Group 1 - Centuri Holdings, Inc. (CTRI) is positioned as a compelling investment opportunity due to improving end markets, accelerating fundamentals, and a resilient business model supported by long-term Master Service Agreements (MSAs) with blue-chip utility customers [2][3] - The company focuses on modernization, maintenance, and expansion of electric and natural gas distribution and transmission networks, with over 80% of revenue coming from long-term, high-visibility MSA relationships, resulting in stable cash flows and low project risk [3] - Centuri has historically achieved an 8.5% organic revenue CAGR through 2024, driven by factors such as aging infrastructure, increased utility capital expenditures, and additional demand from data center projects and storm restoration work [3] Group 2 - Following challenges post-IPO, including a CEO resignation, Chris Brown was appointed as CEO in December 2024, leading to accelerated growth initiatives and an expanded sales pipeline exceeding $12 billion [4] - Under new leadership, the company is transitioning from a maintenance-focused operation to a growth-oriented service provider, with significant bookings and a record backlog of $4.5 billion [4] - CTRI trades at approximately 10.5x 2025e EBITDA, which is a discount compared to peers, despite its lower risk profile and recurring revenue base, with expectations of reaching $300 million EBITDA in 2026, indicating nearly 50% upside from current prices [5] Group 3 - Key catalysts for CTRI include upcoming 2Q earnings, potential investor day guidance, and 2026 consensus-beating guidance, which could further enhance its growth outlook [6] - The company combines a resilient, recurring revenue model with strong growth potential under transformative leadership, making it an attractive opportunity in the utility services sector [6]

Group 1 - Centuri Holdings Inc. has announced customer awards totaling over $300 million, building on a previous $550 million in awards, indicating strong demand for its energy solutions [1][2] - The recent awards reflect a strategic focus on capturing end-market opportunities and delivering profitable growth, as stated by the company's President and CEO [2] - The awarded contracts include work to support data centers in Pennsylvania, a renewal with a utility customer in the Northeast, and new contracts for gas and electric utilities in the Midwest and Southeast [3] Group 2 - Centuri Holdings Inc. operates as a utility infrastructure services firm, providing essential services for building and maintaining energy networks in the U.S. and Canada [4]

Financial Performance - Centuri's Q2 2025 revenue reached $724.1 million [23], compared to $672.1 million in Q2 2024 [30], representing an increase of approximately $52 million [38] - The adjusted EBITDA for Q2 2025 was $71.8 million [30], compared to $68.6 million in Q2 2024 [30] - The adjusted EBITDA margin was 9.9% [23] for Q2 2025 - The company is raising its revenue guidance for FY 2025 to $2.7 billion - $2.85 billion [46] from a previous range of $2.6 billion - $2.8 billion [47] - FY 2025 Adjusted EBITDA is projected to be between $250 million and $270 million [46] Commercial Achievements - Total bookings for the quarter amounted to $1.8 billion [3] - New awards totaled $619 million [26], including $244 million in new MSAs [27] - MSA renewals reached $1.2 billion [25, 27] - The book-to-bill ratio is 2.3x [25] for the six-month period ended June 29, 2025 [29] Segment Performance - Non-Union Electric revenues increased by 24% year-over-year [24], with core electric revenues up by 51% [24] - Union Electric revenues increased by 11% year-over-year [24], with core electric revenues up by 26% [24] - Canadian Gas revenue increased by 18% year-over-year [24], and segment gross margins increased by 210 bps [24]

Core Insights - The company reported a trailing 12-month utility return on equity (ROE) of 8.3% as of June 30, 2025, reflecting improvements in regulatory progress and cost management [6][29] - The Arizona Corporation Commission approved a capital tracker program, and Nevada enacted Senate Bill 417, allowing for alternative ratemaking for natural gas utilities, which is expected to enhance price stability and consumer protection [2][6] - The company successfully reduced its debt by over $470 million through follow-on offerings of Centuri Holdings, strengthening its balance sheet and moving towards a pure-play regulated natural gas business [2][6] Financial Performance - For the second quarter ended June 30, 2025, the company reported a net loss of $12.9 million, a decline of $31.2 million compared to the same period in 2024, primarily due to tax impacts from the sale of Centuri stock [8][9] - Adjusted net income for the second quarter was $38.6 million, representing a 71% increase compared to the same quarter in 2024 [8][29] - Year-to-date net income for 2025 was $100.987 million, a decrease of $5.1 million compared to the previous year, while adjusted net income was $37 million higher than the same period in 2024 [9][29] Operational Highlights - The company added approximately 40,000 new meter sets over the 12 months ending June 30, 2025, resulting in a customer growth rate of 1.8% [6] - The Great Basin Gas Transmission Company's 2028 Expansion Project saw increased capacity demand, rising to about 1.76 billion cubic feet per day from 1.25 billion cubic feet previously announced [3][6] - The company had $356 million in cash and over $1 billion in available liquidity as of June 30, 2025 [6] Segment Performance - The natural gas distribution segment contributed $33.677 million to net income in Q2 2025, up from $27.594 million in Q2 2024, while utility infrastructure services contributed $5.771 million [4][6] - Corporate and administrative net loss increased to $52.331 million in Q2 2025, impacted by tax expenses related to the Centuri stock sale [15][16] - Centuri's net loss improved by $17 million year-to-date, driven by higher work volume under master services agreements [13][16] Future Outlook - The company reaffirmed its 2025 net income guidance of $265 million to $275 million and capital expenditures of approximately $880 million to support customer growth and system improvements [17][19] - The company anticipates a compound annual growth rate (CAGR) of 6.0% to 8.0% for adjusted net income from 2025 to 2029 [19]

