Dycom Industries, Inc. (DY) Earnings

Management highlights

- Overall Q1 Performance * Total revenue hit $1.965 billion, up 56% year-over-year with 25% organic growth, exceeding the high end of management expectations. * Adjusted EBITDA reached $262.5 million (13.4% margin), up 75% year-over-year with a 141 basis point margin increase, also exceeding expectations. * Non-GAAP adjusted diluted EPS was $4.42, an 85% increase year-over-year. * Ended the quarter with a record total backlog of $11.9 billion, growing 25% sequentially, for a book-to-bill ratio of 2.2x. * Consolidated DSO improved 15 days year-over-year to 96 days, a 5 day sequential improvement. - Strategic Initiatives * Talent and workforce development: Investments in training yielded strong results, with 37 new employees added in the quarter to support growth. * Building Systems expansion: Announced a definitive agreement to acquire National Technology Integrators (NTI), a Maryland-based low-voltage engineering and construction firm focused on data center structured cabling, AV and security systems. NTI is already a strategic partner of Dycom's Power Solutions, with existing cross-project collaboration, and the acquisition creates strong synergies across both Dycom segments. The transaction is expected to close in Q2 FY27, be immediately accretive to financial metrics, and expand Dycom's data center and cross-selling capabilities. Management will continue pursuing disciplined high-quality M&A while maintaining net leverage discipline. * Margin expansion: Delivered 141 basis points of year-over-year consolidated margin expansion, with plans for continued modest margin growth in Communications and high-teens margins for Building Systems. * Cash flow enhancement: Prioritized cash flow improvements, delivering the 96-day DSO improvement after five quarters of focused work. - Market Context * Demand for fiber infrastructure (particularly fiber to the home, long-haul and middle-mile builds) remains intensifying and robust. Demand for data center construction is also growing strongly. BEAD (Broadband Equity, Access, and Deployment) program progress continues through state-level and subgrantee pipelines, pointing to future upside.

Guidance

- Full year fiscal 27 guidance was upwardly revised: total contract revenues are now expected to range from $7.38 billion to $7.65 billion, representing 38% total revenue growth (14% organic) at the midpoint, excluding an extra week from the prior fiscal year. - Communications segment full year fiscal 27 guidance is upwardly revised to contract revenues of $6.03 billion to $6.2 billion, representing 12.6% to 15.8% organic year-over-year growth. Management continues to expect modest adjusted EBITDA margin improvement over the prior year. - Building Systems segment full year fiscal 27 guidance is set to contract revenues of $1.35 billion to $1.45 billion, with an upwardly revised expected adjusted EBITDA margin in the high teens (in line with Q1 FY27 performance). - Q2 FY27 guidance: total contract revenues expected between $1.94 billion and $2.01 billion; adjusted EBITDA expected between $284 million and $303 million; adjusted diluted EPS expected between $4.40 and $4.82 per share. All full year and Q2 guidance excludes any contribution from the pending NTI acquisition. - The pending NTI acquisition has an expected initial annual revenue run rate of ~$175 million, with historical adjusted EBITDA margins in the mid-to-high teens, a purchase price of $275 million (cash-free, debt-free), and pro forma consolidated net leverage expected below 2.5x adjusted EBITDA post-close. Management maintains a long-term commitment to leverage discipline.

Segment performance

1. Communications Segment: Revenue was $1.57 billion, growing 24.7% organically year-over-year. It contributed ~80% of total Q1 FY27 revenue. Adjusted EBITDA increased 28% to $192.4 million, with an adjusted EBITDA margin of 12.3%, representing a 31 basis point year-over-year improvement. The segment held $10.8 billion of total backlog, with $5.4 billion of backlog expected to be completed in the next 12 months. 2. Building Systems Segment: Revenue was $395.4 million, representing approximately 20% of total Q1 FY27 revenue. Adjusted EBITDA was $70 million, for an adjusted EBITDA margin of 17.7%. The segment held $1.1 billion of total backlog, with $1 billion of backlog expected to be completed in the next 12 months.

Risks & headwinds

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from current expectations; detailed risk disclosures are included in Dycom's SEC filings. Other specific risks referenced on the call: * Recent rapid fuel price increases create input cost pressure for the Communications segment, partially mitigated by prior fleet optimization and the lower fuel intensity of the Building Systems segment. * Non-linear project timing across segments can lead to uneven quarterly revenue growth even with strong full-year demand. * Skilled workforce availability is a key constraint on project delivery for the industry, which management is actively investing to address.

Analyst Q&A

• Q: What is the customer overlap between NTI, Power Solutions, and legacy Communications, and what immediate cross-selling opportunities exist?

  A: NTI has been a strategic partner of Power Solutions for years, which originally brought the acquisition opportunity to Dycom. Cross-selling opportunities already exist: NTI can provide structured cabling for data center and campus projects, Power Solutions handles inside electrical work, and Dycom Communications handles outside/inside-the-fence fiber to connect sites to long-haul networks. This creates a fully end-to-end offering for general contractors and hyperscaler customers, with significant additional upside now that NTI will be part of Dycom.

• Q: Why does the raised full-year guidance still look conservative after a very strong Q1? What is the expected split of growth between first half and second half?

  A: Q1 benefited from favorable seasonal weather that accelerated activity, and growth is not perfectly linear quarter-over-quarter. The guidance increase reflects strong current demand, particularly for fiber to the home, which is still early in its multi-year build cycle. For Building Systems, the business is on track to double its historical CAGR to over 30% this year, and while the large backlog pipeline supports confidence in full-year results, projects do not all start at once, so growth is spread across the year. Management remains focused on disciplined investment for long-term growth beyond FY27.

• Q: Fiber to the home ramped faster than expected in Q1 — is this demand pull-forward or market share gain? How are long-duration contracts structured to offset cost inflation?

  A: The faster ramp reflects both expanding market presence and growing customer deployment volume: Dycom continues to gain share across multiple customer programs as a result of consistent strong execution, with sequential quarterly fiber to the home revenue growth of 33% in Q1. Recent fuel price increases are factored into current full-year guidance, partially mitigated by prior fleet changes and lower fuel intensity in Building Systems. For longer-duration contracts, customers recognize the need for flexible structures that account for future cost changes, and Dycom structures contracts to protect against inflation while locking in multi-year work, supporting continued margin growth.

• Q: Is the improved DSO sustainable, and what is NTI's end market exposure breakdown?

  A: DSO improvement is the result of sustained company-wide work across both segments (not just a benefit from Building Systems' better profile) and management expects the ~96-day range to be a sustainable new normal. NTI has approximately 2/3 of its revenue exposure to data center projects, and 1/3 from non-data center work including AV and security systems.