Dycom Industries, Inc. Announces Fiscal 2018 First Quarter Results, Provides Guidance For The Next Fiscal Quarter And New Date And Time For The Results Conference Call

PALM BEACH GARDENS, Fla., Nov. 20, 2017 /PRNewswire/ -- Dycom Industries, Inc. (NYSE: DY) announced today its results for the fiscal quarter ended October 28, 2017. This announcement is one day earlier than previously scheduled and the conference call to review the Company's results is now scheduled for Monday, November 20, 2017 at 9:00 a.m. (ET). Specific dial-in and replay information appears below.

The schedule change is a result of the Company's preliminary determination that certain documents containing financial information were subject to unauthorized access after the market closed on Friday, November 17, 2017. The Company's investigation is ongoing and law enforcement authorities have been notified.

    --  Contract revenues of $756.2 million for the quarter ended October 28,
        2017, compared to $799.2 million for the quarter ended October 29, 2016.
        Contract revenues for the quarter ended October 28, 2017 decreased 8.4%
        on an organic basis after excluding $8.6 million of contract revenues
        from an acquired business that was not owned during the prior year
        quarter and $15.5 million of contract revenues from storm restoration
        services in the current period.
    --  Non-GAAP Adjusted EBITDA of $97.6 million, or 12.9% of contract
        revenues, for the quarter ended October 28, 2017, compared to $129.2
        million, or 16.2% of contract revenues, for the quarter ended October
        29, 2016.
    --  On a GAAP basis, net income was $28.8 million, or $0.90 per common share
        diluted, for the quarter ended October 28, 2017, compared to net income
        of $51.0 million, or $1.59 per common share diluted, for the quarter
        ended October 29, 2016. Non-GAAP Adjusted Net Income was $31.6 million,
        or $0.99 per common share diluted, for the quarter ended October 28,
        2017, compared to Non-GAAP Adjusted Net Income of $53.7 million, or
        $1.67 per common share diluted, for the quarter ended October 29, 2016.
        Non-GAAP Adjusted Net Income for the quarters ended October 28, 2017 and
        October 29, 2016 excludes $4.5 million and $4.3 million, respectively,
        of pre-tax interest expense incurred for non-cash amortization of the
        debt discount associated with the Company's 0.75% convertible senior
        notes due September 2021.                              Net income and
        Non-GAAP Adjusted Net Income for the quarter ended October 28, 2017
        include an income tax benefit of approximately $0.9 million for the tax
        effects of certain share-based award activities as a result of the
        Company's adoption of Accounting Standards Update No. 2016-09,
        Compensation - Stock Compensation (Topic 718): Improvements to Employee
        Share-Based Payment Accounting ("ASU 2016-09"). This tax benefit would
        have been recorded to additional paid-in-capital under the previous
        accounting standard.

The Company also announced its outlook for the fiscal quarter ending January 27, 2018. The Company currently expects total contract revenues for the fiscal quarter ending January 27, 2018 to range from $645 million to $675 million. On a GAAP basis, diluted earnings per common share for the fiscal quarter ending January 27, 2018 is expected to range from $0.15 to $0.27. Non-GAAP Adjusted Diluted Earnings per Common Share is expected to range from $0.24 to $0.36. Non-GAAP Adjusted Diluted Earnings per Common Share guidance excludes $4.6 million of pre-tax interest expense for non-cash amortization of debt discount, or $0.09 per common share diluted on an after-tax basis. A reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share guidance provided for the fiscal quarter ending January 27, 2018, along with reconciliations of other Non-GAAP measures, is included within the press release tables.

In addition, the Company expects to provide a fiscal 2019 outlook for revenues and diluted earnings per share for the Company's fiscal year ending January 26, 2019. This annual outlook will be provided in conjunction with the Company's release of results for the fiscal quarter ending January 27, 2018, currently scheduled for Wednesday, February 28, 2018.

Use of Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, the Company may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. See Explanation of Non-GAAP Financial Measures directly following the press release tables.

Conference Call Information and Other Selected Data

A conference call to review the Company's results will be hosted at 9:00 a.m. (ET), Monday, November 20, 2017; call (800) 398-9379 (United States) or (651) 291-0900 (International) ten minutes before the conference call begins and ask for the "Dycom Results" conference call. A live webcast of the conference call and related materials will be available at www.dycomind.com. If you are unable to attend the conference call at the scheduled time, a replay of the live webcast and related materials will be available shortly after the call at www.dycomind.com until Wednesday, December 20, 2017.

About Dycom Industries, Inc.

Dycom is a leading provider of specialty contracting services throughout the United States and in Canada. These services include program management, engineering, construction, maintenance and installation services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities.

