Dycom(US:DY)2024-08-21 18:11Financial Data and Key Metrics Changes - Revenue for the second quarter increased to $1.203 billion, a rise of 15.5% year-over-year, with organic revenue growth of 9.2% [8][19] - Gross margin improved to 20.8%, up 52 basis points compared to the same quarter last year [8][19] - Adjusted EBITDA was $158.3 million, representing 13.2% of revenue, compared to 12.6% in Q2 of the previous year [19] - Adjusted earnings per share increased to $2.46 from $2.03 year-over-year [19] Business Line Data and Key Metrics Changes - Revenue from the top five customers accounted for 54.9% of total revenue, with AT&T being the largest customer at 17.5% of revenue, growing organically by 20.6% [15][19] - Revenue from electric utilities for fiber construction was $88.7 million in the quarter [16] Market Data and Key Metrics Changes - Backlog at the end of the second quarter was $6.834 billion, an increase of $470 million from the previous quarter [17] - The company expects the acquisition of Black & Veatch's wireless telecommunications infrastructure business to contribute $250 million to $275 million in revenue for fiscal year 2026 [10][21] Company Strategy and Development Direction - The company aims to connect America and is well-positioned for growth in the industry, particularly in wireless network modernization and fiber deployments [6][12] - The acquisition of Black & Veatch is seen as a strategic move to enhance geographic presence and address growth opportunities in wireless network modernization [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of macroeconomic conditions and the improvement in labor markets, which positions the company well for future growth [14] - The company anticipates modest revenue growth in the third and fourth quarters due to a focus on site acquisition for next year's construction program [10][22] Other Important Information - The company completed the acquisition of a telecommunications construction contractor for $20.8 million, expanding its geographic footprint to Alaska [21] - The Broadband, Equity, Access, Deployment (BEAD) program is expected to provide significant funding for rural communications networks, with over $40 billion allocated [13][14] Q&A Session Summary Question: How is Dycom positioned in the intercity opportunity? - Management indicated that Dycom has significant experience in intercity work, having placed over 2,000 miles of intercity fiber in the past [28] Question: What was the catalyst for the sequential increase in backlog? - Management noted that there were no BEAD opportunities in the backlog yet, but a broad set of opportunities contributed to the increase [29] Question: Is organic revenue growth expected to decelerate in Q3? - Management clarified that while organic growth may appear to decelerate, it is influenced by prior year comparisons and expected new revenues from acquisitions [32][33] Question: What is the growth rate embedded in the Black & Veatch acquisition? - Management stated that the $1 billion backlog from the acquisition extends through the end of calendar 2027, indicating a solid growth opportunity [43] Question: How does the company view the BEAD program? - Management expressed optimism about the BEAD program, anticipating significant activity in the next year as approvals are secured [55]