Q3 2026 Sterling Infrastructure Inc Earnings Call

October 29, 2026

Noelle Dilts: Good morning, and welcome to Sterling Infrastructure's Q3 2026 earnings conference call and webcast. I am pleased to be here today to discuss our results with Joe Cutillo, Sterling's Chief Executive Officer, Nick Grindstaff, Sterling's Chief Financial Officer, and Dan Govin, Sterling's Chief Operating Officer. As a reminder, accompanying slides are available in the investor relations section of our website and include additional information regarding our full year 2026 financial guidance. Our discussion today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a 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. Please note that management may reference certain historical, forward-looking, and non-GAAP financial measures.

Noelle Dilts: Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are included in our earnings release and posted in the investor relations section of our website. Please refer to the press release for additional information regarding our forward-looking statements and non-GAAP financial measures. Throughout today's discussion, all Q3 2026 comparisons are to the Q3 of 2025, unless otherwise noted. I will now turn the call over to our CEO, Joe Cutillo.

Speaker #5: Please refer to the press release for additional information regarding our forward-looking statements and non-GAAP financial measures. Throughout today's discussion, all 3rd quarter 2026 comparisons are to the 3rd quarter of 2025, unless otherwise noted.

Speaker #5: I'll now turn the call over to our CEO, Joe Cutillo.

Throughout today's discussion, all third quarter 2026 comparisons are to the third quarter of 2025 unless otherwise noted, I'll now turn the call over to our CEO, Joe catillo.

Joe Cutillo: Thanks, Noelle, and good morning, everyone. Sterling delivered another outstanding quarter as adjusted diluted EPS grew 118% to reach $7.58. Revenue increased 127%, and adjusted EBITDA more than doubled. On top of this, our visibility continues to expand. Our total scoped work, which includes signed backlog, unsigned awards, and the next phases being designed on our current projects, now totals nearly $8 billion, up approximately 90% year-over-year. These results demonstrate the strength of our market, the great execution of our teams, and the continued success of our strategy. While the quarterly performance was exceptional, what is even more important is what these results tell us about the opportunity ahead. Throughout 2026, it has become increasingly clear to us that we are in the early stages of significant multi-year investment in large scale, mission critical infrastructure across the US.

Thanks Noel and good morning, everyone.

Sterling delivered. Another outstanding quarter is adjusted. Diluted EPS, grew 118%.

To reach 7 dollars in 58 cents.

Revenue, increased 127% and adjusted the ibida more than doubled.

On top of this, our visibility continues to expand.

Our total scoped work, which includes signed backlog.

Unsigned Awards and the next phases being designed on our current projects. Now, totals nearly 8 billion dollars.

Up approximately 90% year-over-year.

In the continued success of our strategy.

While the quarterly performance was exceptional, which even more important is with these results, tell us about the opportunity ahead.

Joe Cutillo: Data centers remain a powerful growth driver, but the opportunity is much broader, spanning semiconductors, advanced manufacturing, energy infrastructure, and the broader build-out supporting the next generation of US industrial growth. The magnitude of this opportunity is driving us to think even bigger about how we position Sterling for long-term growth. We are focused on building the capacity, services, geographic reach, and customer relationships required to capture more share of this investment. Importantly, the $8 billion of scope work does not capture the full development potential of the campuses we are already working on today. Many of these projects span hundreds or even thousands of acres and are being developed in multiple phases over several years. These are tangible opportunities backed by land, permits, and power commitments, and is on top of what we already have scoped. In total, these opportunities provide more than 5 years of additional work.

Throughout 2026, it has become increasingly clear to us that we are in the early stages of significant. Multi-year investment in large scale, Mission critical infrastructure across the US.

Data centers. Remain a powerful growth driver?

But the opportunity is much broader.

Expanding semiconductors Advanced Manufacturing.

Energy, infrastructure and the broader buildout supporting the next generation of us industrial growth.

The magnitude of this opportunity is driving us to think even bigger about how we position Sterling for long-term growth.

Capacity.

Services.

Geographic, reach in customer relationships, were required to capture more share of this investment.

Importantly.

The 8 billion dollars of scope work does not capture the full development potential of the campuses. We are already working on today.

Many of these projects spend hundreds or even thousands of acres and are being developed and multiple phases over several years.

These are tangible opportunities backed by land.

Permits and power commitments.

And is on top of what we already have scope.

In total these opportunities provide more than 5 years of additional work.

Joe Cutillo: Sterling has never been in a better position. We have significant visibility into future growth, deep relationships with our customers, and the financial and operational resources to capitalize on the opportunities ahead. We are excited about Sterling's future and confident in our ability to compound strong, profitable growth for years to come. Now, I'd like to hand the call over to Dan to discuss our segment results in more detail. Dan?

Sterling has never been in a better position.

We have significant visibility in the future growth.

Deep relationships with our customers and the financial and operational resources to capitalize on the opportunities ahead.

We are excited about Sterling's future and confident in our ability to compound strong profitable growth for years to come.

Now I'd like to hand the call over to Dan to discuss our segment results in more detail. Dan

Dan Govin: Thanks, Joe. I'll begin with E-Infrastructure Solutions, where mission critical demand, accelerating project activity, and outstanding execution drove another excellent quarter. Revenue increased 212% year over year, led by continued strength across data center and semiconductor campus projects. Within E-Infrastructure, Site Development operations more than doubled revenue organically, with strong growth across each of our geographies. In the Southeast, customer demand remains robust and projects continue to expand in acreage, number of phases, and complexity. This trend plays directly to our strengths, allowing us to leverage our broad self-perform capabilities and proven execution model. In the Northeast, we continue to make excellent progress on our large semiconductor campus and remain ahead of schedule. Our execution on this large-scale project is strengthening our position and reputation in the semiconductor market.

thanks Joe.

I'll begin with e infrastructure Solutions, where Mission critical demand, accelerating project activity and outstanding execution. Drove. Another excellent quarter Revenue, increased 212% year-over-year led by a continued strength, across Data Center, and semiconductor campus projects.

Within infrastructure site development operations, more than doubled Revenue, organically with strong growth across each of our geographies.

In the Southeast customer demand remains robust and projects continue to expand in acreage number of phases. And complexity. This trend plays directly to our strengths allowing us to leverage our broad self-performed capabilities and proven execution model.

In the Northeast, we continue to make excellent progress on our large, semiconductor campus and remain ahead of schedule. Our execution on this large scale, project is strengthening our position and reputation in the semiconductor Market.

Dan Govin: Momentum is building in the Rocky Mountain region, where accelerating activity on recently awarded large projects fueled another quarter of exceptional growth. Our teams are delivering strong execution and are successfully redeploying Transportation resources to capitalize on the expanding mission-critical opportunities. Key customers are increasingly engaging us to support their capital plans in Texas, driving significant demand for our Site Development capabilities. Based on the opportunities we see today, we expect Texas to be a meaningful driver of growth over the next several years. Turning to CEC, the electrical business delivered $426 million of revenue in the quarter, more than quadrupling its pro forma full quarter revenue in Q3 2025. Accelerating work on major hyperscaler and large co-location projects drove growth. CEC is scaling rapidly and maintaining strong execution. Year-to-date growth has significantly exceeded our initial expectations, and we now believe full-year revenue could exceed $1 billion.

Momentum is building in the rocky mountain region. We're accelerating activity on recently awarded large projects fueled another quarter of exceptional growth

Our teams are delivering strong execution and are successfully redeploying transportation resources to capitalize on the expanding Mission critical opportunities.

Key customers are increasingly engaging us to support their Capital plans and Texas driving significant demand for our site development capabilities, based on the opportunities. We see today, we expect Texas to be a meaningful driver of growth over the next several years.

turning to CC the electrical business delivered 426 million of Revenue in the quarter more than quadrupling its ProForm of full quarter Revenue in the third quarter of 2025

Accelerating work on, major hyperscaler and large co-location projects drove growth. CEC is scaling rapidly and maintaining strong execution year to date. Growth has significantly exceeded our initial expectations. And we now believe full year Revenue could exceed 1 billion dollars.

Dan Govin: This momentum is extending beyond 2026 as CEC continues to build high-quality, longer-duration backlog with established customers, positioning the business for continued growth in 2027. The strong demand and execution across both CEC and Site Development are translating to significant profit growth for the segment. In the quarter, E-Infrastructure Solutions adjusted operating income increased 171%, with adjusted operating margins of 23%. Margins declined year-over-year, reflecting the significantly higher revenue contribution from CEC, as it represented a third of the segment revenue in the quarter versus 10% in the prior year period. Within the segment, Site Development operating margins remained strong at H1 2026 levels, even though several of our large mission-critical projects are still in the early stages of construction. Margins typically expand as these multi-phase campuses move into later construction phases over the coming months and years.

This momentum is extending Beyond 2026. As CC continues to build, high-quality longer duration, backlog with established customers positioning, the business for continued growth in 2027.

The strong demand and execution across both. CEC and site development are translating into significant profit growth for the segment.

In the quarter, Infrastructure Solutions' adjusted operating income increased 171%, with adjusted operating margins of 23%. Margins declined year-over-year, reflecting the significantly higher revenue contribution from CEC, as it represented a third of the segment revenue in the quarter versus 10% in the prior year period.

Within the statement site development, operating margins remain strong at first half 2026 levels, even though several of our large Mission critical, projects are still in the early stages of construction. Margins typically, expand as these multi-phase campuses move into later construction phases, over the coming months and years.

Dan Govin: CEC operating margins improved both year-over-year and sequentially, and we are encouraged by the margin improvement we are seeing in the core business. As we have previously discussed, we are in the process of winding down some non-core business lines identified during diligence, a process we expect to complete by year-end 2027. We estimate that these non-core operations will be a drag of approximately 160 basis points on full year 2026 CEC margins, masking the roughly equivalent improvement in the core business. At the time of the CEC acquisition, we committed to achieving 300 to 500 basis points of run rate margin improvement at CEC over 18 to 24 months. Progress in the core business and our planned exit from non-core work gives us confidence that we can deliver on this commitment. Looking ahead, the opportunities in front of E-Infrastructure continues to strengthen.

CC, operating margins improved, both year-over-year and sequentially as we are. Encouraged by the margin Improvement. We are seeing in the core business.

Of winding down some non-core business lines, identified. During diligence a process, we expect to complete by year, end 2027.

We estimate that. These non-core operations will be a drag of approximately 160 basis points on full year, 2026, CEC margins masking, the roughly equivalent Improvement in the core business.

At the time of the CEC acquisition, we committed to achieving 300 to 500 basis points of run-rate margin improvement at CC over 18 to 24 months.

Progress in the core business and our plan exit from non-core work, gives us confidence that we can deliver on this commitment.

Dan Govin: In aggregate, our scoped work now approaches $7 billion, an increase of more than 130% year-over-year. The vast majority of these opportunities are tied to mission-critical work, providing substantial visibility into continued growth. Turning to Transportation Solutions. Revenue declined 3%, reflecting the redeployment of resources from transportation into higher-margin E-Infrastructure work. This transition continues to accelerate as E-Infrastructure activity builds in the Rocky Mountain and Texas regions. This was the second consecutive quarter in which our Rocky Mountain operation generated more revenue from E-Infrastructure than Transportation. Despite the lower revenue, Transportation Solutions adjusted operating income grew 22%, and adjusted operating margins reached 19.7%. This demonstrates the discipline we are applying to project selection. Transportation Solutions backlog ended the quarter at $964 million, up 31% year-over-year, largely driven by the conversion of unsigned backlog to signed.

Looking ahead, the opportunity in front of e, infrastructure continues to strengthen in aggregate. Our scope work now, approaches 7 billion dollars and increase of more than 130% year-over-year. The vast majority of these opportunities are tied to Mission critical work. Providing substantial visibility into continued growth.

Turning to Transportation Solutions.

