Centuri Holdings Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 07:06
Quarterly Report for Quarter Ending September 28, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
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 QuarterlyReporton Form 10-Q, and our AnnualReport on Form 10-K for the fiscal year ended December 29, 2024 filed with the SEC on February 26, 2025 (our "2024 Annual Report").
Unless the context otherwise requires, references to "we," "is," "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 2024 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 nine months of 2025 and 2024 ended on September 28, 2025 and September 29, 2024, respectively, and each period had 39 weeks. The third fiscal quarters of 2025 and 2024 each had 13 weeks.
Overview
Company Overview
We are a leading North American utility 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 long-term strategic partners to, and an extension of, North America's electric, gas and combination utility providers, delivering a wide range of infrastructure solutions. 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 renewable energy associated with the expected energy transition, data centers and 5G datacom. 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. Guided by our values and our unwavering commitment to serve as long-term partners 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 were incorporated in Delaware in June 2023 as a wholly owned subsidiary of Southwest Gas Holdings, Inc. ("Southwest Gas Holdings"). We were formed for the purpose of completing an initial public offering, facilitating the separation of the Operating Company from Southwest Gas Holdings and other related transactions in order to carry on the business of the Operating Company, our predecessor for financial reporting purposes. Prior to April 13, 2024, Southwest Gas Holdings owned 1,000 shares of our common stock, representing 100% of the issued and outstanding shares of our common stock. On April 13, 2024, we issued 71,664,592 shares of common stock to Southwest Gas Holdings as consideration for the transfer of assets and assumption of liabilities of the Operating Company (the "Separation"). Following the completion of the Separation, the Operating Company became our wholly owned subsidiary, and all of our operations are conducted through the Operating Company.
On April 17, 2024, the registration statement related to the initial public offering of Centuri's common stock was declared effective, and Centuri's common stock began trading on the New York Stock Exchange ("NYSE") under the ticker "CTRI" (the "Centuri IPO") on April 18, 2024. On April 22, 2024, the Centuri IPO and a concurrent private placement were completed with total final net proceeds of $327.7 million. As of the closing of the Centuri IPO, Southwest Gas Holdings owned 71,665,592 shares of Centuri common stock ("CTRI shares"), or approximately 81% of total outstanding CTRI shares.
Subsequent to the Centuri IPO, Southwest Gas Holdings divested all of its remaining ownership interest in our Company through the course of several transactions described in more detail below. We did not receive any proceeds from any of these transactions.
On May 22, 2025 and June 18, 2025, Southwest Gas Holdings completed secondary public offerings, selling a total of 21,562,500 CTRI shares, with additional private placements closing on May 22, 2025 and July 8, 2025, in which Southwest Gas Holdings sold a total of 3,917,382 CTRI shares to Icahn Partners LP and Icahn Partners Master Fund LP, investment entities associated with Carl C. Icahn ("Icahn Partners"). After these transactions, Southwest Gas Holdings owned 46,185,710 CTRI shares, or approximately 52% of total outstanding CTRI shares.
On August 11, 2025, Southwest Gas Holdings completed another secondary public offering of 17,250,000 CTRI shares and concurrent private placement to Icahn Partners of 1,573,500 CTRI shares (together, the "August sell-down"). After completion of the August sell-down, Southwest Gas Holdings owned 27,362,210 CTRI shares, or approximately 31% of total outstanding CTRI shares, resulting in (i) the loss of its controlling interest in our company and (ii) the
Company ceasing to be a "controlled company" under the NYSE rules.
On September 5, 2025, Southwest Gas Holdings completed a final secondary public offering (the "Final Disposition") of its remaining 27,362,210 CTRI shares. As a result, Southwest Gas Holdings no longer holds any ownership interest in our company and relinquished governance rights originally afforded to it under the Separation Agreement, including the right to nominate any members of our Board of Directors and to approve certain of our corporate actions. For additional information about the Separation Agreement and other agreements signed as part of the Separation and Centuri IPO, refer to "Note 13 - Related Parties" to the condensed consolidated financial statements.
Previously, Southwest Gas Holdings' chief executive officer and director, Karen Haller, served as Chair of our Board. As a result of Southwest Gas Holdings' ownership exit, our Board appointed Christopher Krummel as the Chair of our Board, effective September 15, 2025, replacing Ms. Haller, who remains a member of Board. Ms. Haller also resigned from our Board's compensation committee.
