CTRI - Earnings call transcript Q4 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to Centuri's Fourth Quarter and Full Year 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Wilcock, Centuri's Chief Legal and Administrative Officer and Corporate Secretary.

Jason Wilcock

This morning, we issued and posted to Centuri Holdings website our fourth quarter 2024 earnings release. The slides accompanying today's call are also available on Centuri Holdings website. today's this will some year's on that certain longer-term that impact may earnings note call, address we factors guidance. Please and provide

may We Today's assume will Investor turn the to for to the after also cause and Officer; available Greg of Izenstark, today's we any differ contains including approvals. regulatory is based meaning Holdings and cautionary no conditions of but and several the placing X the results webcast statements live review. any economic call filings being future the President Chief statements Executive Relations of statements, Litigation Securities future Exchange are is be note the today's replay of to from on information holds, measures today's will statements. Brown, such are against impacts well with uncertainties assumptions the reliance caution update as These in non-GAAP discussed Some and materially risks date and presentation, on and actual now forward-looking to our of and the a uncertainties These over our Commission, that included website This following today. risks Reform as Act. to within leadership have call release Chief obligation this made and the management's and the of note from today statements undue section the of Officer. shortly surrounding this On Slides members as Private and on which uncertainties, Securities we Chris. press the subject you call. XX completion call, Centuri team: I'll Chris Financial be we forward-looking regarding of on what encourage

Christian Brown

its strengthen Centuri knowledge it how and clients. to a services its number admire the operates On capability and how the from has I joining before Centuri recruitment was months X years, my reach I of inside observe to had and officially process, of further Moreover, built during over opportunity scale, able organization.

having America. teams. X routinely months, primary North and over sites organization of been visiting strength many truly and doing across our our our dedication and by I've of visited so, after the operating our our Now our In with locations engaged all customers, impressed employees, of people of the many

a leaders customers, some that their and significant focused, a utility a electrification enthusiastic we an same time, with expansion. backdrop, companies upgrade incredibly this in my the growth respect connected where This due will growth We is to intend to we I'm is possess leading of our our that and we we we're the and strong data services and on seeing gas demand market platform to mix the services At its are vital be markets replace end With energy leading structure healthy present believe there capacity improving to returns. solutions infrastructure growth the structured Against have company are the in speak Our systems, grid, ensure us. from markets. of organization end we reflected its months meet and first culture. are The more for community and reliability with both high-quality to demands the that North on today for can infrastructure in across an capitalize infrastructure is seen of pipelines advanced organization evolving our safe, positioned our well need to the expand my able ahead. in to weeks that part and incredibly opportunity the consistently electric, expand growing the aging and is primary to a understanding investment build a our way. profitable job our to to service defines our centers, Centuri enhance lean ensure and deeply deliver from and significant and and time America. and is I required in manufacturing, company's demand natural It subsequent future and growth. remains past experiences, the renewables for

drive prospects maximizes growth proactive instilling culture, capabilities ahead, customers that With across a new and the This exciting the growing one customers, enterprise adding with means and in looking our for we actively our opportunities. actively our mindset expansion. entire existing are continuously

under having but the to not new opportunities Achieving services deliver a and the culture best our greater value best and customers. tools for look all our to challenged actively just do to the contract, more. to existing best positioning, being and are to leaders requires deliver services Our this people,

areas As in as we maturing the stand-alone will to complete months. being subsidiary a a following a the coming the further on provider, transition of company utility our focus from service we

beyond to structured MSAs. focused business existing of our business high-growth market more securing approach and create new we company-wide development, of Firstly, a awards our strategies pipeline, on positioning, focused development winning

Our to provide services only to are value obligation and we is to but our contracting grow organizational further not safely the customers. to to execute bring

one, on maximizing and include: and which collections. through across funding which the drive reducing rental; into work build this by markets needed and reducing a a our reporting growth any sustainability XXXX, and working performance quantify Secondly, by view base, across increasing areas feel the business plans the we seeing of to focus improving over optimizing on the X our second financial long-term are of greater on end we into anticipate two, quantifiable capital will leasing exiting and The to funding, and quarterly And half size and the management, with and we'll that invoicing our these sources performance thirdly, capital renegotiating our greater benefits focus improving more contracts plans tangible returns tighter includes efficient is conducting and these of and by further of intend focus efficiency months we growing of In well fleet coming on our seek including and sheet focus implementation other underperforming. balance a underway, actions to asset future. periods.

