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Dycom(DY) - 2025 Q4 - Annual Report
DYDycom(DY)2025-02-28 14:21
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Financial Performance - Revenues for fiscal year ended January 25, 2025, were 4,702,014,anincreaseof12.54,702,014, an increase of 12.5% from 4,175,574 in fiscal 2024[141]. - Net income for fiscal year 2025 was 233,413,representinga6.3233,413, representing a 6.3% increase from 218,923 in fiscal 2024[141]. - Basic earnings per share for fiscal 2025 were 8.02,upfrom8.02, up from 7.46 in fiscal 2024, reflecting a 7.5% increase[141]. - Total assets at the end of fiscal 2025 were 2,945,367,comparedto2,945,367, compared to 2,516,885 at the end of fiscal 2024, marking a 17.0% increase[141]. - Long-term liabilities increased to 1,119,117infiscal2025from1,119,117 in fiscal 2025 from 955,925 in fiscal 2024, a rise of 17.1%[141]. - Contract revenues for fiscal 2025 were 4.702billion,anincreaseof12.54.702 billion, an increase of 12.5% from 4.176 billion in fiscal 2024[212]. - Contract revenues from acquired businesses were 379.7millioninfiscal2025,comparedto379.7 million in fiscal 2025, compared to 102.7 million in fiscal 2024[212]. - Costs of earned revenues increased to 3.770billion,or80.23.770 billion, or 80.2% of contract revenues, down from 80.5% in fiscal 2024[215]. - General and administrative expenses rose to 393.0 million, or 8.4% of contract revenues, compared to 7.8% in fiscal 2024[217]. - Depreciation expense was 167.2million,or3.6167.2 million, or 3.6% of contract revenues, up from 3.4% in fiscal 2024[218]. - Interest expense, net increased to 61.0 million in fiscal 2025 from 52.6millioninfiscal2024[219].−Netincomeforfiscal2025was52.6 million in fiscal 2024[219]. - Net income for fiscal 2025 was 233.4 million, representing 5.0% of contract revenues, compared to 5.2% in fiscal 2024[212]. - The effective income tax rate for fiscal 2025 was 24.2%, down from 25.0% in fiscal 2024[222]. Customer Base and Revenue Sources - The top five customers accounted for approximately 55.4% of total contract revenues in fiscal 2025, down from 66.7% in fiscal 2023, indicating a diversification in customer base[34]. - Approximately 20.1% of total contract revenues in fiscal 2025 came from AT&T Inc., followed by Lumen Technologies Inc. at 12.1%, and Comcast Corporation at 8.5%[34]. - The company derives approximately 55.4% of its total contract revenues from its top five customers in fiscal 2025, down from 57.7% in fiscal 2024 and 66.7% in fiscal 2023[67]. - Multi-year master service agreements represented 79.3% of contract revenues in fiscal 2025, compared to 77.7% in fiscal 2024 and 79.5% in fiscal 2023[153]. Operational Strategy and Workforce - The company employs approximately 15,623 individuals as of January 25, 2025, emphasizing the importance of human capital in its operations[44]. - Dycom's strategy includes pursuing selective acquisitions that provide incremental revenue and geographic diversification, targeting companies with defensible market positions[32]. - The company is positioned to benefit from increased demand for telecommunications bandwidth, driven by advancements in AI data centers and consumer applications[28]. - The company acquired telecommunications construction contractors for a total of 191.2millioninfiscal2025,expandingitsgeographicpresenceandcustomerbase[155][156][157].−Thecompanyishighlydependentonattractingandretainingskilledlabor,andanyinabilitytodosocouldadverselyaffectproductivityandcompetitiveposition[82].FinancialLiabilitiesandRisks−Thecompanyhassignificantaccountsreceivableandcontractassets,whichcouldbecomeuncollectibleduetocustomerfinancialdifficulties[76].−Thecompanymayfacesignificantliabilitiesifitfailstocomplywithenvironmentallawsorworkplacesafetyregulations[53][54].−Thecompanyfacessignificantliabilitiesduetopotentialnon−compliancewithvariouslawsandregulations,whichcouldadverselyaffectitsfinancialposition[98][99][100][101].−Thecompanyretainstheriskoflossforcertainliabilities,primarilybeingself−insuredformostclaimsduetodeductiblesorretentionlevels[102].−Thecompanymayincursignificantliabilitiesfromwarrantyclaims,whichcouldadverselyimpactitsfinancialresults[105].−Thecompanyparticipatesinmultiemployerpensionplans,whichcouldleadtoadditionalcashcontributionsifplansbecomeunderfunded[106].−Thecompanyretainsriskoflossupto191.2 million in fiscal 2025, expanding its geographic presence and customer base[155][156][157]. - The company is highly dependent on attracting and retaining skilled labor, and any inability to do so could adversely affect productivity and competitive position[82]. Financial Liabilities and Risks - The company has significant accounts receivable and contract assets, which could become uncollectible due to customer financial difficulties[76]. - The company may face significant liabilities if it fails to comply with environmental laws or workplace safety regulations[53][54]. - The company faces significant liabilities due to potential non-compliance with various laws and regulations, which could adversely affect its financial position[98][99][100][101]. - The company retains the risk of loss for certain liabilities, primarily being self-insured for most claims due to deductibles or retention levels[102]. - The company may incur significant liabilities from warranty claims, which could adversely impact its financial results[105]. - The company participates in multiemployer pension plans, which could lead to additional cash contributions if plans become underfunded[106]. - The company retains risk of loss up to 1.0 million for workers' compensation on a per occurrence basis[196]. - The company retained risk of loss up to 1.0millionforthefirst1.0 million for the first 5.0 million of automobile and general liability insurance coverage during fiscal 2025[197]. - The company retains risk of loss up to 750,000perparticipantforemployeegrouphealthclaimsincalendaryear2025[199].MarketConditionsandEconomicFactors−Thecyclicalnatureoftheindustryaffectsdemand,influencedbycustomercapitalexpenditurebudgetsandseasonalspendingpatterns[38].