Credit Suisse 2010 Engineering
and Construction Conference
June 3, 2010
and Construction Conference
June 3, 2010
2
Forward-Looking Statements and Non-GAAP
Information
Information
Forward-Looking Statements and Non-GAAP
Information
Information
This presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “forecast,” “may,” “should”, “could”, “project,” “outlook” and similar
expressions identify forward-looking statements. These forward-looking statements are
based on management’s current expectations, estimates and projections and speak only as
of the date of this presentation. Forward-looking statements are subject to known and
unknown risks and uncertainties that may cause actual results in the future to differ
materially from the results projected or implied in any forward-looking statements contained
in this presentation. The factors that could affect future results and could cause these results
to differ materially from those expressed in the forward-looking statements include, but are
not limited to, those described under Item 1A, “Risk Factors” of the Company’s Annual
Report on Form 10-K for the year ended July 25, 2009, and other risks outlined in the
Company’s periodic filings with the Securities and Exchange Commission (“SEC”). Except
as required by law, the Company may not update forward-looking statements even though
its situation may change in the future.
Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “forecast,” “may,” “should”, “could”, “project,” “outlook” and similar
expressions identify forward-looking statements. These forward-looking statements are
based on management’s current expectations, estimates and projections and speak only as
of the date of this presentation. Forward-looking statements are subject to known and
unknown risks and uncertainties that may cause actual results in the future to differ
materially from the results projected or implied in any forward-looking statements contained
in this presentation. The factors that could affect future results and could cause these results
to differ materially from those expressed in the forward-looking statements include, but are
not limited to, those described under Item 1A, “Risk Factors” of the Company’s Annual
Report on Form 10-K for the year ended July 25, 2009, and other risks outlined in the
Company’s periodic filings with the Securities and Exchange Commission (“SEC”). Except
as required by law, the Company may not update forward-looking statements even though
its situation may change in the future.
This presentation includes certain “Non-GAAP” financial measures as defined by SEC rules.
As required by the SEC we have provided a reconciliation of those measures to the most
directly comparable GAAP measures on the Regulation G slide included at the end of this
presentation.
As required by the SEC we have provided a reconciliation of those measures to the most
directly comparable GAAP measures on the Regulation G slide included at the end of this
presentation.
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Dycom Industries Introduction
n Leading provider of specialty contracting services principally to
telephone and cable companies
telephone and cable companies
n Telecommunications industry dynamics driving growth potential
n Major participant in a large, but fragmented industry, which offers
acquisition opportunities
acquisition opportunities
n Significant portion of revenues from multi-year Master Service
Agreements
Agreements
n Experienced management team operating through a decentralized,
customer-focused organizational structure
customer-focused organizational structure
n Strong cash flows and liquidity
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Revenue Mix
Quarter Ended April 24, 2010- $231.6 million
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Providing End-To-End Services
Engineering
Underground Facility Locating
Outside Plant & Equipment Installation
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Dycom Industries At a Glance
Dycom is a leading telecommunications infrastructure provider in the United States
n Headquartered in Palm Beach Gardens, Florida
n Third quarter fiscal 2010 revenues of $231.6 million
n Strong financial profile
} Cash and equivalents $116.2 million at April 24, 2010
} Shareholders’ equity $389.1 million at April 24, 2010
} Operating cash flow of $126.6 million for fiscal year 2009
n Nationwide footprint
} Operates in 48 states and to a limited extent in Canada
} 30 operating subsidiaries and hundreds of field offices
n Over 8,500 employees
n Listed on the NYSE under the ticker: DY
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Strong subsidiaries, broad national footprint
Subsidiaries
Dycom’s Nationwide Presence
Dycom Operating Overview
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Industry Developments…
n Telephone/cable industry convergence - a reality
} Competition for customers drives growth
n Network bandwidth expansion - an imperative
} Telephone companies expanding network capacity
} Cable responding to match capabilities and facilitate new
products such as VOIP, HDTV, and wideband
products such as VOIP, HDTV, and wideband
n Product bundles - key to telephone/cable success
} Decrease churn
} Provide revenue growth opportunities to offset market share
erosion
erosion
} Differentiate service from satellite video providers
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…And Opportunities
n Increased capital spending
} Telephone company deployments of Fiber (FTTx)
} Cable company bandwidth expansion
} Customer premise equipment deployments
} Fiber to the cell site
n Renewed focus on network reliability and availability as subscribers
demand better service levels
demand better service levels
n Continued outsourcing as time to market and installation quality
crucial for new product launches
crucial for new product launches
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Telecom Capital Spending
Capex Commentary
n Continued capital spending in wireline reflects burgeoning demand for voice, data and
video transmission
video transmission
n RBOCs will continue to constitute the vast majority of U.S. fixed line investment
n Significant portion of RBOCs’ capital budgets are expected to be from fiber deployments,
including fiber to the cell site initiatives
including fiber to the cell site initiatives
n Carriers are shifting capital spending to address growth needs and increased
competition from cable companies
competition from cable companies
“… we believe IPTV is an important part of our future. And we’ll be looking for
ways to continue to expand our investment and the rollout of this product in the
months ahead.”
