Q4 2021 Dycom Industries Inc Earnings Call
Ladies and gentlemen, thank you for standby.
Going to die from <unk> Suisse.
Fiscal 2021 results conference call at.
At this time all participant lines are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
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Now like to hand, the conference over to your speaker today Steven.
President and Chief Executive Officer. Thank you. Please go ahead Sir.
Good morning, everyone I'd like to thank you for attending this conference call to review, our fourth quarter fiscal 2021 results.
Going to slide two.
During this call we will be referring to a slide presentation, which can be found on our website's Investor Center main page.
Relevant slides will be identified by number throughout our presentation.
Today, we have on the call grew debt Ferrari, our Chief Financial Officer, and Ryan Urness, Our General Counsel now I will turn the call over to Ryan Urness. Thank.
Thank you Steve.
The statements made during this call may be forward looking in nature and are provided pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 vs.
These forward looking statements include all comments, reflecting our expectations assumptions or beliefs about future events or performance that do not relate solely to historical periods.
Forward looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections, including those risks described in our annual report on form 10-K filed March 2020, and our other filings with the U S Securities and Exchange Commission.
We assume no obligation to update any forward looking statements Steve.
Steve Thanks.
Thanks Ryan.
Now moving to slide four and a review of our fourth quarter results.
As we review our results. Please note that in our comments today and in the accompanying slides we reference a sure.
Certain non-GAAP measures.
Specifically in accordance with our 50 253 week calendar. This quarter included a 14th week, all references to organic revenue and organic growth excluding the effect of this additional week.
We refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.
To begin I want to express my sincere hope that everyone listening to this call as well as their families are healthy and safe we are living in truly unprecedented in trying times for our country I.
I could not be prouder of our employees as they continue to serve our customers with real fortitude and difficult times. They have my thanks.
For the quarter.
Revenue was $757 million, an increase of one 8% organic.
Organic revenue, excluding $5 $7 million of storm restoration services in the quarter declined six 2%.
As we deployed one gigabit wireline networks wireless wireline converged networks and wireless networks. This quarter reflected an increase in demand from one of our top five customers.
Adjusted adjusted gross margins were 14, 3% of revenue, reflecting the continued impacts of the complexity of a large customer program.
Adjusted General and administrative expenses were eight 5% and all of these factors produced adjusted EBITDA of $45 7 million or six 1% of revenue.
And adjusted diluted loss per share of <unk> <unk> compared to a loss of 23 cents in the year ago quarter.
Liquidity was strong as cash and availability under our credit facility was $575 million.
Finally during the quarter, we repurchased 132 million shares of our common stock for $100 million, representing just over $4, one 5% of common stock outstanding.
Even after the substantial repurchase notional net debt only increased by $14 6 million during the quarter.
In sum over the last four quarters, we have reduced notional net debt by over $275 million increased availability under our credit facility by a similar amount.
And meaningfully reduced shares outstanding.
As our most recent share repurchase authorization has been exhausted our board has newly authorized $150 million and share repurchases.
Now going to slide five.
Today major industry participants are constructing or upgrading significant wireline networks across broad sections of the country.
These wireline networks are generally designed to provision one gigabit network speeds to individual consumers and businesses either directly or wirelessly using <unk> technologies.
Industry participants have stated their belief that a single high capacity fiber network and most cost effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment.
This view appears to be increasing the appetite for fiber deployment and we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden our set of opportunities.
Access to high capacity telecommunications has become increasingly crucial to society and the time of the COVID-19 pandemic, especially in Rural America.
The wide and active participation in the recently completed FCC art off auction augurs well for dramatically increased rural network investment supported by private capital that in case that indication or at least some of the participants is expected to be significantly more than the FCC subsidy.
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 deployed are being provided across the country and numerous geographical areas to multiple customers.
Including customers, who have initiated broad fiber deployments as well as customers, who will shortly resumed broad deployments and with whom order flow has recently increased markedly.
These deployments include networks, consisting entirely of wired network elements as well as converged wireless wireline multi use networks.
Fiber network deployment opportunities are increasing in rural America, as new industry participants respond to emerging societal incentives.
We continue to provide integrated planning engineering and design procurement and construction and maintenance services to several industry participants.
Near term macroeconomic effects and uncertainty may influence the execution of some customer plans customers continued to be focused on the possible macroeconomic effects of the pandemic on their business with particular focus on SMB dislocations and overall consumer confidence and credit worthiness we.
We see some uncertainty in the overall municipal environment as authorities continue to manage the general effects of the pandemic on permitting and inspection processes.
Overall, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.
Moving to slide six during the quarter, we experienced increased demand from one of our top five customers organic revenue decreased six 2% our top five customers combined produced 69, 4% of revenue decreasing 15, 5% organically, while all other customers.
<unk> increased 25, 3% organically.
Cash was our largest customer at 18, 8% of total revenue or $140 9 million Comcast grew 28, 8% organically.
Revenue from AT&T was $126 2 million or 16, 8% of revenue AT&T was <unk> second largest customer.
Verizon was our third largest customer at 15, 7% of revenue were $117 8 million.
