The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and corresponding notes in Item 1 — Financial Statements within Part I of this Quarterly Report on Form 10-Q, and our Annual Report on Form 10-K for the fiscal year ended December 28, 2025 filed with the SEC on February 26, 2026 (our “2025 Annual Report”).
Unless the context otherwise requires, references to “we,” “us,” “our,” “the Company,” and “our Company” refer to Centuri Holdings, Inc. and its consolidated subsidiaries. This discussion contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed within Item 1A. Risk Factors in our 2025 Annual Report. See “Cautionary Note Regarding Forward-Looking Statements.”
We use a 52/53-week fiscal year that ends on the Sunday closest to the end of the calendar year. Unless otherwise stated, references to months and quarters throughout relate to fiscal months and quarters rather than calendar months and quarters. The first fiscal six months of 2026 and 2025 ended on June 28, 2026 and June 29, 2025, respectively, and each period had 26 weeks. The second fiscal quarters of 2026 and 2025 each had 13 weeks.
Overview
Company Overview
We are a leading North American utility and energy infrastructure services company, and we partner with regulated utilities to maintain, upgrade and expand the energy network that powers millions of homes and businesses. We serve as a long-term strategic partner to, and an extension of, North America’s electric, gas and combination utility providers, delivering a wide range of infrastructure solutions to ensure safe, reliable and environmentally sustainable energy operations. Our service offerings primarily consist of the modernization of utility infrastructure through the replacement, maintenance, retrofitting and installation of electric and natural gas distribution and utility-scale transmission networks and building capacity to meet current and future demands. We also serve complementary, attractive and growing end markets such as distributed power projects and data centers. Our essential services enable our customers to enhance the safety, reliability and environmental sustainability of the electric and natural gas networks that consumers rely upon to meet their essential and evolving energy needs. Our strategy is focused primarily on maintaining and growing services to our existing customers through master service agreements (“MSAs”) and bid work, securing new customer relationships, providing services to select adjacent end-markets, expanding our geographic footprint further into the Southeastern and Midwestern United States and Canada, and diversifying our portfolio of work. Guided by our values and our unwavering commitment to serve as a long-term partner to customers and communities, our employees enable our customers to safely and reliably deliver electricity and natural gas and achieve their goals for environmental sustainability.
Separation from Southwest Gas Holdings
We completed an initial public offering (“IPO”) in April 2024. Following the IPO, our former parent, Southwest Gas Holdings, Inc. (“Southwest Gas Holdings”), reduced its ownership interest through a series of secondary offerings and private placements which culminated in Southwest Gas Holdings no longer owning any equity interest in our Company effective September 5, 2025. Accordingly, we no longer qualify as a “controlled company” under the New York Stock Exchange rules.
Segment Information
We report under the following four reportable segments: (i) U.S. Gas Utility Services (“U.S. Gas”); (ii) Canadian Utility Services (“Canadian Operations”); (iii) Union Electric Utility Services (“Union Electric”); and (iv) Non-Union Electric Utility Services (“Non-Union Electric”). Canadian Operations includes the results of Connect Utility Services Corporation (“Connect”), which was acquired in November 2025.
Factors Affecting Our Results of Operations
Our financial results may be impacted by economic conditions that impact businesses generally, such as inflationary impacts on goods and services consumed in the business, regulatory or environmental influences, seasonality and severe weather events, rising interest rates, labor markets and costs (including in regard to contracted or professional services),
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and the availability of those resources. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period.
During the second fiscal quarter of 2026, we reversed $9.0 million in revenue related to a legacy contract with the City of Chicago (the “City of Chicago reversal”) within our U.S. Gas segment upon completing our initial analysis of a court order entered on April 20, 2026, which required us to reassess our estimates of variable consideration under the legacy contract in accordance with ASC 606. This reversal decreased gross profit by the same amount, resulted in a $2.3 million tax benefit and reduced net income by $6.7 million. Refer to “Note 14 — Commitments and Contingencies — Legal Proceedings” to the financial statements for further details.
Market Developments
North America relies on electric and natural gas delivery infrastructure to maintain its dynamic economy, but existing infrastructure is subject to degradation and is often decades old. Governments have increased regulatory stringency and enacted legislation to support the necessary infrastructure investments in the sector, aimed at preventing disruption, enhancing safety and readying to meet current and future demands. Additionally, labor market constraints and a changing utility workforce have led utilities to become increasingly reliant on external outsourced utility infrastructure service providers, creating an overall growing market well-positioned for consolidation. We believe these trends represent a significant challenge for utilities, but also an opportunity for outsourced utility infrastructure services companies to build and maintain more efficient, sustainable infrastructure that can meet the energy needs of future generations.
Rising fuel, labor and material costs have in the past had, and could in the future have, a negative effect on our results of operations, to the extent we cannot pass these costs through to our customers. While we actively monitor economic, industry and market factors that could adversely impact our business, we cannot predict the effect that changes in such factors could have on our future results of operations, financial position and cash flows. Our results of operations in the second fiscal quarter of 2026 were impacted by increased fuel costs, particularly in our U.S. Gas and Non-Union Electric segments. We continue to monitor the impacts of elevated fuel costs and will assess their effect on future periods as market conditions evolve.
During the first fiscal six months of 2026, we incurred increased costs to scale up our workforce in response to increased demand.
