10-K: Centuri Refinances Term Loan, Reports Strong FY2025 Revenue Growth

Centuri Holdings, Inc. announced a seventh amendment to its credit agreement, repricing its term loan with lower interest margins, and reported a 13.1% increase in revenue for fiscal year 2025.

Summary

• Centuri Holdings, Inc. (Centuri) entered into a Seventh Amendment to its Second Amended and Restated Credit Agreement, dated January 12, 2026, to refinance its Sixth Amendment Term Loans.
• The Seventh Amendment Term Loans total $616,000,000 and feature reduced fixed margins for SOFR Loans (from 2.25% to 2.00%) and Base Rate Loans (from 1.25% to 1.00%).
• The term loan facility now matures on July 9, 2032, with quarterly principal repayments of $2,000,000 commencing March 31, 2026.
• For fiscal year 2025, Centuri reported total revenue of $2,982.8 million, a 13.1% increase from $2,637.2 million in fiscal year 2024.
• Net income for fiscal year 2025 was $22.7 million, a significant improvement from a net loss of $6.8 million in fiscal year 2024.
• Adjusted EBITDA for fiscal year 2025 was $249.0 million, up from $238.2 million in fiscal year 2024, though the Adjusted EBITDA Margin decreased from 9.0% to 8.3%.
• Operating cash flows decreased by $80.1 million to $78.1 million in fiscal year 2025, primarily due to a $125.0 million favorable impact from the securitization facility in the prior year that did not recur.
• Centuri completed the acquisition of Connect Atlantic Utility Services Corporation on November 18, 2025, for an estimated $58.0 million in cash, expanding its electric service offerings in Canada.
• The company successfully completed its separation from Southwest Gas Holdings, Inc., which fully divested its ownership by September 5, 2025.
• As of December 28, 2025, Centuri had $754.2 million in outstanding indebtedness (including finance lease liabilities) and $302.4 million in additional borrowing capacity under its revolving credit facility.
• Centuri maintains a backlog of approximately $5.9 billion as of December 28, 2025, with 82% related to Master Service Agreements (MSAs).

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing positively due to the favorable repricing of the term loan and strong revenue growth, indicating effective debt management and market penetration. However, ongoing risks related to multiemployer pension plans, potential legal liabilities, and the impact of supply chain disruptions temper the overall sentiment.

Positives

• The Seventh Amendment repriced the term loan, decreasing fixed margins for SOFR Loans from 2.25% to 2.00% and for Base Rate Loans from 1.25% to 1.00%, which will reduce interest expense.
• Total revenue increased by 13.1% to $2,982.8 million in fiscal year 2025, demonstrating strong top-line growth.
• Net income improved significantly to $22.7 million in fiscal year 2025 from a net loss of $6.8 million in the prior year.
• Base Gross Profit Margin (excluding storm restoration services) increased to 8.0% in fiscal year 2025 from 6.9% in fiscal year 2024, indicating improved core operational efficiency.
• The acquisition of Connect Atlantic Utility Services Corporation expanded electric service offerings into Canada, supporting strategic growth.
• Centuri successfully completed its full separation from Southwest Gas Holdings, Inc., enhancing its independence.
• The company reported compliance with all financial covenants under its revolving credit facility as of December 28, 2025.
• A $23.7 million increase in deferred tax assets allocable to Centuri was recognized as an income tax benefit in the fourth quarter of 2025 following tax deconsolidation.

Negatives

• Overall gross profit margin slightly decreased to 8.3% in fiscal year 2025 from 8.4% in the prior year, partly due to inefficiencies from weather-related work stoppages and reduced storm restoration services revenue.
• Net cash provided by operating activities decreased by $80.1 million in fiscal year 2025, primarily because the prior year included a $125.0 million favorable impact from the initial sale of accounts receivable under the securitization facility, which was cash flow neutral in 2025.
• The company's Adjusted EBITDA Margin decreased from 9.0% in fiscal year 2024 to 8.3% in fiscal year 2025.
• The company has significant outstanding indebtedness of $754.2 million as of December 28, 2025, which exposes it to interest rate risk on variable-rate debt.

