DY - Earnings call transcript Q2 2021 | Dycom Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Dycom Industries Second Quarter 2021 Results Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Steven Nielsen, President and Chief Executive Officer. sir. ahead, go Please

Steven Nielsen

Good attending I review this XXXX quarter operator. thank our like you fiscal for conference results. morning, you, would everyone. to second Thank call to

X. Slide Going to

to our DeFerrari, During Today, on a Urness, found this and we Counsel. our Center be have slides Investor our the Officer page. website’s will Ryan throughout identified call, be by on slide which number Chief can we Financial presentation, General be Relevant will Drew main call referring our presentation.

Now, over I to Ryan turn the will call Urness.

Ryan Urness

nature our events this XXXX. Thank of are you, expectations, assumptions performance made Safe Private statements to or Steve. the about do not Harbor that reflecting Act Reform These to pursuant or The beliefs forward-looking relate call Securities during maybe provisions solely Litigation of statements forward-looking in include future historical provided the comments and periods. all

Forward-looking projections, filings in We forward-looking statements results filed obligation risks U.S. materially actual no to Form other on XXXX differ from March and Exchange uncertainties, Securities any those the assume cause to may XX-K X, including statements. and and which are update Annual Report subject our our with Steve? risks current to Commission. our described

Steven Nielsen

Ryan. Thanks,

to results. X our moving review second a of Now, Slide and quarter

families hope and I call everyone this website that of As you refer are to reconciliation to listening in note review a to we measures we our today non-GAAP sincere results, their corresponding section measures. We the our in safe. well To and these non-GAAP referenced that healthy of comments our for please the as report as want measures. certain their express my accompanying GAAP begin, slides, to quarterly

our prouder I for have with living thanks. truly They my customers continue of serve real in to not be We time our in fortitude times. employees as they difficult our are country. unprecedented could

networks Please liquidity year these to factors $X.XX diluted million excludes of top customers. and EBITDA revenue produced increase adjusted from earnings of as gigabit that share note effect XX reflected quarter in offset the per Liquidity the of continued networks, adjusted wireless net X.X% were complexity converged strong an quarter, of margins of we in XX.X% million, was networks gross a performed contract the credit program. in quarter. was level exceeded all the wireline the diluted XX.X% performance XXXX. were last cash five $XXX.X per General of amount facility $X.XX the our wireless Gross of quarter and XX% for X customer compared deployed and was $X.XX share And administrative represents services or wireline calendar of this revenue adjusted in Now, under $XXX.X demand This quarters. decrease margins our periods. modification of of prior highest Of from expenses ago in resulting overall availability part of reflecting October for impacts our note, revenue by million. as a strong year the quarter a and $XXX in earnings ago large X.X%. last of in two the

of the a million, in we notional reduction million $XX as of quarter $XXX reducing Finally, significant progress million to three during made debt net just the $XXX.X net quarters. over declined leverage last

repurchase has progress Board $XXX authorized in an Directors of share debt, program. our our Given XX-month reducing million

one deliver directly from revenue and enabling capacity X-gigabit are to consumers network country. across networks significant major the or constructing Now, of speeds businesses either are broad generally designed wireline Slide to upgrading X, industry provision individual going single wireline both sections high their networks participants most and a multiple have or using streams stated wirelessly effectively network participants cost businesses, to consumers These technologies. XG recently Several to investment. that services industry and fiber belief today,

set COVID-XX from Recently the Fund FCC of capacity We pandemic, will telecommunications high deploy high dramatically require to time in rural scheduled increasingly especially as of essential fiber network Opportunities XXXX. applications Access other to view distance has the capacity broaden this the become increase networks investment. to a proposed legislation fiber for telemedicine, learning to needs that our federal crucial reflect auction America. the society look calendar Digital expect of and continues opportunities view that in meaningfully Rural industry rural believe this the to effort and of deployments newly and appetite for fall increased some work we home, the forward

and multi-use design, as increasing engineering aerial dozens networks. are opportunities networks as customers and are include America Potential entirely as the deployment stated construction recently elements deployments for who providing network contemplating new country societal initiate resumption respond across with broad customers the provided well wireline consisting management program services to deployments that X-gigabit of several wireless fiber appear to are aspirations in wireless as incentives. areas customers, broad converged industry services wired to of metropolitan These deployments. being well and as be underground participants fulfillment rural of We network including emerging planning, fiber These deployments. in

to small flare-ups. strength and municipalities valuable our first several ability provide the planning, customers. due effects our and to we continue of focus those inspection states us activity of particularly weighted see limitations as on influence well and is We business on industry confidence continue of the Customers and the may and been permitting on some levels increasing environment participants. particular manage of authorities the effects and services the effects consumer overall procurement processes, the and Our with and deliver in plans, of overall particular to overall and the have to service value scale pandemic integrated business, reopen, half construction design, uncertainty to Near-term and engineering confident capital dislocations maintenance worthiness. remain year. pandemic municipal their whose customer to business towards focused and as that on be macroeconomic of general financial impacts the calendar some position to Overall, our COVID-XX medium expenditures possible macroeconomic uncertainty credit

