10-Q 1 dy-20240727.htm 10-Q dy-20240727
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 27, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________


Commission File Number 001-10613
DYCOM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida59-1277135
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
11780 US Highway 1, Suite 600
Palm Beach Gardens, FL33408
(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (561) 627-7171

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.33 1/3 per shareDYNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 29,104,143 shares of common stock with a par value of $0.33 1/3 outstanding at August 20, 2024.


Dycom Industries, Inc.

2
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.
3

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
(Unaudited)
 July 27, 2024January 27, 2024
ASSETS
Current assets:  
Cash and equivalents$19,564 $101,086 
Accounts receivable, net (Note 6)1,507,475 1,243,256 
Contract assets74,229 52,211 
Inventories101,248 108,565 
Income tax receivable5,826 2,665 
Other current assets52,323 42,253 
Total current assets1,760,665 1,550,036 
Property and equipment, net482,996 444,909 
Operating lease right-of-use assets79,975 76,348 
Goodwill320,388 311,991 
Intangible assets, net109,160 108,954 
Other assets26,211 24,647 
Total assets$2,779,395 $2,516,885 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$233,533 $222,121 
Current portion of debt— 17,500 
Contract liabilities34,754 39,122 
Accrued insurance claims51,165 44,466 
Operating lease liabilities33,310 32,015 
Income taxes payable— 3,861 
Other accrued liabilities158,341 147,219 
Total current liabilities511,103 506,304 
Long-term debt942,368 791,415 
Accrued insurance claims - non-current55,206 49,447 
Operating lease liabilities - non-current 46,190 44,110 
Deferred tax liabilities, net - non-current43,943 49,562 
Other liabilities22,136 21,391 
Total liabilities1,620,946 1,462,229 
COMMITMENTS AND CONTINGENCIES (Note 20)
Stockholders’ equity:  
Preferred stock, par value $1.00 per share: 1,000,000 shares authorized: no shares issued and outstanding
— — 
Common stock, par value $0.33 1/3 per share: 150,000,000 shares authorized: 29,098,029 and 29,091,278 issued and outstanding, respectively
9,699 9,697 
Additional paid-in capital17,238 6,217 
Accumulated other comprehensive loss— (1,547)
Retained earnings1,131,512 1,040,289 
Total stockholders’ equity1,158,449 1,054,656 
Total liabilities and stockholders’ equity$2,779,395 $2,516,885 
See notes to the condensed consolidated financial statements.

4
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
For the Three Months Ended
 July 27, 2024July 29, 2023
Contract revenues$1,203,059 $1,041,535 
Costs of earned revenues, excluding depreciation and amortization952,882 830,409 
General and administrative99,583 84,832 
Depreciation and amortization46,572 37,993 
Total1,099,037 953,234 
Interest expense, net(14,657)(12,277)
Loss on debt extinguishment(965)— 
Other income, net6,419 5,731 
Income before income taxes94,819 81,755 
Provision for income taxes26,419 21,509 
Net income$68,400 $60,246 
Earnings per common share:
Basic earnings per common share$2.35 $2.05 
Diluted earnings per common share$2.32 $2.03 
Shares used in computing earnings per common share:
 Basic29,096,224 29,328,218 
 Diluted29,435,895 29,610,946 
See notes to the condensed consolidated financial statements.
















5
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
For the Six Months Ended
 July 27, 2024July 29, 2023
Contract revenues$2,345,482 $2,087,009 
Costs of earned revenues, excluding depreciation and amortization1,874,518 1,683,775 
General and administrative194,138 167,188 
Depreciation and amortization91,777 75,265 
Total2,160,433 1,926,228 
Interest expense, net(27,490)(23,649)
Loss on debt extinguishment(965)— 
Other income, net15,669 10,722 
Income before income taxes172,263 147,854 
Provision for income taxes41,309 36,085 
Net income$130,954 $111,769 
Earnings per common share:
Basic earnings per common share$4.50 $3.81 
Diluted earnings per common share$4.44 $3.76 
Shares used in computing earnings per common share:
 Basic29,105,081 29,348,700 
 Diluted29,508,906 29,708,025 
See notes to the condensed consolidated financial statements.
6
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Net income$68,400 $60,246 $130,954 $111,769 
Foreign currency translation gains, net of tax— — — 225 
Disposal of foreign entity— — 1,547 — 
Comprehensive income$68,400 $60,246 $132,501 $111,994 
See notes to the condensed consolidated financial statements.

7
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
July 27, 2024
Common StockAdditional
Paid-in Capital		Accumulated Other
Comprehensive
Loss		Retained
Earnings		Total
Equity
 SharesAmount
Balances as of April 27, 202429,091,158 $9,697 $7,823 $— $1,063,112 $1,080,632 
Stock-based compensation316 — 9,482 — — 9,482 
Issuance of restricted stock, net of tax withholdings6,555 2 (67)— — (65)
Net income— — — — 68,400 68,400 
Balances as of July 27, 202429,098,029 $9,699 $17,238 $— $1,131,512 $1,158,449 
For the Three Months Ended
July 29, 2023
Common StockAdditional
Paid-in Capital		Accumulated Other
Comprehensive
Loss		Retained
Earnings		Total
Equity
SharesAmount
Balances as of April 28, 202329,318,085 $9,773 $6,620 $(1,546)$882,587 $897,434 
Stock options exercised2,702 1 78 — — 79 
Stock-based compensation330 — 6,323 — — 6,323 
Issuance of restricted stock, net of tax withholdings11,378 3 (39)— — (36)
Net income— — — — 60,246 60,246 
Balances as of July 29, 202329,332,495 $9,777 $12,982 $(1,546)$942,833 $964,046 
See notes to the condensed consolidated financial statements.























DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
8
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands)
(Unaudited)
For the Six Months Ended
July 27, 2024
Common StockAdditional
Paid-in Capital		Accumulated Other
Comprehensive
Loss		Retained
Earnings		Total
Equity
 SharesAmount
Balances as of January 27, 202429,091,278 $9,697 $6,217 $(1,547)$1,040,289 $1,054,656 
Stock options exercised3,976 1 99 — 100 
Stock-based compensation708 — 17,305 — — 17,305 
Issuance of restricted stock, net of tax withholdings212,067 71 (6,284)— (10,113)(16,326)
Repurchase of common stock, including applicable excise tax(210,000)(70)(99)— (29,618)(29,787)
Disposal of foreign entity— — — 1,547 — 1,547 
Net income— — — — 130,954 130,954 
Balances as of July 27, 202429,098,029 $9,699 $17,238 $— $1,131,512 $1,158,449 
For the Six Months Ended
July 29, 2023
Common StockAdditional
Paid-in Capital		Accumulated Other
Comprehensive
Loss		Retained
Earnings		Total
Equity
SharesAmount
Balances as of January 28, 202329,350,021 $9,783 $5,654 $(1,771)$855,089 $868,755 
Stock options exercised9,879 3 301 — — 304 
Stock-based compensation656 — 12,942 — — 12,942 
Issuance of restricted stock, net of tax withholdings196,939 66 (5,816)— (3,901)(9,651)
Repurchase of common stock, including applicable excise tax(225,000)(75)(99)— (20,124)(20,298)
Other comprehensive income— — — 225 — 225 
Net income— — — — 111,769 111,769 
Balances as of July 29, 202329,332,495 $9,777 $12,982 $(1,546)$942,833 $964,046 
See notes to the condensed consolidated financial statements.
9
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the Six Months Ended
July 27, 2024July 29, 2023
Cash flows from operating activities:
Net income $130,954 $111,769 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization91,777 75,265 
Non-cash lease expense19,262 17,091 
Deferred income tax (benefit) provision(5,619)971 
Stock-based compensation17,305 12,942 
(Recovery of) provision for bad debt, net(1,090)1,232 
Gain on sale of fixed assets(20,564)(15,374)
Loss on debt extinguishment965 — 
Amortization of debt issuance costs and other2,951 1,608 
Change in operating assets and liabilities:
Accounts receivable, net(256,491)(148,670)
Contract assets, net(26,262)(31,970)
Other current assets and inventories(2,889)(15,182)
Other assets331 3,412 
Income taxes payable/receivable(7,022)(21,626)
Accounts payable8,846 (6,145)
Accrued liabilities, insurance claims, operating lease liabilities, and other liabilities2,634 (14,170)
Net cash used in operating activities(44,912)(28,847)
Cash flows from investing activities:
Capital expenditures(107,387)(93,888)
Proceeds from sale of assets22,227 20,321 
Cash paid for acquisitions, net of cash acquired(33,792)— 
Net cash used in investing activities(118,952)(73,567)
Cash flows from financing activities:
Proceeds from borrowings on senior credit agreement, including term loan282,375 — 
Principal payments on senior credit agreement, including term loan(147,375)(8,750)
Debt issuance costs(6,645)— 
Repurchase of common stock(29,787)(20,298)
Exercise of stock options100 304 
Restricted stock tax withholdings(16,326)(9,651)
Net cash provided by (used in) financing activities82,342 (38,395)
Net decrease in cash, cash equivalents and restricted cash(81,522)(140,809)
Cash, cash equivalents and restricted cash at beginning of period (Note 8)102,890 225,990 
Cash, cash equivalents and restricted cash at end of period (Note 8)$21,368 $85,181 
10
Supplemental disclosure of other cash flow activities and non-cash investing and financing activities:
Cash paid for interest$25,566 $23,444 
Cash paid for taxes, net$53,929 $56,700 
Purchases of capital assets included in accounts payable or other accrued liabilities at period end$11,209 $13,686 
See notes to the condensed consolidated financial statements.

11
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Dycom Industries, Inc. (“Dycom”, the “Company”, “we”, “our”, or “us”) is a leading provider of specialty contracting services throughout the United States. These services include program management; planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications providers. Additionally, Dycom provides underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities. Dycom supplies the labor, tools, and equipment necessary to provide these services to its customers.

Accounting Period. Our fiscal year ends on the last Saturday in January. As a result, each fiscal year consists of either 52 weeks or 53 weeks of operations (with the additional week of operations occurring in the fourth quarter). Fiscal 2025 and fiscal 2024 each consist of 52 weeks of operations. The next 53 week fiscal period will occur in the fiscal year ending January 31, 2026.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries, all of which are wholly-owned, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2024, filed with the SEC on March 1, 2024. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included. This includes all normal and recurring adjustments and elimination of intercompany accounts and transactions. Operating results for the interim period are not necessarily indicative of the results expected for any subsequent interim or annual period.

Segment Information. The Company operates in one reportable segment. Its services are provided by its operating segments on a decentralized basis. Each operating segment consists of a subsidiary (or in certain instances, the combination of two or more subsidiaries), whose results are regularly reviewed by the Company’s Chief Executive Officer, the chief operating decision maker. All of the Company’s operating segments have been aggregated into one reportable segment based on their similar economic characteristics, nature of services and production processes, type of customers, and service distribution methods.

2. Significant Accounting Policies and Estimates

There have been no material changes to the Company’s significant accounting policies and critical accounting estimates described in the Company’s Annual Report on Form 10-K for fiscal 2024.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. These estimates are based on our historical experience and management’s understanding of current facts and circumstances. At the time they are made, we believe that such estimates are fair when considered in conjunction with the Company’s consolidated financial position and results of operations taken as a whole. However, actual results could differ materially from those estimates.

Per Share Data. Basic earnings per common share is computed based on the weighted average number of common shares outstanding during the period, excluding unvested restricted share units. Diluted earnings per common share includes the weighted average number of common shares outstanding during the period and dilutive potential common shares arising from our stock-based awards (including unvested restricted share units) if their inclusion is dilutive under the treasury stock method. Common stock equivalents related to stock-based awards are excluded from diluted earnings per common share calculations if their effect would be anti-dilutive.

