Sterling Infrastructure, Inc. (STRL) Earnings & Analysis

Latest quarter

Sterling reported Q3 FY2026 revenue of $1.6 billion, above the $1.2 billion consensus. Adjusted earnings were $7.58 per share, exceeding the $6.07 consensus. Revenue increased from $689.0 million a year earlier, while diluted EPS rose to $7.39 from $2.97.

The company’s filing attributed the revenue increase primarily to E-Infrastructure Solutions, where larger volumes from mission-critical projects and recent acquisitions contributed. The filing said Sterling continued shifting resources from transportation toward E-Infrastructure. Transportation revenue fell as other services revenue declined, while Building Solutions revenue decreased amid a residential market downturn.

Sterling’s gross margin narrowed to 24.1% from 24.7% a year earlier, although operating margin rose to 19.6% from 18.2%. The filing said Transportation’s operating margin benefited from an improved project mix, while Building Solutions’ margin declined with the residential downturn.

Free cash flow was $54.3 million, down from $65.3 million a year earlier. CFO Nick Grindstaff said receivables rose at quarter-end because of E-Infrastructure growth and collection timing, and that Sterling collected a major portion of the outstanding funds in early October.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Joe Cutillo said demand extends beyond data centers to semiconductors, advanced manufacturing and energy infrastructure. He said Sterling is investing in people, equipment and capabilities to increase the work it can take on, and that opportunities in Texas exceed its present capacity.

Cutillo said total scoped work was nearly $8.0 billion, encompassing signed backlog, unsigned awards and the next phases being designed on current projects. He distinguished unsigned awards, where final pricing or contract terms are under negotiation, from future site-development phases still in design or pricing. He also said existing campuses have additional development potential beyond scoped work.

Pressed on project timing, Cutillo said projects expected to emerge in the fourth quarter and early 2027 were progressing, although their start dates depended on permits and other steps. He described uncertainty over the validity of some Texas water permits issued through an automated process. On costs, he said phased contracts mitigate much of the risk from diesel and other inflation.

Asked about margins, Cutillo said the growing CEC electrical business operates differently from site civil work: it requires less capital but earns lower margins partly because materials make up a significant portion of revenue. He said CEC had already made progress toward its margin-improvement goal, excluding its legacy business. He declined to predict the overall infrastructure margin because it would depend on the revenue mix.

Cutillo said Sterling was hiring electricians, considering acquisitions that could add labor capacity, and expanding its prefabrication and modular facility. For the fourth quarter, he said Sterling expects seasonal margin pressure and has assumed a greater weather impact than it experienced in 2025. Grindstaff said higher quarter-end receivables reflected E-Infrastructure growth and collection timing, with a major portion collected in early October.

Guidance

Sterling raised its FY2026 revenue guidance to $4.6 billion–$4.7 billion, diluted EPS guidance to $19.16–$19.42 and adjusted diluted EPS guidance to $21.70–$21.96. CFO Nick Grindstaff also raised the EBITDA outlook to $905.0 million–$916.0 million and adjusted EBITDA to $970.0 million–$981.0 million.

Grindstaff said Sterling now anticipates $140.0 million in full-year capital expenditures, compared with its previous range. Cutillo said the outlook assumes a greater fourth-quarter weather impact than in 2025.