Attached files
| file | filename |
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| 8-K - FORM 8-K - DYCOM INDUSTRIES INC | form8k.htm |
| EX-99.1 - EXHIBIT 99.1 - DYCOM INDUSTRIES INC | exhibit991.htm |
Exhibit 99.2
Fiscal 2012
3rd Quarter Presentation
May 23, 2012
1
Participants
|
Steven E. Nielsen
President & Chief Executive Officer Timothy R. Estes
Chief Operating Officer
H. Andrew DeFerrari
Chief Financial Officer Richard B. Vilsoet
General Counsel |
2
Forward-Looking Statements and
Non-GAAP Information
Non-GAAP Information
Forward-Looking Statements and
Non-GAAP Information
Non-GAAP Information
Fiscal 2012 third quarter results are unaudited. This presentation contains “forward-looking statements” which
are statements relating to future events, future financial performance, strategies, expectations, and competitive
environment. All statements, other than statements of historical facts, contained in this presentation, including
statements regarding our future financial position, future revenue, prospects, plans and objectives of
management, are forward-looking statements. Words such as “believe,” “expect,” “anticipate,” “estimate,”
“intend,” “forecast,” “may,” “should,” “could,” “project,” “looking ahead” and similar expressions, as well as
statements in future tense, identify forward-looking statements. You should not read forward looking statements
as a guarantee of future performance or results. They will not necessarily be accurate indications of whether or
at what time such performance or results will be achieved. Forward-looking statements are based on
information available at the time those statements are made and/or management’s good faith belief at that time
with respect to future events. Such statements are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or suggested by the forward-looking
statements. Important factors that could cause such differences include, but are not limited to factors described
under Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended July 30, 2011,
and other risks outlined in the Company’s periodic filings with the Securities and Exchange Commission
(“SEC”). The forward-looking statements in this presentation are expressly qualified in their entirety by this
cautionary statement. Except as required by law, the Company may not update forward-looking statements
even though its situation may change in the future.
are statements relating to future events, future financial performance, strategies, expectations, and competitive
environment. All statements, other than statements of historical facts, contained in this presentation, including
statements regarding our future financial position, future revenue, prospects, plans and objectives of
management, are forward-looking statements. Words such as “believe,” “expect,” “anticipate,” “estimate,”
“intend,” “forecast,” “may,” “should,” “could,” “project,” “looking ahead” and similar expressions, as well as
statements in future tense, identify forward-looking statements. You should not read forward looking statements
as a guarantee of future performance or results. They will not necessarily be accurate indications of whether or
at what time such performance or results will be achieved. Forward-looking statements are based on
information available at the time those statements are made and/or management’s good faith belief at that time
with respect to future events. Such statements are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or suggested by the forward-looking
statements. Important factors that could cause such differences include, but are not limited to factors described
under Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended July 30, 2011,
and other risks outlined in the Company’s periodic filings with the Securities and Exchange Commission
(“SEC”). The forward-looking statements in this presentation are expressly qualified in their entirety by this
cautionary statement. Except as required by law, the Company may not update forward-looking statements
even though its situation may change in the future.
This presentation includes certain “Non-GAAP” financial measures as defined by SEC rules. We believe that the
presentation of certain Non-GAAP financial measures provides information that is useful to investors because it
allows for a more direct comparison of our performance for the period with our performance in the comparable
prior-year periods. As required by the SEC, we have provided a reconciliation of those measures to the most
directly comparable GAAP measures on the Regulation G slides included as slides 11 through 14 of this
presentation. We caution that Non-GAAP financial measures should be considered in addition to, but not as a
substitute for, our reported GAAP results.
presentation of certain Non-GAAP financial measures provides information that is useful to investors because it
allows for a more direct comparison of our performance for the period with our performance in the comparable
prior-year periods. As required by the SEC, we have provided a reconciliation of those measures to the most
directly comparable GAAP measures on the Regulation G slides included as slides 11 through 14 of this
presentation. We caution that Non-GAAP financial measures should be considered in addition to, but not as a
substitute for, our reported GAAP results.
3
Q3-2012 Overview
n Contract revenue of $296.1 million grew 17.3% compared to $252.4 million
in the prior year quarter
in the prior year quarter
n Adjusted EBITDA grew 25.8% year-over-year to $29.9 million in Q3-12
n GAAP net income of $0.28 per share diluted compared to Non-GAAP net
income of $0.10 per share diluted in Q3-11
income of $0.10 per share diluted in Q3-11
n Repurchased 495,500 common shares at an average price of $22.08 per
share
share
Note: Non-GAAP net income per share diluted of $0.10 in Q3-11 is adjusted for the after-tax impact of a $0.6 million litigation
settlement charge, and loss on debt extinguishment of $2.6 million. See “Regulation G Disclosure” slides 11-14 for a
reconciliation of GAAP to Non-GAAP financial measures.
reconciliation of GAAP to Non-GAAP financial measures.
