Cuộc họp công bố kết quả kinh doanh quý 3/2026 của Centuri (CTRI): Doanh thu kỷ lục và triển vọng tăng trưởng năm 2027

Centuri Holdings (NYSE: CTRI) đã công bố doanh thu và lợi nhuận gộp quý 3 năm 2026 đạt mức kỷ lục, nhờ khối lượng mảng Khí đốt Mỹ gia tăng, năng suất được cải thiện và các lợi ích ban đầu từ việc định giá lại hợp đồng. Ban lãnh đạo cũng vạch ra mức tăng trưởng doanh thu khoảng 15% và biên lợi nhuận tiếp tục mở rộng trong năm 2027.

Điểm nhấn chính

• Doanh thu quý 3/2026 tăng 40% so với cùng kỳ năm trước lên mức kỷ lục 1,2 tỷ USD. Lợi nhuận gộp đạt mức kỷ lục 113 triệu USD, với biên lợi nhuận gộp cải thiện lên 9,5% từ mức 7,2% trong quý 2.
• EBITDA điều chỉnh tăng 44% so với cùng kỳ năm trước lên 108 triệu USD. Lợi nhuận ròng điều chỉnh tăng hơn gấp đôi lên 42 triệu USD, tương đương 0,42 USD/cổ phiếu, từ mức 17 triệu USD, tương đương 0,19 USD/cổ phiếu.
• Biên lợi nhuận gộp mảng Khí đốt Mỹ tăng lên 8,2% so với mức 4,2% của quý trước, phản ánh năng suất lao động, quy mô hoạt động và những lợi ích ban đầu từ việc cập nhật giá hợp đồng.
• Khối lượng công việc tồn đọng (backlog) tăng 5% so với cùng kỳ năm trước lên khoảng 6,2 tỷ USD. Danh mục dự án tiềm năng mở rộng 46% lên khoảng 19 tỷ USD, trong khi giá trị các gói thầu đang chờ kết quả tăng hơn gấp đôi so với quý trước lên 4,8 tỷ USD.
• Ban lãnh đạo dự kiến doanh thu năm 2026 đạt từ 3,8 tỷ đến 3,9 tỷ USD và EBITDA điều chỉnh đạt từ 290 triệu đến 300 triệu USD. Dự báo này giả định không có đóng góp từ các hoạt động khắc phục bão trong quý 4.
• Đối với năm 2027, ban lãnh đạo kỳ vọng doanh thu tăng trưởng khoảng 15% lên hơn 4,4 tỷ USD, cùng biên lợi nhuận gộp tổng thể đạt 8,5% đến 9% và biên lợi nhuận gộp gia tăng đạt 12% đến 15%.

Kết quả tài chính chủ chốt

Hiệu quả kinh doanh và hoạt động

Mảng Khí đốt Mỹ

Doanh thu tăng 40% so với cùng kỳ năm trước lên 576 triệu USD, nhờ khối lượng công việc đấu thầu và hợp đồng MSA cao hơn. Biên lợi nhuận gộp đạt 8,2%, so với mức 7,7% của cùng kỳ năm trước và 4,2% trong quý 2/2026.

Ban lãnh đạo cho rằng sự cải thiện so với quý trước là nhờ mức tăng năng suất sau khi mở rộng lực lượng lao động, quy mô hoạt động lớn hơn và những lợi ích bước đầu từ việc định giá lại hợp đồng. Công ty đã tuyển thêm khoảng 300 nhân viên trong quý 3, thấp hơn đáng kể so với mức 1.800 nhân viên được tuyển trong nửa đầu năm 2026.

Centuri cũng đang chuyển dịch nhiều hoạt động hơn sang các khu vực ấm áp hơn nhằm giảm tính mùa vụ. Ban lãnh đạo cho biết họ kỳ vọng mảng kinh doanh Khí đốt Mỹ sẽ có lãi trong quý 1 năm 2027.

Hoạt động mảng Điện và Canada

Doanh thu mảng Điện có công đoàn tăng 65% lên 354 triệu USD, nhờ sự tăng trưởng của các dự án điện và công nghiệp cùng với việc hợp nhất JJ White, đơn vị được mua lại vào tháng 7/2026. Biên lợi nhuận gộp phân khúc đạt 8,9%.

Doanh thu mảng Điện không công đoàn tăng 18% lên 175 triệu USD nhờ khối lượng công việc khắc phục bão tăng cao và hoạt động MSA gia tăng. Biên lợi nhuận gộp cải thiện lên 8,7% từ mức 7,1%.

Hoạt động tại Canada tạo ra 98 triệu USD doanh thu, tăng gần 33%, chủ yếu nhờ thương vụ mua lại Connect. Biên lợi nhuận gộp đạt 19,6%.

Ban lãnh đạo cho biết JJ White đã tạo ra khoảng 8 triệu USD lợi nhuận gộp kể từ khi hoàn tất thương vụ, cao hơn một chút so với kỳ vọng. Khoảng 400 triệu đến 500 triệu USD cơ hội gia hạn hợp đồng đang chờ xử lý có liên quan đến JJ White.

Khối lượng công việc tồn đọng, đấu thầu và dự án tiềm năng

Giá trị hợp đồng ký mới trong quý 3 đạt khoảng 730 triệu USD, nâng tổng giá trị ký mới từ đầu năm đến nay lên khoảng 2,9 tỷ USD. Centuri đã ký gần 100 triệu USD hợp đồng gia hạn MSA, khoảng 185 triệu USD từ các hợp đồng MSA mới và mở rộng, cùng khoảng 445 triệu USD công việc đấu thầu.