12
3. Accounting Standards

Recently issued accounting pronouncements are disclosed in the Company’s Annual Report on Form 10-K for fiscal 2024. As of the date of this Quarterly Report on Form 10-Q, there have been no changes in the expected dates of adoption or estimated effects on the Company’s condensed consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s Annual Report on Form 10-K for fiscal 2024. Accounting standards adopted during the six months ended July 27, 2024 are disclosed in this Quarterly Report on Form 10-Q.

Recently Adopted Accounting Standards

Leases. In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements. The amendments require all entities including public companies to amortize leasehold improvements associated with common control leases over the useful life to the common control group. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. Transition can be done either retrospectively or prospectively. We adopted the provisions of ASU 2023-01 in the first quarter of fiscal 2025 by electing to apply the guidance prospectively to all new leasehold improvements recognized on or after January 28, 2024. The adoption of this update did not have a material impact on our consolidated financial statements.

Accounting Standards Not Yet Adopted

Segment Reporting: Improvements to Reportable Segment Disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires entities to disclose significant segment expenses, on an annual and interim basis, that are regularly provided to the chief operating decision maker, and an amount for other segment items by reportable segment, with a description of its composition. This ASU requires that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this update and all existing segment disclosures in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A retrospective approach is required to be applied to all prior periods presented in the financial statements. We plan to adopt the provisions of ASU 2023-07 in the fourth quarter of fiscal 2025 and continue to evaluate the disclosure requirements related to the new standard.

Income Taxes: Improvements to Income Tax Disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure will be applied on a prospective basis, with the option to apply them retrospectively. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We plan to adopt the provisions of ASU 2023-09 in fiscal 2026 and we are evaluating the disclosure requirements related to the new standard.

All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.


13
4. Computation of Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts):
 For the Three Months EndedFor the Six Months Ended
 July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Net income available to common stockholders (numerator)$68,400 $60,246 $130,954 $111,769 
Weighted-average number of common shares (denominator)29,096,224 29,328,218 29,105,081 29,348,700 
Basic earnings per common share$2.35 $2.05 $4.50 $3.81 
Weighted-average number of common shares29,096,224 29,328,218 29,105,081 29,348,700 
Potential shares of common stock arising from stock options, and unvested restricted share units339,671 282,728 403,825 359,325 
Total shares-diluted (denominator)29,435,895 29,610,946 29,508,906 29,708,025 
Diluted earnings per common share$2.32 $2.03 $4.44 $3.76 
Anti-dilutive weighted shares excluded from the calculation of earnings per common share145,860 179,611 145,868 143,670 


5. Acquisitions

Fiscal 2025. During the second quarter of fiscal 2025, we acquired a telecommunications construction contractor for a total purchase price of $25.1 million ($21.0 million purchase price plus cash acquired of $4.1 million). The acquired company is located in the northwestern United States and provides construction and maintenance services to telecommunications providers, with the majority of its revenues generated in Alaska. This acquisition expands our geographic presence and our customer base.

During the first quarter of fiscal 2025, we acquired a telecommunications construction contractor for $16.0 million ($12.8 million purchase price, plus cash acquired of $3.2 million). The acquired company provides construction and maintenance services for telecommunications providers in the midwestern United States. This acquisition expands our geographic presence within our existing customer base.

The purchase price allocations of these two acquired companies are preliminary and will be completed when valuations for intangible assets and other amounts are finalized within the 12-month measurement period from the respective dates of acquisition.

The following table summarizes the aggregate consideration paid and the estimated fair value of assets acquired and liabilities assumed for each of the acquisitions described above as of the respective acquisition dates (dollars in millions):
14
First quarter of fiscal 2025
Second quarter of fiscal 2025
Assets
Cash and equivalents$3.2 $4.1 
Accounts receivable2.2 3.6 
Other current assets— 0.8 
Property and equipment2.4 5.9 
Goodwill3.2 5.4 
Intangible assets5.4 6.6 
Other assets— 0.7 
Total assets16.4 27.1 
Liabilities
Accounts payable0.1 0.9 
Other accrued liabilities0.3 0.6 
Other liabilities— 0.5 
Total liabilities0.4 2.0 
Net Assets Acquired$16.0 $25.1 

The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill and totaled $8.6 million for the 2025 acquisitions. Goodwill and intangible assets total $20.6 million and are deductible for tax purposes. Accounts receivable and current liabilities were stated at their historical carrying value, which approximates fair value given the short-term nature of these assets and liabilities. The estimate of fair value for fixed assets was based on an assessment of acquired assets’ condition as well as an evaluation of the current market value of such assets.

The Company recorded intangible assets based on its preliminary estimate of fair value which consisted of the following (dollars in millions):
Estimated Useful Life (in years)Intangible Assets Acquired
Customer relationships12.0$10.4 
Backlog intangibles0.80.5 
Trade names10.01.1 
Total intangible assets acquired$12.0 


Fiscal 2024. During August 2023, we acquired Bigham Cable Construction, Inc. ("Bigham"), for $131.2 million ($127.0 million fixed purchase price, plus cash acquired of $8.3 million, less indebtedness of $4.1 million). Bigham provides construction and maintenance services for telecommunications providers in the southeastern United States. This acquisition expands our geographic presence within our existing customer base.

The following table summarizes the aggregate consideration paid and the estimated fair value of assets acquired and liabilities assumed as of the acquisition date (dollars in millions):
15
Assets
Cash and equivalents$8.3 
Accounts receivable45.8 
Other current assets0.3 
Property and equipment, net9.9 
Goodwill39.2 
Intangible assets, net42.2 
Other assets0.8 
Total assets146.5 
Liabilities
Accounts payable8.3 
Other accrued liabilities2.6 
Income taxes payable4.4 
Total liabilities15.3 
Net Assets Acquired$131.2 

The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill and totaled $39.2 million. Goodwill and intangible assets total $81.4 million and are deductible for tax purposes. Accounts receivable and current liabilities were stated at their historical carrying value, which approximates fair value given the short-term nature of these assets and liabilities. The estimate of fair value for fixed assets was based on an assessment of acquired assets’ condition as well as an evaluation of the current market value of such assets.

