Q2 2026 Sterling Infrastructure Inc Earnings Call
Speaker #1: And a less-than-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press door 0 for the operator.
Speaker #1: As a reminder, this call is being recorded on Tuesday, August 4, 2026. I would now like to turn the conference call over to Noelle Dilts.
Speaker #1: Vice President of Investor Relations, and Corporate Strategy. Please go ahead.
Speaker #2: Good morning to everyone joining us, and welcome to Sterling Infrastructure's second quarter 2026 earnings conference call and webcast. I'm pleased to be here today to discuss our results with Joe Catillo, Sterling's Chief Executive Officer, Nick Greinstaff, Sterling's Chief Financial Officer, and Dan Govan, Sterling's Chief Operating Officer.
Speaker #2: As a reminder, there are accompanying slides on the investor relations section of our website. These slides include details on our full year, 2026 financial guidance.
Speaker #2: Before turning the call over to Joe, I will read the Safe Harbor statement. The discussion today may include forward-looking statements. Actual results could differ materially from the statements made today.
Speaker #2: Please refer to Sterling's most recent 10-K and 10-Q filings for more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise.
Speaker #1: At this time, all lines are in, As a reminder, this call is being recorded on Tuesday, alias and only mode. August 4, Following the presentation, we will conduct a 2026.
Speaker #1: At this time, all lines are in, As a reminder, this call is being recorded on Tuesday, alias and only mode. August 4, Following the presentation, we will conduct a 2026. question-and-answer session.
Speaker #2: Please also note that management may reference EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, or adjusted earnings per share on this call, which are all financial measures not recognized under U.S.
Speaker #1: As a reminder, this call is Strategy. Please go being recorded on Tuesday, ahead.
Speaker #1: August 4,
Speaker #2: GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures on our earnings release issued yesterday afternoon.
Speaker #1: conference call over to Noelle Dilts, Vice President of Investor Relations and Corporate.
Speaker #1: Strategy. Please go
Speaker #2: I'll now turn the call over to our CEO, Joe Catillo.
Speaker #2: Good morning to Officer, Nick Grindstaff, STERLING's Chief Financial Officer, and Dan Govan, everyone joining us, and welcome to STERLING STERLING's Chief Operating Officer. INFRASTRUCTURE's second quarter 2026 earnings conference call and As a reminder, there are accompanying webcast.
Speaker #3: Thanks, Noelle. Good morning, everyone. And thank you for joining Sterling's second quarter 2026 earnings call. Sterling delivered another outstanding quarter. With revenue growth of 90% and adjusted diluted EPS growth of $116%, from $2.69 to $5.80.
Speaker #2: I'm pleased to be here website. These slides include today to discuss the results with Joe Cutillo, details on our full year, STERLING's Chief Executive Officer, 2026 financial guidance.
Speaker #2: These slides include today. Please refer to details on our full year, STERLING's most recent 10-K and 10-Q 2026 financial earnings. Before filings for a more complete description turning the call over to Joe, I will read the of risk factors that could affect these safe harbor statement.
Speaker #3: These results reflect the strength of our strategy, accelerating demand across our markets, and the exceptional execution by our teams. Adjusted EBITDA more than doubled in the quarter, with margins expanding 150 basis points year over year to reach 22%.
Speaker #2: The projections and assumptions. The discussion today may include forward-looking statements. The company assumes no obligation to update these statements. Actual results could differ materially from the forward-looking statements as a result of new information.
Speaker #2: The call, which are all financial measures not company assumes no obligation to update recognized under US GAAP. As required by SEC rules and regulations, information, future events, or otherwise.
Speaker #3: The current market demand allows us to be selective. Rather than chasing every opportunity, we are concentrating on the projects that strengthen our customer relationships, position us for future growth, and enhance our margins.
Speaker #2: income, or adjusted earnings per share on this I'll now turn the call over to our CEO, Joe call, which are all financial measures, not Cutillo.
Speaker #2: recognized under US GAAP. As
Speaker #2: required by SEC rules and regulations, Thanks, Noelle.
Speaker #3: Dyeing backlog at quarter end totaled $4.3 billion. Up $116% year over year. In combined backlog, increased $150% to reach $5.6 billion. In addition, we have visibility into high-probability future phase opportunities that exceed $1.4 billion.
Speaker #2: these non-GAAP financial measures are reconciled
Speaker #2: measures upon our earnings release issued yesterday
Speaker #2: measures upon our earnings release issued yesterday afternoon. I'll now turn the call over call.
Speaker #2: to our CEO, Joe
Speaker #2: Cutillo. growth of
Speaker #2: Cutillo. growth of
Speaker #3: Thanks, Noelle. Good morning, 90% and adjusted diluted EPS growth of everyone. And thank you for joining $116%, from STERLING's second quarter 2026 earnings $2.69 to call.
Speaker #3: STERLING delivered another $5.80. outstanding quarter. With revenue These results reflect the strength of our growth 90% and adjusted diluted EPS strategy, accelerating demand across our markets, and growth of the exceptional execution by $116%, from our $2.69 to teams.
Speaker #3: Together, our signed backlog, unsigned awards, and future phase opportunities provide visibility into a total addressable pool of work of more than $7 billion. An increase of more than 2.5 billion since year end.
Speaker #3: The growth in our backlog and future phase work in the quarter together with our visibility into customers' multi-year capital plans further strengthens our confidence in our multi-year outlook.
Speaker #3: The current market demand allows us to be margins. Signed backlog at selective. Rather than chasing every quarter end totaled $4.3 opportunity, we are billion.
Speaker #3: Now, I'd like to discuss our segment results for the quarter in more detail. In E-Infrastructure, second quarter revenue grew $192%. Mission-critical activity—including work on data centers and semiconductor campuses—was the primary growth driver in the quarter.
Speaker #3: Backlog at $1 billion. In addition, we have visibility into $1 billion of high-probability future phase opportunities, up 116% year over year. In combined, $1.4 billion backlog, increased year over year.
Speaker #3: E-Infrastructure adjusted operating income increased $148%. And adjusted operating margins remained strong at $24%. Margins continued to benefit from our strong execution on large time-sensitive mission-critical projects.
Speaker #3: billion. Together, our signed An increase of more than 2.5 billion backlog, unsigned since year end. The growth in our backlog and future awards, and future phase phase work in the quarter together with opportunities provide visibility into a total addressable pool of our visibility into customers' work of more than multi-year capital plans $7 further strengthens our billion.
Speaker #3: Revenue for our site development operations more than doubled on an organic basis. And adjusted operating margins expanded both year over year and sequentially. We saw robust growth across each of our geographies, with particular strength in our Rocky Mountain division.
Speaker #3: An increase of more than $2.5 billion since confidence in our multi-year year-end. The outlook. Now, I'd like growth in our backlog and future phase to discuss our segment results for work for the quarter, together with the quarter in more our visibility into customers' detail.
Speaker #3: Where revenue increased nearly $700%. We also saw strong increases in our Northeast business as work on our large semiconductor campus ramped up. CEC delivered $140% revenue growth compared to its prior year's second quarter.
Speaker #3: multi-year capital In E-Infrastructure, second quarter plans further strengthens our confidence revenue grew in our multi-year $192%. Mission-critical activity including work outlook. Now, I'd like to on data centers and discuss our segment results for semiconductor campuses was the the quarter in more primary growth driver in the detail.
Speaker #3: In quarter. E-Infrastructure, second quarter E-Infrastructure adjusted operating revenue grew income increased $192%. Mission-critical activity including work on $148%. And adjusted operating data centers and margins remained strong at semiconductor campuses was the 24%.
Speaker #3: With margins strengthening both year over year and sequentially. The Texas market remains exceptionally strong. During the quarter, CEC secured several additional project wins contributing to a $1.7 billion increase in its combined backlog since year end 2025.
Speaker #3: primary growth driver in the Margins continued to quarter. benefit from our strong E-Infrastructure adjusted operating income increased execution on large time-sensitive mission-critical projects. $148%.
Speaker #3: And adjusted operating Revenue for our site development margins remained strong in operations more than doubled on an 24%. organic basis. Margins continued to And adjusted operating margins expanded benefit from our strong both year over year execution on large and sequentially.
Speaker #3: Additionally, we are seeing continued success on winning projects where we are performing electrical and site work in an integrated manner. We continue to see tremendous opportunities ahead in both electrical and site development.
Speaker #3: In aggregate, our E-Infrastructure signed backlog, unsigned electrical awards, and future phase site development opportunities now exceed $6 billion. Representing an increase of 2.7 billion since year end.
Speaker #3: And Where revenue increased nearly adjusted operating margins expanded both year over year and $700%. We also saw strong sequentially. We saw robust growth across each of increases in our Northeast business as work on our our geographies with large semiconductor campus particular strength in our ramped Rocky Mountain division.
Speaker #3: Where up. CEC delivered revenue increased nearly $700%. $140% revenue growth compared to its prior year's second We also saw strong quarter. With margins increases in our Northeast business as work on our strengthening both year over year and large semiconductor campus ramped sequentially.
Speaker #3: Mission-critical work, including data centers, large manufacturing projects, and semiconductor, represented more than $92% of E-Infrastructure signed backlog at the end of the quarter. Future phase work is predominantly related to mission-critical projects.
Speaker #3: With margins a $1.7 billion strengthening both year over increase in its combined year and backlog since year end sequentially. The Texas market remains 2025.
Speaker #3: Moving to transportation solutions, second quarter revenue declined 20%. Reflecting our ongoing reallocation of resources, from transportation projects to higher margin E-Infrastructure projects. This shift is now taking place at an accelerated pace, as activity on our E-Infrastructure projects in the Rocky Mountain and Texas regions has increased.
Speaker #3: exceptionally strong. During the quarter, CDC Additionally, we are seeing continued success on winning secured several additional project projects where we are performing wins contributing to a electrical and site work $1.7 billion in an integrated increase in its combined backlog since year end manner.
Speaker #1: Good morning, ladies and gentlemen. And welcome to the STERLING INFRASTRUCTURE second quarter webcast and conference call. At this time, onlines are in a listen-only mode.
Speaker #3: This was the first quarter that our Rocky Mountain operation generated more E-Infrastructure revenue than transportation revenue. In addition, we are continuing to wind down our low bid heavy highway work in Texas, which is nearing completion.
Speaker #1: Following the presentation, we will conduct a question-and-answer session. Good morning, ladies and If at any time during this call gentlemen. And welcome to the require immediate assistance, please STERLING INFRASTRUCTURE second quarter press door zero for the webcast and conference operator.
Speaker #1: Following the presentation, we will conduct a question-and-answer session. Good morning, ladies and gentlemen, and welcome to the Sterling Infrastructure second quarter press call. If at any time during this call you require immediate assistance, please press zero for the webcast and conference operator.
Speaker #3: We continue to see opportunities now tremendous opportunities exceed $6 ahead in both electrical and site billion. Representing an increase development. In of 2.7 aggregate, our billion since year E-Infrastructure signed end.
Speaker #1: I would now like to turn the If at any time during this call you conference call over to Noelle Dilts. Vice President of Investor require immediate assistance, please Relations and Corporate press 40 for the operator.
Speaker #3: Transportation solutions adjusted operating margins reached $19.5% in the quarter up more than $500 basis points from the prior year period. And adjusted operating income grew 8%.
Speaker #3: Representing an increase E-Infrastructure signed backlog at the end of of 2.7 the billion since year quarter. Future phase work is predominantly end. Mission-critical work, related to mission-critical including data centers, large manufacturing projects, and projects.
Speaker #2: Good morning to everyone joining us, and welcome to STERLING
Speaker #2: INFRASTRUCTURE's second quarter
Speaker #2: 2026 earnings conference call and webcast. I'm pleased to be here today 2026.
Speaker #3: This strengthened margins and profitability was driven by our focus on pursuing the most attractive opportunities within the transportation market. We ended the quarter with transportation solutions backlog at $969 million.
Speaker #3: Semiconductor represented more, moving to transportation, than 92% of solutions. Second quarter revenue declined 20%. E-Infrastructure signed backlog at the end of the quarter, reflecting our ongoing efforts.
Speaker #2: to discuss our results with Joe Cutillo, I would now like to turn the
Speaker #2: STERLING's Chief Executive
Speaker #3: A 35% year-over-year increase. This primarily reflects the conversion of unsigned backlog to signed backlog. On a combined backlog basis, transportation solutions is up 8% from second quarter 2025 and is down 11% from year end 2025.
Speaker #2: Before Nick Grindstaff, STERLING's Chief Financial turning the calls over to Joe, I will read the Officer, and Dan Govan, Safe Harbor statement. The STERLING's Chief Operating Officer.
Speaker #2: discussion today may include forward-looking As a reminder, there are accompanying statements. Actual results could slides on the investor relations section of our differ materially from the statements made website.
Speaker #3: As revenue than transportation activity on our E-Infrastructure revenue. In addition, projects in the Rocky Mountain we are continuing to wind down and Texas region has our low bid heavy highway work increased.
Speaker #3: Shifting to building solutions, segment revenue declined 1% in the quarter driven by relatively flat home builder activity and adjusted operating margins were $9.9%. We continue to anticipate that the residential market will face strong headwinds throughout 2026.
Speaker #3: This was in Texas which is the first quarter that our Rocky nearing Mountain operation generated completion. Transportation solutions more E-Infrastructure adjusted operating margins reached revenue than transportation $19.5% in the revenue.
Speaker #2: information, future events, or otherwise. Please refer to Please also note that management may reference STERLING's most recent 10-K and 10-Q EBITDA, adjusted EBITDA, filings for a more complete description of risk factors that could affect these adjusted operating income, adjusted net income, or adjusted earnings per share on this projections and assumptions.
Speaker #3: In addition, quarter up more than $500 we are continuing to wind down basis points from the prior year a low bid heavy highway work period.
Speaker #3: in Texas which is nearing And adjusted operating income grew 8%. This strengthened margins and completion. Transportation solutions profitability was driven by our adjusted operating margins reached focus on pursuing the most attractive $19.5% the opportunities within the quarter up more than $500 transportation basis points from the prior year market.
Speaker #3: In Texas, which is nearing completion, adjusted operating income grew 8%. This strengthened margins. Transportation Solutions profitability was driven by our focus on pursuing the most attractive opportunities within the transportation market. Our adjusted operating margins reached 19.5% in the quarter, up more than 500 basis points from the prior year period.
Speaker #2: these non-GAAP financial measures are Please also note that management may reference EBITDA adjusted EBITDA, reconciled to their most comparable GAAP financial adjusted operating income, adjusted net measures on our earnings release issued yesterday afternoon.
Speaker #3: The strength of Sterling's diversified portfolio and strategy to focus on growth and high-margin end markets enabled us to deliver another fantastic quarter. With that, I'd like to turn it over to Nick to give you more details on some of our financial metrics in 2026 guidance.
Speaker #3: Good morning, everyone.
Speaker #3: STERLING's second quarter 2026 earnings
Speaker #3: Sterling delivered another outstanding quarter, with revenue...
Speaker #3: Nick?
Speaker #2: Thanks, Joe, and good morning. I'll begin with our consolidated backlog metrics. Our second quarter backlog totaled $4.3 billion. A $116% year-over-year increase. Backlog increased 50% year-over-year on an organic basis despite the strong revenue burn in the quarter.
Speaker #3: transportation solutions backlog at $969 On a combined backlog basis, transportation solutions is million. A 35% year-over-year up 8% from second quarter increase. This primarily reflects the conversion 2025 and is down 11% from year end of unsigned backlog to 2025.
Speaker #3: Transportation Solutions backlog is at $969 million on a combined backlog basis. Transportation Solutions is up 8% from the second quarter and up 35% year-over-year. This primarily reflects the conversion of unsigned backlog to signed backlog. It is down 11% from year-end 2025.
Speaker #3: On Shifting to building a combined backlog solutions, segment revenue basis, transportation solutions is up declined 1% in the 8% from second quarter driven by relatively quarter flat home builder 2025 and is down 11% from year end activity and adjusted operating margins were 2025.
Speaker #2: Combined backlog of $5.6 billion increased $150% or 36% on an organic basis. Second quarter 2026 book-to-burn ratios were 1.4 times for backlog and 1.3 times for combined backlog, exclusive of the impact of the Stoneridge acquisition.
Speaker #3: Adjusted EBITDA more than doubled in the quarter, with $5.80. These margins expanding 150 results reflect the strength of our basis points year over year to strategy, accelerating reach demand across the markets, and the 22%.
Speaker #3: Shifting to 9.9%, we continue to anticipate that the residential solutions segment revenue market will face strong declines—about 1%—with headwinds throughout the quarter, driven by relatively flat home builder activity in 2026.
Speaker #3: The current market exceptional execution by demand allows us to be our teams. selective. Rather than chasing every Adjusted EBITDA more than doubled opportunity, we are in the quarter, with concentrating on the projects that margins expanding 150 basis strengthen our customer points year over year to reach relationships, position us for future growth, and enhance our 22%.
Speaker #3: And adjusted operating margins were 9.9%. The strength of STERLING's diversified portfolio and strategy to focus on growth and high-margin end markets enabled us to deliver another fantastic quarter. We continue to anticipate that the residential markets will face headwinds throughout the quarter.
Speaker #2: Turning to cash flow, cash flow from operating activities for the first half of 2026 was $328 million. We expect continued strength in operating cash flow for the full year.
Speaker #3: Up 116% year-over-year, strengthening our customer relationships and positioning us for future growth with a combined backlog. This has increased growth and enhanced our margins by 150%, reaching $5.6 million.
Speaker #2: Cash flow used and investing activities, included $70 million of CapEx. Given the significant increase in our full-year 2026 revenue expectation over the past 6 months and our visibility into future demand, we are increasing our CapEx guidance to $130 to $140 million.
Speaker #3: fantastic quarter
Speaker #3: with that I'd like to turn it over consolidated backlog metrics.
Speaker #3: to Nick to give you more Our second quarter backlog
Speaker #3: details on some of our financial
Speaker #3: metrics in 2026 billion.
Speaker #3: guidance.
Speaker #3: Nick?
Speaker #3: Together, our signed $150% to reach backlog, unsigned $5.6 awards, and future phase billion. In addition, we opportunities provide visibility have visibility into into a total addressable pool of high-probability future phase work of more than opportunities that exceed $7 $1.4 billion.
Speaker #2: Thanks, Joe, and good year-over-year on an organic morning. I'll begin with our basis, despite the strong revenue burn in consolidated backlog metrics this quarter.
