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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 30, 2022

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________


Commission File Number 001-10613
DYCOM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida59-1277135
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
11780 US Highway 1, Suite 600
Palm Beach Gardens, FL33408
(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (561) 627-7171

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.33 1/3 per shareDYNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company
Emerging growth company
 
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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

There were 29,457,881 shares of common stock with a par value of $0.33 1/3 outstanding at August 23, 2022.



Dycom Industries, Inc.
Table of Contents
PART I - FINANCIAL INFORMATION
PART II - OTHER INFORMATION
SIGNATURES

2

Table of Contents
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.
3

Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
(Unaudited)
 July 30, 2022January 29, 2022
ASSETS
Current assets:  
Cash and equivalents$120,278 $310,757 
Accounts receivable, net (Note 5)1,118,595 895,898 
Contract assets45,715 24,539 
Inventories98,883 81,291 
Income tax receivable6,036 12,729 
Other current assets44,296 30,876 
Total current assets1,433,803 1,356,090 
Property and equipment, net312,805 294,798 
Operating lease right-of-use assets64,788 61,101 
Goodwill272,485 272,485 
Intangible assets, net94,020 101,832 
Other assets28,469 31,918 
Total assets$2,206,370 $2,118,224 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$187,570 $155,896 
Current portion of debt17,500 17,500 
Contract liabilities16,170 18,512 
Accrued insurance claims41,870 36,805 
Operating lease liabilities25,352 24,641 
Income taxes payable 233 
Other accrued liabilities143,683 128,209 
Total current liabilities432,145 381,796 
Long-term debt815,332 823,251 
Accrued insurance claims - non-current45,240 48,238 
Operating lease liabilities - non-current 39,276 36,519 
Deferred tax liabilities, net - non-current62,373 55,674 
Other liabilities14,988 14,202 
Total liabilities1,409,354 1,359,680 
COMMITMENTS AND CONTINGENCIES (Note 19)
Stockholders’ equity:  
Preferred stock, par value $1.00 per share: 1,000,000 shares authorized: no shares issued and outstanding
  
Common stock, par value $0.33 1/3 per share: 150,000,000 shares authorized: 29,457,520 and 29,612,867 issued and outstanding, respectively
9,819 9,871 
Additional paid-in capital4,630 2,028 
Accumulated other comprehensive loss(1,769)(1,769)
Retained earnings784,336 748,414 
Total stockholders’ equity797,016 758,544 
Total liabilities and stockholders’ equity$2,206,370 $2,118,224 
See notes to the condensed consolidated financial statements.

4

Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
For the Three Months Ended
 July 30, 2022July 31, 2021
Contract revenues$972,273 $787,568 
Costs of earned revenues, excluding depreciation and amortization797,980 651,367 
General and administrative73,336 64,730 
Depreciation and amortization35,345 38,462 
Total906,661 754,559 
Interest expense, net(9,347)(9,334)
Other income, net2,587 986 
Income before income taxes58,852 24,661 
Provision for income taxes14,996 6,496 
Net income$43,856 $18,165 
Earnings per common share:
Basic earnings per common share$1.48 $0.60 
Diluted earnings per common share$1.46 $0.59 
Shares used in computing earnings per common share:
 Basic29,540,174 30,431,143 
 Diluted29,943,422 30,872,506 
See notes to the condensed consolidated financial statements.
















5

Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
For the Six Months Ended
 July 30, 2022July 31, 2021
Contract revenues$1,848,573 $1,515,065 
Costs of earned revenues, excluding depreciation and amortization1,543,710 1,271,378 
General and administrative142,716 131,740 
Depreciation and amortization71,981 77,542 
Total1,758,407 1,480,660 
Interest expense, net(18,465)(15,211)
Loss on debt extinguishment (62)
Other income, net7,381 3,703 
Income before income taxes79,082 22,835 
Provision for income taxes15,690 3,772 
Net income$63,392 $19,063 
Earnings per common share:
Basic earnings per common share$2.14 $0.62 
Diluted earnings per common share$2.11 $0.61 
Shares used in computing earnings per common share:
 Basic29,579,498 30,553,381 
 Diluted30,021,486 31,085,985 
See notes to the condensed consolidated financial statements.
6

Table of Contents
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
For the Three Months EndedFor the Six Months Ended
July 30, 2022July 31, 2021July 30, 2022July 31, 2021
Net income$43,856 $18,165 $63,392 $19,063 
Foreign currency translation gain (loss), net of tax (1) 1 
Comprehensive income$43,856 $18,164 $63,392 $19,064 
See notes to the condensed consolidated financial statements.

