Good afternoon. I am Louis DiPalma. I cover smart city technologies on William Blair's equity research team. This is day 2 of our 44th annual William Blair Growth Stock Conference. We're pleased to be hosting a 30-minute presentation with the management team of Sterling Infrastructure. Joining me today are CEO Joe Cutillo, recently appointed CFO Sharon Villaverde, former CFO and current EVP Ronald Ballschmiede, and VP of Investor Relations and Corporate Strategy, Noelle Dilts. Following the presentation, there will be a breakout session in the Adler Room. I am required to inform the audience that a complete list of potential conflicts of interest and disclosures are available on our website at williamblair.com. So Joe, thanks for joining us for the second year in a row, and please take it away. Thanks, Louis, and thanks everybody for coming. I'm happy to see quite a crowd. I thought at 4:00 P.M. on the second day, we're gonna have to go to the bar and present from there, but we'll do it from here. Maybe we'll take the questions at the bar afterwards. I wanna sit back and tell everybody a little bit about Sterling Infrastructure. We're a leading infrastructure service provider in the U.S., and if you take a look at where we're physically located, we call it the Money Smile. So we come down the Rocky Mountains, through down through Texas, southeast and up the East Coast, is predominantly where we play. We have three fundamental segments to our business: our E-infrastructure business, excuse me, E-infrastructure segment, our transportation segment, and our Building solutions segment. Since 2015, 2016, when Ron and I both joined the company, we've been on kind of a two-part journey. The first part of our journey was really a turnaround of a business that was, at the time, 95% of the business was low bid, heavy highway, very highly concentrated, highly focused on one end market, one end customer group. If you want my opinion, I'd never be in that business. It's terrible, very high risk, very low margins, and, you know, let somebody else do the work. So we spent the first couple of years not only turning around the business, but transforming it into an infrastructure service provider, up till 2019. Took a lot of hard work, a lot of hard effort, a lot of energy, but you could see very good results. From 2019 and beyond, we think of the transformation as really building off the platform or leveraging the platform we've built to rapidly grow the company. Since then, we've seen 20% compounded annual growth rates on our revenue. Now, what's really interesting, it's probably heresy to say at a growth conference, we don't care about revenue. We care about profitability and cash flow, and as you see by the growth on the bottom line, it's almost double what the top-line growth is. Our focus as we are today and as we go forward, is how do we leverage and utilize our assets to get the greatest returns for our investors and for our company, and also generate significant cash flow as we go forward? We've continued the trend on not only growing the margin, but if you look at the backlog trends that we've had, over the last several years and coming into this year, not only do we continue to see significant growth in backlog, but we continue to see growth in margins. We measure our gross margins on every bid that we do, not only at time of bid, but we measure the gross margins after execution. Not only is the trend continuing up, but we on average finish 0.5 point to 1 point above our bid margins, at the end of our projects. Our total gross margin of the company is actually better than the gross margins that you see here. We finished the first quarter north of 17%. That is because in our Building Solutions business, the residential piece of that never goes into backlog. It's such a fast turn type business, and I'll explain it in more detail later. There's no reason to put it in backlog. It would just confuse the situation. We continue to see great growth opportunities ahead of us, and we'll go through each segment. But more importantly, as we look forward this year into next year, we think we've got 100-200 basis points of margin improvement just because of the mix and the projects that we're working on. So let's start with our largest segment, and probably the most exciting segment for us is E-Infrastructure. E-Infrastructure Solutions really focuses on mission-critical customers and operations, where we help them select the site and develop the site to the point they're gonna pour the slab and build the building. And you say, "Well, why is that important?" It's important because it's the highest variable in any project. So as you can imagine, we do a tremendous amount of data centers. It's our largest end market right now. Whether it's Amazon or Meta or Microsoft, it doesn't matter. They've built a lot of these data centers, hundreds of these data centers. They know from the time the slab is poured till the time it's completed, how many miles of wire, how many miles of pipe, how many screws, how many nuts, how many bolts, and really down to the day, how long it's gonna take to execute that.... What they never know going into the project is how long and how much is it gonna cost to develop the site. These could be on areas