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, 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.

Current wording

We are a leading provider of specialty contracting services focused on the digital infrastructure, telecommunications and utilities industries 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. We also provide underground facility locating services for various utilities, including telecommunications providers, as well as other construction and maintenance services for electric and gas utilities. Additionally, we provide comprehensive building infrastructure solutions, including electrical, energy management, security, and fire safety systems for data centers and other critical facilities. 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 industries we serve affects demand for our services, and our contract revenues and results of operations exhibit seasonality as a significant portion of our Communications segment work is performed outdoors. 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, and 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 55.4%, 57.7%, and 66.7% of our total contract revenues during fiscal 2025, fiscal 2024, and fiscal 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 and many leading general contractors specializing in data center construction. 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 fiscal 2026, fiscal 2025, or fiscal 2024:

Previous wording

Results of the businesses acquired are included in our consolidated financial statements from their respective dates 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 our consolidated financial statements from their respective dates of acquisition. The purchase price allocation of the company acquired in fiscal 2026 is 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.

Previous wording

The following information is presented so that the reader may better understand certain factors impacting our results of operations, and should be read in conjunction with Critical Accounting Policies and Estimates below, as well as Note 2, Significant Accounting Policies & Estimates, in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K.

Current wording

The following information is presented so that the reader may better understand certain factors impacting our results of operations, and should be read in conjunction with Critical Accounting Policies and Estimates below, as well as Note 2, Significant Accounting Policies & Estimates, in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K. Fiscal 2026 had 53 weeks of operations while fiscal 2025 had 52 weeks.

Previous wording

Loss on Debt Extinguishment. Loss on debt extinguishment for fiscal 2025 of $1.0 million includes the write-off of deferred debt issuance costs in connection with the Credit Agreement amendment.

Current wording

Loss on Debt Extinguishment. Loss on debt extinguishment for fiscal 2026 of $7.3 million and fiscal 2025 of $1.0 million includes the write-off of deferred debt issuance costs in connection with the Credit Agreement amendments. See “Liquidity and Capital Resources - Compliance with Credit Agreement” for more information.

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, 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.

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 Communications segment work outside. 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

For certain contracts, representing less than 5% of contract revenues during fiscal 2025, fiscal 2024, and fiscal 2023, we use the cost-to-cost measure of progress. These contracts are generally projects that are completed over a period of less than 12 months and for which payment is received in a lump sum at the end of the project. 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 fiscal 2026, fiscal 2025, and fiscal 2024, we use the cost-to-cost measure of progress. These contracts are generally projects that are completed over a period 12 months or less and for which payment may be received based on project milestones or in a lump sum at the end of the project. 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.

Previous wording

There were no material amounts of unapproved change orders or claims recognized during fiscal 2025, fiscal 2024, and fiscal 2023.

Current wording

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. There were no material amounts of unapproved change orders or claims recognized during fiscal 2026, fiscal 2025, and fiscal 2024.

Previous wording

Goodwill and Intangible Assets. Goodwill and other indefinite-lived intangible assets are assessed for impairment annually, or more frequently, if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. We perform our annual impairment review of goodwill at the reporting unit level. Each of our operating segments with goodwill represents a reporting unit for the purpose of assessing impairment. If we determine the fair value of the reporting unit’s goodwill or other indefinite-lived intangible assets is less than their carrying value as a result of an annual or interim test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during the period incurred.

Current wording

Goodwill and Intangible Assets. Goodwill and other indefinite-lived intangible assets are assessed for impairment annually, or more frequently, if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. We perform our annual impairment review of goodwill at the reporting unit level. Each of our operating segments with goodwill represents a reporting unit for the purpose of assessing impairment. If we determine the fair value of the reporting unit’s goodwill or other indefinite-lived intangible assets is less than their carrying value as a result of an annual or interim test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during the period incurred. The following table sets forth goodwill and other intangible assets, net by reportable segment as of January 31, 2026 (dollars in millions):

