STERLING INFRASTRUCTURE, INC.
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 4, 2026
STRL$252.82+3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0000874238-26-000055
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0000874238-26-000103
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 78 previous paragraphs and 84 current paragraphs.
56 unchanged; 21 reworded; 7 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Stone Ridge Acquisition—On June 1, 2026, Sterling acquired substantially all of the assets of Pocatello, Idaho-based Stone Ridge Contracting, LLC. (“Stone Ridge”), a leading site development contractor. The purchase price was $178.0 million, consisting primarily of $140.0 million in cash and $27.4 million in common stock. Additionally, Stone Ridge has an earn-out opportunity of up to $15 million, contingent upon achievement of a certain EBITDA target. Stone Ridge is included in the Company’s E-Infrastructure Solutions segment.
Current report
A performance obligation is a promise in a contract with a customer to transfer a distinct good or service. Our remaining performance obligations (“RPOs”) represent the amount of revenues we expect to recognize in the future from our contract commitments on projects. For purposes of calculating RPOs, we include all estimated revenues attributable to consolidated joint ventures and variable interest entities.
Current report
We disclose backlog (“Backlog”), a measure commonly used in our industry but not recognized under GAAP. Our methodology for determining Backlog may not be comparable to the methodologies used by other companies. Our Backlog, which previously consisted solely of RPOs, has expanded to include estimated orders from master service agreements (“MSAs”) due to the acquisition of Stone Ridge in the second quarter of 2026. We determine the estimated Backlog for these MSAs using recurring historical trends, factoring in seasonal demand and projected customer needs based upon ongoing communications.
Current report
Generally, our customers are not contractually committed to specific volumes of services under our MSAs, and most of our contracts can be terminated on short notice even if we are not in default. As a result, estimates for Backlog are subject to change based on, among other things, project accelerations; project cancellations or delays, including but not limited to those caused by commercial issues, regulatory requirements, natural disasters, emergencies and adverse weather conditions; and final acceptance of change orders by customers. These factors can cause revenues to be realized in periods and at levels that are different than originally projected. The contracts in Backlog are typically completed in 6 to 36 months.
Current report
Revenues were $1.99 billion for the six months ended June 30, 2026, an increase of $948.4 million, or 91%, compared to the six months ended June 30, 2025. The increase was driven by a $974.1 million increase in E-Infrastructure Solutions and a $2.3 million increase in Building Solutions, partly offset by a $27.9 million decrease in Transportation Solutions.
Current report
Gross profit and margin—Gross profit was $290.0 million for the second quarter of 2026, an increase of $146.8 million, or 103%, compared to the second quarter of 2025. The Company’s gross margin as a percentage of revenue increased to 24.8% in the second quarter of 2026, as compared to 23.3% in the second quarter of 2025.
Current report
Revenues—Revenues were $156.7 million for the second quarter of 2026, a decrease of $40.1 million, or 20%, compared to the second quarter of 2025. Revenues were $289.6 million for the six months ended June 30, 2026, a decrease of $27.9 million, or 9%, compared to the six months ended June 30, 2025. The decreases were driven by lower heavy highway and other revenue.
Removed paragraphs (1)
Previous report
Revenues—Revenues were $132.9 million for the first quarter of 2026, an increase of $12.2 million, or 10.1%, compared to the first quarter of 2025. The increase was driven by higher aviation and heavy highway revenue.
Reworded paragraphs (21)
Previous wording
E-Infrastructure Solutions—Our E-Infrastructure Solutions business is driven by our customers’ investments in the development of data centers, advanced manufacturing centers, e-commerce distribution centers and warehouses. We foresee significant growth opportunities tied to the implementation of multi-year capital deployment plans by data center customers, including hyperscalers, colocation providers and others. These investments are driven by the need to support the increasing use of cloud computing applications, increasing adoption and complexity of artificial intelligence applications and digital transformation across industries. Additionally, we continue to see significant opportunity related to the construction of manufacturing capacity in the U.S., including semiconductor fabrication. Following a decline that began in 2023, the e-commerce distribution sector began to strengthen in 2025 and we expect this momentum to continue in 2026.
Current wording
E-Infrastructure Solutions—Our E-Infrastructure Solutions business is driven by our customers’ investments in the development of data centers, semiconductor fabrication, advanced manufacturing facilities, e-commerce distribution centers and warehouses. We foresee significant growth opportunities tied to the implementation of multi-year capital deployment plans by data center customers, including hyperscalers, colocation providers and others. These investments are driven by the need to support the increasing use of cloud computing applications, increasing adoption and complexity of artificial intelligence applications and digital transformation across industries. Additionally, we continue to see significant opportunity related to the construction of manufacturing capacity in the U.S., including semiconductor fabrication. Following a decline that began in 2023, the e-commerce distribution sector began to strengthen in 2025 and we expect this momentum to continue in 2026.