As Southwest Gas Holdings has now divested all of its ownership of CTRI shares, we are no longer eligible for inclusion in their U.S. federal and state income tax returns. As a result, certain deferred tax assets previously recorded under the separate return method were removed from our condensed consolidated balance sheet through an adjustment to additional paid-in capital. Separately, in accordance with the Company's Tax Assets Agreement with Southwest Gas Holdings (as defined and discussed in "Note 13 - Related Parties" to the condensed consolidated financial statements), we were allocated $55.4 million in estimated deferred tax assets (primarily net operating losses) as part of tax deconsolidation, which is treated as a capital contribution from Southwest Gas Holdings in additional paid-in capital. Our allocation of deferred tax assets from Southwest Gas Holdings is based on estimates of amounts to be included in Southwest Gas Holdings' tax returns for 2024 and 2025, and accordingly the allocation may change in future periods until the 2025 tax return is ultimately filed, with any future changes impacting income tax expense on the statement of operations as we are no longer owned by Southwest Gas Holdings.
Segment Information
We report our results under the following four reportable segments: (i) U.S. Gas Utility Services ("U.S. Gas"); (ii) Canadian Gas Utility Services ("Canadian Gas"); (iii) Union Electric Utility Services ("Union Electric"); and (iv) Non-Union Electric Utility Services ("Non-Union Electric").
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), 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.
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.
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 recent 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. We are currently monitoring the U.S. government shutdown that began on October 1, 2025. At this time, the shutdown has not had a material impact on our business, operations, or demand for our services, and we do not currently anticipate a material impact.
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.
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 master service agreements ("MSAs"), 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. Overall, our results for the third fiscal quarter of 2025 were not significantly impacted by increases in prices, including due to recently implemented tariffs. We are currently monitoring the impacts of tariffs on the price and availability of our equipment as well as any potential impacts to project scheduling, but we do not currently expect a material effect on our results of operations.
Backlog
Backlog as of September 28, 2025 was approximately $5.9 billion, with approximately 86% 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 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 nine-month periods ended September 28, 2025 and September 29, 2024 are set forth and compared below.
Fiscal three months ended September 28, 2025 compared to the fiscal three months ended September 29, 2024
The following table summarizes our consolidated results of operations for the fiscal three months ended September 28, 2025, and September 29, 2024, 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) | September 28, 2025 | September 29, 2024 | $ | % | |||||||||||||||||||||||||||||||
| Revenue, net | $ | 850,044 | 100.0 | % | $ | 720,053 | 100.0 | % | $ | 129,991 | 18.1 | % | |||||||||||||||||||||||
| Cost of revenue (including depreciation) | 772,084 | 90.8 | % | 644,260 | 89.5 | % | 127,824 | 19.8 | % | ||||||||||||||||||||||||||
| Gross profit | 77,960 | 9.2 | % | 75,793 | 10.5 | % | 2,167 | 2.9 | % | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 34,960 | 4.1 | % | 27,213 | 3.8 | % | 7,747 | 28.5 | % | ||||||||||||||||||||||||||
| Amortization of intangible assets | 6,685 | 0.8 | % | 6,662 | 0.9 | % | 23 | 0.3 | % | ||||||||||||||||||||||||||
| Operating income | 36,315 | 4.3 | % | 41,918 | 5.8 | % | (5,603) | (13.4 | %) | ||||||||||||||||||||||||||
| Interest expense, net | 26,205 | 3.1 | % | 23,925 | 3.3 | % | 2,280 | 9.5 | % | ||||||||||||||||||||||||||
| Other expense (income), net | 78 | 0.0 | % | (160) | 0.0 | % | 238 | (148.8 | %) | ||||||||||||||||||||||||||
| Income before income taxes | 10,032 | 1.2 | % | 18,153 | 2.5 | % | (8,121) | (44.7 | %) | ||||||||||||||||||||||||||
| Income tax expense | 7,918 | 1.0 | % | 21,770 | 3.0 | % | (13,852) | (63.6 | %) | ||||||||||||||||||||||||||
| Net income (loss) | 2,114 | 0.2 | % | (3,617) | (0.5 | %) | 5,731 | (158.4 | %) | ||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 15 | 0.0 | % | 35 | 0.0 | % | (20) | (57.1 | %) | ||||||||||||||||||||||||||
| Net income (loss) attributable to common stock | $ | 2,099 | 0.2 | % | $ | (3,652) | (0.5 | %) | $ | 5,751 | (157.5 | %) | |||||||||||||||||||||||
Revenue and Gross Profit
The following table summarizes our revenue, gross profit and gross margin for the periods indicated by segment as well as the dollar and percentage change from the prior year period. The discussion that follows highlights key revenue and gross margin changes at the segment level. Changes in gross profit correspond with the discussed changes in revenue and gross margin.
