Centuri Holding - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered a revenue beat and improved year-over-year profitability metrics, supported by record bookings ($1.20B+), backlog expansion to $4.5B, and stronger Electric segments; guidance for FY 2025 was affirmed, with management signaling trajectory toward the upper end of revenue range.
• Revenue was $550.1M vs $528.0M in Q1 2024 and above consensus ($537.6M*); adjusted diluted EPS of $(0.12) beat consensus ($(0.15)), while adjusted EBITDA of $24.2M came in below consensus ($29.2M).
• U.S. Gas was pressured by harsher winter and mix, yielding negative gross margin (−7.5%), offset by strong Non-union Electric (gross margin 11.9%) and improving Union Electric; Canadian Gas margins were robust (17.8%).
• Management emphasized record awards, a ~$12B opportunity pipeline, minimal expected tariff impact, and capital efficiency progress (net debt/adj EBITDA 3.5x; FCF improvement $44.6M vs prior year); catalysts include momentum in data center-related infrastructure and grid resiliency programs.

What Went Well and What Went Wrong

What Went Well

• Record bookings of over $1.2B drove a 2.2x book-to-bill and backlog growth to $4.5B; “Awards have been very strong and diverse…on track to deliver revenue at the upper end of the guidance range for the year” (CEO).
• Non-union Electric revenue up 41.9% YoY to $137.1M with gross margin rising to 11.9% on higher crew counts, hours worked, and resiliency/storm work efficiency.
• Canadian Gas delivered 17.8% gross margin (vs 7.5% LY) despite modest revenue decline; management highlighted stronger contract structures and execution.

What Went Wrong

• U.S. Gas revenue fell 12.7% YoY to $197.7M; gross margin declined to −7.5% on weather-related inefficiencies and a slower start across certain customers.
• Offshore wind revenue declined $22.3M YoY within Union Electric as projects wound down; segment gross margin remained modest at 6.7%.
• Adjusted EBITDA of $24.2M missed consensus ($29.2M*), reflecting seasonal weakness and segment mix even as revenue and adjusted EPS beat.

Transcript

Operator (participant)

Greetings and welcome to Centuri's First Quarter 2025 Earnings 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, Jason Wilcock, Centuri's Chief Legal and Administrative Officer and Corporate Secretary. Please, you may begin.

Jason Wilcock (Chief Legal and Administrative Officer and Corporate Secretary)

Thank you, Joelle, and hello, everyone. We appreciate you joining our call. This morning, we issued and posted to Centuri Holdings' website our first quarter 2025 earnings release. The slides accompanying today's call are also available on Centuri Holdings' website. 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, based on management's assumptions on what the future holds, but are subject to several risks and uncertainties, including uncertainties surrounding the impact of future economic conditions and regulatory approvals.

A cautionary note, as well as a note regarding non-GAAP measures, is included on slides 2 and 16 of this presentation, today's press release, and our filings with the Securities and Exchange Commission, which we encourage you to review. 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 statement. Today's call is also 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 from Centuri Holdings the following members of the leadership team: Chris Brown, President and Chief Executive Officer; Greg Izenstark, Chief Financial Officer. I'll now turn the call over to Chris.

Christian Brown (President and CEO)

Thank you, Jason, and hello, everybody. We appreciate you joining us for our first quarter 2025 earnings call. Let me start by briefly addressing the delay in the timing of our earnings announcement and the call. We had an issue arise late in the process of finalizing our financial statements for the quarter that caused the delay. The issue is now being resolved, and we do not intend to go into any further detail on this topic. We look forward to discussing our Q1 results with you today. During the quarter, we experienced a strong commercial momentum during the period and delivered results that exceeded our expectations. I'm proud of these achievements and look forward to expanding on them during our call. A big thank you to the Centuri team for their dedication and hard work in driving these outcomes.

