DYCOM INDUSTRIES INC Q4 FY2025 earnings call

• Daniel Peyovich highlighted that Dycom had a strong fourth quarter in fiscal 2025, with revenues of $1.085 billion and adjusted EBITDA of $116.4 million. The company achieved fiscal 2025 revenues of $4.702 billion and an adjusted EBITDA margin of 12.3%. Over three years, revenues increased by 50% and EBITDA margin expanded by 450 basis points. The customer base was diversified, with top five customers making up 55% of revenue in 2025 compared to 66% in 2022.
• Key operational opportunities include fiber-to-the-home programs, 5G expansions (awarded new markets for Verizon and extended existing agreements), long-haul fiber infrastructure for hyperscalers (Lumen award commenced in Q4 and ramping in Q1 2026), state and federal broadband programs (substantial activity at the state level with over $1 billion awarded in Q4 2025 for broadband infrastructure), and service/maintenance work. The company also emphasized capital allocation, having completed three acquisitions in 2025 and repurchased 410,000 shares of common stock.
• Andrew DeFerrari discussed financials, noting fourth quarter contract revenues grew 13.9% to $1.085 billion, full-year contract revenues $4.702 billion (+12.6%). Adjusted EBITDA for Q4 was $116.4 million, full-year $576.3 million (12.3% of revenues). Operating cash flows were strong, with $328.2 million in Q4 and $349.1 million for the full year. Free cash flow increased 82% to $137.8 million for the full year 2025. The company repurchased 200,000 shares in Q4 2025 and the board approved a new $150 million stock repurchase program.

In the fourth quarter of fiscal 2025, Dycom generated revenues of $1.085 billion and adjusted EBITDA of $116.4 million, which is 10.7% of revenue. For the full fiscal year 2025, total contract revenues were $4.702 billion, an increase of 12.6% from the prior year, and adjusted EBITDA was $576.3 million, representing 12.3% of revenues. Backlog at the end of the fourth quarter was $7.76 billion, with $4.642 billion expected to be completed in the next twelve months. The top five customers accounted for 56.7% of total revenue in the fourth quarter, with AT&T being the largest customer at $251.4 million. Operating cash flows were strong, with $328.2 million in the fourth quarter and $349.1 million for the full year, and free cash flow increased 82% to $137.8 million for the full year 2025.

• Dycom expects fiscal 2026 total contract revenues to increase 10% to 13% compared to fiscal 2025. This expectation assumes fiber-to-the-home expansion programs, hyperscaler long-haul network projects, wireless equipment replacements, and maintenance activity proceed as planned. No storm restoration revenues are included in the 2026 outlook. For Q1 2026, the company expects contract revenues of $1.16 billion to $1.2 billion, adjusted EBITDA of $130.6 million to $140.6 million, and diluted EPS of $1.50 to $1.73 per share. Fiscal 2026 capital expenditures net of disposal proceeds are expected to range from $220 million to $230 million.

• Unforeseen weather challenges across the country can impact business operations. For example, severe weather events like snow in New Orleans or fires in California affected operations. - Uncertainty related to the BED program, although separate from BEAD, can affect state and federal broadband initiatives. - Competitive market conditions in the fiber and wireless infrastructure spaces may impact the company's ability to secure projects and maintain margins.

Q: Just a quick clarification on the 2026 guide, wanting to be clear on the jumping-off point regarding revenue including storm work. Also, about the 5,100 miles of long-haul build being private builds.

A: Daniel Peyovich responded that the 2026 guide does not include storm work from fiscal 2025. The 5,100 miles of long-haul build are from public statements of other customers than Lumen, showing the breadth of the hyperscaler opportunity.

Q: Asked about expectations for margins throughout the year and the impact of Black and Veatch ramping up in Q4.

A: Daniel Peyovich stated that margins are expected to be managed through efficiencies, innovation, and operating leverage. Black and Veatch ramping up in Q4 pulled some work forward but still aligns with the initial projection of $250 to $270 million for the year.

Q: Wondering about organic revenues in the quarter excluding storm work and Q1 organic assumptions.

A: Daniel Peyovich explained that storm work occurred throughout the quarter and was not fully anticipated in the initial outlook. For Q1, there are considerations of lapping higher periods from the previous year and some customers starting the year strong then slowing.

Q: Asked about the AI data center opportunity, new deals in Q4, and capital allocation between acquisitions and stock repurchase.

A: Daniel Peyovich discussed that the AI data center opportunity is large with ongoing conversations, and capital allocation balances growth through acquisitions, innovation, and share repurchases as seen with the new $150 million stock repurchase program.

Q: Inquired about headcount reduction and wireless work beyond Black and Veatch acquisition.

A: Daniel Peyovich stated that headcount mix varies based on project nature, and the wireless business includes equipment replacements beyond the Black and Veatch acquisition, with a focus on ramping that program.

Q: Asked about Windstream's fiber deployment plans and BEAD work in backlog.

A: Daniel Peyovich mentioned being well-positioned for Windstream's fiber deployment plans. There is no BEAD work in the backlog yet as customers are not at the award issuance stage but conversations are ongoing.

Q: Asked about CapEx, wireless revenues, BEAD work, and depreciation.

A: Andrew DeFerrari responded that gross CapEx for the quarter was just over $68 million, wireless revenues were a little over 7%, there is no BEAD work in backlog yet, and depreciation and amortization are expected to increase due to CapEx spending.