STERLING INFRASTRUCTURE, INC.

Previous wording

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 wording

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 $178.1 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.

Previous wording

We see favorable opportunities for long-term growth across each of our business segments. We remain focused on our strategic objectives, which include: 1) growth in our E-Infrastructure Solutions segment, with particular focus on large, high-value projects; 2) risk reduction through a continued shift in our Transportation Solutions business away from low-bid heavy highway work, and toward alternative delivery and design-build projects; 3) continuing to grow market share and geographic presence in Building Solutions; and 4) improving our margins in each of our segments.

Current wording

We see favorable opportunities for long-term growth across each of our business segments. We remain focused on our strategic objectives, which include: 1) growth in our E-Infrastructure Solutions segment, with particular focus on large, high-value projects; 2) risk reduction through a continued shift in our Transportation Solutions business away from low-bid heavy highway work, and toward alternative delivery and design-build projects; 3) continuing to grow market share and geographic presence in Building Solutions; and 4) improving our margins and returns in each of our segments.

Previous 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.

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 through 2026 and beyond.

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 elevated 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 Investment and Jobs Act (“IIJA”), which established funding for the fiscal 2022 through 2026 time period, drove significant increases in transportation funding relative to the previous five-year law. As a result of the IIJA, we saw an increase in bid activity and project awards which began in the third quarter of 2022. According to the U.S. Department of Transportation, as of July 31, 2026, approximately $413 billion, or 76%, of the $546 billion in available IIJA transportation funding had been obligated, while approximately $254 billion, or 47%, had been expended. Although the IIJA's original authorization period ended September 30, 2026, Congress enacted a temporary extension of federal surface transportation programs through December 11, 2026, generally maintaining existing program funding levels. Congress is also considering a new five-year surface transportation reauthorization for fiscal years 2027 through 2031, with legislation having advanced through the House Transportation and Infrastructure Committee. While the timing and final funding levels of the next authorization remain uncertain, continued federal investment, together with existing state and local funding programs, is expected to support transportation infrastructure investment opportunities.

Previous wording

Building Solutions—Our Building Solutions segment is comprised of our residential and commercial businesses. The segment is driven by new home starts in Dallas-Fort Worth, the segment’s largest market, and continued expansion in the Houston and Phoenix markets. Building Solutions' core customer base includes top national, regional and custom home builders in our areas. Beginning in the second half of 2024, demand from residential home builder customers began to decline, as prospective homebuyers struggled with affordability challenges. We anticipate that demand will remain muted in the near-term, but believe the dynamics in our markets, including population growth and structural housing shortages, support a return to growth over a multi-year time period.

Current wording

Building Solutions—Our Building Solutions segment is comprised of our residential and commercial businesses. The segment is driven by new home starts in Dallas-Fort Worth, the segment’s largest market, Houston, and Phoenix. Building Solutions' core customer base includes top national, regional and custom home builders in our areas. Beginning in the second half of 2024, demand from residential home builder customers began to decline, as prospective homebuyers struggled with affordability challenges. We anticipate that demand will remain muted in the near-term, but believe the dynamics in our markets, including population growth and structural housing shortages, support a return to growth over a multi-year time period.

Previous wording

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 wording

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 under 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.

Previous 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.

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 them 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 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.

Current wording

At September 30, 2026, our RPOs were $4.05 billion and our estimated orders under MSAs were $94.1 million, resulting in a total Backlog of $4.14 billion. This compares to December 31, 2025, when RPOs were $3.01 billion and estimated MSAs orders were zero, resulting in a total Backlog of $3.01 billion. For the nine months ended September 30, 2026, the Backlog book-to-burn ratio was 1.3X. Unsigned Awards were $2.00 billion at September 30, 2026 and $300.7 million at December 31, 2025, resulting in Combined Backlog of $6.14 billion and $3.31 billion at September 30, 2026 and December 31, 2025, respectively, with a book-to-burn ratio of 1.9X for the nine months ended September 30, 2026.

Previous 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.

Current wording

Revenues—Revenues were $1.56 billion for the third quarter of 2026, an increase of $874.9 million, or 127%, compared to the third quarter of 2025. The increase was driven by a $885.6 million increase in E-Infrastructure Solutions, partly offset by a $5.5 million decrease in Building Solutions and a $5.3 million decrease in Transportation Solutions.

Previous wording

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 wording

Revenues were $3.56 billion for the nine months ended September 30, 2026, an increase of $1.82 billion, or 105%, compared to the nine months ended September 30, 2025. The increase was driven by a $1.86 billion increase in E-Infrastructure Solutions, partly offset by a $33.2 million decrease in Transportation Solutions and a $3.2 million decrease in Building Solutions.

