We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Dycom's 24.5% Building Systems Margin Sustain Profit Growth?
Read MoreHide Full Article
Key Takeaways
Dycom's Building Systems delivered a 24.5% adjusted EBITDA margin and $97.2M in fiscal Q2 EBITDA.
Power Solutions' data center demand supported a $1.26B Building Systems backlog, with $1.11B due in 12 months.
Dycom raised segment revenue guidance to $1.58B-$1.65B, but expects margins to ease to the high teens-low 20s.
Dycom Industries, Inc. (DY - Free Report) is benefiting from strong profitability in its Building Systems segment, supported by robust data center demand, operational efficiencies and strategic acquisitions. In the second quarter of fiscal 2027, the segment delivered an adjusted EBITDA margin of 24.5%, significantly above historical levels. Adjusted EBITDA reached $97.2 million on revenues of $397.5 million, reflecting increased operating leverage, favorable project cost estimates and strong execution.
A key growth driver is Power Solutions, which continues to capitalize on rising demand for data center electrical infrastructure, particularly in the Washington, D.C., Maryland and Virginia region. Building Systems ended the quarter with a backlog of approximately $1.26 billion, including $1.11 billion expected to be completed within the next 12 months. This visibility should support revenue growth and profitability as operations scale.
The acquisition of National Technology Integrators further strengthens the segment's prospects by expanding structured cabling capabilities and creating cross-selling opportunities with Power Solutions. Supported by strong demand and acquisition contributions, management raised its fiscal 2027 Building Systems revenue outlook to $1.58-$1.65 billion.
However, sustaining the 24.5% margin appears challenging, as favorable project cost adjustments may not recur. Management expects adjusted EBITDA margins to normalize to the high teens to low 20s for the remainder of fiscal 2027. Persistent shortages of skilled electricians and continued workforce investments could also constrain profitability.
Nevertheless, growing data center demand, expanding scale and acquisition synergies should support sustained profit growth, even as margins moderate from exceptional levels.
Industry Peers Capitalize on Data Center Demand to Boost Margins
Dycom's 24.5% Building Systems adjusted EBITDA margin highlights the profitability potential of data center infrastructure. Industry peers Sterling Infrastructure, Inc. (STRL - Free Report) and Comfort Systems USA, Inc. (FIX - Free Report) are similarly leveraging strong mission-critical demand, operational efficiencies and strategic expansion to support margin growth.
Sterling is benefiting from rising data center and semiconductor investments. In the second quarter of 2026, E-Infrastructure revenues surged 192%, while adjusted operating margin reached 24%, supported by strong project execution. With mission-critical work accounting for more than 92% of the segment’s signed backlog, Sterling is prioritizing higher-margin opportunities. Its electrical business, CEC, is targeting further margin gains through improved project mix and productivity.
Comfort Systems is capitalizing on strong technology infrastructure demand and modular expansion. FIX’s second-quarter operating margin improved to 17.1% from 13.8% a year earlier, while Electrical gross margin expanded to 26.4%. With a record $14.1 billion backlog and technology representing 58% of first-half revenues, expanding modular capacity and operating efficiencies should support sustained profitability.
View the Zacks #1 Rank List
Image: Bigstock
Can Dycom's 24.5% Building Systems Margin Sustain Profit Growth?
Key Takeaways
Dycom Industries, Inc. (DY - Free Report) is benefiting from strong profitability in its Building Systems segment, supported by robust data center demand, operational efficiencies and strategic acquisitions. In the second quarter of fiscal 2027, the segment delivered an adjusted EBITDA margin of 24.5%, significantly above historical levels. Adjusted EBITDA reached $97.2 million on revenues of $397.5 million, reflecting increased operating leverage, favorable project cost estimates and strong execution.
A key growth driver is Power Solutions, which continues to capitalize on rising demand for data center electrical infrastructure, particularly in the Washington, D.C., Maryland and Virginia region. Building Systems ended the quarter with a backlog of approximately $1.26 billion, including $1.11 billion expected to be completed within the next 12 months. This visibility should support revenue growth and profitability as operations scale.
The acquisition of National Technology Integrators further strengthens the segment's prospects by expanding structured cabling capabilities and creating cross-selling opportunities with Power Solutions. Supported by strong demand and acquisition contributions, management raised its fiscal 2027 Building Systems revenue outlook to $1.58-$1.65 billion.
However, sustaining the 24.5% margin appears challenging, as favorable project cost adjustments may not recur. Management expects adjusted EBITDA margins to normalize to the high teens to low 20s for the remainder of fiscal 2027. Persistent shortages of skilled electricians and continued workforce investments could also constrain profitability.
Nevertheless, growing data center demand, expanding scale and acquisition synergies should support sustained profit growth, even as margins moderate from exceptional levels.
Industry Peers Capitalize on Data Center Demand to Boost Margins
Dycom's 24.5% Building Systems adjusted EBITDA margin highlights the profitability potential of data center infrastructure. Industry peers Sterling Infrastructure, Inc. (STRL - Free Report) and Comfort Systems USA, Inc. (FIX - Free Report) are similarly leveraging strong mission-critical demand, operational efficiencies and strategic expansion to support margin growth.
Sterling is benefiting from rising data center and semiconductor investments. In the second quarter of 2026, E-Infrastructure revenues surged 192%, while adjusted operating margin reached 24%, supported by strong project execution. With mission-critical work accounting for more than 92% of the segment’s signed backlog, Sterling is prioritizing higher-margin opportunities. Its electrical business, CEC, is targeting further margin gains through improved project mix and productivity.
Comfort Systems is capitalizing on strong technology infrastructure demand and modular expansion. FIX’s second-quarter operating margin improved to 17.1% from 13.8% a year earlier, while Electrical gross margin expanded to 26.4%. With a record $14.1 billion backlog and technology representing 58% of first-half revenues, expanding modular capacity and operating efficiencies should support sustained profitability.