STRL 10-K & 10-Q changes, risk factors and insider trading

Across our three operating segments, revenue and profit are generated from infrastructure projects and services, but we do not directly control the process by which such infrastructure projects and services are awarded. The construction industry historically has experienced cyclical fluctuations in financial results due to economic recessions, downturns in business cycles of our customers, supply chain disruptions,disruptions and the price or availability of building materials, inflationary pressures, interest rate fluctuationsfluctuations, international trade issues, including tariffs and counter tariffs, and other economic factors beyond our control. Many factors, including the financial condition of the infrastructure industry, could adversely affect our customers and their willingness to fund capital expenditures in the future. Additionally, consolidation, competition or capital constraints in the industries we serve may result in reduced spending by our customers.

The price and availability of the materials required to execute our projects are subject to volatility and disruptions caused by global economic factors that are beyond our control, including, but not limited to, supply chain disruptions, labor shortages, wage pressures, rising inflation and potential economic slowdown or recession, as well as fuel and energy costs, the impact of natural disasters, public health crises, geopolitical conflicts (such as the conflicts in Eastern Europe and the Middle East), and other matters that have impacted or could impact the global economy. If shortages and cost increases in materials and tightness in the labor market persist for a prolonged period of time, and we are unable to offset such cost increases, our profit margins could be adversely impacted.

We rely on third party suppliers to provide substantially all of the materials (including aggregates, cement, asphalt, concrete, steel, oil and fuel) for our contracts and third party subcontractors to perform some of the work on many of our projects. Increasing prices of materials and equipment and substantial delays in delivering supplies have and could continue to adversely impact our operations and construction projects. For the past several years, our operating margins have been adversely impacted, and may continue to be impacted, by price increases for certain construction materials, includingas fuel,well concrete,as steelfuel andfor lumber.our equipment. To the extent that we are unable to obtain commitments from our suppliers for materials or engage subcontractors, our ability to bid for contracts may be impaired.

•changes in availability,availability and proximity and costs of materials, including steel, concrete, aggregates and other construction materials (such as stone, gravel, sand and oil for asphalt paving),materials, as well as fuel and lubricants for our equipment; and

Because alla significant portion of our construction projects are performed outdoors, work on ourthose contracts is subject to seasonal weather conditions that may delay our work and contribute to project inefficiency. Lengthy periods of wet or cold winter weather will generally interrupt construction, and this can lead to under-utilization of crews and equipment, resulting in less efficient rates of overhead recovery. Extreme heat or cold can prevent us from performing certain types of operations. For example, during the late fall to the early spring months of each year, our work on construction projects in the Rocky Mountain States has been curtailed at times due to snow and other work-limiting weather. In addition, our work is subject to extreme and unpredictable weather conditions, which could become more frequent or severe if general climatic changes occur. For example, in 2021 there was a Texas-wide freezing weather event that caused delays for some of our Transportation Solutions and Building Solutions operations. Future extreme weather events may limit the availability of resources, increase our costs, delay our performance of work for extended periods of time, or cause our projects to be canceled. While revenues can be recovered following a period of bad weather, it is generally impossible to recover the cost of inefficiencies, and significant periods of bad weather typically reduce profitability of affected contracts both in the current period and during the future life of affected contracts. Such reductions in contract profitability negatively affect our results of operations in current and future periods until the affected contracts are completed. To the extent climate change results in an increase in such extreme adverse weather conditions, the likelihood of a negative impact on our operations may increase.

We rely on information technology (“IT”) systems in order to achieve our business objectives. We also rely upon industry accepted security measures and technology to securely maintain confidential information on our IT systems. However, our portfolio of hardware and software products, solutions and services and our enterprise IT systems may be vulnerable to damage or disruption caused by circumstances such as catastrophic events, power outages, natural disasters, computer system or network failures, computer viruses, cyber-attacks or other malicious software programs. The failure or disruption of our IT systems to perform as anticipated for any reason could disrupt our business and result in decreased performance, significant remediation costs, transaction errors, loss of data, processing inefficiencies, downtime, litigation and the loss of suppliers or customers. A significant disruption or failure could have a material adverse effect on our business operations, financial performance and financial condition.

Major public health crises could disrupt the Company’sour operations and adversely affect itsour business, results of operations and financial condition.

In the past, many of the heavy highway contracts on which we bid were awarded through a competitive bid process, with awards generally being made to the lowest bidder, but sometimes recognizing other considerations, such as shorter contract schedules or prior experience with the customer and reputation. Within our geographic markets, we compete with many international, national, regional and local construction firms. Several of these competitors have achieved greater geographic market penetration than we have in the geographic markets in which we compete, and/or have greater resources, including financial resources, than we do. In addition, a number of international and national companies in the heavy highway construction industry that are larger than we are and that currently do not have a significant presence in our geographic markets, if they so desire, could establish a presence in our geographic markets and compete with us for contracts.

Our Transportation Solutions business is highly dependent on the amount and timing of infrastructure work funded by various governmental entities, which, in turn, depend on the overall condition of the economy, the need for new or replacement infrastructure, the priorities placed on various projects funded by governmental entities and federal, state or local government spending levels. Spending on infrastructure could decline for numerous reasons, including decreased revenues received by state and local governments for spending on such projects. For example, state spending on highway and other projects can be adversely affected by decreases or delays in, or uncertainties regarding, federal highway funding, which could adversely affect us since we are reliant upon contracts with state transportation departments for a significant portion of our revenues.

Our contracts generally have clauses that permit the cancellation of the contract unilaterally and at any time as long as the customer compensates us for the work already completed and for additional contractual costs for cancellation. A cancellation of an unfinished contract could cause our equipment and work crews to be idle for a period of time until other comparable work becomes available,available. whichAdditionally, we may be prohibited from bidding on certain government contracts if we fail to maintain required qualifications, and the timing of project awards is unpredictable and outside of our control due to complex and lengthy negotiation processes. Any of the foregoing could have a material adverse effect on our business and results of operations.operations and financial condition.

