Form 8-K DYCOM INDUSTRIES INC For: Aug 23
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 23, 2016
DYCOM INDUSTRIES, INC. |
(Exact name of Registrant as specified in its charter)
Florida | 001-10613 | 59-1277135 | ||
(State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. employer identification no.) | ||
11780 U.S. Highway One, Suite 600, | ||||
Palm Beach Gardens, Florida 33408 | ||||
(Address of principal executive offices) (Zip Code) | ||||
(561) 627-7171 | ||||
(Registrant’s telephone number, including area code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))
Item 2.02 Results of Operations and Financial Condition.
On August 23, 2016, Dycom Industries, Inc. (the “Company”) issued a press release reporting fiscal 2016 fourth quarter and annual results. The Company also provided forward guidance. Additionally, on August 24, 2016, the Company made available related materials to be discussed during the Company’s webcast and conference call referred to in such press release. A copy of the press release and related conference call materials are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The press release and related materials contain the financial measures of Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted Diluted Earnings per Common Share, and certain amounts relating to organic contract revenue, which are Non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Non-GAAP Adjusted EBITDA, defined by the Company as earnings before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, loss on debt extinguishment, and certain non-recurring items, is not a recognized term under generally accepted accounting principles (“GAAP”) and does not purport to be an alternative to net income, operating cash flows, or a measure of earnings. Non-GAAP Adjusted Net Income is not a recognized term under GAAP and does not purport to be an alternative to GAAP net income. Non-GAAP Adjusted Diluted Earnings per Common Share is not a recognized term under GAAP and does not purport to be an alternative to GAAP diluted earnings per common share. Organic contract revenue is not a recognized term under GAAP and does not purport to be an alternative to GAAP contract revenue. Because all companies do not use identical calculations, the presentation of these Non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. The Company believes these Non-GAAP financial measures provide information that is useful to investors because it allows for a more direct comparison of the Company’s performance for the period reported with the Company’s performance in prior periods.
The information in the preceding paragraphs, as well as Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference into another filing under the Exchange Act or the Securities Act of 1933 (the “Securities Act”) if such subsequent filing specifically references this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
On August 23, 2016, the Company issued a press release reporting fiscal 2016 fourth quarter and annual results. The Company also provided forward guidance. Additionally, on August 24, 2016, the Company made available related materials to be discussed during the Company’s webcast and conference call referred to in such press release. A copy of the press release and related conference call materials are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The press release and related materials contain the financial measures of Non-GAAP Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Adjusted Diluted Earnings per Common Share, and certain amounts relating to organic contract revenue, which are Non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Non-GAAP Adjusted EBITDA, defined by the Company as earnings before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, and certain non-recurring items, is not a recognized term under GAAP and does not purport to be an alternative to net income, operating cash flows, or a measure of earnings. Non-GAAP Adjusted Net Income is not a recognized term under GAAP and does not purport to be an alternative to GAAP net income. Non-GAAP Adjusted Diluted Earnings per Common Share is not a recognized term under GAAP and does not purport to be an alternative to GAAP diluted earnings per common share. Organic contract revenue is not a recognized term under GAAP and does not purport to be an alternative to GAAP contract revenue. Because all companies do not use identical calculations, the presentation of these Non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. The Company believes these Non-GAAP financial measures provide information that is useful to investors because it allows for a more direct comparison of the Company’s performance for the period reported with the Company’s performance in prior periods.
The information in the preceding paragraphs, as well as Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. It may only be incorporated by reference into another filing under the Exchange Act or the Securities Act if such subsequent filing specifically references this Current Report on Form 8-K.
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act, including statements regarding the outlook for the Company. These statements are based on management’s current expectations, estimates and projections. Forward-looking statements are subject to risks and uncertainties that may cause actual results in the future to differ materially from the results projected or implied in any forward-looking statements contained in this Current Report on Form 8-K. The most significant of these risks and uncertainties are described in the Company’s Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and include business and economic conditions and trends in the telecommunications industry affecting the Company’s customers, the adequacy of the Company’s insurance and other reserves and allowances for doubtful accounts, whether the carrying value of the Company’s assets may be impaired, preliminary purchase price allocations of acquired businesses, expected benefits and synergies of acquisitions, future financial and operating results, the future impact of any acquisitions or dispositions, the anticipated outcome of other contingent events, including litigation, liquidity and other financial needs, the availability of financing, and the other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov. The Company does not undertake to update forward looking statements except as required by law.
Item 9.01 Financial Statement and Exhibits.