Risks

• Customer concentration: Top 10 customers accounted for 48% of revenues, and top 20 for 65% in fiscal 2025, posing a risk if business from these customers is reduced or lost.
• Project timing and profitability: Factors like weather, economic conditions, inability to meet schedules, or inaccurate cost estimates can lead to additional costs, revenue delays, liquidated damages, or project termination.
• Long-term MSAs: A significant portion of revenue (78% in fiscal 2025) comes from MSAs that can be cancelled on short notice or may not be renewed on favorable terms.
• Backlog uncertainty: Backlog of $5.9 billion may not be realized as anticipated due to customer cancellations, regulatory requirements, or adverse weather.
• Fixed-price and unit-price contracts: These contracts (77% of 2025 revenue) are susceptible to reduced profits or losses if actual costs exceed estimates due to unforeseen inflation, operating inefficiencies, or other factors.
• Operational risks: Reliance on skilled personnel, potential for catastrophic accidents, property damage, personal injury, and difficult working conditions can lead to liabilities, business disruptions, and reputational harm.
• Highly competitive industry: Intense competition, including from in-house utility services, can put pressure on profit margins and affect contract awards.
• Supply chain constraints: Global supply market disruptions for customer-provided components can lead to project delays, increased costs, and inefficiencies.
• Activist stockholders: Actions by activist stockholders, such as the Icahn Group, can be costly, time-consuming, disrupt operations, and cause stock price volatility.
• Fuel, labor, and material costs: Increases in these costs due to inflation or geopolitical events may not be fully recoverable from customers, negatively impacting profitability.
• Equipment costs: Higher costs to lease, acquire, and maintain equipment, or equipment shortages, could adversely affect operations.
• Dependence on suppliers and subcontractors: Limitations on availability or failure to perform by third parties can cause delays and losses.
• Key personnel dependence: Loss of key personnel or inability to attract and retain skilled labor could adversely affect business operations and growth.
• Multiemployer pension plans: Participation in multiemployer defined benefit pension plans, some in 'Red' or 'Yellow' zone status, could lead to additional contributions or withdrawal liabilities.
• Existing indebtedness: High debt levels ($754.2 million) and restrictive covenants could limit financial flexibility, increase vulnerability to adverse conditions, and affect access to capital.
• Goodwill impairment: Future impairment charges are possible if business performance declines or expected growth is not realized, as evidenced by the $214.0 million impairment in fiscal 2023.
• Tax law changes and audits: Changes in tax laws or unfavorable outcomes from tax audits could increase the company's tax burden.
• Climate change and weather: Extreme weather events and seasonal variations can significantly impact operations, project schedules, and profitability.
• Canadian market risks: Operating in Canada exposes the company to potential instability in markets, political/economic conditions, legal/regulatory requirements, and currency fluctuations.
• Legal proceedings: Ongoing lawsuits, such as the NPL Construction Co. claim against the City of Chicago, could result in significant unreserved losses.
• Warranty claims and faulty engineering: Potential liability for defects in workmanship or materials, or errors in planning/design, could reduce profitability and damage reputation.

Future Outlook

Centuri anticipates continued capital expenditures to meet service needs and expects to renegotiate some major contracts to address increased future work costs. The company believes it is well-positioned to serve increased demand from system integrity management programs and to support customer environmental objectives. While the One Big Beautiful Bill Act did not materially impact the 2025 effective tax rate and is not expected to in 2026, further evaluation is ongoing. The company does not intend to pay cash dividends on its common stock for the foreseeable future, prioritizing earnings retention for operations and business growth.

Management Comments

• Management believes Centuri's brand, scale, experience, and service offerings position it competitively to attract and retain talent among large sector providers, while prioritizing safety.
• Management believes that increasing power demands driven by AI, advanced manufacturing, and overall consumer energy use will require additional infrastructure to support North American energy networks.
• Management believes that the trends of increased regulatory stringency and utilities' reliance on outsourced providers present a significant opportunity for utility infrastructure services companies.
• Management believes Centuri has taken steps to secure sufficient equipment delivery and does not anticipate significant disruptions to its fleet in the near-term.
• Management believes Centuri is well-positioned to serve increased demand from system integrity management programs and to support growing customer attention in achieving environmental objectives.
• Management believes any liabilities from known legal matters, including the City of Chicago case, will not materially affect financial position, results of operations, or cash flows.

Industry Context

StockSavvy.ai notes that Centuri operates in a consolidating yet regionally fragmented utility and energy infrastructure services industry. The sector benefits from consistent, non-discretionary, regulatory-driven investment in modernizing aging infrastructure, deploying smart systems, and supporting energy transition initiatives. Increasing power demands from AI and advanced manufacturing, coupled with extreme weather events, are driving demand for infrastructure providers with broad expertise and large footprints. Centuri differentiates itself by being maintenance-oriented, distribution-focused, and having no exposure to cross-country pipeline projects, with a low percentage of fixed-price contracts compared to competitors like Quanta Services, MYR Group, Mastec, Primoris Services Corporation, and Everus Construction Group, Inc.