COVID-XX X, effects Slide pandemic the of performed the economy, we the to overall despite Moving well. on

During customers. we the Organic five two X.X%. of from revenue decreased demand increased our experienced quarter, top

top revenue. revenue all from Comcast customers or total sixth five our finally, organically. X% customer grew all CenturyLink of $XXX or organically, Revenue revenue. Windstream quarter, revenue at our million. CenturyLink other customers customers and fifth largest produced customer decreasing XX.X% second $XXX.X million from XX.X% customers organically. $XX.X was our AT&T at XX.X% five Dycom’s $XXX.X Our third revenue. this revenue organically. of of Verizon of million while $XXX.X aggregate, top the largest consecutive customer customer and was XX.X% increased our largest of revenue, XX.X% X.X% was XX.X% XX.X% have was organically. fourth or was or Of grown of combined in of excluding largest is was at X.X% million. note, was grew where other our million Windstream the or And customer largest

We planning reach our and have our geographic extend network to continued expand services. program management

the trend amount direct be those our operations as parallel X-gigabit networks value several deployment In outside will extended and of the we and increased years, fact, a wireline which over that the we have of must our long-term believe deployments dramatically business, maintenance maintained. wireline and of meaningfully wireless plant last converged increased network

billion $X.XXX April the at at of end quarter, of Slide end second versus the was to line. going quarter X, billion Now essentially the Of XXXX backlog in this $X.XXX the we billion as activity second during new booked $X.XXX quarter performance renewed work. be approximately next and the backlog, XX is expected reflects in existing solid completed the to months. Backlog work

across opportunities customers. a our continue substantial broad We anticipate array future to of

engineering AT&T, in construction Jersey; construction agreement North for fulfillment were Michigan, services construction the Illinois, Mississippi; South agreements and California, and services Verizon, maintenance Pennsylvania. Missouri Florida services quarter York decreased Pennsylvania agreement For in wireless New New services and from Kentucky, Carolina, and Louisiana, Alabama; XX,XXX. from Charter, an a agreements awarded Carolina, Georgia Washington, in maintenance Texas, Alabama, we during and in agreement and Comcast, construction and to a services covering Headcount and Tennessee, and

call the outlook. his Drew to review and over for will I financial Now, turn

Drew DeFerrari

Thanks, Steve and good morning everyone.

a XX.X% Gross solid margins two and operating Difficulty]. Slide declined improvement reflecting performance than at solid were the was a expectations factors. EBITDA basis X, to XXX were of or that $XXX.X in demand and [Technical revenue, point revenues resulted from contract were five million revenue QX our of high-end economic QX our Adjusted due top had in points Organic XX.X% a X.X% $XXX.X better to million, despite several challenging stable customers. of basis XXX Going we growth reflecting for backdrop.

part large the services offset improvement had broad-based of complexity the customers we top First, a across by performed our program. for customer in continued impacts of several of the

than points, reductions headcount pandemic. continued we lastly, of compensation, at leverage compared expected QX XX our And COVID-XX improve to were operating business there result our a during disruptions headcount the from as the basis of fewer other by ‘XX. on onset the part reflecting declined initiated increased the higher Next, G&A quarter. offset as performance-based payroll to costs lower and in expense

per income adjusted in non-GAAP QX Our per share share. $X.XX was

position equivalents, net from a outstanding. quarter We Included discount with million to going million $XXX and from X, principal of and million amount million. financial notes Slide QX flow debt sheet cash free last senior Now, million and principal solid. convertible our revolver term by of $XXX.X $XX.X $XX the million $XXX million reduced balance purchasing remains reduction in and amount have a $XX.X of decline million. was senior notional at loans of of this $XXX.X borrowings, we cash year, of solid Since convertible for QX ended $XXX.X in notes