Forward Looking Information

Results for the fiscal quarter ended October 28, 2017 are preliminary and unaudited. This press release contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. These statements are based on management's current expectations, estimates and projections and include outlook and statements for the fiscal quarter ending January 27, 2018 found under the "Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures" section of this release. Forward-looking statements are subject to risks and uncertainties that may cause actual results in the future to differ materially from the results projected or implied in any forward-looking statements contained in this press release. The most significant of these risks and uncertainties are described in the Company's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and include business and economic conditions and trends in the telecommunications industry affecting the Company's customers, the adequacy of the Company's insurance and other reserves and allowances for doubtful accounts, whether the carrying value of the Company's assets may be impaired, preliminary purchase price allocations of acquired businesses, expected benefits and synergies of acquisitions, the future impact of any acquisitions or dispositions, adjustments and cancellations related to the Company's backlog, the anticipated outcome of other contingent events, including litigation, liquidity and other financial needs, the availability of financing, and the other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company does not undertake to update forward-looking statements.

---Tables Follow---


                                                               DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

                                                                CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                        (Dollars in thousands)

                                                                              Unaudited


                                                                                                                      October 28,
                                                                                                                          2017                    July 29, 2017
                                                                                                                     ------------                 -------------

    ASSETS

    Current assets:

    Cash and equivalents                                                                                                               $24,531                                   $38,608

    Accounts receivable, net                                                                                              347,727                       369,800

    Costs and estimated earnings in excess of billings                                                                    406,517                       389,286

    Inventories                                                                                                            83,877                        83,204

    Deferred tax assets, net (a)                                                                                                -                       26,524

    Income tax receivable                                                                                                   1,008                         7,493

    Other current assets                                                                                                   29,710                        23,603
                                                                                                                           ------                        ------

       Total current assets                                                                                               893,370                       938,518
                                                                                                                          -------                       -------


    Property and equipment, net                                                                                           423,330                       422,107

    Goodwill and other intangible assets, net                                                                             499,069                       505,309

    Other                                                                                                                  36,753                        33,373
                                                                                                                           ------                        ------

       Total non-current assets                                                                                           959,152                       960,789
                                                                                                                          -------                       -------

       Total assets                                                                                                                 $1,852,522                                $1,899,307
                                                                                                                                    ==========                                ==========


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

    Accounts payable                                                                                                                  $109,877                                  $132,974

    Current portion of debt                                                                                                24,063                        21,656

    Billings in excess of costs and estimated earnings                                                                      6,599                         9,284

    Accrued insurance claims                                                                                               48,424                        39,909

    Income taxes payable                                                                                                   10,067                         1,112

    Other accrued liabilities                                                                                              84,091                       113,603
                                                                                                                           ------                       -------

       Total current liabilities                                                                                          283,121                       318,538


    Long-term debt                                                                                                        736,008                       738,265

    Accrued insurance claims                                                                                               60,782                        62,007

    Deferred tax liabilities, net non-current (a)                                                                          77,622                       103,626

    Other liabilities                                                                                                       5,351                         5,288
                                                                                                                            -----                         -----

       Total liabilities                                                                                                1,162,884                     1,227,724


       Total stockholders' equity                                                                                         689,638                       671,583
                                                                                                                          -------                       -------

       Total liabilities and stockholders' equity                                                                                   $1,852,522                                $1,899,307
                                                                                                                                    ==========                                ==========


    (a) The Company adopted Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, on a prospective basis effective
     July 30, 2017, the first day of the fiscal quarter ended October 28, 2017. As a result of this adoption, Deferred tax liabilities, net non-current is presented net of
     approximately $28.2 million of deferred tax assets within the condensed consolidated balance sheets as of October 28, 2017. Under the previous accounting standard, these
     deferred tax assets would have been classified as Deferred tax assets, net.


                                                                                                                DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

                                                                                                            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                              (Dollars in thousands, except share amounts)

                                                                                                                               Unaudited


                                                                                                                                                                    Three Months                    Three Months

                                                                                                                                                                        Ended                           Ended

                                                                                                                                                                  October 28, 2017                October 29, 2016
                                                                                                                                                                  ----------------                ----------------

    Contract revenues                                                                                                                                                                  $756,215                               $799,223
                                                                                                                                                                                       --------                               --------


    Costs of earned revenues, excluding depreciation and amortization                                                                                                      600,847                          614,990

    General and administrative expenses (a)                                                                                                                                 64,562                           60,204

    Depreciation and amortization                                                                                                                                           42,651                           34,546
                                                                                                                                                                            ------                           ------

    Total                                                                                                                                                                  708,060                          709,740
                                                                                                                                                                           -------                          -------


    Interest expense, net (b)                                                                                                                                              (9,707)                         (9,067)

    Other income, net                                                                                                                                                        5,931                              940
                                                                                                                                                                             -----                              ---

    Income before income taxes                                                                                                                                              44,379                           81,356


    Provision for income taxes (c)                                                                                                                                          15,603                           30,306


