Dycom Industries, Inc. (DY) - Q3 2026 10-Q Summary
Business Context and Reporting Period
Dycom Industries, Inc. is a leading provider of specialty contracting services for telecommunications and digital infrastructure in the United States. This report covers the quarterly period ended October 25, 2025 (Fiscal Q3 2026). The company operates in a single reportable segment, providing construction, maintenance, and fulfillment services primarily to telecommunications providers.
Key Financial Metrics
| Metric | Q3 2026 (3 Months) | Q3 2025 (3 Months) | YTD 2026 (9 Months) | YTD 2025 (9 Months) |
|---|---|---|---|---|
| Contract Revenues | $1,451.8 million | $1,272.0 million | $4,088.3 million | $3,617.5 million |
| Net Income | $106.4 million | $69.8 million | $264.9 million | $200.7 million |
| Diluted EPS | $3.63 | $2.37 | $9.05 | $6.81 |
| Operating Cash Flow (YTD) | $223.5 million (vs. $20.9 million YTD 2025) | |||
| Adjusted EBITDA (YTD) | $575.3 million (14.1% of revenue) | |||
| Total Debt (Long-term + Current) | $939.5 million (as of Oct 25, 2025) | |||
| Cash and Equivalents | $110.1 million (as of Oct 25, 2025) | |||
| Working Capital | $1,389.5 million (as of Oct 25, 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Q3 revenues increased 14.1% year-over-year, driven by organic growth in fiber-to-the-home deployments and $110.9 million in revenue from acquisitions completed in the prior fiscal year.
- Profitability Expansion: Net income margin improved to 7.3% in Q3 2026 from 5.5% in Q3 2025. Costs of earned revenues decreased as a percentage of revenue (77.9% vs. 79.2%) due to favorable work mix.
- Expense Management: General and administrative expenses decreased in Q3 2026 compared to the prior year, primarily due to the absence of $7.1 million in incremental stock-based compensation related to a CEO transition that occurred in the prior period.
- Cash Flow Improvement: Operating cash flow for the nine months ended October 25, 2025, surged to $223.5 million compared to $20.9 million in the prior year, reflecting improved working capital management and higher net income.
Outlook, Risks, and Unusual Items
- Major Acquisition: On November 18, 2025, the company announced an agreement to acquire Power Solutions, LLC for approximately $1.95 billion. The deal involves a mix of stock and cash and is intended to expand Dycom's capabilities in electrical infrastructure for data centers. Financing includes a $1.7 billion debt commitment.
- Backlog: Total backlog stood at $8.222 billion as of October 25, 2025, an increase from $7.760 billion at the start of the fiscal year. The company expects to complete 60.7% of this backlog in the next 12 months.
- Customer Concentration: Revenue remains highly concentrated. AT&T Inc. and Lumen Technologies accounted for 24.9% and 11.7% of Q3 revenues, respectively.
- Seasonality: Management notes that results are seasonal, with Q1 and Q2 typically lower due to weather and holidays, while Q3 and Q4 are historically stronger.
- Tax Legislation: New U.S. tax legislation enacted in July 2025 reinstated 100% bonus depreciation, which is expected to reduce cash tax requirements for the current fiscal year.
Investor Verification Checklist
- Acquisition Financing: Verify the final terms and closing conditions of the $1.95 billion Power Solutions acquisition and the associated $1.7 billion debt commitment.
- Customer Concentration Risk: Monitor the stability of capital expenditure budgets for top customers (AT&T, Lumen, Charter), which represent a significant portion of revenue.
- Working Capital Trends: Review the sustainability of the improved Days Sales Outstanding (DSO) of 105 days compared to 119 days in the prior year.
- Debt Covenants: Confirm continued compliance with the Credit Agreement's net leverage ratio (max 3.50x) and interest coverage ratio (min 3.00x) post-acquisition.
- ERP Implementation: Assess the progress and potential disruption risks associated with the ongoing Enterprise Resource Planning (ERP) system implementation.