Executive Summary

Sterling delivered a record Q2: revenue $614.5M, gross margin 23.3%, GAAP diluted EPS $2.31, adjusted diluted EPS $2.69; backlog rose to $2.01B and combined backlog to $2.25B .
Results beat S&P Global consensus: revenue $614.5M vs $554.4M estimate; “Primary EPS” $2.51 vs $2.25 estimate; management raised full‑year guidance across revenue, EPS and EBITDA; data center momentum and transportation margin mix were key drivers *.
Segment strength: E‑Infrastructure revenue +29% YoY with ~28% adjusted operating margin; Transportation revenue +24% with margin expansion; Building Solutions down 1% with margin pressure amid affordability headwinds .
FY25 guidance raised: revenue to $2.10–$2.15B, GAAP diluted EPS $7.87–$8.13, adjusted EPS $9.21–$9.47, adjusted EBITDA $438–$453M; modeling now assumes ~23% gross margin and ~26% tax rate .
Near‑term catalysts: accelerating AI/data‑center buildout, e‑commerce distribution resurgence, and the pending CEC acquisition expanding electrical capabilities and Texas footprint (guidance excludes CEC) .

What Went Well and What Went Wrong

What Went Well
- E‑Infrastructure outperformed: revenue +29% YoY; adjusted operating margin expanded >500 bps to 28.3% driven by large, mission‑critical data center and manufacturing projects. “Gross profit margins…23% marked a new high for the company” .
- Transportation margin mix improved: revenue +24% YoY; adjusted operating income +78% YoY as low‑bid Texas heavy highway downsizing improved mix; backlog $715M with solid Rocky Mountain and Arizona demand .
- Backlog and cash generation: backlog $2.01B (+~24% YoY like‑for‑like); combined backlog $2.25B; Q2 operating cash flow ~$85M; cash & equivalents $699.4M .
- Quote: “We delivered very strong top line growth of 21% and even better bottom‑line growth, with adjusted diluted EPS reaching $2.69, a 41% increase” — CEO Joe Cutillo .
What Went Wrong
- Building Solutions softness: revenue −1% YoY; adjusted operating income −28%; residential impacted by affordability; adjusted margins ~11% in Q2 .
- Book‑to‑burn seasonality: Q2 book‑to‑burn 0.77x for backlog, reflecting strong burn and seasonal lull in Transportation awards .
- Sequential pressure in Transportation backlog: segment backlog declined 17% sequentially due to strong burn and seasonal awards; Texas low‑bid wind‑down weighs on near‑term backlog/revenue (benefits margins) .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025	S&P Global Consensus (Q2 2025)
Revenue ($M)	$582.8	$430.9	$614.5	$554.4*
GAAP Diluted EPS ($)	$1.67	$1.28	$2.31	“Primary EPS” est: $2.2525; actual: $2.5085
Adjusted Diluted EPS ($)	$1.91	$1.63	$2.69	N/A
Gross Margin (%)	19.3%	22.0%	23.3%	N/A
Operating Income ($M)	$72.7	$56.1	$104.6	N/A
EBITDA ($M)	$87.0	$72.1	$116.2	N/A
Adjusted EBITDA ($M)	$92.9	$80.3	$125.6	N/A

Notes: Values with asterisks are retrieved from S&P Global. EPS consensus and “Primary EPS actual” reflect S&P Global’s “Primary EPS” definition and may differ from GAAP diluted EPS reported by the company.*

Segment performance (Q2 2025 vs Q2 2024)

Segment	Revenue Q2’24 ($M)	Revenue Q2’25 ($M)	YoY %	Operating Margin Q2’24	Operating Margin Q2’25
E‑Infrastructure Solutions	$241.3	$310.4	+28.6%	21.4%	27.0%
Transportation Solutions	$232.8	$196.8	−15.5% (GAAP includes RHB in 2024)	6.6%	13.2%
Building Solutions	$108.7	$107.3	−1.3%	13.6%	9.2%

Non‑GAAP segment view excluding RHB in Q2’24 (company’s adjusted presentation)