    Net income                                                                                                                                                                          $28,776                                $51,050
                                                                                                                                                                                        =======                                =======


    Earnings per common share:


    Basic earnings per common share                                                                                                                                                       $0.93                                  $1.62
                                                                                                                                                                                          =====                                  =====


    Diluted earnings per common share                                                                                                                                                     $0.90                                  $1.59
                                                                                                                                                                                          =====                                  =====



    Shares used in computing earnings per common share:

    Basic                                                                                                                                                               31,061,448                       31,429,493
                                                                                                                                                                        ==========                       ==========


    Diluted                                                                                                                                                             31,891,574                       32,200,287
                                                                                                                                                                        ==========                       ==========


    (a) Includes stock-based compensation expense of $7.4 million and $5.7 million for the three months ended October 28, 2017 and October 29, 2016, respectively.

    (b) Includes $4.5 million and $4.3 million for the three months ended October 28, 2017 and October 29, 2016, respectively, for non-cash amortization of the debt discount associated with the Company's 0.75% convertible
     senior notes due September 2021.

    (c) Provision for income taxes includes an income tax benefit of approximately $0.9 million for the tax effects of certain share-based award activities as a result of the Company's adoption of ASU 2016-09. This tax
     benefit would have been recorded to additional paid-in-capital under the previous accounting standard.


                                                                                                                                                             DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

                                                                                                                                                          RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

                                                                                                                                                              TO COMPARABLE GAAP FINANCIAL MEASURES

                                                                                                                                                                      (Dollars in thousands)

                                                                                                                                                                            Unaudited


    CONTRACT REVENUES, NON-GAAP ORGANIC CONTRACT REVENUES, AND DECLINE %'s
    ----------------------------------------------------------------------


                                                                                                                                                                                                         Contract               Revenues    Revenues             Non-GAAP                GAAP   Non-GAAP
                                                                                                                                                                                                                                                                                                    -
                                                                                                                                                                                                                                                                                                Organic
                                                                                                                                                                                                                                                                                                Decline
                                                                                                                                                                                                        Revenues -                from     from storm
                                                                                                                                                                                                                                           restoration
                                                                                                                                                                                                                                             services
                                                                                                                                                                                                           GAAP                 acquired                         - Organic            - Decline    %
                                                                                                                                                                                                                   business (a)                         Contract
                                                                                                                                                                                                                                                        Revenues               %


    Three Months Ended October 28, 2017                                                                                                                                                                                $756,215                $(8,581)                     $(15,484)            $732,150 (5.4)% (8.4)%


    Three Months Ended October 29, 2016                                                                                                                                                                                $799,223          $            -                   $         -            $799,223


    (a) Amount for the three months ended October 28, 2017 represents contract revenues from an acquired business that was not owned in the prior year period.


    NON-GAAP
     ADJUSTED EBITDA
    ----------------

                        Three Months             Three Months

                            Ended                    Ended

                      October 28, 2017         October 29, 2016
                      ----------------         ----------------

    Reconciliation of
     net income to
     Non-GAAP
     Adjusted EBITDA:

    Net income                         $28,776                    $51,050

    Interest expense,
     net                         9,707                     9,067

    Provision for
     income taxes               15,603                    30,306

    Depreciation and
     amortization
     expense                    42,651                    34,546
                                ------                    ------

    Earnings Before
     Interest, Taxes,
     Depreciation &
     Amortization
     ("EBITDA")                 96,737                   124,969

    Gain on sale of
     fixed assets              (6,495)                  (1,443)

    Stock-based
     compensation
     expense                     7,380                     5,707

    Non-GAAP
     Adjusted EBITDA                   $97,622                   $129,233
                                       =======                   ========


                                                                                               DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

                                                                                            RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                                                                          TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)

                                                                                            (Dollars in thousands, except share amounts)

                                                                                                              Unaudited


    NET INCOME, NON-GAAP ADJUSTED NET INCOME, NET INCOME PER COMMON SHARE, AND NON-GAAP ADJUSTED DILUTED EARNINGS PER COMMON SHARE
    ------------------------------------------------------------------------------------------------------------------------------


                                                                                                                                                                         Three Months                     Three Months

                                                                                                                                                                             Ended                            Ended

                                                                                                                                                                       October 28, 2017                 October 29, 2016
                                                                                                                                                                       ----------------                 ----------------

    Reconciliation of Non-GAAP Adjusted Net Income:

    Net income (a)                                                                                                                                                                            $28,776                                           $51,050
                                                                                                                                                                                              -------                                           -------


    Adjustments

    Pre-tax non-cash amortization of debt discount on convertible senior notes                                                                                                    4,547                             4,307

    Tax impact of non-cash amortization of debt discount on convertible senior notes                                                                                            (1,728)                          (1,611)

