Dycom Industries, Inc. (NYSE:DY) Q2 2024 Earnings Call Transcript

Sean Eastman: Okay. Very helpful. And then coming back to the margins, the guidance for revenue implies kind of flat sequential organic revenues from 2Q to 3Q, while the margin expansion guidance seems to imply a pretty meaningful sequential downtick in margins from 2Q to 3Q. So I just want to understand why that makes sense? Is there something in the mix of business? Was there something that perhaps wasn’t sustainable? Any comment there would be helpful.

Steven Nielsen: Sure. I think, Sean, what we would point you to is that clearly, we’ve had some moderation in some customers. And so we’re a little bit under absorbed on G&A. I think is, at least in our model, those margins are in line and a little bit of pressure on the G&A line. given that it’s — our belief is that this is kind of a second half moderation and that things normalize going into next year, we’re making some adjustments but we’re not going to do anything short term that impacts our ability to manage the business for growth long term.

Sean Eastman: Okay. Again, very helpful. One last one, Steve. I mean clearly guiding to a moderation in revenue versus what we’ve seen over the past year or so. Perhaps one benefit of that would be the cash flow unwind. Is that a fair expectation that in the back half, we should see good cash flowing out of the business? Any thoughts there would be also a good perspective.

Steven Nielsen: I think directionally, Sean, you’re there. I mean that’s what we’ve historically seen in our business. I just want to step back and provide perhaps some context on this moderation. Any time we’ve grown, call it, just less than $1 billion over a 2-year period. And the industry has grown with us. This isn’t just us; this is lots of folks. That kind of surge in activity typically has some consolidation that comes and we’ve been through this before. And as we consolidate, we generate cash. We invest that cash to increase our future growth when the business gets better. We’ve got a number of customers that are growing pretty substantially this year and into next year. And we’re going to use that cash to make the business bigger and better as this consolidation unwinds which we don’t think it’s going to take very long for that to do.

Operator: One moment for our next question. And that will come from the line of Frank Louthan with Raymond James.

Frank Louthan: Just on the Bigham deal, just curious when that closes and if you can give us an idea of the margin profile? I would assume you can improve that a little bit but how is that relative to where you are? And then secondly, what are customers telling you about their BEAD plans, some of the funding coming in next year? Are they already lining that up? And was that some of the strategic rationale for Bigham to expand a little bit more in rural areas?

Steven Nielsen: Yes, Frank, so with respect to close, that was a signed and closed deal. So we closed on last Friday. So that’s — it’s done. With respect to the margins, I think that [indiscernible] at our margins are a little bit better. And so we think it’s on the margin line before all the purchase accounting issues that we think it’s accretive to what we’re doing. And once again, we’re going to help invest in that business so that we can both grow at topline and bottom. On BEAD, Frank, I think that’s a great question. Just with respect to Bigham, if you look at the 5 state area that they focus on, those 5 states have received something like, call it, $6 billion of deep funding. So certainly, that’s going to be helpful. We also have lots of other resources in that area, too.