DSOs contract at receivable at impacts with operating and the bringing which our days As of a $XXX.X combined for sequentially QX, line XXX liquidity were large QX, QX, at but of XXX The our still operations days flows net in million. in robust customer assets to accounts million. of flow $XXX program. cash elevated million was in was year-to-date from was Cash $XX.X strong

million continue to CapEx to net improve were make proceeds disposal million. this on QX gross invoicing expect expenditures Capital to and We during of $X $X.X and progress metric. was collections

expect year and disposals our fiscal of net line outlook In liquidity. $XX prior CapEx strong For we the summary, to million. $XX a balance to in of full with strong to remain sheet maintain XXXX, million continue we

on sequential current company company operating the Slide from XXXX the range all Going its condition inline monitor believes of is to unpredictable to our maybe of modestly conditions, flows The compared as QX the uncertain, financial basis anticipates and and impact the business. contract of the continues its Based closely pandemic on XXXX. QX control. to and the COVID-XX lower on cash pandemic margins a for outside of COVID-XX results, company on to impact revenues aspects XX, to

the turn back to will Steve. I Now, call

Steven Nielsen

Drew. Thanks

strengths. significant to Moving a our Slide challenged activity experienced we solid capitalized economy, and XX, within end-market on

foremost, our strong throughout and maintained we customer First presence markets.

Our anticipation deploying the many increasing the enterprises. deployments well Fiber extensive Telephone businesses industry for us sales and as speed and creating of increased are our are the forefront opportunities allowed of new fiber underway are growth Fiber and build opportunities operators and to speeds provisioned as customer at regions be process. has chains, enabling capacity evolving portion fiber-to-the-home country. Customers business. and small opportunities. expand Cable data companies share operations supply technologies of are long-term new market deployments of wireless growing particularly to point being to in Dramatically market of in presence maintenance enable connections. usage deep is value medium upstream. to are underway. consumer should the A to X-gigabit consumers consolidating are high deployments these are

In and planning, converge wireless and and for engineering we maintenance services design, wireline construction and providing networks. wired integrated are addition, increasingly procurement

contend to with COVID-XX our the to encouraged are spending that customers committed As remain capital our we industry initiatives. nation pandemic, major and continued multiyear

team our in of strategies dedicated capabilities experience confident times. we employees, our for prospects company, management navigate and our challenging as are We of the the the our

operator, Now, for call open will questions. we the

Operator

with Thank you. Adam [Operator Davis. comes Thompson question Instructions] first our from And Thalhimer

Your line is open.

Adam Thalhimer

Hey, good morning, guys. Great quarter.

Steven Nielsen

Adam. morning, Good

Adam Thalhimer

getting why is just more Hey, revenue isn’t little near COVID and this morning with work-from-home, there biggest a Steve. am question lift The I term? bit

Steven Nielsen

was quarter of half the the the their spent in the saw front are budgets. customers are prudently some managing we of and heavily in what they there Adam think I year Yes, that

year. are We into looking really at we next encouraged what see going

really others programs. are deployments broad about sets customers of broad subsets customers, of and to those resumption or are contemplating talked aspiring have We of or that fiber two contemplating that

moment. that think the overall is reflects just – the in economy we it the that So, at environment it’s

Adam Thalhimer

Okay.

at can you because the maybe ‘XX growth hinting So, ‘XX? just on revenue in coming are elaborate back in you

Steven Nielsen

think more I X-gig I reflecting commentary that not and the the and Yes. in adds public high-speed ‘XX, customers mean, the guidance we are but never cable across I are they that. said if the moved conferences, look record at we you are we to AT&T important the broadband I connections providing fact that mean, folks industry. for calls earnings have connections on think are XXX,XXX during to important are probably subscribers economy quarter. focused

So one fiber well are kinds as of streams a more multiple enabling I supporting cases And forward. going and about many way consensus fiber think as business. the use people clearly, developments in those that investment – means that the growing that is revenue just thinking

Adam Thalhimer

on And see just of then to that? gross to your Okay. XX%, sustainability lastly, thoughts great back margins what’s

Steven Nielsen

we the program. historical have we would quarter Well, had probably a have that pull long-term it – have And averages, have about little we as talked line have large bit been think we we I you the we of before, and this complex we in I with if if were say as said comments, in customer had before, better. out, mentioned effect this

think so performance. And around we encouraged I margin are

Adam Thalhimer

Good. Steve. Thanks, it turn I will over.

Operator

Thank have Brent we you. D.A. Davidson. another And question Thielman with from

line Your open. is

Brent Thielman

quarter Hey, thanks. morning. as Good well. Great

Steven Nielsen

Brent. Hey, good morning

Brent Thielman

into you more are to modestly but the sequential more you Hey, Adam’s typically performing following into then Steve. revenue see Maybe outlook. seen to flat quarter, maybe markets consistent this question that the shutdown? some business down the to I is have that X going growth outlook quarter, October and month just concerns on tend to know,

Steven Nielsen

can you cause a Well, the in in can look, fact taking that COVID economy. are approach the near-term the and cautious we based impacts flare-ups have reasonably that on

think had the also what in customers earlier we we comments. that back have which our And couple second halves, I goes to in a implies first it of half. bit said strong slower little

