Dycom Industries Inc Q4 2025 Earnings Call Transcript

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

Question: Frank Louthan - Raymond James & Associates - Analyst : Great, thank you. Just a quick clarification. So on the '26 guide, I want to be clear on the jumping off point. Is that on the reported revenue, including the $114 million from the storm growing 10% to 13% off of that? I just want to be clear on that. And then the 5,100 miles of long-haul build that you discussed, are those private bills that are announced or I assume that's not part of the Lumen activity that's going on? Thanks.

Question: Frank Louthan - Raymond James & Associates - Analyst : Okay, great. And just one quick other quick clarification on the Verizon, the new Verizon business, is that expansion of the FiOS network or can you give us a little bit more color on the nature of this new awards? Thanks.

Question: Frank Louthan - Raymond James & Associates - Analyst : Great, thank you very much.

Question: Alexander Waters - BofA Global Research - Analyst : Hey, guys, thanks so much for taking my question. Maybe first, thanks for providing the 2026 revenue bogey, but could you maybe just talk about your expectations for margins throughout the year? And then secondly, I mean, obviously very strong performance from Black & Veatch in 4Q. Does this change the way you guys kind of think about that previous revenue guidance you gave back in 2Q, 3Q this past year? Thanks so much.

Question: Steven Fisher - UBS - Analyst : Thanks. Good morning. Why don't you just give us some sense of how the organic revenues in the quarter were relative to your expectations, excluding the storm work? I'm not sure if the storm work was done like in November early before you gave the guidance, you already kind of knew what it was. Just trying to gauge if there was more kind of core customer activity than you thought because the 7.5% roughly organic growth was higher than you had forecasted. So just trying to separate whether that was the storm mark or if actually the core underlying business was a bit better. And similarly for Q1, can you give us any help on the sort of organic assumption there because it seems like it might be implying a decline? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 2:00PM, DY.N - Q4 2025 Dycom Industries Inc Earnings Call

Question: Steven Fisher - UBS - Analyst : Okay, that's helpful. And then maybe we can get caught up in a lot of these quarter-to-quarter numbers which are still important, but I'm just kind of wondering if on the big picture perspective here, as you talked about in the beginning of the comments, a lot of your customers are stepping up and getting more positive about their investment plans. So I guess I'm just curious if you see this as a result of those increasing plans by our customers? Do you think this will be a longer-than-expected investment cycle or perhaps faster growth in kind of a similar period than you might have thought previously before these kind of announcements?

Question: Steven Fisher - UBS - Analyst : Yeah, just thinking about the big picture over the next few years of how this is going to play out. I mean, is this going to be now a -- do you have more visibility over a greater number of years, or do you think it's just that's going to basically represent just faster growth opportunities and a better organic growth rate for you? I'm just trying to think again about -- we're talking about kind of mid-single digit, upper maybe, mid- to upper single-digit growth organic, near term, but should this be an accelerating growth market over the next several years and you now have more visibility to that as a result of some of these announcements.

Question: Eric Luebchow - Wells Fargo Securities, LLC - Analyst : All right, great, thanks for taking the question. Dan, I wanted to dive a little more into the AI data center opportunity. You made a comment that a lot of the work you're doing now is really over pole work, presumably for Lumen. If you look at the conversations you're having, and it sounded like maybe you booked some additional deals in the fourth quarter. I mean, are you seeing a bigger opportunity coming with new routes that might be a little bit more construction and labor intensive and maybe even a bigger, addressable revenue market for you? And have you started to work down the path of diversifying that away from just Lumen but talking directly to hyperscalers itself perform or other operators out there who have announced some pretty large wins so far? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 2:00PM, DY.N - Q4 2025 Dycom Industries Inc Earnings Call

Question: Eric Luebchow - Wells Fargo Securities, LLC - Analyst : Great, thanks, Dan. And Drew, you made a comment about a focus on free cash flow this year, and I know it's obviously lumpy from quarter to quarter, but maybe you could talk about your ability to generate cash this year? And also there may be a question for Dan just on capital allocation, how are you thinking about potential tuck-in acquisitions, what the pipeline looks like versus buying back your stock, given the authorization that you announced today? Thanks.