Speaker #2: Which is a $30 million increase from prior guidance. These incremental investments in our fleet will drive productivity and expand capacity. First half 2026 cash flow from financing activities was a $48 million outflow.
Speaker #2: year-over-year on an organic Second quarter 2026 book-to-burn basis despite the strong revenue burn in the ratios were 1.4 times for quarter. Combined backlog and 1.3 backlog of $5.6 times for combined billion increased backlog, exclusive of the impact of the $150% or Stoneridge 36% on an organic acquisition.
Speaker #2: Including share repurchases of $35 million, at an average price of $511.18 per share. Remaining availability under the existing repurchase authorization was $339 million, at the end of the quarter.
Speaker #2: We will remain opportunistic in our approach to share repurchases. Moving to our balance sheet, we ended the quarter with $464 million of cash and debt of $284 million.
Speaker #2: For a cash net-of-debt balance of $181 million. On July 2nd, we closed on the extension and expansion of our revolving facilities to $1.5 billion and extended the maturity to July 2031.
Speaker #2: Cash flow used in demand—we are increasing in investing activities, including our CapEx guidance to $70 million of $130 to $140 million CapEx, given the significant amount.
Speaker #2: We used this facility to pay off our existing term loan. The amended facility provides additional flexibility as we look to grow the business both organically and through M&A.
Speaker #2: Our current backlog, visibility, and strong market tailwinds position us for an even better year than we originally anticipated. We are increasing our guidance ranges for 2026 to reflect both the improved outlook for the core business, as well as the addition of Stoneridge.
Speaker #2: These incremental investments in $35 million at an our fleet will drive productivity and expand average price of $511.18 per capacity. First half share. Remaining 2026 cash flow from financing availability under the existing repurchase activities was a $48 authorization was million outflow $339 million at the end of the including share repurchases for 35 quarter.
Speaker #3: We time-sensitive mission-critical saw robust growth across each projects. Revenue for our site-development operations of our geographies with particular strength in our more than doubled on an Rocky Mountain division.
Speaker #3: We time-sensitive mission-critical saw robust growth across each projects. Revenue for our site-development operations of our geographies with particular strength in our more than doubled on an Rocky Mountain division. organic basis.
Speaker #2: million dollars at an average We will remain opportunistic in our approach to price of share repurchases. Moving to our balance sheet, we share. Remaining ended the quarter with availability under the existing repurchase authorization was $464 million of cash and debt of $284 $339 million at the end of the million.
Speaker #2: Our guidance ranges are: revenue of $4 billion to $4.15 billion, diluted EPS of $17.25 to $17.85, adjusted diluted EPS of $19.70 to $20.30, EBITDA of $829 million to $854 million, adjusted EBITDA of $891 million to $916 million.
Speaker #2: quarter. We will remain For a cash net-of-debt balance of opportunistic in our approach to $181 share repurchases. million. On July 2nd, Moving to our balance sheet, we we closed on the extension and ended the quarter with expansion of our revolving $464 million of cash facilities to $1.5 and debt of $284 billion and extended the maturity to million.
Speaker #3: The Texas market remains exceptionally strong. up. CDC delivered During the quarter, CEC $140% revenue growth secured several additional project compared to its prior year's second wins contributing to quarter.
Speaker #2: For cash July net-of-debt balance of 2031. We used this facility to $181 pay off our existing term million. On July 2nd, we loan. The amended facility closed on the extension and expansion provides additional flexibility as we of our revolving look to grow the business both facilities to $1.5 billion and extended the maturity to organically and through M&A.
Speaker #2: Now, I will turn the call back to Joe.
Speaker #3: Thanks, Nick. Positive trends we've been talking about over the past several quarters, have continued to accelerate. We're seeing projects become larger, more complex, and longer in duration.
Speaker #2: The amended facility originally anticipated. We are provides additional flexibility as we look to grow the business both increasing our guidance ranges for 2026 to organically and through M&A.
Speaker #3: We continue to see tremendous opportunities 2025. ahead in both electrical and Additionally, we are seeing site development. In continued success on winning aggregate, our projects where we are performing E-Infrastructure signed electrical and site work in backlog, unsigned electrical an integrated awards, and future phase site development mix.
Speaker #3: Which reflects both the scale of what's being built and the importance of these assets to our customers. Our customers are asking us to do more.
Speaker #2: Our current the core business as well as backlog, visibility, and strong the addition of market tailwinds position us for Stoneridge. Our guidance ranges an even better year than we originally are: revenue of $4 anticipated.
Speaker #3: We are continuing to get pulled into new geographies because they know Sterling can deliver complex projects faster and safer than anyone else. Our customers' recognition of our critical contribution to their success has allowed us to participate in their long-term planning process.
Speaker #2: We are billion to $4.15 increasing our guidance ranges for billion, 2026 to diluted EPS of $17.25 to core business as well as the addition of $17.85, adjusted diluted Stoneridge.
Speaker #2: Our guidance ranges EPS of are: revenue of $4 $19.70 to billion to $4.15 $20.30, billion, EBITDA of diluted EPS of $829 million to $17.25 to $854 million, adjusted EBITDA of $17.85, adjusted diluted $891 million EPS of to $916 $19.70 to million.
Speaker #3: Mission-critical work, including data centers, large awards, and future phase site development opportunities now manufacturing projects, and semiconductor, represented more exceed $6 than 92% of billion.
Speaker #3: What we're seeing ahead is going to be far greater than we originally anticipated. Our focus today is making sure we stay ahead of what's coming.
Speaker #2: $20.30, Now, I will turn the call back to EBITDA of Joe.
Speaker #3: Internally, we are working to ensure that we have the right people, resources, and capacity in place to support sustained strong growth in the years ahead.
Speaker #2: $829 million to Thanks,
Speaker #2: $854 Nick.
Speaker #2: million, adjusted EBITDA of
Speaker #2: $891 million to
Speaker #3: reallocation of resources, Future phase work is predominantly from transportation projects related to mission-critical to higher margin E-Infrastructure projects. Moving to transportation solutions, second quarter revenue projects.
Speaker #2: $916 to
Speaker #3: I'm going to hand the call over to Dan Govan, our Chief Operating Officer, to discuss some of these key areas of focus. Dan?
Speaker #2: to
Speaker #2: Joe.
Speaker #3: This shift is now taking place at an declined 20%. accelerated pace. As Reflecting our ongoing activity on our E-Infrastructure reallocation of resources projects in the Rocky from transportation projects Mountain and Texas regions has to higher margin increased.
Speaker #3: Thanks, duration. Which reflects both the Nick. Positive trends we've been talking scale of what's being about over the past several built and the importance of these quarters have continued to assets to our customers.
Speaker #4: Thanks, Joe. Planning for the future is a core part of our strategy. We aren't just focused on meeting today's demand, we're making the investments now in our people, equipment, and capabilities that will support sustained growth for years to come.
Speaker #3: This was E-Infrastructure the first quarter that our projects. This shift is now Rocky Mountain operation taking place at an generated more E-Infrastructure accelerated pace.
Speaker #3: Which reflects both the STERLING can deliver scale that's being complex projects faster and built and the importance of these assets to our safer than anyone else.
Speaker #3: customers. Our customers are asking Our customers' recognition of our critical us to do more. contribution to their We are continuing to get pulled into new geographies because they know success has allowed us to participate in their long-term planning STERLING can deliver complex process.
Speaker #4: Our people remain our greatest competitive advantage. As our customers undertake larger time-sensitive mission-critical projects across the country, our experienced project managers and operating teams are setting us apart through exceptional operational execution.
Speaker #4: That's why we are increasing our investments in developing, attracting, and retaining the industry's best talent. Through expanded recruiting efforts and training programs, like Sterling Academy and CEC University, we're building the workforce skill sets that will support our accelerated growth.
Speaker #3: contribution to their Our focus today success has allowed us to is making sure we stay ahead of what's participate in their long-term planning coming.
Speaker #3: contribution to their Our focus today success has allowed us to is making sure we stay ahead of what's participate in their long-term planning coming. process.
Speaker #3: What ensure that we have the right we're seeing ahead is going to people, resources, and be far greater than we capacity in place to originally support sustained strong anticipated.
Speaker #3: We ended the quarter with And adjusted operating transportation solutions backlog at income grew $969 8%. This strengthened margins and profitability was driven by a million.
Speaker #3: Our focus today growth in the years is making sure we stay ahead of ahead. I'm going to hand the call over what's coming. to Dan Govan, our Chief Internally, we're working to Operating Officer, to ensure that we have the right discuss some of these key areas of people, resources, and focus.
Speaker #4: Combined with our strong reputation for safety, quality, and execution, these investments position Sterling as the employer of choice, helping us to attract talent as we enter into new markets.
Speaker #3: A 35% year-over-year focus on pursuing the most attractive increase. This primarily opportunities within the reflects the conversion transportation of unsigned backlog to market. We ended the quarter with signed backlog.
Speaker #3: capacity in place to Dan?
Speaker #3: growth for the years
Speaker #3: ahead. I'm going to hand the call over
Speaker #4: We're also investing strategically in our equipment fleet, as we grow and upsize our fleet, we're increasing our capacity and improving productivity and operational efficiency in new geographies.
Speaker #3: to Dan Govan, our Chief Operating Officer, focused on meeting today's
Speaker #3: discuss some of these key areas of...
Speaker #3: focus.
Speaker #3: Dan?
Speaker #2: Thanks, Joe. Planning for the future is a core part of
Speaker #4: This creates benefits that support margin expansion over time. At CEC, we are making great progress in ramping up production at our prefabrication facilities. Which will drive productivity with our field electricians and provide cost savings.
Speaker #2: our strategy. We aren't just
Speaker #2: demand or making the investments now in
Speaker #2: our people, equipment, and
Speaker #2: support sustained growth for years to
Speaker #2: greatest competitive
Speaker #2: advantage, as our customers undertake execution.
Speaker #4: And finally, we're complementing these organic investments with tuck-in acquisitions. These acquisitions bring a strong local leadership while expanding our presence and attractive markets. The recent Stoneridge acquisition is a great example of this strategy in action.
Speaker #2: mission-critical projects across the
Speaker #2: country, our experienced project industry's best managers and operating
Speaker #2: Teams are setting us up through...
Speaker #2: exceptional operational like STERLING Academy, and
Speaker #2: expectations. That's why we are
Speaker #2: increasing our investments in developing, attracting, and retaining the
Speaker #4: As it positions us well for coming activity in the Pacific Northwest. Together, these strategic investments ensure we're well positioned to capitalize on significant opportunities ahead.
Speaker #2: industry's best
Speaker #3: With that, I'd like to turn it over to Nick to give you more 2026. The strength of details on some of our financial STERLING's diversified portfolio metrics in 2026 in strategy to focus on growth and guidance.
Speaker #2: talent. for safety,
Speaker #2: efforts and training programs like
Speaker #2: STERLING Academy and
Speaker #2: STERLING Academy and CEC University for building the the employer of choice helping us
Speaker #3: Nick?
Speaker #2: Thanks, Joe, and good morning. I'll begin with our
Speaker #2: support our accelerated
Speaker #4: Now, I will hand the call back to Joe.
Speaker #2: growth. Combined with our strong
Speaker #2: reputation for safety, strategically in our equipment fleet, as
Speaker #3: Thanks, Dan. Turning to our segment expectations for 2026. Any infrastructure solutions we continue to see exceptionally strong demand, for large mission-critical infrastructure, and we believe this will support meaningful growth for many years to come.
Speaker #2: totaled $4.3
Speaker #2: quality, and execution, we grow and upsize our
Speaker #2: these investments position STERLING as
Speaker #2: A $116%
Speaker #2: the employer of choice helping us
Speaker #2: Backlog increased 50%
Speaker #2: to attract talent as we and operational efficiency
Speaker #2: enter into new markets.
Speaker #2: We're also investing creates benefits that support margin
Speaker #2: strategically in our equipment fleet as expansion over
Speaker #2: Combined Our second quarter backlog totaled backlog of $5.6 $4.3 billion. billion increased A $116% $150% or year-over-year increase. 36% on an organic Backlog increased 50% basis.
Speaker #2: we grow and upsize our time.
Speaker #2: fleet. We're increasing our
Speaker #2: capacity and improving productivity
Speaker #3: In the data center market, customer activity is stronger than ever. Projects are becoming larger, lasting longer, and expanding into more markets across the country.
Speaker #2: and operational efficiency in
Speaker #2: new geographies. This Which will drive productivity with creates benefits that support margin
Speaker #2: expansion over
Speaker #2: time. At CEC, we finally, we're complementing these
Speaker #2: are making great progress in ramping organic investments with tuck-in
Speaker #2: up production at our
Speaker #3: Not only are we seeing more new projects, we're seeing many of our existing projects grow well beyond their original scope. Much of this incremental opportunity is not yet reflected in our backlog or future phase opportunities.
Speaker #2: prefabrication facilities. bring a strong local Which
Speaker #2: will drive productivity with
Speaker #2: Turning to cash basis. Second quarter flow, cash flow from operating activities 2026 booked burn for the first half of backlog and 1.3 2026 was $328 million.
Speaker #2: our field electricians and provide attractive markets.
Speaker #2: cost savings. And
Speaker #2: finally, we're complementing these organic great example of this strategy in
Speaker #2: investments with tuck-in
Speaker #2: acquisitions. These acquisitions us well for coming activity in
Speaker #2: We expect continued strength in operating backlog, exclusive of the impact of the cash flow for the full Stoneridge year. Cash flow acquisition. Turning to cash used in investing activities, cash flow from operations included $70 million of activity in the first half for CapEx.
Speaker #2: leadership while expanding our presence and
Speaker #3: Giving us additional confidence in the runway ahead. With the CEC acquisition, we have broadened our capabilities and are even better positioned to serve our data center customers.
Speaker #2: attractive market. A
Speaker #2: recent Stoneridge acquisition is a
Speaker #2: great example of this strategy in on significant opportunities
Speaker #2: Given the significant 2026 was increase in our full year $328 million. We 2026 revenue expect continued strength in operating expectation over the past six cash flow for the full months, and our visibility into future year.
Speaker #2: action as it positions us
Speaker #2: Pacific
Speaker #2: Northwest. Together, these
Speaker #2: strategic investments ensure we're well positioned to capitalize
Speaker #3: In the semiconductor market, we're making very good progress on our Northeast project, and are running ahead of schedule. We expect to generate significant revenue on this project in the third quarter.
Speaker #2: on significant opportunities
Speaker #2: ahead. Now, I will hand the call see exceptionally strong
Speaker #2: Which is a $30 increase in our full-year million increase from prior 2026 revenue expectation over the past six guidance. These incremental investments in our fleet will drive months, and our visibility into future productivity and expand demand, we are increasing our capacity.
Speaker #2: Back to demand for large, mission-critical projects.
Speaker #2: Joe. infrastructure and we believe
Speaker #3: Thanks, this will support meaningful Dan. Turning to our growth for many years to segment expectations for come. In the data center 2026, any infrastructure market, customer activity solutions we continue to is stronger than see exceptionally strong demand for large mission-critical ever.
Speaker #3: With a weather-related slowdown in the fourth quarter. We believe our exceptional performance on this project will position us in the semiconductor market as the go-to solution for large complex projects just like we have done in the data center market.
Speaker #2: First half CapEx guidance to 2026 cash flow from financing $130 to $140 million. Which is a $30 activities was a $48 million outflow million increase from prior including share repurchases of guidance.
Speaker #3: Projects are becoming beyond their original larger, lasting scope. Much of this incremental longer, and expanding into more opportunity is not yet markets across the reflected in our backlog country.
Speaker #3: In addition to the data centers and semiconductors, we are seeing some momentum in the broader manufacturing market. During the second quarter, we were awarded the initial scope of work on an electric vehicle plant in Atlanta.
Speaker #3: Not only are we, or future phases, seeing more new opportunities giving us projects, we're seeing many of our existing projects grow well beyond their original runway ahead.
Speaker #3: In addition, there are still several opportunities we believe could be awarded in 2026 or early 2027. For full year 2026, we now expect to deliver E infrastructure segment revenue growth of over $100%.
Speaker #3: Much of this incremental scope is not yet reflected in our backlog or future phase opportunities. With the CEC acquisition, we have broadened our capabilities and are even better positioned to serve our data center customers.
Speaker #3: opportunities, giving us in the semiconductor sector additional confidence in the market. We're making very good progress on our Northeast project runway ahead. With the CEC acquisition, we have broadened our reach and are running ahead of schedule.
Speaker #3: Including the contribution from CEC and Stoneridge. We anticipate that the legacy site development business will grow at rates approaching 70% or higher as several of our large projects accelerate adjusted operating profit margins for E infrastructure are expected to be in the mid-20% range.
Speaker #2: Our current backlog, visibility, and strong 2031. We used this facility to pay market tailwinds position us for off our existing term an even better year than we loan.
Speaker #3: We expect to generate significant semiconductor revenue in this market as the go-to solution project in the third, or large, quarter. With weather-related complex projects, just like we saw a slowdown in the fourth—have done in the data center quarter—we believe in our exceptional performance in this market.
Speaker #3: In transportation solutions, we are in the final year of the current federal funding cycle. Which concludes September 2026. We have built over two years of backlog, and are continuing to pursue select attractive opportunities.
Speaker #3: project will position us In addition to the data centers and semiconductors, we market as the go-to solution are seeing some momentum in the for large complex broader manufacturing market.
Speaker #3: In addition to the data Atlanta. In addition, centers and semiconductors, we are there are still several opportunities we seeing some momentum in the broader manufacturing believe could be awarded in 2026 or early market.
Speaker #3: For 2026, we are now anticipating a decline in transportation solutions revenue in the 7 to 10% range as we are shifting resources towards E infrastructure work at a faster pace.
Speaker #3: During the second quarter, we were awarded the initial scope 2027. For full year of work on an electric 2026, we now expect to deliver vehicle plant in E infrastructure segment revenue Atlanta.
Speaker #3: In addition, there growth of over are still several opportunities we believe could be awarded in $100%, including the contribution from 2026 or early CEC and Stoneridge.
Speaker #3: We expect significant year-over-year adjusted operating margin expansion roughly in the range of $150 to $200 basis points. In building solutions, we anticipate that revenue will decline modestly in 2026, and that adjusted operating margin will be in the high single to low double digits.
