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): June 1, 2021
(Exact name of Registrant as specified in its charter)
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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 7.01 Regulation FD Disclosure.
On June 1, 2021 Dycom Industries, Inc. (the “Company”) posted presentation materials under Events & Presentations on the Investor Center section of the Company’s website at https://ir.dycomind.com. Members of the Company’s management may use all or portions of these materials from time to time in meetings with or when making presentations to the investment community, current or potential stakeholders, and others. The presentation materials are furnished herewith as Exhibits 99.1 and 99.2 and will be available at https://ir.dycomind.com for approximately 30 days.
The information in the preceding paragraph, as well as Exhibits 99.1 and 99.2, 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 if such subsequent filing specifically references this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits | ||||
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: June 1, 2021
| DYCOM INDUSTRIES, INC. (Registrant) | |||||
| By: | /s/ Ryan F. Urness | ||||
| Name: | Ryan F. Urness | ||||
| Title: | Vice President, General Counsel and Corporate Secretary | ||||
June 2021Investor Presentation Exhibit 99.1
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 July 31, 2021 found within this presentation. 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, 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 June 1, 2021 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. Important Information 2
3Dycom Overview Leading supplier of specialty contracting services to telecommunication providers throughout the US Intensely focused on the telecommunications market providing our customers with critical network infrastructure that is fundamental to economic progress Durable customer relationships with well established, leading telecommunication providers that span decades Anchored by long term agreements Solid financial profile that positions us well to benefit from future growth opportunities
Fiscal 2021 Annual Operating Performance Contract Revenues of $3.199 billion Non-GAAP Adjusted EBITDA of $311.0 million, or 9.7% of contract revenues Non-GAAP Adjusted Earnings per Common Share Diluted of $2.54 Backlog and Headcount as of May 1, 2021 (Q1 2022) Total Backlog of $6.528 billion Employee headcount of 14,300+ Liquidity Strong liquidity of $477.4 million as of May 1, 2021 (Q1 2022) Reduced notional net debt by $185.2 million over last four quarters 4Financial Overview
344 483 - 50 100 150 200 250 300 350 400 450 500 G ig a b y te s Weighted Average Data Consumed per Month 4Q-19 4Q-20 5Strong Secular Trend Average Upload Consumption Per Subscriber Strong and stable growth in IP traffic even in times of GDP decline Telecommunications networks fundamental to economic progress Data Usage Growth & Broadband Speeds The average subscriber now consumes 480+ GB per month, an increase of 40% from Q4 2019 79% of these subscribers are provisioned at speeds of 100+ Mbps Increasing consumer demand for bandwidth continues to drive fiber deployments by telecom providers Source: OpenVault Broadband Industry Reports 22% 79% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Provisioned Speed Tiers of Broadband Subscribers <100 Mbps 100+ Mbps 16 15 15 15 15 15 16 16 16 17 17 19 19 17 23 27 26 24 25 24 25 27 28 31 0 5 10 15 20 25 30 35 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec G B 2019 2020 “Spurred by homebound workers, students and families, upstream consumption rose by 63% in 2020, 350% of historic rates of growth.” – OpenVault, April 2021 Data usage and download/upload speeds continue to increase as consumer behavior moves to streaming, video conferencing, and connected devices
6Industry Update 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 Increasing access to high capacity telecommunications continues to be crucial to society, especially in rural America Wide and active participation in the completed FCC RDOF auction augurs well for dramatically increased rural network investment supported by private capital that in the case of at least some of the participants is expected to be significantly more than the FCC subsidy Industry increasing network bandwidth dramatically Fiber network deployment opportunities are increasing Dycom’s scale and financial strength position the Company 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 numerous geographic areas to multiple customers, including customers who have initiated broad fiber deployments as well as customers who have resumed broad deployments Fiber network deployment opportunities are increasing in rural America as new industry participants respond to emerging societal incentives Dycom continues to provide integrated planning, engineering and design, procurement and construction and maintenance services to several industry participants
7Intensely Focused on Telecommunications Market Fiscal 2021 Revenue by Customer Type PROGRAM MANAGEMENT PLANNING ENGINEERING & DESIGN PROCUREMENT & CONSTRUCTION FULFILLMENT MAINTENANCE Telecommunications 89.1% Underground Locating 7.2% Electric/Gas Utilities & Other 3.7% Dycom’s extensive market presence and complete lifecycle services offering have allowed the Company to be at the forefront of evolving industry opportunities Telephone companies are deploying FTTH to enable 1 gigabit high speed connections and, increasingly, rural electric utilities are doing the same 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 Fiber deployments enabling new wireless technologies are underway in many regions of the country 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’s Service Offerings
