Dycom Industries, Inc. Announces Fiscal 2020 First Quarter Results And Provides Guidance For The Next Fiscal Quarter
PALM BEACH GARDENS, Fla., May 21, 2019 /PRNewswire/ -- Dycom Industries, Inc. (NYSE: DY) announced today its results for the first quarter ended April 27, 2019. The Company reported:
-- Contract revenues of $833.7 million for the quarter ended April 27,
2019, compared to $731.4 million for the quarter ended April 28, 2018.
Contract revenues for the quarter ended April 27, 2019 increased 15.8%
on an organic basis after excluding contract revenues from an acquired
business that was not owned for the entire period in both the current
and prior year quarter and contract revenues from storm restoration
services. Contract revenues from that acquired business were $6.1
million for the quarter ended April 27, 2019 compared to $5.8 million
for the quarter ended April 28, 2018. Contract revenues from storm
restoration services were $4.7 million for the quarter ended April 27,
2019 compared to $14.8 million for the quarter ended April 28, 2018.
-- Non-GAAP Adjusted EBITDA of $73.6 million, or 8.8% of contract revenues,
for the quarter ended April 27, 2019, compared to Non-GAAP Adjusted
EBITDA of $73.7 million, or 10.1% of contract revenues, for the quarter
ended April 28, 2018.
-- On a GAAP basis, net income was $14.3 million, or $0.45 per common share
diluted, for the quarter ended April 27, 2019, compared to net income of
$17.2 million, or $0.53 per common share diluted, for the quarter ended
April 28, 2018. Non-GAAP Adjusted Net Income was $16.9 million, or $0.53
per common share diluted, for the quarter ended April 27, 2019, compared
to Non-GAAP Adjusted Net Income of $20.6 million, or $0.65 per Non-GAAP
Adjusted Diluted Share, for the quarter ended April 28, 2018.
-- During the quarter ended April 27, 2019, the Company recognized $10.3
million of pre-tax income from the recovery of previously reserved
accounts receivable and contract assets for a customer that filed a
voluntary petition for reorganization during February 2019. In addition,
the Company also recorded an $8.2 million pre-tax charge for estimated
warranty costs for work performed for a customer in prior periods.
Outlook
The Company also announced its outlook for the fiscal quarter ending July 27, 2019. The Company currently expects total contract revenues for the fiscal quarter ending July 27, 2019 to range from $835 million to $885 million. On a GAAP basis, diluted earnings per common share for the fiscal quarter ending July 27, 2019 is expected to range from $0.59 to $0.81 and Non-GAAP Adjusted Diluted Earnings per Common Share is expected to range from $0.70 to $0.92. Non-GAAP Adjusted Diluted Earnings per Common Share guidance excludes $5.0 million of pre-tax interest expense, or $0.11 per common diluted share on an after-tax basis, for the non?cash amortization of the debt discount associated with the Company's 0.75% convertible senior notes due September 2021 (the "Notes"). A reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share guidance provided for the fiscal quarter ending July 27, 2019, along with reconciliations of other Non-GAAP measures, is included within the press release tables. For additional discussion regarding the Company's outlook, please see the presentation materials available on the Company's website posted in connection with the conference call discussed below.
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 Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures in the press release tables that follow.
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), Tuesday, May 21, 2019; call (800) 230-1092 (United States) or (612) 288-0329 (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 on the Company's Investor Center website at https://ir.dycomind.com. If you are unable to attend the conference call at the scheduled time, a replay of the live webcast and the related materials will be available at https://ir.dycomind.com until Thursday, June 20, 2019.
About Dycom Industries, Inc.
Dycom is a leading provider of specialty contracting services throughout the United States. 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
This press release contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. These statements include those related to the outlook for the quarter ending July 27, 2019 found under the "Outlook" and "Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures" sections of this release. Forward looking statements are based on management's current expectations, estimates and projections. These statements are subject to risks and uncertainties that may cause actual results for completed periods and periods 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, customer capital budgets and spending priorities, 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, weather conditions, 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
April 27, January 26,
2019 2019
---
ASSETS
Current assets:
Cash and equivalents $
$33,579 $
128,342
Accounts receivable, net 701,522 625,258
Contract assets 297,630 215,849
Inventories 105,166 94,385
Income tax receivable 2,376 3,461
Other current assets 38,242 29,145
---
Total current assets 1,178,515 1,096,440
---
Property and equipment, net 429,310 424,751
Operating lease right-of-use
assets (a) 69,065
Goodwill and other intangible
assets, net 481,532 486,874
Other 52,784 89,438
---
Total non-current assets 1,032,691 1,001,063
---
Total assets $
2,211,206 $
2,097,503
===
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
138,727 $
119,485
Current portion of debt 11,250 5,625
Contract liabilities 12,815 15,125
Accrued insurance claims 44,035 39,961
Operating lease liabilities
(a) 25,072
Income taxes payable 366 721
Other accrued liabilities 109,390 104,074
---
Total current liabilities 341,655 284,991
Long-term debt 867,376 867,574
Accrued insurance claims 59,793 68,315
Operating lease liabilities
(a) 44,449
Deferred tax liabilities, net
non-current 71,548 65,963
Other liabilities 5,208 6,492
---
Total liabilities 1,390,029 1,293,335
Total stockholders' equity 821,177 804,168
---
Total liabilities and
stockholders' equity $
2,211,206 $
2,097,503
===
(a) The Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842), effective January 27,
2019, the first day of fiscal 2020. On adoption, the Company recognized approximately $71.0 million of
operating lease right-of-use assets and corresponding operating lease liabilities on its condensed
consolidated balance sheet for its operating leases with terms greater than twelve months.