Khối lượng công việc tồn đọng đạt khoảng 6,2 tỷ USD, tăng 5% so với cùng kỳ năm trước. Giá trị các gói thầu đang chờ kết quả tăng lên 4,8 tỷ USD từ mức 2,5 tỷ USD vào cuối quý 2, bao gồm khoảng 2 tỷ USD hợp đồng gia hạn MSA mà ban lãnh đạo kỳ vọng sẽ hoàn tất vào cuối năm.

Danh mục dự án tiềm năng đạt khoảng 19 tỷ USD, tăng 46% so với năm trước. Trong tổng số đó, 12 tỷ USD liên quan đến các cơ hội ngành điện, bao gồm 10 tỷ USD trong mảng phân phối và truyền tải, trong khi 7 tỷ USD liên quan đến khí đốt.

Ban lãnh đạo kỳ vọng tỷ lệ book-to-bill năm 2026 đạt ít nhất 1,3 lần. Tỷ lệ bao phủ doanh thu cho năm 2027 vượt 3,7 tỷ USD và dự kiến sẽ tiệm cận mức 4 tỷ USD vào cuối năm.

Trung tâm dữ liệu

Centuri đã ký kết tổng cộng khoảng 370 triệu USD giá trị công việc liên quan đến trung tâm dữ liệu, với khoảng 200 triệu USD còn lại trong khối lượng tồn đọng. Ban lãnh đạo kỳ vọng phần lớn khối lượng tồn đọng đó sẽ chuyển hóa thành doanh thu trong năm 2027.

Công ty nhắc lại rằng công việc liên quan đến trung tâm dữ liệu dự kiến sẽ không vượt quá 10% doanh thu hàng năm. Các dự án chỉ được đưa vào danh sách đấu thầu chủ động và dự báo khi nguồn vốn, việc cấp phép, phạm vi và kế hoạch triển khai đã được xác định đầy đủ.

Kế hoạch định hướng của ban lãnh đạo

Triển vọng năm 2026 giả định không có đóng góp từ các hoạt động khắc phục bão trong quý 4. Ban lãnh đạo cho biết các công việc khắc phục bão được thực hiện vào đầu tháng 10 sẽ được tính cộng thêm vào định hướng này.

Triển vọng dòng tiền tự do thấp hơn phản ánh nhu cầu vốn lưu động gắn liền với tăng trưởng doanh thu vượt dự báo của công ty. Ban lãnh đạo nhận định sự thiếu hụt này là do vấn đề về thời điểm và kỳ vọng điều này sẽ hỗ trợ tạo ra lượng tiền mặt lớn hơn trong năm 2027.

Rủi ro và các yếu tố cần theo dõi

• Khả năng dự báo trong quý 4 chịu ảnh hưởng bởi sự thiếu chắc chắn về việc liệu các khách hàng ngành tiện ích sẽ sử dụng hết ngân sách hiện tại hay giải ngân phần vốn thặng dư vào cuối năm.
• Tăng trưởng doanh thu nhanh chóng làm tăng nhu cầu vốn lưu động, dẫn đến dòng tiền từ hoạt động kinh doanh và dòng tiền tự do âm trong quý 3.
• Xu hướng chuyển dịch sang thuê đội xe dự kiến sẽ làm giảm biên EBITDA năm 2026 khoảng 90 điểm cơ bản so với năm 2025 do lợi ích khấu hao thấp hơn.
• Các cơ hội trong mảng trung tâm dữ liệu vẫn chịu rủi ro về nguồn vốn, cấp phép và triển khai. Ban lãnh đạo cho biết họ sẽ tránh cam kết nguồn lực khi các điều kiện này chưa rõ ràng.
• Việc định giá lại hợp đồng vẫn đang tiếp tục phản ánh vào khối lượng công việc tồn đọng. Ban lãnh đạo kỳ vọng phần lớn khối lượng tồn đọng sẽ phản ánh mức giá thị trường cập nhật vào thời điểm này năm sau.

Điểm nhấn phần hỏi đáp với chuyên gia phân tích

Mở rộng biên lợi nhuận: Ban lãnh đạo cho biết chi phí nhiên liệu, đội xe và bảo hiểm tăng cao đang được đưa vào giá tính cho khách hàng. Khoảng 2 tỷ USD giá trị gia hạn hợp đồng MSA đang đàm phán cũng phản ánh mức chi phí cập nhật. Centuri tiếp tục đặt mục tiêu biên lợi nhuận gộp gia tăng đạt 12% đến 15% vào năm 2027.

Mục tiêu dài hạn: Ban lãnh đạo cho biết triển vọng sơ bộ năm 2027 đang vượt lộ trình doanh thu và lợi nhuận gộp đặt ra trong các mục tiêu năm 2029 của công ty. Công ty dự kiến sẽ cập nhật các mục tiêu đó khi đưa ra định hướng năm tiếp theo và cho biết bất kỳ sự điều chỉnh nào nhiều khả năng sẽ theo hướng tăng lên chứ không giảm đi.

Tỷ lệ chuyển đổi dòng tiền: Centuri tiếp tục đặt mục tiêu tỷ lệ chuyển đổi dòng tiền tự do đạt 40% đến 50% vào năm 2029. Ban lãnh đạo kỳ vọng mức chuyển đổi sẽ cải thiện dần qua từng năm.

Phân bổ vốn: Giảm đòn bẩy tài chính và tài trợ cho tăng trưởng hữu cơ vẫn là các ưu tiên hàng đầu. Ban lãnh đạo nhận định mức đòn bẩy ròng từ 1,5 đến 2,0 lần là lành mạnh, dù đòn bẩy có thể tạm thời vượt 2,0 lần cho các thương vụ mua lại. Mua lại cổ phiếu và chi trả cổ tức không phải là những ưu tiên hiện tại.

