EX-99.1 2 ex991.htm EX99.1 ex991.htm
D.A. Davidson E&C Conference
September 28, 2010
 
 
 
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Forward-Looking Statements and Non-GAAP
Information
Forward-Looking Statements and Non-GAAP
Information
 This presentation contains forward-looking statements within the meaning of the Private
 Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,”
 “estimate,” “intend,” “forecast,” “may,” “should,” “could,” “project,” “outlook” and similar
 expressions identify forward-looking statements. These forward-looking statements are
 based on management’s current expectations, estimates and projections and speak only as
 of the date of this presentation. Forward-looking statements are subject to known and
 unknown risks and uncertainties that may cause actual results in the future to differ
 materially from the results projected or implied in any forward-looking statements contained
 in this presentation. The factors that could affect future results and could cause these results
 to differ materially from those expressed in the forward-looking statements include, but are
 not limited to, those described under Item 1A, “Risk Factors” of the Company’s Annual
 Report on Form 10-K for the year ended July 31, 2010, and other risks outlined in the
 Company’s periodic filings with the Securities and Exchange Commission (“SEC”). Except
 as required by law, the Company may not update forward-looking statements even though
 its situation may change in the future.
 This presentation includes certain “Non-GAAP” financial measures as defined by SEC rules.
 As required by the SEC we have provided a reconciliation of those measures to the most
 directly comparable GAAP measures on the Regulation G slide included at the end of this
 presentation.
 
 
 
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Dycom Industries Introduction
 
n Leading provider of specialty contracting services principally to
 telephone and cable companies
n Telecommunications industry dynamics driving growth potential
n Major participant in a large, but fragmented industry, which offers
 acquisition opportunities
n Significant portion of revenues from multi-year Master Service
 Agreements
n Experienced management team operating through a decentralized,
 customer-focused organizational structure
n Strong cash flows and liquidity
 
 
 
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Customer Revenue Mix
Quarter Ended July 31, 2010 - $281.5 million*
*Q4-10 includes an incremental week as the result of our 52/53 week fiscal year.
 
 
 
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Providing End-To-End Services
Engineering
Underground Facility Locating
Outside Plant & Equipment Installation
 
 
 
6
Dycom Industries At a Glance
Dycom is a leading telecommunications infrastructure provider in the United States
n Headquartered in Palm Beach Gardens, Florida
n Fourth quarter fiscal 2010 revenues of $281.5 million, including an
 additional week required by our fiscal calendar
n Strong financial profile
 } Cash and equivalents $103.3 million at July 31, 2010
 } Shareholders’ equity $394.6 million at July 31, 2010
 } Operating cash flow of $54.1 million for fiscal year 2010
 } New five year $225 million revolving credit facility through
 October 2015
n Nationwide footprint
 } Operates in 48 states and to a limited extent in Canada
 } 30 operating subsidiaries and hundreds of field offices
n Over 8,800 employees
n Listed on the NYSE under the ticker: DY
 
 
 
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Strong subsidiaries, broad national footprint
Subsidiaries
Dycom’s Nationwide Presence
Dycom Operating Overview
 
 
 
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Industry Developments…
n Telephone/cable industry convergence - a reality
 } Competition for customers drives growth
n Network bandwidth expansion - an imperative
 } Telephone companies expanding network capacity
 } Cable responding to match capabilities and facilitate new
 products such as VOIP, HDTV, and wideband
n Product bundles - key to telephone/cable success
 } Decrease churn
 } Provide revenue growth opportunities to offset market share
 erosion
 } Differentiate service from satellite video providers
 
 
 
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…And Industry Opportunities
n Continued capital spending
 } Telephone company deployments of Fiber (FTTx)
 } Cable company bandwidth expansion
 } Customer premise equipment deployments
 } Fiber to the cell site
 } Rural broadband deployment
n Renewed focus on network reliability and availability as subscribers
 demand better service levels
n Continued outsourcing as time to market and installation quality
 crucial for new product launches
 
