DYCOM INDUSTRIES INC

Previous wording

We are 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, we provide underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities. We supply the labor, tools, and equipment necessary to provide these services to our customers.

Current wording

We are a leading provider of specialty contracting services focused primarily on telecommunications and digital infrastructure throughout the United States. These services include program management, planning, engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications and digital infrastructure providers. Additionally, we provide underground facility locating services for various utilities, including telecommunications providers, as well as other construction and maintenance services for electric and gas utilities. We supply the labor, tools, and equipment necessary to provide these services to our customers.

Previous wording

The cyclical nature of the industry we serve affects demand for our services. The capital expenditure and maintenance budgets of our customers, and the related timing of approvals and seasonal spending patterns, influence our contract revenues and results of operations. Factors affecting our customers and their capital expenditure budgets include, but are not limited to, overall economic conditions, the introduction of new technologies, our customers’ debt levels and capital structures, our customers’ financial performance, our customers’ positioning and strategic plans, and any potential effects from public health emergencies or pandemics. Other factors that may affect our customers and their capital expenditure budgets include new regulations or regulatory actions impacting our customers’ businesses, merger or acquisition activity involving our customers, and the physical maintenance needs of our customers’ infrastructure.

Current wording

The cyclical nature of the industry we serve affects demand for our services. The capital expenditure and maintenance budgets of our customers, and the related timing of approvals and seasonal spending patterns, influence our contract revenues and results of operations. Factors affecting our customers and their capital expenditure budgets include, but are not limited to, overall economic conditions, the introduction of new technologies, our customers’ debt levels and capital structures, our customers’ financial performance, our customers’ positioning and strategic plans. Other factors that may affect our customers and their capital expenditure budgets include the availability of state and federal funding, the implementation or enforcement of regulations or regulatory actions impacting our customers’ businesses, merger or acquisition activity involving our customers, and the physical maintenance needs of our customers’ infrastructure.

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 55.5% and 57.9% of our total contract revenues during the nine months ended October 26, 2024 and October 28, 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.

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 and nine months ended October 26, 2024 or October 28, 2023:

Current wording

Our customer base is highly concentrated. The following reflects the percentage of total contract revenues from customers who contributed at least 10% to our total contract revenues during the three months ended April 26, 2025 or April 27, 2024:

Previous wording

Fiscal 2025. During the third quarter of fiscal 2025, we acquired certain assets and assumed certain liabilities of a telecommunications construction contractor for a cash purchase price of $150.7 million. The acquired business provides wireless construction services for telecommunications providers in various states. This acquisition expands our geographic presence within our existing customer base.

Current wording

Fiscal 2025. During the third quarter of fiscal 2025, we acquired certain assets and assumed certain liabilities of a telecommunications construction contractor for a cash purchase price of $150.7 million. The acquired business provides wireless construction services for telecommunications providers in various states. This acquisition expands our geographic presence within our existing customer base. The purchase price allocation for this business is preliminary and will be completed when the valuation for intangible assets and other amounts are finalized within the 12-month measurement period from the date of the acquisition.

Previous wording

Results of the businesses acquired are included in the condensed consolidated financial statements from the date of acquisition. The purchase price allocations of the companies acquired in fiscal 2025 are preliminary and will be completed when valuations for intangible assets and other amounts are finalized within the 12-month measurement period from the date of acquisition.

Current wording

Results of the businesses acquired are included in the condensed consolidated financial statements from their respective date of acquisition.

Previous wording

For certain contracts, representing less than 5% of contract revenues during each of the nine months ended October 26, 2024 and October 28, 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 three months ended April 26, 2025 and April 27, 2024, 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

General and Administrative Expenses. General and administrative expenses primarily consist of employee compensation and related expenses, including performance-based compensation and stock-based compensation, legal, consulting and professional fees, information technology and development costs, provision for or recoveries of bad debt expense, acquisition and integration costs of businesses acquired, and other costs not directly related to the provision of our services under customer contracts. Our provision for bad debt expense is determined by evaluating specific accounts receivable and contract asset balances based on historical collection trends, the age of outstanding receivables, and the creditworthiness of our customers. We incur information technology and development costs primarily to support and enhance our operating efficiency. Our executive management team and the senior management of our subsidiaries perform substantially all of our sales and marketing functions as part of their management responsibilities.