| Fiscal Three Months Ended | Change | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | $ | % | |||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||
| U.S. Gas | $ | 412,407 | 48.5 | % | $ | 366,070 | 50.8 | % | $ | 46,337 | 12.7 | % | |||||||||||||||||||||||
| Canadian Gas | 74,153 | 8.8 | % | 53,473 | 7.5 | % | 20,680 | 38.7 | % | ||||||||||||||||||||||||||
| Union Electric | 214,499 | 25.2 | % | 171,666 | 23.8 | % | 42,833 | 25.0 | % | ||||||||||||||||||||||||||
| Non-Union Electric | 148,985 | 17.5 | % | 128,844 | 17.9 | % | 20,141 | 15.6 | % | ||||||||||||||||||||||||||
| Consolidated revenue | $ | 850,044 | 100.0 | % | $ | 720,053 | 100.0 | % | $ | 129,991 | 18.1 | % | |||||||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||||||||||||||
| U.S. Gas | $ | 31,650 | 7.7 | % | $ | 27,960 | 7.6 | % | $ | 3,690 | 13.2 | % | |||||||||||||||||||||||
| Canadian Gas | 16,218 | 21.9 | % | 10,969 | 20.5 | % | 5,249 | 47.9 | % | ||||||||||||||||||||||||||
| Union Electric | 19,490 | 9.1 | % | 15,427 | 9.0 | % | 4,063 | 26.3 | % | ||||||||||||||||||||||||||
| Non-Union Electric | 10,602 | 7.1 | % | 21,437 | 16.6 | % | (10,835) | (50.5 | %) | ||||||||||||||||||||||||||
| Consolidated gross profit | $ | 77,960 | 9.2 | % | $ | 75,793 | 10.5 | % | $ | 2,167 | 2.9 | % | |||||||||||||||||||||||
•Revenue from our U.S. Gas segment totaled $412.4 million, marking the highest quarterly revenue achieved by the segment to date and an increase of $46.3 million, or 12.7%, compared to the prior year period. This increase was driven by a recovery of MSA volumes, while bid revenue increased slightly from the third fiscal quarter of 2024, which was a relatively strong quarter for bid revenue. As a percentage of revenue, gross profit increased to 7.7% in the current period from 7.6% in the same period from the prior year. Revenue from Southwest Gas Corporation totaled $24.8 million for the current period compared to $27.2 million in the prior year period.
•Revenue from our Canadian Gas segment totaled $74.2 million, reflecting an increase of $20.7 million, or 38.7%, compared to the prior year period, resulting from higher MSA volumes. As a percentage of revenue, gross profit increased to 21.9% in the current period as compared to 20.5% in the same period from the prior year. This increase was attributable to improvements on bid margins, as the prior year period was negatively impacted by performance issues on certain bid projects which did not recur in the current year period.
•Revenue from our Union Electric segment totaled $214.5 million, reflecting an increase of $42.8 million, or 25.0%, compared to the prior year period. This increase was driven by new bid project wins. Storm restoration services revenue for the Union Electric segment was $1.5 million for the current period compared to $6.7 million for the prior year period. As a percentage of revenue, gross profit increased to 9.1% in the current period as compared to 9.0% in the prior year period. Gross margin was positively impacted by more efficient utilization of fixed costs on higher revenue, slightly offset by the $5.2 milliondecrease in storm restoration services revenue which resulted in $1.6 millionless gross profit.
•Revenue from our Non-Union Electric segment totaled $149.0 million, reflecting an increase of $20.1 million, or 15.6%, compared to the prior year period. This increase was primarily due to an increase in volumes on new and existing MSAs, partially offset by a decrease in storm restoration services revenue, as the current fiscal quarter had no storm restoration services revenue compared to unusually high storm restoration services revenue of $34.7 million in the prior year period. As a percentage of revenue, gross profit decreased to 7.1% in the current period compared to 16.6% in the prior year period. Profitability was negatively affected primarily due to the lack of storm restoration services work, as the $34.7 million in revenue on such work in the prior year period resulted in $13.3 million gross profit that did not recur in the current year. The onboarding of a new MSA also weighed on margins, as crews had not yet reached full utilization. Margins on this MSA are expected to improve as crews reach full utilization.
Selling, General and Administrative Expenses
Selling, general and administrative costs increased by $7.7 million, or 28.5%, in the current period compared to the same period in the prior year. This increase was largely driven by an increase in stock-based compensation and accruals for cash-based incentive compensation. We incurred $2.3 million in separation-related costs in the current period, compared to $1.4 million in non-recurring fees for our accounts receivable securitization facility (the "Securitization Facility") in the prior period. In the current period, we also incurred incremental costs to operate as a standalone public company and to grow our sales and business development function.
Interest Expense, Net
The increase of $2.3 million in interest expense, net in the current period compared to the prior year period was due to $8.3 million in costs related to the refinance of our credit facility. For additional detail about the refinance, see "Credit Facilities" below and "Note 9 - Long-Term Debt" to the condensed consolidated financial statements. These charges were partially offset by the write-off of $1.7 million in debt issuance costs in the third fiscal quarter of 2024 related to a debt extinguishment, and a reduction in interest rates on outstanding variable-rate borrowings.
