Q3 2024 Centuri Holdings Inc Earnings Call
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Speaker Change: Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero.
Speaker Change: Good day, everyone, and welcome to Century's 3rd Quarter 2024 Earnings Conference 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, Mr. Jason Wilcox, Chief Legal and Administrative Officer and Corporate Secretary for Century. Please go ahead, sir.
Jason Wilcox: Thank you, Madison, and hello, everyone. We appreciate you joining our call. This morning, we issued and posted to Century Holdings' website our third quarter 2024 earnings release.
Speaker Change: The slides accompanying today's call are also available on Century Holdings' website.
Speaker Change: 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.
Speaker Change: These statements are as of today's date and based on management's assumptions on what the future holds, but are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions and regulatory approvals.
Speaker Change: Thank you.
Speaker Change: This cautionary note, as well as a note regarding non-GAAP measures, is included on slides 2 and 16 of this presentation.
Speaker Change: today's press release and our filings with
Speaker Change: Securities and Exchange Commission, which we encourage you to review. These risks and uncertainties may cause actual results to differ materially from the statements made today.
We caution against placing undue reliance on any forward-looking statements and we assume no obligation to update any such statement.
Speaker Change: Today's call is also being webcast live and will be available for replay in the investor relations section of our website.
Speaker Change: shortly after the completion of this call. On today's call, we have from Century Holdings, the following members of the leadership team.
Karen Haller, Chairperson of the Board, Paul Caudill, Interim President and Chief Executive Officer.
Jim Connell, Chief Commercial and Strategy Officer, and Greg Eisenstart, Chief Financial Officer. I'll now turn the call over to Karen.
Karen Haller: Thanks Jason and thanks for your interest in Sentry. I'm excited to join today's call to discuss the progress we've made with Sentry's leadership transition process.
Speaker Change: As you likely saw yesterday, we announced that following a thorough search process, Chris Brown will become Century's CEO on December 3rd. Chris brings expertise in leading large, complex organizations through significant evolution and growth in the energy and industrial sectors.
Speaker Change: He has cultivated a wealth of leadership experience and delivered a proven track record of success, including his most recent role as CEO of Intermec, a privately held global E&C company, and previously as CEO of Kim's Engineers and Constructors.
Speaker Change: a FTSE250 listed E&C business, for which Chris was instrumental in driving a nearly six-fold increase in revenue over five years, and having led the company through its sell to S&C Lavalin, a TSX listed E&C company.
Speaker Change: In addition to his experience, the board was attracted to Christine.
Speaker Change: his strategic approach, his collaborative style, his proven proficiency of growing sales, and his expertise in building teams at organizations.
Speaker Change: I believe Chris will prove to be a great leader for Century.
Our entire board is enthusiastic about Chris joining the Sentry team, bringing his commercial, operational, and engineering background to our organization during a transformative time.
Speaker Change: Chris has a deep understanding of the utility and infrastructure sector and has relationships with major energy and electric utility companies.
Speaker Change: I'm confident that Chris...
strategic vision and operational expertise will lead to increased stakeholder value at Sentry. And his proven approach will continue Sentry's already upward trajectory to even new heights.
Speaker Change: We welcome Chris to the team and look forward to him starting with the company on December 3rd.
Speaker Change: I'll now turn the call over to Paul, who has agreed to assist with the leadership transition and who has done an excellent job leading the company in the past few months.
Speaker Change: On behalf of the entire Century Board, I want to express our deep gratitude to Paul for his longstanding support and commitment to Century. Paul? Thank you, Karen, and good morning, everyone. I appreciate you participating in the call with us today.
Speaker Change: We hope following today's call you'll take away an appreciation for three main things.
Speaker Change: Number one, our results on the quarter.
Speaker Change: Number two, how we're intentionally leveraging our scaled platform to approach growth and diversification. And number three, our ongoing focus on cost control and disciplined capital allocation.
Speaker Change: Century's strength lies in building long-term partnerships with our utility and energy customers.
Speaker Change: Earning their trust through our performance.
Speaker Change: Aligned with our customers, we focus on the safety of our employees, the contractors we have working with us, and the people living in the communities we serve.