Previous wording

We performed our annual impairment assessment for fiscal 2025, fiscal 2024, and fiscal 2023, and concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any of the periods. In each of these periods, qualitative assessments were performed on reporting units that comprise a significant portion of our consolidated goodwill balance. For the Company’s indefinite-lived intangible asset we performed a qualitative assessment for fiscal 2025 and 2024 and a quantitative analysis for fiscal 2023. A qualitative assessment includes evaluating all identified events and circumstances that could affect the significant inputs used to determine the fair value of a reporting unit or indefinite-lived intangible asset for the purpose of determining whether it is more likely than not that these assets are impaired. We consider various factors while performing qualitative assessments, including macroeconomic conditions, industry and market conditions, financial performance of the reporting units, changes in market capitalization, and any other specific reporting unit considerations. These qualitative assessments indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units. For the remaining reporting units, we performed the quantitative analysis described in ASC Topic 350 in each of these periods. When performing the quantitative analysis, we determine the fair value of our reporting units using an equal weighting of fair values derived from the income approach and market approach valuation methodologies. Under the income approach, the key valuation assumptions used in determining the fair value estimates of our reporting units for each annual test were: (a) expected cash flow for a period of seven years based on our best estimate of revenue growth rates and projected operating margins; (b) terminal value based upon terminal growth rates; and (c) a discount rate based on the Company’s best estimate of the weighted average cost of capital adjusted for certain risks for the reporting units.

Current wording

We performed our annual impairment assessment for fiscal 2026, fiscal 2025, and fiscal 2024, and concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any of the periods. In each of these periods, qualitative assessments were performed on reporting units that comprise a significant portion of our consolidated goodwill balance. For the Company’s indefinite-lived intangible asset we performed a qualitative assessment for fiscal 2026, fiscal 2025 and fiscal 2024. A qualitative assessment includes evaluating all identified events and circumstances that could affect the significant inputs used to determine the fair value of a reporting unit or indefinite-lived intangible asset for the purpose of determining whether it is more likely than not that these assets are impaired. We consider various factors while performing qualitative assessments, including macroeconomic conditions, industry and market conditions, financial performance of the reporting units, changes in market capitalization, and any other specific reporting unit considerations. These qualitative assessments indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units. For the remaining reporting units, we performed the quantitative analysis described in ASC Topic 350 in each of these periods. When performing the quantitative analysis, we determine the fair value of our reporting units using an equal weighting of fair values derived from the income approach and market approach valuation methodologies. Under the income approach, the key valuation assumptions used in determining the fair value estimates of our reporting units for each annual test were: (a) expected cash flow for a period of seven years based on our best estimate of revenue growth rates and projected operating margins; (b) terminal value based upon terminal growth rates; and (c) a discount rate based on the Company’s best estimate of the weighted average cost of capital adjusted for certain risks for the reporting units.

Previous wording

The discount rate reflects risks inherent within each reporting unit operating individually. These risks are greater than the risks inherent in the Company as a whole. Determination of discount rates included consideration of market inputs such as the risk-free rate, equity risk premium, industry premium, and cost of debt, among other assumptions. The discount rate for fiscal 2025 is consistent with the rate used in fiscal 2024. While the cost of debt decreased, there was a decrease in the market participant debt-to-capital ratios which resulted in the same weighted average cost of capital as prior year. The decrease in the discount rate for fiscal 2024 from fiscal 2023 was largely due to lower cost of equity capital and an increase in the market participant debt-to-capital ratios which results in more allocation to the cost of debt, which is lower than the cost of equity. We believe the assumptions used in the impairment analysis each year are reflective of the risks inherent in the business models of our reporting units and our industry. Under the market approach, the guideline company method develops valuation multiples by comparing our reporting units to similar publicly traded companies. Key valuation assumptions used in determining the fair value estimates of our reporting units rely on: (a) the selection of similar companies and (b) the selection of valuation multiples as they apply to the reporting unit characteristics.