Income Tax
Our effective tax rate for the fiscal three months ended September 28, 2025 and September 29, 2024 was 78.9% and 119.9%, respectively. The effective tax rate for the current year period was impacted by the disproportionate amount of non-deductible expenses in relation to income before income taxes and changes in estimates of pre-tax income. The effective tax rate for the prior year period was impacted by the use of the actual effective tax rate instead of the annual effective tax rate, which is discussed in more detail in "Note 11 - Income Taxes" to the condensed consolidated financial statements. Additionally, differences in income (loss) before income taxes by jurisdiction caused fluctuations in the effective tax rate when comparing periods.
Consolidated Results
Fiscal nine months ended September 28, 2025 compared to the fiscal nine months endedSeptember 29, 2024
The following table summarizes our consolidated results of operations for the fiscal nine-month periods ended September 28, 2025, and September 29, 2024, including as a percentage of revenue, as well as the dollar and percentage change between fiscal years.
| Fiscal Nine Months Ended | Change | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | $ | % | |||||||||||||||||||||||||||||||
| Revenue, net | $ | 2,124,177 | 100.0 | % | $ | 1,920,151 | 100.0 | % | $ | 204,026 | 10.6 | % | |||||||||||||||||||||||
| Cost of revenue (including depreciation) | 1,958,088 | 92.2 | % | 1,770,575 | 92.2 | % | 187,513 | 10.6 | % | ||||||||||||||||||||||||||
| Gross profit | 166,089 | 7.8 | % | 149,576 | 7.8 | % | 16,513 | 11.0 | % | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 90,294 | 4.3 | % | 76,461 | 4.0 | % | 13,833 | 18.1 | % | ||||||||||||||||||||||||||
| Amortization of intangible assets | 20,034 | 0.9 | % | 19,991 | 1.0 | % | 43 | 0.2 | % | ||||||||||||||||||||||||||
| Operating income | 55,761 | 2.6 | % | 53,124 | 2.8 | % | 2,637 | 5.0 | % | ||||||||||||||||||||||||||
| Interest expense, net | 62,314 | 2.9 | % | 70,653 | 3.7 | % | (8,339) | (11.8 | %) | ||||||||||||||||||||||||||
| Other expense (income), net | 205 | 0.0 | % | (899) | 0.0 | % | 1,104 | (122.8 | %) | ||||||||||||||||||||||||||
| Loss before income taxes | (6,758) | (0.3 | %) | (16,630) | (0.9 | %) | 9,872 | (59.4 | %) | ||||||||||||||||||||||||||
| Income tax benefit | 973 | 0.1 | % | 523 | 0.0 | % | 450 | 86.0 | % | ||||||||||||||||||||||||||
| Net loss | (7,731) | (0.4 | %) | (17,153) | (0.9 | %) | 9,422 | (54.9 | %) | ||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 54 | 0.0 | % | (130) | 0.0 | % | 184 | (141.5 | %) | ||||||||||||||||||||||||||
| Net loss attributable to common stock | $ | (7,785) | (0.4 | %) | $ | (17,023) | (0.9 | %) | $ | 9,238 | (54.3 | %) | |||||||||||||||||||||||
Revenue and Gross Profit
The following table summarizes our revenue, gross profit and gross margin for the periods indicated by segment as well as the dollar and percentage change from the prior year period. The discussion that follows highlights key revenue and gross margin changes at the segment level. Changes in gross profit correspond with the discussed changes in revenue and gross margin.