Our ability to attract and retain reliable, qualified personnel is a significant factor that enables us to successfully bid for and profitably complete our work. This includes management, project managers, estimators, supervisors, foremen, equipment operators and laborers for each of our subsidiaries. The loss of the services of any of our subsidiaries’ management-level personnel could have a material adverse effect on us. Our future success will also depend on our ability to hire and retain, or to attract when needed, highly-skilled personnel. Our business operations may be further impacted by general labor shortages in our industry or markets. If competition for additional employees is intense, we could experience difficulty hiring and retaining the personnel necessary to support our business. If we do not succeed in retaining our current employees and attracting, developing and retaining new highly-skilled employees, our reputation may be harmed and our operations and future earnings may be negatively impacted. Effective succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution.

In Arizona,several California,of Hawaii,the Maryland,states Nevada,in Newwhich Jerseywe and New York,operate, we have project personnel that are unionized. Additional groups of our employees may also unionize in the future. If at any time a significant amount of our employees unionized, it could limit the flexibility of the workforce and could result in demands that might increase our operating expenses and adversely affect our profitability. Our inability to negotiate acceptable contracts with unions could result in work stoppages, and any new or extended contracts could result in increased operating costs. Each of our different employee groups could unionize at any time and would require separate collective bargaining agreements. If any group of our employees were to unionize and we were unable to agree on the terms of their collective bargaining agreement or we were to experience widespread employee dissatisfaction, we could be subject to work slowdowns or stoppages. In addition, we may be subject to disruptions by organized labor groups protesting our non-union status. The future or continued occurrence of any of these events would be disruptive to our operations and could have a material adverse effect on our business, operating results and financial condition.

We rely heavily on immigrant labor. We have taken steps that we believe are sufficient and appropriate to ensure compliance with immigration laws. However, we cannot provide assurance that we have identified, or will identify in the future, all undocumented immigrants who work for us. Our failure to identify undocumented immigrants who work for us may result in fines or other penalties being imposed upon us, which could have a material adverse effect on our results of operations and financial condition. Immigration laws have also been an area of considerable political focus in recent years, and, from time-to-time, the U.S. government considers or implements changes to federal immigration laws, regulations or enforcement programs. Changes in immigration or work authorization laws may increase our obligations for compliance and oversight, which could subject us to additional costs and potential liability and make our hiring processes more cumbersome, or reduce the availability of potential employees. Any of the foregoing could have a material adverse effect on our results of operations and financial condition.

Our workers are subject to hazards associated with providing construction and related services on construction sites, plants and quarries.services. These operating hazards can cause personal injury, loss of life, damage to or destruction of property, plant and equipment or environmental damage. On most sites, we are responsible for safety and are contractually obligated to implement safety procedures. Our safety record is an important consideration for us and for our customers. If we experience a material increase in the frequency or severity of accidents, our safety record could substantially deteriorate, which may preclude us from bidding on certain work, expose us to potential lawsuits or cause customers to cancel existing contracts.

We maintain general liability and excess liability insurance, workers’ compensation insurance, auto insurance and other types of insurance all in amounts consistent with our risk of loss and infrastructure industry practice, but this insurance may not be adequate to cover all losses or liabilities that we may incur in our operations. Insurance liabilities are difficult to assess and quantify due to unknown factors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and the effectiveness of our safety program. If we were to experience insurance claims or costs above our estimates, we might be required to use working capital to satisfy these claims rather than to maintain or expand our operations. To the extent that we experience a material increase in the frequency or severity of accidents or workers’ compensation and health claims, or unfavorable developments on existing claims, our results of operations and financial condition could be materially and adversely affected.

We contribute to several multiemployer pension plans for employees covered by collective bargaining agreements. These plans are not administered by us and contributions are determined in accordance with provisions of negotiated labor contracts. The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, imposes certain liabilities upon employers who are contributors to a multiemployer plan in the event of the employer’s withdrawal from, or upon termination of, such plan. If we terminate, withdraw or partially withdraw from other multiemployer pension plans, we could be required to make significant cash contributions to fund thatthose plans unfunded vested benefit, which could materially and adversely affect our financial condition and results of operations; however, we are not currently able to determine the net assets and actuarial present value of the multiemployer pension plans’ unfunded vested benefits allocable to us, if any, and we are not presently aware of the amounts, if any, for which we may be contingently liable if we were to withdraw from any of these plans. In addition, if the funding level of any of these multiemployer plans becomes classified as “critical status” under the Pension Protection Act of 2006, we could be required to make significant additional contributions to those plans.

Risks Related to Legal and Regulatory Matters

Environmental and other regulatory matters, including those relating to climate change, could adversely affect our ability to conduct our business and could require expenditures that could have a material adverse effect on our results of operations and financial condition. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect our financial position and results of operations.

Our operations are subject to various environmental laws and regulations relating to the management, disposal and remediation of hazardous substances and the emission and discharge of pollutants into the air and water. We could be held liable for such contamination created not only from our own activities but also from the historical activities of others on our project sites or on properties that we acquire or lease. Our operations are also subject to laws and regulations relating to workplace safety and worker health, which, among other things, regulate employee exposure to hazardous substances. Violations of such laws and regulations could subject us to substantial fines and penalties, cleanup costs, third party property damage or personal injury claims.claims, Innatural addition,resource growingdamages concerns about climate change and other environmental issues could result inclaims, the impositionissuance of additionalorders environmental regulations. Such legislation or restrictions could increase the costs of projects for us and our clients or, in some cases, prevent a project from going forward, thereby potentially reducing the need for our services which could in turn have a material adverse effect onenjoining our operations and financialadministrative, condition. Generally, environmental lawscivil and regulationscriminal have become, and enforcement practices and compliance standards are becoming increasingly stringent. Moreover, we cannot predict the nature, scope or effect of legislation or regulatory requirements that could be imposed, or how existing or future laws or regulations will be administered or interpreted, with respect to products or activities to which they have not been previously applied. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could increase our compliance costs. Compliance with new regulations could require us to make substantial expenditures for, among other things, pollution control systems and other equipment that we do not currently possess, or the acquisition or modification of permits applicable to our activities.liability.