Speaker #3: The positive trends we've been talking
Speaker #3: about over the past several quarters have continued
Speaker #3: Including the of our large projects contribution from accelerate adjusted operating profit margins CEC and for E infrastructure are STERLING. We anticipate that the expected to be in the legacy site development business mid-20% will grow at rates approaching range.
Speaker #3: accelerate. We're seeing projects become larger, more
Speaker #3: complex, and longer in
Speaker #3: We continue to see opportunities for share gain coming out of the down cycle. Shifting gears as we look forward to the second half of the year and early 2027, we believe that the strong levels of bid activity we are seeing today will translate into strong awards.
Speaker #3: Our customers are asking accelerate. We're seeing projects become us to do more. larger, more We are continuing to get pulled into complex, and longer in new geographies because they know duration.
Speaker #3: In transportation to pursue solutions, we are in the select attractive final year of the current federal opportunities. For funding cycle. Which concludes September 2026, we are now anticipating a decline in transportation solutions revenue in 2026.
Speaker #3: However, given the lumpiness in timing, we could see softer third quarter awards with higher levels in the fourth quarter and early 2027. This coupled with our forecast for strong revenue burn in the third quarter, could result in a sequential backlog decline in the third quarter.
Speaker #3: We have built over two years of the $7 to 10% backlog and are continuing to range as we are shifting pursue select resources towards E infrastructure attractive work at a faster opportunities.
Speaker #3: What projects faster and we're seeing ahead is going to safer than anyone be far greater than else. Our customers' we originally recognition of our critical anticipated.
Speaker #3: For pace. We expect 2026, we are now significant year-over-year adjusted anticipating a decline in transportation operating margin solutions revenue in expansion roughly in the range of the 7th to 10th percent $150 to $200 basis range as we are shifting points.
Speaker #3: This would reflect award timing not a change in demand. On the acquisition front, we are continuing to look for acquisitions that are the right strategic fit to enhance our service offering expand our geographic footprint, and add capacity.
Speaker #3: resources towards E infrastructure In building solutions, we work in a faster anticipate that revenue will pace. We expect decline modestly in significant year-over-year adjusted 2026 and that operating margin adjusted operating margin will be in expansion roughly in the range of the high single to $150 to $200 basis low double points.
Speaker #3: We are seeing more high-quality acquisition targets in the market today than a year ago. Moving to our full year 2026 guidance, the midpoints of our ranges versus prior year would represent a 64% revenue growth, an 84% adjusted EPS growth, and a 79% adjusted EBITDA growth.
Speaker #3: In Digits, we continue to see building solutions. We have opportunities for share gain and anticipate that revenue will come out of the down cycle, declining modestly.
Speaker #4: Thanks, Joe. Planning for the future is a core part of...
Speaker #3: 2026 and that Shifting gears as we look forward to the second adjusted operating margin will be in half of the year and early the high single to low 2027, double we believe that the strong digits.
Speaker #4: our strategy. We aren't just
Speaker #4: demand, we're making the investments now in our people, equipment,
Speaker #3: We continue to see levels of bid activity we are seeing opportunities for share gain today will translate coming out of the down into strong awards.
Speaker #4: and capabilities that will
Speaker #4: support sustained growth for years to
Speaker #3: cycle. Shifting However, given the lumpiness gears as we look forward to the second half of the year and early in timing, we could see softer third-quarter 2027, we awards with higher levels in the fourth believe that the strong levels of bid activity we are seeing quarter and early 2027.
Speaker #4: come. Our people remain our greatest competitive
Speaker #4: advantage. As our customers undertake larger time-sensitive
Speaker #3: With that, I'd like to turn it over for questions.
Speaker #4: mission-critical projects across the
Speaker #4: country, our experienced project managers and operating
Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, you may press star one on your telephone keypad.
Speaker #3: today will translate into This coupled with our forecast for strong awards. strong revenue burn in the third However, given the lumpiness and quarter could result in timing, we could see a sequential backlog softer third-quarter decline in the third awards with higher levels in the fourth quarter.
Speaker #4: Teams are setting us apart through exceptional operational performance.
Speaker #4: That's why we are
Speaker #4: increasing our investments in larger time-sensitive developing, attracting, and retaining the
Speaker #1: Should you wish to cancel your request, you may press star two. Once again, that is star one should you wish to ask a question.
Speaker #3: quarter and early This would reflect award timing not a change in 2027. This coupled with our forecast for demand. On the acquisition front, we strong revenue burn in the third are continuing to look for quarter could result in acquisitions that are the right strategic a sequential backlog decline fit to enhance our service in the third offering expand our quarter.
Speaker #4: talent. Through expanded recruiting efforts and training programs,
Speaker #1: Our first question is from Brent Philman from Open Online. Her line is not open.
Speaker #4: CEC University, we're building the
Speaker #4: workforce skill sets that will
Speaker #4: support our accelerated growth. Combined with our strong reputation,
Speaker #4: Hey, thanks. Good morning. Congrats on the great quarter.
Speaker #3: This would reflect geographic footprint and add award timing, not capacity. We are seeing change in more high-quality acquisition demand. On the acquisition front, we are targets in the market, continuing to look for acquisitions today that are the right strategic fit compared to a year ago.
Speaker #3: Thanks, Brent.
Speaker #4: quality, and execution,
Speaker #4: Joe, any first question if I look at the backlog, you're up two X where you were a year ago. You have Stoneridge also contributing here in the back half.
Speaker #4: these investments position STERLING as
Speaker #4: to attract talent as we
Speaker #4: enter into new markets. We're also investing
Speaker #4: Maybe a little surprised you wouldn't see a bigger step up in revenue. In the second half. And I guess I'm wondering, are there longer than usual lead times associated with some of the backlog, or is this more work start kind of later in the year of 2027?
Speaker #3: We are seeing 64% more high-quality acquisition revenue growth and targets in the market today than a year ago, and 84% adjusted EPS growth.
Speaker #4: fleet, we're increasing our
Speaker #4: capacity and improving productivity
Speaker #4: in new geographies. This
Speaker #3: Moving to our full a 79% adjusted year 2026 guidance, the midpoints of our ranges versus EBITDA growth. With that, I'd like to turn it over for prior year would represent a 64% revenue questions.
Speaker #4: Maybe you could just squash that out.
Speaker #3: Yeah. No, we feel very confident in the backlog that's there, Brent. And the projects are happening on schedule and taking place. I will tell you, we're being very conservative in the fourth quarter right now.
Speaker #4: At CEC, we are making great progress in ramping
Speaker #4: up production at our
Speaker #4: prefabrication facilities.
Speaker #3: 84% adjusted
Speaker #3: EPS growth and a question and answer session.
Speaker #4: our field electricians and provide cost savings. And,
Speaker #3: 79% adjusted EBITDA growth. With that,
Speaker #3: We never know what the weather is going to be in the fourth quarter. If we have weather like last year, I think we'll have a much stronger fourth quarter than we have in our forecast.
Speaker #3: I'd like to turn it over to
Speaker #3: Joshua.
Speaker #4: acquisitions. These acquisitions
Speaker #1: Thank you, ladies and you wish to ask a gentlemen. We will now begin the question question. Our and answer session. Should you first question is from Brent have a question, you may press star Filman from Open Online.
Speaker #3: But frankly, we're just being conservative on the outlook we got. Plenty of work ahead of us and plenty of opportunities coming. Especially as we get into the fourth and first quarter, we see some really strong bid activity that's going to take place there.
Speaker #4: leadership while expanding our presence
Speaker #4: The recent Stoneridge acquisition is a
Speaker #1: or one on a telephone feedback. Her line is not Should you wish to cancel your request, you open. may press star
Speaker #4: action, as it positions
Speaker #1: two. Once again, that is star one. Should you
Speaker #4: the Pacific Northwest. Together, these
Speaker #1: question. Our first Joe, any first question question is from Brent Filman
Speaker #3: So no, nothing of a slowdown, more of a cautious behavior on us. We've raised guidance a couple of times. We've come up significantly in all the areas.
Speaker #4: strategic investments ensure we're
Speaker #4: well positioned to capitalize
Speaker #1: from Open Online. Her line was not
Speaker #1: open.
Speaker #4: ahead. Now, I will hand the call
Speaker #2: Hey, thanks. Good morning.
Speaker #3: We would have never expected CEC. We've had them about a year now, and we've doubled that business already. So we're seeing great progress just the conservative nature we have.
Speaker #4: back to Joe.
Speaker #2: quarter.
Speaker #3: Thanks,
Speaker #3: Thanks, Dan. Turning to our
Speaker #2: Do you have any first question?
Speaker #3: segment expectations for
Speaker #2: If I look at the backlog, you're
Speaker #3: 2026, any infrastructure solutions we continue to
Speaker #2: up a few X where you were a year lead times associated with some of the
Speaker #2: ago. You have
Speaker #2: STERLING also contributing here in the back
Speaker #4: Yeah. Understood. Okay. And then yeah, on that point on CEC, Joe, maybe just the profile of the new work awarded or pending, it seems like you've seen a huge step up in award activity at the electrical business.
Speaker #2: half. Maybe a little surprised you 2027?
Speaker #2: wouldn't see a bigger step up in Yeah.
Speaker #2: revenue in the second half. I guess I'm
Speaker #2: wondering, are there longer than usual lead
Speaker #2: backlog, or is there just more work start
Speaker #2: kind of later in the year of
Speaker #4: Just talk about maybe how the size and scope has changed of some of the pursuits, maybe the profile of margins. You're starting to see come through and kind of your thought process on how margins evolved for the business going forward.
Speaker #2: 2027? Maybe you can just flesh that
Speaker #3: Projects are becoming larger, lasting infrastructure and we believe this longer, and expanding into more will support meaningful markets across the growth for many years to country.
Speaker #2: out.
Speaker #3: Yeah. No, we is going to be in the fourth quarter. feel very confident in the If we have weather like last year, I think we'll have a backlog that's there, Brent, much stronger fourth quarter than we have in our and the projects are forecast.
Speaker #3: Not only are come. In the data center we seeing more new market, customer activity is projects, we're seeing many of our stronger than existing projects grow well ever.
Speaker #3: happening on schedule and taking But frankly, we're just being conservative on the place. I will tell you, we're being very outlook. We got plenty of work ahead of conservative in the fourth quarter right us in plenty of opportunities now.
Speaker #3: Yeah. We're tickled to death with CEC and what they're doing. If we step back and think what we've made the acquisition, we thought it would take us a year to fill their capacity, and we actually talked about shifting some resources to the southeast.
Speaker #3: We never know what the weather is coming, especially as we get into going to be in the fourth quarter. If we, the fourth and first quarter, we see some really heavy weather like last year, I think we'll have a strong bid activity that's going to be a much stronger fourth quarter than we have in our take place there.
Speaker #3: We filled their capacity up in about 90 days. And as a result, they've grown nicely. I think what you don't see in the numbers is kind of what's happening and what's coming from CEC.
Speaker #3: And plenty of opportunities. We've raised guidance a couple of times. We've come up significantly in all the coming—especially as we get into the areas.
Speaker #3: So now, and we've doubled that business no, nothing of a slowdown, already. So we're seeing great progress just the more of a cautious behavior on us.
Speaker #3: One of the strategic things we said we're going to do is they're in some end markets with some services. Then we said we were going to get out of.
Speaker #3: We've raised guidance a couple of conservative nature we times. We've come up significantly in all the have.
Speaker #3: We're in the process of getting out of those. Takes a little time. So when we look at the business, we look at it from the old pieces that we're getting out of and then the remaining business as it goes forward.
Speaker #3: areas. We would have never
Speaker #3: expected CEC without Okay.
Speaker #3: We expect to capabilities and are even better generate significant revenue on this positioned to serve our data center project in the third customers. In quarter.
Speaker #3: them about a year now,
Speaker #3: and we've doubled that business profile of the new work
Speaker #3: already. So we're seeing great
Speaker #3: With a weather-related slowdown in the semiconductor market in the fourth quarter, we believe our Northeast project and our exceptional performance on this are running ahead of schedule. We're making very good progress, and this will position us well.
Speaker #3: progress just the conservative
Speaker #3: And when we look at that piece, the margins are going up very, very nicely in that area. But also the job size is going up significantly.
Speaker #3: nature we award activity at the electrical
Speaker #3: have. Okay. business.
Speaker #2: And then yeah, on that point on
Speaker #2: CEC, Joe, maybe just a
Speaker #3: And I think one of the really rewarding things for us in the quarter, again, that doesn't show up, is CEC is now getting the second buildings on data centers that they're at, which says their performing at or above customer expectations.
Speaker #2: or pending that seems like you've seen a huge
Speaker #2: step up in
Speaker #2: award activity at the electrical
Speaker #2: how the size and scope has changed
Speaker #2: of some of the pursuits, maybe the profile of
Speaker #2: margins. You're starting to see come through. And
Speaker #3: And they're giving them the next phases and the next levels of work. So everything is coming together exactly as we had hoped. They're doing a great job.
Speaker #2: kind of your thought process on how
Speaker #3: During the second quarter, we were awarded the initial scope have done in the data center of work on an electric vehicle plant in market.
Speaker #2: margins evolved for the business going shifting some resources to the
Speaker #2: margins evolved for the business going shifting some resources to the forward.
Speaker #3: doing. I If we step back and think what you think what we made the don't see in the numbers is kind of acquisition, we thought it would take us a year to what's happening and what's coming fill their capacity.
Speaker #3: They're growing very, very rapidly. And adding capacity. And we see candidly, if we had 1,000 or 2,000 more electricians, we'd be growing it even faster.
Speaker #3: We actually talked about from CEC. One of the shifting some resources to the strategic things we said we were going to do Southeast. We filled their capacity up is they're in some end markets with some in about 90 days.
Speaker #3: So we've got a lot of programs in place on not only developing the electricians, but we got a full recruiting team that's recruiting every week to bring those electricians in.
Speaker #3: And as a result, they've grown nicely. I services. Then we said we were going to get out of—we're in the process of getting out of—I think what you don't—those.
Speaker #3: So it's been great. The only downside, which is the only reason I could see that our stock's not up exponentially today and looks like it's down, is the mix makes our margin look like it's lower.
Speaker #3: We anticipate that the 2027. For full year legacy site development business 2026, we now expect to deliver will grow at rates approaching E infrastructure segment revenue 70% or higher as several growth of over $100%.
Speaker #3: Takes a little that area. But also the time. So when we look at the business, job size is going up we look at it from the old pieces that we're getting out of and then the significantly.
Speaker #3: And if you look at every element of e-infrastructure, margins were up in every single piece of it. The only thing this drove the difference in margin is mix.
Speaker #3: In transportation 70% or higher as several solutions, we are in the of our large projects final year of the current federal accelerate. funding cycle.
Speaker #3: When we have CEC grow 140%, we love that. We'll take that all day long. When we have our Rocky Mountain business and we convert it from transportation to e-infrastructure, and they grow 700% in a year, we'll take that.
Speaker #3: But also the job centers that they're at, which says they're size is going up performing at or above significantly. And I think one of the really rewarding things for us in customer expectations.
Speaker #3: Which concludes September for E infrastructure are expected to be in the 2026. We have built over two years of mid-20% backlog and are continuing range.
Speaker #3: buildings on data centers They're doing a great job. They're growing that they're back, which says the very, very performing at and above rapidly. And adding customer expectations.
Speaker #4: Yeah. Understood, Joe. Appreciate the clarification there. Just the last one, maybe the update on the cross-selling opportunities between through CEC and the legacy site development business and how that's progressing.
Speaker #3: And they're capacity. giving them the next phases and the next And we see candidly, if we had 1,000 or levels of work. So everything is 2,000 more electricians, we'd be growing it coming together even faster.
Speaker #3: Exactly as we had hoped. So we've got a lot of programs in place on not only developing—they're doing a great job, they're growing very—the electricians, but we've got a full recruiting team that's recruiting very rapidly.
Speaker #3: Yeah. So we're on more sites today than we were on in the second quarter. And as we look forward, a lot of the data centers that we'll be coming out, we've had let me step back.
Speaker #3: And adding week to bring those electricians in. capacity. And we see candidly, if we had 1,000 or 2,000 So it's been great. The only downside which more electricians, we'd be growing it even is the only reason I could see that our faster.
Speaker #3: So we've got a lot of stock's not up exponentially programs in place on not only developing the today and looks like it's electricians, but we got a full down is the mix recruiting team that's recruiting every week makes our margin look like it's to bring those electricians in.
Speaker #3: Let me just say this. We've had more opportunities to have joint efforts than we have capacity in the electrical side. So as we're building up that capacity, Brent, that number will grow.
Speaker #3: stock's not up exponentially The only thing that's drove the difference in margin is today and let's make it staff, mix. When we have is the mix makes CEC grow 140%, we love our margin look like it's that.
Speaker #3: The reason it's not growing even faster than it is, it's growing faster than we thought. We thought it would take us until this time to be on our first one.
Speaker #3: We're on three or four now. It's just pure capacity. Our customers are asking us for it. If we had a union operation, I would tell you we'd be on a semiconductor plant up in New York right now.
Speaker #3: The only thing that's e-infrastructure, and they drove the difference in margin, is grow 700% in the mix. When we have CEC year, we'll take grow 140%, we love that.
Speaker #3: With the electrical side. So we're getting asked they see the value proposition. Frankly, it's even stronger than we anticipated. We're pretty bullish on it.
Speaker #3: We'll take that all day that. When we have our Rocky Mountain
Speaker #3: business and we convert it from
Speaker #3: transportation to one, maybe the update on the
Speaker #3: e-infrastructure, and they cross-selling opportunities
Speaker #3: So we're very happy with that. The faster we can ramp up additional capacity, or as you know, we're looking at continue to look at acquisitions in and around this space.
Speaker #3: grow 700% in a between through CEC and the legacy
Speaker #3: year, we'll take
Speaker #2: Yeah. Understood, Joe. progressing.
Speaker #2: Appreciate the clarification there. Just the last
Speaker #3: We can add some capacity there, but more joint projects will be on.
Speaker #2: one, maybe the update on the cost selling
Speaker #2: opportunities quarter.
Speaker #2: between the CEC and the legacy
Speaker #2: site development business and how that's
Speaker #4: Excellent. Thanks, Joe. I'll pass it on.
Speaker #2: progressed.
Speaker #3: Thanks, Brent.
Speaker #3: Yeah. opportunities to have joint So Ron, more sites efforts than we have capacity in today than we were on in the second the electrical side.
Speaker #3: Yeah, opportunities to have joint—so, Ron, more site efforts than we have capacity in today than we were on in the second—the Electrical side—quarter.
