Centuri Q1 2025 Earnings Report

Centuri EPS Results

• Actual EPS: -$0.12
• Consensus EPS: -$0.14
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

Centuri Revenue Results

• Actual Revenue: $550.08 million
• Expected Revenue: $534.41 million
• Beat/Miss: Beat by +$15.68 million
• YoY Revenue Growth: +4.20%

Centuri Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 10:00AM ET

Centuri (NYSE:CTRI) operates as a utility infrastructure services company in North America. It offers gas utility services, including maintenance, repair, installation, and replacement services for natural gas local distribution utility companies with focus on the modernization of infrastructure. The company also provides electric utility services comprising design, maintenance and repair, upgrade, and expansion services for transmission and distribution infrastructure. Its customers include electric, gas, and combination utility companies, as well as serves end markets, such as renewable energy and 5G datacom. The company was founded in 1909 and is headquartered in Phoenix, Arizona. Centuri Holdings, Inc. is a subsidiary of Southwest Gas Holdings, Inc.

Centuri Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 2025, Century delivered revenues of $550.1 M (up 4.2% YoY) and gross profit of $20.3 M (up 53.1%), while reducing GAAP net loss and boosting adjusted EBITDA by 20% to $24.2 M.
• The company achieved record bookings of $1.2 B (2.2× book-to-bill) in Q1, lifted backlog to $4.5 B and built a sales pipeline of ~$12 B, targeting a full-year book-to-bill above 1.1×.
• Century reaffirmed its full-year 2025 guidance of $2.6–2.8 B revenue, $240–275 M adjusted EBITDA and $65–80 M net CapEx, with no material impact expected from tariffs or trade disputes.
• Management completed a unified business development review, rolling out enhanced pipeline tools, aligned KPIs and a growth-oriented culture to drive cross-selling and profitable expansion.
• Operationally, harsh winter weather weighed on U.S. gas work early in Q1 but recovered in March/April, while nonunion electric revenue surged 41.9% driven by resiliency and storm work and union electric grew 7.1% in core bids.

Presentation

[Operator]

Greetings, and welcome to Century's First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Wilcox, Century's Chief Legal and Administrative Officer and Corporate Secretary.

[Operator]

Please, you may begin.

[Jason Wilcock, Executive VP, Chief Legal & Administrative Officer at Centuri Holding]

Thank you, Joelle, and hello, everyone. We appreciate you joining our call. This morning, we issued and posted to Century Holdings website our first quarter twenty twenty five earnings release. The slides accompanying today's call are also available on Century Holdings website. Please note that on today's call, we will address certain factors that may impact this year's earnings and provide some longer term guidance.

[Jason Wilcock, Executive VP, Chief Legal & Administrative Officer at Centuri Holding]

Some of the information that will be discussed today contains forward looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are as of today's date and based on management's assumptions on what the future holds, but are subject to several risks and uncertainties, including uncertainties surrounding the impact of future economic conditions and regulatory approval. A cautionary note as well as a note regarding non GAAP measures is included on Slides two and sixteen of this presentation, today's press release and our filings with the Securities and Exchange Commission, which we encourage you to review. These risks and uncertainties may cause actual results to differ materially from statements made today. We caution against placing undue reliance on any forward looking statements, and we assume no obligation to update any such statement.

[Jason Wilcock, Executive VP, Chief Legal & Administrative Officer at Centuri Holding]

Today's call is also being webcast live and will be available for replay in the Investor Relations section of our website shortly after the completion of this call. On today's call, we have from Century Holdings the following members of the leadership team: Chris Brown, President and Chief Executive Officer Greg Eisenstark, Chief Financial Officer. I'll now turn the call over to Chris.

[Christian Brown, President & CEO at Centuri Holding]

Thank you, Jason, and hello, everybody. We appreciate you joining us for our first quarter twenty twenty five earnings call. Let me start by briefly addressing the delay in the timing of our earnings announcement and the call. We had an issue arise late in the process of finalizing our financial statements for the quarter that caused a delay. This year has now been resolved, and we do not intend to go into any further detail on this topic.