that are very flat and take very little site development. A lot of our projects, the majority of our projects, start as mountains and turn into plains, okay? And not only is it the highest variable from being different, but it's also the leading, what's the right word I wanna say? It's really the leading driver to whether that project is on time. If we are 2 weeks late on delivering a site, that site will be 6 months late at the end of the project. So our $100 million contract on a $3 billion project has meaningful impact if we don't execute it on time. So as we tell people, we're not selling site development, we're selling you an insurance policy that if you tell us it needs to be done on June first, it will be done on June first. That's, that's what we sell, okay? We've got more horsepower, more capability to do these projects than anyone. We have very, very sticky customer relationships. Once we get a customer, we usually end up doing all of their work from that time on. Take a look at the portfolio of our customers, 40% of our backlog is data centers. Next leading customer base is the onshoring or reshoring of manufacturing. That's very exciting for us. It's happening faster than we anticipated. We've seen more activity than we would have ever thought. And then after that, e-commerce distribution centers are a large piece. And then we have another segment, which is really small, private work, warehouses, industrial areas. Kind of put it in perspective on the growth rates. Everybody asks us, "Well, is data center real? Is it gonna go away? How long is it gonna last?" We believe we've got good line of sight for the next 3-5 years, and every time we put a projection out, we're wrong because we underestimate the growth rates of the data centers. In the first quarter of this year, our data center work was up over 100%. So we're very happy with the data centers. Not only do we like that work, not only do we have strong relationships, but these projects tend to be multi-phase projects. So when we win a data center, we announce the win. The win might be $50 million or $100 million. But what we also know is that there's 3-5 more phases on the back end of this project, and once we burn off the first phase, we then give them a price for the second phase. We put that in backlog, and we go on. So what appears to be a $50 million or $60 million project may be actually a $300 million or $200 million project that's gonna last 3-5 years, so we like this space a lot. Similarly, with the large manufacturing projects that are coming online, these are multi-phase, multi-year projects, multi-hundred acre facilities that we have to develop. As the jobs get bigger, our margins get better, the competition gets smaller, and the criticalness of the time to complete becomes bigger, right? So that's exactly where we play and what we like to do. Some of our big customers, Meta, Hyundai Engineering, SK Battery, Amazon, Walmart, are just a few of the many. We're doing data centers for pretty much every data center company out there, with the exception of Microsoft. We haven't done a Microsoft in a while. Their footprint tends to fall in different geographic areas than we tend to cover. Our next segment is Transportation solutions. This is where the company started, at low-bid, heavy highway. Today, less than 10% of our Transportation solutions business is low bid, heavy highway. We do have some strategic work that makes sense for us to continue to do. The vast majority of our work is what we call alternative delivery, so we're involved in the design and the build of the project. We control our destiny. This market is the best market it's been, certainly in my lifetime. With the IIJA bill, along with incremental funding from COVID stimulus that was left over and converted, the program kicked off faster and is bigger than it historically has been. We've seen margins in this area from when we started, to kind of put it in perspective, and I used to tell people, "I didn't know you could have margins this low," but the margins in this business were 4%. I don't know how you do that. I think you could wake up and have 4% margin, right? We've now taken that to north of 13%. We've historically kept the reins pretty tight on this and have grown it only 3%-5%. With the margins where they are today and our bids going in at higher margins for future projects, we're letting loose of the reins a little bit, and we'll grow this in strong double digits in 2023 or 2024 and 2025. We're in the middle. Everybody asks us, "Where are you in the cycle?" We're really in the middle of the cycle. We've got 2-3 years left on the federal funding. But the beauty of this segment today is we've got multi-year backlog built up. We'll continue to build multi-year backlog, so even at the end of the cycle, we're not gonna see any dip. We'll continue to grow and and go through there, which is, which is fantastic. So if we step back on E-Infrastructure, we certainly have good line of sight for the next three years on data centers. We know what's coming over the next three years for manufacturing. We feel very good about the tailwinds and what's happening there. Transportation Solutions, our second-largest segment, we've got multiyears of backlog, and we know multiyears of