Core Insights - The article presents a perspective on investment opportunities in various stocks, emphasizing the author's unique insights and background [1] Company Analysis - The author holds a long position in Amazon (AMZN) through stock ownership, options, or other derivatives, indicating a positive outlook on the company's future performance [2] Industry Overview - The analysis aims to provide informational content for investors, highlighting the importance of conducting personal research and due diligence before making investment decisions [3]

Core Insights - Sterling Infrastructure, Inc. (STRL) reported strong first-quarter 2025 earnings with adjusted EPS of $1.63, reflecting a 29% year-over-year growth and beating consensus estimates [1] - Adjusted EBITDA increased by 31% to $80 million, driven by improved margins and disciplined project execution [1] - Revenue reached $430.9 million, growing 7% on a pro forma basis despite a reported year-over-year decline due to a joint venture accounting change [1] - The gross margin expanded by 450 basis points to 22%, indicating operational efficiencies and a favorable project mix [1] - The company reported strong operating cash flow of $85 million and continued capital deployment, including a $25 million acquisition of Drake Concrete [1] Financial Performance - STRL's stock gained 7.3% post-earnings release, outperforming the Zacks Engineering - R and D Services industry (up 1.8%) and the broader Zacks Construction sector (up 0.4%) [2] - The stock is currently trading at a 13.7% discount to its 52-week high of $206.07 and a premium of 90.1% to its 52-week low of $93.50 [2] - STRL is trading above its 200-day and 50-day simple moving averages, indicating positive momentum [3] Growth Drivers - The E-Infrastructure Solutions segment was the primary growth driver, recording 18% revenue growth and a 61% increase in operating income in Q1 [6] - The data center market surged approximately 60% year-over-year, now constituting over 65% of the E-Infrastructure backlog, driven by AI-related computing demand [6] - The company's focus on mission-critical, large-scale projects has provided a competitive edge, with a 618 basis point margin expansion in the E-Infrastructure segment [7] Backlog and Future Opportunities - The total backlog at the end of Q1 2025 reached a record $2.13 billion, up 26% from the end of 2024, with E-Infrastructure accounting for $1.22 billion [8] - Sterling reported $750 million in future phase opportunities, indicating strong continuity of project work [8] - In Transportation Solutions, backlog increased to $861 million, up 11% on a pro forma basis, suggesting ongoing strength in infrastructure spending [9] Strategic Initiatives - The company is optimizing its project mix by reducing exposure to low-bid, heavy highway work and reallocating resources to high-value projects [10] - In E-Infrastructure, Sterling employs a phase-by-phase pricing model to maintain profitability during volatile commodity cycles [11] - The acquisition of Drake Concrete is expected to contribute $55 million in revenues and $6.5 million in EBITDA in 2025, diversifying customer concentration [13] Market Position and Valuation - STRL has consistently surpassed profit estimates, with an average earnings surprise of 11.5% [15] - The company is currently trading at a premium relative to its industry and historical metrics, with a forward 12-month P/E ratio above its five-year average [16] - STRL's P/E ratio is higher than Dycom but lower than Construction Partners and Comfort Systems USA [17] Investment Outlook - Sterling presents a compelling buy opportunity backed by strong fundamentals, consistent execution, and robust sector tailwinds [20] - The company’s E-Infrastructure segment is the core growth engine, with a record backlog providing long-term revenue clarity [21] - With a 6.6% stock gain post-earnings and upward estimate revisions for 2025 EPS growth of 38.5%, STRL stands out as a strong growth candidate in the mid-cap infrastructure space [22]

Company Overview - Sterling Infrastructure (STRL) currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy) [3][4] - The company has shown significant price performance, with shares up 37.91% over the past quarter and 43.35% over the last year [7] Price Performance - STRL shares increased by 9.15% over the past week, outperforming the Zacks Engineering - R and D Services industry, which rose by 0.59% [6] - The monthly price change for STRL is 35.5%, compared to the industry's 4.78% performance [6] Trading Volume - The average 20-day trading volume for STRL is 1,059,492 shares, indicating a bullish sign for the stock [8] Earnings Outlook - Over the past two months, one earnings estimate for STRL has moved higher, while none have moved lower, increasing the consensus estimate from $8.21 to $8.45 [10] - For the next fiscal year, one estimate has also moved upwards with no downward revisions [10]

