Earnings call transcript Q2 2024

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Operator

Good day and welcome to Dycom Industries, Inc.

Second Quarter Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker, Mr. Steven Nielsen. Officer. Executive Chief and President Please go sir. ahead,

Steven Nielsen

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

Slide to Going X.

presentation will Investor website's main throughout page. be to call, our on will Center be slides by this be found we a During slide identified which Relevant presentation. can our referring number

Today, Ryan Urness, and Chief Financial we Officer; have on General the Counsel. call Drew DeFerrari, our our

call the over Ryan turn will I Now Urness. to

Ryan Urness

are of call pursuant statements Private made during Safe Thank provisions to you, Steve. Harbor conference the All forward-looking Securities this Litigation XXXX. provided of the Reform Act

Forward-looking uncertainties differ statements that beliefs do filings reflecting may including which subject XXXX Securities These March the expectations, filed performance described about to from relate assumptions are those Form historical periods. report cause other actual include to or X, and all annual Commission. comments materially not projections, our forward-looking risks with on or with and future risks current our in XX-K Exchange events U.S. and statements our to together results

the statements conference update broadcast solely made forward-looking as original are to and of obligation statements. we date call of assume Forward-looking no any this

Steve?

Steven Nielsen

Ryan. Thanks,

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

non-GAAP section As report and of we our to our measures. to non-GAAP results, for slides, corresponding measures that we certain their quarterly comments note website in reconciliation in review our please today reference accompanying GAAP you these of the We the measures. a refer

billion, was for Now X.X%. the Revenue an organic of $X.XXX increase quarter.

per produced administrative Gross to expenses earnings quarter of revenue of of factors $X.XX second and ago in our in points wireless an converged increased $XXX.X X.X% of were all networks, quarter. gigabit $X.XX EBITDA this year networks, the quarter XXXX. top margin revenue to of demand the wireline million and compared these revenue XX.X% X XX.X% increase share compared of basis deployed and from we and was General XXX of or wireless/wireline X adjusted customers. of fiscal and As reflected networks

last Construction, $XXX.X year acquired States at million. the $XXX of strong price our Cable ability recent to further authorized deployments. Southeastern we of Board over And Friday, telecommunications newly million. expands in Bigham purchase revenues was in growth generated as repurchase a approximately provider $XXX most and Liquidity of for rural last And has million opportunities the authorization share significant Bigham our construction services United in a finally, expired, has address $XXX our share repurchases. million broadband

industry the wirelessly significant major are broad network wireline wireline Now provision individual sections gigabit either using businesses to upgrading generally technologies. XG directly networks designed or across going Today, Slide constructing or to to speeds networks and participants of X. country. consumers These are

our especially in industry. of This for billion country. most fiber high over high-capacity can to cost construction single This to participants single to industry telecommunications America. areas crucial belief be deliver represents for have Royal businesses, networks for the consumers a revenue Increasing opportunities we of access level of to view that their includes $XX high-capacity the network society, the meaningfully effort both and investment an set infrastructure capacity the increasing Industry effectively that broaden the and for from Communications Act believe Jobs fiber and a The networks investment. across appetite fiber support. deployments is multiple to services deploy underserved continues to enabling stated and streams rural continues unserved unprecedented

will for commenced programs have under states Infrastructure telecommunications the prior all funding networks that substantially addition, provide initiation the even to In funding of Act.

elements multiuse new network areas fulfillment customers. to gigabit country societal converged across America initiatives. networks. and are opportunities numerous underground wireless being These emerging in planning, construction management, deployments. the program These and We participants increasing provided aerial, network engineering and are geographic industry deployments design, services deployment Fiber as services for multiple to wireless/wireline and include are rural respond entirely wired networks of in consisting providing

engineering services design, and to procurement construction integrated continue participants. We maintenance industry and and several provide to planning,

including influence the impacting cost Macroeconomic of those plans. the conditions, industry of execution may capital, some

how the In market chassis equipment, large the in persist. particularly many regions conditions for remains increase. continue remains tight prices addition, long labor It for supply to challenged, for equipment Automotive may the be specialty capital chains and equipment to for around truck country. remain seen these required

demand customers. expect to to We amongst continue fluctuate

deployments For customers, into increasing are year. next several

accordingly, first of For through others, this to And be this capital half managing expenditures have year. heavily budgets weighted the year. appear of towards closely end they been more the

are recent capital and have valuable available by growth. to confident this pool expanded financial industry position that encouraged scale of These service context, to industry future financings we the longer-term us our fund remain We well customers. Within deliver financings. to strength our