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Other 0.9 1.2 1.4 1.8 2.2 2.8 3.6 4.7 5.7 6.7 Frontier 3.0 3.0 3.0 3.0 3.0 3.3 4.0 5.0 6.0 7.5 Lumen 1.2 1.6 1.8 2.0 2.4 2.8 3.2 3.6 4.0 4.4 Verizon 14.0 14.6 15.0 15.3 16.0 16.2 16.4 16.6 16.8 17.0 AT&T 3.6 6.4 10.2 13.1 13.6 16.1 19.9 23.8 27.6 30.5 0 10 20 30 40 50 60 70 H O M E S P A S S E D TELCO FIBER PASSINGS 8Strong Tailwinds For Fiber Deployments Factors increasing fiber demand: • Demand on networks continues to grow • Fiber allows telcos to offer symmetrical upload and download speeds • Telcos disclose higher margins and ARPU • Government stimulus and infrastructure bill Fiber is a durable solution and a superior technology to address the demands for broadband. It delivers 1 gigabyte speeds, has low latency, is symmetrical for downlink and uplink demand, and is easily upgradeable to multi-gig with minimal investment as demand growth continues. - Jeff McElfresh, Chief Executive Officer-AT&T Communications AT&T – March 2021 Source: JP Morgan Estimates (I n m ill io n s) “ ” Going forward, our story is based on two primary components. Our base fiber network and our expansion fiber network. Simply put, the base fiber network is fiber that's in the ground today, already generating solid cash flow. The expansion fiber network is the unique and significant opportunity that we have to convert our cash of millions of copper locations into fiber, replicating a proven and successful model to unlock massive value. - John Stratton, Executive Chairman -Frontier – April 2021 “ ”
9Customers Committed to Multi-Year Capital Spending, Fiber Deployments “We intend to double down on our fiber expansion. We expect to more than double our current fiber footprint by the end of 2025, reaching 30 million customer locations with the single goal of offering the best fixed broadband service in the market. We don't intend to stop there.“ ” - John Stankey, CEOAT&T, Inc. – May 2021 We are moving quickly to expand our fiber footprint, and our results show you why that is crucial. We added 235,000 AT&T Fiber customers in the quarter. IP Broadband ARPU grew 3.2% year over year. Our Fiber penetration rate is more than 35% and growing, and total Broadband net adds also increased.“ ”- Pascal Desroches, CFO AT&T, Inc. – April 2021 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E Annual 2.8 3.8 2.9 0.5 2.5 3.8 3.8 3.8 2.9 Cumulative 3.6 6.4 10.2 13.1 13.6 16.1 19.9 23.8 27.6 30.5 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 C u m u la ti ve H o m e s P a ss e d ( in m il li o n s) A n n u a l H o m e s P a ss e d ( in m il li o n s) AT&T FIBER PASSINGS Source: JP Morgan Estimates Industry participants have stated their believe that a single high-capacity fiber network can most cost effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment. This view is increasing the appetite for fiber deployments and we believe that the industry effort to deploy high-capacity fiber networks continues to meaningfully broaden our set of opportunities.
105G Deployment If you think about the capital cost associated with building Small Cell networks, about 80%, 85% of the total cost of building those networks is in the Fiber itself…based on the type of infrastructure that has to be deployed in order to achieve a Small Cell solution for the carriers, the majority of the – think about the revenue and the underlying cost associated with that – is going to be in the Fiber asset, the Fiber asset itself. “ ” - Jay Brown, CEO Crown Castle International Corp. – April 2020 Growth in Number of Small/Macro Cells Source: Cowen and Company 2019 2020 2021 2022E 2023E 2024E 2025E U.S. Small Cell Sites 143 178 224 277 336 398 461 U.S. Macro Sites 269 274 278 285 291 296 302 0 50 100 150 200 250 300 350 400 450 500 Wireless carriers are increasing 4G capacity and augmenting 4G with new 5G technologies creating growth opportunities in the near to intermediate term Hundreds of thousands of small cells will need to be deployed in the next few years to meet growing demands Emerging wireless technologies driving significant wireline deployments Wireline deployments are the foundational element of what is expected to be a decades long deployment of fully converged wireless/wireline networks that will enable high bandwidth, low latency 5G applications (i n t h o u sa n d s)
Local Credibility, National Capability Nationwide footprint with more than 40 operating subsidiaries and 14,300+ employees Operating Subsidiaries 11
$- $100 $200 $300 $400 $500 $600 $700 $800 $900 2014 2015 2016 2017 2018 2019 2020 2021 C u st o m e r C o n tr a ct R e ve n u e s Trailing Twelve Months Ended January Verizon Lumen AT&T Comcast Windstream Charter 12Durable Customer Relationships $ M il li o n s 26% 23% 22% 22% 26% 74% 77% 78% 78% 74% $2,954 $2,978 $3,128 $3,340 $3,199 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2017 2018 2019 2020 2021 C u st o m e r C o n tr a ct R e ve n u e s Trailing Twelve Months Ended January Top 5 Customers All Other Customers $ M il li o n s
13Anchored by Long-Term Agreements Dycom is party to hundreds of MSA’s and other agreements with customers that extend for periods of one or more years Generally multiple agreements maintained with each customer Master Service Agreements (MSA’s) are multi-year, multi-million dollar arrangements covering thousands of individual work orders generally with exclusive requirements; majority of contracts are based on units of delivery Backlog at $6.528 billion as of Q1 2022 Q1 2022 Revenue by Contract Type 77% 15% 8% Master Service Agreements Long-term contracts Short-term contracts $2.639 $2.524 $2.716 $2.512 $2.455 $2.339 $2.787 $2.746 $6.691 $6.349 $7.314 $6.442 $6.441 $5.412 $6.810 $6.528 $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 $ B il li o n s Backlog2 Next 12 month backlog