ways to continue to expand our investment and the rollout of this product in the
months ahead.”
Glen Post III - CenturyLink - - Chairman and Chief Executive Officer May 2010
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Cable Capital Spending
Capex Commentary
n Continued capital expenditures on bandwidth reclamation, VOIP and HDTV product
offerings, and cellular backhaul
offerings, and cellular backhaul
n Ongoing plant and network enhancements are critical as cable operators continue to
offer services that require greater reliability
offer services that require greater reliability
n Network capacity and reliability increasingly crucial as cable companies compete with
traditional telecom firms
traditional telecom firms
“We also continue to make significant progress deploying All-Digital and DOCSIS
3.0. We reach nearly 80% of our footprint with DOCSIS 3.0, reinforcing our
leadership position in broadband. As we deploy this capability, we are doubling the
speeds to our existing customers and introducing new, higher-speed services in
these markets. Today, we offer 50 Mb speed service to 40 million homes where it is
available and will soon begin to roll out 100 Mb service. We are now actively
deploying All-Digital in many of our markets, recapturing and more efficiently using
our bandwidth.”
3.0. We reach nearly 80% of our footprint with DOCSIS 3.0, reinforcing our
leadership position in broadband. As we deploy this capability, we are doubling the
speeds to our existing customers and introducing new, higher-speed services in
these markets. Today, we offer 50 Mb speed service to 40 million homes where it is
available and will soon begin to roll out 100 Mb service. We are now actively
deploying All-Digital in many of our markets, recapturing and more efficiently using
our bandwidth.”
Brian Roberts, Comcast - Chairman and Chief Executive Officer April 2010
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n “Dig Safe” laws in all 50 states require owners of underground utilities to
identify and mark their facilities prior to excavation
identify and mark their facilities prior to excavation
} Regulate telephone, cable, power, gas, water & sewer utilities
} Seek to minimize network outages, protect job-site workers, and
safeguard the general public
safeguard the general public
} Locates often required as a condition for permit issuance
n Generally outsourced by telecom companies and cable operators
} Work generated by excavators via “800 number” call centers
} High volume of transactions must be completed within 48-72 hours
n Regulatory backdrop promotes steady workflow
} Driven by regional macro-economic factors
Underground Facility Locating Services
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Dycom’s Competitive Advantages
n Established customer relationships and reputation
n Broad geographic coverage
n Scale to satisfy customer time and service requirements
n Responsive, local decentralized business units
n Access to capital
n Senior management operating expertise
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Growth Strategy As Opportunities
Expand
Expand
n Build and maintain long-term customer relationships at the local level
} Position business to capture both recurring maintenance and new capital
spending
spending
n Empower subsidiary management
} Build relationships with customer contracting decision makers
} Utilize detailed knowledge of local pricing dynamics
} Leverage subcontractors and local trade relationships
n Deliberately select attractive customers with profitable business
} Focus on higher quality, long-term telecommunications industry leaders
n Selectively screen potential acquisitions
} Healthy players that bring long-term, established customer relationships
} Complement existing Dycom customer footprint
} Position Company for significant customer capital or maintenance
spending
spending
Dycom employs a deliberate and methodical growth strategy
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Blue-chip, predominantly investment grade clients comprise the vast majority of revenue
Well Established Customers
Fiscal Quarter Ended April 24, 2010
Customer Revenue Breakdown
Other
Comcast
Charter
Cablevision
Windstream
AT&T
CenturyLink
Qwest
Verizon
Time Warner Cable
West Carolina Telephone
Electric Power Board
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Customer Rotation
Key long-term relationships help Dycom manage the cyclical nature of telecom and cable capex spending
For comparison purposes, when customers have been combined through acquisition or merger, their revenues have been combined for all periods.
