UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 22, 2022
(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 2.02 Results of Operations and Financial Condition.
On November 22, 2022, Dycom Industries, Inc. (the “Company”) issued a press release reporting fiscal 2023 third quarter results. The Company also provided forward guidance. Additionally, on November 22, 2022, the Company made available related materials to be discussed during the Company’s webcast and conference call referred to in such press release. A copy of the press release and related conference call materials are furnished as Exhibits 99.1, 99.2, and 99.3, respectively, to this Current Report on Form 8-K and are incorporated into Item 2.02 of this Current Report on Form 8-K by reference.
The information in the preceding paragraphs, as well as Exhibits 99.1, 99.2, and 99.3, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference into another filing under the Exchange Act or the Securities Act of 1933 (the “Securities Act”) if such subsequent filing specifically references this Current Report on Form 8-K.
Forward Looking Statements
This Current Report on Form 8-K, including the press release and related slide presentation and Non-GAAP reconciliations that are furnished as exhibits to this Current Report on Form 8-K, contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. These statements are subject to change. Forward-looking statements are based on management’s current expectations, estimates and projections. These statements are subject to risks and uncertainties that may cause actual results for completed periods and periods in the future to differ materially from the results projected or implied in any forward-looking statements contained in this press release. The most significant of these risks and uncertainties are described in the Company’s Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) and include the duration and severity of a pandemic caused by COVID-19, our ability to comply with various COVID-19 legal and contractual requirements and the impacts that those requirements may have on our workforce and our ability to perform our work, vaccination rates in the areas where we operate, any worsening of the pandemic caused by increasing infection rates triggered by new variants, future economic conditions and trends including the potential impacts of an inflationary economic environment, customer capital budgets and spending priorities, the availability and cost of materials, equipment and labor necessary to perform our work, 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. These filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov. The Company does not undertake any obligation to update forward-looking statements except as required by law.
Item 9.01 Financial Statement and Exhibits.
(d)Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: November 22, 2022
| DYCOM INDUSTRIES, INC. (Registrant) | |||||
| By: | /s/ Ryan F. Urness | ||||
| Name: | Ryan F. Urness | ||||
| Title: | Vice President, General Counsel and Corporate Secretary | ||||
Exhibit 99.1
 | NEWS RELEASE | ||||
November 22, 2022 | |||||
DYCOM INDUSTRIES, INC. ANNOUNCES FISCAL 2023 THIRD QUARTER RESULTS
Third Quarter Highlights
•Contract revenues of $1.042 billion; 22.1% growth
•Non-GAAP Adjusted EBITDA of $114.6 million
•Net Income of $54.0 million, or $1.80 per common share diluted
Palm Beach Gardens, Florida, November 22, 2022 - Dycom Industries, Inc. (NYSE: DY) announced today its results for the third quarter ended October 29, 2022. Contract revenues were $1.042 billion for the quarter ended October 29, 2022, compared to $854.0 million in the year ago period, an increase of 22.1%. Non-GAAP Adjusted EBITDA was $114.6 million, or 11.0% of contract revenues, for the quarter ended October 29, 2022, compared to $83.1 million, or 9.7% of contract revenues, in the year ago period.
Net income was $54.0 million, or $1.80 per common share diluted, for the quarter ended October 29, 2022, compared to $28.7 million, or $0.94 per common share diluted, in the year ago period. Results for the quarters ended October 29, 2022 and October 30, 2021 include income tax benefits of $3.2 million, or $0.11 per common share diluted, and $3.0 million, or $0.10 per common share diluted, respectively, for the vesting and exercise of share-based awards and for credits related to tax filings for prior years.
Year-to-Date Highlights
Contract revenues were $2.891 billion for the nine months ended October 29, 2022, compared to $2.369 billion for the nine months ended October 30, 2021. Contract revenues increased 22.2% organically after excluding $3.9 million of contract revenues from storm restoration services in the comparable year ago period. Non-GAAP Adjusted EBITDA was $283.0 million, or 9.8% of contract revenues, for the nine months ended October 29, 2022, compared to $201.0 million, or 8.5% of contract revenues, in the comparable year ago period.
