Dycom Industries, Inc. (DY) on Q4 2021 Results - Earnings Call Transcript

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Dycom Industries Fourth Quarter Fiscal 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Steve Nielsen, President and Chief Executive Officer. Thank you. Please go ahead, sir. Steve Nielsen: Good morning, everyone. I'd like to thank you for attending this conference call to review our fourth quarter fiscal 2021 results. Ryan Urness: Thank you, Steve. The statements made during this call may be forward-looking in nature and are provided pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all comments reflecting our expectations, assumptions or beliefs about future events or performance that do not relate solely to historical periods. Forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections, including those risks described in our annual report on Form 10-K filed March 2, 2020 and our other filings with the U.S. Securities and Exchange Commission. We assume no obligation to update any forward-looking statements. Steve? Steve Nielsen: Thanks, Ryan. Now moving to Slide 4 and a review of our fourth quarter results. As we review our results, please note that in our comments today and in the accompanying slides, we reference certain non-GAAP measures. Specifically, in accordance with our 52/53 week calendar, this quarter included a 14th week. All references to organic revenue and organic growth exclude the effect of this additional week. We refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures. To begin, I want to express my sincere hope that everyone listening to this call as well as their families are healthy and safe. We are living in truly unprecedented and trying times for our country. I could not be prouder of our employees as they continue to serve our customers with real fortitude in difficult times. They have my thanks. Now for the quarter. Revenue was $750.7 million, an increase of 1.8%. Organic revenue, excluding $5.7 million of storm restoration services in the quarter declined 6.2%. As we deployed 1 gigabit wireline networks, wireless/wireline converged networks and wireless networks, this quarter reflected an increase in demand from one of our top five customers. Adjusted gross margins were 14.3% of revenue, reflecting the continued impacts of the complexity of a large customer program. Adjusted general and administrative expenses were 8.5%, and all of these factors produced adjusted EBITDA of $45.7 million or 6.1% of revenue and adjusted diluted loss per share of $0.07 compared to a loss of $0.23 in the year-ago quarter. Liquidity was strong as cash and availability under our credit facility was $570.5 million. Drew DeFerrari: Thanks, Steve, and good morning, everyone. Going to Slide 8. Contract revenues for Q4 were $750.7 million and organic revenue declined 6.2%. Q4 '21 included an additional week of operations due to the Company's 52/53 week fiscal year. Adjusted EBITDA was $45.7 million or 6.1% of revenue compared to $44.5 million or 6% of revenue in Q4 '20. Non-GAAP adjusted gross margins were at 14.3% in Q4 and increased 10 basis points from Q4 '20. Gross margins were within our range of expectations for the quarter, but approximately 80 basis points below the midpoint of our expectations. This variance reflected approximately 100 basis points of pressure from a large customer program, offset in part by approximately 20 basis points of improved performance for several other customers. G&A expense increased 25 basis points, reflecting higher performance-based compensation, offset in part by lower administrative costs compared to Q4 '20. The Q4 '21 non-GAAP effective income tax rate was 30%, including incremental tax benefits related to recent tax filings. For planning purposes for fiscal 2022, we estimate the non-GAAP effective income tax rate will be approximately 27%. Non-GAAP adjusted net loss was $0.07 per share in Q4 '21 compared to a net loss of $0.23 per share in Q4 '20. The improvement resulted from the after-tax benefits of higher adjusted EBITDA, lower depreciation and lower interest expense. Steve Nielsen: Thanks Drew. Moving to Slide 11. Within a challenged economy, we experienced strong award activity and capitalized on our significant strengths. First and foremost, we maintained significant customer presence throughout our markets. We are encouraged with the emerging breadth in our business. Our extensive market presence has allowed us to be at the forefront of evolving industry opportunities. Fiber deployments enabling new wireless technologies are underway in many regions of the country. Operator: First question comes from Adam Thalhimer with Thompson, Davis & Company. Your line is open. Adam Thalhimer: Steve, the biggest question I'm getting this morning is why is the Q1 margin guidance not a little bit better now that the large customer program is coming towards the end? Steve Nielsen: Well, I think as Drew talked about in his comments, February has certainly not been -- was not a good weather month. And there are costs associated with closing out markets and collections. And that's what we're working through, and we're working through -- trying to get through it as quickly as we can. Adam Thalhimer: Okay. And then, what's the correlation between CapEx and revenue because your CapEx is way up year-over-year in '22 and at the highest level in about four years. So just curious how we