Speaker #1: Thank you. And our next question is from Louis De Palma from William Blair, Carolina. Is that open?
Speaker #3: And as we look So as we're building up that capacity, Brent, forward, a lot of the data centers that that number will we'll be coming out, we've grow.
Speaker #3: And as we look So as we're building up that capacity, Brent, forward, a lot of the data centers that that number will we'll be coming out, we've grow. had let me step back.
Speaker #2: Joe, Nick, Dan, and Noel, good morning.
Speaker #3: Hey, Louis.
Speaker #2: Joe, you mentioned how the CEC has lower margins relative to site development and how the CEC margins should grow very nicely from a high-level.
Speaker #3: efforts than we have capacity in We're on three or four the electrical side. So as we're now. It's just pure capacity. building up that capacity, Brent, Our customers are asking us for that number will it.
Speaker #3: Moving to our fit to enhance our service full year 2026 offerings, expand our geographic guidance, the midpoints of our ranges versus footprint, and add prior year would represent capacity.
Speaker #3: grow. The reason it's not If we had a union operation, I would tell you we'd be on a growing even faster than it is, it's growing semiconductor plant up in New York right faster than we thought.
Speaker #3: We thought it would take us until this now. With the electrical side. time to be on our first one. We're on three or So we're getting asked they four see the value now.
Speaker #2: Can you discuss where CEC margins could grow to in the long term? And just in general explain why is there such a significant variation between the margins for site development versus electrical services?
Speaker #3: It's just pure capacity—our proposition. Frankly, it's even stronger than we anticipated. Customers are asking us for it. If we had a union operation, I would tell you. We're pretty bullish on it.
Speaker #1: Thank you. Ladies and gentlemen, we will now begin the
Speaker #1: Should you have a question, you may press
Speaker #3: So we're getting asked, they know, we're looking at continue to look at acquisitions in and around this see the value of our space. We can add some capacity opposition.
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Speaker #2: And could those margins converge over time?
Speaker #3: Frankly, it's even stronger than there, the more we anticipated. We're a pretty bullish on it. joint projects we'll be So we're very happy with that.
Speaker #3: Yeah. So let me make sure people don't get too delusional. We don't ever expect electrical margins to be up at the peak of our site development.
Speaker #3: The faster we can ramp up additional on.
Speaker #3: There are so many more complexities and differences with the site development and things we can do to truly change the scope and drive productivity in those projects versus an electrical project.
Speaker #3: space. We can add some capacity.
Speaker #3: there, the more
Speaker #4: Hey, thanks. Good morning. Congrats on a great—
Speaker #3: Joint projects will be with William Blair, Carolina.
Speaker #4: quarter.
Speaker #3: on.
Speaker #3: Thanks, wish to ask a Brent.
Speaker #4: if I look at the backlog, you're up two X where you were a year
Speaker #3: It's pretty laid out, right? I mean, the design is there. The amount of wire, etc., etc. I'm overly simplifying it. But it's laid out.
Speaker #1: Thank you. And our next question is
Speaker #4: ago. You have Stoneridge also contributing here in the
Speaker #1: from Louis De Palma from William Blair, Carolina. Is that
Speaker #4: back half. Maybe a little surprised you wouldn't see a bigger step up in
Speaker #3: So there's only so much you can get there. However, we're not happy with the margins, nor CEC, with where they are today. And as we move to a better mix of projects, we see three to five hundred basis points on top of some things we're doing internally.
Speaker #1: open?
Speaker #2: Yeah. Nick, Dan, and Noelle, site development and how the
Speaker #4: revenue. Brent. In the second half, and I guess I'm
Speaker #4: good
Speaker #4: I'm wondering, are they longer than usual?
Speaker #3: Hey, CEC margins should
Speaker #3: Louis.
Speaker #4: backlog, or is more work
Speaker #4: Joe, you mentioned
Speaker #4: start kind of later in the year of
Speaker #4: how
Speaker #4: Maybe you could just squash that out.
Speaker #4: lower margins relative to
Speaker #3: No, we feel very confident in the
Speaker #3: Of margin improvement. And we've said over 12 to 18 months. I think we'll see some of that sooner. The faster we get out of some of this other stuff, the faster that's going to come through.
Speaker #3: backlog that's there, Brent.
Speaker #4: CEC margins should grow
Speaker #3: And the projects are happening on schedule and taking
Speaker #4: very just in general explain why is there
Speaker #4: nicely. From such a significant
Speaker #4: High-level, can you discuss the variation between the margins?
Speaker #3: place. I will tell you, we're being very
Speaker #4: discuss for site development
Speaker #3: We're watching that very closely. We watch it every month, Louis. And we doing a fantastic job there. If I step back and think three to five years, I don't know why today, the electrical world is kind of low double-digit margins, call it 10 to 12 percent EBITDA margins.
Speaker #3: conservative in the fourth quarter right
Speaker #4: where CEC margins versus electrical
Speaker #3: now.
Speaker #4: should grow to in the
Speaker #4: long term? And just time? in general, explain why is there
Speaker #4: such a significant
Speaker #4: variation between the margins expect electrical margins to be up
Speaker #4: versus electrical services?
Speaker #4: And could those margins converge over complexities and differences with the
Speaker #4: time? site development and things we can
Speaker #3: I don't know why we can't get that close to 20%. I really don't. Based on the project size, scopes, and the quality of the projects, that's our that's our goal is over a long period of time to get there.
Speaker #3: Yeah. So, to truly make sure people don’t change the scope or get too delusional, we don’t ever expect, and we don’t drive productivity in those projects, expecting electrical margins to be up versus an electrical project.
Speaker #3: So forecast. But no, nothing of a slowdown frankly, we're just being conservative on the more of a cautious behavior on outlook. We got plenty of work ahead of us. us.
Speaker #3: So forecast. But no, nothing of a slowdown frankly, we're just being conservative on the more of a cautious behavior on outlook. We got plenty of work ahead of us.
Speaker #3: site development and things we can I'm overly simplifying it. But it's laid out. So there's only so much you can do to truly get there.
Speaker #3: And we've been pretty successful at driving margins in our businesses much higher than anybody else and we feel like we can do the same here.
Speaker #3: We would have fourth and first quarter, we see some really never expected CEC. We've had strong bid activity that's going to them about a year take place there.
Speaker #3: ...change scope, and however, we're not happy with the margins or the productivity in those projects, nor CEC, with where they are versus an electrical project.
Speaker #3: It's pretty laid out, right? I mean, the design is today. And as we move to a better mix there, the amount of wire, etc., etc.
Speaker #2: Excellent. Color. And I was also wondering, could you provide more detail in terms of why the future phase work metric doesn't always capture the full visibility that you have in terms of your pipeline?
Speaker #4: Yeah. Understood.
Speaker #4: And then yeah, on that point on CEC, Joe, maybe just the
Speaker #3: However, internally, on margin, we're not happy with the margins. Improvement—more CEC with where they are, 18 months. I think we'll see some of that today.
Speaker #4: awarded or pending, it seems like you've seen a
Speaker #4: huge step up in
Speaker #3: Mix of projects. We're watching that very closely. We watch it three to five hundred basis points every month, Louis, and we have points on top of some things we're doing. Seen great progress.
Speaker #4: Just talk about maybe how the size and scope has changed
Speaker #3: Yeah. Great question. One of the time with us and most of the people have a phone to spend enough time with us. We're pretty conservative.
Speaker #4: of some of the pursuits, maybe the profile
Speaker #4: of margins. You're starting to see come through and
Speaker #4: kind of your thought process on
Speaker #4: how margins evolved for the business going
Speaker #3: And if anything, we want to overperform and make people happy. But one of the things we do not include and we're thinking about how we should be communicating this better is we're on a lot of projects today.
Speaker #3: The faster we get out of some of this other know why today, stuff, the faster that's going to come through. We're the electrical world is kind of watching that very closely.
Speaker #4: forward.
Speaker #4: forward. business.
Speaker #3: tickled to death with CEC and what Just talk about maybe
Speaker #3: We watch it every low double-digit margins, call it 10 month, Louis. And we have to 12 percent EBITDA seen great progress. The team's doing a margins.
Speaker #3: they're doing. If we step back and
Speaker #3: think what we made the
Speaker #3: acquisition, we thought it would take us a year to fill their capacity, and we actually had talked about
Speaker #3: Southeast. Yeah, we filled their capacity up in about 90 days. We're tickled to death with CEC and what they're doing, and as a result, they've grown nicely.
Speaker #3: Excuse me. That have a defined scope to build out a piece of property. So let's just say we have 600 acres of land. And they say, we're going to build five buildings on the first 300 acres.
Speaker #3: Call it 10 to over a long period of time to get 12 percent EBITDA there. And we've been pretty margins. I don't know why we can't get successful at driving margins in that close to 20%.
Speaker #3: I really don't. Based on the our businesses much higher than project size, scopes, and anybody else. And we feel like we can do the same the quality of the projects, that's here.
Speaker #3: And then we're going to build five buildings on the next 300 acres. We only talk about the first 300 acres, okay? We know that when they're finished with that, we're going to move the equipment to the next one.
Speaker #3: our goal. Is over
Speaker #3: a long period of time to get
Speaker #3: there. And we've been pretty could you
Speaker #3: There’s a little seasonal dip in the numbers at this time. So when we look at what’s happening and what’s coming from CEC, one of the things we look at is the old pieces that we’re getting out of, and then the strategic things we said we were going to do. The remaining business as it goes is still in some end markets with some forward momentum.
Speaker #3: successful at driving margins in our
Speaker #3: businesses much higher than
Speaker #3: anybody else and we feel like we can the future phase do the
Speaker #3: same.
Speaker #3: But that project hasn't been perfectly defined and articulated. But we know that on other projects we've been on, that happens. But the other thing that's happening, Louis, that is a relatively new dynamic is we are seeing them purchase incremental property on projects that we're on.
Speaker #3: And when we look at that service, and we said we were going to get out a piece, the margins are going up. We're in the process of getting out of it very, very nicely in those.
Speaker #4: Join,
Speaker #4: color. And I was also
Speaker #4: provide more detail in terms Yeah.
Speaker #4: the future phase
Speaker #3: And I think one of the really rewarding things for us in remaining business as it goes through the quarter, again, that doesn't forward. And when we look at that show up, is CEC's piece. The margins are going up very, very nicely in that, now getting the second buildings on data area.
Speaker #4: work metric doesn't with us and most of the people on this phone spend
Speaker #4: visibility that you have in terms
Speaker #3: So let's just say we're on a 300-acre project today. There happens to be one that's close to that. They have now purchased another 600 acres touching that property that they're going to expand and grow that on.
Speaker #3: And they're giving them the next phases and the next the quarter, again, that doesn't show levels of work. So everything is up, is CEC is now getting the second coming together exactly as we had hoped.
Speaker #3: We're pretty conservative. And if anything, we this better is we're on a lot of projects want today. Excuse to overperform and me. To have a defined scope, make people happy.
Speaker #3: That's not in any of our numbers. Now, we're there. We're working with the customers. We're working with them on plans. We're working with that on the future.
Speaker #3: But one of the to build out a piece of property. So let's things we do not just say we have include and we're thinking about how we 600 acres of land.
Speaker #3: These projects we've historically have said have been three years. We just got out of our executive leadership team meeting and we're looking at projects with our team.
Speaker #3: should be communicating And they say we're going to build five this better is buildings on the first 300 we're on a lot of projects today.
Speaker #3: Excuse acres. And then we're going to build five buildings on the next 300 me. That have a defined scope to acres. We only talk about the build out a piece of property.
Speaker #3: And a number of projects we're going to be on for five to eight, 12 years, if they continue to expand on this property is unbelievable.
Speaker #3: So let's just say we have, first, 300 acres of land, okay? And they say, "We're going to build five." We know that when they're finished with that, we're going to move the equipment to the buildings on the first 300, then move to the next one.
Speaker #3: So we don't put any of that into right now our future phase work. And we're trying to figure out a way to still remain extremely conservative but I don't feel like we're painting adequate picture for the outside community to understand when our guys say they're going to be on a job for five to eight years.
Speaker #3: lower. And if you look at every—so it's been great. The only element of e-infrastructure downside, which margins were up in every single—is the only reason I could see that our piece of it.
Speaker #3: We don't talk about that a lot. We talk about the three years because that's the project scope we're doing. The people just don't understand the size and scope of these jobs and the duration.
Speaker #3: But that project hasn't we are seeing them purchase been perfectly defined and incremental property on articulated. But we know projects that we're on. So let's just say we're that on other projects we've been on a 300-acre project on, that happens.
Speaker #3: But the other thing that's today. There happens to be one that's happening, Louis, that is close to that. They have a relatively new now purchased another dynamic is we 600 acres touching that are seeing them purchase property that they're going to expand and incremental property on grow that on.
Speaker #3: We'll take that all day lower. And if you look at every long. When we have our Rocky Mountain element of the infrastructure, business and we convert it from margins were up in every single transportation to piece of it.
Speaker #3: It is getting significantly bigger, which is perfect for us. Now, remember, not only do we have the site size, now we have the electrical side, this stays there after the site is done, for another couple of years.
Speaker #3: So our visibility keeps getting better and better. Project size keeps growing. So we feel very confident the opportunity is much bigger than we've been talking about.
Speaker #4: Yeah. Understood, Joe. Appreciate the clarification there. Just the last
Speaker #3: acres touching that We just got out of our property that they're going to expand and executive leadership team meeting and we're looking at grow that on.
Speaker #3: But what it's also done strategically for us is we had a very, very aggressive organic growth strategy, put in place. We felt. And a strategy to build that capacity.
Speaker #3: That's not in any of projects with our team. And a number of our numbers. Now, we're there. We're projects we're going to be on for five working with the customers.
Speaker #4: site development business and how that's
Speaker #3: We're working with them on eight- to twelve-year, if they plans. We're working with that to continue to expand on this future. These projects we’ve, historically, have said have been three years.
Speaker #3: Yeah. So we're on more sites
Speaker #3: today than we were in the second.
Speaker #3: We unbelievable. So we don't put any of just got out of our that into right now our executive leadership team meeting and we're looking at future phase work.
Speaker #3: And as we look forward, a lot of the data centers
Speaker #3: When we step back and we started looking at these projects and the size of the ones we're just on, in addition to the ones that are coming, we said, "My goodness, we've got a really accelerate the rate in which we're adding capacity just to keep up with this." So that's all exciting stuff.
Speaker #3: projects with our team in a number of And we're trying to figure out a way to still remain projects. We're going to be on five to extremely conservative but I eight, 12 years, if they don't feel like we're painting continue to expand on this adequate picture for the property is outside community to understand what unbelievable.
Speaker #3: that we'll be coming out, we've
Speaker #3: Let me step back. Let me just say this: we've had more
Speaker #3: So we don't put any of that our guys say they're going to be on a job for five into right now our to eight years.
Speaker #3: It's a challenge for us, obviously. And we've always felt comfortable with 20 to 30 percent organic growth. This year, we're growing a hell of a lot more than that.
Speaker #3: The reason it's not Let me just growing even faster than it is, it's growing say this. We've had more faster than we thought. We thought it would take us until opportunities to have joint this time to be on our first one.
Speaker #3: feel like we're painting The people just don't understand the size and scope of adequate picture for the these jobs and the duration. It is outside community to understand when our getting significantly bigger, which is guys say they're going to be on a job for five to perfect for us.
Speaker #3: And we've got to figure out how to keep up with that pace.
Speaker #3: eight years, we don't talk about that a lot. We talk Now, remember, not only do we have the about the three years because that's the project site side, now we have the electrical scope we're side, this stays there, after the site doing.
Speaker #2: Great. Thanks. Thanks, Joe.
Speaker #3: People just don’t understand the size and scope of these jobs and their duration. It is done for another couple of years. So our visibility keeps getting better and better.
Speaker #1: Thank you. Your next question is from Ryan Broovy from Seafold. Your line is still open.
Speaker #4: Yeah. Thanks. Good morning. Nice quarter. Can you give us a sense for how pricing in terms and conditions are trending within your EN for a backlog today versus a year ago?
Speaker #3: So we're very happy with you we'd be on a semiconductor that. plant up in New York right now. The faster we can ramp up additional capacity, or as you We'll be electrical side.
Speaker #3: This stays there after the site. But what it's also done strategically for us is— we— is done. For another couple of— had a very, very— years.
Speaker #3: So our visibility keeps getting aggressive organic growth better and better. Project size keeps strategy put in place, we growing. So we feel felt. very confident the And a strategy to build that opportunity is much bigger than we've been talking about.
Speaker #4: Thanks.
Speaker #3: We're not seeing anything fundamentally shift we've seen a few attempts on the electrical side to add some terms and conditions into some things. We have not accepted, frankly.
Speaker #4: Excellent. Thanks, Joe. I'll pass it on.
Speaker #3: Thanks, know, we're looking at continue to look at Brent. acquisitions in and around this
Speaker #1: Thank you. And our next question is
Speaker #3: We found. got to really accelerate the rate in which we're And a strategy to build that adding capacity just to keep up capacity. When we step back and we with this." So that's all exciting started looking at these projects and the size of the ones we're just on, in stuff.
Speaker #3: But we haven't really seen a fundamental shift in any of that, Brian. Nick, are you aware of anything else?
Speaker #1: from Louis DePalma from
Speaker #1: Is that open?
Speaker #2: Joe, Nick, Dan, and Noelle, good
Speaker #2: morning. Excellent.
Speaker #4: No. No.
Speaker #3: Hey, Thanks, Brent.
Speaker #3: Louis.
Speaker #3: Yeah. Yeah.
Speaker #2: Joe, you mentioned how
Speaker #4: Appreciate it. And then just touching on the capacity comments, maybe a little bit more color on spare capacity that you have at the moment.
Speaker #3: to really This year, we're growing a hell of a lot more than accelerate the rate in which we're that. And we've got to figure out how to keep adding capacity just to keep up up with that with this." So that's all exciting pace.
Speaker #2: the CEC has lower margins relative to
Speaker #3: stuff.
Speaker #2: grow very nicely. From a
Speaker #3: Obviously. And we've always felt comfortable with 20% to 30% organic.
Speaker #4: Where are things tightest for you? How are you thinking about your ability to add project managers and equipment if we remain in this healthy demand environment that you're seeing?
Speaker #2: high-level, can you
Speaker #2: discuss where CEC margins
Speaker #3: hell of a lot more than
Speaker #3: that. And we've got to figure out how to keep from Stifel.