Net income was $117.4 million, or $3.91 per common share diluted, for the nine months ended October 29, 2022. For the comparable year ago period, net income was $47.8 million, or $1.54 per common share diluted. Results for the nine months ended October 29, 2022 and October 30, 2021 include income tax benefits of $7.6 million, or $0.25 per common share diluted, and $5.8 million, or $0.19 per common share diluted, respectively, for the vesting and exercise of share-based awards and for credits related to tax filings for prior years.
During the nine months ended October 29, 2022, the Company purchased 304,030 shares of its own common stock in open market transactions for $28.5 million at an average price of $93.85 per share.
Outlook
The Company expects contract revenues for the quarter ending January 28, 2023 to increase by mid- to high-single digit as a percentage of contract revenues as compared to the quarter ended January 29, 2022. Non-GAAP Adjusted EBITDA as a percentage of contract revenues is expected to increase modestly for the quarter ending January 28, 2023 as compared to the quarter ended January 29, 2022. For additional information regarding the Company’s outlook, please see the presentation materials available on the Company’s website posted in connection with the conference call discussed below.
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, the Company may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. See Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures in the press release tables that follow.
Conference Call Information and Other Selected Data
The Company will host a conference call to discuss fiscal 2023 third quarter results on Tuesday, November 22, 2022 at 9:00 a.m. Eastern time. Interested parties may participate in the question and answer session of the conference call by registering at https://register.vevent.com/register/BI0369368b0c7644b086408460275d7ef8. Upon registration, participants will receive a dial-in number and unique PIN to access the call. Participants are encouraged to join approximately ten minutes prior to the scheduled start time.
For all other attendees, a live listen-only audio webcast of the call, including an accompanying slide presentation, can be accessed directly at https://edge.media-server.com/mmc/p/z2ivk522. A replay of the live webcast and the related materials will be available on the Company's Investor Center website at https://ir.dycomind.com for approximately 120 days following the event.
About Dycom Industries, Inc.
Dycom is a leading provider of specialty contracting services throughout the United States. These services include program management; planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications providers. Additionally, Dycom provides underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities.
Forward Looking Information
This press release contains forward-looking statements within the meaning of the 1995 Private Securities Litigation Reform Act. These forward-looking statements include those related to the outlook for the quarter ending January 28, 2023, including, but not limited to, those statements found under the “Outlook” section of this press release. Forward-looking statements are based on management’s expectations, estimates and projections, are made solely as of the date these statements are made, and are subject to both known and unknown risks and uncertainties that may cause the actual results and occurrences discussed in these forward-looking statements to differ materially from those referenced or implied in the forward-looking statements contained in this press release. The most significant of these known 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 future economic conditions and trends including the potential impacts of an inflationary economic environment, customer capital budgets and spending priorities, the availability and cost of materials, equipment and labor necessary to perform our work, 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 impact to the Company’s backlog from project cancellations or postponements, the impact of the COVID-19 pandemic, the impact of varying climate and weather conditions, the anticipated outcome of other contingent events, including litigation or regulatory actions involving the Company, the adequacy of our liquidity, the availability of financing to address our financial needs, the Company’s ability to generate sufficient cash to service its indebtedness, the impact of restrictions imposed by the Company’s credit agreement, and 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 its forward-looking statements.
