Dycom Industries, Inc. (NYSE:DY) Q1 2027 Earnings Call Transcript

Dycom Industries, Inc. (NYSE:DY) Q1 2027 Earnings Call Transcript May 27, 2026

Dycom Industries, Inc. beats earnings expectations. Reported EPS is $4.42, expectations were $2.73.

Operator: Good day, and thank you for standing by. Welcome to the Dycom Industries Inc. First Quarter 27 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Ms. Callie A. Tomasso, Dycom’s Vice President of Investor Relations and Corporate Communications. Please go ahead.

Callie A. Tomasso: Thank you, operator, and good morning, everyone. Welcome to Dycom’s fiscal 2027 first quarter results conference call. Joining me today are Daniel Peyovich, our President and Chief Executive Officer and Drew DeFerrari, our Chief Financial Officer. Earlier this morning, we released our fiscal 2027 first quarter results along with certain outlook information. We also announced a definitive agreement to acquire National Technology Integrators. a low-voltage engineering and construction firm based in Maryland,. The press release and accompanying materials are available in the Investor Relations section of our website. Including the outlook expectation summary which provides additional outlook metrics beyond what will be discussed on today’s call.

These materials, which we will discuss during today’s call, include forward looking statements. Made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 2000. Our discussion and these statements reflect our expectations, assumptions, and beliefs regarding future events and are subject to risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties is included in our filings with the SEC. Forward looking statements are made as of today’s date and we undertake no obligation to update them. Additionally, we will reference certain non-GAAP financial measures during today’s call. Explanations of these measures and reconciliations to the most directly comparable GAAP measures can be found in our press release and accompanying materials.

With that, I will turn the call over to Daniel Peyovich.

Daniel S. Peyovich: Thank you, Callie, and good morning, everyone. Thank you for joining us today. We delivered an outstanding start to the year. Continuing to execute our strategy and capitalize on the generational set of opportunities across our business. Total revenues of $1.965 billion exceeded the high end of our expectation. Increasing 56% compared to Q1 FY 26. Including organic growth of 25%. With robust and intensifying demand drivers, we remain disciplined in our awards. High grading the pipeline and intensely focusing on execution. The results of this discipline are reflected in our earnings for the quarter. Which also exceeded the high end of our expectations. Adjusted EBITDA of $262.5 million and adjusted EBITDA margin of 13.4% increased 75% and 141 basis points, respectively.

And non-GAAP adjusted diluted EPS was $4.42, an 85% increase. Compared to Q1 fiscal 2026. We ended the quarter with record total backlog of $11.9 billion growing 25% sequentially and representing a book to bill of 2.2x for the quarter. Notably, awards this quarter continued to diversify our backlog across customers. Demand drivers, and geographies. In some cases, we are also seeing customers extend durations to ensure they have the skilled workforce to meet their goals. These awards provide certainty and visibility that allow Dycom to plan and invest for work far in the future and positions us for multi year growth. With strong results in Q1, and intensifying demand across our business, we are increasing our full year fiscal 27 outlook to a range of $7.38 billion to $7.65 billion At the midpoint and excluding the extra week from last year, our new outlook represents total revenue growth of 38%.

Including 14% organic. Compared to last year. I will shift now to our segments. Which delivered excellent performance to start the year. Our Communications segment generated significant revenue growth of 25% compared to Q1 FY 26, with adjusted EBITDA margins that increased 31 basis points year over year. Growth during the period was driven by expansion into additional geographies and fiber to the home builds that ramped ahead of expectations. All aided by a favorable seasonal backdrop. Demand for fiber infrastructure remains as strong as ever. As evidenced by our customers’ bullish commentary about their multiyear fiber to the home long haul build programs, as well as recent announcements from Corning to scale manufacturing capabilities in response to the demand for fiber in the coming years.

Our Building Systems segment is off to a fantastic start. Performing exceptionally well this quarter. Dycom’s integration engine is firing on all cylinders. And I am immensely proud of the team for outpacing our internal projections in a very short period of time. Our solutions eclipse expectations right out of the gate. Delivering 395 million of revenue and adjusted EBITDA margin of 17.7%. Importantly, looking ahead, we expect our fiscal 27 margin to be in a similar range to the Q1 performance. With Power Solutions, we have added an incredible team that has earned tremendous respect across all stakeholders for nearly 3 decades. As a result, we are positioned for significant, long term growth as we continue to scale our digital infrastructure platform.

