CTRI Centuri Holdings Inc

Centuri Holdings, Inc. (NYSE: CTRI) ("Centuri" or the "Company") today announced financial and operating results for the second quarter, ended June 30, 2024. The Company also provided an outlook for full year financial performance.

Second Quarter Business and Financial Highlights

• Completed an initial public offering (“IPO”) and concurrent private placement of common stock on the New York Stock Exchange (“NYSE”); raised final combined net proceeds of $328.0 million primarily used to pay down outstanding debt
• Secured several notable customer awards reflecting total multi-year estimated revenue potential of more than $400 million from a combination of Master Service Agreement (MSA) extensions and strategic bid work; exited the second quarter 2024 with a backlog totaling $4.7 billion
• Finalized extensive two-phase review of corporate and operating company overhead through an executive leadership-led process that is expected to generate approximately $29 million in annualized run rate savings in 2025
• Revenue of $672.1 million
• Net income attributable to common stock of $11.7 million (diluted earnings per share of $0.14)
• Adjusted Net Income of $17.0 million (adjusted diluted earnings per share of $0.20)
• Adjusted EBITDA of $68.6 million and Adjusted EBITDA margin of 10.2%
• Announced in June 2024 that Bill Fehrman will be stepping down as President and CEO of Centuri effective July 31, 2024 to take the CEO role at one of the nation’s largest publicly traded utility companies, while remaining on the Board until a new CEO is named
• Appointed Paul Caudill, a highly experienced power and energy executive, prior Centuri advisory board member, and senior advisor to Bill Fehrman during his tenure as President and CEO of Centuri, as Interim President and CEO until a permanent CEO is identified
• Engaged a national search firm in July 2024 to initiate the process of identifying a permanent CEO

“In the months since the IPO, we experienced weaker than expected customer spending in multiple states, including Illinois, California, and Maryland. This was largely due to unfavorable rate case outcomes for our regulated utility MSA customers, and we were also impacted by bid work with MSA customers that was either delayed or did not materialize. While these factors negatively affected financial results in the second quarter, our focus on cost reduction allowed us to maintain an EBITDA margin in line with historical averages. In addition, the cost saving initiatives, which we began early in Q1, have instilled discipline around capital allocation and drove solid free cash flow generation on adjusted EBITDA,” said Bill Fehrman, outgoing President and CEO of Centuri.

“Centuri is well positioned for the future. We are engaging new customers and new projects through our growth strategy, and we’ll continue the cost savings initiatives led by incoming Interim President & CEO Paul Caudill. Together, these efforts have set the stage for continued growth and customer diversification. I want to thank the highly capable team at Centuri who will continue to lead our new stand-alone public platform and drive significant stakeholder value over the long-term," concluded Fehrman.

Management Commentary

Financial results during the second quarter of 2024 declined on a year-over-year basis primarily driven by 1) several of Centuri's largest MSA clients reducing infrastructure spending due to unfavorable regulatory decisions or deferred hearings, 2) caution in spending among utilities due to a prolonged higher interest rate environment, 3) a seasonally uncharacteristic, higher margin bid job in the second quarter of 2023 that did not repeat, and 4) reduced offshore wind activities primarily due to the cancellation of a project in late 2023.

Centuri remains intensely focused on new business development initiatives. During the second quarter of 2024, the Company continued to execute its commercial strategy and had success in extending and securing new business across several service lines and regions, including notable strategic bid work wins that leverage Centuri's core competencies. Further, management finalized its detailed corporate and operating company overhead reviews, which will drive meaningful savings in 2025, and started the process of identifying savings through a comprehensive supply chain and asset utilization review program that is in its early stages. The focus on cost control and capital efficiency will remain at the forefront under the leadership of Paul Caudill, who played a key role as an advisor to the CEO in helping to develop and implement these programs.