1410+ Years of Robust Cash Flow Generation Fiscal 2011 – Fiscal 2021 Robust cash flow generation and prudent capital allocation provide strong foundation for returns Strong operating cash flow of $1.684 billion over 10+ years Prudent approach to capital allocation: $540 million invested in share repurchases $618 million invested in business acquisitions $1,053 million in cap-ex, net of disposals $2,211 $2,211 $ M il li o n s
15Capital Allocated to Maximize Returns Focus on organic growth opportunities through strategic capital investments in the business Dycom is committed to maximizing long term returns through prudent capital allocation Repurchased 25.2 million shares for approximately $758 million from fiscal 2006 through fiscal 2021 $150.0 million authorization available for share repurchases through August 2022 Invest in Organic Growth Shares Repurchases Pursue Complementary Acquisitions Selectively acquire businesses that complement our existing footprint and enhance our customer relationships Acquisitions have further strengthened Dycom’s customer base, geographic scope, and technical service offerings
16 FINANCIAL UPDATE
$5.26 $3.88 $2.78 $2.27 $2.54 FY 2017 4 Qtrs Ended Jan 2018 FY 2019 FY 2020 FY 2021 Non-GAAP Adjusted Diluted EPS 7 14.1% (0.2)% 3.6% 8.3% (6.1)% FY 2017 4 Qtrs Ended Jan 2018 FY 2019 FY 2020 FY 2021 Non-GAAP Organic Growth (Decline) %1 $3,067 $2,978 $3,128 $3,340 $3,199 FY 2017 4 Qtrs Ended Jan 2018 FY 2019 FY 2020 FY 2021 Contract Revenues $ M il li o n s 7 17Annual Trends 7 $442 $383 $330 $310 $311 14.4% 12.9% 10.5% 9.3% 9.7% FY 2017 4 Qtrs Ended Jan 2018 FY 2019 FY 2020 FY 2021 Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA % $ M il li o n s 7
$89 $92 $45 $70 $103 $93 $46 $44 10.2% 10.4% 6.0% 8.6% 12.5% 11.5% 6.1% 6.1% Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA % $ M il li o n s $884 $884 $738 $814 $824 $810 $751 $727 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 $ M il li o n s 18Quarterly Trends Contract Revenues Non-GAAP Adjusted EBITDA
19Debt and Liquidity Overview Issued $500.0 million principal amount of 4.50% senior notes due April 2029; repaid $105.0 million of revolver borrowings and $71.9 million of term loan borrowings Amended and restated Senior Credit Facility to resize capacity and extend maturity to April 2026 Cash and equivalents of $330.6 million at Q1 2022; $58.3 million is expected to be used to repay 2021 Convertible Notes due September 2021 Improved debt maturity profile and increased financial flexibilityNotional Net Debt reduction of $185.2 million year-over-year ($185.2) 5 5 5 Debt Summary Q4 2021 Q1 2022 $ Millions 0.75% Convertible Notes, mature September 2021: $ 58.3 $ 58.3 4.50% Senior Notes, mature April 2029: - 500.0 Senior Credit Facility, matures April 2026: 3 Term Loan Facility 421.9 350.0 Revolving Facility 105.0 - Total Notional Amount of Debt $ 585.1 $ 908.3 Less: Cash and Equivalents 11.8 330.6 Notional Net Debt $ 573.4 $ 577.6 Liquidity 4 $ 570.5 $ 477.4
20Cash Flow Overview Solid operating cash flows during Q1 2022 Proceeds from Q1 2022 debt offering used, in part, to repay revolver and term loan borrowings Capital expenditures, net of disposals, for fiscal 2022 expected to range from $105 million to $125 million, a reduction of $40 million when the midpoint is compared to the midpoint of the prior outlook; deferral reflects short to medium term manufacturer supply constraints Total DSOs of 128 days at Q1 2022 improved sequentially from 136 days at Q4 2021 4 Qtrs Ended Q1 2022 Operating Cash Flow 4 Qtrs Ended Jan 20187
21 QUESTIONS AND ANSWERS
Contract revenues Range from in-line to modestly lower as compared to Q2 2021 Non-GAAP Adjusted EBITDA % of contract revenues Decreases as compared to Q2 2021 Year-over-year gross margin pressure of approximately 200 bps from the impact of a large customer program and from revenue declines for other large customers that are expected to have lower spending in the first half of this calendar year Interest expense $8.7 million Non-GAAP Adjusted Interest Expense Interest on the 2029 Notes, Term Loan, 2021 Convertible Notes coupon, letters of credit, bank fees for revolving credit facility capacity, amortization of debt issuance costs and other interest $0.7 million Non-Cash amortization of debt discount on 2021 Convertible Notes $9.4 million Total Interest Expense Non-GAAP Adjusted Effective Income Tax Rate (as a % of Non-GAAP Adjusted Income before Taxes) Approximately 27.0% Diluted shares 31.3 million 22Outlook for Quarter Ending July 31, 2021 (Q2 2022) Supplemental Q2 2022 Outlook Information: Q2 2022 Outlook: This slide was used on May 25, 2021 in connection with the Company’s conference call for its fiscal 2022 first quarter results. This information is provided for your reference only and should not be interpreted as a reiteration of these projections by the Company at any time after the date originally provided. Reference is made to slide 2 titled “Important Information” with respect to these slides. The information and statements contained in this slide that are forward-looking are based on information that was available at the time the slide was initially prepared and/or management’s good faith belief at that time with respect to future events. Except as required by law, the Company may not update forward-looking statements even though its situation may change in the future. For a full copy of the conference call materials, including the conference call transcript, see the Company’s Form 8-Ks filed with the Securities and Exchange Commission on May 25, 2021 and May 26, 2021.