Before diving into our progress and business update, I'd like to briefly address the macroeconomic uncertainty that's on everybody's mind. We currently do not anticipate significant impacts from the global trade war or the tariffs on our business during 2025. Our business model offers natural resistance during challenging times. Our MSA-weighted portfolio focuses on regulatory-approved utility programs, which historically are generally insulated from market fluctuations. In addition, we are actively working to expand our sales pipeline to grow our business and diversify our exposure, thereby mitigating further risk. Please also note that in most cases, we do not procure our own materials. I spent a good deal of time throughout the quarter traveling to meet with customers, those whom we already do business with, as well as prospective clients.

I've been extremely encouraged by these engagements, as largely they are confirming their budget commitments and expressing an undeterred need for infrastructure, maintenance, upgrade, and expansion. Given that our fabric guidance embedded an appropriate level of caution, our outlook for full year 2025 remains unchanged. Looking ahead, we plan to consistently monitor day-to-day developments and be ready to adapt as circumstances evolve. I think we could actually see more activity and not less based on these engagements with customers that I've had over the last four months. With that said, let's now review Centuri's strategic priorities and our progress. On the February call, I emphasized how impressed I am with Centuri's exceptional scale, reach, and capabilities. Combined with our dedicated team, these attributes position us as a leading utility service provider.

Our strong platform enables us to deliver critical infrastructure upgrades and maintenance to gas and electric utility and energy partners serving millions across the U.S. and Canada. We believe this foundation also strategically positions us to expand our market presence and capitalize on generational tailwinds created by demand, where opportunities abound across our core end markets. Throughout my conversations with the investment community these past few months, I've consistently highlighted our priorities as we work towards achieving our potential as a fully scaled, integrated company with a strongly differentiated service offering. Our top focus has been implementing a unified company-wide business development strategy focused on high-growth pipeline development, refined market positioning, winning business strategies, and securing new awards. We must grow with our existing customers, add new customers, and continuously pursue new opportunities, all of which require both process enhancement and a fundamental mindset shift.

Since the beginning of 2025, we've made significant progress on this front. On our last public call, we shared the kickoff of a comprehensive evaluation of our pipeline tool and internal sales and business development process. This review is now largely complete. Initial resulting actions have been fully implemented and are already providing tangible benefits and enhancing how we manage the business and make real-time decisions. Now institutionalized in our culture, this will remain a dynamic process that requires oversight and ongoing maintenance and is part of our organizational DNA. To support it, we have and will remain focused intensely on instilling a proactive growth mindset across the organization. We've aligned our KPIs top to bottom with company-wide growth targets and fostered broader thinking and collaboration across the organization.

Moving on into the second and third quarters, we plan to take a deeper examination of our end market's long-term potential as part of a strategic planning process that will result in the development of actionable, measurable initiatives to further improve profitable growth and business resilience taking us into the next three to five years. We will plan to elaborate more on the results of this process in the fourth quarter. Turning to recent business development activity, we are very encouraged by the recent robust growth in our sales pipeline, which is now approaching $12 billion in revenue opportunities, and we remain confident in our ability to achieve a book-to-bill ratio exceeding 1.1x this year, as laid out in the February call. Importantly, we have been working towards this at an aggressive pace with a strong start to 2025.

Specifically, we have achieved a record booking quarter with new bookings totaling $1.2 billion in the first quarter. This is a significant increase over the $221 million we booked in 2024 in the fourth quarter. These bookings drove a book-to-bill ratio of 2.2x and an increase in backlog to $4.5 billion as at Q1 2025 from the $3.7 billion as of year-end 2024. We have begun to keep the market appraised of our commercial achievements on a more real-time basis, demonstrating our commitment to growth targets and accountability. As such, many of the awards in our bookings number were captured in press releases we issued in late March and April. You can review those for additional color, so I won't delve too deeply into details, but do want to highlight a few key points.

Consistent with our history of viewing all of our MSAs, our Q1 bookings represented approximately $700 million of anticipated $2 billion in revenue from MSAs that we previously flagged up for renewal in 2025. We expect to continually successfully negotiate renewals and extensions of long-term contracts through the remainder of this year. Beyond that, we've been laser-focused on expanding our customer base through exploration and pursuit of new opportunities within our end markets. This focus resulted in approximately $505 million of new MSAs and new bid awards won during the first quarter. These new bookings span our segments, regions, and end markets and include a significant new customer MSA to provide essential grid resiliency for a leading U.S. electric utility in the Southwest. Our project is estimated to generate tens of millions in revenue and electrical infrastructure work for data centers and two new gas MSAs in the Pacific Northwest.