65%
35%
62%
38%
63%
68%
32%
68%
32%
64%
36%
37%
63%
33%
67%
37%
64%
36%
64%
36%
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Dycom’s revenue stream is primarily generated by long-term contractual agreements
n Master Service Agreements (MSA’s)
n Significant majority of contracts are
based on units of delivery
based on units of delivery
Revenue By Contract Type
Quarter Ended April 24, 2010
Quarter Ended April 24, 2010
Revenue - - Q3 Fiscal 2010
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Senior Management
Seasoned management team with several decades of combined industry experience
Financial Update
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nCentralize activities which yield synergistic benefits
} Treasury
} Tax
} Risk management
} Capital asset procurement
} Information technology resources
nDecentralize financial operations to provide solid support
and flexibility at operating unit level
and flexibility at operating unit level
nMaintain financial resources to support internal growth
and acquisition opportunities
and acquisition opportunities
Financial Overview
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Fiscal Year Results - Revenue and
Earnings
Earnings
(1) The amounts for EBITDA - Adjusted and Income from continuing operations -Non-GAAP are Non-GAAP financial measures adjusted to exclude certain items. See
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
n Annual revenue exceeding $1.1
billion for the three most recent
fiscal years
billion for the three most recent
fiscal years
n Revenue of $707.1 million for the
nine months ended April 24, 2010
compared to $837.2 million for the
nine months ended April 25, 2009
nine months ended April 24, 2010
compared to $837.2 million for the
nine months ended April 25, 2009
n Revenue and results impacted by
customer reductions in capital
spending plans in response to
challenging economic conditions
customer reductions in capital
spending plans in response to
challenging economic conditions
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Quarterly Results - Revenue and
Earnings
Earnings
n Seasonal revenue pattern driven by
weather and available work days
weather and available work days
n Q3-10 impacted by difficult weather
conditions; total revenue trends
beginning to improve in Q3-10
conditions; total revenue trends
beginning to improve in Q3-10
n EBITDA - Adjusted and Income from
Continuing Operations increased
sequentially reflecting higher levels of
operations and increased productivity
Continuing Operations increased
sequentially reflecting higher levels of
operations and increased productivity
(1) The amounts for EBITDA - Adjusted and Income (Loss) from continuing operations - -Non-GAAP are Non-GAAP financial measures adjusted to exclude certain
items. See “Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
items. See “Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
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Fiscal Year Results - Cash Flow and
(1) Capital expenditures net of proceeds from the sale of assets
(2) The amounts for EBITDA - Adjusted and Net Debt used in the calculations herein are Non-GAAP financial measures adjusted to exclude certain items. See
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
n Cash flow from operations over $100
million for the four most recent years
million for the four most recent years
n Ample cash flows to support capital
expenditures and fund operations
expenditures and fund operations
n Long term financing in place as of
April 24, 2010
April 24, 2010
} $135.35 million Senior Subordinated
Notes - October 2015 maturity
Notes - October 2015 maturity
} $210 million Credit Facility:
} September 2011 maturity
} No borrowings outstanding
n 0.3x ratio of Net Debt to EBITDA-Adjusted
in fiscal 2009
in fiscal 2009
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Quarterly Results - Cash Flow and
Liquidity
(1) Capital expenditures net of proceeds from the sale of assets
(2) The amounts for EBITDA - Adjusted and Net Debt used in the calculations herein are Non-GAAP financial measures adjusted to exclude certain items. See
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
n Cash flows used to fund operations as
activity level increased during the quarter
activity level increased during the quarter
n Capital expenditures, net of disposals at
$6.9 million
$6.9 million
n Strong financial profile
n Ample liquidity as of April 2010
} $116.2 million cash and equivalents
} $131.4 million availability under
Revolving Credit Facility
Revolving Credit Facility
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Regulation G Disclosure
Credit Suisse 2010 Engineering
and Construction Conference
June 3, 2010
and Construction Conference
June 3, 2010