Moving to Slide X.

quarter, increased the During revenue X.X%.

X X.X% top $XXX.X top our customers All customer XX.X% organically. XX.X% largest X increased of or XX.X% AT&T produced our Our revenue of Demand total customers increased from decreasing X of was customers. at organically. million. other revenue, combined,

largest revenue. Ryzen our million customer or $XXX.X of Verizon largest XX.X% our customer organically growth This $XXX.X operations XX.X%, was was our of with of XX.X% million. grew fourth Dycom's ago of to was excluding grew year second organic XX.X% largest million and at grew sold customer was organically was at organically. Brightspeed X.X%. Comcast from period. Lumen from third Lumen $XXX.X Lumen. revenue consecutive XX.X% sixth Revenue the or Comcast or quarter revenue.

is quarter $XX.X X.X% customers And the sign who organically. less consecutive opportunity. This X total of customer finally, quarter where has XX.X% first the X revenue, have is organically. an than since October This the represented customers, of top increasing excluding top encouraging customer aggregate, grown revenue. It XX% in our our other or not XXXX breadth customers that grew have our customer of quarter a XXth our where and be our all was requested customer of disclosed, at largest name fifth million

million fiber in note, was organically X.X%. Of from quarter grew and utilities construction the revenue $XX.X electric

We reach geographic expanded our and management and network our services. program planning have extended

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

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

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

construction a Frontier, Michigan, Ohio, the Texas, we New During from agreement Indiana, for York, Connecticut, Pennsylvania quarter, Illinois, received California, and fiber Florida.

For Pennsylvania, and Brightspeed for Virginia construction Carolina. Jersey, New North a fiber agreement

and rural in Missouri agreements Charter, construction From fiber Florida.

Windstream, from in Georgia. fiber For Arkansas. construction AT&T, agreements was line XX,XXX. utility a And for locating Headcount agreement

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

Drew DeFerrari

Steve good everyone. and morning, Thanks,

operating basis or Adjusted Slide the to or organic higher points on revenue in revenues of and adjusted improved EBITDA level increased 'XX Going XXX of the was $XXX.X X.X%. Contract percentage to The X. compared XX.X% revenue were of performance compared [indiscernible] EBITDA revenue. from XX.X% million billion quarter. revenue million $XXX.X $X.XXX increased

stock-based 'XX X.X% to in revenue of higher QX was The sales, $X.XX depreciation, on Net gains in QX compared partially revenue share in share compared QX and and reflects by to asset $X.XX Gross was EBITDA earnings margin G&A X.X% expense was XX.X% 'XX. in last compared per amortization to income and offset adjusted expense per taxes. lower compensation, year. increase higher of and XX.X% higher interest

X. Going to Slide

Our no and financial were revolver senior of $XXX.XX $XX.X borrowings. with sheet and and was position at ended of term notes, $XXX.X loan Cash and strong. $XXX remains million balance liquidity million QX million. strong We million equivalents

week, This opportunistic from by $XXX share range repurchases for prioritizes of our acquired organic context Last remaining authorization. within our Bigham for Directors net new million capital Construction repurchases of of replaces followed February a a of Our the historical purchase growth amount we the our allocation approved Friday, price and leverage. this Cable And million. prior authorization XXXX. authorization Board share through $XXX M&A

flows $XX increase an of $XX Capital The proceeds Cash accounts QX. was XX. million. receivable provided operating sequentially. days, by in were were CapEx million Slide and net X gross of and DSOs disposal $XX.X XXX to combined of expenditures million, was Going net days activities assets contract