Financial Data and Key Metrics Changes - Adjusted earnings per share increased by 29% to $1.63, with adjusted EBITDA rising by 31% to $80 million [8][10] - Revenue grew by 7% on a pro forma basis, with gross profit margins expanding over 400 basis points to reach 22% [9][10] - Operating cash flow was strong at $85 million, and backlog totaled $2.1 billion, a 17% year-over-year increase [10][11] Business Line Data and Key Metrics Changes - E Infrastructure Solutions segment revenue grew by over 18%, driven primarily by a 60% increase in the data center market [9][14] - Transportation Solutions revenue increased by 9%, with adjusted operating profit growing by 60% due to strong market demand [14][15] - Building Solutions segment revenue declined by 14%, impacted by affordability challenges in the housing market [15][27] Market Data and Key Metrics Changes - E Infrastructure Solutions backlog reached $1.2 billion, up 27% year-over-year, with significant growth in data center projects [11][12] - Transportation Solutions backlog was $861 million, an 11% year-over-year increase [15] - Overall backlog totaled $2.23 billion, a 21% increase from year-end 2024 [16] Company Strategy and Development Direction - The company remains focused on high-return opportunities and plans to enhance long-term value through strategic acquisitions, particularly in e infrastructure [10][28] - The acquisition of Drake Concrete for $25 million is expected to contribute $55 million in revenue and $6.5 million in EBITDA in 2025 [10] - The company is optimistic about future growth in e infrastructure, anticipating mid to high teens revenue growth and adjusted operating profit margins in the mid-20% range [24][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong backlog and future phase opportunities, despite uncertainties in trade policies and the economy [10][22] - The company is optimistic about the ongoing strength in data center demand and anticipates continued growth in core markets [22][24] - Management noted that while the residential market is currently soft, there is significant pent-up demand that could drive future growth [52][53] Other Important Information - The company expects full-year 2025 revenue guidance to range from $2.05 billion to $2.15 billion, with adjusted diluted EPS guidance of $8.40 to $8.90 [21] - The effective income tax rate for the first quarter was 26.1%, with expectations for the full year to remain around 26% [19] Q&A Session Summary Question: Insights on the 35% of backlog not related to data centers - Management feels positive about the backlog, with steady manufacturing and increasing e-commerce activity contributing to growth [31][32] Question: Exposure to tariffs and cost perspective - Management indicated minimal exposure to tariffs due to fixed pricing in contracts and indexing mechanisms in place [34][35] Question: Drivers of margin performance in Transportation Solutions - Margin improvements are primarily due to a shift towards higher-margin services rather than the low bid strategy [46][47] Question: Comfort in bidding for new projects - Management remains optimistic about bid activity and is focusing on long-term project visibility [50][52] Question: Future infrastructure bill expectations - Management noted positive bipartisan activity in Congress regarding the next infrastructure bill, indicating a proactive approach to future funding [68][70] Question: Capacity constraints related to biopharma projects - Management expressed confidence in handling new projects and indicated readiness to expand capacity if necessary [74][76]

