Dycom Industries, Inc. Announces Fiscal 2017 Fourth Quarter And Annual Results And Provides Guidance For The Next Fiscal Quarter
PALM BEACH GARDENS, Fla., Aug. 30, 2017 /PRNewswire/ -- Dycom Industries, Inc. (NYSE: DY) announced today its results for the fourth quarter and fiscal year ended July 29, 2017. The Company reported:
-- Contract revenues of $780.2 million for the quarter ended July 29, 2017,
compared to $789.2 million for the quarter ended July 30, 2016. Contract
revenues for the quarter ended July 29, 2017 grew 4.6% on an organic
basis. Organic contract revenues exclude contract revenues from acquired
businesses that were not owned for the entire period in both the current
and prior year quarter and adjust for the additional week of operations
during the quarter ended July 30, 2016 as a result of the Company's
52/53 week fiscal year. Total contract revenues from acquired businesses
were $19.3 million for the quarter ended July 29, 2017, compared to $5.6
million for the quarter ended July 30, 2016.
-- Non-GAAP Adjusted EBITDA of $118.0 million, or 15.1% of contract
revenues, for the quarter ended July 29, 2017, compared to $126.0
million, or 16.0% of contract revenues, for the quarter ended July 30,
2016.
-- On a GAAP basis, net income was $43.7 million, or $1.38 per common share
diluted, for the quarter ended July 29, 2017, compared to net income of
$49.4 million, or $1.54 per common share diluted, for the quarter ended
July 30, 2016. Non-GAAP Adjusted Net Income was $46.5 million, or $1.47
per common share diluted, for the quarter ended July 29, 2017, compared
to Non-GAAP Adjusted Net Income of $52.7 million, or $1.64 per common
share diluted, for the quarter ended July 30, 2016. Non-GAAP Adjusted
Net Income for the quarters ended July 29, 2017 and July 30, 2016
excludes $4.5 million and $4.6 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. Additionally, Non-GAAP Adjusted Net Income for the
quarter ended July 30, 2016 excludes $0.7 million of pre-tax acquisition
transaction related costs.
The Company also reported:
-- Contract revenues of $3.067 billion for the fiscal year ended July 29,
2017, compared to $2.673 billion for the fiscal year ended July 30,
2016. Contract revenues for the fiscal year ended July 29, 2017 grew
14.1% on an organic basis. Organic contract revenues exclude contract
revenues from acquired businesses that were not owned for the entire
period in both the current and prior year period and adjust for the
additional week of operations during the fourth quarter of fiscal 2016
as a result of the Company's 52/53 week fiscal year. Total contract
revenues from acquired businesses were $214.9 million for the fiscal
year ended July 29, 2017, compared to $119.8 million for the fiscal year
ended July 30, 2016.
-- Non-GAAP Adjusted EBITDA of $441.6 million, or 14.4% of contract
revenues, for the fiscal year ended July 29, 2017, compared to $390.0
million, or 14.6% of contract revenues, for the fiscal year ended July
30, 2016.
-- On a GAAP basis, net income was $157.2 million, or $4.92 per common
share diluted, for the fiscal year ended July 29, 2017, compared to net
income of $128.7 million, or $3.89 per common share diluted, for the
fiscal year ended July 30, 2016. Non-GAAP Adjusted Net Income was $168.3
million, or $5.26 per common share diluted, for the fiscal year ended
July 29, 2017, compared to Non-GAAP Adjusted Net Income of $148.4
million, or $4.48 per common share diluted, for the fiscal year ended
July 30, 2016. Non-GAAP Adjusted Net Income for the fiscal year ended
July 29, 2017 and July 30, 2016 excludes $17.6 million and $14.7
million, respectively, of pre-tax interest expense incurred for non-cash
amortization of the debt discount associated with the Company's
convertible senior notes. Non-GAAP Adjusted Net Income for the fiscal
year ended July 30, 2016 also excludes $0.7 million of pre-tax
acquisition transaction related costs, as well as the impact of a
pre-tax charge of approximately $16.3 million for early extinguishment
of debt.
The Company also announced its outlook for the first quarter of fiscal 2018. The Company currently expects total contract revenues for the first quarter of fiscal 2018 to range from $715 million to $745 million. On a GAAP basis, diluted earnings per common share for the first quarter of fiscal 2018 is expected to range from $0.72 to $0.87. Non-GAAP Adjusted Diluted Earnings per Common Share is expected to range from $0.81 to $0.96. Non-GAAP Adjusted Diluted Earnings per Common Share guidance excludes $4.5 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 first quarter of fiscal 2018, along with reconciliations of other Non-GAAP measures, is included within the press release tables.