Our aggregate quarry leases in Utah and Nevada could subject us to costs and liabilities. As lessee and operator of the quarries, weWe could be held responsible for any contamination or regulatory violations resulting from activities or operations at the quarries.quarries, Any such costs and liabilitieswhich could be significant and could materially and adversely affect our business, operating results and financial condition.

Recent and potential changes in U.S. trade policies and retaliatory responses from other countries may significantly increase the costs or limit supplies of materials and products used in our construction projects involving concrete.projects.

In the recent past, the federal government imposed new or increased tariffs or duties on an array of imported materials and goods used in connection with our construction business, including steel and lumber,projects, which raised our costs for these items (or products made with them). Foreign governments, including China, Canada and Mexico, and trading blocs, such as the European Union, have responded by imposing or increasing tariffs, duties and/or trade restrictions on U.S. goods, and are reportedly considering other measures.goods. Any trading conflicts and related escalating governmental actions that result in additional tariffs, duties and/or trade restrictions could increase our costs further, cause disruptions or shortages in our supply chains and/or negatively impact the U.S., regional or local economies, and, individually or in the aggregate, materially and adversely affect our business and result of operations.

We conduct business across the United States and file income taxes in the federal and various state jurisdictions. Significant judgment is required in our accounting for income taxes. In the ordinary course of our business, there are transactions and calculations in which the ultimate tax determination is uncertain. Changes in tax laws and regulations, in addition to changes and conflicts in related interpretations and other tax guidance, could materially impact our provision for income taxes, deferred tax assets and liabilities, and liabilities for uncertain tax positions. Issues relating to tax audits or examinations and any related interest or penalties and uncertainty in obtaining deductions or credits claimed in various jurisdictions could also impact the accounting for income taxes. Our results of operations are reported based on our determination of the amount of taxes we owe in various tax jurisdictions, and our provision for income taxes and tax liabilitieswhich are subject to review or examination by taxing authorities in applicable tax jurisdictions. An adverse outcome of such a review or examination could adversely affect our operating results and financial condition. Further, the results of tax examinations and audits could have a negative impact on our financial results and cash flows where the results differ from the liabilities recorded in our financial statements.

We may continue to pursue growth through the acquisition of companies or assets that will enable us to broaden the types of projects we execute and also expand into new markets. We have completed several acquisitions and plan to consider strategic acquisitions in the future. We may be unable to implement this growth strategy if we cannot identify suitable companies or assets or reach agreement on potential strategic acquisitions on acceptable terms. Moreover, an acquisition involves certain risks, including:

Under this method, estimated contract revenue is recognized by applying the cost-to-cost measure of progress for the period (based on the ratio of costs incurred to total estimated costs of a contract) to the total estimated revenue for the contract. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials and the performance of subcontractors. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined. These adjustments could result in both increases and decreases in profit margins or losses. Actual results could differ from estimated amounts and could result in a reduction or elimination of previously recognized earnings. In certain circumstances, it is possible that such adjustments could be significant and could have an adverse effect on our business. To the extent that these adjustments result in an increase, a reduction or an elimination of previously reported contract profit, we recognize a credit or a charge against current earnings, which could be material.

Backlog as of December 31, 20242025 totaled $1.69$3.01 billion. Backlog develops as a result of new awards, which represent the potential revenue value realizable pursuant to new project commitments received by us during a given period. Backlog is measured and defined differently by companies within our industry. We refer to “Backlog” as the unearned revenue we expect to earn in future periods on our executed contracts. As the construction on our projects progresses, we increase or decrease Backlog to take into account newly signed contracts, revenue earned during the period and our estimates of the effects of changes in estimated quantities, changed conditions, change orders and other variations from previously anticipated contract revenues, including completion penalties and incentives. In the event of a project cancellation, termination, or scope adjustment, we typically have no contractual right to the total revenues reflected in our Backlog. The timing of contract awards, duration of large new contracts and the mix of services can significantly affect Backlog reporting. We cannot guarantee that the revenue projected in our Backlog will be realized, or if realized, will result in earnings.

Given these factors, our Backlog at any point in time may not accurately represent the revenue that we expect to realize during any period, and our Backlog as of the end of a fiscal year may not be indicative of the revenue we expect to earn in the following fiscal year.year and should not be viewed or relied upon as a stand-alone indicator. Consequently, we cannot provide assurance that our estimates of Backlog will accurately reflect future revenue. Inability to realize revenue from our Backlog could have an adverse effect on our business.

We have pledged substantially all of our assets as collateral in connection with that certain amended and restated credit agreement, dated as of OctoberJune 2,5, 2019,2025, by and among the Company, as borrower, certain of our subsidiaries, as guarantors, the financial institutions party thereto as lenders and BMO Bank N.A., as administrative agent for the lenders (as amended, the “Credit Agreement”), and we have additionally pledged the proceeds of and other rights under our E-Infrastructure Solutions and Transportation Solutions contracts to our bonding agent. As a result, we may have difficulty in obtaining additional financing in the future if such financing requires us to pledge assets as collateral. In addition, under our Credit Agreement, we must obtain the consent of our lenders to incur additional debt from other sources (subject to certain limited exceptions).

WeOur incurredCredit indebtedness in connection with recent acquisitions, and the agreement governing such indebtednessAgreement contains various covenants and other provisions that impose restrictions on our ability to operate and manage our business.

