v3.26.3
ACQUISITIONS
 9 Months Ended
Sep. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
ACQUISITIONS
3.ACQUISITIONS
On June 1, 2026, Sterling acquired substantially all of the assets of Pocatello, Idaho-based Stone Ridge Contracting, LLC (“Stone Ridge”) (the “Stone Ridge Acquisition”). The integration of Stone Ridge, a leading site development contractor, strengthens Sterling's E-Infrastructure geographic footprint across the Pacific Northwest and Texas, which have been key focus areas for strategic geographic expansion.
On September 1, 2025, Sterling acquired substantially all of the assets of Irving, Texas-based CEC Facilities Group, LLC, et al. (“CEC”) (the “CEC Acquisition”). The integration of CEC, a leading specialty electrical and mechanical contractor, broadens Sterling's array of valuable E-Infrastructure services, extends the segment into the next critical phases of the project lifecycle, and creates significant opportunities to cross-sell services.
Both acquisitions were accounted for using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The results of Stone Ridge and CEC since the date of acquisition are included within our E-Infrastructure Solutions segment.
Purchase Consideration
The following table details the components of purchase consideration for the acquisitions.
(In thousands)Stone RidgeCEC
Cash consideration$139,985 $442,937 
Equity consideration27,406 79,458 
Earn-out consideration (1)
9,800 39,194 
Working capital adjustment941 — 
Total fair value of consideration transferred$178,132 $561,589 
(1) The Stone Ridge earn-out arrangement requires the Company to pay up to $15 million based upon Stone Ridge’s achievement of a certain EBITDA target. The CEC earn-out arrangement requires the Company to pay up to $80 million based upon CEC’s achievement of certain operating income targets.
Purchase Price Allocations—The aggregate purchase consideration noted above was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the respective acquisition closing dates, which were based, in part, upon external appraisals and valuations of certain assets, including specifically identified intangible assets. The excess of the fair value of consideration over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. This goodwill represents the value of expected future earnings and cash flows, as well as the synergies created by the integration of the new businesses within our organization, including cross-selling opportunities to help strengthen our existing service offerings and expand our market position. The goodwill and intangibles related to the acquisitions are expected to be deductible for tax purposes.
The following table summarizes our purchase price allocations at the acquisition closing dates, net of cash acquired:
(In thousands)Stone RidgeCEC
Accounts receivable$27,148 $73,549 
Contract assets5,376 40,632 
Other current assets819 20,117 
Property and equipment, net8,288 15,363 
Other non-current assets, net1,496 25,820 
Accounts payable(7,188)(45,460)
Contract liabilities(4,979)(53,555)
Current portion of long-term lease obligations(228)(3,860)
Other current and non-current liabilities(3,611)(47,673)
Total net tangible assets27,121 24,933 
Identifiable intangible assets120,700 227,800 
Goodwill30,311 308,856 
Total fair value of net assets acquired$178,132 $561,589 
The purchase price allocation for the CEC Acquisition was finalized during the third quarter of 2026. The purchase price allocation for the Stone Ridge Acquisition is preliminary. Amounts provisionally assigned to working capital, identifiable intangible assets, and certain other assets and liabilities are subject to change as we complete our valuation procedures. We expect to finalize the allocation as soon as practicable within the measurement period, which will not exceed one year from the acquisition date. Measurement‑period adjustments, if any, will be recorded in the period they are identified and may affect the amounts recognized for assets acquired, liabilities assumed, goodwill, and the intangible amortization in our results of operations.
Identifiable Intangible Assets—Intangible assets identified as part of the Stone Ridge Acquisition are reflected in the table below and are recorded at their estimated fair values, as determined by the Company’s management, based on available information which includes a preliminary valuation from external experts. The estimated useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows.
(In thousands, except life data)Weighted Average Life (Years)June 1, 2026
Fair Value
Customer relationships (1)
25$110,000 
Trade names (2)
2510,700 
Total$120,700 
(1) The customer relationships intangible asset was valued using the multi‑period excess earnings method (“MPEEM”), an income‑based approach. This method estimates the present value of the future cash flows attributable to existing customers with consideration given to estimated customer attrition rates. Significant assumptions used in the valuation included projected revenues, operating margins, a customer attrition rate of 5%, and a discount rate reflecting the risk inherent in the projected cash flows of 22%.
(2) The trade names intangible asset was valued using the relief‑from‑royalty method. Significant assumptions used in the valuation included projected revenues, an estimated royalty rate of 1%, and a discount rate of 22%.
Intangible assets identified as part of the CEC Acquisition are reflected in the table below and are recorded at their estimated fair values, as determined by the Company’s management, based on available information which includes a valuation from external experts. The estimated useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows.
(In thousands, except life data)Weighted Average Life (Years)September 1, 2025
Fair Value
Customer relationships (1)
25$156,300 
Trade names (2)
2571,500 
Total$227,800 
(1) The customer relationships intangible asset was valued using the MPEEM, an income‑based approach. This method estimates the present value of the future cash flows attributable to existing customers with consideration given to estimated customer attrition rates. Significant assumptions used in the valuation included projected revenues, operating margins, a customer attrition rate of 10%, and a discount rate reflecting the risk inherent in the projected cash flows of 13.5%.
(2) The trade names intangible asset was valued using the relief‑from‑royalty method. Significant assumptions used in the valuation included projected revenues, an estimated royalty rate of 1.5%, and a discount rate of 12.5%.
Supplemental Pro Forma Information (Unaudited)—The following unaudited pro forma combined financial information (“the pro forma financial information”) gives effect to the Stone Ridge and CEC Acquisitions and related events as if they occurred at the beginning of the earliest applicable comparative period and primarily includes adjustments to (1) include additional intangible asset amortization associated with the acquisitions, (2) include tax and interest impacts, (3) include the pro forma results of Stone Ridge and CEC for the three and nine months ended September 30, 2025, and (4) include the pro forma results of Stone Ridge for the nine months ended September 30, 2026. This pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on the dates indicated. Further, the pro forma financial information does not purport to project the future operating results of the combined company following the acquisitions.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2026202520262025
Pro forma revenue$1,563,927 $804,368 $3,625,913 $2,116,557 
Pro forma net income attributable to Sterling common stockholders$214,933 $90,766 $480,052 $208,691 
From the acquisition date of June 1, 2026 through September 30, 2026, the revenue and net income associated with the Stone Ridge Acquisition did not have a material impact on our results of operations.