Great. Good morning. I am Louie Di Palma. I cover Smart City Technologies on William Blair's Equity Research Team. This is day one of the 45th Annual William Blair Growth Stock Conference. We're pleased to be hosting a 30-minute presentation with Sterling Infrastructure's management team for the third consecutive year. When we hosted Sterling back in 2023, the stock price was in the 40s. Now here we are, and it's a standing room-only crowd. Joining me today are CEO Joe Cutillo, Interim Principal Financial Officer Ron Ballschmiede, and VP of Investor Relations and Corporate Strategy in the front row, Noelle Dilts. Following the presentation, there will be a breakout session in the Burnham A Room.
I am required to inform the standing room audience and those on the webcast that for a complete list of disclosures and potential conflicts of interest, you can go to the William Blair website. Joe, please take it away. Thank you.
Thanks, Louie. I appreciate everybody coming. This is a nice crowd. Good way to start the day off for us. Let's see if I can figure out how to advance this thing. There we go. Great. Thanks. Before I get started, I want to give just a little bit of background on Sterling Infrastructure and who we are, but more importantly, some of the key takeaways I think you should walk away with today.
I'm not going to read through these for you, but I think a couple of things that will be important to understand is the platform that we've built over the last five years, not only the results that it's been able to deliver, but the results that it will continue to deliver over the next five-plus years as we go forward, and the fact that we have a balance sheet today that is stronger than ever with a company that throws off better profits than any of our competition in higher cash flow. Today, as we sit, we're just under $6 billion market cap, about $2 billion of revenue.
The more important things are even a margin sort of over 15%, and we throw off a ton of cash, over $300 million a year of cash right now, which not only enables us to be strong in our current position, but makes significant investments and acquisitions to broaden this platform as we go forward. We have three fundamental elements of our strategy that have never changed since 2015, and I'll talk about our transformation and where we are today a little bit later. The first is really simple. It's solidify the base. That's continuing to drive up margins, improve productivity, and reduce the risk of our contract types and job execution.
The second one, I've never been the smartest person in the room, but I do know that if I do more work that makes more money and less work that makes less money, ultimately we make more money and we have less risk. We focus on our highest margin products and services, how we continue to expand those and grow those with our customer base. The third element is how do we take those highest margin goods and services and take them to adjacent markets or new markets or add other goods and services that our customers are requesting that ultimately make us stronger within that market and drive profitability higher. As you can see, we started the transformation at the end of 2015. Both Ron and I joined, I think, within one week or two weeks of each other.
The company was losing money at the time. It was in serious trouble. First thing we had to do is a turnaround. We did a turnaround. You can see the first three or four years there was the turnaround efforts. We began building the platform that we have today. The importance of that platform is not only were we able to grow 18% on an annual basis over that time period, but we're really at the beginning of what we can do with this platform and what our future growth will be. More importantly, we have a philosophical view that our bottom line should grow at a faster rate than our top line. Sometimes people get upset because I say I really do not care about revenue. I care about profitability and cash flow.
This is an example of our top line was growing at 18% compounded annual growth rate. Our bottom line has been growing at 38%. When we focus on our assets, our asset allocations, our markets, our end customers, or strategically anything we do, we're looking at how do we drive up more margin, better cash flow, and get better returns. We're very happy to drop businesses, drop customers, drop whatever we've done. What's interesting in the 18% compounded annual growth rate that you don't see is we actually took a couple of our businesses and shrank them over $400 million during that time frame. Now, in 2015, we're about $500 million. We shrank almost the entire business to zero and still were able to deliver 18% compounded annual growth rates.
As we look forward, we've got the best backlog we've had in our history and the best quality backlog, over $2 billion of backlog today, the highest margins in backlog that we have ever had. What's even more important is on top of that $2 billion, we have approximately $750 million of future phase work. What that is, is that's jobs that we're on and executing today. That's what it's going to take to finish those jobs or more that doesn't go into backlog until those pieces are released. Theoretically, we have closer to $3 billion of backlog or work in front of us as we go today. Let me talk a little bit about the platform of businesses that we have. We have three segments today. Our largest segment and most profitable segment is our e-infrastructure solutions. That's roughly 45% of our total revenue.