to in in energy trends turn dynamics and United worth evolving States and our the policy political about specific that it's Centuri. changed business, we commenting the Before how impacts

strong. Our markets our chain the remain across view is core that will end entire value

the We are resiliency, seeing growth. by capital for the into energy and double driven investment levels to grow continue digits, demand need

we have such We growth the we and future have. our projects major of upon and unfunded that not pipeline deliver other relying are that positioning wind are new to offshore positioned opportunity all expectations

people, scaled the to the platform to utility able a meet has the infrastructure needs capability, expertise chain. be Centuri across value and Fortunately, energy and

our to quarter gas Turning business today starting business. and fourth for with trends the

revenues QX, our segment volumes MSA During our in normalized. and gas largely under

Gas our margins competitive averages case improve on and approvals, in completed identified While we allocated have have regarding impact sales rate group to optimized budgets cases are of to slow of constant need pattern during our In between forces significant X.X%. were realign utilization funds of impacted the aligns their spend gas the and by resources When the top remaining positively crew and year now their XXXX should to returns. to XXXX performing largely XXXX down XXXX XXXX, has we clients to budgets clients historical which opportunities lack were maximize for several below count case some they given restructure behaviors ensure anticipate capital our rates. near-term investments, the exit December, been a complete to work and with potential outcomes, funds allocate when expectations, not our customers during margins gas The by rate their driven annual end faster. any normalize and in see contracts our pleased we their of we X% historical concerns set line. and operations. to factor rate our This gross our industry to

We has a will, improvement business, XXXX with to in year-end we In our half steady especially adjustments monitor and counts, recovery make margin which continued second into non-union remain the core improvement. the operations our gas into closely segment, saw our necessary in XXXX. of continued electric as in attentive of course, and throughout crew dynamics

spending gas benefited customers business, twice with budget the we've also year-end. As from some the remaining

Union award activity as the a well experienced LNG in Electric business in as received a core significant significant our pickup fourth Additionally, quarter.

restoration Our electric results with revenues record historical storm XX% were exceeding work average. of bolstered recent the for year by a

skilled As highly mentioned on to needed. built our as and last call, ready we workforce, respond both have that when and is non-union strategically a union

positioning purposeful efforts Pivoting new an of longer-term result the relationships. training, to strengthening customer a in serves as is Furthermore, of success customers. activity. opportunities with it for entry our and point development response business storm Our

strategic in year-end expected at billion a new in for and related work in we and $XXX the MSA. performed new million awards, bid was million Backlog and quarter stood including quarter, million XX% to MSA $XX awards. the at to with During awards at bookings. was secured quiet be awards $X.X This $XXX

XXXX. Looking pipeline will and for book-to-bill focus based XXXX. on step exceed of increased X.X by a late-stage with the and new over will during ahead, XXXX, and bookings has billion $X.X our revenue potential a we bids market XX% during the on our development, in business that MSA of over increased we End have change approximately second half $X billion in renewals anticipate we of deliver during

XXXX to EBITDA few includes Before guidance today The adjusted revenue, Izenstark, high-level turning we introducing of a share outlook. offshore like on the call over targets, EBITDA end Greg growth to thoughts which includes our our CFO, market. I'd our of core a expenditures. are no in business net wind the awards anticipate this we these Informing new rundown projects and and year-over-year, double-digit our capital in range

historical in approximately now outlook. restoration also to secured I'll storm services to than results from is revenue our We XXXX $XX Greg and over elaborate levels, and which on million we our delivered less recent turn of XXXX. assume

Greg Izenstark

of fourth profit in XXXX of compared consolidated increased profit reported prior the in the quarter quarter period. quarter gross XXXX. above X.X% well XX% of was revenues the year X.X% and Gross to X.X% XXXX Fourth was the we fourth margin consolidated higher

guidance $X.XX XXXX came in the year. $X.X a $X.X to in income of billion fourth July loss ahead $X.XX attributable to per of share attributable stock revenues of in net of from diluted year, earnings of loss billion $X.XX we basis, $XX.X the diluted of provided quarter a On the period common net in billion. to share a midpoint For $XXX.X of or the the million up last GAAP or same range was common per stock million

quarter EBITDA, quarter's of $XXX was prior quarter X.X% XXXX. $XX.X fourth In higher non-GAAP the million. a for the As from adjusted a million reported million of quarter results in of on X.X% goodwill. total company the reminder, figure, XX.X% the a margin after-tax improvement from year or quarter, EBITDA impairment XXXX, included fourth XXXX $XX.X fourth Adjusted was the an the