[Christian Brown, President & CEO at Centuri Holding]

We look forward to discussing our Q1 results with you today. During the quarter, we experienced a strong commercial momentum during the period and delivered results that exceeded our expectations. I'm proud of these achievements and look forward to expanding on them during our call. A big thank you to the Century team for their dedication and hard work in driving these outcomes. Before diving into our progress and business update, I'd like to briefly address the macroeconomic uncertainty that's on everybody's mind.

[Christian Brown, President & CEO at Centuri Holding]

We currently do not anticipate significant impacts from the global trade war or the tariffs on our business during 2025. Our business model offers natural resistance during challenging times. Our MSA weighted portfolio focuses on regulatory approved utility programs, which historically are generally insulated from market fluctuations. In addition, we are actively working to expand our sales pipeline to grow our business and diversify our exposure, thereby mitigating further risk. Please also note that in most cases, we do not procure our own materials.

[Christian Brown, President & CEO at Centuri Holding]

I spent a good deal of time throughout the quarter traveling to meet with customers, those whom we already do business with as well as prospective clients. I've been extremely encouraged by these engagements as largely they are confirming their budget commitments and expressing undeterred need for infrastructure, maintenance, upgrade and expansion. Given that our February guidance embedded in appropriate level of caution, our outlook for full year 2025 remains unchanged. Looking ahead, we plan to consistently monitor day to day developments and be ready to adapt to as circumstances evolve. I think we could actually see more activity and not less based on these engagements with customers that have had over the last four months.

[Christian Brown, President & CEO at Centuri Holding]

With that said, let's now review Century's strategic priorities and our progress. On the February call, I emphasized how impressed they are with Century's exceptional scale, reach and capabilities. Combined with our dedicated team, these attributes position us as a leading utility service provider. Our strong platform enables us to deliver critical infrastructure upgrades and maintenance to gas and electric utility and energy partners serving millions across The U. S.

[Christian Brown, President & CEO at Centuri Holding]

And Canada. We believe this foundation also strategically positions us to expand our market presence and capitalize on generational tailwinds created by demand where opportunities abound across our core end markets. Throughout my conversations with the investment community these past few months, I've consistently highlighted our priorities as we work towards achieving our potential as a fully scaled integrated company with a strongly differentiated service offering. Our top focus has been implemented a unified company wide business development strategy focused on high growth pipeline development, refined market positioning, winning business strategies and securing new awards. We must grow with our existing customers, add new customers and continuously pursue new opportunities, all of which require both process enhancement and a fundamental mindset shift.

[Christian Brown, President & CEO at Centuri Holding]

Since the beginning of 2025, we've made significant progress on this front. On our last public call, we shared the kickoff of comprehensive evaluation of our pipeline tool and internal sales and business development process. This review is now largely complete. Initial results and actions have been fully implemented and are already providing tangible benefits and enhancing how we manage the business and make real time decisions. Now institutionalizing our culture, this will remain a dynamic process that requires oversight and ongoing maintenance and is part of our organizational DNA.

[Christian Brown, President & CEO at Centuri Holding]

To support it, have and will remain focused intensely on instilling a proactive growth mindset across the organization. We've aligned our KPIs top to bottom with company wide growth targets and fostered broader thinking and collaboration across the organization. Moving on into the second and third quarters, we plan to take a deeper examination of our end markets long term potential as part of a strategic planning process that will result in development of actionable measurable initiatives to further improve profitable growth and business resilience, taking us into the next three to five years. We will plan to elaborate more on the results of this process in the fourth quarter. Turning to recent business development activity.

[Christian Brown, President & CEO at Centuri Holding]

We are very encouraged by the recent robust growth in our sales pipeline, which is now approaching €12,000,000,000 in revenue opportunities And we remain confident in our ability to achieve a book to bill ratio exceeding 1.1 times this year as laid out in the February call. Importantly, we have been working towards this at an aggressive pace with a strong start to 2025. Specifically, we have achieved a record booking quarter with new bookings totaling $1,200,000,000 in the first quarter. This is a significant increase over the $221,000,000 we booked in 2024 in the fourth quarter. These bookings drove a book to bill ratio of 2.2 times and an increase in backlog to €4,500,000,000 as of Q1 twenty twenty five from the €3,700,000,000 as of year end 2024.

