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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 -
GAAP


Revenues
from
acquired
business (a)


Revenues
from storm restoration services


Non-GAAP

- Organic
Contract
Revenues


GAAP

- Decline

%


Non-GAAP - Organic Decline

%

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
Share

31,891,574


32,200,287





(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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SOURCE Dycom Industries, Inc.