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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Dollars in thousands, except share amounts)
(Unaudited)
For the Three Months Ended
July 30, 2022
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
 SharesAmount
Balances as of April 30, 202229,543,766 $9,848 $3,128 $(1,769)$747,132 $758,338 
Stock options exercised7,500 3 201 — — 204 
Stock-based compensation705 — 4,629 — — 4,630 
Issuance of restricted stock, net of tax withholdings9,579 3 (22)—  (19)
Repurchase of common stock(104,030)(35)(3,307)— (6,651)(9,993)
Net income— — —  43,856 43,856 
Balances as of July 30, 202229,457,520 $9,819 $4,630 $(1,769)$784,336 $797,016 
For the Three Months Ended
July 31, 2021
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
SharesAmount
Balances as of May 1, 202130,778,154 $10,259 $3,807 $(1,767)$797,654 $809,953 
Stock options exercised   — —  
Stock-based compensation537  2,309 — — 2,309 
Issuance of restricted stock, net of tax withholdings23,023 9 (14)—  (5)
Repurchase of common stock(631,638)(211)(3,793)— (45,996)(50,000)
Other comprehensive loss— — — (1)— (1)
Net income— — — — 18,165 18,165 
Balances as of July 31, 202130,170,076 $10,057 $2,309 $(1,768)$769,823 $780,421 
See notes to the condensed consolidated financial statements.



















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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Dollars in thousands, except share amounts)
(Unaudited)
For the Six Months Ended
July 30, 2022
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
 SharesAmount
Balances as of January 29, 202229,612,867 $9,871 $2,028 $(1,769)$748,414 $758,544 
Stock options exercised22,863 8 1,398 — — 1,405 
Stock-based compensation1,278  7,757 — — 7,758 
Issuance of restricted stock, net of tax withholdings124,542 42 (3,247)— (2,346)(5,551)
Repurchase of common stock(304,030)(101)(3,307)— (25,124)(28,532)
Net income— — —  63,392 63,392 
Balances as of July 30, 202229,457,520 $9,819 $4,630 $(1,769)$784,336 $797,016 
For the Six Months Ended
July 31, 2021
Common StockAdditional
Paid-in Capital
Accumulated Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
SharesAmount
Balances as of January 30, 202130,615,167 $10,205 $2,284 $(1,769)$800,588 $811,308 
Stock options exercised11,169 4 362 — — 366 
Stock-based compensation1,241  6,049 — — 6,049 
Issuance of restricted stock, net of tax withholdings174,137 59 (2,592)— (3,832)(6,365)
Repurchase of common stock(631,638)(211)(3,793)— (45,996)(50,000)
Other comprehensive income— — — 1 — 1 
Net income— — — — 19,063 19,063 
Balances as of July 31, 202130,170,076 $10,057 $2,309 $(1,768)$769,823 $780,421 
See notes to the condensed consolidated financial statements.
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the Six Months Ended
July 30, 2022July 31, 2021
Cash flows from operating activities:
Net income $63,392 $19,063 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization71,981 77,542 
Non-cash lease expense15,767 15,986 
Deferred income tax provision6,699 6,412 
Stock-based compensation7,758 6,049 
Amortization of debt discount 1,329 
Provision for bad debt, net134 2,901 
Gain on sale of fixed assets(8,856)(3,844)
Loss on debt extinguishment 62 
Amortization of debt issuance costs and other1,443 1,392 
Change in operating assets and liabilities:
Accounts receivable, net(222,831)(73,898)
Contract assets, net(23,518)32,803 
Other current assets and inventories(30,658)(13,064)
Other assets2,556 2,235 
Income taxes receivable/payable6,460 (14,193)
Accounts payable29,295 8,737 
Accrued liabilities, insurance claims, operating lease liabilities, and other liabilities3,429 (10,706)
Net cash (used in) provided by operating activities(76,949)58,806 
Cash flows from investing activities:
Capital expenditures(80,932)(68,352)
Proceeds from sale of assets8,830 4,235 
Net cash used in investing activities(72,102)(64,117)
Cash flows from financing activities:
Proceeds from 2029 Notes 500,000 
Proceeds from borrowings on senior credit agreement, including term loan 95,000 
Principal payments on senior credit agreement, including term loan(8,750)(271,875)
Debt issuance costs (11,638)
Repurchase of common stock(28,532)(50,000)
Exercise of stock options1,405 366 
Restricted stock tax withholdings(5,551)(6,365)
Net cash (used in) provided by financing activities(41,428)255,488 
Net (decrease) increase in cash, cash equivalents and restricted cash(190,479)250,177 
Cash, cash equivalents and restricted cash at beginning of period (Note 7)312,561 13,574 
Cash, cash equivalents and restricted cash at end of period (Note 7)$122,082 $263,751 
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Supplemental disclosure of other cash flow activities and non-cash investing and financing activities:
Cash paid for interest$16,641 $4,997 
Cash paid for taxes, net$1,897 $12,294 
Purchases of capital assets included in accounts payable or other accrued liabilities at period end$8,238 $9,736 
See notes to the condensed consolidated financial statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Dycom Industries, Inc. (“Dycom”, the “Company”, “we”, “our”, or “us”) 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. Dycom supplies the labor, tools, and equipment necessary to provide these services to its customers.