Chiến lược M&A: Centuri đang đánh giá các thương vụ mua lại bổ sung nhằm mở rộng năng lực truyền tải và phân phối điện, trong đó chú trọng hơn đến mảng truyền tải. Công ty cũng có thể cân nhắc các doanh nghiệp ở miền Nam nước Mỹ kết hợp cả hoạt động khí đốt và điện, giúp giảm tính mùa vụ.

Toàn văn biên bản cuộc gọi công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Hello, everyone. Thank you for joining us, and welcome to the Centuri Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Nathan Tetlow, Vice President, Investor Relations. Nathan, please go ahead.

Nate Tetlow

Thank you, and good morning, everyone. Today, we issued and posted to Centuri Holdings website our third quarter earnings release and investor presentation. 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 meaning of the Private Securities Litigation Reform Act. These statements are as of today's date and based on management's assumptions and are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions and regulatory approvals.

A cautionary note as well as a note regarding non-GAAP measures is included in today's press release, in the investor presentation and in our filings with the Securities and Exchange Commission, which we encourage you to review. Also provided a reconciliations of our non-GAAP measures to related GAAP measures. 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 to update any such statements, except as required by law.

Also, given the increased scale of our business over the last year and in order to simplify reporting, we are no longer presenting the non-GAAP measures of base revenue and base gross profit, which were measures that adjusted for storm restoration work. Today's call is 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 Chris Brown, President and Chief Executive Officer; and Kelly Youngblood, Chief Financial Officer.

I'll now turn the call over to Chris.

Christian Brown

Thank you, Nate, and thank you, everyone, for joining our third quarter earnings call. We're extremely proud to have delivered record quarterly revenue of $1.2 billion and record quarterly gross profit of $113 million. Adjusted net income for the quarter was $42 million, more than double the $17 million we reported a year ago. This is remarkable top line and growth and profit growth and reflects the dedication of our teams across the U.S. and Canada.

Let me start with our third quarter operating performance, which I believe demonstrates the progress we've made across the organization and the benefits of the investments we made earlier in this year. As we transition during the first half of 2026, we invested to build greater scale and capacity across the business, including meaningful additions to our workforce. We expected those investments to begin translating into stronger productivity and improved operating efficiency as those employees became fully integrated into our operations, which is exactly what happened in the third quarter.

In addition to leveraging the benefits of scale and capacity, we've been focused on driving contract pricing to reflect market cost escalation, including fuel and cost of fleet. This effort began earlier in the year with new bid work, new MSAs and MSA renewals, all reflecting updated pricing and market conditions. In addition, all $4.8 billion of outstanding bids, including $2 billion of expected renewals by year-end, reflect updated pricing. By this time next year, we expect the vast majority of our backlog to reflect the updated market pricing.

In terms of results, we delivered record quarterly revenue while at the same time driving meaningful improvement in profitability, which led to record quarterly gross profit. Our gross profit margin increased to 9.5% in the third quarter, up from 7.2% in the second quarter. The progress was particularly evident in U.S. Gas, where our workforce expansion was the most significant. Gross profit margin in U.S. Gas improved to 8.2% from 4.2% in the second quarter. In terms of incremental margins, we achieved a 10.4% incremental gross profit margin on a $342 million year-over-year revenue increase.

Gross profit margin, U.S. Gas gross profit margin and incremental gross profit margin all exceeded expectations and prior external communications. We've been focused on building a more scalable and sustainable operating platform that can support the level of demand we see across our end markets and allow us to grow the business while continuing to improve profitability. There is more work ahead, but the third quarter represents an important step towards and gives increased confidence in the earnings power of our business. As we continue executing our Vision One Centuri strategy, our focus remains on translating strong customer demand and revenue growth into higher productivity, greater operating efficiency and ultimately stronger margins and cash flow over time.

And now for the commercial update. Q3 was an exceptionally active quarter across our core and adjacent end markets. Third quarter bookings were approximately $730 million, bringing our year-to-date bookings to approximately $2.9 billion, and our outstanding bids more than doubled in the quarter to $4.8 billion. This is up from $2.5 billion at the end of the second quarter 2026. The majority of these bids as expected, are within our Electrical segment. And even so far in the fourth quarter, we booked approximately $275 million, split evenly between bid work and MSAs.

We booked nearly $100 million in MSA renewals and approximately $185 million between new MSAs and growth from existing MSAs. The mix being about 60% from the electric end market customers and 40% from our gas customers. Demand for our core MSA work, including expanded scopes of work remains extremely strong. In terms of bid work, we booked approximately $445 million during the quarter, which included the third phase of the natural gas infrastructure project and several electric transmission awards, each in the $10 million to $20 million project size range. Our backlog was up 5% from prior year and now stands at approximately $6.2 billion. And even more notable is that our opportunity pipeline continues to expand and now sits at approximately $19 billion, up 46% from last year, demonstrating the additional strength of our end markets and our ability to position Centuri for future profitable growth.

Within -- included within our $4.8 billion of outstanding bids is approximately $2 billion of MSA renewals, which we expect to renew by the end of the year. This is higher than our previous expectation as discussions with customers are leading to increased scope to work, longer contract periods. When we add in the projected bid work awards, we also see our book-to-bill ratio for 2026 of at least 1.3x, which is exceeding the target earlier communicated of 1.2x. Looking ahead, we now have over $3.7 billion of revenue coverage for 2027, which combined with our pipeline gives us visibility to mid-teens percentage revenue growth for next year 2027.

