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Dycom Industries, Inc. Announces Fiscal 2017 Fourth Quarter And Annual Results And Provides Guidance For The Next Fiscal Quarter

PALM BEACH GARDENS, Fla., Aug. 30, 2017 /PRNewswire/ -- Dycom Industries, Inc. (NYSE: DY) announced today its results for the fourth quarter and fiscal year ended July 29, 2017. The Company reported:

  • Contract revenues of $780.2 million for the quarter ended July 29, 2017, compared to $789.2 million for the quarter ended July 30, 2016. Contract revenues for the quarter ended July 29, 2017 grew 4.6% on an organic basis. Organic contract revenues exclude contract revenues from acquired businesses that were not owned for the entire period in both the current and prior year quarter and adjust for the additional week of operations during the quarter ended July 30, 2016 as a result of the Company's 52/53 week fiscal year. Total contract revenues from acquired businesses were $19.3 million for the quarter ended July 29, 2017, compared to $5.6 million for the quarter ended July 30, 2016.
  • Non-GAAP Adjusted EBITDA of $118.0 million, or 15.1% of contract revenues, for the quarter ended July 29, 2017, compared to $126.0 million, or 16.0% of contract revenues, for the quarter ended July 30, 2016.
  • On a GAAP basis, net income was $43.7 million, or $1.38 per common share diluted, for the quarter ended July 29, 2017, compared to net income of $49.4 million, or $1.54 per common share diluted, for the quarter ended July 30, 2016. Non-GAAP Adjusted Net Income was $46.5 million, or $1.47 per common share diluted, for the quarter ended July 29, 2017, compared to Non-GAAP Adjusted Net Income of $52.7 million, or $1.64 per common share diluted, for the quarter ended July 30, 2016. Non-GAAP Adjusted Net Income for the quarters ended July 29, 2017 and July 30, 2016 excludes $4.5 million and $4.6 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. Additionally, Non-GAAP Adjusted Net Income for the quarter ended July 30, 2016 excludes $0.7 million of pre-tax acquisition transaction related costs.

The Company also reported:

  • Contract revenues of $3.067 billion for the fiscal year ended July 29, 2017, compared to $2.673 billion for the fiscal year ended July 30, 2016. Contract revenues for the fiscal year ended July 29, 2017 grew 14.1% on an organic basis. Organic contract revenues exclude contract revenues from acquired businesses that were not owned for the entire period in both the current and prior year period and adjust for the additional week of operations during the fourth quarter of fiscal 2016 as a result of the Company's 52/53 week fiscal year. Total contract revenues from acquired businesses were $214.9 million for the fiscal year ended July 29, 2017, compared to $119.8 million for the fiscal year ended July 30, 2016.
  • Non-GAAP Adjusted EBITDA of $441.6 million, or 14.4% of contract revenues, for the fiscal year ended July 29, 2017, compared to $390.0 million, or 14.6% of contract revenues, for the fiscal year ended July 30, 2016.
  • On a GAAP basis, net income was $157.2 million, or $4.92 per common share diluted, for the fiscal year ended July 29, 2017, compared to net income of $128.7 million, or $3.89 per common share diluted, for the fiscal year ended July 30, 2016. Non-GAAP Adjusted Net Income was $168.3 million, or $5.26 per common share diluted, for the fiscal year ended July 29, 2017, compared to Non-GAAP Adjusted Net Income of $148.4 million, or $4.48 per common share diluted, for the fiscal year ended July 30, 2016. Non-GAAP Adjusted Net Income for the fiscal year ended July 29, 2017 and July 30, 2016 excludes $17.6 million and $14.7 million, respectively, of pre-tax interest expense incurred for non-cash amortization of the debt discount associated with the Company's convertible senior notes. Non-GAAP Adjusted Net Income for the fiscal year ended July 30, 2016 also excludes $0.7 million of pre-tax acquisition transaction related costs, as well as the impact of a pre-tax charge of approximately $16.3 million for early extinguishment of debt.

The Company also announced its outlook for the first quarter of fiscal 2018. The Company currently expects total contract revenues for the first quarter of fiscal 2018 to range from $715 million to $745 million. On a GAAP basis, diluted earnings per common share for the first quarter of fiscal 2018 is expected to range from $0.72 to $0.87. Non-GAAP Adjusted Diluted Earnings per Common Share is expected to range from $0.81 to $0.96. Non-GAAP Adjusted Diluted Earnings per Common Share guidance excludes $4.5 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 first quarter of fiscal 2018, along with reconciliations of other Non-GAAP measures, 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, August 30, 2017; call (800) 553-5260 (United States) or (612) 332-0636 (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, September 29, 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 fourth 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 first quarter of fiscal 2018 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

 
 

July 29, 2017

 

July 30, 2016

ASSETS

   

Current assets:

   

Cash and equivalents

$

38,608

 

$

33,787

Accounts receivable, net

369,800

 

328,030

Costs and estimated earnings in excess of billings

389,286

 

376,972

Inventories

83,204

 

73,606

Deferred tax assets, net

26,524

 

