Sterling Expands E-Infrastructure Platform With CEC Buyout, Stock Up

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19-06-2025

Sterling Infrastructure, Inc. STRL has signed a definitive agreement to acquire CEC Facilities Group, LLC, a specialty electrical and mechanical contractor based in Irving, TX. The deal is valued at $505 million, including $450 million in cash and $55 million in Sterling Common Stock.The transaction is expected to close in the third quarter of 2025, after which CEC will join the company's E-Infrastructure Solutions segment. The agreement also includes an earn-out if CEC meets certain operating income targets through Dec. 31, 2029.Shares of this Texas-based E-Infrastructure Solutions, Building Solutions and Transportation Solutions provider gained 5.6% during yesterday's trading session and 1.2% in after-hours trading.
Sterling is set to expand its E-Infrastructure capabilities through this strategic acquisition. CEC is a non-union electrical contractor with operations focused on fast-growing markets such as data centers, semiconductors and manufacturing. A majority of CEC's revenues and backlog are linked to these mission-critical sectors. The company provides end-to-end services including design, engineering, installation and maintenance for complex electrical systems.The acquisition will allow Sterling to strengthen its position across the full project lifecycle, including ongoing maintenance and upgrade work. CEC's services align well with Sterling's existing E-Infrastructure platform. The combined business is expected to benefit from cross-selling opportunities and a broader customer base. Sterling has an established presence in the data center segment, while CEC brings strength in the semiconductor market, along with coverage across Texas and other key regions.The addition of CEC also supports Sterling's financial profile. CEC has a strong growth record, with an estimated revenue CAGR of around 20% and an EBITDA margin of approximately 13% in 2025. The deal is expected to be accretive to Sterling's return on invested capital (ROIC). The company also sees scope to expand the electrical services platform further through organic growth and targeted M&A, supported by favorable market trends across CEC's core sectors.
In 2025, CEC is projected to generate $390-$415 million in revenues and $51 million to $54 million in EBITDA. Estimated adjusted EPS accretion for Sterling is between 63 cents and 70 cents per diluted share. The proportion of revenue and earnings contribution from CEC to Sterling will depend on the deal's closing date. Based on current expectations, the acquisition is likely to contribute around five months of financial results in 2025.
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Shares of Sterling have gained 87.5% over the past three months, outperforming 25.5% growth in the Zacks Engineering - R and D Services industry. The company is benefiting from the E-Infrastructure segment's stability, strong backlog, inorganic growth efforts and steady bid activity in key transportation markets.
Sterling currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks from the Construction sector are AECOM ACM, EMCOR Group, Inc. EME and Gibraltar Industries, Inc. ROCK.AECOM presently has a Zacks Rank #2. You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.The company delivered a trailing four-quarter earnings surprise of 8.9%, on average. The stock has increased 26.8% in the past year. The Zacks Consensus Estimate for AECOM's fiscal 2025 sales and EPS implies an increase of 13.9% and 5.6%, respectively, from a year ago.EMCOR currently holds a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 22.8%, on average. The stock has increased 24.8% in the past year.The consensus estimate for EMCOR's 2025 sales and EPS implies an increase of 12.7% and 9.6%, respectively, from a year ago.Gibraltar currently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 3.1%, on average. The stock has lost 18.8% in the past year.The Zacks Consensus Estimate for Gibraltar's 2025 sales and EPS implies an increase of 9.3% and 15.8%, respectively, from a year ago.
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