Revenue declines, 3% reflecting the redeployment of resources from Transportation into higher margin e infrastructure work. This transition continues to accelerate as e infrastructure activity, builds in the Rocky Mountain and Texas regions. This was the second consecutive quarter in which our Rocky Mountain operation generate more revenue from E infrastructure than transportation.

Despite the lower Revenue Transportation Solutions, adjusted operating income group 22% and adjusted operating margins reached. 19.7%, this demonstrates the discipline. We are applying to project selection.

Transportation Solutions backlog ended the quarter at 964 million up 31% year-over-year. Largely driven by the conversion of unsigned backlogged to signed.

Dan Govin: On the combined backlog basis, the segment declined 22%, again, reflecting the shift in resource allocation. In Building Solutions, segment revenue declined 5% as home builder activity slowed and adjusted operating margin was 8%. We expect residential market conditions to remain under pressure through the balance of 2026 and into 2027. We are managing the business carefully through the current environment while positioning the business to capture more market share when conditions improve. Stepping back, the quarter provides clear evidence of Sterling's strategy in action. We are benefiting from exceptional demand in our highest return markets, becoming more selective about where we are deploying our resources, and building the foundation for multi-year growth. With that, I'd like to turn it over to Nick to give you more details on some of our financial metrics and 2026 guidance. Nick?

on the combined backlog basis, the segment declined 22% again, reflecting the shift in resource allocation

In Building Solutions, segment revenue declined 5% as home builder activity slowed, and adjusted operating margin was 8%.

We expect residential market conditions, to remain Under Pressure through the balance of 2026 and into 2027.

We are managing the business carefully through the current environment while positioning the business to capture more market share when conditions improve.

Stepping back, the quarter provides clear evidence of Sterling strategy and action. We are benefiting from exceptional demand. In our highest return markets, becoming more selective about where we are deploying our resources and building the foundation for multi-year growth 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, Nick.

Nick Grindstaff: Thanks, Dan, and good morning. I will begin with our cash flow and balance sheet. For the first 9 months of 2026, cash flow from operating activities was $427 million, an increase of 68% compared with the prior year period. One item to note is the increase in accounts receivable at the end of the quarter. Receivables were higher at the end of the quarter due to substantial growth in E-Infrastructure activity, combined with the timing of collections. However, we have already secured a major portion of these outstanding funds in early October, setting us up for robust operating cash flow in the Q4. Investing activities resulted in a $276 million outflow, including $115 million of capital expenditures. We now anticipate full-year CapEx of approximately $140 million. Financing activities resulted in a $325 million outflow year to date.

Thanks Dan and good morning.

I'll begin with our cash flow and balance sheet.

For the first 9 months of 2026 cash flow from operating activities was 427 million, an increase of 68%. Compared with the prior year period, 1 item to note is the increase in accounts receivable at the end of the quarter.

Receivables were higher at the end of the quarter due to substantial growth in E infrastructure, activity, combined with the timing of collections. However, we have already secured a major portion of these outstanding funds in early October setting us up for robust operating cash flow in the fourth quarter.

Investing activities resulted in a 276 million outflow, including 115 million of capital expenditures. We now anticipate full-year capex of approximately 140 million

Financing activities. Resulted in a 325 million outflow year to date.

Nick Grindstaff: On 2 July, we closed on the extension and expansion of our revolving credit facilities to $1.5 billion and extended the maturity to July 2031. We used this facility and cash on hand to pay off our existing term loan. The expanded facility further strengthens our financial flexibility and provides additional capacity to support both organic growth and M&A. Financing activities included share repurchases of $107 million. At quarter end, $267 million remained available under our existing repurchase authorization. We will continue to take an opportunistic and disciplined approach to share repurchases as part of our broader capital allocation strategy. Turning to the balance sheet, we ended the quarter with $217 million of cash and debt of $95 million, for a cash net of debt balance of $122 million.

On July 2nd, we closed on the extension and expansion of our revolving credit facilities to $1.5 billion and extended the maturity to July 2031.

We use this facility and cash on hand to pay off our existing Term Loan.

The expanded facility further, strengthens our financial flexibility and provides additional capacity to support both organic growth and m&a.

267 million remained available under our existing repurchase authorization.

We will continue to take an opportunistic and disciplined approach to share repurchases as part of our broader capital allocation strategy.

Turning to the balance sheet. We ended the quarter with 217 million of cash and debt of 95 million for a cash net of debt balance of 122 million.

Nick Grindstaff: Combined with our expanded revolving credit facility and strong cash generation, our balance sheet provides significant capacity to continue investing in the business and pursuing acquisitions. Moving to guidance, our performance through the first 9 months and improved visibility into the Q4 give us greater confidence in our full-year outlook. We are raising our 2026 guidance ranges as follows: Revenue of $4.63 billion to $4.73 billion, diluted EPS of $19.16 to $19.42, adjusted diluted EPS of $21.70 to $21.96, EBITDA of $905 million to $916 million, adjusted EBITDA of $970 million to $981 million. Now I will turn the call back to Joe.

Combined with our expanded revolving credit facility and strong cash generation, our balance sheet provides significant capacity to continue investing in the business and pursuing acquisitions.

Moving to guidance our performance through the first 9 months and improved visibility into the fourth quarter. Give us greater confidence in our full year outlook.

We're raising our 2026 guidance ranges as follows revenue of 4.63 billion to 4.73 billion.

Diluted EPS of 19.16 to 19.42.

Adjusted diluted EPS of $21.70 to $1.96.

EBITDA of $905 million to $916 million.

Adjusted ebit da of 970 million to 981 million. Now I will turn the call back to Joe

Joe Cutillo: Thanks, Nick. The trends we have highlighted over the past several quarters have not only continued, they have accelerated. Projects are becoming larger, more technically complex, and longer in duration. Our execution continues to build trust and loyalty with our customers, and that is creating opportunities for Sterling to enter new markets, take on more responsibility, and have greater participation in our customers' long-term capital planning. The opportunity in front of us is larger than ever. Increasingly, the question is not whether the opportunity is there, but how quickly we can add capacity to capture it. We are investing in our people, equipment, and our capabilities while maintaining the execution discipline and focus on returns that have driven our success. As we look to the remainder of 2026, we are confident that we will deliver another record year.

Thanks Nick.

The trends we've highlighted over the past several quarters have not only continued,

They have accelerated.

Projects are becoming larger.

More technically complex.

And longer in duration.

Our execution continues to build, trust in loyalty with our customers.

And that is creating opportunities for Sterling to enter new markets, take on more responsibility.

And have greater participation in our customers long-term capital planning.

The opportunity in front of us is larger than ever.

Increasingly, the question is not whether the opportunity is there?

But how quickly we can add capacity to capture.

We are investing in our people.

Equipment and our capabilities, while maintaining the execution discipline and focus on returns that have driven our success.

As we look to the remainder of 2026, we are confident that we will deliver another record year.

Joe Cutillo: The midpoints of our revised guidance ranges would represent 88% revenue growth year over year, 101% adjusted EPS growth, and 94% adjusted EBITDA growth. Our guidance continues to assume a more pronounced weather impact in the Q4 than we experienced in 2025. Stepping back, our multi-year growth strategy is built around two complementary drivers, strong organic growth and disciplined strategic acquisitions. We are targeting annual organic profitability growth of 20% to 30% over the next several years, with M&A providing an additional opportunity to accelerate that growth. Together, these drivers support an aspiration to grow earnings by approximately 50% per year. We believe 2027 is shaping up to be another year that meets or exceeds this organic framework. On the acquisition front, we remain very active and encouraged by the quality of opportunities in the market.

The midpoints of our revised guidance ranges would represent 88% Revenue growth year-over-year.

Percent adjusted EPS growth.

And 94% adjusted ebit growth.

Our guidance continues to assume a more pronounced weather impact in the fourth quarter that we experienced in 2025.

Stepping back.

Our multi-year growth strategy is built around 2 complimentary drivers.

Strong organic growth.

And disciplined strategic acquisitions.

We are targeting annual organic, profitability growth of 20 to 30% over the next several years.

Operator: Good morning, ladies and gentlemen, and welcome to the Sterling Infrastructure Q3 webcast and conference call. At this time, all lines are in listen-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 star zero for the operator. As a reminder, this call is being recorded on Thursday, 29 October 2026. I would like to turn the conference over to Noelle Dilts, Vice President, Investor Relations and Corporate Strategy. Please go ahead.

With M&A, providing an additional opportunity to accelerate that growth.

Together, these drivers support an aspiration to grow earnings by approximately 50% per year.

We Believe 2027 is shaping up to be another year that meets or exceeds this organic framework.

On the acquisition front.

We remain very active and encouraged by the quality of opportunities in the market.

Joe Cutillo: We will continue to pursue acquisitions that expand our capacity and geographic presence and enhance the value we can bring to our customers. Our strong balance sheet, significant cash generation, and disciplined approach to capital allocation give us the flexibility to fund organic growth and pursue strategic acquisitions supporting our multi-year growth ambition. We are confident in Sterling's ability to deliver sustained, profitable growth and long-term value to our shareholders. With that, I would like to turn it over for questions.

Noelle Dilts: Good morning, and welcome to Sterling Infrastructure's Q3 2026 Earnings Conference call and webcast. I am pleased to be here today to discuss our results with Joe Cutillo, Sterling's Chief Executive Officer, Nick Grindstaff, Sterling's Chief Financial Officer, and Dan Govin, Sterling's Chief Operating Officer. As a reminder, accompanying slides are available in the investor relations section of our website and include additional information regarding our full year 2026 financial guidance. Our discussion today may include forward-looking statements.

We will continue to pursue Acquisitions that. Expand our capacity and Geographic presence and enhance the value we can bring to our customers.

Our strong balance sheet, significant cash, generation and disappoint approach to Capital, allocation. Give us the flexibility to fund organic growth and pursue strategic Acquisitions supporting our multi-year growth ambition.

We're confident in Sterling's ability to deliver sustained profitable growth, and long-term value to our shareholders.

Noelle Dilts: Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a 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. Please note that management may reference certain historical, forward-looking, and non-GAAP financial measures.

With that, I'd like to turn it over for questions.

Thank you, sir. Ladies and Gentlemen, We Now begin the question and answer session. If you'd like to ask a question please press star for the number 1 on your telephone keypad.

Operator: Thank you, sir. Ladies and gentlemen, we now begin the question and answer session. If you would like to ask a question, please press star followed by the number 1 on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star followed by the number 2. If you are using a speakerphone, please lift your handset before pressing any keys. Our line is pleased on the compiled roster. The first question comes from Manish Somaiya with Cantor. Please go ahead.

please lift your hands and for person in any case

I want to please all the compiled the raster press question comes from managed so Maya with can. Please go ahead.

Manish Somaiya: Good morning, gentlemen. Good morning, Noelle. Joe, when I look at the margin guidance for the full year, it implies 19% or so in the Q4. Clearly that is down from 21.6% that you had in Q3. I was just hoping if you can just help us bridge that. I know you talked about the CEC shedding off non-core businesses that is going to impact some margins. Staying on this topic, more specifically, would Q4 represent the trough in margins? How should we think about 2027 as we enter 2027 with strong backlog and obviously to your point, 20% to 30% organic growth?

Uh, good morning, gentlemen, uh, good morning Noel. Um,

Joe, when I look at the uh margin guidance, uh, for the full year.

Uh it implies 19% or so in the fourth quarter and uh you know clearly that's down from 21.6 uh that you had in 3 Q.

So, I was just hoping if you could help us bridge that. I know you talked about the CC.

Uh uh shedding of non-core businesses, that's going to impact the margins. Uh and then just staying on this topic uh, more specifically

Uh, would fourth quarter represent the trough in margins, and how should we sort of think about, uh,

2027 as we uh, uh.

Enter 2027 with a strong backlog and, obviously, to your point, 20% to 30% organic growth.