22,733

Income tax receivable

7,493

 

Other current assets

23,603

 

16,106

  Total current assets

938,518

 

851,234

       

Property and equipment, net

422,107

 

326,670

Goodwill and other intangible assets, net

505,309

 

508,036

Other

33,373

 

33,776

Total non-current assets

960,789

 

868,482

Total assets

$

1,899,307

 

$

1,719,716

       

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities:

     

Accounts payable

$

132,974

 

$

115,492

Current portion of debt

21,656

 

13,125

Billings in excess of costs and estimated earnings

9,284

 

19,557

Accrued insurance claims

39,909

 

36,844

Income taxes payable

1,112

 

15,307

Other accrued liabilities

113,603

 

122,302

  Total current liabilities

318,538

 

322,627

       

Long-term debt

738,265

 

706,202

Accrued insurance claims

62,007

 

52,835

Deferred tax liabilities, net non-current

103,626

 

76,587

Other liabilities

5,288

 

4,178

Total liabilities

1,227,724

 

1,162,429

       

Total stockholders' equity

671,583

 

557,287

Total liabilities and stockholders' equity

$

1,899,307

 

$

1,719,716

 

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share amounts)

Unaudited

               
 

Three Months

 

Three Months

 

Fiscal Year

 

Fiscal Year

 

Ended

 

Ended

 

Ended

 

Ended

 

July 29, 2017

 

July 30, 2016

 

July 29, 2017

 

July 30, 2016

Contract revenues

$

780,188

 

$

789,159

 

$

3,066,880

 

$

2,672,542

               

Costs of earned revenues, excluding depreciation and amortization

606,898

 

605,909

 

2,404,734

 

2,083,579

General and administrative expenses (a)

59,519

 

62,146

 

239,231

 

217,149

Depreciation and amortization

40,244

 

36,010

 

147,906

 

124,940

Total

706,661

 

704,065

 

2,791,871

 

2,425,668

               

Interest expense, net (b)

(9,735)

 

(9,710)

 

(37,364)

 

(34,720)

Loss on debt extinguishment (c)

 

 

 

(16,260)

Other income, net

6,043

 

3,569

 

12,780

 

10,433

Income before income taxes

69,835

 

78,953

 

250,425

 

206,327

               

Provision for income taxes

26,127

 

29,593

 

93,208

 

77,587

               

Net income

$

43,708

 

$

49,360

 

$

157,217

 

$

128,740

               

Earnings per common share:

             
               

Basic earnings per common share

$

1.41

 

$

1.57

 

$

5.01

 

$

3.98

               

Diluted earnings per common share

$

1.38

 

$

1.54

 

$

4.92

 

$

3.89

               
               

Shares used in computing earnings per common share:

             

Basic

31,084,019

 

31,363,768

 

31,351,367

 

32,315,636

               

Diluted

31,664,148

 

32,074,169

 

31,984,731

 

33,115,755

               

(a) Includes stock-based compensation expense of $4.9 million and $4.2 million for the three months ended July 29, 2017 and July 30, 2016, respectively, and $20.8 million and $16.8 million for the fiscal year ended July 29, 2017 and July 30, 2016, respectively. Also includes $0.7 million of acquisition transaction related costs for the three months and fiscal year ended July 30, 2016.

(b) Includes $4.5 million and $4.6 million for the three months ended July 29, 2017 and July 30, 2016, respectively, and $17.6 million and $14.7 million for the fiscal year ended July 29, 2017 and July 30, 2016, respectively, for non-cash amortization of the debt discount associated with the Company's convertible senior notes 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.

 

 

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 (DECLINE) %'s

                       
 

Contract
Revenues - GAAP

 

Revenues
from acquired businesses (a)

 

Additional week of revenue as a result of the Company's 52/53 week year (b)

 

Non-GAAP

- Organic Contract Revenues

 

GAAP

- Growth (Decline)

%

 

Non-GAAP - Organic Growth

%

Three Months Ended July 29, 2017

$

780,188

 

$

(19,264)

 

$

 

$

760,924

 

(1.1)

%

 

4.6

%

                       

Three Months Ended July 30, 2016

$

789,159

 

$

(5,585)

 

$

(55,970)

 

$

727,604

       
                       

Fiscal Year Ended July 29, 2017

$

3,066,880

 

$

(214,936)

 

$

 

$

2,851,944

 

14.8

%

 

14.1

%

                       

Fiscal Year Ended July 30, 2016

$

2,672,542

 

$

(119,818)

 

$

(53,485)

 

$

2,499,239

       
                       

(a) Amounts for the three months and fiscal year ended July 29, 2017 and July 30, 2016 represent contract revenues from acquired businesses that were not owned for the full period in both the current and prior year periods.

(b) The fourth quarter of fiscal 2016 contained 14 weeks of operations as a result of the Company's 52/53 week fiscal year, compared to 13 weeks of operations in the fourth quarter of fiscal 2017. The Non-GAAP adjustment is calculated independently for each comparative period as (i) total fourth quarter of fiscal 2016 contract revenues less, (ii) contract revenues for the fourth quarter of fiscal 2016 from businesses acquired that were not owned for the full period in both the current and prior year period, (iii) divided by 14 weeks.

