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Dycom's (DY) Stock Up on Q2 Earnings Beat, Backlog Solid
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Dycom Industries Inc. (DY - Free Report) reported solid results for second-quarter fiscal 2023 (ended Jul 30, 2022). Both the top and the bottom line surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis. The upside was mainly backed by solid organic growth.
Shares of DY moved up 4.26% on Aug 24, post earnings release.
Major industry players are continuously constructing or enhancing significant wireline networks across broad sections of the country to provide gigabit network speeds to individual consumers and businesses. This is being carried out either directly or wirelessly using 5G technologies, which is broadening the industry and Dycom’s opportunities. Moreover, high-capacity fiber networks are proving to be the most cost-effective technology, enabling multiple revenue streams from a single investment.
Yet, macroeconomic effects and supply constraints might affect the near-term execution of some customer plans.
Earnings & Revenue Discussion
Dycom’s adjusted earnings of $1.46 per share surpassed the Zacks Consensus Estimate of 99 cents by 47.5% and increased 147.5% from the year-ago figure of 59 cents. The uptrend was driven by higher adjusted EBITDA, lower depreciation and amortization, and higher gains on asset sales, partially offset by higher stock-based compensation and interest expense.
Contract revenues of $972.3 million increased 23.5% year over year and topped the consensus mark of $928 million by 4.7%. Organically, contract revenues increased 23.5%.
Its top five customers contributed 67.4% to total contract revenues, which rose 26.6% organically. Revenues from all other customers increased 17.4% organically in the quarter. The quarter marks the 14th consecutive period of organic growth for DY’s all other customers in aggregate, excluding the top five.
Dycom’s largest customer AT&T (contributing 26.3% to total revenues) advanced 44.2% on an organic basis. This marked its sixth consecutive quarter of organic growth. Lumen (the second-largest customer) contributed 13.1% to total revenues, Comcast contributed 11.5%, while Verizon and Frontier represented 8.3% and 8.1% of total revenues, respectively. Lumen and Frontier rose 33.7% and 147% organically, respectively.
Fiber construction revenues from electric utilities increased 54.4% year over year, organically, and contributed 8.2% to total contract revenues.
Dycom’s backlog at the end of the fiscal second quarter totaled $6.028 billion compared with $5.895 billion at the second-quarter fiscal 2022 end. Of the backlog, $3.111 billion is projected to be completed in the next 12 months.
Operating Highlights
The gross margin in the quarter was 17.9%, up 63 basis points (bps) from the year-ago quarter’s level. Improved operating performance was partially offset by higher fuel costs. G&A expense, as a percentage of total revenues, improved 70 bps to 7.5%, backed by an improved operating leverage at the higher level of revenues and tight cost management.
Adjusted EBITDA was $104.7 million during the quarter, up 41.9% year over year. Adjusted EBITDA margin of 10.8% expanded 140 bps from the year-ago level.
Financials
As of Jul 30, 2022, Dycom had liquidity of $366.3 million, including cash and cash equivalents worth $120.3 million, compared with $310.8 million on Jan 29, 2022. Long-term debt was $815.3 million at the end of second-quarter fiscal 2023 compared with $823.3 million at fiscal 2022-end.
During the reported quarter, DY repurchased 104,030 shares for $10 million at an average price of $96.06 per share.
Guidance
For the fiscal third quarter (ended Oct 29, 2022), management expects contract revenues to grow in low- to-mid-teens from the year-ago reported figure. The adjusted EBITDA margin is expected to increase modestly from the year-ago levels. For the period, Dycom expects the effective tax rate to be 26.5% and diluted shares of 30 million. Interest expense is likely to be $10.8 million.
For the fiscal fourth quarter, DY anticipates normal seasonal impacts on contract revenue growth, sequentially.
Martin Marietta Materials, Inc. (MLM - Free Report) reported impressive second-quarter 2022 results. Earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by improved pricing across businesses and higher demand.
Despite increased inflationary pressures from rising input costs and a challenging macroeconomic and geopolitical environment, solid execution of its strategic business plan and a resilient aggregates-led business drove the results.
EMCOR Group, Inc. (EME - Free Report) reported solid results for second-quarter 2022. The top and the bottom line surpassed the Zacks Consensus Estimate and increased year over year.
EME’s board approved a 15.4% hike in its regular quarterly dividend to 15 cents, payable Oct 31 to its stockholders of record as of Oct 18, 2022. Also, it authorized a new share repurchase program to buy back up to an additional $500 million of its outstanding common stock.
MasTec, Inc. (MTZ - Free Report) reported second-quarter 2022 results, wherein earnings met the Zacks Consensus Estimate but revenues surpassed the same.
At June 2022 end, MTZ had an 18-month backlog of $11 billion, up 20% year over year. The metric also grew $360 million from the figure at the end of first-quarter 2022.
