Sterling Infrastructure, Inc.
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Item 1. Business
Overview of the Company’s Business
Sterling Infrastructure, Inc. (“Sterling” or “the Company”) operates through a variety of subsidiaries within three segments specializing in E-Infrastructure, Transportation and Building Solutions in the United States, primarily across the Southern, Northeastern, Mid-Atlantic and Rocky Mountain regions and the Pacific Islands. E-Infrastructure Solutions provides advanced, large-scale site development services and mission-critical electrical services for data centers, semiconductor fabrication, manufacturing, distribution centers, warehousing, power generation and more. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, rail and storm drainage systems. Building Solutions includes residential and commercial concrete foundations for single-family and multi-family homes, parking structures, elevated slabs, other concrete work, plumbing services, and surveys for new single-family residential builds. From strategy to operations, we are committed to sustainability by operating responsibly to safeguard and improve society’s quality of life. Caring for our people and our communities, our customers and our investors – that is The Sterling Way.
In this report, unless the context otherwise indicates, “Sterling,” “the Company,” “we,” “our” or “us” means Sterling and its consolidated subsidiaries. In addition, references to “Note” or “Notes” refer to the Notes to the Consolidated Financial Statements, included in Item 8 of Part II of this annual report on Form 10-K, unless indicated otherwise.
Business Strategy
Since 2016, our strategic vision has been based on the following elements and objectives:
| Strategic Elements | Strategic Objectives | ||||||
| Solidifying the base | Risk Reduction | ||||||
| Growing high margin products and services | Bottom-Line Growth | ||||||
| Expansion into adjacent markets | Exceed Peer Performance | ||||||
| Build a Platform for Future Accretive Growth | |||||||
Solidifying the base—The first element of the transformation of the Company that began in 2016 was a deep evaluation of the risks and opportunities associated with our project portfolio. We continue to work to move the business toward the opportunities that provide the most favorable risk/reward dynamics.
Prior to 2015, the company’s historic base of business was low-bid heavy highway projects within the Transportation Solutions segment; gross margins on these projects during this time were approximately 4%. In 2016, we implemented a strategy to solidify the business by improving risk assessment and bid discipline to significantly reduce the probability of project losses. This strategy has been successful, more than doubling the gross margins of heavy highway projects. In early 2025, we announced the strategic downsizing of our Texas heavy highway business, which is expected to be complete in 2026. This is anticipated to drive further improvement in heavy highway margins.
In recent years, our efforts to solidify the base business have been focused on driving productivity across each of our businesses, developing talent and trades people to support the growth of the company and our industries, and expanding our use of technology across the company to enhance our operations and support growth. Further, we are focused on continual safety enhancements across the organization.
Growing high margin products and services—Across our organization, we are focused on pursuing the most attractive project opportunities from a margin and return perspective. This was a key element of the transformation of the company from 2015 through 2019 and remains a key pillar of our strategy today. The focus in this strategic area is to drive consistent, strong bottom-line growth.
In 2016, we implemented a strategy to shift our Transportation Solutions project mix from low-bid heavy highway projects to alternative delivery heavy highway projects and other higher margin work including airports, commercial, piling and shoring and rail. In 2016, our low-bid heavy highway revenue was approximately 79% of our total revenue, but we have progressively lowered this to 9% as of December 31, 2025.
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In E-Infrastructure Solutions, we have built a reputation for strong execution across large, multifaceted, time-sensitive projects for mission-critical customers. In our site development business, our ability to consistently provide on-time delivery and schedule assurance to our customers through successful project management and execution has become a key source of competitive differentiation, and a factor in our margin profile. In the electrical and mechanical business, we have a strong track record of delivering high-performance electrical solutions for the most demanding mission-critical clients. Our focus on large, time-sensitive mission-critical projects where our superior capabilities are valued by our customers has been a driver of segment margin expansion over time and remains our focus moving forward.
Expansion into adjacent markets—In 2016, we implemented a strategy to pursue growth through the acquisition of companies and assets that will enable us to expand into adjacent markets and broaden the types of projects we execute. We operate a decentralized, adaptive business model, which provides us with flexibility to pursue acquisitions and other strategic transactions. Our acquisition strategy focuses on businesses that can enhance our suite of products and services, expand our geographic footprint or customer relationships, or provide diversification of cash flows. Since 2016, we have completed eleven acquisitions and regularly assess other strategic opportunities. Further, we remain focused on opportunities to expand organically into new markets.