should read that in terms of the timing of revenue growth? Steve Nielsen: Well, we had clearly managed CapEx tightly in fiscal '21. We have a number of opportunities to grow the business and have booked new business. And so, we'll invest to support those opportunities just like we have in the past. Adam Thalhimer: And then just from your prepared comments, Steve, you mentioned a large increase in order flow. I didn't quite catch that. Was that an RDOF comment or not? Steve Nielsen: Well, we won't tell you exactly what customer, Adam. But I would just say that there is a lot of industry focus on fiber to the home. So you have AT&T's announcements, Frontier, Ziply, who acquired the Northwest territories from Frontier as well as rural. And so just as an example, just in the last quarter for rural customers, we completed about 2,800 miles of fiber to the home. And then for a large customer who's just really starting up, we're holding orders for over 1,600 miles of fiber to the home with them. So, there's a lot of activity just beginning right now. Operator: Thank you. Our next question comes from Alex Rygiel with B. Riley. Your line is open. Alex Rygiel: Drew, you mentioned that you're hopeful that DSOs improve in the calendar year. Can you help us to better understand the pace of that improvement and possibly quantify it for us? Steve Nielsen: Well, go ahead, Drew. Drew DeFerrari: Yes. Alex, as I talked about in the remarks, it was impacted by the large customer program. I think if you control for that, kind of the all other was up a little bit year-over-year. But certainly, as the impact of that large program decline, we would expect it to get better. Steve Nielsen: And I think, Alex, just to add to that. So, as the pace on that program declines, we're not adding to the invested base at near the rate that we were. And so, as we work through the collection issues, we expect the balances to come down as we work our way through the year. Alex Rygiel: And so what does the time line look for the pace of those declines in those projects coming to completion? Steve Nielsen: So I would say, this year, we expect to make real progress. This is a program that's been large and complex. It's evolved a number of times. We're working hard. We'd all like it to be sooner rather than later, but we're not going to be able to commit to more precision. We'd like to just be able to get on a call and not have to talk about it anymore. Alex Rygiel: And then lastly, you've made a number of favorable comments here with regards to the opportunities in rural America and private capital coming into the marketplace. How do these new customers compare to traditional telcos? Do they have internal capabilities? Or are they looking to sort of purely outsource all types of construction activities? Steve Nielsen: Yes. That's a great question, Alex. So let's talk a little bit about the work that we're doing for electrical utilities. So that was just over $44 million in the last quarter, up 125% organically year-over-year. And typically, those clients are new to the business, but they're not new to serving rural America. And so, they have ownership of poles, they have access to right away, but they typically outsource the engineering, the planning and the construction. And we're hopeful that there will be maintenance opportunities that follow behind because in their current businesses, they don't have the skill sets to maintain telecommunications networks. Operator: Our next question comes from Brent Thielman with D.A. Davidson. Your line is open. Brent Thielman: Steve, I was looking just for a little more context around the FCC RDOF auction. I mean, obviously, I think it's going to be impactful for your business. But just curious in past experience, how long does it typically take your customers to really get moving to something like this where we can really see it in the numbers? Steve Nielsen: Well, it's interesting, Brent, that some of the recipients -- or at least it appears that the process isn't completely closed. So, there's still some things that are working through, but in a number of instances, the recipients are people that we have been working for, either on their own capital, or in some instances, where they received CARES Act funding under last year's stimulus. And so, I think part of the acceleration that we saw in the quarter is not necessarily RDOF directly funded because that's not done yet, but people who based on where they came out in the auction, feel increasingly confident about their programs and the scale and the scope of what they're going to build. Clearly, I think if you look at some of the public comments from some of the larger participants, they talked about getting underway in the second half of the year. Brent Thielman: Okay. That's helpful. And then, obviously, it seems like there's more discussion around the industry, order activity, awards picking up more recently. I guess I wanted to come back to some of the early-stage challenges that you all and others have talked about in the past, permitting, the local level stuff you've got to work through. Do you think that's going to remain a hang-up to deployment here as we move through 2021? Has there been a lot of progress on that front? Steve Nielsen: So Brent, you really have to think about it in a couple of ways. To the extent that the programs are for existing customers that have an existing footprint in existing