Full Year 2024 Outlook

• Revenue of $2.5 to $2.7 billion
• Adjusted EBITDA margin percentage of 9.0% to 9.6%
• Net capital expenditures of $90 to $99 million

Centuri Holdings, Inc. and Subsidiaries Supplemental Segment Data For the Fiscal Three and Six Months Ended June 30, 2024 and July 2, 2023 (In thousands, except percentages) (Unaudited)

Segment Results

Three months ended June 30, 2024 compared to the three months ended July 2, 2023

 

Fiscal Three Months Ended

 

Change

(dollars in thousands)

June 30, 2024

 

July 2, 2023

 

$

 

%

Revenue:

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas

$

340,686

 

 

50.7

%

 

$

391,882

 

48.6

%

 

$

(51,196

)

 

(13.1

%)

Canadian Gas

 

40,990

 

 

6.1

%

 

 

48,084

 

 

6.0

%

 

 

(7,094

)

 

(14.8

%)

Union Electric

 

164,211

 

 

24.4

%

 

 

218,225

 

 

27.1

%

 

 

(54,014

)

 

(24.8

%)

Non-Union Electric

 

120,512

 

 

17.9

%

 

 

133,561

 

 

16.6

%

 

 

(13,049

)

 

(9.8

%)

Other

 

5,676

 

 

0.8

%

 

 

14,027

 

 

1.7

%

 

 

(8,351

)

 

(59.5

%)

Consolidated revenue

$

672,075

 

 

100.0

%

 

$

805,779

 

 

100.0

%

 

$

(133,704

)

 

(16.6

%)

Gross profit (loss):

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas

$

25,156

 

 

7.4

%

 

$

44,040

 

 

11.2

%

 

$

(18,884

)

 

(42.9

%)

Canadian Gas

 

9,358

 

 

22.8

%

 

 

7,574

 

 

15.8

%

 

 

1,784

 

 

23.6

%

Union Electric

 

12,079

 

 

7.4

%

 

 

17,097

 

 

7.8

%

 

 

(5,018

)

 

(29.4

%)

Non-Union Electric

 

16,237

 

 

13.5

%

 

 

20,575

 

 

15.4

%

 

 

(4,338

)

 

(21.1

%)

Other

 

(2,326

)

 

(41.0

%)

 

 

686

 

 

4.9

%

 

 

(3,012

)

 

NM

 

Consolidated gross profit

$

60,504

 

 

9.0

%

 

$

89,972

 

 

11.2

%

 

$

(29,468

)

 

(32.8

%)

NM — Percentage is not meaningful

• Revenue from our U.S. Gas segment totaled $340.7 million, reflecting a decrease of $51.2 million, or 13.1%, compared to the prior year period. This decrease was largely due to a reduction in net volumes under existing customer MSAs stemming primarily from delayed or unfavorable regulatory decisions faced by key customers and timing of bid projects, as the prior year benefited from the commencement of a large project that has since been completed. As a percentage of revenue, gross profit decreased to 7.4% in the current period from 11.2% in the same period from the prior year. Profitability was negatively affected by lower margins on bid work and one-time severance costs incurred during the current period. Additionally, the prior year period reflected higher utilization of fixed costs due to increased volumes on both MSA and bid projects.

• Revenue from our Canadian Gas segment totaled $41.0 million, reflecting a decrease of $7.1 million, or 14.8%, compared to the prior year period. This decrease was primarily due to a reduction in net volumes under existing MSAs. As a percentage of revenue, gross profit increased to 22.8% in the current period as compared to 15.8% in the same period from the prior year primarily due to favorable changes in mix of work.

• Revenue from our Union Electric segment totaled $164.2 million, reflecting a decrease of $54.0 million, or 24.8%, compared to the prior year period. This decrease was driven by a decline in offshore wind revenue of $20.7 million due to timing of projects, as well as a net reduction in volumes under other existing MSAs. Storm restoration services revenue for the Union Electric segment was $6.1 million for the current period compared to $5.1 million for the prior year period. As a percentage of revenue, gross profit decreased to 7.4% in the current period as compared to 7.8% in the prior year period primarily due to changes in the mix of work.

