Dycom Industries Inc Q2 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Richard Choe - JPMorgan Chase & Co - Analyst : Hi, I wanted to go over for the second quarter kind of what, I guess, didn't come through and led to the low end of guidance for revenue. And then also for given the third quarter guidance and full year guidance, what should the rest of the year look like? And is there going to be less seasonality in the fourth quarter, given where the guidance ranges are.

Question: Richard Choe - JPMorgan Chase & Co - Analyst : And to follow up on the margins, I mean, really high in guidance again for the next quarter. Should we expect this level of margins kind of going forward? And what has the change been because margins has generally been a little bit more modest than this?

Question: Richard Choe - JPMorgan Chase & Co - Analyst : Great thank you.

Question: Alexander Waters - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey, good morning, guys. Thanks for taking my question. Maybe just number one, backing off of Richard's question here. With the 2Q performance, was it kind of the smaller private guys that maybe are slipping a little bit into the second half of the year here? And then maybe just on the wireless side, obviously, really strong quarter in terms of revenues. How should we kind of expect this business to continue to ramp and even into kind of calendar 2026 here?

Question: Alexander Waters - Bofa Merrill Lynch Asset Holdings Inc - Analyst : And then just a quick follow-up on the wireless. Is it mainly just the work that you're doing, or are you seeing any kind of incremental deployments from the carriers?

Question: Frank Louthan - Raymond James & Associates, Inc. - Analyst : Great thank you. Can you give us an update on the percentage of your revenue of your current business that's recurring in nature, recurring revenue? And then where do you see that going over the next couple of years? How much higher can that go? And then can you give us an idea of the data center opportunity that's embedded in your backlog?

Question: Frank Louthan - Raymond James & Associates, Inc. - Analyst : All right. Great. And then are you able to update your backlog with the recent award that you have given this idea of the magnitude of that?

Question: Frank Louthan - Raymond James & Associates, Inc. - Analyst : All right, great, that's helpful. Thank you very much.

Question: Eric Luebchow - Wells Fargo Securities LLC - Analyst : Absolutely. So that's correct. Sangita, the last quarter in our backlog, we had we had awards for inside finance work. This quarter, we have new awards. I would point out, these are different in different places. I can't be too specific, but they're different places. So it's not just extending something that we already had. And we really see we're just very early in kind of entering into that opportunity set. And important to point out, the conversations that we're having with the hyperscalers, it is they're looking for somebody like Dycom to come in across multiple geographies across data center campuses to really give them that level of certainty that they're looking for. So we're pleased with the awards. Still very early game there.

Question: Eric Luebchow - Wells Fargo Securities LLC - Analyst : I'm great. Thanks for taking the question. And Dan, I'm curious talking to some of your larger carrier customers that have benefited from tax reform in the recent bill. Are you having early conversations about accelerating work with them? Is reinvest some of the cash tax savings into the business. And do you think that shows up more next year in subsequent years versus the second half? I am not sure there'll be a whole lot they can do in such a short period of time. But how do you think that flows in some of these incremental builds that you talked about that we've heard about from tax reform?

Question: Eric Luebchow - Wells Fargo Securities LLC - Analyst : Okay. Great. Just one follow-up here. I know you mentioned your DSOs have improved a lot. You see continued room to improve them. So as we think about operating cost potentially ramping, how are you prioritizing potential, I know we invested in the businesses number one, but opportunities in the M&A market to acquire other platforms versus buying back your own stock? What are you seeing out there today? And how are you thinking about allocating excess capital?

Question: Eric Luebchow - Wells Fargo Securities LLC - Analyst : Thanks, Dan.

Question: Steven Fisher - UBS AG - Analyst : Thanks. Good morning. Just to start on the revenues, I'm curious about the visibility you have to the Q4 revenues at this point. What are the go gets from here that you still need to book that hit those implied Q4 numbers? And what are the types of things that are driving the accelerating growth later in the year? Is it really just that first half, second half comparisons from last year on the fiber-to-the-home programs, or is it more that you've got these data center wins that are driving that?

Question: Steven Fisher - UBS AG - Analyst : That's very helpful. And then just a bigger picture question on margins. Just curious, it feels like they compare to a year ago or so, perhaps back at the time, it seemed like it was more of a revenue growth opportunity. And now in recent quarters, the narrative around margins is really evolving and filtering through as you deliver on that. And it sounds like operational leverage and efficiencies. I guess I'm curious, number one, how should we think about this evolution of the margin narrative? Is it more is my impression correct that there's maybe more of a margin narrative than you were thinking, say, a year ago. And are you getting if that's correct, are you getting better efficiencies than you would have thought, is perhaps the growth happening at a more manageable pace that you can better align the headcount with the need. So the operating leverage is coming through better than you might have thought. And then just thinking about how we actually model this, is it given the talk about operating leverage, should we be looking at this on an incremental margin basis year-over-year? Is it a number of basis points year-over-year in terms of margin improvement? Just kind of curious how to I know that's a lot, but just curious how to think about the margins in a bigger picture sense.

Question: Steven Fisher - UBS AG - Analyst : Okay, thanks, congrats on those margins.

Question: Brent Thielman - D.A. Davidson & Co - Analyst : Hey, great, thanks. Good morning. Hey Dan, you talked before about expecting certain middle mile work to commence later in the fiscal year, I think, ramping into next fiscal year, maybe just a progress update on that. And other long-haul middle mile opportunities you see potentially on the horizon?

Question: Brent Thielman - D.A. Davidson & Co - Analyst : Okay. I guess one more on the margins, I mean, fantastic performance here. But Dan, is these things get underway in a bigger way, particularly the inside defense initiatives, other things around long haul. Do we need to consider that in terms of having an accretive or dilutive impact to the margins? How should we approach that, especially as these things become a bigger piece of the revenue pie.

Question: Brent Thielman - D.A. Davidson & Co - Analyst : Very good, thank you.

Question: Adam Thalhimer - Thompson Davis & Co Inc - Analyst : Good morning, guys. I wanted to ask one more about the large August award. When does that work actually start?

Question: Adam Thalhimer - Thompson Davis & Co Inc - Analyst : Got it. And then as you think about the percentage of your revenue from hyperscalers or maybe we'll call it data centers more broadly, what was that percentage in Q2? And where do you think that can go?

Question: Adam Thalhimer - Thompson Davis & Co Inc - Analyst : Got it. And then just lastly, the hyperscaler, I think there was a service and maintenance contract that wasn't traditional telecom, did I hear that right, Dan? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2025 / 1:00PM, DY.N - Q2 2026 Dycom Industries Inc Earnings Call

Question: Adam Thalhimer - Thompson Davis & Co Inc - Analyst : Great, thank you.

Question: Liam Burke - B. Riley Securities Holdings Inc - Analyst : Thank you. Good morning. Your operating cash flow year-over-year was very strong. You highlighted DSOs, better margins. Typically, the second half of the year flips, and that's where you really have stronger cash flow. Is there anything to expect differently than the way the cadence has been from previous years?

Question: Liam Burke - B. Riley Securities Holdings Inc - Analyst : Great. Dan, you talked about the pipeline opportunities as we move into the third quarter. You highlighted some awards. But is there anything that's contributing to the growth in pipeline opportunities, or is it across the board?

Question: Liam Burke - B. Riley Securities Holdings Inc - Analyst : Dan. Thank you, Drew.