Core Viewpoint - Centuri Holdings (CTRI) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade for Centuri reflects an optimistic earnings outlook, likely leading to increased buying pressure and a rise in stock price [4][6]. Impact of Earnings Estimate Revisions - Changes in a company's future earnings potential, as shown through earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors often adjust their valuations based on earnings estimates, which can lead to significant stock price movements due to large share transactions [5]. Centuri's Earnings Outlook - Centuri is projected to earn $0.60 per share for the fiscal year ending December 2025, with no year-over-year change expected [9]. - Over the past three months, the Zacks Consensus Estimate for Centuri has increased by 4.5%, indicating a positive trend in earnings estimates [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [8]. - Centuri's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10][11].

Core Viewpoint - Southwest Gas Holdings, Inc. is initiating a secondary public offering of 9,000,000 shares of Centuri Holdings, Inc. common stock, with an option for underwriters to purchase an additional 1,350,000 shares [1][2] Group 1: Offering Details - The offering includes 9,000,000 existing shares of Centuri's common stock, with a potential additional purchase option for underwriters [1] - Icahn Partners and Icahn Partners Master Fund LP will concurrently purchase $50 million in shares from Southwest Gas Holdings at the offering price [2] - The shares are being offered under an effective shelf registration statement filed with the SEC, and a preliminary prospectus supplement will be available [3] Group 2: Company Background - Southwest Gas Holdings operates through its subsidiary, Southwest Gas Corporation, providing natural gas services to over 2 million customers in Arizona, Nevada, and California [5] - Centuri Holdings, Inc. is a utility infrastructure services company that collaborates with regulated utilities to maintain energy networks across the U.S. and Canada [6]

Financial Performance - GAAP net income was approximately $143 million, a $7.1 million increase quarter-over-quarter[21] - Adjusted diluted earnings per share increased from $1.37 in Q1 2024 to $1.65 in Q1 2025[48] - Southwest Gas expects to issue less than $100 million of equity in 2025 through the existing ATM program, pending Centuri exit path[56] - Southwest Gas reaffirmed its 2025 net income guidance of $265 - $275 million and CapEx of ~$880 million[19, 61] - The company is targeting a 6.0% to 8.0% net income growth and 6.0% to 8.0% rate base growth from 2025-2029[19] Regulatory Updates - Arizona general rate case approved, resulting in ~$80.2 million revenue increase, a 9.84% allowed return on equity, and a 48.5% allowed equity capitalization[21, 25] - GBGTC rate case approved, leading to a revenue increase of ~$9.6 million[25] - California rate case filed in September 2024, requesting a revenue increase of ~$44 million, with rates anticipated to become effective January 2026[25, 37] Growth and Operations - Approximately 40,000 new meter sets were added during the last 12 months, resulting in a 1.8% customer growth rate[21] - Operations and maintenance expense decreased by 1.1% over the first three months of 2025 compared with the same period in 2024[21] - The company projects a population growth of 4.40% in Arizona and 3.42% in Nevada from 2025 to 2030[42]

Financial Performance - Q1 2025 - Revenue reached $550.1 million[26], while adjusted EBITDA was $24.2 million[26], resulting in an adjusted EBITDA margin of 4.4%[26] - Gross profit amounted to $20.3 million[26] - Net loss attributable to common stock was $(17.9) million, or $(0.20) per diluted share[35] - Adjusted net loss was $(10.5) million, or $(0.12) per adjusted diluted share[35] Commercial Achievements - Total bookings reached $1.2 billion[31], with a book-to-bill ratio of 2.2x[31] - New awards totaled $505 million[31], and renewals amounted to $700 million[31] - The company has near-term opportunities valued at $1.4 billion[31] and an opportunity pipeline of approximately $12 billion[31] Segment Performance & Outlook - Non-union Electric revenues increased by 42% year-over-year[29], with segment gross margin rising to 11.9% compared to 2.9% in 1Q24[29] - The company affirms its FY 2025 outlook, projecting revenue between $2.6 billion and $2.8 billion[55], and adjusted EBITDA between $240 million and $275 million[55]