Current wording

General and Administrative Expenses. General and administrative expenses primarily consist of employee compensation and related expenses, including performance-based compensation and stock-based compensation, legal, consulting and professional fees, information technology and development costs, amortization of implementation costs associated with cloud computing arrangements, provision for or recoveries of bad debt expense, acquisition and integration costs of businesses acquired, and other costs not directly related to the provision of our services under customer contracts. Our provision for bad debt expense is determined by evaluating specific accounts receivable and contract asset balances based on historical collection trends, the age of outstanding receivables, and the creditworthiness of our customers. We incur information technology and development costs primarily to support and enhance our operating efficiency. Our executive management team and the senior management of our enterprise and subsidiaries perform substantially all of our sales and marketing functions as part of their management responsibilities.

Previous wording

Interest Expense, Net. Interest expense, net, consists of interest incurred on outstanding variable rate and fixed rate debt and certain other obligations, and the amortization of debt issuance costs. See Note 14, Debt, in the notes to the condensed consolidated financial statements for information on debt issuance costs and the non-cash amortization of the debt discount.

Current wording

Interest Expense, Net. Interest expense, net, consists of interest incurred on outstanding variable rate and fixed rate debt and certain other obligations, and the amortization of debt issuance costs. See Note 14, Debt, in the notes to the condensed consolidated financial statements for information on debt issuance costs.

Previous wording

Seasonality and Fluctuations in Operating Results. Our contract revenues and results of operations exhibit seasonality and are impacted by adverse weather changes as we perform a significant portion of our work outdoors. Consequently, adverse weather, which is more likely to occur with greater frequency, severity, and duration during the winter, as well as reduced daylight hours, impact our operations during the fiscal quarters ending in January and April. Additionally, extreme weather conditions, such as major or extended winter storms, droughts and tornados, and natural disasters, such as floods, hurricanes, tropical storms, whether as a result of climate change or otherwise, could also impact the demand for our services or impact our ability to perform our services. Also, several holidays fall within the fiscal quarter ending in January, which decreases the number of available workdays in this fiscal quarter. Because of these factors, we are most likely to experience reduced revenue and profitability or losses during the fiscal quarters ending in January and April compared to the fiscal quarters ending in July and October.

Current wording

Seasonality and Fluctuations in Operating Results. Our contract revenues and results of operations exhibit seasonality and are impacted by adverse weather changes as we perform a significant portion of our work outdoors. Consequently, adverse weather, which is more likely to occur with greater frequency, severity, and duration during the winter, as well as reduced daylight hours, impact our operations during the fiscal quarters ending in January and April. Additionally, extreme weather conditions, such as major or extended winter storms, droughts and tornados, wildfires, and natural disasters, such as floods, hurricanes, tropical storms, whether as a result of climate change or otherwise, could also impact the demand for our services or impact our ability to perform our services. Also, several holidays fall within the fiscal quarter ending in January, which decreases the number of available workdays in this fiscal quarter. Because of these factors, we are most likely to experience reduced revenue and profitability or losses during the fiscal quarters ending in January and April compared to the fiscal quarters ending in July and October.

Previous wording

We may also experience variations in our profitability driven by a number of factors. These factors include variations and fluctuations in contract revenues, job specific costs, insurance claims, the allowance for doubtful accounts, accruals for contingencies, stock-based compensation expense for performance-based stock awards, the fair value of reporting units for the goodwill impairment analysis, the valuation of intangibles and other long-lived assets, gains or losses on the sale of fixed assets from the timing and levels of capital assets sold, the employer portion of payroll taxes as a result of reaching statutory limits, and our effective tax rate.

Current wording

We may also experience variations in our profitability driven by a number of factors. These factors include variations and fluctuations in contract revenues, job specific costs, insurance claims, the allowance for credit losses, accruals for contingencies, stock-based compensation expense for performance-based stock awards, the fair value of reporting units for the goodwill impairment analysis, the valuation of intangibles and other long-lived assets, gains or losses on the sale of fixed assets from the timing and levels of capital assets sold, the employer portion of payroll taxes as a result of reaching statutory limits, and our effective tax rate.

