Company Quick10K Filing
Dycom Industries
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 32 $1,672
10-Q 2019-11-27 Quarter: 2019-10-26
10-Q 2019-08-29 Quarter: 2019-07-27
10-Q 2019-05-23 Quarter: 2019-04-27
10-K 2019-03-04 Annual: 2019-01-26
10-Q 2018-11-21 Quarter: 2018-10-27
10-Q 2018-08-30 Quarter: 2018-07-28
10-Q 2018-05-24 Quarter: 2018-04-28
10-Q 2017-11-22 Quarter: 2017-10-28
10-K 2017-09-01 Annual: 2017-07-29
10-Q 2017-05-26 Quarter: 2017-04-29
10-Q 2017-03-03 Quarter: 2017-01-28
10-Q 2016-11-23 Quarter: 2016-10-29
10-K 2016-08-31 Annual: 2016-07-30
10-Q 2016-05-27 Quarter: 2016-04-23
10-Q 2016-02-26 Quarter: 2016-01-23
10-Q 2015-11-25 Quarter: 2015-10-24
10-K 2015-09-04 Annual: 2015-07-25
10-Q 2015-05-22 Quarter: 2015-04-25
10-Q 2015-02-27 Quarter: 2015-01-24
10-Q 2014-11-26 Quarter: 2014-10-25
10-K 2014-09-09 Annual: 2014-07-26
10-Q 2014-05-23 Quarter: 2014-04-26
10-Q 2014-03-05 Quarter: 2014-01-25
10-Q 2013-11-29 Quarter: 2013-10-26
10-Q 2013-05-28 Quarter: 2013-04-27
10-Q 2013-03-05 Quarter: 2013-01-26
10-Q 2012-11-21 Quarter: 2012-10-27
10-K 2012-09-04 Annual: 2012-07-28
10-Q 2012-05-24 Quarter: 2012-04-28
10-Q 2012-03-02 Quarter: 2012-01-28
10-Q 2011-11-23 Quarter: 2011-10-29
10-K 2011-09-02 Annual: 2011-07-30
10-Q 2011-06-01 Quarter: 2011-04-30
10-Q 2011-03-07 Quarter: 2011-01-29
10-Q 2010-11-24 Quarter: 2010-10-30
10-K 2010-09-03 Annual: 2010-07-31
10-Q 2010-05-28 Quarter: 2010-04-24
10-Q 2010-03-01 Quarter: 2010-01-23
8-K 2019-12-19 Officers, Exhibits
8-K 2019-12-04 Other Events, Exhibits
8-K 2019-12-03 Regulation FD, Exhibits
8-K 2019-11-26 Earnings, Exhibits
8-K 2019-11-26 Regulation FD, Exhibits
8-K 2019-11-25 Other Events
8-K 2019-09-16 Regulation FD, Exhibits
8-K 2019-08-28 Regulation FD, Exhibits
8-K 2019-08-28 Earnings, Exhibits
8-K 2019-05-29 Regulation FD, Exhibits
8-K 2019-05-21 Earnings, Regulation FD, Exhibits
8-K 2019-05-21 Officers, Shareholder Vote
8-K 2019-05-21 Earnings, Regulation FD, Exhibits
8-K 2019-04-11 Officers
8-K 2019-02-27 Earnings, Regulation FD, Exhibits
8-K 2019-02-27 Earnings, Regulation FD, Exhibits
8-K 2018-11-20 Earnings, Regulation FD, Exhibits
8-K 2018-11-20 Earnings, Regulation FD, Exhibits
8-K 2018-11-19 Officers
8-K 2018-10-19 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-09-20 Regulation FD, Exhibits
8-K 2018-08-29 Earnings, Regulation FD, Exhibits
8-K 2018-08-29 Other Events, Exhibits
8-K 2018-08-29 Earnings, Regulation FD, Exhibits
8-K 2018-08-13 Earnings, Regulation FD, Exhibits
8-K 2018-08-13 Earnings, Regulation FD, Exhibits
8-K 2018-05-30 Regulation FD, Exhibits
8-K 2018-05-22 Earnings, Regulation FD, Exhibits
8-K 2018-05-22 Earnings, Regulation FD, Exhibits
8-K 2018-05-22 Shareholder Vote
8-K 2018-03-29 Officers, Exhibits
8-K 2018-03-26 Officers, Exhibits
8-K 2018-03-06 Regulation FD, Exhibits
8-K 2018-02-28 Earnings, Regulation FD, Exhibits
8-K 2018-02-22 Officers
8-K 2018-02-12 Earnings, Regulation FD, Exhibits
8-K 2018-01-27
DY 2019-10-26
Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 dyq3fy202010qex311.htm
EX-31.2 dyq3fy202010qex312.htm
EX-32.1 dyq3fy202010qex321.htm
EX-32.2 dyq3fy202010qex322.htm