Our outlook is supported by durable investment across North American utility infrastructure markets. U.S. investor-owned electric utilities are expected to invest approximately $1.4 trillion from '26 through 2030, of which over 50% is dedicated to modernization, resiliency, reliability and grid hardening. This end market is our core electric business. At the same time, replacement of aging gas infrastructure remains a long-term safety-driven priority with approximately 45% of the gas distribution made in service lines being under 35 years old or of unknown origin. AGA estimates that natural gas utilities are investing about $37 billion each year to enhance the safety of distribution and transmission lines.

Together, increasing power demand, grid modernization, population migration and the continued replacement of aging infrastructure are supporting sustained investment across Centuri's core electric and gas markets. As we further build upon our efficient One Centuri delivery model, our business remains strong regardless of the political environment, and we continue to grow our business and capabilities to serve our customers and deliver affordable solutions.

Before turning the call over to Kelly, I'd like to briefly discuss data centers, particularly given the significant amount of market attention data centers are receiving. At Centuri, as we've said many times before, we've taken a disciplined approach to what we include in our opportunity pipeline and within our forecast. Any data center project opportunity must have a defined scope of work with a clear estimate of the contract value and margin, and we must have a solid understanding of the customer and the project must have committed funding.

Specific to data centers, by the time we enter the active bidding stage, the projects are generally well advanced and fully permitted with design and engineering substantially complete, and in many cases, initial civil work complete and construction already underway. In short, the data center projects that we evaluate are largely derisked by the time we start investing time or resources into formally bidding for the opportunity. Data centers remain an attractive opportunity for Centuri, allowing us to deploy our existing capabilities into a growing end market. To date, though, we have booked approximately $370 million of data center work in aggregate, with approximately $200 million remaining in backlog. Whilst meaningful, we continue to believe that data center work will not exceed the 10% of our overall annual revenue.

I'll now turn over to Kelly to discuss the financial results. Kelly?

Kelly Youngblood

Thank you, Chris, and thank you, everyone, for joining the call today. Third quarter 2026 consolidated revenues totaled $1.2 billion, a new quarterly record and was a 40% increase compared to Q3 of 2025. Consolidated gross profit was $113 million, also being a quarterly record, and gross margin was 9.5% in the quarter. The incremental gross profit margin compared to last year was 10.4% for the quarter.

Net income attributable to common stock in the third quarter was $27 million or $0.27 per share compared to net income attributable to common stock of $2 million or $0.02 on a per share basis in the same period last year. In the third quarter, adjusted EBIT was $73 million, 79% higher year-over-year and adjusted EBITDA was $108 million, a 44% increase over the same period last year. Adjusted net income in the third quarter came in at $42 million or $0.42 on a per share basis compared to $17 million or $0.19 per share in the prior year period.

Now to our segments. U.S. Gas revenue was $576 million, an increase of 40% compared to the prior year. This growth was driven by increased bid work and MSA volumes, demonstrating the underlying strength of our customer relationships and market position. Gross profit margin was 8.2% in the quarter, up from 7.7% last year and an increase of 400 basis points sequentially compared to last quarter.

As previously mentioned, the improvement in third quarter margins for U.S. Gas was primarily driven by the scale and capacity investments made earlier in the year, which translated into higher productivity, along with the initial benefits of our contract pricing initiatives. Canadian operations revenue was $98 million, up nearly 33% from prior year period, primarily from the inclusion of the Connect acquisition. Operational performance in this segment remains strong against the backdrop of sustained favorable demand as evidenced by the 19.6% gross profit margin in the quarter.

Union Electric revenue was $354 million, an increase of 65% year-over-year, driven by strong growth within our electric and industrial projects in addition to the inclusion of JJ White, which joined Centuri at the end of July 2026. Gross profit margin for the Union Electric segment was 8.9% in the third quarter. Non-Union Electric revenue in the third quarter was $175 million, an increase of 18% year-over-year. This growth was driven by higher storm work in the current year and increased MSA activity. Gross profit margin in the Non-Union Electric segment was 8.7% in the current period compared to 7.1% in the prior year period.

Now turning to our cash flow and balance sheet. Net cash used in operating activities during the third quarter was $28 million and free cash flow was a negative $30 million. We expect cash collections to accelerate in the fourth quarter as we begin converting the recent revenue growth into cash. Our current full year free cash flow expectation is between $25 million to $50 million, down from our prior estimate and driven by the higher working capital requirements as revenue growth has consistently exceeded forecast. However, it's noteworthy to clarify that any shortfall in free cash flow this year is simply a timing issue and will translate into higher cash flow generation for 2027. We ended the quarter with a net debt to adjusted EBITDA ratio of 2.6x, which was down from the 3.8x a year ago. We forecast net debt to adjusted EBITDA to be in the low 2x range by year-end.

Finally, turning to our outlook. As outlined in today's earnings release, we have updated our full year 2026 guidance, including revenue expected to range between $3.8 billion and $3.9 billion, adjusted gross profit of $305 million to $315 million, adjusted EBITDA of $290 million to $300 million, adjusted net income of $80 million to $90 million and net CapEx of $60 million to $70 million. Of note, the guidance assumes no contributions for storm work in the fourth quarter.

Looking ahead and as Chris highlighted, our revenue coverage for 2027 outstanding bids and opportunity pipeline gives us confidence in the mid-teens revenue growth for 2027, which is expected to put us above $4.4 billion in revenue in 2027. In addition, we expect the top line growth to be accompanied by continued margin expansion. We are aiming to achieve an overall gross profit margin of 8.5% to 9% in 2027, which is aligned with our near-term target incremental gross profit margins of 12% to 15%. Relative to the 2029 targets established earlier this year, our preliminary 2027 outlook has us outpacing on both revenue and gross profit growth.

