Centuri Holdings Earnings Call Signals Confident 2026 Path

Centuri Holdings, Inc. ((CTRI)) has held its Q4 earnings call. Read on for the main highlights of the call.

Centuri Holdings’ latest earnings call struck an upbeat tone, with management emphasizing record revenue, strong margin expansion, and a sharply higher backlog that underpins growth visibility into 2026. Executives balanced this optimism with a candid view of seasonal gas headwinds, capital intensity, and slower‑than‑hoped early data‑center wins, but framed guidance as conservative and execution plans as firmly in place.

Record Full-Year Revenue Momentum

Centuri reported record 2025 revenue of $3.0 billion, up 13% from 2024, underscoring solid demand across its utility infrastructure footprint. Fourth‑quarter revenue accelerated to $859 million, a 20% year‑over‑year gain, signaling that growth is not just steady but strengthening as the company heads into the new fiscal year.

Base Revenue and Margin Expansion

Base revenue, which strips out storm work, climbed 18% to $2.9 billion, while base gross profit rose 35% to $234 million, outpacing top‑line growth. Base gross margin improved by roughly 100 basis points to 8.0%, reflecting better pricing, mix, and operational execution that management believes can continue to trend higher.

Bookings, Backlog and Opportunity Pipeline

Bookings exceeded $4.5 billion in 2025, giving Centuri a book‑to‑bill ratio of 1.5x versus its 1.1x target and signaling strong demand visibility. Year‑end backlog swelled 59% to about $5.9 billion, expected to cover more than 85% of 2026 base revenue, while the broader opportunity pipeline stands at $13 billion with hundreds of active bids.

Segment Outperformance in Electric and Canada

Nonunion Electric operations were a standout, with base revenue up 51% to $569 million and base gross margin jumping from 5.9% to 8.5%, indicating strong leverage on higher volumes. Union Electric revenue advanced 21% to $800 million with margin expansion as well, and Canadian revenue grew 25% to $247 million, with margins improving to an impressive 18.6%.

Improved Profitability and Adjusted Metrics

Adjusted net income rose to $39 million in 2025, nearly 50% higher than the prior year based on management’s commentary, signaling that earnings are catching up with revenue. Adjusted EBITDA also improved to $249 million from $238 million, with fourth‑quarter adjusted EBITDA growing to $78 million despite some timing and mix pressures.

Deleveraging and Balance Sheet Strengthening

Net debt to adjusted EBITDA dropped to 2.5x at the end of 2025 from 3.6x a year earlier, marking tangible progress on balance sheet repair. The company raised roughly $251 million of equity, using proceeds for the Connect Atlantic acquisition and debt reduction, and is now targeting a leaner leverage profile of about 2.0x by year‑end 2026.

Cash Generation and CapEx Strategy

Centuri generated $84 million of operating cash flow and $106 million of free cash flow in the fourth quarter, helped by working‑capital progress but still below its longer‑term potential. Fleet investments reached $135 million in 2025 and are expected at $150–$180 million in 2026, with a roughly 50/50 buy‑versus‑lease mix aimed at boosting capital efficiency and funding growth while managing leverage.

Data Center Infrastructure Opportunity

Management spotlighted data centers as a major growth vector, citing more than 20 identified opportunities totaling about $1.4 billion, with upside scenarios approaching $2 billion. Roughly $1.3 billion of funded data‑center work is now tendering, with Centuri expecting meaningful bidding activity and potential bookings in the first half of 2026.

Q4 Earnings Dip and Tax Noise

Despite revenue strength, fourth‑quarter adjusted net income slipped to $16 million, or $0.17 per share, from $18 million, or $0.21, a year earlier, as margins and project timing offset volume gains. Reported net income of $30 million was inflated by a sizable one‑time tax benefit tied to deferred tax assets, making adjusted figures the more useful gauge for investors.

Seasonality and Gas-Segment Headwinds

Executives reiterated that the U.S. gas business faces pronounced first‑quarter seasonality, which has historically pressured early‑year margins and earnings. To tackle this, Centuri has launched a three‑year program aimed at smoothing work patterns and reducing seasonal swings, though management cautioned that near‑term quarterly volatility will likely persist.

Working Capital and Cash Conversion Focus

Management acknowledged that billing and collection timing, reflected in days‑sales‑outstanding metrics, is still weighing on cash conversion relative to earnings. They are actively tightening working‑capital management and reiterated a longer‑term goal of converting roughly 50% of adjusted EBITDA into free cash flow, suggesting additional upside as processes improve.

Capital Intensity and Fleet Efficiency Goals

The company’s fleet remains a heavy but necessary investment area, with 2026 spending expected between $150 million and $180 million even as financing is optimized through leases and sale‑leasebacks. Centuri is targeting at least a 20% improvement in fleet efficiency, but execution on maintenance, utilization, and replacement cycles will be critical to delivering that benefit without straining cash.

Storm Revenue Embedded in Outlook

Guidance for 2026 includes an assumption based on a three‑year average of storm‑related work, contributing around $88 million in revenue and $28 million in gross profit. Management noted that actual storm activity is inherently unpredictable, meaning realized results could swing above or below guidance depending on weather‑driven emergency response demand.

Forward-Looking Guidance and Growth Visibility

For 2026, Centuri forecast base revenue between $3.15 billion and $3.45 billion and base gross profit of $255 million to $285 million, implying a modest uptick in underlying margin. Total revenue is guided to $3.24–$3.54 billion, with adjusted EBITDA of $280–$310 million, adjusted net income of $55–$75 million, lower net CapEx of $75–$90 million, and interest expense projected to fall about 30% as leverage continues to decline.

Centuri’s earnings call painted a picture of a utility‑infrastructure contractor moving from recovery into a more durable growth phase, backed by record backlog and a sizeable pipeline in high‑growth areas like electric and data centers. While seasonal gas softness, working‑capital friction, and heavy fleet spending remain watch items, the combination of improving margins, deliberate deleveraging, and conservative guidance leaves the company looking better positioned for shareholders heading into 2026 and beyond.