The Company recorded intangible assets based on its preliminary estimate of fair value which consisted of the following (dollars in millions):

Estimated Useful Life (in years)Intangible Assets Acquired
Customer relationships12.0$26.8 
Backlog intangibles3.011.6 
Trade names10.03.8 
Total intangible assets acquired$42.2 

The valuation of intangible assets for both fiscal 2025 and fiscal 2024 acquisitions was determined using the income approach methodology. More specifically, the fair values of the customer relationships and the backlog intangibles were estimated using the multi-period excess earnings method, while the trade name was estimated using the relief-from-royalty method. Key assumptions used in estimating future cash flows included projected revenue growth rates, profit margins, discount rates, customer attrition rates and royalty rates among others. The projected future cash flows are discounted to present value using an appropriate discount rate.

Results of the businesses acquired are included in the condensed consolidated financial statements from the date of acquisition. The results from the businesses acquired during fiscal 2025 and 2024 were not considered material to the Company’s condensed consolidated financial statements.

16
6. Accounts Receivable, Contract Assets, and Contract Liabilities

The following provides further details on the balance sheet accounts of accounts receivable, net; contract assets; and contract liabilities.

Accounts Receivable
 
Accounts receivable, net, classified as current, consisted of the following (dollars in thousands):
July 27, 2024January 27, 2024
Trade accounts receivable$558,797 $462,034 
Unbilled accounts receivable904,867 734,442 
Retainage45,481 49,556 
Total1,509,145 1,246,032 
Less: allowance for doubtful accounts(1,670)(2,776)
Accounts receivable, net$1,507,475 $1,243,256 
 
We maintain an allowance for doubtful accounts for estimated losses on uncollected balances. The allowance for doubtful accounts changed as follows (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Allowance for doubtful accounts at beginning of period$1,539 $3,682 $2,776 $3,246 
Provision for (recovery of) bad debt147 796 (1,090)1,232 
Amounts charged against the allowance(16)(677)(16)(677)
Allowance for doubtful accounts at end of period$1,670 $3,801 $1,670 $3,801 

Contract Assets and Contract Liabilities

Net contract assets consisted of the following (dollars in thousands):
July 27, 2024January 27, 2024
Contract assets$74,229 $52,211 
Contract liabilities 34,754 39,122 
Contract assets, net$39,475 $13,089 

The increase in contract assets, net, primarily resulted from increased services performed under contracts consisting of multiple tasks. During the three and six months ended July 27, 2024, we performed services and recognized $2.9 million and $12.5 million, respectively, of contract revenues related to contract liabilities that existed at January 27, 2024. See Note 7, Other Current Assets and Other Assets, for information on our long-term contract assets.

Customer Credit Concentration

We have two customers whose combined amounts of accounts receivable and contract assets, net, exceeded 10% of total combined accounts receivable and contract assets, net. The combined amounts of accounts receivable and contract assets, net, for Lumen Technologies were $402.7, or 25.9%, and $345.0, or 27.4%, as of July 27, 2024 and January 27, 2024, respectively, and Charter Communications were $164.25, or 10.6%, and $108.2, or 8.6%, as of July 27, 2024 and January 27, 2024, respectively, of the total combined accounts receivable and contract assets, net. No other customer had combined amounts of accounts receivable and contract assets, net, which exceeded 10% of total combined accounts receivable and contract assets, net as of July 27, 2024 or January 27, 2024. We believe that none of our significant customers were experiencing financial difficulties that would materially impact the collectability of our total accounts receivable and contract assets, net, as of July 27, 2024 or January 27, 2024.

17
7. Other Current Assets and Other Assets
 
Other current assets consisted of the following (dollars in thousands):
July 27, 2024January 27, 2024
Prepaid expenses$28,238 $20,095 
Deposits and other current assets22,281 20,218 
Restricted cash1,372 1,372 
Receivables on equipment sales432 568 
Other current assets$52,323 $42,253 

Other assets consisted of the following (dollars in thousands):
July 27, 2024January 27, 2024
Long-term contract assets$— $2,610 
Deferred financing costs5,485 2,544 
Restricted cash432 432 
Insurance recoveries/receivables for accrued insurance claims3,714 4,760 
Other non-current deposits and assets16,580 14,301 
Other assets$26,211 $24,647 

Long-term contract assets represent payments made to customers pursuant to long-term agreements and are recognized as a reduction of contract revenues over the period for which the related services are provided to the customers.

See Note 11, Accrued Insurance Claims, for information on our insurance recoveries/receivables.

8. Cash and Equivalents and Restricted Cash
 
Amounts of cash, cash equivalents and restricted cash reported in the condensed consolidated statement of cash flows consisted of the following (dollars in thousands):
July 27, 2024January 27, 2024
Cash and equivalents$19,564 $101,086 
Restricted cash included in:
Other current assets1,372 1,372 
Other assets (long-term)432 432 
Cash equivalents and restricted cash$21,368 $102,890 

18
9. Property and Equipment
 
Property and equipment consisted of the following (dollars in thousands):

Estimated Useful Lives (Years)July 27, 2024January 27, 2024
Land—$8,419 $8,419 
Buildings
10-35
12,032 10,399 
Leasehold improvements
1-10
20,446 19,188 
Vehicles
1-5
887,094 873,944 
Equipment and machinery
1-10
435,834 414,067 
Computer hardware and software
1-7
136,037 138,937 
Office furniture and equipment
1-10
11,536 11,927 
Total1,511,398 1,476,881 
Less: accumulated depreciation(1,028,402)(1,031,972)
Property and equipment, net$482,996 $444,909 

Depreciation expense was $40.7 million and $34.5 million for the three months ended July 27, 2024 and July 29, 2023, respectively and $80.0 million and $68.3 million for the six months ended July 27, 2024 and July 29, 2023.

10. Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance was $320.4 million and $312.0 million as of July 27, 2024 and January 27, 2024, respectively. Changes in the carrying amount of goodwill consisted of the following (dollars in thousands):
GoodwillAccumulated Impairment LossesTotal
Balance as of January 27, 2024
$561,022 $(249,031)$311,991 
Goodwill from fiscal 2024 acquisition(244)— (244)
Goodwill from fiscal 2025 acquisitions8,641 — 8,641 
Balance as of July 27, 2024
$569,419 $(249,031)$320,388 

The Company’s goodwill resides in multiple reporting units and primarily consists of expected synergies, together with the expansion of our geographic presence and strengthening of our customer base from acquisitions. Goodwill and other indefinite-lived intangible assets are assessed annually, or more frequently if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. The profitability of individual reporting units may suffer periodically due to downturns in customer demand, increased costs of providing services, and the level of overall economic activity. Our customers may reduce capital expenditures and defer or cancel pending projects due to changes in technology, a slowing or uncertain economy, merger or acquisition activity, a decision to allocate resources to other areas of their business, or other reasons. The profitability of reporting units may also suffer if actual costs of providing services exceed the costs anticipated when the Company enters into contracts. Additionally, adverse conditions in the economy and future volatility in the equity and credit markets could impact the valuation of our reporting units. The cyclical nature of our business, the high level of competition existing within our industry, and the concentration of our revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units disproportionately, relative to the Company as a whole. As a result, the performance of one or more of the reporting units could decline, resulting in an impairment of goodwill or intangible assets.

19
During the second quarter of fiscal 2025, the Company acquired a telecommunications construction contractor for $25.1 million ($21.0 million purchase price plus cash acquired of $4.1 million). The purchase price was allocated based on the fair value of the assets acquired and the liabilities assumed on the date of acquisition. The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill and totaled $5.4 million, which is deductible for tax purposes. See Note 5, Acquisitions, for more information regarding the acquisition.

During the first quarter of fiscal 2025, the Company acquired a telecommunications construction contractor for $16.0 million ($12.8 million purchase price, plus cash acquired of $3.2 million). The purchase price was allocated based on the fair value of the assets acquired and the liabilities assumed on the date of acquisition. The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill and totaled $3.2 million, which is deductible for tax purposes. See Note 5, Acquisitions, for more information regarding the acquisition.

The Company performs its annual goodwill assessment as of the first day of the fourth fiscal quarter of each fiscal year. As a result of the Company’s fiscal 2024 period assessment, the Company determined that the fair values of each of the reporting units and the indefinite-lived intangible asset were in excess of their carrying values and no impairment had occurred. As of July 27, 2024, we believe the carrying amounts of goodwill and the indefinite-lived intangible asset are recoverable for all of our reporting units.

Intangible Assets

Our intangible assets consisted of the following (dollars in thousands):
July 27, 2024January 27, 2024
Weighted Average Remaining Useful Lives (Years)Gross Carrying AmountAccumulated AmortizationIntangible Assets, NetGross Carrying AmountAccumulated AmortizationIntangible Assets, Net
Customer relationships8.0$348,517 $254,614 $93,903 $338,117 $245,512 $92,605 
Trade names, finite8.814,080 8,999 5,081 13,050 8,723 4,327 
Trade name, indefiniteIndefinite4,700 — 4,700 4,700 — 4,700 
Contract backlog2.012,130 6,703 5,427 11,600 4,335 7,265 
Non-compete agreements3.375 26 49 75 18 57 
$379,502 $270,342 $109,160 $367,542 $258,588 $108,954 

Amortization of our customer relationship intangibles and our contract backlog intangibles are recognized on an accelerated basis as a function of the expected economic benefit. Amortization of our other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life. Amortization expense for finite-lived intangible assets was $5.9 million and $3.5 million for the three months ended July 27, 2024 and July 29, 2023, respectively and $11.8 million and $7.0 million for the six months ended July 27, 2024 and July 29, 2023.

As of July 27, 2024, we believe that the carrying amounts of our intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and the assets could be impaired.

11. Accrued Insurance Claims
 
For claims within our insurance program, we retain the risk of loss, up to certain annual stop-loss limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health. Losses for claims beyond our retained risk of loss are covered by insurance up to our coverage limits.

For workers’ compensation losses during fiscal 2025 and 2024, we retained the risk of loss up to $1.0 million on a per occurrence basis. This retention amount is applicable to all of the states in which we operate, except with respect to workers’ compensation insurance in two states in which we participate in state-sponsored insurance funds.

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For automobile liability and general liability losses during fiscal 2024, we retained the risk of loss up to $1.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for the next $10.0 million on a per-occurrence basis for losses between $5.0 million and $15.0 million, if any. Additionally, during fiscal 2024 we retained $10.0 million risk of loss on a per occurrence basis for losses between $30.0 million and $40.0 million, if any.

For automobile liability losses during fiscal 2025, we retained the risk of loss up to $2.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for the next $5.0 million on a per-occurrence basis for losses between $5.0 million and $10.0 million, if any.

For general liability losses during fiscal 2025, we retained the risk of loss up to $1.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for the next $5.0 million on a per-occurrence basis for losses between $5.0 million and $10.0 million, if any.

We are party to a stop-loss agreement for losses under our employee group health plan. For calendar year 2024, we retain the risk of loss on an annual basis, up to the first $700,000 of claims per participant.

Amounts for total accrued insurance claims and insurance recoveries/receivables are as follows (dollars in thousands):

July 27, 2024January 27, 2024
Accrued insurance claims - current$51,165 $44,466 
Accrued insurance claims - non-current55,206 49,447 
Accrued insurance claims$106,371 $93,913 
Insurance recoveries/receivables:
Non-current (included in Other assets)3,714 4,760 
Insurance recoveries/receivables$3,714 $4,760 

Insurance recoveries/receivables represent the amount of accrued insurance claims that are covered by insurance as the amounts exceed the Company’s loss retention. During the six months ended July 27, 2024, total insurance recoveries/receivables decreased approximately $1.0 million primarily due to the settlement of claims that exceeded our loss retention. Accrued insurance claims decreased by a corresponding amount.

12. Leases

We lease the majority of our office facilities as well as certain equipment, all of which are accounted for as operating leases. These leases have remaining terms ranging from less than 1 year to approximately 6 years. Some leases include options to extend the lease for up to 5 years and others include options to terminate.

