Dycom(DY) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, the company generated revenues of $1.085 billion and adjusted EBITDA of$ 116.4 million, representing 10.7% of revenue [9][30] - For the full fiscal year 2025, total revenues reached $4.702 billion, with an adjusted EBITDA margin of 12.3%, marking a 50% revenue increase over the past three years and a 450 basis point EBITDA margin expansion [10][31] - Adjusted net income for Q4 was$ 34.5 million, with adjusted diluted EPS increasing 48.1% to $1.17 per share [32] Business Line Data and Key Metrics Changes - The top five customers accounted for 56.7% of total revenue in Q4, growing 14.2%, while all other customers grew 13.5% [32] - AT&T was the largest customer, contributing$ 251.4 million, which grew 54.5% in total and 22.7% on an organic basis [33] Market Data and Key Metrics Changes - Backlog at the end of Q4 was $7.76 billion, with$ 4.642 billion expected to be completed in the next twelve months [34] - Operating cash flows were strong at $328.2 million in Q4, with a total of$ 349.1 million for the full year [35] Company Strategy and Development Direction - The company remains focused on organic growth, M&A, and share repurchases, having completed three acquisitions in fiscal 2025 and repurchased 410,000 shares [11][36] - The strategy emphasizes differentiation through a comprehensive footprint and high service levels, with a commitment to capitalizing on fiber-to-the-home and 5G opportunities [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to benefit from significant industry tailwinds, particularly in fiber-to-the-home and hyperscaler long-haul projects [12][19] - For fiscal 2026, the company expects total revenue to increase by 10% to 13% compared to fiscal 2025, excluding storm restoration revenues [23][39] Other Important Information - The company announced a new $150 million stock repurchase program following the expiration of the previous authorization [5] - Capital expenditures for fiscal 2026 are expected to range from$ 220 million to $230 million [39] Q&A Session Summary Question: Clarification on 2026 guidance - Management confirmed that the 2026 revenue outlook does not include$ 114 million from storm work in fiscal 2025 [42][43] Question: Expectations for margins - Management indicated that while they are pleased with past margin improvements, they do not provide specific full-year margin guidance [50][52] Question: Organic revenue performance - Management noted that storm work contributed positively, but there were also unexpected weather challenges impacting overall performance [60][61] Question: AI data center opportunities - Management highlighted ongoing discussions with hyperscalers and the potential for significant long-term opportunities in AI infrastructure [82][85] Question: Capital allocation strategy - Management emphasized a balanced approach between growth investments and share repurchases, with a focus on maintaining low net leverage [90][91] Question: Headcount changes - Management clarified that the reduction in headcount was due to a mix of in-house labor and subcontractors, with no cause for concern [100][101] Question: Wireless revenues - Wireless revenues for the quarter were reported at a little over 7% [122] Question: BEAD revenues - Management confirmed that no BEAD revenues are included in the fiscal 2026 outlook, but they are actively pursuing opportunities [124][126]