Speaker Change: Nothing is more important to all of us at Century than safety.
Speaker Change: By way of example, I would point to the incredibly challenging work performed this hurricane season by our union and non-union line workers and support teams who were deployed to help our customers restore power.
Speaker Change: I could not be prouder of their efforts.
Speaker Change: Over the last 10 months, I've gained a deeper appreciation for the opportunities ahead for the company.
Speaker Change: Century is fortunate to be at the intersection of evolving energy needs and infrastructure growth.
Speaker Change: From electrification and renewables to advanced manufacturing and data centers, the demand for grid interconnections, local transmission, and substation upgrades is on the rise.
Speaker Change: Our core expertise, strong resume and geographic footprint has positioned us to compete for and win new work in these markets.
Speaker Change: To be clear, we are intensely focused on winning smaller scale bid opportunities.
Speaker Change: some with new customers that match our core competencies and risk profile.
Speaker Change: This includes pursuing projects like renewable natural gas.
Speaker Change: hydrogen, and carbon capture.
Speaker Change: We feel strongly that our capability with underground work is a great fit.
Speaker Change: Think Fiber for Broadband and the significant investment in utility services needed to construct a data center as a couple of examples.
Speaker Change: In a few minutes, you'll hear from Jim Connell, our Chief Commercial and Strategy Officer, who will provide more insights into our commercial progress.
Speaker Change: Now, turning to our results.
Speaker Change: We have experienced improvement in our electric business.
Speaker Change: a positive trend that began in July and has continued.
Speaker Change: This includes the incremental onboarding of additional electric crews to existing customer properties during the quarter.
Speaker Change: We also delivered strong performance in storm restoration services driven by the impacts of Hurricanes Beryl and Halit.
Speaker Change: We did not face any significant new regulatorily driven spending delays among our current customer base.
Speaker Change: However, spending under MSAs, particularly in our U.S. gas business, remained relatively subdued.
Speaker Change: We also encountered a few unique challenges during the period, including equipment and insurance-related costs that impact the results, mainly in U.S. gas.
Speaker Change: Thank you.
Speaker Change: With these factors in mind, let me address directly several dynamics important to our business and how we have addressed them.
Speaker Change: First, as just mentioned, our U.S. gas business has faced more muted customer spending under MSAs.
Speaker Change: It's a trend that is not unique to our company.
Speaker Change: Cyclical market dips or adjustments are risks inherent to almost any business.
Speaker Change: We remain bullish on the future of natural gas as a key part of North America's energy future.
Speaker Change: We are mitigating market risk through diversification of the broader business and maintaining a relentless focus on cost discipline.
Speaker Change: The century business you see today has been intentionally and purposefully built.
Speaker Change: You might recall that around 2019, our customers were largely gas utilities. In fact, around 87% of the company's revenue was derived from the gas side of the business.
Speaker Change: We set a strategy to round out our services platform and diversify into electric infrastructure services.
Speaker Change: Today, Century offers a nearly level split between gas and electric services and a fully scaled platform across geographies.
Speaker Change: In that time, we also build out the storm restoration business line.
Speaker Change: We will continue down this path.
Speaker Change: We're working collaboratively across our operating companies to grow both the electric and gas sides of the business.
Speaker Change: and will deploy our core capabilities into adjacent markets.
Speaker Change: As we noted earlier, SG&A cost reduction and control of capital expenditures remains a critical focus.
Speaker Change: We previously discussed the completion of our two-phase review of corporate and operating company overhead, which is expected to generate annualized savings of $29 million in 2025.
Speaker Change: We estimate that these initiatives benefited our third quarter results by approximately $6.4 million.
Speaker Change: In the second quarter call, we also highlighted our fleet.
Speaker Change: and supply chain savings initiatives.
Speaker Change: During the third quarter, we renegotiated an additional four major supply chain contracts.
Speaker Change: bringing the total contracts successfully negotiated to 14 since we began this process.
Speaker Change: We've achieved average discounts of approximately 7% with our suppliers and have addressed roughly 21% of the annual spend with our top 100 vendors.
Speaker Change: As it relates to capital, we are focused on sharing equipment where possible across our business.
Speaker Change: which has benefited CAPEX in the third quarter.
