DYCOM INDUSTRIES INC
For the period ended Jul 27, 2024. Filed Aug 22, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 27, 2024 · Filed Aug 22, 2024
DY$207.52+7.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-04-27; filed 2024-05-23.
0000067215-24-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-27; filed 2024-08-22.
0000067215-24-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 100 current paragraphs.
46 unchanged; 41 reworded; 9 added; 3 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Significant demand for broadband services is driven by applications that require high speed connections as well as the everyday use of mobile data devices. To respond to this demand and other advances in technology, an increasing number of diverse industry participants are constructing or upgrading wireline networks throughout the country. These wireline networks enable the delivery of gigabit network speeds to consumers and businesses. In addition, the advent of AI data centers has sparked interest in broad new national deployments of high-capacity, low latency, intercity networks, as well as metro rings. The level of interest in intercity networks is the highest we have seen in the last 25 years. Finally, wireless networks are deploying additional spectrum bands and equipment so as to more broadly and efficiently provision higher broadband services for both fixed and mobile access.
Current report
Industry participants have stated their belief that a single high-capacity fiber network can most cost effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment. Some of these same industry participants who also provide wireless services, strongly believe that the ability to provision converged wireline fiber and wireless services creates significant competitive advantages. This belief is evident as some wireless providers have recently invested in new fiber providers while another wireline/wireless provider is deploying fiber networks outside its traditional geographic footprint. As a result, we continue to see a meaningfully broader set of opportunities for our industry.
Current report
We are pleased that a number of our customers have entered into strategic transactions (including refinancings) intended to provide the capital necessary for the incremental deployment of fiber to more than 9.5 million homes over the next several years. These individual transactions are currently awaiting regulatory approval, which is currently expected over the next 12 to 18 months. In addition to the incremental private capital associated with these transactions, a wide variety of programs are providing public capital to support broadband deployments. The largest of these programs, the Broadband Equity Access and Deployment Program (“BEAD Program”) includes over $40 billion for the construction of rural communications networks in unserved and underserved areas across the country. This represents an unprecedented level of support and meaningfully increases the rural market that we expect will ultimately be addressed. We believe the magnitude and importance of BEAD should not be under appreciated as it addresses some of the most difficult and expensive locations to deploy in America and represents a generational deployment opportunity. For planning purposes, we currently expect to see BEAD opportunities during the third quarter of calendar year 2025. As BEAD continues to develop, we are also seeing significant deployment activity funded by other state and federal programs.
Current report
Fiscal 2025. During the second quarter of fiscal 2025, we acquired a telecommunications construction contractor for a total purchase price of $25.1 million ($21.0 million purchase price plus cash acquired of $4.1 million). The acquired company is located in the northwestern United States and provides construction and maintenance services to telecommunications providers, with the majority of its revenues generated in Alaska. This acquisition expands our geographic presence and our customer base.
Current report
Loss on Debt Extinguishment. Loss on debt extinguishment includes the write-off of deferred debt issuance costs in connection with the Credit Agreement amendment.
Current report
Contract Revenues. Contract revenues were $1,203.1 million during the three months ended July 27, 2024 compared to $1,041.5 million during the three months ended July 29, 2023. Contract revenues from acquired businesses were $65.9 million for the three months ended July 27, 2024. There were no acquired revenues during the three months ended July 29, 2023. Acquired revenues represent contract revenues from acquired businesses that were not owned for the full period in both the current and comparable prior periods.
Current report
Excluding amounts generated by the acquired business, contract revenues increased by $121.3 million during the six months ended July 27, 2024 compared to the six months ended July 29, 2023. Contract revenues increased by $70.2 million for a customer for fiber deployments, $27.0 million and $21.6 million for two large telecommunications customers primarily for fiber deployments. Contract revenues decreased by $41.9 million and $29.5 million for two large telecommunication customers. All other customers had net increases in contract revenues of $73.9 million on a combined basis during the six months ended July 27, 2024 compared to the six months ended July 29, 2023.
Current report
Costs of earned revenues increased to $1,874.5 million, or 79.9% of contract revenues, during the six months ended July 27, 2024 compared to $1,683.8 million, or 80.7% of contract revenues, during the six months ended July 29, 2023. The primary components of the increase were a $182.2 million aggregate increase in direct labor and subcontractor costs, a $16.3 million increase in other direct costs and a $2.3 million net increase from higher equipment costs, partially offset by lower fuel costs. In addition, there was a decrease of $10.0 million in direct materials expense.
Current report
Loss on Debt Extinguishment. Loss on debt extinguishment during the three months ended July 27, 2024 of $1.0 million includes the write-off of deferred debt issuance costs in connection with the Credit Agreement amendment. See “Liquidity and Capital Resources - Compliance with Credit Agreement” for more information.
Removed paragraphs (3)
Previous report
Significant demand for broadband services is driven by applications that require high speed connections as well as the everyday use of mobile data devices. To respond to this demand and other advances in technology, major industry participants are constructing or upgrading significant wireline networks across broad sections of the country. These wireline networks are generally designed to provision gigabit network speeds to individual consumers and businesses, either directly or wirelessly using 5G technologies. Industry participants have stated their belief that a single high capacity fiber network can most cost effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment. This view is increasing the appetite for fiber deployments, and we believe that the industry’s effort to deploy high capacity fiber networks continues to meaningfully broaden the set of opportunities for our industry. We are encouraged that a number of our customers are pursuing strategic transactions aimed largely in part to increase access to capital and expand fiber deployment programs. Increasing access to high-capacity telecommunications continues to be crucial to society, especially for rural America. The Infrastructure Investment and Jobs Act (“Infrastructure Act”) includes over $40 billion for the construction of rural communications networks in unserved and underserved areas across the country under the Broadband Equity Access and Deployment Program (“BEAD Program”). This represents an unprecedented level of support and meaningfully increases the rural market that we expect will ultimately be addressed. All states and territories have submitted their initial BEAD proposals. In addition, substantially all states have commenced programs that will provide funding for telecommunications networks even prior to the initiation of funding under the Infrastructure Act.