Previous wording

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 wording

Gross profit and margin—Gross profit was $377.3 million for the third quarter of 2026, an increase of $207.1 million, or 122%, compared to the third quarter of 2025. The Company’s gross margin as a percentage of revenue decreased to 24.1% in the third quarter of 2026, as compared to 24.7% in the third quarter of 2025.

Previous 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.

Current wording

Gross profit was $861.5 million for the nine months ended September 30, 2026, an increase of $453.3 million, or 111%, compared to the nine months ended September 30, 2025. The Company’s gross margin as a percentage of revenue increased to 24.2% for the nine months ended September 30, 2026, as compared to 23.5% for the nine months ended September 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 $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.

Current wording

General and administrative expenses—General and administrative expenses were $61.4 million, or 3.9% of revenue, for the third quarter of 2026, compared to $37.6 million, or 5.5% of revenue, for the third quarter of 2025. General and administrative expenses were $162.3 million, or 4.6% of revenue, for the nine months ended September 30, 2026, compared to $106.2 million, or 6.1% of revenue, for the nine months ended September 30, 2025. The increases in expense primarily reflect higher performance based compensation and an increased headcount to support growth.

Previous 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.

Current wording

Income taxes—The effective income tax rate was 24.9% for the third quarter of 2026 and 24.3% for the nine months ended September 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 $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.

Current wording

Revenues—Revenues were $1.30 billion for the third quarter of 2026, an increase of $885.6 million, or 212%, compared to the third quarter of 2025. Revenues were $2.81 billion for the nine months ended September 30, 2026, an increase of $1.86 billion, or 197%, compared to the nine months ended September 30, 2025. The increases were primarily driven by higher volume from large mission-critical projects, with a continued reallocation of resources from transportation projects toward these higher-margin E-Infrastructure opportunities, and the inclusion of revenue from recent acquisitions.

Previous 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.

Current wording

Operating Income—Operating income was $30.2 million, or 18.3% of revenue, for the third quarter of 2026, an increase of $5.9 million, compared to $24.4 million, or 14.3% of revenue, for the third quarter of 2025. Operating income was $73.2 million, or 16.1% of revenue, for the nine months ended September 30, 2026, an increase of $11.6 million, compared to $61.6 million, or 12.6% of revenue, for the nine months ended September 30, 2025. The increases in operating income and margin were driven by an improved project margin mix.

Previous 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.

Current wording

Revenues—Revenues were $96.0 million for the third quarter of 2026, a decrease of $5.5 million, or 5%, compared to the third quarter of 2025. Revenues were $297.5 million for the nine months ended September 30, 2026, a decrease of $3.2 million, or 1%, compared to the nine months ended September 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 $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.

Current wording

Operating Income—Operating income was $5.7 million, or 5.9% of revenue, for the third quarter of 2026, a decrease of $5.1 million, compared to $10.8 million, or 10.6% of revenue, for the third quarter of 2025. Operating income was $20.4 million, or 6.8% of revenue, for the nine months ended September 30, 2026, a decrease of $12.6 million, compared to $33.0 million, or 11.0% of revenue, for the nine months ended September 30, 2025. The decreases in operating income and margin were driven by a continued downturn in residential markets compared to the three and nine months ended September 30, 2025.

Previous 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.

Current wording

Operating Activities—During the nine months ended September 30, 2026, net cash provided by operating activities was $427.1 million, compared to net cash provided by operating activities of $253.9 million for the nine months ended September 30, 2025. Cash flows provided by operating activities were primarily driven by higher operating income, distributions of earnings from our unconsolidated subsidiary, and changes primarily in accounts receivable, contracts in progress, net, and accounts payable (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 six months ended June 30, 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 nine months ended September 30, 2026 and 2025 were as follows:

Previous 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.

Current wording

During the nine months ended September 30, 2026, the change in Contract Capital was $350.8 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 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.

Current wording

Investing Activities—During the nine months ended September 30, 2026, net cash used in investing activities was $276.3 million, compared to net cash used of $531.1 million in the nine months ended September 30, 2025. The net cash used during the current period was driven by $165.0 million for acquisitions and $115.5 million for purchases of capital equipment, partly offset by $4.2 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 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.

Current wording

Financing Activities—During the nine months ended September 30, 2026, net cash used in financing activities was $324.6 million, compared to net cash used of $80.7 million for the nine months ended September 30, 2025. The financing cash outflow during the period was primarily driven by $292.5 million in repayments on our prior term loan facility, $107.3 million for the repurchase of common stock, $16.0 million for withholding taxes paid on the net share settlement of vested equity awards, and $7.8 million of earn-out payments, partly offset by $95.0 million in net Revolving Credit Facility borrowings and $14.7 million of capital contributions from noncontrolling interest owners.

Previous 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.

Current wording

At September 30, 2026, there was approximately $393 million of construction work to be completed on unconsolidated construction joint venture contracts, of which approximately $157 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 September 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.