backlog is continuing to come, and we believe we have continued margin expansion in both of these, in both of these segments. Our third segment is what we call Building Solutions, and it's really broken down into two pieces. We have a residential piece which does slabs for entry-level homes with the high-volume builders. Our three biggest customers are the three biggest guys in the U.S.: D.R. Horton, Lennar, and Pulte. We're located in Houston, Dallas-Fort Worth, and Phoenix, three largest markets in the U.S., all population growth markets. This is critical to understand because everybody wants to look at the U.S. housing market and say, "Is it up? Is it down? Is it flat?" When the U.S. housing market was down 30%, we were up close to double digits. Now, the U.S. housing market's up 8%, we're up 20% or 25%. The first quarter of this year, organically, our slab business grew 25%. Our plumbing business in Dallas, which I'll talk about a little more, grew 27%. So very strong growth rates. The simple fact is, these are high population growth areas. There's not enough housing for the population that's coming in. As a result, the housing markets are continue to remain strong for multiple years. The second piece of that business is our commercial, but it's not commercial like anybody would think in this room. It's really multifamily and parking structures. We don't build the whole building. All we do is the concrete slabs, and a lot of these are what are called podiums, so they have one or two floors of concrete. We'll do that, and then they'll stick build it from there on out. That business was very strong in 2023. We use this as an opportunistic area. When it's strong, we'll move assets from residential over to there, do the work. 24, that business is softening and will be down. We know that. And then we'll just reallocate those assets back and pick up more residential work. The great thing for us is residential actually has a higher margin than commercial, so we'll see incremental margin growth in the Building Solutions segment throughout 2024. So collectively, we think we have 100-200 basis points of margin expansion on top of the revenue growth for the next 12-24 months. What's even better about the business and the growth and the earnings is the cash that we throw off and the opportunities that generates for us. In 2023, we threw off almost $500 million of cash. The key thing for us now is, historically, when I talk about building the platform for growth, we've built this nice platform, we've grown it 20%. As we look forward, we, we did that with little cash flow, right? We were improving the cash flow along the way, so we did a lot of that organically and kind of the old-fashioned way. As we look at the amount of cash that we are throwing off today, we'll jump to the balance sheet and the net debt that we have. We actually have net negative debt, so we got close to $500 million in cash for acquisitions. If we fast-forward the next three years, we throw off close to $1 billion of incremental cash with no incremental acquisitions. So our, our focus right now and, and efforts are around how do we add acquisitions and services to the portfolio? That is the number one best use of cash. We tend to pay 4-6x multiples for businesses. We expect those businesses to double in five years or less, and we expect them to have 75%, 80%, or 90% cash flows on them. So very high expectations. We've been very successful on the acquisitions we've done. We've got a great pipeline of acquisitions out there. We've literally looked at over 100 deals this year already. We're very picky and very selective, but when we get a deal, they've been extremely successful for us. So when I step back and think of it, we've had great growth, even though we don't care about revenue. We have had outstanding earnings growth, which is almost double the revenue growth. We now are throwing off several hundred million a year of cash that we need to put the work in acquisitions, and you start putting this out, and the reality is we're gonna go from $2 billion- $4 billion or $5 billion over the next 3-5 years, with earnings growth that is at higher margins than we are today. So our goal, about a year and a half ago, the good thing is we're, we're generally ahead of our goals. And we said a year and a half ago, we wanted to go from 15% to 20% over the next 3 years to 5 years in, in margins. We are now at about 17.5% organically. We think with the incremental 100-200 basis points, we're getting very close to that 20% gross margin. And to keep it really simple, our SG&A is 5%. It's consistently 5%. So you can do the math on what that comes to, operating income or net income. And once we see a clear path to get to 20, once we get to 20, our objective is gonna get to 25, right? So we don't stop. We will stay focused on bottom line. We'll stay focused on cash generation. We've got the strongest tailwinds in every one of these segments we've seen. And I think, you know, we've had multiple conversations on data centers and the onshoring of manufacturing. We're seeing the onshoring happening faster in what I'll call one-offs, project. But the tsunami is sitting offshore right now, and it's probably not gonna hit till late 2025 or 2026, and that's these chip