Dycom Industries, Inc. — FY2024 Form 10-K
Reporting period: Fiscal year ended January 27, 2024 (52 weeks). The filing also reports fourth-quarter results; fiscal 2024 Q4 ended January 27, 2024. Amounts are U.S. dollars.
Business context and reporting period
Dycom provides telecommunications infrastructure and utility specialty contracting services, including fiber and wireless network engineering, construction, maintenance, facility locating, and fulfillment. It operates across 49 states through more than 40 operating companies and reports one segment. Demand is supported by fiber deployment, wireless network upgrades, and government-supported rural broadband programs, including the BEAD program.
Key financial results
| Metric | FY2024 | FY2023 |
|---|---|---|
| Contract revenue | $4,175.6 million | $3,808.5 million |
| Gross profit | $813.8 million; 19.5% margin | $648.2 million; 17.0% margin |
| Income before taxes | $292.0 million | $180.1 million |
| Net income | $218.9 million; 5.2% net margin | $142.2 million; 3.7% net margin |
| Diluted EPS | $7.37 | $4.74 |
| Adjusted EBITDA (non-GAAP) | $504.8 million; 12.1% of revenue | $366.1 million; 9.6% of revenue |
| Cash from operating activities | $259.0 million | $164.8 million |
Fiscal 2024 Q4 revenue was $952.5 million versus $917.5 million a year earlier; net income was $23.4 million versus $24.8 million, and diluted EPS was $0.79 versus $0.83. Q4 gross profit was $161.1 million, compared with $151.8 million.
Liquidity, debt, and capital allocation
- Cash and equivalents were $101.1 million at year-end, down from $224.2 million. Working capital, excluding current debt, was $1,061.2 million, compared with $1,040.6 million.
- Debt principal comprised $315.0 million under the term loan and $500.0 million of 4.50% senior notes due 2029; net carrying debt was $808.9 million. The term loan weighted-average rate was 7.06% at year-end.
- The $650 million revolving facility had no borrowings and $602.5 million of covenant-determined availability. The company reported compliance with its financial covenants. The credit agreement matures April 2026.
- Capital expenditures were $218.5 million. The company expects fiscal 2025 capital expenditures, net of disposals, of $220–$230 million.
- Dycom repurchased 485,000 shares for $49.7 million in FY2024. At year-end, $120.6 million remained under its $150 million repurchase authorization. It does not anticipate cash dividends in the foreseeable future.
Material changes versus the prior year
- Revenue increased 9.6%; excluding $102.7 million of revenue from the Bigham acquisition, management reported organic revenue growth of $264.4 million.
- Gross margin improved 2.5 percentage points, with costs of earned revenues declining to 80.5% of revenue from 83.0%. Management attributed improvement primarily to work mix and lower relative labor, equipment/fuel, and materials costs.
- Net income increased 54.0% and adjusted EBITDA increased 37.9%. Interest expense rose to $52.6 million from $40.6 million, reflecting higher rates and funded debt balances.
- Operating cash flow increased, although accounts receivable growth used $142.4 million of cash. Days sales outstanding rose to 120 days from 108 days.
- Backlog increased to $6.917 billion from $6.141 billion; the company expects 57.3% of year-end backlog to be completed within 12 months. Backlog is an estimate, not a GAAP measure, and customer work volumes are generally not guaranteed.
Outlook, risks, and unusual items
Management said stabilizing macroeconomic conditions, improving labor availability, and easing equipment supply constraints support the business, while mid-duty chassis remained somewhat constrained. It expects deployment pace to increase for several customers in fiscal 2025 and cited fiber expansion, wireless construction, rural broadband funding, and increased network maintenance needs as opportunities. No revenue or earnings guidance was provided.
- Customer concentration remains significant: the top five customers generated 57.7% of FY2024 revenue. AT&T contributed 16.9%, Lumen 15.6%, and Comcast 10.7%. Customer spending priorities, contract rebids, and termination or rescheduling rights can affect results.
- Most contracts are long-term master service agreements, but customers generally are not committed to minimum volumes and can cancel agreements or awarded work. Backlog and expected revenue are therefore uncertain.
- Other key risks include weather and seasonality, labor and subcontractor availability and costs, fixed-price execution, collection and working-capital demands, interest-rate exposure, safety and environmental liabilities, and cybersecurity or ERP implementation disruption.
- Accrued insurance claims totaled $93.9 million, including $47.2 million of incurred-but-not-reported claims. Actual claims may exceed estimates or retained insurance limits.
- A subsidiary continues to dispute a claimed approximately $13 million multiemployer pension withdrawal liability; an arbitrator ruled against the subsidiary on its asserted statutory exemption, and an appeal is pending. The filing says the potential loss range cannot be estimated.
- FY2024 included a $131.2 million Bigham Cable Construction acquisition; its purchase price allocation remained preliminary. The auditor identified valuation of Bigham customer relationships as a critical audit matter. No goodwill impairment was recorded.
The independent auditor issued an unqualified opinion on the financial statements and internal control over financial reporting. Bigham was excluded from the internal-control assessment because it was acquired during the year.
Most important facts for investors to verify
- Whether customer deployment plans, especially among the largest customers, translate into durable work orders and revenue rather than backlog estimates.
- Whether the rise in DSO and accounts receivable converts to cash, particularly given Lumen’s $345.0 million of accounts receivable and contract assets, or 27.4% of the total combined balance.
- Whether improved gross margins and operating cash flow are sustainable as labor, subcontractor, equipment, and insurance costs change.
- Fiscal 2025 capital spending, acquisition integration, and debt-service needs relative to cash generation and available revolver capacity.
- Developments in the pension withdrawal-liability appeal, insurance reserves, and final Bigham purchase accounting.