– have encouraged are year out programs we this think we into currently you about large coming who people year when look don’t that next half talking I underway. have who are that of of second at them the

of So, moderation. I think we the are near-term despite kind encouraged

Brent Thielman

I some of slowdowns here And fairly quarter, feel appreciate in group? notable this detail. strong. not Okay. across just you if wins do pretty I wondering booking any am bookings around particularly strength like I was withstanding then the mean, broad-based the those is color your award this customer customer or the are there anything the quarter

Steven Nielsen

I Yes, solid was on backlog. quarter it the think the

final this of I quarter think the and we are opportunities other going working into the year. on in some quarter

award be contract employees notification will new of the call and fact, it this In of a $X X Brent, we over months XXX got next morning on million that about CapEx.

are encouraged grow So customers and I that opportunities good to are think there open we are us business backlog. for for

Brent Thielman

still that Okay, those as down last guess the DSOs, as year? coming do below great still you rest the in of to you well. I see ended work The the cash think come we year, where fiscal through can flow

Steven Nielsen

Sure.

historically. if were So, look you quarter DSOs last ex business with at large and program, the the those line in

customer quarter program, to quarter. other – we So seen And really payment in were have they the large change that in behavior. no in customer stable

consuming you flow to large And just as becomes capital, then normalize get think it’s EBITDA that kind conversion when cash free XXX, going you so working better program, cash customer to available. and stop are finance of more I we

Brent Thielman

Okay. luck. Thank you. Great, guys. of Best

Steven Nielsen

Thanks.

Operator

you. Thank

Our next Eastman Sean from KeyBanc question comes with Capital.

line Your is open.

Sean Eastman

just process? And we come it curious around as through or sort that trickle? customer and program breaking that just invoicing Nice I those the a dynamic you DSOs well, from wanted still am to of I gentlemen. work just the a expect as that as dynamic I will as challenge work just as invoicing of work we guys Hi, perspective, figured you start out be this receivables through should levy quarter. kind am curious on slow in a

Steven Nielsen

Sure.

got right, them so do last first off, which Sean, growing, are we quarters. to of able So, to keep from you the couple

that’s So one.

what have have created program, we the that the based some I evolved talked say everybody about processes I As have those on would challenges, this understand. some of has for evolved of systems

we the industry on work normalize is this better. goes think that And I think I we whole see of so that also will mix and is by that as time And see shift. the and as something improve making working

So, program systems in highly on big getting and are better. are money we through working the just not everyday, a program. we but complex, enough. It’s it It’s get

Sean Eastman

incremental color going big came could where is year? way in. customer a a on I more Adam’s challenge the give what of be little to last from on to savings? guiding Got that things then about in that guys a just Was And the from right. you lower clearly, think as and maybe on where color as better the Was than margin helpful next am Any it, revenue question mean, okay. you would sustainability expectations the the there traffic back came guys you they I thinking bridge if were less on bridge just fuel on can roads? maybe margins, to quarter’s call, what the wondered us guess set to about from we contribution I benefit perspective program? there you do I

Drew DeFerrari

is Sure. Sean, Drew. this

for quarter, three I factors previously mentioned the better primary really performance. driving are So the there that

The through first we reductions carry in in was quarter. the April cost made that the

select impact less than then there – disruption. would did was lastly, expected somewhat of we was the quarter, than And there Secondly, less customers. an of say in expected COVID with I some better

As your last by down had of fuel, far end as about the question the quarter. come fuel already

of so… wasn’t So, benefit this there really that, from incremental an much quarter

Sean Eastman

great. Okay,

basically, operating what I in from going at, of getting to perspective? level any cost high come normalized is one a nothing just thoughts that am that’s back sort that’s environment in, So tiny, more

Steven Nielsen

Yes, Sean, this is Steve.

went through as did types for that of were of call, abnormal did through we saw some and all our don’t particularly going think the factors. We about headcount any. nothing insurance accruals last we I out. things those talked mean, in on the quarter our take we normal I those So we process

which We but the to by as sense don’t expect were we and the time able have we COVID, a quarter in accelerated back were underway, were number to of on. them efficiency some that hold those we give through savings initiatives encouraged goes

So on it. yes, be we to hold to hope better and

Sean Eastman

excellent. Okay, just that’s one in sneak more will I guys.

perspective the could provide would is broadband big some maybe DY? on to in program for be well DY How perspective the you Any there, CAF positioned rural be relative mentioned helpful? how that presentation. You for opportunity the can

Steven Nielsen

Sure.

two really the is there Sean, about So, that in talked comments. pieces we

So, Opportunities is is Rural auction FCC. fund a actual the to first Digital Fund, commence administered proceeds one will the of the the those by that which country. October allocate is across the There an end at

years, believe I X phase encouraged FCC there program will about will billion there, it’s are think is $XX private billion to I over that into the capital we in addition $XX money. the that first come and be

