Dycom Industries, Inc. (NYSE:DY) Q4 2023 Earnings Call Transcript

Steven Nielsen: Well, I don’t know that we ever speculate, Adam, who’s going to be in or out, we hope everybody goes up, and that we get our fair share of the business. The states that we announced this quarter are really an extension of our current maintenance agreements. You might recall a couple of quarters ago; we talked about some fiber awards with them in four states. Those projects are underway. They are very focused on deploying fiber and a very experienced management team. We’ve worked with them when they were with other folks in the industry. And we’re working hard to meet their expectations every day.

Operator: Our next question comes from a line of Alex Dwyer with KeyBanc Capital Markets.

Unidentified Analyst: Hi, guys, this Dow for Sean this morning. Thanks for taking our questions. So I guess your CapEx this came year in higher, higher than the high end of your range for this year. I think you guys were waiting on a pretty sizable equipment order as a last quarter. And then your CapEx got for this upcoming year reflects quite a bit of growth. Can you just talk about what this increase in spending kind of tells us about your growth expectation? And maybe the equipment supply chain conditions?

Steven Nielsen: Sure. So we were pleased that in the fourth quarter, Alex, that we received a little bit more equipment than what we had expected when last we talked. I think we had said on last call, if it all shows up, we’d be happy to put it to work. And so we got, we certainly did receive a little more than we expected. We have a positive bias on investing in the business organic growth supported by CapEx is always a good use of the cash flow that we generate in the business. I think I just checked yesterday; we have in excess of $86 million of capital equipment on order right now. So we continue to order equipment, delays are or deliveries are long cycle. So we’re trying to anticipate where we need to order our equipment and continue to try to meet the needs of the customers by investing in the business.

Unidentified Analyst: Got it. And I just wanted to ask about cable. It looks like the passings and CapEx growth expectations for 2023 are pretty robust across a couple of your key customers. Like just curious what you’re seeing from the cable companies if there’s any change in how you’re thinking about the cable opportunities that going forward?

Steven Nielsen: Sure, there certainly been some pretty good increase in expectation around the technical upgrades to their equipment to facilitate capacity expansion. That’s less construction intensive, but something that we’re pleased to participate in. And then I think they’re, that generally the cable industry has been reasonably aggressive or maybe really aggressive around fiber deployments in rural America. There’s lots of state level funding that’s available prior to the B funding and we’re encouraged with the opportunities that we’re seeing for cable operators as they edge out their networks into rural America.

Operator: Our next question comes from the line of Brent Thielman with D.A. Davidson.

Brent Thielman: Good morning, Steve, Drew, team. Steve, I mean, this is the best January quarter margins I think we’ve seen since 2018. And I guess I’m wondering are the inflationary headwinds you’d seen in past quarters effectively negligible at this point when you look at it from a year-on-year comparison, or have you crossed that line where that’s sort of effectively beyond you?

Steven Nielsen: I mean, certainly, I mean, labor still tight, it’s a little bit easier to secure than it was last summer. But I think what I point to more than that, Brent, was we have pretty solid November-December period. And then January’s weather not everywhere. But generally, what was unseasonably good. So it allowed us to really address a substantial amount of work. So good, solid performance in the first couple of months, and they’re just really much better weather, on average, not in California than kind of the Rocky Mountains, but in the bulk of the country, just a little better environment in which to operate.