Speaker Change: We continue to refine our tracking and visibility into asset utilization and idle time, which allows us to maximize our fleet assets to service the entire company, ultimately benefiting our total capital spend.
Speaker Change: I'll now turn it over to Jim Connell, our Chief Commercial and Strategy Officer. Jim. Thank you and good morning everyone. As Paul alluded to, we have a compelling and unique opportunity set in front of us to grow our business.
Speaker Change: During the third quarter, we secured more than $347 million in new awards, including $206 million in MSA awards, or Master Service Agreements, and $140 million in strategic bid awards.
Speaker Change: In MSAs, our U.S. gas business secured an award from a first-time customer in Appalachia.
Speaker Change: This multi-year award has estimated revenue of $60 million in total. If performance meets our expectation, an award like this puts us in a position to compete for other project or bid work from the same customer and others in nearby geographies.
Speaker Change: This competitively bid award reflects directly on our U.S. gas business's execution and performance with this customer.
Speaker Change: Prior to this award, we had targeted and successfully completed a few smaller-scale bid projects first, which earned us the opportunity for a longer-term partnership.
Speaker Change: Also, in the third quarter, after serving as a long-term partner under an MSA, we secured our first bid award from a long-term customer in the Northeast. This project includes large diameter pipe installation and station upgrade work.
Speaker Change: Though relatively modest in size, the project highlights our ability to adapt to the ever-evolving needs of long-standing MSA clients and to be a partner of choice to deliver our services wherever they choose to spend their CapEx.
Speaker Change: Before pointing out some noteworthy commercial and operational achievements in the quarter, I'll briefly touch on our storm response work which Paul mentioned at the beginning of the call.
Speaker Change: While the occurrence and severity of storms is unpredictable, we've been extremely deliberate in establishing a qualified and highly skilled workforce who are trained in this work and strategically positioned in core geographies with both union and non-union offerings.
Speaker Change: to respond when our customers need us.
Speaker Change: Although we'll never be able to predict the weather, be assured,
Speaker Change: The success of our storm capability is not by accident.
Speaker Change: It's through very deliberate and intentional effort in building up and positioning this capability with our customers and prospects alike.
Speaker Change: I'll also note our business is performance-based.
Speaker Change: And we continue to see our successful storm response be an important door opener for longer-term opportunities to serve new customers.
Speaker Change: Turning now to offshore wind.
Speaker Change: In July, we announced our subsidiary Riggs-Dissler's agreement with Vineyard Offshore for fabrication and assembly of secondary steel components for foundations for Vineyard II, a 1,200 megawatt offshore wind project in New England.
Speaker Change: The project was provisionally awarded by Massachusetts in September, and we look forward to playing an integral role as we continue to enjoy first mover status in the offshore wind space.
Speaker Change: In September, we announced a significant milestone in the construction of Orsted Sunrise Wind Project, completing over half of the specialized wind turbine foundation components just south of Albany, New York.
Speaker Change: This project, set to power nearly 600,000 homes with renewable energy, supports New York's goal of 70% renewable energy by 2030.
Speaker Change: Thank you.
Speaker Change: Now turning to our full backlog. As we've discussed before, our MSAs are typically multi-year agreements and their renewal intervals hit at different times, sometimes several in one year and other times more spread out. For this reason, we can expect our backlog to fluctuate.
Speaker Change: In the third quarter, and continuing through the fourth quarter,
Speaker Change: We're in a phase where later next year, we have a few MSAs with existing customers up for renewal. As a result, our backlog decreased from $4.7 billion at the end of the second quarter to $4.3 billion at the end of the third quarter.
Speaker Change: Looking ahead, as we pursue growth, we anticipate growth by securing additional larger strategic bid awards.
Speaker Change: While this may make our backlog more variable in the near term, we expect that these wins will ultimately support backlog growth over time, as this has served as an excellent entry point for long-term customers.
Speaker Change: To fully leverage the market tailwinds, we are also focused on making key hires in specialized areas to strengthen our competitive position in emerging markets such as data centers, carbon capture and sequestration, hydrogen, and others.
Speaker Change: Being more closely tied to our existing customers and prioritizing a further diversification of our customer base is key.
