Wells Fargo Industrials & Materials Conference Day 1 Afternoon Takeaways—SPXC & CTRI

Research evidence excerpt

Wells Fargo Industrials & Materials Conference Day 1 Afternoon Takeaways—SPXC & CTRI

Wells Fargo Industrials & Materials Conference Day 1 Afternoon Takeaways—SPXC & CTRI Equity Research

Investment Thesis, Valuation and Risks

Centuri Holdings, Inc. (CTRI)

Investment Thesis

We think CTRI brings together a solid foundation of loyal customers engaging under multi-year master service agreements, with secular

exposure to higher electric grid investment demands and an attractive inorganic opportunity set over time. Near-term, operational

execution driving cash generation for de-leveraging is the single most important factor to driving multiple expansion, in our view. We rate

CTRI Overweight.

Target Price Valuation for CTRI

Our $37 price target is ~15x EV/EBITDA on our NTM adj EBITDA estimate, a mid-teens % discount to peers. Operational execution driving

margin expansion on strong revenue growth is key to rel val expansion.

Risks to Our Price Target and Rating for CTRI

• Shortfalls in margin expansion progress

• Execution missteps in transition to balanced lease-and-own fleet strategy

• Project execution with pursuit of additional bid work

• Customer concentration: ~50% of revenue is derived from top 10 customers and ~70% of revenue is derived from top 20 customers

• Potential for long-term MSA contracts to be terminated or not renewed

SPX Technologies, Inc. (SPXC)

We rate shares of SPXC Overweight. We expect continued earnings outgrowth vs. EEMI on MSD+ organic growth over the next two years

with continued margin expansion. Organic growth includes a LSD+ CAGR contribution from data center. In addition, we see attractive

M&A capacity to build on an already strong track record of capital deployment to deals. Steady replacement demand, capacity expansion