CTRI earnings call transcript, November 5, 2026

Yeah, this is Kelly.

Thanks, Manish.

Appreciate it.

as kind of an end of year for 2026 is going to take us over a 4.4 billion mark, which is above the, uh, the 2029 expectations that we had laid out earlier in the year. Okay. Um, thanks.

Thank you for that.

And I guess my, my second question here, um, I guess Chris for you, but your, uh, your pipeline, you're talking about, you know, 40 plus data centers now, and the aggregate value is like almost 5 billion and last year. It was last year, last quarter, it was 25 and 2 billion. So I appreciate your comments on, on the election impact, but I guess, uh, maybe you could just give a little bit more context of, uh, what markets are is that, um, coming from, um, it just, the, the increase sequentially, where, where are you seeing kind of the bulk of that activity? Thank you. Um, yeah, I mean, the, the pipeline, um, has, has increased to 19 billion. I'll 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. Seven of the 19 billion sits on the gas side of the business. So that's the overall mix between the two end markets we serve. When it comes to data centers, I think we've only got one data center that we are looking at within within my home state here in Texas. The remainder of the data centers are actually are in the north. And as I said in my as I said in my earlier scripts. 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. We know the customer's got capital in place. 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.

Hi, Sangeetra.

gather to get your electric margins to the same strong levels?

Thank you, Jeff.

I think we spoke about it at great length. You know, there's an element of three or four components to driving the gas margins up. There is the seasonality, as you know, last year and the prior year. And historically, we've had a massive rundown in work that we execute. Starting about Thanksgiving, running all the way through to spring break, you know, all the way through the first quarter. We've repositioned the business. We've got more leadership south of the Mason-Bixon line and actually cross-selling more work into the... Those customers that spend around the year. And as you saw last year, we were in the gas business in the first quarter of the year. So that's one tool. If you would like to use, which 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 of all costs. Well, into the business, into the cost of the business. So we're able to see where our.

And then finally, operational excellence, which which often takes a lot longer, you know, we, you know, we were a relative of a number of businesses that really operated as a as an operating company to a whole core structure. We're now fully integrated in the way we approach. The market will be coming fully integrated and 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 that's the margin improvement. productivity tool I referred to on previous calls. That's now effective.

Thanks so much for the color Chris. Thanks.

Thank you sir.

Thanks for your question, Zach.

Yeah, I don't believe adding 1,800 to the headcount 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 up. 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 normal. I think we're going to be able to mobilize that 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 shock. I've done certain 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. Got it. Thank you. And then one follow up just on data center. I know it's not not your main area of focus. But it 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, you know, given the strength and the pipeline build, should we expect a decent acceleration from that 70?

Are we going to continue? Zach, to be really cautious with data sensors 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 good in work, it needs to be. 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. 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 I think that's I think that's accurate. I doubt much of it will go into 2028. So it's it's. It's less than sort of five or so percent 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. You should 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 answer.

You know, 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's 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 are the same skills, same capability, same contract form that we deliver to other adjacent markets where we see a lot of other activities. So if data centers are not a strong company. Berlin's deliver margin expansion. There are other markets that will. Understood.

Thank you guys.

Thanks, sir.

JJY 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 six. Two and a half 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 eight 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. I would expect some conversion of new awards beyond what we've already disclosed in the coming weeks and months. So far, so good.

Sounds good on that. I just wanted to maybe highlight the $2 billion of MSA renewals you talked about. Maybe you could talk about whether it's existing customers and how the pricing flow through that you guys mentioned is working for that. 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-years. It's $2 billion, clearly not $2 billion. out of the 4.8. Negotiations with the customers are progressing as we expect them to progress. Customers typically recognize this being a lot of cost inflation driven by fuel and fleet. 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.

Appreciate all the color.

Thanks guys.

Thank you for the question.

The power business. has been around for 150 years. It's not driven by data center capital programs. Our business is driven by long term multi year MS. and relationships with public utilities. And look how we're focused on, you know, services and projects that support reliability, resiliency, grid hardening, integrity management. organization on both gas networks as well as the grid. So, you know, the critical mass of the work we execute is non-data sensor related. It's, it was all that long. Before the data sensor search became the thing that we all wanted to talk about. It doesn't matter who's in the governor's mansion or in the White House, our services will be needed to deliver on those requirements of reliability, resiliency, good having as well as integrity. management across the gas systems. We do drive a focus on opportunity, margin opportunity, and in the adjacent end markets, the data centers are one of them. But as you see, we've only got 200. million of backlogging data centers, and we've maintained that it would never be above the 10%. In fact, I think it'll 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 sense. 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.

got it thank you um and then just my second question is on uh if you're seeing any more interesting from customers and consolidating their contractor base um and if that creates any opportunity for a century to take a larger share thank you. I think um I don't know how customers really 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 um and it also translates over to the electric side where it's more about building our capacity to be able to service customer needs um but i i would say that that the more scale we can add through people through fleet and resources allows us to cross sell the broader century it allows us to bring more value to our customers reduce their costs driving affordability to the consumer and allows us to be able to deliver better return to our shareholders and the strategy we laid out is is within our vision one century and we'll continue to do more of that and more also we announced during the quarter which seems to get forgotten is we brought in a new head of greek development and his mission in life is to do exactly that which is to cross-sell our business gas electric union non-union pandemic to power energy transition services to our customers so that we can deliver more drive affordability into our customer and drive better returns for our shareholders.

Yeah, yeah, this is Kelly. I will take that one. Listen, we're still, you know, I know we said that it could be a timing issue of cash going into 27. We are pushing, you know, we're kind of the full court press right now trying to get collections in this year so that we get closer back to what we had originally got into on the cash for the year. But so we'll see where we end up, you know, the last couple of months and, you know, due 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 to, you know, more specific to your question on the. conversion ratio, you know, we've outlined that through 2029, we're targeting to get to a 40 to 50% conversion. And there is nothing at this point that, you know, makes me believe that we're going to need to back. off on that at all, we're going to continue to progress and, and increase the percentage kind of stair step it up every year between now and 2029 understood. And looking at the bid work project sizes, it looks like they're 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? Should we thank 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 50.

percent 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 is really is as simple as that. Understood. Thank you.