General—Sterling operates through a variety of subsidiaries within three segments specializing in E-Infrastructure, Transportation and Building Solutions in the United States, primarily across the Southern, Northeastern, Mid-Atlantic and Rocky Mountain regions and the Pacific Islands. E-Infrastructure Solutions provides advanced, large-scale site development services and mission-critical electrical services for manufacturing, data centers, largesemiconductor scalefabrication, manufacturing, distribution centers, warehousing, power generation and more. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, rail and storm drainage systems. Building Solutions includes residential and commercial concrete foundations for single-family and multi-family homes, parking structures, elevated slabs, other concrete work, plumbing services, and surveys for new single-family residential builds. From strategy to operations, we are committed to sustainability by operating responsibly to safeguard and improve society’s quality of life. Caring for our people and our communities, our customers and our investors – that is The Sterling Way.

Under GAAP, this contractual change requires thatrequired Sterling to no longer consolidate RHB’s results with its own and to use equity method accounting with respect to Sterling’s interest in the entity. Beginning January 1, 2025, the Company willreports reportits portion of RHB’s operating income as a single line item (“Other operating income (expense), net”) in the Consolidated Statements of Operations and will reportreports its interest in RHB at December 31, 2024, and thereafter, as a single line item (“Investment in unconsolidated subsidiary”) in the Consolidated Balance Sheets. RHB’s revenue willis no longer be included in Sterling’s consolidated revenue in 2025 and Sterling’s consolidated backlog figures as of December 31, 20242024, and thereafter, do not include RHB’s backlog.

We see favorable opportunities for long-term growth across each of our business segments. We remain focused on our strategic objectives, as described in Item 1 “Business — Business Strategy.” These objectives include: 1) growth in our E-Infrastructure Solutions segment, with particular focus on large, high-value projects; 2) risk reduction through a continued shift in our Transportation Solutions business away from low-bid heavy highway work, and toward alternative delivery and design-build projects; 3) continuing to grow market share and geographic presence in Building Solutions; and 4) improving our margins in each of our segments.

E-Infrastructure Solutions—Our E-Infrastructure Solutions business is driven by our customers’ investments in the development of data centers, advanced manufacturing centers, e-commerce distribution centers and warehouses. We foresee significant growth opportunities tied to the implementation of multi-year capital deployment plans by data center customers, including hyperscalers, colocation providers and others. These investments are driven by the need to support the increasing use of cloud computing applications, increasing adoption and complexity of artificial intelligence applications and digital transformation across industries. Additionally, we continue to see significant opportunity related to the construction of manufacturing capacity in the U.S., including semiconductor fabrication. Following a decline in activity that began in 2023, awards in the e-commerce distribution sector began to strengthen in late2025 2024.and Similarly,we smallexpect warehousethis activity, which beganmomentum to declinecontinue in 2023 and remained soft in 2024, is beginning to exhibit signs of recovery.2026.

Transportation Solutions—Our Transportation Solutions business is primarily driven by federal, state and municipal funding. Federal funds, on average, provide 50% of annual State Department of Transportation capital outlays for highway and bridge projects. We benefit from a number of federal, state and local infrastructure investment programs. At the state and local level, the November 2020 elections saw strong support for transportation initiatives with the passage of many ballot measures that secured, and in some cases increased, funding. At the Federal level, the Infrastructure Investments and Jobs Act (“IIJA”), which establishes funding for the fiscal 2022 through 2026 time period, drove significant increases in transportation funding relative to the previous five-year law. The IIJA includes approximately $643 billion in funding for transportation programs ($432 billion for highways, $109 billion for transportation and $102 billion for rail), of which $284 billion is an increase over historic investment levels that will fund new transportation infrastructure. The IIJA also includes $25 billion of funding for airport modernizationmodernization. As a result of the IIJA, we saw an increase in bid activity and project awards which started in the third quarter of 2022 and continued through 20232025. andIn 2024.2026, Wewe expect that the combination of strong statestate-level funding in our core geographies and elevated federal funding will allow the transportation market to remain elevatedstrong relative to historical levels in 2025 and 2026.levels.

Building Solutions—Our Building Solutions segment is comprised of our residential and commercial businesses. The segment is driven by new home starts in Dallas-Fort Worth, the segmentssegment’s largest market, and continued expansion in the Houston and Phoenix markets. Building Solutions' core customer base includes top national, regional and custom home builders in our areas. In 2022, the residential market experienced significant price volatility and availability for key materials, including concrete, steel and lumber, as well as increases in subcontractor labor costs and decreased labor availability. The Company negotiated with customers to successfully recoup the increases in material and labor costs through price increases. We saw strong, consistent recovery in residential activity through 2023 and experienced volume growth across each geography. While this strength continued into early 2024,Beginning in the second quarterhalf of 20242024, thedemand combinedfrom impactresidential ofhome interestbuilder ratecustomers uncertainty,began to decline, as prospective homebuyers struggled with affordability challenges,challenges. andWe developedanticipate landthat availabilitydemand drovewill aremain declinemuted in the marketnear-term, which continued through the remainder of the year. Webut believe the dynamics in our markets, including population growth and structural housing shortages, support a return to growth over a multi-year time period.

Our remaining performance obligations on our projects, as defined in ASC 606, do not differ from what we refer to as “Backlog.” Our Backlog represents the amount of revenues we expect to recognize in the future from our contract commitments on projects. The contracts in Backlog are typically completed in 6 to 36 months. Our unsigned awards (“Unsigned Awards”) are excluded from Backlog until the contract is executed by our customer. We refer to the combination of our Backlog and Unsigned Awards as “Combined Backlog.” Our book-to-burn ratio is determined by taking our additions to Backlog and dividing it by revenue for the applicable period. This metric allows management to monitor the Company’s business development efforts to ensure we grow our Backlog and our business over time, and management believes that this measure is useful to investors for the same reason. As noted above, due to the deconsolidation of RHB, Sterling’s consolidated backlog figures as of December 31, 2024 do not include RHB’s backlog.