 
 
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Telecom Capital Spending
Capex Commentary
n Continued capital spending in wireline reflects burgeoning demand for voice, data and
 video transmission
n RBOCs will continue to constitute the vast majority of U.S. fixed line investment
n Significant portion of RBOCs’ capital budgets are expected to be from fiber deployments,
 including fiber to the cell site initiatives
n Carriers are shifting capital spending to address growth needs and increased
 competition from cable companies
“… […] we will continue to invest in developing new products and services and
related businesses. We have IPTV in three markets basically using the same model
that AT&T uses with the Microsoft middleware. We have an Impact 4 Head End in
Missouri and basically, we use the fiber network that you saw to take the national
content out of that impact for Head End, put a local Head in, a mini-Head in, in an
area to take the off-the-air channels and combine the two and basically provide a
video product for our customers. We're in the stage of a soft launch of video, IPTV
video, in the Las Vegas market and expect to be rolling out other, more densely
populated markets in the EMBARQ footprint sometime next year.”
Glen Post III - CenturyLink - Chairman and Chief Executive Officer September 2010
 
 
 
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Cable Capital Spending
Capex Commentary
n Continued capital expenditures on bandwidth reclamation, VOIP and HDTV product
 offerings, and cellular backhaul
n Ongoing plant and network enhancements are critical as cable operators continue to
 offer services that require greater reliability
n Network capacity and reliability increasingly crucial as cable companies compete with
 traditional telecom firms
“We think, with all the devices that are coming out and WiFi being more ubiquitous,
that clearly people are going to see broadband as a more important part of their
household set, whether it's economy broadband at a lower price or whether it's 50 or
100 megabits, depending on what people want in their home. So we're really going to
focus on how do we expand that market. Obviously, the FCC is very focused on how
to expand that market as well, and we think that there will be upward pressure to
expand that market as well as -- and, we hope, to participate and take greater share
from that expansion as well as take share from some of our competitors.”
Mike Angelakis, Comcast -Chief Financial Officer  September 2010
 
 
 
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n “Dig Safe” laws in all 50 states require owners of underground utilities to
 identify and mark their facilities prior to excavation
 } Regulate telephone, cable, power, gas, water & sewer utilities
 } Seek to minimize network outages, protect job-site workers, and
 safeguard the general public
 } Locates often required as a condition for permit issuance
n Generally outsourced by telecom companies and cable operators
 } Work generated by excavators via “800 number” call centers
 } High volume of transactions must be completed within 48-72 hours
n Regulatory backdrop promotes steady workflow
 } Driven by regional macro-economic factors
Underground Facility Locating Services
 
 
 
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Dycom’s Competitive Advantages
n Established customer relationships and reputation
n Broad geographic coverage
n Scale to satisfy customer time and service requirements
n Responsive, local decentralized business units
n Access to capital
n Senior management operating expertise
 
 
 
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Growth Strategy As Opportunities
Expand
n Build and maintain long-term customer relationships at the local level
 } Position business to capture both recurring maintenance and new capital
 spending
n Empower subsidiary management
 } Build relationships with customer contracting decision makers
 } Utilize detailed knowledge of local pricing dynamics
 } Leverage subcontractors and local trade relationships
n Deliberately select attractive customers with profitable business
 } Focus on higher quality, long-term telecommunications industry leaders
n Selectively screen potential acquisitions
 } Healthy players that bring long-term, established customer relationships
 } Complement existing Dycom customer footprint
 } Position Company for significant customer capital or maintenance
 spending
Dycom employs a deliberate and methodical growth strategy
 
 
 
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Blue-chip, predominantly investment grade clients comprise the vast majority of revenue
Well Established Customers
Fiscal Quarter Ended July 31, 2010
Customer Revenue Breakdown
Comcast
AT&T
CenturyLink
Verizon
Charter
Cablevision
Windstream
Questar Gas
Time Warner Cable
Electric Power Board
Other
 