Second is our transportation solutions, which is 30%-35% roughly of the revenue. And the rest falls under our building solutions. Let's start with e-infrastructure solutions. Compounded annual growth rate, pretty nice, 23%. Operating income, pretty good, 28%. But what is it? What does it do? And why do we have those sort of growths and those sort of margins? E-infrastructure solutions today focuses primarily on site development for mission-critical projects, data centers, large manufacturing facilities, e-commerce distribution, anything that is large in scale and very complex. You say, well, isn't this just moving dirt? We like to say we're moving mountains. And why is it so critical or why is it different versus some of the other activities?
What you have to understand is if you're a pick one of the big three data center folks out there, they've built 10, 20, 50, 100 of these data centers. Once the ground is level, we start with basically a mountain in a valley, could be a river, whatever, running through this, and we have to make that site flat that they can build the building on. Put basic utilities in, water, sewer, all that kind of stuff, we stop when they start pouring the concrete. From that point on, I can tell you they know how many nuts, bolts, screws, miles of wire, number of shelves, roofing tile, whatever's going on it, because they've built a lot of these. They also know down to the day how long that's going to take because now you're in a controlled environment. The building's closed in. Weather doesn't matter.
It's a matter of executing. The one piece they never know and is different on every single project is the site. No two sites have ever been the same. No two sites will ever be the same. It is critical for us to work upstream. In some cases, we're working three to five years ahead of these projects with these customers on site selection and giving them an understanding of what it will take in terms of time and cost to get the site prepared. I will tell you cost has become the third or fourth decision factor on this stuff. It is about time. This is all about speed. What we're able to do, I tell people we're not an insurance company, but we sell an insurance policy to our customers. We guarantee we are done on time.
As you can imagine, if anybody's ever built a house or done any sort of project, or even less complicated, if you think of your day, I know generally my day is back to back to back calls, meetings, whatever it is through the day. If my first meeting that day is 10 minutes over, I'm an hour over by the end of the day, right? It just keeps compounding as the day goes on. Think of a $3 billion project that's going to take five years to complete. If we're two weeks behind on delivering that pad or that site, that project will be months behind by the end of the project with the snowball effect that happens. As a result, we're the largest in the country.
We're able to provide them a guarantee that that project will be done on time and the certainty of it, which is of high value to them. Okay? Our goal is actually to deliver it early every time, which gives them now cushion in their schedule. I'd like to tell you I can charge double for it. Some days I challenge the team and ask why we can't charge double for it. We get a slight premium, probably about 5% on the front end. But where we make all our money is on the technology and executio,n and productivity through the course of these projects. We just do it fundamentally different than anybody else. As an example, we have at our large sites, we have drones on sites that fly the site multiple times a day.
Not only is a project management team on site watching those, that information's going back to Atlanta, our headquarters for this business. Once a week, the management team reviews the projects. They go over everything. If they see something that's off or something they should be doing different, it goes right back to the project. If there's a challenge with the project, they've got the brain trust of the entire management team to look at that and be able to solve it. That's just one of 100 different things that we do. This business, from a standpoint of backlog, roughly 60% of our backlog in this business is data centers right now. The vast majority of that $750 million of future phase work is around those mega projects, whether they're factories, large factories, or data centers in this segment. Our second segment is our transportation solutions segment.
This is where the company started. When we came in, 95+% of our business was what was called low-bi d, heavy highway work. For any of you that want to go into business, do not go into that one. Okay? It is about the worst thing you can do. Super high risk, super low returns. Working with DOTs, we like private customers more than public customers. When you get a project design, for those of you that worked in any design and it is only 60% complete, and you have to give a hard bid and guarantee that cost on the back end, it is a pretty high-risk proposition. We quickly moved away from that. We are now focused more on aviation.
We found out early on is a runway is the same thing as a highway, except for you make one and a half to two times as much on a runway as you do on a highway. A rail bridge is the same as a highway bridge, except for we make three to five times as much on a rail bridge. The simple fact is this. There's a value proposition tied to those versus a highway. I don't care what state you're from. If your DOT tells you they care about how long it takes to build a road, they're lying to you. They don't care. They care about the lowest cost in most scenarios. A taxiway or a runway in an airport, if it's not done on time, the airport's paying fees back to the airlines or they're paying penalties, right? There's a time value.