And of of so think interest industry I we see a from in participants program. number that lots

Charter ago, aggressively going month comments in Comcast a their and rural actually about current not the service auction. to publicly made areas their participate would they that are look although to territories. announced that participate to adjacent fact, In in similar are auction expand the into they footprint

So, and that’s when you a have that think that’s good think we large rural customers, thing. large money, focused on we industry a are that accessing – participants

what the nothing billion in legislation who X with legislation that couple ultimately months is I then there respect rural the had for passed a was is passed that into House, the bill there literally infrastructure a but to broadband. pandemic, knows gets $XX offset further ago of either or think to while and

or And it goes what rural I connectivity essential rural figured in we so the out just also also pandemic has as moment, migration in talked back become an is have highlighted America. the is there on residential about will how to do how have at people the call clearly it that last important this the about to of migration America think out job increasingly cities their anywhere. I as And at somewhat to from from think least

around we which than are both. the that we original $X.X we With by was on we stimulus in somewhere encouraged or about that have to program. the less So, last respect ultimately billion in, did it have $X.X $XXX participated I XXXX think just under of call billion, million particular talked that

have networks southern there I not good projects fiber a we So, and a under this small fact that well in started the is networks Act CARES or the We a CARES money. think opportunity. subsidized of in actually states money utilized out available funded to of and state just with one portion number was build Act, fiber –

So, we see good opportunities in rural.

Sean Eastman

for much the Super helpful. Thanks so time.

Operator

Thank you.

Fargo. next Eric from comes Wells with question Our Luebchow

Your line is open.

Eric Luebchow

And Thanks you activity more whether and of you Steve, taking is what type are about could performance of of the what the Great. wireless business, coming maybe the seeing for it percentage made kind now that’s T-Mobile opportunities on revenue and question. talk and tower now X mergers cell small CapEx ramping or any closed Sprint about there of deployments? macro the some then over and are T-Mobile comments next if years. that additional really has

customer that a for could that’s So be growth a you? opportunity good

Steven Nielsen

kind Sure, sure. about then Why and us Drew give the go don’t and will to wireless. we industry talk will Drew I of splits

Drew DeFerrari

Yes.

telco split, locating was customer electrical at XX.X%, facility was and the cable at then other X.X% at and at X.X%. was XX.X%, for So, was

Steven Nielsen

that’s about and as for been made And business. available so, I reflects C-band moderation were more FirstNet, opportunity our spectrum also equals the a us yesterday, we think down is auction with so customer down And respect sequentially but specifically I what slightly real on about Eric, at we I from perspective, grow. customers X%. which year spectrum upcoming good a wireless and good spectrum, news reflected as least tower for wireless, more the always that progress it primary the that apparently think year-over-a think to becomes I think closed were the to CBRS think macro And bands And auction.

encouraged call think auctions. for to on With we the T-Mobile. the on last we out work expect what So, about pretty think we come talked I are T-Mobile, respect to the based do I we of this some

the other meant respond to those has a that carriers, top for very work carriers there But think substantial creation a participant competitor of the as we past the opportunities the in competitively. core to there. that always not robust are have customers they do were We other I

think I number, small growing country And period So, think X of X, I to over, on XX small somewhere show seen cells around we have the there. are again, that X, numbers million industry whatever XXX,XXX cell, then in I years, encouraged there lots And time. before, cell. about of ability There have small really which fiber and of our front-haul, the as we that around well opportunity is key small talked to the that do deployments. especially to cell element backhaul plays is

So, I think in of backhaul we and as the as front-haul. have opportunity both, the radios well and wireless structures and terms antennas

Eric Luebchow

just Great. well I and curious really Comcast helpful. what improvements That’s even to with nice like residential some And it there, you the on are very doing follow-up, uncertainty one SMBs. seems from businesses obviously sequential see was broadband some cable their space, on are it was seeing

as new am specs they this toward I commercial DOCSIS with ramp move deployments Thanks. year, of So you that in kind out wondering, earlier can see another coming standard? X.X think when do we

Steven Nielsen

as sequential So, growth add of how we and say are had tell opportunities were for I split they were the America were I also Comcast that nodes encouraged, particularly cognizant important industry that that will cable there out you But to across they capacity. Eric of they also residential we will connectivity.

end with exam were schedule the they schools. like AP and careful so And year high things around

the for think half through we ahead, we back that’s are continue deeper encouraged to a they So, And I think of push the I year into and growing I more opportunity network. us as that think into year. next look the fiber