EBITDA the $X.X For or full $X.X adjusted noncash The guidance in provided and quarter in was and adjusted our an came includes net adjusted with range in the fourth prior at income of million as earnings impact share share up costs. our adjusted year our adjusted million as period. line per of XXXX, $X.XX, Non-GAAP with difference costs, year of margin net $XX.X assets in primarily between earnings intangible transition or severance the diluted of from the an income stock-based $X.XX results. compensation X% diluted million amortization well per non-GAAP CEO of midyear GAAP

from Gross segment. reportable budget to quarter due increase customers certain bid of and complete decline which totaled XXXX to changes projects. in in projects, GAAP drove $XXX.X to X.X% X.X% U.S. work We This to benefited in late our in XXXX prior of an the a million, year-over-year dollars fourth in closeout each planned spending improvement from Now X.X%. quarter profit the reflecting the of segment period. year Revenue of decreased was margins volumes. the mix from

in We experienced of under improve slightly wind work in $XX.X volumes improvement but expected work. were Electric Union revenue throughout our down XX% an revenues of with this prior an our down decline and XX.X%. drove Revenue or X.X% to were to down profit million, XXXX. In due bid from structurally in margin XXXX. this Within from contracts as mix margins to year of are Canadian our Gas under year-over-year. the due We uptick to Favorable wind XX% the to $XXX.X million, gross pressure flat structure was taking the $XX cost totaled projects. steps of offshore segment timing MSA, quarter the segment, segment million project a was segment, fourth

from with However, experienced $X million, XX.X% million by around revenues our revenues growth driven year-over-year, particularly in $X.X year up infrastructure. of core Union showed prior bid improvement a increased Union Electric also quarter. industrial volumes, in storm segment restoration substation work the

those Southeast for year-on-year response segment's for the which XX.X% mobilized compared primarily year-over-year. fourth crews to segment bid are work, profit and XXXX during Chris revenues. dispatched the factors, these revenues driven severe business. XX.X% to X.X% work core the profitability average in growth generated million referenced the there our profit work from restoration due $XX.X $XXX.X increase the support more the pride have while X.X% and our power and ability crews whereby we to and Hurricane contributed crews will fourth Gross from quarter. profitability, these due performed non-union X,XXX some quarter X.X% we approximately the times. of was non-union territories, restoration services employees mobilize decrease and the $XXX margins on our of segment in XXXX million, million more quickly of, in on their the This electric in Although revenue to efforts was events. well was in Northeast our million. a higher increase restoration crews Non-union reflecting accounted prior revenues to services Electric hours. Improved to $XX fourth the work Segment the we our momentarily. by emerging in period hours We One affected increased restore take levels. to challenging work in is Electric to quarter X-year We compared XXXX. Lee with XXXX. the Union thing This and including storm quarter Throughout Milton, to in of higher touch take respond prior would from storm I revenue several in which those efforts, storm core to also weather early of storm contribution to above in restoration customers period, to the current higher-margin focused, note increased to in working strength of the existing gross in productivity report during lower offset improved additional of the to been quarter the profitable year to revenue at storm than of work improvement and crews

XXXX, $XX cash and now was in flow down or slightly XXXX. million full free cash the million, CapEx net from For year, free cash $XX.X flow was provided down million we define $XX.X from operations as used by million, in less $XX expenditures. flow Note, in net capital

balance balance disclosed. with business $XX debt ratio to sheet December the net equivalents On year core a highlights. X.Xx Xx a with was to million expectations from third basis, Moving consistent from previously XX-month priority. quarter, remains the cash, the our and of capital-efficient on EBITDA ended in We cash sequentially in Growing manner XXXX December adjusted lower improved our end a in sheet. to in trailing strategic XXXX the

free being improving throughout disciplined balance our allocation. reducing sheet more working and XXXX by our flow capital target and continue to capital will needs cash our in We strengthening

outlook, on Slide turning our XXXX outlined to our XX which of earnings presentation. Finally, is

$X.X For billion between revenues, we deliver $X.X billion. expect to and

renegotiate our For forecasting. adjusted Chris crew wind electric to that partially the business and turn the positives work to wind some a lastly, of margins services growing Those and expect restoration to some for our thoughts. gas by million. factors counts between in between EBITDA, million. offset down storm we be on closing in spend $XX $XXX continued began expenditures, modest second back and half $XXX to these a to of contracts. net work With we are and increased assumption alluded exit $XX improvement hours XXXX million levels. improved as it we are behind growth deliver business offshore will that million and forecasting normalized our and/or capital our me with to return our return These include additional that underperforming said, and And in Chris let