4
Revenue Summary
n Top 5 customers represented 59.0% of revenue in
Q3-12 compared to 61.6% of revenue in Q3-11
Q3-12 compared to 61.6% of revenue in Q3-11
Ø CenturyLink, Dycom’s second largest customer,
grew over 38% year over year
grew over 38% year over year
Ø Verizon and Windstream, Dycom’s fourth and fifth
largest customers, both grew 49% year over year
largest customers, both grew 49% year over year
n Revenue growth of 17.3%, fifth consecutive quarter of
organic growth
organic growth
Ø Revenue from Top 5 customers up 12.3%
Ø Combined revenue from other customers up 25.4%
* For comparison purposes, revenues from CenturyLink, Inc. and Qwest Communications International, Inc. have been combined for each period presented. Additionally, revenues
from Windstream Corporation and Kentucky Data Link, Inc. have been combined for each period presented.
from Windstream Corporation and Kentucky Data Link, Inc. have been combined for each period presented.
Note: See “Regulation G Disclosure” slides 11 -14 for a reconciliation of GAAP to Non-GAAP financial measures.
5
Backlog and Awards
Current Awards and Extensions
|
Customers
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Description
|
Area
|
Approximate Term
(in years) |
|
nComcast
|
Cable Installation Services
|
New Jersey, Pennsylvania, Texas
|
4
|
|
nWindstream
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Construction and Maintenance Services
|
Georgia
|
2
|
|
nTime Warner Cable
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Construction and Maintenance Services
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California
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2
|
|
nVerizon
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Engineering Services
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Florida, Virginia, Texas
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3
|
|
nVarious
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Rural broadband
|
Georgia, North Carolina, Tennessee,
Vermont |
1
|
Third Quarter Backlog at $1.744 billion
6
Summary Results
|
($ in millions,
except per share data)
|
Q3-11
(Non-GAAP)
|
Q3-12
|
|
Net Income
|
$ 3.4
|
$ 9.6
|
|
Fully Diluted EPS
|
$0.10
|
$0.28
|
Revenue growth of 17.3%, highest 3rd quarter organic growth
in 8 years
in 8 years
Adjusted EBITDA growth of 25.8% from improved performance
EPS of $0.28 per common share diluted as compared to
Non-GAAP EPS of $0.10 in the prior year quarter
Revenue from Telecommunications customers 86.5% of total
Note: See “Regulation G Disclosure” slides 11-14 for a reconciliation of
GAAP to Non-GAAP financial measures.
GAAP to Non-GAAP financial measures.
|
Adjusted EBITDA-
Non-GAAP as a % of revenues |
9.4%
|
10.1%
|
17.3%
7
Selected Information
(a) Amounts may not foot due to rounding.
(b) Percentages disclosed under the financial amounts for Q3-12 and Q3-11 represent the percentage of contract revenues for the applicable
period.
period.
|
|
|
Q3-12
|
Q3-11
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Change (a)
|
|||
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($ in millions)(b)
|
|||||||
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Contract Revenues
|
$
|
296.1
|
$
|
252.4
|
$
|
43.7
|
|
|
Cost of Earned
Revenues (Non-GAAP Q3-11) |
$
|
241.4
81.5%
|
$
|
206.4
81.8%
|
$
|
34.9
(0.3)%
|
|
|
General & Administrative
|
$
|
27.0
9.1%
|
$
|
23.7
9.4%
|
$
|
3.3
(0.3)%
|
|
|
Depreciation &
Amortization |
$
|
15.6
5.3%
|
$
|
15.5
6.1%
|
$
|
0.1
(0.9)%
|
|
|
Interest Expense, net
|
$
|
4.2
1.4%
|
$
|
4.4
1.7%
|
$
|
(0.2)
(0.3)%
|
|
|
Other Income, net
|
$
|
7.6
2.6%
|
$
|
3.5
1.4%
|
$
|
4.1
1.2%
|
|
|
Net Income - (Non-
GAAP Q3-11) |
$
|
9.6
3.3%
|
$
|
3.4
1.3%
|
$
|
6.3
1.9%
|
|
|
Adjusted EBITDA - Non-
GAAP |
$
|
29.9
10.1%
|
$
|
23.8
9.4%
|
$
|
6.1
0.7%
|
|
Revenue growth of 17.3%
nGrowth within existing contracts
nRural broadband projects
Adjusted EBITDA % increased
68 basis points as a % of revenue
to $29.9 million
68 basis points as a % of revenue
to $29.9 million
nImproved operating leverage
nMaintained cost discipline
Other income, net increased to
$7.6 million from higher asset
sales and favorable pricing
$7.6 million from higher asset
sales and favorable pricing
Note: See “Regulation G Disclosure” slides 11-14 for a reconciliation of GAAP to Non-GAAP financial measures.
