Centuri Holdings, Inc. (CTRI) - 10-Q Summary
Business Context and Reporting Period
Company: Centuri Holdings, Inc.
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Fiscal quarter and six months ended June 28, 2026.
Business Overview: A North American utility and energy infrastructure services company providing maintenance, replacement, and installation services for electric and natural gas distribution networks. The company operates through four segments: U.S. Gas, Canadian Operations, Union Electric, and Non-Union Electric. The company fully separated from its former parent, Southwest Gas Holdings, Inc., in September 2025.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | 6M 2026 | 6M 2025 |
|---|---|---|---|---|
| Total Revenue | $961,986 | $724,052 | $1,685,160 | $1,274,133 |
| Gross Profit | $69,142 | $67,801 | $104,900 | $88,129 |
| Gross Margin | 7.2% | 9.4% | 6.2% | 6.9% |
| Operating Income | $24,149 | $32,159 | $19,407 | $19,446 |
| Net Income (Loss) | $6,148 | $8,079 | $(3,337) | $(9,845) |
| Diluted EPS | $0.06 | $0.09 | $(0.03) | $(0.11) |
| Cash & Equivalents | $40,458 | $126,630 | $40,458 | $126,630 |
| Total Debt (Gross) | $727,718 | $748,418 | $727,718 | $748,418 |
| Adjusted EBITDA | $75,660 | $71,840 | $108,230 | $96,068 |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue increased 32.9% year-over-year (Q2) and 32.3% (6M), driven by new bid contracts, increased Master Service Agreement (MSA) volumes, and the acquisition of Connect Utility Services Corporation (Canadian Operations).
- Margin Compression: Gross margins declined to 7.2% (Q2) and 6.2% (6M) from 9.4% and 6.9% respectively. This was primarily due to a $9.0 million revenue reversal related to a legacy City of Chicago contract, elevated fuel costs, and costs associated with scaling up new work.
- Profitability: Net income for Q2 2026 was $6.1 million compared to $8.1 million in Q2 2025. For the six-month period, the company reported a net loss of $3.3 million, an improvement from the $9.8 million loss in the prior year period.
- Interest Expense: Net interest expense decreased significantly (33.6% in Q2, 32.0% in 6M) due to lower average debt balances and reduced interest rates following credit facility amendments.
- Cash Flow: Operating cash flow was negative $15.0 million for the six months ended June 28, 2026, compared to negative $11.0 million in the prior year, largely due to working capital changes and increased receivables.
Guidance, Outlook, and Risks
- Backlog: As of June 28, 2026, backlog was approximately $6.4 billion, with 83% related to MSAs. Management expects to recognize revenue from remaining performance obligations over the next three years.
- Outlook: Management believes capital resources are sufficient for the next 12 months. The company is well-positioned to serve increased demand from system integrity management programs and environmental objectives.
- City of Chicago Matter: A $9.0 million revenue reversal was recorded in Q2 2026 following a court order regarding a legacy contract. The company intends to continue pursuing the matter but has no contingent liabilities accrued.
- Acquisitions: The company completed the acquisition of Connect Utility Services in November 2025. Subsequently, on July 20, 2026 (post-period), the company acquired JJ White, Inc. for approximately $62.0 million.
- Risks: Key risks include rising fuel, labor, and material costs; variable-rate debt exposure; customer concentration (one Non-Union Electric customer accounted for 11% of 6M revenue); and potential delays or cancellations of projects due to regulatory or weather factors.
Investor Verification Checklist
- City of Chicago Reversal: Verify the status of the legal proceedings and the potential for future revenue recovery or additional losses related to the $9.0 million reversal.
- Fuel Cost Pass-Through: Assess the company's ability to pass through rising fuel costs to customers via contract escalation clauses, given the noted margin impact.
- Debt Covenants: Confirm continued compliance with leverage (4.50:1.00) and interest coverage (2.50:1.00) covenants, especially given the recent refinancing and variable rate exposure.
- Working Capital Trends: Monitor the trend in accounts receivable and contract assets, which increased significantly, impacting operating cash flow.
- Acquisition Integration: Review the financial performance and integration progress of the Connect Utility Services acquisition and the subsequent JJ White, Inc. acquisition.