• Revenue from our Non-Union Electric segment totaled $120.5 million, reflecting a decrease of $13.0 million, or 9.8%, compared to the prior year period. This decrease was primarily driven by a reduction in net volumes under existing customer MSAs. Storm restoration services revenue for the Non-Union Electric Segment was $30.2 million for the current period, compared to $28.9 million for the prior year period. As a percentage of revenue, gross profit decreased to 13.5% in the current period, compared to 15.4% in the prior year period. Profitability was negatively affected by lower work hours for existing crews which caused underutilization of fixed costs.

Centuri Holdings, Inc. and Subsidiaries Supplemental Segment Data For the Fiscal Three and Six Months Ended June 30, 2024 and July 2, 2023 (In thousands, except percentages) (Unaudited)

Six months ended June 30, 2024 compared to the six months ended July 2, 2023

 

Fiscal Six Months Ended

 

Change

(dollars in thousands)

June 30, 2024

 

July 2, 2023

 

$

 

%

Revenue:

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas

$

567,264

 

 

47.3

%

 

$

651,219

 

44.6

%

 

$

(83,955

)

 

(12.9

%)

Canadian Gas

 

75,638

 

 

6.3

%

 

 

87,387

 

 

6.0

%

 

 

(11,749

)

 

(13.4

%)

Union Electric

 

328,062

 

 

27.3

%

 

 

423,894

 

 

29.1

%

 

 

(95,832

)

 

(22.6

%)

Non-Union Electric

 

217,127

 

 

18.1

%

 

 

270,167

 

 

18.5

%

 

 

(53,040

)

 

(19.6

%)

Other

 

12,007

 

 

1.0

%

 

 

26,405

 

 

1.8

%

 

 

(14,398

)

 

(54.5

%)

Consolidated revenue

$

1,200,098

 

 

100.0

%

 

$

1,459,072

 

 

100.0

%

 

$

(258,974

)

 

(17.7

%)

Gross profit (loss):

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas

$

21,180

 

 

3.7

%

 

$

47,406

 

 

7.3

%

 

$

(26,226

)

 

(55.3

%)

Canadian Gas

 

14,903

 

 

19.7

%

 

 

12,050

 

 

13.8

%

 

 

2,853

 

 

23.7

%

Union Electric

 

23,448

 

 

7.1

%

 

 

32,306

 

 

7.6

%

 

 

(8,858

)

 

(27.4

%)

Non-Union Electric

 

19,037

 

 

8.8

%

 

 

39,062

 

 

14.5

%

 

 

(20,025

)

 

(51.3

%)

Other

 

(4,785

)

 

(39.9

%)

 

 

1,097

 

 

4.2

%

 

 

(5,882

)

 

NM

 

Consolidated gross profit

$

73,783

 

 

6.1

%

 

$

131,921

 

 

9.0

%

 

$

(58,138

)

 

(44.1

%)

NM — Percentage is not meaningful

• Revenue from our U.S. Gas segment totaled $567.3 million, reflecting a decrease of $84.0 million, or 12.9%, compared to the prior year period. This decrease was largely due to a reduction in net volumes under existing customer MSAs stemming primarily from delayed or unfavorable regulatory decisions faced by key customers, unfavorable winter weather which delayed work in the first quarter, and timing of bid projects, as the prior year benefited from the commencement of a large project that has since been completed. As a percentage of revenue, gross profit decreased to 3.7% in the current period from 7.3% in the prior year period. Profitability was negatively affected by unfavorable winter weather and lower margins on bid work. Additionally, the prior year period reflected higher utilization of fixed costs due to increased volumes on both MSA and bid projects.

• Revenue from our Canadian Gas segment totaled $75.6 million, reflecting a decrease of $11.7 million, or 13.4%, compared to the prior year period. This decrease was primarily due to a reduction in net volumes under existing MSAs. As a percentage of revenue, gross profit increased to 19.7% in the current period as compared to 13.8% in the prior year period primarily due to favorable changes in mix of work.