I'll now turn it back to Chris to wrap up our prepared remarks. Chris?

Christian Brown

Thank you, Kelly. As we close, I want to reiterate our confidence in the opportunities ahead of us. Our core business remains anchored by long-term MSA agreements, supporting our utility customers sustainable capital programs. Beyond the continued improvement in the business, we remain focused on executing against the margin expansion opportunity we've consistently outlined, reducing seasonality, increased pricing to reflect cost escalation, growing the mix of bid work and advancing operational excellence, particularly within our U.S. Gas business.

We are making tangible progress across each of these areas. We are pursuing and securing higher-margin work, achieving pricing improvements to reflect the market across our portfolio, driving additional activity into warmer geographies to improve seasonality and using new operational tools to identify margin opportunities at the customer scope of work and geographic levels. We're encouraged by the progress we have seen across the organization and remain confident in our ability to drive margins higher as we move into 2027 and beyond.

We appreciate everybody's time and interest today. Operator, let's begin the Q&A.

Operator

[Operator Instructions] Your first question is from the line of Manish Somaiya from Cantor Fitzgerald.

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Manish Somaiya

Congrats, Chris, Kelly, Nate. Good job. A couple of questions. One, Chris, you mentioned that the incremental in the quarter was 10.4%. I was hoping to get that incremental excluding diesel fuel cost pass-throughs.

Kelly Youngblood

Yes. This is Kelly. I'll take the first part of this and Chris can certainly chime in. Listen, we had guided on the last phone call that the quarterly impact, the net impact of fuel would be approximately $5 million, and that's almost exactly where we ended up for the quarter. And we've been pushing through the additional cost of fuel, additional cost related to our fleet transition to more leasing. All of these items, we've been very successful in pushing that cost into our pricing with customers.

As Chris pointed out in the prepared remarks, there's even another $2 billion worth of contracts being renegotiated before the end of the year. Those will all be incorporating the higher cost that we've had from fuel and other items. And so, as far as the incrementals, we are really going to stop quantifying, I think, at this point, the absolute dollar value of fuel. We have incorporated that into our guidance going forward. The 10.4% we had this quarter, very much stronger than what we had in Q2. And if you look at our implied guidance for 2027, that shows the incremental margins are going to be definitely within that 12% to 15% range that we talked about on the phone call.

So I think that's really the recap, Chris. I don't know if you had anything else to add.

Christian Brown

No, nothing to add there, Kelly. That is fine.

Manish Somaiya

Yes. I mean, listen, the performance obviously is very strong, no doubt about that. But I just wanted to sort of understand that math, but I appreciate it. I guess, maybe Kelly, you might have alluded to this, that some of the '29 targets you are running ahead of the margin expectations. Maybe a question for Chris as to -- clearly we are seeing momentum in U.S. Gas. Perhaps if you can just kind of frame that logic for us for '27. And I guess when would you feel comfortable updating your '29 targets, since obviously you have gathered momentum and execution seems to be on track?

Christian Brown

Manish, thanks for your question. Look, we, as you know, we have put a lot of effort into defining and getting real-time data of what work we have in backlog, what we have in our pipeline and accuracy around the forecasting. So as I look to next year, we are trending, we have currently got $3.7 billion, as we have said in our scripted notes, of backlog coverage for next year. We think we are trending towards $4 billion by the end of the year. And that's really what's giving us the confidence around the $4.4 billion, $4.5 billion we have alluded to within our commentary.

I think as we look at the revenue, we've got a very, very good handle on our pricing and our margin in our system now. So we feel very good about giving you a range of 8.5% to 9% on the margin, which if I look to what we committed to within the 2029 targets, we're about 10%, 12% ahead on the revenue of where we thought we would be, and we're a little bit ahead of where we are on where we said we would be on the margin. So that's really put in the context of where we are against the '29 targets we rolled out in May.

To your final question, Manish, is, when are we going to refresh the targets? I think it will be commensurate as we close out the budget and the planning for next year and issue next year's guidance in fall. That's probably where we would look to give an update on the 2029 targets. I do expect the 2029 targets to be higher, not lower than what we've already communicated, just based on the market opportunity within our core markets. And that will drive to drive margin expansion in the business.

Operator

Your next question comes from the line of Justin Hauke from Baird.

Justin Hauke

Great. So thanks for all the color on the call and the details on the awards and the outlook and everything. I wanted to ask a little bit about the guidance implied for the fourth quarter, and it looks like your EBITDA guidance at least, you kind of narrowed the midpoint and you're implying a little bit lower margin than you had previously. The third quarter was kind of ahead of plan, so I don't know if that's just a reflection of lack of storm or maybe you could just talk a little bit about the moving pieces in that.

Kelly Youngblood

No, great point. Yes, Q3 obviously a big beat compared to consensus and what we -- even our own internal budgeting. Q4 looks a little bit light compared to consensus, but if you look at the full second half of the year, we have a beat pretty much across the board. We may be a little bit light on EBITDA margins, to your point, and I think that's really more an effect of our change in kind of leasing methodology or having lower CapEx, so you're not getting the benefit of that depreciation.

And if you look -- the way we're forecasting that, just to give you a number, if you look at full year '26 versus '25, just this change in methodology is about a 90 basis point impact to our EBITDA margins. But again, when you look at whether revenue, GP, EBITDA, absolute dollars, all the profitability metrics for the full second half of the year, we were above consensus, above what our budget was internally, so we are very happy with that. And then as we have mentioned, the '27 guidance on top of what we just provided as kind of an end of year for 2026 is going to take us over a $4.4 billion mark, which is above the 2029 expectations that we had laid out earlier in the year.