Previous wording
Transportation Solutions—Our Transportation Solutions business is primarily driven by federal, state and municipal funding. Federal funds, on average, provide 50% of annual State Department of Transportation capital outlays for highway and bridge projects. We benefit from a number of federal, state and local infrastructure investment programs. At the Federal level, the Infrastructure Investments and Jobs Act (“IIJA”), which establishes funding for the fiscal 2022 through 2026 time period, drove significant increases in transportation funding relative to the previous five-year law. The IIJA includes approximately $643 billion in funding for transportation programs ($432 billion for highways, $109 billion for transportation and $102 billion for rail), of which $284 billion is an increase over historic investment levels that will fund new transportation infrastructure. The IIJA also includes $25 billion of funding for airport modernization. As a result of the IIJA, we saw an increase in bid activity and project awards which started in the third quarter of 2022 and continued through 2025. In 2026, we expect that the combination of strong state-level funding in our core geographies and elevated federal funding will allow the transportation market to remain strong relative to historical levels.
Current wording
Transportation Solutions—Our Transportation Solutions business is primarily driven by federal, state and municipal funding. Federal funds, on average, provide 50% of annual State Department of Transportation capital outlays for highway and bridge projects. We benefit from a number of federal, state and local infrastructure investment programs. At the Federal level, the Infrastructure Investments and Jobs Act (“IIJA”), which establishes funding for the fiscal 2022 through 2026 time period, drove significant increases in transportation funding relative to the previous five-year law. The IIJA includes approximately $643 billion in funding for transportation programs ($432 billion for highways, $109 billion for transportation and $102 billion for rail), of which $284 billion is an increase over historic investment levels that will fund new transportation infrastructure. The IIJA also includes $25 billion of funding for airport modernization. As a result of the IIJA, we saw an increase in bid activity and project awards which started in the third quarter of 2022 and continued through 2025. In 2026, we expect that the combination of strong state-level funding in our core geographies and elevated federal funding will allow the transportation market to remain elevated relative to historical levels.
Previous wording
Our remaining performance obligations on our projects, as defined in ASC 606, do not differ from what we refer to as “Backlog.” Our Backlog represents the amount of revenues we expect to recognize in the future from our contract commitments on projects. The contracts in Backlog are typically completed in 6 to 36 months. Our unsigned awards (“Unsigned Awards”) are excluded from Backlog until the contract is executed by our customer. We refer to the combination of our Backlog and Unsigned Awards as “Combined Backlog.” Our book-to-burn ratio is determined by taking our additions to Backlog and dividing it by revenue for the applicable period. This metric allows management to monitor the Company’s business development efforts to ensure we grow our Backlog and our business over time, and management believes that this measure is useful to investors for the same reason.
Current wording
Our unsigned awards (“Unsigned Awards”) are excluded from Backlog until the contract is executed by our customer. We refer to the combination of our Backlog and Unsigned Awards as “Combined Backlog.” Our book-to-burn ratio is determined by taking our additions to Backlog and dividing it by revenue for the applicable period. This metric allows management to monitor the Company’s business development efforts to ensure we grow our Backlog and our business over time, and management believes that this measure is useful to investors for the same reason.
Previous wording
At March 31, 2026, our Backlog was $3.80 billion, as compared to $3.01 billion at December 31, 2025, with a book-to-burn ratio of 2.1X for the three months ended March 31, 2026. Unsigned Awards were $1.36 billion at March 31, 2026 and $300.7 million at December 31, 2025. Combined Backlog totaled $5.15 billion and $3.31 billion at March 31, 2026 and December 31, 2025, respectively, with a book-to-burn ratio of 3.5X for the three months ended March 31, 2026.
Current wording
At June 30, 2026, our RPOs were $4.23 billion and our MSAs were $100.0 million, resulting in a total Backlog of $4.33 billion. This compares to December 31, 2025, when RPOs were $3.01 billion and MSAs were zero, resulting in a total Backlog of $3.01 billion. For the six months ended June 30, 2026, the Backlog book-to-burn ratio was 1.7X. Unsigned Awards were $1.28 billion at June 30, 2026 and $300.7 million at December 31, 2025, resulting in Combined Backlog of $5.62 billion and $3.31 billion at June 30, 2026 and December 31, 2025, respectively, with a book-to-burn ratio of 2.3X for the six months ended June 30, 2026.