Eric Luebchow

thanks. Okay,

Operator

you. Thank

have Dilts from a Stifel. We Noelle with question

is Your open. line

Noelle Dilts

again And on quarter. good Thanks. congrats a

into margins next are understand if quarter, the you would making program to of profitable. could my Phase to I of terms have or been continue are and the guidance, from more large into guess you looking loaded. Phase more has of half key of I one of your – or walk some been of on from of the through progress one in of lot from large dynamics I the moving a potentially maybe flat two dynamics that you being potentially perspective? customer So, that margin, there question just X, of recognize we the X offset seems half more a some a complex would challenged questions being EBITDA the some is back which of customers of down at to the but lot think I kind the more that me about large front pressure thinking be margin customers sort guess

is So, about we looking sequential that else there anything just think trends? should margin really at in

Steven Nielsen

to think, I reflects Noelle, revenue. our it view just as total

once customers, spend of half and their not first customers in couple are heavily that the we budgets So year they again, had all managing the budget well.

And creates so leverage. of bit negative a operating little that

the as As year get think, reverse. quarter through to that can balance we the but I the into they are on and as start opportunities adjust, fourth of have next we for opportunities that working also we year’s budget go I think there

little with amount starting and that to going fairly sizable fair think it’s there the call, mentioned as not virus that’s we going a on of company, a will the to And the going around done. cost are are for on a our example forward, be ability deal bit are big the reasons new on a take prudent position and have also work we the earlier a contract but impacts hiring customer things quarter. take I to in across but and of kinds of to that this I those of other that, we the do get spending benefits are

Noelle Dilts

businesses that see upgrading on more businesses. continued defer I just are might confidence you where thinking of the little of clear channel in outlook while that you one folks small you are to that that, maybe you small there. how kind checks, there mentioned then coronavirus out guess Is of about medium any it I worried times on market about the call, came to broadband the coming bit seeing concern that? to up deployments crisis, connections, Okay. And a was seems in the But medium sub-segment accelerate decisions know fiber were their few a curious overall.

Steven Nielsen

Yes.

have those business and I we we – comments that’s is small just think residential That we and potential is of that dislocations around another also the and on being what the are year. activity that so are by Noelle dislocations think right. view to in a to or said, said something to line, customers back encouraged prudent medium something half are reason our kind I of the attention paying this

comes So, might a growth vaccine, it’s around. think out kind I And again, than resumes. where a as demand economy potential we a be area SMB. that more right residential always now, on the then But of moves it’s and get

Noelle Dilts

Okay. Thank it. you. Appreciate

Operator

you. Thank

next Our Alex B. from Rygiel Riley. question with comes

Your open. line is

Alex Rygiel

Good you. morning, Thank Steve.

Steven Nielsen

Hey, Alex.

Alex Rygiel

broadband market or when sort of levels start, last see funding that, your what these opportunity, we of in activity there could between some rural pressure the kind versus be downside quarter of today new but programs can a if Understanding gap from of any?

Steven Nielsen

Alex, it’s And the that’s capital, Well, private call amount if even of earlier, going the was wasn’t base will sequentially, with see because sources under up CARES work, available is mentioned was growing about X% fact there on level rural it huge now. additive in we of funding we of as to with of now America that it Act. we right it some at in and a ramp non-traditional work funds the in steady. not fair activity, some think earlier And a picking I new I what that – we And rural quarter quarter the up. look see last but being

already funding am that underway not that the what concerned think what available – to accelerate I have we will I extent slows we trends are I only the am becomes currently seeing. it So the new not

Alex Rygiel

and At your COVID a you do upbeat be opportunity? XXXX. little your limited to And for is guidance think But to year understanding of closer your whatnot. commentary what as issues continues you this point, fairly extensive more about get XXXX kind we that prospects in official be might guidance

Steven Nielsen

and of they think approaches guiding said want on the to I ahead they Yes, call, don’t that this to we how customers last from Alex, our to we get still are them. as mixed we have are the mixed, extent

clear become quarter outcome auction, and bill. calls fourth expect as see about see fourth as stimulus number think infrastructure calls and we we a the or the through I of next potential as go they CBRS bill they of of what year well third their the or quarter into outcome other quarter calls

they more I become forthcoming. we more think as comfortable, get will

Alex Rygiel

cycle there conversation conference the in did call, play the work, that and quarter quarter? around what’s last was question, out one in short some how And last your outlook current

Steven Nielsen

Yes.

So I you tell is cycle would what quarter. think in steady the it short in was the I business,

it we expectations a from So in I our think where don’t in change May. tremendous was had

limited into August, but business, to the saw in there but July and our impacts early With I I spiking the outlook think some, the all some were that’s baked third we virus think August, for quarter.

Alex Rygiel

you. Thank

Operator

Thank you.

