PALM BEACH GARDENS, Fla.,
Feb. 12, 2018 /PRNewswire/ -- Dycom Industries, Inc. (NYSE:
DY) announced today that for the quarter ended
January 27, 2018 the Company expects revenue of
approximately $655.0 million, below
the midpoint of its previous guidance. Additionally, the Company
expects Non-GAAP Adjusted Diluted Earnings per Common Share ranging
from $0.09 - $0.12 for the quarter ended
January 27, 2018, which is below previous
guidance. On a GAAP basis, the Company expects Diluted
Earnings per Common Share ranging from $1.20 - $1.23,
including tax benefits from the Tax Cuts and Jobs Act of 2017 ("Tax
Reform") and tax benefits from the vesting and exercise of
share-based awards. See "Reconciliation of Non-GAAP Financial
Measures to Comparable GAAP Financial Measures" included below.
Widespread adverse weather reduced the number of available
workdays and negatively impacted productivity and margins during
the quarter ended January 27, 2018.
Margins were also impacted by costs incurred in conjunction with
the initiation of large customer programs.
The Company plans to report full financial results for the
second quarter period ended January 27,
2018 on Wednesday, February 28, 2018, before the
open of trading on the New York Stock Exchange.
Outlook
As previously announced, the Company changed its fiscal year end
from the last Saturday in July to the last Saturday in January. As
a result, fiscal 2019 commenced on January 28, 2018.
The Company is providing financial guidance for the 2019 fiscal
year ending January 26, 2019, as well
as updating its outlook for the quarter ending April 28, 2018 (first quarter of fiscal 2019).
This guidance reflects the anticipated timing of activity on large
customer programs and the related impacts on margins as well as
consideration of near-term weather conditions. The Company
currently expects the following:
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|
Fiscal
2019
|
|
Quarter
Ending
April 28,
2018
(Q1-19)
|
Contract
revenues
|
|
$3.30 - $3.50
billion
|
|
$720 - $750
million
|
Diluted Earnings per
Common Share - GAAP(1)
|
|
$4.78 -
$5.70
|
|
$0.52 -
$0.67
|
Non-GAAP Adjusted
Diluted Earnings per Common Share(1)
|
|
$5.22 -
$6.14
|
|
$0.63 -
$0.78
|
Non-GAAP Adjusted
EBITDA % of revenue
|
|
13.6% -
14.1%
|
|
10.7% -
11.1%
|
(1) Earnings per Common Share calculations based on
effective tax rate of 27.3%. See Tax Reform below for further
information.
See reconciliation of Non-GAAP Financial Measures to Comparable
GAAP Financial Measures included below.
Tax Reform
The Company estimates that Tax Reform will result in a
benefit to the Company's income taxes of approximately $31.0 million, or $0.98 per diluted common
share, in the quarter ended January 27,
2018 (second quarter of fiscal 2018). It will not impact
Non-GAAP Adjusted Diluted Earnings per Common Share. This
benefit primarily resulted from the re-measurement of the Company's
net deferred tax liabilities at a lower U.S. federal corporate
income tax rate and represents a preliminary assessment of the
effect of Tax Reform. The impact of Tax Reform may change
from this preliminary estimate as the Company completes
its assessment for purposes of finalizing its year-end
provision for income taxes.
Based on a preliminary analysis of the impact of Tax
Reform, the Company currently expects that the fiscal 2019
effective tax rate will be within a range of 27.0% to 27.5%.
Other Information
As of January 27, 2018, the
Company reported cash and equivalents of approximately $84.0 million, no outstanding borrowings on its
revolving line of credit and $358.1
million of term loans outstanding.
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). In quarterly
results releases, trend schedules, conference calls, slide
presentations, and webcasts, the Company may use or discuss
Non-GAAP financial measures, as defined by Regulation G of the
Securities and Exchange Commission. See Explanation of Non-GAAP
Financial Measures directly following the press release tables.
About Dycom Industries, Inc.
Dycom is a leading provider of specialty contracting services
throughout the United States and
in Canada. These services include
program management, engineering, construction, maintenance and
installation services for telecommunications providers, underground
facility locating services for various utilities, including
telecommunications providers, and other construction and
maintenance services for electric and gas utilities.