| Fiscal Nine Months Ended | Change | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | $ | % | |||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||
| U.S. Gas | $ | 946,935 | 44.6 | % | $ | 933,334 | 48.6 | % | $ | 13,601 | 1.5 | % | |||||||||||||||||||||||
| Canadian Gas | 169,048 | 8.0 | % | 141,118 | 7.4 | % | 27,930 | 19.8 | % | ||||||||||||||||||||||||||
| Union Electric | 572,206 | 26.9 | % | 499,728 | 26.0 | % | 72,478 | 14.5 | % | ||||||||||||||||||||||||||
| Non-Union Electric | 435,988 | 20.5 | % | 345,971 | 18.0 | % | 90,017 | 26.0 | % | ||||||||||||||||||||||||||
| Consolidated revenue | $ | 2,124,177 | 100.0 | % | $ | 1,920,151 | 100.0 | % | $ | 204,026 | 10.6 | % | |||||||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||||||||||||||
| U.S. Gas | $ | 43,218 | 4.6 | % | $ | 49,140 | 5.3 | % | $ | (5,922) | (12.1 | %) | |||||||||||||||||||||||
| Canadian Gas | 32,782 | 19.4 | % | 21,087 | 14.9 | % | 11,695 | 55.5 | % | ||||||||||||||||||||||||||
| Union Electric | 46,658 | 8.2 | % | 38,875 | 7.8 | % | 7,783 | 20.0 | % | ||||||||||||||||||||||||||
| Non-Union Electric | 43,431 | 10.0 | % | 40,474 | 11.7 | % | 2,957 | 7.3 | % | ||||||||||||||||||||||||||
| Consolidated gross profit | $ | 166,089 | 7.8 | % | $ | 149,576 | 7.8 | % | $ | 16,513 | 11.0 | % | |||||||||||||||||||||||
•Revenue from our U.S. Gas segment totaled $946.9 million in the fiscal nine months ended September 28, 2025, reflecting an increase of $13.6 million, or 1.5%, compared to the prior year period. This increase was driven by increased net MSA volumes, with strong performance in the second and third fiscal quarter of 2025 compensating for reduced volumes in the first fiscal quarter of 2025, which was negatively impacted by severe winter weather conditions. The increase in MSA revenue was partially offset by slightly lower bid revenue year-over-year. As a percentage of revenue, gross profit decreased to 4.6% in the fiscal nine months ended September 28, 2025 from 5.3% in the prior year period, primarily driven by inefficiencies due to weather-related work stoppages and delays in the first
fiscal quarter of 2025. Revenue from Southwest Gas Corporation totaled $72.0 million during the fiscal nine months ended September 28, 2025 compared to $79.2 million in the prior year period.
•Revenue from our Canadian Gas segment totaled $169.0 million in the fiscal nine months ended September 28, 2025, reflecting an increase of $27.9 million, or 19.8%, compared to the prior year period. This increase was primarily due to an increase in net volumes under existing MSAs. As a percentage of revenue, gross profit increased to 19.4% in the fiscal nine months ended September 28, 2025 as compared to 14.9% in the prior year period. This increase was primarily attributable to improvements on bid margins, as the prior year period was negatively impacted by performance issues on certain bid projects which did not recur in the current year period.
•Revenue from our Union Electric segment totaled $572.2 million in the fiscal nine months ended September 28, 2025, reflecting an increase of $72.5 million, or 14.5%, compared to the prior year period. This increase was driven by new bid project wins, partially offset by a planned decline in offshore wind revenue of $35.2 million due to timing of projects and a decrease in storm restoration services revenue of $13.7 million ($6.6 million for the fiscal nine months ended September 28, 2025 compared to $20.3 million for the prior year period). As a percentage of revenue, gross profit increased to 8.2% in the fiscal nine months ended September 28, 2025 as compared to 7.8% in the prior year period driven by more efficient utilization of fixed costs on higher revenue, partially offset by the $13.7 million decrease in storm restoration services revenue, which resulted in $3.8 million less gross profit.
•Revenue from our Non-Union Electric segment totaled $436.0 million in the fiscal nine months ended September 28, 2025, reflecting an increase of $90.0 million, or 26.0%, compared to the prior year period. This increase was primarily driven by an increase in volumes under new and existing MSAs, which was partially offset by a decline in storm restoration services revenue of $36.6 million ($30.1 million in the fiscal nine months ended September 28, 2025 compared to $66.7 million in the prior year period). As a percentage of revenue, gross profit decreased to 10.0% in the fiscal nine months ended September 28, 2025 compared to 11.7% in the prior year period. Profitability was negatively impacted by the $36.6 million decrease in storm restoration services, which resulted in $14.5 million less gross profit. This decrease was partially offset by better MSA performance in the first half of 2025 compared to the first half of 2024 driven by more efficient utilization of fixed costs on higher volumes.
Selling, General and Administrative Expenses
Selling, general and administrative costs increased by $13.8 million, or 18.1% in the current period. This increase was largely driven by an increase in stock-based compensation and accruals for cash-based incentive compensation. The current year period also included $6.9 million in separation-related costs and other non-recurring professional fees compared to $3.4 million in similar non-recurring costs (including strategic review costs and securitization facility transaction fees) in the prior year period. These increases were partially offset by $5.7 million in severance paid in 2024 that was recorded within selling, general and administrative costs in the prior year period. In the current year period, we also incurred incremental costs to operate as a standalone public company and to grow our sales and business development function.
Interest Expense, Net
Interest expense, net decreased by $8.3 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, net of $8.3 million in costs related to the refinance of our credit facility.
Income Tax
Our effective tax rate for the fiscal nine-month periods ended September 28, 2025 and September 29, 2024 was (14.4%) and (3.1%), respectively. The effective tax rate for the current year period was impacted by the disproportionate amount of non-deductible expenses in relation to loss before income taxes. The effective tax rate for the prior year period was impacted by the use of the actual effective tax rate instead of the annual effective tax rate. Additionally, differences in income (loss) before income taxes by jurisdiction caused fluctuations in the effective tax rate when comparing periods.