Current wording

The discount rate reflects risks inherent within each reporting unit operating individually. These risks are greater than the risks inherent in the Company as a whole. Determination of discount rates included consideration of market inputs such as the risk-free rate, equity risk premium, industry premium, and cost of debt, among other assumptions. The discount rate for fiscal 2026 increased compared to the rate used in fiscal 2025. The cost of equity increased as did the weighting for equity which resulted in an increase in the weighted average cost of capital compared to the prior year. We believe the assumptions used in the impairment analysis each year are reflective of the risks inherent in the business models of our reporting units and our industry. Under the market approach, the guideline company method develops valuation multiples by comparing our reporting units to similar publicly traded companies. Key valuation assumptions used in determining the fair value estimates of our reporting units rely on: (a) the selection of similar companies and (b) the selection of valuation multiples as they apply to the reporting unit characteristics.

Previous wording

Implementation Costs – Cloud Computing Arrangements. In accordance with ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Internal-Use Software, to the extent costs incurred in a cloud computing arrangement are capitalizable, the corresponding costs are recorded in other assets and the related amortization is included in general and administrative expense in the consolidated statements of operations. The amount of capitalized cloud computing implementation costs included in other non-current assets was $29.8 million and $7.2 million as of January 25, 2025 and January 27, 2024, respectively. The amortization of capitalized implementation costs related to cloud computing arrangements was not material during fiscal 2025, fiscal 2024, or fiscal 2023.

Current wording

Implementation Costs – Cloud Computing Arrangements. In accordance with ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Internal-Use Software, to the extent costs incurred in a cloud computing arrangement are capitalizable, the corresponding costs are recorded in other assets and the related amortization is included in general and administrative expense in the consolidated statements of operations. The amount of capitalized cloud computing implementation costs included in other non-current assets was $61.7 million and $29.8 million as of January 31, 2026 and January 25, 2025, respectively. The amortization of capitalized implementation costs related to cloud computing arrangements was $2.4 million and $1.7 million during fiscal 2026 and fiscal 2025.

Previous wording

Accrued Insurance Claims. For claims within our insurance program, we retain the risk of loss, up to certain annual stop-loss limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health. Losses for claims beyond our retained risk of loss are covered by insurance up to our coverage limits.

Current wording

Accrued Insurance Claims. For claims within our insurance program, we retain the risk of loss, up to certain annual stop-loss limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health. Losses for claims beyond our retained risk of loss are covered by insurance up to our coverage limits. Our Building Systems segment is fully insured for these risks through third-party insurance policies, and we do not retain the risk of loss for claims related to those operations.

Previous wording

For automobile liability and general liability losses during fiscal 2023, we retained the risk of loss up to $1.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for the next $5.0 million on a per-occurrence basis with aggregate stop loss limits of $11.5 million within this layer of retention for the period of fiscal 2023. Additionally, we retained $5.0 million risk of loss on a per occurrence basis for losses between $5.0 million and $15.0 million, if any, and we retained $10.0 million risk of loss on a per occurrence basis for losses between $30.0 million and $40.0 million, if any.

Current wording

For automobile liability losses during fiscal 2025, we retained the risk of loss up to $2.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage and we retained the risk of loss up to $1.0 million for general liability losses during fiscal 2025. We also retained the risk of loss for the next $5.0 million on a per-occurrence basis for losses between $5.0 million and $10 million, if any.

Previous wording

For automobile liability and general liability losses during fiscal 2025 and 2024, we retained the risk of loss up to $1.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for the next $10.0 million on a per-occurrence basis for losses between $5.0 million and $15.0 million, if any. Additionally, during fiscal 2024 we retained $10.0 million risk of loss on a per occurrence basis for losses between $30.0 million and $40.0 million, if any.

Current wording

For automobile liability and general liability losses during fiscal 2024, we retained the risk of loss up to $1.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for the next $10.0 million risk of loss on a per occurrence basis for losses between $5.0 million and $15.0 million, if any, and we retained $10.0 million risk of loss on a per occurrence basis for losses between $30.0 million and $40.0 million, if any.