Comparison to Industry Standards

• Centuri's revenue mix, with 78% from long-term MSAs and 79% from variable-priced contracts (56% unit-priced, 23% T&M), is stated to be among the lowest in the industry for fixed-price contracts (21%), minimizing execution risk compared to peers.
• Centuri's focus on maintenance-oriented and distribution-focused work, without exposure to large-scale, project-based, cross-country transmission, differentiates it from some larger national competitors like Quanta Services, Inc., MYR Group, Mastec, Inc., Primoris Services Corporation, and Everus Construction Group, Inc.
• The company's workforce composition, including both union (57%) and non-union labor, provides flexibility to access a wide range of opportunities across regions, customers, and projects, which is a key competitive characteristic in the industry.

Management Changes

Corporate Governance

Legal Proceedings

• NPL Construction Co., a subsidiary, is pursuing a contract claim for damages against the City of Chicago and related parties. The administrative agency denied NPL's claim, and NPL filed a petition for review with the Circuit Court of Cook County Illinois on November 8, 2024.
• The company has not accrued any reserves for this matter to date, and the ultimate outcome and potential loss are not currently estimable due to uncertainties in the proceedings.

Related Party Transactions

• Southwest Gas Holdings, Inc. (former parent) fully divested its ownership in Centuri by September 5, 2025, and relinquished governance rights.
• Centuri performs construction services for Southwest Gas Corporation, a subsidiary of Southwest Gas Holdings, with revenues of $97.6 million (3% of total) in fiscal 2025.
• As of December 28, 2025, $11.9 million of accounts receivable and $0.7 million of contract assets were related to contracts with Southwest Gas Corporation.
• Centuri recorded de minimis allocated costs from Southwest Gas Holdings in fiscal 2025, down from $0.5 million in 2024, reflecting the separation.
• An Unutilized Tax Assets Settlement Agreement was entered into with Southwest Gas Holdings on February 24, 2025, allocating $55.4 million in estimated deferred tax assets to Centuri as a capital contribution.
• The remaining noncontrolling interest in Drum Parent LLC (parent company of Riggs Distler) held by certain members of Riggs Distler management was 0.80% as of December 28, 2025.

Stakeholder Impact

• Shareholders: Potential for stock price volatility due to market factors, activist investor actions (Icahn Group), and future sales of common stock. No dividends are expected in the foreseeable future.
• Employees: The business is labor-intensive, and the ability to attract and retain skilled personnel is critical. Unionized workforce (57%) introduces risks related to collective bargaining agreement renegotiations and potential work stoppages. Multiemployer pension plan liabilities could impact employee benefits and company contributions.
• Customers: Demand for services is influenced by customer capital budgets, regulatory decisions, and economic conditions. Project delays due to supply chain issues or weather can impact customer satisfaction and project delivery.
• Creditors: The refinancing of the term loan with lower interest margins is favorable, but existing indebtedness and restrictive covenants require careful management. The accounts receivable securitization facility provides liquidity but is an off-balance sheet arrangement.
• Suppliers and Subcontractors: Reliance on these parties for materials and services exposes Centuri to risks of non-performance or supply chain disruptions.

Next Steps

• Centuri will continue to incur capital expenditures to meet anticipated needs for its services.
• The company expects to renegotiate some of its major contracts to address increased costs of future work.
• Centuri will continue to monitor the impacts of tariffs on equipment price and availability, and potential impacts to project scheduling.
• The company intends to vigorously pursue its contract claim against the City of Chicago, with a petition for review filed in the Circuit Court of Cook County Illinois.
• Centuri will continue to evaluate the impact of the One Big Beautiful Bill Act on its financial position and results of operations.
• The company will continue to manage and potentially address liabilities related to multiemployer pension plans, some of which are in critical or endangered status.

Key Dates

Recommendation

Centuri's strong revenue growth and successful refinancing of its term loan at lower interest margins are positive indicators for its financial health and operational efficiency. The completion of the separation from Southwest Gas Holdings and strategic acquisition of Connect Atlantic also support long-term growth. However, the company faces significant risks including customer concentration, potential liabilities from multiemployer pension plans, an ongoing material legal proceeding with the City of Chicago, and the inherent volatility of project-based work and supply chain disruptions. These factors suggest a 'hold' recommendation, as the positives are balanced by notable uncertainties and risks that warrant careful monitoring by investors.

Keywords

Centuri Holdings, Credit Agreement, Term Loan Refinancing, SEC Filing, 10-K, Financial Results, Utility Infrastructure Services, Revenue Growth, Debt Management, Acquisition, Connect Atlantic, Southwest Gas Holdings, Icahn Group, Cybersecurity, ESG, Multiemployer Pension Plans, Capital Expenditures, Operating Cash Flow, Interest Rates, Risk Factors