The following table summarizes the components of lease cost recognized in the condensed consolidated statements of operations for the three and six months ended July 27, 2024 and July 29, 2023 (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Lease cost under long-term operating leases$10,903 $9,351 $21,364 $18,631 
Lease cost under short-term operating leases4,386 6,030 8,380 11,916 
Variable lease cost under short-term and long-term operating leases(1)
913 1,028 2,005 2,150 
Total lease cost$16,202 $16,409 $31,749 $32,697 

(1) Variable lease cost primarily includes insurance, maintenance, and other operating expenses related to our leased office facilities.

Our operating lease liabilities related to long-term operating leases were $79.5 million as of July 27, 2024 and $76.1 million as of January 27, 2024. Supplemental balance sheet information related to these liabilities is as follows:

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July 27, 2024January 27, 2024
Weighted average remaining lease term2.8 years2.8 years
Weighted average discount rate5.4 %5.0 %

Supplemental cash flow information related to our long-term operating lease liabilities for the three and six months ended July 27, 2024 and July 29, 2023 is as follows (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Cash paid for amounts included in the measurement of lease liabilities $11,458 $10,125 $20,886 $18,612 
Operating lease right-of-use assets obtained in exchange for operating lease liabilities $9,336 $8,676 $22,922 $22,611 

As of July 27, 2024, maturities of our lease liabilities under our long-term operating leases for the next five fiscal years and thereafter are as follows (dollars in thousands):

Fiscal YearAmount
Remainder of 2025$19,178 
202631,889 
202719,680 
20289,495 
20294,713 
2030862 
Thereafter13 
Total lease payments85,830 
Less: imputed interest(6,330)
Total$79,500 

As of July 27, 2024, the Company had an operating lease that is expected to commence in fiscal 2025 with a term of 130 months and initial annual rent of $3.2 million. This lease will replace certain other property leases that expire in fiscal 2026. Another lease is also expected to commence in fiscal 2025 with a term of 36 months and annual rent of $0.2 million.

13. Other Accrued Liabilities
 
Other accrued liabilities consisted of the following (dollars in thousands):
July 27, 2024January 27, 2024
Accrued payroll and related taxes$41,813 $32,370 
Accrued employee benefit and incentive plan costs47,454 51,661 
Accrued construction costs32,805 30,712 
Other current liabilities36,269 32,476 
Other accrued liabilities$158,341 $147,219 

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14. Debt
 
The following table summarizes the net carrying value of our outstanding indebtedness (dollars in thousands):
July 27, 2024January 27, 2024
Credit Agreement - Term loan facility (matures January 2029)$446,730 $313,735 
4.50% senior notes, net (mature April 2029)
495,638 495,180 
942,368 808,915 
Less: current portion— (17,500)
Long-term debt$942,368 $791,415 

Credit Agreement

The Company and certain of its subsidiaries are party to an amended and restated credit agreement, dated as of October 19, 2018, with the various lenders party thereto and Bank of America, N.A., as administrative agent (as amended on April 1, 2021, May 9, 2023, and May 15, 2024, the “Credit Agreement”). On May 15, 2024, we amended and restated the Credit Agreement to, among other things, increase the term loan facility and extend the maturity date. The Credit Agreement includes a revolving facility with a maximum revolver commitment of $650.0 million and a term loan facility in the principal amount of $450.0 million. The Credit Agreement also includes a $200.0 million sublimit for the issuance of letters of credit and a $50.0 million sublimit for swingline loans. The maturity of the Credit Agreement is January 15, 2029.

The following table summarizes the net carrying value of the term loan as of July 27, 2024 and January 27, 2024 (dollars in thousands):
July 27, 2024January 27, 2024
Principal amount of term loan$450,000 $315,000 
Less: Debt issuance costs(3,270)(1,265)
Net carrying amount of term loan$446,730 $313,735 

Subject to certain conditions, the Credit Agreement provided us with the ability to enter into one or more incremental facilities either by increasing the revolving commitments under the Credit Agreement and/or by establishing one or more additional term loans, up to the sum of (i) $350.0 million and (ii) an aggregate amount such that, after giving effect to such incremental facilities on a pro forma basis (assuming that the amount of the incremental commitments are fully drawn and funded), the consolidated senior secured net leverage ratio does not exceed 2.25 to 1.00. The consolidated senior secured net leverage ratio is the ratio of our consolidated senior secured indebtedness reduced by unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined by the Credit Agreement. Borrowings under the Credit Agreement are guaranteed by substantially all of our domestic subsidiaries and secured by 100% of the equity interests of our direct and indirect domestic subsidiaries and 65% of the voting equity interests and 100% of the non-voting interests of our first-tier foreign subsidiaries (subject to customary exceptions).

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Under our Credit Agreement, borrowings bear interest at the rates described below based upon our consolidated net leverage ratio, which is the ratio of our consolidated total funded debt reduced by unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated EBITDA, as defined by our Credit Agreement. In addition, we incur certain fees for unused balances and letters of credit at the rates described below, also based upon our consolidated net leverage ratio.

Borrowings - Term SOFR Loans
1.375% - 2.00% plus Term SOFR
Borrowings - Base Rate Loans
0.375% - 1.00% plus Base rate(1)
Unused Revolver Commitment
0.20% - 0.40%
Standby Letters of Credit
1.375% - 2.00%
Commercial Letters of Credit
0.6875% -1.00%

(1) Base rate is described in the Credit Agreement as the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the administrative agent’s prime rate, and (iii) the Term Secured Overnight Financing Rate (“SOFR”) plus 1.00% and, if such rate is less than zero, such rate shall be deemed zero. “Term SOFR” will be the published forward-looking SOFR rate for the applicable interest period plus a 0.10% spread adjustment and if such rate is less than zero, such rate shall be deemed zero.

Standby letters of credit of approximately $47.5 million, issued as part of our insurance program, were outstanding under our Credit Agreement as of both July 27, 2024 and January 27, 2024.

