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Arizona has a new publicly traded company.
Centuri Holdings Inc., a Phoenix-based subsidiary of Southwest Gas Holdings Inc., has spun off from its parent company and raised $292.6 million after expenses in its initial public offering.
Centuri, an infrastructure services company that helps regulated utilities build and maintain energy networks, began trading on Thursday on the New York Stock Exchange under the ticker symbol “CTRI.”
Centuri priced its IPO of 12.4 million shares at $21, on the high range of its proposed offering.
Investors seemed bullish on the stock, pushing the price higher in opening day trading. Centuri shares closed up just over 10% from the issue price, finishing at $23.13, up $2.13. At one point the shares reached a high of $23.75 earlier in the day.
Centuri has a post-IPO market valuation of about $1.82 billion based on 86.7 million outstanding shares of common stock, according to IPO paperwork filed earlier this month with the U.S. Securities and Exchange Commission.
“We're excited about where we're at,” William Fehrman, president and CEO of Centuri, told the Business Journal. “Obviously, separating from (Southwest Gas Holdings) frees us up for our operations as a public company and certainly gives us more tools to use as we look for acquisitions and other methods of growth.”
Centuri raised an additional $54.4 million in a concurrent private placement in which Icahn Partners LP and Icahn Partners Master Fund — the investment entities affiliated with billionaire activist investor Carl Icahn — have agreed to purchase nearly 2.6 million shares of Centuri common stock at the IPO price per share.
Company will use IPO proceeds to pay off debt
Centuri intends to use $150 million of the IPO proceeds and private placement to repay its existing revolving credit facility of $111.2 million, in addition to general corporate expenses and working capital, according to the regulatory filing.
“Right now, the plan is to take the net proceeds from the IPO and use it to pay down debt,” Fehrman said. “That's our intention and we're excited about doing that. It will get us in a much stronger balance sheet position to push forward with our ability to look at targeted acquisitions.”
Southwest Gas Holdings (NYSE: SWX), headquartered in Las Vegas, is an energy company that serves more than 2 million customers in Arizona, Nevada, and California. Last year, Southwest Gas announced plans to spin Centuri off into a separate, publicly-traded company by summer 2024.
“They also announced that post-IPO, they'll assess their options and either do a tax free spin or sell down or some combination thereof,” Fehrman said. “We will continue to communicate through the markets and let everybody know.”
Centuri targets growth through new projects, acquisitions
Centuri’s customer base consists of electric, gas and utilities companies that include American Electric Power, Exelon, NiSource, National Grid, Sempra Energy and Southern Company, among others.
Centuri primarily generates revenue from installation, replacement, repair and maintenance of utility infrastructure, including emergency system restoration after weather-related disruptions.
The company generated $2.9 billion in revenue in 2023, according to a regulatory filing associated with the IPO. It incurred a net loss of $78.9 million last year.
As of Dec. 31, Centuri had cash and cash equivalents of $33.4 million, according to the filing.
Centuri has more than 12,000 employees and operates in 43 states in the U.S. and two Canadian provinces. The company's growth strategy calls for expanding its scope of work for its existing customer base, in addition to seeking additional clean energy projects consisting of wind, solar, electric vehicle charging and battery-storage infrastructure.
Centuri is also targeting growth via acquisitions of other companies, Fehrman said.
“As we get separated from Southwest Gas, we'll have more opportunities to look for targeted companies to bring into the family underneath the Centuri name and bring an additional customer base into the organization,” he said.
Centuri operates its Phoenix headquarters at 19820 N. 7th Ave. The company is not looking to expand into a larger headquarters in the near-term, but could assess its needs based on future growth, Fehrman said.
"We're excited about remaining in Phoenix and using it as our base of operations and look forward to continued growth and partnership with the city,” he said.
