Good day, and thank you for standing by. Welcome to Dycom Industries Inc. First Quarter 2026 Results Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Ms. Callie Tomasso, Dycom's Vice President of Investor Relations. Please go ahead.

Thank you operator, and good morning everyone. Welcome to Dycom's First Quarter Fiscal 2026 Results Conference Call. Joining me today are Dan Peyovich, our President and Chief Executive Officer; and Drew DeFerrari, our Chief Financial Officer. Earlier this morning, we released our fiscal 2026 first quarter results along with certain outlook information. The press release and accompanying materials are available in the Investor Relations section of our website. Today's discussion will include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect our expectations, assumptions and beliefs regarding future events and are subject to risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties is included in our filings with the SEC. Forward-looking statements are made as of today's date, and we undertake no obligation to update them. Additionally, we will reference certain non-GAAP financial measures during today's call. Explanations of these measures and reconciliations to the most directly comparable GAAP measures can be found in our press release and accompanying materials. With that, I will turn the call over to Dan Peyovich. Dan?

Thank you, Callie and good morning, everyone, and thank you for joining us. We delivered a strong start to fiscal 2026 and continue to make progress against the goals I outlined at the start of the year. I'm pleased to report that we exceeded the high end of our guidance for the quarter on all metrics, including revenue, adjusted EBITDA and EPS. Our first quarter revenue was $1.259 billion, a 10.2% increase over Q1 2025. Our adjusted EBITDA was $150.4 million, representing 11.9% of revenues and an increase of 14.9% over Q1 2025. In addition we repurchased 200,000 shares or $30.2 million during the quarter. As a result of our strong performance and our view of the market today, we are increasing our revenue expectations for the year to a range of $5.29 billion to $5.425 billion. Despite the current macroeconomic uncertainty, we remain confident in the drivers of our industry and our ability to capitalize on the opportunities. This is evident in our record backlog of $8.1 billion including a record $4.7 billion of next 12-month backlog. We worked hard to diversify our customer base and the services we offer within the telecommunications and digital infrastructure space. This diversification offers us from the impact of any single customer or program. Underpinning each of these drivers and build programs is our service and maintenance business which has grown significantly along with our revenue in recent years. These services provide consistency and stability as other customers' programs ebb and flow. The nature of the work within this business, that is day-to-day maintenance, restoration as well as accommodating road moves and other infrastructure work and extending networks in the greenfield developments. When taken at scale, creates consistency in the volume of work and associated revenue and margin. Our growth in this business…

Thanks, Dan, and good morning, everyone. We are pleased that we outperformed the high end of our expectations for Q1, delivering solid top-line and adjusted EBITDA growth and margin expansion while also returning capital to our shareholders through share repurchases. First quarter total contract revenues of $1.259 billion grew 10.2% over Q1 of last year. Revenues in the quarter were driven by continued execution of fiber-to-the home programs, wireless activity, higher maintenance and operations services and initial revenue contribution from fiber infrastructure programs for hyperscalers. Adjusted EBITDA of $150.4 million or 11.9% of contract revenues increased 49 basis points as a percentage of contract revenues over Q1 '25 and exceeded the high end of our expectations for the quarter. Net income was $61 million and diluted EPS was $2.09 per share, also exceeding the high end of our expectations. Results for the quarter included income tax benefits resulting from the vesting and exercise of share based awards of $2.2 million or $0.08 per share compared to $5.9 million or $0.20 per share in Q1 last year. We are pleased with the strength of our relationships and diversification across our customer base. We had one customer, AT&T, that exceeded 10% of total revenues. AT&T was at $325.1 million for the quarter. Customers exceeding 5% of total revenues for the quarter were Brightspeed, Charter, Comcast, Frontier, Lumen, Verizon and an unnamed customer. This presentation of our customer base, combined with our annual revenue outlook provides insight into our performance, balanced with attention to customer preferences and competitive considerations. We had solid bookings across a broad range of customers in the quarter. Backlog at the end of Q1 was $8.127 billion, including $4.685 billion that is expected to be completed in the next 12 months. Operating cash flows used in the quarter were…

Thank you. [Operator Instructions] And our first question will come from Alex Waters from BofA. Your line is open.

Hey, good morning. Thanks for taking my question. Maybe first off, Dan, you noted the kind of strong performance of Black & Veatch. Is this more of a pull forward of activity? Or have you seen kind of a larger opportunity set here? And then secondly, just on the maintenance side. You noted it a couple of times in your opening remarks, but could you help size that business for us for Dycom?