• Revenue from our Union Electric segment totaled $328.1 million, reflecting a decrease of $95.8 million, or 22.6%, compared to the prior year period. This decrease was driven by a decline in offshore wind revenue of $33.4 million due to timing of projects, as well as a reduction in net volumes under existing customer MSAs, which was partially due to unfavorable weather. Storm restoration services revenue for the Union Electric segment was $13.6 million for the current period compared to $13.4 million for the prior year period. As a percentage of revenue, gross profit decreased to 7.1% in the current period as compared to 7.6% in the prior year period primarily due to changes in the mix of work.

• Revenue from our Non-Union Electric segment totaled $217.1 million, reflecting a decrease of $53.0 million, or 19.6%, compared to the prior year period. This decrease was primarily driven by a decrease in volumes under existing MSAs, and a decrease in storm restoration revenue of $19.1 million (which was $32.0 million for the first six months of 2024 compared to $51.1 million for the same period in 2023). As a percentage of revenue, gross profit decreased to 8.8% in the current period, compared to 14.5% in the same period from the prior year. Profitability was negatively affected by unfavorable changes in mix of work, including less storm restoration revenue (which typically generates higher profit margins) and underutilization of fixed costs.

Conference Call Information

Centuri will conduct a conference call today, Monday, July 29, 2024 at 12:00 PM ET / 9:00 AM PT to discuss its second quarter 2024 financial results, business highlights, and the Company’s previously disclosed leadership transition. Speakers on the call will include Bill Fehrman, President and Chief Executive Officer; Gregory Izenstark, Chief Financial Officer; and other members of management. The conference call will be webcast live on the Company's investor relations (IR) website at https://investor.centuri.com. The conference call can also be accessed via phone by dialing (800) 267-6316, or for international callers, (203) 518-9783. A supplemental investor presentation will also be available on the IR website prior to the start of the conference call. The earnings call will also be archived on the IR website and a replay of the call will be available by dialing (888) 562-0855 in the U.S., or (402) 220-7339 internationally. The replay dial-in feature will be made available one hour after the call’s conclusion and will be active for 12 months.

About Centuri

Centuri Holdings, Inc. was formed for the purpose of completing an IPO and other related transactions in order to carry on the business of Centuri Group, Inc., its predecessor for financial reporting purposes. Centuri Group, Inc. is a strategic utility infrastructure services company that partners with regulated utilities to build and maintain the energy network that powers millions of homes and businesses across the United States and Canada.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can often be identified by the use of words such as “will,” “predict,” “continue,” “forecast,” “expect,” “believe,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “seek,” “estimate,” “should,” “may” and “assume,” as well as variations of such words and similar expressions referring to the future. The specific forward-looking statements made herein include (without limitation) statements regarding our belief that the fundamentals of our business and services to our customers remain strong; our belief that, in the near term, the Company is well positioned to further implement its cost-focused initiatives while growing the business under the leadership of incoming Interim CEO Paul Caudill; our confidence that Centuri will benefit from multi-decade secular tailwinds in the energy and power infrastructure industries and the deployment of clean technologies, and that these forces are expected to drive growth with new and existing customers and support expansion into adjacent high growth service lines; our belief that the team at Centuri will continue to lead the Company and drive significant stakeholder value over the long-term; our estimation that awards secured in the quarter represent over $400 million in potential revenue; our expectation that our review of corporate and operating company overhead will result in meaningful savings, and our estimation that these savings will be $29 million annually; number ranges presented in our Full Year 2024 Outlook; and our belief that the current focus on cost control and capital efficiency will remain at the forefront under the leadership of Paul Caudill. A number of important factors affecting the business and financial results of Centuri could cause actual results to differ materially from those stated in the forward-looking statements. These factors include, but are not limited to, capital market risks and the impact of general economic or industry conditions. Factors that could cause actual results to differ also include (without limitation) those discussed in Centuri’s filings filed from time to time with the SEC. The statements in this press release are made as of the date of this press release, even if subsequently made available by Centuri on its website or otherwise. Centuri does not assume any obligation to update the forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise.

Backlog

Backlog represents our expected revenue from existing contracts and work in progress as of the end of the applicable reporting period.