The Company uses a 52/53 week fiscal year ending on the last Saturday in January. Fiscal 2022 and fiscal 2023 each consist of 52 weeks of operations. The next 53 week fiscal period will occur in the fiscal year ending January 31, 2026.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries, all of which are wholly-owned, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2022, filed with the SEC on March 4, 2022. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included. This includes all normal and recurring adjustments and elimination of intercompany accounts and transactions. Operating results for the interim period are not necessarily indicative of the results expected for any subsequent interim or annual period.

Segment Information. The Company operates in one reportable segment. Its services are provided by its operating segments on a decentralized basis. Each operating segment consists of a subsidiary (or in certain instances, the combination of two or more subsidiaries), the results of which are regularly reviewed by the Company’s Chief Executive Officer, the chief operating decision maker. All of the Company’s operating segments have been aggregated into one reportable segment based on their similar economic characteristics, nature of services and production processes, type of customers, and service distribution methods.

The United States continues to be impacted by a pandemic caused by a novel strain of coronavirus, including variants of the coronavirus (“COVID-19”). The response to COVID-19 by businesses and governmental agencies, and the ongoing impacts of COVID-19 on global supply chains continues to affect the economy. As the COVID-19 pandemic continues to evolve, we are closely monitoring its impact on all aspects of our business, including how it impacts our customers, subcontractors, suppliers, vendors and employees, in addition to its impact on our ability to provide services to our customers. We believe the full extent of the impact of the COVID-19 pandemic on the Company's operating results, cash flow and financial condition will be determined by factors which are uncertain, unpredictable and outside of our control, including the duration and severity of the pandemic, any worsening of the pandemic, the effectiveness of vaccinations or prior infection to protect against infection or a subsequent infection, the severity of impacts to the health of infected persons, the nature and duration of the containment and mitigation actions taken by federal, state and local governments and protocols and contractual requirements implemented by our customers, and the resulting impact on the demand for our services from our customers. In addition, the ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of the control measures noted above. Our customers may be directly impacted by business curtailments or weak market conditions and may not be willing to continue using the services we provide. Furthermore, the COVID-19 pandemic may cause delays in our provision of services due to interruptions or restrictions in our ability to obtain permits from government agencies and as a result of constraints to the availability of labor, supplies and equipment. The situation surrounding COVID-19 remains fluid, and if disruptions do arise, they could materially adversely impact our business.