Previous wording
Revenues—Revenues were $825.7 million for the first quarter of 2026, an increase of $394.7 million, or 92%, compared to the first quarter of 2025. The increase was driven by a $379.5 million increase in E-Infrastructure Solutions, a $12.2 million increase in Transportation Solutions, and a $3.1 million increase in Building Solutions.
Current wording
Revenues—Revenues were $1.17 billion for the second quarter of 2026, an increase of $553.7 million, or 90%, compared to the second quarter of 2025. The increase was driven by a $594.6 million increase in E-Infrastructure Solutions, partly offset by a $40.1 million decrease in Transportation Solutions and a $779 thousand decrease in Building Solutions.
Previous wording
Gross profit and margin—Gross profit was $194.3 million for the first quarter of 2026, an increase of $99.5 million, or 105%, compared to the first quarter of 2025. The Company’s gross margin as a percentage of revenue increased to 23.5% in the first quarter of 2026, as compared to 22.0% in the first quarter of 2025. The increases were driven by the aforementioned higher revenue volume and an improved project margin mix in our Transportation Solutions segment.
Current wording
Gross profit was $484.3 million for the six months ended June 30, 2026, an increase of $246.3 million, or 103%, compared to the six months ended June 30, 2025. The Company’s gross margin as a percentage of revenue increased to 24.3% for the six months ended June 30, 2026, as compared to 22.8% for the six months ended June 30, 2025. The increases were driven by the aforementioned higher revenue volume and an improved project margin mix in our Transportation Solutions segment.
Previous wording
General and administrative expense—General and administrative expenses were $47.9 million, or 5.8% of revenue, for the first quarter of 2026, compared to $34.6 million, or 8.0% of revenue, for the first quarter of 2025. The increase in expense reflects higher performance based compensation, increased headcount to support growth, and inflation in 2026.
Current wording
General and administrative expense—General and administrative expenses were $53.1 million, or 4.5% of revenue, for the second quarter of 2026, compared to $34.0 million, or 5.5% of revenue, for the second quarter of 2025. General and administrative expenses were $101.0 million, or 5.1% of revenue, for the six months ended June 30, 2026, compared to $68.6 million, or 6.6% of revenue, for the six months ended June 30, 2025. The increases in expense reflects higher performance based compensation, increased headcount to support growth, and inflation in 2026.
Previous wording
Interest, net—Combined interest expense and income was net interest expense of $0.4 million for the first quarter of 2026, compared to net interest income of $1.6 million for the first quarter of 2025. The lower interest income was due to decreased interest rates on our lower average cash balance compared to the first quarter of 2025.
Current wording
Interest, net—Combined interest expense and income was net interest income of $709 thousand for the second quarter of 2026, compared to net interest income of $1.9 million for the second quarter of 2025, and net interest income of $333 thousand for the six months ended June 30, 2026, compared to net interest income of $3.5 million for the six months ended June 30, 2025. The lower interest income in the 2026 periods was due to decreased interest rates on our lower average cash balance compared to the three and six months ended June 30, 2025.
Previous wording
Income taxes—The effective income tax rate was 24.5% for the first quarter of 2026. The rate varied from the statutory rate primarily as a result of non-deductible compensation, state income taxes and other permanent differences. See Note 12 - Income Taxes for more information.
Current wording
Income taxes—The effective income tax rate was 23.3% for the second quarter of 2026 and 23.8% for the six months ended June 30, 2026. The rates varied from the statutory rate primarily as a result of non-deductible compensation, state income taxes and other permanent differences. See Note 12 - Income Taxes for more information.
Previous wording
Revenues—Revenues were $597.7 million for the first quarter of 2026, an increase of $379.5 million, or 173.9%, compared to the first quarter of 2025. The increase was primarily driven by higher volume from data centers and the inclusion of $156.1 million of revenue from the electrical and mechanical business acquired late in the third quarter of 2025.
Current wording
Revenues—Revenues were $905.0 million for the second quarter of 2026, an increase of $594.6 million, or 192%, compared to the second quarter of 2025. Revenues were $1.50 billion for the six months ended June 30, 2026, an increase of $974.1 million, or 184%, compared to the six months ended June 30, 2025. The increases were primarily driven by higher volume from large mission-critical projects and the inclusion of $239.9 million and $396.0 million for the three and six months ended June 30, 2026, respectively, of revenue from the electrical and mechanical business acquired late in the third quarter of 2025.