Previous wording

We are party to a stop-loss agreement for losses under our employee group health plan. For calendar year 2025, we retain the risk of loss on an annual basis, up to the first $750,000 of claims per participant. In calendar years 2024 and 2023, we retained the risk of loss on an annual basis, up to the first $700,000 and $600,000, respectively, of claims per participant.

Current wording

We are party to a stop-loss agreement for losses under our employee group health plan. For calendar year 2026, we retain the risk of loss on an annual basis, up to the first $750,000 of claims per participant. In calendar years 2025 and 2024, we retained the risk of loss on an annual basis, up to the first $750,000 and $700,000, respectively, of claims per participant.

Previous wording

The liability for total accrued insurance claims included incurred but not reported losses of approximately $47.9 million and $47.2 million as of January 25, 2025 and January 27, 2024, respectively.

Current wording

The liability for total accrued insurance claims included incurred but not reported losses of approximately $56.3 million and $47.9 million as of January 31, 2026 and January 25, 2025, respectively.

Previous wording

Compensation expense for stock-based awards is based on fair value at the measurement date. The fair value of RSUs and Performance RSUs is estimated on the date of grant and is equal to the closing market price per share of our common stock on that date. RSUs generally vest ratably over a four-year period. Performance RSUs vest ratably over a three-year period, if certain performance measures are achieved. Each RSU and Performance RSU is settled in one share of our common stock upon vesting. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. This valuation is affected by the Company’s stock price as well as other inputs, including the expected common stock price volatility over the expected life of the options, the expected term of the stock option, risk-free interest rates, and expected dividends, if any. Our outstanding stock options generally vest ratably over a four-year period and are generally exercisable over a period of up to ten years.

Current wording

Compensation expense for stock-based awards is based on fair value at the measurement date. The fair value of RSUs and Performance RSUs is estimated on the date of grant and is equal to the closing market price per share of our common stock on that date. RSUs vest ratably over a three-year period starting in fiscal 2026 and prior grants vested ratably over a four-year period. Performance RSUs vest ratably over a three-year period, if certain performance measures are achieved. Each RSU and Performance RSU is settled in one share of our common stock upon vesting. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. This valuation is affected by the Company’s stock price as well as other inputs, including the expected common stock price volatility over the expected life of the options, the expected term of the stock option, risk-free interest rates, and expected dividends, if any. Our outstanding stock options generally vest ratably over a four-year period and are generally exercisable over a period of up to ten years.

Previous wording

Contract Revenues. Contract revenues were $4.702 billion during fiscal 2025 compared to $4.176 billion during fiscal 2024. Contract revenues from acquired businesses were $379.7 million during fiscal 2025 and $102.7 million during fiscal 2024. 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 wording

Contract Revenues. Contract revenues were $5.546 billion during fiscal 2026 compared to $4.702 billion during fiscal 2025. Contract revenues from acquired businesses were $563.8 million during fiscal 2026 and $109.1 million during fiscal 2025. Acquired revenues represent contract revenues from acquired businesses that were not owned for the full period in both the current and comparable prior periods. Excluding amounts generated by the acquired businesses, contract revenues increased by $389.2 million during fiscal 2026 compared to fiscal 2025, primarily due to net increases in fiber-to-the-home deployments, including rural fiber deployment programs.

Previous wording

Costs of Earned Revenues. Costs of earned revenues increased to $3.770 billion, or 80.2% of contract revenues, during fiscal 2025 compared to $3.362 billion, or 80.5% of contract revenues, during fiscal 2024. The primary component of the increase was a $403.0 million aggregate increase in direct labor and subcontractor costs. The increase was further due to a $21.0 million increase in other direct costs and a $1.4 million increase in equipment maintenance and fuel costs combined, partially offset by a $17.3 million decrease in direct materials.