Generally, our contracts provide that the customer is responsible for supplying the materials for their projects. Fluctuations in the price or availability of materials and equipment that we or our customers utilize could impact (positively or negatively, as applicable) costs to complete projects or result in the postponement of projects. Although certain of our customers have experienced previous disruptions in their supply chain for certain project materials, most of our customers have generally been able to procure the necessary materials in a timely manner.
Our operations also depend on the availability of certain equipment to perform services. We believe we have taken steps to secure delivery of a sufficient amount of equipment and do not anticipate any significant disruptions with respect to our fleet in the near-term.
Demand for Services
The seasonal nature of the industry we serve affects demand for our services. In addition to weather conditions, capital expenditure and maintenance budgets of our customers, as well as the related timing of approvals and seasonal spending patterns, influence our contract revenue and results of operations. Factors affecting our customers and their capital expenditure budgets include, but are not limited to, overall economic conditions, the introduction of new technologies, and our customers’ capital resources, financial performance, and strategic plans. Other factors that may impact our customers and their capital expenditure budgets include new regulations or regulatory actions, merger or acquisition activity involving our customers and the physical maintenance needs of our customers’ infrastructure.
Fluctuations in market prices for oil, gas and other energy sources can impact demand for our services. Such fluctuations can affect the level of activity in energy generation projects as well as pipeline construction projects. The availability of transportation and transmission capacity can also impact demand for our services, including energy generation, electric grid and pipeline construction projects. These fluctuations, as well as the highly competitive nature of our industry, can result in changes in the levels of activity, project mix and moreover the profitability of the services we provide.
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Utilities continue to implement or modify system integrity management programs to enhance safety pursuant to federal and state mandates. These programs have resulted in multi-year utility system replacement programs throughout the U.S., and we believe that we are well-positioned to serve the increased demand resulting from these programs.
Our services support customers’ environmental goals, such as reducing methane emissions from pipeline leaks through pipe repair and replacement, hardening electric infrastructure to prevent damage from storms or otherwise, and assisting gas and electric customers with their renewable and sustainable energy infrastructure initiatives. We believe that we are well-positioned to support growing customer attention in achieving environmental objectives through infrastructure construction and maintenance.
Project Variability
Margins for our projects may vary from period to period due to changes in the volume or type of work performed and the pricing structure of our projects. Additionally, factors such as site conditions, project location, labor shortages, weather events, environmental restrictions, regulatory delays, protests, political activity, legal challenges, or the performance of third parties may adversely impact our project performance.
In certain circumstances, such as with large bid contracts (especially those of a longer duration), or unit-price contracts with revenue caps, results may be impacted by differences between costs incurred and those anticipated when the work was originally bid. Work awarded, or failing to be awarded, by individual large customers can impact our results of operations.
Seasonality and Severe Weather Events
Generally, our revenue is lowest during the first fiscal quarter of the year due to less favorable winter weather and related working conditions in many of the areas where we perform work. Revenue typically improves as more favorable weather conditions occur during the summer and fall months. In cases of severe weather, such as following a regional storm, we may be engaged to perform restoration activities related to above-ground utility infrastructure, which typically results in higher margins due to higher equipment utilization and the absorption of fixed costs. Alternatively, these severe weather events can also delay projects, negatively impacting our results of operations. Severe weather events and the related impacts on our performance and results are not solely within the control of management and cannot always be predicted or mitigated.
Inflation
Under the terms of a majority of our MSAs and other customer agreements, materials used in our utility infrastructure service activities are specified, purchased and supplied by customers. However, our operations are affected by increases in prices, whether caused by inflation, tariffs, rising interest rates or other economic factors. We attempt to recover anticipated increases in the cost of labor, equipment, fuel and materials not purchased by customers through price escalation provisions that allow us to adjust billing rates for certain major contracts annually; by considering the estimated effect of such increases when bidding or pricing new work; or by entering into back-to-back contracts with suppliers and subcontractors. However, the annual adjustment provided by certain contracts is typically subject to a cap and there can be an extended period of time between the impact of inflation on our costs and when billing rates are adjusted. Our actual costs at times can exceed the contractual caps, and therefore negatively impact our operations. Additionally, rising interest rates on our variable-rate debt could have a negative effect on our business, financial condition and results of operations. Excluding fuel, our results for the second fiscal quarter of 2026 were not significantly impacted by increases in prices, including due to tariffs implemented by the Trump Administration.
Backlog
Backlog as of June 28, 2026 was approximately $6.4 billion, with approximately 83% of backlog related to MSAs. Backlog represents contracted revenue on existing bid agreements as well as estimates of revenue to be realized over the contractual life of existing long-term MSAs. The contractual life of an MSA is defined as the stated length of the contract including any renewal options stated in the contract that we believe our customers are reasonably certain to execute.
Backlog differs from remaining performance obligations disclosed in “Note 3 — Revenue and Related Balance Sheet Accounts” to the condensed consolidated financial statements, as remaining performance obligations are limited to contractually obligated revenue on our contracts that exceed one year, which is typically only bid projects, whereas backlog is inclusive of all contracts regardless of length and includes estimated future work over the contractual life of MSAs. Generally, customers are not contractually committed to specific volumes of work under MSAs, and MSAs may be terminated by either party upon notice. Revenue estimates for MSAs are based on historical customer trends. As backlog
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only includes revenue estimates over the contractual life of MSAs, backlog tends to fluctuate based on the timing of MSA renewals.
