Dycom Industries, Inc. (DY) Earnings & Analysis

Latest quarter

Dycom reported Q2 FY2027 revenue of $2.0 billion, up 45.6% from $1.4 billion a year earlier. Revenue was 1.65% above the consensus, although both the reported figure and estimate round to $2.0 billion. Adjusted diluted EPS was $5.29, above the consensus estimate of $4.62. Dycom reported diluted EPS of $3.81, compared with $3.33 a year earlier.

The filing said acquired businesses contributed $397.5 million of quarterly revenue. Excluding acquired businesses, contract revenue increased by $230.5 million, primarily from fiber-to-the-home deployments, including rural programs. CFO Drew DeFerrari said communications revenue grew 16.7% organically, while the newly acquired National Technology Integrators contributed approximately $22.9 million.

Dycom’s gross margin was 22.0%, compared with 22.3% a year earlier, while operating margin was 9.57%, compared with 10.1%. The filing attributed higher direct material costs as a share of revenue primarily to a work mix in which Dycom supplied materials for customers. Free cash flow was $37.9 million, up from $18.4 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Dan Peyovich said demand remained high across fiber-to-the-home, long-haul networks, data center connections and electrical and cabling systems. He said fiber-to-the-home revenue increased nearly 60% in the first half from a year earlier and that customers had reaffirmed their build programs.

Peyovich said Dycom was investing in its workforce as fiber programs expand, including training for long-haul fiber splicing and fiber-to-the-home deployment. Asked about the pace of organic growth in the second half, he said projects are built up individually and progress is not always linear. He added that permits, planning and staffing make the programs complex to start and scale.

DeFerrari said communications adjusted EBITDA margin fell to 13.6% in Q2. He attributed the decline to investment in scaling operations, the effect of deferred wireless projects on operating leverage and higher fuel costs. Peyovich said Dycom expects those investments and the wireless shift to put slight pressure on the segment’s adjusted EBITDA margin year over year.

In building systems, DeFerrari said favorable changes in project cost estimates and service scope helped quarterly margins, alongside operating leverage. Peyovich said demand for inside-plant structured cabling was high and that Dycom was pursuing cross-selling opportunities following its acquisition of National Technology Integrators. He also said the company was turning away some electrical projects because of the time needed to recruit and train workers.

Peyovich said additional awards brought contracted long-haul, middle-mile and inside-the-fence fiber backlog to over $1 billion. Asked when prospective work might enter backlog, he said it was difficult to give an outlook because of execution and contract-signing timing. He said the existing work spans multiple customers and programs. On wireless, he said approximately $150 million of revenue would move from the second half of FY2027 into FY2028, without changing the program’s overall scope or backlog.

Guidance

Dycom raised its FY2027 contract revenue outlook to $7.48 billion to $7.66 billion. DeFerrari said the revised range increased the midpoint by approximately $55 million.

The company now expects communications revenue of $5.90 billion to $6.01 billion, reflecting the deferral of approximately $150 million in wireless revenue to FY2028. Dycom raised its building systems revenue outlook to $1.58 billion to $1.65 billion. Peyovich also described a margin raise for building systems, with adjusted EBITDA margin expected in the high teens to low 20s.