Dycom Industries, Inc. Announces Fiscal 2016 Third Quarter Results And Provides Guidance For The Next Fiscal Quarter

---Tables Follow---

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

As of

As of

April 23, 2016

July 25, 2015

(Dollars in thousands)

ASSETS

Current assets:

Cash and equivalents

$

19,327

$

21,289

Accounts receivable, net

355,318

315,134

Costs and estimated earnings in excess of billings

358,236

274,730

Inventories

61,304

48,650

Deferred tax assets, net

20,581

20,630

Income taxes receivable

15,288

—

Other current assets

18,730

16,199

  Total current assets

848,784

696,632

Property and equipment, net

309,783

231,564

Goodwill and other intangible assets, net

406,340

392,579

Other

34,379

38,089

  Total non-current assets

750,502

662,232

  Total assets

$

1,599,286

$

1,358,864

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

92,964

$

71,834

Current portion of debt (a)

9,375

3,750

Billings in excess of costs and estimated earnings

11,137

16,896

Accrued insurance claims

39,407

35,824

Other accrued liabilities

89,662

98,406

  Total current liabilities

242,545

226,710

Long-term debt (a)

723,952

521,841

Accrued insurance claims

51,318

51,476

Deferred tax liabilities, net non-current

75,590

47,388

Other liabilities

4,141

4,249

  Total liabilities

1,097,546

851,664

  Total stockholders' equity

501,740

507,200

  Total liabilities and stockholders' equity

$

1,599,286

$

1,358,864

(a) Total carrying amount of outstanding indebtedness consisted of the following:

As of

As of

April 23, 2016

July 25, 2015

(Dollars in thousands)

Credit Agreement - Revolving facility (matures April 2020)

$

214,000

$

95,250

Credit Agreement - Term Loan (matures April 2020)

150,000

150,000

7.125% senior subordinated notes

—

280,341

0.75% senior convertible notes (matures September 2021)

485,000

—

Less: Debt discount

(106,269)

—

Less: Unamortized debt issuance costs - Initial purchasers' discount

(9,404)

—

733,327

525,591

Less: Current portion of term loan

(9,375)

(3,750)

Long-term debt

$

723,952

$

521,841

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

April 23, 2016

April 25, 2015

April 23, 2016

April 25, 2015

(Dollars in thousands, except per share amounts)

Contract revenues

$

664,645

$

492,363

$

1,883,383

$

1,443,833

Costs of earned revenues, excluding
depreciation and amortization

520,408

388,239

1,477,671

1,147,136

General and administrative expenses (a)

56,519

44,707

155,003

131,218

Depreciation and amortization

31,583

23,985

88,930

70,179

Total

608,510

456,931

1,721,604

1,348,533

Interest expense, net (b)

(8,007)

(6,646)

(25,010)

(20,126)

Loss on debt extinguishment (c)

—

—

(16,260)

—

Other income, net

4,323

3,471

6,866

7,001

Income before income taxes

52,451

32,257

127,375

82,175

Provision for income taxes

19,368

11,999

47,995

31,678

Net income

$

33,083

$

20,258

$

79,380

$

50,497

Earnings per common share:

Basic earnings per common share

$

1.02

$

0.59

$

2.43

$

1.48

Diluted earnings per common share

$

1.00

$

0.58

$

2.37

$

1.44

Shares used in computing earnings per
common share:

Basic

32,433,560

34,107,262

32,656,490

34,081,381

Diluted

33,050,934

35,028,956

33,486,515

35,091,644

(a) Includes stock-based compensation expense of $3.9 million and $3.2 million for the three months ended April 23, 2016 and April 25, 2015, respectively, and $12.6 million and $10.8 million for the nine months ended April 23, 2016 and April 25, 2015, respectively.

(b) Includes $4.2 million and $10.1 million for the three and nine months ended April 23, 2016 for non-cash amortization of the debt discount associated with the 0.75% convertible senior notes due 2021 issued in September 2015.

(c) The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its 7.125% senior subordinated notes due 2021 on September 15, 2015.