At December 31, 2024,2025, our Backlog was $1.69$3.01 billion, as compared to $2.07$1.69 billion at December 31, 2023.2024, Excludingwith RHB, thea book-to-burn ratio wasof 1.021.6X for the year ended December 31, 2024.2025. Included in Backlog at December 31, 2025 is $488.9 million contributed from the electrical and mechanical business acquired late in the third quarter 2025. The Company’s margin in Backlog has increased to 17.8% at December 31, 2025 from 16.7% at December 31, 2024 from 15.2% at December 31, 2023,2024, driven by a greater mix of E-Infrastructure Solutions backlog. Backlog includes $73.6 millionbacklog and $112.4an millionimproved attributablebacklog tomargin ourmix sharewithin ofTransportation estimated revenues related to joint ventures where we are a noncontrolling joint venture partner at December 31, 2024 and 2023, respectively. We anticipate that approximately 74% of our Backlog will be recognized as revenues during 2025, with substantially all remaining recognized in the twelve months following.Solutions.

Unsigned Awards were $300.7 million at December 31, 2025 and $137.9 million at December 31, 20242024. andIncluded $303.2in millionUnsigned Awards at December 31, 2023.2025 is $226.4 million contributed from the electrical and mechanical business acquired late in the third quarter 2025. Combined Backlog totaled $3.31 billion and $1.83 billion at December 31, 20242025 and $2.372024, billionrespectively, atwith December 31, 2023. Excluding RHB, thea book-to-burn ratio wasof 1.011.7X for the year ended December 31, 2024.2025.

Revenues—Revenues were $2.12$2.49 billion for 2024, an increase of $143.5 million, or 7.3%,2025, compared to $2.12 billion the prior year. TheExcluding increase$235.9 million of RHB revenue from 2024, revenues increased $610.2 million, which was driven by a $152.8$543.0 million increase in E-Infrastructure Solutions and a $92.9 million increase in Transportation Solutions and a $4.5 million increase in Building SolutionsSolutions, partly offset by a $13.7$25.8 million decrease in E-InfrastructureBuilding Solutions.

Gross profit and margin—Gross profit was $426.1$572.3 million for 2024,2025, an increase of $88.5$146.2 million, or 26.2%,34.3%, compared to the prior year. The Company’s gross margin as a percentage of revenue increased to 20.1%23.0% in 2024,2025, as compared to 17.1%20.1% in the prior year. The increases were driven by the aforementioned higher volume,revenue volume and an improved project margin mix inacross theour E-Infrastructure Solutions and Transportation Solutions segments and the inclusion of the Texas plumbing business acquired in late 2023.segments.

The number of contracts in progress that were not substantially complete totaled approximately 180 and 230 December 31, 2024 and 2023, respectively. TheseOur contracts are of various sizes, of different expected profitability and in various stages of completion. The nearer a contract progresses toward completion, the more visibility the Company has in refining its estimate of total revenues (including incentives, delay penalties and change orders), costs and gross profit. Thus, gross profit as a percentage of revenues can increase or decrease from comparable and subsequent quarters due to variations among contracts and depending upon the stage of completion of contracts.

General and administrative expenses—General and administrative expenses were $154.8 million, or 6.2% of revenue, for 2025, compared to $118.4 million, or 5.6% of revenue, for 2024, compared to $98.7 million, or 5.0% of revenue, in the prior year. The increase in expense reflects incrementalhigher G&Aperformance frombased thecompensation, Texasone-time plumbingseverance businesscosts, acquiredincreased headcount to support growth, and inflation in late 2023, growth and inflation.2025.

Income taxes—The effective income tax rate was 24.4%24.2% in 20242025 and 25.1%24.4% in the prior year. The rate varied from the statutory rate primarily as a result of state income taxes, non-deductiblenondeductible compensation, gain on the deconsolidation of subsidiary and other permanent differences. InOn 2024July and4, 2023,2025, the Company’sOne non-deductibleBig compensationBeautiful Bill Act was offsetenacted byinto increasedlaw, introducing changes to the U.S. tax deductionscode. relatedThe tochanges stockdid compensation.not have a material impact on our effective tax rate. See Note 1312 - Income Taxes for more information.

Revenues—Revenues were $408.4$1,466.8 million for 2024,2025, an increase of $4.5$543.0 million, or 1.1%,58.8%, compared to the prior year. The increase was primarily driven by higher volume from data centers and the inclusion of $61.1$170.4 million of revenue from the Texaselectrical plumbingand mechanical business acquired in late 2023 and an increase in residential slabs completed in the Arizonathird marketquarter compared to 2023,2025, partly offset by fewerlower residentialvolume slabsfrom completedwarehouses inand the Texastiming marketsof comparedadvanced tomanufacturing 2023.projects.

Operating income—Operating income was $49.1$346.0 million, or 12.0%23.6% of revenue, for 2024,2025, an increase of $2.9$142.7 million compared to $46.2$203.4 million, or 11.4%22.0% of revenue, in the prior year. The increase in operating income is partly attributable to a $19.4 million (inclusive of $3.0 million of intangible amortization) contribution from the electrical and mechanical business acquired late in the third quarter 2025, and the remaining increases in operating income and margin were driven by thea inclusion of the Texas plumbing business and aproject mix shift towardstoward residential,large whichmission-critical hasprojects, higherpartly marginsoffset thanby commercial.lower volume from warehouses and the timing of advanced manufacturing projects.

Operating Activities—During 2024,2025, net cash provided by operating activities was $497.1$440.0 million compared to net cash provided by operating activities of $478.6$497.1 million in the prior year. The improvement in cashCash flows provided by operating activities waswere primarily driven by higher netoperating incomeincome, the collection of receivables from affiliate, distributions of earnings from our unconsolidated subsidiary, and net improvementschanges in our accounts receivable, net contracts in progress and accounts payable balances (collectively, “Contract Capital”), as discussed below.

