UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 24, 2020
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. employer identification no.) | ||||||||||||||||||
| (Address of principal executive offices) (Zip Code) | ||||||||||||||||||||
Registrant’s telephone number, including area code: (561 ) 627-7171
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On November 24, 2020, Dycom Industries, Inc. (the “Company”) issued a press release reporting fiscal 2021 third quarter results. The Company also provided forward guidance. Additionally, on November 24, 2020, the Company made available related materials to be discussed during the Company’s webcast and conference call referred to in such press release. A copy of the press release and related conference call materials are furnished as Exhibits 99.1, 99.2, and 99.3, respectively, to this Current Report on Form 8-K and are incorporated into Item 2.02 of this Current Report on Form 8-K by reference.
The information in the preceding paragraphs, as well as Exhibits 99.1, 99.2, and 99.3, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference into another filing under the Exchange Act or the Securities Act of 1933 (the “Securities Act”) if such subsequent filing specifically references this Current Report on Form 8-K.
Forward Looking Statements
This Current Report on Form 8-K, including the press release and related slide presentation and non-GAAP reconciliations that are furnished as exhibits to this Current Report on Form 8-K, contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. Forward-looking statements are based on management’s current expectations, estimates and projections. These statements are subject to risks and uncertainties that may cause actual results for completed periods and periods in the future to differ materially from the results projected or implied in any forward-looking statements contained in this Current Report on Form 8-K. 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 the impact of the COVID-19 pandemic on our business operating results, cash flows and/or financial condition and the impacts of the measures we have taken in response to the COVID-19 pandemic, business and economic conditions and trends in the telecommunications industry affecting the Company’s customers, fluctuations in customer capital budgets and spending priorities, 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, weather conditions, 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. These filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov. The Company does not undertake to update forward-looking statements except as required by law.
Item 9.01 Financial Statement and Exhibits.
(d)Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: November 24, 2020
| DYCOM INDUSTRIES, INC. (Registrant) | |||||
| By: | /s/ Ryan F. Urness | ||||
| Name: | Ryan F. Urness | ||||
| Title: | Vice President, General Counsel and Corporate Secretary | ||||
Exhibit 99.1
N E W S R E L E A S E
| FOR IMMEDIATE RELEASE | Contact: | Steven E. Nielsen, President and CEO H. Andrew DeFerrari, Senior Vice President and CFO Callie A. Tomasso, Investor Relations (561) 627-7171 | ||||||
November 24, 2020
DYCOM INDUSTRIES, INC. ANNOUNCES FISCAL 2021 THIRD QUARTER RESULTS
Palm Beach Gardens, Florida, November 24, 2020 - Dycom Industries, Inc. (NYSE: DY) announced today its results for the third quarter and nine months ended October 24, 2020.
Third Quarter Fiscal 2021 Highlights
•Contract revenues of $810.3 million for the quarter ended October 24, 2020, compared to $884.1 million for the quarter ended October 26, 2019. Contract revenues decreased 9.4% on an organic basis after excluding $8.9 million in contract revenues from storm restoration services for the quarter ended October 24, 2020.
•Non-GAAP Adjusted EBITDA of $92.8 million, or 11.5% of contract revenues, for the quarter ended October 24, 2020, compared to $91.7 million, or 10.4% of contract revenues, for the quarter ended October 26, 2019.
•On a GAAP basis, net income was $33.9 million, or $1.05 per common share diluted, for the quarter ended October 24, 2020, compared to $24.2 million, or $0.76 per common share diluted, for the quarter ended October 26, 2019. Non-GAAP Adjusted Net Income was $34.4 million, or $1.06 per common share diluted, for the quarter ended October 24, 2020, compared to $28.1 million, or $0.88 per common share diluted for the quarter ended October 26, 2019.
•Notional net debt was reduced by $110.1 million during the quarter. As of October 24, 2020, the Company had cash and equivalents of $12.0 million, borrowings on its revolving line of credit of $85.0 million, $427.5 million of term loans outstanding and $58.3 million aggregate principal amount of 0.75% convertible senior notes due September 2021 (the “Notes”) outstanding.
Year-to-Date Fiscal 2021 Highlights
•Contract revenues of $2.449 billion for the nine months ended October 24, 2020, compared to $2.602 billion for the nine months ended October 26, 2019. Contract revenues for the nine months ended October 24, 2020 decreased 6.1% on an organic basis after excluding $8.9 million and $4.7 million in contract revenues from storm restoration services for the nine months ended October 24, 2020 and October 26, 2019, respectively.
•Non-GAAP Adjusted EBITDA of $265.3 million, or 10.8% of contract revenues, for the nine months ended October 24, 2020, compared to $254.6 million, or 9.8% of contract revenues, for the nine months ended October 26, 2019. Non-GAAP Adjusted EBITDA for the nine months ended October 26, 2019 excludes $11.0 million of income before taxes reflecting the net benefit of a contract modification.
•On a GAAP basis, net income was $38.5 million, or $1.20 per common share diluted, for the nine months ended October 24, 2020, compared to $68.4 million, or $2.15 per common share diluted, for the nine months ended October 26, 2019. Non-GAAP Adjusted Net Income was $83.7 million, or $2.61 per common share diluted, for the nine months ended October 24, 2020, compared to $72.4 million, or $2.28 per common share diluted, for the nine months ended October 26, 2019. Non-GAAP Adjusted Net Income for the nine months ended October 26, 2019 excludes net income of $7.3 million, or $0.23 per common share diluted, reflecting the after-tax net benefit of a contract modification.
Net income on a GAAP basis for the nine months ended October 24, 2020 includes a pre-tax goodwill impairment charge of
$53.3 million recognized during the first quarter for a reporting unit that generated revenue of less than 4% of Dycom’s
consolidated revenue and did not incur losses in fiscal 2020.
•During the nine months ended October 24, 2020, the Company purchased $401.7 million aggregate principal amount of Notes for $371.4 million, including interest and fees. As a result, net income on a GAAP basis for the nine months ended October 24, 2020 includes a pre-tax gain of approximately $12.0 million.
Outlook
For the quarter ending January 30, 2021 (which includes an additional week of operations as a result of the Company’s 52/53 week fiscal year), the Company expects modestly lower contract revenues with margins that range from in-line to modestly higher, as compared to the quarter ended January 25, 2020. The Company believes the impact of the COVID-19 pandemic on its operating results, cash flows and financial condition is uncertain, unpredictable and could affect its ability to achieve these expected financial results.