Speaker Change: In summary, we are excited about the opportunities ahead and look forward to sharing more progress going forward.
Speaker Change: Thank you.
Speaker Change: I'll now hand it over to Greg Eisenstark, our CFO, to dive into the third quarter results.
Speaker Change: Greg?
Greg Eisenstark: Thank you, Jim, and good morning to all who joined our call today.
Greg Eisenstark: Third quarter of 2024, consolidated revenues declined 7.1% and consolidated gross profit was 13.5% lower, both compared to the same period last year, while gross profit margin was 10.5% in the third quarter of 2024, compared to 11.3% in the third quarter of 2023.
Greg Eisenstark: The decrease in revenues and margins were driven by lower offshore wind activity, the mix of bid work, and continued subdued MSA spending among our U.S. gas customers.
Greg Eisenstark: On a GAAP basis, net loss attributable to common stock in this year's third quarter came in at $3.7 million, or a diluted loss per share of four cents.
Greg Eisenstark: Down from net income attributable to common stock of $16.2 million, or diluted earnings per share of $0.23 in the same period last year. Driven in part by the operational items just mentioned, along with changes in our effective tax rate.
Greg Eisenstark: In the third quarter of 2024, total company adjusted EBITDA, a non-GAAP figure, was $78.8 million, or 13.9% lower from the prior year quarter.
Greg Eisenstark: Adjusted EBITDA margin was 10.9% for the quarter and 8.7% year-to-date.
Greg Eisenstark: These percentages are on target with our full year guidance and have benefited from the business initiatives Paul outlined earlier.
Greg Eisenstark: Non-GAAP adjusted net income in the third quarter came in at $5.3 million or an adjusted diluted earnings per share of $0.06, down from $23.6 million or an adjusted diluted earnings per share of $0.33 in the prior year period.
Greg Eisenstark: The $8.9 million difference between our adjusted net income and net loss included several mostly non-cash items.
Greg Eisenstark: including $6.7 million in amortization of intangible assets, which was in line with the prior year, and factors that were unique to this period, such as $1.4 million of accounts receivable securitization transaction fees.
Greg Eisenstark: as well as a $1.7 million loss on early extinguishment of debt.
Greg Eisenstark: Before turning to segment results, a few words on our restoration services efforts.
Greg Eisenstark: Through our territories, we have dispatched more than 3,500 employees throughout 2024 to respond following severe weather events.
Greg Eisenstark: This generated $87 million in revenues during the first three quarters of 2024, including $41.4 million in the third quarter alone.
Greg Eisenstark: This was about 4% higher than last year's $83.4 million through the first three quarters of 2023 and more than double the $18.9 million we recognized in the prior year quarter.
Greg Eisenstark: Recall that 2023 restoration services revenues were abnormally high in the early part of the year, while no significant named storms occurred in last year's third quarter.
Greg Eisenstark: As many of you likely know, aside from Hurricane Beryl's impact, which was somewhat uncharacteristically early in the third quarter, much of the hurricane activity was near the very end of the third quarter and early in the fourth quarter.
Greg Eisenstark: During the end of October, we have just generated an estimated $50 million in storm restoration services revenues, reflecting work that continued into the period from Hurricane Helene's landfall at the end of September and Hurricane Milton's landfall in early October.
Greg Eisenstark: We are incredibly proud of our team's work to bring power back online to the impacted communities as quickly as possible, and our thoughts remain with all those impacted by these destructive weather events.
Greg Eisenstark: Now to each reportable segment.
Greg Eisenstark: Revenue from our U.S. gas segment totaled $366.1 million, reflecting a year-over-year decrease of 7.5 percent.
Greg Eisenstark: If we look at our MSA volumes, we did not encounter any notable regulatory-driven changes with any of our larger customers, incremental to what we described to you last quarter.
Greg Eisenstark: However, spending remained relatively subdued as we expected coming into the period.
Greg Eisenstark: Gross profit margin in this segment decreased to 7.6% in the current period from 13.2% in the prior year period.
Greg Eisenstark: Impacting this were several factors, including the higher margin bid job in third quarter 2023 and overall mix of bid work.
