Centuri Holdings enters the second half of fiscal 2026 with the strongest revenue growth in its brief public-company history, and the operating question now is whether margin can catch up with the top line. Second-quarter consolidated revenue of $962M climbed 33% year over year, with every operating segment posting double-digit growth. Canadian Operations led the pack with 48% growth. The pattern is consistent across electric as well as gas segments. Reported gross margin compressed to 7.2% from 9.4% a year ago, but two discrete effects obscured the underlying picture.
A $9.0M revenue reversal on a legacy City of Chicago contract hit the gross-profit line. Fuel costs also created 75 to 140 basis points of pressure across segments. On management's preferred base-revenue and base-gross-profit construct, which strips out storm work and the Chicago reversal, trailing twelve-month base gross margin has already expanded to 7.8% from 7.4% a year ago. The trailing twelve-month view is the cleaner reading of the underlying franchise.
The investment debate is whether the integrated utility-infrastructure franchise Centuri is building through organic scale-up, the late-2025 Connect deal, and the August 2026 JJ White announcement can convert a strong revenue print into durable margin expansion. The second quarter showed a 33% revenue jump. The model argues for adjusted EBITDA margin to drift up by a couple of hundred basis points over time. Bookings of roughly $850M in the quarter and a record $16B opportunity pipeline argue that demand visibility is the strongest it has ever been. Adjusted EBITDA of $75.7M was up only 5% on that revenue surge, however, because investment in U.S. Gas mobilization, training, and temporary equipment for new MSAs is hitting the cost line right now. Management guides to a back-half base gross margin of roughly 9.0% under the One Centuri strategy. That back-half print is the variable that determines whether the second-quarter story is a transient cost ramp or a structural margin lift.
The strongest counterargument is that fuel volatility, customer concentration in regulated utilities, and a heavy debt load continue to compress cash conversion, with $15.0M of operating cash used in the first half against $48.1M of capex. The forward catalysts to monitor are the third-quarter base gross margin print, the integration of JJ White into the Union Electric segment, and the absorption of the City of Chicago reserve against further contract true-ups.