The new gas MSAs mark our return to a territory we exited several years ago and were made possible by our strong relationship with the customer from work performed in other territories in the more recent past. We expect the timing of renewals and varying award sizes to create some lumpiness in the magnitude of awards from quarter to quarter. However, we remain very bullish about the opportunity set ahead of us as we work to win more awards within our nearly $12 billion in identified opportunities. We are excited to continue to report our progress in the months ahead. Pivoting to business trends from the first quarter and today, starting with our gas business. During the quarter, the U.S. gas segment faced some impact from adverse early-year weather conditions compared to recent years, which had milder winters.

However, significant improvements in March put us back in line with expectations and continue to improve as we enter the second quarter. Greg will provide more details shortly. In our electric business, we are pleased with the first quarter's performance and current market dynamics. Our non-union electric segment is benefiting from strong market trends across the Sunbelt and Southeast, where the widespread impact of damage and outages caused by major storms last fall seem to be driving grid resiliency and hardening programs forward. In our more bid-heavy union electric business, bidding activity remains very high, and we are winning work, particularly in some of the more industrial-focused end markets, where we perform substation infrastructure and inside electric work. This includes data centers, which require significant infrastructure investment and construction time.

Looking forward, we are confident about our ability to maintain the positive trajectory we have seen across segments and delivering strong results in the coming quarters. Now over to Greg to elaborate on our results and our 2025 look. Greg?

Greg Izenstark (EVP and CFO)

Thank you, Chris, and good morning to those listening in. First quarter 2025 consolidated revenues totaled $550.1 million, a 4.2% increase from the first quarter of 2024, and consolidated gross profit was $20.3 million, which is a 53.1% increase over the prior year period. Gross profit margin of 3.7% in the first quarter of 2025 was higher than the 2.5% we reported in the first quarter of 2024. As a reminder, the first quarter is historically our slowest period, primarily due to the seasonal winter weather. Revenue exceeded our expectations, with most segments delivering year-over-year growth. Gross profit demonstrated improvement in the majority of our segments, with particular strength in our non-union electric segment.

On a GAAP basis, net loss attributable to common stock in the first quarter was $17.9 million, or a diluted loss per share of $0.20, improved from a net loss attributable to common stock of $25.1 million, or $0.35 on a per-share basis in the same period last year. In the first quarter of 2025, total company adjusted EBITDA, a non-GAAP figure, was $24.2 million, or approximately 20% higher from the prior year's quarter's $20.2 million. Adjusted EBITDA margin was 4.4%, up from 3.8% in the first quarter of 2024. Non-GAAP adjusted net loss in the first quarter came in at $10.5 million, or an adjusted diluted loss per share of $0.12, up from $14.4 million, or an adjusted diluted loss per share of $0.20 in the prior year period.

The difference between our GAAP and non-GAAP adjusted net loss primarily reflects the impact of amortization of intangible assets, as well as separation-related costs and non-cash stock-based compensation. Turning to our reportable segments, revenue for our U.S. gas segment totaled $197.7 million, reflecting a year-over-year decrease of 12.7%. Typically, our gas business is more impacted than our electric business segments when we experience very cold weather and snow. The majority of gas work involves digging, trenching, and boring, all of which are challenging when temperatures are below freezing. As many of you can attest, we had a much harsher winter than not only last year, but relative to the last several years. Centuri was particularly hard hit in the central and southern Great Plains and the southern portion of the Mid-Atlantic.

Gross profit margin in the segment decreased to -7.5% in the first quarter of 2025 from -1.8% in the prior year period. This decline was due, again, to the inefficiencies caused by weather disruptions and from a sluggish start to the calendar year across certain customers. As Chris mentioned, March saw significant improvement in work volume and improved margins that continued into the second quarter. As discussed on our February call, we began taking steps to structurally improve our contracts and cost structure in this segment early in the year, and we look forward to much stronger segment results in the second quarter and beyond. Our Canadian gas segment remains a steady business with strong margins.