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
Unaudited
Quarter Ended Quarter Ended
April 27, 2019 April 28, 2018
Contract revenues $
833,743 $
731,375
---
Costs of earned revenues, excluding depreciation and amortization (a) 701,767 599,573
General and administrative expenses (b) (c) 58,622 62,283
Depreciation and amortization 46,341 43,355
Total 806,730 705,211
Interest expense, net (d) (12,233) (10,166)
Other income, net 5,698 7,711
Income before income taxes 20,478 23,709
Provision for income taxes 6,199 6,478
Net income $
14,279 $
17,231
===
Earnings per common share:
Basic earnings per common share $
0.45 $
0.55
===
Diluted earnings per common share $
0.45 $
0.53
===
Shares used in computing earnings per common share:
Basic 31,451,809 31,190,366
Diluted (e) 31,786,459 32,407,914
(a) During the quarter ended April 27, 2019, the Company recorded an $8.2 million pre-tax charge for estimated warranty costs for work performed for a customer in prior periods.
(b) Includes stock-based compensation expense of $3.5 million and $4.9 million for the quarters ended April 27, 2019 and April 28, 2018, respectively.
(c) During the quarter ended April 27, 2019, the Company recognized $10.3 million of pre-tax income from the recovery of previously reserved accounts receivable and contract assets for a customer that filed a voluntary petition
for reorganization during February 2019.
(d) Includes pre-tax interest expense for non-cash amortization of the debt discount associated with the Notes of approximately $4.9 million and $4.7 million for the quarters ended April 27, 2019 and April 28, 2018,
respectively.
(e) During the quarter ended April 28, 2018, the Company's average stock price exceeded the $96.89 conversion price of its Notes. As a result, diluted shares used in computing diluted earnings per common share for the quarter
ended April 28, 2018 include approximately 0.6 million of potential dilution from the embedded conversion feature in the Notes.
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 %'s
Contract Revenues Revenues from
Revenues - storm
GAAP restoration
services Non-GAAP GAAP Non-
from GAAP -
acquired -Organic
Contract
Revenues -Growth Organic
businesses (a) Growth %
%
Quarter Ended April 27, 2019 $
833,743 $
(6,106) $
(4,716) $
822,921 14.0% 15.8%
Quarter Ended April 28, 2018 $
731,375 $
(5,842) $
(14,848) $
710,685
(a) Amounts for the quarters ended April 27, 2019 and April 28, 2018 represent contract revenues from an acquired business that was not owned for the full period in both the current and prior year periods.
NET INCOME AND NON-GAAP ADJUSTED EBITDA
Quarter Ended Quarter Ended
April 27, 2019 April 28, 2018
Reconciliation of net income to Non-GAAP Adjusted EBITDA:
Net income $
14,279 $
17,231
Interest expense, net 12,233 10,166
Provision for income taxes 6,199 6,478
Depreciation and amortization 46,341 43,355
Earnings Before Interest, Taxes, Depreciation & Amortization ("EBITDA") 79,052 77,230
Gain on sale of fixed assets (6,738) (8,415)
Stock-based compensation expense 3,479 4,863
Recovery of previously reserved accounts receivable and contract assets (10,345)
Charge for warranty costs 8,200
Non-GAAP Adjusted EBITDA $
73,648 $
73,678
Contract revenues $
833,743 $
731,375
Non-GAAP Adjusted EBITDA % of contract revenues 8.8% 10.1%
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, DILUTED EARNINGS PER COMMON SHARE, NON-GAAP ADJUSTED DILUTED EARNINGS PER COMMON SHARE, AND NON-GAAP ADJUSTED DILUTED SHARES
Quarter Ended Quarter Ended
April 27, 2019 April 28, 2018
Reconciliation of net income to Non-GAAP Adjusted Net Income:
Net income $
14,279 $
17,231
---
Pre-Tax Adjustments:
Non-cash amortization of debt discount on Notes 4,932 4,672
Recovery of previously reserved accounts receivable and contract assets (a) (10,345) -
Charge for warranty costs (b) 8,200 -
Tax Adjustments:
Tax impact of the vesting and exercise of share-based awards (c) 638 -
Tax impact of pre-tax adjustments (766) (1,275)
Total adjustments, net of tax 2,659 3,397
Non-GAAP Adjusted Net Income $
16,938 $
20,628
===
Reconciliation of diluted earnings per common share to Non-GAAP Adjusted Diluted Earnings per Common Share:
GAAP diluted earnings per common share $
0.45 $
0.53
Total adjustments, net of tax and dilutive share effect of Notes (d) 0.08 0.12
Non-GAAP Adjusted Diluted Earnings per Common Share $
0.53 $
0.65
===
Shares used in computing Non-GAAP Adjusted Diluted Earnings per Common Share:
GAAP diluted shares 31,786,459 32,407,914
Adjustment for economic benefit of note hedge related to Notes (d) (614,999)
Non-GAAP Adjusted Diluted Shares (d) 31,786,459 31,792,915
(a) During the quarter ended April 27, 2019, the Company recognized $10.3 million of pre-tax income from the recovery of previously reserved accounts receivable and contract assets for a customer that filed a voluntary petition for reorganization during February 2019.