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 Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures in the press release tables that follow.
Conference Call Information and Other Selected Data
The Company will host a conference call to discuss fiscal 2021 third quarter results on Tuesday, November 24, 2020 at 9:00 a.m. Eastern time. A live webcast of the conference call and related materials will be available on the Company’s Investor Center website at https://ir.dycomind.com. Parties interested in participating via telephone should dial (833) 519-1313 (United States) or (914) 800-3879 (International) with the conference ID 1388665, ten minutes before the conference call begins. For those who cannot participate at the scheduled time, a replay of the live webcast and the related materials will be available at https://ir.dycomind.com until Thursday, December 24, 2020.
About Dycom Industries, Inc.
Dycom is a leading provider of specialty contracting services throughout the United States. These services include program management; planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications providers. Additionally, Dycom provides underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities.
Forward Looking Information
This press release contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. These
statements include those related to the outlook for the quarter ending January 30, 2021 found under the “Outlook” section of this release. These statements are subject to change. Forward looking statements are based on management’s current expectations, estimates and projections. These statements are subject to risks and uncertainties that may cause actual results for completed periods and periods 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 the projected impact of COVID-19 on the Company’s business operating results, cash flows and/or financial condition and the impacts of the measures the Company has taken in response to COVID-19, the Company’s ability to effectively execute its business and capital plans, business and economic conditions and trends in the telecommunications industry affecting the Company’s customers, customer capital budgets and spending priorities, 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 of the Company’s projects, the related impact to the Company’s backlog from project cancellations, weather conditions, the anticipated outcome of other contingent events, including litigation, liquidity and other financial needs, the availability of financing, the Company’s ability to generate sufficient cash to service its indebtedness, restrictions imposed by the Company’s credit agreement, 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 any obligation to update forward-looking statements.
---Tables Follow---
2
| DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Dollars in thousands) | |||||||||||
| Unaudited | |||||||||||
| October 24, 2020 | January 25, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and equivalents | $ | 12,036 | $ | 54,560 | |||||||
| Accounts receivable, net | 938,941 | 817,245 | |||||||||
| Contract assets | 204,516 | 253,005 | |||||||||
| Inventories | 70,827 | 98,324 | |||||||||
| Income tax receivable | 724 | 3,168 | |||||||||
| Other current assets | 38,462 | 31,991 | |||||||||
| Total current assets | 1,265,506 | 1,258,293 | |||||||||
| Property and equipment, net | 288,292 | 376,610 | |||||||||
| Operating lease right-of-use assets | 65,912 | 69,596 | |||||||||
| Goodwill and other intangible assets, net | 396,976 | 465,694 | |||||||||
| Other | 48,378 | 47,438 | |||||||||
| Total non-current assets | 799,558 | 959,338 | |||||||||
| Total assets | $ | 2,065,064 | $ | 2,217,631 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 183,679 | $ | 119,612 | |||||||
| Current portion of debt | 78,121 | 22,500 | |||||||||
| Contract liabilities | 16,412 | 16,332 | |||||||||
| Accrued insurance claims | 43,623 | 38,881 | |||||||||
| Operating lease liabilities | 26,075 | 26,581 | |||||||||
| Income taxes payable | 8,413 | 344 | |||||||||
| Other accrued liabilities | 107,392 | 98,775 | |||||||||
| Total current liabilities | 463,715 | 323,025 | |||||||||
| Long-term debt | 490,000 | 844,401 | |||||||||
| Accrued insurance claims - non-current | 67,195 | 56,026 | |||||||||
| Operating lease liabilities - non-current | 40,327 | 43,606 | |||||||||
| Deferred tax liabilities, net - non-current | 55,360 | 75,527 | |||||||||
| Other liabilities | 35,343 | 6,442 | |||||||||
| Total liabilities | 1,151,940 | 1,349,027 | |||||||||
| Total stockholders’ equity | 913,124 | 868,604 | |||||||||
| Total liabilities and stockholders’ equity | $ | 2,065,064 | $ | 2,217,631 | |||||||
3
| DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (Dollars in thousands, except share amounts) | |||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||
| Quarter | Quarter | Nine Months | Nine Months | ||||||||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||||||||
| October 24, 2020 | October 26, 2019 | October 24, 2020 | October 26, 2019 | ||||||||||||||||||||
| Contract revenues | $ | 810,256 | $ | 884,115 | $ | 2,448,500 | $ | 2,602,079 | |||||||||||||||
Costs of earned revenues, excluding depreciation and amortization1 | 658,355 | 724,378 | 1,996,514 | 2,146,527 | |||||||||||||||||||
General and administrative2,3 | 62,628 | 69,875 | 195,871 | 193,613 | |||||||||||||||||||
| Depreciation and amortization | 42,313 | 47,356 | 132,313 | 140,941 | |||||||||||||||||||
Goodwill impairment charge4 | — | — | 53,264 | — | |||||||||||||||||||
| Total | 763,296 | 841,609 | 2,377,962 | 2,481,081 | |||||||||||||||||||
Interest expense, net5 | (4,710) | (13,128) | (25,020) | (38,239) | |||||||||||||||||||
Gain on debt extinguishment6 | — | — | 12,046 | — | |||||||||||||||||||
| Other income, net | 3,708 | 1,407 | 7,921 | 11,111 | |||||||||||||||||||
| Income before income taxes | 45,958 | 30,785 | 65,485 | 93,870 | |||||||||||||||||||
Provision for income taxes7 | 12,032 | 6,556 | 26,953 | 25,466 | |||||||||||||||||||
| Net income | $ | 33,926 | $ | 24,229 | $ | 38,532 | $ | 68,404 | |||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic earnings per common share | $ | 1.06 | $ | 0.77 | $ | 1.21 | $ | 2.17 | |||||||||||||||