Financial Performance - Revenues for Q1 2025 were $430.9 million, a decrease from $440.4 million in Q1 2024; excluding $38.5 million of RHB revenue from Q1 2024, revenues increased by $29.1 million[85]. - Gross profit for Q1 2025 was $94.8 million, an increase of $17.9 million or 23.3% compared to Q1 2024, with a gross margin of 22.0%[86]. - Total revenues for Q1 2025 were $430.9 million, a decrease of 2.3% compared to $440.4 million in Q1 2024[94]. - Total operating income for Q1 2025 was $56.1 million, representing 13.0% of revenue, compared to $42.1 million, or 9.6% of revenue, in Q1 2024[94]. - General and administrative expenses increased to $34.6 million, or 8.0% of revenue, in Q1 2025 from $27.3 million, or 6.2% of revenue, in Q1 2024[88]. - Net cash provided by operating activities was $84.9 million in Q1 2025, up from $49.6 million in Q1 2024[101]. - Net cash used in investing activities was $54.2 million in Q1 2025, primarily driven by $37.9 million for acquisitions[103]. - The effective income tax rate for Q1 2025 was 26.1%, with an anticipated full-year rate of approximately 26%[91][92]. - As of March 31, 2025, the company held cash and cash equivalents of $638.6 million[101]. Backlog and Awards - Backlog as of March 31, 2025, was $2.13 billion, up from $1.69 billion at December 31, 2024, with a book-to-burn ratio of 2.2X[83]. - The margin in Backlog increased to 17.7% at March 31, 2025, from 16.7% at December 31, 2024, driven by a greater mix of E-Infrastructure Solutions[83]. - Unsigned Awards were $103.2 million at March 31, 2025, down from $137.9 million at December 31, 2024; Combined Backlog totaled $2.23 billion[84]. Segment Performance - E-Infrastructure Solutions segment revenues increased by $33.8 million, or 18.3%, to $218.3 million in Q1 2025[95]. - Transportation Solutions segment revenues decreased to $120.7 million in Q1 2025 from $149.0 million in Q1 2024, but increased by $10.2 million when excluding prior year RHB revenue[97]. - Building Solutions segment revenues decreased by $14.9 million, or 13.9%, to $92.0 million in Q1 2025 due to lower commercial volume[99]. Strategic Initiatives - The Drake Acquisition for $25 million in cash plus a four-year earn-out opportunity strengthens the company's presence in the Dallas-Fort Worth market[76]. - The Infrastructure Investments and Jobs Act (IIJA) provides approximately $643 billion in funding for transportation programs, significantly increasing funding levels for the next five years[79]. - E-Infrastructure Solutions is expected to see growth driven by investments in data centers and advanced manufacturing, with a recovery in e-commerce distribution sector activity noted[78]. - Building Solutions segment is experiencing a decline due to interest rate uncertainty and affordability challenges, but long-term growth is anticipated due to population growth and housing shortages[81]. - The company aims to improve margins across all segments while focusing on growth in E-Infrastructure Solutions and expanding market share in Building Solutions[77].

Financial Data and Key Metrics Changes - Adjusted earnings per share increased by 29% to $1.63, with adjusted EBITDA rising by 31% to $80 million [7] - Revenue grew by 7% on a pro forma basis, with gross profit margins expanding over 400 basis points to reach 22% [7][15] - Operating cash flow was strong at $85 million, compared to $49.6 million in the prior year [18] Business Line Data and Key Metrics Changes - E Infrastructure Solutions segment revenue grew by over 18%, driven primarily by a 60% increase in the data center market [7][12] - Transportation Solutions revenue increased by 9%, with adjusted operating profit growing by 60% due to strong market demand [12][13] - Building Solutions segment revenue declined by 14%, impacted by affordability challenges in the housing market [13] Market Data and Key Metrics Changes - Backlog at the end of the quarter totaled $2.1 billion, a 17% year-over-year increase on a pro forma basis [9] - E Infrastructure Solutions backlog was $1.2 billion, up 27% year-over-year [10] - Transportation Solutions backlog was $861 million, an 11% year-over-year increase [13] Company Strategy and Development Direction - The company remains focused on pursuing high-return opportunities and enhancing long-term value [8] - The acquisition of Drake Concrete for $25 million is expected to contribute $55 million in revenue and $6.5 million in EBITDA in 2025 [8] - The company is prioritizing e infrastructure for M&A opportunities, particularly in Texas, to capitalize on the growing market [54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong multiyear opportunities in various markets despite uncertainties in trade policies and the economy [8][20] - The company anticipates continued growth in e infrastructure revenue in the mid to high teens and adjusted operating profit margins in the mid-20% range for 2025 [22] - Management noted that the residential market is currently soft but expects pent-up demand to drive recovery in the long term [48] Other Important Information - The company ended the quarter with a strong liquidity position, consisting of $638.6 million in cash and $310 million in debt [18] - Full year 2025 guidance includes revenue of $2.05 billion to $2.15 billion and adjusted EBITDA of $410 million to $432 million [19] Q&A Session Summary Question: Insights on the 35% of backlog not related to data centers - Management feels confident about the backlog, with steady manufacturing and increasing e-commerce activity contributing positively [28][30] Question: Exposure to tariffs and cost perspective - Management indicated minimal exposure to tariffs due to fixed pricing in contracts and indexing mechanisms in place [31][34] Question: Drivers of margin performance in Transportation Solutions - Margin improvement is primarily driven by a shift towards higher-margin services rather than the low bid strategy [42] Question: Comfort in bidding for new projects - Management remains optimistic about bid activity and backlog, focusing on long-term growth despite current softness in the residential market [48] Question: M&A priorities in e infrastructure - The company is looking for geographic expansion and additional services, particularly in Texas, to enhance its portfolio [54][56] Question: Expectations for the next infrastructure bill - Management noted positive bipartisan activity in Congress regarding the next infrastructure bill, indicating a proactive approach to future funding [63][66] Question: Capacity constraints related to biopharma projects - Management is confident in handling new projects and is prepared to increase capacity if necessary [70][72]

