Centuri Holdings, Inc. (CTRI) Earnings

Management highlights

- Overall Financial Performance * Delivered a new quarterly revenue record of $962 million for Q2 2026, a 33% increase from Q2 2025. Adjusted net income was $24.4 million, up 44% year-over-year. * Base results (excluding storm work and a one-time pre-IPO receivable write-off) showed 36% higher base revenue and 21% higher base gross profit versus Q2 2025; year-to-date 2026 base revenue is 33% higher and base gross profit is 35% higher than 2025. - Acquisition Update * Completed the acquisition of J.J. White, a leading union industrial, mechanical and electrical services provider with ~1,000 employees, for $62 million in cash funded from existing balance sheet liquidity. * J.J. White will be integrated into the Riggs Distler business, adding scale and construction expertise for data center and electric end markets across the Northeast and Midwest; expected to add over $20 million in annualized gross profit on a full-year basis. Leverage targets remain unchanged at 2x net debt to adjusted EBITDA by year end. - Bookings, Backlog and Opportunity Pipeline * Q2 2026 bookings were nearly $850 million, bringing year-to-date bookings to over $2.2 billion. Year-to-date book-to-build ratio is 1.3x, with a full-year 2026 organic target of 1.2x book-to-bill (~$4.4 billion total bookings). * Secured a $125 million award for electrical infrastructure on a multi-building data center campus; total data center opportunity pipeline now stands at ~$2 billion at quarter end. Other notable awards include a transmission and substation project in Atlantic Canada and a large high voltage transmission project in the U.S. Northeast. * MSA bookings included $250 million in renewals and $200 million in new and expanded MSAs, with continued strong demand for core MSA work. * Ending backlog is ~$6.4 billion, up 21% year-over-year. Total opportunity pipeline increased 23% quarter-over-quarter to ~$16 billion, with $2.5 billion in outstanding pending bids (up 15% QoQ, 67% from the electrical segment). Bid margins are up more than 10% year-over-year, aligned with long-term targets. * 2027 revenue coverage is on track to hit >$3.6 billion by end of 2026, a 20% organic increase from the start of the year, providing strong visibility for future growth. - Workforce and Investment * Organically added ~1,700 employees in the first half of 2026, including over 1,200 in the U.S. gas business (a 25% headcount increase) to mitigate seasonality and support demand. This mid-term capacity investment reduced Q2 gross profit by ~$3 million, but is expected to drive margin expansion from Q3 2026 onward. U.S. gas gross margin is forecast to hit 7.5% in H2 2026.

Guidance

- Full-year 2026 guidance has been increased to include contributions from the J.J. White acquisition, and incorporates ~$5 million in forecast incremental fuel expenses assuming elevated prices persist through Q3. * Base revenue guidance (excluding storm work and the one-time Chicago receivable write-off): $3.5 billion to $3.7 billion, up from prior guidance. * Base gross profit guidance: $270 million to $290 million. * GAAP revenue guidance (including a 3-year average storm impact of $88 million): $3.59 billion to $3.79 billion. * Adjusted EBITDA guidance: $285 million to $310 billion, adjusted net income guidance: $60 million to $75 million. - Full-year 2026 free cash flow is now expected to exceed $75 million, a 25% improvement over initial expectations. Net capex guidance has been reduced to $60 million to $75 million following an early Q3 equipment sale and leaseback. - Management continues to forecast net debt to adjusted EBITDA of ~2x by the end of 2026. - Management confirmed full-year base gross profit margin is expected to land in the 7.8% to 8% range, with total base gross margin of ~9% for H2 2026, and U.S. gas gross margin of 7.5% for H2 2026. The 2029 9% base gross profit margin target remains on track per the Vision One Century strategy.