Dycom Industries Earnings 2019-10-26

DY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
AWR 2,732 1,567 988 462 110 76 162 3,012 24% 18.6 5%
CWT 2,617 2,965 2,241 654 0 15 120 3,375 0% 28.1 1%
SJW 1,706 2,004 1,110 403 0 44 156 1,795 0% 11.5 2%
DY 1,672 2,328 1,475 3,315 572 60 290 2,603 17% 9.0 3%
MSEX 1,048 808 136 0 34 60 1,219 0% 20.3 4%
PRIM 1,024 1,825 1,204 3,238 343 90 231 1,382 11% 6.0 5%
CTWS 845 981 292 127 0 21 34 1,118 0% 32.9 2%
MYRG 605 807 468 1,831 179 33 91 707 10% 7.8 4%
WAAS 542 722 391 177 93 -19 26 814 53% 31.0 -3%
AEGN 513 1,015 581 1,269 250 -15 39 775 20% 20.1 -1%

Document
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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 October 26, 2019

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)

Florida
 
 
 
59-1277135
(State or other jurisdiction of incorporation or organization)
 
 
 
(I.R.S. Employer Identification No.)
 
 
 
 
 

11780 US Highway 1, Suite 600
 
 
Palm Beach Gardens,
FL
33408
 
 
(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 Class
 
Trading Symbol(s)
 
Name of Each Exchange on Which Registered
Common stock, par value $0.33 1/3 per share
 
DY
 
New 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 31,523,782 shares of common stock with a par value of $0.33 1/3 outstanding at November 25, 2019.



Dycom Industries, Inc.
Table of Contents

2

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
(Unaudited)
 
October 26, 2019
 
January 26, 2019
ASSETS
 
 
 
 Current assets:
 
 
 
 Cash and equivalents
$
11,837

 
$
128,342

 Accounts receivable, net
919,496

 
625,258

 Contract assets
343,191

 
215,849

 Inventories
104,923

 
94,385

 Income tax receivable

 
3,461

 Other current assets
32,483

 
29,145

 Total current assets
1,411,930

 
1,096,440

 
 
 
 
 Property and equipment, net
394,516

 
424,751

 Operating lease right-of-use assets
68,468

 

 Goodwill
325,749

 
325,749

 Intangible assets, net
145,193

 
161,125

 Other assets
49,720

 
89,438

 Total non-current assets
983,646

 
1,001,063

 Total assets
$
2,395,576

 
$
2,097,503

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 

 Current liabilities:
 

 
 

 Accounts payable
$
129,531

 
$
119,485

 Current portion of debt
22,500

 
5,625

 Contract liabilities
19,893

 
15,125

 Accrued insurance claims
41,884

 
39,961

 Operating lease liabilities
25,739

 

 Income taxes payable
9,516

 
721

 Other accrued liabilities
115,724

 
104,074

 Total current liabilities
364,787

 
284,991

 
 
 
 