Justin Hauke

Okay. And I guess my second question here, I guess it is Chris for you, but your pipeline, you are talking about 40 plus data centers now, and the aggregate value is like almost $5 billion, and last year it was -- or last quarter it was 25 and $2 billion. So I appreciate your comments on the election impact, but I guess, maybe you could just give a little bit more context of what markets is that coming from? The increase sequentially, where are you seeing kind of the bulk of that activity?

Christian Brown

Yes. I mean, the pipeline has increased to $19 billion. I will give you some headline mix on that. $12 billion of that is on the electric side, of which $10 billion is distribution and transmission, so core businesses. $7 billion of the $19 billion sits on the gas side of the business. So that is the overall mix between the two end markets we serve. When it comes to data centers, I think we have only got one data center that we are looking at within my home state here in Texas. The remainder of the data centers are actually in the north. And as I said in my earlier script, we don't assume any data center in our financial forecasts unless it's got funding, unless it's got permitting, unless it's got all of the execution plan defined and we know the customer has got capital in place. So I would say most of the data centers are emanating up in the Mid-Atlantic, Midwest area of the U.S., with one actually just sitting in Texas.

Operator

Your next question is from the line of Sangita Jain from KeyBanc Capital Markets.

Sangita Jain

One is on the Q4 guide. Kelly, you mentioned that there's no storm included in that guide. So I'm wondering if you did any work for Hurricane Isaias? And if so, is that going to be on top of the guide that you've given us?

Christian Brown

Sangita, I will probably answer that first question, and then Kelly will no doubt maybe add something to it. The answer to your question is yes, we did do storm work at the beginning of October. And yes, that would be additive to what we have communicated within our overall full year guidance. So that is correct. And specifically around Q4, Q4 is a difficult time in many ways to be absolutely accurate in one's forecast. That is why we often take a conservative approach. And why is it difficult? It's hard to determine exactly what customers have got budget exhaustion as we get towards the end of the year. It's also hard to determine which customers have surplus budget they want us to actually expend and deliver services for.

So we kind of don't get a good view on that until probably November, mid-November, even coming back after Thanksgiving. So that's why you see sort of a conservative approach of what we believe we will secure for Q4. It doesn't include storm. And yes, we have had a little bit of storm at the early part of October. I am not sure what we have this week, but certainly the beginning of October. And if customers, as they did last year, choose to allocate more work because they have got surplus budget coming into the year, we will absolutely help them deliver on those services.

Sangita Jain

Got it. That's very helpful. And then, one more on gas margins have obviously done very well, and you have talked about improvements in the operations there. Can you tell us what tools you are putting together to get your electric margins to the same strong levels?

Christian Brown

Sangita, I think we have spoken about it at great length, and there is an element of 3 or 4 components to driving the gas margins up. There is the seasonality. As you know, last year and the prior year and historically, we have had a massive rundown in work that we execute, starting about Thanksgiving, running all the way through to spring break, all the way through the first quarter. We have repositioned the business. We have got more leadership south of the Mason-Dixon line, and actually cross-selling more work into those customers that spend around the year. And as you saw last year, we cut the $16 million loss down to $6 million, and we believe looking into '27, we will be profitable in the gas business in the first quarter of the year.

So that's one tool, if you would like to use, which is drive -- we refer to, which is driving performance through the business development and sales. Secondly is we've now sort of standardized around the way we capture the cost across all of our businesses. And that's allowed us to fundamentally see where there's areas of opportunity to reflect new pricing that reflects current cost of fleet and fuel and other items. Insurances have all gone up into the business, into the cost of the business. So we're able to see where our pricing, a real granular level, a specific call-off is below where it should be for the current market conditions. So we now have that, and we've had that for probably a quarter.

And then finally, operational excellence, which often takes a lot longer. We were a roll-up of a number of businesses that really operated as an operating company into a HoldCo structure. We're now fully integrated in the way we approach the market. We're becoming fully integrated in how we benchmark and drive performance into the business, so we can see how parts of the gas business perform against other parts of the organization, because we've now got tools around specific leading indicators and specific absolute productivity against task level across all 80-something line items within the P&L. So that's the margin improvement productivity tool I referred to on previous calls. That's now effective.

Operator

Your next question comes from the line of Zachary Schechtman from Wells Fargo.

Zachary Schechtman

I'm just wondering, your next phase of growth, obviously mid-teens revenue growth next year is very good. Can this next phase of growth avoid another labor ramp headwinds? Just wondering how fast you can grow without having to re-accelerate head count growth again.

Christian Brown

Thanks for your question, Zach. Yes, I don't believe adding 1,800 to the head count in a first half year is likely. I think we'll continue to find new business that needs more resources. But as we get rid of seasonality in the business and we become more linear across the 12 months of the year, I don't foresee that we will have such large ramp-ups in any quarter or any half of the year. I think we added about 300 people in the last quarter, give or take, which is significantly less than the 1,800 we added in the first half of the year.

So I think we're a little bit more normalized, Zach, around mobilization, purely driven by not just the tools we have in place across the broader group now, but more importantly about the size and scale in the organization and our efforts to mitigate the seasonality and the sudden sharp downturn of people driven by the weather in Thanksgiving through to spring break. So I don't think you're going to see that in the future.

Zachary Schechtman

Got it. And then one follow-up just on data center. I know it's not your main area of focus. But looks like the pipeline that growth from 16 last quarter to 19 this quarter, I think that was all driven by the data center pipeline. Looks like $70 million of awards was picked up in 3Q. Just kind of wondering, like, how quickly those awards turn to revenue? And given the strength in the pipeline build, should we expect a decent acceleration from that $70 million?