Forward Looking Information
This press release contains forward-looking statements as
contemplated by the 1995 Private Securities Litigation Reform Act.
These statements include those related to the expected results for
the second quarter period ended January 27,
2018 which are preliminary and unaudited, the outlook for
the quarter ending April 28, 2018 and
fiscal 2019 and statements found under the "Reconciliation of
Non-GAAP Financial Measures to Comparable GAAP Financial Measures"
section of this release. Forward looking statements are based on
management's current expectations, estimates and projections. These
statements are subject to risks and uncertainties that may cause
actual results for completed periods and periods in the future to
differ materially from the results projected or implied in any
forward-looking statements contained in this press release. The
most significant of these risks and uncertainties are described in
the Company's Form 10-K, Form 10-Q and Form 8-K reports (including
all amendments to those reports) and include business and economic
conditions and trends in the telecommunications industry affecting
the Company's customers, the adequacy of the Company's insurance
and other reserves and allowances for doubtful accounts, whether
the carrying value of the Company's assets may be impaired,
preliminary purchase price allocations of acquired businesses,
expected benefits and synergies of acquisitions, the future impact
of any acquisitions or dispositions, adjustments and cancellations
related to the Company's backlog, weather conditions, the
anticipated outcome of other contingent events, including
litigation, liquidity and other financial needs, the availability
of financing, the impact of the Tax Cuts and Jobs Act of 2017, and
the other risks and uncertainties detailed from time to time in the
Company's filings with the Securities and Exchange Commission. The
Company does not undertake to update forward-looking
statements.
DYCOM INDUSTRIES,
INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP
FINANCIAL MEASURES
|
UNAUDITED
|
|
|
|
GAAP and
Non-GAAP Earnings per Share Guidance for the Quarter Ended January
27, 2018 (Q2-18)
|
|
|
|
|
|
Quarter
|
|
|
Ended
|
|
|
January 27,
2018
|
Diluted
Earnings per Share:
|
|
|
Diluted Earnings per
Common Share - GAAP
|
|
$1.20 -
$1.23
|
Adjustments
|
|
|
Addback of after-tax
non-cash amortization of debt discount on Notes (a)
|
|
0.09
|
Tax impact of Tax
Reform (b)
|
|
(0.98)
|
Tax impact of
share-based vesting and exercises under ASU 2016-09 (c)
|
|
(0.22)
|
Non-GAAP Adjusted
Diluted Earnings per Common Share
|
|
$0.09 -
$0.12
|
|
|
|
Diluted Shares
(in millions):
|
|
|
Diluted Shares -
GAAP
|
|
32.2
|
Adjustment for
economic benefit of note hedge related to Notes (d)
|
|
(0.4)
|
Non-GAAP Adjusted
Diluted Shares (d)
|
|
31.8
|
|
|
|
(a) The Company
expects to recognize $4.6 million of pre-tax interest expense for
non-cash amortization of the debt discount associated with the
Company's 0.75% convertible senior notes due September 2021 (the
"Notes").
|
(b) The Company
estimates that Tax Reform will result in a benefit to the Company's
income taxes of approximately $31.0 million. This benefit primarily
resulted from the re-measurement of the Company's net deferred tax
liabilities at a lower U.S. federal corporate income tax rate and
represents a preliminary assessment of the effect of Tax Reform.
The impact of Tax Reform may change from
this preliminary estimate as the Company completes its
assessment for purposes of finalizing its year-end provision
for income taxes.
|
(c) The Company
expects to recognize an income tax benefit of approximately $7.0
million for the tax effects of certain share-based award activities
in accordance with ASU 2016-09, Improvements to Employee
Share-Based Payment Accounting ("ASU 2016-09"). See Explanation
of Non-GAAP Financial Measures below for more information related
to income tax benefits as a result of the adoption of ASU
2016-09.
|
(d) Diluted shares
used in computing expected GAAP Diluted Earnings per Common Share
includes approximately 0.4 million common shares from the
dilutive effect of the Notes based on the average share price
during the quarter ended January 27, 2018. The Company
has a note hedge in effect to offset the economic dilution of the
Notes up to an average quarterly share price of $130.43 per share.