Greg Eisenstark: lower utilization of fixed costs, lower productivity caused in part by operational issues including equipment breakages have led to higher rental and repair and maintenance costs and corresponding downtime.
Greg Eisenstark: and unfavorable adjustments arising from self-insurance claims for work conducted in prior years.
Greg Eisenstark: Revenue from our Canadian gas segment totaled $50.4 million, reflecting a decrease of 7.8% compared to the third quarter of 2023.
Greg Eisenstark: This expected decline was driven by a reduction in net volumes under existing MSAs, but gross profit margin increased to 23.4% versus 18.4% in the prior year period, primarily due to mix of work and improved pricing.
Greg Eisenstark: In our Union Electric segment, revenues were $171.7 million, a decline of 15.9% year-over-year. If you were to separate out our offshore wind business, revenues were essentially flat year-over-year.
Greg Eisenstark: care.
Greg Eisenstark: In offshore wind, we were primarily impacted this year by the October 2023 cancellation of Orsted's Ocean Wind Project in New Jersey.
Greg Eisenstark: Beyond wind, storm restoration services revenues in the Union Electric segment came in at $6.7 million for the third quarter of 2024, which was lower than the $10.8 million experienced in prior year period.
Greg Eisenstark: Thus, on a core union electric basis that excludes the lumpier offshore wind and storm restoration services subsegments.
Greg Eisenstark: We experienced modest year-over-year growth of 7.1% for $9.7 billion.
Greg Eisenstark: Growth profit in the Union Electric segment increased to 9% in the third quarter of 2024 as compared to 5.7% in the third quarter of 2023 due to improved work mix and the closeout of our ocean wind offshore wind project, along with the impact of cost savings.
Greg Eisenstark: Non-union electric segment revenue reached $128.8 million, a 16.4% increase year-over-year. In addition to higher storm revenues, this year's third quarter saw improvement in productivity driven by the addition of crews on several customer properties along with improved work hours.
Greg Eisenstark: Segment gross profit increased 16.6% in the current period versus 11.6% in the prior year period, a reflection of a much higher contribution from the more profitable storm restoration work.
Greg Eisenstark: We reported net capital expenditures during the period of $17 million, compared to $22.8 million in the prior year quarter, a reflection of our continued focus on capital disbursement.
Greg Eisenstark: Bye.
Greg Eisenstark: This drove a healthy conversion of adjusted EBITDA to free cash flow of 78%, which is above recent levels.
Greg Eisenstark: In late September, we entered into a three-year accounts receivable securitization facility in the aggregate amount of up to $125 million.
Greg Eisenstark: Proceeds from our utilization of this facility were primarily used to repay amounts outstanding under existing term loan.
Greg Eisenstark: We are continuously evaluating opportunities to optimize our financing structure and securitizing our AR has allowed us to lower our interest expense.
Greg Eisenstark: On a trailing 12-month basis, our net debt-to-adjusted EBITDA ratio was 3.9 times as of the end of the third quarter of 2024, which is down from 4.4 times as of the end of the second quarter of 2024.
Greg Eisenstark: We ended the quarter with $52.5 million in cash and cash equivalents on the balance sheet and remain focused on de-levering the business to be closer to our infrastructure services peers.
Greg Eisenstark: Lastly, turning to our Outlook, we are reiterating our guidance on full year 2024 revenue, adjust the EBITDA margin, and net capital expenditures.
Greg Eisenstark: At the midpoint of our guidance, we continue to expect our leverage at year-end 2024 to be in the mid-threes.
Greg Eisenstark: With that said, let me turn it back to Paul to provide some closing thoughts. Paul. Thank you, Greg. Excuse me. In closing, we remain enthusiastic about the opportunities that exist in our sector.
Greg Eisenstark: including growth with customers existing and new, and deploying our capabilities to serve adjacent markets.
Greg Eisenstark: We see ongoing infrastructure investment from programmatic customer spend combined with federal investments in grid expansion, clean energy, and safety.
Greg Eisenstark: as key tailwinds driving our company forward.
Greg Eisenstark: We are keenly focused on adapting with our customers and expanding our business through a proactive and intentional approach to new client opportunities and market expansion.