Joe Cutillo: Yeah. Appreciate it, Manish. In Q4, we have a couple dynamics. We have the natural seasonality that we go through, and we have done that every year. As we have said, we are being a little conservative on weather for the quarter compared to 2025. Just to remind everybody, 2025 was about the easiest, softest winter we have had since I have been here. We basically did not shut down anything, and we were able to run through the entire winter. We do not anticipate that happening again. If it does happen again, that is good. We will have upside. We will all be happy. So we have margin erosion just from the seasonality in that. But we also have the growth of CEC, which I want to step back and talk about for a second here, because everybody is looking at this as a negative, and it is really baffling to me.

Yeah, appreciate it man. Uh, yeah. So we have in the fourth quarter, we have a couple Dynamics, we have the natural seasonality that we go through. Uh, and we've done that. Every year is we've said, uh, we're being a little conservative on, on weather for the quarter compared to 2025, uh, just to remind everybody 20.

Joe Cutillo: These results demonstrate the strength of our market, the great execution of our teams, and the continued success of our strategy. While the quarterly performance was exceptional, what is even more important is what these results tell us about the opportunity ahead. Throughout 2026, it has become increasingly clear to us that we are in the early stages of significant multi-year investment in large scale, mission critical infrastructure across the US.

25 was about the easiest softest winner. We've had. Since I've been here, we, we basically didn't shut down anything and we're able to run through the entire winner. We don't anticipate that happening again. If it does happen again, that's good. We'll have upside, we'll be happy. Um, so we have margin erosion, just from the, the seasonality in in that. But we also have, uh, the growth of CEC, which, you know, I want to step back and, and talk about for a second here, because everybody's looking at this is, is a negative in in. It's really baffling to me. And, and some people have called it mix, and I wouldn't call it mix. We have an electrical business, which is very different than our site civil business. It requires a heck of a lot more less capital and we've been able to grow it significantly faster than we ever imagined. That is a great thing, we've more than doubled the business yet. Everybody is looking at it as a negative because it's bringing down the total margins. We have invested almost

Joe Cutillo: Some people have called it mix, and I would not call it mix. We have an electrical business which is very different than our site civil business. It requires a heck of a lot less capital, and we have been able to grow it significantly faster than we ever imagined. That is a great thing. We have more than doubled the business, yet everybody is looking at it as a negative because it is bringing down the total margins. We have invested very little to zero capital in the business to double it. We have been much more successful at hiring electricians than we ever anticipated, which is a great sign. We have got the next phases and next levels of projects from our customers, so we have been successful in executing and delivering, yet we are beat up for it. It makes no sense to me.

very little to zero capital in the business, to double it. We've been much more successful in hiring electricians than we ever anticipated, which is a great sign. We've got the next phases and next levels of projects from our customers. So we've been successful in executing and delivering. Yeah, we're beat up for it. It makes no sense to me. So, as we grow that business, look, we've we've had great growth in our site civil business. Uh, but as we grow that at a much greater rate, the bottom,

Joe Cutillo: Importantly, the $8 billion of scope work does not capture the full development potential of the campuses we are already working on today. Many of these projects span hundreds or even thousands of acres and are being developed in multiple phases over several years. These are tangible opportunities backed by land, permits, and power commitments, and is on top of what we already have scoped. In total, these opportunities provide more than 5 years of additional work.

Joe Cutillo: As we grow that business, look, we have had great growth in our site civil business. But as we grow that at a much greater rate, the bottom line is those margins are less. They will always be less. A significant piece of their business is material, and you are not going to be able to get the margins on material that you get in executing the work. Now, another positive thing is we have made great progress in what we said early on is we were going to improve margins in that business 300 to 500 basis points in 18 to 24 months. I will tell you we are a long way on that path. We are ahead of schedule. If you remove the legacy business, which we know we have until the end of 2027, and hopefully we are able to do some things to get out of that a little quicker.

Line is those margins are less, they will always be less. A significant piece of their business is material and you're not going to be able to get the margins on material that you get in executing the word. Now another positive thing is we've made great progress. In what we said early on is we were going to improve margins in that business. 300 to 500 basis points in 18 to 24 months. I will tell you we're a long way on that path. We're ahead of schedule and if you remove the Legacy business, which we know we have until the end of 27 and hopefully, we're able to do some things to get out of that, a little quicker, if you remove that we're on track. And we've seen over 150 basis points of improvement in CBC already. So that's, uh, I just want to use this opportunity to talk a little bit about that because I think people are really confusing uh, kind of the goodness, that's come out of that acquisition.

Joe Cutillo: If you remove that, we are on track and we have seen over 150 basis points of improvement in CEC already. So I just want to use this opportunity to talk a little bit about that, because I think people are really confusing the goodness that has come out of that acquisition, and as a result, are penalizing us for really no reason whatsoever. The second question, can you repeat that, Manish?

And as a result, uh or penalizing us for for really? No, no reason whatsoever.

The second question—just repeat that. Let me...

Manish Somaiya: Yeah.

Joe Cutillo: I'm sorry if you have.

Yeah.

Manish Somaiya: Yeah. Joe, the second question I had was just on the trajectory of margins. Would Q4 represent a trough in margins, and how should we think about margin trajectory as we enter 2027? While I have the mic, if you can also just touch on backlog. How much of that unsigned backlog that you have, which is quite significant, can move into signed backlog? What's the cadence for that? Thank you.

Yeah, no. Joe the the second question I had was just on, you know, the trajectory of margins, you know, would

Dan Govin: In the Southeast, customer demand remains robust and projects continue to expand in acreage, number of phases, and complexity. This trend plays directly to our strengths, allowing us to leverage our broad self-perform capabilities and proven execution model. In the Northeast, we continue to make excellent progress on our large semiconductor campus and remain ahead of schedule. Our execution on this large-scale project is strengthening our position and reputation in the semiconductor market.

4 q sort of represent a trough in margins and and, you know, how should we sort of think about margin trajectory as we enter 2027? And I guess while I have the mic, uh, uh, if you can also just touch on, you know, backlog how much of that unsigned backlog that you have, which is quite significant can move into signed backlog. You know what? Sort of the Cadence for that. Thank you. Yeah, so let me, let me start with the trough. We certainly, uh, have seasonality

Joe Cutillo: Yeah. Let me start with the trough. We certainly have seasonality in our margins. That will continue. As we grow the business and we grow in other regions, could that soften it a little bit or change it? Sure. But we will have seasonality, so we don't have a flat margin across 4 quarters. I will also say we have pretty high expectations for the Site Development growth in 2027. But we also think electrical has the opportunity to continue some of these growth rates. If that happens, again, the blended margin will be the blended margin. I can't predict it because I don't know what the revenue's going to be. But theoretically, and I say theoretically, in reality, the margins of site will continue to improve and the margins in electrical will continue to improve.

Or change it. Sure. But we will have seasonality so we don't have a flat margin across 4 quarters. Uh I will also say we have

Pretty high expectations for the site civil growth and in 2027. But we also think electrical has the opportunity to continue some of these growth rates. And if that happens again, the Blended margin will be the Blended margin. I, I can't predict it because I don't know what the revenue is going to be but theoretically and and I say theoretically in reality the margins of sight will continue to improve in the margins and electrical will continue to improve now. Whatever those revenues come out, will determine the end margin but we're very positive on the margin trajectory in each set each piece of our infrastructure segment.

Dan Govin: Based on the opportunities we see today, we expect Texas to be a meaningful driver of growth over the next several years. Turning to CEC, the electrical business delivered $426 million of revenue in the quarter, more than quadrupling its pro forma full quarter revenue in Q3 2025. Accelerating work on major hyperscaler and large co-location projects drove growth. CEC is scaling rapidly and maintaining strong execution. Year-to-date growth has significantly exceeded our initial expectations, and we now believe full-year revenue could exceed $1 billion.

Joe Cutillo: Whatever those revenues come out will determine the end margin, but we're very positive on the margin trajectory in each piece of our E-Infrastructure Solutions segment. On the backlog, I wish somehow we could get out of backlog altogether because it's really a meaningless number for us. We have to look at what we have in backlog. That's jobs that we're actively working on. We have what we call unsigned awarded contracts. That's predominantly in Transportation Solutions and some in electrical. What those are, is those are jobs that we have been given. We're negotiating final pricing or negotiating final terms and contracts. So those will roll into backlog. They could roll in the quarter. If there's some design work involved, it may take a couple of quarters. But we have won those jobs. We're in the final negotiations. Those will happen.

On the backlog. Um, I wish somehow we could get out of backlog all together because it's really a meaningless.

Number for us, we have to look at what we have in backlog. That's jobs that we're actively working on. We have what we call unsigned awarded contracts that's predominantly in uh transportation and some in electrical um in and what those are is, those are jobs that we have been given we're negotiating, final pricing, or negotiating, final terms and contracts. So those will roll in the backlog that could roll in the, in the quarter. They if, if there's some design work involved, it may take a couple quarters but those have we have won those jobs.

We're in the final negotiation. So those those will happen, we have what we're calling. Um, the the

Joe Cutillo: We have what we are calling the next phase, or what-

next phase, or

Manish Somaiya: Phases in design.

Dan Govin: Margins declined year-over-year, reflecting the significantly higher revenue contribution from CEC, as it represented a third of the segment revenue in the quarter versus 10% in the prior year period. Within the segment, Site Development operating margins remained strong at H1 2026 levels, even though several of our large mission-critical projects are still in the early stages of construction. Margins typically expand as these multi-phase campuses move into later construction phases over the coming months and years.

Joe Cutillo: Phases in design, I guess is what we are calling it. I apologize. But that is work that is really in the site civil sides. That is work that we are in the design phase or in the pricing phase to customers that we know is coming right after these existing phases end. But there is another piece that everybody is missing, and for those that were on the tour and are on the call, we literally have thousands of acres of land that is permitted, powered, and ready to go, and when the existing phases end, they will design, build out those next phases. Those represent over 5 years of work for us.

what is in design? Phase is in design. I guess is what we're calling it. I apologize. But that's work that in, that's really in the site. Civil side. That is work that we are in the design phase or in the pricing Phase 2 customers that we know is coming. It's right after these existing phases and

But there's another piece that that everybody's missing and for those that were on the tour and they're on the call, we literally have thousands of Acres.

Of land that is permitted, powered, and ready to go. And when the existing phases end, they will design and build out those next phases. Those represent over five years of work for us. So, when we talk about backlog, backlog represents a very small piece of work that we have sitting in front of us. And as we're talking about building capacity, I'm sure somebody said, well, your backlog is not growing at the rate that your capacity build needs are saying. It's because of that future land and that longevity of these projects. We know we're required to build this capacity to handle these new projects that are coming up.

Joe Cutillo: So when we talk about backlog represents a very small piece of work that we have sitting in front of us, and as we are talking about building capacity, I am sure somebody is saying, "Well, your backlog is not growing at the rate that your capacity build needs," are saying. It is because of that future land and that longevity of these projects that we know we are required to build this capacity to handle these new projects that are coming. I hope that helps, Manish.

Dan Govin: At the time of the CEC acquisition, we committed to achieving 300 to 500 basis points of run rate margin improvement at CEC over 18 to 24 months. Progress in the core business and our planned exit from non-core work gives us confidence that we can deliver on this commitment. Looking ahead, the opportunities in front of E-Infrastructure continues to strengthen.

I hope that that helps me.

Manish Somaiya: Thanks, Joe. Thank you so much.

Thanks, Joe. Thank you so much.

Operator: Thank you. Your next question comes from Brent Thielman with Oppenheimer. Please go ahead.

Thank you. Your next question comes from. Brent. Tillman with oppenheim please. Go ahead.

Brent Thielman: Hey, thanks. Good morning. Great quarter. Hey, Joe, maybe just

Hey, thanks. Uh, good morning, Greg quarter. Um, Hey Joe, maybe just follow up on that uh, that that last point on E infrastructure and maybe to address some of the other concerns out there. I mean you've got all these campuses with phases going on for years. Presumably those have power. When you look at everything else out there, I guess, just in terms of new campuses that could be potentially in your pipeline to work on. Do those have power connections connections figured out as well, just trying to address that concern.