Notes 23 1) Organic growth (decline) % adjusted for revenues from acquired businesses, storm restoration services, and for the additional week of operations during the fourth quarter as a result of the Company’s 52/53 week fiscal year, when applicable. 2) 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. 3) As of May 1, 2021 and January 30, 2021, the Company had $46.3 million and $52.2 million of standby letters of credit outstanding under the Senior Credit Facility, respectively. 4) 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. 5) Notional net debt as of Q1 2021, Q2 2021, and Q3 2021 consisted of the following: 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, 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) 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 for comparative purposes to other twelve month periods presented. Debt Summary Q1 2021 Q2 2021 Q3 2021 $ Millions 0.75% Convertible Notes, mature September 2021: $ 293.0 $ 58.3 $ 58.3 Senior Credit Facility, matures April 2026: Term Loan Facility 438.8 433.1 427.5 Revolving Facility 675.0 200.0 85.0 Total Notional Amount of Debt $ 1,406.7 $ 691.4 $ 570.8 Less: Cash and Equivalents 643.9 22.5 12.0 Notional Net Debt $ 762.9 $ 668.9 $ 558.7
Exhibit 99.2
Dycom Industries, Inc.
Non-GAAP Reconciliations
Investor Presentation
June 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 for the additional week in the fourth quarter of fiscal 2021 and the fourth quarter of fiscal 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. The Company has a hedge in effect to offset the economic dilution of additional shares that would be issued in connection with the conversion of the Company’s 0.75% convertible senior notes due September 2021 (the “2021 Convertible Notes”) up to an average quarterly share price of $130.43. Diluted shares used in the calculation of Non-GAAP Adjusted Diluted Earnings per Common Share excludes dilution from the 2021 Convertible Notes. Management believes that the calculation of Non-GAAP Adjusted Diluted shares to reflect the hedge will be useful to investors because it provides insight into the offsetting economic effect of the hedge against potential conversion of the 2021 Convertible Notes.
•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 2021 Convertible Notes - The Company’s 2021 Convertible Notes were allocated between debt and equity components. The difference between the principal amount and the carrying amount of the liability component of the 2021 Convertible Notes represents a debt discount. The debt discount is being amortized over the term of the 2021 Convertible 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 2021 Convertible 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.
•Charges for a wage and hour litigation settlement - During the fourth quarter of fiscal 2021, the Company incurred a $2.3 million pre-tax charge for a wage and hour litigation settlement. 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.
•Goodwill impairment charge - During the first quarter of fiscal 2021, 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.
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•Loss (gain) on debt extinguishment - During the second quarter of fiscal 2021, the Company incurred a loss on debt extinguishment of $0.5 million in connection with its purchase of $234.7 million aggregate principal amount of 2021 Convertible Notes for $224.4 million, including interest and fees. During the first quarter of fiscal 2021, the Company recognized a gain on debt extinguishment of $12.5 million in connection with its purchase of $167.0 million aggregate principal amount of 2021 Convertible Notes for $147.0 million, including interest and fees, and, during the fourth quarter of fiscal 2020, the Company incurred a loss on debt extinguishment of $0.1 million in connection with the purchase of $25.0 million aggregate principal amount of 2021 Convertible Notes for $24.3 million, including interest and fees. Management believes excluding the loss (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.
•Charge for warranty costs - During the first quarter of fiscal 2020, 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.
•Charge for (recovery of) previously reserved accounts receivable and contract assets - During the fourth quarter of fiscal 2019, the Company recognized a pre-tax non-cash charge for accounts receivable and contract assets of $17.2 million related to balances owed from a customer. On February 25, 2019, this customer filed a voluntary petition for reorganization. During the first quarter of fiscal 2020, 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.
