Centuri Holdings, Inc. (CTRI) | The Buildout — AI Infrastructure
The Verdict
Centuri Holdings provides the construction and maintenance crews that build, upgrade, and repair North American electric and gas utility networks. Regulated utilities hire it to replace gas distribution pipe, run electric transmission and distribution lines, build substations, and restore service after storms. Its link to the AI build-out is indirect: data centers need power delivery, substations, grid interconnections, gas and water lines, fiber conduit, and cooling systems, and Centuri supplies the labor that installs them. The company works through four segments and operates 97 primary locations across 46 U.S. states and six Canadian provinces.
| Market Cap | — |
| Revenue (TTM) | $3.2B |
| Revenue Growth | +19.6% |
| EBITDA Margin (TTM) | 7.1% |
| Net Debt | $889M |
| Earnings Beats | 3 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Record backlog of $6.5 billion at Q1 2026, up 44% year over year and about 85% MSA-based, with management reporting a 100% MSA renewal rate.
- Q1 2026 bookings of $1.3 billion at a 1.8x book-to-bill, after FY2025 bookings above $4.5 billion at 1.5x.
- Data-center work: $170 million secured since the start of 2025, roughly $300 million selected and in negotiation, and about $1.5 billion under evaluation.
- Net debt/adjusted EBITDA fell to 2.7x from 3.5x a year earlier, with a target of about 2x by year-end 2026.
- First-time 2029 targets: base revenue CAGR of 10%–15%, adjusted EPS CAGR of 30%–45%, and free cash flow conversion of 40%–50%, with no equity issuance expected.
What We’re Watching
- Data-center conversion: about $300 million of work was selected and in negotiation as of May 2026, expected to book in Q2 2026; no data-center customer is named.
- Margin expansion: Q2 FY2026 gross margin of 7.4% was below 8.4% a year earlier, and Non-Union Electric base margin fell 240 bps in Q1 2026.
- Backlog quality: about 85% of the $6.5 billion backlog is MSA-based and not committed volume; hard fixed-price remaining obligations are $444.7 million.
- Customer concentration: the top 10 customers were about 48% of FY2025 revenue, and one unnamed Non-Union Electric customer was 13% of Q1 2026 revenue and 23% of receivables.
The thesis looks to be strengthening on demand and less clear on margin. Bookings, backlog, and pipeline all rose, data-center work moved from prospect toward awards, and leverage is falling. Against that, gross margin compressed year over year in the latest quarter, and a new-MSA ramp and storm mix dented Non-Union Electric margins in Q1 2026. A withheld-receivables dispute is also unaccrued and could produce a significant loss. The open question is whether Centuri can turn its record backlog and data-center pipeline into margin expansion, or whether growth keeps outrunning profitability.
Earnings
Centuri's Q2 FY2026 revenue was $932.0 million, up about 29% from $724.1 million a year earlier. Gross margin was 7.4%, down from 8.4%, and EBITDA was $59.3 million, a 6.4% margin. Net income was $6.1 million, and free cash flow was negative $7.9 million.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $932M | $700M | $724M | +28.7% |
| Gross margin | 7.4% | 5.1% | 8.4% | -100bps |
| EBITDA | $59M | $38M | $73M | −18.4% |
| EPS | $0.06 | $-0.09 | $0.09 | −34.1% |
We’ve got close to $300 million, give or take, of data center work that we believe we have been selected and are currently negotiating. So that should be in the next quarter, the next quarter being Q2, to be precise.— Christian Brown, President and CEO, May 7, 2026
Management tone: The most recent earnings call on record is the Q1 2026 call, dated May 7, 2026. That call marked a shift from near-term execution to a formalized multiyear plan, with management introducing "Vision One Centuri" and 2029 targets. CEO Christian Brown described the market in unusually strong terms, calling North American energy infrastructure a "true tailwind" that is "durable and long term in nature." Management repeatedly described itself as conservative and framed its May reiteration of FY2026 guidance as conservatism rather than a change in outlook. On harder questions — the gap between Q1 book-to-bill and the full-year target, and why EBITDA growth trails gross profit growth — management answered directly.
