PALM BEACH GARDENS, Fla.,
Aug. 28, 2019 /PRNewswire/ -- Dycom Industries, Inc.
(NYSE: DY) announced today its results for the second quarter and
six months ended July 27, 2019. The Company reported:
- Contract revenues of $884.2
million for the quarter ended July
27, 2019, compared to $799.5
million for the quarter ended July
28, 2018. Contract revenues for the quarter ended
July 27, 2019 increased 11.1% on an
organic basis after excluding $3.8
million in contract revenues from storm restoration services
for the quarter ended July 28,
2018.
- Non-GAAP Adjusted EBITDA of $100.2
million, or 11.3% of contract revenues, for the quarter
ended July 27, 2019, compared to
Non-GAAP Adjusted EBITDA of $97.8
million, or 12.2% of contract revenues, for the quarter
ended July 28, 2018.
- On a GAAP basis, net income was $29.9
million, or $0.94 per common
share diluted, for each of the quarters ended July 27, 2019 and July 28,
2018. Non-GAAP Adjusted Net Income was $34.6 million, or $1.09 per common share diluted, for the quarter
ended July 27, 2019, compared to
Non-GAAP Adjusted Net Income of $33.3
million, or $1.05 per Non-GAAP
Adjusted Diluted Share, for the quarter ended July 28, 2018.
- The Company entered into a contract modification that increases
revenue produced by a large customer program. As a result, the
Company recognized $11.8 million of
contract revenues for services performed in prior periods and
$1.8 million of related
performance-based compensation expense. On an after-tax basis,
these items contributed approximately $7.3
million to net income, or $0.23 per common share diluted, for the quarter
ended July 27, 2019.
The Company also reported:
- Contract revenues of $1.718
billion for the six months ended July
27, 2019, compared to $1.531
billion for the six months ended July
28, 2018. Contract revenues for the six months ended
July 27, 2019 increased 13.5% on an
organic basis after excluding contract revenues from an acquired
business that was not owned for the full period in both the current
and prior year periods and contract revenues from storm restoration
services. Contract revenues from that acquired business were
$13.4 million for the six months
ended July 27, 2019 compared to
$14.9 million for the six months
ended July 28, 2018. Contract
revenues from storm restoration services were $4.7 million for the six months ended
July 27, 2019 compared to
$18.6 million for the six months
ended July 28, 2018.
- Non-GAAP Adjusted EBITDA of $173.8
million, or 10.1% of contract revenues, for the six months
ended July 27, 2019, compared to
Non-GAAP Adjusted EBITDA of $171.5
million, or 11.2% of contract revenues, for the six months
ended July 28, 2018.
- On a GAAP basis, net income was $44.2
million, or $1.39 per common
share diluted, for the six months ended July
27, 2019, compared to net income of $47.1 million, or $1.46 per common share diluted, for the six
months ended July 28, 2018. Non-GAAP
Adjusted Net Income was $51.6
million, or $1.62 per common
share diluted, for the six months ended July
27, 2019, compared to Non-GAAP Adjusted Net Income of
$54.0 million, or $1.70 per Non-GAAP Adjusted Diluted Share, for
the six months ended July 28,
2018.
Outlook
The Company also announced its outlook for the fiscal quarter
ending October 26, 2019. The Company
currently expects total contract revenues for the fiscal quarter
ending October 26, 2019 to range from
$820 million to $870 million. On a GAAP basis, diluted earnings
per common share for the fiscal quarter ending October 26, 2019 is expected to range from
$0.48 to $0.68 and Non-GAAP Adjusted Diluted Earnings per
Common Share is expected to range from $0.60 to $0.80.
Non-GAAP Adjusted Diluted Earnings per Common Share guidance
excludes $5.1 million of pre-tax interest expense, or
$0.12 per common diluted share on an
after-tax basis, for the non‑cash amortization of the debt discount
associated with the Company's 0.75% convertible senior notes due
September 2021 (the "Notes"). A
reconciliation of Non-GAAP Adjusted Diluted Earnings per Common
Share guidance provided for the fiscal quarter ending October 26, 2019, along with reconciliations of
other Non-GAAP measures, is included within the press release
tables. For additional discussion regarding the Company's outlook,
please see the presentation materials available on the Company's
website posted in connection with the conference call discussed
below.
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 Reconciliation of Non-GAAP
Financial Measures to Comparable GAAP Financial Measures in the
press release tables that follow.