Non-GAAP Measures

We prepare and present our financial statements in accordance with GAAP. However, management believes that EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Conversion, Adjusted Net Income (Loss), and Adjusted Diluted Earnings (Loss) per Share, all of which are measures not presented in accordance with GAAP, provide investors with additional useful information in evaluating our performance. We use these non-GAAP measures internally to evaluate performance and to make financial, investment, and operational decisions. We believe that presentation of these non-GAAP measures provides investors with greater transparency with respect to our results of operations and that these measures are useful for period-to-period comparisons of results. Management also believes that providing these non-GAAP measures helps investors evaluate the Company’s operating performance, profitability, and business trends in a way that is consistent with how management evaluates such matters.

EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA adjusted for (i) non-cash stock-based compensation expense, (ii) strategic review costs, and (iii) severance costs. Adjusted EBITDA Margin is defined as the percentage derived from dividing Adjusted EBITDA by revenue.

Free Cash Flow is defined as Adjusted EBITDA less net capital expenditures. Net capital expenditures is defined as capital expenditures, net of proceeds from sale of property and equipment. Free Cash Flow Conversion is derived from dividing Free Cash Flow by Adjusted EBITDA.

Adjusted Net Income (Loss) is defined as net income (loss) adjusted for (i) strategic review costs, (ii) severance costs, (iii) amortization of intangible assets, (iv) non-cash stock-based compensation expense, and (v) the income tax impact of adjustments that are subject to tax, which is determined using the incremental statutory tax rates of the jurisdictions to which each adjustment relates for the respective periods. Adjusted Dilutive Earnings per Share is defined as Adjusted Net Income (Loss) divided by weighted average diluted shares outstanding.

Using EBITDA as a performance measure has material limitations as compared to net income (loss), or other financial measures as defined under GAAP, as it excludes certain recurring items, which may be meaningful to investors. EBITDA excludes interest expense net of interest income; however, as we have borrowed money to finance transactions and operations, or invested available cash to generate interest income, interest expense and interest income are elements of our cost structure and can affect our ability to generate revenue and returns for our stockholders. Further, EBITDA excludes depreciation and amortization; however, as we use capital and intangible assets to generate revenues, depreciation and amortization are necessary elements of our costs and ability to generate revenue. Finally, EBITDA excludes income taxes; however, as we are organized as a corporation, the payment of taxes is a necessary element of our operations. As a result of these exclusions from EBITDA, any measure that excludes interest expense net of interest income, depreciation and amortization, and income taxes has material limitations as compared to net income (loss). When using EBITDA as a performance measure, management compensates for these limitations by comparing EBITDA to net income (loss) in each period to allow for the comparison of the performance of the underlying core operations with the overall performance of the company on a full-cost, after-tax basis.

As to certain of the items related to Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Conversion, Adjusted Net Income (Loss), and Adjusted Diluted Earnings (Loss) per Share: (i) non-cash stock-based compensation expense varies from period to period due to changes in the estimated fair value of performance-based awards, forfeitures, and amounts granted; (ii) strategic review costs related to the separation of Centuri are non-recurring; and (iii) severance costs relate to non-recurring restructuring activities. Because EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Conversion, Adjusted Net Income (Loss), and Adjusted Diluted Earnings (Loss) per Share as defined exclude some, but not all, items that affect net income (loss) such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, net income (loss), and information reconciling the GAAP and non-GAAP financial measures, are set forth below. We are unable to provide reconciliations for forward-looking non-GAAP metrics without unreasonable efforts due to our inability to project non-recurring expenses.

Centuri Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

For the Fiscal Three and Six Months Ended

June 30, 2024 and July 2, 2023

(In thousands)

(Unaudited)

 

 

Fiscal Three Months Ended

 

Fiscal Six Months Ended

(dollars in thousands)

June 30, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

Net income (loss)

$

11,697

 

 

$

18,527

 

 

$

(13,536

)

 

$

11,422

 

Interest expense, net

 

22,629

 

 

 

24,525

 

 

 

46,728

 

 

 

46,901

 

Income tax (benefit) expense

 

(474

)

 

 

11,033

 

 

 

(21,247

)

 

 

6,825

 

Depreciation expense

 

27,724

 

 

 

30,190

 