franchises, there are always challenges to large start-ups, but they're somewhat different from those that somebody would have who's starting afresh. So as a simple example, if I'm deploying aerial fiber cable and I can last it to an existing cable that the customer already owns, that's a lot quicker process to get started than if I have to secure the rights to attach to poles in an area where they don't have a franchise or in the process of getting a franchise. So I think if you look at the nature of the awards that we talked about in our comments, generally, we're building for people that are in the business already in a geography that they already serve. Or in the case of these electric utilities, they're actually pole owners. So I would not say that it's ever going to be easy. These are big undertakings. We've got to be closely monitoring developments, but I think that it's a little bit different. The other thing I would tell you is that, and good for the OEMs, there are a lot of fiber orders right now and so we're closely monitoring delivery intervals as they gear up more manufacturing capacity. Brent Thielman: Right. Okay. I guess the last one just have to ask around the big share repo this last quarter, you obviously see a lot of value in yourselves. You've been pretty quiet on the M&A front. Can I take that as a statement, you don't see as much deal out there in other entities as much as you see in yourself right now? Steve Nielsen: Well, I think as we've always said, we were -- we had a great year for reducing net leverage. We got below two times. We always want to fund organic growth because that's the best way to create value for shareholders. But after we make sure that we have that capability, we're going to look to M&A versus share repurchases. And I think if you look at the number of awards and the strategic nature of a number of them, I'd much rather own a piece of those than somebody that didn't get those awards. Operator: Our next question comes from Eric Luebchow with Wells Fargo. Your line is open. Eric Luebchow: Great. So Steve, two of your largest customers, AT&T and Verizon, just spent close to $80 billion at the C-band auction. And Verizon, to us, with maybe a little bit of a surprise to the upside. So have you seen any impact from them in terms of reprioritizing or pushing out some of their capital projects as they clearly need to kind of focus on deleveraging their balance sheet in the near term? Steve Nielsen: Eric, I think we started talking about this probably last summer and fall that there clearly has been an impact in wireless spending generally as you have a big auction, although I'm not sure anybody knew how big the auction would be last fall. I think as the customers work through the actual close of the auction, I think the new spectrum has always created new opportunities for our industry. They've got -- once they buy it, they've got to deploy it. That requires new installation of equipment at existing sites. It requires new sites. Given the propagation characteristics, it's going to create a need for more sites and cell site densification. So on the one hand, I'm sure they would have been happy to pay less, but we're encouraged that they have the conviction to pay more because we know in order to create value it's got to get deployed. Eric Luebchow: Yes. Got it. Makes sense. Just one more for me. So it's somewhat related to RDOF. So Charter had recently announced a $5 billion broadband build-out in rural areas. And they haven't been one of your top customers. But just wondering that for such a large capital program that you've kind of engaged with them and if you see kind of additional opportunity for them in additional -- in addition to Comcast, who's obviously been one of your top customers for some time? Steve Nielsen: Yes, Eric, we're not going to comment on any individual customer about current opportunities, but I would say that we were encouraged generally by the RDOF results and the information that Charter provided the market is really interesting. So the original RDOF auction had about $20 billion to be supplied as a subsidy from the FCC over 10 years. The first auction was expected to require $16 billion then there's another $4 billion coming along. The first auction actually cleared at $9 billion, which indicates how much private capital saw the value in rural assets. And so as you highlighted, Charter for one will receive about $1.2 million in FCC subsidy, but is willing to spend kind of $3 for every $1 that they're receiving from the FCC. And while we don't have clarity from others to the extent that Charter's disclosed it, I think it is encouraging. Kind of a data point for those who have followed the Company for a long time, in 2009, we there was a stimulus program under the Obama administration that had about $6.5 billion, $7 billion of rural broadband spending that we participated in. It's amazing to me that Charter alone is committing to, call it, 80% of that number, and they were only about 10%, 15% of the total receipts of the subsidy under the first round of RDOF, never mind subsequent rounds. Operator: Thank you. Our next question comes from Noelle Dilts with Stifel. Your line is open. Noelle Dilts: First, I just had kind of a housekeeping question. Could you comment on the timing of the share repurchase in the fourth quarter and sort of how we should think about the share base moving forward into the