With a rail customer, they can tell you what an hour of downtime on that rail bridge is. If we can do rapid bridge replacements with the technology we have where we can replace bridges in 24 hours, that is real money to them versus three months, right? We get a huge premium. We have continued to grow that out as we go forward. The transportation work that we do is alternative delivery work today. We do design-build. We are upfront on the design phase. We design the project for manufacturability. We team up with the best people in the industry that have different skills. The margins are significantly higher. The risk is significantly lower. We grow that business at a much lower rate, a controlled rate. We just focus on continuing to grow margins.
As you can see, we've seen a nice increase, 43% increase in margins in that business as we go forward. It's also our cash cow. We work 100% off customers' money. We use that cash to invest in higher margin, higher growth areas of the company. We've made that into a reasonable business. The last piece, which is our smallest segment, is building solutions. Not a sexy business from a standpoint. Slabs for residential builders. The big three are our biggest customers. Very high volume, entry-level, second-level up homes. What we like about this business, 15-day cash cycles, very good margins, less than $100,000 a year in capital required. All our labor is outsourced. I shouldn't say all. We have one operation that has some internal. The vast majority of our labor is outsourced.
Variability on margins at any given time, whether volume's going up or coming down, is very, very consistent. Today, this is our weakest market. The housing market is down. We're in the top three markets in the U.S., Dallas, Fort Worth, Houston, and Phoenix, all population growth markets. Very low market share in Phoenix and Houston. We're leveraging that market share growth in those to offset some of the downturn as we move forward. Ron, you want to talk about financial? The only thing I'll talk about before we go into that, and as Ron gets into the financials and the cash flow, is today we have negative debt. We're throwing off over $300 million a year. We have had very good success with the acquisitions we have made. We're working very hard on acquisitions focused primarily in the e-infrastructure space.
We're finding some good, I'll call them bargains in the building solution space that it's down. Strategically, when we step back and look at e-infrastructure, our customers keep telling us they would like us to do more of the project, right? The next logical step for us is electrical and mechanical. The reason for that is we're doing all the upfront work for the electrical or mechanical, and there's no reason that we can't lay the electrical or do the mechanical. We did a little experiment. I always believe that customers can tell you stuff, but when you put your money where your mouth is, then I really believe you at the end of the day. We did a little experiment this last year. We bought a small dry utility business down in Georgia, went to our customers, and said, "You've been asking us for this.
We've got it. The good news is they say, "Great. We will triple that business in 2024 or 2025." It is impressive. We think if we can add incremental skills and capabilities around the electrical and mechanical as we go forward, they will quickly get adapted into the next phase of projects with our customers. We will improve the margins in that area and have a very high growth and success rate on the back end. That is what we are really looking at doing with our cash. We also did some stock buybacks through the year. Everybody that had anything to do, I always said I never knew my stock would follow NVIDIA, but we did. Unfortunately, when it went down, we rebounded back. We had a nice opportunity. We bought a bunch of stock back. We will continue to do that at the right time. Thanks, place.
Good morning. Welcome. I think we will get on with some financial numbers. Our first quarter results were across the board sensational. I think as we talked earlier, or as Joe mentioned, the only business that was flattish in the quarter or down slightly in the quarter was our residential business. That was anticipated. One of the things we did during the year or during the first quarter is we acquired about $30 million worth of businesses, all very small, the one Joe mentioned, and then also an additional footprint, if you will, in Dallas to fill out our area there and got a good price on it. It was the right thing to do at the right time. We will be able to kind of get that closer to break even this year as the challenge on affordability continues.
Just to give you an idea on prices, we're seeing sub-fives, multiples in the residential space. This one we bought for a three. Whenever you have the cash flow that these have and the consistency in the customer base, and we can buy them for threes, we think it's a good use of capital. Good point. On the balance of that, revenues were up single digits, but the balance of it to our point of you can't sell your way into making money, but you can continue to increase our returns. Every return we had in the quarter improved. That's not unusual for us. First quarter is our slowest quarter. Certainly everything other than the residential business just had fabulous quarters, both on the revenue side and that for the first quarter, which is typically our slowest. A whole lot of those.