For more information, contact:
Callie Tomasso, Investor Relations
Email: investorrelations@dycomind.com
Phone: (561) 627-7171
---Tables Follow---
2
| DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Dollars in thousands) | |||||||||||
| Unaudited | |||||||||||
| October 29, 2022 | January 29, 2022 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and equivalents | $ | 65,285 | $ | 310,757 | |||||||
| Accounts receivable, net | 1,244,482 | 895,898 | |||||||||
| Contract assets | 53,319 | 24,539 | |||||||||
| Inventories | 107,135 | 81,291 | |||||||||
| Income tax receivable | — | 12,729 | |||||||||
| Other current assets | 42,797 | 30,876 | |||||||||
| Total current assets | 1,513,018 | 1,356,090 | |||||||||
| Property and equipment, net | 337,175 | 294,798 | |||||||||
| Operating lease right-of-use assets | 66,083 | 61,101 | |||||||||
| Goodwill and other intangible assets, net | 362,623 | 374,317 | |||||||||
| Other assets | 26,397 | 31,918 | |||||||||
| Total assets | $ | 2,305,296 | $ | 2,118,224 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 200,980 | $ | 155,896 | |||||||
| Current portion of debt | 17,500 | 17,500 | |||||||||
| Contract liabilities | 14,419 | 18,512 | |||||||||
| Accrued insurance claims | 41,594 | 36,805 | |||||||||
| Operating lease liabilities | 26,522 | 24,641 | |||||||||
| Income taxes payable | 9,585 | 233 | |||||||||
| Other accrued liabilities | 160,500 | 128,209 | |||||||||
| Total current liabilities | 471,100 | 381,796 | |||||||||
| Long-term debt | 811,350 | 823,251 | |||||||||
| Accrued insurance claims - non-current | 48,719 | 48,238 | |||||||||
| Operating lease liabilities - non-current | 39,513 | 36,519 | |||||||||
| Deferred tax liabilities, net - non-current | 59,416 | 55,674 | |||||||||
| Other liabilities | 16,582 | 14,202 | |||||||||
| Total liabilities | 1,446,680 | 1,359,680 | |||||||||
| Total stockholders’ equity | 858,616 | 758,544 | |||||||||
| Total liabilities and stockholders’ equity | $ | 2,305,296 | $ | 2,118,224 | |||||||
3
| DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (Dollars in thousands, except share amounts) | |||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||
| Quarter | Quarter | Nine Months | Nine Months | ||||||||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||||||||
| October 29, 2022 | October 30, 2021 | October 29, 2022 | October 30, 2021 | ||||||||||||||||||||
| Contract revenues | $ | 1,042,423 | $ | 853,973 | $ | 2,890,996 | $ | 2,369,038 | |||||||||||||||
| Costs of earned revenues, excluding depreciation and amortization | 850,897 | 705,865 | 2,394,606 | 1,977,243 | |||||||||||||||||||
General and administrative1 | 78,798 | 66,899 | 221,514 | 198,640 | |||||||||||||||||||
| Depreciation and amortization | 35,454 | 37,766 | 107,436 | 115,307 | |||||||||||||||||||
| Total | 965,149 | 810,530 | 2,723,556 | 2,291,190 | |||||||||||||||||||
| Interest expense, net | (10,592) | (9,132) | (29,057) | (24,343) | |||||||||||||||||||
Loss on debt extinguishment2 | — | — | — | (62) | |||||||||||||||||||
| Other income, net | 2,474 | 564 | 9,856 | 4,267 | |||||||||||||||||||
| Income before income taxes | 69,156 | 34,875 | 148,239 | 57,710 | |||||||||||||||||||
Provision for income taxes3 | 15,144 | 6,158 | 30,835 | 9,930 | |||||||||||||||||||
| Net income | $ | 54,012 | $ | 28,717 | $ | 117,404 | $ | 47,780 | |||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic earnings per common share | $ | 1.83 | $ | 0.95 | $ | 3.97 | $ | 1.57 | |||||||||||||||
| Diluted earnings per common share | $ | 1.80 | $ | 0.94 | $ | 3.91 | $ | 1.54 | |||||||||||||||
| Shares used in computing earnings per common share: | |||||||||||||||||||||||
| Basic | 29,524,516 | 30,172,254 | 29,561,172 | 30,426,337 | |||||||||||||||||||
| Diluted | 29,978,795 | 30,614,706 | 30,007,257 | 30,928,890 | |||||||||||||||||||
4
| DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP FINANCIAL MEASURES | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||
| CONTRACT REVENUES, NON-GAAP ORGANIC CONTRACT REVENUES, AND GROWTH %’s | |||||||||||||||||||||||
| Quarter | Quarter | Nine Months | Nine Months | ||||||||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||||||||
| October 29, 2022 | October 30, 2021 | October 29, 2022 | October 30, 2021 | ||||||||||||||||||||