first quarter? Steve Nielsen: Yes. No, we're not going to provide any color other than, as Drew said, it was done open market. We did not use an accelerated buyback. We did not do anything via tender. Drew? Drew DeFerrari: Yes. And then, Noelle, just for planning purposes for the diluted share count in Q1 of fiscal '22, we're estimating 31.3 million diluted shares. Noelle Dilts: Okay. Great. And then Steve, I know for a long time, we've sort of talked about this idea that as you start to see more consistent spending out of your customer base, that's really when we could start to see margins pick up and move toward past historical peaks. It feels like we're starting to get there. So as you sort of what pass the weather impact in the first quarter and the completion of this large customer program, is there anything we should keep in mind that sort of changed relative to history? Or do you think you can get back to the kind of 12% plus margins that we were seeing in and you've been closer to 13% plus that we were seeing in 2016 and 2017 calendar year? Steve Nielsen: Yes. So Noel, not surprisingly, we're not providing guidance, but I think there are a couple of things that your question highlights that are interesting. So for example, this is the first quarter in many years that our top five customers represented less than 70% of total revenue. So we are seeing breadth in the customer base. If you look at Frontier, Ziply, and a number of other customers or the fact that if you aggregate services to electric utilities for fiber, for the quarter was about 5.9% of revenue. So would have been our fifth largest customer, if we aggregated them. I think the other thing to keep in mind, and once again, we're not providing guidance, no guarantees here, but if you look at the footprint that we have with AT&T today, it is actually -- has expanded geographically from where it was in 2015 and 2016, both on the wireless and the wireline side. So clearly, we have to execute. We've got to get the job done, but there is more potential in the business with that particular customer than there was in the past. Operator: Thank you. Our next question comes from Jon Lopez with Vertical Group. Your line is open. Jon Lopez: I had two. The first, I guess, is sort of a clarification, Steve. You mentioned the order flow or you had some commentary around order flow and you also had what was a pretty nice uptick in backlog. I guess the thing I want to make or just hear a little more about is, are these sort of separate events? In other words, was there a nice uptick in backlog like and there's order flow? Or was there a nice uptick in order flow and that resulted in the backlog? Steve Nielsen: Sure, Jon. Happy to clarify. So think about it this way. The backlog is the initiation of new contracts or extension or expansion of existing contracts. Order flow is what we're holding. So we have electronic connections back and forth with our customer. And this is actual orders where we have work order numbers, we have locations, we have quantities that we receive, that we have to get the material in, we have to get the cable placed, those things. But those are specific identified locations where we'll provide services underneath the contracts for which we have backlog. Jon Lopez: Understood. Okay. My second one, I just wanted to come back to the large customer program, And I guess I just want to ask the question this way. I suppose from my perspective, I sensed a couple of months ago, let's say, six, nine months ago, maybe just a little more confidence in the timing of what you used to call the shift from like phase one to phase two. I guess my question -- in between then and now, you've had some re-scoping, and obviously, there's been some complications. I suppose my question for you, has anything, re-scoping or otherwise, changed either the expected benefits or the timing around sort of that cutover? Steve Nielsen: Well, Jon, just to be clear, we've only talked about the initial arrangement under that large customer program and then subsequent arrangement. So this kind of Wall Street construct of phase one to phase two, it's not one, at least the way we think about the program. What we would say is, and I think this has been evident in commentary by that particular customer is that there seems to have been a somewhat elongation over the period of time or the pace at which they're going to build the program. And the example I would give you, Jon, is that we did a very large fiber program for a customer that started in 2003. We're still doing work on that program today. And there have been periods of times where it was busy and slow and back. And I think that's where this large customer program ultimately is -- or at least where it is right now. Jon Lopez: I got you. I got you. That helps. Sorry, one very last one and I apologize, I might make you repeat something you said earlier. But this bucket, the sort of fiber activities for electric utilities, which is down mid-single digits plus of your revenue. I guess I'm wondering, underneath that -- or sort of within that bucket, can you just give us a rough feel for like how many customers you're dealing with there? And is there the potential for, I don't know, any one, two or three of them to eventually, on their own, become let's say, material contributors, like low single-digit type contributors? Steve Nielsen: Jon, it's a little early to tell. But what