8
Cash Flow and Liquidity
Operating cash flows and targeted
capital spending support growth
capital spending support growth
nCash flow supported growth in operations
during the quarter
during the quarter
nCapital expenditures, net of disposals, of
$7.8 million
$7.8 million
Balance Sheet Strength
nAmple liquidity from cash on hand of $66.7
million and $185.9 million of availability under
Senior Credit Agreement
million and $185.9 million of availability under
Senior Credit Agreement
nRepurchased 495,500 shares of common
stock at an average price of $22.08 per share
stock at an average price of $22.08 per share
9
Summary
n End market opportunities driving organic growth
} Industry participants aggressively extending or deploying
fiber networks to provide wireless backhaul services
fiber networks to provide wireless backhaul services
} Broadband stimulus funding meaningfully increasing network
construction for rural service providers
construction for rural service providers
} Cable operators deploying fiber to small and medium
businesses
businesses
} Wireless carriers upgrading from 3G to 4G technologies
} Telephone companies deploying FTTX to enable video
offerings
offerings
n Increased market share has expanded the portion of revenues
that is recurring
that is recurring
10
Looking Ahead
n Revenue which grows in the high-single digits as a percentage of the prior year’s quarterly
revenue, after adjusting for storm work
revenue, after adjusting for storm work
n Margins and earnings which reflect operating efficiencies at higher revenue levels
n Strong cash flows dedicated, as projected returns direct, to supporting organic growth,
accretive acquisition opportunities and share repurchases
accretive acquisition opportunities and share repurchases
n Confident that solid operating trends will continue for a sustained period
Q4 - 2012:
n Revenue which grows high-single digit to low-double digits as a percentage of Q4-11 quarterly
revenue, after excluding Q4-11 storm work of $14.1 million
revenue, after excluding Q4-11 storm work of $14.1 million
n Gross margins in-line year over year
n General and administrative expenses sequentially in-line
n Depreciation and amortization which is flat on a sequential basis
n Other income which decreases approximately $2.0 million from Q4-11
11
Appendix: Regulation G Disclosure
The above table presents the Non-GAAP financial measure of Adjusted EBITDA for the three and nine months ended April 28, 2012 and April 30,
2011 and a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure. Adjusted EBITDA is a Non-GAAP financial measure
within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company defines Adjusted EBITDA as earnings
before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, loss on debt extinguishment
acquisition-related costs, and charges for a wage and hour class action settlement. The Company believes this Non-GAAP financial measure
provides information that is useful to the Company’s investors. The Company believes that this information is helpful in understanding period-over-
period operating results separate and apart from items that may, or could, have a disproportionate positive or negative impact on the Company’s
results of operations in any particular period. Additionally, the Company uses this Non-GAAP financial measure to evaluate its past performance and
prospects for future performance. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income,
operating cash flows, or a measure of earnings. Because all companies do not use identical calculations, this presentation of Non-GAAP financial
measures may not be comparable to other similarly titled measures of other companies.
2011 and a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure. Adjusted EBITDA is a Non-GAAP financial measure
within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company defines Adjusted EBITDA as earnings
before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, loss on debt extinguishment
acquisition-related costs, and charges for a wage and hour class action settlement. The Company believes this Non-GAAP financial measure
provides information that is useful to the Company’s investors. The Company believes that this information is helpful in understanding period-over-
period operating results separate and apart from items that may, or could, have a disproportionate positive or negative impact on the Company’s
results of operations in any particular period. Additionally, the Company uses this Non-GAAP financial measure to evaluate its past performance and
prospects for future performance. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income,
operating cash flows, or a measure of earnings. Because all companies do not use identical calculations, this presentation of Non-GAAP financial
measures may not be comparable to other similarly titled measures of other companies.
12
Amounts may not foot due to rounding.
