Q4 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to lead Dotcom results Conference call at this point all that participant winds Arnaud listen only mode. However, the will meet opportunity for your questions if you'd like to ask a question on the call today. Please press one than zero if you require any assist.
Since during the call. Please press Star Zero, and then operator will assist you offline as a reminder, today's call is being recorded I'll turn the call now over to your host Mr. Stephen Nielsen. Please go ahead Sir.
Thank you John Good morning, everyone I'd like to thank you for attending this conference call to review our fourth quarter 2020 results going to slide two during this call we won't be referring to a slide presentation, which can be found on our web sites Investor said her main page relevant slides will be identified by number throughout our presentation.
Today, we have on the call Tms This our chief operating Officer drew Deferrari, our Chief Financial Officer at writer. It asked her general Counsel now I will turn the call over to Ryan or Dash.
Thank you Steve the statements made during this call maybe forward looking in nature and our provided pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
These forward looking statements include all comments, reflecting our expectations assumptions or beliefs about future events or performance.
The not relates solely to historical periods.
Forward looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projection.
Including those risks described in our annual report on form 10-K filed March for 2019, and other filings with the U.S. Securities Exchange Commission, we assume no obligation to update any forward looking statements Steve.
Thanks, Ryan as we refer to our results. Please note that organic revenue was a non-GAAP measure that excludes revenues from storm restoration services at our comments today and then the accompanying slides we referenced this and other non-GAAP measures. We refer you to the quarterly report section of our website for a reconciliation of these non-GAAP.
Measures to their corresponding GAAP measures.
In addition, our fiscal year 2021 is a 53 week year ending January Thirtyth 2021.
Accordingly, any references to fiscal year 2020 Watt include the last 11 months of calendar 2020, and the first month of calendar 2021.
Moving to slide four.
To begin this call I will provide general comments on cash flow debt pay down backlog operating results at our current outlook regarding a large customer program.
Operating cash flows was strong during the quarter funding a reduction in net debt of $176.3 million. We ended the quarter with over 54.6 million in cash and no draws under revolving credit facility.
Backlog increased by nearly $1 billion, reflecting strong bookings.
When compared to our expectations at the beginning of the quarter revenue was above the midpoint, but gross margin was disappointing.
Got it approximate basis, one quarter of the gross margin pressure was due to several factors, including adverse weather a greater seasonal effects.
Remainder in equal parts once a slow start with a customer who's activity is expected to increase this year and ongoing challenges with a large customer program.
This large customer program experienced increased cost related primarily to two factors first particularly difficult soil conditions in two markets that are approaching completion and second the rollout of a new system by this customer.
With respect to this large customer program, we continue to be challenged by the costs driven by the complexity the program, particularly those cost associated with its initial phase.
After a detailed review it as our current expectations at approximately $400 million of revenue during fiscal 2001 will be generated by the initial phase or the program with a significant majority of our markets completing this initial phase during the second half of calendar 2020.
As a result, we expect that this initial phase will be SUS substantially complete and 90% of the markets we serve.
End of January 21.
With that with two markets continuing that have more extended timeline.
Now going to slide five revenue was 737.6 million a decrease of 1.5% organic revenue excluding storm restoration services of 20.4 million in the ergo quarter increased 1.3%.
As we deployed one gigabit wireline that works wireless wireline converged networks in wireless that works this quarter reflected an increase in demand for three of our top five customers.
Gross margins were four point, 14.2% a revenue reflecting the specific items reviewed early in archives and general and administrative expenses were 8.3%.
All of these factors produced adjusted EBITDA of 44.5 million or 6% of revenue at an adjusted diluted earnings per share a loss of 23 cents compared to a profit of 10 cents into your go quarter.
Liquidity was ample was gas some availability under our credit facility was 337.3 million an increase of 117.7 billion during the quarter.
Now moving to slide six today major industry participants are constructing or upgrading significant wireline networks across broad sections of the country.
As wireline networks are generally designed to provision one gigabit network speeds to individual consumers and businesses either directly or wireless late using fiveg technologies.