Conference Call Information and Other Selected Data
A conference call to review the Company's results will be hosted
at 9:00 a.m. (ET), Wednesday, August 28, 2019; call
(800) 230-1085 (United
States) or (612) 288-0329 (International) ten minutes before
the conference call begins and ask for the "Dycom Results"
conference call. A live webcast of the conference call and related
materials will be available on the Company's Investor Center
website at https://ir.dycomind.com. If you are unable to
attend the conference call at the scheduled time, a replay of the
live webcast and the related materials will be available at
https://ir.dycomind.com until Friday, September 27, 2019.
About Dycom Industries, Inc.
Dycom is a leading provider of specialty contracting services
throughout the United States.
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 outlook for the
quarter ending October 26, 2019 found
under the "Outlook" and "Reconciliation of Non-GAAP Financial
Measures to Comparable GAAP Financial Measures" sections 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, customer capital budgets and spending
priorities, 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, 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 any obligation to update forward-looking
statements.
---Tables Follow---
DYCOM INDUSTRIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Dollars in
thousands)
|
Unaudited
|
|
|
|
|
|
July 27,
2019
|
|
January 26,
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
|
12,583
|
|
$
|
128,342
|
Accounts receivable,
net
|
796,908
|
|
625,258
|
Contract
assets
|
357,615
|
|
215,849
|
Inventories
|
107,353
|
|
94,385
|
Income tax
receivable
|
1,417
|
|
3,461
|
Other current
assets
|
31,971
|
|
29,145
|
Total current
assets
|
1,307,847
|
|
1,096,440
|
|
|
|
|
Property and
equipment, net
|
422,264
|
|
424,751
|
Operating lease
right-of-use assets (a)
|
69,459
|
|
—
|
Goodwill and other
intangible assets, net
|
476,212
|
|
486,874
|
Other
|
52,589
|
|
89,438
|
Total non-current
assets
|
1,020,524
|
|
1,001,063
|
Total
assets
|
$
|
2,328,371
|
|
$
|
2,097,503
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
140,279
|
|
$
|
119,485
|
Current portion of
debt
|
16,875
|
|
5,625
|
Contract
liabilities
|
13,272
|
|
15,125
|
Accrued insurance
claims
|
41,075
|
|
39,961
|
Operating lease
liabilities (a)
|
25,751
|
|
—
|
Income taxes
payable
|
2,553
|
|
721
|
Other accrued
liabilities
|
117,159
|
|
104,074
|
Total current
liabilities
|
356,964
|
|
284,991
|
|
|
|
|
Long-term
debt
|
932,277
|
|
867,574
|
Accrued insurance
claims - non-current
|
58,492
|
|
68,315
|
Operating lease
liabilities - non-current (a)
|
44,371
|
|
—
|
Deferred tax
liabilities, net - non-current
|
77,574
|
|
65,963
|
Other
liabilities
|
5,260
|
|
6,492
|
Total
liabilities
|
1,474,938
|
|
1,293,335
|
|
|
|
|
Total stockholders'
equity
|
853,433
|
|
804,168
|
Total liabilities and
stockholders' equity
|
$
|
2,328,371
|
|
$
|
2,097,503
|
|
|
|
|
(a) The Company
adopted Accounting Standards Update No. 2016-02, Leases (Topic
842), effective January 27, 2019, the first day of fiscal 2020. On
adoption, the Company recognized approximately $71.0 million of
operating lease right-of-use assets and corresponding operating
lease liabilities on its condensed consolidated balance sheet for
its operating leases with terms greater than twelve
months.