Going to XX. Slide

As look with to ahead October organic XXXX, last in be we expect we the XX, to quarter contract year. QX of ending line revenues

construction of million In revenues addition, Cable QX approximately acquired $XX XXXX. Bigham in expect from we

to We percentage as EBITDA XXXX. also of increase to XX XXX non-GAAP expect contract QX points adjusted basis compared revenues to

XX% rate million $X.X net effective Additionally, of and million tax diluted XX.X shares. amortization a income of we interest expense, total $XX.X expect million expense,

Steve. to back call the turn will I Now,

Steven Nielsen

Thanks, Drew.

Moving to Slide XX.

we capitalized significant This strengths. our quarter, solid activity and experienced on

our maintain significant foremost, markets. throughout and First we presence customer

are in by our breadth business. encouraged We the

of extensive at utilities doing market forefront industry consumers to provisioned Rural usage are high-speed allowed spectrum of connections. the growing, opportunities. Telephone electric Our consumer gigabit being fiber-to-the-home and presence companies Dramatically are in increasing are of for is projects are Federal construction rural support and deployments expansion communications particularly America, Wireless upstream. deployments state networks operators continues newly underway. activity increasing in in Cable and dramatically data the same. enable is deploying speeds duration. are available for scale be to has support capacity bands rural year. this increased us evolving fiber

long-term chains, value supply consolidating our market share creating for the of are maintenance and and business. increasing growth Customers operations opportunities

industry nation customers and a encouraged number to uncertainty, remain of initiatives. substantial capital economic our are our committed As navigate spending we that multiyear

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

welcome look growing questions, take I Construction. we Before together. Cable at We new our to Bigham want employees forward to

Now for open operator, call questions. will the we

Operator

Adam & come And Thompson from Instructions] line of [Operator will with the that Davis. Thalhimer

Adam Thalhimer

back fiscal this that when back Congrats and from to weaker touch up? possible it your think you activity of Is picks the Steve Drew, do customers QX? the or on be in going are half acquisition. the in quarter the a good year,

Steven Nielsen

closely Yes, into Adam, the end up. budget of possibility think more halves. seen other activity following environments where there's before. year. that, the their look then could forward I that I to activity year, certainly in first that we've strong We've They manage as that people had pick a normalized And the going seen

Adam Thalhimer

can that Bigham, a Are up? on have And process? maybe for top -- there on you you do comment they can then comment acquisition contracts picking specific And any the large you're customer?

Steven Nielsen

They Charter of a historically Yes. electric successful also work long in had have co-ops. with They the relationship Southeast. for number a

do we a lots So business of we've good with the in the not for a it's and we obviously done These that was There process. expansion We've folks are Southeast. respected. time Charter. known a work long that think of

it did. we just when sense get together so to of us made And for both

Operator

that with from D.A. [Operator Instructions] Brent come And Thielman will line of Davidson. the

Brent Thielman

in improvement larger asking kind strong quarter. color any the saw from Great especially almost consideration demand points in Steve, additional XXX the year. I slower customers. basis of few last some a just margins guess on just over you that of

Steven Nielsen

Yes.

performance. we are year-over-year. last quarter, and think actually, both pleased with the margin We've XX EBITDA over consecutive I margins increased have gross the

the you October the we for continue guidance, If expect look that to at quarter.

there distribution across we've top are -- I organic we've We've are think growth I of top mean, things great about helpful. growth. have customers been lots but of the X. had a good always clearly, talked of also number out had that having

last, We quarters. talked helpful. call that headwinds the have over been that's X it, to about X abated So some

always hard been think we could working a do very place but pleased our in general, also helpful. that's So is in -- the them just better. but are with We're progress. improve always industry to healthy that I we And