Greg Eisenstark: We aim to continue a thoughtful and intentional plan to grow the business, ultimately delivering value for our shareholders.
Greg Eisenstark: Against this backdrop, we will continue to operate our business with strong emphasis on capital discipline and cost control.
Greg Eisenstark: as we work to cement our reputation as a long-term partner to our utility and energy customers.
Greg Eisenstark: I remain very excited about the future of this company.
Greg Eisenstark: beginning next month under the leadership of Chris Brown.
Greg Eisenstark: and I'm grateful for the opportunity to have been a part of building Century's strategic path as it moves forward.
Greg Eisenstark: Thank you for your time today and for your continued support. Madison, you can start the Q&A session.
Madison: Thank you. And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. In the interest of time, we ask that you please limit yourself to one question and one follow-up.
Greg Eisenstark: And we will take our first question from Justin Hawkey with Baird. Please go ahead.
Justin Hawkey: Oh, great. Good morning, everybody. So, I guess I've got a couple of questions.
Justin Hawkey: Let's see, I guess the first one.
Justin Hawkey: I guess I just would like to understand the storm contribution versus the base business a little bit better. You know, with the $50 million that you've done so far in 4Q, that would put you, you know, up to like $137 million for the year.
Justin Hawkey: You know, I think you guys talked about historically do like, you know, 75 million and.
Justin Hawkey: you know, the margins on that work are...
Greg Eisenstark: you know, can be double what your base business is. And so, with the guidance not changing here, I just want to understand what's the offset from that. Is it just the gas MSA work that's coming in a little bit lighter, or, you know, just maybe the moving pieces around that?
Speaker Change: Good morning, Justin. So, I guess I'll start on that. You know, obviously, we don't have a lot of control over storms, but we have done, given the location of the storm activity, you know, about 50 million in the fourth quarter, and your number for the full year is fairly accurate.
Speaker Change: You know, we are excited about some of the work that our electric non-union business, most notably, is doing around crew growth and increased work hours. All of those are going to be a positive for 2024 and beyond.
Speaker Change: You know, on the gas side, we've seen some reduced MSA spending, as we noted. That was in line with our projection, and so we haven't seen a material change in that.
Speaker Change: But we are, you know, we are seeing also a little bit on the Union Electric side some delays in awarded bid work.
Speaker Change: And so that is also playing into our full year projection. But overall, we are very confident in our guidance. We reiterated it this morning, and we're comfortable where we sit today.
Speaker Change: Okay, thanks for that. And then I guess my second question would just be around some of the cost of these programs.
Speaker Change: I just wanted to make sure I understood the numbers that you talked about. The $12 million annualized savings.
Speaker Change: Is that just from the actions you've taken in the quarter? I'm just trying to reconcile that with the $29 million that you're saying you're expecting in savings in 2025.
Speaker Change: Is that $12 million just what you did incremental, or I guess where are you against recognizing that full $29 million?
Speaker Change: So, those are two different buckets. The $29 million that we announced in the second quarter is annualized cost savings related largely to headcount reductions.
Speaker Change: the $12 million that you're referencing is more on the supply chain in the fleet side. Of that amount, about $10 million is reductions that we've gotten related to our capital spend, and about $2 million is estimated to be more kind of
Speaker Change: O&M costs, subcontractors, and kind of repairs and maintenance, stuff like that. So there's kind of three different buckets there, cost savings for people, and then the $12 million is supply chain related.
Speaker Change: Thank you. And we will take our next question from Joe O'Day with Wells Fargo. Please go ahead.
Joe O'Day: All right, good morning. Thanks for taking my questions.
Joe O'Day: Can you elaborate a little bit more on the electric side and union versus non-union and some of the differences you're seeing there and whether that's more related to regional exposure or if there are other factors behind seeing a little bit more strength in one versus the other?
Speaker Change: I mean, you know, from our non-union electric perspective, you know, again, highlight, you know, we're really encouraged by the demand to increase our crews from our, you know, core electric customers.
Joe O'Day: And on the union side, it is a little bit more bid focused than on the non-union side. And while we have been, you know, having a nice
Joe O'Day: pipeline of backlog of big projects. We have seen some delays in timing related to those, but across both businesses we're seeing encouragement on the electric side.