I would say, what we're seeing now is it's dozens of individual utilities. They don't overlap one another geographically, but they're often adjacent to one another. And so there are times, particularly if you look at the consortiums that were pulled together to bid on RDOF, where they have worked together to secure funding and to have their programs managed and built. So it's unlikely that any single customer would be a substantial or even a low single-digit. But if you might have six or eight electrical co-ops that all serve one portion of a state that if they aggregate it together, would be significant. Operator: Thank you. Our next question comes from Alan Mitrani with Sylvan Lake Asset Management. Your line is open. Alan Mitrani: Just a couple of questions. Did I miss the split between telco and cables? Drew, did you give that? Drew DeFerrari: Yes, Alan, I'll answer that. So telco is at 63.8%, cable was at 23.8%, facility locating was 7.8% and that electrical work and other was 4.6%. Alan Mitrani: Great. And also, I -- your unnamed customer has been filling up some of your capacity in the last couple of quarters, making almost more than Charter. Is this -- what I worry about is that customer is very finicky, and it seems like it goes from spending money to not spending at all. Is this a one-off? Or do you think there's more of a consistent program there that we can forecast out? Steve Nielsen: I think generally, Alan, as we said earlier on the call, there is -- it's hard to understate how much interest there is in fiber to the home right now. So if you think about the rural markets, you think about the number of change of control transactions or significant strategic investments that have been made in rural operators as well as the large programs like the program that AT&T has talked about or Frontier. And so at least my sense is that the industry is coalescing around the view that this stuff is important and it's valuable. So that doesn't mean customers won't go up and down or rethink strategies. But in that case, that particular customer has been at it now for seven or eight years, my -- and its sheer speculation is that they're obviously more comfortable with it today as they've been operating the business for a period of time than they might have been three or four years ago. Alan Mitrani: Okay. Also, do you have the percent of the business that was wireless this quarter, what the revenue was? Steve Nielsen: Yes, it was about 6.5%, Alan. So as a percentage, was up a little bit from last quarter, slightly down sequentially on revenue. Alan Mitrani: Okay. And then lastly, on the problem customer contracts that you've had for a while and you're working through, that customer want to -- bid on a lot of spectrum and it's not going away. How do we, as shareholders, deal with the fact that you'll be working with them forever, pretty much? And how do we not get into a similar boat in the next 12 months or more as they start letting out a lot of contracts to start connecting with all the spectrum that they bought? I mean what have you learned? And how can you do it differently? Steve Nielsen: Alan, I think what we'd say is we have learned, I don't know that we're going to talk about publicly exactly what we've learned, but we always take into account what we learn as we work through programs. And challenging programs typically create capabilities that earn a return sometimes for that customer, but oftentimes for another customer. So as challenging as that program has been, we've created more talent, better systems, more focus, and we'll be a better business because of it. It just hasn't been a lot of fun. Alan Mitrani: Okay. And then I just wanted to thank Tim for all his work over the years. It was good to get to know him if he still -- if he's on the call, and wish him best in his next endeavors. Steve Nielsen: Well, much appreciated. And he will be on his next call, which will be his last call. Alan Mitrani: Thank you. Operator: Our next question is follow-up from Alex Rygiel with B. Riley. Your line is open. Alex Rygiel: Steve, in the '90s, electric utilities invested heavily into telecom. How is this developing cycle different? Steve Nielsen: Alex, it's been a long time ago. There was a little bit of investment by electric utilities. I recall about 20 years ago, they had this technology that they were briefly interested into where they could do data over power lines. In this particular case, this is traditional rural utilities. They own poles, there's typically limited cable TV competition and telco networks that may not have been upgraded. And I think what's different this time around is that the technology around fiber to the home, particularly using GPON, is pretty settled, and it's clearly something that people are comfortable investing in. Operator: Thank you. Our next question comes from Sean Eastman with KeyBanc Capital Markets. Your line is open. Alex Dwyer: This is Alex on for Sean. So I'll start off by asking with the operating environment currently as we sit today compared to the first wave of COVID. Is it tougher to get labor on site, move people around? Or how the front lines adapted from a job site productivity perspective? Just any thoughts on this would be helpful. Steve Nielsen: Sure, a good question. So in our business, we track incidents and we track positives. And I would tell you that we saw the curve inside the Company looks a lot