The weighted average interest rates and fees for balances under our Credit Agreement as of July 27, 2024 and January 27, 2024 were as follows:
Weighted Average Rate End of Period
July 27, 2024January 27, 2024
Borrowings - Term loan facility6.93%7.06%
Borrowings - Revolving facility(1)
—%—%
Standby Letters of Credit1.50%1.63%
Unused Revolver Commitment0.25%0.30%

(1) There were no outstanding borrowings under our revolving facility as of July 27, 2024 and January 27, 2024.

Our Credit Agreement contains a financial covenant that requires us to maintain a consolidated net leverage ratio of not greater than 3.50 to 1.00, as measured at the end of each fiscal quarter, and provides for certain increases to this ratio in connection with permitted acquisitions. The consolidated net leverage ratio is the ratio of our consolidated indebtedness reduced by unrestricted cash and cash equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization as defined by our Credit Agreement. The Credit Agreement also contains a financial covenant that requires us to maintain a consolidated interest coverage ratio, which is the ratio of our trailing four-quarter consolidated EBITDA to our consolidated interest expense, each as defined by our Credit Agreement, of not less than 3.00 to 1.00, as measured at the end of each fiscal quarter. At July 27, 2024 and January 27, 2024, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under our revolving facility of $602.5 million for both periods as determined by the most restrictive covenant. For calculation purposes, applicable cash on hand is netted against the funded debt amount as permitted in the Credit Agreement.

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4.50% Senior Notes Due 2029

On April 1, 2021, we issued $500.0 million aggregate principal amount of 4.50% senior notes due 2029 (the “2029 Notes”). The 2029 Notes are guaranteed on a senior unsecured basis, jointly and severally, by all of our domestic subsidiaries that guarantee the Credit Agreement.

The indenture governing the 2029 Notes contains certain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to (i) incur additional debt and issue certain preferred stock, (ii) pay certain dividends on, repurchase, or make distributions in respect of, our and our subsidiaries’ capital stock or make other payments restricted by the indenture, (iii) enter into agreements that place limitations on distributions made from certain of our subsidiaries, (iv) guarantee certain debt, (v) make certain investments, (vi) sell or exchange certain assets, (vii) enter into transactions with affiliates, (viii) create certain liens, and (ix) consolidate, merge or transfer all or substantially all of our or our Subsidiaries’ assets. These covenants are subject to a number of exceptions, limitations and qualifications as set forth in the indenture governing the 2029 Notes.

The following table summarizes the net carrying value of the 2029 Notes as of July 27, 2024 and January 27, 2024 (dollars in thousands):
July 27, 2024January 27, 2024
Principal amount of 2029 Notes $500,000 $500,000 
Less: Debt issuance costs(4,362)(4,820)
Net carrying amount of 2029 Notes$495,638 $495,180 

The following table summarizes the fair value of the 2029 Notes, net of debt issuance costs. The fair value of the 2029 Notes is based on the closing trading price per $100 of the 2029 Notes as of the last day of trading (Level 2), which was $94.41 and $92.49 as of July 27, 2024 and January 27, 2024, respectively (dollars in thousands):

July 27, 2024January 27, 2024
Fair value of principal amount of 2029 Notes$472,050 $462,450 
Less: Debt issuance costs(4,362)(4,820)
Fair value of 2029 Notes$467,688 $457,630 

15. Income Taxes

Our effective income tax rate was 27.9% and 26.3% for the three months ended July 27, 2024 and July 29, 2023, respectively and 24.0% and 24.4% for the six months ended July 27, 2024 and July 29, 2023, respectively. The interim income tax provisions are based on the effective income tax rate expected to be applicable for the full fiscal year, adjusted for specific items that are required to be recognized in the period in which they occur. The effective tax rate differs from the statutory rate primarily due to the difference in income tax rates from state to state where work was performed, non-deductible and non-taxable items, tax credits recognized, the tax effects of the vesting and exercise of share-based awards, and changes in unrecognized tax benefits. Deferred tax assets and liabilities are based on the enacted tax rate that will apply in future periods when such assets and liabilities are expected to be settled or realized.

We are currently under IRS audit for fiscal year 2020. We believe our provision for income taxes is adequate; however, any assessment may affect our results of operations and cash flows.

16. Other Income, Net

The components of other income, net, were as follows (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Gain on sale of fixed assets$8,160 $7,558 $20,564 $15,374 
Miscellaneous expense, net(1,741)(1,827)(4,895)(4,652)
Other income, net$6,419 $5,731 $15,669 $10,722 

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We participate in a vendor payment program sponsored by one of our customers. Eligible accounts receivable from this customer are included in the program and payment is received pursuant to a non-recourse sale to a bank partner. This program effectively reduces the time to collect these receivables as compared to that customer’s standard payment terms. We incur a discount fee to the bank on the payments received that is included as an expense component in miscellaneous expense, net, in the table above.

17. Capital Stock

Repurchases of Common Stock. On August 23, 2023 the Company announced that its Board of Directors authorized a new $150 million program to repurchase shares of the Company’s outstanding common stock through February 2025 in open market or private transactions. During the three months ended July 27, 2024, the Company did not repurchase any shares of its own common stock. As of July 27, 2024, $90.9 million of the authorization was available for repurchases.

Restricted Stock Tax Withholdings. During the six months ended July 27, 2024 and July 29, 2023, we withheld 113,654 shares totaling $16.3 million and 101,397 shares totaling $9.7 million, respectively, to meet payroll tax withholding obligations arising from the vesting of restricted share units. All shares withheld have been cancelled. Shares of common stock withheld for tax withholdings do not reduce our total share repurchase authority. 

Upon cancellation of shares repurchased or withheld for tax withholdings, the excess over par value is recorded as a reduction of additional paid-in capital until the balance is reduced to zero, with any additional excess recorded as a reduction of retained earnings.

18. Stock-Based Awards

We have certain stock-based compensation plans under which we grant stock-based awards, including common stock, stock options, time-based restricted share units (“RSUs”), and performance-based restricted share units (“Performance RSUs”) to attract, retain, and reward talented employees, officers, and directors, and to align stockholder and employee interests.