Joe Cutillo: Thanks, Brent.

Brent Thielman: to follow up on that last point on E-Infrastructure, maybe to address some of the other concerns out there. You have all these campuses with phases going on for years. Presumably, those have power. When you look at everything else out there, I guess just in terms of new campuses that could be potentially in your pipeline to work on, do those have power connections figured out as well? Just trying to address that concern.

Joe Cutillo: Yeah. I am not aware that we have ever started a campus that did not already have power on it. So these are all permitted, all powered, all ready to go. As we are looking at the ones coming, they are obviously working on the permitting, the power, and as soon as that is released, they generally turn it over to us, and we start working. The incremental land that we are talking about is part of that package, and what we have seen in a lot of cases where they were able to get more power associated with a project, they are buying up incremental land around that area. So a lot of these jobs are actually continuing to get bigger than they originally started when we started on the project. So that is not uncommon at all.

Yeah, yeah, we I'm not aware that we've ever started a campus. Uh, that wasn't, didn't already have power on it. So, these are all permitted, all powered already, uh, ready to go. Um, and you know, as we're looking at the ones coming, um, they are obviously working on the permitting, the power. As soon as that's released they generally turn it over to us. Uh, and we start working the incremental land that we're talking about is part of that package. And what we've seen in a lot of cases, where they were able to get more power. Uh, associated with the project, they're buying up incremental, land, around that area. So, a lot of these jobs are

Dan Govin: This was the second consecutive quarter in which our Rocky Mountain operation generated more revenue from E-Infrastructure than Transportation. Despite the lower revenue, Transportation Solutions adjusted operating income grew 22%, and adjusted operating margins reached 19.7%. This demonstrates the discipline we are applying to project selection. Transportation Solutions backlog ended the quarter at $964 million, up 31% year-over-year, largely driven by the conversion of unsigned backlog to signed.

Actually continuing to get bigger uh than they originally started when we started on the project. So that's not uncommon at all.

Brent Thielman: Okay. Then maybe on CEC, obviously massive growth here this year. Joe, given some of the constraints out there, help us think about how you get more out of this business, whether it is capacity investments, et cetera. I think ultimately what I am trying to get to is what sort of a realistic growth assumption when you think about that 20% to 30% you threw out there for a business like this, just given the demand

You know, look, you know, what sort of a realistic growth assumption—when you think about that 20 to 30 throughout there—for a business like this, just given the demand and supply side constraints.

Joe Cutillo: Yeah

Brent Thielman: and supply side constraints.

Joe Cutillo: I will tell you a couple things, Brent. We have been very happy with the ability of CEC to obtain electricians. The last number I saw, we were hiring roughly 80 a week, just in the state of Texas. We think we can continue to be successful at that into 2027. I will tell you, we have some pretty aggressive growth opportunities with CEC in 2027. But in addition, we are looking for small to mid-size, and if we found a large, that would be great, acquisitions that we can convert their labor force, what they are working on existingly. They may be working on small commercial projects or small industrial projects where we can convert those labor forces to our end mission-critical customers and add capacity there. In addition, we talked about we tripled the size, and we are building out our IMS facility, which does prefab and modules.

Dan Govin: Stepping back, the quarter provides clear evidence of Sterling's strategy in action. We are benefiting from exceptional demand in our highest return markets, becoming more selective about where we are deploying our resources, and building the foundation for multi-year growth. With that, I'd like to turn it over to Nick to give you more details on some of our financial metrics and 2026 guidance. Nick?

I'll tell you a couple things Brent. Um, we've been very happy uh with the ability of CDC to uh obtain electricians. You know, the last number I saw we were hiring roughly 80 a week just in the state of Texas. Uh, we think we could continue, uh, to be successful at that, uh, into 2027. I will tell you we have some pretty aggressive, uh, uh, growth opportunities, uh, with CEC in 27. Uh, but in addition, you know, we're looking for, uh, small to midsize and if we find a large that would be great, uh, Acquisitions that, we can convert their labor force. Um, but what they're working on existing in the way they may be working on small commercial projects or small industrial projects where we can convert those labor forces to our ambition, critical customers uh and add capacity there in addition.

Nick Grindstaff: However, we have already secured a major portion of these outstanding funds in early October, setting us up for robust operating cash flow in the Q4. Investing activities resulted in a $276 million outflow, including $115 million of capital expenditures. We now anticipate full-year CapEx of approximately $140 million. Financing activities resulted in a $325 million outflow year to date.

You know, we talked about how we tripled the size and we're building out on our IMF facility, which does prefab and modules. Every time we can do prefabs or modules, it takes a significant amount of the work required out of the project, which in turn...

Joe Cutillo: Every time we can do prefabs or modules, it takes a significant amount of the work required out of the project, which in turn, turns into capacity for us. So those are the things that we are really focused on. We are happy with the progress. I think that CEC will have great growth numbers in 2027, this year.

Turns into capacity uh, for us. So those are the things that we're really focused on. We're happy with the progress. Um I think uh CBC will have great growth numbers in 27. Uh physically

Brent Thielman: Okay. Last quick one, just on Site Development. I think you mentioned maybe you did not see the step-up in margin into Q3 from preceding quarters, just kind of given project timing, early-stage projects. Could you talk about maybe the other elements, like new geographies you are ramping up on? Are those a margin drag?

Okay. Last last Quick 1 just on site development. I I think you mentioned maybe you didn't see the Step Up in margin into 3Q from proceeding quarters. Just kind of given project timing. Early stage projects, could you talk about maybe the other elements like new geographies, your ramping up on? Or are those margin are they approaching kind of core Legacy margins and just talk through that? Yeah. We're

Joe Cutillo: Yeah.

Brent Thielman: Are they approaching kind of core legacy margins? Just talk through that.

Joe Cutillo: Yeah. The new geographies, we are certainly not near what I will call our most established geographies margins. But we are seeing nice improvement in them. The other thing to keep in mind, we talked about the Micron project and the high burn in the quarter, and I do not know, Brad, if we have talked about this specifically with you, but one of the uniquenesses of that particular project is the first $600 million or so at 4 million cubic yards of rock that we had to buy and put on that. So it was a large material purchase, and the margins are lower on the material side. So their margins on that job are not at the levels of our traditional job. As we get into future phases, that turns into a more traditional job for us. So that definitely was lower as a blended margin.

So the new geographies, we're, we're certainly not uh near what I'll call our step most established uh geographies margins but we saw we're seeing nice Improvement in them. Um, the other thing to keep in mind we we talked about the micro project in the high burn and the quarter. And I don't know Brent, we could talk about this specifically with you but uh, you know, 1 of the 1 of the unique misses of that particular project is the first 600 million uh, dollars or so.

Nick Grindstaff: Financing activities included share repurchases of $107 million. At quarter end, $267 million remained available under our existing repurchase authorization. We will continue to take an opportunistic and disciplined approach to share repurchases as part of our broader capital allocation strategy. Turning to the balance sheet, we ended the quarter with $217 million of cash and debt of $95 million, for a cash net of debt balance of $122 million.

At 4 million cubic yards of rock that we had to buy and put on that. So it was a large material purchase in the margins or lower out the material side. Uh, so their margins on that job are not at the levels of our traditional job. Now as we get into future phases, that turns into a more traditional job for us. Um, so that definitely, uh, was lower as a blended margin, but we're, we're very happy with the progress of all the margins because we were able even with that, even with the new geographies to keep the site civil margins flat uh quarter over quarter. So it says we're making a lot of progress in a lot of areas. We would have thought based on that burn of of Micron, that the margins could have gone down for the quarter.

Joe Cutillo: But we are very happy with the progress of all the margins because we were able, even with that, even with the new geographies, to keep the site civil margins flat quarter-over-quarter. It says we are making a lot of progress in a lot of areas. We would have thought based on that burn of Micron, that the margins could have gone down for the quarter.

Brent Thielman: Yeah. Okay. Very good. I will pass it on. Thank you.

Yep. Okay, uh very good. I'll pass it on. Thank you.

Operator: Thank you. Your next question comes from Noelle Dilts with William Blair. Please go ahead.

Thank you. Your next question comes from. Noah Evans with William Blair to go ahead.

[Analyst] (William Blair): Great. Good morning, Joe, Dan, Nick, and Noelle. Thanks for taking my questions.

Great, good morning, Joe Dan, Nick and Noel. And thanks for taking my questions. Um,

Joe Cutillo: Good morning.

[Analyst] (William Blair): To start off, last quarter, you alluded to the softness in Q3 bookings and then a resurgence in Q4 and early 2027. I am sorry if I missed it, but can you give us some color on those potential bookings? Are they still expected to occur this quarter or early next year? Given that different customers' award phases and different sizes, are you confident that these potential expected bookings are going to be as large, or is it just more confidence that they will occur in this timeframe? Thanks.

To start off last quarter, you alluded to the softness in Q3 bookings, and then kind of a resurgence in Q4 and early 2027. And I'm sorry if I missed it, but can you give us some color on those potential bookings? Are they still expected to occur this quarter or early next year?

And then given that different customers award phases and sizes. Are you confident that these potential expected bookings are going to be like, as large, or is it just more confidence that they will occur in this time frame? Thanks.

Joe Cutillo: Well, here is what I will tell you, and this is again why we do not like backlog. I could theoretically book a billion-dollar project and put $10 million in backlog, and you would not see the 900 and whatever billion dollars left. What I can tell you is all the projects that we have talked about coming out in the fourth quarter and first quarter are still there. They are still coming out. We will see timing. I always hate timing because if something moves one week, it can miss a quarter and be in the next quarter. But those projects are still progressing and moving forward. Those projects are bigger than projects that we have seen in the past and will last longer than projects have in the past. We are extremely optimistic that they will be contributors in 2027. How fast they start and everything, it is the same typical thing, right?

Joe Cutillo: The opportunity in front of us is larger than ever. Increasingly, the question is not whether the opportunity is there, but how quickly we can add capacity to capture it. We are investing in our people, equipment, and our capabilities while maintaining the execution discipline and focus on returns that have driven our success. As we look to the remainder of 2026, we are confident that we will deliver another record year.

Uh, we will see timing. I always hate timing because if something moves 1 week, it can miss a quarter and be in the next quarter. But those projects are still progressing and moving forward. Uh, those projects are bigger uh, than projects that we've seen in the past and will last longer, uh, than projects have in the past. Um, we're extremely optimistic. Uh, that they will be contributors in 2027. Um, how fast they start and everything. It

It's the same typical thing, right? They're they're working through permits, they're working through all that and as soon as they get everything done, they're going to pull the trigger and get us going as fast as possible. So uh nothing's changed on the Outlook there, nothing changed on the project types or size. Um and we're, we're still moving forward. So we feel very good about the prospects are in front of us and uh the impact that's going to have on 27

Joe Cutillo: They are working through permits, they are working through all that. As soon as they get everything done, they are going to pull the trigger and get us going as fast as possible. Nothing has changed on the outlook there. Nothing changed on the project types or size. We are still moving forward. We feel very good about the prospects that are in front of us and the impact that is going to have on 2027.

Joe Cutillo: We are targeting annual organic profitability growth of 20% to 30% over the next several years, with M&A providing an additional opportunity to accelerate that growth. Together, these drivers support an aspiration to grow earnings by approximately 50% per year. We believe 2027 is shaping up to be another year that meets or exceeds this organic framework. On the acquisition front, we remain very active and encouraged by the quality of opportunities in the market.

