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Dycom Industries, Inc. Announces Fiscal 2016 Third Quarter Results And Provides Guidance For The Next Fiscal Quarter
PR Newswire
PALM BEACH GARDENS, Fla.

PALM BEACH GARDENS, Fla., May 24, 2016 /PRNewswire/ -- Dycom Industries, Inc. (NYSE: DY) announced today its results for the third quarter ended April 23, 2016. The Company reported:

  • Contract revenues of $664.6 million for the quarter ended April 23, 2016, compared to $492.4 million for the quarter ended April 25, 2015. Contract revenues for the quarter ended April 23, 2016 grew 28.7% on an organic basis after excluding contract revenues from acquired businesses that were not owned for the entire period in both the current and prior year quarter. Total contract revenues from acquired businesses were $30.8 million for the quarter ended April 23, 2016, compared to none for the quarter ended April 25, 2015.
     
  • Non-GAAP Adjusted EBITDA of $91.9 million, or 13.8% of contract revenues, for the quarter ended April 23, 2016, compared to $63.0 million, or 12.8% of contract revenues, for the quarter ended April 25, 2015.
     
  • On a GAAP basis, net income was $33.1 million, or $1.00 per common share diluted, for the quarter ended April 23, 2016. Non-GAAP Adjusted Net Income was $35.7 million, or $1.08 per common share diluted, for the quarter ended April 23, 2016, compared to net income of $20.3 million, or $0.58 per common share diluted, for the quarter ended April 25, 2015. Non-GAAP Adjusted Net Income for the quarter ended April 23, 2016 excludes $4.2 million of pre-tax interest expense incurred for non-cash amortization of the debt discount associated with the Company's 0.75% senior convertible notes due September 2021, issued in September 2015.

The Company also reported:

  • Contract revenues of $1.883 billion for the nine months ended April 23, 2016, compared to $1.444 billion for the nine months ended April 25, 2015. Contract revenues for the nine months ended April 23, 2016 grew 23.7% on an organic basis after excluding contract revenues from acquired businesses that were not owned for the entire period in both the current and prior year period. Total contract revenues from acquired businesses were $110.4 million for the nine months ended April 23, 2016, compared to $10.3 million for the nine months ended April 25, 2015.
     
  • Non-GAAP Adjusted EBITDA of $264.0 million, or 14.0% of contract revenues, for the nine months ended April 23, 2016, compared to $177.0 million, or 12.3% of contract revenues, for the nine months ended April 25, 2015.
     
  • On a GAAP basis, net income was $79.4 million, or $2.37 per common share diluted, for the nine months ended April 23, 2016. Non-GAAP Adjusted Net Income was $95.7 million, or $2.86 per common share diluted, for the nine months ended April 23, 2016, compared to net income of $50.5 million, or $1.44 per common share diluted, for the nine months ended April 25, 2015. Non-GAAP Adjusted Net Income for the nine months ended April 23, 2016 excludes the impact of a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of the Company's 7.125% senior subordinated notes, as well as $10.1 million of pre-tax interest expense incurred for non-cash amortization of the debt discount associated with the Company's 0.75% senior convertible notes due September 2021, issued in September 2015.

The Company also announced its outlook for the fourth quarter of fiscal 2016 which contains an additional week of operations as a result of the Company's 52/53 week fiscal year. The Company currently expects total contract revenues for the fourth quarter of fiscal 2016 to range from $750 million to $780 million and Non-GAAP Adjusted Diluted Earnings per Common Share to range from $1.45 to $1.60. Non-GAAP Adjusted Diluted Earnings per Common Share guidance excludes $4.6 million of pre-tax interest expense for non-cash amortization of debt discount, or $0.09 per common share diluted on an after-tax basis. On a GAAP basis, diluted earnings per common share for the fourth quarter of fiscal 2016 is expected to range from $1.36 to $1.51. A reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share guidance provided for the fourth quarter of fiscal 2016 is included within the press release tables.

Use of Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, the Company may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. See Explanation of Non-GAAP Financial Measures directly following the press release tables.

Conference Call Information and Other Selected Data

A conference call to review the Company's results will be hosted at 9:00 a.m. (ET), Wednesday, May 25, 2016; call (800) 230-1096 (United States) or (612) 288-0340 (International) ten minutes before the conference call begins and ask for the "Dycom Results" conference call. A live webcast of the conference call, along with related materials, will be available at www.dycomind.com. The conference call materials will be available at approximately 7:00 a.m. (ET) on May 25, 2016. If you are unable to attend the conference call at the scheduled time, a replay of the live webcast and the conference call materials will be available at www.dycomind.com until Friday, June 24, 2016.