Shifting to discuss our initiatives. Last quarter, I spoke of 4 core strategic priorities for the year, and we delivered on every 1 of them in our first quarter. First, talent and workforce development. Our investments in our training and our people are yielding great results. We added 37 employees in the quarter as we continue to invest to support our significant growth. Second, we are executing on the expansion of our building systems segment, both organically as power solutions scaled its operations, and through strategic M&A. Today, we announced a definitive agreement to acquire Nash National Technology Integrators, a tenured and fast-growing low voltage engineering and construction firm based in Maryland,. Enhancing our position and further extending our capabilities in the high growth, data center industry.

National technology innovators specializes in inside plant structured cabling, including within data centers, as well as audio visual, and security systems. This is a critical step that connects the work of both our segments. We will be able to offer our customers complete fiber infrastructure starting at the racks connecting data centers across America ultimately bringing fiber connectivity to businesses communities, and homes. Their work marries incredibly well with our inside the plant electrical work as these trades are highly coordinated and in high demand. Importantly, this private, sounder led business is another cultural fit with a team that is highly respected and excited to continue the growth story. Based in Maryland, and with much of their revenue in the DMV, they also have operations spanning Texas, and the Midwest, brought there by their general contractor and hyperscaler customers because of their proven performance.

This creates enormous opportunity for Dycom to continue to grow our Building Systems segment and cross sell our services. This cross-selling is already occurring. Power solutions and national technology innovators have been strategic partners for years and are currently working on projects together. In addition, we are already working together on inside the fence fiber work in our communications segment. In short, the synergies are incredibly strong. And this is a perfect fit to further increase our opportunity set. They consistently deliver superb results and the transaction is expected to be immediately accretive across key enterprise financial metrics. We are excited to welcome National Technology Integrators to the Dycom family when the transaction closes expected in Q2.

Looking ahead, we will continue to pursue additional high quality M&A while also maintaining our commitment to long term net leverage discipline and investing organic growth opportunities. Moving to our third strategic priority, margin expansion. We delivered year over year improvement of 141 basis points in adjusted EBITDA margin for the quarter. Looking toward the full fiscal year, continue to expect our Communications segment to modestly increase adjusted EBITDA margin over the prior year, and we now expect our Building Systems segment to maintain adjusted EBITDA margin in the high teens. 4, cash flow enhancement continues to be a priority, and our combined DSOs were 96 days for the quarter. A significant improvement of 15 days year over year.

Over the past 5 quarters, we have laid out a clear picture of the intensifying demand across our industry. And we have proven Dycom’s ability to step up and capitalize on it. We are doing that through clear strategy, consistent execution, organic investments, and disciplined M&A. Looking ahead, the momentum behind fiber deployment and data center build is stronger today than we have ever seen. We are moving quickly to capture this opportunity. Expanding our presence and footprint across our business, while continuing to anchor ourselves with steady service and maintenance work. On top of that, speed is progressing through state level and subgrantee pipeline which points to upside for both our backlog and our future outlook. In closing, Dycom’s scale and positioning combined with our local expertise is unmatched digital infrastructure.

We are focused on delivering value to our frontline employees and our customers and believe that this goes hand in hand with delivering value to our shareholders. I would like to thank my 20 thousand teammates for raising the bar every day for our customers, and in our communities. I am incredibly proud of what we have accomplished together and confident we will continue to deliver value for our shareholders and long term opportunities for our teams as we pursue our vision to be the people connecting America. I will turn the call over to Drew now for a deeper dive into our Q1 performance and further details on our acquisition.

H. Andrew DeFerrari: Thanks, Daniel, and good morning, everyone. In Q1, we outperformed the high end of our expectations delivering strong top line and adjusted EBITDA growth and margin expansion while also investing in our future growth and returning capital to our shareholders through share repurchases. Q1 total contract revenues of $1.65 billion grew 56.1% over Q1 of last year. This reflects the strength of relationships and continued diversification of across our customer base. Organic revenue of the Communications segment grew 24.7% and Building Systems grew significantly compared to the prior year quarter. Building systems represented approximately 20% of total revenue for the quarter. Consolidated adjusted EBITDA of 263 million increased 75% over Q1 2026 reflecting strong performance in both of our business segments.

