Centuri Holdings, Inc. (NYSE: CTRI) ("Centuri" or the "Company")
today announced results for the first quarter, ended March 31,
2024.
Financial Highlights
- On April 22, 2024, completed an initial public offering ("IPO")
of 14.3 million shares of common stock (including the underwriters'
full exercise of their over-allotment options) at a price to the
public of $21.00 per share. Additionally, completed a concurrent
private placement of 2.6 million shares of common stock at a price
per share equal to the IPO price.
- Total net proceeds from capital raise transactions after
deducting underwriting discounts and commissions and estimated
offering expenses were $329.3 million; funds were primarily used to
pay down outstanding debt on our credit facility.
- In April 2024, paid $92.0 million to acquire the remaining 10%
outstanding noncontrolling interest in Linetec Services, LLC
- Received over $40 million of new awards from existing master
service agreements ("MSAs") customers supporting the work to
advance critical reliability and integrity spending
- First quarter consolidated revenue of $528.0 million
- First quarter results include net loss attributable to common
stock of $(25.1) million, adjusted net loss of $(14.4) million, and
adjusted EBITDA of $20.2 million
- First quarter results included $8.3 million of nonrecurring
strategic review and severance costs
First quarter 2024 revenue was $528.0 million, compared to
$653.3 million in the first quarter of 2023. Revenue was down from
the previous year primarily due to unfavorable weather which drove
a reduction in volumes under existing customer MSAs, as well as the
timing of bid projects, and lower offshore wind and storm
restoration services revenue.
Net loss attributable to common stock was $(25.1) million for
the first quarter of 2024, which included nonrecurring strategic
review costs and severance costs of approximately $8.3 million on a
pre-tax basis, compared to $(8.8) million in the prior year period.
Adjusted net loss for the first quarter of 2024 was $(14.4)
million, compared to $(1.9) million in the previous year. Current
year results were negatively affected due to the aforementioned
factors that impacted our revenue. Adjusted EBITDA was $20.2
million in the first quarter of 2024 compared to $49.2 million in
the first quarter of 2023.
“Delivering our financial results for the first time as a public
company after successfully completing our IPO in April is a major
milestone for the Centuri team and a reflection of our team's
dedication, commitment and hard work," said Bill Fehrman, President
and CEO of Centuri. "Moving past the typical seasonality
experienced by our business during the first quarter of the year,
we expect to continue to build on our track record of delivering
consistent growth by serving our customers across the utility value
chain. We are confident in Centuri’s prospects to deliver value for
our stockholders as a standalone company."
Centuri Group, Inc. and
Subsidiaries
Supplemental Segment
Data
For the Fiscal Three Months
Ended
March 31, 2024 and April 2,
2023
(In thousands, except
percentages)
(Unaudited)
Segment Results
Revenue
Fiscal Three Months
Ended
Change
(dollars in thousands)
March 31, 2024
April 2, 2023
$
%
U.S. Gas
$
226,578
42.9%
$
259,337
39.7%
$
(32,759
)
(12.6%)
Canadian Gas
34,648
6.6%
39,303
6.0%
(4,655
)
(11.8%)
Union Electric
163,851
31.0%
205,669
31.5%
(41,818
)
(20.3%)
Non-Union Electric
96,615
18.3%
136,606
20.9%
(39,991
)
(29.3%)
Other
6,331
1.2%
12,378
1.9%
(6,047
)
(48.9%)
Consolidated revenue, net
$
528,023
100.0%
$
653,293
100.0%
$
(125,270
)
(19.2%)
Gross profit
Fiscal Three Months
Ended
Change
(dollars in thousands)
March 31, 2024
April 2, 2023
$
%
U.S. Gas
$
(3,976
)
(1.8%)
$
3,366
1.3%
$
(7,342
)
(218.1%)
Canadian Gas
5,545
16.0%
4,476
11.4%
1,069
23.9%
Union Electric
11,369
6.9%
15,209
7.4%
(3,840
)
(25.2%)
Non-Union Electric
2,800
2.9%
18,487
13.5%
(15,687
)
(84.9%)
Other
(2,459
)
(38.8%)
411
3.3%
(2,870
)
NM
Consolidated gross profit
$
13,279
2.5%
$
41,949
6.4%
$
(28,670
)
(68.3%)
NM — Percentage is not
meaningful
- Revenue from our U.S. Gas segment totaled $226.6 million,
reflecting a decrease of $32.8 million, or 12.6%, compared to the
prior year. This decrease was primarily due to unfavorable winter
weather which drove a reduction in net volumes under existing
customer MSAs and timing of bid projects, as the prior year
benefited from the commencement of a large project that has since
been completed. As a percentage of revenue, gross profit decreased
to (1.8%) in the current period from 1.3% in the prior period.
