Exhibit 99-2
4th Quarter Presentation
August 25, 2010
1
Participants
Steven E. Nielsen President & Chief Executive Officer H. Andrew DeFerrari Chief Financial Officer Richard B. Vilsoet General Counsel |
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Forward-Looking Statements and Non-
GAAP Information
GAAP Information
Forward-Looking Statements and Non-
GAAP Information
GAAP Information
Fiscal 2010 fourth quarter and annual results are preliminary and unaudited. This
presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements with respect to the
Company’s fiscal 2011 first quarter results. The words “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “forecast,” “may,” “should”, “could”, “project,” “outlook” and similar
expressions, including statements regarding backlog, 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.
presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements with respect to the
Company’s fiscal 2011 first quarter results. The words “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “forecast,” “may,” “should”, “could”, “project,” “outlook” and similar
expressions, including statements regarding backlog, 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 slides included at slides 10
through12 of this presentation.
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 slides included at slides 10
through12 of this presentation.
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Q4-2010 Overview
n Contract revenue of $281.5 million in Q4-10 increased
12.9% sequentially from Q3-10, excluding the incremental
week required by our 52/53 week fiscal calendar (see slide
10 for a reconciliation)
12.9% sequentially from Q3-10, excluding the incremental
week required by our 52/53 week fiscal calendar (see slide
10 for a reconciliation)
n Revenue trends continue to improve
n Q4-10 results of $0.12 per share
n Strong liquidity at July 31, 2010
n New five-year $225 million revolving Credit Agreement
entered into during the quarter
entered into during the quarter
Note: See “Regulation G Disclosure” slide 10 for a reconciliation of GAAP to Non-GAAP financial measures.
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Revenue Summary
n Top 5 customers represented 62.1% of
revenue in Q4-10 and 63.7% of
revenue in Q4-09
revenue in Q4-10 and 63.7% of
revenue in Q4-09
n Contract revenue declined in Top 5
customers by 5.5% and increased at all
other customers 1.2%, after excluding
the incremental week in Q4-10
customers by 5.5% and increased at all
other customers 1.2%, after excluding
the incremental week in Q4-10
n Organic revenue trends which
improved in total
improved in total
n Excluding Verizon, all other customers
combined grew 5.8% in Q4-10, after
excluding the incremental week in Q4-10
combined grew 5.8% in Q4-10, after
excluding the incremental week in Q4-10
* For comparison purposes, CenturyLink includes combined revenues from CenturyTel, Inc. and Embarq Corporation for each period presented.
Note: See “Regulation G Disclosure” slides 10 and 11 for a reconciliation of GAAP to Non-GAAP financial measures.
** Organic revenue change excludes revenue from storm restoration work in Q3-09, Q2-09 and Q1-09 and excludes the impact of an additional week in Q4-10 to adjust for our 52/53
week fiscal calendar.
week fiscal calendar.
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Backlog and Employees
Current Awards and Extensions
Customers | Area | Description | Approximate Term (in years) |
nAT&T | North Carolina, Tennessee | Construction and maintenance services | 3 |
nComcast | Washington, Oregon, California, .Georgia, New Jersey, .Pennsylvania, Delaware | Installation services | 3 |
nAT&T | Georgia | Utility line locating | 3 |
nComcast | Connecticut | Network Upgrade | 1 |
nVarious | Kentucky, South Carolina | Rural fiber deployment | 1 |
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Summary Results
Fully Diluted EPS | |
Q4-09 | Q4-10 |
$0.17 | $0.12 |
(a) Q4-10 includes an incremental week as the result of our 52/53 week fiscal year.
(a)
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Selected Financial Information
n Year-over-year organic revenue decline
of 3.1%, after excluding the additional
week in Q4-10 required by our 52/53
week fiscal calendar (a)
of 3.1%, after excluding the additional
week in Q4-10 required by our 52/53
week fiscal calendar (a)
n Cost of earned revenues as a
percentage of revenue impacted by
higher costs for labor and materials and
increased prices of gasoline
percentage of revenue impacted by
higher costs for labor and materials and
increased prices of gasoline
n G&A unchanged as a percentage of
contract revenues
contract revenues
n Depreciation, amortization, and interest
expense up slightly as a percentage of
contract revenues
expense up slightly as a percentage of
contract revenues
n Other income, net increased from more
assets being sold with favorable prices
received
assets being sold with favorable prices
received
n Effective tax rate at 42.5% for the
quarter and 45.5% for the full year
quarter and 45.5% for the full year
(a) See “Regulation G Disclosure” slide 10 for a reconciliation of GAAP to Non-GAAP financial measures.