Revenue totaled $39.8 million, down 2.9% from the prior year period, while segment margin of 17.8% was more than double the prior year period's 7.5%, as profitability in the prior year period was negatively impacted by performance issues on certain bid projects. In our union electric segment, revenue was $175.5 million, an improvement of 7.1% year-over-year. Our core union electric segment, which excludes offshore wind and storm restoration services, experienced 32.7% growth year-over-year, driven by increased bid project activity, particularly in industrials work around substation infrastructure. Within the segment, offshore wind revenues were down 64.1%, or $22.3 million, as project work winds down in line with our expectations. Gross profit in the union electric segment was 6.7% in the first quarter of 2025, largely in line with the first quarter of 2024. Non-union electric segment revenue in the first quarter of 2025 was $137.1 million, a 41.9% increase year-over-year.

Core non-union work increased 27.1% during the period, primarily due to an increase in volumes on MSAs as we deployed significantly more crews and had higher work hours during the period. Segment gross profit increased meaningfully to 11.9% in the current period compared to 2.9% in the prior year period. This reflected the favorable impact of more efficient utilization of fixed costs due to an increase in resiliency work that drove higher crew counts and hours worked, as well as an increased contribution for more profitable storm work. Turning to capital expenditures, in line with our capital efficiency program outlined in the February call, net CapEx was $23.2 million, down from $24.6 million in the prior year period, and our free cash flow in the first quarter of 2025 improved by $44.6 million compared to the first quarter of 2024.

Moving into some balance sheet highlights, on a trailing 12-month basis, our net debt-to-adjusted EBITDA ratio improved to 3.5x at March 30, 2025, from 3.6x at December 29, 2024. We ended the quarter with $15.3 million in cash and cash equivalents on the balance sheet. Growing our business in a capital-efficient manner remains a core strategic priority. As Chris discussed in February, enhancing capital efficiency by refining our capital equipment sourcing and fleet management and reducing working capital levels through improved AR and DSO management are among Centuri's key strategic priorities. We are progressing on all of these fronts with a goal of improving free cash flow and further strengthening our balance sheet. Finally, turning to our 2025 outlook, for revenues, we affirmed we expect to deliver between $2.6 billion and $2.8 billion. For adjusted EBITDA, we retained our outlook of generating between $240 million and $275 million.

Finally, on CapEx, we continue to forecast our net spend to be between $65 million and $80 million. Chris mentioned it, but I'll repeat it. At this time, we do not foresee a material impact from tariffs on our business. We plan to, of course, continue to follow any developments and the resulting effects on our business as we move through the weeks and months ahead. Over to Chris to conclude our prepared remarks. Chris?

Christian Brown (President and CEO)

Thank you, Greg. Centuri remains committed to delivering structured, profitable growth. To summarize, we are well underway in implementing a unified business development strategy. We have enhanced our pipeline management and sales strategies and are fostering a growth-orientated culture. Our business performance is off to a solid start in 2025. Awards have been very strong and diverse, and market trends are driving growth across both our gas and electric segments. The work under contract and the highly probable opportunities suggest that we are on track to deliver revenue at the upper end of the guidance range for the year. Simultaneously, we continue advancing our other strategic objectives, improving capital efficiency and performance by optimizing funding sources and reducing working capital.

Our core end markets remain strong, with capital investments reaching double-digit growth driven by increasing demand for energy resilience, which gives us confidence to maintain our full-year 2025 forecast introduced in February. Thank you very much for your time and support. We look forward to providing additional updates on our achievements. Operator, you may start the Q&A session.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. We request that our callers limit their questions to one question and one follow-up. Your first question comes from Drew Chamberlain with J.P. Morgan. Your line is now open.

Drew Chamberlain (Equity Research Associate)

Thanks for taking the questions. First one for me, can you just talk a little bit about the trajectory for 2025 and how you think you're still going to get to the—I mean, now it sounds like the upper end of the revenue guidance, despite the weaker Q1 in U.S. gas there. And maybe where is that other catch-up or rebalancing coming from? Is it gas being stronger throughout the rest of the year, or is it the other aspects of the business?

