Exhibit 99.2
1st Quarter Presentation
November 23, 2010
1
Participants
Steven E. Nielsen President & Chief Executive Officer Tim Estes Chief Operating 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 first quarter results are 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 second quarter. 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 31, 2010, 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.
statements within the meaning of the Private Securities Litigation Reform Act of 1995,
including statements with respect to the Company’s fiscal 2011 second quarter. 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 31, 2010, 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 13
and 14 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 13
and 14 of this presentation.
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Q1-2011 Overview
n Contract revenue of $261.6 million increased 1.0% year-over-year in
Q1-11
Q1-11
n First organic growth since Q4-08
n Q1-11 results of $0.18 per share
n Strong liquidity at October 30, 2010
n Repurchased over 3.5 million shares for $34.2 million during the period
August 27, 2010 through November 22, 2010
August 27, 2010 through November 22, 2010
n Acquired Communication Services, Inc. (“CSI”) on November 19, 2010
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Share Repurchase Recap
Fiscal Year | Amount | Shares | Average price paid |
Fiscal 2006 | $186,221,173 | 8,763,451 | $ 21.25 |
Fiscal 2008 | 25,159,123 | 1,693,500 | $ 14.86 |
Fiscal 2009 | 2,914,806 | 450,000 | $ 6.48 |
Fiscal 2010 | 4,488,655 | 475,602 | $ 9.44 |
Fiscal 2011 (thru 11/22/10) | 34,239,112 | 3,531,400 | $ 9.70 |
Total | $253,022,869 | 14,913,953 | $ 16.97 |
Over $250 million returned to shareholders
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Revenue Summary
n Top 5 customers represented 62.0% of
revenue in Q1-11 and 65.5% of
revenue in Q1-10.
revenue in Q1-11 and 65.5% of
revenue in Q1-10.
n Contract revenue from non-Top 5
customers increased by 11.2%, the
fastest rate of growth since Q4 of fiscal
2006.
customers increased by 11.2%, the
fastest rate of growth since Q4 of fiscal
2006.
n Overall revenue trends continue to
improve in Q1-11. Revenue grew
organically for the first time since Q4 of
fiscal 2008.
improve in Q1-11. Revenue grew
organically for the first time since Q4 of
fiscal 2008.
n Excluding Verizon, all other customers
combined grew 8.9% in Q1-11.
combined grew 8.9% in Q1-11.
* For comparison purposes, CenturyLink includes combined revenues from CenturyTel, Inc. and Embarq Corporation for each period presented.
Note: See “Regulation G Disclosure” slide 13 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 | Georgia, Kentucky, North Carolina | Construction and maintenance services | 3 |
nComcast | Maryland | Network upgrade | 1 |
nDukeNet | North Carolina | Fiber to the cell site | 1 |
nVarious | New Mexico, North Carolina, Tennessee, Virginia, and Wyoming | Rural fiber deployment | 1-2 |
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Opportunities Update
Potential Customers | Grants | Total Including Recipient Match | ||
Opportunities excluding projects related to data centers, libraries, computer/broadband training, mapping and projects outside the lower 48 states | 334 | $6.076 billion | $7.117 billion | |
Actively targeted opportunities | 177 | $4.397 billion | $5.199 billion |
n Broadband Initiatives Program (BIP)
n Broadband Technology Opportunities Program (BTOP)
n Total Federal Government Funding - $6.9 billion ($7.2 billion originally allocated)
Note: The information included above has been compiled from publicly available data. The Company is not responsible for the accuracy of, or updates to, this information.
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Summary Results
Fully Diluted EPS - Non-GAAP | |
Q1-10 | Q1-11 |
$0.15 | $0.18 |
Note: See “Regulation G Disclosure” slide 14 for a reconciliation of GAAP to Non-GAAP financial measures.
1.0%
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Selected Financial Information
(a) See “Regulation G Disclosure” slide 14 for a reconciliation of GAAP to Non-GAAP financial measures.
(b) Amounts may not foot due to rounding.
Q1-11 | Q1-10 | Change (b) | |||
($ in millions) | |||||
Contract Revenues | $261.6 | $259.1 | $2.5 | §Year-over-year revenue increase of 1.0% | |
Cost of Earned Revenues - Non- GAAP (a) | $209.3 80.0% | $208.0 80.3% | $1.4 (0.2)% | §Cost of earned revenues as a percentage of revenue improved as a result of improved labor efficiency and safety claim experience, partially offset by the impact of increased materials, increased prices of gasoline, and $0.5 million for a legal settlement during Q1-11 | |
General & Administrative | $22.8 8.7% | $23.5 9.1% | $0.7 (0.3)% | §G&A decline from reduced payroll and professional fees | |
Depreciation & Amortization | $15.6 6.0% | $15.2 5.9% | $0.4 0.1% | §Depreciation and interest expense up slightly | |
Interest expense | $3.7 1.4% | $3.5 1.4% | $0.2 - | ||
Other Income, Net | $1.8 0.7% | $1.1 0.4% | $0.7 0.2% | §Other income, net increased as more assets were sold and favorable prices received | |
Effective income tax rate - Non-GAAP (a) | 43.3% | 42.4% | 0.9% | ||
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Cash Flow and Liquidity
n Solid operating cash flows during the
quarter
quarter
n Combined days sales outstanding on
trade receivables and net unbilled
revenues were 62 days in Q1-11 (a)
trade receivables and net unbilled
revenues were 62 days in Q1-11 (a)
n Capital expenditures, net of disposals at
$11.4 million
$11.4 million
n Over 3.2 million shares repurchased for
approximately $31.0 million during the
quarter at an average price of $9.58 per
share
approximately $31.0 million during the
quarter at an average price of $9.58 per
share
n Debt less cash was approximately $55
million at the end of Q1-11
million at the end of Q1-11
(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 Clear indications of an improving environment
n Notable contract awards
n At the forefront of evolving industry opportunities including
those generated by rural broadband stimulus funding
those generated by rural broadband stimulus funding
n Encouraged by deployment of new technologies to
consumers and businesses by cable operators
consumers and businesses by cable operators
n Responding to an increasing number of industry
participants for wireless backhaul services
participants for wireless backhaul services
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Looking Ahead
n Normal seasonal operating patterns and organic growth drive revenue
n Improving organic growth and new project opportunities enable ongoing
assessments of our portfolio of businesses and contracts
assessments of our portfolio of businesses and contracts
n Continued solid and growing cash flows dedicated to accretive
acquisition opportunities and share repurchases as valuation and
projected returns direct
acquisition opportunities and share repurchases as valuation and
projected returns direct
n Confidence that trends will be improving for a sustained period
supporting patience with respect to individual quarterly results
supporting patience with respect to individual quarterly results
Q2 - 2011:
n Revenues which grow slightly year over year
n Margins which improve year over year
n Approximately breakeven earnings per share due to seasonal effects
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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. The Non-GAAP adjustments in Q3-09, Q2-09, and Q1-09 also
reflect storm restoration revenues recognized during those periods.
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.
period; divided by (ii) revenues in the comparative prior year quarter period.
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Appendix: Regulation G Disclosure
1st Quarter Presentation
November 23, 2010