Previous report
We are providing program management, planning, engineering and design, aerial, underground, and wireless construction and fulfillment services for gigabit deployments. These services are being provided across the country in numerous geographic areas to multiple customers. These deployments include networks consisting entirely of wired network elements and converged wireless/wireline multi-use networks. Fiber network deployment opportunities are increasing in rural America as new industry participants respond to emerging societal initiatives. We continue to provide integrated planning, engineering and design, procurement and construction and maintenance services to several industry participants.
Previous report
On May 9, 2023, we amended the Credit Agreement to replace LIBOR with the Secured Overnight Financing Rate (“SOFR”) and provide that term loans and revolving loans will bear interest at a rate per annum equal to, either term SOFR or the base rate, plus, in each case, an applicable margin that will be determined based on our consolidated net leverage ratio, as specified above. “Term SOFR” will be the published forward-looking SOFR rate for the applicable interest period plus a 0.10% spread adjustment and if such rate is less than zero, such rate shall be deemed zero.
Reworded paragraphs (41)
Previous wording
Macro-economic conditions appear stable. In addition, the market for labor has improved in many regions around the country. Automotive and equipment supply chains are also improving, although the supply of mid-duty chassis is still somewhat constrained. Prices for capital equipment continue to increase, but at a moderating rate. For several customers, we expect the pace of deployments to increase this year, including two customers whose capital expenditures were more heavily weighted toward the first half of calendar year 2023. Within this context, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.
Current wording
Macro-economic conditions appear stable. In addition, the market for labor has improved in many regions around the country. Automotive and equipment supply chains have normalized and prices for capital equipment have been stable since the first of the year. Within this context, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.
Previous wording
Telephone companies are deploying fiber-to-the-home to enable gigabit high-speed connections. Rural electric utilities are doing the same. Dramatically increased speeds for consumers are being provisioned and consumer data usage is growing, particularly upstream. Wireless construction activity in support of newly available spectrum bands continues this year. Federal and state support for rural deployments of communications networks is dramatically increasing in scale and duration. Cable operators are increasing fiber deployments in rural America. Capacity expansion projects 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.
Current wording
Telephone companies are deploying fiber-to-the-home to enable gigabit high-speed connections. Rural electric utilities are doing the same. Dramatically increased speeds for consumers are being provisioned and consumer data usage is growing, particularly upstream. Wireless construction activity in support of newly available spectrum bands and fixed wireless access continues this year. Demand for low latency Artificial Intelligence (“AI”) data center connectivity is growing rapidly. Federal and state support for rural deployments of communications networks is dramatically increasing in scale and duration. Cable operators are increasing fiber deployments in rural America. Capacity expansion projects 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.
Previous wording
We have established relationships with many leading telecommunications providers, including telephone companies, cable multiple system operators, wireless carriers, telecommunications equipment and infrastructure providers, as well as electric and gas utilities. Our customer base is highly concentrated, with our top five customers accounting for approximately 56.4% and 65.5% of our total contract revenues during the three months ended April 27, 2024 and April 29, 2023, respectively.
Current wording
We have established relationships with many leading telecommunications providers, including telephone companies, cable multiple system operators, wireless carriers, telecommunications equipment and infrastructure providers, as well as electric and gas utilities. Our customer base is highly concentrated, with our top five customers accounting for approximately 55.5% and 61.5% of our total contract revenues during the six months ended July 27, 2024 and July 29, 2023, respectively.
Previous wording
The following reflects the percentage of total contract revenues from customers who contributed at least 2.5% to our total contract revenues during the three months ended April 27, 2024 or April 29, 2023:
Current wording
The following reflects the percentage of total contract revenues from customers who contributed at least 2.5% to our total contract revenues during the three and six months ended July 27, 2024 or July 29, 2023:
Previous wording
In addition, another customer contributed 6.8% and 4.6% to our total contract revenues during the three months ended April 27, 2024 and April 29, 2023, respectively.
Current wording
In addition, another customer contributed 8.0% and 5.3% to our total contract revenues during the three months ended July 27, 2024 and July 29, 2023, respectively. During the six months ended July 27, 2024 and July 29, 2023 this customer contributed 7.4% and 5.0%, respectively.
Previous wording
Fiscal 2025. During the first quarter of fiscal 2025, we acquired a telecommunications construction contractor for $16.2 million ($13.0 million purchase price, plus cash acquired of $3.2 million). The acquired company provides construction and maintenance services for telecommunications providers in the midwestern United States. This acquisition expands our geographic presence within our existing customer base.
Current wording
During the first quarter of fiscal 2025, we acquired a telecommunications construction contractor for $16.0 million ($12.8 million purchase price, plus cash acquired of $3.2 million). The acquired company provides construction and maintenance services for telecommunications providers in the midwestern United States. This acquisition expands our geographic presence within our existing customer base.