Recent Strategic Transactions
RHB Deconsolidation—Since 2012, the Company has held a 50% ownership interest in Road and Highway Builders, LLC (“RHB”), with Rich Buenting holding the remaining 50% ownership interest. Historically, the Company fully consolidated the entity as a result of its exercise of control of the entity. On December 31, 2024, the parties executed an amendment to the RHB operating agreement to ensure the continuation of this mutually beneficial relationship while addressing the evolving needs and interest of both parties.
Under GAAP, this contractual change required Sterling to no longer consolidate RHB’s results with its own and to use equity method accounting with respect to Sterling’s interest in the entity. Beginning January 1, 2025, the Company reports its portion of RHB’s income as a single line item (“Other operating income (expense), net”) in the Consolidated Statements of Operations and reports its interest in RHB at December 31, 2024 and thereafter, as a single line item (“Investment in unconsolidated subsidiary”) in the Consolidated Balance Sheets. RHB’s revenue is no longer included in Sterling’s consolidated revenue in 2025 and Sterling’s consolidated backlog figures as of December 31, 2024 and thereafter, do not include RHB’s backlog.
CEC Acquisition—On September 1, 2025, the Company acquired substantially all of the assets of Irving, Texas-based CEC Facilities Group, LLC (“CEC”) a leading specialty electrical and mechanical contractor. The purchase price was $562 million, consisting primarily of $443 million in cash and $79 million in common stock. Additionally, CEC has an earn-out opportunity of up to an aggregate of $80 million, contingent upon achieving certain operating income targets. CEC is included in the Company’s E-Infrastructure Solutions segment.
Segments, Markets and Customers
The Company’s internal and public segment reporting are aligned based upon the services offered by its operating groups, which represent the reportable segments. The Company’s operations consist of three reportable segments: E-Infrastructure Solutions, Transportation Solutions and Building Solutions. See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 20 - Segment Information for further discussion of our business segments.
E-Infrastructure Solutions—Our E-Infrastructure Solutions segment serves large, blue-chip end users in the data center, manufacturing, e-commerce distribution center, warehousing, power generation sectors and more. We are a leading provider of large-scale site development services in the Southeast, Northeast, Mid-Atlantic and Rocky Mountain regions of the United States. The top four customers in each year, accounted for 27% of the segment’s revenue in 2025, 31% in 2024 and 40% in 2023.
Transportation Solutions—Our Transportation Solutions segment is comprised of heavy highway, aviation and rail projects, and it relies heavily on federal and state infrastructure spending. The principal geographic markets of this segment are Utah, Arizona, Colorado, Nevada, Texas and the Pacific Islands. Within these principal markets, our core customers are state Departments of Transportation (“DOT(s)”) and regional transit, airport, port, water and railroad authorities. The top four state DOTs in each year, accounted for 58% of the segment’s revenue in 2025, 47% in 2024 and 50% in 2023.
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Building Solutions—Our Building Solutions segment is comprised of our residential and commercial businesses. The principal geographic market for our residential business is Texas, specifically Dallas-Fort Worth, Houston and the surrounding communities. In 2021, we expanded our residential business into the greater Phoenix area and continued this expansion in 2022 with the acquisition of the CCS business. In 2023, we further expanded our services in the Dallas-Fort Worth market to include plumbing services for all the major plumbing phases required for new single-family residential builds with our acquisition of PPG. Our core residential customer base is comprised of leading national, regional and custom home builders. Our commercial business focuses on concrete construction of multi-family foundations, parking structures, elevated slabs and other concrete work for leading developers and general contractors in commercial markets. The top four customers in each year, including their respective affiliates, accounted for 45% of the segment’s revenue in 2025, 36% in 2024 and 42% in 2023.
In 2025, no individual customer accounted for more than 10% of our consolidated revenues; however we routinely construct projects for our largest customers mentioned above. The loss of any of these customers could have a material adverse effect on our business and financial results. Refer to Item 1A “Risk Factors” and Note 18 - Concentration of Risk and Enterprise Wide Disclosures for information on the Company’s major customers that represent a concentration of risk due to their significant revenue contributions.