2. Significant Accounting Policies and Estimates

There have been no material changes to the Company’s significant accounting policies and critical accounting estimates described in the Company’s Annual Report on Form 10-K for fiscal 2022.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and
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accompanying notes. These estimates are based on our historical experience and management’s understanding of current facts and circumstances. At the time they are made, we believe that such estimates are fair when considered in conjunction with the Company’s consolidated financial position and results of operations taken as a whole. However, actual results could differ materially from those estimates.

3. Accounting Standards

Recently issued accounting pronouncements are disclosed in the Company’s Annual Report on Form 10-K for fiscal 2022. As of the date of this Quarterly Report on Form 10-Q, there have been no changes in the expected dates of adoption or estimated effects on the Company’s condensed consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s Annual Report on Form 10-K for fiscal 2022. Further, there have been no additional accounting standards issued as of the date of this Quarterly Report on Form 10-Q that are applicable to the condensed consolidated financial statements of the Company.

Accounting Standards Not Yet Adopted

All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.


4. Computation of Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts):
 For the Three Months EndedFor the Six Months Ended
 July 30, 2022July 31, 2021July 30, 2022July 31, 2021
Net income available to common stockholders (numerator)$43,856 $18,165 $63,392 $19,063 
Weighted-average number of common shares (denominator)29,540,174 30,431,143 29,579,498 30,553,381 
Basic earnings per common share$1.48 $0.60 $2.14 $0.62 
Weighted-average number of common shares29,540,174 30,431,143 29,579,498 30,553,381 
Potential shares of common stock arising from stock options, and unvested restricted share units403,248 441,363 441,988 532,604 
Total shares-diluted (denominator)29,943,422 30,872,506 30,021,486 31,085,985 
Diluted earnings per common share$1.46 $0.59 $2.11 $0.61 
Anti-dilutive weighted shares excluded from the calculation of earnings per common share:
Stock-based awards198,043 226,894 157,879 88,613 
0.75% convertible senior notes due 2021(1) (2)
 601,349  601,349 
Warrants(1) (2)
 601,349  601,349 
Total 198,043 1,429,592 157,879 1,291,311 

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(1) The Company used the treasury stock method for calculating any potential dilutive impact on earnings per common share if our average stock price for the period exceeded the $96.89 per share conversion price. There was no dilutive impact on earnings per common share during any of the periods presented as our average stock price did not exceed the per share conversion price and the 2021 Convertible Notes (as defined in Note 13) matured on September 15, 2021. The warrants associated with our 2021 Convertible Notes would have had a dilutive impact on earnings per common share if our average stock price for the period had exceeded the $130.43 per share warrant strike price. As our average stock price did not exceed the strike price for the warrants for any periods presented, the underlying common shares were anti-dilutive as reflected in the table above. The warrants were scheduled to expire on a series of dates concluding on May 9, 2022. During the fourth quarter of fiscal 2022, we purchased the remaining warrants for $0.7 million and there are no additional warrants outstanding.

(2) In connection with the offering of the 2021 Convertible Notes, we entered into convertible note hedge transactions with counterparties for the purpose of reducing the potential dilution to common stockholders from the conversion of the 2021 Convertible Notes and offsetting any potential cash payments in excess of the principal amount of the 2021 Convertible Notes. Prior to conversion, the convertible note hedge was not included for purposes of the calculation of earnings per common share as its effect would be anti-dilutive. Upon any conversion, the convertible note hedge was expected to offset the dilutive effect of the 2021 Convertible Notes when the average stock price for the period was above $96.89 per share. The 2021 Convertible Notes matured on September 15, 2021. The convertible note hedge transactions expired on September 13, 2021. See Note 13, Debt, for additional information related to our 2021 Convertible Notes, warrant transactions, and hedge transactions.