Good morning Alex. On Black & Veatch, the wireless acquisition, that's a little bit of both, a little bit of a pull forward, but mostly ramping much quicker than expected and work is going extremely well. The business is well integrated into our overall operations and excited about how they've done this quarter and the projection ahead. On the maintenance side, absolutely. As I talked about service and maintenance underpins the drivers in our business, certainly a core part of our strategy that goes back a long way. It really enables the other drivers, as you've seen. And if you look at our backlog, that growth is not only in service and maintenance but across many drivers. So very different today than maybe a few years ago. Recurring revenue, I think that is a very important point, longer-term contracts. And even though in our backlog, we only project them until the end of the current agreement, it is quite common that we get to renew those. So that consistency when you take it at scale and the scale that we have across the entirety of the United States and across many, many customers, really gives us embedded operations, and we can leverage that. We can leverage that into customer builds, we can certainly leverage that in opportunities. We leverage it and how we look at our labor and our labor forces and our ability to respond ultimately to our customers' increasing demands. Yes, specifically about size. What I would say, we don't give specifics, Alex but it is historically been over 50% of our business.

Perfect. Thank you so much.

Thank you. Our next question will come from Richard Choe from JPMorgan. Your line is open.

Hi. I wanted to follow up a little bit on the second quarter guidance. Is that the continuation of the strength from the wireless side? Or do you see new projects kind of ramping up and helping contribute to that?

Good morning Richard. First, I talked last quarter about fiber-to-the-home builds and how they're ramping our customers. Now I think the total, if you look back a little over a year, the total is over [45] (ph) million incremental passings that they've added. And as you've heard on many of our calls we've been fortunate to be part of those programs that are increasing and also win new markets. So Richard as we look out over the years, certainly for Q1, those programs went a little bit quicker than we expected. And as we look towards the rest of the year, that certainly will be included in our outlook. The second part is absolutely the wireless business, as I mentioned, is going very well, integrating very well and ramping more quickly. So that very much helped in our Q1 results. It's very much part of the Q2 outlook and certainly the outlook for the full year.

And you mentioned a little bit on the CapEx from your equipment suppliers and that being manageable. I know it could be a little confusing given all the changes we've kind of seen. But is there any potential or idea of maybe pulling forward some of the spending before the tariffs hit or maybe it's too late. Any kind of thoughts there?

So Richard, our strategy around the equipment that we purchased in order to do the work and of course, as you know, our customers buy the bulk of what we actually install. But for our equipment manufacturers, it's always been something we've been very strategic about. As you saw coming through COVID, we were able to stay ahead of that from an equipment perspective, even though when there were significant shortages. And even then when costs increased considerably for some of those pieces of equipment, in this particular case, we feel really good about where we are with the growth that we've had, we've been spending a lot of time projecting and working with our equipment manufacturers to make sure we can enable that growth. I would add, we do that on the labor side as well, right? We want to make sure that neither of those are going to impede our customers' big plans and aspirations. So we feel good about where we're at. The tariffs impacts are real right, for things that are coming in from outside of the United States, we're in constant conversations with the manufacturers. When you look at in the entirety, when you build up the whole model, what it cost to pass a home or to put in a foot of fiber on the long haul, it is a very small component. So we feel that it's very manageable going forward and feel good about the size of our current fleet and our ability to adapt to that.

Great. Thank you.

Thank you. Our next question will come from Steven Fisher from UBS. Your line is open.

Thanks. Good morning. Just a follow-up on some of the cost angles there. It was nice to see the year-over-year margin improvement I guess was there anything unusual with the cost this quarter or mix or execution that was contributing to that year-over-year growth? And just curious if there's any reason to think we won't see continued kind of year-over-year margin improvement for the balance of the year.

Good morning, Steve. First, operating leverage is what I would focus on. So I talked about last quarter, we're pretty strategic about how we are investing in the business to make sure we can stay ahead of growth, make sure we can continue to deliver at the level that we've been delivering for our customers and the communities and certainly for our shareholders. So at times, we're investing in the business, and it doesn't drop through. And other times, we're able to pass that through down to the bottom-line. So operating leverage is a big part of that increase. As we look forward towards the year, and I think Drew mentioned this a little bit, we do see opportunities for continued margin growth, working very hard to achieve that. And again most of that would come from operating leverage. We're always -- I should know, we're always working on efficiencies of the business, so I don't want that to be mistaken. We spent a lot of time on safety, a lot of time on quality, a lot of time on production, really up the training rigor across the business. Again this all comes back to making sure we could stay ahead of labor and deliver the quality for our customers. But at the end of the day, if you think about our margin opportunities right now, the bulk is going to be for operating leverage.