like the curve for the country. And so clearly, cases have declined over the last month, but there were periods of time in January, where we had over 200 people or 200 employees that were quarantined because of the impact of COVID. So, we're encouraged it's coming down. Waiting for the vaccine to become more broadly available and be happy to be looking at this in the rearview mirror, but it still is an impact in the business we got to pay attention to. Obviously, the variants and other things could change that outlook, but we're better today than we were six weeks ago. Alex Dwyer: Got it. And then aside from the broader macro implications, what are you tracking from a legislative perspective from this new administration that could impact the industry specifically? Is the potential for rural broadband, the primary one? Or is there anything else you would highlight? Steve Nielsen: Well, there's been lots of discussions in Congress about potential subsidies for rural broadband. It has come and gone in and out of bills. So I guess, at this point, we're paying attention to them. But I think we're probably more encouraged by the RDOF outcome just because of the substantial amounts of private capital that, that auction appears to have attracted. And so anything that we would get on top of that would just be incremental, not based to the way we're thinking about the business. Operator: Thank you. Our next question is the follow-up from Noelle Dilts with Stifel. Your line is open. Noelle Dilts: This is sort of a basic question, so I apologize. But when you start to look at doing more of this rural work, is there a way that we should be thinking about the addressable construction content that materially different from what you might see in a suburban bill? But obviously, there's much more distance covered, but there are fewer obstacles or disruptions. Is there a way we should be thinking about the addressable content for you as a role becomes a bigger part of the business? Thank you. Steve Nielsen: Sure, Noelle. Good question. So typically, rural will be more aerial and less varied because there's just more room on poles, less -- they're less congested. I would point you to some of Charter's disclosures. They've talked about the number of locations that they're going to serve. They talked about how much money they expected to take. There's been some speculation on the sell side in terms of how many miles of plant that would require. And I think that's probably they and other RDOF recipients, I think you'll see more disclosure there. There's also been a small investor-owned telephone company consolidated that announced a bill funded in part by an investment by private equity. That would give you some idea of kind of a blend of suburban and rural. So those would be the two places to look. Operator: Thank you. Our next follow-up comes from Adam Thalhimer with Thompson, Davis & Company. Your line is open. Steve Nielsen: Operator, we don't have Adam. Do we have any other questions? Adam Thalhimer: Sorry about that. Steve, I wanted to see if can get your help on a couple of specific customers. Starting with Lumen, they were up a lot in the first half, down a lot in the back half, which I think you telegraphed flat for the full year. Is flat a good expectation for '22? Steve Nielsen: Well, again, Adam, we're not providing guidance. I think with respect to Lumen, they've had some public comments that they're committed to their fiber-to-the-home program. They're extremely disciplined about how they're deploying capital. And they've also commented that as they work through their CAF II commitments through the balance of this calendar year that they provided some commentary, that they would look to rotate the resources that have been supporting the CAF II deployment into their fiber-to-the-home strategy. So I think in general, encouraged that they're committed to it. Well, they are extremely disciplined. They're careful in where they deploy capital to make sure it gets a good return. Adam Thalhimer: Okay. And then what do I do with Verizon as the large program comes out? How do we think -- does that go to some kind of a maintenance level? I know you do kind of $300 million of East Coast maintenance work. Or is there kind of follow-on work from the large program that gives you growth versus the maintenance level? Steve Nielsen: Look, Adam, I would say that we're heavily focused on -- with a large customer program on closing markets, getting the -- collecting the cash. I think there will continue to be opportunities under that program that stretch for a long period of time, just as other programs have like the FIOS program. But it's too early for us to focus on that. We're much more focused on the closeout and the collections. And clearly, we'd like to grow business with them. But right now, that's where the focus is. And clearly, there's plenty of other growth opportunities in the industry broadly. Operator: And I'm currently showing no further questions at this time. I'd like to turn the call back over to Steve Nielsen for closing remarks. Steve Nielsen: Well, we appreciate everybody's time and attention on the call, and we look forward to speaking to you at the end of May. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
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Dycom Industries, Inc. (NYSE:DY) Showcases Strong Financial Performance in Fiscal Third-Quarter Earnings