Consolidated adjusted net income was $134.3 million and adjusted diluted EPS was $4.42 per share an increase of 85% over Q1 2026. These results are adjusted to exclude the amortization of intangible assets. Results for the quarter included income tax benefits, resulting from the vesting and exercise of share based awards of $12.5 million or $0.41 per share compared to $2.2 million or $0.08 per share in Q1 last year. Moving to the results of our business segments. Each of which performed well in the quarter and exceeded our expectations. Communications revenue was $1.57 billion grew 24.7% organically driven by ramping fiber to the home programs increased long haul and middle mile fiber infrastructure builds, and growing maintenance and operation services.

Adjusted EBITDA for communications increased 28% to $192.4 million or 12.3% of segment revenue reflecting operating leverage and continued investment to scale our footprint and increase headcount further strengthening our position to execute on multiyear build programs. Building systems revenue was $395.4 million and adjusted EBITDA was $70 million or 17.7% of segment revenue as power solutions ramp growth ahead of our initial expectations and we integrated the operation. Total backlog at the end of Q1 was $11.9 billion including $10.8 billion communications backlog and $1.1 billion of building systems backlog. Backlog expected to be completed in the next 12 months was $6.4 billion including $5.4 billion of communications and $1 billion for billing systems.

And contract assets net were 96 days. A reduction of 5 days sequentially from Q4 2026 and 15 days year over year. During Q1, we repurchased 100 thousand shares of our common stock for approximately $36 million or $360 per share. We ended the quarter with cash and equivalents of $538.8 million and total liquidity of over $1.28 billion. Pro form a net leverage at the end of the quarter was 2.3x adjusted EBITDA, providing us with financial flexibility for continued strategic growth and investment. Building on our strong first quarter results and a favorable demand outlook, we are increasing our full year fiscal 27 expected range of contract rep We now expect total contract revenues to range from $7.38 billion to $7.65 billion For the Communications segment, we expect contract revenues ranging from 6.03 billion $6.2 billion, increasing approximately 12.6% to 15.8% organically from last year.

For the Building Systems segment, expect contract revenues ranging from $1.35 billion $1.45 billion. We also anticipate adjusted EBITDA margin expansion. For communications, we continue to expect modest adjusted EBITDA margin improvement over last year for Building Systems, we now expect an adjusted EBITDA margin in the high teens. Similar to our Q1 performance as we capitalize on the strong opportunity set and proven performance in the DMV. On a consolidated basis for Q2, we expect total contract revenues of $1.94 billion $2.01 billion, adjusted EBITDA of $284 million to $303 million and adjusted diluted EPS of $4.40 to $4.82 per share excluding the impact of intangible amortization expense. This outlook for fiscal 27 and Q2 of fiscal 27 excludes any results from the pending acquisition of National Technology Integrators.

While we expect to close the acquisition in our fiscal Q2 impacts are dependent on the timing of completion. Now for more details on the pending acquisition. This acquired business will be included in our Building Systems segment and we anticipate an initial annual revenue run rate of approximately $175 million. Historically, the business achieved adjusted EBITDA margins in the mid to high teens, and we expect that to continue. The purchase price is $275 million on a cash free, debt free basis and the consideration is approximately $234 million payable in cash and approximately $41 million of Dycom common stock valued as of the signing date of the transaction. Consolidated pro form a net leverage is expected to be below 2.5x adjusted EBITDA and we remain committed to our long term net leverage discipline.

The transaction is subject customary closing and post closing adjustments, and we expect it to close before the end of our July fiscal quarter. This acquisition presents key revenue synergy opportunities as we expand our capabilities across the digital infrastructure space. With a strong start to the year and clear momentum across the business, we are confident in our ability to execute our strategy as we pursue the significant and growing opportunities ahead. Operator? This concludes our prepared remarks. You may now open the call for questions. Thank you.

Q&A Session

Operator: Withdraw your question, please press *11 again. Our first question comes from the line of Manish Samaya with Cantor Fitzgerald. Your line is now open.