(b) During the quarter ended April 27, 2019, the Company recorded an $8.2 million pre-tax charge for estimated warranty costs for work performed for a customer in prior periods.
(c) During the quarter ended April 27, 2019, the Company excluded income tax expense of approximately $0.6 million for the tax effects of the vesting and exercise of share-based awards from its Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per
Common Share.
(d) The Company has a note hedge in effect to offset the economic dilution of additional shares from the Notes up to an average quarterly share price of $130.43 per share. Non-GAAP Adjusted Diluted Shares excludes the GAAP dilutive share effect of the Notes.
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
Quarter
Ending
July 27,
2019
GAAP diluted
earnings per
common share
$0.59 - $0.81
Adjustment
Addback of after-
tax non-cash
amortization of
debt discount (a) 0.11
Non-GAAP Adjusted
Diluted Earnings
per Common Share
$0.70 - $0.92
Diluted shares (in
millions) 31.8
(a) The Company expects to recognize
approximately $5.0 million in pre-tax
interest expense during the quarter
ending July 27, 2019 for the non-cash
amortization of the debt discount
associated with the Notes.
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 is calculated as the
percentage change in Non-GAAP Organic Contract Revenues over those of
the comparable prior year periods. 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, 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 the non-cash
amortization of the debt discount and the related tax impact, certain
tax impacts resulting from vesting and exercise of share-based awards,
and certain non-recurring items.
-- Non-GAAP Adjusted Diluted Earnings per Common Share and Non-GAAP
Adjusted Diluted Shares - Non-GAAP Adjusted Net Income divided by
Non-GAAP Adjusted Diluted Shares outstanding. The Company has a hedge in
effect to offset the economic dilution of additional shares that would
be issued in connection with the conversion of the Notes up to an
average quarterly share price of $130.43. The measure of Non-GAAP
Adjusted Diluted shares used in computing Non-GAAP Adjusted Diluted
Earnings per Common Share excludes dilution from the Notes. Management
believes that the calculation of Non-GAAP Adjusted Diluted shares to
reflect the note hedge will be useful to investors because it provides
insight into the offsetting economic effect of the hedge against
potential conversion of the Notes.
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 debt discount on Notes - The Company's Notes
were allocated between debt and equity components. The difference
between the principal amount and the carrying amount of the liability
component of the Notes represents a debt discount. The debt discount is
being amortized over the term of the 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 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.
-- Recovery of previously reserved accounts receivable and contract assets
- During the quarter ended April 27, 2019, the Company recognized $10.3
million of pre-tax income from the recovery of previously reserved
accounts receivable and contract assets for a customer that filed a
voluntary petition for reorganization during February 2019. The Company
excludes the impact of this recovery from its Non-GAAP financial
measures because the Company believes it is not indicative of its
underlying results.
-- Charge for warranty costs - During the quarter ended April 27, 2019, the
Company recorded an $8.2 million pre-tax charge for estimated warranty
costs for work performed for a customer in prior periods. The Company
excludes the impact of this charge from its Non-GAAP financial measures
because the Company believes it is not indicative of its underlying
results in the current period.
-- Tax impact of the vesting and exercise of share-based awards - The
Company excludes certain tax impacts resulting from the vesting and
exercise of share-based awards as these amounts may vary significantly
from period to period. Excluding these amounts from the Company's
Non-GAAP financial measures provides management with a more consistent
measure for assessing financial results.
-- Tax impact of pre-tax adjustments - The tax impact of pre-tax
adjustments reflects the Company's effective tax rate used for financial
planning for the applicable period.
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SOURCE Dycom Industries, Inc.