Christian Brown

prepared inspiring. want dedicated growth. by also CEO and months out I been and growth earlier. discussed drive my is have to enlightening Centuri as implementing the close remarks, increasing My that long-term strategies first to reiterate President opportunities both profitable To few themes

in business We structured to are a a and prioritization. comprehensive Through forecasting, robust strategic highly business growth dynamic our committed business to model growth can fostering reviews decision-making. development greater through pipeline mindset, we optimized predictability and approach by ensure

enhancing DSO fleet capital through are improved management. capital We and by our efficiency levels and and refining reducing working equipment capital resourcing AR management

committed highly early deliver your and improvement and to vision so with improved our for you new thank look continued and our in forward gas key achieving confidence performance. to business Lastly, area we taken much to are being margin a steps have support We focus milestones.

Operator

Sangita Your with comes [Operator KeyBanc. question first Instructions] Jain from

Sangita Jain

First, And when to about? And ask outcome expect can hear that I what on review when strategic we the we you can talked the expect concluded? one that's that? of should

Christian Brown

X think determine do the the core from last our all business really get our organic we been to MSAs I is we probably the X growth more and the from X data organically. How the be large revenues months ability really a standpoint. on has is sales our the good. to winning, development, to past grow how build of business flat next business to near-term pipeline And the understand around prioritizing

core grow further at to good prioritization market a where I markets, think which start near-term end our good how X a in we growth we core opportunities in core the locations, from. focused more our Basically, very be years. get end core customers, X in new then all on long-term and our differentiation thorough longer-term we driving focused opportunities, handle the on markets our we with that we in want which at once the business look a then some growth capital, will of term, our around want where the customers handle deploy growth we first next have do drive the the the is And look accelerate growth. conduct to X can on and to reside, more longer how making we'll months to markets X

end think to strategy, of end before position being roll up year, a actually out the of in I not then. a sort more the toward we'll

the and growth at core the block it moment really is priority in driving today. the tackling business as Our is and

Sangita Jain

given and us guidance end you in you low maybe the that you've expect understand we should what for that end to can year, reach hen Greg, for this help the what's range? the guidance of us high

Greg Izenstark

high end, business about the those development On growth then activity some Chris storm that influence the the crew end of number greater opportunities. crews is timing could can obviously, range of the of work work getting little a range. and we talked influence just upside using the sales wildcard. that, onboarding a the top opportunities Obviously, of and of the And bid obviously mentioned, the a bit

any the to probably project or could it, come other downside, but contribute cancellations biggest world might the news the the any that that's delays that's one. On out in of of

Operator

Justin Baird. question with from next comes Hauke Your Robert

Justin Hauke

on guess, a are are? $X.X standards kind understand here. confidence seeking I And guess, on bit just to you little final negotiations what just some what terms an I those to of more your the in $X billion billion how that and as that going opportunities will meet new negotiations. outlined you maybe gas are update wanted improve I of that the the MSAs your modifications you're on gives

Greg Izenstark

the We've side, up, to new as perspective steps on come well both from those have gas of some accordingly. of all XXX% contracts. end as in experience our we started or certain well continue an underperforming them year. our key are virtually MSA is perspective, This bids exit that way underperforming renegotiating MSAs. repricing to and already the will areas the we're renewal and MSAs, an throughout we're renewals From From taking either MSA

at past, we improve on price the work and are scope pricing Those normal that's it that to when As and and of and into come and volumes XXXX. the contracts. both escalator the up, us opportunity annual all give in to an we head we've the look that talked well us the gives above the expect look renewals optimism way as beyond in new

Christian Brown

good deliberate identify near-term sales. here, takeaway to about growth We're in On all all opportunities. as say events, work we're convert. following, to I X.X. And mentioned pipeline improvement to the recent no driving mentioned so XX% we in stage concerned see market efficient end late start market, We've some cautious as had result Whilst reach, actively more that we in the well you coming and capability, a concern and about the this that for seeing at the in got should a about locations year. MSAs. structured book-to-bill be opportunity at beyond ability drive concern Justin, near-term to a will to a we My months. with pipeline and positive be of have the can greater we're market our negotiating our We've internally after grow do growth. at fits book-to-bill There's the our focused opportunities we think weeks not the our We with no that. I over to we opportunity. are that think the core on we The year are would the would the