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP FINANCIAL MEASURES

Unaudited

NON-GAAP ORGANIC CONTRACT REVENUES AND NON-GAAP ORGANIC CONTRACT REVENUES GROWTH %

Contract
Revenues -
GAAP

Revenues
from
businesses
acquired

Non-GAAP
- Organic
Contract
Revenues

GAAP
- Growth
%

Non-GAAP
- Organic
Growth
%

(Dollars in thousands)

Three Months Ended April 23, 2016

$

664,645

$

(30,779)

$

633,866

35.0%

28.7%

Three Months Ended April 25, 2015

$

492,363

$

—

$

492,363

Nine Months Ended April 23, 2016

$

1,883,383

$

(110,363)

$

1,773,020

30.4%

23.7%

Nine Months Ended April 25, 2015

$

1,443,833

$

(10,252)

$

1,433,581

NON-GAAP ADJUSTED EBITDA

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

April 23, 2016

April 25, 2015

April 23, 2016

April 25, 2015

(Dollars in thousands)

Reconciliation of net income to Non-GAAP Adjusted
EBITDA:

Net income

$

33,083

$

20,258

$

79,380

$

50,497

Interest expense, net

8,007

6,646

25,010

20,126

Provision for income taxes

19,368

11,999

47,995

31,678

Depreciation and amortization expense

31,583

23,985

88,930

70,179

  Earnings Before Interest, Taxes, Depreciation &
  Amortization ("EBITDA")

92,041

62,888

241,315

172,480

Gain on sale of fixed assets

(4,061)

(3,067)

(6,213)

(6,249)

Stock-based compensation expense

3,892

3,219

12,600

10,773

Loss on debt extinguishment

—

—

16,260

—

  Non-GAAP Adjusted EBITDA

$

91,872

$

63,040

$

263,962

$

177,004

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)

Unaudited

NON-GAAP ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER COMMON SHARE

        Three Months        

Nine Months

Ended

Ended

April 23, 2016

April 23, 2016

(Dollars in thousands,

except share amounts)

Reconciliation of Non-GAAP Adjusted Net Income:

Net income

$

33,083

$

79,380

Adjustments

Pre-tax loss on debt extinguishment

—

16,260

Pre-tax non-cash amortization of debt discount

4,192

10,119

Tax impact of adjustments

(1,580)

(10,045)

Total adjustments, net of tax

2,612

16,334

Non-GAAP Adjusted Net Income

$

35,695

$

95,714

Reconciliation of Non-GAAP Adjusted Diluted Earnings per Common
Share:

Net income per common share

$

1.00

$

2.37

Total adjustments from above, net of tax

0.08

0.49

Non-GAAP Adjusted Diluted Earnings per Common Share

$

1.08

$

2.86

Diluted shares used in computing Adjusted Diluted Earnings per Common
Share

33,050,934

33,486,515

OUTLOOK - ADJUSTED DILUTED EARNINGS PER COMMON SHARE

Outlook for the

Three Months Ending

July 30, 2016 (a)(b)

Diluted earnings per common share

Adjustment

After-tax non-cash amortization of debt discount (c)

$0.09

Non-GAAP Adjusted Diluted Earnings per Common Share

(a) The fourth quarter of fiscal 2016 contains an additional week of operations as a result of the Company's 52/53 week fiscal year.

(b) Guidance for diluted earnings per common share and Non-GAAP adjusted diluted earnings per common share for the three months ended July 30, 2016 were computed using approximately 32.1 million in diluted weighted average shares outstanding.

(c) The Company expects to recognize approximately $4.6 million in pre-tax interest expense during the three months ended July 30, 2016 for non-cash amortization of the debt discount associated with its 0.75% senior convertible notes. The Company excludes the effect of this amortization in its Non-GAAP financial measures.

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. Non-GAAP Organic Contract Revenue growth (decline) is calculated as the percentage change in Non-GAAP Organic Contract Revenues over those of the comparable prior year period. Management believes organic growth (decline) 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, loss on debt extinguishment, 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 loss on debt extinguishment, non-cash amortization of the debt discount, certain non-recurring items and any tax impact related to these items, and "Non-GAAP Adjusted Diluted Earnings per Common Share" as Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding. 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 0.75% senior convertible notes due September 2021 (the "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 will be amortized over the term of the notes but will not result in periodic cash interest payments. During the three and nine months ended April 23, 2016, the Company recognized approximately $4.2 million and $10.1 million, respectively, in pre-tax interest expense for non-cash amortization of the debt discount associated with the Notes. 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.
  
  
• Loss on debt extinguishment - The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its 7.125% senior subordinated notes in the first quarter of fiscal 2016. Management believes excluding the loss on debt extinguishment from the Company's Non-GAAP financial measures assists investors' overall understanding of the Company's current financial performance.  The Company believes this type of charge is not indicative of its core operating results. The exclusion of the loss on debt extinguishment from the Company's Non-GAAP financial measures provides management with a consistent measure for assessing the current and historical financial results.
  
  
• Tax impact of adjusted results - The tax impact of the adjusted results for the three and nine months ended April 23, 2016 was calculated utilizing a Non-GAAP effective tax rate which approximates the Company's effective tax rate used for financial planning. The tax impact included in the Company's guidance for the quarter ending July 30, 2016 was calculated using an effective tax rate used for financial planning and forecasting future results.