 Long-term debt
970,243

 
867,574

 Accrued insurance claims - non-current
58,352

 
68,315

 Operating lease liabilities - non-current
43,217

 

 Deferred tax liabilities, net - non-current
73,158

 
65,963

 Other liabilities
5,669

 
6,492

 Total liabilities
1,515,426

 
1,293,335

 
 
 
 
 COMMITMENTS AND CONTINGENCIES, Note 19


 


 
 
 
 
 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: 31,520,485 and 31,430,031 issued and outstanding, respectively
10,507

 
10,477

 Additional paid-in capital
30,040

 
22,489

 Accumulated other comprehensive loss
(1,285
)
 
(1,282
)
 Retained earnings
840,888

 
772,484

 Total stockholders’ equity
880,150

 
804,168

 Total liabilities and stockholders’ equity
$
2,395,576

 
$
2,097,503

 
 
 
 
See notes to the condensed consolidated financial statements.

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Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
 
For the Three Months Ended
 
October 26, 2019
 
October 27, 2018

 
 
 
 Contract revenues
$
884,115

 
$
848,237

 
 
 
 
 Costs of earned revenues, excluding depreciation and amortization
724,378

 
687,164

 General and administrative
69,875

 
68,763

 Depreciation and amortization
47,356

 
45,533

 Total
841,609

 
801,460

 
 
 
 
 Interest expense, net
(13,128
)
 
(11,310
)
 Other income, net
1,407

 
2,817

 Income before income taxes
30,785

 
38,284

 
 
 
 
 Provision for income taxes
6,556

 
10,454

 
 
 
 
 Net income
$
24,229

 
$
27,830

 
 
 
 
 Earnings per common share:
 
 
 
 Basic
$
0.77

 
$
0.89

 
 
 
 
 Diluted
$
0.76

 
$
0.87

 
 
 
 
 Shares used in computing earnings per common share:
 
 
 
 Basic
31,502,543

 
31,246,591

 
 
 
 
 Diluted
31,826,845

 
31,834,542

 
 
 
 
See notes to the condensed consolidated financial statements.

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Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)
 
For the Nine Months Ended
 
October 26, 2019
 
October 27, 2018

 
 
 
 Contract revenues
$
2,602,079

 
$
2,379,081

 
 
 
 
 Costs of earned revenues, excluding depreciation and amortization
2,146,527

 
1,929,113

 General and administrative
193,613

 
195,601

 Depreciation and amortization
140,941

 
133,694

 Total
2,481,081

 
2,258,408

 
 
 
 
 Interest expense, net
(38,239
)
 
(31,922
)
 Other income, net
11,111

 
14,686

 Income before income taxes
93,870

 
103,437

 
 
 
 
 Provision for income taxes
25,466

 
28,476

 
 
 
 
 Net income
$
68,404

 
$
74,961

 
 
 
 
 Earnings per common share:
 
 
 
 Basic
$
2.17

 
$
2.40

 
 
 
 
 Diluted
$
2.15

 
$
2.34

 
 
 
 
 Shares used in computing earnings per common share:
 
 
 
 Basic
31,480,759

 
31,214,172

 
 
 
 
 Diluted
31,811,505

 
32,065,229

 
 
 
 
See notes to the condensed consolidated financial statements.



5

Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
 
For the Three Months Ended
 
For the Nine Months Ended
 
October 26, 2019
 
October 27, 2018
 
October 26, 2019
 
October 27, 2018
 Net income
$
24,229

 
$
27,830

 
$
68,404

 
$
74,961

 Foreign currency translation losses, net of tax

 
(6
)
 
(3
)
 
(127
)
 Comprehensive income
$
24,229

 
$
27,824

 
$
68,401

 
$
74,834

 
 
 
 
 
 
 
 
See notes to the condensed consolidated financial statements.