Competition
The competitors of our segments vary widely, from small local contractors to large international construction companies. We aim to position ourselves in the mid-level market, traditionally bidding on work too large for the small local contractors yet too small for the large national and international construction companies. However, should market conditions become less favorable, we would expect to see a convergence from both the small local contractors and large international construction companies into our targeted mid-level market. This convergence could increase competitive bidding pressure and reduce both revenue growth and margins. See Item 1A “Risk Factors” for further discussion of risks associated with our competitive environment.
Seasonality
Operations of our segments are often affected by weather conditions, especially during the first and fourth quarters of our fiscal year. These conditions may disrupt construction schedules and lead to variability in our revenues, profitability and the number of employees we require. For additional discussion regarding the potential impacts of seasonality on our business, see Item 1A “Risk Factors.”
Resources
We procure raw materials essential for the operation of our segments, such as, cement, aggregate, concrete, liquid asphalt, lumber, steel and fuels, including diesel, gasoline, natural gas and propane, from a broad network of sources. Fluctuations in the price and availability of these raw materials may vary over time due to changes in market conditions and production capacities.
Backlog
Our remaining performance obligations on our projects, as defined in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, 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. The value of our Backlog was $3.01 billion at December 31, 2025, as compared to $1.69 billion at December 31, 2024. We exclude from our Backlog any contract where we are the apparent low bidder for projects (“Unsigned Awards”) until such contract is formally executed by the customer (approximately $300.7 million at December 31, 2025). Certain Building Solutions revenue is recognized upon completion at a point in time and therefore is never reflected in our Backlog. See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Backlog” for a discussion and quantification of our Backlog. Also see Item 1A “Risk Factors” for further discussion of risks related to Backlog.
Contracts
Our contracts are awarded on a competitively bid basis or negotiated bid basis using a range of contracting options, including fixed-unit price, lump sum and cost-reimbursable. Each of these contract types presents advantages and disadvantages. Typically, the Company assumes more risk with lump-sum contracts; however, these types of contracts can yield additional profits if the work is completed for less than originally estimated. Under fixed-unit price contracts, the Company’s profit may vary if actual labor-hour costs vary significantly from the negotiated rates. Each contract is designed to optimize the balance between risk and reward. At December 31, 2025, substantially all of our Backlog was contracted on a fixed-unit price or lump sum basis. We occasionally present claims or change orders to our clients for additional costs
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exceeding or not included in the initial contract price. Also, because some contracts can provide little or no fee for managing material costs, the components of contract cost can impact profitability.
Substantially all of the contracts in our Backlog contain termination for convenience clauses which allow the customer to cancel the contract at their election but would require that the Company be compensated for work performed through the date of termination and for any applicable contractual costs for cancellation. As part of our business, we are a party to joint venture arrangements, pursuant to which we typically jointly bid on and execute particular projects with other companies in the construction industry. See Item 1A “Risk Factors” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of our types of risk and how we mitigate cancellation and credit risk.
Insurance and Bonding
Our buildings and equipment are covered by insurance at levels our management believes to be adequate. In addition, we maintain general liability, excess liability, workers’ compensation and auto insurance all in amounts deemed consistent with our risk of loss and standard industry practice.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Regarding Forward-Looking Statements
This quarterly report on Form 10-Q (“Report”), including the documents incorporated herein by reference, contains statements that are, or may be considered to be, “forward-looking statements” regarding the Company which represent our expectations and beliefs concerning future events. These forward-looking statements are intended to be covered by the safe harbor for certain forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements included or incorporated by reference herein relate to matters that are not based on historical facts and reflect our current expectations as of the date of this Report, regarding items such as: our industry and business outlook, including relating to federal, state and municipal funding for projects, the residential home building market and demand from our customers; business strategy, including the integration of recent acquisitions and the potential for additional future acquisitions; expectations and estimates relating to our backlog; expectations concerning our market position; future operations; margins; profitability; capital expenditures; liquidity and capital resources; and other financial and operating information. Forward-looking statements may use or contain words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “likely,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “will,” “would” and similar terms and phrases.