Analyst (Manish Samaya): Thank you and congratulations on an exceptionally strong quarter. The team. Couple of questions, Daniel. Maybe on the NTI acquisition to begin with, if you could just help us understand the customer overlap between NTI, Power Solutions, and the legacy communications business? And how do you see immediate cross selling opportunities?

Daniel S. Peyovich: that is the beauty of this transaction that, Manish. So thank you for asking the question to start. This is a partnership with power solutions that goes back a number of years. Between them and NTI. that is how we were connected to NTI to begin with. And we started talking to them about opportunities on the communication side, the work we are doing inside the fence in other facilities around the country. We started to see some really good efficiencies there and began conversations on how we can make them part of the Dycom family. What you see ultimately is the potential for campuses to have not only power solutions doing the electrical inside, but NTI also doing the structured cabling, while our communications business is doing the inside-the-fence work.

And then ultimately connecting it back to the tube. The long haul and middle mile route. So it is a it is a completely comprehensive offering that quite literally connects the homes and businesses of America all the way into the data centers and racks themselves. Ton of synergies to actually cross sell that work. So a lot of their work, just like power solutions, goes to the general contractors. But they also have relationships with the hyperscalers. So we could have conversation on really both those fronts, and we are already seeing again, before the acquisition, just in conversations to try and sell that as a partnership. Seeing really good connection there, and we think that is going to even go exponential. Here now that they will be part of the Dycom family next quarter.

Analyst (Manish Samaya): that is helpful. And then just going to the guidance for the full year, clearly Q1 was exceptionally strong, outlook for Q2 is strong. But when I look at the full year guidance range, it still looks a bit conservative. So I am just trying to figure out if there is anything in the second half that I am missing. Specifically, when I look at the total increase in revenues versus the prior guidance that you gave for the full year, I think it is about 77.5%. So maybe if you can just help us reconcile as to what is happening in the first half versus the second half. Thank you.

Daniel S. Peyovich: Incredibly pleased with the start of the year, and I will talk really about the collective view on each of the segments, if I could. So first, significant growth. We are looking at 56% year over year revenue growth. That takes a lot of investment. We were fortunate with the weather. Right? Q1 really behaved more like Q2 or Q3. what is important, is the demand has to be there. And what it shows is this demand that we have been talking about across the business, across the demand drivers, is incredibly strong, and we are able to capitalize on that. On the communication side, we have been talking about fiber to the home for a long time. And we have been sending the message that, listen. This is really only early in the build.

there is a lot of growth opportunity left in fiber to home. there is still several years where the passings are going to continue to increase. there is several years beyond that where the cost for passing will increase. And what you really see in Q1, because that was really aided on the communication side, by fiber to the home, is that is starting to take place. So just as we talked about, just as we set up our strategy, we believe that is gonna continue But like a lot of things, that does not mean it is perfectly linear when you start out with a very strong seasonal quarter and you are running into Q2 and Q3, And you see in our outlook for Q2 that does become a little more you do not see the same kind of upswing that you would see. And then a reminder on both sides of the business, of course, we build these from the bottoms up.

And so, you know, it is it is not going to be perfect linear. But we are incredibly pleased with the overall growth and results. On the building systems segment, 1, you see incredible growth the first year. We are talking about now for the full year them doubling the CAGR that they have had over the last 4 or 5 years. So going from 15% to 30%+ plus growth. That is significant. Requires significant investment. And even with that investment, you can see already we are in the high teens EBITDA margin range. So very pleased there as well. A couple more comments. 1 is if you look at their backlog, it is very different how it behaves. Those projects get contracted right before we are about to start the build. What we do have behind that, though, is what we call a, b, and c, awarded but not contracted, and then further behind that shadow backlog.

And what I can tell you is even though we do not publish those numbers, they are multiples of what you see in that immediate backlog. So that gives us the confidence, Manish, for the year. To raise the overall revenue on the building system side, gives us confidence in the margin profile because we can see what those projects look like. And we can see how those shapes. But just like on the communication side, that does not mean that they all start at the exact same time and finish at the same time. So we do shape that out over the year. So all told, what you see is significant growth. Incredibly pleased with that. We see continued opportunities to invest in the business. For growth beyond this year. And we are just incredibly proud of our teams for being able to deliver at the level they are delivering today.

