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

Steven Nielsen: I think. Christian, as always, it’s a big industry depends on the size of the entity you’re talking to, and with particular pockets as may under addressing, I think we still, we certainly see good growth opportunities, we’ve got to execute against them. I think as we work our way through the year, that will be increased opportunities that are resulting out of government funding, not just the B program, which may be late in the year. But certainly some of the ARPA funds are still coming into the economy, RDOF funds, and it’s not to be under appreciated the amount of state level activity that is where funds are coming out, based on state programs. So I think there’s lots of opportunities. We’re not giving guidance for the year, we had a really strong quarter, again, a strong quarter and a strong year. So the comps may be a little tougher this year compared to last, but we’re still optimistic on our prospects.

Christian Schwab: Okay, great. No other questions, and hopefully you can bring better weather to Minnesota as soon as possible and do more work here. Talk to you later, Steve.

Steven Nielsen: That may be a global warming opportunity for you, Chris, and I’m not sure we can change Minnesota weather.

Operator: Our next question comes from a line of Alex Rygiel with B. Riley.

Alex Rygiel: Thank you. Good morning, Steve. Very nice quarter. Can you remind us what you believe the industry can provide? And Dycom like services deserve as it relates to gross margin and EBITDA margin?

Steven Nielsen: Alex, we’ll focus our comments on EBITDA margin, there’s certainly been periods of time where we’ve had broadly distributed growth, where EBITDA margins have approached fifteens, we’re not there now. We have opportunities to improve the business, we’re working hard to do that. I think we’ve had good control around our G&A. We’ve had some inflationary impact, certainly over the last year or so in the cost of goods. And so we’re — we’ve got lots of work to do, we’re continuing to do that. And I think there’s nothing structural that says we can’t get back there. But it’s going to be the result of a sustained effort to do that.

Alex Rygiel: And you highlighted your maintenance and operations business, I suspect that’s increasing as a percentage of total, is that accretive or dilutive to your margins right now?

Steven Nielsen: Alex, we always think about any activity that we provide customers as a function of the amount of capital that we invest, if we have the similar levels of capital in a maintenance and operations business compared to construction or capital related business. They’ll have about the same return to me, there are some activities we do, where projects are small, and so DSOs are a lot of work. And we perform well on those businesses too. So I think it’s really a function of the capital that’s required that ultimately drives margins, of course, we have to perform in order to earn those margins.

Alex Rygiel: And one last one, if I could, in some years, your customer starts slowly in the new year, sometimes driven by economic uncertainty or other reasons. It sounds like January started out strong. Any comments on February and any risk that maybe you, because of the favorable weather, you’ve gotten sort of ahead of your customer plans.

Steven Nielsen: The weather really isn’t an effect on customer plans. I mean, what we got done in January had to be planned and permitted and ready to go long before January. So I really think that was just the opportunity to get out and execute the work. With respect to the April quarter, this is another one that is back end loaded. April’s weather obviously is better than February and March. I would say February’s weather generally was is a little more challenging than January. And certainly there’s been some more weather impacts in California. But this is a quarter that always resolves itself or performs based on how we do in April just because more daylight, better weather. Just more to get done.