For additional detail on selected financial information including organic contract revenue, customer metrics, and certain other selected financial data and Non-GAAP financial measures, please refer to the Trend Schedule at www.dycomind.com in the Investor Center. The Trend Schedule will be available at approximately 7:00 a.m. (ET) on May 25, 2016.

About Dycom Industries, Inc.

Dycom is a leading provider of specialty contracting services throughout the United States and in Canada. These services include program management, engineering, construction, maintenance and installation services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities.

Forward Looking Information

Fiscal 2016 third quarter results are preliminary and unaudited. This press release contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. These statements are based on management's current expectations, estimates and projections and includes the fourth quarter of fiscal 2016 outlook and statements found under our "Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures" section of this release. Forward-looking statements are subject to 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 press release. The most significant of these risks and uncertainties are described in our Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and include business and economic conditions and trends in the telecommunications industry affecting our customers, the adequacy of our insurance and other reserves and allowances for doubtful accounts, whether the carrying value of our assets may be impaired, preliminary purchase price allocations of acquired businesses, expected benefits and synergies of acquisitions, the future impact of any acquisitions or dispositions, the anticipated outcome of other contingent events, including litigation, liquidity and other financial needs, the availability of financing, and the other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission. The Company does not undertake to update forward-looking statements.

 

---Tables Follow---

 
 
 
 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

 

As of

 

As of

 

April 23, 2016

 

July 25, 2015

 

(Dollars in thousands)

ASSETS

       

Current assets:

       

Cash and equivalents

$

19,327

 

$

21,289

Accounts receivable, net

355,318

 

315,134

Costs and estimated earnings in excess of billings

358,236

 

274,730

Inventories

61,304

 

48,650

Deferred tax assets, net

20,581

 

20,630

Income taxes receivable

15,288

 

Other current assets

18,730

 

16,199

  Total current assets

848,784

 

696,632

         

Property and equipment, net

309,783

 

231,564

Goodwill and other intangible assets, net

406,340

 

392,579

Other

34,379

 

38,089

  Total non-current assets

750,502

 

662,232

  Total assets

$

1,599,286

 

$

1,358,864

         

LIABILITIES AND STOCKHOLDERS' EQUITY

       

Current liabilities:

       

Accounts payable

$

92,964

 

$

71,834

Current portion of debt (a)

9,375

 

3,750

Billings in excess of costs and estimated earnings

11,137

 

16,896

Accrued insurance claims

39,407

 

35,824

Other accrued liabilities

89,662

 

98,406

  Total current liabilities

242,545

 

226,710

         

Long-term debt (a)

723,952

 

521,841

Accrued insurance claims

51,318

 

51,476

Deferred tax liabilities, net non-current

75,590

 

47,388

Other liabilities

4,141

 

4,249

  Total liabilities

1,097,546

 

851,664

         

  Total stockholders' equity

501,740

 

507,200

  Total liabilities and stockholders' equity

$

1,599,286

 

$

1,358,864

         
         

(a) Total carrying amount of outstanding indebtedness consisted of the following:

       
 

As of

 

As of

 

April 23, 2016

 

July 25, 2015

 

(Dollars in thousands)

       

Credit Agreement - Revolving facility (matures April 2020)

$

214,000

 

$

95,250

Credit Agreement - Term Loan (matures April 2020)

150,000

 

150,000

7.125% senior subordinated notes

 

280,341

0.75% senior convertible notes (matures September 2021)

485,000

 

Less: Debt discount

(106,269)

 

Less: Unamortized debt issuance costs - Initial purchasers' discount

(9,404)

 

 

733,327

 

525,591

Less: Current portion of term loan

(9,375)

 

(3,750)

Long-term debt

$

723,952

 

$

521,841

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

               
 

Three Months

 

Three Months

 

Nine Months

 

Nine Months

 

Ended

 

Ended

 

Ended

 

Ended

 

April 23, 2016

 

April 25, 2015

 

April 23, 2016

 

April 25, 2015

 

(Dollars in thousands, except per share amounts)

               

Contract revenues

$

664,645

 

$

492,363

 

$

1,883,383

 

$

1,443,833

               

Costs of earned revenues, excluding
depreciation and amortization

520,408

 

388,239

 

1,477,671

 

1,147,136

General and administrative expenses (a)

56,519

 

44,707

 

155,003

 

131,218

Depreciation and amortization

31,583

 