−Economicdownturnsandcapitalmarketfluctuationsmayadverselyaffectcustomerspendingonthecompany′sservices,potentiallyimpactingrevenuesandliquidity[65].−Regulatorychangesandgovernmentfundingrequirementsmayconstraincustomerspendingonservices,potentiallyimpactingrevenuesandliquidity[78].−Uncertaintyregardingfuturegovernmentbudgetdecisionscouldleadtoreducedfundingforinfrastructureprograms,affectingthecompany′srelianceonsuchfunding[79].−Rapidtechnologicalchangesinthetelecommunicationsindustrymayinfluencecustomerspendingonservices,potentiallyreducingrevenues[80].−Thedemandforbroadbandservicesissignificantlyincreasingduetohigh−speedconnectionrequirementsandmobiledatausagegrowth[144].−Federalandstatesupportforruralbroadbanddeploymentprogramsisatunprecedentedlevels,providingsignificantcapitalforfiberdeployment[147].OperationalChallenges−Thecompany’soperationsareaffectedbyseasonalityandadverseweatherconditions,particularlyduringfiscalquartersendinginJanuaryandApril[71].−Dycom′sservicesaresignificantlyimpactedbyadverseweatherconditions,particularlyduringthefiscalquartersendinginJanuaryandApril[39].−Adverseweatherconditionsandseasonalitysignificantlyimpactcontractrevenues,particularlyinthefiscalquartersendinginJanuaryandApril[167].−Thecompanymayexperiencevariationsinprofitabilityduetofluctuationsincontractrevenues,job−specificcosts,andotheroperationalfactors[168].−Thecompanyactivelymonitorsclaimsandparticipateswithinsurersindeterminingclaimsestimates,whichcanaffectoperatingmargins[51].−Thecompanycentralizescertainfinancialactivitiestoleveragescaleandreducecostswhiledecentralizingtransactionrecordingforoperationalaccountability[31].StockandShareholderInformation−Themarketpriceofthecompany′scommonstockhasshownsignificantvolatility,rangingfrom750,000 per participant for employee group health claims in calendar year 2025[199]. Market Conditions and Economic Factors - The cyclical nature of the industry affects demand, influenced by customer capital expenditure budgets and seasonal spending patterns[38]. - Economic downturns and capital market fluctuations may adversely affect customer spending on the company's services, potentially impacting revenues and liquidity[65]. - Regulatory changes and government funding requirements may constrain customer spending on services, potentially impacting revenues and liquidity[78]. - Uncertainty regarding future government budget decisions could lead to reduced funding for infrastructure programs, affecting the company's reliance on such funding[79]. - Rapid technological changes in the telecommunications industry may influence customer spending on services, potentially reducing revenues[80]. - The demand for broadband services is significantly increasing due to high-speed connection requirements and mobile data usage growth[144]. - Federal and state support for rural broadband deployment programs is at unprecedented levels, providing significant capital for fiber deployment[147]. Operational Challenges - The company’s operations are affected by seasonality and adverse weather conditions, particularly during fiscal quarters ending in January and April[71]. - Dycom's services are significantly impacted by adverse weather conditions, particularly during the fiscal quarters ending in January and April[39]. - Adverse weather conditions and seasonality significantly impact contract revenues, particularly in the fiscal quarters ending in January and April[167]. - The company may experience variations in profitability due to fluctuations in contract revenues, job-specific costs, and other operational factors[168]. - The company actively monitors claims and participates with insurers in determining claims estimates, which can affect operating margins[51]. - The company centralizes certain financial activities to leverage scale and reduce costs while decentralizing transaction recording for operational accountability[31]. Stock and Shareholder Information - The market price of the company's common stock has shown significant volatility, ranging from 111.70 to 202.82pershareduringfiscal2025[91].−Thecompanyrepurchased200,000sharesofcommonstockatanaveragepriceof202.82 per share during fiscal 2025[91]. - The company repurchased 200,000 shares of common stock at an average price of 179.27, totaling 35.9millionduringthefourthquarteroffiscal2025[136].−TheBoardofDirectorsauthorizedanew35.9 million during the fourth quarter of fiscal 2025[136]. - The Board of Directors authorized a new 150 million share repurchase program effective through August 2026, replacing the remaining $55 million from the previous program[137]. - The company has not paid cash dividends since 1982 and intends to retain earnings for business use and capital allocation strategies[134]. Compliance and Regulatory Environment - The company is subject to various federal, state, and local government regulations, which could impact its operations and financial performance[52]. - The company is subject to anti-takeover provisions that could make it more difficult to effect an acquisition or change in control[107].