[Christian Brown, President & CEO at Centuri Holding]

We have begun to keep the market appraised of our commercial achievements on a more real time basis, demonstrating our commitment to growth targets and accountability. As such, many of the awards in our bookings number were captured in press releases we issued in late March and April. You can review those for additional color, so I won't delve too deeply into details, but do want to highlight a few key points. Consistent with our history of viewing all of our MSAs, our Q1 bookings represented approximately $700,000,000 of anticipated $2,000,000,000 in revenue from MSAs that we previously flagged up for renewal in 2025. We expect to continually successfully negotiate renewals and extensions of long term contracts through the remainder of this year.

[Christian Brown, President & CEO at Centuri Holding]

Beyond that, we've been laser focused on expanding our customer base through exploration and pursuit of new opportunities within our end markets. This focus resulted in approximately $5.00 $5,000,000 of new MSAs and new bid awards won during the first quarter. These new bookings span our segments, regions and end markets and include a significant new customer MSA to provide essential good resiliency for a leading U. S. Electric utility in the Southwest.

[Christian Brown, President & CEO at Centuri Holding]

Our project estimated to generate tens of millions in revenue and electrical infrastructure work for data centers and two new gas MSAs in the Pacific Northwest. The new gas MSAs mark our return to a territory we exited several years ago and were made possible by our strong relationship with a customer from work performed in other territories in the more recent past. We expect the timing of renewals and varying award sizes to create some lumpiness in the magnitude of awards from quarter to quarter. However, we remain very bullish about the opportunities set ahead of us as we work to win more awards within our nearly $12,000,000,000 in identified opportunities. We are excited to continue to report our progress in the months ahead.

[Christian Brown, President & CEO at Centuri Holding]

Pivoting to business trends from the first quarter and today, starting with our gas business. During the quarter, The U. S. Gas segment faced some impact from adverse early year weather conditions compared to recent years, which had milder winters. However, significant improvements in March put us back in line with expectations and continued to improve as we enter the second quarter.

[Christian Brown, President & CEO at Centuri Holding]

Greg will provide more details shortly. In our electric business, we are pleased with the first quarter's performance and current market dynamics. Our nonunion electrical segment is benefiting from strong market trends across the Sunbelt and Southeast where the widespread impact of damage and outages caused by major storms last fall seem to be driving group resiliency and hardening programs forward. In our more bid heavy union electric business, business activity remains very high and we are winning work, particularly in some of the more industrial focused end markets where we perform substrates and infrastructure and inside electric work. This includes data centers which require significant infrastructure investment construction time.

[Christian Brown, President & CEO at Centuri Holding]

Looking forward, we are confident about our ability to maintain the positive trajectory we are seeing across segments and delivering strong growth in the strong results in the coming quarters. Now over to Greg to elaborate on our results and our twenty twenty five outlook. Greg?