23,985

 

88,930

 

70,179

Total

608,510

 

456,931

 

1,721,604

 

1,348,533

               

Interest expense, net (b)

(8,007)

 

(6,646)

 

(25,010)

 

(20,126)

Loss on debt extinguishment (c)

 

 

(16,260)

 

Other income, net

4,323

 

3,471

 

6,866

 

7,001

Income before income taxes

52,451

 

32,257

 

127,375

 

82,175

               

Provision for income taxes

19,368

 

11,999

 

47,995

 

31,678

               

Net income

$

33,083

 

$

20,258

 

$

79,380

 

$

50,497

               

Earnings per common share:

             
               

Basic earnings per common share

$

1.02

 

$

0.59

 

$

2.43

 

$

1.48

               

Diluted earnings per common share

$

1.00

 

$

0.58

 

$

2.37

 

$

1.44

               
               

Shares used in computing earnings per
common share:

             

Basic

32,433,560

 

34,107,262

 

32,656,490

 

34,081,381

               

Diluted

33,050,934

 

35,028,956

 

33,486,515

 

35,091,644

               

(a) Includes stock-based compensation expense of $3.9 million and $3.2 million for the three months ended April 23, 2016 and April 25, 2015, respectively, and $12.6 million and $10.8 million for the nine months ended April 23, 2016 and April 25, 2015, respectively.

 

(b) Includes $4.2 million and $10.1 million for the three and nine months ended April 23, 2016 for non-cash amortization of the debt discount associated with the 0.75% convertible senior notes due 2021 issued in September 2015.

 

(c) The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its 7.125% senior subordinated notes due 2021 on September 15, 2015.

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP FINANCIAL MEASURES

Unaudited

 
 

NON-GAAP ORGANIC CONTRACT REVENUES AND NON-GAAP ORGANIC CONTRACT REVENUES GROWTH %

                   
 

Contract
Revenues -
GAAP

 

Revenues
from
businesses
acquired

 

Non-GAAP
- Organic
Contract
Revenues

 

GAAP
- Growth
%

 

Non-GAAP
- Organic
Growth

%

 

(Dollars in thousands)

                   

Three Months Ended April 23, 2016

$

664,645

 

$

(30,779)

 

$

633,866

 

35.0%

 

28.7%

                   

Three Months Ended April 25, 2015

$

492,363

 

$

 

$

492,363

       
                   

Nine Months Ended April 23, 2016

$

1,883,383

 

$

(110,363)

 

$

1,773,020

 

30.4%

 

23.7%

                   

Nine Months Ended April 25, 2015

$

1,443,833

 

$

(10,252)

 

$

1,433,581

       

 

               

NON-GAAP ADJUSTED EBITDA

                 
               
 

Three Months

 

Three Months

 

Nine Months

 

Nine Months

 

Ended

 

Ended

 

Ended

 

Ended

 

April 23, 2016

 

April 25, 2015

 

April 23, 2016

 

April 25, 2015

 

(Dollars in thousands)

Reconciliation of net income to Non-GAAP Adjusted
EBITDA:

             

Net income

$

33,083

 

$

20,258

 

$

79,380

 

$

50,497

Interest expense, net

8,007

 

6,646

 

25,010

 

20,126

Provision for income taxes

19,368

 

11,999

 

47,995

 

31,678

Depreciation and amortization expense

31,583

 

23,985

 

88,930

 

70,179

  Earnings Before Interest, Taxes, Depreciation &
  Amortization ("EBITDA")

92,041

 

62,888

 

241,315

 

172,480

Gain on sale of fixed assets

(4,061)

 

(3,067)

 

(6,213)

 

(6,249)

Stock-based compensation expense

3,892

 

3,219

 

12,600

 

10,773

Loss on debt extinguishment

 

 

16,260

 

  Non-GAAP Adjusted EBITDA

$

91,872

 

$

63,040

 

$

263,962

 

$

177,004

 

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)

Unaudited

       

NON-GAAP ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER COMMON SHARE

       
 

        Three Months        

 

Nine Months

 

Ended

 

Ended

 

April 23, 2016

 

April 23, 2016

 

(Dollars in thousands,

except share amounts)

Reconciliation of Non-GAAP Adjusted Net Income:

     
       

Net income

$

33,083

 

$

79,380

       

Adjustments

     

Pre-tax loss on debt extinguishment

 

16,260

Pre-tax non-cash amortization of debt discount

4,192

 

10,119

Tax impact of adjustments

(1,580)

 

(10,045)