Previous wording

The following table sets forth our condensed consolidated statements of operations for the periods indicated and the amounts as percentages of contract revenues (totals may not add due to rounding) (dollars in millions):

Current wording

The following table sets forth our condensed consolidated statements of operations for the periods indicated and the amounts as a percentage of contract revenues (totals may not add due to rounding) (dollars in millions):

Previous wording

Contract Revenues. Contract revenues were $1,272.0 million during the three months ended October 26, 2024 compared to $1,136.1 million during the three months ended October 28, 2023. Contract revenues from acquired businesses (excluding contract revenues from storm restoration services) were $80.1 million for the three months ended October 26, 2024 and $45.2 million for the three months ended October 28, 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. Additionally, contract revenues from storm restoration services during the three months ended October 26, 2024 were $46.3 million while there were no significant revenues from storm restoration services during the three months ended October 28, 2023.

Current wording

Contract Revenues. Contract revenues were $1.259 billion during the three months ended April 26, 2025 compared to $1.142 billion during the three months ended April 27, 2024. Contract revenues from acquired businesses were $111.9 million and $3.4 million for the three months ended April 26, 2025 and April 27, 2024, respectively. Acquired revenues represent contract revenues from acquired businesses that were not owned for the full period in both the current and comparable prior periods.

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 90.6%, 6.4%, and 3.0%, respectively, for the three months ended October 26, 2024 compared to 90.1%, 6.7%, and 3.2%, respectively, for the three months ended October 28, 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 91.3%, 6.5%, and 2.2%, respectively, for the three months ended April 26, 2025 compared to 89.9%, 7.1%, and 3.0%, respectively, for the three months ended April 27, 2024.

Previous wording

Costs of Earned Revenues. Costs of earned revenues increased to $1,007.4 million, or 79.2% of contract revenues, during the three months ended October 26, 2024 compared to $886.7 million, or 78.0% of contract revenues, during the three months ended October 28, 2023. The primary components of the increase were a $125.7 million aggregate increase in direct labor and subcontractor costs and a $4.0 million increase in other direct costs, offset by a $8.3 million decrease in direct materials expense and a $0.6 million decrease in equipment and fuel costs.

Current wording

Costs of Earned Revenues. Costs of earned revenues increased to $1.011 billion, or 80.3% of contract revenues, during the three months ended April 26, 2025 compared to $921.6 million, or 80.7% of contract revenues, during the three months ended April 27, 2024. The primary components of the increase were an $82.4 million aggregate increase in direct labor and subcontractor costs, a $5.6 million increase in other direct costs, and a $3.4 million increase in direct materials expense, offset by a $1.9 million decrease in equipment and fuel costs.

Previous wording

Costs of earned revenues as a percentage of contract revenues increased 1.2% during the three months ended October 26, 2024 compared to the three months ended October 28, 2023. Labor and subcontracted labor costs increased 3.3% primarily due to the mix of work performed during the three months ended October 26, 2024. Direct material costs decreased 1.3% primarily as a result of our mix of work in which we provide materials for customers. Equipment and fuel costs decreased 0.5% and other direct costs decreased by 0.3% on a net basis as a percentage of contract revenues for the three months ended October 26, 2024 compared to the three months ended October 28, 2023.

Current wording

Costs of earned revenues as a percentage of contract revenues decreased 0.3% during the three months ended April 26, 2025 compared to the three months ended April 27, 2024. Labor and subcontracted labor costs increased 0.6% primarily due to the mix of work performed during the three months ended April 26, 2025. Direct material costs decreased 0.2% primarily as a result of our mix of work in which we provide materials for customers. Equipment and fuel costs decreased 0.5% and other direct costs decreased by 0.2% on a net basis as a percentage of contract revenues for the three months ended April 26, 2025 compared to the three months ended April 27, 2024.