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Thank you, Chris, and good morning to those listening in. First quarter twenty twenty five consolidated revenues totaled $550,100,000 a 4.2% increase from the first quarter of twenty twenty four, and consolidated gross profit was 20,300,000 which is a 53.1% increase over the prior year period. Gross profit margin of 3.7% in the first quarter of twenty twenty five was higher than the 2.5% we reported in the first quarter of twenty twenty four. As a reminder, the first quarter is historically our slowest period primarily due to the seasonal winter weather. Revenue exceeded our expectations with most segments delivering year over year growth.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Gross profit demonstrated improvement in the majority of our segments with particular strength in our nonunion electric segment. On a GAAP basis, net loss attributable to common stock in the first quarter was $17,900,000 or diluted loss per share of $0.20 improved from a net loss attributable to common stock of $25,100,000 or 35% or $0.35 on a per share basis in the same period last year. In the first quarter of twenty twenty five, total company adjusted EBITDA, a non GAAP figure, was $24,200,000 or approximately 20% higher from the prior year quarter's twenty point two million dollars Adjusted EBITDA margin was 4.4%, up from 3.8% in the first quarter of twenty twenty four. Non GAAP adjusted net loss in the first quarter came in at $10,500,000 or an adjusted diluted loss per share of $0.12 up from $14,400,000 or an adjusted diluted loss per share of $0.20 in the prior year period. The difference between our GAAP and non GAAP adjusted net loss primarily reflects the impact of amortization of intangible assets as well as separation related costs and non cash stock based compensation.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Turning to our reportable segments. Revenue for US gas segment totaled $197,700,000 reflecting a year over year decrease of 12.7%. Typically, our gas business is more impacted than our electric business segments when we experience very cold weather and snow. The majority of gas work involves digging, trenching, and boring, all of which are challenging when temperatures are below freezing. As many of you can attest, we had a much harsher winter than not only last year, but relative to the last several years.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Century was particularly hard hit in the Central And Southern Great Plains and the Southern Portion of the Mid Atlantic. Gross profit margin in the segment decreased to negative 7.5% in the first quarter of twenty twenty five from negative 1.8 in the prior year period. This decline was due again to the inefficiencies caused by weather disruptions and from a sluggish start to the calendar year across certain customers. As Chris mentioned, March saw significant improvement in work volume and improved margins that continued into the second quarter. As discussed on our February call, we began taking steps to structurally improve our contracts and cost structure in this segment early in the year and we look forward to much stronger segment results in the second quarter and beyond.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Our Canadian Gas segment remains a steady business with strong margins. Revenue totaled $39,800,000 down 2.9% from the prior year period, while segment margin of 17.8% was more than double the prior year period's 7.5% as profitability in the prior year period was negatively impacted by performance issues on certain bid projects. In our Union Electric segment, revenue was $175,500,000 an improvement of 7.1% year over year. Our core Union Electric segment, which excludes offshore wind and storm restoration services, experienced 32.7 growth year over year driven by increased bid project activity particularly in industrial work around substation infrastructure. Within this segment offshore wind revenues were down 64.1% or $22,300,000 as work as project work winds down in line with our expectations.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Gross profit in the Union Electric segment was 6.7% in the first quarter of twenty twenty five, largely in line with the first quarter of twenty twenty four. Nonunion Electric segment revenue in the first quarter twenty twenty five was $137,100,000 a 41.9% increase year over year. Core nonunion work increased 27.1% during the period primarily due to an increase in volumes on MSAs as we deployed significantly more crews and had higher work hours during the period. Segment gross profit increased meaningfully to 11.9% in the current period compared to 2.9% in the prior year period. This reflected the favorable impact of more efficient utilization of fixed costs due to an increase in resiliency work that drove higher crew counts and higher and and hours worked, as well as an increased contribution from more profitable storm work.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Turning to capital expenditures. In line with our capital efficiency program outlined in the February call, net CapEx was $23,200,000 down from $24,600,000 in the prior year period and our free cash flow in the first quarter twenty twenty five improved by $44,600,000 compared to the first quarter of twenty twenty four. Moving to some balance sheet highlights. On a trailing twelve month basis, our net debt to adjusted EBITDA ratio improved to 3.5 times at 03/30/2025 from 3.6 times at 12/29/2024. We ended the quarter with $15,300,000 in cash and cash equivalents on the balance sheet.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Growing our business in a capital efficient manner remains a core strategic priority. As Chris discussed in February, enhancing capital efficiency by refining our capital equipment sourcing and fleet management and reducing working capital levels through improved AR and DSO management are among Century's key strategic priorities. We are progressing on all of these fronts with a goal of improving free cash flow and further strengthening our balance sheet. Finally, turning to our 2025 outlook. For revenues, we affirm we expect to deliver between 2,600,000,000.0 and $2,800,000,000.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

For adjusted EBITDA, we retained our outlook of generating between $240,000,000 and $275,000,000. And finally, on CapEx, we continue to forecast our net spend to be between $65,000,000 and $80,000,000 Chris mentioned it, but I'll repeat it. At this time, we do not foresee a material impact from tariffs on our business. We plan to, of course, continue to follow any developments and the resulting effects on our business as we move through the weeks and months ahead. Over to Chris to conclude our prepared remarks.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Chris?