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Dycom's (DY) Stock Up on Q2 Earnings Beat, Backlog Solid
Dycom Industries Inc. (DY - Free Report) reported solid results for second-quarter fiscal 2023 (ended Jul 30, 2022). Both the top and the bottom line surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis. The upside was mainly backed by solid organic growth.
Shares of DY moved up 4.26% on Aug 24, post earnings release.
Major industry players are continuously constructing or enhancing significant wireline networks across broad sections of the country to provide gigabit network speeds to individual consumers and businesses. This is being carried out either directly or wirelessly using 5G technologies, which is broadening the industry and Dycom’s opportunities. Moreover, high-capacity fiber networks are proving to be the most cost-effective technology, enabling multiple revenue streams from a single investment.
Yet, macroeconomic effects and supply constraints might affect the near-term execution of some customer plans.
Earnings & Revenue Discussion
Dycom’s adjusted earnings of $1.46 per share surpassed the Zacks Consensus Estimate of 99 cents by 47.5% and increased 147.5% from the year-ago figure of 59 cents. The uptrend was driven by higher adjusted EBITDA, lower depreciation and amortization, and higher gains on asset sales, partially offset by higher stock-based compensation and interest expense.
Contract revenues of $972.3 million increased 23.5% year over year and topped the consensus mark of $928 million by 4.7%. Organically, contract revenues increased 23.5%.
Its top five customers contributed 67.4% to total contract revenues, which rose 26.6% organically. Revenues from all other customers increased 17.4% organically in the quarter. The quarter marks the 14th consecutive period of organic growth for DY’s all other customers in aggregate, excluding the top five.
Dycom’s largest customer AT&T (contributing 26.3% to total revenues) advanced 44.2% on an organic basis. This marked its sixth consecutive quarter of organic growth. Lumen (the second-largest customer) contributed 13.1% to total revenues, Comcast contributed 11.5%, while Verizon and Frontier represented 8.3% and 8.1% of total revenues, respectively. Lumen and Frontier rose 33.7% and 147% organically, respectively.
Fiber construction revenues from electric utilities increased 54.4% year over year, organically, and contributed 8.2% to total contract revenues.
Dycom’s backlog at the end of the fiscal second quarter totaled $6.028 billion compared with $5.895 billion at the second-quarter fiscal 2022 end. Of the backlog, $3.111 billion is projected to be completed in the next 12 months.
Operating Highlights
The gross margin in the quarter was 17.9%, up 63 basis points (bps) from the year-ago quarter’s level. Improved operating performance was partially offset by higher fuel costs. G&A expense, as a percentage of total revenues, improved 70 bps to 7.5%, backed by an improved operating leverage at the higher level of revenues and tight cost management.
Adjusted EBITDA was $104.7 million during the quarter, up 41.9% year over year. Adjusted EBITDA margin of 10.8% expanded 140 bps from the year-ago level.
Financials
As of Jul 30, 2022, Dycom had liquidity of $366.3 million, including cash and cash equivalents worth $120.3 million, compared with $310.8 million on Jan 29, 2022. Long-term debt was $815.3 million at the end of second-quarter fiscal 2023 compared with $823.3 million at fiscal 2022-end.
During the reported quarter, DY repurchased 104,030 shares for $10 million at an average price of $96.06 per share.
Guidance
For the fiscal third quarter (ended Oct 29, 2022), management expects contract revenues to grow in low- to-mid-teens from the year-ago reported figure. The adjusted EBITDA margin is expected to increase modestly from the year-ago levels. For the period, Dycom expects the effective tax rate to be 26.5% and diluted shares of 30 million. Interest expense is likely to be $10.8 million.
For the fiscal fourth quarter, DY anticipates normal seasonal impacts on contract revenue growth, sequentially.
Zacks Rank & Few 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.
Martin Marietta Materials, Inc. (MLM - Free Report) reported impressive second-quarter 2022 results. Earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis, backed by improved pricing across businesses and higher demand.
Despite increased inflationary pressures from rising input costs and a challenging macroeconomic and geopolitical environment, solid execution of its strategic business plan and a resilient aggregates-led business drove the results.
EMCOR Group, Inc. (EME - Free Report) reported solid results for second-quarter 2022. The top and the bottom line surpassed the Zacks Consensus Estimate and increased year over year.
EME’s board approved a 15.4% hike in its regular quarterly dividend to 15 cents, payable Oct 31 to its stockholders of record as of Oct 18, 2022. Also, it authorized a new share repurchase program to buy back up to an additional $500 million of its outstanding common stock.
MasTec, Inc. (MTZ - Free Report) reported second-quarter 2022 results, wherein earnings met the Zacks Consensus Estimate but revenues surpassed the same.
At June 2022 end, MTZ had an 18-month backlog of $11 billion, up 20% year over year. The metric also grew $360 million from the figure at the end of first-quarter 2022.