(a) Year-over-year growth (decline) percentage is calculated as follows: (i) revenues in the quarterly period less (ii) revenues in the comparative prior year quarter period;
divided by (ii) revenues in the comparative prior year quarter period.
divided by (ii) revenues in the comparative prior year quarter period.
(b) For Q3-12, GAAP and Non-GAAP revenue growth percentages are the same as revenues from business acquired in 2011 were included for the full quarter in each
period and there were no other Non-GAAP adjustments in either period. For Q1-11, GAAP and Non-GAAP revenue growth percentages are the same as there were no
Non-GAAP adjustments in either period.
period and there were no other Non-GAAP adjustments in either period. For Q1-11, GAAP and Non-GAAP revenue growth percentages are the same as there were no
Non-GAAP adjustments in either period.
(c) Non-GAAP adjustments in Q2-12, Q3-11 and Q2-11 reflect revenues from businesses acquired during Q2-11. Non-GAAP adjustments in Q1-12 reflect storm
restoration revenues ($3.7 million) and revenues from businesses acquired during Q2-11 ($14.5 million). Non-GAAP adjustments in Q4-11 reflect storm restoration
revenues ($14.1 million) and revenues from businesses acquired during Q2-11 ($14.1 million). Non-GAAP adjustments in Q4-10 result from the Company’s 52/53 week
fiscal year. The Q4-10 Non-GAAP adjustments reflect the impact of the additional week in Q4-10 and are calculated by dividing contract revenues by 14 weeks. The
result, representing one week of contract revenues, is subtracted from the GAAP-contract revenues to calculate 13 weeks of revenue for Q4-10 on a Non-GAAP basis for
comparison purposes. Non-GAAP adjustments in Q3-09, Q2-09, and Q1-09 reflect storm restoration revenues recognized during those periods.
restoration revenues ($3.7 million) and revenues from businesses acquired during Q2-11 ($14.5 million). Non-GAAP adjustments in Q4-11 reflect storm restoration
revenues ($14.1 million) and revenues from businesses acquired during Q2-11 ($14.1 million). Non-GAAP adjustments in Q4-10 result from the Company’s 52/53 week
fiscal year. The Q4-10 Non-GAAP adjustments reflect the impact of the additional week in Q4-10 and are calculated by dividing contract revenues by 14 weeks. The
result, representing one week of contract revenues, is subtracted from the GAAP-contract revenues to calculate 13 weeks of revenue for Q4-10 on a Non-GAAP basis for
comparison purposes. Non-GAAP adjustments in Q3-09, Q2-09, and Q1-09 reflect storm restoration revenues recognized during those periods.
13
Appendix: Regulation G Disclosure
The items reconciling "GAAP" to “Non-GAAP” financial measures are specifically described below:
(a) Charge for a wage and hour class action litigation settlement.
(b) Loss on debt extinguishment associated with the redemption of $48.4 million in aggregate principal amount of the Company’s 8.125% senior subordinated notes due
2015.
2015.
(c) Provision for income taxes includes the tax effect of the other reconciling items identified herein.
(d) The provision for income taxes, divided by income before income taxes, represents the effective tax rate. On a GAAP basis, this rate was 38.4% and 44.8% for the
three months ended April 28, 2012 and April 30, 2011, respectively. On a Non-GAAP basis, this rate was 42.1% for the three months ended April 30, 2011.
three months ended April 28, 2012 and April 30, 2011, respectively. On a Non-GAAP basis, this rate was 42.1% for the three months ended April 30, 2011.
14
Appendix: Regulation G Disclosure
The items reconciling "GAAP" to “Non-GAAP” financial measures are specifically described below:
(a) Charge for a wage and hour class action litigation settlement.
(b) Acquisition related costs.
(c) Loss on debt extinguishment associated with the tender offer and redemption of $135.4 million in aggregate principal amount of the Company’s 8.125% senior
subordinated notes due 2015.
subordinated notes due 2015.
(d) Provision for income taxes includes the tax effect of the other reconciling items identified herein.
(e) The provision for income taxes, divided by income before income taxes, represents the effective tax rate. On a GAAP basis, this rate was 39.4% and 50.0% for the nine
months ended April 28, 2012 and April 30, 2011, respectively. On a Non-GAAP basis, this rate was 42.1% for the nine months ended April 30, 2011.
months ended April 28, 2012 and April 30, 2011, respectively. On a Non-GAAP basis, this rate was 42.1% for the nine months ended April 30, 2011.
Fiscal 2012
3rd Quarter Presentation
May 23, 2012