Sterling's $505M Play: Why This CEC Facilities Group Acquisition Changes the E-Infrastructure Game

Sterling Infrastructure has just sealed a major deal that’s reshaping how the electrical contracting world operates. The company has finalized its agreement to acquire substantially all assets from CEC Facilities Group, a Texas-based powerhouse in mission-critical electrical and mechanical contracting. The headline number? $505 million upfront at closing – comprising $450 million in cash plus $55 million in Sterling common stock, with additional earn-out potential tied to performance through 2029.

The Numbers That Matter

Let’s break down what this acquisition actually brings to the table. CEC is pulling in an estimated $390-$415 million in full-year 2025 revenues, with EBITDA margins hovering around 13% – that’s the kind of profitability that gets investors’ attention. The deal is expected to contribute roughly five months of revenue and earnings to Sterling in 2025, translating to approximately $0.63-$0.70 per fully diluted share in accretive earnings.

Here’s what makes these numbers compelling: CEC has been growing at roughly 20% revenue CAGR over two years, which is aggressive growth in the contracting space. Strong free cash flow conversion plus those double-digit margins put CEC in the top tier of electrical service providers.

Where CEC Actually Makes Its Money

Electrical services account for over 80% of CEC’s revenue, and here’s the critical part – more than 80% of that comes from high-growth, mission-critical markets. Semiconductors dominate as the largest end market, followed by data centers and advanced manufacturing. This concentration isn’t a weakness; it’s a strength, because these sectors aren’t going anywhere.

CEC operates primarily across Texas with service extensions into the Rocky Mountain region, Southwest, and Southeast. That geographic footprint creates immediate cross-selling opportunities with Sterling’s existing operations.

Why Sterling Wanted This Deal

The strategic rationale here is clean: complementarity. Sterling’s E-Infrastructure Solutions segment already dominates site civil infrastructure for manufacturing, data centers, and distribution centers. CEC brings electrical expertise – design, engineering, installation, and maintenance services for complex electrical infrastructure. Together, they touch the entire project lifecycle, from site prep to electrical systems to ongoing maintenance and retrofit work.

That matters because it lets Sterling pitch customers a more comprehensive solution. It also creates opportunities to leverage Sterling’s established data center relationships while tapping CEC’s deep semiconductor market connections. Both customer bases exist in overlapping geographies, creating immediate cross-sell potential.

The Management Side

Ray Waddell, CEC’s founder and chairman, will step into a strategic leadership role overseeing Sterling’s electrical services platform growth. Daniel Williams continues as CEO running day-to-day CEC operations. That continuity signals Sterling isn’t planning a wholesale integration disruption – they’re bringing experienced operators on board who built something valuable.

The Broader Picture

Beyond the immediate financial metrics, Sterling is signaling confidence in mission-critical infrastructure growth. The electrical services space has robust multi-year tailwinds – semiconductor buildout, data center expansion, manufacturing reshoring. CEC represents a platform Sterling can grow organically while also pursuing bolt-on M&A targets within electrical contracting.

The transaction is expected to close in Q3 2025, pending standard regulatory approvals including Hart-Scott-Rodino clearance. Sterling’s board and CEC’s board both unanimously approved the deal, suggesting confidence on both sides.

This acquisition essentially lets Sterling move beyond site development into the specialized systems that make those sites actually function. In an economy increasingly dependent on semiconductor manufacturing and data processing, that’s a logical expansion.