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), Wednesday, August 30, 2017; call (800) 553-5260 (United States) or (612) 332-0636 (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 at www.dycomind.com until Friday, September 29, 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
Fiscal 2017 fourth quarter results 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 the first quarter of fiscal 2018 outlook, backlog and statements 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
July 29, 2017 July 30, 2016
------------- -------------
ASSETS
Current assets:
Cash and equivalents $38,608 $33,787
Accounts receivable, net 369,800 328,030
Costs and estimated earnings in excess of billings 389,286 376,972
Inventories 83,204 73,606
Deferred tax assets, net 26,524 22,733
Income tax receivable 7,493 -
Other current assets 23,603 16,106
------ ------
Total current assets 938,518 851,234
------- -------
Property and equipment, net 422,107 326,670
Goodwill and other intangible assets, net 505,309 508,036
Other 33,373 33,776
------ ------
Total non-current assets 960,789 868,482
------- -------
Total assets $1,899,307 $1,719,716
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $132,974 $115,492
Current portion of debt 21,656 13,125
Billings in excess of costs and estimated earnings 9,284 19,557
Accrued insurance claims 39,909 36,844
Income taxes payable 1,112 15,307
Other accrued liabilities 113,603 122,302
------- -------
Total current liabilities 318,538 322,627
Long-term debt 738,265 706,202
Accrued insurance claims 62,007 52,835
Deferred tax liabilities, net non-current 103,626 76,587
Other liabilities 5,288 4,178
----- -----
Total liabilities 1,227,724 1,162,429
Total stockholders' equity 671,583 557,287
------- -------
Total liabilities and stockholders' equity $1,899,307 $1,719,716
========== ==========
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
Unaudited
Three Months Three Months Fiscal Year Fiscal Year
Ended Ended Ended Ended
July 29, 2017 July 30, 2016 July 29, 2017 July 30, 2016
------------- ------------- ------------- -------------
Contract revenues $780,188 $789,159 $3,066,880 $2,672,542
-------- -------- ---------- ----------
Costs of earned revenues, excluding depreciation and amortization 606,898 605,909 2,404,734 2,083,579
General and administrative expenses (a) 59,519 62,146 239,231 217,149
Depreciation and amortization 40,244 36,010 147,906 124,940
------ ------ ------- -------
Total 706,661 704,065 2,791,871 2,425,668
------- ------- --------- ---------
Interest expense, net (b) (9,735) (9,710) (37,364) (34,720)
Loss on debt extinguishment (c) - - - (16,260)
Other income, net 6,043 3,569 12,780 10,433
----- ----- ------ ------
Income before income taxes 69,835 78,953 250,425 206,327
Provision for income taxes 26,127 29,593 93,208 77,587
Net income $43,708 $49,360 $157,217 $128,740
======= ======= ======== ========
Earnings per common share:
Basic earnings per common share $1.41 $1.57 $5.01 $3.98
===== ===== ===== =====
Diluted earnings per common share $1.38 $1.54 $4.92 $3.89
===== ===== ===== =====
Shares used in computing earnings per common share:
Basic 31,084,019 31,363,768 31,351,367 32,315,636
========== ========== ========== ==========
Diluted 31,664,148 32,074,169 31,984,731 33,115,755
========== ========== ========== ==========
(a) Includes stock-based compensation expense of $4.9 million and $4.2 million for the three months ended July 29, 2017 and July 30, 2016, respectively, and $20.8 million and $16.8 million for the fiscal year ended July 29, 2017 and July 30, 2016, respectively. Also includes $0.7
million of acquisition transaction related costs for the three months and fiscal year ended July 30, 2016.
(b) Includes $4.5 million and $4.6 million for the three months ended July 29, 2017 and July 30, 2016, respectively, and $17.6 million and $14.7 million for the fiscal year ended July 29, 2017 and July 30, 2016, respectively, for non-cash amortization of the debt discount
associated with the Company's convertible senior notes issued in September 2015.
(c) During the first quarter of fiscal 2016, the Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt.
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 GROWTH (DECLINE) %'s
-------------------------------------------------------------------------------
Additional Non-GAAP
week of -
revenue as a Organic
result of Growth
the
Company's
52/53 week
Contract Revenues year (b) Non-GAAP GAAP
Revenues - GAAP from acquired
businesses
(a)
-Organic
Contract (Decline)
Revenues -Growth %
%
---
Three Months Ended July 29, 2017 $780,188 $(19,264) $ - $760,924 (1.1)% 4.6%
Three Months Ended July 30, 2016 $789,159 $(5,585) $(55,970) $727,604
Fiscal Year Ended July 29, 2017 $3,066,880 $(214,936) $ - $2,851,944 14.8% 14.1%
Fiscal Year Ended July 30, 2016 $2,672,542 $(119,818) $(53,485) $2,499,239
(a) Amounts for the three months and fiscal year ended July 29, 2017 and July 30, 2016 represent contract revenues from acquired businesses that were not owned for the full period in both the current and prior year periods.
(b) The fourth quarter of fiscal 2016 contained 14 weeks of operations as a result of the Company's 52/53 week fiscal year, compared to 13 weeks of operations in the fourth quarter of fiscal 2017. The Non-GAAP adjustment is calculated independently for each comparative period as (i) total fourth quarter of fiscal 2016 contract
revenues less, (ii) contract revenues for the fourth quarter of fiscal 2016 from businesses acquired that were not owned for the full period in both the current and prior year period, (iii) divided by 14 weeks.