5. Accounts Receivable, Contract Assets, and Contract Liabilities

The following provides further details on the balance sheet accounts of accounts receivable, net; contract assets; and contract liabilities.

Accounts Receivable
 
Accounts receivable, net, classified as current, consisted of the following (dollars in thousands):
July 30, 2022January 29, 2022
Trade accounts receivable$412,859 $330,811 
Unbilled accounts receivable682,119 545,493 
Retainage24,402 20,318 
Total1,119,380 896,622 
Less: allowance for doubtful accounts(785)(724)
Accounts receivable, net$1,118,595 $895,898 
 
We maintain an allowance for doubtful accounts for estimated losses on uncollected balances. The allowance for doubtful accounts changed as follows (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 30, 2022July 31, 2021July 30, 2022July 31, 2021
Allowance for doubtful accounts at beginning of period$761 $4,237 $724 $1,676 
Provision for bad debt102 78 134 2,901 
Amounts charged against the allowance(78)(2,788)(73)(3,050)
Allowance for doubtful accounts at end of period$785 $1,527 $785 $1,527 

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Contract Assets and Contract Liabilities

Net contract assets consisted of the following (dollars in thousands):
July 30, 2022January 29, 2022
Contract assets$45,715 $24,539 
Contract liabilities 16,170 18,512 
Contract assets, net$29,545 $6,027 

The increase in net contract assets primarily resulted from increased services performed under contracts consisting of multiple tasks. During the three and six months ended July 30, 2022, we performed services and recognized $3.6 million and $11.3 million of contract revenues related to contract liabilities that existed at January 29, 2022. See Note 6, Other Current Assets and Other Assets, for information on our long-term contract assets.

Customer Credit Concentration

Customers whose combined amounts of accounts receivable and contract assets, net, exceeded 10% of total combined accounts receivable and contract assets, net, as of July 30, 2022 or January 29, 2022 were as follows (dollars in millions):

July 30, 2022January 29, 2022
Amount% of TotalAmount% of Total
Lumen Technologies$231.1 20.1%$166.0 18.4%
AT&T Inc.$162.3 14.1%$106.0 11.7%
Verizon Communications Inc.$147.7 12.9%$144.3 16.0%
Comcast Corporation$133.9 11.7%$113.5 12.6%


We believe that none of the customers above were experiencing financial difficulties that would materially impact the collectability of the Company’s total accounts receivable and contract assets, net, as of July 30, 2022 or January 29, 2022.

6. Other Current Assets and Other Assets
 
Other current assets consisted of the following (dollars in thousands):
July 30, 2022January 29, 2022
Prepaid expenses$25,960 $14,640 
Deposits and other current assets16,515 14,083 
Insurance recoveries/receivables for accrued insurance claims69 756 
Restricted cash1,372 1,372 
Receivables on equipment sales380 25 
Other current assets$44,296 $30,876 

Other assets consisted of the following (dollars in thousands):
July 30, 2022January 29, 2022
Long-term contract assets$10,991 $14,056 
Deferred financing costs4,221 4,834 
Restricted cash432 432 
Insurance recoveries/receivables for accrued insurance claims3,405 3,687 
Other non-current deposits and assets9,420 8,909 
Other assets$28,469 $31,918 

Long-term contract assets 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.
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See Note 10, Accrued Insurance Claims, for information on our Insurance recoveries/receivables.

7. Cash, Cash Equivalents and Restricted Cash
 
Amounts of cash, cash equivalents and restricted cash reported in the condensed consolidated statement of cash flows consisted of the following (dollars in thousands):
July 30, 2022January 29, 2022
Cash and cash equivalents$120,278 $310,757 
Restricted cash included in:
Other current assets1,372 1,372 
Other assets (long-term)432 432 
Cash, cash equivalents and restricted cash$122,082 $312,561 

8. Property and Equipment
 
Property and equipment consisted of the following (dollars in thousands):