 

 

55,375

 

 

 

61,393

 

Amortization of intangible assets

 

6,661

 

 

 

6,670

 

 

 

13,329

 

 

 

13,337

 

EBITDA

 

68,237

 

 

 

90,945

 

 

 

80,649

 

 

 

139,878

 

Non-cash stock-based compensation

 

80

 

 

 

689

 

 

 

(508

)

 

 

833

 

Strategic review costs

 

(1,867

)

 

 

1,137

 

 

 

2,010

 

 

 

1,228

 

Severance costs

 

2,186

 

 

 

163

 

 

 

6,657

 

 

 

232

 

Adjusted EBITDA

$

68,636

 

 

$

92,934

 

 

$

88,808

 

 

$

142,171

 

Adjusted EBITDA Margin (% of revenue)

 

10.2

%

 

 

11.5

%

 

 

7.4

%

 

 

9.7

%

 

Fiscal Three Months Ended

 

Fiscal Six Months Ended

(dollars in thousands)

June 30, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

Adjusted EBITDA

$

68,636

 

 

$

92,934

 

 

$

88,808

 

 

$

142,171

 

Net capital expenditures

 

(20,029

)

 

 

(28,575

)

 

 

(48,904

)

 

 

(49,146

)

Free Cash Flow

$

48,607

 

 

$

64,359

 

 

$

39,904

 

 

$

93,025

 

Free Cash Flow Conversion (% of adjusted EBITDA)

 

70.8

%

 

 

69.3

%

 

 

44.9

%

 

 

65.4

%

 

Centuri Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

For the Fiscal Three and Six Months Ended

June 30, 2024 and July 2, 2023

(In thousands)

(Unaudited)

 

Fiscal Three Months Ended

 

Fiscal Six Months Ended

(dollars in thousands)

June 30, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

Net income (loss)

$

11,697

 

 

$

18,527

 

 

$

(13,536

)

 

$

11,422

 

Strategic review costs

 

(1,867

)

 

 

1,137

 

 

 

2,010

 

 

 

1,228

 

Severance costs

 

2,186

 

 

 

163

 

 

 

6,657

 

 

 

232

 

Amortization of intangible assets

 

6,661

 

 

 

6,670

 

 

 

13,329

 

 

 

13,337

 

Non-cash stock-based compensation

 

80

 

 

 

689

 

 

 

(508

)

 

 

833

 

Income tax impact of adjustments(1)

 

(1,766

)

 

 

(2,165

)

 

 

(5,373

)

 

 

(3,908

)

Adjusted Net Income (Loss)

$

16,991

 

 

$

25,021

 

 

$

2,579

 

 

$

23,144

 

(1)

 

Calculated based on a blended statutory tax rate of 25%.

 

 

Fiscal Three Months Ended

 

Fiscal Six Months Ended

 

June 30, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

Diluted earnings (loss) per share attributable to common stock (GAAP as reported)

$

0.14

 

 

$

0.24

 

 

$

(0.17

)

 

$

0.12

 

Add-back (deduct) net income (loss) attributable to noncontrolling interests

 

—

 

 

 

0.02

 

 

 

—

 

 

 

0.04

 

Strategic review costs

 

(0.02

)

 

 

0.02

 

 

 

0.03

 

 

 

0.02

 

Severance costs

 

0.03

 

 

 

—

 

 

 

0.09

 

 

 

—

 

Amortization of intangible assets

 

0.07

 

 

 

0.09

 

 

 

0.16

 

 

 

0.18

 

Non-cash stock-based compensation

 

—

 

 

 

0.01

 

 

 

(0.01

)

 

 

0.01

 

Income tax impact of adjustments

 

(0.02

)

 

 

(0.03

)

 

 

(0.07

)

 

 

(0.05

)

Adjusted Diluted Earnings per Share

$

0.20

 

 

$

0.35

 

 

$

0.03

 

 

$

0.32

 

 

Centuri Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

For the Fiscal Three and Six Months Ended

June 30, 2024 and July 2, 2023

(In thousands, except per share information)

(Unaudited)

 