[Analyst] (William Blair): Great. Thanks. That makes a ton of sense. Can you give us, just drill down on the geographic expansion, specifically, how has your penetration of Texas been going in light of the ERCOT audit? Differentiate between West Texas exposure with your Rocky Mountains business, as well as, I guess Stone Ridge has exposure there, and then your East Texas exposure with Plateau. Also, have you already started to expand into the Pacific Northwest, or is that more of a 2027 event? You have talked about customers dragging you into that geography as well as other geographies. Just an update on specifically Texas and then the Pacific Northwest and then other ancillary geographies. Thanks.

Great, thanks. That makes a ton of sense. Um, and then can you, can you give us just like drill down on, on the geographic expansion? Um, specifically like how, how is your penetration of Texas been going in light of the earth, hot audit? Um, and then like differentiate between West, Texas, exposure with your your Rocky Mountains, business, uh, as well as, I guess, Stone Ridge, has exposure there and then your East Texas, exposure with plateau and then also, like, have you already started to expand into the Pacific Northwest or is that more of a 2027 event you, you've talked

Talked about customers, dragging you into that geography as well as other geographies. So just an update on on on specifically Texas and then the Pacific Northwest and then other um ancillary geographies thanks.

Joe Cutillo: Well, Texas is going to be the biggest data center state in the next 5 years. The magnitude of projects coming out are huge. They are in what I will call the early phases of a lot of these projects, and that is what we see coming out, essentially Q4, Q1 of next year, some of those, both in West Texas and what we call East Texas, which is really North Central Texas. We have made great progress on the ones we are on. The CEC business has got the second phases. We continue with the Site Developments. We have got the total packages on those. We continue to get asked by our customers to do more. We are very bullish on Texas. Our bigger challenge right now is how do we grow capacity fast enough to capture as much of Texas as is being thrown at us, right?

Yeah. Well you know um Texas is is going to be the biggest data center state in the next 5 years.

Um, so um the magnitude of projects coming out are huge.

Um, they're in what I'll call the early early, phases of a lot of these projects. And, and we, that's what we see coming out essentially, fourth quarter, first quarter next year, some of those both in West Texas and what we call East Texas, which is really North Central, Texas. Uh, and uh, uh, We've made great progress on the ones. We're on the CEC business has got this, the second phase, is we continue with the site developments, we've got the total packages on those.

Uh and we continue to get asked by our customers to do more and so and we're we're very bullish on on Texas. Uh, our, our bigger challenge right now is how do we grow capacity fast enough? Uh, to capture as much of Texas as as being thrown at us, right? Um, so we've got more, I guess a simple way to put it is, we got more opportunity than we have capacity right now or trying to figure out how to get more capacity to take that, um, the the uh, upper Northwest or Pacific Northwest. Um, you know, we we're up, um, we're doing work. Uh, you know, 1 of the first jobs, we're doing work on

Joe Cutillo: We have got more. I guess the simple way to put it is we got more opportunity than we have capacity right now. We are trying to figure out how to get more capacity to take that. The Upper Northwest or Pacific Northwest, we are up there. We are doing work. One of the first jobs we are doing work on happens to be a Micron plant up there. We got pulled into the Micron plant because of the work we have done in New York. We see that as the beginning. The data centers we are talking about have not come out yet. We think that is going to be late 2027 or 2028 before we start seeing that activity. The good news is we are positioned with Stone Ridge, positioned with our RLW business and the work we are doing up in Idaho, and we will be ready for that when it comes.

Happens to be a micron chip plant up there. Uh we got pulled into the Micron chip plant because of the work we've done in New York. Um, we see that as the beginning uh the the data centers, we're talking about haven't come out yet. We think that's going to be late, 27 or 28. Uh before we start seeing that activity, uh, but the good news is, we're positioned with Stone Ridge a position with our our W business and the work we're doing up in Idaho, uh, and we'll be ready for that. Uh, that when it comes.

[Analyst] (William Blair): Great. Thanks. Just a final quick question. You guided to CapEx of $140 million for 2026, which implies $20 million sequential step-down. Given we are having a lot of conversations today about capacity, in the past, you have alluded to some of the heavy machinery providers having some supply tightness. Is that kind of the contributor to why CapEx is stepping down sequentially? How are you looking at growth CapEx and your ability to build capacity to meet all of this tremendous demand? Thanks.

Great, thanks. And then, just a final quick question. Um, you guided to capex of 140 million, uh, for for 2026 which implies 20 million sequential step down and given where we're having a lot of conversations today about capacity. Um, and then in the past you've alluded to some of the heavy machinery providers. Uh having some Supply tightness uh is that kind of the contributor to why capex is stepping down sequentially? Or how are you kind of looking at at growth capex and kind of your ability to build capacity to meet all of this tremendous demand. Thanks.

Joe Cutillo: We basically did not shut down anything, and we were able to run through the entire winter. We do not anticipate that happening again. If it does happen again, that is good. We will have upside. We will all be happy. So we have margin erosion just from the seasonality in that. But we also have the growth of CEC, which I want to step back and talk about for a second here, because everybody is looking at this as a negative, and it is really baffling to me.

Yeah, I'll let they give you some color on it, but it's it's just timing, you know? It's uh, I wouldn't look at it stepping down. I think because we go to next year. Um, you know, we we'll be more uh, capex to to help with our growth rates. But Nick, do you want to give some? Yeah, so and look, we have other things in our tool box here too. As far as procuring equipment, we've got a leasing program. Uh, obviously.

Joe Cutillo: Yeah. I will let Nick give you some color on it, but it is just timing. I would not look at it as stepping down. I think as we go into next year we will need more CapEx to help with our growth rates. Nick, you want to give some details?

Nick Grindstaff: Yeah. So, and look, we have other things in our toolbox here too, as far as procuring equipment. We have a leasing program. Obviously, we have rentals too, but it is not all captured in the CapEx number. So, we will supplement that CapEx with our leasing program.

So we've got when I was 2 but even you know, so it's just not all cap, it's not all capture in the capex number um, and so um we'll we'll supplement that capex with the with our leasing program.

[Analyst] (William Blair): Great. Thank you.

Great. Thank you.

Operator: Thank you. Your next question comes from Kurt Yinger with D.A. Davidson. Please go ahead.

Thank you. Your next question comes from Kirby Jinger with da Davidson. Please go ahead.

Kurt Yinger: Great. Thank you, and good morning, everyone. Just quickly on CEC. I think year to date, that is a little bit over $800 million in revenue. I know you have that $1 billion number out there. I guess, is there any reason to believe that Q3 burn is maybe something that couldn't be repeated, or is that maybe just a little bit of conservatism thinking about the end of the year?

Joe Cutillo: We have invested very little to zero capital in the business to double it. We have been much more successful at hiring electricians than we ever anticipated, which is a great sign. We have got the next phases and next levels of projects from our customers, so we have been successful in executing and delivering, yet we are beat up for it. It makes no sense to me.

Um just quickly on on CEC I think kind of year to date. That's a little bit over 800 million in Revenue. I I know you have kind of that 1 billion number out there I guess. Is there any reason to believe that like Q3 kind of burn is is

Maybe something that couldn't be repeated or or is that maybe just a little bit of conservatism, thinking about kind of the end of the year.

Joe Cutillo: Yeah. As we said, no, there is no reason that we can't do Q3 and other quarters. We have factored in some conservativeness on weather. The other thing that people tend to forget is Q4, we have a couple of big holidays called Thanksgiving and Christmas. Our guys work all year long and don't get vacation, and we try to force schedule vacations around those holidays. It is a lot easier for us to manage. So part of the seasonality is just labor management and resource management. It is a lot easier, frankly, for us to say we are going to shut down these 2 weeks or reduce crews these 2 weeks and reduce crews these 2 weeks so everybody gets their vacation in and can hit the ground running in the next year. So nothing unique about Q3. What you are seeing is CEC's continued to have very strong bookings and growth.

Yeah. We we, as, as we said, um, no, there's, there's no reason that, uh, we can't do, you know, 2, things free and other quarters. Um, we, we have factored in. So I'm conservative this, uh, whether the other thing that people tend to forget is Q4, we have a couple, big holidays, called Thanksgiving and Christmas. And, and our guys work all year long and don't get vacation and we try to force schedule vacations around those holidays. It's a lot easier for us to manage. So, part of the seasonality is just Labor Management and and Resource Management. Um, it's a lot easier. Frankly for us to say we're going to shut down these 2 weeks for reduce Crews this. These 2 weeks and reduce Crews these 2 weeks. So everybody gets their vacation in and uh, can hit the ground running uh, in the next year. So nothing. Nothing unique, uh, about Q3

Joe Cutillo: Now, another positive thing is we have made great progress in what we said early on is we were going to improve margins in that business 300 to 500 basis points in 18 to 24 months. I will tell you we are a long way on that path. We are ahead of schedule. If you remove the legacy business, which we know we have until the end of 2027, and hopefully we are able to do some things to get out of that a little quicker.

uh what you're seeing is you know, the CC's continue to have very strong bookings and and grow uh they they got the next buildings of several uh projects within Texas and you're just seeing that Revenue kick in

Joe Cutillo: They got the next buildings of several projects within Texas, and you are just seeing that revenue kick in.

Manish Somaiya: Yeah.

Joe Cutillo: I'm sorry if you have.

Kurt Yinger: Understood. Okay. Second on just kind of the competitive environment more broadly in the Site Development side. You have talked about the desire to plant the flag on those projects that are longer in duration, making sure that you are aligned with the right customers. I guess, is there any trade-off you have to make from a margin perspective to extend that visibility and ensure you are partnered with those right customers? Or is that service, speed, execution, all of those things still showing up in terms of the margin profile of the work that you are bidding or new work, so to speak?

Understood. Okay. And then the second on on just kind of the competitive environment, more broadly, and, and the site development side, um, you know, you've talked about, you know, the desire to plant the flag on those projects, you know, that are longer duration. You know, making sure that you're aligned with the right customers. Um, I guess, is there any trade-off you have to make from a, from a margin perspective, to extend that visibility and and ensure your partner with those right customers or is the, you know, service speed execution, all of those things, you know, still showing up in terms of the margin profile of of the work that you know, you're bidding or or new work so to speak.

Joe Cutillo: Well, I guess a couple of things to keep in mind. First of all, our first phase is always our lowest margin phase, and as these projects advance and we get further in phases, our margins go up over time. In a lot of that, everybody thinks it is pricing. It is really about productivity and things we can do along the line in earlier phases, which either help us or eliminates things we have to do in future phases. That is one. The other piece of it is, if we plant a flag in Texas where we are not 100% vertically integrated, those initial margins will be lower than in the Southeast where we are vertically integrated, and we perform everything.

Well, a couple of things to keep in mind. First of all, our first phase is always...

margin phase and as these projects,

Joe Cutillo: But we also think electrical has the opportunity to continue some of these growth rates. If that happens, again, the blended margin will be the blended margin. I can't predict it because I don't know what the revenue's going to be. But theoretically, and I say theoretically, in reality, the margins of site will continue to improve and the margins in electrical will continue to improve.

Advance and we get further in phases, our margins, go up over time, okay? Um, and a lot of that everybody thinks it's pricing. It's really about productivity and things we can do along the line in earlier phases, which either help us or eliminates things we have to do in future phases. That that's 1. The other, the other piece of it is uh, if we plan a flag in Texas where we're not 100% vertically, integrated those initial margins will be lower than in the Southeast where we're vertically integrated and we perform everything. However, we've talked strategically that once we get enough critical mass and we're getting there very quickly. Um, we will begin vertical integration in Texas or in new geographies that we are and continue to ramp up that margin profile. So you get a double ramp. You've got the natural progression of the phases over that 5 year period or 7 years, whatever that project takes and then you've got

Joe Cutillo: However, we have talked strategically that once we get enough critical mass, and we are getting there very quickly, we will begin vertical integration in Texas or in new geographies that we are and continue to ramp up that margin profile. So you get a double ramp. You have got the natural progression of the phases over that five-year period or seven years, whatever that project takes. Then you have got an incremental ramp, which is around as we continue to vertically integrate the other ancillary services and stuff required on that project, you get another pickup. So the way you look at it is, this is the best way for us to have not only long-term growth but also long-term margin expansion opportunities because the margins will go up on those projects over time.