Previous wording

General and Administrative Expenses. General and administrative expenses increased to $110.8 million, or 8.7% of contract revenues, during the three months ended October 26, 2024 compared to $87.5 million, or 7.7% of contract revenues, during the three months ended October 28, 2023. The increase in total general and administrative expenses during the three months ended October 26, 2024 is mainly attributable to an increase in administrative, payroll, performance based compensation, $7.1 million incremental stock based compensation expense resulting from the CEO transition, acquisition costs, $4.2 million acquisition integration costs and other costs, including incremental general and administrative expenses from the acquired businesses.

Current wording

General and Administrative Expenses. General and administrative expenses increased to $103.7 million, or 8.2% of contract revenues, during the three months ended April 26, 2025 compared to $94.6 million, or 8.3% of contract revenues, during the three months ended April 27, 2024. The increase in total general and administrative expenses during the three months ended April 26, 2025 is mainly attributable to an increase in administrative, payroll, performance based compensation and other costs, including incremental general and administrative expenses from the acquired businesses.

Previous wording

Depreciation and Amortization. Depreciation expense was $42.4 million, or 3.3% of contract revenues, during the three months ended October 26, 2024 compared to $36.5 million, or 3.2% of contract revenues, during the three months ended October 28, 2023. Depreciation expense was $122.4 million, or 3.4% of contract revenues during the nine months ended October 26, 2024 compared to $104.8 million, or 3.3% of contract revenues during the nine months ended October 28, 2023. The increase in depreciation expense during the three and nine months ended October 26, 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 $46.4 million, or 3.7% of contract revenues, during the three months ended April 26, 2025 compared to $39.4 million, or 3.4% of contract revenues, during the three months ended April 27, 2024. The increase in depreciation expense during the three months ended April 26, 2025 is primarily due to higher capital expenditures to support our growth in operations, the normal replacement cycle of fleet assets, and depreciation from acquired businesses.

Previous wording

Amortization expense was $9.6 million and $6.0 million during the three months ended October 26, 2024 and October 28, 2023, respectively and $21.3 million and $13.0 million during the nine months ended October 26, 2024 and October 28, 2023, respectively. The increase in amortization expense during the three and nine months ended October 26, 2024 is due to the increase in amortizing intangibles from acquired businesses.

Current wording

Amortization expense was $12.0 million and $5.8 million during the three months ended April 26, 2025 and April 27, 2024, respectively. The increase in amortization expense during the three months ended April 26, 2025 is due to the increase in amortizing intangibles from acquired businesses.

Previous wording

Interest Expense, Net. Interest expense, net was $17.5 million and $14.0 million during the three months ended October 26, 2024 and October 28, 2023, respectively, and $44.9 million and $37.6 million during the nine months ended October 26, 2024 and October 28, 2023, respectively, as a result of higher outstanding borrowings during the current period and lower interest income on invested cash balances.

Current wording

Interest Expense, Net. Interest expense, net was $14.0 million and $12.8 million during the three months ended April 26, 2025 and April 27, 2024, respectively, as a result of higher outstanding borrowings during the current period and lower interest income on invested cash balances.

Previous wording

Other Income, Net. Other income, net was $6.9 million and $6.9 million during the three months ended October 26, 2024 and October 28, 2023, respectively and $22.6 million and $17.6 million during the nine months ended October 26, 2024 and October 28, 2023, respectively. Gain on sale of fixed assets, net was $8.2 million and $8.4 million during the three months ended October 26, 2024 and October 28, 2023, respectively and $28.8 million and $23.7 million during the nine months ended October 26, 2024 and October 28, 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 $2.7 million and $2.2 million of expense during the three months ended October 26, 2024 and October 28, 2023 respectively, and $8.7 million and $7.8 million during the nine months ended October 26, 2024 and October 28, 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 $7.3 million and $9.3 million during the three months ended April 26, 2025 and April 27, 2024, respectively. Gain on sale of fixed assets, net was $9.8 million and $12.4 million during the three months ended April 26, 2025 and April 27, 2024, 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 $3.6 million and $2.9 million of expense during the three months ended April 26, 2025 and April 27, 2024 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 and nine months ended October 26, 2024 and October 28, 2023 (dollars in millions):

Current wording

Income Taxes. The following table presents our income tax provision and effective income tax rate for the three months ended April 26, 2025 and April 27, 2024 (dollars in millions):

Previous wording

Our effective income tax rate was 23.6% and 25.5% for the three months ended October 26, 2024 and October 28, 2023, respectively, and 23.8% and 24.9% for the nine months ended October 26, 2024 and October 28, 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 22.3% and 19.2% for the three months ended April 26, 2025 and April 27, 2024, 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 $69.8 million for the three months ended October 26, 2024 compared to $83.7 million for the three months ended October 28, 2023. Net income was $200.7 million for the nine months ended October 26, 2024 compared to $195.5 million for the nine months ended October 28, 2023.