Non-GAAP Adjusted Diluted Shares excludes the GAAP dilutive effect
of the Notes based on the expected effect of the note hedge. See
the Company's Form 8-K previously filed with the Securities
and Exchange Commission on September 28, 2015 for further
information regarding the Notes and note hedge.
|
DYCOM INDUSTRIES,
INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP
FINANCIAL MEASURES (CONTINUED)
|
UNAUDITED
|
|
|
|
|
|
GAAP and
Non-GAAP Adjusted Diluted Earnings per Common Share Guidance for
Fiscal 2019 and Quarter Ending April 28, 2018
(Q1-19)
|
|
|
|
|
|
|
|
|
|
Quarter
Ending
|
|
|
|
|
April 28,
2018
|
|
|
Fiscal
2019
|
|
(Q1-19)
|
Diluted
Earnings per Share:
|
|
|
|
|
Diluted Earnings per
Common Share - GAAP (a)
|
|
$4.78 -
$5.70
|
|
$0.52 -
$0.67
|
Adjustment
|
|
|
|
|
Addback of after-tax
non-cash amortization of debt discount on Notes (b)
|
|
0.44
|
|
0.11
|
Non-GAAP Adjusted
Diluted Earnings per Common Share
|
|
$5.22 -
$6.14
|
|
$0.63 -
$0.78
|
|
|
|
|
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Diluted Shares (in
millions) (c)
|
|
31.9
|
|
31.8
|
|
|
|
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(a) Based on a
preliminary analysis of the impact of Tax Reform, the Company
currently expects that the fiscal 2019 effective tax rate will be
within a range of 27.0% to 27.5%.
|
(b) The Company
expects to recognize approximately $19.1 million and $4.7 million
in pre-tax interest expense during fiscal 2019 and the quarter
ending April 28, 2018, respectively, for non-cash
amortization of the debt discount associated with the
Notes.
|
(c) Actual diluted
shares will include any applicable dilutive effect of the Notes
based on the average share price during the respective period. The
Company has a note hedge in effect to offset the economic dilution
of the Notes up to an average quarterly price of $130.43 per share.
Accordingly, for Non-GAAP Adjusted Diluted Earnings per Common
Share calculations, the Company expects to present results per
share that exclude the dilutive effect of the Notes, if applicable,
based on the expected effect of the note hedge.
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|
|
|
|
|
|
Reconciliation
of Net Income to Non-GAAP Adjusted EBITDA based on the Midpoint of
Earnings per Common Share ("EPS") Guidance for
Fiscal 2019 and Quarter Ending April 28, 2018 (Q1-19) (Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Quarter
Ending
|
|
|
|
|
April 28,
2018
|
|
|
Fiscal
2019
|
|
(Q1-19)
|
|
|
(at midpoint of
EPS guidance)
|
Net Income
|
|
$
|
167.2
|
|
$
|
19.0
|
Interest Expense,
Net
|
|
41.5
|
|
10.1
|
Provision for income
taxes
|
|
62.8
|
|
7.1
|
Depreciation and
amortization
|
|
183.6
|
|
43.8
|
Earnings Before
Interest, Taxes, Depreciation & Amortization
("EBITDA")
|
|
455.1
|
|
80.0
|
Gain on sale of fixed
assets
|
|
(11.0)
|
|
(5.1)
|
Stock-based
compensation expense
|
|
26.1
|
|
5.3
|
Non-GAAP Adjusted
EBITDA
|
|
$
|
470.2
|
|
$
|
80.3
|
|
|
|
|
|
Contract Revenues (at
midpoint of guidance)
|
|
$
|
3,400
|
|
$
|
735
|
Non-GAAP Adjusted
EBITDA % of Contract Revenues (at midpoint of
guidance)
|
|
|
13.8%
|
|
|
10.9%
|
|
|
|
|
|
Amounts in tables
above may not add due to rounding.
