Dycom Industries Stock

Dycom Industries, Inc. is a leading provider of specialty contracting services to the telecommunications infrastructure and utility industries throughout the United States.

The company is made up of more than 40 operating companies that serve a diverse customer base across 49 states from hundreds of field offices. The company’s deep industry knowledge, strong customer relationships, broad geographic presence and skilled workforce provide the scale needed to quickly execute on opportunities to service existing and new customers throughout urban and rural America.

The company’s operating companies supply telecommunications providers with a comprehensive portfolio of specialty services, including program management; planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services. Additionally, the company provides underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities. The company supplies the expertise, labor, equipment, and tools necessary to provide services to the company’s customers.

Engineering Services: The company provides engineering services to telecommunications providers, including the planning and design of aerial, underground, and buried fiber optic, copper, and coaxial cable systems that extend from the telephone company hub location, or cable operator headend, to a consumer’s home or business. The company also plans and designs wireless networks in connection with the deployment of new and enhanced macro cell and new small cell sites. Additionally, the company obtains rights of way and permits in support of its engineering activities and those of its customers and provides program and project management and inspection personnel in conjunction with engineering services or on a stand-alone basis.

Construction, Maintenance, and Installation Services: The company provides a range of construction, maintenance, and installation services, including the placement and splicing of fiber, copper, and coaxial cables. The company excavates trenches to place these cables; place related structures, such as poles, anchors, conduits, manholes, cabinets, and closures; place drop lines from main distribution lines to a consumer’s home or business; and maintain and remove these facilities. The company provides these services for both telephone companies and cable multiple system operators in connection with the deployment, expansion, or maintenance of new and existing networks. The company also provides tower construction, lines and antenna installation, foundation and equipment pad construction, small cell site placement for wireless carriers, and equipment installation and material fabrication and site testing services. In addition, the company provides underground facility locating services for various utility companies, including telecommunications providers. The company’s underground facility locating services include locating telephone, cable television, power, water, sewer, and gas lines. In addition, the company installs and maintains customer premise equipment, such as digital video recorders, set top boxes and modems, for cable multiple system operators and others. The company also performs construction and maintenance services for electric and gas utilities and other customers.

Business Strategy

The key elements of the company’s strategy are to selectively increase market share; pursue disciplined financial and operating strategies; and pursue selective acquisitions.

Customer Relationships

The company has established relationships with many leading telecommunications providers, including telephone companies, cable multiple system operators, wireless carriers, telecommunication equipment and infrastructure providers, as well as electric and gas utilities. The company’s customer base is highly concentrated, with its top five customers during fiscal 2023, accounting for approximately 66.7% of its total contract revenues. During fiscal 2023, the company derived approximately 25.2% of its total contract revenues from AT&T Inc., 12.7% from Lumen Technologies Inc., 11.3% from Comcast Corporation, 9.1% from Verizon Communications, Inc., and 8.5% from Frontier Communications Corporation.

The company serves its markets locally through dedicated and experienced personnel. The company’s sales and marketing efforts are the responsibility of the management teams of its operating companies. These teams possess intimate knowledge of their particular markets, allowing the company to be responsive to customer needs. Executive management supports these efforts, both at the local and national levels, focusing on contacts with the appropriate personnel within the company’s customers’ organizations.

The company performs a significant amount of its services under master service agreements and other contracts that contain customer-specified service requirements. These agreements include discrete pricing for individual tasks. The company generally possesses multiple agreements with each of its significant customers.

Seasonality

The company’s contract revenues and results of operations exhibit seasonality and are impacted by adverse weather changes as it performs a significant portion of its work outdoors. Consequently, adverse weather, which is more likely to occur with greater frequency, severity, and duration during the winter, as well as reduced daylight hours, impact the company’s operations during the fiscal quarters ending in January and April. Additionally, extreme weather conditions, such as major or extended winter storms, droughts and tornados, and natural disasters, such as floods, hurricanes, tropical storms, whether as a result of climate change or otherwise, could also impact the demand for its services, or impact its ability to perform its services. Also, several holidays fall within the fiscal quarter ending in January, which decreases the number of available workdays in this fiscal quarter. Because of these factors, the company is most likely to experience reduced revenue and profitability or losses during the fiscal quarters ending in January and April compared to the fiscal quarters (year ended January 28, 2023) ending in July and October.

Subcontractors and Materials

The company contracts with subcontractors to perform a significant amount of its work and to manage fluctuations in work volumes and to reduce the amount it expends on fixed assets and working capital. For a majority of the contract services it performs, the company is provided the majority of the required materials by its customers.

Regulation

The company is subject to the requirements of the federal Occupational Safety and Health Act (OSHA) and comparable state statutes that regulate the protection of the health and safety of workers.

History

Dycom Industries, Inc. was founded in 1969. The company was incorporated in the state of Florida in 1969.