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Dycom Industries, Inc. Announces Fiscal 2017 Second Quarter Results And Provides Guidance For The Next Fiscal Quarter
PR Newswire
PALM BEACH GARDENS, Fla.

PALM BEACH GARDENS, Fla., March 1, 2017 /PRNewswire/ -- Dycom Industries, Inc. (NYSE: DY) announced today its results for the second quarter ended January 28, 2017. The Company reported:

  • Contract revenues of $701.1 million for the quarter ended January 28, 2017, compared to $559.5 million for the quarter ended January 23, 2016. Contract revenues for the quarter ended January 28, 2017 grew 22.9% 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 $13.4 million for the quarter ended January 28, 2017, compared to none for the quarter ended January 23, 2016.
  • Non-GAAP Adjusted EBITDA of $86.2 million, or 12.3% of contract revenues, for the quarter ended January 28, 2017, compared to $66.4 million, or 11.9% of contract revenues, for the quarter ended January 23, 2016.
  • On a GAAP basis, net income was $23.7 million, or $0.74 per common share diluted, for the quarter ended January 28, 2017, compared to net income of $15.5 million, or $0.46 per common share diluted, for the quarter ended January 23, 2016. Non-GAAP Adjusted Net Income was $26.4 million, or $0.82 per common share diluted, for the quarter ended January 28, 2017, compared to Non-GAAP Adjusted Net Income of $18.0 million, or $0.54 per common share diluted, for the quarter ended January 23, 2016. Non-GAAP Adjusted Net Income for the quarter ended January 28, 2017 and January 23, 2016 excludes $4.4 million and $4.1 million, respectively, of pre-tax interest expense incurred for non-cash amortization of the debt discount associated with the Company's 0.75% convertible senior notes due September 2021.

The Company also reported:

  • Contract revenues of $1.500 billion for the six months ended January 28, 2017, compared to $1.219 billion for the six months ended January 23, 2016. Contract revenues for the six months ended January 28, 2017 grew 20.3% 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 $101.2 million for the six months ended January 28, 2017, compared to $55.8 million for the six months ended January 23, 2016.
  • Non-GAAP Adjusted EBITDA of $215.4 million, or 14.4% of contract revenues, for the six months ended January 28, 2017, compared to $172.1 million, or 14.1% of contract revenues, for the six months ended January 23, 2016.
  • On a GAAP basis, net income was $74.7 million, or $2.32 per common share diluted, for the six months ended January 28, 2017, compared to net income of $46.3 million, or $1.37 per common share diluted, for the six months ended January 23, 2016. Non-GAAP Adjusted Net Income was $80.2 million, or $2.49 per common share diluted, for the six months ended January 28, 2017, compared to Non-GAAP Adjusted Net Income of $60.0 million, or $1.78 per common share diluted, for the six months ended January 23, 2016. Non-GAAP Adjusted Net Income for the six months ended January 28, 2017 and January 23, 2016 excludes $8.7 million and $5.9 million, respectively, of pre-tax interest expense incurred for non-cash amortization of the debt discount associated with the Company's 0.75% convertible senior notes due September 2021. Non-GAAP Adjusted Net Income for the six months ended January 23, 2016 also 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.

The Company also announced its outlook for the third quarter of fiscal 2017. The Company currently expects total contract revenues for the third quarter of fiscal 2017 to range from $715 million to $745 million. On a GAAP basis, diluted earnings per common share for the third quarter of fiscal 2017 is expected to range from $1.02 to $1.15. Non-GAAP Adjusted Diluted Earnings per Common Share is expected to range from $1.11 to $1.24. Non-GAAP Adjusted Diluted Earnings per Common Share guidance excludes $4.4 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. A reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share guidance provided for the third quarter of fiscal 2017 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, March 1, 2017; call (800) 230-1074 (United States) or (612) 234-9960 (International) ten minutes before the conference call begins and ask for the "Dycom Results" conference call. A live webcast of the conference call and related materials will be available at www.dycomind.com. If you are unable to attend the conference call at the scheduled time, a replay of the live webcast and related materials will be available at www.dycomind.com until Friday, March 31, 2017.