Previous wording
For certain contracts, representing less than 5% of contract revenues during each of the three months ended April 27, 2024 and April 29, 2023, we use the cost-to-cost measure of progress. These contracts are generally projects that are completed over a period of less than twelve months. Under the cost-to-cost measure of progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs. Contract costs include direct labor, direct materials, and subcontractor costs, as well as an allocation of indirect costs. Contract revenues are recorded as costs are incurred. We accrue the entire amount of a contract loss, if any, at the time the loss is determined to be probable and can be reasonably estimated.
Current wording
For certain contracts, representing less than 5% of contract revenues during each of the six months ended July 27, 2024 and July 29, 2023, we use the cost-to-cost measure of progress. These contracts are generally projects that are completed over a period of less than twelve months. Under the cost-to-cost measure of progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs. Contract costs include direct labor, direct materials, and subcontractor costs, as well as an allocation of indirect costs. Contract revenues are recorded as costs are incurred. We accrue the entire amount of a contract loss, if any, at the time the loss is determined to be probable and can be reasonably estimated.
Previous wording
Other Income, Net. Other income, net, primarily consists of gains or losses from sales of fixed assets and a loss on dissolution of foreign entities in the three months ended April 27, 2024. Other income, net also includes discount fee expense associated with the collection of accounts receivable under a customer-sponsored vendor payment program.
Current wording
Other Income, Net. Other income, net, primarily consists of gains or losses from sales of fixed assets. Other income, net also includes discount fee expense associated with the collection of accounts receivable under a customer-sponsored vendor payment program.
Previous wording
Excluding amounts generated by the acquired business, contract revenues increased by $25.7 million during the three months ended April 27, 2024 compared to the three months ended April 29, 2023. Contract revenues increased by $26.5 million for a telecommunications customer primarily for rural fiber deployments and $20.4 million for another telecommunications customer primarily for fiber-to-the-home deployments. Contract revenues decreased by $21.7 million, $15.6 million, and $8.9 million for three large telecommunication customers. All other customers had net increases in contract revenues of $25.0 million on a combined basis during the three months ended April 27, 2024 compared to the three months ended April 29, 2023.
Current wording
Excluding amounts generated by the acquired business, contract revenues increased by $95.6 million during the three months ended July 27, 2024 compared to the three months ended July 29, 2023. Contract revenues increased by $40.5 million for a customer for fiber deployments, and $35.9 million and $1.2 million for two large telecommunications customers primarily for fiber deployments. Contract revenues decreased by $20.2 million and $13.9 million for two large telecommunication customers. All other customers had net increases in contract revenues of $52.1 million on a combined basis during the three months ended July 27, 2024 compared to the three months ended July 29, 2023.
Previous wording
The percentage of our contract revenues by customer type from telecommunications, underground facility locating, and electric and gas utilities and other customers, was 89.9%, 7.1%, and 3.0%, respectively, for the three months ended April 27, 2024 compared to 89.7%, 7.0%, and 3.3%, respectively, for the three months ended April 29, 2023.
Current wording
The percentage of our contract revenues by customer type from telecommunications, underground facility locating, and electric and gas utilities and other customers, was 90.3%, 6.8%, and 2.9%, respectively, for the three months ended July 27, 2024 compared to 89.0%, 7.4%, and 3.6%, respectively, for the three months ended July 29, 2023.
Previous wording
Contract Revenues. Contract revenues were $1,142.4 million during the three months ended April 27, 2024 compared to $1,045.5 million during the three months ended April 29, 2023. Contract revenues from acquired businesses were $71.2 million for the three months ended April 27, 2024. There were no acquired revenues during the three months ended April 29, 2023.
Current wording
Contract revenues were $2,345.5 million during the six months ended July 27, 2024 compared to $2,087.0 million during the six months ended July 29, 2023. Contract revenues from acquired businesses were $137.1 million for the six months ended July 27, 2024. There were no acquired revenues during the six months ended July 29, 2023.
Previous wording
Costs of Earned Revenues. Costs of earned revenues increased to $921.6 million, or 80.7% of contract revenues, during the three months ended April 27, 2024 compared to $853.4 million, or 81.6% of contract revenues, during the three months ended April 29, 2023. The primary components of the increase were a $66.0 million aggregate increase in direct labor and subcontractor costs and a $6.1 million increase in other direct costs, partially offset by a $3.6 million decrease in direct materials expense and a $0.2 million net decrease from lower fuel costs and higher equipment costs.
Current wording
Costs of Earned Revenues. Costs of earned revenues increased to $952.9 million, or 79.2% of contract revenues, during the three months ended July 27, 2024 compared to $830.4 million, or 79.7% of contract revenues, during the three months ended July 29, 2023. The primary components of the increase were a $116.2 million aggregate increase in direct labor and subcontractor costs, a $2.5 million increase in equipment and fuel costs and a $10.2 million increase in other direct costs, partially offset by a $6.4 million decrease in direct materials expense.
Previous wording
Costs of earned revenues as a percentage of contract revenues decreased 1.0% during the three months ended April 27, 2024 compared to the three months ended April 29, 2023. Direct material costs decreased 0.9% primarily as a result of our mix of work in which we provide materials for customers. Equipment and fuel costs decreased 0.4% on a net basis as a percentage of contract revenues and other direct costs decreased 0.1%. Labor and subcontracted labor costs increased 0.4% primarily due to the mix of work performed during the three months ended April 27, 2024.
