STRL earnings analysis
What we found in STRL's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Sterling delivered an exceptional Q2, with revenue up 90% to $1.168 billion, GAAP diluted EPS of $5.00, and operating margin expanding to 18.8%. E-Infrastructure was the central driver, with revenue up 192%, while backlog grew to $4.33 billion and combined backlog reached $5.62 billion. Offsetting factors are shrinking Transportation volume, continued residential weakness in Building Solutions, acquisition/integration exposure, and a $68.1 million first-half Contract Capital cash use.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and EPS accelerated sharply
- Q2 revenue reached $1.168 billion, up $553.7 million (90%) from $614.5 million in Q2 2025 and approximately 41% from $825.7 million in Q1 2026. GAAP diluted EPS was $5.00, versus $2.31 a year ago and $3.09 in Q1 2026.
- Margins expanded despite acquisition costs
- Gross margin expanded 150 basis points year over year to 24.8% from 23.3%, while operating margin rose 180 basis points to 18.8% from 17.0%. The operating margin also improved from 16.7% in Q1 2026.
- E-Infrastructure drove growth
- E-Infrastructure revenue increased 192% to $905.0 million, driven by large mission-critical projects. The late-Q3 2025 electrical and mechanical acquisition supplied $239.9 million of quarterly revenue and $25.2 million of operating-income contribution, including $2.3 million of intangible amortization.
- Backlog rose 44% with strong awards
- Backlog increased to $4.33 billion at June 30 from $3.01 billion at December 31, 2025; combined backlog including unsigned awards reached $5.62 billion versus $3.31 billion. Six-month backlog and combined-backlog book-to-burn ratios were 1.7x and 2.3x, respectively.
- Cash conversion remained strong
- Six-month operating cash flow nearly doubled to $328.0 million from $170.3 million. After $69.6 million of capital-equipment purchases, calculated free cash flow was $258.4 million, equivalent to 21.6% of six-month revenue.
- Net cash strengthened and debt was repaid
- Cash and cash equivalents rose $73.7 million in the first half to $464.5 million. The company paid off all $285 million of term-loan principal and interest outstanding on July 2, 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- No material risk-factor updates
- Item 1A states there were no material changes from risk factors in the 2025 Form 10-K. Existing risks remain relevant, including project-cost escalation, funding, labor, customer-concentration, acquisition, and joint-venture exposures.
- Transportation volume contracted
- Transportation revenue fell $40.1 million, or 20%, year over year to $156.7 million. Although operating margin improved to 18.0% from 13.2%, the volume decline reflects lower heavy-highway and other revenue.
- Residential downturn pressures Building
- Building Solutions revenue declined $0.8 million to $106.5 million and operating income declined $1.4 million to $8.5 million; its operating margin compressed to 8.0% from 9.2%. Management anticipates residential demand will remain muted in the near term because of affordability pressure.
- Receivables increased working-capital needs
- Accounts receivable consumed $242.4 million of cash during the first six months, and net Contract Capital was a $68.1 million use of cash. This working-capital requirement was substantially above the $24.6 million use in the prior-year period.
- Acquisition integration and control scope risk
- Stone Ridge required $140.0 million of cash consideration and carries an earn-out opportunity of up to $15.0 million. In addition, CEC and Stone Ridge represented 32.5% of total assets and 20.4% of quarterly revenue excluded from management's June 30 controls assessment under the newly-acquired-business SEC accommodation.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $5.0
- Gross margin
- 24.8%
- Operating margin
- 18.8%
- Segment
- E-Infrastructure Solutions: $905.001 million revenue (78% of total), up $594.595 million / 192% year over year.
- Segment
- Transportation Solutions: $156.692 million revenue (13% of total), down $40.105 million / 20% year over year.
- Segment
- Building Solutions: $106.486 million revenue (9% of total), down $0.779 million / 0.7% year over year.
What they said about what is next.
The 10-Q does not provide quantitative revenue or EPS guidance. Management discusses favorable long-term E-Infrastructure opportunities and expects muted near-term Building Solutions demand; quantitative outlook was deferred to the August 3 earnings release/call.
The filing reads better than the one before it.
What came before.
- 10-Q · May 5, 2026
- Sterling Infrastructure, Inc. significantly outperformed expectations for Q1 2026, reporting revenues of $825.68 million and EPS of $3.59. This reflects a substantial 92% increase in revenue from the same quarter last…
- 10-K · February 26, 2026
- Sterling’s 2025 10-K shows material backlog growth to $3.01 billion (from $1.69 billion at 12/31/24) and strategic expansion into higher‑margin E‑Infrastructure via the September 1, 2025 CEC acquisition (total purchase…
- 10-Q · August 5, 2025
- Sterling reported a stronger Q2 with revenue of $614,468 (in thousands) and diluted EPS of $2.31, both up versus the prior-year quarter. Gross profit rose to $143,140 (in thousands) and operating income increased to…
- 10-Q · May 6, 2025
- Sterling Infrastructure reported Q1 revenue of $430,949,000 (vs. prior-year $440,360,000) and diluted EPS of $1.28 (vs. $1.00 a year ago). Margins expanded materially (gross margin 22.0% and operating margin 13.0%) and…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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