Speaker #4: Thanks.
Speaker #2: could grow to in the long term?
Speaker #3: up with that Yeah.
Speaker #3: pace.
Speaker #3: Yeah. So definitely the tightest is around electricians. I'll start there. That's always the tightest part of the market. Our teams have done a really good job at making sure we have an adequate supply or adequate number of electricians to do the jobs we have.
Speaker #4: Great quarter. Can you give us a sense, thanks, for how pricing and terms and conditions are trending within your EN, for Joe?
Speaker #1: Thank you. Your next
Speaker #1: question is from Ryan Murphy from People. Caroline, is it
Speaker #2: services? And could those margins converge over
Speaker #1: open?
Speaker #2: Yeah.
Speaker #2: Thanks. Good morning. Nice
Speaker #2: quarter. Can you give us a sense...
Speaker #3: Yeah. So let me make sure people don't get too delusional. We don't ever
Speaker #2: for how pricing and terms and conditions are seen a
Speaker #3: It certainly has curtailed us from taking on more jobs than we could, frankly. There's more opportunities out there. Some of the joint opportunities we talked about earlier.
Speaker #3: at the peak of our site development. There are so many more
Speaker #2: Backlog today versus a year ago?
Speaker #2: Thanks.
Speaker #3: So we're not we haven't really seen a seeing anything fundamentally fundamental shift we've shift in any of that, seen a few Brian. Nick, are you attempts on the electrical side to add aware?
Speaker #3: So we're working hard on that. As you get into the site side, we've done a really good job, but I will tell you, for the first time, we're getting really tight on the capacity piece.
Speaker #3: some terms and conditions into some
Speaker #3: It's pretty laid out, right? I mean, the design is development. There are so many more there, the amount of wire, etc., complexities and differences with the etc.
Speaker #3: things. We have not Yeah. Yeah.
Speaker #3: We've been able to flex up proactively. We've done some stuff proactively several years ago to make sure we're preparing for some of this. And as we're stretching further and further geographically, and let me remind everybody, geographic expansion for us historically when we had plateau in Potillo, was kind of one state further from where they were to maybe two states.
Speaker #3: fundamental
Speaker #3: Shift in any of that, comments?
Speaker #3: Brian. Nick, are you aware
Speaker #3: of anything else?
Speaker #2: No.
Speaker #2: No. Appreciate
Speaker #2: add project managers, and then
Speaker #3: of projects, we see three to five hundred basis out. So there's always so much you can points on top of some things we're doing get there.
Speaker #2: just touching on the capacity equipment if we remain in this healthy
Speaker #2: Comments, maybe a little about the demand environment that you're seeing?
Speaker #2: that you have at the moment. Where are
Speaker #3: Now we're serving the east part of Texas, out of Atlanta in the west part of Texas, out of Utah. That's a much further stretch than moving one or two states.
Speaker #2: things tightest for is around electricians.
Speaker #2: you? How are you thinking about your ability to
Speaker #2: you? How are you thinking about your ability to add project managers and market.
Speaker #3: sooner. The faster we get out of some of this other And as we move to a better stuff, the faster that's going to come through.
Speaker #2: environment that you're seeing?
Speaker #3: So as a result, it requires a few more resources. You can't lever local resources as much. You can bounce around. So we're getting tight on the capacity there.
Speaker #3: The team's doing a fantastic job of margin improvement internally. And we've said over 12 to 18 months there. If I step back and think three to five years, I don't think we'll see some of that sooner.
Speaker #3: Yeah, have an adequate supply or adequate number of electricians to do—so definitely the tightest is the jobs around electricians. I'll start there.
Speaker #3: So we're doing as Dan talked about, we're doing stuff on the equipment side. We're doing stuff on the people side. But another big part of this is we are going to have to make more acquisitions in and around the geographic expansions that we are that we can add that pure human capital resource to execute these jobs.
Speaker #3: I don't know why we can't fantastic job get that close to there. If I step back and 20%. I really don't. Based on think three to five years, I don't the project size, scopes, and know why today, the electrical world is kind of the quality of the projects, that's our that's our goal is low double-digit margins.
Speaker #3: So we're proactively—we've done some things proactively, working hard several years ago to make sure we're preparing for some of that. As you get into the—of this.
Speaker #3: site side, we've done a really And as we're stretching further and good job. But I will tell further you, for the first time, we're getting really tight geographically, and let me on the capacity.
Speaker #3: So I think as we go forward, we're starting to look at a little bit smaller players where we would like to have really large players, but unfortunately, there's really not that many out there.
Speaker #2: Excellent. Color. And I was also wondering,
Speaker #3: Been able to flex up remind everybody, geographic expansion for us historically when proactively. Lots of stuff proactively several we had plateau in Potillo, was kind years ago to make sure we're preparing for some of one state further from where they of the and were to maybe two states.
Speaker #2: provide more detail in terms
Speaker #2: of why
Speaker #3: And augmenting them with some of our resources. So we don't have to put a full team in Texas. We can put a partial team with an acquisition in Texas or in New Mexico or Oklahoma, wherever that may be.
Speaker #2: work metric doesn't always capture the full
Speaker #3: As we're stretching further and now we're serving the east part of Fort Worth geographically, and let me – Texas out of Atlanta, and the west part of Texas out of – remind everybody, geographically, Utah.
Speaker #2: visibility that you have in terms
Speaker #2: of your pipeline?
Speaker #3: Great
Speaker #3: Great question. One of the things is, you spend enough time...
Speaker #3: And that helps us build that capacity quicker and faster and a little bit of what we're doing with Stoneridge, frankly, and why we made that acquisition.
Speaker #3: enough time with us, we're pretty conservative. And if anything,
Speaker #3: we want to overperform Yeah. Great and make people happy. But one of question. One of the the things we do not things is spend enough time with include and we're thinking about how we us and most people have a sponsor, spend enough should be communicating time with us.
Speaker #4: Appreciate it. I'll pass it on.
Speaker #3: So as a side. We're doing stuff on the people result, it requires a few more side. But another big part resources. You can't lever local of this is we are going to have resources as much as you can bounce to make more around.
Speaker #1: Thank you. And your next question is from Alex Vajal from Texas Capital. Your line is still open.
Speaker #3: So we're getting tight on the acquisitions capacity there. So in and around the geographic we're doing Dan talked about, we're doing stuff on the equipment expansions that we are that we can add that pure human side.
Speaker #5: Thank you. Very nice quarter, gentlemen. When additional phases of work come out, are these being competitively bid or do you find Sterling just basically directly negotiating on these additional phases?
Speaker #3: We're doing stuff on the people capital resource side. But another big part of to execute these this is we are going to have jobs.
Speaker #5: And just kind of the same question, but are you seeing an increase in competition for additional phases of work?
Speaker #3: expansion that we are that we Where we would like to have really can add that pure human large players, but unfortunately, there's really not capital resource that many out there.
Speaker #3: To execute these and augment them with some of our jobs and resources, so we don't have to put a full team in Texas as we go forward.
Speaker #3: to execute these And augmenting them with some of our jobs. So resources. So we don't have to put a we'll as we go forward, we're starting full team in Texas. to look at a little bit We could put a partial team with an smaller players where acquisition in Texas we would like to have really or in New Mexico large players but unfortunately, there's really not or Oklahoma, wherever that may that many out there.
Speaker #3: Yeah. So if we perform, which we have on everyone, not aware of anything where we've lost feature phases. We generally are negotiating those prices with the customer on the future phase work.
Speaker #3: But that project hasn't acres." And then we're going to build five buildings on the next 300 been perfectly defined acres. We only talk about the and articulated.
Speaker #3: But we know that on other projects we've been first 300 acres, on, that happens. But the other thing okay? that's happening, Louis, that We know that when they're finished with is a relatively that, we're going to move the equipment to the new dynamic is next one.
Speaker #3: Unless it's an extreme change of scope. Let's just say it's not part of our project and they want something else added to that project that's outside our normal scope, that would be a normal bid.
Speaker #3: We can put a we're doing with Stoneridge, partial team with an frankly, and why we made that acquisition in Texas or acquisition. in New Mexico or
Speaker #3: We'd give them a number. Would not be atypical for them to maybe get another number. A perfect example of that is they need to put a road through to get to a new phase and they need paving and curbs and a bunch of stuff like that.
Speaker #3: Oklahoma, wherever that may Appreciate it.
Speaker #3: be. And that helps us build that.
Speaker #3: capacity quicker on.
Speaker #3: and faster. A little bit of what
Speaker #3: We're doing with Stoneridge, from Alex Rigel from Texas,
Speaker #3: frankly, and why we made that acquisition.
Speaker #3: That's not in any projects that we're on. So let's just say we're of our numbers. Now, we're there. We're working on a 300-acre project with the customers.
Speaker #3: They may ask us to give them a bid on that. We may subcontract that or they may bid it out to somebody else. But for the most part, once we're on the job, and this is really important, and I'll talk strategically, on what we're doing and why we're advancing so quickly in Texas and some of the other markets, is the way our teams would tell you is once we plant our flag, we are there.
Speaker #2: Appreciate it. I'll pass it
Speaker #3: We're working with them on today. There happens to be one that's planned. We're working with that, on the close to that. They've now purchased another 600. These projects we've historically said have been three years.
Speaker #2: on.
Speaker #1: Thank
Speaker #1: Thank you. And your next question is...
Speaker #1: from Alex Rajal from Texas, bid or do you find
Speaker #1: open?
Speaker #3: Thank you. Very nice quarter,
Speaker #3: gentlemen. When
Speaker #3: additional phases of work come in competition for additional phases out, are these being competitively
Speaker #3: Bid, or do you find—yeah. So if we perform, which Sterling just basically directly, we have ongoing negotiations on these additional—everyone's not aware of anything where we've had phases?
Speaker #3: We're not leaving. And that gives us an opportunity to drive project productivity along the way that, as you've seen, our future phase work margins tend to get better than our early phase work, right?
Speaker #3: And kind of along those lines, same question, but are you seeing an increase in competition for additional phases of work? We generally are negotiating those prices with regard to additional phases.
Speaker #2: Yeah.
Speaker #2: So if we perform, phase work.
Speaker #3: So we're going to be incredibly competitive to plant that flag. And then we're going to use productivity and technology to drive margins up through the rest of that project in get better margins for each of the phases as we go on.
Speaker #4: if we have on
Speaker #3: We don't talk about that a lot. We talk future phase work. And we're trying to figure out a about the three years because that's the way to still remain project scope we're extremely conservative but I don't doing.
Speaker #4: Everyone, not aware of anything where we've...
Speaker #4: interface, we generally are
Speaker #4: negotiating those prices with
Speaker #4: phase of work. Unless
Speaker #4: it's an extreme change of
Speaker #5: And secondly, can you speak to some of the other end markets that are seeing green shoots like pharma and semi and other factories?
Speaker #4: scope. Let's just say it's not part of our perfect example of that is they need
Speaker #4: project and they want something else added to
Speaker #4: that project that's outside our normal scope, that would be a normal bid.
Speaker #4: We'd give them a number. Would
Speaker #3: Yeah. And to just back the one thing I didn't answer is on the competition side. We always see local competition, especially when we go to a new market.
Speaker #4: It would not be atypical for them to subcontract that, or they may handle it themselves.
Speaker #3: Project size keeps getting significantly bigger, which is growing. So we feel perfect for us. Now, very confident the remember, not only do we have the site opportunity is much bigger than we've been talking size, now we have the electrical about.
Speaker #3: Project size keeps getting significantly bigger, which is growing. So we feel perfect for us. Now, very confident the remember, not only do we have the site opportunity is much bigger than we've been talking size, now we have the electrical about. side.
Speaker #4: maybe get another number. A perfect example of that is they need
Speaker #3: There's a lot of small players. But generally, after we do one job, that gets a lot smaller. The first one's always the hardest one for us to get, frankly.
Speaker #4: new phase and they need paving and curbs
Speaker #4: and a bunch of stuff like that. They strategically, on what we're
Speaker #4: We may subcontract that, or they may.
Speaker #4: bid it up to somebody else.
Speaker #3: But we have not seen an influx of major new players or anything along those lines, especially on these large jobs. Somebody went at 20 or 30 million dollar data center in one of our markets, probably.
Speaker #4: We're on the job, and this is really
Speaker #3: capacity. When we step back, what it's also done strategically for us is we've started looking at these projects and the size of the ones we're just on, in addition to the ones that are coming. We have a very, very aggressive organic growth strategy put in place, and we said, "My goodness."
Speaker #4: important, and I'll talk there.
Speaker #4: strategically on what we're
Speaker #4: doing and why we're advancing the SOAR Drive project.
Speaker #4: quickly in Texas with some of the other productivity along the way that,
Speaker #4: teams would tell you is once we plant
Speaker #4: our flag, we are there. better than our early phase
Speaker #3: We don't even generally look at those unless a customer forces us to. So those sort of things are going to continue to happen. But we haven't seen any major influx of large competitors in our markets.
Speaker #4: We're not leaving. And work, right?
Speaker #4: That gives us an opportunity to
Speaker #4: drive project
Speaker #3: It's a challenge for us, obviously. And we've always felt comfortable with addition to the ones that are coming, 20 to 30 percent organic we said, "My goodness, we've got growth.
Speaker #4: productivity, along with productivity and technology, to
Speaker #4: work margins tend to get
Speaker #3: I'm sorry. What was the next question?
Speaker #4: better than our early phase work, in getting better margins for each of the
Speaker #5: Other end markets like pharma, semi, and other factories. Any progress there?
Speaker #4: flag. And then we're going to use productivity and technology to drive
Speaker #3: Yeah. So we're we still see all of that progressing. We think pharma's 28, semis are around 20, 30. I will tell you, the team up in New York is doing an outstanding job.
Speaker #2: Great. Thanks,
Speaker #2: Joe.
Speaker #4: margins are up for the rest of that project.
Speaker #1: Thank you. Your next question is from Ryan Ruby
Speaker #4: phases later
Speaker #1: Your line is still open.
Speaker #1: Your line is still open.
Speaker #4: on.
Speaker #3: And secondly, on local competition, especially when we go to—can you speak to some of the other end markets or new markets? There are a lot of smaller, newer, or 'green' players we are seeing.
Speaker #4: Thanks. Good morning. Nice
Speaker #3: shoots like pharma and But generally, after we do one the job, refactories?
Speaker #3: I mean, they've made not by name, but they've made all the local and some of the national news up there on how far ahead of schedule they are on this project.
Speaker #4: a backlog today versus a year ago?
Speaker #4: Yeah. And just back to one thing I
Speaker #4: Didn't answer is that it gets a lot smaller.
Speaker #4: Thanks.
Speaker #4: Thanks.
Speaker #4: competition side. We always
Speaker #3: seeing anything fundamentally
Speaker #4: see local competition, especially when we go to get, frankly.
Speaker #3: shift we've
Speaker #4: a new market. There's a lot of small
Speaker #3: I will tell you the general contractors on the job and the end customer on this job is extremely happy and, frankly, has never seen progress like these guys were making.
Speaker #4: players.
Speaker #3: few attempts on the electrical side to add some terms and conditions into some
Speaker #4: But generally, after we do one,
Speaker #4: job, lines, especially on these large that gets a lot smaller.
Speaker #3: things. We have not accepted, frankly. But
Speaker #4: One's always the hardest one for us to...
Speaker #3: I think that's going to be the entry point to a lot more semiconductor plants for us coming around 2030. But I think there might be some intermediate opportunities on some facilities that are being built today in regions and geographies we have historically not been in that we may get pulled into.
Speaker #4: get. Frankly. center in one of our markets,
Speaker #4: not seen an
Speaker #4: influx of major new
Speaker #4: lines, especially on these large
Speaker #4: Appreciate it. No. No.
Speaker #4: jobs. Somebody went a 20 or seen any major influx 30 million dollar data
Speaker #4: Appreciate it.
Speaker #4: center in one of our markets.
Speaker #4: And then, haven't really seen—just touching on the capacity,
Speaker #4: Probably. We don't even generally look at those unless the next
Speaker #4: a customer forces us question?
Speaker #4: So, those sorts of things are going to continue.
Speaker #3: In addition, we saw the start of the EV plant in Atlanta just outside Atlanta this quarter. So we're seeing some mixed activities in the manufacturing space.
Speaker #4: Maybe a little bit more, Color, on spare
Speaker #4: capacity that you have at the moment. Where
Speaker #4: But we haven't there?
Speaker #4: seen any major influx
Speaker #4: are things tightest for you? How are you thinking about your ability to
Speaker #4: of large competition in
Speaker #4: What was see all of that the next
Speaker #4: question?
Speaker #3: Other end markets are around 20—pharma, semi, and other factories—any progress? 30, I will tell you there.
Speaker #3: One-off, two-offs. Those sort of things. But we haven't seen any delays in the pharma or the next generation of semiconductors so far.
Speaker #4: Thanks.
Speaker #3: Yeah, a bit more color on spare capacity. So, definitely the tightest...
Speaker #4: Yeah.
Speaker #4: So the team up in New York is
Speaker #3: I'll start there. That's always the tightest part of the
Speaker #4: we're we still
Speaker #5: Great. Thank you.
Speaker #4: progressing. We think pharma's
Speaker #3: Our teams have done a really good job at making sure we
Speaker #4: 28, semis are
Speaker #1: Thank you. And your next question is from Maneesh Somalian from Cantor. Your line is still open.
Speaker #4: around
Speaker #4: 2030. I will tell you what schedule they are on with this.
Speaker #4: the team up in New York is
Speaker #3: have. It certainly has That's always the tightest part of the curtailed us from taking on more market. Our jobs than we could, frankly. teams have done a really good job in There's more opportunities out there.
Speaker #4: doing an outstanding job. Contractors on the job and the end customer on—I mean, they've
Speaker #5: Good morning, everybody. Can you hear me okay?
Speaker #4: made not by name, but
Speaker #4: they've made all the local and some of the happy, and,
Speaker #3: Yeah.
Speaker #5: Okay. Wonderful. Congrats on the quarter. Joe, a couple of questions. One from a big-picture standpoint. Obviously, we're seeing a lot of news about data centers being banned and a lot of new markets.
Speaker #4: national news up frankly, has never seen progress
Speaker #4: They're on, and how far ahead of schedule these guys are making.
Speaker #3: Some of the making sure we joint opportunities we talked about have an adequate supply or earlier. So we're adequate number of electricians working hard on to do the jobs we that.