Great. And then it sounded like you reiterated your comments and message on BEAD, no change there. It seems like this quarter and the guidance tells us that you really don't need to deliver double-digit growth since you don't have anything in your revenues for it. I'm just curious what you're hearing on that program and how you see the importance of it for your business in the next couple of years, just in case as the policy landscape evolves, if it gets further diminished. Just kind of want to curious to see how you're thinking about it for the next couple of years.

I think you hit on the key message there. It is not in our outlook today. When you think about the other drivers, we think about the growth of our service and maintenance business that we've grown along with our revenue these past few years. We feel really good about our growth prospects you see that in the outlook for this year. And I think we feel good about opportunities that go well beyond this year regardless of -- that said, we continue to believe BEAD is going to be a real opportunity, everybody is expecting to hear something probably in mid-June or July. So hopefully, by next quarter, we can provide a little bit more clarity. We're talking to the broadband offices weekly. Certainly, we're talking to many of the subgrantees and potential subgrantees constantly. There's still a lot of bullishness that a lot of fiber is going to get installed in rural America for the BEAD program. But as I noted, really, that's going to be calendar '26 or fiscal '27. We'll continue to update, Steve, but I think the important takeaway is it is really not needed for a current growth curve. We'd love to have it. We still think there's going to be plenty of rural opportunities with or without BEAD.

Perfect. Thank you so much.

Thank you. Our next question will come from Frank Louthan from Raymond James & Associates. Your line is open.

Great. Thank you. Looking at your backlog, is the pace that you're working through the backlog change from how it's trended historically or things moving any faster? And can you give us an idea of the current organic growth rate and what percentage of your backlog is -- it represents organic growth? Thanks.

Yes. The first part, Frank, I think just touching on backlog overall that I'd like to highlight is the diversification. So across customers, across programs and across drivers. We do feel like we have a really good mix across multiple opportunities. And really as we look forward to our potential growth in the future, more opportunities out there to continue that diversification. So that's the first point I'd make on backlog. As far as organic growth, I'll let Drew talk about that a little bit, but if I can just make a couple of points. One, we continue to see long-term opportunities for organic growth. Two when you think about the businesses and the reason that we've really been highlighting our overall growth, when you think about the business like the wireless business that we recently acquired, we're investing huge amounts of capital into that business. We are growing it significantly. We're doing a lot of work to make that more efficient and more effective. So this isn't a situation where we're just adding another layer to the cake that came in operating at a certain level and comes into the business. And I can tell you, when Drew and myself and the rest of the leadership team are having conversations, we don't differentiate internally about where we're going to invest. We're looking for the right kind of opportunities with the right kind of returns for our shareholders. and whether it's organic or inorganic, doesn't matter. The point is that all of those opportunities we're growing. So we feel good about, obviously the overall growth this year, feel good about our opportunities for continued organic growth, and I'll let Drew touch on any of the numbers.

Yes. Frank. So organic growth was slightly positive this quarter. We did disclose it. So you'll see that. And then if you recall from last quarter, I called out that last year, at the beginning of the year, we had a couple of customers that had a busier start and then they slowed later in the year. And so we're lapping those quarters in the first and second quarter of this year, so we see opportunities for organic growth to continue to grow from here.

Frank, I think you mentioned burn rate to I apologize. I didn't hit one. We still feel good about the pace of our business, and we don't see any big changes there.

Okay, great. Thank you.

Thank you. Our next question will come from Sangita Jain from KeyBanc Capital Markets. Your line is open.

Thank you. Good morning. Thanks for taking my question. So one, I have on your guidance raise. So if we look at 1Q results on the 2Q guide, I'm wondering if that implies some conservatism in your full year guidance range in the sense that you may not be factoring in the full impact of the extra week? Or if there is something else that we are missing? I know you referenced some pull forward.

All right. Good morning. We certainly included the extra week in the year. And it's important to note. So one, yes, we've included the outperformance in Q1. We certainly looked at Q2. But as you look across the scope of our business, we have hundreds, in fact, thousands of projects. And of course, when we project that we projected project by project, they don't all move in the same rate in the same direction at the same time. So we spent a lot of time about that. We feel really good about the growth and the increase in the outlook that we gave for the year and the increase in the outlooks for of Q2 and believe one is achievable, and there's opportunities for our continued growth.

Great. And then a follow-up on your commentary around your expanded O&M business. Longer time, do you think that can reduce your capital intensity and be more like a free cash flow accretion event over time? How should we think about that?