Aluminum was our fourth largest customer at $100 5 million or 13, 4% of revenue and.
And finally revenue from Windstream was $36 million or four 8% of revenue Windstream was our fifth largest customer.
This is the eighth consecutive quarter, where all of our other customers in aggregate, excluding the top five customers have grown organically.
In fact, our business with these customers has grown organically by double digits each of the last two quarters.
Of note fiber construction revenue from electrical utilities was $44 1 million in the quarter or five 9% of total revenue.
This activity increased organically, 125% year over year.
We have extended our geographic reach and expanded our program management network planning services in fact over the last several years, we have meaningfully increased the long term value of our maintenance and operations business a <unk>.
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 going to slide seven.
Backlog at the end of the fourth quarter was $6 eight 1 billion versus five for one 2 billion at the end of the October 2020 quarter, increasing approximately $1 4 billion.
Of this backlog approximately $2 787 billion is expected to be completed in the next 12 months the.
The increase in backlog reflects renewals or new awards across a significant number of customers offset in part by adjustments, resulting from further communications regarding the re prioritization and re scoping of the components of a large program.
And our assessment of the expected pace of another component of the same program.
From AT&T, we received extensions as well as awards expanding our covered services across a significant majority of our business.
First construction expansions in Kentucky, Tennessee, North Carolina, South Carolina, Alabama, Georgia, and Florida.
Second extensions for construction and maintenance services agreements in Kentucky, Tennessee, North Carolina, South Carolina, Alabama, Georgia, and Florida third an extension and scope expansion for wireless services in Kentucky, South Carolina, Alabama, and Georgia, and finally, a five year extension for locating services in California.
No.
For Comcast engineering agreements in Michigan, Massachusetts, Pennsylvania, Maryland, Delaware, and Georgia for charter construction and maintenance agreements in New York, and Ohio from Frontier construction agreements in Connecticut, and Florida at our construction maintenance agreement in Florida for Verizon or construction agreement in Texas and <unk>.
Renewal in Maryland, and Virginia, and locating your agreements for various customers in Maryland, and New Jersey.
Head count increased during the quarter to 14276 now.
Now I will turn the call over to drew for his financial review and outlook. Thanks, Steven Good morning, everyone going to slide eight contract revenues for Q4 were $750 7 million and organic revenue declined six 2%.
Q4, 'twenty one included an additional week of operations due to the company at 50 253 week fiscal year.
Adjusted EBITDA was $45 7 million or six 1% of revenue compared to $44 5 million or 6% of revenue in Q4 'twenty.
Non-GAAP adjusted gross margins were at 14, 3% in Q4 and increased 10 basis points from Q4 'twenty.
Gross margins were within our range of expectations for the quarter, but approximately 80 basis points below the midpoint of our expectations. This variance reflected approximately 100 basis points of pressure from a large customer program.
Offset in part by approximately 20 basis points of improved performance for several other customers.
G&A expense increased 25 basis points, reflecting higher performance based compensation offset in part by lower administrative costs compared to Q4 'twenty.
The Q4, 'twenty, one non-GAAP effective income tax rate was 30%, including incremental tax benefits related to recent tax filings for planning purposes for fiscal 2022, we estimate the non-GAAP effective income tax rate will be approximately 27%.
Non-GAAP adjusted net loss was <unk> <unk> per share in Q4, 'twenty, one compared to a net loss of 23 per share in Q4 'twenty.
The improvement resulted from the after tax benefits of higher adjusted EBITDA, lower depreciation and lower interest expense now going to slide nine our balance sheet and financial position remained strong during Q4, we repurchased 1 million 324381 shares.
Of our common stock at an average price per share of $75 51 in.
In the open market for $100 million, our board of directors has approved a new authorization of $150 million for share repurchases through August 2022.
Over the past four quarters, we've reduced notional net debt by $276 4 million, we ended the quarter with $11 8 million of cash and equivalents $105 million of revolver borrowings $421 $9 million of term loans and $58 3 million principal amount.
Of convertible notes outstanding.
As of Q4, our liquidity was strong at $575 million.
Cash flows from operations were robust at $102 4 million, bringing our year to date operating cash flow to $381 8 million from a strong conversion of earnings to cash and prudent working capital management the.
The combined Dsos of accounts receivable and net contract assets was at 136 days, reflecting the impact of a large customer program.
We expect improvement in the DSO metric in fiscal 2022 as the impact of this large customer program declines cash.
Capital expenditures were $24 million during Q4 net of disposal proceeds and gross Capex was $21 9 million.
Looking ahead to fiscal year 2022, we expect net capex to range from $150 million to $160 million.
In summary, we continue to maintain a strong balance sheet and strong liquidity going to slide 10.
As we look ahead to the first quarter of fiscal 2022, we expect our results to be impacted by the adverse winter weather conditions experienced in many regions of the country.
For the quarter ending May one 2021 as compared sequentially to the quarter ended January 32021, the company expects contract revenues to range from in line to modestly lower and non-GAAP adjusted EBITDA as a percentage of contract revenues to range from in line to.
Modestly higher.
