Thank you for joining us today. I'm Joe Cutillo, CEO of Sterling Infrastructure. This afternoon, we're gonna give you a real fast, high-level look at the company, the transformation we've gone through over the last several years, where we are today, some of the results we've been generating, and what this builds for a platform for future growth for us. We started this journey at the end of 2015, beginning of 2016, to take the company from a business that was 95% low bid, heavy highway, to an infrastructure service provider with a broad base of customers and offerings across the US.
We started with three basic elements to our strategy, which were around solidifying our base, which is the continuous improvement in driving margin, growing our high-margin products and services, and then expansion into adjacent spaces and adjacent markets. Our entire focus along this journey, and as we go forward, is bottom-line growth focused. We don't talk about revenue a lot. We don't focus on revenue, and as a result, we've been able to grow our revenue at compounded annual growth rates around 15%. But more importantly, the strategy has delivered bottom-line growth of compounded annual growth rates of around 60%. So if we look at the transformation and some of the major steps that have taken place, in 2015, this company was actually losing money.
We put a plan in place to refocus on areas that were making higher margins. Put a lot of processes, procedures, and things in place to conduct what we consider our first line of defense, which is risk management on selecting the right projects and going after the right markets. In 2017, we expanded beyond our highway business into a business called Tealstone, which does residential slabs in Dallas. Along the journey back into our highway business, we began focusing that business on aviation and rail. One of the things that we found during our analysis of the business early on is that aviation project made roughly one and a half times as much money as a highway project, and a rail project made almost three times as much as a highway project.
So we started to reassess and reallocate those resources to focus on higher-margin areas, and better returns for the company. We continued that through 2019, brought in Tealstone, and then did our first acquisition in our E-Infrastructure space called Plateau. Plateau does site development for data centers, e-commerce distribution centers, and manufacturing-type facilities. In 2021, we added to that portfolio by buying an acquisition up in the Northeast called Petillo. Petillo is a sister company to Plateau, where we run union through the Northeast and non-union through the Southeast. And then that builds out our portfolio of three segments that we have today. If you wanna go to the next slide. We have three segments that is built out: E-Infrastructure, which is, again, our site development, Transportation Solutions, and Building Solutions is our focus.
E-Infrastructure, again, what we do is we help our customers do site selection. As you can imagine, if you're building an Amazon distribution center, as an example, Amazon knows how many shelves, how many bolts, how many robots, how many baskets are in a distribution center. It's very easy to predict, build, and do that. The one thing they don't know about a project is what it costs and how long it's gonna take to develop the site. So we will work with them upfront on their site selection. They'll come to us with multiple locations. We'll help them understand what it's gonna cost, how long it's gonna take, so that they make the best choice. We also give them the estimate on pricing. That pricing then gets turned over to a general contractor, and we ultimately work for the general contractor to complete that.
That business is focused primarily data centers, again, e-commerce distribution centers, and we've recently had the new emergence of onshoring or reshoring in the manufacturing space, which has been a tremendous tailwind for us coming into 2023. We see that over the next 3-5 years as a continuing growth area of opportunity with electric vehicle plants, electric batteries. We're doing some solar, and we're working diligently to get involved in some of the CHIPS Act as we go forward. The performance of this business has been extremely strong. It's our highest growth, highest margin business. We've seen organic growth rates, strong double digits. We saw a slight dip in margins during the COVID pandemic. This was driven by supply chain.
Not only the rapid-fire inflation that we saw, but related to just, material availabilities and efficiencies, that we lost as a result of having to go back to projects after they were complete, to install or put in utilities because pipes and materials were not available. We think this business will continue to improve slightly on margins as we go forward, and will remain our highest margin, highest gross growth area over the next 3-5 years. Transportation Solutions, this is where the business started. Again, in 2015, we were 95% low bid, heavy highway. We've transformed that business to focus on alternative delivery for transportation, which is more design build, where we control our destiny, and we're involved in the process from the beginning.
Along with expanding our aviation presence, rail, and then we have some specialty products like piling and shoring. The margins on this business have grown significantly. We focus 100% on margin growth here. We don't care about revenue growth, though the revenue growth has continued to work very nicely. This business is really a cash cow for us. We work 100% off customers' money. We use this to generate cash to invest in our higher growth, higher margin product lines or segments, being the E-Infrastructure and Building Solutions. As we look forward, the IIJA infrastructure bill has helped us tremendously and will continue to be strong for the next 3-5 years. Building Solutions, again, we started with a slab business in Dallas.