Actual events, results and outcomes may differ materially from those anticipated, projected or assumed in the forward-looking statements due to a variety of factors. Although it is not possible to identify all of these factors, they include, among others, the following:
•factors that affect demand for our services or demand in end markets, including economic recessions or volatile economic cycles;
•cost escalations associated with our contracts, due to changes in availability, proximity and cost of construction materials and fuel for our equipment, geopolitical conflicts (such as the conflicts in Eastern Europe and the Middle East) and related disruptions to the global energy markets, changes in U.S. trade policies and retaliatory responses from other countries, and cost escalations associated with subcontractors and labor;
•any action or inaction of suppliers, subcontractors, design engineers, joint venture partners, customers, competitors, banks, surety companies and others which is beyond our control, including the failure of suppliers, subcontractors and joint venture partners to perform their obligations;
•factors that affect the accuracy of estimates inherent in the bidding for contracts, estimates of backlog, and “over time” revenue recognition accounting policies, including onsite conditions that differ materially from those assumed in the original bid, contract modifications, mechanical problems with machinery or equipment and effects of other risks referenced below;
•changes in costs to lease, acquire or maintain our equipment;
•changes in general economic conditions, including reductions in federal, state and local government funding for projects, changes in those governments’ budgets, practices, laws and regulations and interest rate fluctuations and other adverse economic factors beyond our control in our geographic markets;
•the presence of competitors with greater financial resources or lower margin requirements than ours, and the impact of competitive bidders on our ability to obtain new backlog at reasonable margins acceptable to us;
•design/build contracts which subject us to the risk of design errors and omissions;
•our ability to obtain bonding or post letters of credit;
•adverse weather conditions;
•potential disruptions, failures or security breaches of the information technology systems on which we rely to conduct our business or failure to comply with laws and regulations regarding data privacy and cybersecurity;
•potential risks and uncertainties relating to major public health crises;
•our dependence on a limited number of significant customers;
•our ability to attract and retain key personnel;
•increased unionization of our workforce or labor costs and any work stoppages or slowdowns;
•federal, state and local environmental laws and regulations where non-compliance can result in penalties and/or termination of contracts as well as civil and criminal liability;
•our ability to obtain, maintain, and comply with governmental permits, licenses, and approvals;
•citations issued by any governmental authority, including the Occupational Safety and Health Administration;
•our ability to qualify as an eligible bidder under government contract criteria;
•delays or difficulties related to the completion of our projects, including additional costs, reductions in revenues or the payment of liquidated damages, or delays or difficulties related to obtaining required governmental permits and approvals;
•any prolonged shutdown of the government;
•our ability to successfully identify, finance, complete and integrate recent and potential acquisitions or our ability to identify all liabilities associated with an acquired business or asset prior to our acquisition;
•our ability to raise additional capital in the future on favorable terms or at all;
•our ability to generate cash flows sufficient to fund our financial commitments and objectives;
•our ability to meet the terms and conditions of our debt obligations and covenants; and
•the other risks discussed in more detail in the Company’s annual report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) under “Part I, Item 1A. Risk Factors,” other portions of this Report, or our other filings with the Securities and Exchange Commission (the “SEC”).
In reading this Report, you should consider these factors carefully in evaluating any forward-looking statements and you are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements reflect our current expectations as of the date of this Report regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. Additional factors or risks that we currently deem immaterial, that are not presently known to us or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made. Further, we may make changes to our business plans that could affect our results. Although we believe that our plans, intentions and expectations reflected in, or suggested by, the forward-looking statements that we make in this Report are reasonable, we can provide no assurance that they will be achieved.
The forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise, and notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes.
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OVERVIEW
General—Sterling operates through a variety of subsidiaries within three segments specializing in E-Infrastructure, Transportation and Building Solutions in the United States, primarily across the Southern, Northeastern, Mid-Atlantic and Rocky Mountain regions and the Pacific Islands. E-Infrastructure Solutions provides advanced, large-scale site development services and mission-critical electrical services for data centers, semiconductor fabrication, manufacturing, distribution centers, warehousing, power generation and more. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, rail and storm drainage systems. Building Solutions includes residential and commercial concrete foundations for single-family and multi-family homes, parking structures, elevated slabs, other concrete work, plumbing services, and surveys for new single-family residential builds. From strategy to operations, we are committed to sustainability by operating responsibly to safeguard and improve society’s quality of life. Caring for our people and our communities, our customers and our investors – that is The Sterling Way.