Estimated Useful Lives (Years)July 30, 2022January 29, 2022
Land$4,127 $4,127 
Buildings
10-35
10,421 10,649 
Leasehold improvements
1-10
17,814 17,706 
Vehicles
1-5
748,196 714,515 
Computer hardware and software
1-7
160,876 153,072 
Office furniture and equipment
1-10
12,596 12,939 
Equipment and machinery
1-10
343,613 329,145 
Total1,297,643 1,242,153 
Less: accumulated depreciation(984,838)(947,355)
Property and equipment, net$312,805 $294,798 

Depreciation expense was $31.5 million and $33.8 million for the three months ended July 30, 2022 and July 31, 2021, respectively, and $64.2 million and $68.2 million for the six months ended July 30, 2022 and July 31, 2021, respectively.

9. Goodwill and Intangible Assets

Goodwill

There was no change in the carrying amount of goodwill during the six months ended July 30, 2022. The goodwill balance consisted of the following (dollars in thousands):
July 30, 2022January 29, 2022
Goodwill, gross$521,516 $521,516 
Accumulated impairment losses(249,031)(249,031)
Total$272,485 $272,485 

The Company’s goodwill resides in multiple reporting units and primarily consists of expected synergies, together with the expansion of the Company’s geographic presence and strengthening of its customer base from acquisitions. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment, or more frequently if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. The profitability of individual reporting units may suffer periodically due to downturns in customer demand, increased costs of providing services, and the level of overall economic activity. The Company’s customers may reduce capital expenditures and defer or cancel pending projects due to changes in technology, a slowing or uncertain economy, merger or acquisition activity, a decision to allocate resources to other
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areas of their business, or other reasons. The profitability of reporting units may also suffer if actual costs of providing services exceed the costs anticipated when the Company enters into contracts. Additionally, adverse conditions in the economy and future volatility in the equity and credit markets could impact the valuation of the Company’s reporting units. The cyclical nature of the Company’s business, the high level of competition existing within its industry, and the concentration of its revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units disproportionately, relative to the Company as a whole. As a result, the performance of one or more of the reporting units could decline, resulting in an impairment of goodwill or intangible assets.

The Company performs its annual impairment assessment as of the first day of the fourth fiscal quarter of each fiscal year. As a result of the Company’s fiscal 2022 period assessment, the Company determined that the fair values of each of the reporting units and the indefinite-lived intangible asset were in excess of their carrying values and no impairment had occurred. As of July 30, 2022, the Company continues to believe the remaining goodwill and the indefinite-lived intangible asset are recoverable for all of its reporting units.

Intangible Assets

Our intangible assets consisted of the following (dollars in thousands):
July 30, 2022January 29, 2022
Weighted Average Remaining Useful Lives (Years)Gross Carrying AmountAccumulated AmortizationIntangible Assets, NetGross Carrying AmountAccumulated AmortizationIntangible Assets, Net
Customer relationships8.0$312,017 $223,552 $88,465 $312,017 $215,806 $96,211 
Trade names, finite8.09,250 8,395 855 9,250 8,329 921 
Trade name, indefinite4,700  4,700 4,700  4,700 
$325,967 $231,947 $94,020 $325,967 $224,135 $101,832 

Amortization of our customer relationship intangibles is recognized on an accelerated basis as a function of the expected economic benefit. Amortization of our other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life. Amortization expense for finite-lived intangible assets was $3.9 million and $4.7 million for the three months ended July 30, 2022 and July 31, 2021, respectively, and $7.8 million and $9.4 million for the six months ended July 30, 2022 and July 31, 2021, respectively.

As of July 30, 2022, we believe that the carrying amounts of our intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment.

10. Accrued Insurance Claims
 
Within our insurance program, we retain the risk of loss on a per occurrence basis in varying amounts depending on the type of claim and the terms of the applicable insurance coverage. Additionally, we retain the risk of loss, up to certain annual aggregate stop loss limits, for claims covered by our automobile liability, general liability (including claims relating to underground facility locating services), works’ compensation, and employee group health. Losses for covered claims beyond our retained risk of loss are paid or reimbursed by our insurance carriers up to our coverage limits.