Projects included in backlog can be subject to delays or cancellation as a result of regulatory requirements, adverse weather conditions, customer requirements and other factors that could cause actual revenue to differ significantly from the estimates, or cause revenue to be realized in periods other than originally expected.
Results of Operations
Our results of operations, on a consolidated basis and by segment, for the fiscal three- and six-month periods ended June 28, 2026 and June 29, 2025 are set forth and compared below.
Fiscal three months ended June 28, 2026 compared to the fiscal three months ended June 29, 2025
The following table summarizes our consolidated results of operations for the fiscal three months ended June 28, 2026, and June 29, 2025, including as a percentage of revenue, as well as the dollar and percentage change period-over-period.
Fiscal Three Months Ended Change
(dollars in thousands) June 28, 2026 June 29, 2025 $ %
Revenue, net $ 961,986 100.0 % $ 724,052 100.0 % $ 237,934 32.9 %
Cost of revenue (including depreciation) 892,844 92.8 % 656,251 90.6 % 236,593 36.1 %
Gross profit 69,142 7.2 % 67,801 9.4 % 1,341 2.0 %
Selling, general and administrative expenses 37,236 3.9 % 28,959 4.1 % 8,277 28.6 %
Amortization of intangible assets 7,757 0.8 % 6,683 0.9 % 1,074 16.1 %
Operating income 24,149 2.5 % 32,159 4.4 % (8,010) (24.9 %)
Interest expense, net 12,107 1.3 % 18,247 2.5 % (6,140) (33.6 %)
Other income, net (261) (0.1 %) (353) (0.1 %) 92 (26.1 %)
Income before income taxes 12,303 1.3 % 14,265 2.0 % (1,962) (13.8 %)
Income tax expense 6,155 0.7 % 6,186 0.9 % (31) (0.5 %)
Net income 6,148 0.6 % 8,079 1.1 % (1,931) (23.9 %)
Net income attributable to noncontrolling interests 49 0.0 % 26 0.0 % 23 88.8 %
Net income attributable to common stock $ 6,099 0.6 % $ 8,053 1.1 % $ (1,954) (24.3 %)
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Revenue and Gross Profit
The following table summarizes our revenue and gross profit for the periods indicated by segment as well as the dollar and percentage change from the prior year period. Gross margins are calculated by dividing gross profit by revenue. The discussion that follows highlights key revenue changes at the segment level. Changes in gross profit correspond with the discussed changes in revenue.
Fiscal Three Months Ended Change
(dollars in thousands) June 28, 2026 June 29, 2025 $ %
Revenue:
U.S. Gas $ 489,520 50.9 % $ 336,834 46.5 % $ 152,686 45.3 %
Canadian Operations 81,438 8.5 % 55,111 7.6 % 26,327 47.8 %
Union Electric 224,167 23.3 % 182,239 25.2 % 41,928 23.0 %
Non-Union Electric 166,861 17.3 % 149,868 20.7 % 16,993 11.3 %
Consolidated revenue $ 961,986 100.0 % $ 724,052 100.0 % $ 237,934 32.9 %
Gross profit:
U.S. Gas $ 20,647 4.2 % $ 26,424 7.8 % $ (5,777) (21.9 %)
Canadian Operations 13,042 16.0 % 9,485 17.2 % 3,557 37.5 %
Union Electric 20,195 9.0 % 15,355 8.4 % 4,840 31.5 %
Non-Union Electric 15,258 9.1 % 16,537 11.0 % (1,279) (7.7 %)
Consolidated gross profit $ 69,142 7.2 % $ 67,801 9.4 % $ 1,341 2.0 %
•Revenue from our U.S. Gas segment totaled $489.5 million, reflecting an increase of $152.7 million, or 45.3%, compared to the prior year period, primarily driven by new bid and MSA contracts. We also experienced additional volumes on existing MSAs during the current period. As a percentage of revenue, gross profit decreased to 4.2% in the current period from 7.8% in the prior year period. Profitability in the current year period was negatively impacted by the $9.0 million City of Chicago reversal. Excluding the impacts of this revenue reversal, gross profit as a percentage of revenue was 5.9%. Profitability in the current year period was also negatively impacted by elevated fuel costs, which reduced margin by approximately 75 basis points, and costs to scale up new work (impact of approximately 60 basis points), including for training and temporary equipment rental costs.
•Revenue from our Canadian Operations segment totaled $81.4 million, reflecting an increase of $26.3 million, or 47.8%, compared to the prior year period. This increase was driven by the acquisition of Connect, which contributed approximately $22.3 million in revenue and $2.4 million in gross profit in the current year period. As a percentage of revenue, gross profit decreased to 16.0% in the current period as compared to 17.2% in the prior year period, as the addition of Connect, which carries slightly lower margins than the segment's legacy gas operations, more than offset improvements in gas MSA margins.
•Revenue from our Union Electric segment totaled $224.2 million, reflecting an increase of $41.9 million, or 23.0%, compared to the prior year period. This increase was driven primarily by new bid projects. As a percentage of revenue, gross profit increased to 9.0% in the current period as compared to 8.4% in the prior year period. Gross margin for the current year period was positively impacted by a favorable change in estimated cost to complete on an offshore wind project that is nearing completion.