| Contract Revenues - GAAP | $ | 1,042,423 | $ | 853,973 | $ | 2,890,996 | $ | 2,369,038 | |||||||||||||||
| Contract Revenues - GAAP Organic Growth % | 22.1 | % | 22.0 | % | |||||||||||||||||||
| Contract Revenues - GAAP | $ | 1,042,423 | $ | 853,973 | $ | 2,890,996 | $ | 2,369,038 | |||||||||||||||
| Revenues from storm restoration services | — | — | — | (3,869) | |||||||||||||||||||
| Non-GAAP Organic Contract Revenues | $ | 1,042,423 | $ | 853,973 | $ | 2,890,996 | $ | 2,365,169 | |||||||||||||||
| Non-GAAP Organic Contract Revenues Growth % | 22.1 | % | 22.2 | % | |||||||||||||||||||
| NET INCOME AND NON-GAAP ADJUSTED EBITDA | |||||||||||||||||||||||
| Quarter | Quarter | Nine Months | Nine Months | ||||||||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||||||||
| October 29, 2022 | October 30, 2021 | October 29, 2022 | October 30, 2021 | ||||||||||||||||||||
| Reconciliation of net income to Non-GAAP Adjusted EBITDA: | |||||||||||||||||||||||
| Net income | $ | 54,012 | $ | 28,717 | $ | 117,404 | $ | 47,780 | |||||||||||||||
| Interest expense, net | 10,592 | 9,132 | 29,057 | 24,343 | |||||||||||||||||||
| Provision for income taxes | 15,144 | 6,158 | 30,835 | 9,930 | |||||||||||||||||||
| Depreciation and amortization | 35,454 | 37,766 | 107,436 | 115,307 | |||||||||||||||||||
| Earnings Before Interest, Taxes, Depreciation & Amortization ("EBITDA") | 115,202 | 81,773 | 284,732 | 197,360 | |||||||||||||||||||
| Gain on sale of fixed assets | (5,135) | (415) | (13,991) | (4,259) | |||||||||||||||||||
| Stock-based compensation expense | 4,515 | 1,789 | 12,273 | 7,838 | |||||||||||||||||||
Loss on debt extinguishment2 | — | — | — | 62 | |||||||||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 114,582 | $ | 83,147 | $ | 283,014 | $ | 201,001 | |||||||||||||||
| Non-GAAP Adjusted EBITDA % of contract revenues | 11.0 | % | 9.7 | % | 9.8 | % | 8.5 | % | |||||||||||||||
5
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)
Explanation of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company’s quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the Company’s performance for the period reported with the Company’s performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. Management defines the Non-GAAP financial measures used as follows:
•Non-GAAP Organic Contract Revenues - contract revenues from businesses that are included for the entire period in both the current and prior year periods, excluding contract revenues from storm restoration services. Non-GAAP Organic Contract Revenue change percentage is calculated as the change in Non-GAAP Organic Contract Revenues from the comparable prior year period divided by the comparable prior year period Non-GAAP Organic Contract Revenues. Management believes Non-GAAP Organic Contract Revenues is a helpful measure for comparing the Company’s revenue performance with prior periods. For comparison purposes, Lumen’s Non-GAAP Organic Contract Revenue and Non-GAAP Organic Contract Revenue Growth percentage excludes the estimated contract revenues for the quarters ended October 29, 2022 and October 30, 2021 related to the ILEC (incumbent local exchange carrier) business in 20 states it sold to Brightspeed on October 3, 2022.
•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.
6
Notes
1 Includes stock-based compensation expense of $4.5 million and $1.8 million for the quarters ended October 29, 2022 and October 30, 2021, respectively, and $12.3 million and $7.8 million for the nine months ended October 29, 2022 and October 30, 2021, respectively.
2 During the nine months ended October 30, 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.
3 Results include income tax benefits of $3.2 million, or $0.11 per common share diluted, and $3.0 million, or $0.10 per common share diluted for the quarters ended October 29, 2022 and October 30, 2021, respectively, for the vesting and exercise of share-based awards and for credits related to tax filings for prior years.
Results for the nine months ended October 29, 2022 and October 30, 2021 include income tax benefits of $7.6 million, or $0.25 per common share diluted, and $5.8 million, or $0.19 per common share diluted, respectively, for the vesting and exercise of share-based awards and for credits related to tax filings for prior years.