NON-GAAP ADJUSTED EBITDA
------------------------
Three Months Three Months Fiscal Year Fiscal Year
Ended Ended Ended Ended
July 29, 2017 July 30, 2016 July 29, 2017 July 30, 2016
------------- ------------- ------------- -------------
Reconciliation of net income to Non-GAAP Adjusted
EBITDA:
Net income $43,708 $49,360 $157,217 $128,740
Interest expense, net 9,735 9,710 37,364 34,720
Provision for income taxes 26,127 29,593 93,208 77,587
Depreciation and amortization expense 40,244 36,010 147,906 124,940
------ ------ ------- -------
Earnings Before Interest, Taxes, Depreciation & 119,814 124,673 435,695 365,987
Amortization ("EBITDA")
Gain on sale of fixed assets (6,645) (3,593) (14,866) (9,806)
Stock-based compensation expense 4,874 4,249 20,805 16,850
Loss on debt extinguishment - - - 16,260
Acquisition transaction related costs - 715 - 715
--- --- --- ---
Non-GAAP Adjusted EBITDA $118,043 $126,044 $441,634 $390,006
======== ======== ======== ========
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 Fiscal Year Fiscal Year
Ended Ended Ended Ended
July 29, 2017 July 30, 2016 July 29, 2017 July 30, 2016
------------- ------------- ------------- -------------
Reconciliation of Non-GAAP Adjusted Net Income:
Net income $43,708 $49,360 $157,217 $128,740
------- ------- -------- --------
Adjustments
Pre-tax non-cash amortization of debt discount 4,499 4,590 17,610 14,709
Pre-tax loss on debt extinguishment - - - 16,260
Pre-tax acquisition transaction related costs - 715 - 715
Tax impact of adjustments (1,675) (1,995) (6,561) (12,040)
Total adjustments, net of tax 2,824 3,310 11,049 19,644
Non-GAAP Adjusted Net Income $46,532 $52,670 $168,266 $148,384
======= ======= ======== ========
Reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share:
Net income per common share $1.38 $1.54 $4.92 $3.89
Total adjustments from above, net of tax 0.09 0.10 0.35 0.59
---- ---- ---- ----
Non-GAAP Adjusted Diluted Earnings per Common $1.47 $1.64 $5.26 $4.48
Share
===
Diluted shares used in computing Adjusted Diluted Earnings per Common Share 31,664,148 32,074,169 31,984,731 33,115,755
========== ========== ========== ==========
Amounts in table above may not add due to rounding.
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES
(CONTINUED)
Unaudited
OUTLOOK - DILUTED EARNINGS PER COMMON SHARE
AND NON-GAAP ADJUSTED DILUTED EARNINGS PER
COMMON SHARE
-------------------------------------------
Outlook for the
Three Months Ending
October 28, 2017
----------------
Diluted earnings per
common share -GAAP
(a) $0.72 - $0.87
-------------
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) $0.81 - $0.96
=============
(a) Guidance for diluted earnings per common
share and Non-GAAP Adjusted diluted earnings
per common share for the three months ending
October 28, 2017 were computed using
approximately 31.9 million in diluted
weighted average shares outstanding.
(b) The Company expects to recognize
approximately $4.5 million in pre-tax
interest expense during the three months
ending October 28, 2017 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. In the fourth quarter of fiscal 2016 Non-GAAP Organic
Contract Revenues were also adjusted for the additional week as a result
of the Company's 52/53 week fiscal calendar. The Non-GAAP adjustment is
calculated independently for each comparative period as (i) total fourth
quarter of fiscal 2016 contract revenues less, (ii) contract revenues
for the fourth quarter of fiscal 2016 from businesses acquired that were
not owned for the full period in both the current and prior year period,
(iii) divided by 14 weeks. Non-GAAP Organic Contract Revenue growth is
calculated as the percentage change in Non-GAAP Organic Contract
Revenues over those of the comparable prior year period. Management
believes organic growth 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, loss on debt extinguishment, 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 loss on debt
extinguishment, non-cash amortization of the debt discount, certain
non-recurring items and any tax impact related to these items.
-- 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.
-- Loss on debt extinguishment - The Company incurred a pre-tax charge of
approximately $16.3 million for early extinguishment of debt in
connection with the redemption of its 7.125% senior subordinated notes
in the first quarter of fiscal 2016. Management believes excluding the
loss on debt extinguishment from the Company's Non-GAAP financial
measures assists investors' overall understanding of the Company's
current financial performance. The Company believes this type of charge
is not indicative of its core operating results. The exclusion of the
loss on debt extinguishment from the Company's Non-GAAP financial
measures provides management with a consistent measure for assessing the
current and historical financial results.
-- Acquisition transaction related costs - The Company incurred costs of
approximately $0.7 million in connection with an acquisition during the
fourth quarter of fiscal 2016. The exclusion of the acquisition
transaction related costs 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 and fiscal year ended July 29, 2017 and July 30,
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 October 28, 2017 was calculated using an effective tax
rate used for financial planning and forecasting future results.
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