| Diluted earnings per common share | $ | 1.05 | $ | 0.76 | $ | 1.20 | $ | 2.15 | |||||||||||||||
| Shares used in computing earnings per common share: | |||||||||||||||||||||||
| Basic | 31,878,583 | 31,502,543 | 31,744,199 | 31,480,759 | |||||||||||||||||||
| Diluted | 32,425,300 | 31,826,845 | 32,106,661 | 31,811,505 | |||||||||||||||||||
4
| 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 DECLINE %’s | |||||||||||||||||||||||||||||
| Contract Revenues - GAAP | Revenues from storm restoration services | Non-GAAP - Organic Contract Revenues | GAAP - Decline % | Non-GAAP - Organic Decline % | |||||||||||||||||||||||||
| Quarter Ended October 24, 2020 | $ | 810,256 | $ | (8,894) | $ | 801,362 | (8.4) | % | (9.4) | % | |||||||||||||||||||
| Quarter Ended October 26, 2019 | $ | 884,115 | $ | — | $ | 884,115 | |||||||||||||||||||||||
| Nine Months Ended October 24, 2020 | $ | 2,448,500 | $ | (8,894) | $ | 2,439,606 | (5.9) | % | (6.1) | % | |||||||||||||||||||
| Nine Months Ended October 26, 2019 | $ | 2,602,079 | $ | (4,716) | $ | 2,597,363 | |||||||||||||||||||||||
| NET INCOME AND NON-GAAP ADJUSTED EBITDA | |||||||||||||||||||||||
| Quarter | Quarter | Nine Months | Nine Months | ||||||||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||||||||
| October 24, 2020 | October 26, 2019 | October 24, 2020 | October 26, 2019 | ||||||||||||||||||||
| Reconciliation of net income to Non-GAAP Adjusted EBITDA: | |||||||||||||||||||||||
| Net income | $ | 33,926 | $ | 24,229 | $ | 38,532 | $ | 68,404 | |||||||||||||||
| Interest expense, net | 4,710 | 13,128 | 25,020 | 38,239 | |||||||||||||||||||
| Provision for income taxes | 12,032 | 6,556 | 26,953 | 25,466 | |||||||||||||||||||
| Depreciation and amortization | 42,313 | 47,356 | 132,313 | 140,941 | |||||||||||||||||||
| Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”) | 92,981 | 91,269 | 222,818 | 273,050 | |||||||||||||||||||
| Gain on sale of fixed assets | (4,001) | (2,241) | (9,207) | (13,785) | |||||||||||||||||||
| Stock-based compensation expense | 3,796 | 2,694 | 10,490 | 8,450 | |||||||||||||||||||
Goodwill impairment charge4 | — | — | 53,264 | — | |||||||||||||||||||
Gain on debt extinguishment6 | — | — | (12,046) | — | |||||||||||||||||||
Charge for warranty costs1 | — | — | — | 8,200 | |||||||||||||||||||
Recovery of previously reserved accounts receivable and contract assets3 | — | — | — | (10,345) | |||||||||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 92,776 | $ | 91,722 | $ | 265,319 | $ | 265,570 | |||||||||||||||
| Non-GAAP Adjusted EBITDA % of contract revenues | 11.5 | % | 10.4 | % | 10.8 | % | 10.2 | % | |||||||||||||||
Non-GAAP Adjusted EBITDA, excluding contract modification8 | $ | 254,610 | |||||||||||||||||||||
Non-GAAP Adjusted EBITDA, excluding contract modification % of contract revenues8 | 9.8 | % | |||||||||||||||||||||
5
| 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, DILUTED EARNINGS PER COMMON SHARE, AND NON-GAAP ADJUSTED DILUTED EARNINGS PER COMMON SHARE | |||||||||||||||||||||||
| Quarter | Quarter | Nine Months | Nine Months | ||||||||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||||||||
| October 24, 2020 | October 26, 2019 | October 24, 2020 | October 26, 2019 | ||||||||||||||||||||
| Reconciliation of net income to Non-GAAP Adjusted Net Income: | |||||||||||||||||||||||
| Net income | $ | 33,926 | $ | 24,229 | $ | 38,532 | $ | 68,404 | |||||||||||||||
| Pre-Tax Adjustments: | |||||||||||||||||||||||
| Non-cash amortization of debt discount on Notes | 643 | 5,068 | 6,732 | 15,016 | |||||||||||||||||||
Gain on debt extinguishment6 | — | — | (12,046) | — | |||||||||||||||||||
Goodwill impairment charge4 | — | — | 53,264 | — | |||||||||||||||||||
Charge for warranty costs1 | — | — | — | 8,200 | |||||||||||||||||||
Recovery of previously reserved accounts receivable and contract assets3 | — | — | — | (10,345) | |||||||||||||||||||
| Tax Adjustments: | |||||||||||||||||||||||
| Tax impact of the vesting and exercise of share-based awards | (33) | 163 | (241) | 801 | |||||||||||||||||||
Tax effect from net operating loss carryback under enacted CARES Act7 | — | — | (2,631) | — | |||||||||||||||||||
| Tax impact related to previous tax year filing | — | — | — | 1,092 | |||||||||||||||||||
| Tax impact of pre-tax adjustments | (177) | (1,394) | 113 | (3,540) | |||||||||||||||||||
| Total adjustments, net of tax | 433 | 3,837 | 45,191 | 11,224 | |||||||||||||||||||
| Non-GAAP Adjusted Net Income | $ | 34,359 | $ | 28,066 | $ | 83,723 | $ | 79,628 | |||||||||||||||
Non-GAAP Adjusted Net Income, excluding contract modification8 | $ | 72,378 | |||||||||||||||||||||
| Reconciliation of diluted earnings per common share to Non-GAAP Adjusted Diluted Earnings per Common Share: | |||||||||||||||||||||||
| GAAP diluted earnings per common share | $ | 1.05 | $ | 0.76 | $ | 1.20 | $ | 2.15 | |||||||||||||||
| Total adjustments, net of tax | 0.01 | 0.12 | 1.41 | 0.35 | |||||||||||||||||||
| Non-GAAP Adjusted Diluted Earnings per Common Share | $ | 1.06 | $ | 0.88 | $ | 2.61 | $ | 2.50 | |||||||||||||||
Non-GAAP Adjusted Diluted Earnings per Common Share, excluding contract modification8 | $ | 2.28 | |||||||||||||||||||||
| Shares used in computing Non-GAAP Adjusted Diluted Earnings per Common Share | 32,425,300 | 31,826,845 | 32,106,661 | 31,811,505 | |||||||||||||||||||
| Amounts in table above may not add due to rounding. | |||||||||||||||||||||||
6
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 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, excluding contract revenues from storm restoration services. Non-GAAP Organic Contract Revenue (decline) growth is calculated as the percentage change in Non-GAAP Organic Contract Revenues over those of the comparable prior year periods. Management believes organic (decline) 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, 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 the non-cash amortization of the debt discount and the related tax impact, certain tax impacts resulting from vesting and exercise of share-based awards, and certain non-recurring items. Management believes Non-GAAP Adjusted Net Income is a helpful measure for comparing the Company’s operating performance with prior periods.