7
Q3 Fiscal 2023 Results November 22, 2022
• Q3 2023 Overview • Industry Update • Financial & Operational Highlights • Outlook • Closing Remarks • Q&A 2 Participants and Agenda Steven E. Nielsen President and Chief Executive Officer H. Andrew DeFerrari Chief Financial Officer Ryan F. Urness General Counsel
Important Information Caution Concerning Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the 1995 Private Securities Litigation Reform Act. These forward-looking statements include those related to the outlook for the quarter ending January 28, 2023, including, but not limited to, those statements found under the “Outlook” section of this presentation. Forward-looking statements are based on management’s expectations, estimates and projections, are made solely as of the date these statements are made, and are subject to both known and unknown risks and uncertainties that may cause the actual results and occurrences discussed in these forward-looking statements to differ materially from those referenced or implied in the forward-looking statements contained in this presentation. The most significant of these known 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 duration and severity of a pandemic caused by COVID-19, our ability to comply with various COVID-19 legal and contractual requirements and the impacts that those requirements may have on our workforce and our ability to perform our work, vaccination rates in the areas where we operate, any worsening of the pandemic caused by increasing infection rates triggered by new variants, future economic conditions and trends including the potential impacts of an inflationary economic environment, customer capital budgets and spending priorities, the availability and cost of materials, equipment and labor necessary to perform our work, 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 impact to the Company’s backlog from project cancellations or postponements, the impact of the COVID-19 pandemic, the impact of varying climate and weather conditions, the anticipated outcome of other contingent events, including litigation or regulatory actions involving the Company, the adequacy of our liquidity, the availability of financing to address our financial needs, the Company’s ability to generate sufficient cash to service its indebtedness, the impact of restrictions imposed by the Company’s credit agreement, and 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 its forward-looking statements. Non-GAAP Financial Measures This presentation includes certain “Non-GAAP” financial measures as defined by Regulation G of the SEC. As required by the SEC, an explanation of the Non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP financial measures are provided in the Company’s Form 8-K filed with the SEC on November 22, 2022 and on the Company’s Investor Center website at https://ir.dycomind.com. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. 3
Q3 2023 Overview Contract Revenues • Contract revenues of $1.042 billion increased 22.1% Operating Performance • Non-GAAP Adjusted EBITDA of $114.6 million, or 11.0% of contract revenues, compared to $83.1 million, or 9.7% of contract revenues, in the year ago period • Diluted earnings per common share of $1.80, compared to $0.94 in the year ago period • Diluted earnings per common share included incremental tax benefits of $0.11 per common share in Q3 2023, compared to $0.10 per common share in the year ago period Liquidity • Ample liquidity of $444.3 million 4 Contract Revenues Diluted EPS
Industry Update The effort to deploy high-capacity fiber networks continues to meaningfully broaden the set of opportunities for our industry • Major industry participants are constructing or upgrading significant wireline networks across broad sections of the country • High-capacity fiber networks are increasingly viewed as the most cost effective technology, enabling multiple revenue streams from a single investment • Fiber network deployment opportunities are increasing in rural America; federal and state support programs for the construction of communications networks in unserved and underserved areas across the country are unprecedented Macroeconomic conditions, including those impacting the cost of capital, may influence the execution of some industry plans, increasing the likelihood that demand could fluctuate amongst customers and result in a wider range of potential outcomes moving into next year Our scale and financial strength position us well to take advantage of these opportunities to deliver valuable services to our customers, including integrated planning, engineering and design, procurement and construction and maintenance services 5
Contract Revenues 6 Q3 2023 Organic Growth: 22.1% 27.4% 13.3% Total Customers Top 5 Customers All Other Customers2 29.4% 64.5% 1.7% 115.4% AT&T Lumen3 Verizon Frontier Top 5 customers represented 66.5% and 65.4% of contract revenues in Q3 2023 and Q3 2022, respectively Fiber construction revenue from electric utilities increased organically 53.6% year-over-year and was $82.4 million, or 7.9% of contract revenues, in Q3 2023 Top 5 Customers - % of Total Contract RevenuesNon-GAAP Organic Growth (Decline) %1 Q3 2023Q3 2022