Current wording

Net Income. Net income was $61.0 million for the three months ended April 26, 2025 compared to $62.6 million for the three months ended April 27, 2024.

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 $15.3 million as of October 26, 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 $16.1 million as of April 26, 2025 compared to $92.7 million as of January 25, 2025. 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 $1,293.3 million as of October 26, 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 $1,207.9 million as of April 26, 2025 compared to $1,117.5 million as of January 25, 2025.

Previous wording

12 months. Our capital requirements may increase to the extent we seek to grow by acquisitions that involve consideration other than our stock, experience difficulty or delays in collecting amounts owed to us by our customers, increase our working capital in connection with new or existing customer programs, or we repurchase our common stock, or repay Credit Agreement borrowings. Changes in financial markets or other components of the economy could adversely impact our ability to access the capital markets, in which case we would expect to rely on a combination of available cash and our Credit Agreement to provide short-term funding. Management regularly monitors the financial markets and assesses general economic conditions for possible impact on our financial position. We believe our cash investment policies are prudent and expect that any volatility in the capital markets would not have a material impact on our cash investments.

Current wording

Sufficiency of Capital Resources. We believe that our capital resources, including existing cash balances and amounts available under our Credit Agreement, are sufficient to meet our financial obligations. These obligations include payments on our debt, working capital requirements, and the purchase of equipment at our expected level of operations for at least the next 12 months. Our capital requirements may increase to the extent we seek to grow by acquisitions that involve consideration other than our stock, experience difficulty or delays in collecting amounts owed to us by our customers, increase our working capital in connection with new or existing customer programs, or we repurchase our common stock, or repay Credit Agreement borrowings. Changes in financial markets or other components of the economy could adversely impact our ability to access the capital markets, in which case we would expect to rely on a combination of available cash and our Credit Agreement to provide short-term funding. Management regularly monitors the financial markets and assesses general economic conditions for possible impact on our financial position. We believe our cash investment policies are prudent and expect that any volatility in the capital markets would not have a material impact on our cash investments.

Previous wording

Net Cash Flows. The following table presents our net cash flows for the nine months ended October 26, 2024 and October 28, 2023 (dollars in millions):

Current wording

Net Cash Flows. The following table presents our net cash flows for the three months ended April 26, 2025 and April 27, 2024 (dollars in millions):

Previous wording

Cash Provided by (Used in) Operating Activities. Depreciation and amortization, non-cash lease expense, stock-based compensation, amortization of debt issuance costs, deferred income taxes, gain on sale of fixed assets and (recovery) provision for bad debt were the primary non-cash items in cash flows from operating activities during the current and prior periods.

Current wording

Cash used in Operating Activities. Depreciation and amortization, non-cash lease expense, stock-based compensation, amortization of debt issuance costs, deferred income taxes, gain on sale of fixed assets and recovery of bad debt were the primary non-cash items in cash flows from operating activities during the current and prior periods.

Previous wording

During the nine months ended October 26, 2024, net cash provided by operating activities was $20.9 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $341.8 million of operating cash flow during the nine months ended October 26, 2024. Changes that used operating cash flow during the nine months ended October 26, 2024 included an increase in accounts receivable and in other assets of $405.5 million and $9.1 million, respectively. Changes that provided operating cash flow during the nine months ended October 26, 2024 included a net increase in income taxes payable/receivable, an increase in accrued liabilities, net, a decrease in contract assets, net, a decrease in other current assets and inventories and an increase in accounts payable of $22.4 million, $21.2 million, $19.2 million, $7.1 million and $2.9 million, respectively.

