Sterling Infrastructure, Inc.

Greetings and welcome to the Sterling Infrastructure second quarter 2023 conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Noelle Diltz, Vice President of Investor Relations and Corporate Strategy. Thank you. You may begin.

Thank you, Jesse. Good morning to everyone joining us and welcome to Sterling Infrastructure's 2023 Second Quarter Earnings Conference Call and Webcast. I'm pleased to be here today to discuss our second quarter results with Joe Cotillo, Sterling's Chief Executive Officer, and Ron Balshmity, Sterling's Chief Financial Officer. Joe will open the call with an overview of the company and its performance in the quarter. Ron will follow that up with the detailed discussion of our financial results, after which Joe will provide a market and full year outlook. Then we will open the call up for questions. As a reminder, there are accompanying slides on the investor relations section of our website. Before turning the call over to Joe, I'll read the safe harbor statement. Some discussions made today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events, or otherwise. Please also note that management may reference EBITDA, adjusted EBITDA, adjusted net income, or adjusted earnings per share on this call, which are all financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon. I'll now turn the call over to our CEO, Joe Cotillo. Thanks, Noelle.

Good morning, everyone, and thank you for joining Sterling's second quarter 2023 earnings call. It's a fantastic time to be part of the Sterling team. When we started this journey to transform our company seven years ago, we sought to build a diversified infrastructure solutions business that consistently delivered bottom line growth and strong cash flow. Our results in the second quarter reflect how far we've come. Put simply, we had a great quarter. We delivered revenue growth across each of our segments to drive a 13% year-over-year increase in total revenue, which reflects 11% organic growth and 2% acquired growth. More important, each of our segments generated significant operating profit improvements that drive an operating income growth of 37%. Cash flow was exceptionally strong in the quarter, and our balance sheet is in great shape. And finally, our combined backlog grew 42% from year end 2022 to reach a new record level. These results would not have been possible without the hard work and dedication of our Sterling team. Their drive and entrepreneurial spirit enables us to consistently outperform and serve the customer better than our competition. While we're pleased with our progress, there is still a lot more opportunity ahead of us. As we continue to grow the business both organically and through M&A, we remain committed to our guiding principles, the Sterling Way, which remind us of our duty to continuously improve how we protect our people, our environment, and give back to our communities, all working to build America's infrastructure. Moving to our financials. In E-Infrastructure, which is our largest segment and represents half of our sales, we delivered just over 11% top line growth and 250 basis points of operating margin expansion to drive 32% operating income growth. Our revenue growth in the quarter was driven by continued strength and activity related to high value advanced manufacturing projects and data centers. On the profitability front, as supply chains have eased, we have been able to recapture the inefficiencies that impacted our margins during COVID. Additionally, we are seeing a mixed benefit as our large project work picks up. Looking at our e-infrastructure verticals in more detail, on the advanced manufacturing We ramped up activity on our previously announced Hyundai and Rivian projects in the quarter. These projects are progressing very well. Additionally, two weeks ago, we announced that we had been awarded the next phase of the Hyundai project, which contributed to our record e-infrastructure bookings in the quarter of $424 million. Data center activity remains strong as our customers push to manage increasing data demand, and the evolving needs of AI. Bookings in this market also contributed to our strong backlog growth in the quarter. Activity in e-commerce distribution centers has stabilized at lower levels relative to last year. We expect activity to remain roughly at current levels through 2024 and rebounding in 2025. In transportation solutions, we delivered a 5.9% revenue growth and operating margin expansion of 130 basis points, which drove a 33% growth in operating income. Operating margins reached a new high of 6.5%. Our laser focus on improving margins coupled with the strong activity associated with the infrastructure bill are enabling us to meet our margin thresholds and grow the business. We believe we will continue to see growth in both margins and revenue in this segment as we go forward. Notably, aviation bid activity, which had been slow to release, picked up significantly in the quarter. As a result, we had some nice awards in the quarter and anticipate more to come in the second half of the year. In building solutions, we grew revenue nearly 30% in total and over 16% on an organic basis. We expanded operating margin by 70 basis points to drive an operating income growth of 38%. Our residential revenue increased over 21% in the quarter as we set new records in each of our geographies for both the number of slabs poured and revenue generated. Our commercial revenue increased nearly 50%, reflecting strong market demand and more attractive margins. The increase in our second quarter building solutions operating profit was driven by the recovery in residential volume, improved mixed within commercial, and better margins across both. In view of our strong first half results, record backlog position and excellent execution, we are raising our full year guidance. The midpoint of our increased guidance would represent a 13% increase in revenue and 32% increase in net income relative to 2022 levels. With that, I'd like to turn it over to Ron to give you more details on the quarter. Ron?