Centuri Holdings, Inc. Q4 FY2025 earnings call

• 2025 delivered $3.0 billion of revenue, a record, with adjusted net income of $39 million, a 49% increase over prior year. Base revenue increased 18% and base gross profit increased 35%. • Set a goal to achieve 1.1x book-to-bill ratio in 2025 but exceeded it with a 1.5x book-to-bill, bookings surpassed $4.5 billion. • Renewal success and consistent win rates support growth. Through February 2026, booked ~$1.1 billion. • Backlog at year-end was ~$5.9 billion, an increase of $2.2 billion from last year. • Initiatives for margin improvement: addressing gas business seasonality, improving fleet efficiency, driving crew efficiency in nonunion electric segment, and expecting average weighted bid margin to expand. • Milestones in 2025: fully separated from former parent, acquired Connect Atlantic Utility Services, reduced leverage with net debt to adjusted EBITDA of 2.5x.

In 2025, U.S. Gas revenue was $1.3 billion, up 5% from 2024, with a gross profit margin of 5.4%. Canadian operations revenue was $247 million, up 25% from 2024, with a gross profit margin of 18.6%. Union Electric base revenue was $800 million, up 21% year over year, with a base gross profit margin of 8.7%. Nonunion electric segment had base revenue of $569 million, up 51% over 2024, with a base gross profit margin of 8.5%.

• 2026 base revenue expected to be $3.15 billion to $3.45 billion and base gross profit $255 million to $285 million. • Revenue, adjusted EBITDA, and adjusted net income include storm restoration services with a three-year average of $88 million in revenue and $28 million in gross profit. Expected revenue $3.24 billion to $3.54 billion, adjusted EBITDA $280 million to $310 million, adjusted net income $55 million to $75 million. • Net CapEx expected to be between $75 million and $90 million.

Q: How much of the January storm revenue was already realized?

A: The storm impact thus far this year has been pretty minor, largely in line with last year.

Q: On guidance, how does gross margin look when excluding storms?

A: Gross profit margin would be largely in line with this year, up a little bit on an annualized basis.

Q: On seasonality of gas segment margin, what is the expectation?

A: Striving to be predictable and consistent, seeing positive signs in January, with plans to make a big dent in the three-year seasonality program.

Q: On data center win rates and pipeline status?

A: Win rates have improved, focus on targeted data center customers, with near-term pipeline of about $1.5 billion to $1.6 billion in awards.

Q: Key changes implemented in 2025 to drive growth?

A: Effective sales pipeline, business cadence, and capital efficiency initiatives.

Q: How is the organization sized for 2026 base revenue?

A: Not sized to capacity, constantly seeking to add capacity, especially on the people side.

Q: On free cash flow and working capital?

A: Focus on reducing DSO, bill quicker, and get collected quicker, with target of 50% free cash flow conversion of adjusted EBITDA.

Q: On data center fiber project and communications growth?

A: Fiber is complementary to existing work, not building out a telecom business.

Q: On bid work awards revenue-burn phasing?

A: Profile expected to be similar to last year.

Q: On reducing Q1 seasonality in gas business?

A: Desire to get rid of seasonality and deliver 7%+ gross profit each quarter.

Q: On M&A and tuck-ins?

A: Focus on Midwest and electrical transmission/distribution for possible tuck-in acquisitions.

Q: On data center pipeline timing?

A: First share of bookings from $1.3 billion expected in first six months of 2026.

Q: On storm revenues and capacity?

A: Increase in nonunion business gives more upside potential for storm revenues if there is a weather event.