During 2024,2025, the change in Contract Capital was $185.5$54.2 million.million, which was primarily driven by the E-Infrastructure Solutions segment due to the increased size and duration of its projects in progress. The Company’s Contract Capital fluctuations are impacted by the mix of projects in Backlog, seasonality, the timing of new awards and related payments for work performed and the contract billings to the customer as projects are completed. Contract Capital is also impacted at period-end by the timing of accounts receivable collections and accounts payable payments for projects.

Investing Activities—During 2024,2025, net cash used in investing activities was $185.8$551.9 million, compared to net cash used of $87.8$185.8 million in the prior year. In 2024, the amount ofThe net cash used induring investingthe activitiesperiod was primarily driven by $103.8$482.3 million offor cashacquisitions removed(including from$442.9 million for the Company’sCEC ConsolidatedAcquisition Balanceand Sheet$25 duemillion tofor the deconsolidationDrake of RHBAcquisition) and $81.0$77.3 million for purchases of capital equipment, partly offset by $5.7 million of cash proceeds from the sale of property and equipment. Capital equipment is acquired as needed to support changing levels of production activities and to replace retiring equipment.

Financing Activities—During 2024,2025, net cash used in financing activities was $118.6$161.5 million compared to net cash used of $104.5$118.6 million in the prior year. InThe 2024,financing cash outflow during the amount of net cash used in financing activitiesperiod was primarily driven by $70.6$74.2 million for the repurchase of common stock, $26.3$40.1 million for distributions to our noncontrolling interest partners, $24.7 million of repayments on the Term Loan FacilityFacility, and $21.5$21.0 million for withholding taxes paid on the net share settlement of vested equity awards.

Credit Facility—Our amended and restated Credit Agreement provides the Company with senior secured debt financing consisting of the following (collectively, the “Credit Facility”): (i) a senior secured first lien term loan facility (the “Term Loan Facility”) in the aggregate principal amount of $350$300 million and (ii) a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $75$150 million (with a $75 million limit for the issuance of letters of credit and a $15 million sublimit for swing line loans). At December 31, 2024,2025, we had $317.2$292.5 million of outstanding borrowings under the Term Loan Facility and no outstanding borrowings under the Revolving Credit Facility. The obligations under the Credit Facility are secured by substantially all assets of the Company and the subsidiary guarantors, subject to certain permitted liens and interests of other parties.customary exceptions. The Credit Facility will mature on AprilJune 2,5, 2026.2028.

Capital Strategy—The Company will continue to explore additional revenue growth and capital alternatives to improve leverage and strengthen its financial position in order to take advantage of trends in the civilmarkets infrastructurein andwhich E-infrastructurewe markets.operate. The Company also expects to continue to pursue strategic uses of its cash, such as investing in projects or businesses that meet its gross margin and overall profitability targets, managing its debt balances and repurchasing shares of its common stock.

Capital Expenditures—Capital equipment is acquired as needed by increased levels of production and to replace retiring equipment. Capital expenditures, net of disposals,expenditures incurred in 20242025 were $70.8$77.3 million. Management expects net capital expenditures in 20252026 to be in the range of $70$100 to $80$110 million; however, the award of a project requiring significant purchases of equipment or other factors could result in increased expenditures.

Purchase Price Allocations—The aggregate purchase price for the PPG and CCS acquisitions were allocated to the major categories of assets and liabilities acquired based upon their estimated fair values as of the closing date, which were based, in part, upon internal and external valuations of certain assets, including specifically identified intangible assets and property and equipment. The valuations were based on the income-based and market-based valuation methods noted above. The excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. See Note 3 - Acquisitions for further discussion.

Goodwill—Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any indicators of impairment or when other actions require an impairment assessment. The Company performs the annual impairment assessment for its reporting units during the fourth quarter of each year based on balances as of October 1. During the fourth quarterquarters of 2024,2025, 20232024 and 2022,2023, the Company performed a qualitative assessment of goodwill, and based on this assessment, no indicators of impairment were present. Factors considered include macroeconomic, industry and competitive conditions, financial performance and reporting unit specific events. These are discussed in a number of places including Item 1A “Risk Factors.” Our annual assessments indicated there was no impairment of goodwill during the years ended December 31, 2024,2025, 20232024 and 2022.2023.

CECStone Ridge Acquisition—On SeptemberJune 1, 2025,2026, the CompanySterling acquired substantially all of the assets of Irving,Pocatello, Texas-basedIdaho-based CECStone FacilitiesRidge Group,Contracting, LLCLLC. (“CECStone Ridge”), a leading specialtysite electrical and mechanicaldevelopment contractor. The purchase price was $561.6$178.0 million, consisting primarily of $442.9$140.0 million in cash and $79.5$27.4 million in common stock. Additionally, CECStone Ridge has an earn-out opportunity of up to an aggregate of $80$15 million, contingent upon achievingachievement of a certain operatingEBITDA incometarget. targets.Stone CECRidge is included in the Company’s E-Infrastructure Solutions segment.

E-Infrastructure Solutions—Our E-Infrastructure Solutions business is driven by our customers’ investments in the development of data centers, semiconductor fabrication, advanced manufacturing centers,facilities, e-commerce distribution centers and warehouses. We foresee significant growth opportunities tied to the implementation of multi-year capital deployment plans by data center customers, including hyperscalers, colocation providers and others. These investments are driven by the need to support the increasing use of cloud computing applications, increasing adoption and complexity of artificial intelligence applications and digital transformation across industries. Additionally, we continue to see significant opportunity related to the construction of manufacturing capacity in the U.S., including semiconductor fabrication. Following a decline that began in 2023, the e-commerce distribution sector began to strengthen in 2025 and we expect this momentum to continue in 2026.