•Non-GAAP Adjusted Diluted Earnings per Common Share - Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding.
•Notional Net Debt - Notional net debt is a Non-GAAP financial measure that is calculated by subtracting cash and equivalents from the aggregate face amount of outstanding long-term debt. Management believes notional net debt is a helpful measure to assess the Company’s liquidity.
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 debt discount on Notes - The Company’s 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 excludes 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.
•Goodwill impairment charge - The Company incurred a goodwill impairment charge of $53.3 million for a reporting unit that performs installation services inside third party premises. Management believes excluding the goodwill impairment charge from the Company’s Non-GAAP financial measures assists investors’ overall understanding of the Company’s current financial performance and provides management with a consistent measure for assessing the current and historical financial results.
•Gain on debt extinguishment - During the nine months ended October 24, 2020, the Company recognized a gain on debt extinguishment of $12.0 million in connection with its purchase of $401.7 million aggregate principal amount of Notes for $371.4 million, including interest and fees. Management believes excluding the gain on debt extinguishment from the Company’s Non-GAAP financial measures assists investors’ overall understanding of the Company’s current financial performance and provides management with a consistent measure for assessing the current and historical financial results.
7
•Charge for warranty costs - During the nine month ended October 26, 2019, the Company recorded an $8.2 million pre-tax charge in the first quarter for estimated warranty costs for work performed for a customer in prior periods. The Company excludes the impact of this charge from its Non-GAAP financial measures because the Company believes it is not indicative of its underlying results in the current period.
•Recovery of previously reserved accounts receivable and contract assets - During the nine months ended October 26, 2019, the Company recognized $10.3 million of pre-tax income from the recovery of previously reserved accounts receivable and contract assets in the first quarter based on collections from a customer. The Company excludes the impact of this recovery from its Non-GAAP financial measures because the Company believes it is not indicative of its underlying results.
•Tax impact of the vesting and exercise of share-based awards - The Company excludes certain tax impacts resulting from the vesting and exercise of share-based awards as these amounts may vary significantly from period to period. Excluding these amounts from the Company’s Non-GAAP financial measures provides management with a more consistent measure for assessing financial results.
•Tax effect from a net operating loss carryback under enacted CARES Act - For the nine months ended October 24, 2020, the Company recognized an income tax benefit of $2.6 million during the first quarter from a net operating loss carryback under the enacted U.S. Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The Company excludes this impact because the Company believes it is not indicative of the Company’s underlying results or ongoing operations.
•Tax impact of previous tax year filing - During the nine months ended October 26, 2019, the Company recognized an income tax expense of $1.1 million on a previous tax year filing. The Company excludes this impact because the Company believes it is not indicative of the Company’s underlying results or ongoing operations.
•Tax impact of pre-tax adjustments - The tax impact of pre-tax adjustments reflects the Company’s estimated tax impact of specific adjustments and the effective tax rate used for financial planning for the applicable period.
8
Notes
1 During the nine months ended October 26, 2019, the Company recorded an $8.2 million pre-tax charge in the first quarter for estimated warranty costs for work performed for a customer in prior periods.
2 Includes stock-based compensation expense of $3.8 million and $2.7 million for the quarters ended October 24, 2020 and October 26, 2019, respectively, and $10.5 million and $8.5 million for the nine months ended October 24, 2020 and October 26, 2019, respectively.
3 During the nine months ended October 26, 2019, the Company recognized $10.3 million of pre-tax income from the recovery of previously reserved accounts receivable and contract assets in the first quarter based on collections from a customer.
4 The Company incurred a goodwill impairment charge of $53.3 million during the nine months ended October 24, 2020 for a reporting unit that performs installation services inside third party premises.
5 Includes pre-tax interest expense for non-cash amortization of the debt discount associated with the Notes of $0.6 million and $5.1 million for the quarters ended October 24, 2020 and October 26, 2019, respectively, and $6.7 million and $15.0 million for the nine months ended October 24, 2020 and October 26, 2019, respectively.
6 During the nine months ended October 24, 2020, the Company purchased $401.7 million aggregate principal amount of its Notes for $371.4 million, including interest and fees. The purchase price was allocated between the debt and equity components of the Notes. Based on the net carrying amount of the Notes, the Company recognized a net gain on debt extinguishment of $12.0 million after the write-off of associated debt issuance costs. The Company also recognized the equity component of the settlement of the Notes.
7 For the quarter and nine months ended October 24, 2020, the provision for income taxes includes less than $0.1 million and $0.2 million, respectively, of income tax benefit for the vesting and exercise of share-based awards. Additionally, for the nine months ended October 24, 2020, the Company recognized an income tax benefit of $2.6 million during the first quarter from a net operating loss carryback under the enacted CARES Act. For the quarter and nine months ended October 26, 2019, the provision for income taxes includes $0.2 million and $0.8 million, respectively, of income tax expense for the vesting and exercise of share-based awards. Additionally, for the nine months ended October 26, 2019, the provision for income taxes includes $1.1 million of income tax expense related to a previous tax year filing.
8 During the nine months ended October 26, 2019, the Company entered into a contract modification in the second quarter that increased revenue produced by a large customer program. As a result, the Company recognized $11.8 million of contract revenues for services performed in prior periods, $0.8 million of related performance-based compensation expense, and $1.0 million of stock-based compensation. On an after-tax basis, these items contributed approximately $7.3 million to net income, or $0.23 per common share diluted, for the nine months ended October 26, 2019. These amounts are excluded from the calculations of Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per Common Share for the nine months ended October 26, 2019.