For fiscal 2022, with regard to workers’ compensation losses, we retained the risk of loss up to $1.0 million on a per occurrence basis. This retention amount is applicable to all of the states in which we operate, except with respect to workers’ compensation insurance in two states in which we participate in state-sponsored insurance funds. With regard to automobile liability and general liability losses for fiscal 2022, we retained the risk of loss up to $1.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for automobile and general liability for the next $5.0 million on a per-occurrence basis with aggregate loss limits of $11.5 million within this layer of retention. In addition, we retained $10.0 million risk of loss on a per occurrence basis for losses above $30.0 million.

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For fiscal 2023, with regard to workers’ compensation losses, our retention of risk remains the same as fiscal 2022. With regard to automobile liability and general liability losses, our retention of risk remains the same as fiscal 2022, with the exception that we retained an additional $5.0 million risk of loss on a per occurrence basis for losses above $10.0 million, if any.

We are party to a stop-loss agreement for losses under our employee group health plan. For the calendar year 2022, we retain the risk of loss on an annual basis, up to the first $600,000 of claims per participant.

Amounts for total accrued insurance claims and insurance recoveries/receivables are as follows (dollars in thousands):

July 30, 2022January 29, 2022
Accrued insurance claims - current$41,870 $36,805 
Accrued insurance claims - non-current45,240 48,238 
Accrued insurance claims$87,110 $85,043 
Insurance recoveries/receivables:
Current (included in Other current assets)$69 $756 
Non-current (included in Other assets)3,405 3,687 
Insurance recoveries/receivables$3,474 $4,443 

Insurance recoveries/receivables represent the amount of accrued insurance claims that are covered by insurance as the amounts exceed the Company’s loss retention. During the six months ended July 30, 2022, total insurance recoveries/receivables decreased approximately $1.0 million primarily due to the settlement of claims that exceeded our loss retention. Accrued insurance claims decreased by a corresponding amount.

11. Leases

We lease the majority of our office facilities as well as certain equipment, all of which are accounted for as operating leases. These leases have remaining terms ranging from less than 1 year to approximately 8 years. Some leases include options to extend the lease for up to 5 years and others include options to terminate.

The following table summarizes the components of lease cost recognized in the condensed consolidated statements of operations for the three and six months ended July 30, 2022 and July 31, 2021 (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 30, 2022July 31, 2021July 30, 2022July 31, 2021
Lease cost under long-term operating leases$8,461 $8,796 $16,927 $17,426 
Lease cost under short-term operating leases6,460 6,064 12,715 11,255 
Variable lease cost under short-term and long-term operating leases(1)
999 696 2,020 1,940 
Total lease cost$15,920 $15,556 $31,662 $30,621 

(1) Variable lease cost primarily includes insurance, maintenance, and other operating expenses related to our leased office facilities.

Our operating lease liabilities related to long-term operating leases were $64.6 million as of July 30, 2022 and $61.2 million as of January 29, 2022. Supplemental balance sheet information related to these liabilities is as follows:

July 30, 2022January 29, 2022
Weighted average remaining lease term3.0 years3.1 years
Weighted average discount rate3.5 %3.8 %
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Supplemental cash flow information related to our long-term operating lease liabilities for the three and six months ended July 30, 2022 and July 31, 2021 is as follows (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 30, 2022July 31, 2021July 30, 2022July 31, 2021
Cash paid for amounts included in the measurement of lease liabilities $9,582 $6,835 $17,470 $17,586 
Operating lease right-of-use assets obtained in exchange for operating lease liabilities $10,555 $7,859 $19,457 $19,569 

As of July 30, 2022, maturities of our lease liabilities under our long-term operating leases for the next five fiscal years and thereafter are as follows (dollars in thousands):

Fiscal YearAmount
Remainder of 2023$14,466 
202424,646 
202516,826 
20268,286 
20273,865 
Thereafter1,784 
Total lease payments69,873 
Less: imputed interest(5,245)
Total