Yes, Sangita, I appreciate the question. So free cash flow continues to be a priority for the company. Pleased that we had DSO improvement in the quarter. We work hard at that, and we'll continue to. We're not satisfied yet with where we're at there. Just from a CapEx perspective, we did have a busier start to the year or an active start to the year, I should say, around that. We do still see the range of total -- our net CapEx for the year in that [220 to 230] (ph) range, and we're working hard at the operating cash flow.

Great. Appreciate that. Thank you.

Thank you. Our next question will come from Adam Thalhimer from Thompson Davis. Your line is open.

Good morning guys. Congrats on the BEAD. Dan, I wanted to follow up on you're talking kind of fast. It sounded like there were two incremental awards. One was for middle mile fiber for data centers and one was for inside of the fence work for a hyperscaler customer. Were those both awarded after the quarter? And are they in the revenue guide?

Adam, it's a good point. So I appreciate the opportunity to highlight it. So the first one is for a customer other than Lumen, that's middle mile at work to enable the AI infrastructure for hyperscalers. So different customer, a great opportunity, multiyear. We're very excited to partner with the customer there. The second is separate. So that one is included in our backlog. And the second one, the inside the fence work that I talked about. The important point I was trying to make is this is a new opportunity set for us, it is work that we do all the time. But moving from the right away in and inside the fence quite literally inside the fence into these data centers and data center clusters, is a new scope. So work that we know now well, this really comes out of the evolution of us spending years now with the hyperscalers. And myself, personally, of course, I spent a couple of decades working with hyperscalers building these data centers. So things that we feel really good about, but it is a good opportunity set and one that we hope to be able to expand in future years and certainly in future quarters. The reason I noted about the award itself is this one is just a little unique. We have an MSA for the work. They won't issue the PO technically until we're about to start. So that work is not included in backlog, but we do anticipate that work to happen this year.

Got it. And are you working inside of the walls of the data center? Or is it more connecting when you look at a data center campus that's more connecting the data centers within the campus.

Absolutely. So typically, we're going to take the work that we do for the carriers to evolve in the right way that we referred to as the meet-me vault. From that point, is more typically where our work is. Again, that's on the carrier side. So this is work that the carriers themselves would not typically do. Now we are going to take it from that vault actually inside fence and ultimately, inside the data centers to land. We won't be taking it in the data center halls into the racks themselves. But we will terminate inside the data center walls. So the good scope opportunity. We also will connect data centers where they have multiple data centers in one cluster or on one set of sites. We have an opportunity to connect those as well. So again, great opportunity for us, one that we're excited about and certainly appreciate the work that we've done and we'll continue to do for the hyperscalers.

All right. Great. Thanks for the color.

Thank you. [Operator Instructions] And our next question will come from Jean Veliz from D.A. Davidson. Your line is open.

Good morning and congrats on the quarter. Regarding the Charter Cox acquisition following the Verizon and Frontier acquisition, does that further -- does further customer consolidation drive more business?

So historically, and I think there's a little -- you're breaking up just a little there, but I think you were talking about Verizon, Frontier and then crossing additional milestones. So typically, when we think about customer consolidation, that's been a positive for us. One, larger customers typically want a national player like us to deal the work across many of their locations. And two, any time there's capital infusion and consolidation like that, generally speaking, there's going to be more opportunities, more investment overall. So generally, yes, we think that is a positive for us historically it has been. And again, customers we've been working with for a long time, and we're excited about their combination.

Great. Thank you. Appreciate the time.

Thank you. And our next question will come from Laura Maher from B. Riley Securities. Your line is open.

Hi, thanks for taking my question. So I was wondering as it relates to government layoffs have you seen this affect the approval process at all? And are you seeing any early benefits of deregulation?

So again, something that these days is quite fluid, and we're following very closely. If you are referring to the potential for easing permitting, that would obviously be a positive for the industry. I think there are a lot of opportunities. We talk a lot about BEAD and some of the potential pullbacks. But to your point, there are a lot of things that could further enable expansion for our customers. If you look at bonus depreciation in the latest bill, that would obviously be a positive for our customers, and they've talked about how that could increase spending. So there are a lot of potential positives and we'll see how it plays out something we're watching closely every day.

Okay, thanks. I’ll pass it on.

Thank you. And that does conclude our question-and-answer session for today's call. I'd now like to turn the conference back to Mr. Dan Peyovich for any closing remarks.

Yes. I'd like to thank everyone for joining us this morning and look forward to seeing you next quarter. Be safe and be well.

Thank you. And this does conclude our conference. Thank you for participating, and you may now disconnect. Everyone, have a wonderful day.