9
Exhibit 99.2 Dycom Q3 2021 Results November 24, 2020
Participants Agenda Steven E. Nielsen • Q3 2021 Overview President & Chief Executive Officer • Industry Update H. Andrew DeFerrari Chief Financial Officer • Financial & Operational Highlights Ryan F. Urness General Counsel • Outlook • Closing Remarks • Q&A 2
Important Information Caution Concerning Forward-Looking Statements This presentation contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. These statements include those related to the outlook for the quarter ending January 30, 2021 found within this presentation. These statements are subject to change. Forward looking statements are based on management’s current expectations, estimates and projections. These statements are subject to risks and uncertainties that may cause actual results for completed periods and periods in the future to differ materially from the results projected or implied in any forward-looking statements contained in this presentation. 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 the projected impact of COVID-19 on the Company’s business operating results, cash flows and/or financial condition and the impacts of the measures the Company has taken in response to COVID-19, the Company’s ability to effectively execute its business and capital plans, business and economic conditions and trends in the telecommunications industry affecting the Company’s customers, customer capital budgets and spending priorities, 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 of the Company’s projects, the related impact to the Company’s backlog from project cancellations, weather conditions, the anticipated outcome of other contingent events, including litigation, liquidity and other financial needs, the availability of financing, the Company’s ability to generate sufficient cash to service its indebtedness, restrictions imposed by the Company’s credit agreement, 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 any obligation to update forward-looking statements. Non-GAAP Financial Measures This presentation includes certain “Non-GAAP” financial measures as defined by Regulation G of the SEC. As required by the SEC, an explanation of the Non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP financial measures are provided in the Company’s Form 8-K filed with the SEC on November 24, 2020 and on the Company’s Investor Center website at https://ir.dycomind.com. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. 3
Contract Revenues Q3 2021 Overview Contract Revenues Q3 2021 revenues of $810.3 million decreased 9.4% on an organic basis after excluding $8.9 million of revenues from storm restoration services for Q3 2021 Operating performance Non-GAAP Adjusted EBITDA for Q3 2021 of $92.8 million, or 11.5% of contract revenues, compared to $91.7 million, or 10.4% of contract revenues, for Q3 2020 Non-GAAP Adjusted Non-GAAP Adjusted Diluted Earnings per Common Share of $1.06 for Q3 2021, compared to $0.88 for Diluted EPS Q3 2020 Liquidity Strong liquidity of $587.1 million at Q3 2021 Reduced notional net debt by $110.1 million during Q3 2021 and by $467.4 million since Q3 2020 4
Industry Update Industry Increasing Network Bandwidth Dramatically Major industry participants constructing or upgrading significant wireline networks across broad sections of the country generally designed to provision 1 gigabit network speeds directly to consumers or wirelessly using 5G technologies Industry effort to deploy high capacity fiber networks continues to meaningfully broaden Dycom’s set of opportunities Access to high capacity telecommunications increasingly crucial to society in the time of the COVID-19 pandemic, especially in rural America where dramatically increased rural network investment will be required to support work from home, telemedicine, distance learning and other newly essential applications Dycom’s scale and financial strength position it well to deliver valuable services to its customers Dycom is currently providing services for 1 gigabit full deployments and converged wireless/wireline multi-use network deployments across the country in dozens of metropolitan areas to several customers, including customers with stated aspirations to initiate broad fiber deployments as well as customers who appear to be contemplating the resumption of broad deployments and with whom current activity is increasing Potential fiber network deployment opportunities are increasing in rural America as new industry participants respond to emerging societal incentives Dycom’s ability to provide integrated planning, engineering and design, procurement and construction and maintenance services is of particular value to several industry participants COVID-19 Near Term Impacts Macro-economic effects and uncertainty may influence some customer plans Customers continue to be focused on the possible macro-economic effects of the pandemic on their business with particular focus on SMB dislocations and overall consumer confidence and credit worthiness Some uncertainty is seen in the overall municipal environment as authorities continue to manage the general effects of the pandemic on permitting and inspection processes and the impacts of potential business limitations due to recent nationwide increase in COVID-19 infections 5
Contract Revenues 2 Formerly known as CenturyLink, Inc. Q3 2021 Organic growth (decline): Top 5 customers represented 71.6% and 77.3% of contract (9.4)% (15.4)% 11.1% revenues in Q3 2021 and Q3 2020, respectively Total Customers Top 5 Customers All Other Customers Q3 2021 % of contract revenues from customers #6 through #10: 9.0% 2.4% 2.3% 2.3% 1.6% 0.9% Comcast Customer #6 Frontier Charter Dominion Energy NiSource 6
Backlog and Awards Selected Q3 2021 Awards and Extensions: Contracts executed subsequent to Q3 2021 resulted Customer Description Area Term in bookings in excess of $740 million of backlog that will be incorporated in the Q4 2021 calculation AT&T Maintenance Services IN, OH, KY, TN, AL, GA, FL 3 years Locating Services GA 3 years Frontier Engineering & Construction Services NY Various Rural Fiber Services MN, OK, TN, MS 1 year 7
Financial Highlights As % of Contract Revenues Q3 2021 revenues of $810.3 million decreased 9.4% on an organic basis after excluding $8.9 million of revenues from storm restoration services for Q3 2021 Non-GAAP Adjusted EBITDA of $92.8 million, or 11.5% of revenue, and Non-GAAP Adjusted Diluted EPS of $1.06 for Q3 2021 reflecting solid operating performance Non-GAAP Adjusted Diluted EPS increase for Q3 2021 resulted from higher Adjusted EBITDA, lower depreciation and interest expense, and higher other income from asset sales, offset in part by higher income tax expense 8
Liquidity Overview $ Millions Q2 2021 Q3 2021 Debt Summary 0.75% Convertible Senior Notes, mature Sept 2021: $ 58.3 $ 58.3 Senior Credit Facility, matures Oct 2023:4 Term Loan Facilities 433.1 427.5 Revolving Facility 200.0 85.0 Total Notional Amount of Debt $ 691.4 $ 570.8 Less: Cash and Equivalents 22.5 12.0 Notional Net Debt7 $ 668.9 $ 558.7 ($467.4) $ Millions Q3 2020 Q3 2021 Cash Flow Summary Cash provided by (used in) operating activities $ (24.0) $ 111.9 Capital expenditures, net of disposals $ (14.5) $ (3.5) (Repayments) Borrowings on Senior Credit Facility $ 38.0 $ (120.6) Other financing & investing activities, net $ (0.2) $ 1.6 7 7 7 Total Days Sales Outstanding ("DSO")6 128 127 Reduced notional net debt by $467.4 million since Q3 2020, including a Robust operating cash flows of $111.9 million during Q3 2021 and Q3 2021 reduction of $110.1 million $279.4 million year-to-date from prudent working capital management During Q3-2021: DSOs of 127 at Q3 2021, compared to DSOs of 128 at Q3 2020 . Generated solid free cash flow Capital expenditures, net of disposals for fiscal 2021 anticipated at . Repaid $115.0 million on Revolver $45 - $55 million, a $15 million reduction from prior outlook . Repaid $5.6 million of Term Loan borrowings Strong liquidity5 of $587.1 million at Q3 2021 9