Fiscal Three Months Ended

 

Fiscal Six Months Ended

 

June 30, 2024

 

July 2, 2023

 

June 30, 2024

 

July 2, 2023

Revenue

$

643,394

 

 

$

775,473

 

 

$

1,148,139

 

 

$

1,399,962

 

Revenue, related party

 

28,681

 

 

 

30,306

 

 

 

51,959

 

 

 

59,110

 

Total revenue, net

 

672,075

 

 

 

805,779

 

 

 

1,200,098

 

 

 

1,459,072

 

Cost of revenue (including depreciation)

 

585,755

 

 

 

688,569

 

 

 

1,078,608

 

 

 

1,272,684

 

Cost of revenue, related party (including depreciation)

 

25,816

 

 

 

27,238

 

 

 

47,707

 

 

 

54,467

 

Total cost of revenue

 

611,571

 

 

 

715,807

 

 

 

1,126,315

 

 

 

1,327,151

 

Gross profit

 

60,504

 

 

 

89,972

 

 

 

73,783

 

 

 

131,921

 

Selling, general and administrative expenses

 

20,698

 

 

 

30,100

 

 

 

49,248

 

 

 

53,639

 

Amortization of intangible assets

 

6,661

 

 

 

6,670

 

 

 

13,329

 

 

 

13,337

 

Operating income

 

33,145

 

 

 

53,202

 

 

 

11,206

 

 

 

64,945

 

Interest expense, net

 

22,629

 

 

 

24,525

 

 

 

46,728

 

 

 

46,901

 

Other income, net

 

(707

)

 

 

(883

)

 

 

(739

)

 

 

(203

)

Income (loss) before income taxes

 

11,223

 

 

 

29,560

 

 

 

(34,783

)

 

 

18,247

 

Income tax (benefit) expense

 

(474

)

 

 

11,033

 

 

 

(21,247

)

 

 

6,825

 

Net income (loss)

 

11,697

 

 

 

18,527

 

 

 

(13,536

)

 

 

11,422

 

Net income (loss) attributable to noncontrolling interests

 

10

 

 

 

1,381

 

 

 

(165

)

 

 

3,120

 

Net income (loss) attributable to common stock

$

11,687

 

 

$

17,146

 

 

$

(13,371

)

 

$

8,302

 

 

 

 

 

 

 

 

 

Income (loss) per share attributable to common stock:

 

 

 

 

 

 

 

Basic

$

0.14

 

 

$

0.24

 

 

$

(0.17

)

 

$

0.12

 

Diluted

$

0.14

 

 

$

0.24

 

 

$

(0.17

)

 

$

0.12

 

Shares used in computing earnings per share:

 

 

 

 

 

 

 

Weighted average basic shares outstanding

 

84,629

 

 

 

71,666

 

 

 

78,147

 

 

 

71,666

 

Weighted average diluted shares outstanding

 

84,636

 

 

 

71,666

 

 

 

78,147

 

 

 

71,666

 

 

Centuri Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

June 30,

2024

 

December 31,

2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

30,919

 

 

$

33,407

 

Accounts receivable, net

 

326,065

 

 

 

335,196

 

Accounts receivable, related party, net

 

12,170

 

 

 

12,258

 

Contract assets

 

286,794

 

 

 

266,600

 

Contract assets, related party

 

2,242

 

 

 

3,208

 

Prepaid expenses and other current assets

 

65,503

 

 

 

32,258

 

Total current assets

 

723,693

 

 

 

682,927

 

Property and equipment, net

 

533,927

 

 

 

545,442

 

Intangible assets, net

 

355,061

 

 

 

369,048

 

Goodwill, net

 

372,729

 

 

 

375,892

 

Right-of-use assets under finance leases

 

38,750

 

 

 

43,525

 

Right-of-use assets under operating leases

 

112,605

 

 

 

118,448

 

Other assets

 

84,855

 

 

 

54,626

 

Total assets

$

2,221,620

 

 

$

2,189,908

 

LIABILITIES, TEMPORARY EQUITY AND EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

31,194

 

 

$

42,552

 

