Centuri Holdings, Inc. (CTRI) - 10-K Summary
Business Context and Reporting Period
Company: Centuri Holdings, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 28, 2025 (52 weeks)
Business Overview: A leading 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.
Key Corporate Events:
- Completed full separation from former parent Southwest Gas Holdings in September 2025.
- Completed a November 2025 public offering raising $250.9 million in net proceeds.
- Acquired Connect Atlantic Utility Services Corporation in November 2025 for approximately $58.0 million, expanding electric services in Canada.
Key Financial Metrics
| Metric (in millions) | Fiscal 2025 | Fiscal 2024 | Change |
|---|---|---|---|
| Revenue, Net | $2,982.8 | $2,637.2 | +13.1% |
| Gross Profit | $246.6 | $220.7 | +11.7% |
| Gross Margin | 8.3% | 8.4% | -0.1 pts |
| Operating Income | $92.8 | $86.8 | +7.0% |
| Net Income (Attributable to Common Stock) | $22.4 | ($6.7) | Turnaround |
| Adjusted EBITDA | $249.0 | $238.2 | +4.5% |
| Adjusted EBITDA Margin | 8.3% | 9.0% | -0.7 pts |
| Cash from Operating Activities | $78.1 | $158.2 | -50.6% |
| Total Debt (Outstanding) | $754.2 | $885.7 | -14.8% |
| Cash and Cash Equivalents | $126.6 | $49.0 | +158.4% |
Note: Net income for 2025 includes a $23.7 million income tax benefit from the allocation of deferred tax assets following deconsolidation from Southwest Gas Holdings.
Material Changes vs. Prior Period
- Revenue Growth: Driven by increased volumes in Canadian Operations (+24.8%), Non-Union Electric (+23.5%), and Union Electric (+16.6%). U.S. Gas grew modestly (+5.4%).
- Storm Restoration Impact: Storm restoration revenue decreased significantly year-over-year ($40.2 million in 2025 vs. $136.7 million in 2024), negatively impacting Non-Union Electric margins.
- Operating Cash Flow: Decreased primarily due to the absence of a one-time $125.0 million cash inflow from the initial sale of receivables under the Securitization Facility in 2024. Excluding this, working capital changes were favorable.
- Debt Reduction: Net debt decreased due to the use of equity offering proceeds to repay borrowings and fund the Connect acquisition.
- Segment Performance: Canadian Operations gross margin improved to 18.6% (from 15.8%) due to better bid margins. Non-Union Electric gross margin declined to 9.8% (from 12.7%) largely due to the drop in high-margin storm work.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management believes capital resources, operating cash flows, and credit facilities are sufficient to meet obligations for the next 12 months.
- Backlog as of December 28, 2025, was approximately $5.9 billion, with 82% related to Master Service Agreements (MSAs).
- The company expects to continue incurring capital expenditures to meet service needs and is monitoring the impact of tariffs and inflation on equipment costs.
- Customer Concentration: Top 20 customers represented 65% of revenue; top 10 represented 48%. Loss of significant customers could materially impact results.
- Contract Cancellation: 78% of revenue comes from MSAs which can often be cancelled by customers on short notice (typically 30 days).
- Weather & Seasonality: Revenues are typically lowest in Q1 due to winter weather. Severe weather can cause delays or provide high-margin restoration work, creating volatility.
- Legal Proceedings: A contract claim against the City of Chicago remains unresolved; the company has not accrued reserves but notes potential for significant loss if unsuccessful.
- Activist Stockholder: The Icahn Group owns approximately 10% of outstanding shares and has a director on the Board. Future sales by this group could impact stock price.
- Interest Rate Risk: Significant exposure to variable-rate debt; a 100 basis point increase would impact pretax earnings by approximately $7.1 million.
Investor Verification Checklist
- Backlog Realization: Verify the stability of the $5.9 billion backlog, noting that 82% is MSA-based and not contractually guaranteed volume.
- Storm Revenue Volatility: Assess the sustainability of margins without the high-margin storm restoration revenue seen in 2024.
- Debt Covenants: Confirm ongoing compliance with the leverage ratio (4.50:1.00 until Sept 2026, then 4.00:1.00) and interest coverage ratios.
- Tax Asset Allocation: Monitor the finalization of the $23.7 million tax benefit and any future true-ups related to the Southwest Gas Holdings separation.
- Connect Integration: Track the performance and integration of the Connect acquisition in the Canadian Operations segment.
- Union Labor Costs: Review upcoming collective bargaining agreement expirations (27 in 2026, 14 in 2027) for potential wage inflation impacts.