Speaker #4: they are on this
Speaker #4: project to a lot more semiconductor. I will tell you the general contractors on the job and the end customer on this.
Speaker #3: As you get into have. It certainly has the site side, we've done a really curtailed us from taking on more good job. But I will tell jobs than we could, frankly.
Speaker #4: job is extremely
Speaker #5: I guess there was an article yesterday on Texas on Greg Abbott banning new data center approvals. Maybe if you could just help us understand the dynamics of what's going on on the ground because obviously, if closer, do what's happening are things really getting delayed or is it just politics as usual?
Speaker #4: happy and
Speaker #3: For the first time, we're really getting more opportunities out there. Some of the tightness is on the capacity piece, but we've been able to flex up earlier with some of the joint opportunities we talked about.
Speaker #4: frankly has never seen progress like these guys were making. I think that's
Speaker #4: going to be the entry point.
Speaker #4: to a lot more semiconductor
Speaker #4: plants for us coming around 2030, but I
Speaker #4: I think there might be some intermediate steps.
Speaker #4: opportunities on some facilities that
Speaker #4: are being built today in regions.
Speaker #5: That's my first question.
Speaker #4: been in that we may get
Speaker #3: Yeah. We certainly haven't seen anything that's impacted any of our schedules at this time. There's going to be states. I think people have to realize there's going to be states and geographies that will never have data centers or have very few.
Speaker #4: addition, we saw
Speaker #4: the start of the EV
Speaker #4: plant in Atlanta, just outside
Speaker #4: Atlanta, this quarter. So we're great.
Speaker #4: seeing some mixed activities in the
Speaker #3: That's a much further expansion for us historically when stretched than moving one or two. We have plateaued in Cutillo, it was kind of states. So as a result of one state further from where they were, maybe two states, it requires a few more.
Speaker #3: New York, it seems to be against everything that brings revenue to the state and they have banned the data centers is one of those.
Speaker #4: manufacturing space. One-off, you.
Speaker #4: Two-offs, those sort of things. We haven't seen any. Thank you.
Speaker #4: delays in the pharma. Or
Speaker #3: You can't lever local resources as much. Now we're serving the east part of Texas out of Atlanta, and you can bounce around.
Speaker #4: the next generation of from Cantor.
Speaker #4: semiconductors.
Speaker #3: In Texas, they're moving forward very quickly. I think we'll continue to see anything new and anything big, there's always the political side that's raising ruckus, I guess, is the best way to put it.
Speaker #3: So we're getting tight on the capacity there. So Utah. That's a much further we're doing stretch than moving one or two as Dan talked about, we're doing stuff on the equipment states.
Speaker #3: Great. Thank
Speaker #3: you. Okay.
Speaker #1: Thank you. And your next question is from Manisha Somalian.
Speaker #1: from Santor. Caroline, is that
Speaker #1: open?
Speaker #3: Good morning, everybody. Can you hear me?
Speaker #3: okay?
Speaker #4: Yeah.
Speaker #3: But so far, we have not seen any issues or delays. With the projects, we're on, nor are the projects coming. Do I think realistically down the road?
Speaker #3: Okay. Wonderful. Congrats on
Speaker #3: the quarter.
Speaker #3: Joe, a couple of questions. One from a big picture
Speaker #3: standpoint, obviously what we're you could just help us understand the
Speaker #3: seeing on data sets you're dynamics of what's going on on the ground,
Speaker #3: Seeing and anatomy markets, because obviously if closer – do what's – I guess there was an...
Speaker #3: So we'll, I to make more think, as we go forward, we're starting acquisitions in and around the geographic to look at a little bit smaller players.
Speaker #3: Could there be other supply chain delays once the build starts out on some of these projects? I think some of the upstream or downstream, however you want to look at it, supply chain elements are the companies are getting pressured on capacity and stuff.
Speaker #3: article yesterday on Texas
Speaker #3: on Greg Abbott banning new data, just
Speaker #3: Maybe if politics as usual?
Speaker #3: you could just help us understand the Yeah. We certainly we haven't seen dynamics of what's going on on the ground because anything that's impacted any of obviously it's closer to what's our schedules at happening are things really this time.
Speaker #3: ...getting delayed or is it there's going to be states? I think people have to realize it's just politics. There are going to be states and geographies that will never—as usual.
Speaker #3: You certainly could see some of that stuff, but on the site side, they want to get that done as soon as possible. It's the only place they can pick up time if you're prepared.
Speaker #3: That's have data centers or will have very few. New my first question.
Speaker #4: Yeah.
Speaker #4: We certainly we haven't seen
Speaker #3: So we have not seen any of the delays there. And candidly, on the electrical side, our teams have not seen any they may see a week delay or a couple of days, but I have not seen anything of significance that's concerned us.
Speaker #3: be, and that helps us build that And augmenting them with some of our capacity resources. So we don't have to put a quicker. And faster and a little bit of what full team in Texas.
Speaker #4: our schedules. At
Speaker #4: This time, there's going to be banned data.
Speaker #4: be space. I think people have to realize there are going to be centers, is one of
Speaker #4: to be states and geographies that will never
Speaker #4: have data centers or libraries. New York seems to be against everything that
Speaker #4: I'll pass it
Speaker #5: That's helpful, Joe. And then just on the e-infrastructure margins, obviously, in the second quarter, we had about 24.1. I think you addressed some of the factors there.
Speaker #4: brings revenue to the state, and
Speaker #4: they ran the data
Speaker #1: Thank you. And your next question is:
Speaker #4: those. In
Speaker #1: Capital. Your line is still
Speaker #4: Texas, they're moving forward very way to put it.
Speaker #1: open.
Speaker #5: Thank you. Very nice, quarter, gentlemen.
Speaker #5: Mix was a big factor. But how should we think about normalized margins at least for this year and possibly into '27? And perhaps if you can just kind of help us understand where the margin improvement for CEC is coming from.
Speaker #4: quickly. But so far, we have not seen—I think we'll continue...
Speaker #3: Thanks.
Speaker #4: See, like anything new, and anything...
Speaker #5: When additional phases of work come
Speaker #5: out, are these being competitively
Speaker #4: side that's
Speaker #5: Sterling just basically directly negotiating on these additional
Speaker #4: Raising ruckus, I guess, is the best road,
Speaker #4: Way to put it. Could there be other supply chain
Speaker #4: But so far we have not seen delays once the build starts any issues or
Speaker #5: phases? And just kind of same question, but are you seeing an increase
Speaker #5: I think you mentioned 12 to 18 months. But if you can just kind of help us understand the different buckets of margin improvement and then finally, on Stoneridge, I guess the margins there are mid-teens.
Speaker #4: delays. With the projects we're on or the projects haven't.
Speaker #5: of work?
Speaker #4: So I think this particular
Speaker #4: road elements are the companies are
Speaker #4: Could there be other supply chains getting pressured on capacity and...
Speaker #4: delays once the build stuff.
Speaker #5: If you can also kind of frame that same pathway for us.
Speaker #4: starts out on some of these projects? I think some
Speaker #4: ...of the upstream, or want to get that done as soon as possible.
Speaker #4: downstream, however you want to look at
Speaker #3: Yeah. So let me step back a little bit in time. When we bought Plateau, who has fantastic margins today, their margins were in that 15 to 18 percent range.
Speaker #3: the customer on the future
Speaker #4: elements are the companies are
Speaker #3: Unless it's an extreme change of...
Speaker #3: scope. Let's just say it's not part of our
Speaker #4: stuff. We certainly could see some of that stuff.
Speaker #3: project and they want something else added
Speaker #4: But on the site side, they...
Speaker #3: to that project that's outside our normal scope, that would be a normal bid.
Speaker #4: want to get that done as soon as possible. It's the only
Speaker #3: And it's taken us a few years and we've moved those margins up significantly. If you take a look at the Plateau business, they're getting close to peak margins.
Speaker #4: place they can pick up time if you're significance that's concerned re prepared. So we have not
Speaker #3: We'd give them a number. Would not be atypical for them to
Speaker #3: maybe get another number. A
Speaker #4: the electrical side,
Speaker #4: Our teams have not seen any.
Speaker #3: They'll still have some small incremental gains, but we're not going to see the monumental gains in that business that we've seen unless projects change.
Speaker #4: and they may see a week delay or a couple.
Speaker #3: to put a road through to get to a
Speaker #3: new phase and they need paving and
Speaker #4: of days, but I've not seen anything of addressed some of the
Speaker #3: curbs and a bunch of stuff like that. They may ask us to give them a bid on that.
Speaker #4: significance that's
Speaker #3: How did that go for Factor?
Speaker #3: Joe? And then just on
Speaker #3: To a further degree. But in the rest of our e-infrastructure pieces, the Patillo business has always been a lower margin business. As they're getting into bigger and bigger jobs, data centers, chip plants, those margins will come up.
Speaker #3: the infrastructure
Speaker #3: bid it out to somebody
Speaker #3: margins, obviously the second quarter we had possibly into '27? about 24.1. I think you
Speaker #3: else. But for the most part, once
Speaker #3: we're on the job, and this is to put a road through to get to a really important, and I'll talk
Speaker #3: factors there. Next was a big
Speaker #3: factor. CEC is coming, but how should we think about
Speaker #3: doing and why we're advancing so quickly in Texas and some of the other
Speaker #3: normalized margins from.
Speaker #3: Margins on bigger jobs are better. Our Rocky Mountain transportation business that we've shifted, grown to 700% into e-infrastructure, e-infrastructure margins there, even with their small equipment suite, even with what they're doing from not being vertically integrated is an example, are still significantly better than transportation.
Speaker #3: markets, is the way our
Speaker #3: at least for this year and
Speaker #3: Teams would tell you, once we plant our flag, we are
Speaker #3: Perhaps, if you can just kind of help us.
Speaker #3: understand where the finally, on
Speaker #3: We're not leaving, and that gives us an opportunity to—
Speaker #3: Margin improvement for Stoneridge—I guess the margins there are...
Speaker #3: from. I think you mentioned 12 to 18.
Speaker #3: months. But if you can just kind of help us understand the pathway for the different buckets,
Speaker #3: as you've seen, our future
Speaker #3: So we're going to be incredibly competitive to plant that
Speaker #3: But it's going to take us a little time to do some vertical integrations. We got to have enough critical mass in the market to make vertical integration worth its while, right?
Speaker #3: flag, and then we're going to use
Speaker #3: If you can also kind of frame that we're in that 15% to 18% same pathway range. And it's taken us a few years, for us.
Speaker #3: drive margins up through the rest of that project
Speaker #3: So as we build enough critical mass, as we build up their equipment suite and the really simple way to think of it is if I have a bucket that's three times the size of an existing bucket for every scoop, I scoop three times as much dirt.
Speaker #4: Yeah, so let me step back a little bit in time. When we—
Speaker #4: bought
Speaker #3: phases as we go on.
Speaker #4: Plateau, who has business, they're getting close to peak
Speaker #5: Then secondly, competitive to plant that can you speak to some of the other end
Speaker #4: Fantastic margins today, their margins... margins.
Speaker #5: markets that are seeing green shoots, like pharma and semi, and
Speaker #4: were in that $15 to $18
Speaker #3: It's really that simple, right? So it takes me one-third the time to move the dirt. So we'll continue to improve and grow their equipment suites.
Speaker #4: percent. And it's taken us a few, but we're not going to see the monumental
Speaker #5: other factories?
Speaker #4: significantly. If you take a look at the plateau,
Speaker #3: Yeah. And it just backed the one thing I didn't answer—can I get better margins for—on the...
Speaker #4: business, they're getting most of these.
Speaker #3: competition side. We always
Speaker #3: Their margins will come up. On CEC, there's really two big drivers there. One, is we're getting out of some legacy business segments that have relatively low margin.
Speaker #4: margins. They'll still have some small of our infrastructure
Speaker #4: incremental gains,
Speaker #4: gains in that business
Speaker #4: that we've seen unless projects
Speaker #4: Change. To further that, those margins will come up.
Speaker #3: The first one's always the hardest one for us to.
Speaker #4: degree. But in the rest
Speaker #3: That will improve their margin, right? It's just portfolio management. The second piece is they're getting more and more engaged on these data centers and the data centers are getting bigger.
Speaker #3: But we have not seen an...
Speaker #4: pieces, the Plateau business has
Speaker #3: influx of major new
Speaker #4: business. They're getting into bigger and bigger
Speaker #3: players or anything along those
Speaker #4: jobs. Data centers, big E infrastructure margins there, even with
Speaker #3: We're watching their margins go up as job sizes go up. So it's a combination of things. So we'll continue to see those go up.
Speaker #3: jobs. Somebody went on a $20 or $30 million data
Speaker #4: plants, those margins will come up. Margins on
Speaker #4: Bigger jobs are suited, even with what they're doing, if not better. Our Rocky—
Speaker #4: Mountain transportation business, we've shifted and
Speaker #3: probably. We don't even generally look at those
Speaker #3: Where people are going to get confused, every single quarter, because it's not perfect math, is the mix of that's going to change. And when CEC grows at a much greater rate, then e-infrastructure it's going to appear our margins are going down, even though their margins are going up.
Speaker #3: unless a customer forces us
Speaker #4: grown to
Speaker #3: So those sort of things are going to continue to happen. But we haven't—
Speaker #4: The infrastructure margins there, even with
Speaker #4: their small equipment mass in the market to make vertical
Speaker #4: suite, even with what they're doing.
Speaker #3: of large competitors in our markets. I'm sorry. What was
Speaker #4: from not being vertically integrated is an we build enough critical mass, as we example, are still significantly
Speaker #3: And site development's margins are going up. It's that's just mix. There's nothing we can do. But if you look at the returns we're getting on the dollars and the growth, I think most people would take that any day of the week.
Speaker #4: better. And
Speaker #5: Other end markets, like pharma, semi, and other factories—any progress?
Speaker #4: transportation, but it's going to take us a little time to do some bucket that's three times the size of an existing one.
Speaker #4: vertical integration. So we're going to have another
Speaker #3: Yeah. So
Speaker #4: mass in the market to make vertical three times as much dirt.
Speaker #3: we're we still
Speaker #4: So, as we build enough vertical mass, as...
Speaker #3: progressing. We think pharma's
Speaker #4: We build up their equipment; we're in the dirt. A really simple way to think of it is, I have...
Speaker #5: So just quickly then, Joe, if you can just help us frame what the legacy e-infrastructure margins are versus what the CEC margins are. And I'll get back in queue.
Speaker #4: a bucket that's three times the size of an
Speaker #4: existing bucket for every scoop.
Speaker #4: scoop three times as much of theirs—it's really
Speaker #3: doing an outstanding job. I mean,
Speaker #4: That's simple, right? So, it's there.
Speaker #3: they've made not by name, but they've made all the local and some of
Speaker #4: It takes me one-third the time to
Speaker #5: Thank you so much.
Speaker #4: move the dirt. So
Speaker #3: You have the exact numbers, Nick. I don't know what that is.
Speaker #3: the national news up
Speaker #4: we'll continue to improve and grow their relatively low base
Speaker #3: there on how far ahead of
Speaker #4: Full year.
Speaker #4: up. On CEC, there's
Speaker #3: project. I will tell you the general
Speaker #3: Just wait a second.
Speaker #4: There. One is we're getting out...
Speaker #4: Through the quarter.
Speaker #2: And in the second quarter on an adjusted basis, we're 20 high 20s, so 20.
Speaker #4: of some legacy data centers, and the data centers are getting
Speaker #3: this job is extremely
Speaker #4: business segments. They have bigger.
Speaker #4: relatively low
Speaker #4: That will improve their margin, So it's a combination of
Speaker #4: For the.
Speaker #3: I think that's going to be the entry point
Speaker #2: For e-infrastructure site and CEC was 11.
Speaker #4: right? It's just portfolio things.
Speaker #4: management. The second piece
Speaker #3: Yeah. So you're looking at if you take the site side, you're in upper 20s. And the CEC sides, roughly 12%. So there's a big difference.
Speaker #3: plants for us coming around 2030, but I
Speaker #4: data centers, and the data centers are getting
Speaker #4: ...bigger. We're watching their margins continue to change.
Speaker #3: I think there might be some intermediate steps.
Speaker #3: opportunities on some facilities that
Speaker #4: up as job sizes go up.
Speaker #4: So it's a combination of
Speaker #3: are being built today in regions and geographies where we have historically not
Speaker #3: It's over 2X. The margin profile. So it doesn't take a lot of makeshift or incremental growth in CEC to dilute the overall margin.
Speaker #4: that. So we'll continue to see those go up. Where people are going to get
Speaker #3: been in, that we may get pulled.
Speaker #4: confused every single quarter, which is not
Speaker #3: into.
Speaker #3: addition, we saw
Speaker #3: the start of the EV
Speaker #4: that's going to change. And when
Speaker #4: CEC grows at a much greater do.
Speaker #2: No, that was just an example.
Speaker #4: Rate, then E Infrastructure, it's going...
Speaker #3: Yeah. That's just for the quarter.
Speaker #3: outside Atlanta this quarter. So we're seeing some mixed activities in
Speaker #5: Okay. Thank you, Joe.
Speaker #4: Even though
Speaker #4: their margins are going up, and site
Speaker #3: the manufacturing space. One-off, two-offs, those sort of things. But we haven't seen any
Speaker #4: up, it's
Speaker #1: Thanks, here. And your next question is from Samita Jaine from KeyBank Capital Markets. Caroline, is that open?
Speaker #4: that's just mixed. us frame what There's nothing we can
Speaker #3: delays in the pharma or the next generation
Speaker #4: do. But if you look at
Speaker #4: the returns we're getting on the dollars or the margins are versus what the CEC margins gross, I think most people think
Speaker #3: of semiconductors so
Speaker #3: far.
Speaker #3: far.
Speaker #5: Good. Thank you. Good morning. Can I follow up on the margin question? I kind of just want to understand the go-forward guidance and whether it's a function of CEC growing a lot faster than you had anticipated.
Speaker #5: Thank
Speaker #4: that any day of the You have the
Speaker #4: week. exact numbers, Nick.
Speaker #4: week. exact numbers, Nick.
Speaker #1: And your next question is from Manish Somalian.
Speaker #3: us frame what Just through the the legacy E infrastructure margins are versus what the CEC margins quarter.
Speaker #3: Can you just frame what the legacy E infrastructure margins are versus what the CEC margins are this quarter? And I'll get back to you.
Speaker #1: Your line is still open.