Total adjustments, net of tax

2,612

 

16,334

       

Non-GAAP Adjusted Net Income

$

35,695

 

$

95,714

       

Reconciliation of Non-GAAP Adjusted Diluted Earnings per Common
Share:

     
       

Net income per common share

$

1.00

 

$

2.37

Total adjustments from above, net of tax

0.08

 

0.49

Non-GAAP Adjusted Diluted Earnings per Common Share

$

1.08

 

$

2.86

       

Diluted shares used in computing Adjusted Diluted Earnings per Common
Share

33,050,934

 

33,486,515

 
 

OUTLOOK - ADJUSTED DILUTED EARNINGS PER COMMON SHARE

   
 

Outlook for the

 

Three Months Ending

 

July 30, 2016 (a)(b)

   
   

Diluted earnings per common share

   $1.36 - $1.51

   

Adjustment

 

After-tax non-cash amortization of debt discount (c)

$0.09

   

Non-GAAP Adjusted Diluted Earnings per Common Share

   $1.45 - $1.60

   
   

(a) The fourth quarter of fiscal 2016 contains an additional week of operations as a result of the Company's 52/53 week fiscal year.

 

(b) Guidance for diluted earnings per common share and Non-GAAP adjusted diluted earnings per common share for the three months ended July 30, 2016 were computed using approximately 32.1 million in diluted weighted average shares outstanding.

 

(c) The Company expects to recognize approximately $4.6 million in pre-tax interest expense during the three months ended July 30, 2016 for non-cash amortization of the debt discount associated with its 0.75% senior convertible notes. The Company excludes the effect of this amortization in its Non-GAAP financial measures.

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)

 

Explanation of Non-GAAP Financial Measures

 

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company's quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the Company's performance for the period reported with the Company's performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. Management defines the Non-GAAP financial measures used in this release as follows:

 
  • Non-GAAP Organic Contract Revenues - contract revenues from businesses that are included for the entire period in both the current and prior year periods. Non-GAAP Organic Contract Revenue growth (decline) is calculated as the percentage change in Non-GAAP Organic Contract Revenues over those of the comparable prior year period. Management believes organic growth (decline) is a helpful measure for comparing the Company's revenue performance with prior periods.
     
  • Non-GAAP Adjusted EBITDA - net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, loss on debt extinguishment, and certain non-recurring items. Management believes Non-GAAP Adjusted EBITDA is a helpful measure for comparing the Company's operating performance with prior periods as well as with the performance of other companies with different capital structures or tax rates.
     
  • Non-GAAP Adjusted Net Income - GAAP net income before loss on debt extinguishment, non-cash amortization of the debt discount, certain non-recurring items and any tax impact related to these items, and "Non-GAAP Adjusted Diluted Earnings per Common Share" as Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding. Management excludes or adjusts each of the items identified below from Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per Common Share:

 

    • Non-cash amortization of the debt discount - The Company's 0.75% senior convertible notes due September 2021 (the "Notes") were allocated between debt and equity components. The difference between the principal amount and the carrying amount of the liability component of the notes represents a debt discount. The debt discount will be amortized over the term of the notes but will not result in periodic cash interest payments. During the three and nine months ended April 23, 2016, the Company recognized approximately $4.2 million and $10.1 million, respectively, in pre-tax interest expense for non-cash amortization of the debt discount associated with the Notes. The Company has excluded the non-cash amortization of the debt discount from its Non-GAAP financial measures because it believes it is useful to analyze the component of interest expense for the Notes that will be paid in cash. The exclusion of the non-cash amortization from the Company's Non-GAAP financial measures provides management with a consistent measure for assessing financial results.
       
    • Loss on debt extinguishment - The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its 7.125% senior subordinated notes in the first quarter of fiscal 2016. Management believes excluding the loss on debt extinguishment from the Company's Non-GAAP financial measures assists investors' overall understanding of the Company's current financial performance.  The Company believes this type of charge is not indicative of its core operating results. The exclusion of the loss on debt extinguishment from the Company's Non-GAAP financial measures provides management with a consistent measure for assessing the current and historical financial results.
       
    • Tax impact of adjusted results - The tax impact of the adjusted results for the three and nine months ended April 23, 2016 was calculated utilizing a Non-GAAP effective tax rate which approximates the Company's effective tax rate used for financial planning. The tax impact included in the Company's guidance for the quarter ending July 30, 2016 was calculated using an effective tax rate used for financial planning and forecasting future results.

 

 

SOURCE Dycom Industries, Inc.


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