    Total adjustments, net of tax                                                                                                                                                 2,819                             2,696


    Non-GAAP Adjusted Net Income (a)                                                                                                                                                          $31,595                                           $53,746
                                                                                                                                                                                              =======                                           =======


    Reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share:

    Net income per common share                                                                                                                                                                 $0.90                                             $1.59

    Total adjustments from above, net of tax                                                                                                                                       0.09                              0.08
                                                                                                                                                                                   ----                              ----

    Non-GAAP Adjusted Diluted Earnings per Common Share                                                                                                                                         $0.99                                             $1.67
                                                                                                                                                                                                =====                                             =====


    Diluted shares used in computing Adjusted Diluted Earnings per Common                                                                                                    31,891,574                        32,200,287
    Share
                                                                                                                                                                                                                     ===


    (a) Net income and Non-GAAP Adjusted Net Income for the quarter ended October 28, 2017 include an income tax benefit of approximately $0.9 million for the tax effects of certain share-based award activities as a result of the Company's
     adoption of ASU 2016-09. This tax benefit would have been recorded to additional paid-in-capital under the previous accounting standard.



    OUTLOOK - DILUTED EARNINGS PER COMMON SHARE AND
     NON-GAAP ADJUSTED DILUTED EARNINGS PER COMMON
     SHARE
    -----------------------------------------------


                                                       Outlook for the

                                                     Three Months Ending

                                                      January 27, 2018
                                                      ----------------

    Diluted earnings per
     common share -GAAP (a)                                  $0.15 - $0.27
                                                             -------------


    Adjustment

    Adjustment for addback
     of after-tax non-cash
     amortization of debt
     discount on convertible
     senior notes (b)                                                $0.09


    Non-GAAP Adjusted
     diluted earnings per
     common share (a)                                        $0.24 - $0.36
                                                             =============


    (a) Guidance for diluted earnings per common
     share and Non-GAAP Adjusted diluted earnings
     per common share for the three months ending
     January 27, 2018 were computed using
     approximately 31.9 million in diluted weighted
     average shares outstanding.

    (b) The Company expects to recognize
     approximately $4.6 million in pre-tax interest
     expense during the three months ending January
     27, 2018 for non-cash amortization of the debt
     discount associated with its convertible senior
     notes. The Company excludes the effect of this
     non-cash amortization of debt discount in its
     Non-GAAP financial measures.


    Amounts in tables above may not add due to
     rounding.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)

Explanation of Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company's quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the Company's performance for the period reported with the Company's performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. Management defines the Non-GAAP financial measures used in this release as follows:

    --  Non-GAAP Organic Contract Revenues - contract revenues from businesses
        that are included for the entire period in both the current and prior
        year periods, excluding contract revenues from storm restoration
        services. Non-GAAP Organic Contract Revenue growth (decline) is
        calculated as the percentage change in Non-GAAP Organic Contract
        Revenues over those of the comparable prior year period. Management
        believes organic growth (decline) is a helpful measure for comparing the
        Company's revenue performance with prior periods.
    --  Non-GAAP Adjusted EBITDA - net income before interest, taxes,
        depreciation and amortization, gain on sale of fixed assets, stock-based
        compensation expense, and certain non-recurring items. Management
        believes Non-GAAP Adjusted EBITDA is a helpful measure for comparing the
        Company's operating performance with prior periods as well as with the
        performance of other companies with different capital structures or tax
        rates.
    --  Non-GAAP Adjusted Net Income - GAAP net income before non-cash
        amortization of the debt discount and the related tax impact.
    --  Non-GAAP Adjusted Diluted Earnings per Common Share - Non-GAAP Adjusted
        Net Income divided by weighted average diluted shares outstanding.

Management excludes or adjusts each of the items identified below from Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per Common Share:

    --  Non-cash amortization of the debt discount - The Company's 0.75%
        convertible senior notes due September 2021 were allocated between debt
        and equity components. The difference between the principal amount and
        the carrying amount of the liability component of the convertible senior
        notes represents a debt discount. The debt discount is being amortized
        over the term of the convertible senior notes but does not result in
        periodic cash interest payments. The Company has excluded the non-cash
        amortization of the debt discount from its Non-GAAP financial measures
        because it believes it is useful to analyze the component of interest
        expense for the convertible senior notes that will be paid in cash. The
        exclusion of the non-cash amortization from the Company's Non-GAAP
        financial measures provides management with a consistent measure for
        assessing financial results.
    --  Tax impact of adjusted results - The tax impact of the adjusted results
        for the three months ended October 28, 2017 and October 29, 2016 was
        calculated utilizing a Non-GAAP effective tax rate which approximates
        the Company's effective tax rate used for financial planning. The tax
        impact included in the Company's guidance for the quarter ending January
        27, 2018 was calculated using an effective tax rate used for financial
        planning and forecasting future results.

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