Revenue rose 127% to $1.56B and operating margin gained 1.4 points to 19.6% even as gross margin fell 0.6 points 8-K. Management raised 2026 guidance to revenue of $4.63B to $4.73B 8-K.
Sterling Infrastructure, Inc · Q3 2026 · Reported 28 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Revenue | 1,563.93 | 689.02 | +127.0 % |
Gross profit | 377.28 | 170.22 | +121.6 % |
Operating income | 306.84 | 125.31 | +144.9 % |
Net income | 214.93 | 92.09 | +133.4 % |
Diluted EPS | 6.92 USD/share | 2.97 USD/share | +133.0 % |
Gross margin | 24.1 % | 24.7 % | -0.6 pp |
Operating margin | 19.6 % | 18.2 % | +1.4 pp |
Net margin | 13.7 % | 13.4 % | +0.4 pp |
Figures in USD, as reported. Margins are computed from the reported lines.
The electrical acquisition, not the base business alone, doubled revenue
Revenue reached $1.56B, up 127.0% from $689.02M a year earlier, and E-Infrastructure Solutions revenue rose 212% to $1.30B 8-K. CEC, acquired on September 1, 2025, contributed $425.6M in the quarter against $41.4M in the partial ownership period a year earlier 8-K.
Management puts organic growth at 70% (a company-defined figure), and Site Development revenue rose 133% 8-K. So acquired revenue explains a large part of the headline, while the legacy business still grew strongly.
Operating margin rose even though gross margin fell
Gross margin was 24.1% against 24.7% a year earlier, a decline of 0.6 points, yet operating margin rose 1.4 points to 19.6% from 18.2% 8-K. Operating income was $306.84M, up 144.9%. Overhead grew more slowly than revenue: G&A was $61.4M against $37.6M 8-K. That suggests operating leverage rather than better project pricing.
Two items sit in operating expenses: $2.1M of acquisition related costs and $2.5M of earn-out expense 8-K. In a calculation that excludes the acquisition costs, operating margin is 19.8% and up 1.6 points, with operating income up 146.5% 8-K. Excluding the earn-out expense instead gives the same 19.8% and 1.6 points, with operating income up 146.9% 8-K. The company-defined adjusted net income was $235.4M, or $7.58 per diluted share, against reported $214.9M and $6.92 8-K. The gap is mainly $11.2M of stock-based compensation and $10.3M of intangible amortization 8-K.
Mix is diluting E-Infrastructure margins while Building weakens
E-Infrastructure adjusted operating margin (company-defined) was 23.2% against 26.8% a year earlier 8-K. Management attributes the lower reported segment margin to the higher CEC contribution, and says CEC's margin improved both year over year and sequentially 8-K. Growth is therefore arriving at a lower margin than the legacy site work earned.
Transportation revenue fell 3.1% as resources moved to E-Infrastructure work, yet operating income rose 24.0% 8-K. Building Solutions revenue fell 5.4% and operating income fell 47.3% 8-K. Management links the revenue decline to slower homebuilder activity and expects challenging conditions through 2026 8-K.
Backlog supports the raised outlook, but signed bookings trailed revenue
Signed backlog was $4.14B, up 61%, and Combined Backlog, which includes $2.00B of unsigned awards, was $6.14B, up 78% 8-K. Book-to-burn was 0.9x for signed backlog and 1.4x for Combined Backlog, so the quarter's growth in visible work came mostly from unsigned awards 8-K.
Full-year guidance is revenue of $4.63B to $4.73B, net income of $596M to $604M and diluted EPS of $19.16 to $19.42 8-K. Cash flows from operations were $427.1M for the nine months ended September 30, 2026, and share repurchases were $107.3M for the same period 8-K.
What to watch next
Whether unsigned awards of $2.00B convert to signed backlog, since signed backlog book-to-burn was 0.9x in the quarter 8-K.
Full-year guidance of revenue of $4.63B to $4.73B and adjusted EPS of $21.70 to $21.96, and whether CEC reaches the over $1 billion of 2026 revenue management now sees as possible 8-K.
Whether CEC's margin gains offset the dilution in E-Infrastructure, where adjusted operating margin was 23.2% against 26.8% a year earlier, and whether Building Solutions stabilises 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.