Earnings call transcript: Centuri Holdings reports Q4 2024 earnings beat amid stock dip

Centuri Holdings Inc. (CTRI) reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of 21 cents against a forecast of 19 cents. The company achieved consolidated revenues of $717.1 million, contributing to a full-year revenue of $2.64 billion. Despite the earnings beat, Centuri’s stock dropped 4.05% in pre-market trading, closing at $18.02, reflecting a complex investor sentiment.

Key Takeaways

• Centuri exceeded EPS expectations with a 21-cent result versus a 19-cent forecast.
• Q4 revenues increased by 7.8% year-over-year, reaching $717.1 million.
• Stock fell 4.05% in pre-market despite positive earnings results.
• Strong growth in energy infrastructure and storm restoration revenues.
• 2025 revenue guidance set between $2.6 billion and $2.8 billion.

Company Performance

Centuri Holdings showed robust performance in Q4 2024, with consolidated revenues rising by 7.8% year-over-year. The company’s gross profit also saw a significant increase of 32%, improving the gross profit margin to 9.9% from 8.1% in the previous year. This growth is attributed to strong capital investments in energy infrastructure and increased demand for energy resiliency.

Financial Highlights

• Revenue: $717.1 million, up 7.8% year-over-year
• Full-year revenue: $2.64 billion
• Earnings per share: 21 cents, exceeding the 19-cent forecast
• Q4 net income: $10.3 million (12 cents per diluted share)
• Adjusted EBITDA for Q4: $70.7 million, a 22.9% increase

Earnings vs. Forecast

Centuri Holdings reported an EPS of 21 cents, beating the forecast of 19 cents by 10.5%. This marks a positive deviation from expectations, continuing the company’s trend of meeting or exceeding earnings forecasts in recent quarters.

Market Reaction

Despite the earnings beat, Centuri’s stock price fell by 4.05% in pre-market trading, closing at $18.02. The stock is currently trading closer to its 52-week low of $14.47, indicating investor caution. This decline may reflect broader market trends or specific concerns about the company’s future growth prospects.

Outlook & Guidance

Looking forward, Centuri has set its 2025 revenue guidance between $2.6 billion and $2.8 billion, with an adjusted EBITDA target of $240 million to $275 million. The company anticipates double-digit EBITDA growth and a modest recovery in its gas business, while storm restoration services are expected to normalize.

Executive Commentary

CEO Chris Brown emphasized the company’s dedication to long-term growth, stating, "Centuri is dedicated to increasing long-term growth opportunities by implementing strategies that drive profitable growth." He also highlighted efforts to enhance capital efficiency and focus on delivering more value to existing customers.

Risks and Challenges

• Potential volatility in energy infrastructure investments.
• Dependence on storm restoration revenues, which are expected to normalize.
• Challenges in exiting underperforming contracts and optimizing resources.
• Macroeconomic pressures that may impact capital expenditure plans.

Q&A

During the earnings call, analysts inquired about Centuri’s strategic focus on organic growth and the potential for MSA contract improvements. Executives indicated a cautious approach to storm restoration revenues and noted the winding down of offshore wind projects.

Full transcript - Centuri Holdings Inc (CTRI) Q4 2024:

Conference Operator: Greetings and welcome to Century’s Fourth Quarter and Full Year twenty twenty four Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Wilcock, Century’s Chief Legal and Administrative Officer and Corporate Secretary.

Please, you may begin.

Jason Wilcock, Chief Legal and Administrative Officer and Corporate Secretary, Century Holdings: Thank you, Joelle, and hello, everyone. We appreciate you joining our call. This morning, we issued and posted the Century Holdings website, our fourth quarter twenty twenty four earnings release. The slides accompanying today’s call are also available on Century Holdings website. Please note that on today’s call, we will address certain factors that may impact this year’s earnings and provide some longer term guidance.

Some of the information that will be discussed today contains forward looking statements within the meeting of the Private Securities Litigation Reform Act. These statements are as of today’s date and based on management’s assumptions on what the future holds, but are subject to several several risks and uncertainties, including uncertainties surrounding the impact, future economic conditions and regulatory approvals. This cautionary note, as well as a note regarding non GAAP measures is included on slides two and sixteen of this presentation, today’s press release and our filings with the Securities and Exchange Commission, which we encourage you to review. These risks and uncertainties may cause actual results to differ materially from statements made today. We caution against placing undue reliance on any forward looking statements and we assume no obligation

Chris Brown, President and Chief Executive Officer, Century Holdings: to update any such statement.

Jason Wilcock, Chief Legal and Administrative Officer and Corporate Secretary, Century Holdings: Today’s call is also being webcast live and will be available for replay in the Investor Relations section of our website shortly after the completion of this call. On today’s call, we have from Century Holdings the following members of the leadership team. Chris Brown, President and Chief Executive Officer Greg Eisensart, Chief Financial Officer. I’ll now turn the call over to Chris.

Chris Brown, President and Chief Executive Officer, Century Holdings: Thank you, Jason. Good day, everybody. Thank you for joining us for our fourth quarter full year twenty twenty four earnings call. My first as President and CEO of Century. It is an honor to lead this organization and I deeply appreciate the warm welcome I’ve received since joining in early December.

Greg Eisensart, Chief Financial Officer, Century Holdings: Thank you to all my colleagues.

Chris Brown, President and Chief Executive Officer, Century Holdings: Long before officially joining Century over a number of years I had the opportunity to observe how Century is building scale, reach and capability and admire how it operates and services its clients. Moreover, during seven months of recruitment process I was able to further strengthen my knowledge from inside the organization. Now after over three months I’ve engaged with many of our employees, our customers, routinely visited all of our primary operating locations and visited many sites across North America. In doing so, I’ve been truly impressed by the strength of our organization and the dedication of our people and our teams. Our leaders are deeply connected with their customers, possess a strong understanding of our organization and consistently ensure that we deliver the safe high quality service that defines our organization and our culture.

Against this backdrop, I’m incredibly enthusiastic to speak with the investment community for the first time today and in the weeks and months ahead. Centuri is a leading utility infrastructure services company and as a platform that we can build from growing our end markets in a more focused, structured and significant way. We believe we are incredibly well positioned in both our primary end markets. With respect to electric, we are able to capitalize on the evolving energy demands and infrastructure expansion. The need to upgrade an agent grid, enhance its reliability and expand its capacity due to the growth we have seen from data centers, advanced manufacturing, electrification and renewables present significant opportunity for us.

At the same time, natural gas remains a vital part of our mix of solutions that will be required to meet future end demands and there is an improving and healthy demand for our services to expand and replace systems, pipelines and infrastructure across North America. It is my job to ensure the growth we’re seeing in the market is reflected in the company’s growth and subsequent returns. This is where I intend to lean on my past experiences leading solid companies to structured profitable growth. With the exciting prospects ahead, we are actively instilling a proactive growth mindset in our culture. One that maximizes capabilities across the entire enterprise and actively drives our expansion.

This means growing with our existing customers, adding new customers and continuously looking for opportunities. Our leaders are being challenged to not just deliver services under contract but to actively look for opportunities to do more. Achieving this requires having the best positioning, the best people, the best tools and a culture to deliver greater value and services to all our existing and our new customers. As we complete the transition from being a subsidiary of a utility company to maturing as a stand alone service provider, we will further our focus on the following areas in the coming months. Firstly, we’ll create a structured company wide approach to business development focused on high growth development of our pipeline, more focused market positioning, business winning strategies and securing of new awards beyond our existing MSAs.

Our organizational obligation is to not only safely execute the services we are contracted to provide, but to grow and to bring further value to our customers. Secondly, we’ll focus on improving capital efficiency with a focus on increasing returns across our asset base which will include one, growing the fleet size by reducing balance sheet funding and maximizing other efficient sources of funding including leasing and rental. And two, a greater focus on reducing working capital by optimizing invoicing and our collections. And thirdly, improving our financial performance through tighter performance management which includes exiting and renegotiating any of the contracts that we feel are underperforming. Implementation of these plans across these three focus area is well underway and we anticipate seeing tangible and quantifiable benefits over the coming months and quarterly reporting periods.

In the second half of twenty twenty five we intend to build further on this work by conducting a more long term view of our end markets and seek to quantify actions and plans needed to drive greater growth and sustainability into our business into the future. Before we turn to specific trends in our business, it’s worth commenting about the change political dynamic and evolving energy policy in The United States and how that impacts century. Our view is that our core end markets across the entire value chain will remain strong. We are seeing capital investment levels continue to grow into the double digits driven by the need for energy resiliency, demand and growth. We are positioning and have positioned our pipeline a future opportunity suspect we are not relying upon new offshore wind and other unfunded major projects to deliver the growth expectations that we all have.

Fortunately, Sensory has the capability, people’s expertise and the scale platform to be able to meet infrastructure needs across the energy and in utility value chain. Turning to business trends for the fourth quarter and today starting with our gas business. During Q4 revenues and volumes under our FSA in our gas segment largely normalized. While rate cases are a constant factor in our industry for 2025 we have not identified any that post significant concerns regarding their potential impact on our 2025 operations. In December, we were pleased to see several of our gas clients allocate remaining funds in their 2024 budgets to complete capital investments which positively impacted our top line.

This pattern aligns with historical behaviors where clients set annual budgets to ensure they spend allocated funds by the end of the year to maximize their returns. Gas margins during 2024 went below our expectations driven by rate case approvals, competitive forces and the need to realign resources and improve utilization rates. When some of our customers slowed down given rate out case outcomes, we lack mid term sales opportunities and should have optimized our crew counts faster. The work to exit on performing contracts and restructure the gas group now has largely been completed and we anticipate gross margins to normalize during 2025 to their historical averages of between 77.5%. We will of course closely monitor customer dynamics and make adjustments as necessary and remain attentive to gas margin improvement.

In our electric business we saw steady improvement in our core operations throughout the second half of twenty twenty four into the year end. With a continued recovery in crude counts especially in our non union segment which has continued into 2025. As with the gas business, we’ve also benefited from some customers spending remaining budget dollars prior to the year end. Additionally, our core union electric business experienced a significant pick up in activity as well as a significant LNG award received in the fourth quarter. Our electric results were bolstered by a record year for storm restoration work with revenues exceeding 80% of the recent historical average.

As mentioned on our last call, we have strategically built a highly skilled workforce both union and non union that is ready to respond as and when needed. Our storm response success is a result of purposeful efforts in the training, positioning and strengthening of our customer relationships. Furthermore, it says it’s an entry point for longer term opportunities with new customers. Pivoting to business development activity. During the quarter we secured $221,000,000 in new awards including $99,000,000 in MSA awards and $122,000,000 in strategic bid awards.

This was and was expected to be a quiet quarter for new awards and bookings. Backlog at the year end stood at $3,700,000,000 with 90% related to work performed in our MSA. Looking ahead, we anticipate that with our increased focus on business development, we will deliver a step change in bookings and will exceed a book to bill of $1,100,000,000 during 2025. End market has increased our pipeline by over 30% during the second half of twenty twenty four and we have approximately $1,500,000,000 of late stage bids and the potential of over $2,000,000,000 in new revenue based upon MSA renewals during 2025. Before turning the call over to our CFO, Greg Eisenstark, I’d like to share a few high level thoughts on our 2025 outlook.

The guidance we are introducing today includes a range of revenue, adjusted EBITDA and net capital expenditures. In forming these targets, we anticipate double digit EBITDA growth in our core business year over year, which includes the rundown of our offshore wind projects and no new awards in this end market. We also assume revenue from store restoration services at recent historical levels, which is approximately $60,000,000 less that we secured and delivered in 2024. I’ll now turn over Greg to elaborate on our results and our 2020 power outlook. Greg?

Thanks, Chris,

Greg Eisensart, Chief Financial Officer, Century Holdings: and good morning to everyone joining us. Fourth quarter twenty twenty four consolidated revenues increased 7.8%. Consolidated gross profit was 32% higher compared to the prior year period. Gross profit margin of 9.9% in fourth quarter of twenty twenty four was well above the 8.1% we reported in the fourth quarter of twenty twenty three. For the year 2024 revenues of $2,640,000,000 came in ahead of the midpoint of the guidance range we provided in July of $2.5 to $2,700,000,000 On a GAAP basis, net income attributable to common stock in the fourth quarter was, was $10,300,000 or diluted earnings per share of 12¢.

Up from a net loss attributable to common stock of $210,700,000 or diluted loss per share of $2.94 in the same period last year. As a reminder, the fourth quarter of twenty twenty three results included a $2.00 $9,000,000 after tax impairment on goodwill. In the fourth quarter of twenty twenty four, total company adjusted EBITDA, a non GAAP figure was $70,700,000 or 22.9% higher than the prior year quarter’s $57,500,000 Adjusted EBITDA margin was 9.9% for the quarter, an improvement from the 8.6% reported in the fourth quarter of twenty twenty three. For full year 2024, our adjusted EBITDA margin of 9% was in line with the guidance range provided with our mid year results. Non GAAP adjusted net income in the fourth quarter came in at $18,400,000 or an adjusted diluted earnings per share of $0.21 Up from $4,900,000 or an adjusted diluted earnings per share of $0.07 in the prior year period.

The $8,100,000 difference between our GAAP and non GAAP adjusted debt income primarily includes the impact of amortization of intangible assets. As well as CEO transition costs, non cash stock based compensation and severance costs. Now to each reportable segment. Revenue from our US Gas segment totaled $327,200,000 reflecting a year over year increase of 5.4%. We benefited late in the quarter from customers spending planned 2024 budget dollars to complete projects, which drove an improvement in volumes.

Gross profit margins decreased to 6.2% in the fourth quarter of twenty twenty four from 7.8% in the prior year period. This decline was due to changes in the mix of work and close out of certain bid projects. We are taking steps to structurally improve our contracting cost structure in this segment as margins were under pressure throughout 2024. Revenue from our Canadian gas segment totaled $56,800,000 effectively flat with the fourth quarter of twenty twenty three. We experienced an uptake in volumes under MSA, but bid work was down due to the timing of projects.

Favorable mix drove an improvement in gross profit margin to 18% from the prior year’s period 17.1%. In our Union Electric segment, revenue was $193,800,000 A decline of 5.5% year over year. Within this segment, offshore wind revenues were down 75% or $43,000,000 due to the expected wind down of project work. However, our core Union Electric segment experienced a 17.5% growth year over year, driven by increased bid volumes, particularly in industrial work around substation infrastructure. Union storm restoration revenues also showed improvement with revenues of 9,300,000 up from 3,000,000 in the prior year quarter.

Although these crews are Northeast map focused, we mobilized crews to the Southeast to support our non union efforts, which I will touch on momentarily. Gross profit in the union electric segment increased to 9.9% in the fourth quarter of twenty twenty four compared to 6.7% in the fourth quarter of twenty twenty three. This improvement was due to several factors, including an increase in higher margin storm work and improved margins on mid work during the quarter. Non union electric segment revenue in the fourth quarter twenty twenty four was $139,300,000 a 49.7% increase year over year. This increase was primarily due to revenue from storm restoration services performed early in the quarter in response to hurricane, Killeen and Milton, which accounted for $40,400,000 of the segment’s revenues.

Improved productivity driven by the additional crews and higher work hours for existing crews also contributed to year on year growth in our core non union electric business. Segment gross profit increased to 15.3% in the current period compared to 6.8% in the prior year period, reflecting the contribution from the more profitable storm restoration work and higher work hours. Chris referenced the strength of our restoration services efforts in 2024. We generated revenues of $137,000,000 from emerging storm restoration work well above the prior three year average of approximately $75,000,000 Throughout our territories, we dispatched more than 3,200 employees to respond to severe weather events. We take pride in our ability to quickly mobilize and restore power to those affected during these challenging times.

One thing to take note of, while we report storm revenues and profitability, there is some offset whereby those crews would have been working with their core customers at lower revenue and profitability levels. For the full year, net CapEx was 89,400,000 down from $94,900,000 in 2023. And free cash flow was $69,000,000 down slightly from $73,000,000 in 2023. Note, we now define free cash flow to cash flow provided by or used in operations less net capital expenditures. Moving to balance sheet highlights.

On a trailing twelve month basis, our net debt to adjusted dividend ratio improved to 3.6 times in December 2024 from four times in December 2023 and was lower sequentially from the end of the third quarter, Consistent with expectations previously disclosed. We ended the year with $49,000,000 in cash, cash equivalents on the balance sheet. Growing our business in a capital efficient manner remains core, a core strategic priority. We will continue to target improved improving free cash flow and strengthening our balance sheet throughout 2025 by reducing our working capital needs and being more disciplined in our capital allocation. Finally, turning to our 2025 outlook, which is outlined on slide 13 of our earnings presentation.

For revenues, we expect to deliver between $2.6 and $2,800,000,000 For adjusted EBITDA, we expect to deliver between $240 and $275,000,000 And lastly, on capital expenditures, we are forecasting our net spend to be between $65 and $80,000,000 Chris alluded to some of these factors behind our forecasting. Those include a continued improvement in our electric business that began in the second half twenty twenty four with growing crew towns and increased work hours and a return to modest growth in our gas business and improving improved margins as we exit and or renegotiate underperforming contracts. These positives are partially offset by the additional wind down of offshore wind work and our assumption that storm restoration services will return to normalized levels. With that said, let me turn it back to Chris

Chris Brown, President and Chief Executive Officer, Century Holdings: for some closing thoughts. Chris? Thank you, Greg. To close out my prepared remarks on a retreat seems discussed earlier. My first few months as President and CEO have been both enlightening and also inspiring.

Centuri is dedicated to increasing long term growth opportunities by implementing strategies that drive profitable growth. We are committed to fostering greater predictability in our business through robust forecasting, comprehensive business reviews and strategic growth prioritization. Through a highly structured approach to business development and by dynamic pipeline model and a growth mindset, we can ensure optimized decision making. We are enhancing capital efficiency by refining our capital equipment resourcing and fleet management and reducing working capital levels through improved AR and DSO management. Lastly, we are highly committed to margin improvement with our gas business being a key focus area and have taken early steps to deliver improved performance.

We thank you so much for your continued support and confidence in our vision and look forward to achieving new milestones. Operator, you can start our Q and A session.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Sangeeta Jain with KeyBanc. Your line is now open.

Sangeeta Jain, Analyst, KeyBanc: Great. Thank you so much for taking my questions. Good morning. So first, can I ask one on the strategic review that you talked about? And when we can expect to hear the outcome of that?

And what should we expect when that’s concluded?

Chris Brown, President and Chief Executive Officer, Century Holdings: Nikitra, it’s Chris. I’ll answer the question. I think the next sort of three to six is the last three months is really prioritizing, the business winning, the business development, organic sales to determine how, how large our mid time pipeline is and all time to be good. How do we build on the revenues we get from our core MSAs and really understand more data around our ability to grow the business organically. And as every result, the past has been probably from a growth standpoint.

I think once we have a good handle on all of the near term opportunities, we will conduct a more thorough longer term look at the end markets, where the opportunities reside, look at our differentiation in the long term market growth and then start making some prioritization around where we want to deploy capital, which new customers, which end markets we want to further grow from. So basically the first three to six months is focused on driving growth in our core business with our customers, that our core customers in our core markets, in our core locations get a very good handle on how we can drive growth. And then the longer term, we’ll be more focused on that on how do we accelerate that growth in the next three to five years. I think we’ll end up being in a position towards the end of the year, Sangeetha, to actually sort of roll out a more cogent three to five years strategy, not before then. Our priority at the moment is the block in tackling and really driving growth in the core business as it is today.

Sangeeta Jain, Analyst, KeyBanc: Understood. That’s super helpful. And then maybe for Greg, the guidance that you’ve given us for this year, can you help us understand what’s in the low end and what we should expect for you to reach the high end of that guidance range?

Greg Eisensart, Chief Financial Officer, Century Holdings: Yes. Good morning. So on the high end, the upside of that, we talked about a number of crew growth opportunities. Obviously, the timing of onboarding those crews will influence, could influence the range using the sales work and the business development work that Chris just mentioned. Getting some greater bid opportunities and activity, can obviously, influence the top end of the range.

And then obviously, storm, is a little bit of a wild card. On the downside, you know, project delays or or any cancellation that might come out of, you know, any of the other news that’s that’s in the world, could contribute to it. But that would probably be the biggest one.

Sangeeta Jain, Analyst, KeyBanc: Understood. Appreciate your responses. Thank you.

Chris Brown, President and Chief Executive Officer, Century Holdings: Thank you, Sandeep.

Conference Operator: Your next question comes from Justin Hawk with Robert Baird. Your line is now open.

Justin Hawk, Analyst, Robert Baird: Great. Thank you. Good morning.

Conference Operator: I guess my first question here,

Justin Hawk, Analyst, Robert Baird: I just I wanted to understand a little bit more the modifications you’re seeking on some of your gas MSAs and just, I guess

Conference Operator: what gives you confidence that

Justin Hawk, Analyst, Robert Baird: the terms will improve to kind of meet what your new standards are and maybe just an update on how those negotiations are going on the $2,000,000,000 that you kind of outlined as opportunities here, I guess $1,500,000,000 that was better in final negotiations?

Chris Brown, President and Chief Executive Officer, Century Holdings: Just let’s I’ll ask Greg to answer the initial response on the gas margins. And then I’ll I’ll talk a little bit about what we’re seeing in the data pipeline.

Greg Eisensart, Chief Financial Officer, Century Holdings: So from the gas side, you know, we’ve already taken we’re well on our way and taking steps to either exit areas that are underperforming or renegotiating, underperforming contracts. This is both from an MSA perspective as well as new bid work as it comes up for re as new bids come up, we’re re pricing them accordingly. You know, from a MSA perspective, you know, we have virtually 100% renewal in all our MSAs. We’ve already started to experience, certain renewals of some key MSAs and those will continue throughout the end of the year. As I, as we’ve talked in the past, you know, when new renewals come up, it gives us an opportunity to look at the pricing and the scope of work that we expect and and look to, kind of improve both volumes and the price kind of above and beyond that normal annual, cost of, you know, the annual escalator that’s in the contracts.

So those are all kind of well on the way and give us, you know, optimism as we head into 2025.

Chris Brown, President and Chief Executive Officer, Century Holdings: Okay. On the market, Justin, I would say the following, we’re not concerned at all, with the end market opportunity that fits with our capability, our reach, our locations so that we can grow beyond the core MSA. So there’s no concern about market opportunity. We’re seeing about a 30% growth in mid term pipeline opportunities. You know, whilst we’re cautious after recent events, we think we will have a positive book to bill this year of about 1.1.

And the late stage you mentioned that we mentioned in the result as well as you mentioned here, we are actively negotiating to convert. We’ve had a good start to the year. And so my takeaway would be, no concern at all on the ability to identify opportunities for the data pipeline to drive the growth. We’ve got some work to do internally to be more structured and focused and deliberate in driving sales. And I think once we are efficient at that, we should see a greater improvement in our book to bill over the coming weeks and months.

Justin Hawk, Analyst, Robert Baird: Okay. And I guess my second one, I guess it’s a two parter, but just on the maybe the cadence or the seasonality of 2025, the first half of twenty twenty four kind of started slow. I guess, should we be thinking that the growth contribution is kind of higher in the first half versus maybe a seasonally abnormally low last year, or just kind of how that works through? And then the last one for that question would just also be on the offshore wind. Is there anything in backlog for ’26 at this point or is the $40,000,000 for ’25 kind of everything that you have left on the offshore wind as it stands right now?

Thank you.

Greg Eisensart, Chief Financial Officer, Century Holdings: Yeah. So on the seasonality, you know, I would expect, you know, first quarter to be, you know, consistent with, with last year. Obviously weather and other factors and just the seasonal nature of many of the territories in which we operate, will, will drive that. And then see, you know, some of that increase start in the second quarter and then, and then accelerate in the, in the back half of the year. From an offshore wind perspective, I think we alluded to we have about $40,000,000 in backlog for 2025.

We have about $25,000,000 remaining on the the existing backlog or existing projects in 2026 and we have nothing else in in our pipeline related to that at this point.

Chris Brown, President and Chief Executive Officer, Century Holdings: Yeah. We’ve we’ve stripped everything out of the net term pipeline, partly driven by changing administration, but also the unpredictability of when those projects get sanctioned. So in the near term you wanna hear too many words about offshore wind does become our cause. It’s it’s not in the forecast. It’s not in our near term.

We’re not committed a lot of sales resource to it at all. And if the future brings it back into focus with capital allocated, we’re already. But at the moment, we’re, we don’t see that as a driver at all in our business. It’s pretty immaterial.

Justin Hawk, Analyst, Robert Baird: Yes. Got it. Okay. Thank you.

Conference Operator: Your next question comes from Chris Ellinghaus with Seabert William Schenck. Your line is now open.

Chris Ellinghaus, Analyst, Seabert William Schenck: Hey, guys. How are you?

Greg Eisensart, Chief Financial Officer, Century Holdings: Good morning. Good morning.

Chris Ellinghaus, Analyst, Seabert William Schenck: Chris, as you sort of looked at the business from an outsider’s perspective, margins historically have been materially higher. Question one, sometimes double digits. Do you see that as a realistic goal going forward? And two, you talked about some of the MSAs underperforming. Is that some lag that remains from inflationary periods?

Greg Eisensart, Chief Financial Officer, Century Holdings: Because

Chris Brown, President and Chief Executive Officer, Century Holdings: let me cover it from my perspective and then I’m sure Greg may have a couple of supplementary inputs. I don’t believe our focus at the moment is going to be on other than what we’ve said on gas margin improvement. Our challenge today is not about cost efficiency and getting margins up. It’s about getting the organization turned into becoming an organization that’s not only focused on delivering the services we’re contracting to deliver but do more for our existing customers. So I think there’s there’s there’s a block of tackling focus on getting more volume into the business, selling more and and maintaining margins versus growing margins.

I’m not overly concerned about where the margins are. The caveat being the improvement we do expect from the gas business going into 2025. Our focus is about driving profitable growth consistent with our existing margins. On the gas side, you know, we’ve done a great job in the latter stages of ’24 to sort of renegotiate those underperforming contracts. I think reallocate resources so we’re more productive.

Early signs turning into ’24 into ’25 as you look at the seasonality effect. It looks like they’re getting better. So I think we’ve done all the work we need to do with maybe one contract still to go. So I think the gas margins is now down to performance and making sure that we maintain the right levels of productivity within those contracts. Okay.

Chris Ellinghaus, Analyst, Seabert William Schenck: You’re using a three year average for storm restoration revenues. Is that a period that you see as normal? And given climate change issues, is that something that you expect off of that kind of base to have some upside to it over time?

Chris Brown, President and Chief Executive Officer, Century Holdings: Chris, I’m going to give you a we can talk to the specifics with Greg’s tenure with our business. Just chasing storm revenues won’t allow us to grow our core business. So our our push into the budgeting process, our capital allocation and our resources has all been focused on driving more core business.

Chris Ellinghaus, Analyst, Seabert William Schenck: Right.

Chris Brown, President and Chief Executive Officer, Century Holdings: And not not setting an expectation in our base budget to to to to get an abnormal or even a a sort of slightly greater revenue from Storm. So we’ve set a cautious approach in what we believe we will get from Storm coming into ’25 because it’s just not predictable as we all observe. And we’ve driven the discipline to the business that we won’t grow growth from doing the day to day services that that come from the utility sector and are not predicated on on storm events. So we felt the trillion three year average was was kind of a cautious approach, to drive our organization into building more capability and doing more work for our customers in our core business.

Chris Ellinghaus, Analyst, Seabert William Schenck: Okay. That’s fair. One last question. You sort of alluded to some of the gas customers having some you know, sort of catch up on their CapEx towards the end of the year. Does some of that carry forward into, the first half or just the year for, for this year?

Greg Eisensart, Chief Financial Officer, Century Holdings: There might be a pocket here or there, but generally speaking, would we just, you know, our gas customers were trying, we’re looking at where, what they had spent as of the end of the third quarter, where their budget was for the full year and and trying to to, you know, spend the dollars that they had budgeted, for the most part.

Chris Brown, President and Chief Executive Officer, Century Holdings: Got it. But I would I would add but I would add, Chris, if you do dissect that, living without pipeline day to day at the moment as is the wider

Greg Eisensart, Chief Financial Officer, Century Holdings: organization. If you look at the day

Chris Brown, President and Chief Executive Officer, Century Holdings: to day pipeline opportunities that we will tend to run and hopefully win, there’s a significant component in gas. It’s well over 50% of our pipeline today with more than ample opportunities there. We just got to win them and convert. Okay. Thank you.

Appreciate the details.

Greg Eisensart, Chief Financial Officer, Century Holdings: Thanks, Chris.

Conference Operator: There are no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in assay. Please disconnect your lines.

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