Joe Cutillo: That's predominantly in Transportation Solutions and some in electrical. What those are, is those are jobs that we have been given. We're negotiating final pricing or negotiating final terms and contracts. So those will roll into backlog. They could roll in the quarter. If there's some design work involved, it may take a couple of quarters. But we have won those jobs. We're in the final negotiations. Those will happen.

An incremental ramp, which comes around as we continue to vertically integrate the other ancillary services and items required on that project. You get another pickup. So, when you look at it,

This is the the best way for us to have not only long-term growth, but also long-term margin expansion opportunities because the margins will go up on those projects over time.

Joe Cutillo: We have what we are calling the next phase, or what-

Manish Somaiya: Phases in design.

Kurt Yinger: Got it. Maybe just one quick follow-up on that. You have talked about a lot of these new geographies and Texas in particular. When you think about the timeline for kind of vertically integrating some of those new areas, is that something that you would kind of think about as a 2027- type timing or probably think further out in terms of when that happens?

Got it and maybe just 1 quick follow up on that. I mean, you've talked about, you know, a lot of these new geographies and Texas in particular like when you think about the timeline for for kind of vertically integrating, some of those new areas is that something that you would kind of think about as a, a 2027

Um type timing or or you know, probably think further out in terms of when that happens.

Joe Cutillo: Yeah. Unfortunately, it is not a toggle switch. It is kind of a duration time. It took us. Well, I will tell you, we are still not finished in the Southeast. We continue to look at other services we can add that are parts of the project. But it is really a 24 to 36 month kind of runway, if I was going to give kind of a ballpark or average. What we have to do, just to kind of understand it, is we got to have enough critical mass that when we buy a company, we can keep them busy 100% of the time on our projects. Otherwise, we will have underutilization, negative productivity, and it will actually drag down the margin. What we like to do, which makes it take a little more time, but it is a much more successful model, is we like to partner with subcontractors and test drive.

Unfortunately, it's not a toggle switch. It's kind of a duration time it took us. Well, I will tell you we're still not finished in the Southeast, where we continue to look at other services we can add that are parts of the project, but...

yeah, I it's it's

Of a ballpark average. What we have to do is just to kind of understand it is, we got to not critical mass that when we we buy a company. Um, we can keep them busy 100% of the time on a project, otherwise we'll have underutilization negative productivity and it'll actually drag down the margin. So in in what we like to do, um, which makes it take a little more time but it's a much more successful model is we like to partner with subcontractors in test drive

Manish Somaiya: Thanks, Joe. Thank you so much.

Operator: Thank you. Your next question comes from Brent Thielman with Oppenheimer. Please go ahead.

Joe Cutillo: The ones that we think are the best, we then continue to grow until the point that they cannot keep up with us, and then it is a logical time to buy, right? It is good for them and it is good for us. We have great success rate, not only on acquiring them, but we double or triple them in 12 to 18 months by putting more revenue and volume on. It has worked out really well. As soon as we get enough critical mass, whether that is in blasting or soil stabilization or I can name 10 other things, we will start looking on how to vertically integrate that. In some cases, we may organically try to put a small business together to support that.

And the ones that we think are the best, we then continue to grow until the point that they can't keep up with us, and then it's a logical time to buy them, right? And it's good for them, and it's good for us. Uh, and...

Brent Thielman: Hey, thanks. Good morning. Great quarter. Hey, Joe, maybe just

Joe Cutillo: Thanks, Brent.

Brent Thielman: To follow up on that last point on E-Infrastructure, maybe to address some of the other concerns out there. You have all these campuses with phases going on for years. Presumably, those have power. When you look at everything else out there, I guess just in terms of new campuses that could be potentially in your pipeline to work on, do those have power connections figured out as well? Just trying to address that concern.

We have a great success rate not only on acquiring them, but we double or triple them in 12 to 18 months by putting more revenue and volume on. So, uh, it's worked out really well.

So soon as we get enough critical mass, whether that's in blasting or soil stabilization or I can name 10 other things, um we'll start looking at how to vertically integrate that uh or you know in some cases we met organically uh uh try to put a small business together to to support that.

Kurt Yinger: Okay. That makes sense. Thank you very much for the color.

Okay, that makes sense. Thank you very much for the color.

Operator: Thank you. Your next question comes from Brian Brophy with Stifel. Please go ahead.

Thank you. Your next question comes from, Brian, Brophy with T4, please go ahead.

Quentin Hellmer: Hi, this is Quentin Hellmer on for Brian Brophy. Stone Ridge outperformed quite meaningfully it seems. You touched a bit on the drivers already. Is this kind of a one-off because of the large project that you mentioned earlier? What is kind of the trajectory we should be thinking about as you continue to execute on tuck-ins on the Site Development side? What are some things you are seeing there? Any color would be appreciated.

Hi, this is Quinton Helmer on for Brian, Brophy. So Stone Ridge. Outperformed quite meaningfully. It seems you touched a bit on the drivers already. Um, is this kind of a 1-off? Because of the large project that you mentioned earlier, what's kind of the trajectory you should be thinking about as you continue to execute on tucking, on the side development side. Like what are, what are some things you're seeing there? Any, any color would be appreciated?

Joe Cutillo: The incremental land that we are talking about is part of that package, and what we have seen in a lot of cases where they were able to get more power associated with a project, they are buying up incremental land around that area. So a lot of these jobs are actually continuing to get bigger than they originally started when we started on the project. So that is not uncommon at all.

Noelle Dilts: I am sorry, what was the question around Stone Ridge you mentioned?

I'm I'm sorry. What was the question around?

What did you mentioned? Yeah. And it's kind of how how how it outperformed um obviously the Micron plans part of it, I'm kind of trying to see what's the trajectory we should be thinking about is she kind of continue to execute on these tuck-ins and yeah, any color that would be appreciated.

Quentin Hellmer: Yeah, just how it outperformed. Obviously the Micron plant is part of it. I am kind of trying to see what is the trajectory we should be thinking about as you continue to execute on these tuck-ins. Any color there would be appreciated.

Joe Cutillo: Yeah. The Micron job really isn't related to Stone Ridge. The Micron job is related to. The reason we got that, how we got that, is the performance that we have on the New York job. If you guys remember, we delivered the September package in July, and we delivered the January, February package back in September. So we are several months ahead on that project. Not only was Micron impressed, but the GCs on there were so impressed on how far ahead we were. We were asked to go take a look at the job that is taking place in Idaho, and since have started doing some work on that job. We are actually using our RLW business on that. They were doing another data center up in that region, in area. So we just moved them over there on that. What was the next question?

Yeah, yeah. So uh, the microphone job really isn't related to The Stone Ridge, but my current job is related to, uh, the reason we got that and how we got that is the performance that we have on the New York job. If you guys remember, we delivered, the September package in July and we delivered the January or February back in back in September. So we're several months ahead on that project. Uh, Not only was Mike Brown and press with the GCS on there. So, aggressive on how far ahead we were, we were asked to go take a look at

Joe Cutillo: Yeah

Brent Thielman: and supply side constraints.

That have the job that's taking place in Idaho, um, in sense of started doing some work on that job. We're actually using our our row business, uh, on that. They were doing uh, another data center up in that region an area. Uh, so we just moved them. Moved them over there.

What was the next question? Know. That was pretty much it. Thank you for the clarification. That's uh, that's very helpful. I'll pass it on.

Joe Cutillo: But in addition, we are looking for small to mid-size, and if we found a large, that would be great, acquisitions that we can convert their labor force, what they are working on existingly. They may be working on small commercial projects or small industrial projects where we can convert those labor forces to our end mission-critical customers and add capacity there. In addition, we talked about we tripled the size, and we are building out our IMS facility, which does prefab and modules.

Quentin Hellmer: No, that was pretty much it. Thank you for the clarification. That is very helpful. I will pass it on.

Joe Cutillo: Yeah, I think the important takeaway of that is exactly what we did in data centers, we are doing in semiconductors. The semiconductor tidal wave hits around 2030. For us, to have this much work today in semiconductors is a huge bonus, but more of a credit to our teams on the value they can bring to customers. We believe we will be the go-to company on the big semiconductor jobs when they come.

Yeah, I think the important takeaway is that is exactly what we did in data centers. We're doing in semiconductors in the semiconductor Title. Wave hits around 2030. So for us to have this much work today in semiconductors is a huge bonus but more of the credit to our teams, on the value, they can bring to customers and we believe we will be the go-to company uh on the big semiconductor jobs when they come.

Operator: Thank you. Your next question comes from Sangita Jain with KeyBanc Capital Markets. Please go ahead.

Thank you. Your next question comes from Jane with kba capital markets. Please go ahead.

Sangita Jain: Great, thanks for taking my question. Joe, can I ask you a bigger picture question on the dynamics that you are seeing in the market right now with reference to the pushback to rural data center activity, and if that is changing in any way how you manage risks as you consider terms and conditions for these large bookings?

Thanks for taking my questions. Do you have? Can I ask you a bigger picture question on the Dynamics that you're seeing in the market right now, with reference to the push, back to rural data interactivity? And if that is changing in any way how you manage risks as you consider terms and conditions for these large bookings,

Joe Cutillo: Yeah. So a couple things. There is so much noise out there, and I can't wait for next week to be over, on permitting and everything else. In fairness to our customers, we've got these projects, they've got them sitting there, they're ready to get going. But they're trying to figure out, is something going to change, right? My answer is, I don't know. They don't know. Right now, in some instances, I'll give you a perfect example. In Texas, there is all the buzz around permitting and having to go back through everything. One of the things that was happening is TCEQ, who hands out all the water permits for the state of Texas, has an automated process for permits. Well, guess what? Data centers were still submitting applications for permits through the automated system, and they were getting permits.

Yeah. So a couple things there, there is so much noise out there and I can't wait for next week to be over, um, on on permitting and everything else in in in fairness to our customers. You know, they we've got these projects, they've got them sitting there. They're ready to get going.

Joe Cutillo: Yeah.

Brent Thielman: Are they approaching kind of core legacy margins? Just talk through that.

Permitting and having to go back through everything. And 1 of the things that was happening is is TCEQ who who hands out all the water permits for the State of Texas, as an automated process for permits. Well, guess what? Data centers were still submitting?

Joe Cutillo: So it was a large material purchase, and the margins are lower on the material side. So their margins on that job are not at the levels of our traditional job. As we get into future phases, that turns into a more traditional job for us. So that definitely was lower as a blended margin.

Applications for permits through the automated system, and they were getting permits, um, some group stepped in and said, wait a second. This isn't what the governor said, you have to manually review the permits

Joe Cutillo: Some group stepped in and said, "Wait a second, this isn't what the governor said. You have to manually review the permits." TCEQ said, "Well, we don't really have a process to manually review." The customer said, "I got permits. Are they valid or not valid?" I will tell you, they're debating back and forth right now on whether they are, so it's a little bit of limbo. So are those projects going to go? Absolutely are they going to go. Is there confusion in the system right now for things like that? Absolutely there is. I think after the election, a lot of this goes away and it'll become very clear. But we're not seeing anybody backing off projects. We're not seeing anybody change strategies or anything else. But let's just say we're all wrong. Worst case scenario, something like that happens.

And tcq said, well.

We don't really have a process to manually review.

The customer said,

I got permits. Are they valid or not? Valid. I will tell you they're debating back and forth right now on whether they are, so it's a little bit of limbo.

So are those projects going to go? Absolutely. Are they going to go? Is there confusion in the system right now for things like that? Absolutely. There is um I think after the election a lot of this goes away and it'll become very clear um but we're not seeing anybody backing off projects. We're not seeing anybody change strategies or anything else but let's just say we're all wrong.

Brent Thielman: Yeah. Okay. Very good. I will pass it on. Thank you.