Outlook For the quarter ending January 30, 2021 (which includes an additional week of operations due to the Company’s 52/53 week fiscal year), the Company expects modestly lower contract revenues with margins that range from in-line to modestly higher, as compared to the quarter ended January 25, 2020 The Company believes the impact of the COVID-19 pandemic on its operating results, cash flows and financial condition is uncertain, unpredictable and could affect its ability to achieve these expected financial results 10
Closing Remarks Solid end market activity despite challenging economic backdrop Fiber deployments enabling new wireless technologies are underway in many regions of the country Telephone companies are deploying FTTH to enable 1 gigabit high speed connections Cable operators are deploying fiber to small and medium businesses and enterprises, partly in anticipation of the customer sales process; deployments to expand capacity as well as new build opportunities are underway Dramatically increased speeds to consumers are being provisioned and consumer data usage is growing, particularly upstream Customers are consolidating supply chains creating opportunities for market share growth and increasing the long- term value of Dycom’s maintenance and operations business Dycom is increasingly providing integrated planning, engineering and design, procurement and construction and maintenance services for wired and converged wireless/wireline networks Remain encouraged that Dycom’s major customers continue to be committed to multi-year capital spending initiatives 11
Notes 1) Organic growth (decline) % adjusted for revenues from acquired businesses and storm restoration services, when applicable. 2) Formerly known as CenturyLink, Inc. 3) The Company’s backlog represents an estimate of services to be performed pursuant to master service agreements and other contractual agreements over the terms of those contracts. These estimates are based on contract terms and evaluations regarding the timing of the services to be provided. In the case of master service agreements, backlog is estimated based on the work performed in the preceding 12 month period, when available. When estimating backlog for newly initiated master service agreements and other long and short-term contracts, the Company also considers the anticipated scope of the contract and information received from the customer during the procurement process. A significant majority of the Company’s backlog comprises services under master service agreements and other long-term contracts. Backlog is not a measure defined by United States generally accepted accounting principles (“GAAP”) and should be considered in addition to, but not as a substitute for, GAAP results. Participants in the Company’s industry often disclose a calculation of their backlog; however, the Company’s methodology for determining backlog may not be comparable to the methodologies used by others. Dycom utilizes the calculation of backlog to assist in measuring aggregate awards under existing contractual relationships with its customers. The Company believes its backlog disclosures will assist investors in better understanding this estimate of the services to be performed pursuant to awards by its customers under existing contractual relationships. 4) As of both October 24, 2020 and July 25, 2020, the Company had $52.2 million of standby letters of credit outstanding under the Senior Credit Facility. 5) Liquidity represents the sum of the Company’s availability on its revolving facility as defined by the Company’s Senior Credit Facility and available cash and equivalents. 6) DSO is calculated as the summation of current and non-current accounts receivable (including unbilled receivables), net of allowance for doubtful accounts, plus current contract assets, less contract liabilities (formerly referred to as billings in excess of costs and estimated earnings) divided by average revenue per day during the respective quarter. Long-term contract assets are excluded from the calculation of DSO, as these amounts represent payments made to customers pursuant to long-term agreements and are recognized as a reduction of contract revenues over the period for which the related services are provided to the customers. 7) Notional net debt as of Q3 2020, Q4 2020 and Q1 2021 consisted of the following: $ Millions Q3 2020 Q4 2020 Q1 2021 Debt Summary 0.75% Convertible Senior Notes, mature Sept 2021: $ 485.0 $ 460.0 $ 293.0 Senior Credit Facility, matures Oct 2023:4 Term Loan Facilities 450.0 444.4 438.8 Revolving Facility 103.0 - 675.0 Total Notional Amount of Debt $ 1,038.0 $ 904.4 $ 1,406.7 Less: Cash and Equivalents 11.8 54.6 643.9 Notional Net Debt $ 1,026.2 $ 849.8 $ 762.9 12
Exhibit 99.3
Dycom Industries, Inc.
Non-GAAP Reconciliations
Q3 2021
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 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, excluding contract revenues from storm restoration services, adjusted independently for each comparative period for the additional week in the fourth quarter of fiscal 2016, the quarter ended July 30, 2016, as a result of the Company’s 52/53 week fiscal year. Non-GAAP Organic Contract Revenue (decline) growth is calculated as the percentage change in Non-GAAP Organic Contract Revenues over those of the comparable prior year periods. Management believes organic (decline) 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, 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 the non-cash amortization of the debt discount and the related tax impact, certain tax impacts resulting from vesting and exercise of share-based awards, and certain non-recurring items. Management believes Non-GAAP Adjusted Net Income is a helpful measure for comparing the Company’s operating performance with prior periods.
•Non-GAAP Adjusted Diluted Earnings per Common Share - Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding.
•Notional Net Debt - Notional net debt is a Non-GAAP financial measure that is calculated by subtracting cash and equivalents from the aggregate face amount of outstanding long-term debt. Management believes notional net debt is a helpful measure to assess the Company’s liquidity.
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 debt discount on Notes - 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 excludes 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.
•Goodwill impairment charge - The Company incurred a goodwill impairment charge of $53.3 million for a reporting unit that performs installation services inside third party premises. Management believes excluding the goodwill impairment charge from the Company’s Non-GAAP financial measures assists investors’ overall understanding of the Company’s current financial performance and provides management with a consistent measure for assessing the current and historical financial results.