•Impact on stock-based compensation expense from non-cash charge for accounts receivable and contract assets - The Company excludes the impact on stock-based compensation expense from the non-cash charge for accounts receivable and contract assets from its Non-GAAP financial measures because the Company believes it is not indicative of its underlying results or ongoing operations.
•Tax effect from a net operating loss carryback under enacted CARES Act - During the first quarter of fiscal 2021, 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 second quarter of fiscal 2020, the Company recognized an income tax expense of $1.1 million on a previous tax year filing. The Company has excluded this impact because the Company believes it is not indicative of the Company’s underlying results or ongoing operations.
•Tax impact from Tax Reform - During the quarter ended January 27, 2018, the Company recognized an income tax benefit of approximately $32.2 million resulting from the Tax Cuts and Jobs Act of 2017 (“Tax Reform”), primarily due to a reduction of net deferred tax liabilities. The Company has excluded this impact because it is a significant change in the U.S. federal corporate tax rate and because the Company believes it is not indicative of the Company’s underlying results or ongoing operations.
•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 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 | ||||||||||||||||||||||||||||||||||||||||||||
| Annual Non-GAAP Organic Contract Revenues | ||||||||||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||
| Contract Revenues - GAAP | Revenues from acquired businesses1 | Revenues from storm restoration services | Additional week of revenue as a result of the Company’s 52/53 week fiscal year3 | Non-GAAP - Organic Revenues | Growth (Decline)% | |||||||||||||||||||||||||||||||||||||||
| Four Quarters Ended | GAAP - Organic % | Non-GAAP - Organic % | ||||||||||||||||||||||||||||||||||||||||||
| January 30, 2021 (FY2021) | $ | 3,199.2 | $ | — | $ | (14.6) | $ | (53.2) | $ | 3,131.4 | (4.2) | % | (6.1) | % | ||||||||||||||||||||||||||||||
| January 25, 2020 (FY2020) | $ | 3,339.7 | $ | — | $ | (4.7) | $ | — | $ | 3,335.0 | ||||||||||||||||||||||||||||||||||
| January 25, 2020 (FY2020) | $ | 3,339.7 | $ | (26.6) | $ | (4.7) | $ | — | $ | 3,308.3 | 6.8 | % | 8.3 | % | ||||||||||||||||||||||||||||||
| January 26, 2019 (FY2019) | $ | 3,127.7 | $ | (29.6) | $ | (42.9) | $ | — | $ | 3,055.3 | ||||||||||||||||||||||||||||||||||
| January 26, 2019 (FY2019) | $ | 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 (FY2017) | $ | 3,066.9 | $ | (214.9) | $ | — | $ | — | $ | 2,851.9 | 14.8 | % | 14.1 | % | ||||||||||||||||||||||||||||||
| July 30, 2016 (FY2016) | $ | 2,672.5 | $ | (119.8) | $ | — | $ | (53.5) | $ | 2,499.2 | ||||||||||||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
4
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||||||||||||||||||||
| Quarterly Non-GAAP Adjusted EBITDA | |||||||||||||||||||||||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Q2-20 | Q3-20 | Q4-20 | Q1-21 | Q2-21 | Q3-21 | Q4-21 | Q1-22 | ||||||||||||||||||||||||||||||||||||||||
| Ended | Ended | Ended | Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||||||||||||||||
| 7/27/19 | 10/26/19 | 1/25/20 | 4/25/20 | 7/25/20 | 10/24/20 | 1/30/21 | 5/1/21 | ||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 29.9 | $ | 24.2 | $ | (11.2) | $ | (32.4) | $ | 37.0 | $ | 33.9 | $ | (4.2) | $ | 0.9 | |||||||||||||||||||||||||||||||
| Interest expense, net | 12.9 | 13.1 | 12.6 | 12.5 | 7.9 | 4.7 | 4.7 | 5.9 | |||||||||||||||||||||||||||||||||||||||