•Revenue from our Non-Union Electric segment totaled $166.9 million, reflecting an increase of $17.0 million, or 11.3%, compared to the prior year period due primarily to higher volumes on new and existing MSAs. Storm restoration services revenue decreased by $3.7 million and the related gross profit decreased $2.3 million between periods, as storm work performed in the current year period was performed for on-system customers at slightly lower margins. As a percentage of revenue, Non-Union Electric gross profit decreased to 9.1% in the current period compared to 11.0% in the prior year period driven by the decreased storm profitability and elevated fuel prices (fuel price increases had a negative impact of approximately 140 basis points), partially offset by increased productivity of crews on base MSA work.
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Selling, General and Administrative Expenses
Selling, general and administrative costs increased by $8.3 million, or 28.6%, in the current period compared to the prior year period, while remaining relatively flat as a percentage of revenue. We incurred $1.7 million in non-recurring costs related to the implementation of our One Centuri strategy and $1.4 million in non-recurring acquisition costs during the current period compared to $2.9 million in non-recurring costs (separation costs and one-time professional fees) in the prior year period. Bonus and stock-based compensation increased approximately $3.7 million between periods. Salaries and benefits were approximately $1.0 million higher in the current year period as several positions were added between periods to support increased growth. Additionally, Connect contributed approximately $0.7 million in selling, general and administrative costs in the current year period. The remainder of the increase was attributable to increased insurance costs, professional fees, and other general overhead costs.
Interest Expense, Net
The decrease of $6.1 million in interest expense, net in the current period compared to the prior year period was due to a reduction in average debt balance and a reduction in interest rates on outstanding variable-rate borrowings.
Income Tax
Our effective tax rate for the fiscal three months ended June 28, 2026 and June 29, 2025 was 50.0% and 43.4%, respectively. For the current year period, discrete tax items impacting the effective tax rate were primarily due to the City of Chicago reversal and differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense. There were no material discrete items in the fiscal three months ended June 29, 2025. Effective tax rates for both periods were impacted by the disproportionate amount of non-deductible expenses in relation to income before income taxes.
Consolidated Results
Fiscal six months ended June 28, 2026 compared to fiscal six months ended June 29, 2025
The following table summarizes our consolidated results of operations for the fiscal six-month periods ended June 28, 2026 and June 29, 2025, including as a percentage of revenue, as well as the dollar and percentage change between fiscal years.
Fiscal Six Months Ended Change
(dollars in thousands) June 28, 2026 June 29, 2025 $ %
Revenue, net $ 1,685,160 100.0 % $ 1,274,133 100.0 % $ 411,027 32.3 %
Cost of revenue (including depreciation) 1,580,260 93.8 % 1,186,004 93.1 % 394,256 33.2 %
Gross profit 104,900 6.2 % 88,129 6.9 % 16,771 19.0 %
Selling, general and administrative expenses 69,934 4.1 % 55,334 4.4 % 14,600 26.4 %
Amortization of intangible assets 15,559 0.9 % 13,349 1.0 % 2,210 16.6 %
Operating income 19,407 1.2 % 19,446 1.5 % (39) (0.2 %)
Interest expense, net 24,542 1.5 % 36,109 2.8 % (11,567) (32.0 %)
Other (income) expense, net (181) 0.0 % 127 0.0 % (308) NM
Loss before income taxes (4,954) (0.3 %) (16,790) (1.3 %) 11,836 (70.5 %)
Income tax benefit (1,617) (0.1 %) (6,945) (0.5 %) 5,328 (76.7 %)
Net loss (3,337) (0.2 %) (9,845) (0.8 %) 6,508 (66.1 %)
Net income attributable to noncontrolling interests 91 0.0 % 39 0.0 % 52 133.3 %
Net loss attributable to common stock $ (3,428) (0.2 %) $ (9,884) (0.8 %) $ 6,456 (65.3 %)
NM — Percentage is not meaningful
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Revenue and Gross Profit
The following table summarizes our revenue and gross profit for the periods indicated by segment, as well as the dollar and percentage change from the prior year period. Gross margins are calculated by dividing gross profit by revenue. The discussion that follows highlights key revenue changes at the segment level. Changes in gross profit correspond with the discussed changes in revenue.
Fiscal Six Months Ended Change
(dollars in thousands) June 28, 2026 June 29, 2025 $ %
Revenue:
U.S. Gas $ 774,019 45.9 % $ 534,528 42.0 % $ 239,491 44.8 %
Canadian Operations 141,466 8.4 % 94,895 7.4 % 46,571 49.1 %
Union Electric 428,236 25.4 % 357,707 28.1 % 70,529 19.7 %
Non-Union Electric 341,439 20.3 % 287,003 22.5 % 54,436 19.0 %
Consolidated revenue $ 1,685,160 100.0 % $ 1,274,133 100.0 % $ 411,027 32.3 %
Gross profit:
U.S. Gas $ 14,312 1.8 % $ 11,568 2.2 % $ 2,744 23.7 %
Canadian Operations 22,142 15.7 % 16,564 17.5 % 5,578 33.7 %
Union Electric 38,429 9.0 % 27,168 7.6 % 11,261 41.4 %
Non-Union Electric 30,017 8.8 % 32,829 11.4 % (2,812) (8.6 %)
Consolidated gross profit $ 104,900 6.2 % $ 88,129 6.9 % $ 16,771 19.0 %
•Revenue from our U.S. Gas segment totaled $774.0 million in the fiscal six months ended June 28, 2026, reflecting an increase of $239.5 million, or 44.8%, compared to the prior year period. This increase was driven by increased MSA volumes on existing contracts as well as new bid and MSA contracts. As a percentage of revenue, gross profit slightly decreased to 1.8% in the fiscal six months ended June 28, 2026, from 2.2% in the prior year period. Profitability in the current year period was negatively impacted by the $9.0 million City of Chicago reversal. Excluding the impacts of this reversal, gross profit as a percentage of revenue was 3.0%, improved from the prior year due to a more efficient performance in the first fiscal quarter, partially offset by reduced profitability in the second fiscal quarter due to costs incurred to scale up new work, including training and temporary equipment rental costs, as well as increased fuel costs in the current year period.
