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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)

Florida

59-1277135

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

11780 US Highway 1, Suite 600

Palm Beach Gardens,

FL

33408

(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 Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common stock, par value $0.33 1/3 per share

DY

New 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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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
Item 1.			Financial Statements			3
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			40
Item 4.			Controls and Procedures			41
PART II - OTHER INFORMATION
Item 1.			Legal Proceedings			42
Item 1A.			Risk Factors			42
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			42
Item 6.			Exhibits			43
SIGNATURES						44

2

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Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

3

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Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share amounts)

(Unaudited)

			July 30, 2022						January 29, 2022
ASSETS
Current assets:
Cash and equivalents			$	120,278					$	310,757
Accounts receivable, net (Note 5)			1,118,595						895,898
Contract assets			45,715						24,539
Inventories			98,883						81,291
Income tax receivable			6,036						12,729
Other current assets			44,296						30,876
Total current assets			1,433,803						1,356,090
Property and equipment, net			312,805						294,798
Operating lease right-of-use assets			64,788						61,101
Goodwill			272,485						272,485
Intangible assets, net			94,020						101,832
Other assets			28,469						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 debt			17,500						17,500
Contract liabilities			16,170						18,512
Accrued insurance claims			41,870						36,805
Operating lease liabilities			25,352						24,641
Income taxes payable			—						233
Other accrued liabilities			143,683						128,209
Total current liabilities			432,145						381,796
Long-term debt			815,332						823,251
Accrued insurance claims - non-current			45,240						48,238
Operating lease liabilities - non-current			39,276						36,519
Deferred tax liabilities, net - non-current			62,373						55,674
Other liabilities			14,988						14,202
Total liabilities			1,409,354						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 capital			4,630						2,028
Accumulated other comprehensive loss			(1,769)						(1,769)
Retained earnings			784,336						748,414
Total stockholders’ equity			797,016						758,544
Total liabilities and stockholders’ equity			$	2,206,370					$	2,118,224
See notes to the condensed consolidated financial statements.

4

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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, 2022						July 31, 2021
Contract revenues			$	972,273					$	787,568
Costs of earned revenues, excluding depreciation and amortization			797,980						651,367
General and administrative			73,336						64,730
Depreciation and amortization			35,345						38,462
Total			906,661						754,559
Interest expense, net			(9,347)						(9,334)
Other income, net			2,587						986
Income before income taxes			58,852						24,661
Provision for income taxes			14,996						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:
Basic			29,540,174						30,431,143
Diluted			29,943,422						30,872,506
See notes to the condensed consolidated financial statements.

5

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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, 2022						July 31, 2021
Contract revenues			$	1,848,573					$	1,515,065
Costs of earned revenues, excluding depreciation and amortization			1,543,710						1,271,378
General and administrative			142,716						131,740
Depreciation and amortization			71,981						77,542
Total			1,758,407						1,480,660
Interest expense, net			(18,465)						(15,211)
Loss on debt extinguishment			—						(62)
Other income, net			7,381						3,703
Income before income taxes			79,082						22,835
Provision for income taxes			15,690						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:
Basic			29,579,498						30,553,381
Diluted			30,021,486						31,085,985
See notes to the condensed consolidated financial statements.

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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

