Centuri Holdings, Inc.

Please stand by, your program is about to begin. If you need assistance during your conference today, please press star zero. Good day, everyone, and welcome to Century's third 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 Wilcock, Chief Legal and Administrative Officer and Corporate Secretary for Century. Please go ahead, sir.

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. The slides accompanying today's call are also available on Century 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 meeting of the Private Securities Litigation Reform Act. 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. This cautionary note, as well as the note regarding non-GAAP measures, is included on slides two 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 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.

Thanks, Jason, and thanks for your interest in Century. I'm excited to join today's call to discuss the progress we've made with Century's leadership transition process. 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. 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. PRIVATELY HELD GLOBAL E&C COMPANY, AND PREVIOUSLY AS CEO OF KIM'S ENGINEERS AND CONSTRUCTORS, A FTSE 250-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 ITSELF TO S&C LAVALIN, A TSX-LISTED E&C COMPANY. IN ADDITION TO HIS EXPERIENCE, THE BOARD WAS ATTRACTED TO CHRIS'S STRATEGIC APPROACH his collaborative style, his proven proficiency of growing sales, and his expertise in building teams at organizations. I believe Chris will prove to be a great leader for Century. Our entire board is enthusiastic about Chris joining the Century team, bringing his commercial, operational, and engineering background to our organization during a transformative time. Chris has a deep understanding of the utility and infrastructure sector, major energy and electric utility companies. I am confident that Chris's 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. We welcome Chris to the team and look forward to him starting with the company on December 3rd. 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 the past few months. On behalf of the entire Sentry Board, I want to express our deep gratitude to Paul for his longstanding support and commitment to Sentry. Paul.

Thank you, Karen. And good morning, everyone. I appreciate you participating in the call with us today. We hope following today's call, you'll take away an appreciation for three main things. Number one, our results on the quarter. Number two, how we're intentionally leveraging our skilled platform to approach growth and diversification. And number three, our ongoing focus on cost control and disciplined capital allocation. Century's strength lies in building long-term partnerships with our utility and energy customers, earning their trust through our performance. 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. Nothing is more important to all of us at Century than safety. 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. I could not be prouder of their efforts. Over the last 10 months, I've gained a deeper appreciation for the opportunities ahead for the companies, Century is fortunate to be at the intersection of evolving energy needs and infrastructure growth. From electrification and renewables to advanced manufacturing and data centers, the demand for grid interconnections, local transmission, and substation upgrades is on the rise. Our core expertise, strong resume, and geographic footprint has positioned us to compete for and win new work in these markets. To be clear, we are intensely focused on winning smaller scale bid opportunities, some with new customers, that match our core competencies and risk profile. This includes pursuing projects like renewable natural gas, hydrogen, and carbon capture. We feel strongly that our capability with underground work is a great fit. Think fiber for broadband and the significant investment in utility services needed to construct a data center as a couple of examples. 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. Now turning to our results. We have experienced improvement in our electric business, a positive trend that began in July and has continued. This includes the incremental onboarding of additional electric crews to existing customer properties during the quarter. We also delivered strong performance in storm restoration services, driven by the impacts of hurricanes Beryl and Haleem. We did not face any significant new regulatorily driven spending delays among our current customer base. However, spending under MSAs, particularly in our U.S. gas business, remained relatively subdued. We also encountered a few unique challenges during the period, including equipment and insurance-related costs that impacted results mainly in U.S. gas. With these factors in mind, let me address directly several dynamics important to our business and how we have addressed them. First, as just mentioned, our U.S. gas business has faced more muted customer spending under MSAs. It's a trend that is not unique to our company. Cyclical market dips or adjustments are a risk inherent to almost any business. We remain bullish on the future of natural gas as a key part of North America's energy future. We are mitigating market risk through diversification of the broader business and maintaining a relentless focus on cost discipline. The century business you see today has been intentionally and purposefully built. 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. We set a strategy to round out our services platform and diversify into electric infrastructure services. Today, Century offers a nearly level split between gas and electric services and a fully scaled platform across geographies. In that time, we also build out the storm restoration business line. We will continue down this path. We're working collaboratively across our operating companies to grow both the electric and gas sides of the business. And we'll deploy our core capabilities into adjacent markets. As we noted earlier, SG&A cost reduction and control of capital expenditures remains a critical focus. 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. We estimate that these initiatives benefited our third quarter results by approximately $6.4 million. In the second quarter call, we also highlighted our fleet and supply chains savings initiatives. During the third quarter, we renegotiated an additional four major supply chain contracts, bringing the total contracts successfully negotiated to 14 since we began this process. 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. As it relates to capital, we are focused on sharing equipment where possible across our business, which has benefited CapEx in the third quarter. 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. 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. 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. In MSAs, our US gas business secured an award from a first-time customer in Appalachia. This multi-year award has estimated revenue of $60 million in total. If performance meets our expectation, project or bid work from the same customer and others in nearby geographies this competitively bid award reflects directly on our U.S gas businesses execution and performance with this customer 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 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. Though relatively modest in size, the project highlights our ability to adapt to the ever-evolving needs of longstanding MSA clients and to be a partner of choice to deliver our services wherever they choose to spend their CapEx. 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. 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 to respond when our customers need us. Although we'll never be able to predict the weather, be assured the success of our storm capability is not by accident. It's through very deliberate and intentional effort in building up and positioning this capability with our customers and prospects alike. I'll also note our business is performance based and we continue to see our successful storm response be an important door opener for longer term opportunities to serve new customers. Turning now to offshore wind. 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 2, a 1200 megawatt offshore wind project in New England. 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. 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. This project, set to power nearly 600,000 homes with renewable energy, supports New York's goal of 70% renewable energy by 2030. 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. In the third quarter and continuing through the fourth quarter, 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 the end of the second quarter to $4.3 billion at the end of the third quarter. Looking ahead, as we pursue growth, we anticipate growth by securing additional larger strategic bid awards. 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. 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. Being more closely tied to our existing customers and prioritizing a further diversification of our customer base is key. In summary, we are excited about the opportunities ahead and look forward to sharing more progress going forward. I'll now hand it over to Greg Eisenstark, our CFO, to dive into the third quarter results. Greg?