Segment	Revenue Q2’24 ex‑RHB ($M)	Revenue Q2’25 ($M)	YoY %	Adjusted Operating Margin Q2’24	Adjusted Operating Margin Q2’25
E‑Infrastructure Solutions	$241.3	$310.4	+28.6%	23.1%	28.3%
Transportation Solutions	$158.8	$196.8	+23.9%	10.0%	14.4%
Building Solutions	$108.7	$107.3	−1.3%	15.1%	11.0%

Key KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Backlog ($B)	$1.62 (ex‑RHB)	$2.13	$2.01
Combined Backlog ($B)	$1.91 (ex‑RHB)	$2.23	$2.25
Book‑to‑Burn (Quarter)	N/A	N/A	0.77x backlog; 1.03x combined backlog
Book‑to‑Burn (YTD)	N/A	N/A	1.36x backlog; 1.47x combined backlog
Cash & Equivalents ($M)	$648.1 (9/30/24)	$638.6 (3/31/25)	$699.4 (6/30/25)
Operating Cash Flow ($M)	N/A	$84.9 (Q1)	~$85.4 (Q2)

Context: 2024 comparisons reflect deconsolidation of the RHB JV effective 12/31/24; company provides adjusted prior‑period metrics excluding RHB for comparability .

Guidance Changes

Metric	Period	Previous Guidance (5/5/25)	Current Guidance (8/4/25)	Change
Revenue	FY25	$2.05B–$2.15B	$2.10B–$2.15B	Raised (midpoint)
Net Income (GAAP)	FY25	$222M–$239M	$243M–$252M	Raised
Diluted EPS (GAAP)	FY25	$7.15–$7.65	$7.87–$8.13	Raised
EBITDA	FY25	$381M–$403M	$406M–$421M	Raised
Adjusted Net Income	FY25	$262M–$278M	$285M–$294M	Raised
Adjusted Diluted EPS	FY25	$8.40–$8.90	$9.21–$9.47	Raised
Adjusted EBITDA	FY25	$410M–$432M	$438M–$453M	Raised
Gross Margin	FY25 (modeling)	N/A	~23.0%	New detail
G&A as % of Revenue (ex‑amort.)	FY25 (modeling)	N/A	~6.3%	New detail
Other Operating Income	FY25 (modeling)	N/A	$13–$15M	New detail
Effective Tax Rate	FY25 (modeling)	N/A	~26%	New detail
Diluted Shares	FY25 (modeling)	~31.2M	~31.0M	Slightly lower

Segment outlook from management (qualitative guidance):

E‑Infrastructure: FY25 revenue growth 18%–20%, adjusted operating margins mid‑to‑high 20% .
Transportation: FY25 revenue growth low‑to‑mid teens (adjusted basis), adjusted operating margins low teens; Texas low‑bid wind‑down to support margins .
Building Solutions: FY25 revenue down mid‑to‑high single digits; adjusted margins low double digits amid affordability headwinds .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
AI/Data centers	Data centers >65% of E‑Infrastructure backlog; strong activity	Data centers 62% of E‑Infrastructure backlog; pipeline of mega‑sites (incl. self‑contained power); multi‑acre, multi‑phase campuses; expansion plans into Texas & Northwest	Sustained strength; expanding scope and geographies
E‑commerce distribution	Limited in 2024; expected restart 2025	Backlog up ~700% in quarter; 7–9 projects anticipated in 2025; larger 4‑story, 90‑ft facilities nearly 2× prior revenue per project	Strong resurgence
Transportation market	Solid demand; Texas low‑bid wind‑down to improve margins	Revenue +24% YoY; backlog dynamics reflect seasonal awards; wind‑down continues; margin improvement ongoing	Margin mix improving
Housing affordability	Residential softness and weather impacted Q1	Building Solutions −1% revenue; ~11% adj margin; ongoing affordability headwinds; expecting trough through H2 barring rate cuts	Persistent headwind
Capital allocation/liquidity	Share repurchases; strong cash generation	Cash $699M; net cash $401M; extended/expanded credit facility to 2028; leverage 0.7×; pending $450M CEC cash outlay	Ample dry powder; de‑risked balance sheet
M&A (CEC)	N/A	Agreement to acquire CEC (6/17); progressing to close; expands electrical services esp. semi/data centers; accelerates Texas expansion; guidance excludes CEC	Strategically additive, closing pending