We Jon Group. question from have Lopez with Vertical a

Your is open. line

Jon Lopez

so Thanks much. good morning. Hey,

Steven Nielsen

Jon. Good morning,

Jon Lopez

you? are How

Steven Nielsen

Just fine.

Jon Lopez

a got good. half Good, two I and questions.

by The a myself like one, still little I first I confused backlog. find guess

all these it haven’t down So, disparity this between plans network stresses maybe we that single-digits. things place various I could just it’s this if the and high yet how still been of of just than customers that look ask discussing, just at greater the we way, will those with number, of we seeing but XX do or the things? sort sort deal are you filter two to put the if month in have because Is

Steven Nielsen

the So remaining, master Jon, we months also agreement agreements. run-rate backlog quarter gets number every the quarter service revenue master for as months under take the is in typically times the about way we and I backwards we monthly think right. and multiply XX% this XX service valued of of look under that And

And to awards. renewal to so sensitive new sensitive cycles or it the is it’s

past. we perspective backlog way, this been conclusions calculated – based the on contract if for or I around ago, right. got booked we number. it And book are amount that’s included has our the would mean, on customer for not example, a from morning, or backlog particularly of X any effective going this the near-term given the to any any try be conclusions it in weeks precise quarter demand had reasonable to just been so that in to in draw And

So, think not backlog. it’s the just way about we

Jon Lopez

Got it.

of like come? this sort its argument that stuff starting so timing Okay, is is related to

Steven Nielsen

Yes.

next the there renew no we of XX in for end, renew we them, we in an contracts – have is renewed. we so is months them before we are decades, do areas have come a backlog day period As contract, have renew that had to XX a There backlog. they if remember, served months we the

Jon Lopez

it. got I Right.

Steven Nielsen

a It’s subject that’s calculation to timing.

Jon Lopez

question, at okay. first second some we the there we Can the of If lot a point that you of half at factors of what different question a down the it’s your was CapEx a but bit. this, with Verizon’s some quite up just I revenue my If this look But quite for at calendar it, of expect year, I is it’s look there to Got realized go into dynamics customer? just going at way. ask the work that Verizon, and would apart parse you improvement bit.

Steven Nielsen

conversation on that so and CapEx one our out have of Jon, goes all a So in mind to through they cash keep purchased of basis in and recognize the not they similar equipment CapEx in backlog, any customers, line specific that inventory.

their a difficult correlate revenue to don’t in it’s we facets. them so companies, all line, directly are our work right. short-term And pretty big spending basis, for on They to

impact I they what the difficulties statistical that as is the compared tight but you that ahead budget has half it are full as using times particular of years, flat year the the any which over next customer of spend over in in a there will year CapEx last the the would work a year, X with second Now, time, essentially been given to dramatically one – they in measure. to what of which revenue half would with the priorities reassess the the on But year tell where pretty our tell period as they same intensity grown they look budget you the of year. has

Jon Lopez

I one that XXX just ask coming very look this up low Got equal, from here a times? does has want of number couple it. the historically it we point guess in we last the back gross from is, I level gotten contract, basis My argue helpful. that like Really to that If way, already are guess back guess basis points doesn’t the XXX not customer is of I from the here historical, low topic, margin current to XXs. – lift reasonable? I yet couple of a question all improvements kind of that large incorporate the couple else

Steven Nielsen

is been margins. large I we that have have for said think range the the last what over you always in program, around couple middle historical customer of of that if our years, control we

get trend, we to going hard were I the obviously, and little we a no but are we to work quarter, guarantees, think this continue encouraged. better are

Jon Lopez

helpful. Got thoughts. it. all Really the Thanks for

Operator

Thank comes Alan [Operator question from you. Instructions] Our Sylvan with Management. Mitrani next Lake Asset

is line Your open.

Alan Mitrani

Thanks, guys.

you list mind ahead, the do top their of us go XX we percentages? customers and giving before the Just

Steven Nielsen

X they are the on in So, the… Alan, Slide on –

Alan Mitrani

Okay.