I think, as we mentioned earlier, our EBITDA and cash flow was precious to us. Just at EBITDA in the quarter, over $80 million and cash flow from ops of about $85 million. Now, some of that is obviously timing. However, we would and will. We expect to kind of keep that runway going. Not unusual for us to have a cash flow from operations in the $300 million-$400 million range, certainly $350 million-$400 million this year. As we mentioned earlier, I think the cash that we have in the balance sheet is $438 million, $439 million. We are ready for the first opportunities we have that meet our acquisition thresholds and our strategy. This one I pretty much called. I think the keys are this operating cash flow returns have been fabulous.
If you track these along with the revenue side, you'd see that the return percentages have increased substantially every year for that period of time. Continues to be strong. Sorry. The balance sheet, certainly we're obviously sitting on $664 million of cash. That's at about $300 million of debt. We will continue to look for acquisitions. They have to be accretive. They have to have something special in them that allows us to use our other business units to either help them run a different way or to continue to increase their returns. We would expect to get 2.5 times the runway done on 464. We're very picky on acquisitions. I mean, we looked at over 200 acquisitions last year to make three. We're very picky. We have high expectations. People are critical to us. We buy people. We don't buy businesses.
We also have expectations that we can double those businesses in five years. Capital allocation is pretty straightforward. As we mentioned, our stock program, it's $200 million has been authorized. We're about halfway through that. We take an opportunistic view of that. When the stock came down because of the excitement in the chip world, it's come roaring back. We did take advantage of that and $30-some million was acquired in the first quarter. Obviously, when that goes back up, we'll slow that down because our best returns are the right acquisitions for the right time to continue to grow our business at rates that improve our operating performance. As Joe mentioned, we don't really care about returns. Returns are important to us.
We do a lot of things to say, "Sorry." Two years ag,o when the commercial business was slowing down, our e-infrastructure business said, "We're not making that any money." It was like, "We'll stop doing it." We are going to miss our revenues. We do not care. Go get your money on working something else that our margins are better. That is an institution that we have enjoyed since Joe and I joined 10 years ago. Getting to the full year guidance, I think I would not use the record one, two, three, four. I would use them all. We expect to have revenue of just over $2 billion. That is sort of a same store, but for some of these small tuck-ins that we are doing, those are probably less than $35 million worth or $40 million of revenue incremental in this year.
Our net income will be at a high of $222 million-$239 million. Down the line, our great EBITDA $381 million-$403 million is our guidance number. You can see the other two. Free cash flow, we generally say our free cash flow should be right around our operating income. We will be a little bit better than that this year. The cash will still keep rolling. Frankly, we are out looking for the right transactions. We are picky. We probably look at 30 before we find one. Maybe that is even conservative on it. We think our capital is pretty precious. We wait and get the right deal. It will be accretive if we are doing it at just our philosophy. That is pretty much it from my side. Yeah.
If there's any key takeaways and we've got the session afterwards where we can answer a lot of questions and go into more detail, it's hard to cover everything in 30 minutes or less. Key takeaways is if you believe infrastructure spend is going to continue, if you believe technology is going to continue to spend, if you believe there's any onshoring that's coming back, if you believe there's any sort of build, we're very bullish on the next five. We're very bullish because we work three to five years with our customers on projects that take that long before they break ground. We feel very good on this presentation. We're very bullish because we work three to five years with our customers on projects that take that long before they break ground. We feel very good on the data center world.
We feel very good on the manufacturing world. If you go and focus on margins, you find yourselves in better places that are growing quickly. There are very few commodities that are growing quickly, and they have shitty margins, right? If you keep following margins, you will find the next best market. Those best markets are always high-growth markets, right? That is the culture we have. That is what our guys are out looking for every single day. As soon as you can become complacent with one customer, you are dead. We are always looking to improve that bottom line and that cash flow. That is how we got into data centers. That is how we got into these mission-critical factories. We will see new things come out over the next three to five years.
One of the key things I did not mention as we talk about e-infrastructure is what we call the fungibility of our assets. Today, I do not care if it is a data center. I do not care if it is a manufacturing facility. I do not care if it is an e-commerce distribution center. All the work is the same to me. As we start adding other capabilities, whether that is electrical or mechanical or specialty piping, there is some other stuff. We are looking for those assets that at the end of the day, we do not care if the ship goes from data centers to manufacturing because manufacturing could go to energy, right, at some point in time. We are positioned that none of that matters to us. We just move where the money is and follow that.
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