Operator: Thank you. Our next question comes from the line of Eric Luebchow with Wells Fargo. Your line is now open.

Analyst (Eric Luebchow): Great. Thanks for taking the question. Daniel, I think you said and you alluded to it in your last comment, about fiber to the home projects ramping a little faster than you expected. And maybe just a little more color on that. Do you think there is a little bit of a pull forward of demand you saw in the first quarter? Or do you think there is signs you are actually gaining market share of some of these larger programs as they ramp this year and next?

Daniel S. Peyovich: that is exactly right, We are continuing to expand our market presence. Right? We are getting additional awards in additional spaces. We continue to deliver at an exceptional level. We are not perfect. Trust me, we are not perfect. But our teams are absolutely committed to making our customers successful. From a timing perspective, we have been talking about how these builds themselves are building and growing and ramping and how that happens at different paces. What you are seeing this year is many coming online and really starting to increase in volume and velocity at the same time. And again, if you look at our overall outlook for the year, you see that is continuing. You see the significant growth over last year.

This is not something we publish. But if you just look sequentially quarter over quarter, our fiber to the home works grew 33% in 1 quarter’s time. So it just shows our ability to capitalize there. Continue to grow against that. And I think if you if you listen to other commentary in the industry, it is not always the same message, which really, from our perspective, just shows our ability to, 1, execute on the work, but 2, have our customers continue to grow our share. As we continue to deliver for them.

Analyst (Eric Luebchow): Great. Thanks for that, Daniel. And just 1 follow-up. So you alluded to the fact you are signing some longer duration contracts. With your customers to lock in their labor supply. And I guess how are you thinking about structuring those contracts to make sure you have cost inflation protection? I know we have seen some costs like fuel, in particular, rise pretty rapidly in the last couple of months. Just wondering how you think about projecting that future cost curve. Thank you.

Daniel S. Peyovich: Yes. So fuel has obviously been an impact for anybody that is doing our line of work. What we have done and what I talked about last quarter, we made intentional moves last year around our fleet. To help offset that and that has helped mitigate obviously our expansion into the building system segment that does not use as much fuel per dollar revenue as we use on the communication side. So all that has helped to offset. But to your point, yeah, it is certainly been an impact. And, you know, we are watching it closely like everybody else. We do have that model in based on everything that we can all know today. In our outlook for the rest of the year. So we do feel good about that. When it comes to the long term contracts, and this is a really good point to make, We have been talking about the skilled workforce.

We have talking about building ahead of our customers and making sure that we can be there to meet their needs. We talked about our relationships. We are spending time with customers, not just talking about the work that we are going to do this year, or even next year, but out through the end of the decade. And what all of our customers recognize is that the skilled workforce is really what is going to make or break their builds. it is gonna make or break their ability to succeed. And they are very robust and, in many cases, growing plans. So as part of those conversations, as you would expect, it naturally evolves to, hey, Dycom, how do we make sure that we have your teams locked up to deliver on our plans all the way through the end of the decade?

Of course, Eric, as you would think, we are very thoughtful in how we would contract that work. We were very thoughtful in how we would think about the different parts and pieces, and our customers understand that because contracting 3 or 4 years out, right, you got to be smart about how you set that up. So we feel really good about how those contracts are structured. We feel really good about the relationships. We feel really good about, 1, our ability to continue to deliver. And our ability to continue to grow. But as you can see in our outlooks, the communications segment, also our ability to invest and grow margin at the same time.

Analyst (Eric Luebchow): Great. Thanks, Daniel. Congrats on the quarter.

Analyst: Thank you. Our next question comes from the line of Joseph Osha with Guggenheim Partners. Your line is now open. Hi, thanks very much for taking the question. 2 questions actually. First, you commented a bit in terms of the outcome, but as I think about the improved outlook on the communication side for the rest of the year, Is most of that coming from FTTH or is there some long haul and middle mile in there? And then the second question, I will just ask now. Is there an upper limit to leverage that you have that you are thinking about? I am just trying to understand how far you might take that as you continue to explore other acquisition opportunities. Thank you.

