0000067215-25-000079
SEC filingRevenue grew 14% YoY to $1.452B in Q3 FY26, driven by fiber deployments and acquisitions, while net income rose to $106.4M.
For the three months ended October 25, 2025, Dycom reported contract revenues of $1.452 billion, a 14.1% increase from $1.272 billion in the same period last year. Excluding $110.9 million from acquired businesses, organic revenue grew $89.9 million, primarily driven by fiber-to-the-home deployments, including rural fiber programs. Costs of earned revenues (excluding depreciation and amortization) improved to 77.9% of revenue from 79.2%, a 130 basis point improvement, due to favorable mix of work (lower labor and subcontracted labor costs). General and administrative expenses decreased to $107.3 million (7.4% of revenue) from $110.8 million (8.7%), largely due to the absence of $7.1 million in CEO transition costs and lower acquisition integration costs. Depreciation and amortization increased to $62.2 million (4.3% of revenue) from $52.0 million (4.1%), reflecting higher capital expenditures and amortization from acquisitions. Interest expense, net decreased to $13.8 million from $17.5 million due to lower borrowings and interest rates. Net income rose 52.4% to $106.4 million, with a net income margin of 7.3% versus 5.5%.
Dycom reports contract revenues by customer type, not by formal operating segments. In Q3 FY26, telecommunications customers accounted for 91.6% of total contract revenues (up from 90.6%), underground facility locating services contributed 6.0% (down from 6.4%), and electric and gas utilities and other represented 2.4% (down from 3.0%). The shift toward telecommunications reflects strong demand for fiber-to-the-home and rural broadband deployments. The company noted that acquired businesses, primarily in telecommunications construction, added $110.9 million in revenues for the quarter.
Management's outlook is embedded in the MD&A narrative rather than explicit guidance. Key forward-looking indicators include: backlog of $8.222 billion as of October 25, 2025, with 60.7% expected to be completed in the next twelve months, compared to $7.760 billion at year-end. The company highlighted multi-year fiber-to-the-home deployments, fiber builds for data centers supporting AI, and wireless modernization as demand drivers. Recent acquisition of Power Solutions (announced November 18, 2025) for $1.95 billion will expand capabilities into electrical infrastructure for data centers. The company expects to fund capital expenditures primarily from operating cash flows and credit availability. Management believes existing capital resources are sufficient for at least the next 12 months, though acquisition-related financing (commitments for $1.0 billion term loan and $700 million bridge facility) will increase leverage temporarily. Seasonality remains a factor, with Q2 and Q3 (fiscal quarters ending October and July) typically strongest due to weather.
As of October 25, 2025, Dycom held $110.1 million in cash and equivalents, up from $92.7 million at fiscal year-end January 25, 2025. Total debt stood at $939.5 million, comprising a $442.7 million term loan (net of issuance costs) and $496.8 million of 4.50% senior notes due 2029. The company had $596.4 million of borrowing availability under its $650 million revolving credit facility. Net working capital (current assets less current liabilities) was $1.37 billion, reflecting strong liquidity. The company's net leverage ratio covenant was 3.50x, and it was in compliance.
Dycom disclosed $432.8 million in outstanding performance and surety contract bonds as of October 25, 2025, along with $53.6 million in standby letters of credit issued under its credit agreement to collateralize insurance obligations. The most significant commitment is the November 18, 2025 agreement to acquire Power Solutions, LLC for a preliminary purchase price of $1.95 billion, payable as 1,011,069 shares of common stock (valued at $292.5 million) and $1.6575 billion in cash. The acquisition is subject to customary closing conditions and is expected to close by December 22, 2025. To finance the cash portion, Dycom entered into a debt commitment letter for a $1.0 billion term loan A facility, a $700 million bridge loan facility, and a $445 million backstop facility.
Dycom repurchased 200,000 shares of common stock during the nine months ended October 25, 2025, at an average price of $150.93, for a total of $30.2 million. As of October 25, 2025, $119.8 million remained available under the $150 million repurchase program authorized on February 26, 2025. The company did not pay dividends. Capital expenditures totaled $186.4 million for the nine-month period, representing 4.6% of contract revenues. Net debt decreased by $3.7 million, with $629 million in borrowings and $634 million in repayments under the senior credit agreement.
Dycom operates in a single reportable segment: specialty contracting services. All revenues are derived within the United States. The company's customer base is highly concentrated, with AT&T Inc. and Lumen Technologies each exceeding 10% of total contract revenues for the nine months ended October 25, 2025 (25.9% and 11.0%, respectively). By customer type, telecommunications services accounted for 91.7% of revenues, underground facility locating for 6.1%, and electrical/gas utilities and other for 2.2%.
Operating cash flow of $223.5M significantly exceeded net income of $264.9M, indicating strong cash conversion despite a large working capital outflow. The primary driver was a $214.9M increase in accounts receivable, partially offset by a $102.9M increase in contract assets. Depreciation and amortization of $181.4M and deferred tax provisions of $52.9M provided substantial non-cash add-backs.
Capital expenditures of $186.4M represented 70% of operating cash flow, a high reinvestment rate consistent with the company's capital-intensive business model. Proceeds from asset sales of $31.1M partially offset the outlay.
Share repurchases of $30.2M were fully covered by operating cash flow, with a payout ratio of 13.5%. No dividends were paid. The company also used $13.8M for restricted stock tax withholdings.
The most notable anomaly is the massive swing in operating cash flow from $20.9M to $223.5M, driven by a $405.5M prior-year accounts receivable build that reversed to a $214.9M build this year. Cash taxes paid increased to $81.3M from $57.8M, reflecting higher profitability.