ConDig (05-Aug-26) Texas-based civil contractor Sterling Infrastructure reported record financial results for the second quarter of 2025, driven by continued momentum in its E-Infrastructure and transportation solutions divisions.
The Woodlands-based company posted strong revenue growth, expanded margins, and record net income, prompting a boost in its full-year guidance.
Second-quarter revenues reached $614.5 million, a 21% increase compared to the adjusted prior-year period, excluding the deconsolidated RHB joint venture. Gross margin rose sharply to 23.3%, up from 19.3% a year ago, as the company continues to focus on higher-margin service offerings.
Net income hit $71 million, or $2.31 per diluted share, marking a 37% increase and setting a new second-quarter record. Adjusted net income came in even stronger at $82.8 million, or $2.69 per diluted share, up 39% and 41%, respectively. Adjusted EBITDA also reached a new second-quarter high at $125.6 million, a 35% year-over-year increase.
“Our outstanding second quarter results reflect the strength and resilience of our portfolio, as we delivered very strong top line growth of 21% and even better bottom-line growth,” said Joe Cutillo, Sterling’s chief executive officer.
“Gross profit margins of 23% marked a new high for the company as we continue to shift toward large, mission-critical projects in high-demand sectors like data centers and manufacturing.”
The company’s E-Infrastructure Solutions segment led the quarter with 29% revenue growth and 57% adjusted operating income growth, achieving a segment operating margin of 28.3%. Meanwhile, transportation solutions revenue grew 24%, with adjusted operating income up 78%, supported by ongoing demand in core markets like Arizona and the Rocky Mountain region.
Backlog at quarter-end stood at $2.01 billion, with a book-to-burn ratio of 1.4x. Including unsigned awards, combined backlog reached $2.25 billion. Operating cash flow for the first half of the year totaled $170.3 million, with a cash balance of $699.4 million and net cash of $401 million.
In contrast, the building solutions segment saw a 1% decline in revenue and a 28% drop in adjusted operating income, reflecting ongoing softness in the residential market amid affordability challenges.
Sterling also reaffirmed progress on its acquisition of CEC Facilities Group, announced in June. The deal, which is expected to strengthen Sterling’s presence in the high-growth electrical services market and expand its geographic footprint in Texas, remains on track to close later this year. The updated guidance does not yet include any contribution from CEC.
2025 Outlook Raised
Given the company’s strong first-half performance, Sterling raised its full-year 2025 guidance. The company now expects:
- Revenue of $2.10 to $2.15 billion
- Net income of $243 to $252 million
- Diluted EPS of $7.87 to $8.13
- Adjusted net income of $285 to $294 million
- Adjusted diluted EPS of $9.21 to $9.47
- Adjusted EBITDA of $438 to $453 million
“We believe 2025 will be another record year for Sterling,” Cutillo said. “Our strong backlog, operational performance, and strategic shift toward higher-margin work give us continued confidence in our ability to drive bottom-line growth that outpaces the top line.”