Operator: Thank you. Your next question comes from Noelle Dilts with William Blair. Please go ahead.

Worst-case scenario, something like that happens.

Joe Cutillo: Here's what's going to happen as a result. That 1,000 acres that I have left on the job that has power and permitting, they are going to figure out how to either build that out faster or buy more land around it until they get the other stuff worked out. So we're sitting here looking at it with 5-plus years of work in our wraps on projects we're working on, saying, could there be some noise? Probably. Do we hear anything about the work slowing down or getting smaller? The answer's absolutely not. So we'll get through it and it'll be fine.

Here's what's going to happen as a result.

Noah Levitz: Great. Good morning, Joe, Dan, Nick, Noelle. Thanks for taking my questions.

Joe Cutillo: Good morning.

That thousand acres that I have left on the job, that has power and permitting, is going to—they are going to figure out how to either build that out faster or buy more land around it, until they get the other stuff worked out. So we are sitting here looking at it with 5-plus years of work.

Noah Levitz: To start off, last quarter, you alluded to the softness in Q3 bookings and then a resurgence in Q4 and early 2027. I am sorry if I missed it, but can you give us some color on those potential bookings? Are they still expected to occur this quarter or early next year? Given that different customers' award phases and different sizes, are you confident that these potential expected bookings are going to be as large, or is it just more confidence that they will occur in this timeframe? Thanks.

In our graphs on projects, we're working on saying, could there be some noise?

Probably that we hear anything about the works slowing down or getting smaller. The answer is absolutely not. Um, so we'll get through it and uh it'll it'll it'll be fine.

Sangita Jain: All right. Thanks. If I can ask one on the entire margin discussions that has happened so far. You spoke about Site Development margins, the puts and takes. You're in early stages on several jobs, and those stages tend to be a little bit margin dilutive. You're also moving into new geographies. So can you tell us how you're thinking about which one goes first, whether the existing jobs go into advanced stages and show more margin or whether the geographic expansion takes over and we continue to see margins in this flattish range for a while?

All right, thanks. And then, if I can ask one on the entire margin discussion that has happened so far. You spoke about site prep margins, the puts and takes—you know, you're in early stages on several jobs, and those stages tend to be a little bit margin dilutive.

You're also moving into new geographies. So can you tell us how you're thinking about which 1 goes first? Whether the

Joe Cutillo: They are still coming out. We will see timing. I always hate timing because if something moves one week, it can miss a quarter and be in the next quarter. But those projects are still progressing and moving forward. Those projects are bigger than projects that we have seen in the past and will last longer than projects have in the past. We are extremely optimistic that they will be contributors in 2027. How fast they start and everything, it is the same typical thing, right?

Existing jobs going to Advanced stages and show more margin or whether the geographic expansion takes over and we continue to see margins in this flattish range for a while.

Joe Cutillo: Well, I would have to do a pretty deep analysis on it. Here is what I would tell you, is in the quarter, you would have thought our margins would have gone down on Site Development and they did not, which says the combination of the advancements in margins in the new geographic expansions are improving very nicely. We are in the early phases of a lot of projects. I would have thought that would have brought it down. That Micron project, which is a unique one. We know that shifts into a different set of phases as we get into 2027, probably around Q2. We know we will continue to make advancements. I do not see us having Site Development margins going backwards. The question is how fast do they go forward, right? As those kick in, they are all positive tailwinds, not negative headwinds is the report.

um, well I I

I'd have to do a pretty deep analysis on it. Here's what I would tell you is in the quarter.

You would have thought our margins would have gone down on site and they didn't um which says in the combination of the advancements in margins, in the new Geographic, expansions are improving very nicely. Uh, we're in the early phases of a lot of projects I would have thought that would have brought it down and that might Grant project, which is a unique 1. We know that shifts into a different set of phases as we get into 2027. It's probably around the second quarter. Uh, we know we'll continue to make advancements. Um, so I don't see us having, um, site margins, going backwards. The question is, how fast do they go forward? Right? And, uh, as those kick in, they're all positive Tailwinds, not negative Tailwind, uh, is, is we move forward.

Noah Levitz: Great. Thanks. That makes a ton of sense. Can you give us, just drill down on the geographic expansion, specifically, how has your penetration of Texas been going in light of the ERCOT audit? Differentiate between West Texas exposure with your Rocky Mountains business, as well as, I guess Stone Ridge has exposure there, and then your East Texas exposure with Plateau.

Sangita Jain: Understood. Thank you so much.

Understood, thank you so much.

Operator: Thank you. Your next question comes from Adam Thalhimer with Thompson Davis. Please go ahead.

Thank you. Your next question comes from Tim with Thompson Davis. Please go ahead.

Adam Thalhimer: Hey, good morning, guys. Jay, you talked about growing earnings 50% plus with acquisitions. Was that a multi-year comment or a 2027 comment?

Hey, good morning, guys. Um, hey Joe, you talked about growing earnings 50% plus with acquisitions. Was that a...

Noah Levitz: Also, have you already started to expand into the Pacific Northwest, or is that more of a 2027 event? You have talked about customers dragging you into that geography as well as other geographies. Just an update on specifically Texas and then the Pacific Northwest and then other ancillary geographies. Thanks.

Multi-year, comment or a 2027 comment.

Joe Cutillo: Well, Adam, over the last six years, we've grown at 48% on the bottom. I don't like to go backwards, and I think we have a multi-year opportunity here to continue to grow based on what we're seeing coming out of the marketplace. Everybody talks about data centers. We feel very bullish on what we're seeing over the next three to five years coming out of data centers. We feel like we are positioning ourselves extremely well for the semiconductor wave that starts coming out around 2030. You start putting those together, plus nobody's talking about the one-off manufacturing plants here and there. We've got the Rivian plant, they just announced an Audi plant. They just announced four or five others. We don't have those, but we'll see where they fall in if we do them.

well, Adam

Over the last 6 years, we've grown at 48%, on the bottom.

I don't like to go backwards, and I think we have a multi-year opportunity here to continue to grow based on what we're seeing coming out of the marketplace. Yeah, everybody talks about data centers. We feel very bullish on what we're seeing over the next 3 to 5 years coming out of data centers. We feel like we are positioning ourselves extremely well for the semiconductor wave that starts coming out around 2030.

Joe Cutillo: We have made great progress on the ones we are on. The CEC business has got the second phases. We continue with the Site Developments. We have got the total packages on those. We continue to get asked by our customers to do more. We are very bullish on Texas. Our bigger challenge right now is how do we grow capacity fast enough to capture as much of Texas as is being thrown at us, right?

Joe Cutillo: We're passing on the pharma plants right now just because we don't have the capacity to go after them. We have plenty of opportunity to do that. The biggest wildcard is the acquisition. I feel very good about our organic side. The acquisitions are always a wildcard. Can we find the right ones in the right place at the right price? I feel very good about the market today. We've seen some high-quality businesses out there, both in site and electrical, and excited about 2027. It's not 27. This is what we think we can do over a multi-year.

He has plenty of opportunity to do that. The biggest wild card is the acquisition for. I feel very good about our organic side.

Um, the Acquisitions are always a wild card. Can we find the right ones in the right place? Uh, at the right price? Uh, I feel very good about the market today. You know, we've seen some high quality businesses out there, uh, both in sight and Electrical, uh, and excited about 2027. Um, so it's not 27, this is, this is what we think we can do over multi-year.

Joe Cutillo: We got pulled into the Micron plant because of the work we have done in New York. We see that as the beginning. The data centers we are talking about have not come out yet. We think that is going to be late 2027 or 2028 before we start seeing that activity. The good news is we are positioned with Stone Ridge, positioned with our RLW business and the work we are doing up in Idaho, and we will be ready for that when it comes.

Adam Thalhimer: Okay. Good color. To what extent were margins negatively impacted in Q3 by diesel or other inflation?

Okay.

Good color, and then, um, to what extent were margins?

Were we negatively impacted in Q3 by diesel or other inflation?

Joe Cutillo: It's really interesting. Nobody's heard us talk about diesel. Nobody's heard us talk about inflation. The reality is, what we love about our contract structure and the way these things are phased is that really mitigates a big part of that risk. If we won a seven-year billion-dollar project and we put that all in backlog, we'd be whining and crying at every one of these calls about diesel prices, about concrete prices, about something else. It's a negative. The outside world just don't believe we have a billion dollars, but we know we do. It's a positive because the contract structure really mitigates the risk on that stuff. I won't tell you that we've had zero impact. That would be false. But we're not going to talk about it because our job is to overcome it, and it's such a small impact. We're moving forward.

Yeah, you know, it's really interesting—nobody sort of talks about diesel.

Nobody's Tucker. Just talk about inflation.

Um, the reality is what we love about our contract structure and the way these things are phased is that it really mitigates a big part of that risk. Um, if we want a $1 billion, you know, a 7-year billion-dollar project and we put that all in backlog, we'd be whining and crying on every one of these calls about diesel prices, about concrete prices, about something else. Um, so it's a negative—the outside world doesn't know. I believe we have a billion dollars, but we know we do. Uh, it's a positive because the...

Noah Levitz: Great. Thanks. Just a final quick question. You guided to CapEx of $140 million for 2026, which implies $20 million sequential step-down. Given we are having a lot of conversations today about capacity, in the past, you have alluded to some of the heavy machinery providers having some supply tightness. Is that kind of the contributor to why CapEx is stepping down sequentially? How are you looking at growth CapEx and your ability to build capacity to meet all of this tremendous demand? Thanks.

Contract structure really mitigates the risk on that stuff. So I won't tell you that we've had zero impact—that would be false.

Um, but we're not going to talk about it, because our job is to overcome it and, uh, it's such a small impact. We're—we're moving forward.

Adam Thalhimer: Perfect. Thanks, guys.

Perfect. Thanks guys.

Operator: Thank you. Your next question comes from Julio Romero with Sidoti & Company. Please go ahead.

Thank you. Your next question comes from Julia Romero with CDT Company. Please go ahead.

Hey, good morning. Thanks for taking my questions. Joe, Nick, Dan Noel. Um,

Julio Romero: Hey, good morning. Thanks for taking my questions, Joe, Nick, Dan, Noelle. A lot of good questions about capacity today. Just over the next four to five years, how would you have us think about the pace of capacity adds and what kind of visibility you have to that pace? Joe, you said that you have been very successful at hiring and adding electricians. You said CEC is a great returns business, relatively less fleet needed, more about adding headcount. So clearly with the demand outlook being very strong and multi-year, it sounds more and more like the pace of capacity adds is increasingly important to the growth runway in, say, 2028, 2029 and the next decade. So if you could speak to the pace and visibility of that.

A lot of good questions about capacity today just over the next.

4 to 5 years. How would you have us? Think about the pace of capacity, ads, and what kind of visibility you have to that pace? Um, Joe, you said that you've been very successful at hiring and adding electricians, he said cc is a great returns business. Um, relatively less Fleet needed more about adding headcount. So clearly with the demand Outlook being very strong and multi-year, it sounds more and more like the pace of capacity ads is increasingly important to the growth Runway and say 28.29 and the next decade. So if you could speak to the PACE and visibility of that,

Noah Levitz: Great. Thank you.

Operator: Thank you. Your next question comes from Kurt Yinger with D.A. Davidson. Please go ahead.

Yeah, yeah. Really. It's a good question. You know that the question no 1's asked and I'm glad because it's kind of a delusional question is, you know, we've grown it much far. We we've said over the next several years we can grow 20 to 30% organically and feel comfortable with that.

Joe Cutillo: Yeah. Really, it is a good question. The question no one has asked, and I am glad because it is kind of a delusional question, is we have grown at much far. We said over the next several years, we can grow 20% to 30% organically and feel comfortable with that. We have grown a hell of a lot more than that organically over the last couple of years. Now, you can only keep that sort of pace for so long. We feel good on the 20% to 30% organic pace over the next several years. Certainly internally, we are going to try to do a hell of a lot more than that. But you really start getting stretched on some of the internal resources, some of the capabilities.