Backlog, Awards and Employees 7 Customer Description of Services Area Term Lumen Construction & Maintenance WA, OR, NV, UT, WY, CO, SD, NE, MN, IA, FL 3 years AT&T Utility Line Locating FL 3 years Charter Construction & Maintenance TX, MI, OH, NY, FL 3 years Windstream Construction GA 1 year Various Rural Fiber Deployments OR, WI, MO 1 year Backlog4 Selected Q3 2023 Awards and Extensions: Employee Headcount
Financial Highlights 8 Contract Revenues Non-GAAP Adjusted EBITDA Diluted EPS • Contract revenues of $1.042 billion increased 22.1% • Non-GAAP Adjusted EBITDA of $114.6 million, or 11.0% of contract revenues • Diluted earnings per common share of $1.80 • Diluted earnings per common share included incremental tax benefits of $0.11 per common share in Q3 2023, compared to $0.10 per common share in the year ago period As % of Contract Revenues
Debt and Liquidity Overview Debt maturity profile and liquidity provide financial flexibility 9 • Ample liquidity of $444.3 million at Q3 2023 • Capital allocation prioritizes organic growth, followed by opportunistic share repurchases and M&A, within the context of the Company’s historical range of net leverage $ Millions Q2 2023 Q3 2023 Debt Summary 4.50% Senior Notes, mature April 2029 $ 500.0 $ 500.0 Senior Credit Facility, matures April 2026:5 Term Loan Facility 341.3 336.9 Revolving Facility - - Total Notional Amount of Debt $ 841.3 $ 836.9 Less: Cash and Equivalents 120.3 65.3 Notional Net Debt $ 721.0 $ 771.6 Liquidity6 $ 366.3 $ 444.3
Cash Flow Overview 10 Operating Cash Flow • Operating cash flow used to support strong organic growth during fiscal 2023 • Capital expenditures, net of disposals, for fiscal 2023 expected to range from $165 million to $175 million, a decrease compared to the low end of $180 million in the outlook previously provided 4 Qtrs Ended Q3 2023 $ Millions Q3 2022 Q3 2023 Cash Flow Summary Operating cash flow $ 104.3 $ (4.5) Capital expenditures, net of disposals $ (44.1) $ (49.2) Repayments on Senior Credit Facility $ - $ (4.4) Extinguishment of 2021 Convertible Notes $ (58.3) $ - Other financing & investing activities, net $ (0.2) $ 3.1 Days Sales Oustanding ("DSO") Q2 2023 Q3 2023 Total DSO7 107 112
INTEREST EXPENSE, NET $11.8 million EFFECTIVE INCOME TAX RATE Approximately 27.0% DILUTED SHARES 30.1 million Outlook for Quarter Ending January 28, 2023 (Q4 2023) CONTRACT REVENUES Increase by mid- to high-single digit as a percentage of contract revenues compared to Q4 2022 NON-GAAP ADJUSTED EBITDA % OF CONTRACT REVENUES Increase modestly compared to Q4 2022 11 Q4 2023 Outlook:
Closing Remarks We maintain significant customer presence throughout our markets and are encouraged by the breadth in our business Our extensive market presence has allowed us to be at the forefront of evolving industry opportunities • Telephone companies are deploying FTTH to enable gigabit high speed connections and, increasingly, rural electric utilities are doing the same • Dramatically increased speeds to consumers are being provisioned and consumer data usage is growing, particularly upstream • Wireless construction activity in support of newly available spectrum bands is increasing this year • Federal and state support for rural deployments of communications networks is dramatically increasing in scale and duration • 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 • Customers are consolidating supply chains creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business A growing number of our customers are committed to multi-year capital spending initiatives 12
Notes 1. Organic growth (decline) % adjusted for contract revenues from 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. Q3 2023 % of contract revenues for customers #6 through #10 included in All Other Customers are presented in the following table: 3. On October 3, 2022, Brightspeed acquired Lumen’s ILEC (incumbent local exchange carrier) business in 20 states (the “20-State ILEC Business”). The Company continues to serve both Lumen and Brightspeed in connection with various work, including the 20-State ILEC Business. For comparison purposes, Lumen’s Non-GAAP Organic Contract Revenue and Non-GAAP Organic Contract Revenue Growth percentage excludes the estimated contract revenues related to the 20-State ILEC Business for the quarters ended October 29, 2022 and October 30, 2021. Refer to Company’s Q3 2023 Non-GAAP Reconciliations report for a reconciliation of these Non-GAAP financial measures to comparable GAAP financial measures. 4. 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. 5. As of Q2 2023 and Q3 2023, the Company had $47.5 million of standby letters of credit outstanding under the Senior Credit Facility. 6. Liquidity represents the sum of availability from the Company’s Senior Credit Facility, considering net funded debt balances, and available cash and equivalents. For calculation of availability under the Senior Credit Facility, applicable cash and equivalents are netted against the funded debt amount. 7. 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. 13 Customer #6 Windstream Charter Dominion Energy ImOn Communications 3.4% 2.1% 1.8% 1.5% 1.0%
The people connecting America® 14
Exhibit 99.3
Dycom Industries, Inc.