Brent Thielman

run guess, of Okay. sort to some I I ramp-up more been moderated plans for the you've mean, among able who short other stepping with compensate Steve, in these customers. of And the back, customers than

of a on in spending I it sustainable You've conviction? here. see kind few your legacy This of on But be of increase and of we environment is participants especially some kind a always trend money. pause does basis. multiple there your sort this take said a with you, as customers will today for sort Does guess larger a of short-term variations new spending patterns

Steven Nielsen

Yes.

in keep of short billion just at mind last we've I if had over you think, look X years, Brent, organic growth. that to it's helpful the of $X

So do don't -- that X or and on just X customers. you

in expect for think lot the I well I that I growth pattern next increased. least the ever really do to the supporting there's So are maybe capital we that's capital that late it's been helpful that's think the a at not long more a that as see broad time in to think been already the business growth that XXXXs, years. And a raises broad which been as private book seen I've public drivers a some and capital new couple as of or the since business ago. that's industry do as both of

Brent Thielman

the congrats to trailing XX-month believe forward? on Okay. last there Bigham lower? $XXX is the to million, now that appropriate reason just revenue on that. And acquisition, It's any it'd going be of Is consider

Steven Nielsen

Sure. a nice of They've had period growth.

We the synergies hard more expect work going to We be we'll growth. of is their that equipment the with one together. support to deal acquiring We're to to continue. that of them think help able capital

do and think the position nicely. that from So us to I to acquire that. we forward give continue business expect forecast think we and I have they'll benefit going on industry. to And grow that not unit grow typically, Bigham us trends been you one in We're growing a things in to but big put help nicely

Operator

of that Markets. with question. next our Sean line for moment Eastman the will come Capital from KeyBanc One And

Sean Eastman

to to right announced customers of about assume to the takeaway. I the your wanted comment is. month. that earlier come referring you're that we understand longer-term this make with significance were back away large one I of wanted what Steve, fiber just communicating securitization the to the And what sure I there, secured. But financings you're come your industry by just

Steven Nielsen

Sure.

think So was a of that amount there fund that. customers than was able were Sean, fiber very capital that significant do with tranches were additional their But of one that they to to our the bigger raise of probably and rating. to out investment-grade go clearly, significant couple and program. a it's I able

when that I think if did began industry gain market others industry future [indiscernible]. growth was number a some rapidly. ABS to transition to for, trying tower And a that you to XX think capital of good we look access it high-yield investment-grade on are any of grow I its back supported so CMBS. in the the only that milestone industry, portion smaller financing So but ago hugely financing work for access a to growth customer did but can its industry. from That's time for that a I was not needs. that a thing that that involved years And that successful more

investment-grade here meeting a thing. think does you opportunity I anytime a capital that infrastructure. So fiber see good growth with as That's it

Sean Eastman

Okay. from in of then imply expansion margins to to back guidance XQ, Very flat meaningful revenue the the implies while kind to helpful. pretty sequential organic margins, revenues from margin to And a coming guidance downtick XQ. XQ XQ for the sequential seems

the So perhaps helpful. comment sense? that that I just business? mix want to something be understand there why of there makes sustainable? Any Is there wasn't would something in Was

Steven Nielsen

Sure.

I think, moderation clearly, some some is we've customers. point Sean, to had what we that you would in

a And absorbed under so G&A. we're bit on little

in anything is, going that in term. and this are think some moderation the to half normalize not that to kind given making long bit margins of second at do least impacts line we're on our for ability is but I a a line. manage our and next business into that term things model, it's growth G&A our those short the of year, adjustments belief -- pressure going we're little that is

Sean Eastman

guiding also out one, that we Okay. mean what thoughts revenue Is half, good Again, we've I fair the year of would versus a would benefit that seen or should see expectation good Steve. last very there flowing over unwind. cash so. to the that flow in Perhaps Any moderation business? be cash a the back helpful. of a one perspective. past the One clearly be in