Core Insights - Southwest Gas Holdings reported a net income of $113.9 million for Q1 2025, an increase of $26.2 million compared to Q1 2024, driven by higher operating margins and improved performance at Centuri [4][7][20] - The company achieved a utility return on equity (ROE) of 8.2% over the last twelve months, with a 5.2% earnings growth in Q1 2025 [6][24] - An annual revenue increase of approximately $80.2 million was approved in Arizona, which included an increase in the allowed return on equity to 9.84% [6][25] Financial Performance - Net income for Q1 2025 was $113.9 million, compared to $87.7 million in Q1 2024, reflecting a significant improvement [4][20] - Adjusted net income for Q1 2025 was $119.4 million, up from $98.5 million in the same period last year, marking a 21% increase [7][22] - Diluted earnings per share rose to $1.58 in Q1 2025 from $1.22 in Q1 2024 [4][22] Operational Highlights - The utility added approximately 40,000 new meter sets, resulting in a 1.8% customer growth rate over the past twelve months [6][12] - The operating margin increased by $38.9 million, with combined rate relief in Nevada, California, and Arizona contributing approximately $27 million [12][20] - Operations and maintenance expenses decreased by $1.5 million, primarily due to reduced external contractor costs [12][20] Strategic Developments - The company is committed to fully separating Centuri and is evaluating market conditions for optimal timing and value [3][11] - A constructive outcome on the revenue phase of the Arizona general rate case has bolstered the company's regulatory strategy [2][6] - The company anticipates a final decision on the proposed system integrity mechanism settlement in the third quarter of 2025 [2][11] Guidance and Outlook - The company reaffirmed its 2025 net income guidance of $265 million to $275 million and projected capital expenditures of approximately $880 million [10] - The expected compound annual growth rate (CAGR) for adjusted net income from 2025 to 2029 is estimated to be between 6.0% and 8.0% [10] - The authorized rate base across various jurisdictions totals approximately $5.81 billion, with an average authorized return on common equity of 9.89% [25][26]

Financial Data and Key Metrics Changes - The company reported revenues of $6.2 billion, net income attributable to common stock of $144 million, or $0.96 per diluted share, and adjusted diluted earnings per share of $1.78 [10] - Adjusted EBITDA was $504 million, representing 8.1% of revenues [10] - The company generated cash flow from operations of $243 million and free cash flow of $118 million, which included a $109 million tax payment deferred from 2024 [10] - Full year 2025 expectations for revenue were increased by $100 million, adjusted EBITDA by $10 million, and adjusted earnings per share by $0.05 [11][12] Business Line Data and Key Metrics Changes - The company emphasized strong growth in its core markets, particularly in renewable energy generation and storage, with a focus on solar and battery projects [13][118] - The backlog reached a record of $35.3 billion, indicating robust demand across various sectors [5][10] - The company is actively engaged in providing solutions for power generation, including solar, wind, and storage, with a noted increase in solar bookings [118] Market Data and Key Metrics Changes - Utilities in the U.S. are forecasting significant increases in power demand driven by new technologies and infrastructure needs [9] - The company highlighted the potential for the largest investment in high voltage transmission infrastructure in a generation, driven by the need for resilient electric grids [9] - The company noted that demand for renewable energy generation and storage remains strong, with expectations for continued growth in these areas [13][118] Company Strategy and Development Direction - The company's core strategy focuses on execution certainty, investment discipline, and a differentiated platform that integrates craft labor with engineering and technology [6][8] - The company aims to strengthen customer partnerships and drive long-term sustainable value creation through strategic investments [6][8] - The management emphasized a collaborative model that positions the company as a trusted partner rather than just a contractor [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties and emerge stronger due to its diversified solution-based strategy [8] - The company is proactively collaborating with customers to optimize costs and manage supply chain challenges [12] - Management indicated that the business is well-positioned for sustained leadership and long-term growth in the evolving energy and infrastructure landscape [9] Other Important Information - The company has repurchased approximately $135 million of its common stock, with $365 million remaining under its existing repurchase authorization [13] - The company received credit upgrades from S&P Global Ratings, which are expected to lower borrowing costs and expand liquidity [11] Q&A Session Summary Question: Impact of Long Island Power Authority's decision on guidance - Management clarified that the decision was not anticipated in their guidance for the year [18][23] Question: Expansion of high voltage transmission projects - Management confirmed ongoing demand for transmission infrastructure and expects continued backlog growth despite macro uncertainties [27][31] Question: Impact of tariffs on customers - Management stated that they have not seen significant impacts from tariffs on their customer base and believe their portfolio can weather potential disruptions [35][36] Question: Interconnection work related to coal plants - Management acknowledged the potential for interconnection work but emphasized that they see ample projects available regardless of coal plant status [45][49] Question: Margin expectations with larger projects - Management indicated that while margins may not see immediate upward momentum due to training costs, they expect returns to improve as the business scales [54][56] Question: Status of Cupertino acquisition and synergies - Management reported that the Cupertino business is ahead of schedule and is expected to generate significant synergies moving forward [58][60] Question: Visibility of larger projects in backlog - Management noted that larger projects are becoming increasingly visible and expects them to show up in the backlog soon [62][64] Question: Strategic benefits from supply chain access - Management highlighted the importance of internal supply chain capabilities and their role in providing better solutions to clients [86][90]