Profitability was negatively affected by lower MSA volumes,
unfavorable winter weather and the timing of bid projects.
- Revenue from our Canadian Gas segment totaled $34.6 million,
reflecting a decrease of $4.7 million, or 11.8%, compared to the
prior year. This decrease was primarily due to a reduction in net
volumes under existing MSAs. As a percentage of revenue, gross
profit increased to 16.0% in the current period as compared to
11.4% in the prior period primarily due to favorable changes in mix
of work.
- Revenue from our Union Electric segment totaled $163.9 million,
reflecting a decrease of $41.8 million, or 20.3%, compared to the
prior year. This decrease was driven by a decline in offshore wind
revenue of $12.6 million due to timing of project completion, as
well as unfavorable winter weather conditions that led to a net
reduction in volumes under other existing MSAs. Storm restoration
services revenue for the Union Electric segment was $7.5 million
for the first fiscal three months of 2024 compared to $8.3 million
for the same period in 2023. As a percentage of revenue, gross
profit decreased to 6.9% in the current period as compared to 7.4%
in the prior period primarily due to changes in the mix of work,
including less storm restoration services.
- Revenue from our Non-Union Electric segment totaled $96.6
million, reflecting a decrease of $40.0 million, or 29.3%, compared
to the prior year. This decrease was primarily driven by a $20.4
million reduction in revenue from storm restoration services ($1.8
million for the first quarter of 2024 compared to $22.2 million for
the same period in 2023), as well as a decrease in volumes under
existing MSAs. As a percentage of revenue, gross profit decreased
to 2.9% in the current period, compared to 13.5% in the prior
period. Profitability was negatively affected by unfavorable
changes in mix of work, including a reduction in storm restoration
services revenue, which typically generates a higher profit margin
than core infrastructure services, and lower MSA volumes.
Conference Call Information
Centuri expects to hold its inaugural earnings conference call
concurrent with the planned release of its second quarter 2024
financial results in August 2024. Additional information will be
released closer to that time.
About Centuri
Centuri Holdings, Inc. was formed for the purpose of completing
an IPO and other related transactions in order to carry on the
business of Centuri Group, Inc., its predecessor for financial
reporting purposes. Centuri Group, Inc. is a strategic utility
infrastructure services company that partners with regulated
utilities to build and maintain the energy network that powers
millions of homes and businesses across the United States and
Canada.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements can often be identified by the use of words such as
“will,” “predict,” “continue,” “forecast,” “expect,” “believe,”
“anticipate,” “outlook,” “could,” “target,” “project,” “intend,”
“plan,” “seek,” “estimate,” “should,” “may” and “assume,” as well
as variations of such words and similar expressions referring to
the future. The specific forward-looking statements made herein
include (without limitation) statements regarding our confidence in
our prospects to deliver value for our stockholders as an
independent standalone company; our expectation to continue to
build on our track record of delivering consistent growth by
serving our customers across the utility value chain; our
estimation of offering expenses, which impact the net proceeds from
our IPO; and our expectation to hold our first earnings conference
call when announcing our results for the second quarter of 2024. A
number of important factors affecting the business and financial
results of Centuri could cause actual results to differ materially
from those stated in the forward-looking statements. These factors
include, but are not limited to, capital market risks and the
impact of general economic or industry conditions. Factors that
could cause actual results to differ also include (without
limitation) those discussed in Centuri’s filings filed from time to
time with the SEC. The statements in this press release are made as
of the date of this press release, even if subsequently made
available by Centuri on its website or otherwise. Centuri does not
assume any obligation to update the forward-looking statements,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments, or
otherwise.
Non-GAAP Measures
We prepare and present our financial statements in accordance
with GAAP. However, management believes that EBITDA, Adjusted
EBITDA, Adjusted EBITDA Margin and Adjusted Net Loss, all of which
are measures not presented in accordance with GAAP, provide
investors with additional useful information in evaluating our
performance. We use these non-GAAP measures internally to evaluate
performance and to make financial, investment and operational
decisions. We believe that presentation of these non-GAAP measures
provides investors with greater transparency with respect to our
results of operations and that these measures are useful for
period-to-period comparisons of results. Management also believes
that providing these non-GAAP measures helps investors evaluate the
Company’s operating performance, profitability and business trends
in a way that is consistent with how management evaluates such
matters.