Core Viewpoint - Sterling Infrastructure (STRL) reported quarterly earnings of $1.63 per share, exceeding the Zacks Consensus Estimate of $1.58 per share, and showing an increase from $1 per share a year ago, indicating a positive earnings surprise of 3.16% [1] Financial Performance - The company achieved revenues of $430.95 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.69%, although this represents a decline from year-ago revenues of $440.36 million [2] - Over the last four quarters, Sterling Infrastructure has consistently surpassed consensus EPS estimates, achieving this four times [2] Stock Performance - Since the beginning of the year, Sterling Infrastructure shares have decreased by approximately 1.7%, while the S&P 500 has declined by 3.3%, indicating relative outperformance [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $2.14 on revenues of $535.3 million, and for the current fiscal year, it is $8.21 on revenues of $2.03 billion [7] Industry Context - The Engineering - R and D Services industry, to which Sterling Infrastructure belongs, is currently ranked in the top 15% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

May 6, 2025 Q1 2025 EARNINGS CALL We build and service the infrastructure that enables our economy to run, our people to move, and our country to grow. DISCLOSURE: Forward-Looking Statements This presentation contains, and the officers and directors of the Company may from time to time make, statements that are considered forward- looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and ...

Financial Performance - First quarter 2025 revenue was $430.9 million, a 7% increase on a pro forma basis excluding RHB[6] - Adjusted net income for the first quarter increased by 28% to $50.2 million, resulting in adjusted diluted EPS of $1.63[6] - Total revenues for the three months ended March 31, 2025, were $430,949,000, up from $401,896,000 in 2024, reflecting a growth of 7.2%[34] - Adjusted EBITDA for the three months ended March 31, 2025, was $80,304,000, compared to $61,294,000 in 2024, indicating a 31% increase[32] - The company reported a net income attributable to Sterling common stockholders of $257 million for 2024, with guidance for 2025 set between $222 million and $239 million[38] Revenue Segments - E-Infrastructure Solutions revenue grew by 18%, contributing to a 61% increase in adjusted operating income, with adjusted operating margins expanding to 23.2%[7] - Transportation Solutions revenue increased by 9%, with adjusted operating income growing by 60%[8] - Building Solutions revenue declined by 14%, impacted by a slowdown in the housing market and severe weather conditions[9] - The E-Infrastructure Solutions segment generated revenues of $218,263,000, accounting for 51% of total revenues, up from $184,476,000 (46%) in 2024[34] Guidance and Projections - The company raised its full-year 2025 guidance, projecting 12% revenue growth and 22% adjusted diluted EPS growth[9] - The company provided full-year 2025 guidance for net income attributable to Sterling common stockholders between $222,000,000 and $238,700,000, compared to $257,461,000 in 2024[36] - Adjusted net income attributable to Sterling common stockholders for 2025 is projected to be between $261,718,000 and $278,418,000, compared to $220,745,000 in 2024[36] - Full Year 2025 EBITDA guidance is projected between $381 million and $403 million, compared to actual EBITDA of $411 million for 2024[38] Backlog and Demand - The company ended the quarter with a backlog of $2.1 billion, representing a 17% increase