Christian Brown

We're going to continue, Zach, to be really cautious with data centers, and not just because of all the headlines you read in the news. At the end of the day, we've got a very diligent approach with all of our customers to be sure that if we're bidding work, it needs to be funded. We need clarity on scope. We need clarity that it is funded and that we're not going to put resources that ultimately slow down or need to be demobilized. We want consistency, stability in the business. So specifically to the data centers, I think most of the data center work, the $200 million that remains in backlog, will burn off next year. I think that's accurate. I doubt much of it will go into 2028. So it's less than sort of 5%-or-so of what we think revenue will be next year.

When it comes to other data centers, I mean, clearly the political environment during the course of this year didn't just start yesterday. It started long before that. So we've always been extremely cautious on where we would put capital. And even though they've gone into the pipeline now, and we've got vision on exactly whether they're funded and whether they're permitted, we'll continue to be very cautious on which contracts we actually do sign, we do book. And that caution will be all around, are they funded? Is there any risk to the permit? And if there is, we will take a very steady approach about what we put into our forecasts.

So I can't answer a call like this exactly when those things will -- when those bids and opportunities will convert. I just can't. But what I would say to you, if data center A has some risk to it, then maybe that's not a piece of, that is not a scope of work that we will continue to follow. But if it's got funding and we can see it's going to be permitted, we possibly will. But there are lots of other adjacent end markets that we service. And I remind everybody on the call, the people that deliver our services to data centers have the same skills, same capability, same contract form that we deliver to other adjacent markets where we see a lot of other activity. So if data centers are not a strong component to deliver margin expansion, there are other markets that will.

Operator

Your next question is from the line of Kevin Gainey from Thompson Davis.

Kevin Gainey

I think I wanted to take a look at the acquisition of JJ. You've got about 3 months, and it looks like it's meaningfully contributing. How's the integration going there? And how do you feel about the targets you set out with for them? And then maybe if you could talk about if you've run into some cross-selling opportunities thus far.

Christian Brown

So it's Chris, and I'll answer the question and see whether Kelly's got anything to add here. I think JJ White, as with the Connect acquisitions in the prior year, has exceeded all of our expectations. I think you will recall the intention was the operational component of JJ White was very complementary to our existing union business, and we folded that within the Union Electric business that's led by Steve Zemaitatis and Riggs Distler. A lot of the integration has already been done. We've been able to integrate a lot of the operational people.

The back office, I think, is more or less through its integration. We are actively out in the market together as a one-company approach. There's a number of opportunities in the pipeline that we think will convert in the near term. I referred in the script earlier, we've got $4.8 billion of opportunity that we are currently outstanding and are negotiating. That's up from the $2.5 billion in the first quarter. There's $400 million, $500 million of that, that actually is JJ White-related renewals that we expect to win.

So I would say JJ White, I think we closed July 20, has delivered everything we expected it to deliver. The team is great, the leadership is great, the operationals are exceptional. Customer feedback has been fantastic. I think everybody will recall we paid about $62.5 million with the usual adjustment due to working capital on the basis of $20 million of gross profit during the year. I think so far we've delivered about $8 million of gross profit out of the business, so it's a little better than we thought, and we're very pleased with the business. And I would expect some conversion of new awards beyond what we've already disclosed in the coming weeks and months. So far, so good.

Kevin Gainey

Sounds good on that. And then I just wanted to maybe highlight the $2 billion of MSA renewals you talked about. Maybe if you could talk about whether it's existing customers or if it's -- and how the pricing flow-through that you guys mentioned is working for that.

Christian Brown

I don't want to get into pricing on a call specific about renewals, but they're all renewals, which means they're all existing customers. They're all multi-year. It's $2 billion, clearly not $2 million out of the $4.8 billion. And negotiations with the customers are progressing as we expect them to progress. Customers typically recognize there's been a lot of cost inflation driven by fuel and fleet, and we're trying to get that aligned with our overall pricing for the services we offer. I would say the discussions are going very well.

Operator

Your next question comes from the line of Lauren Sullivan from UBS.

Lauren Sullivan

This is Lauren on for Steve Fisher. First, just wanted to ask how you're thinking about the election impact on utility funding and planning, and if that's affecting your own planning at all?

Christian Brown

Thank you for the question. Look, our business has been around for 150 years, and it's not driven by data center capital programs. Our business is driven by long-term, multi-year MSAs and relationships with public utilities. And look, we're focused on services and projects that support reliability, resiliency, grid hardening, integrity management, modernization, on both gas networks as well as the grid. So the critical mass of the work we execute is non-data center related. It was all there long before the data center surge became the thing that we all wanted to talk about. It doesn't matter who is in the governor's mansion or in the White House, our services will be needed to deliver on those requirements of reliability, resiliency, grid hardening as well as integrity management across the gas systems.

We do drive a focus on opportunity, margin opportunity and in the adjacent end markets, and data centers are one of them. But as you see, we've only got $200 million of backlog in data centers, and we've maintained that it would never be above the 10%. In fact, I think it will be less than the 10% of our revenue going forward. So I think the political environment that has changed recently, but has slowly been moving in a certain direction during the course of the year, will have little to no impact upon us, because our business and the services we offer are needed by the ultimate customer, and it doesn't matter whether it's a blue or a red leading our political environment.

Lauren Sullivan

Got it. And then just my second question is on, if you're seeing any more interest from customers in consolidating their contractor base, and if that creates any opportunity for Centuri to take a larger share.