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization. Adjusted EBITDA is defined as EBITDA
adjusted for (i) non-cash stock-based compensation expense, (ii)
strategic review costs, and (iii) severance costs. Adjusted EBITDA
Margin is defined as the percentage derived from dividing Adjusted
EBITDA by revenue.
Adjusted Net Loss is defined as net loss adjusted for (i)
strategic review costs, (ii) severance costs, (iii) amortization of
intangible assets, (iv) non-cash stock-based compensation expense
and (v) the income tax impact of adjustments that are subject to
tax, which is determined using the incremental statutory tax rates
of the jurisdictions to which each adjustment relates for the
respective periods.
Using EBITDA as a performance measure has material limitations
as compared to net loss, or other financial measures as defined
under GAAP, as it excludes certain recurring items, which may be
meaningful to investors. EBITDA excludes interest expense net of
interest income; however, as we have borrowed money to finance
transactions and operations, or invested available cash to generate
interest income, interest expense and interest income are elements
of our cost structure and can affect our ability to generate
revenue and returns for our stockholders. Further, EBITDA excludes
depreciation and amortization; however, as we use capital and
intangible assets to generate revenues, depreciation and
amortization are necessary elements of our costs and ability to
generate revenue. Finally, EBITDA excludes income taxes; however,
as we are organized as a corporation, the payment of taxes is a
necessary element of our operations. As a result of these
exclusions from EBITDA, any measure that excludes interest expense
net of interest income, depreciation and amortization and income
taxes has material limitations as compared to net loss. When using
EBITDA as a performance measure, management compensates for these
limitations by comparing EBITDA to net loss in each period, to
allow for the comparison of the performance of the underlying core
operations with the overall performance of the company on a
full-cost, after-tax basis.
As to certain of the items related to Adjusted EBITDA, Adjusted
EBITDA Margin and Adjusted Net Loss: (i) non-cash stock-based
compensation expense varies from period to period due to changes in
the estimated fair value of performance-based awards, forfeitures
and amounts granted; (ii) strategic review costs related to the
separation of Centuri are non-recurring; and (iii) severance costs
relate to non-recurring restructuring activities. Because EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Loss, as
defined, exclude some, but not all, items that affect net loss,
such measures may not be comparable to similarly titled measures of
other companies. The most comparable GAAP financial measure, net
loss, and information reconciling the GAAP and non-GAAP financial
measures, are set forth below.
Centuri Group, Inc. and
Subsidiaries
Reconciliation of Non-GAAP
Financial Measures
For the Fiscal Three Months
Ended
March 31, 2024 and April 2,
2023
(In thousands)
(Unaudited)
Fiscal Three Months
Ended
March 31, 2024
April 2, 2023
Net loss
$
(25,233
)
$
(7,105
)
Interest expense, net
24,099
22,376
Income tax benefit
(20,773
)
(4,208
)
Depreciation expense
27,651
31,203
Amortization of intangible assets
6,668
6,667
EBITDA
12,412
48,933
Non-cash stock-based compensation
(588
)
144
Strategic review costs
3,877
91
Severance costs
4,471
69
Adjusted EBITDA
$
20,172
$
49,237
Adjusted EBITDA Margin (% of
revenue)
3.8
%
7.5
%
Fiscal Three Months
Ended
March 31, 2024
April 2, 2023
Net loss
$
(25,233
)
$
(7,105
)
Strategic review costs
3,877
91
Severance costs
4,471
69
Amortization of intangible assets
6,668
6,667
Non-cash stock-based compensation
(588
)
144
Income tax impact of adjustments(1)
(3,607
)
(1,743
)
Adjusted net loss
$
(14,412
)
$
(1,877
)
(1)
Calculated based on a blended
statutory tax rate of 25%.