[Christian Brown, President & CEO at Centuri Holding]

Thank you, Greg. Essentura remains committed to delivering structured profitable growth. To summarize, we are well underway in implementing a unified business development strategy. We have enhanced our pipeline management and sales strategies and are fostering a growth orientated culture. Our business performance is off to a solid start in 2025.

[Christian Brown, President & CEO at Centuri Holding]

Awards have been very strong and diverse and market trends are driving growth across both our gas and electrical segments. The work under contract and the highly probable opportunities suggest that we are on track to deliver revenue at the upper end of the guidance range for the year. Simultaneously, we continue advancing our other strategic objectives, improving capital efficiency and performance by optimizing funding sources and reducing working capital. Our core end markets remained strong with capital investments reaching double digit growth driven by increasing demand for energy resilience, which gives us confidence to maintain our full year 2025 forecast introduced in February. Thank you very much for your time and support.

[Christian Brown, President & CEO at Centuri Holding]

We continue we look forward to providing additional updates on our achievements. Operator, you may start the Q and A session.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Drew Chamberlain with JPMorgan. Your line is now open.

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

Thanks for taking the questions. First one for me, can you just talk a little bit about the trajectory for 2025 and how you think you're still going to get to the I mean, now it sounds like the upper end of the revenue guidance despite the weaker 1Q in U. S. Gas there. And maybe where is that other catch up or rebalancing coming from?

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

Is it gas being stronger throughout the rest of the year? Or is it the other aspects of the business?

[Christian Brown, President & CEO at Centuri Holding]

Sure. Thanks for the question. It's Chris. So the weather affected us in just January and February in the gas business. It bounced back and we were at the expected margins in margins in March and continuing into April.

[Christian Brown, President & CEO at Centuri Holding]

So it was eight to nine days, I think, we lost in the in the first two months, which caused the which caused the slower than anticipated start for the gas business. But as I said, it recovered in March and April. So for the full year, we have work under contract, I'll just repeat what I said, as well as backlog that is pushing us towards the the upper end of the guidance. All of the operating companies are well on track and forecasting that they will they will meet their budget expectations. So even though the gas has had a the gas businesses had a US gas business had a slower start in January, February, they fully anticipate about getting back to the level of performance we have budgeted for the year and that formed the basis of our guidance.

[Christian Brown, President & CEO at Centuri Holding]

So it's across all of the businesses that we're expecting delivery to the expectations, Drew. Gas was just a slightly slower start. There's been another correction in March and going into April, but we still feel very good about the opportunities in the gas business as well as the broader electrical, both union and non union.

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

Okay. That's good to hear. Thanks, Chris. And then just maybe stepping back for a follow-up. Can you just talk a little bit more about maybe some of the key findings of the strategic review?

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

Obviously, good to hear that it's you know, near nearly wrapping up here. But maybe just if you could just talk to us a little bit about what you found as as most valuable from that process.

[Christian Brown, President & CEO at Centuri Holding]

I I think there there was some if I break it down probably into into into four components, we we structurally, we needed to make sure the business had a top to bottom across all operating companies detail available in lives live sales pipeline so we could generate analytics to provide us with the right level of information so we can make informed decisions on how we position ourselves in the market. I think we we were still a little bit abstract across the five operating companies. Now we've got a fully integrated sales pipeline that basically is more forward looking, allows us to make decisions around increasing the pipeline, decisions on pricing, decisions on positioning. So the pipeline was one. Secondly, I I think cross selling is a term I think we've used in the past.