Christian Brown

I think -- I don't know how customers really look at it, but what I see as a service provider to our customers is affordability is absolutely crucial, particularly on the gas side. And that affords us an opportunity with our size and scale, as you've seen in our gas margins. And it also translates over to the electric side, where it's more about building our capacity to be able to service customer needs. But I would say that the more scale we can add through people, through fleet and resources, allows us to cross-sell the broader Centuri. It allows us to bring more value to our customers, reduce their costs, drive affordability to the consumer and allows us to be able to deliver better return to our shareholders. And the strategy we laid out is within our Vision One Centuri, and we'll continue to do more of that.

More so, we announced during the quarter, which seems to get forgotten, is we brought in a new head of group development, and his mission in life is to do exactly that, which is to cross-sell our business, gas, electric, union, non-union, behind the meter power energy transition services to our customers so that we can deliver more, drive affordability to our customer, and drive better returns for our shareholders.

Operator

Your next question comes from the line of Sherif El-Sabbahy from Bank of America.

Sherif El-Sabbahy

It seems like conversion is similar to last year at about 13% at the midpoint of guide. Understand you're expecting an improvement in 2027, but does that improvement get you back to the historical conversion rates of 25% to 30% or how should we be considering that improvement next year?

Kelly Youngblood

Yes. This is Kelly. I will take that one. Listen, we're still -- I know we said that it could be a timing issue of cash going into '27. We are pushing -- we're kind of in full court press right now, trying to get collections in this year so that we get closer back to what we had originally guided to on the cash for the year. So we'll see where we end up the last couple of the months. I'm new to the company, but I've looked over the last couple of years, the trend of the company has been to get a lot of the cash collections during the month of November and December, so we'll see where that ends up.

But more specific to your question on the conversion ratio, we have outlined that through 2029, we are targeting to get to a 40% to 50% conversion, and there is nothing at this point that makes me believe that we are going to need to back off on that at all. We are going to continue to progress and increase the percentage, kind of stair-step it up every year between now and 2029.

Sherif El-Sabbahy

Understood. And looking at the bid work project sizes, it looks like they are up about 38% from third quarter of last year. Is this more of a function of pursuing bigger projects or is it just that the projects in the pipeline are structurally larger, given what utilities are trying to accomplish?

Christian Brown

Sherif, again, thanks for the question. It goes back to the basic strategy we laid out with everybody in May, which is we want to continue to grow our MSAs, but if we want to have margin expansion and we want to deliver on 15% revenue growth with higher margins, we will need to do more bid work. So the dynamic in the revenue and the dynamic in the margin is all driven by that mix. It really is as simple as that.

Operator

Your last question comes from the line of Manish Somaiya from Cantor Fitzgerald.

Manish Somaiya

Chris, obviously, the organic growth is quite strong. I was hoping to get some clarity on how you guys are thinking about inorganic growth. What are sort of the potential opportunities that you are seeing out there that could make sense, and which of the segments would those fit in? And then secondly, with obviously the share markets in dislocation, your own shares at a very sort of attractive level, one would say. How do you guys think about share buybacks? How is the Board thinking about capital allocation? If you can also give us some sense of how those discussions are being thought about.

Christian Brown

Manish, I will cover the M&A market, then I will ask Kelly to jump in on the share buyback and capital allocation priorities. Our focus on M&A, we look at M&A in support of our Vision One strategy, which we have consistently rolled out. And we are looking to invest in businesses that are mainly tuck-in acquisitions that unlock more growth potential on the electric distribution transmission side of our business, with a heavy T, less of a D. And we are looking at opportunities all the time, as you would expect us to do, to identify more opportunities that look like Connect and JJ White that will untap positioning in the market with customers to drive the electric transmission and distribution.

You could find a situation, and again, I will repeat what I have said on prior calls with many, you could find opportunities in the south of the country that has got both gas and electric that we would be very willing to look at if it unlocks opportunity with customers to deal with seasonality as well as gives us a position with customers to push more on the transmission and distribution side, recognizing the entry point maybe through gas. So that's what I would say on M&A.

Capital allocation?

Kelly Youngblood

Yes. In terms of capital allocation, I think we've said this at recent conferences, our primary focus right now is delevering the balance sheet, supporting the organic growth opportunities that we have. Chris just talked about evaluating tuck-in M&A opportunities, which we will continue to do. But specific to buybacks or dividends, I think our priority right now is just to focus on the organic growth we have and funding that and getting our leverage ratio lower. We talked about it in our guidance. We think we'll be in the low-2s. Ideally, we'd like to get that leverage ratio below 2x. That may periodically go back above 2, depending on M&A opportunities. But it mostly always wants to see a track record of that kind of heading back down below 2x. So that's really the priorities for the moment. Give us some more time, let us get the leverage ratio down, and then maybe we'll have that discussion. But right now, the timing is just not right for us.

Manish Somaiya

And just, Kelly, as a follow-up. As you think about leverage, what do you think is the ideal target leverage for the company? When you say less than 2x, is it 1.5x, 1x?

Kelly Youngblood

Well, listen, I'm a conservative accountant, conservative CFO. The lower, the better, right? But definitely below 2x. I think if we were ranging between 1.5x to 2x, that's a very healthy place to be for our company. And as I said, we may periodically go above that with M&A that we're doing, but we would always like to see that path back to a more normalized, less than 2x. But yes, that's kind of the range we're thinking about. The lower, the better, but I think that's kind of the way we're thinking about it.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Nathan for closing remarks.

Nate Tetlow

Thank you, everyone, for joining today, and thank you for your interest in Centuri. Please feel free to follow up with me with any questions, and that concludes today's call.

Operator

Thank you for attending. You may now disconnect.