Centuri (NYSE: CTRI) revenue jumps 40% and gross margin climbs from second quarter

What happened

Centuri Holdings, Inc. (NYSE: CTRI) posted third-quarter revenue of $1.2 billion, up 40% from a year earlier.

Gross profit rose 45% to $113.4 million. Gross margin reached 9.5%, up from 9.2% a year earlier. Net income attributable to common stock was $26.9 million, compared with $2.1 million a year earlier.

On $342.0 million of added revenue, gross profit grew $35.4 million. That 10.4% incremental margin ran above the quarter's overall margin, so new work earned more than the average dollar of existing work.

Key numbers

Metric	Latest	Change	Source
Third-quarter revenue	$1.2 billion	from $850.0 million, +40.2%	SEC 8-K, Exhibit 99.1
Third-quarter gross profit	$113.4 million	from $78.0 million, +45.4%	SEC 8-K, Exhibit 99.1
Third-quarter gross profit margin	9.5%	from 9.2%, +0.3 percentage points	SEC 8-K, Exhibit 99.1
Net debt to adjusted EBITDA	2.6x	from 3.8x, -1.2x	SEC 8-K, Exhibit 99.1
Nine-month cash used in operating activities	$42.6 million	from $5.8 million	SEC 8-K, Exhibit 99.1
2027 revenue coverage	approximately $3.7 billion		SEC 8-K, Exhibit 99.1

Read more: Centuri (CTRI) company research

Where the margin gain came from

President and CEO Christian Brown credited workforce additions made in the first half. He said productivity and efficiency improved across operations. The move from the second quarter is large. Gross margin rose from 7.2%, and in U.S. Gas, where hiring was heaviest, it went from 4.2% to 8.2%.

The year-over-year picture is more mixed. U.S. Gas margin was 7.7% a year earlier. Canadian Operations slipped to 19.6% from 21.9%. Union Electric edged down to 8.9% from 9.1%, while Non-Union Electric rose to 8.7% from 7.1%.

Growth was broad. Union Electric revenue rose 65%, driven mainly by new bid work and the addition of JJ White. Canadian Operations rose 33% with Connect Utility Services included. U.S. Gas rose 40%, and Non-Union Electric rose 18%. Storm restoration added $21.3 million of revenue and $6.1 million of gross profit.

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Guidance and 2027 targets

Centuri updated its 2026 guidance to revenue of $3.8 billion to $3.9 billion, adjusted gross profit of $305 million to $315 million and adjusted EBITDA of $290 million to $300 million. Adjusted net income is guided at $80 million to $90 million, with net capital spending of $60 million to $70 million. The outlook assumes no storm restoration work in the fourth quarter.

For 2027, the company set preliminary targets of mid-teens percent revenue growth and a gross margin of 8.5% to 9.0%. It has approximately $3.7 billion of revenue coverage for next year. Backlog was approximately $6.2 billion at quarter-end. The opportunity pipeline reached $19 billion, up 46% from a year earlier.

Why it matters

OptimistFi has argued that Centuri's long-term service agreements and field workforce should produce recurring revenue and gradually higher margins. The quarter supports the margin half. The 2027 target range sits above the reported 7.6% margin for the first nine months. That figure includes a $9.0 million reversal of revenue on a legacy City of Chicago contract, which the company calls non-recurring. The target range is still below the third-quarter level.

The company measures the pipeline as unweighted bids and opportunities. It counts every tracked opportunity, not only likely wins.

Leverage also improved. Net debt was 2.6 times trailing adjusted EBITDA on Sept. 27, against 3.8 times a year earlier. Net interest expense in the quarter fell to $13.2 million from $26.2 million.

Cash flow and bookings

Cash flow has not kept pace with revenue. Operating activities used $42.6 million in the first nine months, against $5.8 million used a year earlier. Receivables stood at $583.8 million on Sept. 27, up 85.5% from $314.7 million on Dec. 28, 2025. Cash fell to $42.0 million from $126.6 million. The line of credit rose to $178.6 million from $91.2 million.

Bookings also trail the company's goal. Third-quarter bookings were approximately $730 million. The year-to-date book-to-bill ratio was 1.01x against a target of 1.2x. Centuri says the full-year ratio will exceed that target. It rests on nearly $4.8 billion of outstanding bids, which include MSA renewals expected by year-end.

What's next

The next test is year-end. Centuri estimates that approximately $2 billion of MSA contract value will be renewed by then. Renewals at that scale would back the 2027 coverage and the recurring-revenue part of the case. Missing that mark would leave the full-year ratio nearer the level posted so far.

The fourth-quarter report will also show whether gross margin holds without storm work, which the guidance excludes.

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