Non-GAAP Reconciliations
Q3 2023
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, as a result of the Company’s 52/53 week fiscal year. Non-GAAP Organic Contract Revenue change percentage is calculated as the change in Non-GAAP Organic Contract Revenues from the comparable prior year period divided by the comparable prior year period Non-GAAP Organic Contract Revenues. Management believes Non-GAAP Organic Contract Revenues is a helpful measure for comparing the Company’s revenue performance with prior periods. For comparison purposes, Lumen’s Non-GAAP Organic Contract Revenue and Non-GAAP Organic Contract Revenue Growth percentage excludes the estimated contract revenues for the quarters ended October 29, 2022 and October 30, 2021 related to the ILEC (incumbent local exchange carrier) business in 20 states it sold to Brightspeed on October 3, 2022.
•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.
•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 debt. Management believes notional net debt is a helpful measure to assess the Company’s liquidity.
2
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP Organic Contract Revenues | ||||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||||||||
| Contract Revenues - GAAP | Revenues from storm restoration services | Additional week as a result of the Company’s 52/53 week fiscal year1 | Non-GAAP - Organic Revenues | Growth (Decline)% | ||||||||||||||||||||||||||||||||||
| Quarter Ended | GAAP - Organic % | Non-GAAP - Organic % | ||||||||||||||||||||||||||||||||||||
| October 29, 2022 | $ | 1,042.4 | $ | — | $ | — | $ | 1,042.4 | 22.1 | % | 22.1 | % | ||||||||||||||||||||||||||
| October 30, 2021 | $ | 854.0 | $ | — | $ | — | $ | 854.0 | ||||||||||||||||||||||||||||||
| July 30, 2022 | $ | 972.3 | $ | — | $ | — | $ | 972.3 | 23.5 | % | 23.5 | % | ||||||||||||||||||||||||||
| July 31, 2021 | $ | 787.6 | $ | — | $ | — | $ | 787.6 | ||||||||||||||||||||||||||||||
| April 30, 2022 | $ | 876.3 | $ | — | $ | — | $ | 876.3 | 20.5 | % | 21.1 | % | ||||||||||||||||||||||||||
| May 1, 2021 | $ | 727.5 | $ | (3.9) | $ | — | $ | 723.6 | ||||||||||||||||||||||||||||||
| January 29, 2022 | $ | 761.5 | $ | — | $ | — | $ | 761.5 | 1.4 | % | 10.1 | % | ||||||||||||||||||||||||||
| January 20, 2021 | $ | 750.7 | $ | (5.7) | $ | (53.2) | $ | 691.8 | ||||||||||||||||||||||||||||||
| October 30, 2021 | $ | 854.0 | $ | — | $ | — | $ | 854.0 | 5.4 | % | 6.6 | % | ||||||||||||||||||||||||||
| October 24, 2020 | $ | 810.3 | $ | (8.9) | $ | — | $ | 801.4 | ||||||||||||||||||||||||||||||
| July 31, 2021 | $ | 787.6 | $ | — | $ | — | $ | 787.6 | (4.4) | % | (4.4) | % | ||||||||||||||||||||||||||
| July 25, 2020 | $ | 823.9 | $ | — | $ | — | $ | 823.9 | ||||||||||||||||||||||||||||||
| May 1, 2021 | $ | 727.5 | $ | (3.9) | $ | — | $ | 723.6 | (10.7) | % | (11.1) | % | ||||||||||||||||||||||||||
| April 25, 2020 | $ | 814.3 | $ | — | $ | — | $ | 814.3 | ||||||||||||||||||||||||||||||
| January 30, 2021 | $ | 750.7 | $ | (5.7) | $ | (53.2) | $ | 691.8 | 1.8 | % | (6.2) | % | ||||||||||||||||||||||||||