(d) | Exhibits |
99.1 | Press release dated August 23, 2016 by Dycom Industries, Inc. reporting fiscal 2016 fourth quarter and annual results. |
99.2 | Slide presentation relating to the webcast and conference call to be held on August 24, 2016. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: August 24, 2016
DYCOM INDUSTRIES, INC. (Registrant) | |
By: | /s/ Richard B. Vilsoet |
Name: | Richard B. Vilsoet |
Title: | Vice President, General Counsel and Corporate Secretary |
Exhibit 99.1
N E W S R E L E A S E
FOR IMMEDIATE RELEASE | Contact: | Steven E. Nielsen, President and CEO H. Andrew DeFerrari, Senior Vice President and CFO (561) 627-7171 |
August 23, 2016
DYCOM INDUSTRIES, INC. ANNOUNCES FISCAL 2016 FOURTH QUARTER AND ANNUAL RESULTS
AND PROVIDES GUIDANCE FOR THE NEXT FISCAL QUARTER
Palm Beach Gardens, Florida, August 23, 2016 - Dycom Industries, Inc. (NYSE: DY) announced today its results for the fourth quarter and fiscal year ended July 30, 2016. The Company reported:
• | Contract revenues of $789.2 million for the quarter ended July 30, 2016, compared to $578.5 million for the quarter ended July 25, 2015. Contract revenues for the quarter ended July 30, 2016 grew 20.0% on an organic basis after excluding contract revenues from acquired businesses that were not owned for the entire period in both the current and prior year quarter and adjusting for the additional week of operations during the quarter ended July 30, 2016 as a result of the Company’s 52/53 week fiscal year. Total contract revenues from acquired businesses were $44.8 million for the quarter ended July 30, 2016, compared to $2.4 million for the quarter ended July 25, 2015. |
• | Non-GAAP Adjusted EBITDA of $126.0 million, or 16.0% of contract revenues, for the quarter ended July 30, 2016, compared to $88.5 million, or 15.3% of contract revenues, for the quarter ended July 25, 2015. |
• | On a GAAP basis, net income was $49.4 million, or $1.54 per common share diluted, for the quarter ended July 30, 2016. Non-GAAP Adjusted Net Income was $52.7 million, or $1.64 per common share diluted, for the quarter ended July 30, 2016, compared to net income of $33.8 million, or $0.97 per common share diluted, for the quarter ended July 25, 2015. Non-GAAP Adjusted Net Income for the quarter ended July 30, 2016 excludes $0.7 million of pre-tax acquisition transaction related costs and $4.6 million of pre-tax interest expense incurred for non-cash amortization of the debt discount associated with the Company’s 0.75% senior convertible notes due September 2021. |
The Company also reported:
• | Contract revenues of $2.673 billion for the fiscal year ended July 30, 2016, compared to $2.022 billion for the fiscal year ended July 25, 2015. Contract revenues for the fiscal year ended July 30, 2016 grew 22.7% on an organic basis after excluding contract revenues from acquired businesses that were not owned for the full year in both the current and prior year and adjusting for the additional week of operations during the fourth quarter of fiscal 2016 as a result of the Company’s 52/53 week fiscal year. Total contract revenues from acquired businesses were $159.0 million for the fiscal year ended July 30, 2016, compared to $17.7 million for the fiscal year ended July 25, 2015. |
• | Non-GAAP Adjusted EBITDA of $390.0 million, or 14.6% of contract revenues, for the fiscal year ended July 30, 2016, compared to $265.5 million, or 13.1% of contract revenues, for the fiscal year ended July 25, 2015. |
• | On a GAAP basis, net income was $128.7 million, or $3.89 per common share diluted, for the fiscal year ended July 30, 2016. Non-GAAP Adjusted Net Income was $148.4 million, or $4.48 per common share diluted, for the fiscal year ended July 30, 2016, compared to net income of $84.3 million, or $2.41 per common share diluted, for the fiscal year ended July 25, 2015. Non-GAAP Adjusted Net Income for the fiscal year ended July 30, 2016 excludes $0.7 million of pre-tax acquisition transaction related costs, the impact of a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of the Company’s 7.125% senior |
subordinated notes, as well as $14.7 million of pre-tax interest expense incurred for non-cash amortization of the debt discount associated with the Company’s 0.75% senior convertible notes due September 2021.
The Company’s fiscal year ends on the last Saturday in July. 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 2016 consisted of 53 weeks and fiscal 2015 consisted of 52 weeks of operations. Fiscal 2017 will consist of 52 weeks of operations.
The Company also announced its outlook for the first quarter of fiscal 2017. The Company currently expects total contract revenues for the first quarter of fiscal 2017 to range from $780 million to $810 million. On a GAAP basis, diluted earnings per common share for the first quarter of fiscal 2017 is expected to range from $1.47 to $1.62. Non-GAAP Adjusted Diluted Earnings per Common Share is expected to range from $1.55 to $1.70. Non-GAAP Adjusted Diluted Earnings per Common Share guidance excludes $4.3 million of pre-tax interest expense for non-cash amortization of debt discount, or $0.08 per common share diluted on an after-tax basis. A reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share guidance provided for the first quarter of fiscal 2017 is included within the press release tables.
Additionally, the Company reported that the recently acquired operations of Goodman Networks are now expected to produce lower revenue in fiscal 2017 than initially anticipated but are expected to achieve higher EBITDA margins sooner than initially anticipated. The Company currently expects these operations to produce revenues of approximately $100 million during fiscal 2017. Beginning in the second quarter of fiscal 2017, these operations are expected to produce EBITDA as a percentage of revenue in line with Dycom’s consolidated EBITDA as a percentage of revenue.
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, the Company may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. See Explanation of Non-GAAP Financial Measures directly following the press release tables.
Conference Call Information and Other Selected Data
A conference call to review the Company’s results will be hosted at 9:00 a.m. (ET), Wednesday, August 24, 2016; call (800) 230-1074 (United States) or (612) 234-9960 (International) ten minutes before the conference call begins and ask for the “Dycom Results” conference call. A live webcast of the conference call, along with related materials, will be available at www.dycomind.com. The conference call materials will be available at approximately 7:00 a.m. (ET) on August 24, 2016. If you are unable to attend the conference call at the scheduled time, a replay of the live webcast and the conference call materials will be available at www.dycomind.com until Friday, September 23, 2016.
For additional detail on selected financial information including organic contract revenue, customer metrics, and certain other selected financial data and Non-GAAP financial measures, please refer to the Trend Schedule at www.dycomind.com in the Investor Center. The Trend Schedule will be available at approximately 7:00 a.m. (ET) on August 24, 2016.
About Dycom Industries, Inc.
Dycom is a leading provider of specialty contracting services throughout the United States and in Canada. These services include program management, engineering, construction, maintenance and installation services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, and other construction and maintenance services for electric and gas utilities.
Forward Looking Information
Fiscal 2016 fourth quarter results are preliminary and unaudited. This press release contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act. These statements are based on management’s current expectations, estimates and projections and includes the first quarter of fiscal 2017 outlook and statements found under the “Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures” section of this release. Forward-looking statements are subject to risks and uncertainties that may cause actual results in the future to differ materially from the results projected or implied in any forward-looking statements contained in this press release. The most significant of these risks and uncertainties are described in the Company’s Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and include business and economic conditions and trends in the telecommunications industry affecting the Company’s customers, the adequacy of the Company’s insurance and other reserves and allowances for doubtful accounts, whether the carrying
2
value of the Company’s assets may be impaired, preliminary purchase price allocations of acquired businesses, expected benefits and synergies of acquisitions, the future impact of any acquisitions or dispositions, the anticipated outcome of other contingent events, including litigation, liquidity and other financial needs, the availability of financing, and the other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. The Company does not undertake to update forward-looking statements.