Joe O'Day: And then
Speaker Change: On the supply chain side, just in terms of how you think about moving forward, I think you talked about maybe about 20% of agreements that have been reviewed, just the timeline that you set for going through those, and anything from sort of the value of the full opportunity as you make your way through those reviews.
Speaker Change: Yeah, we continue to make progress on that. We haven't put a specific date or deadline internally on how long that's going to take.
Speaker Change: We're working through the more significant ones first and obviously trying to make progress each and every quarter.
Joe O'Day: It will take a little bit of time for us to work through all of that and then.
Joe O'Day: little bit more time for it actually to fully appear or for us to fully get our benefit you know in our results but we are continuing to make good progress on the on the supply chain renegotiation front.
Speaker Change: Thank you. And we will take our next question from Sangeeta Jain with KeyBank. Please go ahead.
Sangeeta Jain: Great. Thank you so much for taking my question. Greg, if you can remind us how much do you have in your backlog currently for offshore wind and how you're thinking about that given, you know, the results of the elections, et cetera? Great.
Speaker Change: Uh, good morning. So, yes, we do have roughly 100 million dollars in backlog related to offshore wind. That's for both the 4th quarter and we'll spread into early 2026.
Speaker Change: Thank you. Bye.
Joe O'Day: And you know, as far as the election, I think it's probably a little early for us to comment on that just given
Joe O'Day: how recent the announcement is, but from our perspective, we're really comfortable with the offshore wind work that we have.
Joe O'Day: We have really strong relationships with a number of developers in the region. We talked a little bit earlier about the Vineyard project and we think we can continue to take advantage of our first mover advantage in that space.
Speaker Change: Got it. And if I can follow up with one on gas MSA-related spending environment, I appreciated the comments earlier, but just wanted to check if you're waiting for any material rate case outcomes that could support the growth in 2025, maybe?
Speaker Change: I'll take that one. It's nice to hear from you today.
Speaker Change: Thank you.
Speaker Change: With GAS specifically at the macro level, you mentioned the regulatory outcomes. We are aligned with key customers that have announced or have in process pending regulatory decisions. So we're staying on top of that very closely. But I would mention that our number one priority is to grow and diversify our customer base.
Speaker Change: more customers using our gas services really means that two or three of them should they reduce spending.
Speaker Change: just won't have as great an impact on our results. Jim mentioned that we're also looking to engage using our gas capabilities, like with undergrounding, to expand into adjacent markets.
Speaker Change: One other thing I'd highlight on the gas business that's important, we made and announced a decision earlier this year to consolidate our U.S. gas business under one president.
Speaker Change: We did that for a reason. We're really focused on using scale when you consider the size of that business and the footprint. We want to use scale across all these geographic locations to drive down our costs.
Speaker Change: So, when I think about the gas business, I think about, you know, kind of more customers to reduce the risk of two or three, reducing spending, existing capabilities into adjacent markets, and then we're going to use scale to drive down costs.
Speaker Change: Thank you. And we will take our next question from Stephen Fisher with UBS. Please go ahead.
Stephen Fisher: Thanks. Good morning. You mentioned that you have some nice bid opportunities out there for a few quarters out. Just curious, can you talk about how the competition
Stephen Fisher: is looking for bid work in general and maybe if you can just give us an update on this, the overall targeted mix that you have for bid work versus MSA work.
Speaker Change: Jim, you want to address the competition and I can maybe take the...
Speaker Change: second part of the question. Good morning, Stephen. Jim here. To your point, this
Speaker Change: It's a great reminder that everything we do is competitively bid. The vast majority of the work we have earned over time is roughly 90% with regulated.
Speaker Change: utilities, investor-owned utilities across the United States and Canada, and to be clear, we are in a competitive bid environment each and every day. But it's also worth pointing out that the trends continue to suggest that our mainstay customers and new customers
Speaker Change: have more work than resources, and so in turn, turning more to outsourcing, and especially to scale players, puts us in a position to be able to
Speaker Change: land and successfully execute on those opportunities and when we look at the market in general
Speaker Change: every piece of research that we track.