Daniel S. Peyovich: Absolutely. On the communications outlook, it is largely fiber to home. And again, Joseph, this is a message that we have been sending. Fiber to home is still earlier on in the overall cycle from our perspective, and we see significant continued growth. And that is really what gives us confidence in that raise for the year on the communication side. And the overall performance there. And it also goes back to the question that was just asked about our confidence to continue to contract that further out. The long haul middle mile is still an early innings in I have said before that we really see that as calendar 2027. Coming online, but 2028 really kind of being that fast and furious year. Now that said, we have been doing it for some time now.

A couple of years, we have been working on these projects. We still think we were first on the field. We continue to get more and more work there. We continue to grow that revenue. But if you look at it compared to Fiber to Home, Fiber to Home is just much more robust today. And we like that. We like how those will blend together as you as you start to move several years out. On the on the leverage question, again, we are, 1, very excited about the opportunity set. We do have a strategy what kind of companies we are looking for, the culture has to fit. First and foremost. it is gotta fit our strategy for growth and how it how it actually augments our current opportunity set. From a leverage point itself, again, we are gonna be very responsible just like we have always been.

We are gonna have that discipline to make sure anytime we bring leverage up, we are gonna have a clear path to bring it back down. We do not wanna be elevated over long periods of time. That said, there is lot of attractive opportunities out there. And we talked about in our prepared remarks that we are still actively looking and having those conversations. But again, we are gonna be prudent in how we think about leverage. Thank you.

Analyst: Thank you. Our next question comes from the line of Frank Louthan with Raymond James and Associates. Your line is now open.

Analyst (Frank Louthan): Great. Thank you. On the DSOs, how sustainable is that? Is this sort of a new normal or is there something in the quarter that kind of impacted that? And how should we think about that going forward? And then when we look at NTI, how should we think about its overall exposure if you kind of break it down between data centers and then more of the AV and DaaS type opportunities? Thanks.

Daniel S. Peyovich: For noticing the DSOs, Frank, because we put a lot of work into that. We talked about it being a priority going back to last year. We talked about it being part of 4 strategic priorities for this year. What I want to make clear is that is improvement on both segments of the business. that is not just an offset from Power Solutions having a better profile in that industry. We have been working hard on the communications side as well and saw significant improvement in the DSOs there. So when you combine it together, very pleased to be below a hundred. Coming in at 96 days. We do think that is a sustainable range over time. On that NTI exposure, the raw numbers is about 2/3 data center exposure and about 1/3 that is non data center. Right. Great. Thank you.

Operator: Thank you. As a reminder, to ask a question at this time, please press *11 on your touch tone telephone. Our next question comes from the line of Richard Cho with JPMorgan. Your line is now open.

Analyst (Richard Cho): I just wanted to follow-up, with the, I guess, long-haul middle-mile type of build, has that opportunity set changed at all? As things have developed? And when should we expect that revenue to maybe start ramping? Just wanted to get an update there.

Daniel S. Peyovich: it is grown significantly, Richard. We talked about to think probably 5 quarters ago, this 20 billion opportunity set related to long-haul middle-mile. That has certainly grown. We have updated numbers internally. We have not published that What you have seen more and more is our customers being very vocal about it. 1 of my favorite commentaries, 1 of our customers talked about how they are having conversations with hyperscalers about routes that would have up to 7.5 thousand to 10 thousand fiber strands per route. And that is a huge number beyond even what we are talking about today when we are bringing in a 64 or 288-count fiber. If you think about getting to 7.5 thousand or 10 thousand over time, it goes back to what we said.

This is this is a decade plus long build. To get the architecture that they need out there. To support the continued development and the continued consumption of data. We continue to do more work and we are ramping up there. We are winning more. We are seeing more opportunities set. We are capitalizing on that. They just take a long time to get started. And so that runway, you know, is typically a year ish. From when you kind of start hearing about these programs to when they get going and then you have to ramp to get it on plane. So really start thinking about next year calendar 2027 and especially calendar 2028. Yeah. Those train counts are pretty amazing.

Analyst (Richard Cho): 1 follow-up on the fiber to the home. Was it multiple companies ramping? And do you expect or do you expect more to ramp from your entire base, through the year? Just any color on the breadth Exactly.

