Dycom Industries Inc Q3 2025 Earnings Call Transcript

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

Question: Adam Thalhimer - Thompson, Davis & Company, Inc. - Analyst : Hey, good morning, guys. Nice quarter, and Steve, congrats on your last conference call. Drew, can you actually just pick up where you left off, you talked about start-up incremental costs in Q4 related to the startup of large programs. Can you just flesh that out a little bit for us?

Question: Adam Thalhimer - Thompson, Davis & Company, Inc. - Analyst : And then can you talk about the what you got from Lumen in the quarter versus the total Lumen AI opportunity, because the backlog went up basically by the Black & Veatch acquisition, I think.

Question: Alexander Waters - BofA Securities - Analyst : Hi, good morning. Thanks so much for taking my question. Maybe just first off here, Dan, I think in your script, you noted the BEAD opportunity kind of 2H '25 and 2026. It seems like it's changed a little bit from last quarter when I think it was noted 2Q. Maybe if you could just describe that a little bit more? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 2:00PM, DY.N - Q3 2025 Dycom Industries Inc Earnings Call

Question: Alexander Waters - BofA Securities - Analyst : Okay. Perfect. Thanks. And then maybe just on kind of the all other customers bucket. It seems like that was down 9% year-on-year. Maybe just could you talk about what you're seeing from these customers and kind of what the expectations are going forward?

Question: Min Cho - B. Riley Securities - Analyst : Hi. Good morning. This is actually Min on for Alex. Steve, first, I want to thank you for this great and the long run, just wishing you the best in retirement. So my first question has to do with -- just in terms of the BEAD funding, obviously, it looks like you're not really expecting much change in terms of funding support. But can you just provide any update on your thoughts just under the Trump administration -- under a new Trump administration?

Question: Min Cho - B. Riley Securities - Analyst : Excellent. Also can you just provide any kind of detail around how the integration of Black & Veatch is going so far? And what were your wireless revenues in the quarter?

Question: Min Cho - B. Riley Securities - Analyst : Okay. And what were your total wireless revenues?

Question: Frank Louthan - Raymond James & Associates, Inc. - Analyst : Great. Thank you. Steve, congratulations on the career and finish in the last earnings call here. I appreciate all the help over the years. So I just wanted to check on as far as the guide, I assume any potential storm cleanup revenue is not in the guide. But can you give us an idea of what you think that impact will be on the fourth quarter? Will it be more or less do you think from Q3? And any impact to to the regular business from -- related to the storms?

Question: Frank Louthan - Raymond James & Associates, Inc. - Analyst : Okay. Thank you. And as far as some of these AI builds that you're seeing, is relative to maybe a few months ago, are you seeing these be more substantially related to larger long-haul projects versus short spurs off of networks that we maybe have seen previously?

Question: Sangita Jain - KeyBanc Capital Markets Inc. - Analyst : Thank you so much for taking my question. So if I can ask one on GigaPower. I think you showed up for the first time as your top 10 customers. Can you talk a little bit more about how you see that growing in the near term?

Question: Sangita Jain - KeyBanc Capital Markets Inc. - Analyst : Great. And on your Lumen work and any other data center type work that you're looking at, is there a difference in how you price them or a margin

Question: Eric Luebchow - Wells Fargo Securities - Analyst : Great. Thanks for taking the question. Steve, best of luck on the next stage into retirement. So just to -- just to kind of talk about some of the large opportunities you have, the AI data center build, the BEAD program potentially picking up. Dan, maybe you could talk about whether you'll kind of have to ramp up your labor force to meet all this demand into the next year or so? And any color on what the environment is like for hiring new employees, whether they're direct Dycom employees or subcontractors?