Thank you, Jim, and good morning to all who joined our call today. 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. 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. On a gap 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 $0.04, down from net income attributable to common stock of $16.2 million, or diluted earnings per share of 23 cents in the same period last year, driven in part by the operational items just mentioned, along with changes in our effective tax rate. 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. Adjusted EBITDA margin was 10.9%, for the quarter and 8.7% year-to-date. These percentages are on target with our full year guidance and have benefited from the business initiatives Paul outlined earlier. 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. The $8.9 million difference between our adjusted net income and net loss included several mostly non-cash items, 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, as well as a $1.7 million loss on early extinguishment of debt. Before turning to segment results, a few words on our restoration services efforts. Through our territories, we have dispatched more than 3,500 employees throughout 2024 to respond following severe weather events. This generated $87 million in revenues during the first three quarters of 2024, including $41.4 million in the third quarter alone. 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. 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. 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. Through 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. 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. Now to each reportable segment. Revenue from our U.S. gas segment totaled $366.1 million, reflecting a year-over-year decrease of 7.5%. 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. However, spending remained relatively subdued as we expected coming into the period. Gross profit margin in the segment decreased to 7.6% in the current period from 13.2% in the prior year period. Impacting this were several factors, including the higher margin bid job in the third quarter of 2023, an overall mix of bid work, lower utilization of fixed costs, lower productivity caused in part by operational issues, including equipment breakages, that led to higher rental and repair and maintenance costs, and corresponding downtime, and unfavorable adjustments arising from self-insurance claims for work conducted in prior years. Revenue from our Canadian gas segment totaled $50.4 million, reflecting a decrease of 7.8% compared to the third quarter of 2023. 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. 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. In offshore wind, we were primarily impacted this year by the October 2023 cancellation of Orsted's ocean wind project in New Jersey. 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. Thus, on a core Union Electric basis that excludes the lumpier offshore wind and storm restoration services subsegments, we experienced modest year-over-year growth of 7.1% for $9.7 million. 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. 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. 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. 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 discipline. This drove a healthy conversion of adjusted EBITDA to free cash flow of 78%, which is above recent levels. In late September, we entered into a three-year accounts receivable securitization facility in the aggregate amount of up to $125 million. Proceeds from our utilization of this facility were primarily used to repay amounts outstanding under existing term limits. We are continuously evaluating opportunities to optimize our financing structure, and securitizing our AR has allowed us to lower our interest expense. 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. We ended the quarter with $52.5 million in cash and cash equivalents on the balance sheet and remain focused on delivering the business to be closer to our infrastructure services peers. Lastly, turning to our outlook, we are reiterating our guidance on full year 2024 revenue, adjusted EBITDA margin, and net capital expenditures. At the midpoint of our guidance, we continue to expect our leverage at year end 2024 to be in the mid-threes, 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, including growth with customers existing and new, and deploying our capabilities to serve adjacent markets. We see ongoing infrastructure investment from programmatic customer spend combined with federal investments in grid expansion, clean energy, and safety as key tailwinds driving our company forward. 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. We aim to continue a thoughtful and intentional plan to grow the business, ultimately delivering value for our shareholders. Against this backdrop, we will continue to operate our business with strong emphasis on capital discipline and cost control as we work to cement our reputation as a long-term partner to our utility and energy customers. I remain very excited about the future of this company and beginning next month under the leadership of Chris Brown, and I'm grateful for the opportunity to have been a part of building Century's strategic path as it moves forward. Thank you for your time today and for your continued support. Madison, you can start the Q&A session.

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. And we will take our first question from Justin Hawkey with Baird. Please go ahead.