---Tables Follow---
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
Unaudited | |||||||
As of | As of | ||||||
July 30, 2016 | July 25, 2015 | ||||||
(Dollars in thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 33,787 | $ | 21,289 | |||
Accounts receivable, net | 328,030 | 315,134 | |||||
Costs and estimated earnings in excess of billings | 376,972 | 274,730 | |||||
Inventories | 73,606 | 48,650 | |||||
Deferred tax assets, net | 22,733 | 20,630 | |||||
Other current assets | 16,106 | 16,199 | |||||
Total current assets | 851,234 | 696,632 | |||||
Property and equipment, net | 326,670 | 231,564 | |||||
Goodwill and other intangible assets, net | 508,036 | 392,579 | |||||
Other (b) | 33,776 | 33,148 | |||||
Total non-current assets | 868,482 | 657,291 | |||||
Total assets | $ | 1,719,716 | $ | 1,353,923 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 115,492 | $ | 71,834 | |||
Current portion of debt (a) | 13,125 | 3,750 | |||||
Billings in excess of costs and estimated earnings | 19,557 | 16,896 | |||||
Accrued insurance claims | 36,844 | 35,824 | |||||
Income taxes payable | 15,307 | 8,916 | |||||
Other accrued liabilities | 122,302 | 89,490 | |||||
Total current liabilities | 322,627 | 226,710 | |||||
Long-term debt (a) (b) | 706,202 | 516,900 | |||||
Accrued insurance claims | 52,835 | 51,476 | |||||
Deferred tax liabilities, net non-current | 76,587 | 47,388 | |||||
Other liabilities | 4,178 | 4,249 | |||||
Total liabilities | 1,162,429 | 846,723 | |||||
Total stockholders’ equity | 557,287 | 507,200 | |||||
Total liabilities and stockholders’ equity | $ | 1,719,716 | $ | 1,353,923 | |||
(a) Total carrying amount of outstanding indebtedness consisted of the following (dollars in thousands): | |||||||
As of | As of | ||||||
July 30, 2016 | July 25, 2015 | ||||||
Credit Agreement - Revolving facility (matures April 2020) | $ | — | $ | 95,250 | |||
Credit Agreement - Term loan facilities (mature April 2020) | 346,250 | 150,000 | |||||
0.75% senior convertible notes (matures September 2021) | 485,000 | — | |||||
Debt discount and unamortized debt issuance costs (b) | (111,923 | ) | (4,941 | ) | |||
7.125% senior subordinated notes (including debt premium) | — | 280,341 | |||||
719,327 | 520,650 | ||||||
Less: Current portion of term loan facilities | (13,125 | ) | (3,750 | ) | |||
Long-term debt | $ | 706,202 | $ | 516,900 | |||
(b) During the fourth quarter of fiscal 2016, debt issuance costs of $4.9 million (previously reported within other non-current assets) were reclassified as a reduction to long-term debt as of July 25, 2015 due to the Company’s adoption of Financial Accounting Standards Board Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. |
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
Unaudited | |||||||||||||||
Three Months | Three Months | Fiscal Year | Fiscal Year | ||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||
July 30, 2016 | July 25, 2015 | July 30, 2016 | July 25, 2015 | ||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||
Contract revenues | $ | 789,159 | $ | 578,479 | $ | 2,672,542 | $ | 2,022,312 | |||||||
Costs of earned revenues, excluding depreciation and amortization | 605,909 | 446,114 | 2,083,579 | 1,593,250 | |||||||||||
General and administrative expenses (a) | 62,146 | 47,483 | 217,149 | 178,700 | |||||||||||
Depreciation and amortization | 36,010 | 25,865 | 124,940 | 96,044 | |||||||||||
Total | 704,065 | 519,462 | 2,425,668 | 1,867,994 | |||||||||||
Interest expense, net (b) | (9,710 | ) | (6,899 | ) | (34,720 | ) | (27,025 | ) | |||||||
Loss on debt extinguishment (c) | — | — | (16,260 | ) | — | ||||||||||
Other income, net | 3,569 | 1,292 | 10,433 | 8,291 | |||||||||||
Income before income taxes | 78,953 | 53,410 | 206,327 | 135,584 | |||||||||||
Provision for income taxes | 29,593 | 19,583 | 77,587 | 51,260 | |||||||||||
Net income | $ | 49,360 | $ | 33,827 | $ | 128,740 | $ | 84,324 | |||||||
Earnings per common share: | |||||||||||||||
Basic earnings per common share | $ | 1.57 | $ | 1.00 | $ | 3.98 | $ | 2.48 | |||||||
Diluted earnings per common share | $ | 1.54 | $ | 0.97 | $ | 3.89 | $ | 2.41 | |||||||
Shares used in computing earnings per common share: | |||||||||||||||
Basic | 31,363,768 | 33,936,859 | 32,315,636 | 34,045,481 | |||||||||||
Diluted | 32,074,169 | 34,830,901 | 33,115,755 | 35,026,688 | |||||||||||
(a) Includes stock-based compensation expense of $4.2 million and $3.1 million for the three months ended July 30, 2016 and July 25, 2015, respectively, and $16.8 million and $13.9 million for the fiscal year ended July 30, 2016 and July 25, 2015, respectively. Includes $0.7 million of acquisition transaction related costs for the three months and fiscal year ended July 30, 2016. | |||||||||||||||
(b) Includes $4.6 million and $14.7 million for the three months and fiscal year ended July 30, 2016, respectively, for non-cash amortization of the debt discount associated with the 0.75% convertible senior notes due 2021. | |||||||||||||||
(c) The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its 7.125% senior subordinated notes due 2021 on September 15, 2015. |
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP FINANCIAL MEASURES | |||||||||||||||||||||
Unaudited | |||||||||||||||||||||
NON-GAAP ORGANIC CONTRACT REVENUES AND NON-GAAP ORGANIC CONTRACT REVENUES GROWTH % | |||||||||||||||||||||
Contract Revenues - GAAP | Revenues from businesses acquired (a) | Additional week of revenue as a result of the Company's 52/53 week year (b) | Non-GAAP - Organic Contract Revenues | GAAP - Growth % | Non-GAAP - Organic Growth % | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Three Months Ended July 30, 2016 | $ | 789,159 | $ | (44,782 | ) | $ | (53,170 | ) | $ | 691,207 | 36.4 | % | 20.0 | % | |||||||