Steven Nielsen

call some just isn't lots this our we're period. we've pretty over And we time consolidation and industry I Sean, mean I customers in think $X cash. the take context as we seen before. just step moderation. some this than what us; this bigger to do. us. the provide in Any it, activity business. on We has and And year. back we've surge less gets a I that grown of through a folks. there. unwinds increase And perhaps next This with better. to to into consolidation future billion generate this are just kind X-year that you're don't is this it's business of the going We've growth been very want for long of directionally, we've business when growing which use our got That comes has substantially typically cash make grown, better to historically and to cash year we that that and that invest number as to that's consolidate, think going

Operator

moment One next line And the our with Louthan Raymond James. for Frank that of will question. from come

Frank Louthan

the us curious margin to if relative you the then they Just on that their give up? next secondly, and some would is for can idea areas? that are? about that And you you little in you BEAD to but deal, the a can what assume bit already plans, closes customers funding bit that expand rationale more some the And improve rural Bigham telling little an of are of of I how Are coming a year? Bigham just profile? strategic where in when was that lining

Steven Nielsen

Frank, with a to close, so deal. that and respect Yes, was closed signed

closed last Friday. we So on

margins that -- With it's that's at are a better. margins, our to the I bit little think done. So respect [indiscernible]

doing. that the bottom. both that's it's can that the think in And again, help all purchase that issues BEAD, And and accretive margin once to line great so it's think we at accounting so we a On what going question. we I before we're Frank, grow on business invest think we're topline to

funding. you Just that something focus the state of $X with call look deep received have respect they on, states X like, X those area at to if billion Bigham, it,

helpful. be to going that's certainly, So

too. lots We also that of in have other area, resources

least are the billion about actually I thinking footprint. encouraged industry some we're XX% BEAD in think $XX analysts way is that about ILEC have at we're that the of

we'll the good think that some And I planning. opportunities with active respect then to some expressed others So pretty see ILECs. have with

going kind this Frank. So received allocation. $X I morning, looked on. I think amazing, there's of planning billion there's lots of states or more that It's XX of

capital to of years. market over the So to couple coming lots -- of industry the next the coming

Operator

our for B. the question. with will next moment One Alex And from Rygiel that Riley Securities. come of line

Alex Rygiel

looks you M&A change quarter bit? a share be to allocation Can as moved of ahead to this repurchases. like have it as capital that touch upon Steve, appears priorities

Steven Nielsen

Yes.

weeks found a that X This in always wasn't we've to to working Alex, think, have forward to on celebrated its a for I been an approach just this an This well-run opportunistic looking that businesses. last business closed. while. We're always M&A. family we buy the We've had deal opportunity is anniversary. a XXth and

So we've been that past. it the fits a with successful profile in

irrespective were repurchases is or deal in where think when very share completing. I presented So of itself, were on growth. interested we that it This organic a we

I capability And where we moderates still growth net where about think to tried when with this cash the after we think opportunistic that be intrinsic always to increase have. be leverage Xx. on little time we're a you below I deal, of go if of -- periods are there think to the grow we'll going nicely We've flow bit.

got still room that of available plenty we liquidity of we've the sheet So the the to and grow balance given strength have.

Alex Rygiel

are chance be might specifically how number a to a [indiscernible], years And of ago you assuming and changed? I'm then relates quantify today relative you macro that? to to here. as can M&A, -- address the might backlog bringing then have it And could purchase multiples Any they in they

Steven Nielsen

Yes.

in a through the we're they we'll say backlog can those is think Certainly, deal range. for that we and us our we interest This good was October within through gone the We're but is sellers. our results up, I do feel working right details. backlog. now plenty have good for and that our into Clearly, we have quarter. factor of deal that was included good the details have working this what really as certainly historical rates valuation

Operator

that One with the question. line moment of will Fargo. Eric for And from our Wells next Luebchow come

Eric Luebchow

the question, Steve. for Thanks Great.

any you if customers sequential of more you the declined basis. like color did about wondering a could pretty provide substantially So that last you just quarter? talked on So two

like it out, customers If looks other XX% sequentially. you them grew your all strip over

way to other spend of your pretty customers some for grow guide between two QX those kind moderating any to that disaggregate are nicely. So of the and that customers continue

