Q2 2026 Sterling Infrastructure Inc Earnings Call Transcript
Key Points
- Sterling Infrastructure Inc (STRL) delivered exceptional Q2 2026 results with revenue growth of 90% and adjusted diluted EPS growth of 116% to $5.80.
- Adjusted EBITDA more than doubled, with margins expanding 150 basis points year-over-year to 22%.
- Signed backlog surged 116% year-over-year to $4.3 billion, with combined backlog up 150% to $5.6 billion, providing strong multi-year visibility.
- E-infrastructure segment revenue grew 192%, driven by robust demand in mission-critical data center and semiconductor projects, with margins remaining strong at 24%.
- Transportation Solutions achieved significant margin expansion of over 500 basis points to 19.5%, despite a 20% revenue decline, reflecting a strategic shift to higher-margin work.
- The company raised its full-year 2026 guidance, now expecting revenue of $4.0-$4.15 billion and adjusted EPS of $19.70-$20.30, reflecting strong market tailwinds.
- CEC, the electrical business, delivered 140% revenue growth and is seeing improved margins and larger project wins, including integrated site and electrical work.
- Strong cash flow from operations of $328 million in the first half of 2026, with a net cash position of $181 million and an expanded $1.5 billion revolver for M&A flexibility.
- The company is investing in capacity, including a $30 million increase in CapEx guidance, to support sustained growth and meet accelerating demand.
- Management sees significant future opportunities, including $1.4 billion in high-probability future phase work and expanding project scopes that could extend durations to 5-12 years.
- Transportation Solutions revenue declined 20% in Q2 2026 due to the reallocation of resources to e-infrastructure projects, and full-year revenue is expected to decline 7-10%.
- Building Solutions revenue declined 1% and is expected to face strong headwinds throughout 2026 due to a weak residential market.
- E-infrastructure margins were diluted by the faster growth of lower-margin CEC electrical work, which may cause confusion and pressure on overall margin perception.
- The company anticipates a potential sequential backlog decline in Q3 2026 due to lumpy award timing, which could raise concerns about demand sustainability.
- Capacity constraints, particularly in electricians and site development resources, are limiting the ability to take on additional work and may require more acquisitions.
- The company is facing increased competition and pricing pressure in some markets, though it remains selective in project selection.
- Fourth-quarter revenue guidance is conservative due to weather-related uncertainties, which could lead to underperformance if conditions are unfavorable.
- The residential market is expected to remain weak, with Building Solutions revenue declining modestly and margins in the high single to low double digits.
- The company is experiencing higher costs and resource strain from geographic expansion, requiring additional investments in fleet and personnel.
- There is a risk of project delays or cancellations in the data center market due to political or regulatory actions, though none have impacted current schedules.
Good morning, ladies and gentlemen, and welcome to the Sterling Infrastructure second quarter webcast and conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call require immediate assistance, please press *0 for the operator. As a reminder, this call is being recorded on Tuesday, August 4th, 2026.
I would now like to turn the conference call over to Noelle Dilts.
Vice President of Investor Relations and Corporate Strategy. Please go ahead.
Good morning to everyone joining us and welcome to Sterling Infrastructure's second quarter 2026 earnings conference call and webcast. I'm pleased to be here today to discuss our results with Joe Cotillo, Sterling's Chief Executive Officer, Nick Grindstaff, Sterling's Chief Financial Officer, and Dan Govan, Sterling's Chief Operating Officer. As a reminder, there are accompanying slides
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