Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 3, 2026 · Beat 7 of last 7 quarters
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Sterling's results underscore the accelerating pace of AI infrastructure construction, with data center and semiconductor campus work driving 192% E-Infrastructure growth and a $2.7B increase in visible work pool. The company's capacity constraints and aggressive expansion plans (including M&A and CapEx increases) signal sustained multi-year demand for site development and electrical services in the AI buildout.
Sterling delivered another record quarter with revenue up 90% YoY and adjusted EPS up 116%. E-Infrastructure revenue grew 192% on strong data center and semiconductor campus activity, with CEC revenue up 140% and Rocky Mountain revenue up nearly 700%. Transportation revenue declined 20% as resources shifted to E-Infrastructure, but margins expanded 500+ bps to 19.5%. Building Solutions revenue declined 1% with margins of 9.9%. Signed backlog reached $4.3B (up 116% YoY) and combined backlog $5.6B (up 150%), with total visible work pool exceeding $7B. Cash flow from operations was $328M in H1, and the company closed on a $1.5B revolver expansion.
Management raised full-year 2026 guidance: revenue to $4.0–$4.15B (from $3.7–$3.8B), adjusted diluted EPS to $19.70–$20.30 (from $18.40–$19.05), and adjusted EBITDA to $891–$916M (from $843–$873M). E-Infrastructure revenue is now expected to grow over 100% (legacy site development ~70%+), with adjusted operating margins in the mid-20% range. Transportation revenue is expected to decline 7–10% as resources shift to E-Infrastructure, with 150–200 bps of margin expansion. Building Solutions revenue is expected to decline modestly with high single-digit to low double-digit margins. Management flagged potential softer Q3 awards due to timing, with stronger awards in Q4 and early 2027, and increased CapEx guidance to $130–$140M to expand capacity.
“We're seeing projects become larger, more complex, and longer in duration, which reflects both the scale of what's being built and the importance of these assets to our customers.”
on Demand trends
“If we had 1,000 or 2,000 more electricians, we'd be growing it even faster.”
on Capacity constraints
“We're seeing projects become larger, more complex, and longer in duration, which reflects both the scale of what's being built and the importance of these assets to our customers.”
on Demand trends
With backlog up 2x YoY and Stone Ridge contributing in H2, why not a bigger step-up in H2 revenue? Are there longer lead times or later starts?
Joe Cutillo said the backlog is solid and projects are on schedule, but they are being conservative on Q4 due to weather uncertainty. He noted strong bid activity in Q4 and Q1, and that guidance has been raised multiple times, with CEC already doubled since acquisition.
Can you discuss the profile of new CEC work, including size, scope, and margin evolution?
Joe Cutillo said CEC filled capacity in 90 days, is exiting low-margin legacy segments, and is winning second buildings on data centers, indicating strong performance. Margins are improving as job sizes increase, and they are adding electricians aggressively.
Why does future phase work not capture full visibility?
Joe Cutillo explained they only include defined scopes (e.g., first 300 acres of a larger campus), not incremental land purchases or expansions on existing projects. Some projects could last 5–12 years, and they are considering better communication of this visibility.