Segment performance

1. U.S. Gas: Second quarter 2026 revenue was $489.5 million, a 45% increase year-over-year. Revenue contributes ~51% of total consolidated quarterly revenue. Gross profit margin was 4.2% in the quarter, down from 7.8% in Q2 2025. Year-to-date base gross profit has more than doubled year-over-year, and base gross profit margin improved 36% compared to the same period in 2025. 2. Canadian Operations: Second quarter 2026 revenue was $81.4 million, up nearly 48% year-over-year (driven by the inclusion of Kinect). Revenue contributes ~8.5% of total consolidated quarterly revenue. Gross profit margin was 16% in the quarter, indicating strong operational performance. 3. Union Electric: Second quarter 2026 revenue was $224.2 million, a 23% increase year-over-year, fueled by robust activity in industrial end-user segments. Revenue contributes ~23.3% of total consolidated quarterly revenue. Gross profit margin was 9%, up from 8.4% in Q2 2025. 4. Non-union Electric: Second quarter 2026 revenue was $166.9 million, an 11% increase year-over-year. Base revenue was $157.1 million, a 15% increase year-over-year driven by expanded MSA activity. Revenue contributes ~17.3% of total consolidated quarterly revenue. Reported gross profit margin was 9.1%, down from 11% in Q2 2025, while base gross profit margin was 8.4%, down from 8.9% year-over-year.

Risks & headwinds

- Forward-looking statements are subject to risks and uncertainties, including uncertain impacts of future economic conditions and required regulatory approvals, which could cause actual results to differ materially from projections. - Elevated fuel prices driven by the ongoing Middle East conflict created a $6 million negative cost impact in Q2 2026, representing a 60 basis point headwind to base gross profit; a total $12 million full-year 2026 fuel headwind is now incorporated into guidance. - The business experiences meaningful seasonality that creates non-linear quarterly results, creating near-term margin volatility as capacity investments are ramped up ahead of future revenue growth.

Analyst Q&A

• Q: What are the key goals and expected synergies from the J.J. White acquisition?

  A: Management had a long-standing relationship with J.J. White, so cultural and operational fit was already well established. The primary goals are adding scale and capacity to deliver growth in the Northeast and Midwest, particularly for data center and energy end markets. J.J. White's 1,000-person workforce is expected to easily scale to 2,000 employees, adding much-needed capacity. No cost synergies are expected; all synergies will come from combining capabilities to win more work for existing customers via shared talent and supply chain resources.

• Q: Why is the upward revenue guidance revision not matched by a proportional increase in EBITDA guidance, and what is the outlook for H2 2026 margins?

  A: Approximately two-thirds of the guidance increase comes from organic growth, with one-third from five months of J.J. White contribution in H2. J.J. White has very low depreciation due to its capital-light model, leading to a lower EBITDA contribution relative to gross profit. Guidance also incorporates the $12 million full-year fuel headwind. Management is highly confident in the 9% H2 base gross margin forecast, as nearly all 2026 revenue is already under contract. Capacity added in Q2 U.S. gas is fully mobilized, and the investments will widen margins in H2 after the near-term Q2 drag. Excluding one-time items, underlying trailing twelve-month base margins are already up 40 basis points year-over-year, showing clear positive momentum.

• Q: What is the mix trend for bid work versus MSA work, and how are bid margins trending?

  A: The long-term strategy is shifting the mix from 80% MSA / 20% bid work to 65% MSA / 35% bid work. Since the end of 2025, total bid work in the opportunity pipeline has increased ~47%, which is fully aligned with the stated strategic goal. The average size of bid opportunities has only increased by ~$2 million, so the company is not shifting to much larger projects, just growing the overall volume of higher-margin bid work. Bid work margins are currently 110 to 150 basis points higher than MSA work, in line with expectations.

• Q: Is geographic and transmission expansion expected to happen organically or via acquisition?

  A: Electric transmission expansion is primarily being driven organically right now: the transmission opportunity pipeline has doubled since December 2025, and the company already secured two major transmission awards in Q2. Management remains open to small to mid-sized acquisitions that complement the electrical and transmission business, similar to the prior Kinect and J.J. White acquisitions, if targets are available at the right price.