Sterling Infrastructure (STRL) Morgan Stanley's 14th Annual Laguna Conference summary

Demand and project visibility

• No project delays, pauses, push-outs or cancellations; hyperscalers continue asking how to accelerate delivery. Permitting and power are in place before work begins, with 3–5 years of project visibility and development taking 5 years from funding decision to groundbreaking.

• Campus scale has expanded from ~100 acres to active projects exceeding 10,000 acres, with future campuses discussed at 30,000–50,000 acres.

• Projects being bid are 5x–10x larger than a cited example; projects starting over the next 12 months may run 8–12 years, with electrical work extending timelines another 2–4 years.

• Backlog was $4.3B as of June 30, 2026, with combined backlog visibility of $5.6B and strong bid activity; a separate $7B of backlog and future-phase work was cited as understating the broader opportunity.

Capacity and labor

• Site-development capacity depends on project-management skills; equipment may tighten late this year and next year, with Caterpillar arrangements to secure supply. Electrical capacity is constrained by electricians; certification takes 4 years, and Texas journeymen may supervise no more than 4 apprentices each.

• Modular and prefabrication facility capacity was tripled; factory-built work can reduce cost and labor by 15%–20%.

• Texas electrical hiring reached 80 additional electricians per week as the business grew 140% YoY; traveling crews are drawn by higher pay and 2–3-year project stability.

• Labor availability may remain challenging for 3–4 years; pharma construction is expected from 2028 and semiconductors from 2030, alongside grid, LNG and potential nuclear projects.

Margins and execution

• Plateau site-development margins rose from 15%–18% to roughly double through vertical integration and equipment investment; geographic expansion offers similar opportunity. CEC targets 300–500 bps of margin expansion over 18–24 months and expects to exit two loss-making legacy businesses by end-2027.

• Complex underground site work uses 3D modeling, LiDAR and drones; vertical integration can reduce project time and millions of dollars in costs.

• At Micron's New York facility, September work was delivered in July and January work in September, enabling the first building to start 6 months ahead of the original expectation.

• In Q2, the largest transportation business performed more E-Infrastructure than transportation work; its E-Infrastructure activity grew 700% YoY as resources shifted to support demand.