plants. These are mega facilities that are 5- 10 year projects, that are gonna be size and scope that, people have not seen historically. When you're talking about $100 billion projects, we just haven't done anything like that in our country in a long, long time. So we're very excited about what we see in front of us already. We're even more excited about what's sitting off that shoreline that's gonna come in. We think that chips are only one of the pieces that are gonna come back from manufacturing. We think there's gonna be a big push on pharma and a couple other areas as well. The beauty of our business model today is our assets are fungible, that we don't care which one of those it is. We can move and go to where the money is. So we talked about the capital allocations. The other part of capital allocations besides M&A is we've got a stock repurchase plan in place. We believe our stock price is still very low compared to where it should be, and our multiple is low, though we've made great progress. Noelle's done a great job coming on board here in the last year for us. But we think we've got a lot of runway there. So we're bullish on the business. We're bullish on the trajectory that we're on, and bullish on the markets that we're in. As we add more services to the portfolio, it's only gonna create more opportunities for us. So our full year guidance, as we've said, I won't read you all the numbers. What we've told the street is, we are expecting to be at the high end of that guidance, after the first quarter. If we have a strong second quarter, hopefully, that may even go up. But we're very confident on the earnings growth that we're gonna see. Again, don't confuse revenue with earnings growth, right? We the revenue, I we will give you numbers. I don't care about those numbers. I wanna beat the bottom line, and beat the cash flow as we go forward. So summary, we've had a great transformation. You know, we've done something that very few companies have been able to do. I think more importantly, we've built something that can grow faster and longer and stronger than most companies out there. We see continued opportunities for margin and expansion. I don't wanna talk about, you know, other people in our segment or our sectors, but if you take a look at any of our numbers, we're best in class on any of them. So, we're pretty proud of that, but we have more room to go. We got a robust balance sheet that we can make not only one or two, but a number of acquisitions here in the near future. And we've had very good stock performance. When I got here, it was $3 a share, and made it up to $135. I won't tell you where my happiness number is, but it's a lot higher than $135. That's all I'll tell you. And we'll get there. Great. I think we have time for a few questions now, and then we will continue the conversation in the Adler Room for the breakout. But one of the main themes, I think, I think you might have said the phrase margin expansion about 45 times during the course of your presentation. Can you elaborate further in terms of what is driving that margin expansion? Is, does a lot of it have to do with the price inflation that has occurred in the industry, or is it just the inherent, like, operating leverage across, you know, your three different business segments, such that it's, you see a lot of, you know, durability over the next 5-10 years? Yeah, it actually is a little different. It starts with discipline. You know, with that 20% growth, what we don't talk about is we shrunk the business $600 million. So think about that. We're $2 billion. We shrank it $600 million to grow 20%. We have tremendous discipline to say no. If the job is not right, the margins aren't right, the customer is not gonna pay, we say no, and we will continue to say no. That's a cultural change throughout the company, and but it is real, right? Everybody says you can't get price. Bullshit. You can't do this. Bullshit. If you believe you can't, you can't. If you believe you should and you can and you will, you will, and we've driven that through the culture. Now, I won't lie, in the transportation segment, we took the margin from 4%, which I still can't even say with a straight face, it's hard, to 10%, 11%, and we picked up a couple points of price. There has been price appreciation in that market. Contractors are full, and they finally have started—we're starting to see price realization. In E-infrastructure, it's really about job selection. As these jobs get bigger, that's the exciting thing about some of these mega factories. Those jobs get bigger, our margins get better. That's just very, very consistent across the board. So if you look at our margin improvement this year, our revenue is not gonna grow at the historical rates because the small stuff is down 40%-50%. We're not gonna chase it. We could go get that, but the margins are too low, so we'll let somebody else do it. We'll focus on the big stuff, capitalize on it, and our bottom line will grow strong double digits, over the top. From a competitive standpoint, since you have such scale now and you have this super healthy balance sheet in terms of a net cash balance, does that, like, exclude a lot of competitors from bidding against you for some of these new mega projects? And