Speaker #5: Good morning, everybody. Can you hear me?
Speaker #5: okay?
Speaker #3: Thank you And in the second quarter on
Speaker #5: Let's say a few months ago when you gave us this guidance.
Speaker #3: Yeah.
Speaker #4: You have the majestic basis.
Speaker #4: Exact numbers, Nick. I don't know what that—
Speaker #5: Wonderful. Congrats on the quarter.
Speaker #4: is.
Speaker #3: Yeah. So the easier way to think of margins is if you take e-infrastructure, you break it down into site development and electrical, right? We'll keep it that simple.
Speaker #5: Joe, a couple of questions. One from a big-picture standpoint, obviously,
Speaker #4: Just.
Speaker #5: We're seeing a lot of news about data centers.
Speaker #5: being banned and a lot of new markets. I guess there was an
Speaker #5: In the second quarter,
Speaker #5: I'm going to try to get 20s.
Speaker #5: this.
Speaker #5: article yesterday on Texas on Greg Abbott banning new
Speaker #3: In the quarter, we saw improved margins in site. And electrical. But the revenue mix of the electrical being growing in a much faster rate brings down that overall margin.
Speaker #5: data center approvals. Maybe if
Speaker #4: Yeah. So you're
Speaker #4: site side, you're in upper 20s. And the
Speaker #5: happening? Are things really getting delayed, or is it
Speaker #4: CEC side, roughly
Speaker #3: As we go through the rest of the year, the margin is diluted by the accelerated growth rate of CEC. Okay? So it's really this is purely mix, not we're not losing margin in our businesses.
Speaker #4: Difference—it's over 2x the margin profile.
Speaker #5: That's my first question.
Speaker #4: doesn't take a lot of
Speaker #4: makeshift or incremental growth Joe.
Speaker #4: that we see to move the overall
Speaker #4: margin. Yeah. That's just really
Speaker #3: I want to make sure everybody understands that. This is purely a mix of revenue that drives that. Yeah.
Speaker #4: cool. open.
Speaker #3: Thank
Speaker #3: you,
Speaker #3: Joe.
Speaker #3: York seems to be against everything that
Speaker #3: brings revenue to the state and they
Speaker #2: So yeah.
Speaker #1: Thank you. And your
Speaker #3: And then the other piece you have the site side, where we saw the increase the trajectory of growth in margins slow down is we have one new projects where the beginning phases of new projects are lower.
Speaker #1: Elaine. Elaine, is it
Speaker #3: those. In
Speaker #1: open?
Speaker #3: Texas, they're moving forward very
Speaker #3: Thank you. Good
Speaker #3: Good morning. A few months ago when you gave us—can I follow up on that?
Speaker #3: quickly. I think we'll continue to
Speaker #3: The margin question? I kind of just want to do this.
Speaker #3: See anything new and anything big, there's always the political.
Speaker #3: But two, we also have that 700% growth in the Rocky Mountains transportation business, which has that smaller equipment suite, isn't vertically integrated, grow at a faster rate than our Southeast business.
Speaker #3: side that's raising ruckus, I guess is the best
Speaker #3: Let's end electrical, right? We'll keep it at that. Say a few months ago, when you gave us the quarter, we saw improved guidance.
Speaker #3: any issues or delays. With the projects, we're
Speaker #4: Yeah. So the easy
Speaker #3: So when that happens, their margins are lower. I will tell you that. Their margins are improving, but they're still lower than our Southeast margins.
Speaker #3: on, nor are the projects coming. Do I think realistically, down the
Speaker #4: Take E-Infrastructure; you break it down into site.
Speaker #4: development and electricity, right? Keep it that
Speaker #3: So that blend makes it appear that the total margin is down, but the individual elements are all going in the right direction.
Speaker #4: In the quarter, we saw improved performance.
Speaker #3: out on some of these projects? I think some of the upstream or
Speaker #4: margins in site. year, the margin is diluted by
Speaker #3: Downstream, however you want to look at it—supply chain.
Speaker #4: And electrical. the accelerated growth
Speaker #2: So relative to our previous expectations, yes, the growth at CEC has been higher. And the ramp on some of those newer projects has been faster.
Speaker #4: mix of the electrical being
Speaker #4: growing in a much faster way brings down that this is purely mix,
Speaker #4: overall margin, as we’re not losing
Speaker #3: You certainly could see some of that stuff, but on the site side, they
Speaker #4: We go to the rest of the margin in our businesses.
Speaker #4: year, the margin is diluted by
Speaker #5: Understood. Thank you. That's all for me. Thanks.
Speaker #3: It's the
Speaker #3: prepared, so we have not seen any of the delays there. And, candidly,
Speaker #4: rate of CEC.
Speaker #4: Rate of CEC. Okay? So, it's that.
Speaker #3: Thank you.
Speaker #4: really this is purely mix,
Speaker #1: Thank you. Your next question is from Adam Solomon from Thomson Davis. Caroline, is that open?
Speaker #3: On the electrical side, our teams have not seen
Speaker #4: not we're not losing
Speaker #3: any they may see a week delay or a couple
Speaker #4: margin in our businesses. I want to make sure, on the side where we saw
Speaker #4: everybody understands that. This is
Speaker #3: of days, but I have not seen anything of
Speaker #6: Hey, good morning, guys. Great quarter.
Speaker #4: revenue that drives that. Yeah.
Speaker #3: Thanks.
Speaker #3: us.
Speaker #6: Joe, the e-infrastructure orders came under record level and I couldn't believe it. They were even up sequentially. Can you give more color about what was in there and maybe how much stone ridge added?
Speaker #5: That's
Speaker #5: helpful, Joe.
Speaker #5: And then just on—and candidly, on—the infrastructure...
Speaker #4: other piece you have on the site
Speaker #5: margins, obviously, in the second quarter, we had
Speaker #4: side, where we saw
Speaker #5: about 24.1. I think you
Speaker #4: the increase the trajectory
Speaker #4: of growth in margins slow
Speaker #5: Factors there. Mix was a big—
Speaker #4: DOWN is we suit, and isn't vertically integrated,
Speaker #5: But how should we think about normalized
Speaker #4: have one new project where they're grow at a faster rate than our
Speaker #3: Yeah. So what makes it even more impressive is that we're able to do that on a really strong revenue quarter. Which is always tough to do.
Speaker #5: margins at least for this year and
Speaker #4: The beginning phases of new projects are in the Southeast business.
Speaker #4: lower. But two, we also have
Speaker #5: And perhaps, if you can just kind of help us,
Speaker #5: And perhaps if you can just kind of help us understand where they addressed some of the margin improvement for—
Speaker #4: that 700% tell you that.
Speaker #4: growth in the Rocky Mountain
Speaker #4: transportation business, which has margins smaller than our Southeast margins.
Speaker #3: Nick, do you want to go through some of the backlog numbers? Stone Ridge certainly added some of that. CDC had a great quarter. With their bookings on that.
Speaker #4: equipment suite. It isn't vertically
Speaker #4: integrated. Grow at a faster rate than our... Appear that the total margin is...
Speaker #5: I think you mentioned 12 to 18.
Speaker #4: Southeast business. So, when that went down, but the individual elements are—
Speaker #5: understand the different buckets of margin improvement, and then
Speaker #4: happens, their margins are lower. I
Speaker #4: Their margins are direction.
Speaker #4: improving, but they're still lower
Speaker #3: I don't know, Nick, if you have the detailed numbers there.
Speaker #4: than our Southeast margins. So they've been higher, and the ramp that blend makes it
Speaker #5: mid-teens. If you can also kind of frame that same
Speaker #4: appear that the total margin is
Speaker #4: Yeah. So CEC was at about 2.4 billion combined backlog for the quarter. June. Stone Ridge was at about 140 million dollars. For committed backlog, signed.
Speaker #4: Down, but the individual elements are understood.
Speaker #5: us.
Speaker #4: are all going in the right direction.
Speaker #3: Yeah. So let me step back a little bit in time. When we of margin improvement and then bought finally, on Stoneridge, I Plateau, who has fantastic guess the margins there are margins today, their margins mid-teens.
Speaker #2: So, relative to our previous expectations, yes, the growth at CEC—
Speaker #2: has been higher and the
Speaker #2: brand on some of those fewer projects has
Speaker #2: been
Speaker #2: been faster.
Speaker #3: Understood. open. Thank you. That's
Speaker #3: and we've moved those margins up.
Speaker #3: all for me. Thanks.
Speaker #3: Thanks. Joe,
Speaker #3: significantly. If you take a look at the plateau,
Speaker #4: Thank
Speaker #4: you.
Speaker #1: Thank
Speaker #1: from Adam Palmer from Compton orders came in a record
Speaker #3: They'll still have some small, incremental gains.
Speaker #1: Davis. Elaine, is that
Speaker #4: And it's I think it's 140.
Speaker #1: open? sequentially.
Speaker #1: open? sequentially.
Speaker #5: Hey, good morning, guys. Great
Speaker #3: gains in that business that we've seen, unless projects
Speaker #4: Thanks.
Speaker #2: Okay.
Speaker #3: change to a further degree. But in the rest
Speaker #5: Joe,
Speaker #4: For signed backlog.
Speaker #5: the E infrastructure Yeah.
Speaker #5: Orders came on at a record, so what makes it even more...
Speaker #3: Yeah. The biggest driver, though, for the quarter's CEC. CEC has some great bookings. And Adam, what they are, that's the next phases and next sets of buildings of projects that they're currently on.
Speaker #3: pieces, the Patillo business is
Speaker #5: Couldn't believe it. They were even up.
Speaker #5: sequentially. Can you give more color about what was
Speaker #3: always been a lower margin business. As they're getting into bigger and bigger
Speaker #5: in there, and maybe how much Stone Ridge does.
Speaker #3: jobs, data centers, chip plants,
Speaker #5: added?
Speaker #3: Margins on bigger jobs are
Speaker #3: So for us, yeah, everybody likes to look at just the pure raw number, but what's really encouraging for us is the fact that they are winning those next phases and winning those next level of projects, which is just proof in the pudding that they're executing well, they're delivering to the customer, they're doing what they need.
Speaker #3: Better. Our Rocky Mountain transportation business that we've shifted,
Speaker #4: What's impressive is that we're able to do that on really strong revenue.
Speaker #4: quarter. Which is always
Speaker #3: grown to 700% in E-infrastructure,
Speaker #4: the backlog numbers?
Speaker #3: their small equipment
Speaker #4: Stone Ridge certainly added some of that. there. Yeah. So CEC had a great CEC was at quarter. about 2.4 With their bookings on that.
Speaker #3: Being vertically integrated, as an example, still provides significant advantages.
Speaker #3: better than
Speaker #3: And as part of the portfolio, we see the same thing happening with them as we have with Plateau or RLW or Patilla.
Speaker #3: transportation. But it's going to take us a little time to do some vertical integrations. We've got to have enough critical
Speaker #5: Yeah.
Speaker #5: So CEC was at
Speaker #3: integration worth its while, right? So, as
Speaker #6: Got it. Okay. And then Joe, your comment about the potential for softer Q3 awards? I think you talked about the stock being down. That's probably the biggest reason.
Speaker #5: about 2.4
Speaker #3: build up their equipment suite and then really simple way to think of it is, if I have a
Speaker #5: billion combined backlog for the backlog.
Speaker #5: quarter.
Speaker #3: bucket for every scoop, I scoop
Speaker #5: Ridge was at about 140 million
Speaker #3: It's really
Speaker #6: Can you provide additional color on what you meant by that? Maybe more color on what you're seeing in the bidding?
Speaker #5: dollars. Okay. For committed
Speaker #3: It took me one-third the time to move integration work as well, right?
Speaker #3: So we'll continue to improve and grow their equipment suites. Their margins will come.
Speaker #5: backlog.
Speaker #3: Yeah. It's just timing. I wish we could get our customers to bid equal amounts every quarter through the year and make our lives a lot easier.
Speaker #5: Fine.
Speaker #3: On CEC, there are really two big drivers.
Speaker #5: And I think it's
Speaker #3: One, is we're getting out of some legacy
Speaker #5: 140
Speaker #3: But the reality is they don't. We can have a quarter where they bid three or four new projects and we look like the greatest thanks and slice bread.
Speaker #3: business segments that have
Speaker #3: That will improve their margin, right? It's just portfolio management.
Speaker #5: backlog.
Speaker #4: Yeah. The biggest driver though
Speaker #3: And the next quarter, they bid one or none. It's just the timing of their cycle when it comes out. The important thing for us, and I get if you're not kind of in the mix of things, people who are looking for indicators.
Speaker #3: The second piece is they're getting more and more engaged on these
Speaker #4: bookings. And Adam, what they
Speaker #4: the next
Speaker #4: phases and the next set of phases, and winning those next level opportunities.
Speaker #3: We're watching their margins go up as job sizes go up.
Speaker #4: building projects that they're currently on. So, for projects, which
Speaker #4: is just proof in the pudding.
Speaker #4: Everybody likes to look at just pure.
Speaker #3: So, we'll continue to see those go up. Where people are going to get confused,
Speaker #4: raw number, but it's really
Speaker #3: But for us, we're in conversations with them all the time. We know what's coming. As long as we know what's coming, we feel good.
Speaker #4: Encouraging for us is the fact we need.
Speaker #3: Every single quarter, because it's not perfect math, is the mix of that's going...
Speaker #4: that they are winning those next.
Speaker #3: And when CEC grows at a much greater rate,
Speaker #4: level of projects, which
Speaker #3: When it hits, less of a concern for us, right? Whether it's third quarter or fourth quarter. But we see really strong activity that's going to take place in the fourth quarter and first quarter.
Speaker #4: is just proof in the pudding or Patilla.
Speaker #4: that they're executing well, they're delivering,
Speaker #3: Their margins are going up, and site development's margins are going...
Speaker #4: To the customer, they're doing what they...
Speaker #4: need. And as part of the
Speaker #3: It's— that's just mix. There's nothing we can—
Speaker #4: happening with them as we have.
Speaker #3: Of next year. And there's just a little bit of a lull in the third quarter. So we're trying to give people a heads up that we see that coming.
Speaker #3: But if you look at the returns we're getting on the dollars and the
Speaker #4: RLW or Pillow.
Speaker #4: RLW or Pillow.
Speaker #3: Growth—I think most people would take
Speaker #5: Okay. And
Speaker #5: then Joe, your comment about
Speaker #3: that any day of the
Speaker #3: week.
Speaker #3: We know it's coming. Don't panic. It's not a problem. But instead of telling people after the fact, when we know that's just going to probably happen.
Speaker #5: the potential
Speaker #5: So just quickly then, Joe, if you can just help
Speaker #5: awards? I think
Speaker #5: You talked about the stock being down. That's customers too, bid equal.
Speaker #5: the legacy E infrastructure
Speaker #5: probably the biggest reason. amounts every quarter through the year and make
Speaker #5: additional color on what you meant by
Speaker #5: are. And I'll get back in queue. Thank you so much.
Speaker #5: Thank you. I'll get back in the queue. Thank you so much.
Speaker #3: Could something slip in the third quarter and we look like idiots and it comes in early? Possibly, but I wouldn't plan that.
Speaker #5: that? the reality is they don't. Maybe more color on what you're
Speaker #5: seeing and getting?
Speaker #3: On what that—so, just quickly, is...
Speaker #4: It's
Speaker #4: just tiny.
Speaker #6: Perfect. Thank you, Joe.
Speaker #4: The full year.
Speaker #4: I wish we could get our
Speaker #3: Thanks.
Speaker #4: customers to. Next quarter, they bid one or
Speaker #4: amounts every quarter throughout the year and make
Speaker #4: our lives a lot easier. But of their cycle when it comes
Speaker #1: Thank you. And your next question is from Julio Romero from Sidoti and Company. Caroline, is that open?
Speaker #4: The reality is they don't. We can have—
Speaker #2: we're 20 high
Speaker #4: three or four new projects and we
Speaker #3: For A
Speaker #4: looked like the greatest thing since sliced bread, and the things—people who are
Speaker #3: E infrastructure site and year—CEC was 11, yeah. So you're looking at, if you take the site side, you're in upper—
Speaker #6: Thanks. Hey, good morning, Joe, Nick, Noel, and Dan. Maybe starting off here, you recently upsized the revolver to one and a half billion. You're carrying a net cash position.
Speaker #4: Next quarter, they did one or are looking for indicators. But for us,
Speaker #4: of their cycle, and when it comes
Speaker #3: And the CEC side's roughly 12%, so there's a big difference. It's over 2x the margin profile, so it doesn't—
Speaker #4: us, and I get if
Speaker #6: How should we think about that? Should we read that larger facility as kind of the M&A acquisition candidate size moving up? Is it purely optionality?
Speaker #4: you're not kind of in the mix of hits, less of a concern for us,
Speaker #4: looking for indicators for us. We're in conversations with them all the
Speaker #3: take a lot of makeshift or incremental growth in.
Speaker #4: time. We know what's coming. As long as
Speaker #6: Just help us think about that here.
Speaker #3: CEC to dilute the overall
Speaker #4: We know what's coming; we feel quarter.
Speaker #3: Yeah. Nick, do you want to answer it?
Speaker #4: good. When it
Speaker #3: margin.
Speaker #4: Yeah, sure. I mean, we upsized the facility certainly to take advantage of opportunities for acquisitions. And to have that drive powder to be able to execute on those.
Speaker #2: No, that was just 12%.
Speaker #4: hits—less of a concern for us—of a lull in the third.
Speaker #3: Yeah. So there's a big—that's just for the quarter.
Speaker #4: right? Whether it's third quarter or fourth
Speaker #5: Okay. Thank
Speaker #5: you,
Speaker #4: ...quarter. But we really see that coming up.
Speaker #4: strong activity that's
Speaker #1: Thank you. And your next question is from Samita.
Speaker #4: Also, we paid off our existing term loan and moved to an all-revolver structure. And so we've enhanced pricing. We added some key relationship banks to the mix.
Speaker #4: quarter. Of next
Speaker #4: year, and there's just a little
Speaker #1: Jaine from KeyBank Capital Markets. Your line is now
Speaker #4: bit of a lull in the third that's just going to probably
Speaker #4: So we're trying to give people a hand.
Speaker #5: Great, thank you. Good morning. Can I follow up on the—
Speaker #4: heads up that we see that coming. We
Speaker #4: I know it's coming—possibly, but I wouldn't plan on it.
Speaker #5: Margin question? I kind of just want to...