•Revenue from our Canadian Operations segment totaled $141.5 million in the fiscal six months ended June 28, 2026, reflecting an increase of $46.6 million, or 49.1%, compared to the prior year period. The increase was driven by the acquisition of Connect, which contributed approximately $45.5 million revenue and $5.8 million in gross profit in the current year period. As a percentage of revenue, gross profit decreased to 15.7% in the fiscal six months ended June 28, 2026 as compared to 17.5% in the prior year period. This decrease was primarily driven by Connect, which carries slightly lower margins than the segment's legacy gas operations.
•Revenue from our Union Electric segment totaled $428.2 million in the fiscal six months ended June 28, 2026, reflecting an increase of $70.5 million, or 19.7%, compared to the prior year period. As a percentage of revenue, gross profit increased to 9.0% in the fiscal six months ended June 28, 2026 as compared to 7.6% in the prior year period. Gross margin for the current year period was positively impacted by a favorable change in estimated cost to complete on an offshore wind project that is nearing completion.
•Revenue from our Non-Union Electric segment totaled $341.4 million in the fiscal six months ended June 28, 2026, reflecting an increase of $54.4 million, or 19.0%, compared to the prior year period. Storm restoration services revenue increased $3.2 million, but the related gross profit decreased $2.8 million, as storm work performed in the current year period was performed for on-system customers at slightly lower margins. As a percentage of revenue, gross profit decreased to 8.8% in the fiscal six months ended June 28, 2026 compared to 11.4% in the prior year period, largely due to the decreased profitability of storm restoration services work and elevated fuel costs in the current year period, and to a lesser extent by ramp-up inefficiencies experienced on a new MSA in the first fiscal quarter.
Selling, General and Administrative Expenses
Selling, general and administrative costs increased by $14.6 million, or 26.4% in the current period, while decreasing slightly as a percentage of revenue. The current year period included $3.1 million in non-recurring strategy implementation
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costs and acquisition costs, whereas the prior year included $3.2 million in non-recurring separation related costs and $1.4 million in non-recurring one-time professional fees.
Year-over-year, bonus and stock-based compensation increased approximately $5.7 million. Salaries and benefits were up approximately $2.6 million as several positions were added between periods to support increased growth. Additionally, Connect contributed approximately $1.3 million in selling, general and administrative costs in the current year period. We also experienced increased insurance costs, professional fees, and other general overhead costs.
Interest Expense, Net
Interest expense, net decreased by $11.6 million during the current period compared to the prior year period due to a reduction in average debt balance and a decrease in interest rates on outstanding variable-rate borrowings.
Income Tax
Our effective tax rate for the fiscal six-month periods ended June 28, 2026 and June 29, 2025 was 32.6% and 41.4%, respectively. For the current year period, discrete tax items impacting the effective tax rate were primarily due to the City of Chicago reversal and differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense. There were no material discrete items in the fiscal six months ended June 29, 2025. Effective tax rates for both periods were impacted by the disproportionate amount of non-deductible expenses in relation to loss before income taxes.
Non-GAAP Financial Measures
We prepare and present our financial statements in accordance with GAAP. However, management believes that EBIT, Adjusted EBIT, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Base Revenue, Base Gross Profit, and Base Gross Profit Margin, 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. Because these non-GAAP measures, as defined, exclude some, but not all, items that affect comparable GAAP financial measures, these non-GAAP measures may not be comparable to similarly titled measures of other companies. Management believes that, due to the non-recurring nature of the City of Chicago reversal, its exclusion from certain non-GAAP financial measures provides investors with a better understanding of the current performance of the business.
EBIT is defined as earnings before interest and taxes. Adjusted EBIT is defined as EBIT, adjusted for (i) non-cash stock-based compensation, (ii) acquisition costs, (iii) separation-related costs, (iv) strategy implementation costs, (v) other professional fees and (vi) the City of Chicago reversal. Adjusted EBITDA is defined as Adjusted EBIT, adjusted to remove depreciation and amortization. Adjusted EBITDA Margin is defined as the percentage derived from dividing Adjusted EBITDA by revenue.
Management believes that EBIT, Adjusted EBIT, and Adjusted EBITDA help investors gain an understanding of the factors affecting our ongoing cash earnings from which capital investments are made and debt is serviced, and that Adjusted EBIT and Adjusted EBITDA provide additional insight by removing certain expenses that are non-recurring or non-operational in nature. Management believes that Adjusted EBITDA Margin is useful for the same reason as Adjusted EBITDA, and also provides an additional understanding of how Adjusted EBITDA is impacted by factors other than changes in revenue.