Our biggest customers in this area are the big three builders: Pulte, Lennar, and Horton. They have asked us to expand with them across the country, in various other end markets. We've expanded in Houston and Phoenix. We're now in the number 1, number 2, number 3 markets. Still have very low market share in Houston and Phoenix with the recent expansions, and we see the opportunity to double that business just with those two markets alone. In the future, we will look for not only other geographic expansion opportunities, but we're also looking at adding other capabilities into the portfolio. Our customers have asked us to look at things such as electrical, plumbing, or framing. So we will look at those as tuck-in acquisitions. Financial overview. Ron?
Sure. Got my phone on? All right. So, let me talk a little bit about the second quarter. It's a great story because every one of those boxes is a high point for our company. So we had a very strong second quarter, better than our expectations, and as we look for the balance of the year, also expect third and fourth quarter to be very strong also. So we took our guidance up a fair amount at the end of this first quarter. So revenues were up 13%. We had acquired a business, a residential slab business in Arizona at the end of last year, so we got about $11 million of revenue in there. The rest of it is organic growth.
With operating income up $60.3 million, essentially, that was each of our business units performing better than we had anticipated. And ultimately, net income up 40%. And really, to Joe's credit, you can see that this is not an unusual trend for us to have somewhere between 10%-15% organic growth on an overall basis, and continue to have net income growth of, you know, in the 30s and 40% growth, all from that focus of do more of the things that we make the most money on. It's a pretty simple strategy, so we're really focused on the margins. And whether it's a type of business, we don't think the returns are right, we just stop doing it.
We sold a business that was frankly, we tried to sell for a while, and that actually helped us instead of hurt us, and we got some some cash out of it. So we're gonna continue to focus on that. Gross margins all-time high of 17.7% in the quarter. Each of our businesses chipped into that increase. And one item that is still I scratch my head over, it's just a fabulous cash flow quarter, $181 million of cash flow from operations in the in the first quarter, and then ended the quarter with $280 million, $278 million of of cash and cash equivalents, and a backlog of $1.74 billion.
You know, I'm an old dog, I call it backlog. It's the same thing as an RPO, it's just a GAAP term. But we had the $1.4 billion is a high watermark for us. It as you can see, the largest growth was in the E-Infrastructure side. A very nice project from Hyundai SK for a electric battery plant in Georgia. That is off and running. It's gonna go about two years, but a fabulous project. 600 acres, by far the largest project we've done, and if you ever need to go see some yellow iron, you can go see $100 million worth out in the yard, in that yard next to you go by there.
The transportation solutions, that's really our highway business, and highway and bridges. Up slightly during the quarter, that's a new higher watermark. The more important interesting part is, we have something we call unsigned contracts. It basically means we've won the job. We haven't either got the final terms inked, or in some cases, we're still working on the design. So that doesn't go in backlog, but we had $650 million of unsigned work that will come into backlog in the back half of this year. So, that is the largest that's been by threefold, probably on average. So just a great setup for 2024 and into 2025.
With the work of that Hyundai plant, a couple other large ones on the E-Infrastructure side, we now have visibility out into most of 2025, or 2024, sorry, for the E-Infrastructure side. So we're really zeroing in on the back part of 2025 or 2024, and then in 2025 as we start doing our planning and make sure we can keep this train going down the right path and continue the returns increasing. And my free cash flow, I call it my cash flow because it's sort of my job.
But, as you can see, the huge step up over the years, 2019 was the end of the year, fourth quarter of October of 2019 is when we bought Plateau, and then we bought Petillo at the beginning of 2022. So, cash flow from operations is $181 million, and net CapEx is about $30 million. We expect it to be about $60 million for the full year. Probably 90% of that cash or that net CapEx is for our E-Infrastructure business.
We have a process by which we own probably about two-thirds of what we need, and then, because it's more economical or because it's a specialty piece of equipment that we don't use again, we'll rent from the corner rental place or short-term leases. So our typical run rate is in that call it $60-$68 million-ish of CapEx. Balance sheet is strong. You know, we... When we bought Plateau, well, when I joined the company, the company was broke, to say it nicely. So, we went from I affectionately called our pawnshop lenders to a great lender to help us do the residential business acquisition in 2017.
But then when we had the opportunity to buy for our first E-Infrastructure business, the Plateau business, about $400 million, we became more of a traditional bank with a term loan and a revolver. We leveraged up about 4x EBITDA. We were pretty confident in the cash flow generation of that business and in our recently repaired other businesses. When we did that, we told our investors not to worry, we're gonna get that down to 2.5x. That's our focus, 2.5x EBITDA, and committed to do that in 6 quarters. We did it in a little over 4, and have been working that down as we go.