Transportation Solutions—Our Transportation Solutions business is primarily driven by federal, state and municipal funding. Federal funds, on average, provide 50% of annual State Department of Transportation capital outlays for highway and bridge projects. We benefit from a number of federal, state and local infrastructure investment programs. At the Federal level, the Infrastructure Investments and Jobs Act (“IIJA”), which establishes funding for the fiscal 2022 through 2026 time period, drove significant increases in transportation funding relative to the previous five-year law. The IIJA includes approximately $643 billion in funding for transportation programs ($432 billion for highways, $109 billion for transportation and $102 billion for rail), of which $284 billion is an increase over historic investment levels that will fund new transportation infrastructure. The IIJA also includes $25 billion of funding for airport modernization. As a result of the IIJA, we saw an increase in bid activity and project awards which started in the third quarter of 2022 and continued through 2025. In 2026, we expect that the combination of strong state-level funding in our core geographies and elevated federal funding will allow the transportation market to remain strongelevated relative to historical levels.

Our remaining performance obligations on our projects, as defined in ASC 606, do not differ from what we refer to as “Backlog.” Our Backlog represents the amount of revenues we expect to recognize in the future from our contract commitments on projects. The contracts in Backlog are typically completed in 6 to 36 months. Our unsigned awards (“Unsigned Awards”) are excluded from Backlog until the contract is executed by our customer. We refer to the combination of our Backlog and Unsigned Awards as “Combined Backlog.” Our book-to-burn ratio is determined by taking our additions to Backlog and dividing it by revenue for the applicable period. This metric allows management to monitor the Company’s business development efforts to ensure we grow our Backlog and our business over time, and management believes that this measure is useful to investors for the same reason.

At MarchJune 31,30, 2026, our BacklogRPOs waswere $3.80 billion, as compared to $3.01$4.23 billion atand our MSAs were $100.0 million, resulting in a total Backlog of $4.33 billion. This compares to December 31, 2025, withwhen RPOs were $3.01 billion and MSAs were zero, resulting in a total Backlog of $3.01 billion. For the six months ended June 30, 2026, the Backlog book-to-burn ratio ofwas 2.1X for the three months ended March 31, 2026.1.7X. Unsigned Awards were $1.36$1.28 billion at MarchJune 31,30, 2026 and $300.7 million at December 31, 2025.2025, resulting in Combined Backlog totaledof $5.15$5.62 billion and $3.31 billion at MarchJune 31,30, 2026 and December 31, 2025, respectively, with a book-to-burn ratio of 3.5X2.3X for the threesix months ended MarchJune 31,30, 2026.

Revenues—Revenues were $825.7$1.17 millionbillion for the firstsecond quarter of 2026, an increase of $394.7$553.7 million, or 92%,90%, compared to the firstsecond quarter of 2025. The increase was driven by a $379.5$594.6 million increase in E-Infrastructure Solutions, partly offset by a $12.2$40.1 million increasedecrease in Transportation Solutions,Solutions and a $3.1$779 millionthousand increasedecrease in Building Solutions.

Gross profit and margin—Gross profit was $194.3$290.0 million for the firstsecond quarter of 2026, an increase of $99.5$146.8 million, or 105%,103%, compared to the firstsecond quarter of 2025. The Company’s gross margin as a percentage of revenue increased to 23.5%24.8% in the firstsecond quarter of 2026, as compared to 22.0%23.3% in the firstsecond quarter of 2025. The increases were driven by the aforementioned higher revenue volume and an improved project margin mix in our Transportation Solutions segment.

General and administrative expense—General and administrative expenses were $47.9$53.1 million, or 5.8%4.5% of revenue, for the firstsecond quarter of 2026, compared to $34.6$34.0 million, or 8.0%5.5% of revenue, for the firstsecond quarter of 2025. General and administrative expenses were $101.0 million, or 5.1% of revenue, for the six months ended June 30, 2026, compared to $68.6 million, or 6.6% of revenue, for the six months ended June 30, 2025. The increaseincreases in expense reflects higher performance based compensation, increased headcount to support growth, and inflation in 2026.

Interest, net—Combined interest expense and income was net interest expenseincome of $0.4$709 millionthousand for the firstsecond quarter of 2026, compared to net interest income of $1.6$1.9 million for the firstsecond quarter of 2025, and net interest income of $333 thousand for the six months ended June 30, 2026, compared to net interest income of $3.5 million for the six months ended June 30, 2025. The lower interest income in the 2026 periods was due to decreased interest rates on our lower average cash balance compared to the firstthree quarterand ofsix months ended June 30, 2025.

Income taxes—The effective income tax rate was 24.5%23.3% for the firstsecond quarter of 2026 and 23.8% for the six months ended June 30, 2026. The raterates varied from the statutory rate primarily as a result of non-deductible compensation, state income taxes and other permanent differences. See Note 12 - Income Taxes for more information.

Revenues—Revenues were $597.7$905.0 million for the firstsecond quarter of 2026, an increase of $379.5$594.6 million, or 173.9%,192%, compared to the firstsecond quarter of 2025. TheRevenues were $1.50 billion for the six months ended June 30, 2026, an increase wasof $974.1 million, or 184%, compared to the six months ended June 30, 2025. The increases were primarily driven by higher volume from datalarge centersmission-critical projects and the inclusion of $156.1$239.9 million and $396.0 million for the three and six months ended June 30, 2026, respectively, of revenue from the electrical and mechanical business acquired late in the third quarter of 2025.