Daniel S. Peyovich: So you are you are seeing more and more of these programs that are getting to accelerated levels of that are consistent. And it is important to remember, you hear our customers talk about it, that does not mean all markets that they have a ramping at the same time. It does not mean that we have every single market that they have. So we are looking at it from a very micro level. And yes, to your point, you are talking about ramping work across many customers, across many markets, which again, just goes back to that indication that the homes in America are gonna get past the 60 million that is yet to come that our customers have talked about. Are going to get past. it is just gonna take some time, and we are excited to be there to support them in that build.

Analyst (Richard Cho): Great. Thank you.

Analyst: Thank you. Our next question comes from the line of Steven Fisher with UBS. Your line is now open.

Analyst (Steven Fisher): Thanks. Good morning and congratulations on the quarter. I am curious on the building segment margins. What changed in the outlook for the rest of the year? I understand first quarter had some good execution, weather perhaps, but you are also raising the rest of the year to be consistent with the first quarter. I assume you are still making some of the scaling investments and the back office. So I guess I am curious what happened with the rest of the outlook? And does that imply that there is still potentially some upside beyond this year if you are still making those investments and achieving the higher margins there.

Daniel S. Peyovich: Yeah. I really could not be more pleased 1, with our team’s ability to integrate power solutions, and 2, with just the strength of their operation and their customer relationships. Steven. So, you know, last quarter, we talked a lot about making investments. Every time we do an acquisition, this 1 was unique because it was in a segment of its own so everybody could see it. But every time we make an acquisition, we are gonna invest. In that. When we close with NTI, we will make investments there. What we are trying to do is bring together 2 things to make something that is different than when they were apart. And that does take investment. It does take clear strategy. We are typically adding resources and staff to help make that happen.

And that is what we are doing a quarter ago with power solutions. What you can see is we were able to get traction on that incredibly quickly. When you talk about doubling of 4 or 5 year trailing CAGR rate, in a very short period of time. I do not think it surprise anybody that takes a lot of investment and a whole lot of discipline. So we could not be more pleased with how that is come through the business, and that gives us confidence as we look out to the rest of the year. But to your question, absolutely, we continue to make investments. Because this goes well beyond our fiscal 27. We continue to make those investments for future growth. At the same time, we have got the confidence to say that margin that we saw this first quarter, that we can be in that range throughout the year.

Analyst (Steven Fisher): Okay. And then just a follow-up as it relates to NTI and the similar topic, can you just maybe talk about some of the investments that you need to make there And maybe just some of the differences in the skill sets that you are bringing along in terms of the type of labor and how easy or hard it is to go out and grow that skill set relative to what is what you brought in with power solutions in terms of electricians, etcetera?

Daniel S. Peyovich: Let me take the skill set 1 first. Steven. This is, again, great synergy for our business. This is an opportunity for us to have a fungible workforce. So some of the work that National Technology Integrators does is union. Some of the work that they do in other markets is nonunion. And in those non union markets, that is very fungible for what we are doing in the inside the fence work. So we do have an ability to cross train to augment staffing there. You know, I do not want to get too far ahead of all the investments that we will make because right now, we are working to close and bring them formally into the family. But similar to what we have done in other places. Right? How do we augment that to really create an inflection in the growth opportunity?

To give a different balance sheet to get some different resources? And what we love about National Technology Integrators is that not only are they based in the DMV and have a lot of work there, but they are in these other markets. Which are which are critical markets to what is going on in the data center space, markets like Texas. So that just gives us another ability to flex off of that and to continue to grow and think about how do we continue to increase the building segments part of our business overall.

Analyst: Thank you very much. Thank you. Our next question comes from the line of Michael Dudas with Vertical Research Partners. Your line is now open.

Analyst (Michael Dudas): Good morning, Callie, Drew, Daniel. Good morning. Daniel, maybe you could share a little bit more of your thoughts you mentioned in your prepared remarks about Bead. The progress overall and how it is looking relative to when we could see some of that conversion into maybe backlog and into revenues, maybe second half this year into fiscal year 28?

Daniel S. Peyovich: So BEAD continues to make progress. And this is something that we have had a strategy going back, I think it is over 4 years now. And we have been partnering with the different states we have had numerous conversations and tons of relationships across sub grantees, still believe that we will see revenue in Q2 of this year, But really and we have talked about this before and it is unchanged. Think about that as calendar 2027. So when it really starts to take hold and get moving. You are gonna see the different programs different sub grantees start at different paces. You know, programs can start sooner. that is why we believe we will still see some revenue in Q2. And just a reminder, this is not included in our outlook. So we really want people to think about BEAD for this year as potential uplift. And then really starting to take shape in calendar 2027.

