Centuri (CTRI) Morgan Stanley's 14th Annual Laguna Conference summary

Strategic transformation and vision

• Rolled out Vision One Centuri strategy, focusing on deepening core utility relationships, expanding into higher-margin adjacent markets, and building an integrated, sustainable business model.

• Targeting a minimum of 10% organic growth annually over the next five years, with gross profit margins approaching 10%.

• Recent independence from former parent enabled a shift to a unified market presence and operational integration.

• Significant C-suite changes, including new CFO, General Counsel, and Group Development Officer, to drive margin expansion and capital efficiency.

• Emphasis on leveraging existing capabilities for both utility and adjacent markets, such as renewable gas and data centers.

Financial performance and outlook

• Achieved 33% year-over-year revenue growth in the first half, adding over $400 million in revenue.

• Incremental margin from new work reached 11.6% in H1, despite headwinds from fleet strategy changes, fuel costs, and onboarding 1,700 new employees.

• Adjusted fleet ownership model to improve liquidity and deleverage, with legacy contract impacts expected to diminish by 2027.

• Gas business margins trending above 7.5%, with overall gross profit expected to exceed 10% in H2.

• Free cash flow improved to $36 million in 2025 and is guided to $75+ million in 2026, targeting 40–50% EBITDA conversion by 2027–2029.

Capital allocation and M&A

• Leverage reduced to 2.5–2.6x, with a goal of reaching 2x or lower by year-end and further reductions by 2027.

• Capital priorities are organic growth, further deleveraging, and bolt-on M&A for scale and geographic diversity.

• Recent acquisitions (Connect and J.J. White) expanded presence in Atlantic Canada and added nearly 1,000 employees, supporting cross-selling and backlog growth.

• Integration of acquired businesses progressing well, with new wind farm projects and expanded midstream/data center opportunities.

• Dividends and buybacks are not near-term priorities.