|
DYCOM INDUSTRIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars in
thousands, except share amounts)
|
Unaudited
|
|
|
Quarter
|
|
Quarter
|
|
Six
Months
|
|
Six
Months
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
July 27,
2019
|
|
July 28,
2018
|
|
July 27,
2019
|
|
July 28,
2018
|
Contract
revenues
|
$
|
884,221
|
|
$
|
799,470
|
|
$
|
1,717,964
|
|
$
|
1,530,844
|
|
|
|
|
|
|
|
|
Costs of earned
revenues, excluding depreciation and amortization (a)
|
720,382
|
|
642,376
|
|
1,422,150
|
|
1,241,949
|
General and
administrative (b) (c)
|
65,117
|
|
64,555
|
|
123,738
|
|
126,838
|
Depreciation and
amortization
|
47,244
|
|
44,805
|
|
93,586
|
|
88,160
|
Total
|
832,743
|
|
751,736
|
|
1,639,474
|
|
1,456,947
|
|
|
|
|
|
|
|
|
Interest expense, net
(d)
|
(12,878)
|
|
(10,446)
|
|
(25,111)
|
|
(20,612)
|
Other income,
net
|
4,006
|
|
4,156
|
|
9,705
|
|
11,868
|
Income before income
taxes
|
42,606
|
|
41,444
|
|
63,084
|
|
65,153
|
|
|
|
|
|
|
|
|
Provision for income
taxes (e)
|
12,710
|
|
11,544
|
|
18,909
|
|
18,022
|
|
|
|
|
|
|
|
|
Net income
|
$
|
29,896
|
|
$
|
29,900
|
|
$
|
44,175
|
|
$
|
47,131
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
0.95
|
|
$
|
0.96
|
|
$
|
1.40
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$
|
0.94
|
|
$
|
0.94
|
|
$
|
1.39
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
Shares used in
computing earnings per common share:
|
|
|
|
|
Basic
|
31,487,011
|
|
31,206,340
|
|
31,469,401
|
|
31,198,349
|
|
|
|
|
|
|
|
|
Diluted
(f)
|
31,820,296
|
|
31,954,013
|
|
31,803,368
|
|
32,180,960
|
|
|
|
|
|
|
|
|
(a) During the six
months ended July 27, 2019, the Company recorded an $8.2 million
pre-tax charge in the first quarter for estimated warranty costs
for work performed for a customer in prior periods.
|
(b) During the six
months ended July 27, 2019, the Company recognized $10.3 million of
pre-tax income from the recovery of previously reserved accounts
receivable and contract assets in the first quarter based on
collections from a customer.
|
(c) Includes
stock-based compensation expense of $2.3 million and $6.0 million
for the quarters ended July 27, 2019 and July 28, 2018,
respectively, and $5.8 million and $10.9 million for the six months
ended July 27, 2019 and July 28, 2018, respectively.
|
(d) Includes pre-tax
interest expense for non-cash amortization of the debt discount
associated with the Notes of $5.0 million and $4.8 million for
the quarters ended July 27, 2019 and July 28, 2018, respectively,
and $9.9 million and $9.4 million for the six months ended July 27,
2019 and July 28, 2018, respectively.
|
(e) For the three and
six months ended July 27, 2019, the provision for income taxes
included $1.1 million related to a previous tax year filing. For
the six months ended July 27, 2019, the provision for income taxes
also included $0.6 million of income tax expense for the vesting
and exercise of share-based awards.
|
(f) During the
quarter and six months ended July 28, 2018, the Company's average
stock price exceeded the $96.89 conversion price of its Notes. As a
result, diluted shares used in computing diluted earnings per
common share for the quarter and six months ended
July 28, 2018 include approximately 0.1 million and 0.4
million weighted shares, respectively, of potential dilution from
the embedded conversion feature in the Notes.
|
DYCOM INDUSTRIES,
INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP
FINANCIAL MEASURES
|
(Dollars in
thousands)
|
Unaudited
|
|
CONTRACT REVENUES,
NON-GAAP ORGANIC CONTRACT REVENUES, AND GROWTH %'s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
Revenues -
GAAP
|
|
Revenues
from
acquired
businesses (a)
|
|
Revenues
from storm
restoration
services
|
|
Non-GAAP
- Organic
Contract
Revenues
|
|
GAAP
-
Growth
%
|
|
Non-
GAAP -
Organic
Growth %
|
Quarter Ended July
27, 2019
|
$
|
884,221
|
|
$
|
—
|
|
$
|
—
|
|
$
|
884,221
|
|
|
10.6%
|
|
|
11.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended July
28, 2018
|
$
|
799,470
|
|
$
|
—
|
|
$
|
(3,760)
|
|
$
|
795,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended July
27, 2019
|
$
|
1,717,964
|
|
$
|
(13,401)
|
|
$
|
(4,716)
|
|
$
|
1,699,847
|
|
|
12.2%
|
|
|
13.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended July
28, 2018
|
$
|
1,530,844
|
|
$
|
(14,915)
|
|
$
|
(18,609)
|
|
$
|
1,497,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Amounts for the
six months ended July 27, 2019 and July 28, 2018 represent contract
revenues from an acquired business that was not owned for the full
period in both the current and prior year periods.
