Conestoga Capital Advisors, LLC on Sterling Infrastructure, Inc.
Thesis
Sterling performs complex site preparation and electrical work for hyperscale data centers and industrial construction. Conestoga initiated a position because the company can win mission-critical projects requiring scale and specialized execution. Customers frequently build campuses in several phases, creating recurring contract opportunities. The CEC acquisition increased electrical capability and backlog exceeded $4.3 billion, more than double the prior year.
“Signed backlog reached $4.3 billion at the end of June, more than double a year earlier”
Key risks
- Data-center construction spending could slow or be deferred.
- Complex projects and the CEC acquisition create operational and integration execution risk.
- Backlog conversion depends on customers proceeding with multi-phase construction schedules.