Three Months Ended July 25, 2015 | $ | 578,479 | $ | (2,354 | ) | $ | — | $ | 576,125 | ||||||||||||
Fiscal Year Ended July 30, 2016 | $ | 2,672,542 | $ | (158,965 | ) | $ | (52,897 | ) | $ | 2,460,680 | 32.2 | % | 22.7 | % | |||||||
Fiscal Year Ended July 25, 2015 | $ | 2,022,312 | $ | (17,657 | ) | $ | — | $ | 2,004,655 | ||||||||||||
(a) Amounts for the three months and fiscal year ended July 30, 2016 and July 25, 2015 represent revenues from acquired businesses that were not owned for the full period in both the current and prior year periods. | |||||||||||||||||||||
(b) Calculated as total fourth quarter of fiscal 2016 contract revenues less contract revenues for the fourth quarter of fiscal 2016 from businesses acquired that were not owned for the full period in both the current and prior year period, divided by 14 weeks. |
NON-GAAP ADJUSTED EBITDA | |||||||||||||||
Three Months | Three Months | Fiscal Year | Fiscal Year | ||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||
July 30, 2016 | July 25, 2015 | July 30, 2016 | July 25, 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Reconciliation of net income to Non-GAAP Adjusted EBITDA: | |||||||||||||||
Net income | $ | 49,360 | $ | 33,827 | $ | 128,740 | $ | 84,324 | |||||||
Interest expense, net | 9,710 | 6,899 | 34,720 | 27,025 | |||||||||||
Provision for income taxes | 29,593 | 19,583 | 77,587 | 51,260 | |||||||||||
Depreciation and amortization expense | 36,010 | 25,865 | 124,940 | 96,044 | |||||||||||
Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”) | 124,673 | 86,174 | 365,987 | 258,653 | |||||||||||
Gain on sale of fixed assets | (3,593 | ) | (861 | ) | (9,806 | ) | (7,110 | ) | |||||||
Stock-based compensation expense | 4,249 | 3,150 | 16,850 | 13,923 | |||||||||||
Loss on debt extinguishment | — | — | 16,260 | — | |||||||||||
Acquisition related costs | 715 | — | 715 | — | |||||||||||
Non-GAAP Adjusted EBITDA | $ | 126,044 | $ | 88,463 | $ | 390,006 | $ | 265,466 |
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES | |||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED) | |||||||
Unaudited | |||||||
NON-GAAP ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER COMMON SHARE | |||||||
Three Months | Fiscal Year | ||||||
Ended | Ended | ||||||
July 30, 2016 | July 30, 2016 | ||||||
(Dollars in thousands, except share amounts) | |||||||
Reconciliation of Non-GAAP Adjusted Net Income: | |||||||
Net income | $ | 49,360 | $ | 128,740 | |||
Adjustments | |||||||
Pre-tax loss on debt extinguishment | — | 16,260 | |||||
Pre-tax non-cash amortization of debt discount | 4,590 | 14,709 | |||||
Acquisition related costs | 715 | 715 | |||||
Tax impact of adjustments | (1,995 | ) | (12,040 | ) | |||
Total adjustments, net of tax | 3,310 | 19,644 | |||||
Non-GAAP Adjusted Net Income | $ | 52,670 | $ | 148,384 | |||
Reconciliation of Non-GAAP Adjusted Diluted Earnings per Common Share: | |||||||
Net income per common share | $ | 1.54 | $ | 3.89 | |||
Total adjustments from above, net of tax | 0.10 | 0.59 | |||||
Non-GAAP Adjusted Diluted Earnings per Common Share | $ | 1.64 | $ | 4.48 | |||
Diluted shares used in computing Adjusted Diluted Earnings per Common Share | 32,074,169 | 33,115,755 |
OUTLOOK - ADJUSTED DILUTED EARNINGS PER COMMON SHARE | |
Outlook for the | |
Three Months Ending | |
October 29, 2016 (a) | |
Diluted earnings per common share | $1.47 - $1.62 |
Adjustment | |
After-tax non-cash amortization of debt discount (b) | $0.08 |
Non-GAAP Adjusted diluted earnings per common share | $1.55 - $1.70 |
(a) Guidance for diluted earnings per common share and Non-GAAP adjusted diluted earnings per common share for the three months ending October 29, 2016 were computed using approximately 32.2 million in diluted weighted average shares outstanding. | |
(b) The Company expects to recognize approximately $4.3 million in pre-tax interest expense during the three months ending October 29, 2016 for non-cash amortization of the debt discount associated with its 0.75% senior convertible notes. The Company excludes the effect of this amortization in its Non-GAAP financial measures. |
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED)
Explanation of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company’s quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the Company’s performance for the period reported with the Company’s performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. Management defines the Non-GAAP financial measures used in this release as follows:
• | Non-GAAP Organic Contract Revenues - contract revenues from businesses that are included for the entire period in both the current and prior year periods, adjusted for the additional week in the fourth quarter of fiscal 2016 as a result of the Company’s 52/53 week fiscal calendar. Non-GAAP Organic Contract Revenue growth (decline) is calculated as the percentage change in Non-GAAP Organic Contract Revenues over those of the comparable prior year period. Management believes organic growth (decline) is a helpful measure for comparing the Company’s revenue performance with prior periods. |
• | Non-GAAP Adjusted EBITDA - net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, loss on debt extinguishment, and certain non-recurring items. Management believes Non-GAAP Adjusted EBITDA is a helpful measure for comparing the Company’s operating performance with prior periods as well as with the performance of other companies with different capital structures or tax rates. |
• | Non-GAAP Adjusted Net Income - GAAP net income before loss on debt extinguishment, non-cash amortization of the debt discount, certain non-recurring items and any tax impact related to these items, and “Non-GAAP Adjusted Diluted Earnings per Common Share” as Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding. Management excludes or adjusts each of the items identified below from Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per Common Share: |