 
 
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Customer Rotation
Key long-term relationships help Dycom manage the cyclical nature of telecom and cable capex spending
For comparison purposes, when customers have been combined through acquisition or merger, their revenues have been combined for all periods.
62%
38%
63%
68%
32%
67%
33%
64%
36%
37%
63%
33%
67%
37%
64%
36%
64%
36%
64%
36%
 
 
 
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Dycom’s revenue stream is primarily generated by long-term contractual agreements
n Master Service Agreements (MSA’s)
Revenue By Contract Type
Quarter Ended July 31, 2010
Revenue - Q4 Fiscal 2010
 
 
 
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Senior Management
Seasoned management team with several decades of combined industry experience
 
 
 
Financial Update
 
 
 
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nCentralize activities which yield synergistic benefits
 } Treasury
 } Tax
 } Risk management
 } Capital asset procurement
 } Information technology resources
 
nDecentralize financial operations to provide solid support
and flexibility at operating unit level
nMaintain financial resources to support internal growth
and acquisition opportunities
Financial Overview
 
 
 
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Fiscal Year Results - Revenue and
Earnings
(1) The amounts for EBITDA - Adjusted and Income from continuing operations -Non-GAAP are Non-GAAP financial measures adjusted to exclude certain items. See
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
n Revenue of $988.6 million for fiscal
 2010 compared to $1,106.9 million
 for fiscal 2009
n Fiscal 2010 revenue and results
 impacted by customer reductions in
 capital spending plans in response
 to challenging economic conditions
 
 
 
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Fiscal Year Results - Cash Flow and
Liquidity
(1) Capital expenditures net of proceeds from the sale of assets
(2) The amounts for EBITDA - Adjusted and Net Debt used in the calculations herein are Non-GAAP financial measures adjusted to exclude certain items. See
“Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
n Strong cash flow from operations. Fiscal
 2010 cash flows impacted by lower levels
 of operations
n Ample cash flows to support capital
 expenditures and fund operations
n Long term financing in place as of
 July 31, 2010
 } $135.35 million Senior Subordinated
 Notes - October 2015 maturity
 } $225 million Credit Facility:
 } June 2015 maturity
 } No borrowings outstanding
n 0.4x ratio of Net Debt to EBITDA-Adjusted
 in fiscal 2009 and fiscal 2010
 
 
 
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n Seasonal revenue pattern driven by
 weather and available work days
n Q4-10 reflects improving revenue
 trends

 
n EBITDA - Adjusted and Income from
 Continuing Operations increased
 sequentially reflecting higher levels of
 operations and increased productivity
 
 
 
(1) The amounts for EBITDA - Adjusted and Income (Loss) from continuing operations -Non-GAAP are Non-GAAP financial measures adjusted to exclude certain
items. See “Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
 * Q4-10 includes an incremental week as the result of our 52/53 week fiscal year.
 
 
 
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Quarterly Results - Cash Flow and
Liquidity
 (1) Capital expenditures net of proceeds from the sale of assets
 (2) The amounts for EBITDA - Adjusted and Net Debt used in the calculations herein are Non-GAAP financial measures adjusted to exclude certain items. See
 “Regulation G Disclosure” slide for a reconciliation of Non-GAAP financial measures to GAAP financial measures.
n Cash flows from operations impacted as
 activity level increased during the quarter
n Capital expenditures, net of disposals at
 $15.0 million, reflecting replacement cycle
 and growth opportunities
n Strong financial profile
n Ample liquidity as of July 2010
 } $103.3 million cash and equivalents
 } $124.1 million availability under
 Revolving Credit Facility
 * Q4-10 includes an incremental week as the result of our 52/53 week fiscal year.
 
 
 
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D.A. Davidson E&C Conference
September 28, 2010