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Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Dollars in thousands, except share amounts)
(Unaudited)
 
For the Three Months Ended
 
Common Stock
 
Additional
Paid-in Capital
 
Accumulated Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Equity
 
Shares
 
Amount
 
 
 
 
Balances as of July 27, 2019
31,489,923

 
$
10,496

 
$
27,563

 
$
(1,285
)
 
$
816,659

 
$
853,433

Stock options exercised
9,609

 
3

 
127

 

 

 
130

Stock-based compensation
1,301

 

 
2,694

 

 

 
2,694

Issuance of restricted stock, net of tax withholdings
19,652

 
8

 
(344
)
 

 

 
(336
)
Other comprehensive loss

 

 

 

 

 

Net income

 

 

 

 
24,229

 
24,229

Balances as of October 26, 2019
31,520,485

 
$
10,507

 
$
30,040

 
$
(1,285
)
 
$
840,888

 
$
880,150

 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
Common Stock
 
Additional
Paid-in Capital
 
Accumulated Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Equity
 
Shares
 
Amount
 
 
 
 
Balances as of July 28, 2018
31,224,470

 
$
10,408

 
$
17,356

 
$
(1,267
)
 
$
756,708

 
$
783,205

Stock options exercised
10,775

 
4

 
116

 

 

 
120

Stock-based compensation
925

 

 
7,366

 

 

 
7,366

Issuance of restricted stock, net of tax withholdings
47,241

 
16

 
(1,673
)
 

 

 
(1,657
)
Other comprehensive loss

 

 

 
(6
)
 

 
(6
)
Net income

 

 

 

 
27,830

 
27,830

Balances as of October 27, 2018
31,283,411

 
$
10,428

 
$
23,165

 
$
(1,273
)
 
$
784,538

 
$
816,858

 
 
 
 
 
 
 
 
 
 
 
 
See notes to the condensed consolidated financial statements.

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Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Dollars in thousands, except share amounts)
(Unaudited)
 
For the Nine Months Ended
 
Common Stock
 
Additional
Paid-in Capital
 
Accumulated Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Equity
 
Shares
 
Amount
 
 
 
 
Balances as of January 26, 2019
31,430,031

 
$
10,477

 
$
22,489

 
$
(1,282
)
 
$
772,484

 
$
804,168

Stock options exercised
26,479

 
9

 
304

 

 

 
313

Stock-based compensation
4,538

 

 
8,450

 

 

 
8,450

Issuance of restricted stock, net of tax withholdings
59,437

 
21

 
(1,203
)
 

 

 
(1,182
)
Other comprehensive loss

 

 

 
(3
)
 

 
(3
)
Net income

 

 

 

 
68,404

 
68,404

Balances as of October 26, 2019
31,520,485

 
$
10,507

 
$
30,040

 
$
(1,285
)
 
$
840,888

 
$
880,150

 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended
 
Common Stock
 
Additional
Paid-in Capital
 
Accumulated Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Equity
 
Shares
 
Amount
 
 
 
 
Balances as of January 27, 2018
31,185,669

 
$
10,395

 
$
6,170

 
$
(1,146
)
 
$
709,577

 
$
724,996

Stock options exercised
45,217

 
16

 
485

 

 

 
501

Stock-based compensation
2,015

 

 
18,277

 

 

 
18,277

Issuance of restricted stock, net of tax withholdings
50,510

 
17

 
(1,767
)
 

 

 
(1,750
)
Other comprehensive loss

 

 

 
(127
)
 

 
(127
)
Net income

 

 

 

 
74,961

 
74,961

Balances as of October 27, 2018
31,283,411

 
$
10,428

 
$
23,165

 
$
(1,273
)
 
$
784,538

 
$
816,858

 
 
 
 
 
 
 
 
 
 
 
 
See notes to the condensed consolidated financial statements.