• | Non-cash amortization of the debt discount - The Company’s 0.75% senior convertible notes due September 2021 (the “Notes”) were allocated between debt and equity components. The difference between the principal amount and the carrying amount of the liability component of the notes represents a debt discount. The debt discount will be amortized over the term of the notes but will not result in periodic cash interest payments. During the three months and fiscal year ended July 30, 2016, the Company recognized approximately $4.6 million and $14.7 million, respectively, in pre-tax interest expense for non-cash amortization of the debt discount associated with the Notes. The Company has excluded the non-cash amortization of the debt discount from its Non-GAAP financial measures because it believes it is useful to analyze the component of interest expense for the Notes that will be paid in cash. The exclusion of the non-cash amortization from the Company’s Non-GAAP financial measures provides management with a consistent measure for assessing financial results. |
• | Loss on debt extinguishment - The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its 7.125% senior subordinated notes in the first quarter of fiscal 2016. Management believes excluding the loss on debt extinguishment from the Company’s Non-GAAP financial measures assists investors’ overall understanding of the Company’s current financial performance. The Company believes this type of charge is not indicative of its core operating results. The exclusion of the loss on debt extinguishment from the Company’s Non-GAAP financial measures provides management with a consistent measure for assessing the current and historical financial results. |
• | Tax impact of adjusted results - The tax impact of the adjusted results for the three months and fiscal year ended July 30, 2016 was calculated utilizing a Non-GAAP effective tax rate which approximates the Company’s effective tax rate used for financial planning. The tax impact included in the Company’s guidance for the quarter ending October 29, 2016 was calculated using an effective tax rate used for financial planning and forecasting future results. |
8
4th Quarter Fiscal 2016
Results Conference Call
August 24, 2016
Exhibit 99.2
2
Forward Looking Statements and Non-GAAP
Information
This presentation contains “forward-looking statements”. Other than statements of historical facts, all statements contained in
this presentation, including statements regarding the Company’s future financial position, future revenue, prospects, plans and
objectives of management, are forward-looking statements. Words such as “outlook,” “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “should,” “could,” “project,” and similar expressions, as well as statements in future tense, identify
forward-looking statements. You should not consider forward-looking statements as a guarantee of future performance or
results. Forward-looking statements are based on information available at the time those statements are made and/or
management’s good faith belief at that time with respect to future events. Such statements are subject to risks and
uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the
forward-looking statements. Important factors, assumptions, uncertainties, and risks that could cause such differences are
discussed in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on
September 4, 2015, our Quarterly Report on Form 10-Q filed with the SEC on May 27, 2016 and other filings with the SEC. The
forward-looking statements in this presentation are expressly qualified in their entirety by this cautionary statement. The
Company undertakes no obligation to update these forward-looking statements to reflect new information, or events or
circumstances arising after such date.
This presentation includes certain “Non-GAAP” financial measures as defined by Regulation G of the SEC. As required by the
SEC, we have provided a reconciliation of those measures to the most directly comparable GAAP measures on the Regulation G
slides included as slides 13 through 19 of this presentation. Non-GAAP financial measures should be considered in addition to,
but not as a substitute for, our reported GAAP results.
3
Participants and Agenda
Participants
Steven E. Nielsen
President & Chief Executive Officer
Timothy R. Estes
Chief Operating Officer
H. Andrew DeFerrari
Chief Financial Officer
Richard B. Vilsoet
General Counsel
Agenda
Introduction and Q4-16 Overview
Industry Update
Financial & Operational Highlights
Outlook
Conclusion
Q&A
4
Strong demand and revenue growth
Contract revenues of $789.2 million in Q4-16 compared to $578.5 million in
Q4-15. Organic growth of 20.0% excluding contract revenues of acquired
businesses not included for the entire period of Q4-16 and Q4-15 and
adjusting for the additional week of operations as a result of our fiscal
calendar.
Strong operating performance
Non-GAAP Adjusted EBITDA of $126.0 million, or 16.0% of revenues in
Q4-16, compared to $88.5 million, or 15.3% in Q4-15
Non-GAAP Adjusted Diluted EPS increased to $1.64 in Q4-16 compared to
$0.97 diluted earnings per share in Q4-15
Acquired certain assets of Goodman Networks and NextGen
Telecom for aggregate cash purchase price of $108.4 million
during Q4-16
Strong balance sheet and robust liquidity. Operating cash flows of
$182.5 million during Q4-16
Financial charts - $ in millions, except earnings per share amounts
Q4-16 Overview and Highlights
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
* Q4-15 diluted earnings per share is on a GAAP basis as there were no Non-GAAP adjustments to Q4-15.