| January 25, 2020 | $ | 737.6 | $ | — | $ | — | $ | 737.6 | ||||||||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
3
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | ||||||||||||||||||||||||||||||||
| Non-GAAP Organic Contract Revenues - Certain Customers | ||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||
| Contract Revenues - GAAP | Estimated Revenues from Lumen’s Divested Business2 | Non-GAAP - Organic Revenues | Growth % | |||||||||||||||||||||||||||||
| Quarter Ended | GAAP - Organic % | Non-GAAP - Organic % | ||||||||||||||||||||||||||||||
| Lumen | ||||||||||||||||||||||||||||||||
| October 29, 2022 | $ | 142.9 | $ | (15.4) | $ | 127.5 | 38.7 | % | 64.5 | % | ||||||||||||||||||||||
| October 30, 2021 | $ | 103.0 | $ | (25.5) | $ | 77.5 | ||||||||||||||||||||||||||
Top 5 Customers3 | ||||||||||||||||||||||||||||||||
| October 29, 2022 | $ | 693.7 | $ | (15.4) | $ | 678.4 | 24.3 | % | 27.4 | % | ||||||||||||||||||||||
| October 30, 2021 | $ | 558.1 | $ | (25.5) | $ | 532.6 | ||||||||||||||||||||||||||
| All Other Customers (excluding Top 5 Customers) | ||||||||||||||||||||||||||||||||
| October 29, 2022 | $ | 348.7 | $ | 15.4 | $ | 364.0 | 17.9 | % | 13.3 | % | ||||||||||||||||||||||
| October 30, 2021 | $ | 295.9 | $ | 25.5 | $ | 321.4 | ||||||||||||||||||||||||||
Note: Amounts above may not add due to rounding.
4
| Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures | |||||||||||
| Non-GAAP Adjusted EBITDA | |||||||||||
| Unaudited | |||||||||||
| (Dollars in thousands) | |||||||||||
| Quarter Ended | |||||||||||
| October 29, 2022 | October 30, 2021 | ||||||||||
| Net income | $ | 54,012 | $ | 28,717 | |||||||
| Interest expense, net | 10,592 | 9,132 | |||||||||
| Provision for income taxes | 15,144 | 6,158 | |||||||||
| Depreciation and amortization | 35,454 | 37,766 | |||||||||
| Earnings Before Interest, Taxes, Depreciation & Amortization ("EBITDA") | 115,202 | 81,773 | |||||||||
| Gain on sale of fixed assets | (5,135) | (415) | |||||||||
| Stock-based compensation expense | 4,515 | 1,789 | |||||||||
| Non-GAAP Adjusted EBITDA | $ | 114,582 | $ | 83,147 | |||||||
| Non-GAAP Adjusted EBITDA % of contract revenues | 11.0 | % | 9.7 | % | |||||||
Note: Amounts above may not add due to rounding.
5
Notes to Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
1 The Company has a 52/53 week fiscal year. All quarter periods presented contain 13 weeks except for the quarter ended January 30, 2021, 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.
2 On October 3, 2022, Brightspeed acquired Lumen’s ILEC (incumbent local exchange carrier) business in 20 states (the “20-State ILEC Business”). The Company continues to serve both Lumen and Brightspeed in connection with various work, including the 20-State ILEC Business. For comparison purposes, Lumen’s Non-GAAP Organic Contract Revenue and Non-GAAP Organic Contract Revenue Growth percentage excludes the estimated contract revenues related to the 20-State ILEC Business for the quarters ended October 29, 2022 and October 30, 2021.
3 Top 5 Customers included AT&T, Lumen, Comcast, Verizon, and Frontier for the quarters ended October 29, 2022 and October 30, 2021.
6