We believe wireline deployments are the foundation will element of what is expected to be a decade long deployment of fully converged wireless wireline networks that will enable high bandwidth low latency fiveg applications.
This perspective was reinforced when one leader in the small cell industry stated quote vipers, where the vast majority of the capitalism building out a small cell the boy about about 80% of our capital is in the fiber Porsche unquote the industry effort required to deploy these converged network continues to meaningfully broaden our set of opportunities.
Total industry opportunities in aggregate our robust.
We are providing program management planning engineering and design aerial underground and wireless construction and fulfillment services for one gigabit deployments. These services are being provided across the country and dozens of metropolitan areas to several customers.
These deployments include networks, consisting entirely of wired network elements as well as converged wireless wireline multi use networks.
Potential wired network construction opportunities exist outside of the traditional customer franchise boundaries.
Customers are pursuing multiyear initiatives that are being planned and man it's out of market by market basis.
Our ability to provide integrated planning engineering and design procurement and construction and maintenance services is of particular value to several industry participants.
We expect some normal timing volatility and customer spending modulations as network deployment strategies and technologies of all tactical considerations by also impact timing.
We remain confident that are competitively unparalleled scale at our financial strength position us well to deliver valuable service to our customers.
Going to slide seven.
We continue to experience effects of a strong overall industry environment during the quarter with increased demand from three of our top five customers.
Organic revenue increased 1.3% our top five customers combined produced 77.2% of revenue decreasing 1.2% organically, while all other customers increased 10.6% organically.
Rising was our largest customer 21.9% of total revenue were 161 point Threemillion rising grew organically 3.3%.
Revenue from Centurylink was 135.1 billion or 18.3% of revenue Centurylink was <unk> second largest customer in grew 31.1% organically.
Hey, TMT was our third largest customer at 18% of revenue or 132.5 million Comcast was our fourth largest customer at 101.6 million or 13.8% of revenue and finally revenue for Windstream was 38.8 billion or 5.3% revenue Windstream was our.
Fifth largest customer and grew or get a 45.9% organically.
Of note. This is the fourth consecutive quarter, where all of our other customers an aggregate excluding the top five customers have grown organically.
This quarter was our seventh consecutive of organic growth than we have continued to extend our geographic reach and expand our program management network planning services.
In fact over the last several years, we have meaningfully increase the long term value of our maintenance and operations business, a trend, which we believe will parallel our deployment of one gigabit wireline direct and wireless wireline converged networks.
As those deployments dramatically increase the amount of outside plant network that must be extended and maintained.
Now moving to slide eight.
Backlog at the end of the fourth quarter was 7.3, 0.1 4 billion versus 6.349 billion at the end of the October 2019 quarter.
An increase of over 965 million.
This backlog approximately 2.716 billion is expected to be completed in the next 12 months.
Backlog activity during the fourth quarter reflects solid performance as we booked new work and renewed existing work, we continue to anticipate substantial future opportunities across a broad array of our customers.
For century, like we were awarded construction and maintenance services agreements in Utah, Colorado, South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri, Louisiana, Ohio, Virginia, Tennessee, North Carolina in Florida.
From a PMT construction services agreements in Ohio, Tennessee, North Carolina, and Georgia for Horizon Engineering, and construction services agreements in various locations.
From Comcast Engineering services agreements for Michigan, Massachusetts, Pennsylvania, Maryland, Delaware in Georgia.
And with various customers locating services agreements in Oregon, California, Indiana, Ohio, Virginia, and New Jersey headcount decreased to quit a seasonally during the quarter to 15230.
Now I will turn the call over to drew for his financial review and outlook.
Thanks, Steve and good morning, everyone going to slide nine contract revenues for Q4 20 were 737.6 million.
Organic revenue growth was 1.3% with increases from three of our top five customers adjusted EBITDA was 44.5 million or 6% of revenue.
Gross margins were at 14.2% and were approximately 175 basis points below our expectations for the quarter.