  • Earnings Per Share (EPS) of $2.68, surpassing estimates and indicating a 14.04% earnings surprise.
  • Revenue reached approximately $1.01 billion, with a notable contribution from the top five customers enhancing margins.
  • The company's price-to-earnings (P/E) ratio stands at 23.9, reflecting investor confidence in its future earnings potential.

Dycom Industries, Inc. (NYSE:DY) is a prominent player in the specialty contracting services sector, providing a range of services to telecommunications providers, including engineering, construction, and maintenance. The company competes with other firms in the Zacks Building Products - Heavy Construction industry. On November 20, 2024, Dycom reported its fiscal third-quarter earnings, showcasing strong financial performance.

The company reported earnings per share (EPS) of $2.68, surpassing the estimated $2.35, marking a 14.04% earnings surprise. Despite this, the EPS was slightly lower than the $2.82 reported in the same quarter last year. Dycom's revenue for the period was approximately $1.01 billion, slightly below the estimated $1.04 billion. However, the company reported revenues of $1.27 billion for the quarter ending October 2024, exceeding the Zacks Consensus Estimate by 4.16%.

Dycom's performance was bolstered by significant contributions from its top five customers, which helped improve its margins year-over-year. This indicates a strong financial position and operational efficiency. The company's price-to-earnings (P/E) ratio is approximately 23.9, reflecting investor confidence in its earnings potential. The price-to-sales ratio stands at about 1.24, suggesting a favorable market value relative to sales.

The enterprise value to sales ratio is around 1.52, indicating the company's total value compared to its sales. With an enterprise value to operating cash flow ratio of approximately 18.9, Dycom's valuation in relation to its cash flow from operations is highlighted. The earnings yield is about 4.18%, providing insight into the return on investment for shareholders.

Dycom's debt-to-equity ratio is approximately 0.98, indicating a balanced approach to financing its assets with debt and equity. The current ratio is around 3.12, suggesting the company's strong ability to cover its short-term liabilities with its short-term assets. This financial stability is further emphasized by Dycom's consistent outperformance of consensus EPS estimates in three of the past four quarters.

Dycom Industries, Inc. Quarterly Earnings Preview

  • Dycom Industries, Inc. is set to release its quarterly earnings report on Wednesday, May 22, 2024, with Wall Street expecting an EPS of $1.39 and estimated revenue of $1.09 billion.
  • The company has a history of exceeding earnings expectations in three out of the last four quarters, with an average beat of 53.9%.
  • Despite challenges such as soft demand from top customers, analysts have revised their EPS estimates upwards, reflecting a mix of optimism and concerns about DY's financial health.

Dycom Industries, Inc. (NYSE:DY) is gearing up for its quarterly earnings report, set to be released on Wednesday, May 22, 2024, before the market opens. As a leading provider of specialty contracting services, DY operates within the construction and telecommunications sectors, offering engineering, construction, maintenance, and installation services for telecommunications providers. The company's upcoming earnings report is highly anticipated, especially considering Wall Street's expectations of an earnings per share (EPS) of $1.39 and estimated revenue of approximately $1.09 billion for the quarter.

In the previous quarter, DY's performance did not meet the Zacks Consensus Estimate, falling short by 13.2% and marking a decline of 4.8% from the previous year. This was despite a 3.8% year-over-year increase in contract revenues, which, however, also did not meet consensus expectations by 2%. Over the past four quarters, Dycom has managed to exceed earnings estimates three times, with an impressive average beat of 53.9%. This track record of exceeding earnings expectations in three out of four quarters highlights the company's potential to deliver strong financial results, despite occasional setbacks.

For the fiscal first quarter of 2024, analysts have revised their EPS estimates for DY upwards to $1.39 from $1.31 over the last 60 days, indicating a potential year-over-year decrease of 19.7%. This adjustment reflects analysts' optimism as well as concerns, considering the forecasted revenue of approximately $1.09 billion represents a 4.2% increase from the previous year. However, there are concerns about soft demand from Dycom's top five customers, which could potentially impact the company's financial results. This situation underscores the challenges DY faces in maintaining its revenue growth amidst fluctuating demand from key clients.

DY's financial health, as indicated by its price-to-earnings (P/E) ratio of approximately 20.35 and a price-to-sales (P/S) ratio of about 1.06, demonstrates the market's valuation of the company in relation to its earnings and sales, respectively. The enterprise value to sales (EV/Sales) ratio of roughly 1.25 and the enterprise value to operating cash flow (EV/OCF) ratio of around 20.10 further illustrate how the market values DY in terms of its sales and operating cash flow. Additionally, the company's earnings yield of approximately 4.91% provides insight into the potential return on investment for shareholders. The debt-to-equity (D/E) ratio of about 0.80 shows DY's reliance on debt financing relative to shareholder equity, while the current ratio of approximately 3.06 indicates the company's capability to cover its short-term liabilities with its short-term assets.

As DY prepares to release its quarterly earnings report, investors and analysts alike will be keenly watching how the company navigates the challenges of soft demand from its top customers and whether it can continue its trend of exceeding earnings expectations. The upcoming earnings call, scheduled for May 22, 2024, will offer further insights into DY's performance and strategic direction as it moves into the new fiscal year.