*
Q4-16 contained 14 weeks as a result of our 52/53 week fiscal year compared to 13 weeks in Q4-15
5
Industry increasing network bandwidth dramatically
Major industry participants deploying significant wireline networks
Newly deployed networks provisioning 1 gigabit speeds; speeds
beyond 1 gigabit envisioned
Industry developments have produced opportunities which in
aggregate are without precedent
Delivering valuable service to customers
Currently providing services for 1 gigabit full deployments across the
country in dozens of metropolitan areas to a number of customers
Revenues and opportunities driven by this industry standard
accelerated
Customers are revealing with more specificity multi-year initiatives
that are being implemented and managed locally
Calendar 2016 performance to date and outlook clearly
demonstrate we are currently in the early stages of a massive
investment cycle in wireline networks
Dycom’s scale, market position and financial strength position
it well as opportunities continue to expand
Industry Update
6
Revenue Highlights
Q4-16 organic growth of 20.0%, seventh
straight quarter with double digit organic
growth
Revenues from Q4-16 Top 5 customers
increased 44.0% organically. All other
customers decreased 18.5% organically.
Top 5 customers in each period
represented 73.9% of revenues in Q4-16
compared to 64.3% in Q4-15
Significant organic growth in Q4-16 from
several key customers:
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
Organic growth over the last 7 quarters reflects Dycom’s continued ability to gain share and expand
geographic reach, meaningfully increasing the long-term value of our maintenance business
AT&T 82.9%
Comcast 45.3%
Verizon
67.7%
Windstream 32.0%
*Organic % growth (decline) adjusted for additional week in Q4-16
*
*
7
Customers Description Area
Approximate
Term (in years)
AT&T Wireless Construction Services California, Nevada, Arizona, Texas, Kentucky, Georgia, Florida 3
Construction and Maintenance Services Kentucky, Tennessee 3
Engineering Services Texas 3
Comcast Construction and Maintenance Services Michigan, Maryland, Virginia, Florida 3
Windstream Construction Services Nebraska 2
Charter Construction & Maintenance Services Texas, Missouri, Illinois, Kentucky, Tennessee, Alabama 1
Various Construction – CAF II Colorado, South Dakota, Minnesota, Wisconsin, Nebraska,
Pennsylvania, West Virginia, Virginia, Tennessee, North
Carolina
1
Backlog and Awards
Notes: Our backlog represents the estimated amounts under master service agreements and other contractual agreements, including long-term contracts, for services projected to be performed over the terms of the contracts and is
based on contract terms, our historical experience with customers and, more generally, our experience in similar procurements. Backlog is not a measure defined by United States generally accepted accounting principles; however, it
is a common measurement used in our industry. Our methodology for determining backlog may not be comparable to the methodologies used by others.
Selected Current Awards and Extensions
Financial charts - $ in millions
8
As a % of Revenues
15.3% 16.0%
Revenues of $789.2 million and organic growth of 20.0% adjusting for $53.2 million for the additional week of
operations as a result of our fiscal calendar. Revenues from acquired businesses contributed $44.8 million in Q4-16 and
$2.4 million in Q4-15.
Non-GAAP Adjusted EBITDA increased to 16.0% of revenue in Q4-16 compared to 15.3% in Q4-15
Gross margin % increased 34 basis points and Non-GAAP G&A decreased 42 basis points from improved
performance and operating leverage on our increased scale
Non-GAAP Adjusted Diluted EPS of $1.64 in Q4-16 compared to $0.97* diluted EPS in Q4-15
Financial Highlights
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
* Q4-15 diluted earnings per share is on a GAAP basis as there were no Non-GAAP adjustments to Q4-15.
Financial charts - $ in millions, except earnings per share amounts
*
Q4-16 contained 14 weeks as a result of our 52/53 week fiscal year compared to 13 weeks in Q4-15
9
Strong balance sheet and liquidity
Liquidity Overview
(a) During Q4-16, the Company adopted of FASB’s ASU 2015-03 which reclassified approximately $1.2 million in debt issuance costs in both Q3-16 and Q4-16 from other assets to a contra-liability associated with the Company’s Senior Convertible Notes.
(b) Availability on Revolver presented net of $57.7 million and $57.6 million for outstanding L/C’s under the Senior Credit Agreement at Q3-16 and Q4-16, respectively.
Financial tables - $ in millions
Robust operating cash flows
* Amounts may not add due to rounding. Total days sales outstanding (“DSO”) is calculated as the summation of current accounts receivable, plus costs and estimated earnings in excess of billings, less billings in excess of costs and estimated
earnings, (“CIEB, net”) divided by average revenue per day during the respective quarter (Q4-16 contained 98 days while Q3-16 contained 91 days).
Liquidity exceeds $426 million at the end of
Q4-16 consisting of availability under our
Credit Facility and cash on hand
During Q4-16, reduced borrowings on credit
agreement by $17.8 million to $346.3 million
Robust operating cash flows of $182.5 million
during Q4-16
Total cash paid for acquisitions of
$108.4 million during the quarter
Cap-ex, net of disposals was $43.2 million
DSO improved by 11 days contributing to strong
operating cash flows
*
10
Q1-2016
Included for
comparison
Q1-2017 Outlook and Commentary
Contract Revenues $ 659.3 $780 - $810 Broad range of demand from several large customers
Robust 1 gigabit deployments, cable capacity projects and CAF II accelerating, core
market share growth
Total revenue expected to include approximately $55.0 million in Q1-17 compared
to $29.9 million in Q1-16 from businesses acquired in Q1-16 and Q4-16
For the fiscal year of 2017, recently acquired operations of Goodman Networks
expected to produce revenues of approximately $100 million
Gross Margin % 23.1% Gross Margin % which
increases slightly
from Q1-16
Solid mix of customer growth opportunities
G&A Expense % 7.8% G&A as a % of revenue
in-line with Q1-16
G&A as a % of revenue supports our increased scale
Outlook for G&A expense % includes share-based compensation Share-based compensation $ 4.5 $ 5.7
Depreciation &
Amortization
$ 27.4 $35.0 - $35.7 Depreciation reflects cap-ex supporting growth and maintenance
Includes amortization of approximately $6.2 million in Q1-17 compared to
$4.8 million in Q1-16
Non-GAAP Adjusted Interest
Expense
$ 7.4 Approximately $ 4.5
Includes 0.75% cash coupon on Senior Convertible Notes, interest on Senior Credit
Agreement, amortization of debt issuance costs and other interest. Q1-16 also
included interest on 7.125% Notes previously outstanding.