Non-GAAP Financial Measures
We prepare and present our financial statements in accordance with GAAP. However, management believes that EBITDA, 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. Management also believes that providing these non-GAAP measures helps investors evaluate the Company's operating results 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, (ii) separation-related costs, (iii) strategic review costs, (iv) severance costs, (v) securitization facility transaction fees, (vi) other professional fees, and (vii) CEO transition costs. Adjusted EBITDA Margin is defined as the percentage derived from dividing Adjusted EBITDA by revenue. Management believes that EBITDA helps 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 EBITDA provides additional insight by removing certain expenses that are non-recurring and/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. Because these non-GAAP metrics, as defined, exclude some, but not all, items that affect comparable GAAP financial measures, these non-GAAP metrics may not be comparable to similarly titled measures of other companies.
Adjusted Net Income is defined as net income (loss) adjusted for (i) separation-related costs, (ii) strategic review costs, (iii) severance costs, (iv) amortization of intangible assets, (v) securitization facility transaction fees, (vi) other professional fees, (vii) CEO transition costs, (viii) loss on debt modification and extinguishment, (ix) non-cash stock-based compensation, and (x) 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.
Base Revenue is defined as revenue, net adjusted to exclude revenue and attributable to storm restoration services. Base Gross Profit is defined as gross profit adjusted to exclude gross profit attributable to storm restoration services. Base Gross Profit Margin is calculated by dividing Base Gross Profit by 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. Management believes these Non-GAAP measures are more suitable disclosures for evaluating fundamental business performance and for comparison purposes.
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 revenue, 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 these non-GAAP metrics: (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) separation-related costs represent expenses incurred post-Centuri 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 and costs incurred in connection with the establishment of Centuri's Unutilized Tax Assets Settlement Agreement with Southwest Gas Holdings and under other separation-related agreements, which are not reflective of our ongoing operations and will not recur following the full separation from Southwest Gas Holdings; (iii) strategic review costs represent expenses incurred during the Centuri IPO and related costs incurred to establish Centuri as a public company leading up to the IPO; (iv) severance costs relate to non-recurring restructuring activities; (v)
securitization facility transaction fees represent legal and other professional fees incurred to establish our Securitization Facility; (vi) CEO transition costs represent incremental costs incurred to find and hire a replacement CEO; (vii) other professional fees are non-recurring costs associated with certain one-time events; and (viii) loss on debt modification and extinguishment represents non-recurring professional fees expensed as part of our credit facility refinance as well as the non-cash write-off of unamortized debt issuance costs associated with debt extinguishments. The most comparable GAAP financial measure and information reconciling the GAAP and non-GAAP financial measures are set forth below.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
The following table presents reconciliations of net income (loss) to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the specified periods:
| Fiscal Three Months Ended | Fiscal Nine Months Ended | ||||||||||||||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | |||||||||||||||||||
| Net income (loss) | $ | 2,114 | $ | (3,617) | $ | (7,731) | $ | (17,153) | |||||||||||||||
| Interest expense, net | 26,205 | 23,925 | 62,314 | 70,653 | |||||||||||||||||||
| Income tax expense | 7,918 | 21,770 | 973 | 523 | |||||||||||||||||||
| Depreciation expense | 27,805 | 26,546 | 82,901 | 81,921 | |||||||||||||||||||
| Amortization of intangible assets | 6,685 | 6,662 | 20,034 | 19,991 | |||||||||||||||||||
| EBITDA | 70,727 | 75,286 | 158,491 | 155,935 | |||||||||||||||||||
| Non-cash stock-based compensation | 2,143 | 1,318 | 5,893 | 810 | |||||||||||||||||||
| Separation-related costs | 2,343 | - | 5,518 | - | |||||||||||||||||||
| Strategic review costs | - | - | - | 2,010 | |||||||||||||||||||
| Severance costs | - | 531 | - | 7,188 | |||||||||||||||||||
| Securitization facility transaction fees | - | 1,393 | - | 1,393 | |||||||||||||||||||
| Other professional fees | - | - | 1,379 | - | |||||||||||||||||||
| CEO transition costs | - | 233 | - | 233 | |||||||||||||||||||
| Adjusted EBITDA | $ | 75,213 | $ | 78,761 | $ | 171,281 | $ | 167,569 | |||||||||||||||
| Adjusted EBITDA Margin (% of revenue) | 8.8 | % | 10.9 | % | 8.1 | % | 8.7 | % | |||||||||||||||
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 Nine Months Ended | ||||||||||||||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | |||||||||||||||||||
| Net income (loss) | $ | 2,114 | $ | (3,617) | $ | (7,731) | $ | (17,153) | |||||||||||||||
| Separation-related costs | 2,343 | - | 5,518 | - | |||||||||||||||||||
| Strategic review costs | - | - | - | 2,010 | |||||||||||||||||||
| Severance costs | - | 531 | - | 7,188 | |||||||||||||||||||
| Amortization of intangible assets | 6,685 | 6,662 | 20,034 | 19,991 | |||||||||||||||||||
| Securitization facility transaction fees | - | 1,393 | - | 1,393 | |||||||||||||||||||
| Other professional fees | - | - | 1,379 | - | |||||||||||||||||||
| CEO transition costs | - | 233 | - | 233 | |||||||||||||||||||
| Loss on debt modification and extinguishment | 8,240 | 1,726 | 8,240 | 1,726 | |||||||||||||||||||
| Non-cash stock-based compensation | 2,143 | 1,318 | 5,893 | 810 | |||||||||||||||||||
|
Income tax impact of adjustments(1)
|
(4,853) | (2,966) | (10,267) | (8,339) | |||||||||||||||||||
| Adjusted Net Income | $ | 16,672 | $ | 5,280 | $ | 23,066 | $ | 7,859 | |||||||||||||||
(1)Calculated based on a blended statutory tax rate of 25%.