Ended the second quarter at one point in time 1.4 times turn times EBITDA, and we're sitting on $267 million of cash as we speak. And as you might guess, we look at a lot of transactions. We're very picky. But our best return for shareholders has been picking the right acquisition for the right reasons and having the ability to grow our gross margin over a longer period of time from 17%-20%. And gonna hopefully do that by organic work, and then pick up a couple of either tuck-ins or a more significant transaction. Thank you. Joe, you wanna take the phone?
Sure. Thanks. As we as we look forward, I think, taking a second and looking at where we are, we sit here today with the best portfolio of products and services we've ever had. We've got tailwinds in every one of our segments, we've got record backlog, record margins, continued growth. The beauty of this business is we've come from just around $3 a share when we started to we're just shy of $80 a share today. But more importantly, we feel like we're just at the beginning of the journey. We've built a platform of which now we can really grow off of, we can really add to, and we're looking for that fourth leg or that fourth segment in another area, whether that's around the grid, or renewables, or something else along those lines.
We're in the best position we've been today. As Ron said earlier, it's not often to be in the middle of the year of 2023, and our focus right now is on 2025. Generally, businesses like us, we're looking at the next quarter, the next half, and maybe the next year. And so I would tell you that we're positioned as good as we can be right now as we move forward. Capital allocation, we've got strong cash, as Ron mentioned. We're looking to continue to add tuck-in acquisitions to our portfolio and to strengthen those segments and provide more offerings, and again, looking at that fourth leg as we move forward. So is... Yep, got me confused there.
Guidance for the year, I won't read you the numbers. What I'll tell you is we raised guidance at the end of the last quarter. And we raised guidance really outside the full range that we had. That's how strong the year has been, and the bookings have been, and the backlog. So as we go forward, markets are strong, segments are strong, opportunities for us to add to those are very strong. We sit here today in the best position we've been in, and we feel very good about 2023 and 2024 and are looking at 2025. I'll leave it open for questions. Yes?
Can you repeat that whole compensation package?
We are paid on EPS and EBITDA. So 80% of our compensation is on financial performance, 20% of our is on strategic. So we'll have two elements of that. One is safety, so that's a big part... Just as a perspective, our safety record is about 10 times better than our industry average. We benchmark ourselves against oil and gas, not regular infrastructure, and we're right on par with the best there. And then we pick a strategic metric every year that we think is critical for us to accomplish throughout that year, that presents ourselves for longer term growth, okay? And then on our actual payouts, we have a cash bonus piece, but we also have a large piece that's on three-year consecutive growth targets.
You mentioned renewables as an area of interest. Renewables?
Yes.
Expand a little where renewables-
Yeah, we haven't found—I, I'll tell you, it's, it's an area we're looking at. We haven't found the right entry point. The grid is something we're really interested at, we haven't found the right entry point, and we're extremely picky on acquisitions. We want it to be accretive day one. Our goal is to get the gross margin up over 20%, so it's got to be above that, all right? Which is getting harder and harder to find with some of the bigger deals. And cash flow is important to us, and everything we've looked at doesn't meet the margin and cash flow profiles we want. So though, those businesses seem to get a better multiple in the marketplace, we don't understand why exactly.
There's something to it we need to figure out. They don't fit our, our profile today. So we'll keep looking. There'll be an entry point or a right way to do it, we just... We haven't found it yet. Yes, sir?
Can you talk through maybe the bottlenecks in terms of increasing capacity or the infrastructure business, and that sounds sold out at the moment for next year? So what organic steps do you take to really improve capacity?
Yeah, we'll, I mean, we'll keep selling. Don't, don't get me wrong. We, the right jobs come along, we'll figure it out. It's changed in the last 6 months. You know, for a while there, equipment was a huge constraint for us. Knock on wood, we've, we've been very fortunate. We have not had labor issues in that segment. We can get as many operators as we need. Equipment was the issue. Our bigger issue is, what drives our capacity limitation is size and mix of jobs as much as anything. So if I do $5-$10 million jobs, I need 5 project teams to do that. If I do 1 $150 million job, I can do 5 $50 million jobs with the same assets, okay?
That's really why we focus more and more on going after those larger scale, larger sized projects. The manufacturing stuff and the data centers are getting bigger, from our project perspective, so that all helps us, gain incremental capacity without any capital, or, or incremental people.