year-over-year[5] - The company reported a book-to-burn ratio of 2.2x for the quarter, indicating strong demand for future projects[5] - The backlog excluding RHB at the end of 2024 was $1.693 billion, showing a decrease from $1.824 billion at the beginning of the year[42] - The combined backlog excluding RHB was $1.831 billion at the end of 2024, compared to $1.891 billion at the beginning of the year[42] Cash Flow and Assets - Cash flows from operations totaled $84.9 million, with cash and cash equivalents at $638.6 million as of March 31, 2025[6] - Cash flows from operating activities for the three months ended March 31, 2025, were $84,883,000, significantly higher than $49,591,000 in 2024, marking a 71% increase[28] - Total assets increased to $2,034,539,000 as of March 31, 2025, from $2,016,774,000 at the end of 2024[26] - Total liabilities rose to $1,207,612,000 as of March 31, 2025, compared to $1,190,296,000 at the end of 2024[26] Stock and Acquisitions - The acquisition of Drake Concrete is expected to contribute approximately $55 million in revenue and $6.5 million in adjusted EBITDA in 2025[4] - The company repurchased $43,846,000 of common stock during the three months ended March 31, 2025[28] - Non-cash stock-based compensation for 2024 was $19 million, with a forecast of $23 million for 2025[38] - The company incurred acquisition-related costs of $421,000 in 2024, with no such costs projected for 2025[40] Other Notable Information - The company plans to report RHB's operating income as a single line item starting January 1, 2025, following its deconsolidation[40]

Core Insights - Sterling Infrastructure, Inc. reported strong financial results for Q1 2025, with adjusted net income increasing by 28% and adjusted diluted EPS reaching $1.63 [6][8][9] - The company experienced a revenue growth of 7% on a pro forma basis, driven by significant growth in E-Infrastructure Solutions and Transportation Solutions [6][8] - The backlog at the end of Q1 2025 was $2.1 billion, reflecting a 17% increase year-over-year, with a book-to-burn ratio of 2.2x [6][8] Financial Performance - Revenues for Q1 2025 were $430.9 million, a 7% increase compared to the prior year quarter, excluding RHB [8][20] - Gross margin improved to 22.0%, up from 17.5% in the previous year [8][20] - Net income attributable to Sterling common stockholders was $39.5 million, or $1.28 per diluted share, representing increases of 27% and 28% respectively [8][20] Segment Performance - E-Infrastructure Solutions generated revenues of $218.3 million, accounting for 51% of total revenue, with an operating income margin of 21.4% [21] - Transportation Solutions saw revenues of $120.7 million, with a 9% increase and an operating income margin of 9.3% [21] - Building Solutions experienced a revenue decline of 14%, attributed to challenges in the housing market [9][21] Acquisition and Strategic Moves - The acquisition of Drake Concrete, LLC for $25 million is expected to contribute approximately $55 million in revenue and $6.5 million in adjusted EBITDA in 2025 [5][6] - The company is focusing on high-margin service offerings, which has positively impacted gross profit margins and adjusted EBITDA growth [6][9] Outlook and Guidance - The company raised its 2025 guidance, projecting a 12% revenue growth on a pro forma basis, alongside 22% growth in adjusted diluted EPS and 23% growth in adjusted EBITDA [9][33] - The CEO expressed confidence in continued bottom-line growth that outpaces top-line growth, supported by a strong backlog and cash flow generation [6][9]