Is Geographic Expansion Supporting Sterling's Backlog Growth?

Sterling Infrastructure, Inc. STRL is expanding its geographic footprint to support long-term backlog growth and improve visibility across key end markets. The company is moving into regions where customers are planning large, multi-year infrastructure projects. This strategy allows Sterling to position itself early and remain involved as projects progress through different phases, rather than relying on short-duration work. Texas remains a key focus, where site-development work has already begun, while additional regions are being targeted based on expected increases in mission-critical activity over the next two to three years.

In the third quarter of 2025, Sterling reported a signed backlog of approximately $2.6 billion, representing a 64% year-over-year increase. The backlog growth reflects strong project awards across multiple regions. However, the reported figure understates the full scale of opportunity created by the company’s expanding geographic reach. When negotiated but unsigned awards and future phases tied to ongoing megaprojects are included, total potential work now exceeds $4 billion.

E-Infrastructure represents the majority of this broader pipeline. Sterling continues to follow customers into new geographies where data centers, manufacturing facilities and other mission-critical developments are being built. Customer pull into new locations is being driven by hyperscalers, semiconductor manufacturers and e-commerce operators planning multi-year capital deployments. These projects often span several years and move through multiple construction stages, increasing the value of early geographic entry.

Geographic expansion also supports backlog stability. Exposure across multiple markets reduces dependence on any single region or project and helps balance project timing. The company expects geographic expansion to remain an important source of contract awards through 2026 and beyond, reinforcing its role in supporting sustained backlog growth.

Sterling’s Competitive Position

Sterling operates in a data center-driven market that includes competition from large infrastructure players such as Quanta Services, Inc. PWR and EMCOR Group, Inc. EME. These companies benefit from rising infrastructure and data center investment, though their exposure differs in structure and focus.

Quanta is a leading participant in data center-related demand through its strong position in power generation, transmission and high-voltage electrical systems. Its growth is more closely tied to large-scale grid and utility investment rather than direct involvement at the data center site level. EMCOR, on the other hand, plays a more direct role in data center construction through mechanical, electrical and specialty contracting services. However, data centers represent only one part of EMCOR’s broader end-market exposure, alongside several other commercial and industrial verticals.

Sterling stands out through its integrated approach, combining site development with mission-critical electrical services. This positioning allows the company to participate earlier in project lifecycles and supports faster conversion from backlog to revenues. As a result, Sterling maintains a more concentrated and higher-growth exposure to data center development compared with Quanta and EMCOR.

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