			For the Three Months Ended												For the Six Months Ended
			July 30, 2022						July 31, 2021						July 30, 2022						July 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 Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Equity
			Shares						Amount
Balances as of April 30, 2022			29,543,766						$	9,848					$	3,128					$	(1,769)					$	747,132					$	758,338
Stock options exercised			7,500						3						201						—						—						204
Stock-based compensation			705						—						4,629						—						—						4,630
Issuance of restricted stock, net of tax withholdings			9,579						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, 2022			29,457,520						$	9,819					$	4,630					$	(1,769)					$	784,336					$	797,016
			For the Three Months Ended
			July 31, 2021
			Common Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Equity
			Shares						Amount
Balances as of May 1, 2021			30,778,154						$	10,259					$	3,807					$	(1,767)					$	797,654					$	809,953
Stock options exercised			—						—						—						—						—						—
Stock-based compensation			537						—						2,309						—						—						2,309
Issuance of restricted stock, net of tax withholdings			23,023						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, 2021			30,170,076						$	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 Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Equity
			Shares						Amount
Balances as of January 29, 2022			29,612,867						$	9,871					$	2,028					$	(1,769)					$	748,414					$	758,544
Stock options exercised			22,863						8						1,398						—						—						1,405
Stock-based compensation			1,278						—						7,757						—						—						7,758
Issuance of restricted stock, net of tax withholdings			124,542						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, 2022			29,457,520						$	9,819					$	4,630					$	(1,769)					$	784,336					$	797,016
			For the Six Months Ended
			July 31, 2021
			Common Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Equity
			Shares						Amount
Balances as of January 30, 2021			30,615,167						$	10,205					$	2,284					$	(1,769)					$	800,588					$	811,308
Stock options exercised			11,169						4						362						—						—						366
Stock-based compensation			1,241						—						6,049						—						—						6,049
Issuance of restricted stock, net of tax withholdings			174,137						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, 2021			30,170,076						$	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, 2022						July 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 amortization			71,981						77,542
Non-cash lease expense			15,767						15,986
Deferred income tax provision			6,699						6,412
Stock-based compensation			7,758						6,049
Amortization of debt discount			—						1,329
Provision for bad debt, net			134						2,901
Gain on sale of fixed assets			(8,856)						(3,844)
Loss on debt extinguishment			—						62
Amortization of debt issuance costs and other			1,443						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 assets			2,556						2,235
Income taxes receivable/payable			6,460						(14,193)
Accounts payable			29,295						8,737
Accrued liabilities, insurance claims, operating lease liabilities, and other liabilities			3,429						(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 assets			8,830						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 options			1,405						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 Ended												For the Six Months Ended
			July 30, 2022						July 31, 2021						July 30, 2022						July 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 shares			29,540,174						30,431,143						29,579,498						30,553,381
Potential shares of common stock arising from stock options, and unvested restricted share units			403,248						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 awards			198,043						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, 2022						January 29, 2022
Trade accounts receivable			$	412,859					$	330,811
Unbilled accounts receivable			682,119						545,493
Retainage			24,402						20,318
Total			1,119,380						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 Ended												For the Six Months Ended
			July 30, 2022						July 31, 2021						July 30, 2022						July 31, 2021
Allowance for doubtful accounts at beginning of period			$	761					$	4,237					$	724					$	1,676
Provision for bad debt			102						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, 2022						January 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, 2022												January 29, 2022
			Amount						% of Total						Amount						% 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, 2022						January 29, 2022
Prepaid expenses			$	25,960					$	14,640
Deposits and other current assets			16,515						14,083
Insurance recoveries/receivables for accrued insurance claims			69						756
Restricted cash			1,372						1,372
Receivables on equipment sales			380						25
Other current assets			$	44,296					$	30,876

Other assets consisted of the following (dollars in thousands):

			July 30, 2022						January 29, 2022
Long-term contract assets			$	10,991					$	14,056
Deferred financing costs			4,221						4,834
Restricted cash			432						432
Insurance recoveries/receivables for accrued insurance claims			3,405						3,687
Other non-current deposits and assets			9,420						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, 2022						January 29, 2022
Cash and cash equivalents			$	120,278					$	310,757
Restricted cash included in:
Other current assets			1,372						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, 2022						January 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
Total									1,297,643						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, 2022						January 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, 2022																								January 29, 2022
			Weighted Average Remaining Useful Lives (Years)						Gross Carrying Amount						Accumulated Amortization						Intangible Assets, Net						Gross Carrying Amount						Accumulated Amortization						Intangible Assets, Net
Customer relationships			8.0						$	312,017					$	223,552					$	88,465					$	312,017					$	215,806					$	96,211
Trade names, finite			8.0						9,250						8,395						855						9,250						8,329						921
Trade name, indefinite			—						4,700						—						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, 2022						January 29, 2022
Accrued insurance claims - current			$	41,870					$	36,805
Accrued insurance claims - non-current			45,240						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 Ended												For the Six Months Ended
			July 30, 2022						July 31, 2021						July 30, 2022						July 31, 2021
Lease cost under long-term operating leases			$	8,461					$	8,796					$	16,927					$	17,426
Lease cost under short-term operating leases			6,460						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, 2022						January 29, 2022
Weighted average remaining lease term			3.0 years						3.1 years
Weighted average discount rate			3.5		%				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 Ended												For the Six Months Ended
			July 30, 2022						July 31, 2021						July 30, 2022						July 31, 2021
Cash paid for amounts included in the measurement of lease liabilities			$	9,582					$	6,835					$