Current wording

Costs of Earned Revenues, excluding Depreciation and Amortization. Costs of earned revenues increased to $4.406 billion, or 79.4% of contract revenues, during fiscal 2026 compared to $3.770 billion, or 80.2% of contract revenues, during fiscal 2025. The primary component of the increase was a $492.3 million aggregate increase in direct labor and subcontractor costs. The increase was further due to a $78.3 million increase in direct materials, a $52.0 million increase in other direct costs and a $13.3 million increase in equipment maintenance and fuel costs combined.

Previous wording

Costs of earned revenues as a percentage of contract revenues decreased 0.3% during fiscal 2025 compared to fiscal 2024. As a percentage of contract revenues, direct materials decreased 1.1% primarily as a result of our mix of work in which we provide materials for our customers and other direct costs decreased 0.2% as a percentage of contract revenues during fiscal 2025. Equipment maintenance and fuel costs combined decreased 0.4% as a percentage of contract revenues. Labor and subcontracted labor costs increased 1.4% primarily due to the mix of work performed.

Current wording

Costs of earned revenues as a percentage of contract revenues decreased 0.7% during fiscal 2026 compared to fiscal 2025. As a percentage of contract revenues, direct materials increased 0.6% primarily as a result of our mix of work in which we provide materials for our customers. Equipment maintenance and fuel costs combined decreased 0.3% as a percentage of contract revenues. Labor and subcontracted labor costs decreased 1.0% as a percentage of contract revenues, primarily due to the mix of work performed.

Previous wording

General and Administrative Expenses. General and administrative expenses increased to $393.0 million, or 8.4% of contract revenues, during fiscal 2025 compared to $327.7 million, or 7.8% of contract revenues, during fiscal 2024. The increase in total general and administrative expenses primarily resulted from increased administrative, payroll, performance based compensation, $11.4 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 administrative expenses from acquired businesses. See Note 19, Stock-Based Awards, for additional information regarding the CEO transition.

Current wording

General and Administrative Expenses. General and administrative expenses increased to $445.5 million, or 8.0% of contract revenues, during fiscal 2026 compared to $393.0 million, or 8.4% of contract revenues, during fiscal 2025. The increase in total general and administrative expenses primarily resulted from increased administrative, payroll, performance based compensation, $18.8 million of acquisition and integration costs during fiscal 2026 (compared to $4.2 million during fiscal 2025) and other costs, including incremental general administrative expenses from acquired businesses. This increase was partially offset by lower stock-based compensation expense in the current year, as the prior year included $11.4 million incremental stock-based compensation expense resulting from the CEO transition. See Note 19, Stock-Based Awards, for additional information regarding the CEO transition.

Previous wording

Depreciation and Amortization. Depreciation expense was $167.2 million, or 3.6% of contract revenues, during fiscal 2025, compared to $143.3 million, or 3.4% of contract revenues, during fiscal 2024. The increase in depreciation expense during fiscal 2025 was primarily due to higher capital expenditures to support our growth in operations, normal replacement cycle of fleet assets, and depreciation from acquired businesses. Amortization expense was $31.4 million and $19.8 million during fiscal 2025 and fiscal 2024, respectively. The increase in amortization expense during fiscal 2025 is due to the increase in amortizing intangibles from acquired businesses.

Current wording

Depreciation and Amortization. Depreciation expense was $200.8 million, or 3.6% of contract revenues, during fiscal 2026, compared to $167.2 million, or 3.6% of contract revenues, during fiscal 2025. The increase in depreciation expense during fiscal 2026 was primarily due to incremental capital expenditures to support our growth in operations, normal replacement cycle of fleet assets, and depreciation from acquired businesses. Amortization expense was $68.8 million and $31.4 million during fiscal 2026 and fiscal 2025, respectively. The increase in amortization expense during fiscal 2026 is due to the increase in amortizing intangibles from acquired businesses.

Previous wording

Interest Expense, Net. Interest expense, net increased to $61.0 million during fiscal 2025 from $52.6 million during fiscal 2024 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 increased to $66.5 million during fiscal 2026 from $61.0 million during fiscal 2025 as a result of higher outstanding borrowings during the current period, which was partially offset by higher interest income on invested cash balances.

