Dycom Industries Inc. (DY)
F2Q09 (Qtr End 01/24/09) Earnings Call
February 25, 2009; 09:00 am ET
Steven Nielsen - President & Chief Executive Officer
Rick Vilsoet - General Counsel
Drew DeFerrari - Chief Financial Officer
Tim Estes - Chief Operating Officer
Alex Rygiel - FBR Capital Markets
Adam Thalhimer - BB&T Capital Markets
Previous Statements by DY
» Dycom Industries Inc. F1Q10 (Qtr End 10/24/09) Earnings Call Transcript
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» Dycom Industries Inc. F1Q09 (Qtr End 25/10/08) Earnings Call Transcript
John Rogers - D.A. Davidson & Co.
Greg Weaver - Invicta Capital
Chris Keller - Principal Global Investors
Alan Mitrani - Sylvan Lake Management
Ladies and gentlemen, thank you for standing by. Welcome to the Dycom results conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session; instructions will be given at that time. (Operator Instructions)
I would now like to turn the conference over to our host, Steven Nielsen, President and CEO. Please go ahead.
Thank you, Linda. Good morning everyone. I’d like to thank you for attending our second quarter fiscal 2009 Dycom results conference call. During the call we will be referring to a slide presentation which can be found on our website www.dycomind.com under the heading Investors, and subheading Event Details. Relevant slides will be identified by number throughout our presentation.
Going to slide one, today we have on the call, Tim Estes, our Chief Operating Officer; Drew DeFerrari, our Chief Financial Officer; and Rick Vilsoet, our General Counsel.
Now I will turn the call over to Rick Vilsoet. Rick.
Thank you, Steve. Going to slide two; except for historical information, the statements made by company management during this call may be forward-looking, and are made pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on management’s current expectations, estimates and projections, and involve known and unknown risks and uncertainties, which may cause actual results to differ materially from forecasted results. These risks and uncertainties are more fully described in the company’s filings with the Securities and Exchange Commission. The company does not undertake to update forward-looking information. Steve.
Thanks Rick. Yesterday we issued a press release announcing our second quarter results. As you review this release, it is important to note the following.
During the second quarter of fiscal 2009 we recorded a preliminary pretax goodwill impairment charge of $96.8 million. This charge was a result of a test for impairment prompted by a sustained reduction in the company’s market capitalization, compared to the book value of shareholders equity. In addition, our second quarter results included a pretax gain of approximately $1.3 million related to buy back of $4.65 million of the company’s senior subordinated notes, due 2015.
During the second quarter of fiscal 2008, the company recorded a charge of $7.6 million for a wage in our class action settlement. For clarity and to enable comparability between periods, my comments will be limited to results from continuing operations excluding these items. A reconciliation of the non-GAAP results to our GAAP results has been provided with our press release, as well as on slide 10.
Moving to slide three, results of a loss of $0.04 per share for the second quarter were below the lower end of our initial EPS expectations, and in-line with last week’s preliminary release. Revenue declined sequentially by 26.5% and declined year-over-year by 13.8% for the quarter, reflecting customer reductions in near term capital spending plans during the latter part of the quarter.
Volumes were down from telephone companies as customer deployed capital for new network initiatives at a slowing pace, and all customers tightly managed routine capital and maintenance expenditures. Construction spending by cable customers slowed going into the calendar year end, while installation activity was mixed, but firm toward the latter part of the quarter.
Margins decline sequentially, but improved slightly year-over-year. Cash flow from operations was very strong, reflecting reduced working capital as revenue slowed, collection of hurricane related accounts receivable earned during the first quarter, and a decline in days sale outstanding. No shares of common stock were repurchased during the quarter due to the uncertainty in the financial markets.
During the quarter we experienced the effects of an overall economy which slowed markedly. Revenue from AT&T was down sequentially and down year-over-year at $48.4 million or 19.7% of revenue. AT&T was our largest customer. Revenue from Comcast was down sequentially, but up year-over-year. Comcast was our second largest customer at $37.7 million or 15.4% of total revenue.
Revenue from Verizon was $36.3 million; Verizon was Dycom’s third largest customer for the quarter at 14.8% of revenue. Time Warner Cable was our fourth largest customer, with revenues of $20.2 million or 8.2% of total revenue, reflecting slowing upgrade activity and mixed installation volumes.
Revenue from Embark was down sequentially by $4 million, and down year-over-year. Embark was our fifth largest customer at 5.9% of total revenue. All together, our top five customers represented 64% of total revenue and we’re down 13.9%, all other customers declined 13.5%. Our seventh largest customer, Windstream grew at an 83% year-over-year, reflecting market share growth.
Now moving to slide five; backlog at the end of the second quarter was $1.13 billion versus $1.15 billion at the end of the first quarter, a decrease of approximately $19 million. Of this backlog, approximately $726 million is expected to be completed in the next 12 months.