|
NET INCOME AND
NON-GAAP ADJUSTED EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
July 27,
2019
|
|
July 28,
2018
|
|
July 27,
2019
|
|
July 28,
2018
|
Reconciliation of net
income to Non-GAAP Adjusted EBITDA:
|
|
|
|
|
|
|
|
Net income
|
$
|
29,896
|
|
$
|
29,900
|
|
$
|
44,175
|
|
$
|
47,131
|
Interest expense,
net
|
12,878
|
|
10,446
|
|
25,111
|
|
20,612
|
Provision for income
taxes
|
12,710
|
|
11,544
|
|
18,909
|
|
18,022
|
Depreciation and
amortization
|
47,244
|
|
44,805
|
|
93,586
|
|
88,160
|
Earnings Before
Interest, Taxes, Depreciation & Amortization
("EBITDA")
|
102,728
|
|
96,695
|
|
181,781
|
|
173,925
|
Gain on sale of fixed
assets
|
(4,806)
|
|
(4,909)
|
|
(11,544)
|
|
(13,324)
|
Stock-based
compensation expense
|
2,277
|
|
6,048
|
|
5,756
|
|
10,911
|
Recovery of
previously reserved accounts receivable and contract
assets
|
—
|
|
—
|
|
(10,345)
|
|
—
|
Q1-20 charge for
warranty costs
|
—
|
|
—
|
|
8,200
|
|
—
|
Non-GAAP Adjusted
EBITDA
|
$
|
100,199
|
|
$
|
97,834
|
|
$
|
173,848
|
|
$
|
171,512
|
|
|
|
|
|
|
|
|
Contract
revenues
|
$
|
884,221
|
|
$
|
799,470
|
|
$
|
1,717,964
|
|
$
|
1,530,844
|
Non-GAAP Adjusted
EBITDA % of contract revenues
|
|
|
11.3%
|
|
|
|
12.2%
|
|
|
|
10.1%
|
|
|
|
11.2%
|
DYCOM INDUSTRIES,
INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)
|
(Dollars in
thousands, except share amounts)
|
Unaudited
|
|
|
|
|
|
|
|
|
NET INCOME,
NON-GAAP ADJUSTED NET INCOME, DILUTED EARNINGS PER COMMON SHARE,
NON-GAAP ADJUSTED DILUTED EARNINGS PER COMMON SHARE, AND NON-GAAP
ADJUSTED DILUTED SHARES
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
July 27,
2019
|
|
July 28,
2018
|
|
July 27,
2019
|
|
July 28,
2018
|
Reconciliation of net
income to Non-GAAP Adjusted Net Income:
|
|
|
|
|
|
|
|
Net income
|
$
|
29,896
|
|
$
|
29,900
|
|
$
|
44,175
|
|
$
|
47,131
|
|
|
|
|
|
|
|
|
Pre-Tax
Adjustments:
|
|
|
|
|
|
|
Non-cash amortization
of debt discount on Notes
|
5,015
|
|
4,750
|
|
9,947
|
|
9,422
|
Q1-20 charge for
warranty costs (a)
|
—
|
|
—
|
|
8,200
|
|
—
|
Recovery of
previously reserved accounts receivable and contract assets
(b)
|
—
|
|
—
|
|
(10,345)
|
|
—
|
|
|
|
|
|
|
|
|
Tax
Adjustments:
|
|
|
|
|
|
|
|
Tax expense for the
vesting and exercise of share-based awards
|
—
|
|
—
|
|
638
|
|
—
|
Tax expense related
to previous tax year filing
|
1,092
|
|
—
|
|
1,092
|
|
—
|
Tax effect of pre-tax
adjustments
|
(1,379)
|
|
(1,314)
|
|
(2,145)
|
|
(2,589)
|
Total adjustments,
net of tax
|
4,728
|
|
3,436
|
|
7,387
|
|
6,833
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted Net
Income
|
$
|
34,624
|
|
$
|
33,336
|
|
$
|
51,562
|
|
$
|
53,964
|
|
|
|
|
|
|
|
|
Reconciliation of
diluted earnings per common share to Non-GAAP Adjusted Diluted
Earnings per Common Share:
|
|
|
|
|
|
|
|
GAAP diluted earnings
per common share
|
$
|
0.94
|
|
$
|
0.94
|
|
$
|
1.39
|
|
$
|
1.46
|
Total adjustments,
net of tax and dilutive share effect of Notes (c)
|
0.15
|
|
0.11
|
|
0.23
|
|
0.23
|
Non-GAAP Adjusted
Diluted Earnings per Common Share
|
$
|
1.09
|
|
$
|
1.05
|
|
$
|
1.62
|
|
$
|
1.70
|
|
|
|
|
|
|
|
|
Shares used in
computing Non-GAAP Adjusted Diluted Earnings per Common
Share:
|
|
|
|
|
|
|
|
GAAP diluted
shares
|
31,820,296
|
|
31,954,013
|
|
31,803,368
|
|
32,180,960
|
Adjustment for
economic benefit of note hedge related to Notes (c)
|
—
|
|
(120,196)
|
|
—
|
|
(367,597)
|
Non-GAAP Adjusted
Diluted Shares (c)
|
31,820,296
|
|
31,833,817
|
|
31,803,368
|
|
31,813,363
|
|
|
|
|
|
|
|
|
(a) During the six
months ended July 27, 2019, the Company recorded an $8.2 million
pre-tax charge in the first quarter for estimated warranty costs
for work performed for a customer in prior periods.