Management Guidance
Management introduced FY2026 guidance on February 25, 2026: base revenue $3.15B–$3.45B, base gross profit $255M–$285M, revenue including storm $3.24B–$3.54B, adjusted EBITDA $280M–$310M, adjusted net income $55M–$75M, and net capex $75M–$90M. It reiterated those ranges unchanged on May 7, 2026, and said free cash flow should exceed $60M with net leverage around 2x by year-end 2026. Storm is modeled using a three-year average of $88M revenue and $28M gross profit. On August 4, 2026, the company said it raised full-year 2026 guidance; the new ranges were not in the source.
Trajectory
Revenue has grown from $550.1 million in Q1 FY2025 to $932.0 million in Q2 FY2026, with the latest quarter up about 29% year over year. The quarterly pattern is seasonal: Q1 is the weakest and Q3 the strongest, with Q4 and Q1 stepping down sequentially before the second-quarter rebound. Gross margin has moved with the seasons too — 3.7% in Q1 FY2025, 12.3% in Q4 FY2025, and 7.4% in Q2 FY2026 against 8.4% a year earlier. The code-computed signals show revenue accelerating while gross, operating, and EBITDA margins compress, and Q2 FY2026 EBITDA of $59.3 million was below the $72.7 million reported a year earlier.
The Model
The model projects FY+1 revenue of $3,600 million with EBITDA of $295 million, an 8.2% margin, and FY+2 revenue of $4,040 million with EBITDA of $339 million, an 8.4% margin. The near-term case rests on the record backlog and the FY2026 guidance management said it raised in August 2026. The FY+2 step assumes continued conversion of the data-center pipeline and the utility MSA base, alongside modest margin expansion.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2.9B | $3.6B | $4.0B |
| YoY Growth | — | +24.8% | +12.2% |
| EBITDA | $232M | $295M | $339M |
| EBITDA Margin | 8.0% | 8.2% | 8.4% |
Projections are the median of 5 independent model runs. The model’s revenue sits 5.4% above analyst consensus.
Management introduced FY2026 guidance on February 25, 2026: base revenue $3.15B–$3.45B, base gross profit $255M–$285M, revenue including storm $3.24B–$3.54B, adjusted EBITDA $280M–$310M, adjusted net income $55M–$75M, and net capex $75M–$90M. It reiterated those ranges unchanged on May 7, 2026, and said free cash flow should exceed $60M with net leverage around 2x by year-end 2026. Storm is modeled using a three-year average of $88M revenue and $28M gross profit. On August 4, 2026, the company said it raised full-year 2026 guidance; the new ranges were not in the source.
What Could Go Right — and Wrong
- Data-center pipeline converts: the roughly $300 million selected and negotiating books, and more of the $1.5 billion under evaluation converts.
- Base gross margin moves toward the 2029 target of 8.7%–9.7% through seasonality mitigation and a mix shift toward bid work.
- The record $6.5 billion backlog converts into revenue, with the CEO saying almost all of the FY2026 midpoint guidance was already under contract.
- Net leverage reaches about 2x by year-end 2026 and below 2x after, freeing cash.
- Cross-selling and small acquisitions add revenue: 3–4 tuck-ins, each under roughly $100 million of revenue.
- MSA volume risk: about 85% of backlog is MSA-based, not committed volume, and customers can terminate on notice.
- Margin execution: the shift toward bid work, to about 35% by 2029, raises fixed-price risk, and gross margin already compressed year over year.
- Customer concentration: one unnamed Non-Union Electric customer was 13% of Q1 2026 revenue and 23% of receivables and contract assets.
- Legal: a withheld-receivables dispute is unaccrued and could produce a significant loss that is not currently estimable.
- Competitor scale: Quanta, MasTec, MYR, Everus, and Primoris are larger and adding capacity.
Looking Ahead
Over the next 12 months, Centuri's story turns on conversion and margin. Management said it expects roughly $300 million of selected data-center work to book, with award flow slower in the second quarter and picking up at the end of Q3 and the start of Q4 2026. It targets free cash flow above $60 million for 2026 and net leverage around 2x by year-end, falling below 2x after. Two internal programs — a group-wide workforce forecasting tool and an enterprise project management office — are expected to be fully implemented during 2026. Longer term, the company targets base revenue growth of 10%–15% a year through 2029 and 3–4 tuck-in acquisitions, each under roughly $100 million of revenue.