SIGNIFICANT TRANSACTIONS
CEC Acquisition—On September 1, 2025, the Company acquired substantially all of the assets of Irving, Texas-based CEC Facilities Group, LLC (“CEC”) a leading specialty electrical and mechanical contractor. The purchase price was $561.6 million, consisting primarily of $442.9 million in cash and $79.5 million in common stock. Additionally, CEC has an earn-out opportunity of up to an aggregate of $80 million, contingent upon achieving certain operating income targets. CEC is included in the Company’s E-Infrastructure Solutions segment.
MARKET OUTLOOK AND TRENDS
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.
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.
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.
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.
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BACKLOG
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.
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.
RESULTS OF OPERATIONS
Consolidated Results
| Three Months Ended March 31, | |||||||||||||||||||
| (In thousands) | 2026 | 2025 | |||||||||||||||||
| Revenues | $ | 825,675 | $ | 430,949 | |||||||||||||||
| Gross profit | 194,296 | 94,840 | |||||||||||||||||
| General and administrative expense | (47,850) | (34,631) | |||||||||||||||||
| Intangible asset amortization | (7,093) | (4,503) | |||||||||||||||||
| Acquisition related costs | (1,407) | (179) | |||||||||||||||||
| Earn-out expense | (2,488) | (1,343) | |||||||||||||||||
| Other operating income, net | 2,356 | 1,892 | |||||||||||||||||
| Operating income | 137,814 | 56,076 | |||||||||||||||||
| Interest (expense) income, net | (376) | 1,595 | |||||||||||||||||
| Income before income taxes and noncontrolling interests | 137,438 | 57,671 | |||||||||||||||||
| Income tax expense | (33,673) | (15,080) | |||||||||||||||||
Less: Net income attributable to noncontrolling interests | (7,796) | (3,114) | |||||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 95,969 | $ | 39,477 | |||||||||||||||
| Gross margin | 23.5 | % | 22.0 | % | ||||||||||||||
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.
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.
Our contracts are of various sizes, of different expected profitability and in various stages of completion. The nearer a contract progresses toward completion, the more visibility the Company has in refining its estimate of total revenues (including incentives, delay penalties and change orders), costs and gross profit. Thus, gross profit as a percentage of revenues can increase or decrease from comparable and subsequent quarters due to variations among contracts and the stage of completion of contracts.
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.
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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.
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.
Segment Results
The Company’s operations consist of three reportable segments: E-Infrastructure Solutions, Transportation Solutions and Building Solutions. We incur certain expenses at the corporate level that relate to our business as a whole. A portion of these expenses are allocated to our business segments by various methods, but primarily on the basis of usage. The balance of the corporate level expenses are reported in the “Corporate G&A Expense” line, which is primarily comprised of corporate headquarters facility expense, the cost of the executive management team and other expenses pertaining to certain centralized functions that benefit the entire Company, but are not directly attributable to any specific business segment, such as corporate human resources, legal, governance, compliance and finance functions.
| (In thousands) | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| Revenues | 2026 | % of Revenue | 2025 | % of Revenue | |||||||||||||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 597,732 | 72% | $ | 218,263 | 51% | |||||||||||||||||||||||||||||||||
| Transportation Solutions | 132,863 | 16% | 120,661 | 28% | |||||||||||||||||||||||||||||||||||
| Building Solutions | 95,080 | 12% | 92,025 | 21% | |||||||||||||||||||||||||||||||||||
| Total Revenues | $ | 825,675 | $ | 430,949 | |||||||||||||||||||||||||||||||||||
| Operating Income | |||||||||||||||||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 133,764 | 22.4% | $ | 46,642 | 21.4% | |||||||||||||||||||||||||||||||||
| Transportation Solutions | 14,754 | 11.1% | 11,253 | 9.3% | |||||||||||||||||||||||||||||||||||
| Building Solutions | 6,215 | 6.5% | 12,352 | 13.4% | |||||||||||||||||||||||||||||||||||
| Segment Operating Income | 154,733 | 18.7% | 70,247 | 16.3% | |||||||||||||||||||||||||||||||||||
| Corporate G&A Expense | (13,024) | (12,649) | |||||||||||||||||||||||||||||||||||||
| Acquisition Related Costs | (1,407) | (179) | |||||||||||||||||||||||||||||||||||||
| Earn-out Expense | (2,488) | (1,343) | |||||||||||||||||||||||||||||||||||||
| Total Operating Income | $ | 137,814 | 16.7% | $ | 56,076 | 13.0% | |||||||||||||||||||||||||||||||||
E-Infrastructure Solutions
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.