A quarter of the variance was from several factors, including adverse weather in greater seasonal effects. The remaining margin pressure was split between a slow start with a customer who's activities are expected to increase this year and margin pressure on a large customer program.
Adjusted DNA expense increased 49 basis points compared to Q4 19.
Higher administrative costs were partially offset by a reduction of performance based incentive compensation and share based compensation during the quarter.
Our non-GAAP adjusted loss per share Q4, 20 was 23 cents per share.
Now going to slide 10.
Our balance sheet and financial position remains strong.
During Q4 to one eight the company reduce net debt by approximately 176.3 million by repaying 103 million of revolver <unk> revolver borrowings and 5.6 million of term loan borrowings on the senior credit facility.
Purchasing 25 million of principal amount of our convertible senior notes at a discount for 24.3 million and by increasing cash by over 42 million.
We ended the quarter with 54.6 million of cash and equivalents no outstanding borrowings on our revolving line of credit.
444.4 million of term loans outstanding and 460 million principal amount of convertible senior notes outstanding.
Our liquidity is ample at 337.3 million consisting of availability from our credit facility in cash on cash balances.
Cash flows from operations were robust at 191.8 million. During Q4, we made solid progress invoicing collecting balances during the quarter as reflected by the $189 million sequential decline in accounts receivable and that contract assets compared to October.
The combined Dsos of accounts receivable and that contract assets were 130 days at the end of the quarter.
We expect dsos to improve for large customer program as the initial phases completed and a number of markets. We serve during fiscal 2021 and final invoice documentation is completed.
Capital expenditures were $15.8 million during Q4 20 net of disposal proceeds and gross Capex was 18.7 million.
For fiscal 2021, we anticipate capital expenditures net of disposal proceeds to range from 120 to 130 million in.
In summary, we continued to maintain ample liquidity and a strong balance sheet.
Going to slide 11 for the quarter ending April 2020, we expect total revenue to range from 730 million to 780 million.
During Q1 21, we expect the margin pressure that we experienced in Q4 20 to continue for a large customer program and for a customer with a slow start is activities are expected to increase this year.
In addition, we've experienced an increase of approximately $3 million per quarter for insurance premiums primarily in our excess coverage layers for auto in general liability.
These premiums reflect market driven increases as the company has not had any meaningful claims experience in these excess layers of the program.
Considering these factors we currently expect non-GAAP adjusted EPS to range from a loss of nine cents per share the income of eight cents per share.
Adjusted EBITDA per cent of contract revenue, which decreases from the Q1 20 resolved.
Now going to slide 12.
For Q2 21, we currently expect revenue to range from a low single digit decrease to a low single digit increase as a percentage of revenue compared to total contract revenues of 884.2 million in the Q2 20 period.
For comparative purposes prior year non-GAAP adjusted EBITDA was 10.2% for Q2 20 after excluding that benefit of a contract modification we recognized in that period.
For Q2, 21, we expect non-GAAP adjusted EBITDA margin percent of contract revenue to be in line with a 10.2% result from Q2 2020.
Finally, as a reminder, for 50 to 53 week calendar or fiscal <unk> fiscal 2021 will include 53 weeks of operations with the extra week of operations included in the fourth quarter ending January 2021.
Now I will turn the call back to Steve. Thanks drew moving to slide 13 within a growing economy, we experienced the effects of a strong industry environment and capitalized on our significant strikes first and foremost we maintain strong customer present throughout our markets second our extensive market presence has allowed us to be at the forefront of evolve.
Being industry opportunities the end market drivers of these opportunities remain firm at our strength today.
Fiber deployments, enabling new wireless technologies are underway in many regions of the country wireless construction activity and supportive expanded coverage and capacity continued to grow through the deployment of enhanced macro cells and new small cells. In fact, we've recently completed or begun work associated with several thousand fiveg small cell sites.
Across 11 stage.
Phone companies are deploying fiber to the home to enable one gigabit high speed connections cable operators are deploying fiber to small and medium businesses and enterprises. A portion of these deployments are in anticipation of the customer sales process fiber deep deployments to expand capacity capacity or increasing.
