Centuri Raises Outlook as Record Revenue Outruns Profit Growth
Second-quarter revenue rose 33% to $962.0 million as utility-infrastructure demand expanded.
Centuri Holdings (CTRI), a utility-infrastructure services provider, reported record second-quarter revenue as rapid growth outpaced profit gains and pressured margins. Revenue growth accelerated from 31% in the first quarter and 20% in the fourth quarter of 2024.
Gross profit rose 2% from a year earlier, slowing from 76% growth in the first quarter. Gross margin recovered sequentially to 7.2% from 4.9%, though it remained below 9.4% a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization increased 5% to $75.7 million, while the adjusted EBITDA margin narrowed to 7.9% from 9.9%.
Higher fuel prices and costs to mobilize workers in the U.S. Gas business reduced the quarter's Base Gross Profit Margin by about 95 basis points. Fuel accounted for roughly $6 million of the impact, while resource additions, mobilization and ramp-up costs contributed about $3 million. Centuri expanded its workforce organically by about 1,700 employees, or 18%, during the first half to add capacity for expected demand.
U.S. Gas revenue climbed 45.3% to $489.5 million, but gross profit fell 21.9% and its margin contracted to 4.2% from 7.8%. The segment's Base Gross Profit Margin was 5.9% after excluding a $9.0 million reversal tied to pre-2020 work for the City of Chicago. Centuri wrote down all remaining receivables and contract assets associated with that work.
Union Electric provided the clearest margin offset, with revenue up 23.0% and gross margin improving to 9.0% from 8.4%. Non-Union Electric revenue growth slowed to 11.3% from 27% in the first quarter, while its margin declined to 9.1%. Canadian Operations remained the fastest-growing segment, posting a 47.8% revenue increase as its margin eased to 16.0%.
Adjusted net income rose 44% to $24.4 million, while GAAP net income declined to $6.1 million from $8.1 million and operating income fell to $24.1 million from $32.2 million. Quarterly bookings totaled nearly $850 million, down from $1.3 billion in the first quarter, and backlog slipped to about $6.4 billion from a record $6.5 billion. The opportunity pipeline expanded 23% sequentially to a record $16 billion, with outstanding bids rising to about $2.5 billion.
Centuri now expects full-year Base Revenue of $3.5 billion to $3.7 billion, Adjusted EBITDA of $285 million to $310 million and Adjusted Net Income of $60 million to $75 million. The forecast incorporates the JJ White acquisition and about $5 million of incremental fuel expense, while the company expects its workforce investment to lift companywide Base Gross Profit Margin to approximately 9.0% in the second half. The $62 million JJ White purchase added roughly $315 million of backlog and a $2.8 billion pipeline as Centuri entered the second half with net leverage of 2.6 times, down from 3.7 times a year earlier.