Adjusted Net Income is defined as net income (loss) adjusted for (i) separation-related costs, (ii) strategy implementation costs, (iii) amortization of intangible assets, (iv) other professional fees, (v) City of Chicago reversal, (vi) non-cash stock-based compensation, (vii) acquisition costs and (viii) 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. Management believes that Adjusted Net Income helps investors understand the profitability of our business when excluding certain expenses that are non-recurring and/or non-operational in nature.
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Base Revenue is defined as total revenue, net adjusted to exclude revenue attributable to storm restoration services and the impact of the City of Chicago reversal. Base Gross Profit is defined as gross profit adjusted to exclude gross profit attributable to storm restoration services and the City of Chicago reversal. Base Gross Profit Margin is calculated by dividing Base Gross Profit by Base Revenue. U.S. Gas Base Revenue is defined as U.S. Gas segment revenue, net adjusted to exclude the impact of the City of Chicago reversal. U.S. Gas Base Gross Profit is defined as U.S. Gas segment gross profit adjusted to exclude the City of Chicago reversal. U.S. Gas Base Gross Profit Margin is calculated by dividing U.S. Gas Base Gross Profit by U.S. Gas Base Revenue. Revenue derived from storm restoration services varies from period to period due to the unpredictable nature of weather-related events, and when this type of work is performed, it typically generates a higher profit margin than base infrastructure services projects due to higher contractual hourly rates given the nature of services provided and improved operating efficiencies related to equipment utilization and absorption of fixed costs. While storm restoration services remain a key capability of the Company, management believes its exclusion provides more suitable disclosures for evaluating fundamental business performance and for comparison purposes.
Using EBIT, Adjusted EBIT, and Adjusted EBITDA as performance measures has material limitations as compared to net income (loss), or other financial measures as defined under GAAP, as they exclude certain recurring items, which may be meaningful to investors. These metrics all exclude 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, these metrics exclude income taxes; however, as we are organized as a corporation, the payment of taxes is a necessary element of our operations. Adjusted EBITDA also excludes depreciation and amortization; however, as we use capital and intangible assets to generate revenue, depreciation and amortization are necessary elements of our costs and ability to generate revenue. As a result of these exclusions, the metrics from which they are excluded have material limitations compared to net income (loss). When using these metrics as a performance measure, management compensates for these limitations by comparing them 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 these non-GAAP measures: (i) non-cash stock-based compensation varies from period to period due to changes in the estimated fair value of performance-based awards, forfeitures and amounts granted; (ii) acquisition costs vary from period to period depending on the level of our acquisition activity; (iii) separation-related costs represent expenses incurred post-IPO in connection with the separation and stand up of Centuri as its own public company, including costs incurred in association with Southwest Gas Holdings’ sale of its holdings of our common stock, which are not reflective of our ongoing operations and will not recur given that Centuri is fully separated from Southwest Gas Holdings; (iv) strategy implementation costs represent non-recurring consulting fees incurred in connection with implementing the Company’s new long-term strategy announced on May 6, 2026; (v) other professional fees are non-recurring costs associated with certain one-time events; and (vi) the City of Chicago reversal relates to a non-recurring reversal of revenue on a legacy contract. The most comparable GAAP financial measures and information reconciling the GAAP and non-GAAP financial measures are set forth below.
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EBIT, Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin
The following table presents reconciliations of net income (loss) to EBIT, Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin for the specified periods:
Fiscal Three Months Ended Fiscal Six Months Ended
(dollars in thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
Net income (loss) $ 6,148 $ 8,079 $ (3,337) $ (9,845)
Interest expense, net 12,107 18,247 24,542 36,109
Income tax expense (benefit) 6,155 6,186 (1,617) (6,945)
EBIT 24,410 32,512 19,588 19,319
Non-cash stock-based compensation 4,080 2,163 6,311 3,750
Acquisition costs 1,396 — 1,396 —
Separation-related costs — 1,564 — 3,175
Strategy implementation costs 1,676 — 1,676 —
Other professional fees — 1,379 — 1,379
City of Chicago reversal 8,953 — 8,953 —
Adjusted EBIT 40,515 37,618 37,924 27,623
Depreciation expense 27,388 27,539 54,747 55,096
Amortization of intangible assets 7,757 6,683 15,559 13,349
Adjusted EBITDA $ 75,660 $ 71,840 $ 108,230 $ 96,068
Adjusted EBITDA Margin (% of revenue) 7.9 % 9.9 % 6.4 % 7.5 %
Adjusted Net Income:
The following table presents reconciliations of net income (loss) to Adjusted Net Income for the specified periods:
Fiscal Three Months Ended Fiscal Six Months Ended
(dollars in thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
Net income (loss) $ 6,148 $ 8,079 $ (3,337) $ (9,845)
Separation-related costs — 1,564 — 3,175
Strategy implementation costs 1,676 — 1,676 —
Amortization of intangible assets 7,757 6,683 15,559 13,349
Other professional fees — 1,379 — 1,379
City of Chicago reversal 8,953 — 8,953 —
Non-cash stock-based compensation 4,080 2,163 6,311 3,750
Acquisition costs 1,396 — 1,396 —
Income tax impact of adjustments(1) (5,617) (2,948) (8,126) (5,414)
Adjusted Net Income $ 24,393 $ 16,920 $ 22,432 $ 6,394
(1)Calculated based on a blended statutory tax rate of 25%, except for acquisition costs which are not deductible.