(b) Amounts may not foot due to rounding.
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Cash Flow and Liquidity
n Cash flows impacted by increased
operations during the quarter
operations during the quarter
n Combined days sales outstanding on
trade receivables and net unbilled
revenues were 61 days in Q4-10 and
62 days in Q4-09 (a)
trade receivables and net unbilled
revenues were 61 days in Q4-10 and
62 days in Q4-09 (a)
n Capital expenditures, net of disposals
at $15.0 million
at $15.0 million
n Debt less cash was approximately $32
million at the end of Q4-10
million at the end of Q4-10
n New five-year $225 million revolving
Credit Agreement
Credit Agreement
n In compliance with debt covenants as
of July 31, 2010
of July 31, 2010
(a) Days sales outstanding is calculated as the summation of current accounts receivable, plus costs and
estimated earnings in excess of billings, less billings in excess of costs and estimated earnings, divided by
average revenue per day during the respective quarter.
estimated earnings in excess of billings, less billings in excess of costs and estimated earnings, divided by
average revenue per day during the respective quarter.
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Summary
n Economic environment slow
n Solid customer relationships
n Market share growing as customers consolidate vendors
n At the forefront of evolving industry opportunities including those generated by rural
broadband stimulus funding
broadband stimulus funding
n Encouraged by deployment of new technologies to consumers and businesses by
cable operators
cable operators
n Responding to an increasing number of industry participants for wireless backhaul
services
services
n Looking ahead to the first quarter of fiscal 2011 we expect:
} Revenues that are down slightly year-over-year
} Margins which improve sequentially
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Appendix: Regulation G Disclosure
Amounts may not foot due to rounding.
(a) Non-GAAP adjustments in Q4-10 result from the Company’s 52/53 week fiscal year. The Q4-10 Non-GAAP adjustments reflect the
impact of the additional week in Q4-10 and are calculated by dividing contract revenues by 14 weeks. The result, representing one week
of contract revenues, is subtracted from the GAAP-contract revenues to calculate 13 weeks of revenue for Q4-10 on a Non-GAAP basis
for comparison purposes.
impact of the additional week in Q4-10 and are calculated by dividing contract revenues by 14 weeks. The result, representing one week
of contract revenues, is subtracted from the GAAP-contract revenues to calculate 13 weeks of revenue for Q4-10 on a Non-GAAP basis
for comparison purposes.
(b) The Non-GAAP growth (decline) percentage is calculated as follows: (i) Non-GAAP contract revenues for Q4-10 less (ii) revenues in
the comparative prior year period or prior quarter period; divided by (ii) revenues in the comparative prior year period or prior quarter
period.
the comparative prior year period or prior quarter period; divided by (ii) revenues in the comparative prior year period or prior quarter
period.
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Amounts may not foot due to rounding.
(a) Non-GAAP adjustments in Q4-10 result from the Company’s 52/53 week fiscal year. The Q4-10 Non-GAAP adjustments reflect the
impact of the additional week in Q4-10 and are calculated by dividing contract revenues by 14 weeks. The result, representing one week
of contract revenues, is subtracted from the GAAP-contract revenues to calculate 13 weeks of revenue for Q4-10 on a Non-GAAP basis
for comparison purposes. The Non-GAAP adjustments in Q3-09, Q2-09, and Q1-09 also reflect storm restoration revenues recognized
during those periods.
impact of the additional week in Q4-10 and are calculated by dividing contract revenues by 14 weeks. The result, representing one week
of contract revenues, is subtracted from the GAAP-contract revenues to calculate 13 weeks of revenue for Q4-10 on a Non-GAAP basis
for comparison purposes. The Non-GAAP adjustments in Q3-09, Q2-09, and Q1-09 also reflect storm restoration revenues recognized
during those periods.
(b) Year-over-year growth (decline) percentage is calculated as follows: (i) revenues in the quarterly period less (ii) revenues in the
comparative prior year quarter period; divided by (ii) revenues in the comparative prior year quarter period.
comparative prior year quarter period; divided by (ii) revenues in the comparative prior year quarter period.
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Appendix: Regulation G Disclosure
4th Quarter Presentation
August 25, 2010