Current wording
Costs of earned revenues as a percentage of contract revenues decreased 0.5% during the three months ended July 27, 2024 compared to the three months ended July 29, 2023. Direct material costs decreased 1.4% primarily as a result of our mix of work in which we provide materials for customers. Equipment and fuel costs decreased 0.4% on a net basis as a percentage of contract revenues. Labor and subcontracted labor costs increased 1.2% primarily due to the mix of work performed during the three months ended July 27, 2024. Other direct costs were in line as a percentage of contract revenues for the three months ended July 27, 2024 compared to the three months ended July 29, 2023.
Previous wording
General and Administrative Expenses. General and administrative expenses increased to $94.6 million, or 8.3% of contract revenues, during the three months ended April 27, 2024 compared to $82.4 million, or 7.9% of contract revenues, during the three months ended April 29, 2023. The increase in total general and administrative expenses during the three months ended April 27, 2024 is mainly attributable to an increase in administrative, payroll, performance based compensation, stock based compensation and other costs.
Current wording
General and Administrative Expenses. General and administrative expenses increased to $99.6 million, or 8.3% of contract revenues, during the three months ended July 27, 2024 compared to $84.8 million, or 8.1% of contract revenues, during the three months ended July 29, 2023. The increase in total general and administrative expenses during the three months ended July 27, 2024 is mainly attributable to an increase in administrative, payroll, performance based compensation, stock based compensation, acquisition costs and other costs.
Previous wording
Depreciation and Amortization. Depreciation expense was $39.4 million, or 3.4% of contract revenues, during the three months ended April 27, 2024 compared to $33.8 million, or 3.2% of contract revenues, during the three months ended April 29, 2023. The increase in depreciation expense during the three months ended April 27, 2024 is primarily due to higher capital expenditures to support our growth in operations and the normal replacement cycle of fleet assets.
Current wording
Depreciation and Amortization. Depreciation expense was $40.7 million, or 3.4% of contract revenues, during the three months ended July 27, 2024 compared to $34.5 million, or 3.3% of contract revenues, during the three months ended July 29, 2023. Depreciation expense was $80.0 million, or 3.4% of contract revenues during the six months ended July 27, 2024 compared to $68.3 million, or 3.3% of contract revenues during the six months ended July 29, 2023. The increase in depreciation expense during the three and six months ended July 27, 2024 is primarily due to higher capital expenditures to support our growth in operations and the normal replacement cycle of fleet assets.
Previous wording
Amortization expense was $5.8 million and $3.5 million during the three months ended April 27, 2024 and April 29, 2023, respectively. The increase in amortization expense during the three months ended April 27, 2024 is due to the increase in amortizing intangibles from acquired businesses.
Current wording
Amortization expense was $5.9 million and $3.5 million during the three months ended July 27, 2024 and July 29, 2023, respectively and $11.8 million and $7.0 million during the six months ended July 27, 2024 and July 29, 2023, respectively. The increase in amortization expense during the three and six months ended July 27, 2024 is due to the increase in amortizing intangibles from acquired businesses.
Previous wording
Interest Expense, Net. Interest expense, net was $12.8 million and $11.4 million during the three months ended April 27, 2024 and April 29, 2023, respectively, as a result of higher interest rates on funded debt balances and higher outstanding borrowings during the current period and lower interest income on invested cash balances.
Current wording
Interest Expense, Net. Interest expense, net was $14.7 million and $12.3 million during the three months ended July 27, 2024 and July 29, 2023, respectively, as a result of higher interest rates on funded debt balances and higher outstanding borrowings during the current period and lower interest income on invested cash balances.
Previous wording
Other Income, Net. Other income, net was $9.3 million and $5.0 million during the three months ended April 27, 2024 and April 29, 2023, respectively. Gain on sale of fixed assets, net was $12.4 million and $7.8 million during the three months ended April 27, 2024 and April 29, 2023, respectively. The change in other income, net is primarily a function of the number of assets sold and prices obtained for those assets during each respective period. Other income, net also reflects $2.9 million and $3.2 million of expense during the three months ended April 27, 2024 and April 29, 2023 respectively, associated with the non-recourse sale of accounts receivable under a customer-sponsored vendor payment program.
Current wording
Other Income, Net. Other income, net was $6.4 million and $5.7 million during the three months ended July 27, 2024 and July 29, 2023, respectively and $15.7 million and $10.7 million during the six months ended July 27, 2024 and July 29, 2023, respectively. Gain on sale of fixed assets, net was $8.2 million and $7.6 million during the three months ended July 27, 2024 and July 29, 2023, respectively and $20.6 million and $15.4 million during the six months ended July 27, 2024 and July 29, 2023, respectively. The change in other income, net is primarily a function of the number of assets sold and prices obtained for those assets during each respective period. Other income, net also reflects $3.0 million and $2.4 million of expense during the three months ended July 27, 2024 and July 29, 2023 respectively, and $5.9 million and $5.6 million during the six months ended July 27, 2024 and July 29, 2023, respectively, associated with the non-recourse sale of accounts receivable under a customer-sponsored vendor payment program.