Previous wording
Operating Income—Operating income was $133.8 million, or 22.4% of revenue, for the first quarter of 2026, an increase of $87.1 million, compared to $46.6 million, or 21.4% of revenue, for the first quarter of 2025. The increase in operating income is primarily driven by higher volume from large mission-critical projects, and partly attributable to a $12.3 million (inclusive of $2.3 million of intangible amortization) contribution from the electrical and mechanical business acquired late in the third quarter of 2025.
Current wording
Operating Income—Operating income was $210.8 million, or 23.3% of revenue, for the second quarter of 2026, an increase of $127.1 million, compared to $83.8 million, or 27.0% of revenue, for the second quarter of 2025. Operating income was $344.6 million, or 22.9% of revenue, for the six months ended June 30, 2026, an increase of $214.2 million, compared to $130.4 million, or 24.7% of revenue, for the six months ended June 30, 2025. The increases in operating income were primarily driven by higher volume from large mission-critical projects, and partly attributable to $25.2 million (inclusive of $2.3 million of intangible amortization) and $37.5 million (inclusive of $4.6 million of intangible amortization) of contributions for the three and six months ended June 30, 2026, respectively, from the electrical and mechanical business acquired late in the third quarter of 2025.
Previous wording
Operating Income—Operating income was $14.8 million, or 11.1% of revenue, for the first quarter of 2026, an increase of $3.5 million, compared to $11.3 million, or 9.3% of revenue, for the first quarter of 2025. The increase in operating income and margin were driven by the aforementioned revenue volume and an improved project margin mix.
Current wording
Operating Income—Operating income was $28.2 million, or 18.0% of revenue, for the second quarter of 2026, an increase of $2.2 million, compared to $26.0 million, or 13.2% of revenue, for the second quarter of 2025. Operating income was $42.9 million, or 14.8% of revenue, for the six months ended June 30, 2026, an increase of $5.7 million, compared to $37.2 million, or 11.7% of revenue, for the six months ended June 30, 2025. The increases in operating income and margin were driven by an improved project margin mix.
Previous wording
Revenues—Revenues were $95.1 million for the first quarter of 2026, an increase of $3.1 million, or 3.3%, compared to the first quarter of 2025. The increase was driven by slightly higher residential and commercial volume compared to 2025. Our businesses specializing in residential concrete slabs and plumbing are still being affected by a market downturn, as affordability issues continue to impact potential homebuyers.
Current wording
Revenues—Revenues were $106.5 million for the second quarter of 2026, a decrease of $780 thousand, or 0.7%, compared to the second quarter of 2025. Revenues were $201.6 million for the six months ended June 30, 2026, an increase of $2.3 million, or 1.1%, compared to the six months ended June 30, 2025. Current year revenues remained relatively flat compared to prior year periods as our businesses specializing in residential concrete slabs and plumbing are still being affected by a market downturn, as affordability issues continue to impact potential homebuyers.
Previous wording
Operating Income—Operating income was $6.2 million, or 6.5% of revenue, for the first quarter of 2026, a decrease of $6.1 million, compared to $12.4 million, or 13.4% of revenue, for the first quarter of 2025. The decrease in operating income and margin were driven by a continued downturn in residential markets compared to the first quarter of 2025.
Current wording
Operating Income—Operating income was $8.5 million, or 8.0% of revenue, for the second quarter of 2026, a decrease of $1.4 million, compared to $9.9 million, or 9.2% of revenue, for the second quarter of 2025. Operating income was $14.7 million, or 7.3% of revenue, for the six months ended June 30, 2026, a decrease of $7.5 million, compared to $22.2 million, or 11.1% of revenue, for the six months ended June 30, 2025. The decreases in operating income and margin were driven by a continued downturn in residential markets compared to the three and six months ended June 30, 2025.
Previous wording
Operating Activities—During the three months ended March 31, 2026, net cash provided by operating activities was $165.6 million, compared to net cash provided by operating activities of $84.9 million for the three months ended March 31, 2025. Cash flows provided by operating activities were primarily driven by higher operating income, the collection of receivables from affiliate, distributions of earnings from our unconsolidated subsidiary, and changes in our accounts receivable, net contracts in progress and accounts payable balances (collectively, “Contract Capital”), as discussed below.
Current wording
Operating Activities—During the six months ended June 30, 2026, net cash provided by operating activities was $328.0 million, compared to net cash provided by operating activities of $170.3 million for the six months ended June 30, 2025. Cash flows provided by operating activities were primarily driven by higher operating income, the collection of receivables from affiliate, distributions of earnings from our unconsolidated subsidiary, and changes in our accounts receivable, net contracts in progress and accounts payable balances (collectively, “Contract Capital”), as discussed below.