•Gain on debt extinguishment - During the nine months ended October 24, 2020, the Company recognized a gain on debt extinguishment of $12.0 million in connection with its purchase of $401.7 million aggregate principal amount of 0.75% convertible senior notes due September 2021 for $371.4 million, including interest and fees. Management believes excluding the gain on debt extinguishment from the Company’s Non-GAAP financial measures assists investors’ overall understanding of the Company’s current financial performance and provides management with a consistent measure for assessing the current and historical financial results.
2
•Charge for warranty costs - During the quarter ended April 27, 2019, the Company recorded an $8.2 million pre-tax charge for estimated warranty costs for work performed for a customer in prior periods. The Company excludes the impact of this charge from its Non-GAAP financial measures because the Company believes it is not indicative of its underlying results in the current period.
•Recovery of previously reserved accounts receivable and contract assets - During the quarter ended April 27, 2019, the Company recognized $10.3 million of pre-tax income from the recovery of previously reserved accounts receivable and contract assets based on collections from a customer. The Company excludes the impact of this recovery from its Non-GAAP financial measures because the Company believes it is not indicative of its underlying results.
•Tax impact of the vesting and exercise of share-based awards - The Company excludes certain tax impacts resulting from the vesting and exercise of share-based awards as these amounts may vary significantly from period to period. Excluding these amounts from the Company’s Non-GAAP financial measures provides management with a more consistent measure for assessing financial results.
•Tax effect from a net operating loss carryback under enacted CARES Act - For the quarter ended April 25, 2020, the Company recognized an income tax benefit of $2.6 million from a net operating loss carryback under the enacted U.S. Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The Company excludes this impact because the Company believes it is not indicative of the Company’s underlying results or ongoing operations.
•Tax impact of previous tax year filing - During the quarter ended July 27, 2019, the Company recognized an income tax expense of $1.1 million on a previous tax year filing. The Company excludes this impact because the Company believes it is not indicative of the Company’s underlying results or ongoing operations.
•Tax impact of pre-tax adjustments - The tax impact of pre-tax adjustments reflects the Company’s estimated tax impact of specific adjustments and the effective tax rate used for financial planning for the applicable period.
3
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | ||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Organic Contract Revenues | ||||||||||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||
| Contract Revenues - GAAP | Revenues from acquired businesses1 | Revenues from storm restoration services | Additional week as a result of our 52/53 week fiscal year3 | Non-GAAP - Organic Revenues | Growth (Decline)% | |||||||||||||||||||||||||||||||||||||||
| GAAP % | Non-GAAP - Organic % | |||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended October 24, 2020 | $ | 810.3 | $ | — | $ | (8.9) | $ | — | $ | 801.4 | (8.4) | % | (9.4) | % | ||||||||||||||||||||||||||||||
| Quarter Ended October 26, 2019 | $ | 884.1 | $ | — | $ | — | $ | — | $ | 884.1 | ||||||||||||||||||||||||||||||||||
| Nine Months Ended October 24, 2020 | $ | 2,448.5 | $ | — | $ | (8.9) | $ | — | $ | 2,439.6 | (5.9) | % | (6.1) | % | ||||||||||||||||||||||||||||||
| Nine Months Ended October 26, 2019 | $ | 2,602.1 | $ | — | $ | (4.7) | $ | — | $ | 2,597.4 | ||||||||||||||||||||||||||||||||||
| Four Quarters Ended | ||||||||||||||||||||||||||||||||||||||||||||
| January 25, 2020 | $ | 3,339.7 | $ | (26.6) | $ | (4.7) | $ | — | $ | 3,308.3 | 6.8 | % | 8.3 | % | ||||||||||||||||||||||||||||||
| January 26, 2019 | $ | 3,127.7 | $ | (29.6) | $ | (42.9) | $ | — | $ | 3,055.3 | ||||||||||||||||||||||||||||||||||
| January 26, 2019 | $ | 3,127.7 | $ | (69.9) | $ | (42.9) | $ | — | $ | 3,014.9 | 5.0 | % | 3.6 | % | ||||||||||||||||||||||||||||||
January 27, 20182 | $ | 2,977.9 | $ | (32.3) | $ | (35.1) | $ | — | $ | 2,910.5 | ||||||||||||||||||||||||||||||||||
January 27, 20182 | $ | 2,977.9 | $ | (87.3) | $ | (35.1) | $ | — | $ | 2,855.5 | 0.8 | % | (0.2) | % | ||||||||||||||||||||||||||||||
January 28, 20172 | $ | 2,954.2 | $ | (37.3) | $ | — | $ | (56.0) | $ | 2,860.9 | ||||||||||||||||||||||||||||||||||
| July 29, 2017 | $ | 3,066.9 | $ | (214.9) | $ | — | $ | — | $ | 2,851.9 | 14.8 | % | 14.1 | % | ||||||||||||||||||||||||||||||
| July 30, 2016 | $ | 2,672.5 | $ | (119.8) | $ | — | $ | (53.5) | $ | 2,499.2 | ||||||||||||||||||||||||||||||||||
| July 30, 2016 | $ | 2,672.5 | $ | (159.0) | $ | — | $ | (52.9) | $ | 2,460.7 | 32.2 | % | 22.7 | % | ||||||||||||||||||||||||||||||
| July 25, 2015 | $ | 2,022.3 | $ | (17.7) | $ | — | $ | — | $ | 2,004.7 | ||||||||||||||||||||||||||||||||||
| July 25, 2015 | $ | 2,022.3 | $ | (40.4) | $ | — | $ | — | $ | 1,982.0 | 11.6 | % | 9.6 | % | ||||||||||||||||||||||||||||||
| July 26, 2014 | $ | 1,811.6 | $ | (2.8) | $ | — | $ | — | $ | 1,808.8 | ||||||||||||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
4
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | ||||||||||||||||||||||||||||||||
| Non-GAAP Organic Contract Revenues - Certain Customers | ||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||
| Contract Revenues - GAAP | Revenues from storm restoration services | Non-GAAP - Organic Revenues | Growth (Decline)% | |||||||||||||||||||||||||||||
| Quarter Ended | GAAP % | Non-GAAP - Organic % | ||||||||||||||||||||||||||||||
| Comcast | ||||||||||||||||||||||||||||||||
| October 24, 2020 | $ | 143.6 | $ | (0.5) | $ | 143.2 | 9.4 | % | 9.0 | % | ||||||||||||||||||||||
| October 26, 2019 | $ | 131.3 | $ | — | $ | 131.3 | ||||||||||||||||||||||||||
Top 5 Customers4 | ||||||||||||||||||||||||||||||||
| October 24, 2020 | $ | 580.5 | $ | (2.4) | $ | 578.1 | (15.0) | % | (15.4) | % | ||||||||||||||||||||||
| October 26, 2019 | $ | 683.2 | $ | — | $ | 683.2 | ||||||||||||||||||||||||||
| All Other Customers (excluding Top 5 Customers) | ||||||||||||||||||||||||||||||||
| October 24, 2020 | $ | 229.7 | $ | (6.5) | $ | 223.3 | 14.3 | % | 11.1 | % | ||||||||||||||||||||||
| October 26, 2019 | $ | 200.9 | $ | — | $ | 200.9 | ||||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
5
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | |||||||||||
| Non-GAAP Adjusted EBITDA | |||||||||||
| Unaudited | |||||||||||
| (Dollars in thousands) | |||||||||||
| Quarter Ended | |||||||||||
| October 24, 2020 | October 26, 2019 | ||||||||||
| Net income | $ | 33,926 | $ | 24,229 | |||||||
| Interest expense, net | 4,710 | 13,128 | |||||||||
| Provision for income taxes | 12,032 | 6,556 | |||||||||
| Depreciation and amortization | 42,313 | 47,356 | |||||||||
| Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”) | 92,981 | 91,269 | |||||||||
| Gain on sale of fixed assets | (4,001) | (2,241) | |||||||||
| Stock-based compensation expense | 3,796 | 2,694 | |||||||||
| Non-GAAP Adjusted EBITDA | $ | 92,776 | $ | 91,722 | |||||||
| Non-GAAP Adjusted EBITDA % of contract revenues | 11.5 | % | 10.4 | % | |||||||
Note: Amounts above may not add due to rounding.
