Dycom (DY) Down On Wider-Than-Expected Q4 Loss, Q1 View Weak
Zacks Investment Research | Feb 26, 2020 09:45PM ET
Dycom Industries Inc.’s (NYSE:DY) shares plummeted more than 29% on Feb 26, after the company reported lackluster fourth-quarter fiscal 2020 (ended Jan 25, 2020) results. Its bottom line not only missed the Zacks Consensus Estimate but also declined from the year-ago level. The company provided weak fiscal first-quarter guidance.
During the quarter, it reported adjusted loss of 23 cents per share, wider than the consensus estimate of 2 cents. In the year-ago quarter, the company reported earnings of 10 cents per share. Dycom highlighted that adverse weather, seasonal effects, challenges surrounding a large customer program, and a slow start at a specific customer in rolling out its new system weighed on margins in the quarter.
Revenue & Operating Highlights
Dycom’s quarterly contract revenues came in at $737.6 million, increasing 1.5% year over year. The reported figure also surpassed the consensus mark of $727.6 million by 1.4%.
Organically, revenues (excluding storm restoration services of $20.4 million in the year-ago quarter) grew 1.3% year over year in the fiscal fourth quarter. This marked the seventh consecutive quarter of organic growth. The upside was backed by higher demand from three of its top five customers owing to the deployment of 1-gigabit wireline networks, wireless/wireline converged networks and wireless networks.
The company’s top five customers contributed 77.2% to total contract revenues, decreasing 1.2% organically. Dycom’s largest customer Verizon (NYSE:VZ) accounted for 21.9% of the total revenues. Verizon grew 3.3% year over year organically. CenturyLink (NYSE:CTL) (second-largest customer) added 18.3% to total revenues and increased 31.1% organically. AT&T (NYSE:T) contributed 18% to revenues; Comcast (NASDAQ:CMCSA) accounted for 13.8%; and Windstream — representing 5.3% of the total revenues — climbed 45.9% organically. Revenues from all other customers grew 10.6% organically in the quarter.
Dycom’s backlog at the end of the reported quarter totaled $7.314 billion versus $6.349 billion at fiscal third-quarter end. Of the backlog, $2.716 billion is projected to be completed in the next 12 months.
Gross margin during the quarter was 14.2%, which was 175 basis points (bps) below the company’s expectations. Adjusted EBITDA margin also contracted 200 bps to 6% from 8% in the year-ago quarter.
Dycom Industries, Inc. Price, Consensus and EPS Surprise
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