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Table of Contents

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
For the Nine Months Ended
 
October 26, 2019
 
October 27, 2018
Cash flows from operating activities:
 
 
 
Net income
$
68,404

 
$
74,961

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
Depreciation and amortization
140,941

 
133,694

Non-cash lease expense
22,263

 

Deferred income tax provision
7,189

 
15,142

Stock-based compensation
8,450

 
18,277

Provision for bad debt (recovery), net
(7,015
)
 
(73
)
Gain on sale of fixed assets
(13,785
)
 
(17,198
)
Amortization of debt discount
15,016

 
14,223

Amortization of debt issuance costs and other
2,997

 
2,712

Change in operating assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable, net
(297,573
)
 
(213,707
)
Contract assets, net
(122,514
)
 
(88,388
)
Other current assets and inventories
(13,795
)
 
(16,540
)
Other assets
39,219

 
(26,622
)
Income taxes receivable/payable
12,256

 
8,269

Accounts payable
13,810

 
35,667

Accrued liabilities, insurance claims, operating lease liabilities, and other liabilities
(9,616
)
 
41,245

Net cash used in operating activities
(133,753
)
 
(18,338
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures
(101,858
)
 
(127,800
)
Proceeds from sale of assets
16,169

 
19,614

Cash paid for acquisitions, net of cash acquired

 
(20,917
)
Other investing activities
306

 
1,576

Net cash used in investing activities
(85,383
)
 
(127,527
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from borrowings on senior credit agreement, including term loans
345,000

 
423,188

Principal payments on senior credit agreement, including term loans
(242,000
)
 
(331,250
)
Debt financing costs

 
(6,684
)
Exercise of stock options
313

 
501

Restricted stock tax withholdings
(1,182
)
 
(1,750
)
Net cash provided by financing activities
102,131

 
84,005

Net decrease in cash and equivalents and restricted cash
(117,005
)
 
(61,860
)
 
 
 
 
Cash, cash equivalents and restricted cash at beginning of period
134,151

 
90,182

 
 
 
 
Cash, cash equivalents and restricted cash at end of period
$
17,146

 
$
28,322

Supplemental disclosure of other cash flow activities and non-cash investing and financing activities:
 
 
 
Cash paid for interest
$
19,966

 
$
16,478

Cash paid for taxes, net
$
6,588

 
$
5,652

Purchases of capital assets included in accounts payable or other accrued liabilities at period end
$
2,247

 
$
6,482

 
 
 
 
See notes to the condensed consolidated financial statements.

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Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Dycom Industries, Inc. (“Dycom” or the “Company”) 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.

The Company uses a 52/53 week fiscal year ending on the last Saturday in January. Fiscal 2019 and fiscal 2020 each consist of 52 weeks of operations. The next 53 week fiscal period will occur in the fiscal year ending January 30, 2021.

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 2019, filed with the SEC on March 4, 2019. 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), the results of which 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 2019, except with respect to the Company’s accounting policy for leases as described further below.

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 the Company’s historical experience and management’s understanding of current facts and circumstances. At the time they are made, the Company believes 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.

Leases. The Company’s leases are accounted for as operating leases, with lease expense recognized on a straight-line basis over the lease term. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. For leases with initial terms greater than 12 months, the Company records operating lease right-of-use assets and corresponding operating lease liabilities. Operating lease right-of-use assets represent the Company’s right to use the underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make the related lease payments. These assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet.


10

Table of Contents

3. Accounting Standards

Recently issued accounting pronouncements are disclosed in the Company’s Annual Report on Form 10-K for fiscal 2019. 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 consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s Annual Report on Form 10-K for fiscal 2019. Further, there have been no additional accounting standards issued as of the date of this Quarterly Report on Form 10-Q that are applicable to the consolidated financial statements of the Company. Accounting standards adopted during the nine months ended October 26, 2019 are disclosed in this Quarterly Report on Form 10‑Q.

Recently Adopted Accounting Standards

Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) which is intended to increase transparency and comparability of accounting for lease transactions. For all leases with terms greater than 12 months, the new guidance requires lessees to recognize right-of-use assets and corresponding lease liabilities on the balance sheet and to disclose qualitative and quantitative information about lease transactions. The new standard maintains a distinction between finance leases and operating leases. As a result, the effect of the new guidance on leases in the statement of operations and statement of cash flows is largely unchanged.