Question: Eric Luebchow - Wells Fargo Securities, LLC - Analyst : Great. Thank you both.

Question: Sangita Jain - Keybanc Capital Markets Inc. - Analyst : Thank you. Good morning and thanks for taking my question. So two brief ones for you, one on the headcount that you have in your slide deck, just wondering if there's anything to read into the sequential reduction in headcount this quarter?

Question: Sangita Jain - Keybanc Capital Markets Inc. - Analyst : Got it. And then one on -- I know we've talked a lot about fiber already on this call, so I was wondering if you can talk about if you're seeing any radio replacement work beyond the work that you're doing currently with the Black & Veatch acquisition?

Question: Sangita Jain - Keybanc Capital Markets Inc. - Analyst : Got it. Thank you.

Question: Adam Thalhimer - Thompson Davis & Co. - Analyst : Nice quarter, nice outlook.

Question: Adam Thalhimer - Thompson Davis & Co. - Analyst : I wanted to ask about Windstream, which is talking about doubling the pace of their fiber deployments this year. Is that something you could benefit from, or does the merger with Unity possibly impact the relationship?

Question: Adam Thalhimer - Thompson Davis & Co. - Analyst : And then Drew, maybe a quick one on Q1 cash flow. I'm wondering if that could be a little better than normal seasonality just given all the storm work from Q4?

Question: Adam Thalhimer - Thompson Davis & Co. - Analyst : Last one for me. Just curious, I think Gigapower was in the top 10 for the second quarter in a row. Curiou what the outlook is there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 2:00PM, DY.N - Q4 2025 Dycom Industries Inc Earnings Call

Question: Adam Thalhimer - Thompson Davis & Co. - Analyst : I'll turn it over. Thanks, guys.

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Hi, thank you. I just have a few clean-up questions. Can you tell us what the -- and then a bigger one, can you tell us what the gross CapEx was for the quarter?

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Okay, and what about the cadence for the CapEx for the year? For this coming year?

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Okay, and then what were the wireless revenues this quarter?

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Okay. Great. And then, I'm trying to just to be clear, are you -- you're guiding with no storm revenues this year, which I understand, which is great, conservative. And then did you say that you were guiding for no BEAD revenues as well for the year or did I mishear that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 2:00PM, DY.N - Q4 2025 Dycom Industries Inc Earnings Call

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Calendar '26, right. And do you have any BEAD work in your backlog, though?

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Got it. Okay, perfect.

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Okay, great. And then Drew, you talked about depreciation and amortization going up obviously because you're spending money. Can you give us, I mean, you were at a little under $53 million this past quarter. Do you expect that to ramp ratably this coming year -- I mean last year? But basically, or is there a step function?

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Okay, yeah, it looks like with the acquisitions you did, the amortization of intangibles, you're adding about [$1] in the quarter, something like that in terms of non-cash EPS. If you look at cash EPS versus non-cash, some years obviously you have a lot of acquisitions this past year. You did a bunch so that should impact the non-cash earnings number meaningfully, so the cash flow will be better.

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Okay, we'll take a look at that. Dan, I want to ask a bigger question in terms of -- and I asked it the other quarter to Steve, but your SG&A expense, the company's SG&A expense has grown faster than revenues the last couple of years. You're talking about getting operating leverage on the margins. It doesn't sound like we're going to see it much from the gross margins this year. Based on the way you're talking, it seems like there's going to be obviously a lower gross margin first quarter given some of the spend, and then you need a bigger ramp for the year to get gross margin expansion. So help me understand, I want to know if the SG&A expense, are you going to look to grow that at some point slower or in line with revenues so you get some of that operating leverage? Do we see that this year? When does that come in?

Question: Alan Mitrani - Sylvan Lake Asset Management LLC - Analyst : Okay, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 2:00PM, DY.N - Q4 2025 Dycom Industries Inc Earnings Call