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After an incredible beat last quarter, Dycom Industries Inc. (DY - Free Report) followed up with another impressive beat in its fourth-quarter fiscal 2016 results. The specialty contracting services provider reported adjusted earnings per share of $1.64 in the quarter, surpassing the Zacks Consensus Estimate of $1.56 by 5.1%.
The bottom-line figure was even more remarkable on a year-over-year basis, surging a whopping 69% compared with the year-ago tally of 97 cents per share.
Robust top-line growth drove earnings, while diligent operational initiatives undertaken by the company supported the bottom line.
For fiscal 2016, the posted adjusted earnings of $148.4 million ($4.48 per share), up a massive 76% from the previous-year figure of $84.3 million ($2.41 per share).
Inside the Headlines
Dycom’s fiscal fourth-quarter contract revenues continued their strong momentum, and came in at $789.2 million, up 36.4% year over year. Also, the top line beat the Zacks Consensus Estimate of $773 million. Contract revenues grew 20% on an organic basis. Acquisitions too, added $44.8 million in revenues, significantly supplementing the revenue stream.
Extensive deployment of 1-Gigabyte wireline networks by major customers and increasing rollout of fiber by cable operators in small and medium businesses boosted top-line growth. Solid performance across the majority of business lines including engineering & design and aerial and underground construction services, and healthy inorganic growth also augmented revenues.
For the full year, Dycom reported contract revenues of $2.7 billion, up over 32% year over year, on the back of sturdy organic growth.
The company reported non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $126 million for the quarter, compared with $88.5 million recorded a year ago.
The Goodman Networks Acquisition
During the reported quarter, Dycom acquired certain telecom-related assets of Goodman Networks Incorporated for about $107.5 million in cash. It purchased certain assets and associated liabilities in Goodman's current wireline and wireless network deployment businesses.
Initially, Dycom projected the buyout to generate about $150–$165 million in revenues over the next 12 months, by providing services like wireless network construction in Texas, Georgia, Southern California and other markets. This specialty contracting services provider also expected the EBITDA (earnings before interest, taxes, depreciation and amortization) of the acquired business, as a percentage of revenue, to be roughly in line with its own ratio in fiscal 2018.
However, concurrent with the earnings release, Dycom announced that the recently-acquired operations of Goodman Networks are now forecast to generate lower revenue in fiscal 2017 than initially projected. However, they are likely to produce higher EBITDA margins sooner, than anticipated earlier.
Liquidity
Dycom exited the quarter with cash and cash equivalents of $33.8 million compared with $21.3 million as of Jul 25, 2015. The company’s long-term debt was $706.2 million as of Jul 30, 2016, compared with $516.9 million as of Jul 25, 2015.
Guidance
Dycom issued guidance for first-quarter fiscal 2017, wherein adjusted earnings per share are projected in the range of $1.55-$1.70 on revenues within a range of $780–$810 million.
The Zacks Consensus Estimate for first-quarter fiscal 2017 earnings is currently pegged at $1.62 per share, within the company’s guided range.
We believe Dycom’s top line has benefited significantly from favorable industry trends over the past few quarters, which are driving client spending. Deployment of fiber-to-the-home and fiber-to-the-node technologies by major telecom operators to enable video offerings and 1-gigabit high-speed connections are opening up considerable growth opportunities for the company.
Going forward, we believe that the significant investments in wireline networks, cable capacity projects and the ongoing Connect America Fund II project will help Dycom maintain its growth momentum.
Also, the company’s diligent capital expenditure strategy has supplemented organic revenue improvement over the past 12 months. We also believe that investments made in assets will bolster operating efficiency, accelerating the delivery of backlogs, which in turn bodes well for long-term growth.
This apart, Dycom has a highly concentrated client base, among which the biggest ones – i.e. AT&T, Inc. (T - Free Report) , Comcast Corp. (CMCSA - Free Report) , Verizon Communications Inc. (VZ - Free Report) and Centurylink – contributed about 56% of revenues in fiscal 2015.
However, uncertainties in the macroeconomic environment, especially fluctuations in oil prices and unfavorable weather conditions, remain headwinds for the company.As a matter of fact, pronounced seasonal impact from businesses acquired by the company in 2015 has hampered earnings significantly in the past, and could affect operations in the future as well.
Dycom presently carries a Zacks Rank #3 (Hold).