[Christian Brown, President & CEO at Centuri Holding]

We've got great capability across all the op curves. We've got great scale. We've just been trying to maximize that and go to the market as one century. So there's there's been a a a positioning of the broader company to our customers. The third thing is is culture.

[Christian Brown, President & CEO at Centuri Holding]

I think everybody's objective in the business who faces a customer should be not only delivering the services we're contracted to provide, but also identifying more work we can do for our customers. And that's been a cultural shift. And then probably the fourth part is, and I mentioned it in the prepared notes, is is having KPIs from top to bottom on on both growth as as well as increasing profitability in the business. And they're the four areas.

[Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co]

That's great. Thank you very much, Chris. I'll I'll pass it over.

[Christian Brown, President & CEO at Centuri Holding]

Appreciate it.

[Operator]

Your next question comes from Steven Fisher with UBS. Your line is now open.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Thanks and congratulations on the progress. Just on The U. S. Gas segment, curious how you would frame the loss relative to what you would have expected going into the quarter? And I guess the bigger picture question here is really, is this a business or a segment that should generate a profit in Q1?

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Is that your sort of ongoing strategic target? And if so, is there anything that structurally you need to do to be able to achieve that or just every year you have

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

to hope that the weather is going

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

to be friendly enough to allow for a profit?

[Christian Brown, President & CEO at Centuri Holding]

Stephen, I'll answer the question around positioning the business in the future. I know Greg can can answer the questions on what we would normally expect. The there's no doubt when you do work in certain states, in certain regions of the country, the weather comes and we can't we can't control the weathers. But what we can do is is help migrate the business further south so that we've got more sales opportunities across the Sunbelt and other parts of the country both in industrial and traditional utility clients so that we get we can get some size and scale into the pipeline in the in in in in the Lower States and mitigate the the impacts of the weather in particularly in the Northeast, maybe even across across going across the West Coast. So the answer to your question is there's some work we have implemented to build up a pipeline of opportunities in states that are less affected by the weather so that we can become profitable earlier in the year.

[Christian Brown, President & CEO at Centuri Holding]

That that's that's something we're ongoing with.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

And and from an expectation perspective, Steve, and good morning. What I'd I'd say is, you know, q one is is the seasonally slow period, most notably for the gas business just given the weather conditions that I articulated on the in my prepared remarks. And, you know, we still remain confident that the full year will will perform as as expected, heading into the year.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Okay. That's helpful. And then I think you still have the 1.1 times book to bill target. With over two times in the first quarter, are you sort of should we expect some pretty I know you mentioned lumpiness, but should there be some pretty kind of light quarters within that? What kind of visibility and cadence should we expect on the bookings from here?

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Thank you.

[Christian Brown, President & CEO at Centuri Holding]

It's a good question, Steven. The strength of the bookings has continued nicely into q two and we track it weekly. So we've we've got good visibility on the full year. We've continued into q two with a very strong booking quarter. And I I think the the 1.1 is definitely an achievable target for the full year.

[Christian Brown, President & CEO at Centuri Holding]

I think there are there are months of the year where the traditional MSA renewals, are slower and and you then get a pickup as you move into the fourth quarter, to the year close to the year end. So we to answer your question, I I would foresee some lumpiness in the third quarter. The second quarter look looks robust and the fourth quarter driven by not only m MSA renewals, but also some new new bid work will will pick up again. But we're we're confident we will we will achieve, if not exceed, the 1.1 target with q three probably being our quietest quarter, but q two and q four being pretty solid on bookings, both MSAs and new bid awards.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Very helpful. Thank you.

[Operator]

Your next question comes from Justin Hockey with Robert W. Baird. Your line is now open.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

Great. Good morning. Thank you for taking my Good morning. Good morning. I guess first one just to clarify, the guidance, when you say the upper end of revenue, didn't hear you say the upper end of adjusted EBITDA as well.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

So I just wanted to kind of confirm what you're thinking on the EBITDA side. And then maybe some comments on kind of the cadence and the seasonality given that you had some slower starts in electric to kind of start the year last year and maybe it's little tougher in the back half or just kind of how to think about the contribution going forward?