Current wording

During the three months ended April 26, 2025, net cash used in operating activities was $54.0 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $186.1 million of operating cash flow during the three months ended April 26, 2025. Changes that used operating cash flow during the three months ended April 26, 2025 included an increase in accounts receivable, in contract assets, net, in other current assets and inventories, and in other assets of $154.1 million, $20.1 million, $16.5 million and $11.7 million, respectively and a decrease in accrued liabilities, net of $42.0 million. Changes that provided cash flow during the three months ended April 26, 2025 included an increase in accounts payable and a net increase in income taxes payable of $40.9 million and $17.4 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 119 as of October 26, 2024 compared to 121 as of October 28, 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 credit losses, and current contract assets, net of contract liabilities, divided by the average daily revenue for the most recently completed quarter. Our DSO was 111 as of April 26, 2025 compared to 110 as of April 27, 2024.

Previous wording

During the nine months ended October 28, 2023, net cash used in operating activities was $66.1 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $402.0 million of operating cash flow during the nine months ended October 28, 2023. Changes that used operating cash flow during the nine months ended October 28, 2023 included an increase in accounts receivable, a decrease in income taxes payable/receivable, an increase in contract assets, net, and an increase in other current assets and inventories, of $361.1 million, $14.6 million, $11.3 million and $5.7 million, respectively. In addition, changes that used operating cash flow during the nine months ended October 28, 2023 included a decrease in accrued liabilities of $6.6 million and accounts payable, of $3.5 million. A decrease in other assets of $0.7 million provided operating cash flow during the nine months ended October 28, 2023.

Current 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.

Previous wording

Cash Used in Investing Activities. Net cash used in investing activities was $335.4 million during the nine months ended October 26, 2024 compared to $253.5 million during the nine months ended October 28, 2023. During the nine months ended October 26, 2024 and October 28, 2023, capital expenditures were $182.0 million and $161.1 million, respectively, and cash paid for acquisitions was $183.9 million amd $122.9 million, respectively. These expenditures were offset in part by proceeds from the sale of assets of $30.4 million and $30.5 million during the nine months ended October 26, 2024 and October 28, 2023, respectively.

Current wording

Cash Used in Investing Activities. Net cash used in investing activities was $68.6 million during the three months ended April 26, 2025 compared to $42.2 million during the three months ended April 27, 2024. During the three months ended April 26, 2025 and April 27, 2024, capital expenditures were $79.5 million and $42.0 million, respectively, and cash paid for acquisitions during the three months ended April 27, 2024 was $13.0 million. These expenditures were offset in part by proceeds from the sale of assets of $10.9 million and $12.7 million during the three months ended April 26, 2025 and April 27, 2024, respectively.

Previous wording

Cash Provided by Financing Activities. Net cash provided by financing activities was $228.7 million during the nine months ended October 26, 2024. During the nine months ended October 26, 2024, borrowings and repayments under our Credit Agreement were $755.4 million and $465.4 million, respectively. We paid approximately $6.7 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 nine months ended October 26, 2024. We also paid $16.9 million, net to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the nine months ended October 26, 2024. In addition, we paid $8.0 million, net, to tax authorities for payroll tax withholding obligations on the exercise of stock options.

Current wording

Cash Provided by Financing Activities. Net cash provided by financing activities was $45.9 million during the three months ended April 26, 2025. During the three months ended April 26, 2025, borrowings and repayments under our Credit Agreement were $285.0 million and $196.0 million, respectively. In addition, we repurchased 200,000 shares of our common stock in open market transactions, at an average price of $150.93 per share, for $30.2 million, during the three months ended April 26, 2025. We also paid $12.9 million, net to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the three months ended April 26, 2025.

Previous wording

Net cash provided by financing activities was $111.1 million during the nine months ended October 28, 2023. During the nine months ended October 28, 2023, borrowings under our credit agreement were $475.0 million. We used approximately $334.1 million to repay borrowings under our Credit Agreement. 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 nine months ended October 28, 2023. We also paid $9.8 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during the nine months ended October 28, 2023. This was partially offset by the exercise of stock options, which provided $0.3 million during the nine months ended October 28, 2023.

Current wording

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 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.

Previous 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.