- Q2 2026Data-center awards book — ~$300M selected and negotiating; booking not confirmed in source.
- Q2 2026Near-term bid decisions — Award decisions on the remaining ~$1.3B near-term pool.
- H2 2026Award flow pickup — Management expects slower Q2, then pickup end of Q3/start of Q4.
- Year-end 2026Leverage target — Net debt/adjusted EBITDA around 2x.
- FY2026Free cash flow target — Management expects FCF above $60M.
- During 2026Internal tools live — Workforce forecasting tool and enterprise PMO implemented.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $2.6B | $2.9B | $3.2B | +9.4% |
| Gross Margin | 8.0% | 8.2% | 8.3% | +23bps |
| EBITDA | $243M | $232M | $230M | -4.6% |
| EBITDA Margin | 9.2% | 8.0% | 7.1% | 118bps |
| Net Income | −$7M | $22M | $29M | +430.9% |
| Free Cash Flow | $59M | −$8M | −$15M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)8.3%
- EBITDA Margin (TTM)7.1%
- Net Margin (TTM)0.9%
- ROIC4.5%
- FCF Conversion-6.7%
- SBC / Revenue0.1%
The Company
Centuri Holdings is a North American utility and energy infrastructure services company with more than 115 years of operating history. It partners mainly with regulated electric, gas, and combination utilities to maintain, upgrade, and expand energy networks — replacing and installing gas and electric distribution infrastructure, doing utility-scale transmission work, and restoring service after storms and extreme weather. Its role in the AI build-out is physical rather than digital: data-center sites need power delivery, substations, interconnections, gas and water lines, fiber conduit, and cooling, and Centuri provides the crews that build that infrastructure.
The company reports through four segments: U.S. Gas Utility Services, Canadian Utility Services, Union Electric Utility Services, and Non-Union Electric Utility Services. It operates 97 primary locations across 46 U.S. states and six Canadian provinces, with executive offices in Phoenix, Arizona and an in-house fabrication shop inside U.S. Gas. Most revenue runs through master services agreements with regulated utilities, and customers generally supply the materials. Centuri completed its IPO in April 2024; former parent Southwest Gas Holdings no longer owned any Centuri equity effective September 5, 2025.
Business Segments
Competitive Landscape
Centuri competes for utility and data-center infrastructure work against larger contractors. Its 10-K names Quanta Services, MYR Group, MasTec, Primoris, and Everus Construction Group as competitors, and the source describes Centuri as a meaningful but mid-tier player against several much larger rivals. Its stated differentiation is integrated scope — transmission tower construction, substation work, interconnects, and battery storage under one provider — plus a 100% MSA renewal rate and a footprint across 46 states and six provinces. Management targets transmission projects under $200 million, large enough to compete with smaller regional players but below the typical targets of larger industrial players.
- Quanta ServicesNamed in the 10-K as a competitor. Neighbor read-through: record $48.5B backlog, 1.6x book-to-bill, and $500–700M of investment to double transformer manufacturing capacity. AEP cited Quanta as its strategic transmission partner.
- MYR GroupNamed in the 10-K as a competitor. Neighbor read-through: Q1 revenue of $1.0B, record $2.84B backlog, and a 2026 T&D margin target raised to 8%–11%.
- MasTecNamed in the 10-K as a competitor. Neighbor read-through: Q1 revenue of $3.829B, record $20.3B backlog, and about 6,000 people added year over year.
- Named in the 10-K as a competitor. Neighbor read-through: cut 2026 guidance after solar overruns, but booked over $400M of data-center enabling infrastructure in Q1 2026.
- Everus Construction GroupNamed in the 10-K as a competitor. Neighbor read-through: Q1 revenue of $1.04B, record $3.68B backlog, and T&D EBITDA margin of 13.3%.
Supply Chain
Centuri sits between regulated utilities and the physical energy build-out, supplying construction and maintenance labor rather than equipment. Customers generally supply the materials, and the main named supply constraints — electric transformers and gas risers — are customer-provided components. No customer or competitor transcript in the source mentions Centuri by name.