Dramatically increased fees to consumers are being provisioned in consumer data usage is growing dramatically.
Customers are consolidating supply change, creating opportunities for market share growth and increasing the long term value of our maintenance and operations business.
In addition, we are increasingly providing integrated planning engineering and design procurement and construction and maintenance services for wired and converged wireless wireline networks.
We remain encouraged that our major customers are committed to multiyear capital spending initiatives that we are confident in our strategies the prospects for company the capabilities of our dedicated employees in the experience of our management team as we grow our business.
Now John we will open the call for questions.
Certainly and ladies and gentlemen, again, if you wish to ask your question. Please press one zero on your telephone keypad you may withdraw your question and anytime may be repeating the ones you command. If you use any speakerphone. Please pick up the handset before press and the numbers. Once again, if you have a question you may press one than zero at this time.
Yeah.
And first of all line of Adam Thalhimer with Thompson Davis. Please go ahead.
Hi, Good morning, guys talking about the tough finished the year.
Yeah, we understand that.
I wanted to ask about the Q1 revenue guide it seems kind of abnormally low yet to customers who were.
Down in Q4 and it are those two customers is that the weakness that you see in Q1.
So so Adam as we've talked about on the call a November if you recall, we had we disclose they have a little over $60 billion of 80 and the fiber to the home.
Revenue in the April 2019 quarter.
And that's what's coming that's come out of the business.
We've been encouraged by some of their comments recently the that.
As a demonstrate success in selling into that footprint. They may resumes on belt, but right now that's what's coming out of the business.
Okay, and then a lots of awards with century link it seems like you picked up some new states in fact.
Their capex forecast is up low single digits I'm, just curious with some new territory. If you can do.
Kind of meaningfully better than that well as you saw both in the in the October quarter, which I think we grew organically a 38% than this winter quarter at 31% I think we've had some nice growth would century like.
They had some encouraging comments on there a recent call where they.
Decided to invest in and expanding their fiber footprint.
As for fiber to the whole in fact.
So you get a near term limits to that level of activity.
And that also with bringing off net buildings on that to their own network, where we're also seeing activity. There. So I think fundamentally increased activity as a implement those strategies as well as a.
Some additional footprint.
Okay and last one for me just curious on the on the Dsos drew.
Are you trying to signal that does a really come down.
Kind of January calendar, 21, or does that process started mid mid year of calendar 2020.
So Adam work, we continue to work at it we've got a large program, we're working that that every day.
And as you look back in the comments that I had a we made solid progress in the quarter, but we've got work to do still there.
As we as we work our way through the initial days.
And complete documentation around that that something that we think and kind of group.
I I think Adam I would just add look we had a good cash flow quarter, we pay down some debt, but we still got work to do.
We're working hard at it we've got to increase operating cash flow when we've got increased cash collections.
We're exploring you know we're working in a number of areas to do that and we want to do it in a sustainable way.
Okay. Thanks, guys.
Our next question from much and dealing with Deutsche Bank. Please go ahead.
Hi, Good morning, guys good morning.
So just as a pickup on Adam's question, just with respect to Dsos, you're at 130 days right now.
How do you think about like what should be the normalized level.
Then if you can break out just how much would be tied to kind of the big program.
And then lastly, just just thinking about.
Our leverage comfort, how do you think about that and.
Do you expect to continue reducing that through pay down through 20 <unk> fiscal 2021.
No drew why don't you take the so yeah. So.
Yeah, I mean, we've made progress on the program in the period.
And it's something we continue to work through Uh Huh.
Improve that amount so we made progress kind of across the board with customers.
And then it with respect to kind of normalize the show I think for the mix of customers that we have Adam I mean are a jet excuse me.
Yeah, we need to be in the Ninetys mean that that's the objective that we've said in the company. We have a number of customers that are there we have others that once again, we're working with to get there in a sustainable way.
And so I think that's where where we need to be.