Base Revenue, Base Gross Profit and Base Gross Profit Margin
The following tables present reconciliations of revenue, net to Base Revenue and gross profit to Base Gross Profit and Base Gross Profit Margin, as well as U.S. Gas revenue, net to U.S. Gas Base Revenue and U.S. Gas Gross Profit to U.S. Gas Base Gross Profit and U.S. Gas Base Gross Profit Margin.
Fiscal Three Months Ended Fiscal Six Months Ended
(dollars in thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
Total revenue, net $ 961,986 $ 724,052 $ 1,685,160 $ 1,274,133
Less: Storm restoration services revenue (11,412) (17,017) (45,892) (35,169)
Add: City of Chicago reversal 8,953 — 8,953 —
Base Revenue $ 959,527 $ 707,035 $ 1,648,221 $ 1,238,964
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Fiscal Three Months Ended Fiscal Six Months Ended
(dollars in thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
Gross profit $ 69,142 $ 67,801 $ 104,900 $ 88,129
Less: Storm restoration services gross profit (2,387) (4,978) (10,098) (10,992)
Add: City of Chicago reversal 8,953 — 8,953 —
Base Gross Profit $ 75,708 $ 62,823 $ 103,755 $ 77,137
Base Gross Profit Margin 7.9 % 8.9 % 6.3 % 6.2 %
Fiscal Three Months Ended Fiscal Six Months Ended
(dollars in thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
U.S. Gas revenue, net $ 489,520 $ 336,834 $ 774,019 $ 534,528
Add: City of Chicago reversal 8,953 — 8,953 —
U.S. Gas Base Revenue $ 498,473 $ 336,834 $ 782,972 $ 534,528
Fiscal Three Months Ended Fiscal Six Months Ended
(dollars in thousands) June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
U.S. Gas Gross profit $ 20,647 $ 26,424 $ 14,312 $ 11,568
Add: City of Chicago reversal 8,953 — 8,953 —
U.S. Gas Base Gross Profit $ 29,600 $ 26,424 $ 23,265 $ 11,568
U.S. Gas Base Gross Profit Margin 5.9 % 7.8 % 3.0 % 2.2 %
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Liquidity and Capital Resources
Sources and Uses of Liquidity
Our primary liquidity needs have historically related to supporting working capital requirements, funding capital expenditures and servicing our debt. As of June 28, 2026 and December 28, 2025, cash and cash equivalents were $40.5 million and $126.6 million, respectively. We believe our capital resources, including existing cash balances, together with our operating cash flows and borrowings under our credit facilities, are sufficient to meet our financial obligations for the next 12 months and the foreseeable future.
We evaluate our working capital requirements on a regular basis and regularly monitor financial markets and assess general economic conditions for possible impacts to our financial position. Our capital requirements may change to the extent we identify acquisition opportunities, if we experience difficulties collecting amounts due from customers, increase our working capital in connection with new or existing customer programs or repay certain credit facilities.
Cash Flows
The following table presents a summary of our cash flows:
Fiscal Six Months Ended
(dollars in thousands) June 28, 2026 June 29, 2025
Net cash used in operating activities $ (15,012) $ (10,983)
Net cash used in investing activities $ (48,877) $ (42,641)
Net cash (used in) provided by financing activities $ (21,929) $ 32,687
Operating Activities
Cash flows provided by operating activities are impacted by changes in the timing of demand for our services and related operating margins but can also be affected by working capital needs. Working capital is primarily affected by changes in accounts receivable, contract assets, prepaid expenses and other current assets, accounts payable, accrued expenses, contract liabilities, and income tax accounts, which are primarily related to changes in revenue and related costs of revenue. These working capital balances are affected by changes in revenue resulting from the timing and volume of work performed, variability in the timing of customer billings and collections of receivables, as well as settlement of payables and other liabilities.
Net cash used in operating activities for the fiscal six months ended June 28, 2026 was $15.0 million, compared to $11.0 million for the fiscal six months ended June 29, 2025, representing a decrease in operating cash flows of $4.0 million, which was driven by the following factors:
•Net income: Our net loss improved $6.5 million from the prior year period.
•Accounts receivable and contract assets: Cash flow decreased $16.2 million. The current year period benefitted from the sale of an additional $40.0 million in accounts receivable under the Securitization Facility. We had a significant increase in revenue between the current year period and the prior year period, including from certain bid projects in which billings are subject to completion of milestones, and certain MSAs in which customer approval is contractually required before invoices can be issued. Occasionally, these contractual requirements slow down the billing process, particularly when customers need to review large volumes of work.
•Contract liabilities: Cash flow increased $8.7 million, as certain new projects led to advance billings to customers.
Investing Activities
Net cash used in investing activities was $48.9 million in the fiscal six months ended June 28, 2026 compared to $42.6 million for the fiscal six months ended June 29, 2025, an increase of $6.3 million.
The construction industry is capital intensive, and we expect to continue to incur capital expenditures to meet anticipated needs for our services. For the fiscal six months ended June 28, 2026 and June 29, 2025, we had capital expenditures of $48.1 million and $45.2 million, respectively.
These items were partially offset by proceeds from the sale of property and equipment of $2.6 million and $2.5 million for the fiscal six-month periods ended June 28, 2026 and June 29, 2025, respectively.
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Financing Activities
Net cash used in financing activities was $21.9 million for the fiscal six months ended June 28, 2026, compared to net cash provided by financing activities of $32.7 million for the fiscal six months ended June 29, 2025, a decrease of $54.6 million. The decrease was primarily attributable to lower net proceeds from our revolving line of credit.