Management Commentary

Strategic focus and margin trajectory: “We are raising our 2025 guidance… midpoints…13% revenue growth…32% adjusted diluted EPS growth and 30% adjusted EBITDA growth” .
E‑Infrastructure strength: “Adjusted operating margins expanded over 500 basis points to reach 28.3%… shift toward large, mission‑critical projects, including data centers and manufacturing” .
Backlog visibility: “Signed backlog and high‑probability future phase work… visibility into a pool of E‑Infrastructure work approaching $2 billion” .
CEC rationale: “Combination of CEC’s leading electrical services… and Sterling’s best‑in‑class site civil infrastructure services will… accelerate project timelines and become even more valuable to our customers… accelerate our geographic expansion into Texas” .

Q&A Highlights

Data center pipeline and geographies: Positioned “extremely well” for hyperscaler CapEx; active expansion into Texas and planning for Northwest; expectation of Texas wins as early as year‑end; Northwest on 12–18‑month horizon .
Margin sustainability: Larger, multi‑phase campuses (with on‑site power) support productivity and margin expansion across phases; confidence margins will continue to expand .
E‑commerce surge: Anticipated 7–9 projects in 2025; newer designs are larger, driving higher revenue per project and attractive margins .
Building Solutions outlook: Organic revenue down low‑to‑mid teens in H2; margins protected via variable labor and material cost relief; upside if rates fall, but not in guidance .
Segment resource allocation: Transportation assets redeployed to E‑Infrastructure where returns are higher; transportation margin gains are “pure” segment improvements; revenue/backlog may moderate as mix shifts .
CEC closing: Most licensing/permits in process; ~65–70% through; no major issues anticipated; will be cash‑funded and synergistic .

Estimates Context

S&P Global consensus for Q2 2025: revenue $554.35M (4 estimates); “Primary EPS” $2.2525 (4 estimates). Reported “Primary EPS actual” $2.5085 and revenue actual $614.47M — both beats. GAAP diluted EPS reported by the company was $2.31 and adjusted diluted EPS was $2.69 *.
Takeaway: Strong top‑line and profitability outperformance versus consensus, with mix/margin benefits in E‑Infrastructure and Transportation likely driving upward estimate revisions for FY25 revenue, EPS, and EBITDA. Values retrieved from S&P Global.*

Key Takeaways for Investors

E‑Infrastructure is the engine: sustained data center demand and burgeoning e‑commerce projects underpin multi‑year growth and margin expansion; management explicitly expects margins to continue rising .
Guidance raised on all fronts; modeling now embeds ~23% gross margin and ~26% tax rate, signaling confidence in structural profitability improvements .
Transportation strategy (exiting low‑bid Texas) strengthens margin profile despite near‑term top‑line/backlog moderation; Rocky Mountain and Arizona demand is solid .
Building Solutions remains cyclical and sensitive to rates; management managing margins via variable labor and cost tailwinds; keep expectations conservative until affordability improves .
Balance sheet optionality: $699M cash and 0.7× leverage support organic ramp and M&A; CEC (excluded from guidance) could accelerate Texas expansion and deepen capability moat in electrical/mechanical scopes .
Trading implication: Positive revision setup from beats and raised FY guide; narrative anchored on AI/data center seculars, with incremental catalysts from e‑commerce awards and CEC close.

Additional Relevant Q2 2025 Press Releases

Agreement to acquire CEC Facilities Group (6/17/25): adds mission‑critical electrical services for semiconductor/data center markets; strategic fit with site civil capabilities .
Credit facility extension/expansion (6/9/25): amended 2019 credit agreement extended to June 2028, expanded size, improved rates and flexibility .
CFO appointment (6/12/25): Nicholas Grindstaff named CFO, joining ahead of Q2 earnings .

References:

Q2 2025 press release and detailed financials .
Form 8‑K with Exhibit 99.1 (press release) and Exhibit 99.2 (slides) .
Q2 2025 earnings call transcript .
Q1 2025 press release for sequential comps and prior guidance .
Q4 2024 press release for trend context .
S&P Global consensus and “Primary EPS actual” for Q2 2025 (Revenue, EPS, # of estimates)*. Values retrieved from S&P Global.

STERLING INFRASTRUCTURE, INC. (STRL)·Q2 2025 Earnings Summary