Current portion of finance lease liabilities

 

10,572

 

 

 

11,370

 

Current portion of operating lease liabilities

 

19,634

 

 

 

19,363

 

Accounts payable

 

116,595

 

 

 

116,583

 

Accrued expenses and other current liabilities

 

158,362

 

 

 

187,050

 

Contract liabilities

 

17,177

 

 

 

43,694

 

Total current liabilities

 

353,534

 

 

 

420,612

 

Long-term debt, net of current portion

 

866,682

 

 

 

1,031,174

 

Line of credit

 

143,597

 

 

 

77,121

 

Finance lease liabilities, net of current portion

 

19,417

 

 

 

24,334

 

Operating lease liabilities, net of current portion

 

99,278

 

 

 

105,215

 

Deferred income taxes

 

134,760

 

 

 

135,123

 

Other long-term liabilities

 

69,949

 

 

 

71,076

 

Total liabilities

 

1,687,217

 

 

 

1,864,655

 

Commitments and contingencies

 

 

 

Temporary equity:

 

 

 

Redeemable noncontrolling interests

 

3,969

 

 

 

99,262

 

Equity:

 

 

 

Common stock, $0.01 par value, 850,000,000 shares authorized, 88,517,521 shares issued and outstanding at June 30, 2024 and 1,000 shares issued and outstanding at December 31, 2023

 

885

 

 

 

—

 

Additional paid-in capital

 

694,427

 

 

 

374,124

 

Accumulated other comprehensive loss

 

(7,606

)

 

 

(4,025

)

Accumulated deficit

 

(157,272

)

 

 

(144,108

)

Total equity

 

530,434

 

 

 

225,991

 

Total liabilities, temporary equity and equity

$

2,221,620

 

$

2,189,908

 

 

Centuri Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows

For the Fiscal Six Months Ended

June 30, 2024 and July 2, 2023

(In thousands)

(Unaudited)

 

Fiscal Six Months Ended

 

June 30, 2024

 

July 2, 2023

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(13,536

)

 

$

11,422

 

Adjustments to reconcile net (loss) income to net cash used in operating activities

 

 

 

Depreciation

 

55,375

 

 

 

61,393

 

Amortization of intangible assets

 

13,329

 

 

 

13,337

 

Amortization of debt issuance costs

 

2,585

 

 

 

2,519

 

Non-cash stock-based compensation expense

 

(508

)

 

 

833

 

Gain on sale of equipment

 

(1,995

)

 

 

(1,835

)

Amortization of right-of-use assets

 

10,216

 

 

 

7,462

 

Deferred income taxes

 

(8,297

)

 

 

2,093

 

Changes in assets and liabilities, net of non-cash transactions

 

(133,580

)

 

 

(116,711

)

Net cash used in operating activities

 

(76,411

)

 

 

(19,487

)

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(53,154

)

 

 

(53,752

)

Proceeds from sale of property and equipment

 

4,250

 

 

 

4,606

 

Net cash used in investing activities

 

(48,904

)

 

 

(49,146

)

Cash flows from financing activities:

 

 

 

Proceeds from initial public offering and private placement, net of offering costs paid

 

330,343

 

 

 

—

 

Proceeds from line of credit borrowings

 

237,553

 

 

 

179,276

 

Payment of line of credit borrowings

 

(168,361

)

 

 

(78,729

)

Principal payments on long-term debt

 

(177,687

)

 

 

(23,604

)

Principal payments on finance lease liabilities

 

(5,771

)

 

 

(6,074

)

Redemption of redeemable noncontrolling interest

 

(92,838

)

 

 

(39,894

)

Other

 

(173

)

 

 

(213

)

Net cash provided by financing activities

 

123,066

 

 

 

30,762

 

Effects of foreign exchange translation

 

(239

)

 

 

298

 

Net decrease in cash and cash equivalents

 

(2,488

)

 

 

(37,573

)

Cash and cash equivalents, beginning of period

 

33,407

 

 

 

63,966

 

Cash and cash equivalents, end of period

$

30,919

 

 

$

26,393

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240729252960/en/

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