Executive Summary

Q4 2024 delivered modest top-line growth and strong margin execution: revenue $498.8M (+3% YoY), gross margin 21.4% (+250 bps YoY), adjusted diluted EPS $1.46 (+13% YoY); GAAP diluted EPS was $3.64, aided by a non-cash gain from RHB deconsolidation .
E‑Infrastructure led performance: segment operating margin expanded to 24.1% (+680 bps YoY), with data center-related revenue up >50% YoY and now over 60% of segment backlog; Building Solutions faced DFW demand/earn-out headwinds; Transportation moderated on tough weather/timing comps and Texas low‑bid exit strategy .
FY25 guidance introduced with a new non‑GAAP methodology: revenue $2.00–$2.15B, diluted EPS $6.75–$7.25, EBITDA $370–$395M; adjusted EPS $7.90–$8.40 and adjusted EBITDA $395–$420M; modeling includes gross margin 21–22%, G&A ~6% of revenue, tax rate ~26% .
Balance sheet/cash flow remain catalysts: cash $664.2M, net cash $347.9M, TTM operating cash flow $497.1M; company reiterated opportunistic M&A and buybacks (FY24 repurchases $70.6M) .
Near‑term stock narrative: AI/data center tailwinds, margin mix shift, and RHB accounting change underpin earnings trajectory; transportation normalization and TX low‑bid exit a top‑line headwind but margin-accretive; additional project awards (Utah I‑15, Colorado I‑25) support backlog visibility .

What Went Well and What Went Wrong

What Went Well

E‑Infrastructure margin expansion: “operating margins expanded nearly 700 basis points to reach 24.1%” with >50% YoY growth in data center revenue; DC now >60% of segment backlog .
Backlog/multi‑phase visibility: combined backlog $1.83B; E‑Infrastructure backlog >$1B (+27% YoY); pipeline of high‑probability future phases growing; award activity strong in Q1’25 .
Cash generation/liquidity: TTM CFO $497.1M; cash $664.2M; net cash $347.9M; reiterated flexibility for acquisitions/buybacks .
Quote: “We expect this trend to continue in 2025... our operating cash flow... was again excellent at $174 million, driving our net cash position to $348 million” .

What Went Wrong

Transportation Q4 softness vs tough comp: revenue and operating income declined on weather/project timing; segment margin fell to 5.0% vs 7.0% YoY .
Strategic exit from TX low‑bid heavy highway weighs near‑term revenue/backlog; management quantified TX low‑bid work at ~$75M annually .
Building Solutions headwinds: Q4 revenue −3%, operating income −17% driven by $1.8M PPG earn‑out; DFW residential softness and weather disruptions impacted volumes .

Financial Results

Quarterly Headline Metrics (chronological: Q2 → Q3 → Q4 2024)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$582.8	$593.7	$498.8
Gross Margin %	19.3%	21.9%	21.4%
Diluted EPS (GAAP) ($)	$1.67	$1.97	$3.64
Adjusted Diluted EPS ($)	$1.67	$1.98	$1.46
EBITDA ($USD Millions)	$87.0	$100.8	$167.4
Adjusted EBITDA ($USD Millions)	$87.1	$100.9	$76.4

YoY Comparison – Q4

Metric	Q4 2023	Q4 2024
Revenue ($USD Millions)	$486.0	$498.8
Gross Margin %	18.9%	21.4%
Diluted EPS (GAAP) ($)	$1.28	$3.64
Adjusted Diluted EPS ($)	$1.29	$1.46
EBITDA ($USD Millions)	$68.4	$167.4
Adjusted EBITDA ($USD Millions)	$68.9	$76.4

Segment Breakdown

Segment	Q2 2024 Revenue ($M)	Q2 2024 Op Margin %	Q3 2024 Revenue ($M)	Q3 2024 Op Margin %	Q4 2024 Revenue ($M)	Q4 2024 Op Margin %
E‑Infrastructure	$241.3	21.4%	$263.9	25.8%	$234.0	24.1%
Transportation	$232.8	6.6%	$227.3	8.2%	$174.7	5.0%
Building	$108.7	12.7%	$102.6	11.0%	$90.1	10.3%

Note: Q4 2024 reflects RHB deconsolidation; historical tables in the Q4 8‑K provide adjusted quarterly data for comparability .