Previous wording

Loss on Debt Extinguishment. Loss on debt extinguishment during fiscal 2025 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.

Current wording

Loss on Debt Extinguishment. Loss on debt extinguishment during fiscal 2026 of $7.3 million and fiscal 2025 of $1.0 million includes the write-off of deferred debt issuance costs in connection with the Credit Agreement amendments. See “Liquidity and Capital Resources - Compliance with Credit Agreement” for more information.

Previous wording

Other Income, Net. Other income, net was $29.2 million and $21.6 million during fiscal 2025 and fiscal 2024, respectively. The change in other income, net was primarily a function of the number of assets sold and prices obtained for those assets during each respective period. Gain on sale of fixed assets was $36.5 million and $28.3 million during fiscal 2025 and fiscal 2024, respectively. Other income, net also includes expense 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 $16.6 million and $29.2 million during fiscal 2026 and fiscal 2025, respectively. The change in other income, net was primarily a function of the number of assets sold and prices obtained for those assets during each respective period. Gain on sale of fixed assets was $26.7 million and $36.5 million during fiscal 2026 and fiscal 2025, respectively. Other income, net also includes expense associated with the non-recourse sale of accounts receivable under a customer-sponsored vendor payment program.

Previous wording

Net Income. Net income was $233.4 million for fiscal 2025 compared to $218.9 million for fiscal 2024.

Current wording

Net Income. Net income was $281.2 million for fiscal 2026 compared to $233.4 million for fiscal 2025.

Previous wording

Non-GAAP Adjusted EBITDA. Adjusted EBITDA is a Non-GAAP measure, as defined by Regulation G of the SEC. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, and certain non-recurring items. Management believes Adjusted EBITDA is a helpful measure for comparing the Company’s operating performance with prior periods as well as with the performance of other companies with different capital structures or tax rates. The following table provides a reconciliation of net income to Non-GAAP Adjusted EBITDA (dollars in thousands):

Current wording

Non-GAAP Adjusted EBITDA. Adjusted EBITDA is a Non-GAAP measure. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, and certain non-recurring items. Management believes Adjusted EBITDA is a helpful measure for comparing the Company’s operating performance with prior periods as well as with the performance of other companies with different capital structures or tax rates. The following table provides a reconciliation of net income to Non-GAAP Adjusted EBITDA (totals may not add due to rounding) (dollars in millions):

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 $92.7 million as of January 25, 2025, 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 $709.2 million as of January 31, 2026, 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 $1,117.5 million as of January 25, 2025 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 $1,754.0 million as of January 31, 2026 compared to $1,117.5 million as of January 25, 2025.

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 2026 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. We expect capital expenditures, net of disposals, to range from $210.0 million to $220.0 million during fiscal 2027 to support growth opportunities and the replacement of certain fleet assets.

Previous wording

During fiscal 2024, net cash provided by operating activities was $259.0 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $147.9 million of operating cash flow during fiscal 2024. Working capital changes that used operating cash flow during fiscal 2024 included an increase in accounts receivable of $142.4 million, a decrease in accrued liabilities of $24.9 million, and a decrease in income tax payable/receivable of $14.2 million. Working capital changes that provided operating cash flow during fiscal 2024 included a decrease in contract assets, net of $23.0 million, increase in accounts payable of $7.0 million, decrease in other current assets and inventory of $3.1 million and decrease in other assets of $0.4 million.

Current wording

Cash Provided by Operating Activities. During fiscal 2026, net cash provided by operating activities was $642.5 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $35.8 million of operating cash flow during fiscal 2026. Working capital changes that provided operating cash flow during fiscal 2026 included an increase in accounts payable of $223.2 million. Working capital changes that used operating cash flow during fiscal 2026 included an increase in contract assets, net of $111.3 million, an increase in other assets of $50.2 million, a decrease in income tax payable of $46.8 million, a decrease in accrued liabilities of $41.7 million, an increase in accounts receivable, net of $0.8 million, and an increase in other current assets and inventory of $8.2 million.