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.
Transportation Solutions
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.
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.
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Building Solutions
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.
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.
LIQUIDITY AND SOURCES OF CAPITAL
Cash and Cash Equivalents—Total cash and cash equivalents at March 31, 2026 and December 31, 2025 includes the following components:
| (In thousands) | March 31, 2026 | December 31, 2025 | ||||||||
| Generally Available | $ | 406,461 | $ | 314,567 | ||||||
| Construction Joint Ventures | 105,397 | 76,154 | ||||||||
| Cash and cash equivalents | $ | 511,858 | $ | 390,721 | ||||||
The following table presents consolidated information about our cash flows:
| (In thousands) | Three Months Ended March 31, | ||||||||||||
| Net cash provided by (used in): | 2026 | 2025 | |||||||||||
| Operating activities | $ | 165,568 | $ | 84,883 | |||||||||
| Investing activities | (17,684) | (54,211) | |||||||||||
| Financing activities | (26,747) | (56,220) | |||||||||||
| Net change in cash and cash equivalents | $ | 121,137 | $ | (25,548) | |||||||||
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.
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:
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Contracts in progress, net | $ | 12,690 | $ | 31,428 | |||||||
| Accounts receivable | (12,740) | (32,233) | |||||||||
| Receivables from and equity in construction joint ventures | (1,050) | (1,101) | |||||||||
| Accounts payable | 4,115 | (5,438) | |||||||||
| Change in Contract Capital, net | $ | 3,015 | $ | (7,344) | |||||||
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.
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.
25
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.
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.
JOINT VENTURES
We participate in various construction joint venture partnerships in order to share expertise, risk and resources for certain highly complex projects. The joint venture’s contract with the project owner typically requires joint and several liability among the joint venture partners. Although our agreements with our joint venture partners provide that each party will assume and fund its share of any losses resulting from a project, if one of our partners is unable to pay its share, we would be fully liable for such share under our contract with the project owner. Circumstances that could lead to a loss under these guarantee arrangements include a partner’s inability to contribute additional funds to the venture in the event that the project incurred a loss or additional costs that we could incur should the partner fail to provide the services and resources toward project completion to which it committed in the joint venture agreement. See the 2025 Form 10-K under “Part I, Item 1A. Risk Factors.”
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.
NEW ACCOUNTING STANDARDS
See the applicable section of Note 2 - Basis of Presentation and Significant Accounting Policies for a discussion of new accounting standards.
CRITICAL ACCOUNTING ESTIMATES
There have been no material changes to the Company’s discussion of critical accounting estimates from those described in Item 7 of our 2025 Form 10-K.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-04-23 | CUTILLO JOSEPH A | Chief Executive Officer | Sell | -50,000 | $497.57 | -$24,878,635 |
| 2026-03-25 | CUTILLO JOSEPH A | Chief Executive Officer | Sell | -50,000 | $453.48 | -$22,674,175 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-04 10-Q expected by 2026-08-08 (in 50 days)
- ~2026-11-03 10-Q expected by 2026-11-07 (in 141 days)
- ~2027-02-25 10-K expected by 2027-03-10 (in 255 days)
- ~2027-05-04 10-Q expected by 2027-05-08 (in 323 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-21 8-K Officer/Director Change
- 2026-05-12 S-3ASR S-3ASR
- 2026-05-05 10-Q Quarterly Report
- 2026-05-04 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-26 10-K Annual Report
- 2026-02-25 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-12 8-K Other Events; Financial Statements and Exhibits
- 2025-11-04 10-Q Quarterly Report
- 2025-11-03 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-09-24 8-K Officer/Director Change
- 2025-08-05 10-Q Quarterly Report
- 2025-08-04 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-07-10 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-06-18 8-K Material Agreement Entered; Unregistered Equity Sale; Financial Statements and Exhibits
- 2025-06-12 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits