Centuri Q2 2026 earnings: Record revenue came with margin pressure

Centuri (NYSE: CTRI) reported fiscal Q2 2026 revenue of $962.0 million, up 32.9% year over year, while GAAP diluted EPS declined to $0.06 from $0.09. Gross margin contracted despite broad-based segment growth, although adjusted EBITDA increased 5% to $75.7 million. The results cover the quarter ended June 28, 2026, and were released on August 4, 2026.

Core earnings data

Revenue reached a company quarterly record, with Base Revenue rising 36% to $959.5 million. Profit growth was considerably slower: gross profit increased only 2%, while GAAP operating income and net income declined.

Non-GAAP results were more favorable, including 21% growth in Base Gross Profit and 5% growth in adjusted EBITDA. However, Base Gross Profit Margin fell to 7.9% from 8.9%, indicating that higher activity did not fully translate into improved quarterly profitability.

Base Revenue, Base Gross Profit, and Base Gross Profit Margin exclude unpredictable storm restoration work and the City of Chicago reversal. Adjusted EBITDA is also a non-GAAP measure.

Business and segment performance

Revenue increased in all four operating segments, led by Canadian Operations and U.S. Gas. Profit trends were more divided: Union Electric and Canadian Operations generated higher gross profit, while U.S. Gas and Non-Union Electric reported declines.

Base Revenue growth came from new bid and master service agreement contracts in U.S. Gas, new bid work in Union Electric, the inclusion of Connect Utility Services in Canadian Operations, and higher volumes under new and existing agreements in Non-Union Electric.

Centuri booked nearly $850 million of work during the quarter, producing a quarterly book-to-bill ratio of 0.9x. Year-to-date bookings reached approximately $2.2 billion, equivalent to a 1.3x book-to-bill ratio. Backlog was approximately $6.4 billion, up 21% year over year, while the unweighted opportunity pipeline increased 23% sequentially to $16 billion.

JJ White expands Union Electric

Centuri completed its approximately $62 million cash acquisition of JJ White on July 20, after the quarter ended. Consequently, JJ White was not included in Q2 results but is incorporated into the updated full-year guidance.

JJ White adds nearly 1,000 employees and industrial, mechanical, and electrical capabilities across markets including power generation and data centers. At closing, the acquired company had approximately $315 million of backlog and a $2.8 billion opportunity pipeline. Centuri expects more than $20 million of annual gross profit contribution and immediate accretion to adjusted net income, although this figure represents an annual expectation rather than a 2026 contribution forecast.

Revenue growth outpaced profit as operating costs compressed margins

Centuri’s 33% revenue increase produced only 2% growth in GAAP gross profit. Higher fuel prices reduced Q2 results by an estimated $6 million, while investment in U.S. Gas resources, employee mobilization, and ramp-up costs added another $3 million. Together, management estimated that these items reduced Base Gross Profit Margin by approximately 95 basis points.

The company increased its workforce organically by approximately 1,700 employees, or 18%, during the first half to support backlog and Base Revenue growth. Management described the $3 million U.S. Gas spending as a planned capacity investment and expects it to contribute more meaningfully to gross profit and margins beginning in Q3.

A separate $9 million City of Chicago revenue reversal also affected U.S. Gas. Centuri wrote down all remaining receivables and contract assets related to work completed before 2020 following an April 2026 court order. Excluding the reversal, U.S. Gas Base Gross Profit Margin was 5.9%, compared with the reported segment margin of 4.2%.

Profitability, cash flow and balance sheet

Selling, general and administrative expenses increased to $37.2 million from $29.0 million, while intangible asset amortization rose to $7.8 million from $6.7 million. Because gross profit increased by only $1.3 million, these higher expenses contributed to the decline in operating income. Lower net interest expense—$12.1 million versus $18.2 million—partially offset that pressure below the operating line.

Cash-flow information was provided only for the first half, not Q2 separately. Net cash used in operating activities was $15.0 million for the six months ended June 28, compared with $11.0 million used a year earlier. First-half capital expenditures were $48.1 million, and cash and cash equivalents declined to $40.5 million from $126.6 million at the end of fiscal 2025.

The Net Debt to Adjusted EBITDA ratio improved to 2.6x from 3.7x a year earlier. The June 28 balance sheet predates the approximately $62 million cash payment for JJ White, making post-acquisition cash and leverage important items for subsequent reporting periods.

Full-year 2026 guidance

Centuri described its full-year outlook as raised and updated it to include anticipated contributions from JJ White and approximately $5 million of incremental expense from elevated fuel prices. The release did not provide the previous guidance ranges, so the size of the revision cannot be quantified from the supplied information.

Revenue and non-GAAP earnings guidance use three-year average storm restoration assumptions of $88 million in revenue and $28 million in gross profit. Because storm work is highly unpredictable, actual contributions could differ from those assumptions. Centuri is also targeting a full-year book-to-bill ratio of approximately 1.2x.

Risks investors need to watch

• Margin recovery depends on execution. Base Gross Profit Margin fell by one percentage point in Q2, while management’s second-half forecast calls for approximately 9.0%. Achieving that level depends partly on converting workforce and mobilization spending into more profitable work.
• Fuel remains a measurable cost pressure. Higher fuel prices reduced Q2 results by approximately $6 million, and guidance includes another $5 million of incremental expense based on current prices persisting through Q3.
• Cash use and acquisition funding require monitoring. Centuri used $15.0 million of operating cash in the first half and had $40.5 million of cash at quarter-end. That balance did not yet reflect the subsequent $62 million JJ White acquisition payment.
• Storm assumptions can create guidance variability. Reported revenue and adjusted earnings guidance include contributions based on historical storm averages, even though management describes storm restoration demand as highly unpredictable.
• Pipeline does not equal contracted revenue. The $16 billion opportunity pipeline is unweighted, while backlog includes estimates of revenue expected over the contractual lives of long-term service agreements.

Summary

Centuri’s Q2 2026 results showed broad demand and record revenue, supported by growth across every segment and a larger backlog. Profitability did not keep pace because of fuel costs, U.S. Gas mobilization spending, the City of Chicago reversal, and higher operating expenses. The central issue for the second half is whether the expanded workforce, backlog conversion, and JJ White acquisition can lift Base Gross Profit Margin toward management’s approximately 9.0% forecast without adding further pressure to cash and leverage.