What Centuri (CTRI) Said on Its Q3 Earnings Call

Key Points

• Record Q3 results: Revenue rose 40% year over year to $1.2 billion, and adjusted EBITDA increased 44% to $108 million. Gross margin improved to 9.5%, supported by more productive new hires and updated contract pricing.
• Growth outlook strengthened: Backlog reached about $6.2 billion, with outstanding bids of $4.8 billion. Management expects 2027 revenue above $4.4 billion and gross margin of 8.5% to 9%.
• Cash flow guidance was reduced: Centuri lowered its 2026 free cash flow expectation to $25 million–$50 million, citing higher-than-expected working capital needs from revenue growth. Management characterized the shortfall as a timing issue and expects cash collections to accelerate in Q4.

Centuri NYSE: CTRI reported record third-quarter revenue and gross profit as workforce investments and contract pricing improvements helped the utility infrastructure services company expand margins. Management also projected mid-teens revenue growth in 2027, while lowering its 2026 free cash flow expectation because of higher working capital needs.

Revenue rose 40% from a year earlier to $1.2 billion, while gross profit reached $113 million. Net income attributable to common stock increased to $27 million, or $0.27 per share, from $2 million, or $0.02 per share, a year earlier. Adjusted net income more than doubled to $42 million, or $0.42 per share.

Adjusted EBITDA rose 44% to $108 million, and adjusted EBIT increased 79% to $73 million, Chief Financial Officer Kelly Youngblood said on the earnings call.

Workforce investments and pricing support margins

Centuri’s gross profit margin improved to 9.5% from 7.2% in the second quarter. President and CEO Chris Brown said employees hired during the first half of 2026 became more productive as they were integrated into operations. The company added approximately 1,800 employees in the first half and about 300 in the third quarter, he said.

The improvement was particularly evident in U.S. Gas, where third-quarter gross margin rose to 8.2% from 4.2% in the preceding quarter. U.S. Gas revenue increased 40% year over year to $576 million, driven by higher bid work and volumes under master service agreements, or MSAs.

Brown said Centuri has also been updating contract prices to reflect higher fuel, fleet and other costs. All $4.8 billion of outstanding bids incorporate updated pricing, he said, and the company expects the vast majority of its backlog to reflect market pricing by this time next year.

Union Electric revenue rose 65% to $354 million, supported by electric and industrial project growth and the addition of J.J. White, which joined Centuri in July. Canadian Operations revenue increased nearly 33% to $98 million, primarily because of the Connect acquisition. Non-Union Electric revenue climbed 18% to $175 million, driven by storm work and increased MSA activity.

Backlog and 2027 outlook

Third-quarter bookings totaled approximately $730 million, bringing the year-to-date total to roughly $2.9 billion. Backlog rose 5% from a year earlier to approximately $6.2 billion, while the opportunity pipeline grew 46% to about $19 billion, Brown said.

Outstanding bids more than doubled from $2.5 billion at the end of the second quarter to $4.8 billion. That figure includes approximately $2 billion of MSA renewals Centuri expects by year-end. Brown said customer discussions have included increased scopes of work and longer contract periods.

For 2027, management projected revenue above $4.4 billion and an overall gross profit margin of 8.5% to 9%. Centuri has more than $3.7 billion of revenue coverage for next year, Brown said, and expects that figure to trend toward $4 billion by year-end.

Brown said the company’s preliminary 2027 outlook puts it ahead of the revenue and gross profit growth trajectory implied by its 2029 targets. He said Centuri would likely update those targets alongside its next-year guidance and expects the revised targets to be higher, not lower, based on opportunities in its core markets.

Cash flow and full-year guidance

Centuri used $28 million in operating cash during the third quarter and reported negative free cash flow of $30 million. Youngblood said the company expects cash collections to accelerate in the fourth quarter, but lowered its full-year free cash flow expectation to $25 million to $50 million because revenue growth has required more working capital than anticipated.

Youngblood described the expected shortfall as a timing issue and said Centuri is pressing to collect cash before year-end. He reiterated a target of 40% to 50% free cash flow conversion by 2029, with the percentage expected to rise gradually.

Updated 2026 guidance includes:

• Revenue of $3.8 billion to $3.9 billion.
• Adjusted gross profit of $305 million to $315 million.
• Adjusted EBITDA of $290 million to $300 million.
• Adjusted net income of $80 million to $90 million.
• Net capital expenditures of $60 million to $70 million.

The outlook excludes fourth-quarter storm work. Brown said Centuri performed some storm work in early October that would be additive to its guidance.

Data centers and capital allocation

Centuri has booked approximately $370 million of data center work in aggregate, with about $200 million remaining in backlog. Brown said most of that backlog is expected to convert to revenue next year and reiterated that data center work is not expected to exceed 10% of annual revenue.

Brown said the company evaluates whether projects have committed funding, clear scopes and appropriate permits before investing resources in bids. He said most of the data center opportunities Centuri is examining are in the Mid-Atlantic and Midwest.

Centuri ended the quarter with net debt of 2.6 times adjusted EBITDA, down from 3.8 times a year earlier. Youngblood said the company’s capital allocation priorities are reducing leverage, funding organic growth and evaluating tuck-in acquisitions. Buybacks or dividends are not the priority at present, he said, adding that a leverage range of 1.5 to 2 times would be a healthy level for the company.

About Centuri (NYSE:CTRI)

Centuri Holdings, Inc is a strategic infrastructure services company that supports the development, maintenance and modernization of energy and utility systems. The company provides construction and related services for natural gas and electric distribution infrastructure, including pipelines, utility networks and other assets used to deliver energy to homes, businesses and communities.

Centuri also serves customers in areas such as electric transmission, renewable energy and broader utility infrastructure.

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