Previous wording
Income Taxes. The following table presents our income tax provision and effective income tax rate for the three months ended April 27, 2024 and April 29, 2023 (dollars in millions):
Current wording
Income Taxes. The following table presents our income tax provision and effective income tax rate for the three and six months ended July 27, 2024 and July 29, 2023 (dollars in millions):
Previous wording
Our effective income tax rate was 19.2% and 22.1% for the three months ended April 27, 2024 and April 29, 2023, respectively. The interim income tax provisions are based on the effective income tax rate expected to be applicable for the full fiscal year, adjusted for specific items that are required to be recognized in the period in which they occur. The effective tax rate differs from the statutory rate primarily due to the difference in income tax rates from state to state where work was performed, non-deductible and non-taxable items, tax credits recognized, the tax effects of the vesting and exercise of share-based awards, and changes in unrecognized tax benefits. Deferred tax assets and liabilities are based on the enacted tax rate that will apply in future periods when such assets and liabilities are expected to be settled or realized.
Current wording
Our effective income tax rate was 27.9% and 26.3% for the three months ended July 27, 2024 and July 29, 2023, respectively, and 24.0% and 24.4% for the six months ended July 27, 2024 and July 29, 2023, respectively. The interim income tax provisions are based on the effective income tax rate expected to be applicable for the full fiscal year, adjusted for specific items that are required to be recognized in the period in which they occur. The effective tax rate differs from the statutory rate primarily due to the difference in income tax rates from state to state where work was performed, non-deductible and non-taxable items, tax credits recognized, the tax effects of the vesting and exercise of share-based awards, and changes in unrecognized tax benefits. Deferred tax assets and liabilities are based on the enacted tax rate that will apply in future periods when such assets and liabilities are expected to be settled or realized.
Previous wording
Net Income. Net income was $62.6 million for the three months ended April 27, 2024 compared to $51.5 million for the three months ended April 29, 2023.
Current wording
Net Income. Net income was $68.4 million for the three months ended July 27, 2024 compared to $60.2 million for the three months ended July 29, 2023. Net income was $131.0 million for the six months ended July 27, 2024 compared to $111.8 million for the six months ended July 29, 2023.
Previous wording
We are subject to concentrations of credit risk relating primarily to our cash and equivalents, accounts receivable, and contract assets. Cash and equivalents primarily include balances on deposit with banks and totaled $26.1 million as of April 27, 2024 compared to $101.1 million as of January 27, 2024. We maintain our cash and equivalents at financial institutions we believe to be of high credit quality. For all periods presented, we have not experienced any loss or lack of access to cash in our operating accounts.
Current wording
We are subject to concentrations of credit risk relating primarily to our cash and equivalents, accounts receivable, and contract assets. Cash and equivalents primarily include balances on deposit with banks and totaled $19.6 million as of July 27, 2024 compared to $101.1 million as of January 27, 2024. We maintain our cash and equivalents at financial institutions we believe to be of high credit quality. For all periods presented, we have not experienced any loss or lack of access to cash in our operating accounts.
Previous wording
Sources of Cash. Our sources of cash are operating activities, long-term debt, equity offerings, bank borrowings, proceeds from the sale of idle and surplus equipment and real property, and stock option proceeds. Cash flow from operations is primarily influenced by demand for our services and operating margins, but can also be influenced by working capital needs associated with the services that we provide. In particular, working capital needs may increase when we have growth in operations and where project costs, primarily associated with labor, subcontractors, equipment, and materials, are required to be paid before the related customer balances owed to us are invoiced and collected. Our working capital (total current assets less total current liabilities, excluding the current portion of debt) was $1,130.8 million as of April 27, 2024 compared to $1,061.2 million as of January 27, 2024.
Current wording
Sources of Cash. Our sources of cash are operating activities, long-term debt, equity offerings, bank borrowings, proceeds from the sale of idle and surplus equipment and real property, and stock option proceeds. Cash flow from operations is primarily influenced by demand for our services and operating margins, but can also be influenced by working capital needs associated with the services that we provide. In particular, working capital needs may increase when we have growth in operations and where project costs, primarily associated with labor, subcontractors, equipment, and materials, are required to be paid before the related customer balances owed to us are invoiced and collected. Our working capital (total current assets less total current liabilities, excluding the current portion of debt) was $1,249.6 million as of July 27, 2024 compared to $1,061.2 million as of January 27, 2024.
Previous wording
Our level of capital expenditures can vary depending on the customer demand for our services, the replacement cycle we select for our equipment, and overall growth. We intend to fund these expenditures primarily from operating cash flows, availability under our Credit Agreement (as defined below), and cash on hand. We expect capital expenditures, net of disposals, to range from $220.0 million to $230.0 million during fiscal 2025 to support growth opportunities and the replacement of certain fleet assets.
Current wording
Our level of capital expenditures can vary depending on the customer demand for our services, the replacement cycle we select for our equipment, and overall growth. We intend to fund these expenditures primarily from operating cash flows, availability under our Credit Agreement (as defined below), and cash on hand.
Previous wording
Net Cash Flows. The following table presents our net cash flows for the three months ended April 27, 2024 and April 29, 2023 (dollars in millions):
Current wording
Net Cash Flows. The following table presents our net cash flows for the six months ended July 27, 2024 and July 29, 2023 (dollars in millions):
Previous wording
During the three months ended April 27, 2024, net cash used in operating activities was $37.4 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $153.2 million of operating cash flow during the three months ended April 27, 2024. Changes that used operating cash flow during the three months ended April 27, 2024 included an increase in accounts receivable, a decrease in accrued liabilities, and a decrease in accounts payable of $126.2 million, $18.0 million, $15.4 million, respectively. In addition, changes that used operating cash flow during the three months ended April 27, 2024 included an increase in other current assets and inventories of $8.1 million. Changes that provided operating cash flow during the three months ended April 27, 2024 included an increase in income taxes payable, a decrease in contract assets, net, and a decrease in other assets of $10.2 million, $2.2 million and $2.2 million, respectively.