Oh, great. Good morning, everybody. So I guess I've got a couple of questions. Let's see. I guess the first one, 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. You know, I think you guys talked about historically you do like you know, 75 million and, you know, the margins on that work are, 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?

Good morning, Justin. So I guess I'll start on that. Obviously, we don't have a lot of control over storms, but we have done, given the location of the storm activity, about 50 million in the fourth quarter, and your number for the full year is fairly accurate. 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. 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. But we are, you know, we are seeing also a little bit on the union electric side some delays in awarded bid work. And so that is also playing into our our full year projection. But overall, we are very confident in our in our guidance. We reiterated it this morning and we're comfortable where we sit today.

OK, thanks for that. And then I guess my second question would just be around some of these programs. I just want to make sure I understood the numbers that you talked about. The $12 million annualized savings, 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. Is that $12 million just what you did incremental? Or I guess, where are you against recognizing that full $29 million?

So those are two different buckets the 29 million dollars that we announced in the second quarter is annualized cost savings related largely to headcount reductions of that we recognized about six and a half million dollars in the third quarter um and and the 12 million dollars that you're referencing is more on the supply chain in the fleet side of that amount about 10 million dollars is reductions that we've gotten related to our capital spend, and about $2 million is estimated to be more kind of 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.

Thank you. And we will take our next question from Joe O'Day with Wells Fargo. Please go ahead.

Hi, good morning. Thanks for taking my questions. 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?

I mean, you know, from our non-union electric perspective, you know, I'll again highlight, you know, we're really encouraged by the demand to increase our crews from our, you know, core electric customers. 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, have a nice pipeline of some delays in timing related to those, but across both businesses we're seeing encouragement on the electric side.

And then on the supply chain side, just in terms of how you think about moving forward, I think you talked about maybe about 20 percent of agreements that have been reviewed. Just the timeline that you set for going through those, you know, anything from sort of a full, the value of the full opportunity as you make your way through those reviews.

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. We're working through, you know, the more significant ones first and obviously trying to make progress each and every quarter, but It will take a little bit of time for us to work through all of that and then a little bit more time for it actually to fully appear or for us to fully get our benefit in our results. But we are continuing to make good progress on the supply chain renegotiation front.

Thank you. And we will take our next question from Sangeeta Jain with KeyBank. Please go ahead.

Great. Thank you so much for taking my question. Craig, 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 the results of the elections, et cetera?

Good morning. So yes, we do have roughly $100 million in backlog related to offshore wind. That's for both the fourth quarter and And, you know, as far as the election, I think it's probably a little early for us to comment on that, just given, you know, how recent the announcement is. But from our perspective, we're really comfortable with the offshore wind work that we have. 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, you know, take advantage of our first mover advantage in that space.

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? Yeah, I'll take that one.

It's nice to hear from you today. With gas specifically at the macro level, you mentioned the regulatory outcome. 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. More customers using our gas services really means that two or three of them, should they reduce spending, 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 to expand into adjacent markets. One other thing I'd highlight on the gas business that's important. We made and announced the decision earlier this year to consolidate our US gas business under one president. 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. 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.

Thank you. And we will take our next question from Steven Fisher with UBS. Please go ahead.

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 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.

Jim, you want to address the competition?

I can take the... Good morning, Steven. Jim here. To your point, 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 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 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 land and successfully execute on those opportunities. And when we look at the market in general, Every piece of research that we track suggests 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've faced across the history of our organization and will going forward.

Steve, thanks Jim. I would just highlight that this growth we 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 and we're going to. We're going to move our way into this. We already have. We've announced a few. 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'll put the company and kind of the financials at risk as we move into this. So it's a great opportunity for us, but we're going to do it smartly.

Does that make sense? And 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? What was the actual dollar amount of the impact in the quarter? And maybe how you can mitigate that risk going forward.

Yeah, I mean, there was just a handful of jobs. um they they are largely complete or will be largely complete before the end of the year um and you know it really relates to you know certain equipment that we had uh boring equipment and and the rods um unfortunately broke that is just the nature of our construction business as we're doing work uh you know things do uh will will tend to break down um and we need to you know obviously fix and correct those um and so But it was, you know, fairly just a handful of jobs.

Thank you. And we will take our next question from Drew Chamberlain with JP Morgan. Please go ahead.

Yeah, good morning and thank you for taking our questions. I just kind of want to start with the decline in the backlog and 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 early signs are for expected spend levels into 25.

Do you want to take that one? Yeah. Good morning, Drew. From a backlog perspective, we mentioned that historically, being a heavy MSA business, the backlog will fluctuate based off of when those MSAs term out. And while they are multi-year, 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. So in a lot of ways, it's just a timing thing. 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. 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 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, 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

uh we're working each and every day to put ourselves in a position to win okay thanks jim uh and then just just one other i noticed the slide said that the 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

We don't have any current ongoing storm restoration work that's beyond what I already announced.

Okay. Thanks, Greg.

Thank you. 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.

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.

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.