Effective January 27, 2019, the first day of fiscal 2020, the Company adopted the requirements of ASU 2016-02 using the transition provisions at the date of adoption instead of at the earliest comparative period presented in the financial statements. Accordingly, comparative financial statements for periods prior to the date of adoption were not adjusted. The Company elected the group of practical expedients that allowed it not to reassess the following: whether any expired or existing contracts represent leases, the classification of any expired or existing leases, and the initial direct costs for any expired or existing leases. The Company did not elect the practical expedient to use hindsight to determine the lease term. On adoption, the Company recognized approximately $71.0 million of operating lease right-of-use assets and corresponding lease liabilities on its condensed consolidated balance sheet for its operating leases with terms greater than 12 months. The adoption of ASU 2016-02 did not have a material impact on the Company’s condensed consolidated statements of operations, comprehensive income, or cash flows.

Accounting Standards Not Yet Adopted

Financial Instruments. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”). This ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which could result in earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for financial instruments at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current GAAP, which generally require that a loss be incurred before it is recognized. The new standard will also apply to receivables arising from revenue transactions such as contract assets and accounts receivables and is effective for fiscal years beginning after December 15, 2019. The standard will be applied prospectively with an adjustment to retained earnings. The Company is currently evaluating the effect of the standard on its consolidated financial statements.



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Table of Contents

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 Ended
 
For the Nine Months Ended
 
October 26, 2019
 
October 27, 2018
 
October 26, 2019
 
October 27, 2018
Net income available to common stockholders (numerator)
$
24,229

 
$
27,830

 
$
68,404

 
$
74,961

 
 
 
 
 
 
 
 
Weighted-average number of common shares (denominator)
31,502,543

 
31,246,591

 
31,480,759

 
31,214,172

 
 
 
 
 
 
 
 
Basic earnings per common share
$
0.77

 
$
0.89

 
$
2.17

 
$
2.40

 
 
 
 
 
 
 
 
Weighted-average number of common shares
31,502,543

 
31,246,591

 
31,480,759

 
31,214,172

Potential shares of common stock arising from stock options, and unvested restricted share units
324,302

 
587,951

 
330,746

 
605,992

Potential shares of common stock issuable on conversion of 0.75% convertible senior notes due 2021(1)

 

 

 
245,065

Total shares-diluted (denominator)
31,826,845

 
31,834,542

 
31,811,505

 
32,065,229

 
 
 
 
 
 
 
 
Diluted earnings per common share
$
0.76

 
$
0.87

 
$
2.15

 
$
2.34

 
 
 
 
 
 
 
 
Anti-dilutive weighted shares excluded from the calculation of earnings per common share:
 
 
Stock-based awards
239,540

 
121,722

 
256,269

 
68,395

0.75% convertible senior notes due 2021(1)
5,005,734

 
5,005,734

 
5,005,734

 
4,760,669

Warrants(1)
5,005,734

 
5,005,734

 
5,005,734

 
5,005,734

Total
10,251,008

 
10,133,190

 
10,267,737

 
9,834,798



(1) Under the treasury stock method, the convertible senior notes will have a dilutive impact on earnings per common share if the Company’s average stock price for the period exceeds the $96.89 per share conversion price. The Company’s average stock price did not exceed the per share conversion price during the three or nine months ended October 26, 2019; therefore, there was no dilutive impact on earnings per common share for these periods. During the first and second quarters of fiscal 2019, the Company’s average stock price of $110.46 and $99.27, respectively, each exceeded the per share conversion price. As a result, shares presumed to be issuable under the convertible senior notes that were dilutive during the period are included in the calculation of diluted earnings per share for the nine months ended October 27, 2018. The warrants associated with the Company’s convertible senior notes will have a dilutive impact on earnings per common share if the Company’s average stock price for the period exceeds the $130.43 per share warrant strike price. As the Company’s average stock price did not exceed the strike price for the warrants for any of the periods presented, the underlying common shares were anti-dilutive as reflected in the table above.