| (Benefit) provision for income taxes | 12.7 | 6.6 | (4.1) | 2.7 | 12.2 | 12.0 | (2.1) | (2.7) | |||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 47.2 | 47.4 | 46.6 | 45.9 | 44.1 | 42.3 | 43.6 | 39.1 | |||||||||||||||||||||||||||||||||||||||
| Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”) | 102.7 | 91.3 | 43.9 | 28.6 | 101.3 | 93.0 | 42.0 | 43.1 | |||||||||||||||||||||||||||||||||||||||
| Gain on sale of fixed assets | (4.8) | (2.2) | (1.1) | (1.8) | (3.4) | (4.0) | (0.8) | (2.9) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 2.3 | 2.7 | 1.6 | 2.3 | 4.4 | 3.8 | 2.3 | 3.7 | |||||||||||||||||||||||||||||||||||||||
Loss (gain) on debt extinguishment4,5,6 | — | — | 0.1 | (12.5) | 0.5 | — | — | 0.1 | |||||||||||||||||||||||||||||||||||||||
Charges for a wage and hour litigation settlement7 | — | — | — | — | — | — | 2.3 | — | |||||||||||||||||||||||||||||||||||||||
Goodwill impairment charge8 | — | — | — | 53.3 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 100.2 | $ | 91.7 | $ | 44.5 | $ | 69.9 | $ | 102.7 | $ | 92.8 | $ | 45.7 | $ | 44.1 | |||||||||||||||||||||||||||||||
| Contract revenues | $ | 884.2 | $ | 884.1 | $ | 737.6 | $ | 814.3 | $ | 823.9 | $ | 810.3 | $ | 750.7 | $ | 727.5 | |||||||||||||||||||||||||||||||
| Non-GAAP Adjusted EBITDA % of contract revenues | 11.3 | % | 10.4 | % | 6.0 | % | 8.6 | % | 12.5 | % | 11.5 | % | 6.1 | % | 6.1 | % | |||||||||||||||||||||||||||||||
Q2-20 Non-GAAP Adjusted EBITDA, excluding contract modification9 | $ | 89.2 | |||||||||||||||||||||||||||||||||||||||||||||
Q2-20 Non-GAAP Adjusted EBITDA % of contract revenues, excluding contract modification9 | 10.2 | % | |||||||||||||||||||||||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
5
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||
| Annual Non-GAAP Adjusted EBITDA | |||||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||
| FY2017 | 4 Qtrs. | FY2019 | FY2020 | FY2021 | |||||||||||||||||||||||||
| Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||
| 7/29/17 | 1/27/182 | 1/26/19 | 1/25/20 | 1/30/21 | |||||||||||||||||||||||||
| Net income | $ | 157.2 | $ | 151.3 | $ | 62.9 | $ | 57.2 | $ | 34.3 | |||||||||||||||||||
| Interest expense, net | 37.4 | 38.7 | 44.4 | 50.9 | 29.7 | ||||||||||||||||||||||||
| Provision for income taxes | 93.2 | 26.6 | 25.1 | 21.3 | 24.9 | ||||||||||||||||||||||||
| Depreciation and amortization | 147.9 | 162.7 | 179.6 | 187.6 | 175.9 | ||||||||||||||||||||||||
| Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”) | 435.7 | 379.3 | 312.0 | 317.0 | 264.8 | ||||||||||||||||||||||||
| Gain on sale of fixed assets | (14.9) | (18.9) | (19.4) | (14.9) | (10.0) | ||||||||||||||||||||||||
| Stock-based compensation expense | 20.8 | 23.1 | 20.2 | 10.0 | 12.8 | ||||||||||||||||||||||||
Charges for a wage and hour litigation settlement7 | — | — | — | — | 2.3 | ||||||||||||||||||||||||
Goodwill impairment charge8 | — | — | — | — | 53.3 | ||||||||||||||||||||||||
Loss (gain) on debt extinguishment4,5 | — | — | — | 0.1 | (12.0) | ||||||||||||||||||||||||
Charge for warranty costs10 | — | — | — | 8.2 | — | ||||||||||||||||||||||||
Charge for (recovery of) accounts receivable and contract assets11 | — | — | 17.2 | (10.3) | — | ||||||||||||||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 441.6 | $ | 383.5 | $ | 330.0 | $ | 310.0 | $ | 311.0 | |||||||||||||||||||
| Contract revenues | $ | 3,066.9 | $ | 2,977.9 | $ | 3,127.7 | $ | 3,339.7 | $ | 3,199.2 | |||||||||||||||||||
| Non-GAAP Adjusted EBITDA % of contract revenues | 14.4 | % | 12.9 | % | 10.5 | % | 9.3 | % | 9.7 | % | |||||||||||||||||||
Note: Amounts above may not add due to rounding.