Operating Income—Operating income was $133.8$210.8 million, or 22.4%23.3% of revenue, for the firstsecond quarter of 2026, an increase of $87.1$127.1 million, compared to $46.6$83.8 million, or 21.4%27.0% of revenue, for the firstsecond quarter of 2025. Operating income was $344.6 million, or 22.9% of revenue, for the six months ended June 30, 2026, an increase of $214.2 million, compared to $130.4 million, or 24.7% of revenue, for the six months ended June 30, 2025. The increaseincreases in operating income iswere primarily driven by higher volume from large mission-critical projects, and partly attributable to a $12.3$25.2 million (inclusive of $2.3 million of intangible amortization) contributionand $37.5 million (inclusive of $4.6 million of intangible amortization) of contributions for the three and six months ended June 30, 2026, respectively, from the electrical and mechanical business acquired late in the third quarter of 2025.

Revenues—Revenues were $132.9$156.7 million for the firstsecond quarter of 2026, ana increasedecrease of $12.2$40.1 million, or 10.1%,20%, compared to the firstsecond quarter of 2025. Revenues were $289.6 million for the six months ended June 30, 2026, a decrease of $27.9 million, or 9%, compared to the six months ended June 30, 2025. The increasedecreases waswere driven by higher aviation andlower heavy highway and other revenue.

Operating Income—Operating income was $14.8$28.2 million, or 11.1%18.0% of revenue, for the firstsecond quarter of 2026, an increase of $3.5$2.2 million, compared to $11.3$26.0 million, or 9.3%13.2% of revenue, for the firstsecond quarter of 2025. Operating income was $42.9 million, or 14.8% of revenue, for the six months ended June 30, 2026, an increase of $5.7 million, compared to $37.2 million, or 11.7% of revenue, for the six months ended June 30, 2025. The increaseincreases in operating income and margin were driven by the aforementioned revenue volume and an improved project margin mix.

Revenues—Revenues were $95.1$106.5 million for the firstsecond quarter of 2026, a decrease of $780 thousand, or 0.7%, compared to the second quarter of 2025. Revenues were $201.6 million for the six months ended June 30, 2026, an increase of $3.1$2.3 million, or 3.3%,1.1%, compared to the firstsix quartermonths ofended June 30, 2025. TheCurrent increaseyear wasrevenues drivenremained byrelatively slightly higher residential and commercial volumeflat compared to 2025.prior Ouryear periods as our businesses specializing in residential concrete slabs and plumbing are still being affected by a market downturn, as affordability issues continue to impact potential homebuyers.

Operating Income—Operating income was $6.2$8.5 million, or 6.5%8.0% of revenue, for the firstsecond quarter of 2026, a decrease of $6.1$1.4 million, compared to $12.4$9.9 million, or 13.4%9.2% of revenue, for the firstsecond quarter of 2025. Operating income was $14.7 million, or 7.3% of revenue, for the six months ended June 30, 2026, a decrease of $7.5 million, compared to $22.2 million, or 11.1% of revenue, for the six months ended June 30, 2025. The decreasedecreases in operating income and margin were driven by a continued downturn in residential markets compared to the firstthree quarterand ofsix months ended June 30, 2025.

Cash and Cash Equivalents—Total cash and cash equivalents at MarchJune 31,30, 2026 and December 31, 2025 includes the following components:

Operating Activities—During the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities was $165.6$328.0 million, compared to net cash provided by operating activities of $84.9$170.3 million for the threesix months ended MarchJune 31,30, 2025. Cash flows provided by operating activities were primarily driven by higher operating income, the collection of receivables from affiliate, distributions of earnings from our unconsolidated subsidiary, and changes in our accounts receivable, net contracts in progress and accounts payable balances (collectively, “Contract Capital”), as discussed below.

Changes in Contract Capital—The change in operating assets and liabilities varies due to fluctuations in operating activities and investments in Contract Capital. The changes in components of Contract Capital during the threesix months ended MarchJune 31,30, 2026 and 2025 were as follows:

During the threesix months ended MarchJune 31,30, 2026, the change in Contract Capital was $3.0$68.1 million. The Company’s Contract Capital fluctuations are impacted by the mix of projects in Backlog, seasonality, the timing of new awards and related payments for work performed and the contract billings to the customer as projects are completed. Contract Capital is also impacted at period-end by the timing of accounts receivable collections and accounts payable payments for projects.

Investing Activities—During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $17.7$206.5 million, compared to net cash used of $54.2$66.5 million in the threesix months ended MarchJune 31,30, 2025. The net cash used during the current period was driven by $19.6$140.0 million for acquisitions and $69.6 million for purchases of capital equipment, partly offset by $1.9$3.1 million of cash proceeds from the sale of property and equipment. Capital equipment is acquired as needed to support changing levels of production activities and to replace retiring equipment.

Financing Activities—During the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities was $26.7$47.8 million, compared to net cash used of $56.2$68.7 million for the threesix months ended MarchJune 31,30, 2025. The financing cash outflow during the period was primarily driven by $12.3$35.3 million for the repurchase of common stock, $10.7$11.9 million for withholding taxes paid on the net share settlement of vested equity awards, $7.8 million of earn-out payments, and $3.8$7.5 million of repayments on the Term Loan Facility.Facility, partly offset by $14.7 million of capital contributions from noncontrolling interest owners.

Capital Strategy—The Company will continue to explore additional revenue growth and capital alternatives to improve leverage and strengthen its financial position in order to take advantage of trends in the markets in which we operate. The Company also expects to continue to pursue strategic uses of its cash, such as investing in projects or businesses that meet its gross margin and overall profitability targets, managing its debt balances and repurchasing shares of its common stock.

At MarchJune 31,30, 2026, there was approximately $375$376 million of construction work to be completed on unconsolidated construction joint venture contracts, of which approximately $150$151 million represented our proportionate share. Due to the joint and several liability under our joint venture arrangements, if one of our joint venture partners fails to perform, we and the remaining joint venture partners would be responsible for completion of the outstanding work. As of MarchJune 31,30, 2026, we are not aware of any situation that would require us to fulfill responsibilities of our joint venture partners pursuant to the joint and several liability under our contracts.