Steven Nielsen

Yes.

we course at everybody to Eric, the that continues at we can that level, the growth that into go the certainly high hard of there's we the and moderating, we're a we're saw if at and rates hard is requires growth what of a else we is as lots work say seeing October base but working bigger think can off sequentially but rates by that certainly opportunity. I adjustment the everybody do for better

Eric Luebchow

Okay. wireless I slowdown equipment the A appreciate equipment. for of manufacturers and recently some that. couple wireline cited demand

just of you times Or business? digestion down versus So demand few a equipment that see, year? have think is it maybe an read coming in largely based of what lead issue do does you this last on you inventory terms any next in can a lot lot with see quarters your on the in

Steven Nielsen

and kind hindsight, that through inventory. with expert we we're working services of supply those and no to challenged benefit they're pleased have chains issues. got ordering been in we're the in of certainly through the that business a when lot of business we're where that Well, But around was That's it. we've work there why but clearly,

time little you look we a bit seen if feel got that of still the provided. you number tell, you question year. run before, customers that of can of at are next being optimistic a just get it's strongly. rotation. the about And we information We've a when We've details consolidation growing to but As good for through some

Eric Luebchow

just And the few about materially for last wireless A second me, pretty quarter. the of talked companies then tower Perfect. in one activity slowing Steve. one

small it's know workforce. customer, decent of your amount business you as your piece of but a did top I a One do your of competitors well.

we terms see wireless your commentary heard So all of industry if doing on from participants. -- at you're other any the did you maybe what you could in with slowdown consistent what side, a provide there,

Steven Nielsen

was revenue revenue. total Sure, X.X%, X.X% of about Eric. Total wireless

somewhat. off was certainly it So

done the pretty spectrum great mid-band it's have job efficiently think of acknowledged have. that deploying they generally carriers I a that

the term, done great But getting ultimately term, wireless. in that's our Again, so there their what's business of are affected And is activity. job always good in over we quickly. for think And good great business. the out there opportunities a near this long again, for they've

Operator

from [Operator line Sylvan Mitrani One Asset moment our And Alan Instructions] of question. the with Lake come for will Management. next that

Alan Mitrani

Just Was subcontractor a guys all couple. Bigham a at you for no? or

Steven Nielsen

no, to customers. they're No, direct

Alan Mitrani

Okay, year, you're good. to, guess, the down your XX% revenues don't and next direction, can, normally, around looking the given is base I excluding Normally, that decline your already give down want Just some say typically weather against you XX% guidance quarter. Bigham, Also, add revenues out if flat. menu quarter that's I you you guiding which -- just holiday third in you XX% a course. to are fiscal think know if the we'll quarter, quarter X fourth us to but to quarters seasonality I quarter, depending ahead. look quarter there use this on regular normally, ahead the base the to normally slowdown give of XX%? as this Do then to from odd

Steven Nielsen

we're out the Alan, quarter second giving mean, not I guidance.

would a by think -- quarter just by influenced that holidays that always did weather. what and is, is say I to what we impacted can be hours, can daylight be it's is you reiterate

provide at of next way the it guidance of to in But opportunities activity way, some over already about point. working that $XX when Street. its important billion adjusting but And that the this I it's billion, customers there's look of us some system. top billion know see of I years, to that's couple that $XX mean, thinking capital it's on we way, picking into quarter seasonality through with up public Alan, their capital early the too we ahead have $XX for a for We

feel good so And pretty year. outlook we at next for the

Operator

any I'm to questions for like would at this in queue over showing the turn back Steven Mr. closing remarks. the I time. call no to further now Nielsen

Steven Nielsen

week call, Well, to you we thank quarter our and the we Thank for you. to time third again on and look earnings speaking of attention Thanksgiving. everybody their forward

Operator

Thank concludes you This program. for participating. today's all

You disconnect. may now

Dycom Industries (DY) 23 Aug 232024 Q2 Earnings call transcript