6
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||
| Annual Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings Per Share | |||||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||||
| (Dollars and shares in millions, except per share amounts) | |||||||||||||||||||||||||||||
| FY2017 | 4 Qtrs. | FY2019 | FY2020 | FY2021 | |||||||||||||||||||||||||
| Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||
| 7/29/17 | 1/27/182 | 1/26/19 | 1/25/20 | 1/30/21 | |||||||||||||||||||||||||
| Net income | $ | 157.2 | $ | 151.3 | $ | 62.9 | $ | 57.2 | $ | 34.3 | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
Cost of earned revenues, excluding depreciation and amortization10,7 | — | — | — | 8.2 | 2.1 | ||||||||||||||||||||||||
General and administrative11,7 | — | — | 15.3 | (10.3) | 0.2 | ||||||||||||||||||||||||
Goodwill impairment charge8 | — | — | — | — | 53.3 | ||||||||||||||||||||||||
Interest expense, net12 | 17.6 | 18.1 | 19.1 | 20.1 | 7.4 | ||||||||||||||||||||||||
Gain on debt extinguishment5 | — | — | — | — | (12.0) | ||||||||||||||||||||||||
| Income before income taxes | 17.6 | 18.1 | 34.4 | 18.0 | 50.9 | ||||||||||||||||||||||||
Provision for income taxes13 | 6.6 | 46.0 | 8.8 | 2.8 | 3.8 | ||||||||||||||||||||||||
| Total adjustments, net of tax | 11.0 | (27.9) | 25.6 | 15.2 | 47.1 | ||||||||||||||||||||||||
| Non-GAAP Adjusted Net Income | $ | 168.3 | $ | 123.5 | $ | 88.5 | $ | 72.4 | $ | 81.4 | |||||||||||||||||||
| Diluted earnings per common share | $ | 4.92 | $ | 4.74 | $ | 1.97 | $ | 1.80 | $ | 1.07 | |||||||||||||||||||
Total adjustments, net of tax and dilutive share effect of Notes14 | 0.35 | (0.86) | 0.82 | 0.48 | 1.47 | ||||||||||||||||||||||||
| Non-GAAP Adjusted Diluted Earnings per Common Share | $ | 5.26 | $ | 3.88 | $ | 2.78 | $ | 2.27 | $ | 2.54 | |||||||||||||||||||
| Shares used in computing diluted earnings per common share | 32.0 | 31.9 | 32.0 | 31.8 | 32.1 | ||||||||||||||||||||||||
Adjustment to Shares used in computing diluted earnings per common share14 | — | (0.1) | (0.2) | — | — | ||||||||||||||||||||||||
| Shares used in computing Non-GAAP Adjusted Diluted Earnings per Common Share | 32.0 | 31.8 | 31.8 | 31.8 | 32.1 | ||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
7
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||||||||||||||
| Calculation of Cumulative Cash Flows Fiscal 2011 through Fiscal 2021 | |||||||||||||||||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||
| Net Cash Provided by Operating Activities | Capital Expenditures, net of Proceeds from Assets Sales | Cash Paid for Acquisitions, net of Cash Acquired | Repurchases of Common Stock | Borrowings and Other Financing Activities15 | Other Investing Activities16 | Total Amount Provided by Other Financing and Investing Activities | |||||||||||||||||||||||||||||||||||
| Fiscal 2021 | $ | 381.8 | $ | (44.6) | $ | — | $ | (100.0) | $ | (283.4) | $ | — | $ | (283.4) | |||||||||||||||||||||||||||
| Fiscal 2020 | 58.0 | (101.5) | — | — | (31.1) | 0.3 | (30.8) | ||||||||||||||||||||||||||||||||||
| Fiscal 2019 | 124.4 | (142.0) | (20.9) | — | 80.9 | 1.6 | 82.5 | ||||||||||||||||||||||||||||||||||
| Six months ended January 27, 2018 | 160.5 | (76.0) | — | (16.9) | (21.5) | (0.7) | (22.2) | ||||||||||||||||||||||||||||||||||
| Fiscal 2017 | 256.4 | (185.2) | (24.2) | (62.9) | 20.4 | 0.3 | 20.7 | ||||||||||||||||||||||||||||||||||
| Fiscal 2016 | 261.5 | (175.5) | (157.2) | (170.0) | 254.1 | (0.5) | 253.6 | ||||||||||||||||||||||||||||||||||
| Fiscal 2015 | 141.9 | (93.6) | (31.9) | (87.1) | 75.9 | (4.5) | 71.4 | ||||||||||||||||||||||||||||||||||
| Fiscal 2014 | 84.2 | (73.7) | (17.1) | (10.0) | 19.0 | (0.3) | 18.7 | ||||||||||||||||||||||||||||||||||
| Fiscal 2013 | 106.7 | (58.8) | (330.3) | (15.2) | 263.5 | 0.1 | 263.6 | ||||||||||||||||||||||||||||||||||
| Fiscal 2012 | 65.1 | (52.8) | — | (13.0) | 7.6 | 0.9 | 8.5 | ||||||||||||||||||||||||||||||||||
| Fiscal 2011 | 43.9 | (49.2) | (36.5) | (64.5) | 47.5 | 0.2 | 47.7 | ||||||||||||||||||||||||||||||||||
| Cumulative | $ | 1,684.4 | $ | (1,053.0) | $ | (618.1) | $ | (539.6) | $ | 432.9 | $ | (2.6) | $ | 430.3 | |||||||||||||||||||||||||||
| Cash and cash equivalents at January 30, 2021 | $ | 11.8 | |||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents at July 31, 2010 | 103.3 | ||||||||||||||||||||||||||||||||||||||||
| Net decrease in cash and cash equivalents | (91.6) | ||||||||||||||||||||||||||||||||||||||||
Net decrease in restricted cash17 | (4.3) | ||||||||||||||||||||||||||||||||||||||||
| Total decrease in cash, cash equivalents, and restricted cash | $ | (95.9) | |||||||||||||||||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
8
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 4 Quarters Ended January 27, 2018 represent the aggregate of Q3 2017, Q4 2017, Q1 2018 and Q2 2018, and amounts provided for the 4 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 quarters ended January 30, 2021 and July 30, 2016, which contained an additional week of operations.