[Christian Brown, President & CEO at Centuri Holding]

I can take the guidance question. Look, We we've not read guidance because we're we're we're only quarter in. We wanna be cautious. You know, as as as everybody knows, we've had a lot going on in the business and a lot of change. So we are cautious.

[Christian Brown, President & CEO at Centuri Holding]

So the what I would say to your question is, yes, the bookings, the backlog, and the very highly probable work is taking us towards the upper end of the guidance as we said in our prepared notes. So that's that's close to the 2,800,000,000.0 of revenue for the year. We don't see any impact, so we don't see any dilution of our margins as we continue to drive growth into the business nor do we see any margin erosion coming from competitive pressures. So we're still very happy with the EBITDA margin to answer your question.

[Christian Brown, President & CEO at Centuri Holding]

In terms of seasonality,

[Christian Brown, President & CEO at Centuri Holding]

all of the all of the businesses, with the exception of January, February, in the eight or nine days, have that affected the the gas business up in the Northeast and and Atlantic Coast. All of all of the businesses are showing strong q two, q '3, q '4, all the way to year end. So we don't see any any further seasonality as we've come through the first quarter.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

Okay. Thank you. I guess my second question is, so obviously a big part of the story this quarter was the really strong bookings, which we've already discussed. But I wanted to ask about $5.00 $5,000,000 that's the new work. Some of that is new NSAs, as you mentioned, the one in Pacific Northwest.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

But then some of it are these strategic bids, which I know Chris has been something you've wanted the company to pivot towards. And I guess I was just curious to understand kind of the risk profile of that work, the strategic stuff. Are those customers you worked with in the past? Just how to get comfortable that it doesn't change kind of the the lower risk MSA profile? Thank you.

[Christian Brown, President & CEO at Centuri Holding]

Justin, I I will tell you the the type of work we are performing is is just us sticking to the knitting. It's as simple as that. It's the same it's the same services we've been providing for the last the last number of years. It's nothing new. It's nothing different.

[Christian Brown, President & CEO at Centuri Holding]

The risk profile is not changing. There's no need to change it. There's plenty of opportunity doing the same thing, the same type of services, the same forms of contracts with many of the same same customers. So there's no shift at all in what we're doing and how it's just how we've positioned ourselves in the market and holding ourselves to to account to actually find more opportunity. So I I I wouldn't read in the 05/2005, and it and it's continued as we've gone into into the second quarter.

[Christian Brown, President & CEO at Centuri Holding]

The focus to drive businesses on these new opportunities in these new MSAs, but it's it's doing the same thing, the same services under the same type of risk profile that we we do each year and have done so for many years. So there's no change there. No need to.

[Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co]

Okay. I appreciate the perspective. Thank you very much.

[Christian Brown, President & CEO at Centuri Holding]

Appreciate it.

[Operator]

Your next question comes from Sangeethi Jain with KeyBanc Capital Markets. Your line is now open.

[Sangita Jain, Senior Analyst at KeyBanc Capital Markets]

Great. Good morning. Thank you for taking my questions. So if I can ask one more on margins. Just trying to see if there are things that you will need to do as a result of the strategic review to get you to the full year EBITDA margin, especially if it's a more normal stormier versus last year?

[Christian Brown, President & CEO at Centuri Holding]

Thank you for the questions, Antjece. No. I don't there's nothing radical. There's nothing different we need to do. From the inside, we are tracking the budget we expected to track that will deliver will deliver the full year guidance.

[Christian Brown, President & CEO at Centuri Holding]

The the backlog, the type of work, the expected bookings that we foresee in the next few weeks basically confirmed because we just got to execute on delivery execute and deliver to achieve this year's consensus. There's nothing there's nothing abnormal to it. Yeah. There was a bit of disappointment in January, February with the with the weather, but again, we can't can't really change the weather. What was what was absolutely clear was the bounce back in March and April in the gas business, and that's that's now trending to exactly where we wanted it to be for the year.

