market position.

Acquisition Progress

In a strategic maneuver to solidify its position in the market, Sterling announced an agreement to acquire all assets of CEC Facilities Group LLC. This acquisition is seen as beneficial for expanding Sterling's operational capabilities, particularly in high-growth markets like semiconductors and data centers. The anticipated performance from CEC is expected to enhance Sterling's overall operational efficiency and project timelines, although the guidance for 2025 doesn’t factor in contributions from CEC yet.

CEO Insights

CEO Joe Cutillo highlighted the company's impressive Q2 performance, citing a significant 29% growth in E-Infrastructure Solutions and 24% in Transportation Solutions as key contributors to revenue growth. Despite a slight decline in Building Solutions due to market fluctuations, the overall portfolio remains resilient.

Cutillo expressed optimism about Sterling’s trajectory, stating, _“Our exceptional results for the quarter underscore the robustness of our business model. We are positioned for continued success.”_ Notably, the demand for E-Infrastructure Solutions and future work in this sector is robust, nearing $2 billion in visibility.

In the Transportation Solutions sector, revenue showed robust growth, with a 24% increase observed, and an impressive 78% rise in adjusted operating income. The management expressed confidence in the company's strategic decisions regarding the downsizing of its heavy highway business, indicating that while there may be short-term impacts on revenue, this approach aims to bolster margins moving forward.

Improved Financial Guidance

Given the solid performance in the first half of 2025, Sterling has revised its full-year guidance upwards. The targets set for the year include revenues of $2.10 billion to $2.15 billion and a projected net income of $243 million to $252 million, resulting in a diluted EPS expectation ranging between $7.87 to $8.13. Additionally, the company forecasts an EBITDA of $406 million to $421 million for 2025, marking an anticipated growth trajectory.

Overall, Sterling Infrastructure's performance in Q2 not only reflects its operational efficiency but also sets a precedent for achieving record-breaking results in the forthcoming quarters. The strategic alignment with high-growth sectors and operational efficiencies indicates strong potential for the company within the competitive landscape. More details will be shared in the upcoming conference call on August 5, where the management will discuss these results alongside other recent developments in greater depth.