Centuri Holdings, Inc. Q1 FY2026 earnings call

Key Messages - First quarter delivered exceptional results with significant y-o-y growth in revenue, base revenue, gross profit, etc. - Segments showed varying growth and margin changes. - Bookings in first quarter $1.3 billion with 1.8 times book-to-bill ratio; awards included MSA renewals, new/growth MSAs, bid work. - Momentum continued into April with pending bids. - Strategy focused on protecting and deepening core, pursuing growth portfolio initiatives, and sustainably scaling enterprise. - Talent, fleet, and sales pipeline initiatives underway.

U.S. gas revenue was $284 million, up 44% y-o-y; gross loss $6 million, 57% improvement from last year. Canadian operations revenue $60 million, up 51% y-o-y; gross profit margin slightly down to 15% due to inclusion of Connect. Uni Electric base revenue $199 million, up 14% y-o-y; base gross profit margin 8.7%, up 200 basis points. Non-union electric base revenue $151 million, up 25% y-o-y; base gross profit margin 6.3% due to activity ramp, resource allocations, and seasonal impacts, but back to normal by end of March. Revenue contribution: U.S. gas ~39.3%, Canadian operations ~8.3%, Uni Electric ~27.5%, Non-union electric ~20.9%.

Forward-looking Statements - Reiterated full year 2026 guidance: base revenue 3.15 - 3.45 billion, base gross profit 255 - 285 billion; revenue $3.24 - 3.54 billion, adjusted EBITDA $280 - 310 billion, adjusted net income $55 - 75 million, net cap tax $75 - 90 million. - Expect base revenue CAGR 10 - 15% through 2029, adjusted EBITDA CAGR 9 - 17%, adjusted EPS CAGR 30 - 45% through 2029. - Forecast net debt to adjust EBITDA around two times by year end 2026 and below two times thereafter with no equity issuances assumed.

Risks - Uncertainties surrounding impacts of future economic conditions and regulatory approvals. - Seasonal impacts on business, e.g., Winter Storm Fern affected work. - Risk of not achieving growth targets or margin improvements as planned. - Potential challenges in executing on strategic initiatives and integrating acquisitions.

Q: Short-term revenue growth outlook for Q2, especially gas and electric after Q1 strength?

A: Conservatism in guidance; first quarter beat internal budget, end markets supporting, bookings strong with book-to-bill expected 1.1 - 1.2, confidence in rest of year with margin improvements. ### Q: Why 10 - 15% base revenue growth forecast not showing greater operating leverage?

A: Strategy development involved change to unify organization, numbers well backed by facts, alignment, and data; conservatism in plan but aiming to achieve targets. ### Q: Market perception of stock down 15% despite strong quarter?

A: Some may neglect seasonal impact; operating quarter met internal expectations, every operating business beat budget. ### Q: Completeness of data center related orders?

A: Close to 300 million of data center work in negotiation, expected in next quarter. ### Q: Inclusion of M&A in 10 - 15% base revenue growth forecast?

A: Organic growth ~12%, M&A component ~3%, self-sustaining plan with funding for organic growth, token acquisitions, and debt reduction. ### Q: Book-to-bill ratio of 1.1 - 1.2 for year despite Q1 1.8?

A: Some conservatism, timing of awards, focusing on margin improvement for 2026 and building backlog for 2027. ### Q: Pipeline dynamics and mix shift?

A: Pipeline at $13 billion, focused on quality, not quantity; mix of gas and electric consistent with market opportunity growth. ### Q: M&A size in 2029 outlook?

A: M&A funded without equity offering, line of sight on some, within range of Connect, less than ~100 million revenue. ### Q: Margins in non-union electric in Q1 and storm work margin?

A: Margins in non-union electric affected by MSA ramp early in quarter but expected to improve; storm work margin varies due to factors like timing and location of work. ### Q: Use of cash for free cash flow and bid work project sizes?

A: Use of cash due to timing and working capital changes; bid work projects average size upticking slightly, MSA work average size in range. ### Q: Adjusted EBITDA CAGR vs gross profit CAGR and visibility into 2027?

A: Leasing impact causes headwind on adjusted EBITDA; visibility into 2027 positive with trends showing more coverage backlog than previous year.