Justin Hauke

last the 'XX the 'XX question just And Or last be Is how for wind should have half for this that thinking anything wind. I it in million backlog offshore started of year? the contribution of Is the everything the $XX the point? stands maybe there now? right half just for offshore left one then at Maybe 'XX a that on as the on seasonally cadence is would seasonality the slow. be that you in that also abnormally guess through. first growth first works low the 'XX, higher versus we of

Greg Izenstark

drive From then offshore backlog in increase seasonal year. second some of and first On which Obviously, back million the the see just that about and $XX will the with the of be quarter and an consistent have expect think operate I of we I start last we nature would weather territories and accelerate in the year. to of XXXX. then perspective, we factors the seasonality many to half for alluded quarter wind in that in other

the related at million or We pipeline in point. $XX in that our on remaining else projects to backlog have existing this and have about XXXX, we existing nothing

Christian Brown

Yes, we of our ready. out It's committing offshore not unpredictability stripped wind resource We're won't administration, business. everything lot into if we the of moment, pipeline, sanctioned. pretty driven it in projects in immaterial. we'll In words you that near all. future near-term any all the But to by capital the the when the It's of about also but be not not It's don't partly term hear get those in And at change becoming our our near allocated, call. at with as driver a the it term. in the at a see brings sales focus back forecast.

Operator

next Williams Shank. [Operator Siebert Ellinghaus from comes Chris Your with Instructions] question

Christopher Ellinghaus

have about digits. from historically that double see business materially perspective, lag that MSAs that periods? forward? the outsider's the realistic two, going been you margins at in goal of talked looked remains one, from you inflationary some higher. an Do some you've As a Question And sometimes underperforming. Is as

Christian Brown

the is improvement. going on moment other believe gas to don't we our be I than said focus at what margin

contracting about getting deliver to into not for up. that's on getting cost challenge existing efficiency do Our margins It's the customers. organization becoming services more delivering about but not an turned today we're only our the organization and is focused

into volume the block business I growing are. from business, selling concerned going focus on more margins being and do the versus the the caveat more and I'm into getting gas we a tackling The improvement margins. think 'XX. expect margins not overly where maintaining about there's

consistent margins. growth focus driving Our is profitable existing our about with

team gas to side, great stages has On contracts. a done 'XX of the latter in those the underperforming job renegotiate

better. you Early I getting seasonality more turning into think effect, look 'XX productive. the reallocate as resources 'XX they look like at into signs were they're

done I do think we more the to all need maybe go. we've contract still to with work

and we productivity contracts. the down making maintain performance those is gas I that right think the of to margin levels sure now within

Christopher Ellinghaus

expect as have that upside You're using average to that is a storm that you climate some base period restoration normal? revenues. given you X-year time? for see Is something issues, change that over of And that it to a off

Christian Brown

to We with can talk business. with our specifics Greg the

won't core Just chasing our business. revenues grow to allow storm us

an capability And Our allocation drive organization that will just for and the driving and an base storm into it's setting our not as and discipline cautious from expectation want in slightly we've come we get sort business. approach revenue resources was not coming abnormal on work believe a the has that all in to doing our push business our observe. felt in We driven of events. into our the services storm budgeting customers budget core 'XX all process, what capital to into or building our predicated more more the day-to-day because the to more get from sector we focused from set approach from trailing We've that our doing we business not growth on greater even utility are a been core average X-year cautious storm. a we

Christopher Ellinghaus

customers some the having of end forward carry catch-up toward to Does the gas year half year. the into You some first the CapEx on or just year? some the their sort of that of alluded for of this

Christian Brown

there. budgeted most There that quarter, had trying the dollars part. had of gas the for they budget speaking, end to the might of year spend spent full for be at here the as were a looking our pocket their But they or where and was generally the what customers third

Greg Izenstark

Chris, convert. significant It's will just to tender got you win, than well look and with But over the with I we XX% pipeline opportunities add, We today organization, at today gas. looking would in hopefully at near-term dissect component you our pipeline as pipeline do our wider opportunities if there. and if the the of more moment there's ample win that a

Operator

questions at further no lines this gentlemen, and and for ask your please concludes you this are for your disconnect you time. call There Ladies that conference We participating thank today.

Centuri (CTRI) 26 Feb 252024 Q4 Earnings call transcript