Current wording
During the six months ended July 27, 2024, net cash used in operating activities was $44.9 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $280.9 million of operating cash flow during the six months ended July 27, 2024. Changes that used operating cash flow during the six months ended July 27, 2024 included an increase in accounts receivable, an increase in contract assets, net, and a decrease in income taxes payable of $256.5 million, $26.3 million, and $7.0 million, respectively. In addition, changes that used operating cash flow during the six months ended July 27, 2024 included an increase in other current assets and inventories of $2.9 million. Changes that provided operating cash flow during the six months ended July 27, 2024 included an increase in accounts payable, an increase in accrued liabilities, and a decrease in other assets of $8.8 million, $2.6 million, and $0.3 million, respectively.
Previous wording
Days sales outstanding (“DSO”) is calculated based on the ending balance of total current and non-current accounts receivable (including unbilled accounts receivable), net of the allowance for doubtful accounts, and current contract assets, net of contract liabilities, divided by the average daily revenue for the most recently completed 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. Including these balances in DSO is not meaningful to the average time to collect accounts receivable and current contract asset balances. Our DSO was 110 as of April 27, 2024 compared to 106 as of April 29, 2023.
Current wording
Days sales outstanding (“DSO”) is calculated based on the ending balance of total current and non-current accounts receivable (including unbilled accounts receivable), net of the allowance for doubtful accounts, and current contract assets, net of contract liabilities, divided by the average daily revenue for the most recently completed 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. Including these balances in DSO is not meaningful to the average time to collect accounts receivable and current contract asset balances. Our DSO was 117 as of July 27, 2024 compared to 111 as of July 29, 2023.
Previous wording
During the three months ended April 29, 2023, net cash used in operating activities was $85.1 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $184.6 million of operating cash flow during the three months ended April 29, 2023. Changes that used operating cash flow during the three months ended April 29, 2023 included an increase in accounts receivable, decrease in accrued liabilities, increase in other current assets and inventories, and decrease in accounts payable of $118.3 million, $26.0 million, $16.3 million, and $10.5 million, respectively. In addition, changes that used operating cash flow during the three months ended April 29, 2023 included an increase in contract assets of $8.7 million and a net decrease in income taxes payable of $5.6 million. A decrease in other assets of $0.8 million provided operating cash flow during the three months ended April 29, 2023.
Current wording
During the six months ended July 29, 2023, net cash used in operating activities was $28.8 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $234.4 million of operating cash flow during the six months ended July 29, 2023. Changes that used operating cash flow during the six months ended July 29, 2023 included an increase in accounts receivable, and increase in contract assets, net, an increase in income taxes receivable, and an increase in other current assets and inventories, of $148.7 million, $32.0 million, $21.6 million, and $15.2 million, respectively. In addition, changes that used operating cash flow during the six months ended July 29, 2023 included a decrease in accrued liabilities of $14.2 million and accounts payable, net of $6.1 million. A decrease in other assets of $3.4 million provided operating cash flow during the six months ended July 29, 2023.
Previous wording
Cash Used in Investing Activities. Net cash used in investing activities was $42.2 million during the three months ended April 27, 2024 compared to $33.6 million during the three months ended April 29, 2023. During the three months ended April 27, 2024 and April 29, 2023, capital expenditures were $42.0 million and $42.9 million, respectively. Additionally, we acquired the assets of a telecommunications construction contractor for $13.0 million. These expenditures were offset in part by proceeds from the sale of assets of $12.7 million and $9.3 million during the three months ended April 27, 2024 and April 29, 2023, respectively.
Current wording
Cash Used in Investing Activities. Net cash used in investing activities was $119.0 million during the six months ended July 27, 2024 compared to $73.6 million during the six months ended July 29, 2023. During the six months ended July 27, 2024 and July 29, 2023, capital expenditures were $107.4 million and $93.9 million, respectively. Additionally, we acquired the assets of two telecommunications construction contractors for $33.8 million. These expenditures were offset in part by proceeds from the sale of assets of $22.2 million and $20.3 million during the six months ended July 27, 2024 and July 29, 2023, respectively.
Previous wording
Credit Agreement were $120.0 million and $69.4 million, respectively. We repurchased 210,000 shares of our common stock in open market transactions, at an average price of $141.84 per share, for $29.8 million, during the three months ended April 27, 2024. We also paid $16.3 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the three months ended April 27, 2024. This was partially offset by the exercise of stock options, which provided $0.1 million during the three months ended April 27, 2024.
Current wording
Cash Provided by (Used in) Financing Activities. Net cash provided by financing activities was $82.3 million during the six months ended July 27, 2024. During the six months ended July 27, 2024, borrowings and repayments under our Credit Agreement were $282.4 million and $147.4 million, respectively. We paid approximately $6.6 million in issuance costs and third party fees and expenses related to our financing transactions. In addition, we repurchased 210,000 shares of our common stock in open market transactions, at an average price of $141.84 per share, for $29.8 million, during the six months ended July 27, 2024. We also paid $16.3 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the six months ended July 27, 2024. This was partially offset by the exercise of stock options, which provided $0.1 million during the six months ended July 27, 2024.
