Sterling Infrastructure Reports Q1 2025 Financial Results with Revenue Decline but Increased Gross Profit

Sterling Infrastructure, Inc. reported its financial results for the first quarter of 2025, revealing revenues of $430.9 million, a decrease from $440.4 million in the same period last year. The decline in revenue was partially offset by a significant increase in gross profit, which rose to $94.8 million from $76.9 million, marking a 23.3% increase year-over-year. The company's gross margin improved to 22.0%, up from 17.5% in the prior year. Net income attributable to Sterling common stockholders was $39.5 million, or $1.29 per share, compared to $31.0 million, or $1.00 per share, in the first quarter of 2024.

The company experienced notable changes in its operational structure, particularly with the deconsolidation of its 50% owned subsidiary, Road and Highway Builders, LLC (RHB), effective January 1, 2025. This change required Sterling to report its interest in RHB using the equity method, which means RHB's revenue is no longer included in Sterling's consolidated revenue. Additionally, Sterling completed the acquisition of Drake Concrete, LLC for $25 million, enhancing its Building Solutions segment and expanding its presence in the Dallas-Fort Worth market.

Operationally, Sterling's E-Infrastructure Solutions segment saw a revenue increase of 18.3% to $218.3 million, driven by higher demand for data center projects. Conversely, the Transportation Solutions segment reported revenues of $120.7 million, a decrease from $149.0 million, primarily due to the absence of RHB revenue in 2025. The Building Solutions segment faced challenges, with revenues declining to $92.0 million, attributed to lower commercial volume and adverse weather conditions impacting residential projects.

The company’s cash flow from operating activities significantly improved, totaling $84.9 million compared to $49.6 million in the prior year, driven by higher operating income and effective management of working capital. However, cash used in investing activities increased to $54.2 million, largely due to the Drake acquisition and capital expenditures. Financing activities also saw a net outflow of $56.2 million, primarily from stock repurchases totaling $43.8 million.

Looking ahead, Sterling Infrastructure anticipates continued growth across its segments, particularly in E-Infrastructure Solutions, supported by increasing investments in data centers and manufacturing facilities. The company aims to enhance its market position while managing costs and improving margins. Despite current challenges in the residential market, Sterling remains optimistic about long-term growth driven by population trends and infrastructure investments.