Non-GAAP Adjusted Interest Expense excludes non-cash amortization of debt
discount of $4.3 million in Q1-17 compared to $1.8 million in Q1-16
Other Income, net $ 1.5 $ 0.2 - $ 0.6 Other income, net primarily includes gain (loss) on sales of fixed assets and discount
charges related to non-recourse sales of accounts receivable in connection with a
customer’s supplier payment program
Loss on debt
extinguishment
$16.3 $ - Q1-16 included pre-tax charge of $16.3 million for loss on debt extinguishment in
connection with the redemption of the 7.125% senior subordinated notes
Non-GAAP Adjusted EBITDA
%
16.0% Non-GAAP Adjusted
EBITDA % in-line or better
than the Q1-16 result
Adjusted EBITDA amount increases from revenue growth and strong operating
performance
Diluted Earnings per Share
$ 1.24
Non-GAAP Adjusted
Diluted EPS
$ 1.55 - $ 1.70
Non-GAAP Adjusted Diluted EPS excludes non-cash amortization of debt discount
on Senior Convertible Notes. See slide 18 for reconciliation of guidance for Non-
GAAP Adjusted Diluted Earnings per Common Share
Effective tax rate of approximately 37.5% during Q1-17
Diluted Shares 33.9 million 32.2 million
Q1-2017 Outlook
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
Financial table- $ in millions, except earnings per share amounts (% as a percent of contract revenues)
11
Looking Ahead to Q2-2017
Q2-2016
Included for comparison
Q2-2017 Outlook and Commentary
Contract Revenues $ 559.5 Total revenue growth %
in high teens or slightly
better as a % of revenue
compared to Q2-16
Expectation of normal winter weather patterns
Broad range of demand from several large customers
Robust 1 gigabit deployments, cable capacity projects and CAF II
accelerating, core market share growth
Total revenue expected to include approximately $20.0 million in Q2-17
from businesses acquired in Q4-16 compared to none in Q2-16
Gross Margin %
19.5% Gross Margin % which
increases from Q2-16
Solid mix of customer growth opportunities
Q2 margins display impacts of seasonality including:
* inclement winter weather
* fewer available workdays due to holidays
* reduced daylight work hours
* restart of calendar payroll taxes
G&A Expense % 8.4% G&A as a % of revenue
in-line with Q2-16
G&A as a % of revenue supports our increased scale
Outlook for G&A expense % includes share-based compensation Share-based compensation $ 4.2 $ 5.2
Depreciation &
Amortization
$ 29.9 $35.5 - $36.2
Depreciation reflects cap-ex supporting growth and maintenance
Includes amortization of approximately $6.1 million in Q2-17 compared to
$4.7 million in Q2-16
Non-GAAP Adjusted
Interest Expense
$ 3.7 Approximately $ 4.3 Non-GAAP Adjusted Interest Expense excludes non-cash amortization of
debt discount of $4.4 million in Q2-17 compared to $4.1 million in Q2-16
Other Income, net $ 1.1 $ 0.2 - $ 0.7 Other income, net primarily includes gain (loss) on sales of fixed assets and
discount charges related to non-recourse sales of accounts receivable in
connection with a customer’s supplier payment program
Non-GAAP Adjusted
EBITDA %
11.9% Non-GAAP Adjusted
EBITDA % which
increases from Q2-16
Adjusted EBITDA increases from revenue growth and improved operating
performance
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
Financial table- $ in millions (% as a percent of contract revenues)
12
Conclusion
Firm and strengthening end market opportunities
Telephone companies deploying FTTX to enable video offerings and 1 gigabit
connections
Cable operators continuing to deploy fiber to small and medium businesses with
overall cable capital expenditures, new build opportunities, and capacity expansion
projects increasing
Connect America Fund (“CAF”) II projects in planning, engineering, and construction,
with activity accelerating. We are executing meaningful assignments from one
recipient for fixed wireless deployments
Customers are consolidating supply chains creating opportunities for market share
growth and increasing the long-term value of our maintenance business
Encouraged that industry participants are committed to multi-year
capital spending initiatives which in most cases are meaningfully
accelerating and expanding in scope
13
Appendix: Regulation G Disclosure
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Organic Contract Revenue
Unaudited
($ in millions)
GAAP %
Non-GAAP -
Organic %
Revenues from
businesses
acquired
Additional week
as a result of our
52/53 week fiscal
year
Q4-16 Organic Growth:
Q4-16 789.2$ (44.8)$ (53.2)$ 691.2$ 36.4% 20.0%
Q4-15 578.5$ (2.4)$ -$ 576.1$
Prior Quarters Organic Growth (Decline):P ior Qua ters Organic Growth (Decline):
Q3-16 664.6$ (30.8)$ -$ 633.9$ 35.0% 28.7%
Q3-15 492.4$ -$ -$ 492.4$
Q2-16 559.5$ (32.9)$ -$ 526.6$ 26.8% 19.4%
Q2-15 441.1$ -$ -$ 441.1$
Q1-16 659.3$ (39.5)$ -$ 619.7$ 29.2% 21.9%
Q1-15 510.4$ (1.9)$ -$ 508.5$
Q4-15 578.5$ (11.8)$ -$ 566.7$ 20.0% 18.2%
Q4-14 482.1$ (2.8)$ -$ 479.3$
Q3-15 492.4$ (8.9)$ -$ 483.4$ 15.5% 13.4%
Q3-14 426.3$ -$ -$ 426.3$
Q2-15 441.1$ (9.5)$ -$ 431.5$ 12.9% 10.5%
Q2-14 390.5$ -$ -$ 390.5$
Q1-15 510.4$ (10.1)$ -$ 500.3$ (0.5)% (2.4)%
Q1-14 512.7$ -$ -$ 512.7$
Contract
Revenues NON-GAAP ADJUSTMENTS
Revenue Growth
(Decline) %
Non-GAAP Organic
Contract Revenues
14
Notes: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Adjusted EBITDA
Unaudited
($ in 000's)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
Q4-16 contained 14 weeks as a result of our 52/53 week fiscal year as compared to 13 weeks in Q4-15, Q1-16 and Q2-16 presented herein
15
Note: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Organic Contract Revenue – certain customers
Unaudited
($ in millions)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
16
Note: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share
Unaudited
($ in 000's, except per share amounts)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
Q4-16 contained 14 weeks as a result of our 52/53 week fiscal year
17
Note: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share
Unaudited
($ in 000's, except per share amounts)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
GAAP
Reconciling
Item
Adjusted
Non-GAAP
Contract revenues 659,268$ -$ 659,268$
Cost of earned revenues, excluding
depreciation and amortization 506,978 - 506,978
