Dycom Industries, Inc. Q2 FY2026 earnings call

• The company delivered record revenue, EBITDA, and EPS, driven by operating leverage, efficiencies, and operational excellence.
• Revenue grew 14.5% year-over-year to $1.38 billion. Adjusted EBITDA was $205.5 million, a 29.8% increase with a 14.9% margin.
• DSO improved by nine days year-over-year to 108 days. Total backlog was $8 billion, with next twelve months backlog at $4.6 billion, up 20.2% year-over-year.
• Secured a significant new award for service/maintenance and fiber to the home across numerous states, to be reported in Q3 backlog.
• Fiber to the home passings by customers comprise over 125 million, with over 50 million incremental in the past sixteen months.
• Service and maintenance business growing with new awards, providing recurring revenue stream.
• Wireless space sees optimism with equipment upgrades and densification; BEAD program expected to have opportunity once plans finalized.
• Data center infrastructure demand growing, with addressable market for Dycom over $20 billion in next five years.
• Skilled workforce development is a key differentiator, with investment in recruiting, training, and retaining talent.
• Macroeconomic factors like Big Beautiful Bill Act spurring investment, permitting process streamlining for infrastructure.

Dycom Industries, Inc. reported a revenue of $1.38 billion for the second quarter of 2026, representing a 14.5% increase over the prior year. Adjusted EBITDA was $205.5 million, a 29.8% increase year-over-year, with a 14.9% margin. AT&T contributed $373 million and Lumen contributed $155.4 million to total revenues, each exceeding 10% of total revenues. Backlog at the end of Q2 was $7.989 billion, including $4.604 billion expected to be completed in the next twelve months, which is a year-over-year increase of 20.2%. The total backlog was $8 billion, a 16.9% year-over-year increase.

• Reaffirmed fiscal 2026 revenue outlook range of $5.29 billion to $5.425 billion.
• For 2026, expects contract revenues of $1.38 billion to $1.43 billion, adjusted EBITDA of $198 million to $213 million, and diluted EPS of $3.30 to $3.36 per share.
• Next twelve months backlog increased 20.2% year-over-year to $4.6 billion.

• Short-term variation in backlog due to timing of contract signings.
• Tariffs being fluid, though not significantly impacting current business operations or customers' build programs.

Q: For the second quarter, what led to the revenue and what should the rest of the year look like?

A: Revenue was impacted by program ramps. The business has strong momentum with backlog up, and is optimistic about the rest of the year with reaffirmed full-year guide.

Q: Should we expect current margin levels going forward?

A: Yes, the company strongly believes in the margins produced, with operational efficiencies contributing to durable margin outcomes.

Q: Were smaller private guys slipping in the second half?

A: Some customers had lighter programs in Q2, but the business has strong momentum with significant growth expected.

Q: How is the wireless business expected to ramp?

A: Wireless business has been ahead of expectations, with aggregate work increasing and potential for densification in the future.

Q: What is the percentage of recurring revenue?

A: Over 80% of revenue is from MSAs, with service and maintenance business growing and hyperscaler service/maintenance work adding recurring opportunities.

Q: Update on inside defense data center award?

A: There have been new awards for inside defense work, different from previous, and still early in the opportunity set.

Q: Early conversations with carriers on tax reform?

A: Customers are reinvesting cash tax savings, with most impact expected starting next calendar year.

Q: Visibility to Q4 revenues and accelerating growth?

A: Confident in the business with ongoing awards and ramping programs, though Q4 may have some seasonality.

Q: Impact of new initiatives on margins?

A: The company has shown ability to compete, and margins are expected to remain in a similar range across business drivers.

Q: Progress on middle mile work?

A: Middle mile work is early, with significant contribution expected next year and 2027.

Q: Start date of large August award?

A: Work is in planning, with some contribution this year but mostly next fiscal year.

Q: Hyperscaler revenue percentage and growth?

A: Still early, but the company is well-positioned with lessons learned, contributing more materially next year.

Q: Operating cash flow and seasonality?

A: Expect same seasonality, with improvement in DSO and tax legislation providing cash flow benefits.