In terms of leverage I think over long period of time, we've had kind of a.
Kind of a two area net leverage objective, we're not there now we'd like to get there overtime.
We continue to have growth opportunities as we.
Discussed a of the prior question, we have been able to grow footprint, we're gonna have the capital to expand the business.
We'd like to get leverage to continue to move down overtime.
Got it and then just on a gross margins I think you called out.
All of issues with silicon missions and delay in terms of ramp of a customer.
And you know understanding that it's going to continue into the first quarter I just want to get a sense for how to think about as we go through.
Balances there.
So I think with respect to the to the soil conditions and the large customer program. If you recall it was two quarters ago, we were able to negotiate a contract modification.
That provided a benefit in that quarter and so this is a program where there have been.
Some challenges both ways on on forecasting.
I think we continue to work hard to get better the programs of the initial phases. The most challenging as we complete that structurally.
We need to get better.
Great. Thank you.
Our next question from Brent Thielman with D.A. Davidson. Please go ahead.
Thanks, Good morning.
Good morning.
Hey, Steve if you wrap up this initial phase of this large customer program can you talk about what should sort of changed for you as you move into the next stages. The this just trying to get it but I understand it kind of how these.
Cost pressure should abate.
Beyond that that 21.
Well I think as we've talked about last.
Last November Brent that as we as we go beyond the initial phase we negotiated some new arrangements.
For subsequent portions of the work that we think more adequately reflect the cost of providing the service. So we think we've made adjustments there we continue to work on systems.
And we continue to do to work hard on improving performance, but I think a structural level. We think we have a an arrangement that more appropriately reflects cost and risks of providing the service.
Okay, and the actual work that you'll be doing will that change at all.
So in as you go deeper into any network build.
The core or the backbone the center part of the build which ties together.
In the cable World had engine hubs and other.
Customers they use different nomenclature, but in that portion of the build you tend to be more.
Urban heavier construction areas and that's created some riskier.
Okay. Okay, and then just on that on the two Q outlook in kind of basis around the margins kind of hearing prior year levels is that is that more a function of one program kind of expected to ramp up enough that the one where you're incurring the higher cost or is it a little more line of sight to kind of winding down its initial.
Phase on the larger kind of higher cost program well I think we're encouraged to cross the customers that we see good growth with Centurylink at Windstream.
We have another customer.
Where we have a pretty detailed plan and understanding where not only as activity on current projects, increasing but we're initiating new projects.
And I think as we see that come into the business and less of a drag from the roll off of the 80 anti.
Fiber to the home program I think that's where a what we're looking to.
Okay, and then just lastly looks like you know an uptick here in Capex expected for fiscal 2001 is that just ramp up spending on equipment to support to the bigger booking any any sort of one timers embedded in that.
There's really no one I mean in every year, there's something you have to do I think once again, we though we have worked to do on operating cash flow, we're going to be prudent in our capex, but where we have good opportunities for growth.
We're going to fund those.
Okay, great. Thanks for taking the questions.
Next we'll go to and Jennifer Fritzsche Huh with Wells Fargo. Please go ahead.
Great. Thank you Steve.
Well our year.
And specifically on Ethiopian Horizon, you announced that can you disclose your wireless revenue and then as you look at 18 T. I know you're lapping on that 60 million, but do you see mild fell.
And the fiber related the small cells taking up.
Well, that's flat and then I guess more importantly, horizon, a few weeks ago at our analyst day spoke of significant densification and much of their densification efforts for small cells being connected to their own fiber.
Are you playing a role in that can you kind of explored that a little bit.
Yeah, Joe with respect to the wireless revenue was actually 10.1% of total revenue. So first time, it's been north of 10%.
And in many years.
So we were encouraged with that we had organic growth in the in in wireless of 22.3%.
At our largest customers there is a TNT and it was actually up 65%. So we're seeing lots of opportunities in wireless a mix of a macro cell and and small cell.
We think that continues to increase which I think is consistent with where the customer commentary.
With respect to Densification I think particularly.