Previous wording
Net cash used in financing activities was $34.1 million during the three months ended April 29, 2023. We repurchased 225,000 shares of our common stock in open market transactions, at an average price of $90.21 per share, for $20.3 million, during the three months ended April 29, 2023. We also paid $9.6 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the three months ended April 29, 2023. In addition, we used approximately $4.4 million to repay term loan borrowings under our Credit Agreement. This was partially offset by the exercise of stock options, which provided $0.2 million during the three months ended April 29, 2023.
Current wording
Net cash used in financing activities was $38.4 million during the six months ended July 29, 2023. We repurchased 225,000 shares of our common stock in open market transactions, at an average price of $90.21 per share, for $20.3 million, during the six months ended July 29, 2023. We also paid $9.7 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the six months ended July 29, 2023. In addition, we used approximately $8.8 million to repay term loan borrowings under our Credit Agreement. This was partially offset by the exercise of stock options, which provided $0.3 million during the six months ended July 29, 2023.
Previous wording
Compliance with Credit Agreement. As of April 27, 2024, we were party to a credit agreement, dated as of October 19, 2018, as amended, with the various lenders party thereto and Bank of America, N.A., as administrative agent (as amended on April 1, 2021 and May 9, 2023, the “Credit Agreement”), which includes a revolving facility with a revolver commitment of $650.0 million and a term loan facility in the principal amount of $350.0 million. The Credit Agreement also includes a $200.0 million sublimit for the issuance of letters of credit and a $50.0 million sublimit for swingline loans. The maturity of the Credit Agreement was on April 1, 2026. On May 15, 2024, we amended and restated the Credit Agreement to, among other things, increase the term loan and extend the maturity date. The following discussion of the Credit Agreement is as of April 27, 2024, which was prior to the amendment and restatement. See Note 21, Subsequent Events, for further information.
Current wording
Compliance with Credit Agreement. We are party to an amended and restated credit agreement, dated as of October 19, 2018, with the various lenders party thereto and Bank of America, N.A., as administrative agent (as amended on April 1, 2021, May 9, 2023, and May 15, 2024, the “Credit Agreement”). On May 15, 2024, we amended and restated the Credit Agreement to, among other things, increase the term loan facility and extend the maturity date. The Credit Agreement includes a revolving facility with a maximum revolver commitment of $650.0 million and a term loan facility in the principal amount of $450.0 million. The Credit Agreement also includes a $200.0 million sublimit for the issuance of letters of credit and a $50.0 million sublimit for swingline loans. The maturity of the Credit Agreement is January 15, 2029.
Previous wording
(1)Base rate is described in the Credit Agreement as the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the administrative agent’s prime rate, and (iii) the Term SOFR plus 1.00% and, if such rate is less than zero, such rate shall be deemed zero.
Current wording
(1)Base rate is described in the Credit Agreement as the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the administrative agent’s prime rate, and (iii) the Term Secured Overnight Financing Rate (“SOFR”) plus 1.00% and, if such rate is less than zero, such rate shall be deemed zero.
Previous wording
(1)There were no outstanding borrowings under our revolving facility as of January 27, 2024.
Current wording
(1)There were no outstanding borrowings under our revolving facility as of July 27, 2024 and January 27, 2024.
Previous wording
Our Credit Agreement contains a financial covenant that requires us to maintain a consolidated net leverage ratio of not greater than 3.50 to 1.00 as measured at the end of each fiscal quarter, and provides for certain increases to this ratio in connection with permitted acquisitions. The consolidated net leverage ratio is the ratio of our consolidated indebtedness reduced by unrestricted cash and cash equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization as defined by our Credit Agreement. The Credit Agreement also contains a financial covenant that requires us to maintain a consolidated interest coverage ratio, which is the ratio of our trailing four-quarter consolidated EBITDA to our consolidated interest expense, each as defined by our Credit Agreement, of not less than 3.00 to 1.00, as measured at the end of each fiscal quarter. At April 27, 2024 and January 27, 2024, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under our revolving facility of $547.5 million and $602.5 million, respectively, as determined by the most restrictive covenant. For calculation purposes, applicable cash on hand is netted against the funded debt amount as permitted in the Credit Agreement.
Current wording
Our Credit Agreement contains a financial covenant that requires us to maintain a consolidated net leverage ratio of not greater than 3.50 to 1.00 as measured at the end of each fiscal quarter, and provides for certain increases to this ratio in connection with permitted acquisitions. The consolidated net leverage ratio is the ratio of our consolidated indebtedness reduced by unrestricted cash and cash equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization as defined by our Credit Agreement. The Credit Agreement also contains a financial covenant that requires us to maintain a consolidated interest coverage ratio, which is the ratio of our trailing four-quarter consolidated EBITDA to our consolidated interest expense, each as defined by our Credit Agreement, of not less than 3.00 to 1.00, as measured at the end of each fiscal quarter. At July 27, 2024 and January 27, 2024, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under our revolving facility of $602.5 million for both periods as determined by the most restrictive covenant. For calculation purposes, applicable cash on hand is netted against the funded debt amount as permitted in the Credit Agreement.
Previous wording
(1)Includes interest payments on our $500.0 million principal amount of 2029 Notes outstanding, and excludes interest payments on our variable rate debt. Variable rate debt as of April 27, 2024 consisted of $310.6 million outstanding under our term loan facility and $55.0 million of revolver borrowings.
Current wording
(1)Includes interest payments on our $500.0 million principal amount of 2029 Notes outstanding, and excludes interest payments on our variable rate debt. Variable rate debt as of July 27, 2024 consisted of $450.0 million outstanding under our term loan facility.