Christian Brown (President and CEO)

Drew, thanks for the question. It's Chris. The weather affected us in just January and February in the gas business, it bounced back, and we were at the expected margins in March and continuing into April. It was eight to nine days, I think, we lost in the first two months, which caused the slower-than-anticipated start for the gas business. As I say, it recovered in March and April. For the full year, we have work under contract. I'll just repeat what I said, as well as backlog that is pushing us towards the upper end of the guidance. All of the operating companies are well on track and forecasting that they will meet their budget expectations.

Even though the gas business has had a—U.S. gas business had a slower start in January and February, they fully anticipate about getting back to the level of performance we have budgeted for the year, and that formed the basis of our guidance. It is across all of the businesses that we are expecting delivery to the expectations, Drew. Gas was just a slightly slower start. There has been an overcorrection in March and going into April, but we still feel very good about the opportunities in the gas business, as well as the broader electrical, both union and non-union.

Drew Chamberlain (Equity Research Associate)

Okay. It's good to hear. Thanks, Chris. Maybe stepping back for a follow-up, can you just talk a little bit more about maybe some of the key findings of the strategic review? Obviously, good to hear that it's nearly wrapping up here, but maybe just if you could just talk to us a little bit about what you found as most valuable from that process.

Christian Brown (President and CEO)

I think there was some—if I break it down probably into four components. Structurally, we needed to make sure the business had a top-to-bottom across all operating companies, detailed available and live sales pipeline so we could generate analytics to provide us with the right level of information so we can make informed decisions on how we position ourselves in the market. I think we were still a little bit abstract across the five operating companies. Now we have got a fully integrated sales pipeline that basically is more forward-looking, allows us to make decisions around increasing the pipeline, decisions on pricing, decisions on positioning. The pipeline was one. Secondly, I think cross-selling is a term I think we have used in the past. We have got great capability across all the OpCos. We have got great scale. We have just been trying to maximize that and go to the market as one Centuri.

There has been a positioning of the broader company to our customers. The third thing is culture. I think everybody's objectives in the business who faces a customer should be not only delivering the services we're contracted to provide, but also identifying more work we can do for our customers. That's been a cultural shift. Probably the fourth part is, and I mentioned it in the prepared notes, having KPIs from top to bottom on both growth as well as increasing profitability in the business. They're the four areas.

Drew Chamberlain (Equity Research Associate)

That's great. Thank you very much, Chris. I'll pass it over.

Christian Brown (President and CEO)

Appreciate it.

Operator (participant)

Your next question comes from Steven Fisher with UBS. Your line is now open.

Steven Fisher (Managing Director and Equity Research Analyst)

Thanks, and congratulations on the progress. Just on the U.S. gas segment, curious how you would frame the loss relative to what you would have expected going into the quarter. I guess the bigger picture question here is really, is this a business or a segment that should generate a profit in Q1? Is that your sort of ongoing strategic target? If so, is there anything that structurally you need to do to be able to achieve that, or just every year you have to hope that the weather is going to be friendly enough to allow for a profit?

Christian Brown (President and CEO)

Steven, I'll answer the question around positioning the business in the future, and then Greg can answer the questions on what we would normally expect. There's no doubt when you do work in certain states, in certain regions of the country, the weather comes, and we can't control the weather. What we can do is help migrate the business further south so that we've got more sales opportunities across the Sunbelt and other parts of the country, both in industrial and traditional utility clients, so that we can get some size and scale into the pipeline in the lower states and mitigate the impacts of the weather, particularly in the Northeast, maybe even going across the West Coast.

The answer to your question is there's some work we have implemented to build up a pipeline of opportunities in states that are less affected by the weather so that we can become profitable earlier in the year. That's something we're ongoing with.

Greg Izenstark (EVP and CFO)

From an expectation perspective, Steven, good morning. What I'd say is Q1 is a seasonally slow period, most notably for the gas business, just given the weather conditions that I articulated in my prepared remarks. We still remain confident that the full year will perform as expected heading into the year.

