Dycom's (DY) Q1 Earnings & Revenues Beat Estimates, Increase Y/Y
Dycom Industries Inc. DY reported solid results for first-quarter fiscal 2024 (ended Apr 29, 2023). The top and bottom lines surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis. The upside was mainly backed by solid organic growth of the top five customers.
Shares of DY dropped 3.3% during the trading session and gained 0.5% in after-hour trading on May 24.
Earnings & Revenue Discussion
Dycom’s adjusted earnings of $1.73 per share surpassed the Zacks Consensus Estimate of 70 cents by 147.1%. The quarterly earnings increased from the year-ago adjusted figure of 51 cents per share. The uptrend was driven by higher adjusted EBITDA, lower amortization and higher gains on asset sales, partially offset by higher depreciation, stock-based compensation, interest expenses and taxes.
Contract revenues of $1,045 million increased 19.3% year over year (all organic) and topped the consensus mark of $940 million by 11.2%. With the deployment of gigabit wireline networks, wireless/wireline converged networks and wireless networks, the company witnessed an increase in demand from four of its top five customers.
The company’s top five customers represented 65.5% of total contract revenues, which rose 20.7% organically. Revenues from all other customers increased 16.7% organically in the quarter. The quarter marks the 17th consecutive period of organic growth for DY’s all other customers in aggregate, excluding the top five.
Dycom’s largest customer AT&T contributed 21.5% to total revenues. Lumen (the second-largest customer) contributed 13% to total revenues and grew 70.4% organically. This marks the fifth consecutive quarter of organic growth with Lumen. Comcast contributed 11.5% (up 8.4%), while Frontier and Verizon represented 9.9% and 9.6% of total revenues, respectively. Frontier and Verizon rose 80.2% and 23.4% organically, respectively.
Fiber construction revenues from electric utilities increased 20% year over year, organically, and contributed 8% to total contract revenues in the quarter.
Dycom’s backlog at the end of the fiscal first quarter totaled $6.316 billion compared with $6.141 billion at the fourth quarter of fiscal 2023-end. Of the backlog, $3.482 billion is projected to be completed in the next 12 months.
Dycom Industries, Inc. Price, Consensus and EPS Surprise
Dycom Industries, Inc. price-consensus-eps-surprise-chart | Dycom Industries, Inc. Quote
Operating Highlights
Depreciation and amortization expenses of $37.3 million were up 1.7% year over year. General and administrative expenses of $82.4 million increased 18.7% year over year.
Adjusted EBITDA was $113.5 million during the quarter, up 78.2% year over year. Adjusted EBITDA margin of 10.9% expanded 360 basis points (bps) from the year-ago level.
Financials
As of Apr 29, 2023, Dycom had liquidity of $673.9 million, including cash and cash equivalents worth $71.4 million (compared with $224.2 million on Jan 28, 2023). Long-term debt was $803.4 million at the fiscal first-quarter end, down from $807.4 million at the fiscal 2023-end.
Fiscal Q2 2024 Guidance
For the fiscal second quarter (ending Jul 29, 2023), management expects contract revenues to grow in mid-single digits from the year-ago reported figure. The adjusted EBITDA margin is expected to increase 50-100 bps from the year-ago level. For the period, Dycom expects the effective tax rate to be 26% and diluted shares of 29.7 million. Interest expense is likely to be $12.2 million.
Zacks Rank & Few Recent Construction Releases
Dycom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quanta Services Inc. PWR reported better-than-expected results for first-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate.
PWR has been experiencing high demand for infrastructure solutions that support energy transition initiatives, and increase reliability, safety and efficiency. Notably, project activities associated with renewable generation have been going strong and are expected to continue throughout the year.
KBR, Inc. KBR reported strong results in first-quarter 2023, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
KBR’s top and bottom lines gained on strong underlying growth and margin expansion, as well as excellent bookings in the reported quarter.
Fluor Corporation FLR reported mixed results for first-quarter 2023. Earnings missed the Zacks Consensus Estimate but increased from the previous year. Revenues surpassed the consensus mark and grew from the year-ago level.
For 2023, FLR still expects adjusted earnings per share in the range of $1.50-$1.90 per share. It expects adjusted EBITDA in the range of $450-$600 million.
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