Speaker Change: suggest a continuation of growth in their CapEx spending, which as you know is the place in which we participate most frequently. So from that perspective, not significantly new or changing on the front, but it's much of the same of what we faced across the history of our organization and will going forward.
Speaker Change: Yes, Steve. Thanks, Jim. I would just highlight that.
Steve: This growth, first of all, we haven't set a target for kind of bid or project work as a total portion of our mix, but we have discussed kind of going across these smaller-scale bid opportunities. But the key point here is it's going to be risk-informed.
Speaker Change: And we're going to move our way into this. We already have. We've announced a few.
Speaker Change: few projects, but we're going to do this in a risk-informed basis so we can kind of move the company away from MSAs over a longer period of time in a very thoughtful and kind of efficient way so we don't put the company and kind of the financials at risk as we move into this so
Speaker Change: It's a great opportunity for us, but we're going to do it smartly.
Speaker Change: That makes sense. Then maybe if you could just talk about the lower productivity you had on a few of those jobs related to the equipment issues. How many projects are we talking about? Where are they in their percentage of completion?
Speaker Change: what was the actual dollar amount of the impact in the quarter and maybe how you can mitigate that risk going forward.
Speaker Change: Yeah, I mean there was just a handful of jobs. They are largely complete or will be largely complete before the end of the year.
Speaker Change: And, you know, it really relates to, you know, certain equipment that we had, boring equipment and the rods.
Speaker Change: unfortunately broke. That is just the nature of our construction businesses as we're doing work.
Speaker Change: you know, things will tend to break down and we need to, you know, obviously fix and correct those. But it was, you know, fairly just a handful of jobs.
Speaker Change: Thank you.
Speaker Change: And we will take our next question from Drew Chamberlain with J.P. Morgan. Please go ahead.
Drew Chamberlain: Yeah, good morning, and thank you for taking our questions. I just kind of want to start with the decline in the backlog, and I obviously appreciate the, you know, the moving parts that can go into that, but just, you know, how do you think about the bookings in this quarter and then plus what you're hearing just generally from your customers and how you feel like that sets you up for coverage into 25 and really what their, you know, early signs are for, you know, expected spend levels into 25.
Speaker Change: You want to take that one? Yeah, good morning Drew. From a backlog perspective, we mentioned that historically
Speaker Change: with being a heavy MSA business.
Speaker Change: the backlog will fluctuate based off of when those MSAs term out, and while they are multi-year,
Speaker Change: It's also good to point out that over the last decade, we have successfully renegotiated and extended virtually every MSA that we've had.
Speaker Change: So, in a lot of ways, it's just a timing thing.
Speaker Change: But, it's also important to point out that we look at backlog in a bifurcated way in that we have our MSA backlog and then our project backlog.
Speaker Change: And generally speaking, as we go forward, the messaging for many of our longstanding customers is that it's a stable environment. So what we have experienced in 24, we don't anticipate meaningful difference.
Speaker Change: in the work that they're deploying. But moreover, the consistent theme here, once again, is that our existing customers and those that we've purposely gone out and met with their executives and working with their organizations to find ways in to those new organizations.
Speaker Change: All of them are messaging is that over time they have more work and resources to be able to complete it. And so we're bullish on the prospects long term, and rest assured we are working each and every day to put ourselves in a position to win.
Speaker Change: Okay, thanks Jim. And then just one other, I noticed the slide said that the storm restoration work from the hurricanes this fall is ongoing. I mean is there still material work that's being done and maybe you know what's embedded into the the rest of the the 4Q guide that might be incremental to the to the 50 that's already been done?
Speaker Change: Thank you.
Speaker Change: We don't have any current ongoing storm restoration work that's beyond what I already announced.
Speaker Change: Thank you.
Speaker Change: And it appears that there are no further questions at this time. I will now turn the program back to Paul for any additional or closing remarks.
Paul Caudill: Thanks, Madison, for your help this morning and for all of the participants. We really appreciate your interest in Century. Be safe and have a great rest of the week. Thank you very much.
Madison: Thank you.
Speaker Change: Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.
Speaker Change: [music]
Speaker Change: Now I'm back to doing loading screens because of the time.
Speaker Change: Thank you!
Speaker Change: Thank you.