The Non-GAAP adjustment for the additional week of operations for the quarter ended January 30, 2021 is calculated as (i) contract revenues less (ii) contract revenues from storm restoration services (iii) divided by 14 weeks.
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 During the quarter ended January 25, 2020, the Company purchased $25.0 million aggregate principal amount of its 0.75% convertible senior notes due September 2021 (the “2021 Convertible Notes”) for $24.3 million, including interest and fees. The purchase price was allocated between the debt and equity components of the 2021 Convertible Notes. Based on the net carrying amount of the 2021 Convertible Notes, the Company recognized a net loss on debt extinguishment of $0.1 million after the write-off of associated debt issuance costs. The Company also recognized the equity component of the settlement of the 2021 Convertible Notes.
5 During the quarter ended April 25, 2020, the Company purchased $167.0 million aggregate principal amount of its 2021 Convertible Notes for $147.0 million, including interest and fees. The purchase price was allocated between the debt and equity components of the 2021 Convertible Notes. Based on the net carrying amount of the 2021 Convertible Notes, the Company recognized a net gain on debt extinguishment of $12.5 million after the write-off of associated debt issuance costs. The Company also recognized the equity component of the settlement of the 2021 Convertible Notes.
During the quarter ended July 25, 2020, the Company purchased $234.7 million aggregate principal amount of its 2021 Convertible Notes for $224.4 million, including interest and fees. The purchase price was allocated between the debt and equity components of the 2021 Convertible Notes. Based on the net carrying amount of the 2021 Convertible Notes, the Company recognized a net loss on debt extinguishment of $0.5 million after the write-off of associated debt issuance costs. The Company also recognized the equity component of the settlement of the 2021 Convertible Notes.
6 During the quarter ended May 1, 2021 the Company recognized a loss on debt extinguishment of $0.1 million in connection with the amendment and restatement of its credit agreement maturing in April 2026.
7 During the quarter ended January 30, 2021 the Company incurred a $2.3 million pre-tax charge for a wage and hour litigation settlement. Of the $2.3 million pre-tax charge $2.1 million and $0.2 million were included in costs of earned revenues and general and administrative expenses, respectively.
8 The Company incurred a goodwill impairment charge of $53.3 million during the quarter ended April 25, 2020 for a reporting unit that performs installation services inside third party premises.
9 During the quarter ended July 27, 2019, the Company entered into a contract modification 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. These amounts are excluded from the calculations of Non-GAAP Adjusted EBITDA for the quarter ended July 27, 2019.
10 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.
11 During the quarter ended January 26, 2019, the Company recognized a pre-tax non-cash charge for accounts receivable and contract assets of $17.2 million related to balances owed from a customer. On February 25, 2019, this customer filed a voluntary petition for reorganization. Partially offsetting this charge, the Company’s stock-based compensation expense was reduced by approximately $1.9 million for the quarter ended January 26, 2019 as a result of the pre-tax non-cash charge for accounts receivable and contract assets. Excluding this reduction, Non-GAAP Stock-Based Compensation Expense was $3.8 million for the quarter ended January 26, 2019. During the quarter ended April 27, 2019, the Company recognized $10.3 million of pre-tax income from the recovery of these previously reserved accounts receivable and contract assets based on collections from the customer.
12 Amounts represent the non-cash amortization of the debt discount associated with the Company’s 2021 Convertible Notes.
13 Amounts represent the tax related impact of all pre-tax adjustments as well as the tax effects of the vesting and exercise of share-based awards. 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 CARES Act and, for the quarter ended July 27, 2019, the Company recognized an income tax expense of $1.1 million on a previous tax year filing. Additionally, during the quarter ended January 27, 2018, the Company recognized an income tax benefit of approximately $32.2 million resulting from Tax Reform, primarily due to the re-measurement of the Company’s net deferred tax liabilities at a lower U.S. federal corporate income tax rate.
14 The Company has a hedge in effect to offset the economic dilution of additional shares that would be issued in connection with the conversion of the 2021 Convertible Notes up to an average quarterly share price of $130.43. Non-GAAP Adjusted Diluted Shares excludes the GAAP dilutive share effect of the 2021 Convertible Notes. See the Company’s Form 8-K previously filed with the Securities and Exchange Commission on September 28, 2015 for further information regarding the 2021 Convertible Notes and note hedge.
15 Other financing activities represents net cash provided by (used in) financing activities less repurchases of common stock.
9
16 Other investing activities represents net cash provided by (used in) investing activities less capital expenditure, net of proceeds from asset sales and less cash paid for acquisitions, net of cash acquired.
17 The Company adopted Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"), effective January 28, 2018. ASU 2016-18 requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior to the adoption of this guidance, changes in restricted cash were presented within cash flows in other investing activities.
10