Steven Fisher (Managing Director and Equity Research Analyst)

Okay. That's helpful. I think you still have the 1.1x book-to-bill target. Now with over 2x in the first quarter, should we expect some pretty—I know you mentioned lumpiness, but should there be some pretty kind of light quarters within that? What kind of visibility and cadence should we expect on the bookings from here? Thank you.

Christian Brown (President and CEO)

That's a good question, Steven. The strength of the bookings has continued nicely into Q2, and we track it weekly. So we've got good visibility on the full year. We've continued into Q2 with a very strong booking quarter. I think the 1.1x is definitely an achievable target for the full year. I think there are months of the year where the traditional MSA renewals are slower, and you then get a pickup as you move into the fourth quarter to the year close to the year end. To answer your question, I would foresee some lumpiness in the third quarter. The second quarter looks robust, and the fourth quarter, driven by not only MSA renewals but also some new bid work, will pick up again.

We are confident we will achieve, if not exceed, the 1.1x target, with Q3 probably being our quietest quarter, but Q2 and Q4 being pretty solid on bookings, both MSAs and new bid awards.

Steven Fisher (Managing Director and Equity Research Analyst)

Very helpful. Thank you.

Operator (participant)

Your next question comes from Justin Hawke with Robert W. Baird. Your line is now open.

Justin Hawke (VP and Senior Research Associate)

Great. Good morning. Thank you for taking the question.

Christian Brown (President and CEO)

Morning.

Justin Hawke (VP and Senior Research Associate)

Morning. I guess first one, just to clarify, the guidance, when you say the upper end of revenue, I did not hear you say the upper end of adjusted EBITDA as well. So I just wanted to kind of confirm what you are thinking on the EBITDA side and then maybe some comments on kind of the cadence and the seasonality, given that you had some slower starts in electric to kind of start the year last year, and maybe it is a little tougher in the back half or just kind of how to think about the contribution going forward.

Christian Brown (President and CEO)

I can take the guidance question. Look, we've not raised guidance because we're only a quarter in. We want to be cautious. As everybody knows, we've had a lot going on in the business and a lot of change. So we are cautious. What I would say to your question is, yes, the bookings, the backlog, and the very highly probable work is taking us towards the upper end of the guidance, as we said in our prepared notes. That's closer to $2.8 billion of revenue for the year. We don't see any impacts, and we don't see any dilution of our margins as we continue to drive growth into the business, nor do we see any margin erosion coming from competitive pressures. We're still very happy with the EBITDA margin, to answer your question.

In terms of seasonality, all of the businesses, with the exception of January, February, and the eight and nine days we had that affected the gas business up in the Northeast and Atlantic Coast, all of the businesses are showing strong Q2, Q3, Q4 all the way to year end. We do not see any further seasonality as we have come through the first quarter.

Justin Hawke (VP and Senior Research Associate)

Okay. Thank you. I guess my second question is, so obviously, a big part of the story this quarter was the really strong bookings, which we've already discussed, but I wanted to ask about the $505 million that's the new work. And some of that is new MSAs, as you mentioned, the one in Pacific Northwest, but then some of it are these strategic bids, which I know Chris has been something you've wanted the company to pivot towards. I guess I was just curious to understand kind of the risk profile of that work, the strategic stuff. Are those customers you've worked with in the past? And just how to get comfortable that it doesn't change kind of the lower-risk MSA profile? Thank you.

Christian Brown (President and CEO)

Justin, I will tell you the type of work we are performing just does stick into the knitting. It's as simple as that. It's the same services we've been providing for the last number of years. It's nothing new. It's nothing different. The risk profile's not changing. There's no need to change it. There's plenty of opportunity doing the same thing, the same type of services, the same forms of contract with many of the same customers. There's no shift at all in what we're doing, and it's just how we've positioned ourselves in the market and holding ourselves to account to actually find more opportunity. I wouldn't read in the 505, and it's continued as we've gone into the second quarter.

The focus to drive business is on these new opportunities and these new MSAs, but it's doing the same thing, the same services under the same type of risk profile that we do each year and have done so for many years. There is no change there. No need to.

Justin Hawke (VP and Senior Research Associate)

Okay. I appreciate the perspective. Thank you very much.