Analyst (Michael Dudas): Excellent. Thank you, Daniel.

Operator: Thank you. Our next question comes from the line of Liam Burke with B. Riley Securities. Your line is now open.

Analyst (Liam Burke): Thank you. Daniel, you mentioned in earlier comments that you are working more and more with your customers on longer term projects and multiyear planning. Does that change the composition of the business to multiyear projects versus MSA?

Daniel S. Peyovich: So still mostly under MSAs or long term agreements. Liam. I think if you look at our backlog, our next 12 months, we had a significant backlog increase. Our next 12 months went up. But really what you see again is we are adding we are adding firepower into the out years, which again is a big positive for us. It allows us to plan to be proactive, to continue to invest in the business and have really good foresight into what some of those bills are going to look like. So, you know, it is a big positive in our space. To be talking about work and actually contracting work that is 3 or 4 years out.

Analyst (Liam Burke): Great. And on the data center volumes, are you seeing more activity? I mean, you talked about fiber to the home, but is there more activity over and above fiber to the home on data center activity on the local loop?

Daniel S. Peyovich: If you are talking about inside the fence, and all the other fiber that is connected to that kind of middle mile, absolutely. Continues to grow is the conversations that I feel like I say this every quarter the conversations only continue to grow, and that really is true. And then specifically on the data center side, again, the demand has not abated whatsoever. In fact, it is only increasing. You can see that in our outlook. You can see that in our results. And you can see that in the confidence in us raising for the year in that segment as well.

Analyst (Liam Burke): Great. Thank you, Daniel.

Operator: Thank you. Our next question is from the line of Manish Samaya with Cantor Fitzgerald. Your line is now open. Manish, your line is open. Please check your mute button.

Analyst (Manish Samaya): Hi. I am sorry. Can you hear me? We got you, Manish. Okay. Awesome. I appreciate that. Daniel, I just had 2 follow ups for you. 1 is on the building systems backlog. Should we assume sort of high teens margin in line with the 2027 margin expectations? Or is that different based on mix or customers, etcetera?

Daniel S. Peyovich: Yes. So that backlog is consistent. As you can see, their next 12 months and their — and we believe this will continue be the case. Their next 12 months and their total backlog are very close in numerically to each other. Okay. And then secondly, obviously, talked about The margin profile is very similar to what we saw in Q1.

Analyst (Manish Samaya): strong end markets, but I was wondering if there are any projects or work that you are essentially passing on And if so, what are the big reasons for it? Is it execution? Is it pricing? Is it not meeting your hurdles? If you can just kinda give us a sense as to what is happening on the ground.

Daniel S. Peyovich: Yeah. We are very pleased that we have strong partnerships with our customer set. And that is really what we are looking for, Manish. We want customers that understand the value of the skilled workforce They understand the value of all the investments that Dicom has made. To help deliver at a higher level for them. There are still there are still people out there that are looking for low bid numbers, and that is just not where we play. Right? We want to play in those longer term agreements where we really have input on how they think about their builds, how they think about their programs, how we can support that. Have really good dialogue that allows us both quite frankly, to raise the bar together. So that is where we play.

So, yes, we — there is work that we pass up. What I would tell you, we feel really good, again, with what we have done from a skilled workforce. So really good about the growth that we saw in our headcount for the quarter and our continued growth for the year and the investments we are working there. So we do not believe that we are leaving any of these important builds behind. At the same time, we are gonna be selective on the pipeline.

Analyst (Manish Samaya): Okay. Appreciate that, Daniel. Thank you.

Analyst: Thank you. And I am showing no further questions from our phone lines. I would now like to turn the conference back to Mr. Daniel Peyovich for closing remarks.

Daniel S. Peyovich: I want to thank everybody for joining us today, and I want to thank our 20 thousand teammates for their fantastic execution this quarter. Look forward to seeing you all in about 3 months. Thanks so much.

Operator: This concludes today’s conference. Frank you for your participation. You may now disconnect.