Question: Eric Luebchow - Wells Fargo Securities - Analyst : Got you. And I think the last earnings call, you mentioned that some of your smaller customers, you expect that they may slow a little bit near term as they we're kind of assessing opportunities under the BEAD program in their core market. So I just wanted to see if you think that's still the case over the next couple of quarters as we get more clarity on state awards from BEAD and any -- how that how that has tracked so far versus the expectations you laid out last quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 2:00PM, DY.N - Q3 2025 Dycom Industries Inc Earnings Call

Question: Jean Ramirez - D.A. Davidson - Analyst : Thank you. Just want to clarify, your cost of revenue and G&A -- SG&A for the next quarter, is it in line or with 3Q, or is there going to be a bit of a step-up like you mentioned earlier?

Question: Jean Ramirez - D.A. Davidson - Analyst : Thank you. And regarding the BEAD's program, -- can you clarify whether you -- when will you actually start -- I guess the better question is, from your talks with your clients, when do you expect the actual building of fiber deployment will it be more towards the end of next fiscal year and going into 2026? Or would it -- or are you seeing more immediate turnarounds given how fast the BEAD program expected to accelerate now that we've passed the second phase. Any color on that?

Question: Jean Ramirez - D.A. Davidson - Analyst : And just again, going back to the backlog question. I guess you're not parsing out what would be organic backlog. But if we're taking that 12-month number, what is the cadence of the backlog -- or the burn rate through next year? Will it be more second half weighted? Or do you see some similarities compared to this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 2:00PM, DY.N - Q3 2025 Dycom Industries Inc Earnings Call

Question: Avinatan Jaroslawicz - UBS Investment Bank - Analyst : Hi. Good morning, guys. Thanks for the taking the question. Just wanted to unpack what's driving the organic growth slow down, slight deceleration into Q4 here.

Question: Alan Mitrani - Sylvan Lake Asset Management. - Analyst : Thank you. Congratulations, Steve. This is, I think, my longest CEO relationship, given how long you've been CEO, like separation anxiety, you're going to have to maybe

Question: Alan Mitrani - Sylvan Lake Asset Management. - Analyst : We appreciate it. We look forward to working with Dan and the team. One thing that I noticed, besides the slowdown, obviously, at least short term, is the SG&A expense for last year and for this year, it seems like it's growing faster than the revenues. Is that can you talk about -- I realize there's been some transition, there's been multiple acquisitions, and I'm talking about taking out some of these excess costs that you're talking about. Do you see foresee over the next year or two years, obviously, revenue starting to ramp up faster than SG&A? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 2:00PM, DY.N - Q3 2025 Dycom Industries Inc Earnings Call

Question: Alan Mitrani - Sylvan Lake Asset Management. - Analyst : Yes. It seems like in the past, you've had these situations where you're spending a little more to anticipate the next big revenue jump, given the BEAD is coming and also these acquisitions and new opportunities with AI. Is that the setup that we're looking at over the next couple of years the way you envision it? I'm not talking about as a percent of revenue, SG&A has always been fairly contained and you guys have done the next job. I'm talking about more just the next step-up in terms of growing the ability to handle $5 billion to $6 billion plus in revenues instead of where you've been in the last few years?

Question: Alan Mitrani - Sylvan Lake Asset Management. - Analyst : Great. And then lastly, there's been a lot of talk, obviously, with the new administration, Elon Musk and Starlink, and you guys, people talk about the potential always the fear of BEAD being canceled or some sort of spending clawbacks. Can you talk about -- I realize you're further down on the totem pole. But can you just talk a little bit about how that works in terms of the allocation funding coming through the state, the matching with the government and the ability to delay or push that off, just what your view is on that.

Question: Adam Thalhimer - Thompson, Davis & Company, Inc. - Analyst : Hey, guys. Thanks for taking the follow-up. AT&T, the awards in the quarter, were those wireless or wireline? And were there any new states in there?

Question: Adam Thalhimer - Thompson, Davis & Company, Inc. - Analyst : Got it. And then Verizon was down sequentially more than I expected in Q3. I was curious if you pulled crews like from those territories for stores? Or what drove the sequential decline considering they want to do more FiOS builds?

Question: Adam Thalhimer - Thompson, Davis & Company, Inc. - Analyst : Okay. And then just lastly, I think I had a note there were $2.5 million of B&V integration costs in Q4, but I didn't see any in the guidance. So are those not --