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Dycom Industries (DY) Q4 Earnings, Revenues Beat Estimates
After an incredible beat last quarter, Dycom Industries Inc. (DY - Free Report) followed up with another impressive beat in its fourth-quarter fiscal 2016 results. The specialty contracting services provider reported adjusted earnings per share of $1.64 in the quarter, surpassing the Zacks Consensus Estimate of $1.56 by 5.1%.
The bottom-line figure was even more remarkable on a year-over-year basis, surging a whopping 69% compared with the year-ago tally of 97 cents per share.
Robust top-line growth drove earnings, while diligent operational initiatives undertaken by the company supported the bottom line.
For fiscal 2016, the posted adjusted earnings of $148.4 million ($4.48 per share), up a massive 76% from the previous-year figure of $84.3 million ($2.41 per share).
Inside the Headlines
Dycom’s fiscal fourth-quarter contract revenues continued their strong momentum, and came in at $789.2 million, up 36.4% year over year. Also, the top line beat the Zacks Consensus Estimate of $773 million. Contract revenues grew 20% on an organic basis. Acquisitions too, added $44.8 million in revenues, significantly supplementing the revenue stream.
Extensive deployment of 1-Gigabyte wireline networks by major customers and increasing rollout of fiber by cable operators in small and medium businesses boosted top-line growth. Solid performance across the majority of business lines including engineering & design and aerial and underground construction services, and healthy inorganic growth also augmented revenues.
For the full year, Dycom reported contract revenues of $2.7 billion, up over 32% year over year, on the back of sturdy organic growth.
The company reported non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $126 million for the quarter, compared with $88.5 million recorded a year ago.
The Goodman Networks Acquisition
During the reported quarter, Dycom acquired certain telecom-related assets of Goodman Networks Incorporated for about $107.5 million in cash. It purchased certain assets and associated liabilities in Goodman's current wireline and wireless network deployment businesses.
Initially, Dycom projected the buyout to generate about $150–$165 million in revenues over the next 12 months, by providing services like wireless network construction in Texas, Georgia, Southern California and other markets. This specialty contracting services provider also expected the EBITDA (earnings before interest, taxes, depreciation and amortization) of the acquired business, as a percentage of revenue, to be roughly in line with its own ratio in fiscal 2018.
However, concurrent with the earnings release, Dycom announced that the recently-acquired operations of Goodman Networks are now forecast to generate lower revenue in fiscal 2017 than initially projected. However, they are likely to produce higher EBITDA margins sooner, than anticipated earlier.
Liquidity
Dycom exited the quarter with cash and cash equivalents of $33.8 million compared with $21.3 million as of Jul 25, 2015. The company’s long-term debt was $706.2 million as of Jul 30, 2016, compared with $516.9 million as of Jul 25, 2015.
Guidance
Dycom issued guidance for first-quarter fiscal 2017, wherein adjusted earnings per share are projected in the range of $1.55-$1.70 on revenues within a range of $780–$810 million.
The Zacks Consensus Estimate for first-quarter fiscal 2017 earnings is currently pegged at $1.62 per share, within the company’s guided range.
DYCOM INDS Price and Consensus
DYCOM INDS Price and Consensus | DYCOM INDS Quote
Our Take
We believe Dycom’s top line has benefited significantly from favorable industry trends over the past few quarters, which are driving client spending. Deployment of fiber-to-the-home and fiber-to-the-node technologies by major telecom operators to enable video offerings and 1-gigabit high-speed connections are opening up considerable growth opportunities for the company.
Going forward, we believe that the significant investments in wireline networks, cable capacity projects and the ongoing Connect America Fund II project will help Dycom maintain its growth momentum.
Also, the company’s diligent capital expenditure strategy has supplemented organic revenue improvement over the past 12 months. We also believe that investments made in assets will bolster operating efficiency, accelerating the delivery of backlogs, which in turn bodes well for long-term growth.
This apart, Dycom has a highly concentrated client base, among which the biggest ones – i.e. AT&T, Inc. (T - Free Report) , Comcast Corp. (CMCSA - Free Report) , Verizon Communications Inc. (VZ - Free Report) and Centurylink – contributed about 56% of revenues in fiscal 2015.
However, uncertainties in the macroeconomic environment, especially fluctuations in oil prices and unfavorable weather conditions, remain headwinds for the company.As a matter of fact, pronounced seasonal impact from businesses acquired by the company in 2015 has hampered earnings significantly in the past, and could affect operations in the future as well.
Dycom presently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>