Steven Nielsen

they presentation are the material, In there. outlined

Alan Mitrani

Fair will following question, by And as have this your these then, regarding look from been year, that calendar do think be you you fiscal challenging issues to margin, that. last it Verizon, I has relates at customer, all enough. just gross by will year? large who that this referenced finished

Steven Nielsen

extend maybe actually beyond this again of a but extending There one that still in but progress talked total, about broadly – don’t that particularly February see work. and fiscal then are we in we substantial for Alan, with better projects end period for and we So the are time, extended, two some that we of for of in by mix it’s as that, encouraged one or we comfortable that’s May year.

level, May. think is, from when a we of I there lot not in so change a And at spoke high

Alan Mitrani

came you down in put will cost stock in though even the basis? it out, beginning And bit SG&A comp, the think on so you quarter, that run the up revenues think that some do P&L, headcount a come have quarter, the out seems holding about run-rate was just from like it’s flat, going of it it Okay. taken where the in the not middle has a SG&A? of like flattish How it quarter, these – – it how year-over-year, slightly much, show we or to ex then was the the forward of in the cuts towards should that

Steven Nielsen

performance incentive the increase look business. of and a stock we number in that incentive we the quarter Alan, formula our in driven stayed we comp to So had out took real business, cost and that bonus progress G&A when expense strip we in out compensation are in performance made and they quarter. better April the and plans the – so reflected that But but at out

Alan Mitrani

can works the business, you year of or are have some new you XXX. out, some to as income the got assets be us I you mean next getting ago, book rid you a it’s through dropping up how you even in working are just just down was Do walk your because of them now what’s year? year Okay. think could went PP&E other ago you what and are significantly, – And harder – that then enough you has been relative selling it call to or change – business it well. your I you guess XXX – since And though

Steven Nielsen

had percentage them a pay our that leverage pretty levels our make any in assets appropriately. months fact the advantage the of nice to a or CapEx XX worked always replacement we Alan, we ago, that our we have for at where quarter of Well, beginning sell uncertainty maintenance able this that routine given sure what that took we the have of And cycle say and last expense typically used were quarter. increase year to the were aggressively been we managing at without from we to do and

new capital to this earlier, revisit leverage on CapEx. allocation to have M&A. now we was that going are are allocation when we opportunities we come at not capital down. deploying going think our aggressively then some we approaching and will growth through have in grow organically. we more the that looking as that now CapEx more that we I we share repurchases a target, target and level And startup But we will a evaluate continue two talked about needed to in that going And also is basic that we at are framework approaching also something to spend that were to leverage versus we and opportunities look fund to, we quarter were money to are of kind look area, capital to says

Alan Mitrani

you. Great. Thank

Operator

you. Thank

follow-up Adam a Davis. Thalhimer Thompson have from with We

open. Your is line

Adam Thalhimer

I keep I standpoint turn me when of to that wanted feel significant buyback, does to all kind the revenue positive, mean, announcement buyback it I sustainability on ask the us I you Steve, we margins of don’t Thanks. both? – in the about and and know, seems is asking but the from are confident read

Steven Nielsen

that had it, face around there was leverage let’s hadn’t – while. We at above a of been here lot we for that was look, a target. Well, fun levels

improve, flow working constrained buyback our cash we And hard I stay the stable And that done actions our – isn’t we or get have earlier, over quarters Tim, shows. we three in organization that million was has the to up, what think talked what DSOs leverage to organization this about that up Drew job that’s are the value me leverage down as and were for us we up taken our contemplate will $XXX conversion done EBITDA allows great or goes and have could more a we the cash. We them do. create if free generate shareholders to is when then

a the level on We lower are revolver at today.

we at end million the were $XX are last we today less than on the of revolver at quarter. think I

So things yes, with we have do it in. comes some the we can as cash

Adam Thalhimer

times referencing in particularly and of in question, one or in large what a answers couple that a am not is? Noelle’s I then your I startup don’t of the you And Q&A program large back. to the Okay. sure session know are

Steven Nielsen

quarter, besides fact three of last and good about be a today CapEx generated this $X flow we the core and have that quarters. that there employee a said we the it Well, use will cash notified we that’s over million of it’s about startup got and XXX customer of that just with

Adam Thalhimer

few Okay. what’s next – the in interest Drew, you And just we the lastly, be putting for the quarters? should can model expense

Drew DeFerrari

Yes.

which there out rates lower Adam, clearly of is all, there helpful. right First now, is

just continue the revolver If you we take loan and and as pay the scheduled flow can well. the the do I term revolver, to up down generate think at you if on math there. can look where down cash I a think ended is there from

Adam Thalhimer

it. Appreciate Okay.

Drew DeFerrari

notes. there that those mean, completed thereabout is the We much, last to quarter. or on not there million down is in really I not much really or the the quarter, buyback convertible $XX are after left

Adam Thalhimer

Okay, thanks. Appreciate it.

Operator

I Thank call remarks. would the Steven queue. other in closing Nielsen are the you. turn to back like any questions And there no to for

Steven Nielsen

for Have we everybody in day. joining Well, Thank you. look call a thank you forward we to and the November. again to good speaking

Operator

call. gentlemen, Ladies and this for concludes participating. today’s conference Thank you

a now everyone. Have great day. may You disconnect

Dycom Industries (DY) 26 Aug 202021 Q2 Earnings call transcript