[Sangita Jain, Senior Analyst at KeyBanc Capital Markets]

Great. Thank you. And if I can ask on the new MSAs that you spoke about, can you just tell in more detail if you were able to displace income incumbents on those or if that was an increase in the utility scope of work that allowed you to participate in these?

[Christian Brown, President & CEO at Centuri Holding]

It was it was both, to answer you clearly. We were we've been performing well with many of our customers. We've been spending time with our customers and asking if there are opportunities to do more and and and more of a stronger positioning. Not all of the competition perform as well as we do. So we've seen opportunity to displace, but we've we're also seeing opportunity just because clients are spending more money.

[Christian Brown, President & CEO at Centuri Holding]

So it's both, and and that's continued as we've gone into the second quarter also.

[Sangita Jain, Senior Analyst at KeyBanc Capital Markets]

Great. That's good to hear. Thank you so much.

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

You. Take question.

[Operator]

Your next question comes from Sharif El Sabahi with Bank of America. Your line is now open.

[Sherif El-Sabbahy, Analyst at Bank of America]

Hi, good morning. Hi, Sharif. Morning. Doing well, thanks. Just wanted to touch on the nonunion electric.

[Sherif El-Sabbahy, Analyst at Bank of America]

Storm was a substantial lift there. Could you give us a sense of what gross margin look like ex storm just to give an idea of how much fixed cost absorption contributed to the improvement in the quarter?

[Greg Izenstark, Executive VP & CFO at Centuri Holding]

Storm you know, was about 10% of their revenue. It wasn't overly material. I mean, the the drive in in improved EBITDA margin was or gross margin, excuse me, was really driven by the increased crews that we added, not just the ones in the first quarter, but also the the 40 or so crews that we added in the flat half of 2024 that we talked about in prior calls. And then just increased work hours, especially given some of the the headwinds we had last year, with with work hours. We've really seen those return to more normal levels.

[Sherif El-Sabbahy, Analyst at Bank of America]

Understood. And looking at the bookings, you had good bookings in the quarter. You touched on this a bit earlier with the lumpiness of MSA renewals. Can you give us a sense of typically is Q1 the heavier renewal period for a lot of those MSAs? And can you give us a sense of what backlog looked like in the first quarter historically in 2022 or 2023 just to understand the typical MSA impact at the start of the year?

[Christian Brown, President & CEO at Centuri Holding]

MSA renewals are mainly in the fourth quarter is what the dataset tells me. So that so so we can probably do the calculation on the on the backlog. Greg will will look into that. But the the lumpiness is is is typically in the middle of the year in the utility clients where MSAs are renewing. But recall, our drive is to find new opportunities, new bid work, which is less seasonal.

[Christian Brown, President & CEO at Centuri Holding]

So I did answer the question a little earlier. Q q one was was was busy across MSA renewals as well as MSA bidding as well as new bid work. Q two is the same. Although there are one or two MSAs that we expect to renew around about June 30, so they may go over the quarter. But but we expect q two to be busy.

[Christian Brown, President & CEO at Centuri Holding]

Q three does not have a lot of MSA renewals. So it will be mainly bid work, is why I said earlier, it will be somewhat quieter. And then as we get into the fourth quarter, there are some larger MSAs that will be renewed and there'll be also a significant amount of bid work we're anticipating. So that's how I'd answer the question.

[Sherif El-Sabbahy, Analyst at Bank of America]

Thank you.

[Operator]

There are no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Participants

Executives

• Jason Wilcock, Executive VP, Chief Legal & Administrative Officer
• Christian Brown, President & CEO
• Greg Izenstark, Executive VP & CFO

Analysts

• Drew Chamberlain, Equity Research Associate at JP Morgan Chase & Co
• Steven Fisher, Managing Director & Equity Research Analyst at UBS Group
• Justin Hauke, Vice President and Senior Research Associate at Robert W. Baird & Co
• Sangita Jain, Senior Analyst at KeyBanc Capital Markets
• Sherif El-Sabbahy, Analyst at Bank of America