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Backlog ($USD Billions)	$2.10	$2.06	$1.69 (ex‑RHB)
Combined Backlog ($USD Billions)	$2.45	$2.37	$1.83 (ex‑RHB)
Backlog Gross Margin %	16.0%	16.8%	16.7%
Cash & Cash Equivalents ($USD Millions)	$540.0	$648.1	$664.2
Cash From Operations TTM ($USD Millions)	$170.6 (six‑mo)	$322.8 (nine‑mo)	$497.1 (TTM)
Book‑to‑Burn (Backlog / Combined)	—	—	1.32x / 0.99x
Net Cash ($USD Millions)	—	—	$347.9 (cash net of debt)

Guidance Changes

FY2025 Guidance (new methodology)

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	FY2025	N/A	$2.00–$2.15	New
Gross Margin %	FY2025	N/A	21.0–22.0	New
Diluted EPS ($)	FY2025	N/A	$6.75–$7.25	New
Adjusted Diluted EPS ($)	FY2025	N/A	$7.90–$8.40	New
EBITDA ($M)	FY2025	N/A	$370–$395	New
Adjusted EBITDA ($M)	FY2025	N/A	$395–$420	New
G&A (% of Revenue)	FY2025	N/A	~6%	New
Other Operating Income ($M)	FY2025	N/A	$13–$15	New
JV NCI Expense ($M)	FY2025	N/A	~$12	New
Effective Tax Rate %	FY2025	N/A	~26%	New
Expected Diluted Shares (M)	FY2025	N/A	32.0	New

Segment outlook embedded in guidance:

E‑Infrastructure: revenue growth >10%; operating profit growth >25% .
Transportation: revenue ~flat ex‑RHB; operating profit growth low‑to‑mid teens .
Building: revenue low single digits; margin expansion from mix shift .

FY2024 Guidance Evolution vs Actual

Metric	Q2 2024 Guidance	Q3 2024 Guidance	FY2024 Actual	Change Q3 vs Q2	Actual vs Guidance
Revenue ($B)	$2.150–$2.225	$2.150–$2.175	$2.1158	Trimmed	Slightly below
Net Income ($M)	$175–$180	$180–$185	$257.5 (GAAP) / $189.9 adj	Raised	GAAP above; adj above
Diluted EPS ($)	$5.60–$5.75	$5.85–$6.00	$8.27 (GAAP) / $6.10 adj	Raised	GAAP above; adj above
EBITDA ($M)	$300–$310	$310–$315	$410.9 (GAAP) / $320.0 adj	Raised	GAAP above; adj above

Note: FY2024 GAAP results include a non‑cash gain on RHB deconsolidation; management introduced a new non‑GAAP framework for FY2025 (adds stock‑based comp and intangible amortization adjustments) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Data center/AI demand	DC revenue +100%; backlog >40% (Q2); DC revenue +90%; backlog >50% (Q3)	DC revenue +>50% YoY; >60% of E‑Infra backlog; multiyear awards visibility	Accelerating
Transportation (IIJA/macro)	“Strongest... in our history” (Q2), +54% revenue; still 2.5 years remaining on IIJA (Q3)	Q4 margin normalized; backlog timing; management sees no impact from tariffs/funding changes; TX low‑bid exit	Plateauing growth; margin‑focused
Margin mix shift	E‑Infra margin 21.4% (Q2); 25.8% (Q3)	24.1% (Q4); mix toward mission‑critical drives margins	Sustained high margins
Residential housing (DFW/Houston/Phoenix)	Weather/land impacts (Q2)	DFW slowdown, weather days; cautious H2 recovery; plumbing/slab bundling strategy	Near‑term headwind; H2 rebound potential
M&A/geographic expansion	Ongoing capital allocation flexibility (Q2/Q3)	Pursuing E‑Infra and Building M&A; organic expansions; dry utility/electrical scope additions	Increasing focus
CHIPS/onshoring outlook	IIJA backdrop (Q3)	Onshoring pipelines; semiconductor awards likely 2026–27; not the sole dependency	Positive optionality
Market chatter (DeepSeek)	—	Management sees no DC slowdown; clarifies misperceptions	Narrative stabilization