As a fiveg is deployed on millimeter wave, but even other mid band, but higher frequency spectrum, you need more cell sites to deliver the true promise of Fiveg.
And we expect a number of.
Participants to continue to deploy those.
And we will vote install the small cells themselves.
As well as well as connect them with fiber one of the interesting things that we're beginning to say in a small but it's illustrative of kind of the theme behind your question as we're actually seeing on some of our master contracts.
Where we're actually incorporating what historically would be considered small cell wireless work right into our core wireline Master service agreements.
Either in the provisioning of the fiber or actually in one instance, where actually starting to set the structures.
So we think this is a <unk>. This is a trend that we will continue for a period of thought.
And sorry, if I can yes, there's some questions about rising needing more spectrum and participating in upcoming C band auction is anything you're seeing from them.
Imply like a whole back of capital or anything that would suggest that it sounds like no, but I want to come from that I think that as the comments that they've made publicly I think there and Fuji asked about the pace and runway for their fiber deployments.
And I think they Oh, we see no sign that that's changing.
Okay. Thank you.
And next we'll go to Sean you spent with Keybanc capital markets. Please go ahead.
Hi, guys.
Next question.
I hate to be the data beat a dead horse here, but just going back to this sort of phase one phase two dynamic on the on the challenging customer program.
I'm just trying to understand so phase one run through fiscal 2001, as we've indicated Im just wondering you know at what point does.
Is there a point in fiscal 2001 that phase two kind of overtakes phase one in terms of revenue contribution or into the phase two not really take off in earnest until fiscal 2002, just trying to understand that dynamic yeah, Sean I think we've got to be limited our comments, we're not going to get it.
Head to the customer other than to say, we have started a modest amount of work under the new arrangements.
And the customers working through their priorities for this year's plan.
Got it.
And and so I guess, maybe beyond this transition from phase one phase two.
It.
Is there any other important dynamics, we should be thinking about from a margin progression standpoint or is that really the big driver here as we look to see this kind of year over year margin expansion positively inflect.
Yeah, I don't think that we have must add beyond that we do have other customers that are growing throughout the year.
Particularly as the as the a year progresses through the summer.
Utilization goes up we get more balanced growth across the customers. That's always been helpful to our margins doesn't mean, we don't have to work hard to execute it we can always do better things but.
But I think that's how we're looking at the year.
Okay, Great and then just on the working capital on one piece.
I think commentary on the last call is quite positive on.
The progress and navigating this difficult invoicing process.
Would you say that the progress in the coroner was kind of inline with your expectations and kind of continuing to improve or.
Has there been any kind of set back there in terms of where your expectations where in the last time, we spoke.
Yeah, I guess, Sean what I would say is what we had a good cash flow quarter, there's still work to do.
Across a number of customers were working hard and the number of areas to improve operating cash flow and cash collections and do it in a way that sustainable.
Got it and when do you may want to give us maybe a rough guidelines on what EBITDA to free cash flow conversion should look like in fiscal 2001.
Yeah, we haven't given guidance for the full fiscal year, Sean, but what I would tell you is based on grooves guidance for the April quarter.
And the and the July quarter.
Theres got to be some use of working capital as we grow seasonally that happens every year.
If you look at it on a full year basis.
You know, we expect to have better conversion this year than last year, because last year was not a good conversion year.
Okay Fair enough I appreciate the time.
Our next questions from Alex Regal with B. Riley FBR. Please go ahead.
Thanks, Good morning, good morning, Alex.
From a big picture, Steve where do you think normalized margins shouldn't be.
So I think if you look over a long period of time and you have a lot of history with the company, we've been able to achieve.
Hello.
The of low teens, EBITDA low doubled low double digit EBITDA.
Generally and there have been years, where we've had broadly distributed growth when it has been better we're not there now, but we are working hard and the number of areas to get back.
Into that normalized range and better if we get.
And as it relates this large customer program.
The 400 million is that revenue you expect to burn in fiscal 2001 and in your 12 month in total backlog.