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 2017 second 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 include the third quarter of fiscal 2017 outlook, backlog and statements found under the "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 the Company's 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 the Company's customers, the adequacy of the Company's insurance and other reserves and allowances for doubtful accounts, whether the carrying value of the Company's 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, adjustments and cancellations related to the Company's backlog, 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 the Company's 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

(Dollars in thousands)

Unaudited

       
 

January 28, 2017

 

July 30, 2016

ASSETS

     

Current assets:

     

Cash and equivalents

$

29,491

 

$

33,787

Accounts receivable, net

308,867

 

328,030

Costs and estimated earnings in excess of billings

397,048

 

376,972

Inventories

84,535

 

73,606

Deferred tax assets, net

20,886

 

22,733

Income tax receivable

26,639

 

Other current assets

20,863

 

16,106

Total current assets

888,329

 

851,234

       

Property and equipment, net

344,120

 

326,670

Goodwill and other intangible assets, net

498,226

 

508,036

Other

35,768

 

33,776

Total non-current assets

878,114

 

868,482

Total assets

$

1,766,443

 

$

1,719,716

       

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities:

     

Accounts payable

$

99,318

 

$

115,492

Current portion of debt

18,813

 

13,125

Billings in excess of costs and estimated earnings

18,004

 

19,557

Accrued insurance claims

39,428

 

36,844

Income taxes payable

452

 

15,307

Other accrued liabilities

87,137

 

122,302

Total current liabilities

263,152

 

322,627

       

Long-term debt

740,575

 

706,202

Accrued insurance claims

59,693

 

52,835

Deferred tax liabilities, net non-current

83,352

 

76,587

Other liabilities

4,599

 

4,178

Total liabilities

1,151,371

 

1,162,429

       

Total stockholders' equity

615,072

 

557,287

Total liabilities and stockholders' equity

$

1,766,443

 

$

1,719,716

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share amounts)

Unaudited

               
 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

Ended

 

Ended

 

Ended

 

Ended

 

January 28,
2017

 

January 23,
2016

 

January 28,
2017

 

January 23,
2016

Contract revenues

$

701,131

 

$

559,470

 

$

1,500,355

 

$

1,218,738

               

Costs of earned revenues, excluding depreciation and
amortization

561,371

 

450,284

 

1,176,361

 

957,263

General and administrative expenses (a)

58,191

 

47,020

 

118,395

 

98,484

Depreciation and amortization

35,705

 

29,898

 

70,252

 

57,347

Total

655,267

 

527,202

 

1,365,008

 

1,113,094

               

Interest expense, net (b)

(9,181)

 

(7,872)

 

(18,248)

 

(17,003)

Loss on debt extinguishment (c)

 

 

 

(16,260)

Other income, net

1,006

 

1,072

 

1,946

 

2,542

Income before income taxes

37,689

 

25,468

 

119,045

 

74,923

               

Provision for income taxes

14,026

 

9,995

 

44,332

 

28,626

               

Net income

$

23,663

 

$

15,473

 

$

74,713

 

$

46,297

               

Earnings per common share:

             
               

Basic earnings per common share

$

0.75

 

$

0.47

 

$

2.37

 

$

1.41

               

Diluted earnings per common share

$

0.74

 

$

0.46

 

$

2.32

 

$

1.37

               
               

Shares used in computing earnings per common share:

                 

Basic

31,531,834

 

32,662,942

 

31,480,660

 

32,767,088

               

Diluted

32,161,566

 

33,520,136

 

32,180,923

 

33,703,438

               

(a) Includes stock-based compensation expense of $5.3 million and $4.2 million for the three months ended January 28, 2017
and January 23, 2016, respectively, and $11.0 million and $8.7 million for the six months ended January 28, 2017 and
January 23, 2016, respectively.

(b) Includes $4.4 million and $4.1 million for the three months ended January 28, 2017 and January 23, 2016, respectively,
and $8.7 million and $5.9 million for the six months ended January 28, 2017 and January 23, 2016, respectively, for non-cash
amortization of the debt discount associated with the 0.75% convertible senior notes due 2021 issued in September 2015.

(c) During the first quarter of fiscal 2016, 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.