General and administrative expenses 51,464 - 51,464
Depreciation and amortization 27,449 - 27,449
Total 585,891 - 585,891
Interest expense, net (9,131) 1,780 (7,351)
Loss on debt extinguishment (16,260) 16,260 -
Other income, net 1,469 - 1,469
Income before income taxes 49,455 18,040 67,495
Provision for income taxes 18,631 6,837 25,468
Net income 30,824$ 11,203$ 42,027$
Diluted earnings per share 0.91$ 0.33$ 1.24$
Shares used in computing Diluted EPS (in 000's): 33,887 33,887
Three Months Ended
October 24, 2015
Q1-16
For Comparison purposes for slides 10 and 11
18
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Outlook – Diluted Earnings per Common Share
Unaudited
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
(a) Guidance for Diluted earnings per common share and Non-GAAP Adjusted Diluted Earnings per Common Share for the three months ending October 29, 2016
were computed using approximately 32.2 million in diluted weighted average shares outstanding.
(b) The Company expects to recognize approximately $4.3 million in pre-tax interest expense during the three months ending October 29, 2016 for non-cash
amortization of the debt discount associated with its 0.75% Senior Convertible Notes. The Company excludes the effect of this non-cash amortization in its Non-
GAAP financial measures.
Outlook for the
Three Months Ending
October 29, 2016 (a)
Diluted earnings per common share $1.47 - $ 1.62
Adjustment
After-tax non-cash amortization of debt discount (c) $ 0.08
Non-GAAP Adjusted Diluted Earnings per Common Share $1.55 - $ 1.70
Appendix: Regulation G Disclosure
19
Explanation of Non-GAAP Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company’s quarterly results releases, trend schedules, conference
calls, slide presentations, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes
that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the
Company’s performance for the period reported with the Company’s performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in
addition to, but not as a substitute for, the Company’s reported GAAP results. Management defines the Non-GAAP financial measures as follows:
• Non-GAAP Organic Contract Revenues - contract revenues from businesses that are included for the entire period in both the current and prior year periods and adjusted for the
additional week in Q4-16 as a result of our 52/53 week fiscal year. Non-GAAP Organic Revenue growth (decline) is calculated as the percentage change in Non-GAAP Organic Contract
Revenues over those of the comparable prior year period. Management believes organic growth (decline) is a helpful measure for comparing the Company’s revenue performance with
prior periods.
• Non-GAAP Adjusted EBITDA - net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, loss on debt
extinguishment, and certain non-recurring items. Management believes Non-GAAP Adjusted EBITDA is a helpful measure for comparing the Company’s operating performance with prior
periods as well as with the performance of other companies with different capital structures or tax rates.
• Non-GAAP Adjusted Net Income - GAAP net income before loss on debt extinguishment, non-cash amortization of the debt discount, certain non-recurring items and any tax impact
related to these items, and "Non-GAAP Adjusted Diluted Earnings per Common Share" as Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding.
Management excludes or adjusts each of the items identified below from Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per Common Share:
• Non-cash amortization of the debt discount - The Company’s 0.75% senior convertible notes due 2021 (the "Notes") were allocated between debt and equity components. The
difference between the principal amount and the carrying amount of the liability component of the notes represents a debt discount. The debt discount will be amortized over
the term of the notes but will not result in periodic cash interest payments. During the three months ended October 24, 2015, January 23, 2016, April 23, 2016, and July 30,
2016 the Company recognized approximately $1.8 million, $4.1 million, $4.2 million and $4.6 million, respectively, in pre-tax interest expense for non-cash amortization of the
debt discount associated with the Notes. The Company has excluded the non-cash amortization of the debt discount from its Non-GAAP financial measures because it believes
it is useful to analyze the component of interest expense for the Notes that will be paid in cash. The exclusion of the non-cash amortization from the Company’s Non-GAAP
financial measures provides management with a consistent measure for assessing financial results.
• Loss on debt extinguishment - The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its
7.125% senior subordinated notes during the first quarter of fiscal 2016. Management believes excluding the loss on debt extinguishment from the Company’s Non-GAAP
financial measures assists investors’ overall understanding of the Company's current financial performance. The Company believes this type of charge is not indicative of its
core operating results. The exclusion of the loss on debt extinguishment from the Company’s Non-GAAP financial measures provides management with a consistent measure
for assessing the current and historical financial results.
• Acquisition transaction related costs – The Company incurred costs of approximately $0.7 million in connection with the acquisition of Goodman Networks during the fourth
quarter of fiscal 2016. The exclusion of the acquisition transaction related costs from the Company’s Non-GAAP financial measures provides management with a consistent
measure for assessing financial results.
• Tax impact of adjusted results - The tax impact of the adjusted results was calculated utilizing a Non-GAAP effective tax rate which approximates the Company’s effective tax
rate used for financial planning. The tax impact included in the Company’s guidance for the quarter ending July 30, 2016 was calculated using an effective tax rate used for
financial planning and forecasting future results.
Appendix: Regulation G Disclosure
4th Quarter Fiscal 2016
Results Conference Call
August 24, 2016
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