Previous wording
Changes in Contract Capital—The change in operating assets and liabilities varies due to fluctuations in operating activities and investments in Contract Capital. The changes in components of Contract Capital during the three months ended March 31, 2026 and 2025 were as follows:
Current wording
Changes in Contract Capital—The change in operating assets and liabilities varies due to fluctuations in operating activities and investments in Contract Capital. The changes in components of Contract Capital during the six months ended June 30, 2026 and 2025 were as follows:
Previous wording
During the three months ended March 31, 2026, the change in Contract Capital was $3.0 million. The Company’s Contract Capital fluctuations are impacted by the mix of projects in Backlog, seasonality, the timing of new awards and related payments for work performed and the contract billings to the customer as projects are completed. Contract Capital is also impacted at period-end by the timing of accounts receivable collections and accounts payable payments for projects.
Current wording
During the six months ended June 30, 2026, the change in Contract Capital was $68.1 million. The Company’s Contract Capital fluctuations are impacted by the mix of projects in Backlog, seasonality, the timing of new awards and related payments for work performed and the contract billings to the customer as projects are completed. Contract Capital is also impacted at period-end by the timing of accounts receivable collections and accounts payable payments for projects.
Previous wording
Investing Activities—During the three months ended March 31, 2026, net cash used in investing activities was $17.7 million, compared to net cash used of $54.2 million in the three months ended March 31, 2025. The net cash used during the current period was driven by $19.6 million for purchases of capital equipment, partly offset by $1.9 million of cash proceeds from the sale of property and equipment. Capital equipment is acquired as needed to support changing levels of production activities and to replace retiring equipment.
Current wording
Investing Activities—During the six months ended June 30, 2026, net cash used in investing activities was $206.5 million, compared to net cash used of $66.5 million in the six months ended June 30, 2025. The net cash used during the current period was driven by $140.0 million for acquisitions and $69.6 million for purchases of capital equipment, partly offset by $3.1 million of cash proceeds from the sale of property and equipment. Capital equipment is acquired as needed to support changing levels of production activities and to replace retiring equipment.
Previous wording
Financing Activities—During the three months ended March 31, 2026, net cash used in financing activities was $26.7 million, compared to net cash used of $56.2 million for the three months ended March 31, 2025. The financing cash outflow during the period was primarily driven by $12.3 million for the repurchase of common stock, $10.7 million for withholding taxes paid on the net share settlement of vested equity awards, and $3.8 million of repayments on the Term Loan Facility.
Current wording
Financing Activities—During the six months ended June 30, 2026, net cash used in financing activities was $47.8 million, compared to net cash used of $68.7 million for the six months ended June 30, 2025. The financing cash outflow during the period was primarily driven by $35.3 million for the repurchase of common stock, $11.9 million for withholding taxes paid on the net share settlement of vested equity awards, $7.8 million of earn-out payments, and $7.5 million of repayments on the Term Loan Facility, partly offset by $14.7 million of capital contributions from noncontrolling interest owners.
Previous wording
Capital Strategy—The Company will continue to explore additional revenue growth and capital alternatives to improve leverage and strengthen its financial position in order to take advantage of trends in the markets in which we operate. The Company also expects to continue to pursue strategic uses of its cash, such as investing in projects or businesses that meet its gross margin and overall profitability targets, managing its debt balances and repurchasing shares of its common stock.
Current wording
Capital Strategy—The Company will continue to explore additional revenue growth and capital alternatives to strengthen its financial position in order to take advantage of trends in the markets in which we operate. The Company also expects to continue to pursue strategic uses of its cash, such as investing in projects or businesses that meet its gross margin and overall profitability targets, managing its debt balances and repurchasing shares of its common stock.
Previous wording
At March 31, 2026, there was approximately $375 million of construction work to be completed on unconsolidated construction joint venture contracts, of which approximately $150 million represented our proportionate share. Due to the joint and several liability under our joint venture arrangements, if one of our joint venture partners fails to perform, we and the remaining joint venture partners would be responsible for completion of the outstanding work. As of March 31, 2026, we are not aware of any situation that would require us to fulfill responsibilities of our joint venture partners pursuant to the joint and several liability under our contracts.
Current wording
At June 30, 2026, there was approximately $376 million of construction work to be completed on unconsolidated construction joint venture contracts, of which approximately $151 million represented our proportionate share. Due to the joint and several liability under our joint venture arrangements, if one of our joint venture partners fails to perform, we and the remaining joint venture partners would be responsible for completion of the outstanding work. As of June 30, 2026, we are not aware of any situation that would require us to fulfill responsibilities of our joint venture partners pursuant to the joint and several liability under our contracts.