Christian Brown (President and CEO)

Appreciate it.

Operator (participant)

Your next question comes from Sangita Jain with KeyBanc Capital Markets. Your line is now open.

Sangita Jain (Senior Analyst)

Great. Good morning. Thank you for taking my question. If I can ask one more on margins, just trying to see if there are things that you will need to do as a result of the strategic review to get you to the full-year EBITDA margin, especially if it's a more normal storm year versus last year.

Christian Brown (President and CEO)

Thank you for the question, Sangita Jain. No. There's nothing radical. There's nothing different we need to do. From the inside, we are tracking the budget we expected to track that will deliver the full-year guidance. The backlog, the type of work, the expected bookings that we foresee in the next few weeks basically confirm to us we just got to execute and deliver to achieve this year's consensus. There's nothing abnormal to it. Yeah, there was a bit of disappointment in January and February with the weather, but again, we can't really change the weather. What was absolutely clear was the bounce back in March and April in the gas business, and that's now trending to exactly where we wanted it to be for the year.

Sangita Jain (Senior Analyst)

Great. Thank you. If I can ask on the new MSAs that you spoke about, can you just tell in more detail if you were able to displace incumbents on those or if that was an increase in the utility scope of work that allowed you to participate in these?

Christian Brown (President and CEO)

It was both to answer you clearly. We've been performing well with many of our customers. We've been spending time with our customers and asking if there are opportunities to do more and more of a stronger positioning. Not all of the competition perform as well as we do. We've seen opportunity to displace, but we're also seeing opportunity just because clients are spending more money. It is both, and that's continued as we've gone into the second quarter also.

Sangita Jain (Senior Analyst)

Great. That's good to hear. Thank you so much.

Christian Brown (President and CEO)

Thank you for the question.

Operator (participant)

Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Sherif El-Sabbahy with Bank of America. Your line is now open.

Sherif El-Sabbahy (Analyst)

Hi. Good morning. I just wanted to touch on.

Christian Brown (President and CEO)

Hi, Sherif.

Sherif El-Sabbahy (Analyst)

Doing well. Thanks. Just wanted to touch on the non-union electric. Storm was a substantial lift there. Could you give us a sense of what gross margin looked like ex-storm, just to give an idea of how much fixed cost absorption contributed to the improvement in the quarter?

Greg Izenstark (EVP and CFO)

Storm was about 10% of their revenue. It wasn't overly material. I mean, the drive in improved EBITDA margin or gross margin, excuse me, was really driven by the increased crews that we added, not just the ones in the first quarter, but also the 40 or so crews that we added in the last half of 2024 that we talked about in prior calls, and then just increased work hours, especially given some of the headwinds we had last year with work hours. We've really seen those return to more normal levels.

Sherif El-Sabbahy (Analyst)

Understood. Looking at the bookings, you had good bookings in the quarter. You touched on this a bit earlier with the lumpiness of MSA renewals. Can you give us a sense of typically, is Q1 the heavier renewal period for a lot of those MSAs? Can you give us a sense of what backlog looked like in the first quarter historically in 2022 or 2023, just to understand the typical MSA impact at the start of the year?

Christian Brown (President and CEO)

MSA renewals are mainly in the fourth quarter, is what the data set tells me. We can probably do the calculation on the backlog. Greg will look into that. The lumpiness is typically in the middle of the year in the utility clients where MSAs are renewing. Recall, our drive is to find new opportunities, new bid work, which is less seasonal. I did answer the question a little earlier. Q1 was busy across MSA renewals as well as MSA bidding as well as new bid work. Q2 is the same, although there are one or two MSAs that we expect to renew around about June 30, so they may go over the quarter, but we expect Q2 to be busy.

Q3 does not have a lot of MSA renewals, so it will be mainly bid work, which is why I said earlier it would be somewhat quieter. As we get into the fourth quarter, there are some larger MSAs that will be renewed, and there'll be also a significant amount of bid work we're anticipating. That's how I'd answer the question.

Sherif El-Sabbahy (Analyst)

Thank you.

Operator (participant)

There are no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.