How much backlog associated with this large customer program.
Sure interfaces, yeah. So Alex that is the the the burn rate that we expect as we complete.
90% of the of the market saw that initial phase.
You know could be a little more a little less it's a it's an estimate.
But what we're trying to communicate is that there is a runway here for us to take some of the complexity of the business. It's been associated with the number of markets that we're in.
On this program.
For those for the initial phase that that continues to be on as we talked about a couple of markets I have extended timelines.
And so we'll have a.
Lesser impact significantly lesser impact on the overall business.
Again as it relates to future period backlog associated with this up can you quantify that so show Alex as we've said before we're trying to provide additional information to help people understand the business. We don't typically breakout below total backlog backlog by customer.
Subject to estimates it moves up and down we think that the burn rate is what's important to understand for this fiscal year.
Thank you.
Our next question from Noelle Dilts with Stifel. Please go ahead.
Hi, Good morning, Good morning, Noel I'm, just wondering I guess clarification point.
Benefit you talked about the slow start to the customer program being a drag on margins but.
Do you sort of look at revenue and revenue was in line with your expectations. So.
How should we think about that I mean, but was there a customer that was that more revenue came in better than you were expecting that offset maybe some of the expected revenue you were thinking about under at the on the program that what's going to ramp I'm, just trying to kind of rectify that revenues in line versus that the profitability must there yeah. So so I think I think no well clearly we had strong growth with a cup.
All of customers.
And weaker growth with others I think on this program on this particular program, we have pretty good detailed understanding of the ramp for this year. It got a little bit slow it started a little slower than we expected, but we expect to have good growth on that program.
This year and so yes, there there obviously for where we came in the range.
We did better with some and not quite as well as we would have liked.
In two cases.
Got it thank you.
And then going back to I, you've touched on this a little bit what that discussion on the phase one versus phase to work for the large customer program.
But what I'm trying to understand as.
If this is more of that if that if that confidence you haven't the margin opportunity. There is tied more to pricing or if it's tied more to the structure of the contract in other words. You know are we looking at more of like on a cost plus type of arrangement. So that the contract better cap shares that the cost side of that.
Yes, and or is it just that you feel you have a better sense and the cost and so it's been big 10 more accurately into maybe more of a unit type agreement.
Yeah, no I'm not going to characterize the agreement with the customers other than to say that what we said in November.
And what we've seen out on the initial work that we've done is that we that we have reached.
Arrangement that more appropriately reflects not only the cost of providing the service, but the risks.
So there's really two dimensions.
Okay got it.
Then any comments on just a sprint T. T mobile spent I should say in the opportunity. They that you see there as it relates to the industry over on the wireless side.
Yeah, I think what we would say no well is that we're encouraged with the recent court ruling that allows the merger to receive has apparently has some state approvals that they're still working through but generally in our industry when the when.
Customers combined and grow larger they create greater capabilities. There are certainly some requirements that T. Mobile agreed to in terms of deploying a broad broadband capable wireless in many parts are rural America that will require more.
Infrastructure.
And I think.
In the past is companies have combined that's created a competition for the other providers and that's generally spurred investment.
As a response so we think that overall, it's a good thing.
Thank you.
And next we'll go to on Blake Hirschman with Stephens. Please go ahead.
Hi, Good morning, guys. Good morning Blake.
Backlog was up nicely quarter over quarter can you give us any sense as to how the margins look on the new work coming and then if they're in line with that kind of low teens low double digits.
<unk>.
Normally expect yes, there are certainly in line with with our our expectations, where the pricing was attractive.
And reflects current cost in the market with existing customers I mean in a number of cases. These were renewals, where we have a detailed understanding of our cost and even in the footprint expansions it tended to be in adjacent service territory. So.
So we feel good about the new awards.
Got it and then on 18 teach fiber to the home.
Thank you said 60 million.
<unk>.
In the fiscal first quarter or at least what's baked into the guide can you.
Kind of remind us.
How that headwind.
For the rest of the year and if it.