Current wording

Compliance with Credit Agreement. We are 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, 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

Subject to certain conditions, the Credit Agreement provided us with the ability to enter into one or more incremental facilities either by increasing the revolving commitments under the Credit Agreement and/or by establishing one or more additional term loans, up to the sum of (i) $350.0 million and (ii) an aggregate amount such that, after giving effect to such incremental facilities on a pro forma basis (assuming that the amount of the incremental commitments are fully drawn and funded), the consolidated senior secured net leverage ratio does not exceed 2.25 to 1.00. The consolidated senior secured net leverage ratio is the ratio of our consolidated senior secured indebtedness reduced by unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined by the Credit Agreement. Borrowings under the Credit Agreement are guaranteed by substantially all of our domestic subsidiaries and secured by 100% of the equity interests of our direct and indirect domestic subsidiaries and 65% of the voting equity interests and 100% of the non-voting interests of our first-tier foreign subsidiaries (subject to customary exceptions).

Current wording

Subject to certain conditions, the Credit Agreement provides us with the ability to enter into one or more incremental facilities either by increasing the revolving commitments under the Credit Agreement and/or by establishing one or more additional term loans, up to the sum of (i) $350.0 million and (ii) an aggregate amount such that, after giving effect to such incremental facilities on a pro forma basis (assuming that the amount of the incremental commitments are fully drawn and funded), the consolidated senior secured net leverage ratio does not exceed 2.25 to 1.00. The consolidated senior secured net leverage ratio is the ratio of our consolidated senior secured indebtedness reduced by unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined by the Credit Agreement. Borrowings under the Credit Agreement are guaranteed by substantially all of our domestic subsidiaries and secured by 100% of the equity interests of our direct and indirect domestic subsidiaries and 65% of the voting equity interests and 100% of the non-voting interests of our first-tier foreign subsidiaries (subject to customary exceptions).

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 October 26, 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 $447.5 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 April 26, 2025 and January 25, 2025, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under our revolving facility of $513.5 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.

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 $416.0 million and $409.6 million of outstanding performance and other surety contract bonds, as of October 26, 2024 and January 27, 2024, respectively. The estimated cost to complete projects secured by our outstanding performance and other surety contract bonds was approximately $197.8 million as of October 26, 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 October 26, 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 $440.0 million and $413.5 million of outstanding performance and other surety contract bonds, as of April 26, 2025 and January 25, 2025, respectively. The estimated cost to complete projects secured by our outstanding performance and other surety contract bonds was approximately $230.4 million as of April 26, 2025. 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. At each of April 26, 2025 and January 25, 2025, we had $31.0 million of outstanding surety bonds related to our insurance obligations. Additionally, we have periodically guaranteed certain obligations of our subsidiaries, including obligations in connection with obtaining state contractor licenses and leasing real property and equipment.

Previous wording

Our backlog is an estimate of the uncompleted portion of services to be performed under contractual agreements with our customers and totaled $7.856 billion and $6.917 billion at October 26, 2024 and January 27, 2024, respectively. We expect to complete 56.9% of the October 26, 2024 total backlog during the next twelve months. Our backlog represents an estimate of services to be performed pursuant to master service agreements and other contractual agreements over their terms. 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 twelve month period, when applicable. When estimating backlog for newly initiated master service agreements and other long and short-term contracts, we also consider the anticipated scope of the contract and information received from the customer during the procurement process and, where applicable, other ancillary information. The majority of our backlog comprises services under master service agreements and other long-term contracts.

Current wording

Our backlog is an estimate of the uncompleted portion of services to be performed under contractual agreements with our customers and totaled $8.127 billion and $7.760 billion at April 26, 2025 and January 25, 2025, respectively. We expect to complete 57.6% of the April 26, 2025 total backlog during the next twelve months. Our backlog represents an estimate of services to be performed pursuant to master service agreements and other contractual agreements over their terms. 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 twelve month period, when applicable. When estimating backlog for newly initiated master service agreements and other long and short-term contracts, we also consider the anticipated scope of the contract and information received from the customer during the procurement process and, where applicable, other ancillary information. The majority of our backlog comprises services under master service agreements and other long-term contracts.