We've grown a hell of a lot more than that organically over the last couple years. Um, now you can only keep that sort of pace for so long. We feel good on the 20- 30%, organic, uh, Pace over the next several years. Uh, you know, certainly internally we're going to try to do a hell of a lot more than that. Um, but you really start getting stretched on some of the internal resources, some of the the capabilities, uh, to beat that pace. It's, it's really going to require us to do more on the acquisition front and really add more uh, capacity. Whether that's in new geographies uh or within geographies that we're in for us to even come close to keeping up with the pace of stuff coming out in Texas. Uh we're going to have to make those Acquisitions. Now is we talked about uh in the in the site tour a couple weeks ago. Uh, there are things we can do with Acquisitions that are not even in Texas that can help us with, capacity, in Texas. And what

Joe Cutillo: To beat that pace, it is really going to require us to do more on the acquisition front and really add more capacity, whether that is in new geographies or within geographies that we are in. For us to even come close to keeping up with the pace of stuff coming out of Texas, we are going to have to make those acquisitions. As we talked about in the site tour a couple of weeks ago, there are things we can do with acquisitions that are not even in Texas that can help us with capacity in Texas. What I mean by that is we have two types of crews. We have traveling crews, and we have local crews. For us, a traveling crew, it does not matter if they are in Virginia or Texas or Ohio or wherever you want to pick. They travel, and they do work.

Joe Cutillo: It is a lot easier for us to manage. So part of the seasonality is just labor management and resource management. It is a lot easier, frankly, for us to say we are going to shut down these 2 weeks or reduce crews these 2 weeks and reduce crews these 2 weeks so everybody gets their vacation in and can hit the ground running in the next year. So nothing unique about Q3. What you are seeing is CEC's continued to have very strong bookings and growth.

I mean by that is we have 2 2 types of Crews, we have traveling Crews and we have local Crews.

And for us a traveling crew. It doesn't matter if they're in Virginia uh or Texas or Ohio or wherever you want to pick, okay. Um they travel and they do work. So 1 of the things we're looking at, is if we have a concentration of either a travel and cruises on a on a mega project and it's going to be there for a long period of time or multiple traveling crews in the GI.

Joe Cutillo: They got the next buildings of several projects within Texas, and you are just seeing that revenue kick in.

Joe Cutillo: One of the things we are looking at is if we have a concentration of either a traveling crew that is on a mega project and is going to be there for a long period of time or multiple traveling crews in a geography, does it make sense for us to make an acquisition within that geography of which we can then lever to do the work of a traveling crew and grow that business quite substantially very quickly, and that then frees up the capacity of that traveling crew. So I can make an acquisition in an area, grow the business very rapidly, double it probably 3 years, free up a traveling crew that now frees up $500-plus million of capacity for me and put them in a new geography.

Geography. Does it make sense for us to make an acquisition within that geography, which we can then leverage to do the work of the traveling crew and grow that business substantially very quickly, and that then frees up the capacity of that traveling group? So, I can make an acquisition in an area.

Joe Cutillo: Those are some of the things we are looking at to increase the pace of growth beyond that 20% to 30% level.

to increase the pace of growth beyond that 20% to 30%

Julio Romero: Very helpful. Thank you. Have you seen any changes in how customers are financing or committing to future phases or negotiating payment terms? Just talk about more broadly how customer financial quality influences your customer selection process.

them very helpful. Thank you. And then have you seen any changes in how customers are are are financing or committing to Future phases or or negotiating payment terms? Um and just talk about more broadly, how how customer Financial quality influences your customer selection process.

Joe Cutillo: Yeah. No, we haven't seen anything. Look, the lion's share of our customers are the top-tier guys, one tier down, that are all financially very stable. I know everybody panics when a Meta or Amazon or somebody goes and gets financing. I look at that as that's more money they're going to spend on us to build more stuff, right? That's the greatest thing that can happen every time I see that happen. So we have not seen anything along those lines. The step-up in receivables in the quarter really is more timing and starting the first phase of a lot of these projects. As you can imagine, you start a project, you get going. Even if you have a 30-day billing cycle, by time you get everything done, billed, and in, it's 60 days minimum before you're going to get your first payment.

Yeah. Now we haven't, we haven't seen anything. You know, like the the the line share of our customers are the top tier Guys, 1 1, tier down that are all financially. Very stable. I know everybody Annex when you know, meta or Amazon or somebody goes and gets financing. I look at that as that's more money, they're going to spend on us to build more stuff, right? That's the greatest thing that can happen every time I see that happen. Uh, so, uh, we have not seen, uh, anything along those lines, uh, the the step up and receivables in. The quarter really is more timing, uh, and starting, uh, the first phase of a lot of these projects and uh, you know, is you can imagine you start a project.

Joe Cutillo: Then you have got an incremental ramp, which is around as we continue to vertically integrate the other ancillary services and stuff required on that project, you get another pickup. So the way you look at it is, this is the best way for us to have not only long-term growth but also long-term margin expansion opportunities because the margins will go up on those projects over time.

You get going even if you have a 30-day billing cycle by time you get everything done build and in its 60 days minimum before you're going to get your first payment. So uh unless you start those right at the beginning of the quarter you're not going to see them and we had a pretty strong first couple weeks in October. So it just got to wait what we've seen the past.

Joe Cutillo: Unless you start those right at the beginning of the quarter, you're not going to see them. We had a pretty strong first couple of weeks in October, so it just kind of weighed out with what we've seen in the past.

Julio Romero: Great. Thank you.

Great. Thank you.

Thank you, Julio. There are no further questions on the phone line. I'll turn it back to Joe for some closing comments.

Operator: Thank you, Julio. That is all for the questions on the phone line. I'll turn it back to Joe for some closing comments.

Joe Cutillo: Great. Thanks, Bob. I want to thank everybody again for joining the call today. If you have any follow-up questions, please contact Noelle Dilts. Her contact information is in the press release. I hope everybody has a great day. We will be talking to a lot of you this afternoon. Thanks.

Great. Thanks. Bob.

I want to thank everybody again for, uh, for joining the call today. Uh, if you have a follow-up questions, please contact Noel. Dils her contact information is in the Press. I hope everybody has a great day.

We'll be talking to a lot of you this afternoon. Thanks.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and ask that you please disconnect your lines. Have a great day.

Joe Cutillo: What we have to do, just to kind of understand it, is we got to have enough critical mass that when we buy a company, we can keep them busy 100% of the time on our projects. Otherwise, we will have underutilization, negative productivity, and it will actually drag down the margin. What we like to do, which makes it take a little more time, but it is a much more successful model, is we like to partner with subcontractors and test drive.

Kurt Yinger: Okay. That makes sense. Thank you very much for the color.

Operator: Thank you. Your next question comes from Brian Brophy with Stifel. Please go ahead.

Quentin Helmer: Hi, this is Quentin Hellmer on for Brian Brophy. Stone Ridge outperformed quite meaningfully it seems. You touched a bit on the drivers already. Is this kind of a one-off because of the large project that you mentioned earlier? What is kind of the trajectory we should be thinking about as you continue to execute on tuck-ins on the Site Development side? What are some things you are seeing there? Any color would be appreciated.

Noelle Dilts: I am sorry, what was the question around Stone Ridge you mentioned?

Quentin Helmer: Yeah, just how it outperformed. Obviously the Micron plant is part of it. I am kind of trying to see what is the trajectory we should be thinking about as you continue to execute on these tuck-ins. Any color there would be appreciated.

Joe Cutillo: Not only was Micron impressed, but the GCs on there were so impressed on how far ahead we were. We were asked to go take a look at the job that is taking place in Idaho, and since have started doing some work on that job. We are actually using our RLW business on that. They were doing another data center up in that region, in area. So we just moved them over there on that. What was the next question?

Quentin Helmer: No, that was pretty much it. Thank you for the clarification. That is very helpful. I will pass it on.

Operator: Thank you. Your next question comes from Sangita Jain with KeyBanc Capital Markets. Please go ahead.

Joe Cutillo: Right now, in some instances, I'll give you a perfect example. In Texas, there is all the buzz around permitting and having to go back through everything. One of the things that was happening is TCEQ, who hands out all the water permits for the state of Texas, has an automated process for permits. Well, guess what? Data centers were still submitting applications for permits through the automated system, and they were getting permits.

Joe Cutillo: So are those projects going to go? Absolutely are they going to go. Is there confusion in the system right now for things like that? Absolutely there is. I think after the election, a lot of this goes away and it'll become very clear. But we're not seeing anybody backing off projects. We're not seeing anybody change strategies or anything else. But let's just say we're all wrong. Worst case scenario, something like that happens.

Joe Cutillo: I would have thought that would have brought it down. That Micron project, which is a unique one. We know that shifts into a different set of phases as we get into 2027, probably around Q2. We know we will continue to make advancements. I do not see us having Site Development margins going backwards. The question is how fast do they go forward, right? As those kick in, they are all positive tailwinds, not negative headwinds is the report.

Sangita Jain: Understood. Thank you so much.

Operator: Thank you. Your next question comes from Adam Thalhimer with Thompson Davis. Please go ahead.

Adam Thalhimer: Hey, good morning, guys. Jay, you talked about growing earnings 50% plus with acquisitions. Was that a multi-year comment or a 2027 comment?

Joe Cutillo: We feel like we are positioning ourselves extremely well for the semiconductor wave that starts coming out around 2030. You start putting those together, plus nobody's talking about the one-off manufacturing plants here and there. We've got the Rivian plant, they just announced an Audi plant. They just announced four or five others. We don't have those, but we'll see where they fall in if we do them.

Adam Thalhimer: Okay. Good color. To what extent were margins negatively impacted in Q3 by diesel or other inflation?

Joe Cutillo: The outside world just don't believe we have a billion dollars, but we know we do. It's a positive because the contract structure really mitigates the risk on that stuff. I won't tell you that we've had zero impact. That would be false. But we're not going to talk about it because our job is to overcome it, and it's such a small impact. We're moving forward.

Adam Thalhimer: Perfect. Thanks, guys.

Operator: Thank you. Your next question comes from Julio Romero with Sidoti & Company. Please go ahead.

Julio Romero: You said CEC is a great returns business, relatively less fleet needed, more about adding headcount. So clearly with the demand outlook being very strong and multi-year, it sounds more and more like the pace of capacity adds is increasingly important to the growth runway in, say, 2028, 2029 and the next decade. So if you could speak to the pace and visibility of that.

Joe Cutillo: Now, you can only keep that sort of pace for so long. We feel good on the 20% to 30% organic pace over the next several years. Certainly internally, we are going to try to do a hell of a lot more than that. But you really start getting stretched on some of the internal resources, some of the capabilities.

Joe Cutillo: As we talked about in the site tour a couple of weeks ago, there are things we can do with acquisitions that are not even in Texas that can help us with capacity in Texas. What I mean by that is we have two types of crews. We have traveling crews, and we have local crews. For us, a traveling crew, it does not matter if they are in Virginia or Texas or Ohio or wherever you want to pick. They travel, and they do work.

Joe Cutillo: So I can make an acquisition in an area, grow the business very rapidly, double it probably 3 years, free up a traveling crew that now frees up $500-plus million of capacity for me and put them in a new geography.

Joe Cutillo: Those are some of the things we are looking at to increase the pace of growth beyond that 20% to 30% level.

Joe Cutillo: So we have not seen anything along those lines. The step-up in receivables in the quarter really is more timing and starting the first phase of a lot of these projects. As you can imagine, you start a project, you get going. Even if you have a 30-day billing cycle, by time you get everything done, billed, and in, it's 60 days minimum before you're going to get your first payment.

Julio Romero: Great. Thank you.

Operator: Thank you, Julio. That is all for the questions on the phone line. I'll turn it back to Joe for some closing comments.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.