And in the second quarter.
Yes, So show Blake, we talked about this back in November it's a little over 60 million in the April quarter, a little over 30 million in the July quarter at essentially negligible.
Thereafter.
Okay.
Alright, Thanks, a lot.
For me.
And we'll go to a Adam Thalhimer with Thompson Davis. Please go ahead.
Hey, Good morning, guys. What would you say your margin expectations are for the back half Steve.
Well I might add them as as you know, we're giving quantitative guidance on the April quarter qualitative.
The July corridor.
We need to get better, but we're not guiding me, we're not in no way or we satisfied with current performance.
But it seems like you're guiding to better.
Trend because you've got a significant decline in Q1 filed by flat in Q2.
And then in the back half you should have this kind of rotation from phase one phase two.
I look at them I think there are certainly elements here that we're working through.
In this challenging period of time to make things better I think the other thing to just keep in mind with respect to the April quarter February's weather has not been particularly helpful and in the southeast and in other regions of the country. So we wanted to make sure that we reflected that prudently in the guide.
Okay and makes sense in other question I'm getting.
From clients kind of during the call is just about the.
Size assays to versus phase one.
And is it kind of a seamless transition does the total revenue from that customer stay flattish.
That transition happens, yeah, and Adam I understand the question I think all we can say at this point as we've done a modest amount of work the customers working through you know the planned for the year in the priorities and we'll report.
Now that's going as we learn more.
Okay. Thank you.
And we'll go to Noelle Dilts with Stifel. Please go ahead.
Hi.
Just with some of the supply chain disruptions, we heard about on the telecom side are associated with current virus any.
Thing concerns that you're thinking about it as it relates to just the availability of equipment and and the supply chain.
Yes, we have not I'm not aware that we've had any issues.
With with any of the equipment that we install I mean, there is a pretty robust supply chain for big Telecom companies, a fair amount of inventory along the way I mean, it's obviously something that bears watching.
But at this point, we've not seen that I think if there weren't impact it would be more around the wireless part of the business in the in the.
In the more construction a master contract related areas I think we have much more construction content less equipment.
How did that makes sense. Thank you.
And we'll go to a Alex we go with B. Riley FBR. Please go ahead.
Quick follow ups, Steve can you remind us what your share buyback authorization is today and whether or not you have any restrictions.
And the to be in the market currently.
Yeah, So Alex what I would say is we have a program that's expiring.
We have the ability to renew it but at this point, we're really focused on operating cash flow funding the organic growth of the business.
Yeah, and getting leverage down.
Thank you.
And we'll know to Jennifer Fritzsche Huh with Wells Fargo. Please go ahead.
Thanks, Steve.
Ask about Centurylink, because I can't Comcast because it really hasn't come up my Chung call and you know they're growing more out of it even since you reported last quarter that broadband pipe you said, it's going kind of risk, especially with quite hot.
Actions I think the numbers like double a non corner cord Cotter are you seeing yet your revenue with Comcast.
It is that a trend back the kind of a car continue to happen or how do you think.
No I think we're optimistic about opportunities with that customer in specific and with the cable industry in general.
I think the numbers that I saw showed that.
The average consumer used 340 gig of data.
In the fourth quarter compared to 270 in the year ago period, and cord cutters were over 500, I think all of the cable operators have talked about in Comcast as specific as commented specifically about pivoting from a video centric strategy to kind of activity and as a pivot those dollars from.
From a GP and other more equipment intensive.
Deploy much we think that's good for our business and I think we'll see a pick up there.
Got it thank you.
And with no further questions in queue I missed the Nielsen I'll turn it back to you for any closing I'll just turn it over to drew for one final comment on some sort of detail. So on the customer split for the quarter. The telco was at 73.8%.
Cable was at 16.8%.
Facility locating was 6.3% and electrical and other was 3.1%.
All right well. Thank you everybody for attending the call will speak to again in a at the end of that thank you.
Ladies and gentlemen that does conclude your conference for today. Thank you for your participation you may now disconnect.
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