In connection with the offering of the convertible senior notes, the Company entered into convertible note hedge transactions with counterparties for the purpose of reducing the potential dilution to common stockholders from the conversion of the notes and offsetting any potential cash payments in excess of the principal amount of the notes. Prior to conversion, the convertible note hedge is not included for purposes of the calculation of earnings per common share as its effect would be anti-dilutive. Upon conversion, the convertible note hedge is expected to offset the dilutive effect of the convertible senior notes when the average stock price for the period is above $96.89 per share. See Note 13, Debt, for additional information related to the Company’s convertible senior notes, warrant transactions, and hedge transactions.


12

Table of Contents

5. 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):
 
October 26, 2019
 
January 26, 2019
Trade accounts receivable
$
408,188

 
$
331,903

Unbilled accounts receivable
503,169

 
283,463

Retainage
12,696

 
10,831

Total
924,053

 
626,197

Less: allowance for doubtful accounts
(4,557
)
 
(939
)
Accounts receivable, net
$
919,496

 
$
625,258


 
The Company maintains an allowance for doubtful accounts for estimated losses on uncollected balances. Approximately $16.8 million of the allowance for doubtful accounts as of January 26, 2019 was classified as non-current. The allowance for doubtful accounts changed as follows (dollars in thousands):
 
For the Three Months Ended
 
For the Nine Months Ended
 
October 26, 2019
 
October 27, 2018
 
October 26, 2019
 
October 27, 2018
Allowance for doubtful accounts at beginning of period
$
924

 
$
948

 
$
17,702

 
$
998

Provision for bad debt (recovery)
3,498

 
(36
)
 
(7,015
)
 
(73
)
Amounts recovered (charged) against the allowance
135

 
34

 
(6,130
)
 
21

Allowance for doubtful accounts at end of period
$
4,557

 
$
946

 
$
4,557

 
$
946



Contract Assets and Contract Liabilities

Net contract assets consisted of the following (dollars in thousands):
 
October 26, 2019
 
January 26, 2019
Contract assets
$
343,191

 
$
215,849

Contract liabilities
19,893

 
15,125

Contract assets, net
$
323,298

 
$
200,724



Net contract assets were $323.3 million and $200.7 million as of October 26, 2019 and January 26, 2019, respectively. The increase primarily resulted from services performed under contracts consisting of multiple tasks which will be billed as the tasks are completed. During the three and nine months ended October 26, 2019, the Company performed services and recognized $1.6 million and $12.2 million, respectively, of contract revenues related to its contract liabilities that existed at January 26, 2019. See Note 6, Other Current Assets and Other Assets, for information on the Company’s long-term contract assets.


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Customer Credit Concentration

Customers whose combined amounts of accounts receivable and contract assets, net, exceeded 10% of total combined accounts receivable and contract assets, net, as of October 26, 2019 or January 26, 2019 were as follows (dollars in millions):
 
October 26, 2019
 
January 26, 2019
 
Amount
 
% of Total
 
Amount
 
% of Total
Verizon Communications Inc.
$
511.3

 
41.1%
 
$
298.4

 
36.2%
CenturyLink, Inc.
$
200.9

 
16.1%
 
$
147.2

 
17.9%
Comcast Corporation
$
160.2

 
12.9%
 
$
127.2

 
15.4%
AT&T Inc.
$
111.3

 
8.9%
 
$
90.6

 
11.0%


The Company believes that none of the customers above were experiencing financial difficulties that would materially impact the collectability of the Company’s total accounts receivable and contract assets, net, as of October 26, 2019 or January 26, 2019.