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 credit losses, 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 114 days and 120 days as of January 25, 2025 and January 27, 2024, respectively.

Current wording

Our days sales outstanding (“DSO”) was 101 days and 114 days as of January 31, 2026 and January 25, 2025, respectively. 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. DSO as of January 31, 2026 is calculated on a pro forma basis by adjusting contract revenues during the fourth quarter of fiscal 2026 to include the historical contract revenues of the business acquired in fiscal 2026 as if such acquisition had occurred as of the beginning of the fiscal quarter.

Previous wording

Cash Provided by Operating Activities. During fiscal 2025, net cash provided by operating activities was $349.1 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $114.6 million of operating cash flow during fiscal 2025. Working capital changes that used operating cash flow during fiscal 2025 included an increase in accounts receivable, net of $117.8 million, a decrease in accrued liabilities of $21.0 million, an increase in other assets of $21.0 million, and a decrease in accounts payable of $16.8 million. Working capital changes that provided operating cash flow during fiscal 2025 included an increase in contract liabilities, net of $31.2 million, an increase in income tax payable of $26.5 million, and a decrease in other current assets and inventory of $4.3 million.

Current wording

During fiscal 2025, net cash provided by operating activities was $349.1 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $114.6 million of operating cash flow during fiscal 2025. Working capital changes that used operating cash flow during fiscal 2025 included an increase in accounts receivable, net of $117.8 million, a decrease in accrued liabilities of $21.0 million, an increase in other assets of $21.0 million, and a decrease in accounts payable of $16.8 million. Working capital changes that provided operating cash flow during fiscal 2025 included an increase in contract liabilities, net of $31.2 million, an increase in income tax payable of $26.5 million, and a decrease in other current assets and inventory of $4.3 million.

Previous wording

Net cash used in investing activities was $306.2 million during fiscal 2024. Capital expenditures of $218.5 million were for the replacement of certain fleet assets and new work opportunities. Additionally, we acquired the assets of a telecommunications contraction company for $122.9 million. Proceeds from sale of assets were $35.2 million.

Current wording

Cash Used in Investing Activities. Net cash used in investing activities was $1,835.7 million during fiscal 2026. Capital expenditures of $240.8 million were primarily for the replacement of certain fleet assets and other equipment for new work opportunities and cash paid for the fiscal 2026 acquisition, net of cash acquired, was $1,628.6 million. Proceeds from sale of assets were $33.6 million.

Previous wording

Cash Used in Investing Activities. Net cash used in investing activities was $395.2 million during fiscal 2025. Capital expenditures of $250.5 million were for the replacement of certain fleet assets and new work opportunities and cash paid for acquisitions was $183.9 million. Proceeds from sale of assets were $39.1 million.

Current wording

Net cash used in investing activities was $395.2 million during fiscal 2025. Capital expenditures of $250.5 million were for the replacement of certain fleet assets and new work opportunities and cash paid for acquisitions was $183.9 million. Proceeds from sale of assets were $39.1 million.

Previous wording

Net cash used in financing activities was $75.9 million during fiscal 2024. During fiscal 2024, borrowings under our credit agreement were $763.0 million. We used approximately $780.5 million to repay borrowings under our Credit Agreement. We repurchased 485,000 shares of our common stock in open market transactions, at an average price of $102.39 per share, for $49.7 million, during fiscal 2024. Average price paid per share excludes 1% excise tax on share repurchases. We also paid $9.9 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during fiscal 2024. This was partially offset by the exercise of stock options, which provided $1.1 million during fiscal 2024.