|
|
|
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|
DYCOM INDUSTRIES, INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES
(CONTINUED)
Explanation of Non-GAAP Financial Measures
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). In the
Company's quarterly results releases, trend schedules, conference
calls, slide presentations, and webcasts, it may use or discuss
Non-GAAP financial measures, as defined by Regulation G of the
Securities and Exchange Commission. The Company believes that the
presentation of certain Non-GAAP financial measures in these
materials provides information that is useful to investors because
it allows for a more direct comparison of the Company's performance
for the period reported with the performance in prior periods. The
Company cautions that Non-GAAP financial measures should be
considered in addition to, but not as a substitute for, the
Company's reported GAAP results. Management defines the Non-GAAP
financial measures used in this release as follows:
- Non-GAAP Adjusted EBITDA - net income before interest,
taxes, depreciation and amortization, gain on sale of fixed assets,
stock-based compensation expense, and certain non-recurring items.
Management believes Non-GAAP Adjusted EBITDA is a helpful measure
for comparing the Company's operating performance with prior
periods as well as with the performance of other companies with
different capital structures or tax rates.
- Non-GAAP Adjusted Net Income - GAAP net income before
non-cash amortization of the debt discount and the related tax
impact, certain tax impacts resulting from vesting and exercise of
share-based awards, certain tax impacts of Tax Reform, and
certain non-recurring items.
- Non-GAAP Adjusted Diluted Earnings per Common Share and
Non-GAAP Adjusted Diluted Shares - Non-GAAP Adjusted Net
Income divided by Non-GAAP Adjusted Diluted Shares outstanding. The
Company has a note hedge in effect to offset the economic dilution
of its Notes up to an average quarterly share price of $130.43. The measure of Non-GAAP Adjusted Diluted
Shares used in computing Non-GAAP Adjusted Diluted Earnings per
Common Share excludes dilution from the Notes. Management believes
that the calculation of Non-GAAP Adjusted Diluted Shares to reflect
the note hedge is useful to investors because it provides
insight into the offsetting economic effect of the hedge against
potential conversion of the Notes.
Management excludes or adjusts each of the items identified
below from Non-GAAP Adjusted Net Income and Non-GAAP Adjusted
Diluted Earnings per Common Share:
- Non-cash amortization of the debt discount - The
Company's Notes were allocated between debt and equity components.
The difference between the principal amount and the carrying amount
of the liability component of the Notes represents a debt discount.
The debt discount is being amortized over the term of the Notes but
does not result in periodic cash interest payments. The Company has
excluded the non-cash amortization of the debt discount from its
Non-GAAP financial measures because it believes it is useful to
analyze the component of interest expense for the Notes that will
be paid in cash and provides management with a consistent measure
for assessing financial results.
- Tax impact from Tax Reform - During the quarter ended
January 27, 2018, the Company expects
to recognize an income tax benefit of approximately $31.0 million resulting from Tax Reform,
primarily due to a reduction of net deferred tax liabilities. The
Company has excluded this impact because it is a significant change
in the U.S. federal corporate tax rate and because the Company
believes it is not indicative of the Company's underlying results
or ongoing operations. The impact of Tax Reform may
change from this preliminary estimate as the Company
completes its assessment for purposes of finalizing its year-end
provision for income taxes.
- Tax impact of excess tax benefits as a result of ASU
2016-09 - ASU 2016-09 became effective for the Company during
the first quarter period ended October 28,
2017 and changed the treatment of excess tax benefits (or
shortfalls) arising from the vesting and exercise of share-based
awards. Prior to ASU 2016-09, these amounts were recorded as an
adjustment to additional paid-in capital. With the adoption of ASU
2016-09, these amounts are now captured in the Company's provision
for income taxes. The Company excluded the impact of approximately
$7.0 million of excess tax benefits
during the quarter ended January 27,
2018 from its provision for income taxes in its Non-GAAP
measures as this amount may vary significantly from period to
period and excluding this amount from the Company's Non-GAAP
financial measures provides management with a more consistent
measure for assessing financial results.
- Tax impact of adjusted results - The tax impact of
the adjusted results reflects the Company's effective tax rate
used for financial planning during the applicable period.
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SOURCE Dycom Industries, Inc.