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP FINANCIAL MEASURES

(Dollars in thousands)

Unaudited

 

CONTRACT REVENUES, NON-GAAP ORGANIC CONTRACT REVENUES, AND GROWTH %'s

                   
 

Contract
Revenues -
GAAP

 

Revenues
from
acquired
businesses (a)

 

Non-GAAP

- Organic
Contract
Revenues

 

GAAP

- Growth

%

 

Non-
GAAP -
Organic
Growth

%

Three Months Ended January 28, 2017

$

701,131

 

$

(13,414)

 

$

687,717

 

25.3%

 

22.9%

                   

Three Months Ended January 23, 2016

$

559,470

 

$

 

$

559,470

       
                   

Six Months Ended January 28, 2017

$

1,500,355

 

$

(101,163)

 

$

1,399,192

 

23.1%

 

20.3%

                   

Six Months Ended January 23, 2016

$

1,218,738

 

$

(55,805)

 

$

1,162,933

       
                   

(a) Amounts for the three and six months ended January 28, 2017 and January 23, 2016 represent revenues from acquired
businesses that were not owned for the full period in both the current and prior year periods.

 

NON-GAAP ADJUSTED EBITDA

             
 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

Ended

 

Ended

 

Ended

 

Ended

 

January 28,
2017

 

January 23,
2016

 

January 28,
2017

 

January 23,
2016

Reconciliation of net income to Non-GAAP Adjusted
EBITDA:

             

Net income

$

23,663

 

$

15,473

 

$

74,713

 

$

46,297

Interest expense, net

9,181

 

7,872

 

18,248

 

17,003

Provision for income taxes

14,026

 

9,995

 

44,332

 

28,626

Depreciation and amortization expense

35,705

 

29,898

 

70,252

 

57,347

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

82,575

 

63,238

 

207,545

 

149,273

Gain on sale of fixed assets

(1,729)

 

(1,016)

 

(3,172)

 

(2,152)

Stock-based compensation expense

5,309

 

4,200

 

11,015

 

8,708

Loss on debt extinguishment

 

 

 

16,260

Non-GAAP Adjusted EBITDA

$

86,155

 

$

66,422

 

$

215,388

 

$

172,089

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

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

(Dollars in thousands, except share amounts)

Unaudited

               

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

               
 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

Ended

 

Ended

 

Ended

 

Ended

 

January 28,
2017

 

January 23,
2016

 

January 28,
2017

 

January 23,
2016

Reconciliation of Non-GAAP Adjusted Net Income:

             

Net income

$

23,663

 

$

15,473

 

$

74,713

 

$

46,297

               

Adjustments

             

Pre-tax non-cash amortization of debt discount

4,379

 

4,148

 

8,686

 

5,928

Pre-tax loss on debt extinguishment

 

 

 

16,260

Tax impact of adjustments

(1,631)

 

(1,628)

 

(3,242)

 

(8,465)

Total adjustments, net of tax

2,748

 

2,520

 

5,444

 

13,723

               

Non-GAAP Adjusted Net Income

$

26,411

 

$

17,993

 

$

80,157

 

$

60,020

               

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

             

Net income per common share

$

0.74

 

$

0.46

 

$

2.32

 

$

1.37

Total adjustments from above, net of tax

0.09

 

0.08

 

0.17

 

0.41

Non-GAAP Adjusted Diluted Earnings per Common
Share

$

0.82

 

$

0.54

 

$

2.49

 

$

1.78

               

Diluted shares used in computing Adjusted Diluted
Earnings per Common Share

32,161,566

 

33,520,136

 

32,180,923

 

33,703,438

 

OUTLOOK - DILUTED EARNINGS PER COMMON SHARE AND NON-GAAP ADJUSTED DILUTED EARNINGS
PER COMMON SHARE

   
 

Outlook for the

 

Three Months
Ending

 

April 29, 2017

Diluted earnings per common share (a)

  $1.02 - $1.15

   

Adjustment

 

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

$0.09

   

Non-GAAP Adjusted diluted earnings per common share (a)

  $1.11 - $1.24

   

(a) Guidance for diluted earnings per common share and Non-GAAP adjusted diluted earnings per common share for the
three months ending April 29, 2017 were computed using approximately 32.0 million in diluted weighted average shares
outstanding.

(b) The Company expects to recognize approximately $4.4 million in pre-tax interest expense during the three months ending
April 29, 2017 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.

 

Amounts in tables above may not add due to rounding.

 

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 is calculated as the percentage change in Non-GAAP Organic Contract Revenues over those of the comparable prior year period. Management believes organic growth 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. Non-GAAP Adjusted Diluted Earnings per Common Share - 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% convertible senior 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 is being amortized over the term of the Notes but does not result in periodic cash interest payments. 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 six months ended January 28, 2017 and January 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 April 29, 2017 was calculated using an effective tax rate used for financial planning and forecasting future results.

 

SOURCE Dycom Industries, Inc.


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