6
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | |||||||||||||||||
| Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings Per Share | |||||||||||||||||
| Unaudited | |||||||||||||||||
| (Dollars and shares in thousands, except per share amounts) | |||||||||||||||||
| Quarter Ended October 24, 2020 | |||||||||||||||||
| GAAP | Reconciling Items | Non-GAAP Adjusted | |||||||||||||||
| Contract revenues | $ | 810,256 | $ | — | $ | 810,256 | |||||||||||
| Costs of earned revenues, excluding depreciation and amortization | 658,355 | — | 658,355 | ||||||||||||||
| General and administrative | 62,628 | — | 62,628 | ||||||||||||||
| Depreciation and amortization | 42,313 | — | 42,313 | ||||||||||||||
| Total | 763,296 | — | 763,296 | ||||||||||||||
Interest expense, net5 | (4,710) | 643 | (4,067) | ||||||||||||||
| Other income, net | 3,708 | — | 3,708 | ||||||||||||||
| Income before income taxes | 45,958 | 643 | 46,601 | ||||||||||||||
Provision for income taxes6 | 12,032 | 210 | 12,242 | ||||||||||||||
| Net income | $ | 33,926 | $ | 433 | $ | 34,359 | |||||||||||
| Diluted earnings per common share | $ | 1.05 | $ | 0.01 | $ | 1.06 | |||||||||||
| Shares used in computing diluted earnings per common share | 32,425 | — | 32,425 | ||||||||||||||
| Quarter Ended October 26, 2019 | |||||||||||||||||
| GAAP | Reconciling Items | Non-GAAP Adjusted | |||||||||||||||
| Contract revenues | $ | 884,115 | $ | — | $ | 884,115 | |||||||||||
| Costs of earned revenues, excluding depreciation and amortization | 724,378 | — | 724,378 | ||||||||||||||
| General and administrative | 69,875 | — | 69,875 | ||||||||||||||
| Depreciation and amortization | 47,356 | — | 47,356 | ||||||||||||||
| Total | 841,609 | — | 841,609 | ||||||||||||||
Interest expense, net5 | (13,128) | 5,068 | (8,060) | ||||||||||||||
| Other income, net | 1,407 | — | 1,407 | ||||||||||||||
| Income before income taxes | 30,785 | 5,068 | 35,853 | ||||||||||||||
Provision for income taxes6 | 6,556 | 1,231 | 7,787 | ||||||||||||||
| Net income | $ | 24,229 | $ | 3,837 | $ | 28,066 | |||||||||||
| Diluted earnings per common share | $ | 0.76 | $ | 0.12 | $ | 0.88 | |||||||||||
| Shares used in computing diluted earnings per common share | 31,827 | — | 31,827 | ||||||||||||||
Note: Amounts above may not add due to rounding.
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Notes to Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
1 Amounts represent contract revenues from acquired businesses that were not owned for the full period in both the current and comparable prior periods, including any contract revenues from storm restoration services for these acquired businesses.
2 Due to the change in the Company’s fiscal year end, the Company’s fiscal 2018 six month transition period consisted of Q1 2018 and Q2 2018. Amounts provided for the Four Quarters Ended January 27, 2018 represent the aggregate of Q3 2017, Q4 2017, Q1 2018, and Q2 2018, and amounts provided for the Four Quarters Ended January 28, 2017 represent the aggregate of Q3 2016, Q4 2016, Q1 2017, and Q2 2017, for comparative purposes to other twelve month periods presented.
3 The Company has a 52/53 week fiscal year. All four-quarter periods presented contain 52 weeks except for those that include the quarter ended July 30, 2016 which contained an additional week of operations. The Non-GAAP adjustment for the additional week of operations is calculated independently for each four-quarter period presented that includes the quarter ended July 30, 2016. The impact of the additional week of operations for the quarter ended July 30, 2016 is calculated as (i) contract revenues less, (ii) contract revenues from acquired businesses in each comparative period, (iii) divided by 14 weeks.
4 Top 5 Customers included Verizon, Comcast, Lumen (formerly known as CenturyLink, Inc.), AT&T, and Windstream for the quarters ended October 24, 2020 and October 26, 2019.
5 Non-GAAP Adjusted Interest expense, net excludes the non-cash amortization of the debt discount associated with the Notes.
6 Non-GAAP Adjusted Provision for income taxes reflects the tax related impact of all pre-tax adjustments as well as the tax effects of the vesting and exercise of share-based awards.
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