Management Commentary

“In the fourth quarter we delivered 3% revenue growth and a 13% increase in adjusted diluted EPS... we expect this trend to continue in 2025.” — CEO Joe Cutillo .
“E‑Infrastructure... operating margins expanded nearly 700 basis points to reach 24.1%... data center-related revenue increased over 50%... now represents over 60% of segment backlog.” — CEO .
“We have made the strategic decision to accelerate our shift away from low bid heavy highway work in Texas... will weigh on revenue and backlog in the near term, but will benefit margins as we move through 2025.” — CEO .
“Cash flow from operating activities for 2024 was a strong $497.1 million... cash $664.2 million... cash net of debt $347.9 million.” — CFO Sharon Villaverde .
“For 2025, we anticipate... E‑Infrastructure revenue growth in excess of 10% and operating profit growth north of 25%... Transportation revenue relatively flat ex‑RHB with profit growth... Building low single‑digit revenue growth and margin expansion.” — CEO .

Q&A Highlights

Geographic expansion for data centers: Management is leveraging Transportation assets to expand organically (Rockies, Texas, Ohio) and actively pursuing acquisitions to match execution standards; potential spoke‑and‑hub model under consideration .
Transportation funding/tariffs: CEO emphasized projects are funded (state/federal) and reported “we have not seen $1 of impact” from tariff/funding changes; growth plateau after initial IIJA ramp; TX low‑bid exit offsets market growth .
E‑Infrastructure margin drivers: Mix toward larger, multi‑phase mission‑critical projects and execution/productivity synergies; potential margin stability/uplift into 2025 .
Building/PPG execution: Weather impacted DFW starts; H2 strength expected by builders; plans for a Fort Worth location combining plumbing/slab; bundling strategy in Phoenix to gain share .
CHIPS/onshoring: Not dependent on chips, but sees multiyear manufacturing onshoring and pharma/auto opportunities in Southeast/Mid‑Atlantic; semiconductor projects feasible but complex; timeline 2026–27 .
Market reaction/DeepSeek: Management reiterated DC build plans from hyperscalers remain robust; clarified misconceptions driving sell‑off narrative .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable in this session due to data access limits; as a result, explicit vs‑consensus comparisons cannot be provided here. Values would normally be retrieved from S&P Global.
Directionally, Q4 adjusted diluted EPS grew 13% YoY and gross margin expanded 250 bps YoY; future estimate revisions likely to reflect higher E‑Infrastructure margins, a more margin‑accretive Transportation mix, and FY25 adjusted EPS/EBITDA guidance ranges .

Key Takeaways for Investors

E‑Infrastructure is the core earnings engine: mission‑critical/data center mix supports mid‑20s operating margins and multiyear visibility; DC exposure (>60% of segment backlog) remains a positive catalyst .
FY25 setup shows continued bottom‑line leverage: guidance implies margin resilience and double‑digit adjusted EPS/EBITDA growth despite top‑line moderation from TX low‑bid exit .
Transportation normalizes but profitability improves: backlog timing and weather effects in Q4; TX strategy trades revenue for margins; funding backdrop steady per management .
Building recovering second half: near‑term DFW/weather headwinds; strategic initiatives (new Fort Worth location; plumbing/slab bundling in Phoenix) aim to drive share and margins .
Liquidity/M&A optionality: $664M cash, net cash ~$348M, strong CFO; expect selective acquisitions (electrical/mechanical scope, semiconductor adjacency) and opportunistic buybacks .
Accounting/RHB deconsolidation: boosts FY24 GAAP but FY25 reporting transitions to equity method and new non‑GAAP adjustments (stock comp, intangible amortization, earn‑outs); model accordingly .
Backlog quality: backlog gross margin ~16.7%; combined backlog $1.83B; plus additional awards in Utah and Colorado bolster visibility into 2025–2027 .

STERLING INFRASTRUCTURE, INC. (STRL)·Q4 2024 Earnings Summary