6. Other Current Assets and Other Assets
 
Other current assets consisted of the following (dollars in thousands):
 
October 26, 2019
 
January 26, 2019
Prepaid expenses
$
15,746

 
$
12,758

Deposits and other current assets
14,665

 
14,762

Insurance recoveries/receivables for accrued insurance claims
297

 

Restricted cash
1,556

 
1,556

Receivables on equipment sales
219

 
69

Other current assets
$
32,483

 
$
29,145



Other assets consisted of the following (dollars in thousands):
 
October 26, 2019
 
January 26, 2019
Long-term contract assets
$
24,190

 
$
30,399

Deferred financing costs
7,555

 
9,036

Restricted cash
3,753

 
4,253

Insurance recoveries/receivables for accrued insurance claims
4,800

 
13,684

Long-term accounts receivable, net

 
24,815

Other non-current deposits and assets
9,422

 
7,251

Other assets
$
49,720

 
$
89,438



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.

Long-term accounts receivable, net of allowance for doubtful accounts, represent trade receivables due from Windstream Holdings, Inc. as of January 26, 2019. During the nine months ended October 26, 2019 the Company collected a substantial portion of these accounts receivable.

See Note 10, Accrued Insurance Claims, for information on the Company’s Insurance recoveries/receivables.


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7. Cash, Cash 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):
 
October 26, 2019
 
January 26, 2019
Cash and cash equivalents
$
11,837

 
$
128,342

Restricted cash included in:
 
 
 
Other current assets
1,556

 
1,556

Other assets
3,753

 
4,253

Cash, cash equivalents and restricted cash
$
17,146

 
$
134,151



8. Property and Equipment
 
Property and equipment consisted of the following (dollars in thousands):
 
Estimated Useful Lives (Years)
 
October 26, 2019
 
January 26, 2019
 Land
 
$
4,024

 
$
4,359

 Buildings
10-35
 
12,929

 
13,555

 Leasehold improvements
1-10
 
17,061

 
16,185

 Vehicles
1-5
 
617,152

 
589,741

 Computer hardware and software
1-7
 
148,024

 
140,327

 Office furniture and equipment
1-10
 
13,288

 
12,804

 Equipment and machinery
1-10
 
308,682

 
296,408

 Total
 
 
1,121,160

 
1,073,379

 Less: accumulated depreciation
 
 
(726,644
)
 
(648,628
)
 Property and equipment, net
 
 
$
394,516

 
$
424,751



Depreciation expense was $42.1 million and $39.8 million for the three months ended October 26, 2019 and October 27, 2018, respectively, and $125.0 million and $116.5 million for the nine months ended October 26, 2019 and October 27, 2018, respectively.

9. Goodwill and Intangible Assets

Goodwill

There were no changes in the carrying amount of goodwill during the three or nine months ended October 26, 2019. The goodwill balance consisted of the following (dollars in thousands):
 
 
October 26, 2019
Goodwill, gross
 
$
521,516

Accumulated impairment losses
 
(195,767
)
Total
 
$
325,749



The Company’s goodwill resides in multiple reporting units and primarily consists of expected synergies, together with the expansion of the Company’s geographic presence and strengthening of its customer base from acquisitions. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment, 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. The Company’s 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

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future volatility in the equity and credit markets could impact the valuation of the Company’s reporting units. The cyclical nature of the Company’s business, the high level of competition existing within its industry, and the concentration of its 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.

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 2019 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 October 26, 2019, the Company continues to believe the goodwill and the indefinite-lived intangible asset are recoverable for all of its reporting units.

Intangible Assets

The Company’s intangible assets consisted of the following (dollars in thousands):
 
October 26, 2019
 
January 26, 2019
 
Weighted Average Remaining Useful Lives (Years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Intangible Assets, Net
 
Gross Carrying Amount
 
Accumulated Amortization
 
Intangible Assets, Net
Customer relationships
10.4
 
$
312,017

 
$
173,279

 
$
138,738

 
$
312,017

 
$
157,691

 
$
154,326

Trade names, finite
7.9