Current wording

Cash Provided by Financing Activities. Net cash provided by financing activities was $1,809.6 million during fiscal 2026. During fiscal 2026, borrowings under our credit agreement were $2,969.0 million. We used approximately $1,079.0 million to repay borrowings under our Credit Agreement. We also borrowed and repaid $600.0 million on a 364 day secured bridge loan facility related to the fiscal 2026 acquisition. 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 fiscal 2026. Average price paid per share excludes 1% excise tax on share repurchases. We also paid $14.4 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during fiscal 2026. In addition, we paid $1.9 million, net, to tax authorities for payroll tax withholding obligations on the exercise of stock options. We paid approximately $33.9 million in issuance costs and third party fees and expenses related to our financing transactions.

Previous wording

Cash Provided by (Used in) Financing Activities. Net cash provided by financing activities was $37.7 million during fiscal 2025. During fiscal 2025, borrowings under our credit agreement were $987.4 million. We used approximately $852.4 million to repay borrowings under our Credit Agreement. We repurchased 410,000 shares of our common stock in open market transactions, at an average price of $160.10 per share, for $65.6 million, during fiscal 2025. Average price paid per share excludes 1% excise tax on share repurchases. We also paid $17.0 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during fiscal 2025. In addition, we paid $8.0 million, net, to tax authorities for payroll tax withholding obligations on the exercise of stock options. We paid approximately $6.7 million in issuance costs and third party fees and expenses related to our financing transactions.

Current wording

Net cash provided by financing activities was $37.7 million during fiscal 2025. During fiscal 2025, borrowings under our credit agreement were $987.4 million. We used approximately $852.4 million to repay borrowings under our Credit Agreement. We repurchased 410,000 shares of our common stock in open market transactions, at an average price of $160.10 per share, for $65.6 million, during fiscal 2025. Average price paid per share excludes 1% excise tax on share repurchases. We also paid $17.0 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during fiscal 2025. In addition, we paid $8.0 million, net, to tax authorities for payroll tax withholding obligations on the exercise of stock options. We paid approximately $6.7 million in issuance costs and third party fees and expenses related to our financing transactions.

Previous 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.

Current wording

Compliance with Credit Agreement. The Company and certain of its subsidiaries are party to a credit agreement (as defined below). The Company, the Guarantors (as defined therein) party thereto, the Term Loan B lender (as defined therein) party thereto and Bank of America, N.A (“Bank of America”) as administrative and collateral agent (in such capacities and together with its successors and permitted assigns, the “Administrative Agent”), entered into that certain First Amendment to the Third Amended and Restated Credit Agreement (the “Amendment”), which amends that Third Amended and Restated Credit Agreement, dated as of December 23, 2025 by and among, the Company, the Guarantors from time to time party thereto, the Lenders (as defined therein) from time to time party thereto and the L/C Issues (as defined therein) from time to time party thereto and the Administrative Agent (the “Existing Credit Agreement”, and, the Existing Credit Agreement, as amended by the Amendment, the “Credit Agreement”). On December 23, 2025, we amended and restated the Credit Agreement to, among other things, establish a $600.0 million 364 day secured bridge loan facility (the “Bridge Facility”), increase the existing senior secured term loan A facility from $440.0 million to $1,540.0 million (the “Term Loan A Facility”), increase the commitments under the senior secured revolving credit facility from $650.0 million to $800.0 million (the “Revolving Credit Facility”) and extend the maturity date of the Term Loan A Facility and the Revolving Credit Facility. On January 27, 2026, we entered into the First Amendment to, among other things, establish an $800 million senior secured term loan B facility (the “Term Loan B Facility”), the proceeds of which were used to (i) refinance the Bridge Facility, (ii) pay the fees and expenses incurred in connection therewith and (iii) fund cash to the balance sheet of the Company. The Credit Agreement includes a revolving facility with a maximum revolver commitment of $800.0 million, a Term Loan A Facility in the principal amount of $1,540.0 million, and a Term Loan B Facility in the principal amount of $800.0 million. The Credit Agreement also includes a $225.0 million sublimit for the issuance of letters of credit and a $50.0 million sublimit for swingline loans. The maturity of the Revolving Credit Facility and Term Loan A Facility is December 23, 2030. The maturity of the Term Loan B Facility is January 27, 2033.