Base Revenue and Base Gross Profit
The following table presents reconciliations of revenue, net to Base Revenue and gross profit to Base Gross Profit and Base Gross Profit Margin.
| Fiscal Three Months Ended | Fiscal Nine Months Ended | ||||||||||||||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | |||||||||||||||||||
| Total revenue, net | $ | 850,044 | $ | 720,053 | $ | 2,124,177 | $ | 1,920,151 | |||||||||||||||
| Less: Storm restoration services revenue | (1,491) | (41,385) | (36,660) | (87,020) | |||||||||||||||||||
| Base Revenue | $ | 848,553 | $ | 678,668 | $ | 2,087,517 | $ | 1,833,131 | |||||||||||||||
| Fiscal Three Months Ended | Fiscal Nine Months Ended | ||||||||||||||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | |||||||||||||||||||
| Gross profit | $ | 77,960 | $ | 75,793 | $ | 166,089 | $ | 149,576 | |||||||||||||||
| Less: Storm restoration services gross profit | (353) | (15,256) | (11,345) | (29,640) | |||||||||||||||||||
| Base Gross Profit | $ | 77,607 | $ | 60,537 | $ | 154,744 | $ | 119,936 | |||||||||||||||
| Base Gross Profit Margin | 9.1 | % | 8.9 | % | 7.4 | % | 6.5 | % | |||||||||||||||
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 September 28, 2025 and December 29, 2024, cash and cash equivalents were $16.1 million and $49.0 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 Nine Months Ended | |||||||||||
| (dollars in thousands) | September 28, 2025 | September 29, 2024 | |||||||||
| Net cash (used in) provided by operating activities | $ | (5,769) | $ | 97,232 | |||||||
| Net cash used in investing activities | (64,161) | (59,291) | |||||||||
| Net cash provided by (used in) financing activities | 36,953 | (18,747) | |||||||||
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) provided by operating activities for the fiscal nine months ended September 28, 2025 was $(5.8) million, compared to $97.2 million for the fiscal nine months ended September 29, 2024, representing a decrease in operating cash flows of $103.0 million. This decrease is primarily attributable to our Securitization Facility, as the prior year-to-date period included a $125.0 million favorable impact to cash from operating activities due to the initial sale of accounts receivable upon the inception of our Securitization Facility in September 2024. In the current year, the facility was cash flow neutral, as the same amount of receivables remained sold. Partially offsetting the impact of the Securitization Facility were the factors below, which had a combined net favorable impact on cash from operating activities of approximately $15.7 million year-over-year:
•Net income and non-cash adjustments: Net income adjusted for several non-cash items (stock-based compensation, depreciation, debt issuance cost amortization and write-offs, gain on sale of equipment, and deferred taxes) increased approximately $14.7 million year-over-year.
•Accounts receivable and contract assets: Cash flow decreased $78.5 million (excluding the impacts of the Securitization Facility discussed above) due to higher revenue and the timing of customer billings resulting in increased balances.
•Accounts payable and accrued expenses:Cash flow increased $50.7 million as increased work volumes in the current period and timing of billings by vendors led to higher accounts payable and accrued expenses at the end of the current period.
•Contract liabilities:Cash flow increased $28.8 million, as new projects led to advance billings to customers.
Investing Activities
Net cash used in investing activities was $64.2 million in the fiscal nine months ended September 28, 2025 compared to $59.3 million for the fiscal nine months ended September 29, 2024, an increase of $4.9 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 nine months ended September 28, 2025 and September 29, 2024, we had capital expenditures of $68.7 million and $66.1 million, respectively.