Foreign Operations
While we primarily operate in the United States, we also have operations in Canada. Therefore, changes in the value of Canadian dollars affect our financial statements when translated into U.S. dollars. The revenue from our Canadian operations was approximately 8% and 7% of total revenue for the fiscal six-month periods ended June 28, 2026 and June 29, 2025, respectively. At times, we also enter into transactions in foreign currencies, primarily in Canadian dollars, that subject us to currency risks. We regularly monitor our foreign currency exposure to determine the most effective foreign currency risk mitigation strategies. Currently, we are not party to any foreign currency exchange contracts.
Credit and Securitization Facilities
Term Loan and Revolving Credit Facility
On July 9, 2025, we signed the sixth amendment to our second amended and restated credit agreement to refinance and replace in full our existing term loan facility with an $800 million term loan facility, $93.6 million of which is comprised of new term loans used to refinance existing indebtedness and $706.4 million of which was used to refinance existing term loans. This amendment also increased the maximum principal amount of our senior secured revolving credit facility from $400 million to $450 million. On January 12, 2026, we entered into the seventh amendment to our amended and restated credit agreement, which (i) repriced the term loan, (ii) decreased the fixed margin for SOFR loans from 2.25% to 2.00% and (iii) decreased the fixed margin for base rate loans from 1.25% to 1.00%. This multi-currency facility allows us to request loan advances in either Canadian dollars or U.S. dollars. Amounts borrowed and repaid under the revolving line of credit portion of the facility are available to be re-borrowed. Our term loan facility is set to mature on July 9, 2032, and our revolving credit facility is set to mature on July 9, 2030.
The obligations under our credit agreement are secured by present and future ownership interests in substantially all of our direct and indirect subsidiaries, substantially all of our tangible and intangible personal property, and all products, profits and proceeds of the foregoing. Assets securing the facility totaled $2.3 billion as of June 28, 2026.
During the fiscal six months ended June 28, 2026, the maximum amount outstanding on the combined facility was $708.8 million, at which point $616.0 million was outstanding on the term loan portion of the facility. As of June 28, 2026 and December 28, 2025, $85.9 million and $91.2 million, respectively, was outstanding on the revolving credit facility, in addition to $616.0 million that was outstanding on the term loan portion of the facility as of both June 28, 2026 and December 28, 2025. Also, as of June 28, 2026 and December 28, 2025, there was approximately $307.7 million and $302.4 million, respectively, net of outstanding letters of credit, of unused capacity under the line of credit. We had $68.6 million of unused letters of credit available as of both June 28, 2026 and December 28, 2025.
We are required to maintain a leverage ratio of 4.50 to 1.00 for any future quarter ending prior to September 30, 2026, and 4.00 to 1.00 for any quarter ending on or after September 30, 2026. We are also required to maintain an interest coverage ratio of greater than a minimum of 2.50 to 1.00. We are currently in compliance with all of our financial covenants under the revolving credit facility.
The applicable margin for our revolving credit facility ranges from 1.25% to 2.25% for SOFR and Canadian Overnight Repo Rate Average (“CORRA”) loans and from 0.25% to 1.25% for base rate loans, depending on our net leverage ratio. The term loan facility has a fixed margin of 1.00% for base rate loans and 2.00% for SOFR loans.
Accounts Receivable Securitization
In September 2024, we entered into our Securitization Facility with PNC Bank, National Association (“PNC”) to improve cash flows from trade accounts receivable and used all of the proceeds to pay down our existing debt. Under the Securitization Facility, certain of our designated subsidiaries have sold or contributed, and will continue to sell or contribute, their accounts receivable and contract assets generated in the ordinary course of their business and certain related assets to the indirect wholly owned bankruptcy-remote Special Purpose Entity (“SPE”) we created specifically for
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this purpose. The SPE transfers ownership and control of accounts receivable to PNC for payments as set forth in the agreement. We account for accounts receivable sold to the banking counterparty as a sale of financial assets and have derecognized the accounts receivable from our condensed consolidated balance sheet for the current period. On May 4, 2026, we signed an amendment to the Securitization Facility which increased the capacity from $125.0 million to $165.0 million.
The total outstanding balance of accounts receivable that had been sold and derecognized was $165.0 million as of June 28, 2026. We had no unused capacity on the Securitization Facility as of June 28, 2026.
Equipment Term Loans
As of June 28, 2026, we had six U.S. equipment term loans with initial amounts totaling approximately $150.0 million, with certain owned equipment used as collateral. The loans are serviced in U.S. dollars.
Recently Issued Accounting Pronouncements
Refer to “Note 2 — Basis of Presentation and Recent Accounting Pronouncements” to our condensed consolidated financial statements for a discussion of recent accounting standards and pronouncements.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires the use of estimates and assumptions. A summary of our critical accounting policies and estimates is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our 2025 Annual Report. We are required to make estimates and judgments in the preparation of our condensed consolidated financial statements that affect the reported amounts of assets and liabilities, revenue and expenses and related disclosures. We continually review these estimates and their underlying assumptions to ensure they are appropriate for the circumstances. Changes in the estimates and assumptions we use could have a material impact on our financial results. During the fiscal six months ended June 28, 2026, there were no material changes in our critical accounting estimates or policies.