|
(b) During the six
months ended July 27, 2019, the Company recognized $10.3 million of
pre-tax income from the recovery of previously reserved accounts
receivable and contract assets in the first quarter based on
collections from a customer.
|
(c) The Company has a
note hedge in effect to offset the economic dilution of additional
shares from the Notes up to an average quarterly share price of
$130.43 per share. Non-GAAP Adjusted Diluted Shares excludes the
GAAP dilutive share effect of the Notes.
|
|
Amounts in table
above may not add due to rounding.
|
DYCOM INDUSTRIES,
INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP
FINANCIAL MEASURES (CONTINUED)
|
Unaudited
|
|
OUTLOOK - DILUTED
EARNINGS PER COMMON SHARE AND NON-GAAP ADJUSTED DILUTED EARNINGS
PER COMMON SHARE
|
|
|
|
Quarter
Ending
|
|
October 26,
2019
|
|
|
GAAP diluted earnings
per common share
|
$0.48 -
$0.68
|
|
|
Adjustment
|
|
Addback of after-tax
non-cash amortization of debt discount (a)
|
0.12
|
|
|
|
Non-GAAP Adjusted
Diluted Earnings per Common Share
|
|
$0.60 -
$0.80
|
|
|
|
|
|
|
Diluted shares (in
millions)
|
|
31.8
|
|
|
|
(a) The Company expects to
recognize approximately $5.1 million in pre-tax interest
expense during the quarter ending October 26, 2019 for
the non-cash amortization of the debt discount associated with the
Notes.
|
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 Company's 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 Organic Contract Revenues - contract revenues
from businesses that are included for the entire period in both the
current and prior year periods, excluding contract revenues from
storm restoration services. Non-GAAP Organic Contract Revenue
growth is calculated as the percentage change in Non-GAAP Organic
Contract Revenues over those of the comparable prior year periods.
Management believes organic growth is a helpful measure for
comparing the Company's revenue performance with prior
periods.
- 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
the non-cash amortization of the debt discount and the related tax
impact, certain tax impacts resulting from vesting and exercise of
share-based awards, 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 hedge in effect to offset the economic dilution of
additional shares that would be issued in connection with the
conversion of the 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 will be 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 debt discount on Notes - 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. The exclusion of the non-cash amortization from
the Company's Non-GAAP financial measures provides management with
a consistent measure for assessing financial results.
- Recovery of previously reserved accounts receivable and
contract assets - During the six months ended July 27, 2019, the Company recognized
$10.3 million of pre-tax income from
the recovery of previously reserved accounts receivable and
contract assets in the first quarter based on collections from a
customer. The Company excludes the impact of this recovery from its
Non-GAAP financial measures because the Company believes it is not
indicative of its underlying results.
- Q1-20 charge for warranty costs - During the six months
ended July 27, 2019, the Company
recorded an $8.2 million pre-tax
charge for estimated warranty costs for work performed for a
customer in prior periods. The Company excludes the impact of this
charge from its Non-GAAP financial measures because the Company
believes it is not indicative of its underlying results in the
current period.
- Tax impact of the vesting and exercise of share-based
awards - The Company excludes certain tax impacts resulting
from the vesting and exercise of share-based awards as these
amounts may vary significantly from period to period. Excluding
these amounts from the Company's Non-GAAP financial measures
provides management with a more consistent measure for assessing
financial results.
- Tax impact of previous tax year filing - During the
quarter and six months ended July 27,
2019, the Company recognized an income tax expense of
$1.1 million on a previous tax year
filing. The Company has excluded this impact because the Company
believes it is not indicative of the Company's underlying results
or ongoing operations.
- Tax impact of pre-tax adjustments - The tax impact of
pre-tax adjustments reflects the Company's effective tax rate used
for financial planning for the applicable period.
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SOURCE Dycom Industries, Inc.