 

 

 

NON-GAAP ADJUSTED EBITDA

             
 

Three Months

 

Three Months

 

Fiscal Year

 

Fiscal Year

 

Ended

 

Ended

 

Ended

 

Ended

 

July 29, 2017

 

July 30, 2016

 

July 29, 2017

 

July 30, 2016

Reconciliation of net income to Non-GAAP Adjusted
EBITDA:

             

Net income

$

43,708

 

$

49,360

 

$

157,217

 

$

128,740

Interest expense, net

9,735

 

9,710

 

37,364

 

34,720

Provision for income taxes

26,127

 

29,593

 

93,208

 

77,587

Depreciation and amortization expense

40,244

 

36,010

 

147,906

 

124,940

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

119,814

 

124,673

 

435,695

 

365,987

Gain on sale of fixed assets

(6,645)

 

(3,593)

 

(14,866)

 

(9,806)

Stock-based compensation expense

4,874

 

4,249

 

20,805

 

16,850

Loss on debt extinguishment

 

 

 

16,260

Acquisition transaction related costs

 

715

 

 

715

  Non-GAAP Adjusted EBITDA

$

118,043

 

$

126,044

 

$

441,634

 

$

390,006

 

 

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

 

Fiscal Year

 

Fiscal Year

 

Ended

 

Ended

 

Ended

 

Ended

 

July 29, 2017

 

July 30, 2016

 

July 29, 2017

 

July 30, 2016

Reconciliation of Non-GAAP Adjusted Net Income:

             

Net income

$

43,708

 

$

49,360

 

$

157,217

 

$

128,740

               

Adjustments

             

Pre-tax non-cash amortization of debt discount

4,499

 

4,590

 

17,610

 

14,709

Pre-tax loss on debt extinguishment

 

 

 

16,260

Pre-tax acquisition transaction related costs

 

715

 

 

715

Tax impact of adjustments

(1,675)

 

(1,995)

 

(6,561)

 

(12,040)

Total adjustments, net of tax

2,824

 

3,310

 

11,049

 

19,644

               

Non-GAAP Adjusted Net Income

$

46,532

 

$

52,670

 

$

168,266

 

$

148,384

               

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

             

Net income per common share

$

1.38

 

$

1.54

 

$

4.92

 

$

3.89

Total adjustments from above, net of tax

0.09

 

0.10

 

0.35

 

0.59

Non-GAAP Adjusted Diluted Earnings per Common
Share

$

1.47

 

$

1.64

 

$

5.26

 

$

4.48

               

Diluted shares used in computing Adjusted Diluted Earnings per Common Share

31,664,148

 

32,074,169

 

31,984,731

 

33,115,755

 

Amounts in table above may not add due to rounding.

 

 

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)

Unaudited

   

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

   
 

Outlook for the

 

Three Months Ending

 

October 28, 2017

Diluted earnings per common share - GAAP (a)

   $0.72 - $0.87

   

Adjustment

 

Adjustment for addback of after-tax non-cash amortization of debt discount on convertible senior notes (b)

$0.09

   

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

  $0.81 - $0.96

   

(a) Guidance for diluted earnings per common share and Non-GAAP Adjusted diluted earnings per common share for the three months ending October 28, 2017 were computed using approximately 31.9 million in diluted weighted average shares outstanding.

(b) The Company expects to recognize approximately $4.5 million in pre-tax interest expense during the three months ending October 28, 2017 for non-cash amortization of the debt discount associated with its convertible senior notes. The Company excludes the effect of this non-cash amortization of debt discount 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. In the fourth quarter of fiscal 2016 Non-GAAP Organic Contract Revenues were also adjusted for the additional week as a result of the Company's 52/53 week fiscal calendar. The Non-GAAP adjustment is calculated independently for each comparative period as (i) total fourth quarter of fiscal 2016 contract revenues less, (ii) contract revenues for the fourth quarter of fiscal 2016 from businesses acquired that were not owned for the full period in both the current and prior year period, (iii) divided by 14 weeks. 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 were allocated between debt and equity components. The difference between the principal amount and the carrying amount of the liability component of the convertible senior notes represents a debt discount. The debt discount is being amortized over the term of the convertible senior 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 convertible senior 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.
  • Acquisition transaction related costs - The Company incurred costs of approximately $0.7 million in connection with an acquisition during the fourth quarter of fiscal 2016. The exclusion of the acquisition transaction related costs from the Company's Non-GAAP financial measures provides management with a consistent measure for assessing financial results.
  • Tax impact of adjusted results - The tax impact of the adjusted results for the three months and fiscal year ended July 29, 2017 and July 30, 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 October 28, 2017 was calculated using an effective tax rate used for financial planning and forecasting future results.

 

SOURCE Dycom Industries, Inc.

For further information: Steven E. Nielsen, President and CEO, H. Andrew DeFerrari, Senior Vice President and CFO, (561) 627-7171