These items were partially offset by proceeds from the sale of property and equipment of $4.6 million and $6.8 million for the fiscal nine-month periods ended September 28, 2025 and September 29, 2024, respectively.
Financing Activities
Net cash provided by (used in) financing activities was $37.0 million for the fiscal nine months ended September 28, 2025 compared to $(18.7) million for the fiscal nine months ended September 29, 2024. This increase was primarily due to the following factors:
•Non-recurring prior-year transactions: The prior year included $328.0 million in proceeds from the Centuri IPO. The prior year also included $92.8 million in cash outflows to purchase noncontrolling interests in our subsidiaries. These two transactions resulted in a net $235.2 million inflow that did not recur in the current period.
•Term loan financing activity: Net financing cash flows related to our term loan facility increased $354.7 million between periods, as in the prior year we made over $285.0 million in term loan prepayments (using proceeds from the Centuri IPO and Securitization Facility), while in the current year we increased our borrowings under our term loan facility when we refinanced our credit agreement.
•Revolving credit facility activity: Net financing cash flows related to our revolving credit facility decreased $61.0 million between periods. We used the majority of the additional borrowings under our term loan facility to pay down the balance on our revolving credit facility.
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 nine-month periods ended September 28, 2025 and September 29, 2024, 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.
Creditand Securitization Facilities
Term Loan and Revolving Credit Facility
On July 9, 2025, we signed the sixth amendment to our 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. 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.
We evaluated whether modification or extinguishment accounting should be applied on a lender-by-lender basis in association with the refinance. The results of this analysis are summarized below:
•Term loan facility:$1.9 million in unamortized debt issuance costs were written-off related to debt extinguishments, and $6.0 million in third-party fees related to debt modifications were expensed. These
$7.9 million in costs were recorded within interest expense, net on the statement of operations. A total of $3.7 million in new lender and third-party costs incurred in the refinance were capitalized as a reduction in long-term debt and will be amortized over the life of the term loan facility.
•Revolving credit facility: $0.4 million in unamortized debt issuance costs were written-off related to debt extinguishments and recorded within interest expense, net on the statement of operations. A total of $1.5 million in new third-party fees were capitalized and will be amortized over the life of the revolving credit facility. These capitalized costs are recorded within other assets on the condensed consolidated balance sheet.
As a result of the refinance, our term loan facility, previously set to mature on August 27, 2028, is now set to mature on July 9, 2032, and our revolving credit facility, previously set to mature on August 27, 2026, is now set to mature on July 9, 2030. The term loan facility, which previously did not have any principal payments due aside from a balloon payment at maturity, now requires quarterly principal payments of $2.0 million with the remainder paid in a balloon payment at maturity. 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 $2.1 billion as of September 28, 2025.
During the fiscal nine months ended September 28, 2025, the maximum amount outstanding on the combined facility was $916.0 million, at which point $800.0 million was outstanding on the term loan portion of the facility. As of September 28, 2025 and December 29, 2024, $95.8 million and $113.5 million, respectively, was outstanding on the revolving credit facility, in addition to $800.0 million and $706.4 million that was outstanding on the term loan portion of the facility as of September 28, 2025 and December 29, 2024, respectively. Also, as of September 28, 2025 and December 29, 2024, there was approximately $297.8 million and $226.1 million, respectively, net of outstanding letters of credit, of unused capacity under the line of credit. We had $68.6 million and $64.6 million of unused letters of credit available as of September 28, 2025 and December 29, 2024, respectively.
Immediately prior to the sixth amendment, we were required to maintain a leverage ratio of 4.00 to 1.00, and an interest coverage ratio of greater than a minimum of 2.50 to 1.00 under our revolving credit facility. Pursuant to the sixth amendment signed on July 9, 2025, we are now 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. The requirement to maintain an interest coverage ratio of greater than a minimum of 2.50 to 1.00 remains unchanged. We are currently in compliance with all of our financial covenants under the revolving credit facility.
The applicable margin for the newly amended 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 newly amended term loan facility has a fixed margin of 1.25% for base rate loans and 2.25% for SOFR loans, which is 0.25% lower than the rates prior to the sixth amendment.
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 and/or contributed, and will continue to sell and/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 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.
The total outstanding balance of accounts receivable that had been sold and derecognized was $125.0 million as of September 28, 2025. We had no unused capacity on the Securitization Facility as of September 28, 2025.
Equipment Term Loans
As of September 28, 2025, we had six equipment term loans with initial amounts totaling approximately $150 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 2024 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 nine months ended September 28, 2025, there were no material changes in our critical accounting estimates or policies.
Centuri Holdings Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 13:07 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]