Centuri Group, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations
For the Fiscal Three Months
Ended
March 31, 2024 and April 2,
2023
(In thousands, except per share
information)
(Unaudited)
Fiscal Three Months
Ended
March 31, 2024
April 2, 2023
Revenue, net
$
504,745
$
624,489
Revenue, related party
23,278
28,804
Total revenue
528,023
653,293
Cost of revenue (including
depreciation)
492,853
584,115
Cost of revenue, related party (including
depreciation)
21,891
27,229
Total cost of revenue
514,744
611,344
Gross profit
13,279
41,949
Selling, general and administrative
expenses
28,550
23,539
Amortization of intangible assets
6,668
6,667
Operating (loss) income
(21,939
)
11,743
Interest expense, net
24,099
22,376
Other (income) expense, net
(32
)
680
Loss before income tax benefit
(46,006
)
(11,313
)
Income tax benefit
(20,773
)
(4,208
)
Net loss
(25,233
)
(7,105
)
Net (loss) income attributable to
noncontrolling interests
(175
)
1,739
Net loss attributable to common stock
$
(25,058
)
$
(8,844
)
Loss per share attributable to common
stock:
Basic
$
(242,060
)
$
(85,433
)
Diluted
$
(242,060
)
$
(85,433
)
Shares used in computing earnings per
share:
Weighted average basic shares
outstanding
0.1
0.1
Weighted average diluted shares
outstanding
0.1
0.1
Centuri Group, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
March 31, 2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
18,405
$
33,407
Accounts receivable, net
279,406
335,196
Accounts receivable, related party,
net
8,409
12,258
Contract assets
254,369
266,600
Contract assets, related party
3,461
3,208
Prepaid expenses and other current
assets
48,951
32,258
Total current assets
613,001
682,927
Property and equipment, net
537,682
545,442
Intangible assets, net
361,911
369,048
Goodwill, net
373,646
375,892
Right-of-use assets under finance
leases
41,089
43,525
Right-of-use assets under operating
leases
117,827
118,448
Other assets
74,150
54,626
Total assets
$
2,119,306
$
2,189,908
LIABILITIES, TEMPORARY EQUITY AND
EQUITY
Current liabilities:
Current portion of long-term debt
$
42,770
$
42,552
Current portion of finance lease
liabilities
11,092
11,370
Current portion of operating lease
liabilities
19,940
19,363
Accounts payable
114,613
116,583
Accrued expenses and other current
liabilities
238,134
187,050
Contract liabilities
13,648
43,694
Total current liabilities
440,197
420,612
Long-term debt, net of current portion
1,021,318
1,031,174
Line of credit
125,229
77,121
Finance lease liabilities, net of current
portion
21,670
24,334
Operating lease liabilities, net of
current portion
104,110
105,215
Deferred income taxes
134,939
135,123
Other long-term liabilities
69,564
71,076
Total liabilities
1,917,027
1,864,655
Temporary equity:
Redeemable noncontrolling interests
4,511
99,262
Equity:
Common stock, $0.01 par value, 1,000
shares authorized, and 103.52 shares issued and outstanding
—
—
Additional paid-in capital
373,351
374,124
Accumulated other comprehensive loss
(6,568
)
(4,025
)
Accumulated deficit
(169,015
)
(144,108
)
Total equity
197,768
225,991
Total liabilities, temporary equity and
equity
$
2,119,306
$
2,189,908
Centuri Group, Inc. and
Subsidiaries
Condensed Statements of Cash
Flows
For the Fiscal Three Months
Ended
March 31, 2024 and April 2,
2023
(In thousands)
(Unaudited)
Fiscal Three Months
Ended
March 31, 2024
April 2, 2023
Cash flows from operating activities:
Net loss
$
(25,233
)
$
(7,105
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation
27,651
31,203
Amortization of intangible assets
6,668
6,667
Amortization of debt issuance costs
1,318
1,260
Non-cash stock-based compensation
expense
(588
)
144
Gain on sale of equipment
(944
)
(661
)
Amortization of right-of-use assets
5,100
3,712
Deferred income taxes
(1,600
)
(5,267
)
Changes in assets and liabilities, net of
non-cash transactions
(34,585
)
21,925
Net cash (used in) provided by operating
activities
(22,213
)
51,878
Cash flows from investing activities:
Capital expenditures
(30,499
)
(23,237
)
Proceeds from sale of property and
equipment
1,624
2,666
Net cash used in investing activities
(28,875
)
(20,571
)
Cash flows from financing activities:
Proceeds from line of credit
borrowings
55,896
8,137
Payment of line of credit borrowings
(5,931
)
(71,017
)
Principal payments on long-term debt
(10,557
)
(13,207
)
Principal payments on finance lease
liabilities
(2,914
)
(3,056
)
Redemption of redeemable noncontrolling
interest
(37
)
—
Other
(173
)
(213
)
Net cash provided by (used in) financing
activities
36,284
(79,356
)
Effects of foreign exchange
translation
(198
)
104
Net decrease in cash and cash
equivalents
(15,002
)
(47,945
)
Cash and cash equivalents, beginning of
period
33,407
63,966
Cash and cash equivalents, end of
period
$
18,405
$
16,021
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508321999/en/
For Centuri investors, contact: (623) 879-3700
Investors@Centuri.com
For Centuri media information, contact: Jennifer Russo (602)
781-6958 JRusso@Centuri.com
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