Previous wording
(4)We have committed capital for the expansion of our vehicle fleet in order to accommodate manufacturer lead times. As of April 27, 2024, purchase and other contractual obligations includes approximately $128.0 million for issued orders with delivery dates scheduled to occur over the next 12 months.
Current wording
(4)We have committed capital for the expansion of our vehicle fleet in order to accommodate manufacturer lead times. As of July 27, 2024, purchase and other contractual obligations includes approximately $114.0 million for issued orders with delivery dates scheduled to occur over the next 12 months.
Previous wording
Our condensed consolidated balance sheet as of April 27, 2024 includes a long-term liability of approximately $54.4 million for accrued insurance claims. This liability has been excluded from the table above as the timing of payments is uncertain.
Current wording
Our condensed consolidated balance sheet as of July 27, 2024 includes a long-term liability of approximately $55.2 million for accrued insurance claims. This liability has been excluded from the table above as the timing of payments is uncertain.
Previous wording
The liability for unrecognized tax benefits for uncertain tax positions was approximately $17.6 millionand $17.6 million as of April 27, 2024 and January 27, 2024, respectively, and is included in other liabilities in the condensed consolidated balance sheets. This amount has been excluded from the contractual obligations table because we are unable to reasonably estimate the timing of the resolution of the underlying tax positions with the relevant tax authorities.
Current wording
The liability for unrecognized tax benefits for uncertain tax positions was approximately $17.6 million and $17.6 million as of July 27, 2024 and January 27, 2024, respectively, and is included in other liabilities in the condensed consolidated balance sheets. This amount has been excluded from the contractual obligations table because we are unable to reasonably estimate the timing of the resolution of the underlying tax positions with the relevant tax authorities.
Previous wording
Performance and Payment Bonds and Guarantees. We have obligations under performance and other surety contract bonds related to certain of our customer contracts. Performance bonds generally provide a customer with the right to obtain payment and/or performance from the issuer of the bond if we fail to perform our contractual obligations. We had $397.0 million and $409.6 million of outstanding performance and other surety contract bonds, as of April 27, 2024 and January 27, 2024, respectively. The estimated cost to complete projects secured by our outstanding performance and other surety contract bonds was approximately $158.3 million as of April 27, 2024. In addition to performance and other surety contract bonds, as part of our insurance program we also provide surety bonds that collateralize our obligations to our insurance carriers. As of April 27, 2024 and January 27, 2024, we had $24.1 million and $20.4 million, respectively, of outstanding surety bonds related to our insurance obligations. Additionally, the Company periodically guarantees certain obligations of its subsidiaries, including obligations in connection with obtaining state contractor licenses and leasing real property and equipment.
Current wording
Performance and Payment Bonds and Guarantees. We have obligations under performance and other surety contract bonds related to certain of our customer contracts. Performance bonds generally provide a customer with the right to obtain payment and/or performance from the issuer of the bond if we fail to perform our contractual obligations. We had $422.4 million and $409.6 million of outstanding performance and other surety contract bonds, as of July 27, 2024 and January 27, 2024, respectively. The estimated cost to complete projects secured by our outstanding performance and other surety contract bonds was approximately $202.0 million as of July 27, 2024. In addition to performance and other surety contract bonds, as part of our insurance program we also provide surety bonds that collateralize our obligations to our insurance carriers. As of July 27, 2024 and January 27, 2024, we had $24.1 million and $20.4 million, respectively, of outstanding surety bonds related to our insurance obligations. Additionally, the Company periodically guarantees certain obligations of its subsidiaries, including obligations in connection with obtaining state contractor licenses and leasing real property and equipment.
Showing the first 40 of 41 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
The percentage of our contract revenues by customer type from telecommunications, underground facility locating, and electric and gas utilities and other customers, was 90.0%, 7.0%, and 3.0%, respectively, for the six months ended July 27, 2024 compared to 89.4%, 7.2%, and 3.4%, respectively, for the six months ended July 29, 2023.
Current report — wording carried from elsewhere
Costs of earned revenues as a percentage of contract revenues decreased 0.8% during the six months ended July 27, 2024 compared to the six months ended July 29, 2023. Direct material costs decreased 1.1% primarily as a result of our mix of work in which we provide materials for customers and equipment and fuel costs decreased 0.4% on a net basis as a percentage of contract revenues. Labor and subcontracted labor costs increased 0.8% primarily due to the mix of work performed during the six months ended July 27, 2024. Other direct costs were in line as a percentage of contract revenues for the six months ended July 27, 2024 compared to the six months ended July 29, 2023.
Current report — wording carried from elsewhere
General and administrative expenses increased to $194.1 million, or 8.3% of contract revenues, during the six months ended July 27, 2024 compared to $167.2 million, or 8.0% of contract revenues, during the six months ended July 29, 2023. The increase in total general and administrative expenses during the six months ended July 27, 2024 is mainly attributable to an increase in administrative, payroll, performance based compensation, stock based compensation, acquisition costs and other costs.
Current report — wording carried from elsewhere
Interest expense, net was $27.5 million and $23.6 million during the six months ended July 27, 2024 and July 29, 2023, respectively, as a result of higher interest rates on funded debt balances and higher outstanding borrowings during the current period and lower interest income on invested cash balances.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Cash Provided by (Used in) Financing Activities. Net cash provided by financing activities was $4.7 million during the three months ended April 27, 2024. During the three months ended April 27, 2024, borrowings and repayments under our