Speaker #4: panic. It's not a Perfect.
Speaker #4: And so overall, I feel really good about our revolver and how it positions us going forward.
Speaker #4: problem. But instead of telling people after the fact, well, we—
Speaker #5: the go-forward guidance, and whether it's a function of CEC growing a lot faster than
Speaker #4: know that's just going to probably Thanks.
Speaker #4: happen. Could something slip in the third quarter? And we— Thank you.
Speaker #5: you had anticipated. Let's Good.
Speaker #3: But.
Speaker #6: Okay. That's very helpful. And go ahead.
Speaker #4: look like idiots and it comes in early? Possibly, but I wouldn't play
Speaker #3: And the use is there's no question we've always been acquisitive. Our acquisitions turned out pretty good. If we could double every acquisition like CEC in a year, I think we'd get the acquisition prize of the year and I don't know what that is.
Speaker #5: guidance.
Speaker #4: that.
Speaker #3: Yeah. So the easier way to think of understand to go forward guidance margins is if you and whether it's a function of CEC growing a lot faster than take E infrastructure, you break it down into site development you had anticipated.
Speaker #5: Perfect. Thank
Speaker #5: you,
Speaker #5: Joe.
Speaker #1: Thank you. And your next question?
Speaker #1: is from Julio Romero from
Speaker #1: Potosi and Company. Position. Elaine, is that—
Speaker #1: open?
Speaker #3: So we've been very good. We're going to need to add more acquisitions for capacity. With what we're seeing, the part that everybody is missing put down the newspapers, quit reading the craziness that's out there.
Speaker #3: margins in site.
Speaker #5: Thanks. Hey, good morning,
Speaker #3: And electrical margins is — if you, but the revenue mix...
Speaker #5: Joe, Nick, Noelle, and the M&A acquisition candidate
Speaker #5: Dan. size moving up? Maybe starting off here, you recently
Speaker #5: upsized the revolver to $1 and a
Speaker #3: Of the electrical being, growing at a much faster rate brings down that...
Speaker #5: Half a billion. You're carrying net cash. Yeah, Nick, do you want to answer?
Speaker #3: overall margin. As we go through the rest of the
Speaker #5: How should we think about that? Should we read that...
Speaker #3: What we are seeing, just from our top hyperscalers, the amount of work that is coming we have to add capacity significantly faster just to keep up with them.
Speaker #5: the M&A acquisition candidate
Speaker #3: rate of CEC, okay? So, it's really
Speaker #5: Is the size moving up? Is it purely...
Speaker #5: Just help us think about those.
Speaker #5: here.
Speaker #4: Yeah. Thank you, Loan, and moving to Elaine. Yeah, sure. We all revolver-upsized the facility, certainly to take structure and take advantage of— we've enhanced pricing.
Speaker #3: That's not including all the other players that are entering the market building stuff. It is unbelievable what is coming down the tracks. And so we are going to have to make more acquisitions not only just from a strategic geographic standpoint, but from a pure capacity add standpoint to keep up with that demand that's coming.
Speaker #3: I want to make sure everybody understands that. This is
Speaker #3: purely a mix of revenue that drives
Speaker #3: Yeah. And then the other piece, you—
Speaker #4: Also, we paid off our existing term about our revolver and HAY loan and moved to an all-revolver position going forward.
Speaker #3: have the site
Speaker #4: structure. But. And so
Speaker #3: the increase the trajectory
Speaker #3: of growth in margins slow down as we
Speaker #4: We added some key relationship banks, too.
Speaker #3: We have one new project where the beginning phases are lower.
Speaker #4: And so, overall, I feel the real question we've always been...
Speaker #4: good about our revolver and how
Speaker #3: But two, we also have
Speaker #4: It positions us going out pretty well.
Speaker #6: Excellent. And kind of relates to my follow-up here is just CEC is running well ahead of the revenue expectations you set at the announcement.
Speaker #4: forward.
Speaker #3: that 700% growth in the Rocky Mountains transportation
Speaker #5: Okay. That's very
Speaker #5: helpful.
Speaker #3: business, which has that smaller equipment.
Speaker #4: And the use is
Speaker #4: there's no
Speaker #6: Obviously, it's making up more of the infrastructure mix as we've talked about today. And I'm curious how that and your comments about more capacity needed relate to your M&A priorities.
Speaker #4: Question. We've always been—so we've been very...
Speaker #4: acquisitive. Our acquisitions good.
Speaker #3: So when that happens, their margins are lower.
Speaker #4: turned out pretty good. If we could,
Speaker #4: double every acquisition like CEC, what we're seeing, the part that everybody
Speaker #3: Their margins are improving, but they're still lower.
Speaker #6: Kind of ranking them today, where do your priorities kind of sit at with regards to geographical, electrical versus specialty mechanical, more site development, just help us think about those priorities here.
Speaker #4: get the acquisition prize of the year. I don't know if that is—
Speaker #3: So that blend makes it
Speaker #4: so we've been very
Speaker #4: Good. Top, we're going to need to add more.
Speaker #4: acquisitions.
Speaker #3: all going in the right
Speaker #4: With what we're seeing, the part that's coming, we have to add—everybody is missing—put down the...
Speaker #2: So, relative to our previous expectations, yes, the growth at CEC has
Speaker #3: Yeah. The answer is a little bit all of the above. But if you would ask me kind of in the third quarter last year after we purchased CEC, would you look for more electrical capacity in the Texas market?
Speaker #4: newspapers, quit reading
Speaker #4: the craziness that's out including all the other players there. What we are seeing, just from our
Speaker #2: on some of those newer projects has been
Speaker #2: faster.
Speaker #2: faster.
Speaker #4: top
Speaker #4: hyperscalers, the amount of work that is what is coming down the
Speaker #5: Thank you. That's all for me.
Speaker #5: Thanks.
Speaker #5: Thanks.
Speaker #4: coming we have to add tracks.
Speaker #3: Thank direction.
Speaker #3: I would have said no. We're probably going to focus more on the Southeast. Today, if the right opportunities came up, I would add two or three more CECs to the Texas market.
Speaker #3: you.
Speaker #4: capacity significantly faster just to
Speaker #1: Thank you.
Speaker #4: keep up with that. That's not
Speaker #4: keep up with that. That’s not including all the other acquisitions, not only just from a
Speaker #1: Adam Solomon from Thomson
Speaker #1: Davis. Your line is now
Speaker #4: players that are entering the market strategic geographic standpoint, but from a pure
Speaker #4: building stuff. It is capacity add.
Speaker #6: Hey, good morning, guys. Great quarter.
Speaker #4: unbelievable what is coming down the
Speaker #3: That's how big we believe that market's going to be. We certainly would like to add the electrical capabilities in the Southeast. We think that's obviously a large market for us and the value proposition is the same.
Speaker #4: tracks. And so we are going to have to make more acquisitions, not only just from a
Speaker #6: level, and I couldn't believe it. They were even up
Speaker #4: strategic view, but from a pure
Speaker #4: capacity
Speaker #6: in there and maybe how much Stoneridge added?
Speaker #3: So we continue to look hard for the right acquisition in that market. And then on the site side, especially as we're moving further and further from the West East and from the East West to Texas, and some of the surrounding markets, the Texas market is going to be bigger.
Speaker #4: with that demand that's
Speaker #4: coming.
Speaker #3: impressive is that we're able to do that on a really strong revenue
Speaker #5: Excellent. And kind of
Speaker #5: just CEC is running well ahead of the revenue
Speaker #3: quarter, which is always tough to
Speaker #5: expectations. You said at the announcement. priorities kind of sit at with regards to Obviously, it's making up more of the
Speaker #3: Nick, do you want to go through some of the backlog numbers?
Speaker #5: infrastructure mix as we've talked about
Speaker #3: Stoneridge certainly added some of that this quarter.
Speaker #5: today. And I'm curious how that and more site development,
Speaker #3: In the next three years, than any other market related to data centers, everything else. It is coming. And I guess there's always something that could stop it, but I don't know what that is.
Speaker #3: With their bookings on that, I don't know.
Speaker #5: priorities, kind of ranking them—today, where do
Speaker #5: your priorities kind of sit at with regard to ask me kind of in the third
Speaker #3: Nick, if you have the detailed numbers.
Speaker #5: geographical, electrical
Speaker #5: versus specialty mechanical, purchased CEC, would you
Speaker #3: Right now. And so we're working really, really hard on what do we need to do to add that incremental capacity today to start getting ahead of that curve.
Speaker #5: more site look for more electrical
Speaker #5: here.
Speaker #4: Yeah. The answer
Speaker #4: Billion combined backlog for the—I don't know, quarter. Nick, if you have the detailed numbers, June. Stoneridge was at about there.
Speaker #4: It's a little bit all of the above. I'm going to focus more on the— But if you would...
Speaker #4: ask me kind of in the third Southeast. quarter last year after we
Speaker #3: Just like we did with Stoneridge, because we believe in 20 late 2007, 2008, some of the upper Pacific Northwest areas are going to start taking off as well.
Speaker #4: purchased the would add two or three more CECs to
Speaker #4: You look for more electrical in the Texas market.
Speaker #4: dollars.
Speaker #4: capacity in the Texas
Speaker #4: market? I would have said no.
Speaker #4: Probably going to push more on the to add the electrical
Speaker #2: That's fine.
Speaker #3: I sound like a broken record, but we have great visibility to multi-year projects that are coming and we are continuing to position ourselves to be there.
Speaker #4: Signed.
Speaker #4: southeast.
Speaker #4: Today, if the right opportunities came up, I that's
Speaker #4: And it's I think it's 140.
Speaker #4: And it's I think it's 140.
Speaker #4: CDCs to the Texas market. That's how
Speaker #4: big we believe that market's
Speaker #3: So we look really smart when they come out, but it's just our customers telling us where they're going.
Speaker #4: going to be. We certainly would like
Speaker #4: For signed
Speaker #4: capabilities to the southeast. We
Speaker #4: backlog.
Speaker #3: Yeah. The biggest driver, though, for the—
Speaker #4: think that's
Speaker #6: Helpful. Thanks very much.
Speaker #4: obviously a large market for us. Value proposition is the same.
Speaker #3: bookings. And Adam, what they are, that's
Speaker #3: Thank you.
Speaker #4: So we continue to look
Speaker #1: Thank you. That concludes our question and answer session for today. I would now like to turn to Carmen's call back over to Joe Cattello for the closing remarks.
Speaker #4: hard for the right
Speaker #3: and next sets of buildings of
Speaker #4: acquisition in that
Speaker #3: projects that they're currently on. So for us, yeah,
Speaker #4: market. And then, on the site side,
Speaker #3: Everybody likes to look at just the pure, raw numbers.
Speaker #4: moving further and
Speaker #3: Great. I want to thank everybody again for joining our call today. If you have any follow-up questions, please feel free to contact Noel Builds or contact information can be found in the press release.
Speaker #4: further from the west, east, and from the east-west is coming. to Texas, and some of the
Speaker #3: Encouraging for us is the fact that they are winning those next.
Speaker #4: surrounding markets, the
Speaker #4: Texas market is going to be
Speaker #4: years, than any other market related
Speaker #3: that they're executing well, they're delivering to the
Speaker #3: Thanks, everybody. And have a great day.
Speaker #3: customer, they're doing what they
Speaker #4: to data centers, everything else. incremental capacity
Speaker #4: It is
Speaker #3: And as part of the
Speaker #4: something that can stop it. But I don't know what that
Speaker #3: with them as we have with Plateau or RLW.
Speaker #4: is. Right now. And so late 27,
Speaker #4: we're working really, really 28, some of the
Speaker #4: hard on what do we need to do to add upper Pacific Northwest areas are going to
Speaker #6: Got it. Okay. And
Speaker #6: then Joe, your comment about
Speaker #4: today to start getting ahead of that
Speaker #6: the potential
Speaker #6: for softer Q3 awards? I think you
Speaker #4: curve. Just like we did with
Speaker #4: 2027,
Speaker #6: talked about the stock being down. That's probably the biggest reason. Can you provide
Speaker #4: 2028, some of the are continuing to position ourselves to be
Speaker #6: Could you provide some additional color on what you meant by "Got it"?
Speaker #4: upper Pacific Northwest areas are there.
Speaker #6: that? Maybe more color on what you're seeing
Speaker #4: going to start taking off as
Speaker #4: well. I feel like a broken record, but we have great visibility
Speaker #6: in the bidding.
Speaker #3: It's
Speaker #3: Just timing. I wish we could get our...
Speaker #4: to multi-year Helpful.
Speaker #4: are continuing to position ourselves to be
Speaker #3: our lives a lot easier. But
Speaker #4: There, so we look really smart when they come to you.
Speaker #4: out. It's just our customers
Speaker #3: We can have a quarter where they bid.
Speaker #4: telling us where we are for today.
Speaker #4: going.
Speaker #3: three or four new projects and we look
Speaker #3: like the greatest things since sliced bread and the
Speaker #5: Helpful. Thanks very
Speaker #5: much.
Speaker #4: you.
Speaker #3: none. It's just the timing
Speaker #1: Thank
Speaker #1: you. That concludes our question and answer please feel free to contact Noelle session for today. I would now like to turn
Speaker #3: out. The important thing for
Speaker #3: us, and I get if you're not kind of in the mix of
Speaker #1: a conference call back over to Joe Patel
Speaker #1: remarks.
Speaker #4: Great. I want to thank everybody.
Speaker #3: we're in conversations with them all the time. We know what's coming. As long as
Speaker #4: today. If you have any follow-up,
Speaker #3: We know what's coming. We feel good. When it
Speaker #4: Dilts or contact information can be found in the press release. Thanks, everybody. And have a great day.
Speaker #3: Right? Whether it's third quarter or fourth quarter. But we see really...
Speaker #3: strong activity that's going to
Speaker #3: of next year. And there's just a little bit
Speaker #3: quarter. So we're trying to give people a heads-up.
Speaker #3: We know it's coming.
Speaker #3: It's not a problem.
Speaker #3: after the fact, when we know
Speaker #3: Could something slip in the third quarter and we look like idiots and it comes in early?
Speaker #3: that.
Speaker #3: that.
Speaker #6: Thank you, Joe.
Speaker #1: And your next question is from Julio Romero from
Speaker #1: Sidoti and Company, your line is now open.
Speaker #1: open.
Speaker #6: Thanks. Hey, good morning Joe, Nick, Noelle, and Dan. Maybe starting off here, you recently upsized the revolver to $1 and a—
Speaker #6: half billion. You're carrying a net cash
Speaker #6: How should we think about that? Should we read that larger facility as kind of
Speaker #6: Is it purely optionality? Just help us think about that.
Speaker #6: here.
Speaker #6: here.
Speaker #3: that?
Speaker #4: Yeah, sure. We upsized the facility, certainly, to take—
Speaker #4: advantage of opportunities for acquisitions, and to have...
Speaker #4: that dry powder to be able to execute on
Speaker #4: Also, we
Speaker #4: We have opportunities for acquisitions and have added some key relationship banks that drive powder to be able to execute on mix. And so, overall, I feel really good about those.
Speaker #6: Okay, that's very helpful. And go ahead.
Speaker #3: And the use is there's no we enhanced pricing.
Speaker #3: acquisitive. Our acquisitions turned
Speaker #3: If we could double every acquisition like CEC in a year, I think we'd get...
Speaker #3: I don't know what that is.
Speaker #3: We're going to need to add more acquisitions for capacity. With
Speaker #3: is missing. Put down the newspapers, quit reading the
Speaker #3: craziness that's out there. What we are seeing, just from our
Speaker #3: hyperscalers, the amount of work that is
Speaker #3: capacity, significantly faster, just to keep up with them. That's not
Speaker #3: that are entering the market building stuff. It is unbelievable
Speaker #3: And so we are going to have to
Speaker #3: make more
Speaker #3: standpoint to keep up
Speaker #3: with that demand that's
Speaker #3: coming.
Speaker #6: Excellent. And kind of
Speaker #6: just CEC is running well ahead of the revenue
Speaker #6: expectations you said at the announcement. Obviously, it's making up more of the
Speaker #6: infrastructure mix, as we've talked about today, and I'm curious how that—and your comments about more capacity needed—
Speaker #6: Relate to your M&A priorities—kind of ranking them today, where do your...
Speaker #6: geographical, electrical versus specialty mechanical,
Speaker #6: just help us think about those priorities here.
Speaker #6: Just help us think about those priorities here.
Speaker #3: Yeah, the answer is needed relate to your M&A a little bit all the above. But if you would
Speaker #3: quarter last year after we
Speaker #3: Capacity in the Texas market? I would have said no. We're probably—
Speaker #3: Today, if the right opportunities came up, I would
Speaker #3: That's how
Speaker #3: big. We believe that's where the market is going to be. We certainly would like
Speaker #3: capabilities in the Southeast. We think
Speaker #3: obviously a large market for us and the value proposition is the same.
Speaker #3: So we continue to look
Speaker #3: hard for the right acquisition
Speaker #3: in that market. And then on the site side,
Speaker #3: especially as we're
Speaker #3: moving further and further
Speaker #3: from the West, East, and from the East-West to Texas, and some of the surrounding
Speaker #3: markets, the Texas
Speaker #3: market is going to be
Speaker #3: bigger in the next three
Speaker #3: years than any other market related to data centers and everything else. It
Speaker #3: And I guess there's always something that could stop it, but I don't know what that
Speaker #3: is. Right now. And so
Speaker #3: We're working really, really hard on what we need to do to add that.
Speaker #3: today to start getting ahead of that curve.
Speaker #3: Just like we did with
Speaker #3: start taking off as well. I sound like a broken record, but
Speaker #3: we have great visibility
Speaker #3: to multi-year projects that are coming and we
Speaker #3: So we look really smart when they come out, but it's just our customers telling
Speaker #3: us where they're
Speaker #3: going.
Speaker #6: Thanks very much.
Speaker #6: Thanks very much.
Speaker #3: Thank projects that are coming and we
Speaker #1: Thank
Speaker #1: I would now like to turn the conference call back over to Joe Cutillo for the closing
Speaker #1: remarks.
Speaker #1: remarks.
Speaker #3: Great. Want to thank everybody Thank again for joining our call
Speaker #3: Dilts or contact information can be found in the press
Speaker #3: release. Thanks, everybody, and have a great
Speaker #3: day.
Speaker #1: Thank you, ladies and again for joining our call gentlemen. The conference call has now
Speaker #1: ended. Thank you all for joining. You may now disconnect.