like you were talking about the CHIPS Act and a lot of the onshoring of the new semiconductor plants and, like, is it—do you just, are you able to exert, you know, pricing power for these big jobs? I'd like to tell you I could get 2x price on all our jobs. The reality is I can't, right? That's, somebody else would come in. We get a slight premium, and we're able to do that, because of size and speed, but we're also able to do it as an example, you know, the recent Hyundai battery plant, that we did. What people don't realize is you start a project and they're good at billing, but you're not gonna get a bill in for the first 30 days, and then you're gonna get paid, right? So it's not uncommon, at the rate that we go on these projects, it's not uncommon for us to have $30 million invested before we get the first paycheck, right? Now, we catch that up, and we run cash positive as a, as a general thing, but out of the chute. And we make sure our customers explain that to any competitors in the bid process, that you better have $30 million-$50 million of cash up front, and we want to see it on your balance sheet because, because that's what it's gonna take to get this project started, right? So there are certainly benefits of scale and size that help us have a competitive advantage. Definitely. In terms of your transportation segment with the IIJA, I think you mentioned how you think there's still two to three years of runway until, like, the peak in that cycle. Is that, like, the peak in terms of, like, bookings associated with the funding for IIJA, or is, like, revenue lag those- Yeah. those bookings? Yeah, and let me. It's not gonna continue up. I would say what we've done is, the way these programs start is they start out slow, then they hit pace, right? So they ramp up. We've hit pace. That pace is gonna maintain for another 2-3 years, and then the way to think of it, those jobs bid three years out still have a 1.5-2 years before they're finished, right? So that's where people get a little confused on the timing. So we think even though we're halfway through the cycle from a build and execution, we're still early in the impact that really drives to the company. Great. And in terms of the housing market, is there, like, any particular areas of strength that you're seeing in terms of your residential business? Or are some geographies stronger- Yeah - than others? Yeah, we definitely have strategically positioned ourselves in the three largest, fastest-growing markets. Down the road, Florida makes sense. There's parts of Florida that would make sense for us to get into. But those markets have historically, over the last several years, been much stronger than the average U.S. housing market. And if, you know, some of you may be from Texas, or if anybody's been in Texas, it's unbelievable how fast it's growing. You know, they keep saying Houston and Dallas are both gonna double by 20, I think it's 2037 or some crazy number like that. Houston's as big as Chicago right now, so imagine Chicago doubling in the next 12-15 years. Even if they're off five years, I mean, it's still astronomical, and it's happening. I mean, you're seeing it firsthand. The amount of people moving to Texas is thousands of people a day, right? I mean, it's an astronomical number. So the rest of the infrastructure is not keeping up with it, right? So there's some other issues that they're gonna have, but it's real. And for geographic expansion into like other like fast-growing geographies, is that something you could do organically, or is that something where you would look to- Yeah - acquire? It's so we expanded organically into Houston, then into Phoenix, and then made a small acquisition in Phoenix to grow some capacity. We could do it organically. It's faster to do it acquisitively. So if we found the right acquisition, we would do it. We bought a plumbing business in Dallas in December. It's been a great business. It only grew 27% organically in the first quarter, so it's off to a reasonable start for us. We would like to find either two more of those, one in Phoenix and Houston, or we've already started talking to the—there's four really strong young guys that work under the leader of maybe moving one of them out there and starting up organically in 2025 or 2026. That makes sense. You know, for these businesses, as you are a service provider, has the labor market been an inhibitor for you? You know, what's been really interesting is, there's labor's always tight, right? I'm not gonna lie. But the area we have seen the biggest challenge in labor is the unskilled labor. So in our residential business, we have a lot of unskilled labor around the slab work, and that is the hardest to get. When it comes to the highly skilled, you know, we say we've got the biggest, brightest, shiniest toys and the biggest jobs. We literally have started using social media to promote our jobs, and we have a waiting list of people that wanna come run our equipment. So we really have not had an issue there. We pay more, and they work more hours, so they make more money, and they like it. Great, and that is all the time that we have for the main session. Thanks for joining us, and we are going to continue in the Adler Room. Thank you. Thank you. Thank you.