Compensation expense for stock-based awards is based on fair value at the measurement date. This expense fluctuates over time as a function of the duration of vesting periods of the stock-based awards and the Company’s performance, as measured by criteria set forth in performance-based awards. Stock-based compensation expense is included in general and administrative expenses in the condensed consolidated statements of operations and the amount of expense ultimately recognized depends on the quantity of awards that actually vest. Accordingly, stock-based compensation expense may vary from period to period.

The performance criteria for the Company’s performance-based equity awards utilize the Company’s operating earnings (adjusted for certain amounts) as a percentage of contract revenues for the applicable annual period (a “Performance Year”) and its Performance Year operating cash flow level (adjusted for certain amounts). Additionally, certain awards include three-year performance measures that, if met, result in supplemental shares awarded. For Performance RSUs, the Company evaluates compensation expense quarterly and recognizes expense for performance-based awards only if it determines it is probable that performance criteria for the awards will be met.

During the three months ended July 27, 2024, the Company announced its CEO succession plan and transition. In connection with this transition, the Company will incur approximately $11.4 million of incremental stock-based compensation modification expense through the current CEOs retirement date of November 30, 2024 related to previously issued equity awards. Of this total, approximately $2.2 million was recognized during the three months ended July 27, 2024.

Stock-based compensation expense and the related tax benefit recognized during the three and six months ended July 27, 2024 and July 29, 2023 were as follows (dollars in thousands):
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Stock-based compensation$9,482 $6,323 $17,305 $12,942 
Income tax effect of stock-based compensation$2,330 $1,567 $4,269 $3,211 

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During the three months ended July 27, 2024 and July 29, 2023, the Company realized $0.1 million and $0.1 million of net excess tax benefits, respectively, related to the vesting and exercise of share-based awards. During the six months ended July 27, 2024 and July 29, 2023, the Company realized approximately $6.0 million and $2.8 million of net excess tax benefits, respectively, related to the vesting and exercise of share-based awards.

As of July 27, 2024, we had unrecognized compensation expense related to stock options, RSUs, and target Performance RSUs (based on the Company’s expected achievement of performance measures) of $6.6 million, $29.2 million, and $27.1 million, respectively. This expense will be recognized over a weighted-average number of years of 1.0, 2.7, and 1.4, respectively, based on the average remaining service periods for the awards. We may recognize an additional $12.8 million in compensation expense in future periods after July 27, 2024 if the maximum number of Performance RSUs is earned based on certain performance measures being met.

Stock Options

The following table summarizes stock option award activity during the six months ended July 27, 2024:
Stock Options
SharesWeighted Average Exercise Price
Outstanding as of January 27, 2024264,125 $70.18 
Granted27,680 $141.28 
Options exercised(3,976)$25.15 
Outstanding as of July 27, 2024287,829 $77.64 
Exercisable options as of July 27, 2024207,589 $64.92 

RSUs and Performance RSUs

The following table summarizes RSU and Performance RSU award activity during the six months ended July 27, 2024:
Restricted Stock
RSUsPerformance RSUs
Share UnitsWeighted Average Grant Date Fair ValueShare UnitsWeighted Average Grant Date Fair Value
Outstanding as of January 27, 2024390,765 $74.89 431,190 $95.98 
Granted99,897 $145.33 170,526 $141.28 
Share units vested(185,391)$53.93 (146,702)$92.07 
Forfeited or canceled(8,481)$82.47 (78,169)$93.25 
Outstanding as of July 27, 2024296,790 $114.48 376,845 $118.57 

The total number of granted Performance RSUs presented above consists of 117,938 target shares and 52,588 supplemental shares. The total number of Performance RSUs outstanding as of July 27, 2024 consists of 257,672 target shares and 119,173 supplemental shares. With respect to the Company’s Performance Year ended January 27, 2024, the Company added 712 supplemental shares and cancelled 66,685 supplemental shares during the six months ended July 27, 2024, as a result of the performance period criteria not being met.

19. Customer Concentration and Revenue Information

Geographic Location

We provide services throughout the United States.

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Significant Customers

Our customer base is highly concentrated, with our top five customers accounting for approximately 55.5% and 61.5% of total contract revenues during the six months ended July 27, 2024 and July 29, 2023, respectively. Customers whose contract revenues exceeded 10% of total contract revenues during the three and six months ended July 27, 2024 or July 29, 2023, as well as total contract revenues from all other customers combined, were as follows (dollars in millions):
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Amount% of TotalAmount% of TotalAmount% of TotalAmount% of Total
AT&T Inc.$210.2 17.5%$174.3 16.7%$425.7 18.2%$398.7 19.1%
Lumen Technologies163.7 13.6162.5 15.6320.5 13.7298.9 14.3
Comcast Corporation105.6 8.8119.5 11.5210.6 9.0240.1 11.5
Verizon Communications Inc.85.3 7.1104.910.1163.5 7.0204.9 9.8
Total other customers combined638.3 53.0480.346.11,225.2 52.1944.4 45.3
Total contract revenues$1,203.1 100.0%$1,041.5 100.0%$2,345.5 100.0%$2,087.0 100.0%

See Note 6, Accounts Receivable, Contract Assets, and Contract Liabilities, for information on our customer credit concentration and collectability of trade accounts receivable and contract assets.

Customer Type

Total contract revenues by customer type during the three and six months ended July 27, 2024 and July 29, 2023 were as follows (dollars in millions):
For the Three Months EndedFor the Six Months Ended
July 27, 2024July 29, 2023July 27, 2024July 29, 2023
Amount% of TotalAmount% of TotalAmount% of TotalAmount% of Total
Telecommunications$1,086.2 90.3%$927.1 89.0%$2,113 90.0%$1,865.3 89.4%
Underground facility locating82.1 6.876.7 7.4163.1 7.0149.6 7.2
Electrical and gas utilities and other34.8 2.937.7 3.669.4 3.072.1 3.4
Total contract revenues$1,203.1 100.0%$1,041.5 100.0%$