The company believes the impact of the COVID-19 pandemic on it's operating results cash flows and financial condition is uncertain and unpredictable and could affect its ability to achieve these expected financial results now I will turn the call back to Steve. Thanks drew moving to slide 11.
Within a challenged economy, we experienced strong award activity and capitalized on our significant strengths.
First and foremost we maintained significant customer presence throughout our markets. We are encouraged with the emerging breadth in our business.
Our extensive market presence has allowed us to be at the forefront of evolving industry opportunities fiber deployments, enabling new wireless technologies are underway in many regions of the country.
Telephone companies are deploying fiber to the home to enable one gigabit high speed connections increasingly rural electric utilities are doing the same.
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.
Deployments to expand capacity as well as new build opportunities are underway.
Dramatically increased speeds to consumers are being provisioned and consumer data usage is growing particularly upstream.
Customers are consolidating supply change, creating opportunities for market share growth and increasing the long term value of our maintenance and operations business.
As our nation and industry continued to contend with the COVID-19 pandemic. We remain encouraged that our major customers are committed to multiyear capital spending initiatives. We are confident in our strategies the prospects for our company the capabilities of our dedicated employees and the experience of our management team as we navigate.
<unk> times now.
Now operator, we will open the call for questions.
Thank you.
The other to ask a question you will need to press star one of your telephone withdraw your question press the pound key.
Jim Molloy from joining roster.
Our first question comes from Adam <unk> with Thompson Davis <unk> Company. Your line is open Hey, good morning, guys, Hey, good morning, Adam.
Steve The biggest question I am getting this morning is why is the Q1 margin guidance not a little bit better now that the large customer program is coming towards the end.
Well I think as drew talked about it in his comments February has certainly not been was not a good weather month.
And there are costs associated with the with closing out markets and.
In collections and that's what we're working through.
And we're working through trying to get through it as quickly as we can.
Okay, and then what's the correlation between.
Capex and revenue because your Capex is.
Way up year over year, and 22 and at the highest level in about four years. So.
So just curious how we should read that in terms of the timing of revenue growth.
Well.
We are clearly managed capex tightly in fiscal 'twenty, one we have a number of opportunities to grow the business and have booked new business until we'll invest to support those opportunities just like we have in the past.
And then just from your prepared comments, Steve you mentioned, a large increase in order flow I didn't quite cash that was that in our das comment or not.
Well, we won't tell you exactly what what customer Adam, but I would just say that there is lot of industry focus on fiber to the home. So you have at&t's announcements frontier Zipadelli, who acquired the northwest territories from frontier as well as rural and so just.
As an example, just in the last quarter for our rural customers.
We completed about 2800 miles of fiber to the home.
And then for a large customer who is just really starting up.
We are holding orders for over 600 miles of fiber to the home with them. So there's a lot of activity.
Just beginning right now.
Okay I'll turn it over thank you.
Thank you. Our next question comes from Alex Rygiel with B Riley.
Yes.
Thank you good morning, Steven Drew drew you mentioned that you're hopeful that dsos improved in the calendar year can you help us to better understand the pace of that improvement and possibly quantify it for us.
Go ahead yeah.
Alex as I talked about in the remarks.
It was impacted by the large customer program I think a few.
Control for that kind of the all other was up a little bit year over year.
But.
Certainly as the impacts of that large program.
Klein.
Would expect it to get better.
And I think Alex just to add to that so as the as the pace on that program declines were not adding to the investor base at near the rate that we were and so as we worked through the collection issues, we expect the balances to come down.
As we work our way through the year.
And so what does the timeline look for the piece of those declines in those projects coming to completion.
So I would say this year, we expect to make real progress. This is a program that's been large and complex it's evolved a number of times.
We're working hard we'd all like it to be sooner rather than later, but but we're not going to be able to commit to more precision we'd like to just be able to get on the call will not have to talk about it anymore.
And then lastly, you've made a number of favorable comments here with regards to the opportunities in rural America, and private capital coming into the marketplace.
How do these new customers compared to traditional telcos.
They have internal capabilities or are they looking to sort of purely outsource all types of construction activities.
Yes, that's a great question, Alex So, let's talk a little bit about the work that we're doing for electrical utility so that was.
Just over $44 million in the last quarter up 125% organically year over year and typically those clients are new to the business, but theyre not theyre not new to serving rural America and so they have <unk>. They have ownership of poles, they have access to right away, but they typically.
Outsource the engineering, the planning and the construction.
And we're hopeful that there will be maintenance opportunities that follow behind.
Because they are in.
In their current businesses. They don't have the skill sets to maintain.
Telecommunications networks.
Thank you very much.
Thank you. Our next question comes from Brent Thielman with D. A Davidson your line is open.
Hey, Thanks, Good morning, Hey, Brian.
Hey, Steve It's looking just for a little more context around the FCC.
Auction I mean, obviously it I think it's going to be impactful for your business, but just curious in past experience how long does it typically take your customers to really get moving something like this where we can really see it in the numbers.
Well, it's interesting Brian that that some of the recipients or at least appears the process isn't completely closed. So so theres still some things are working through but in a number of instances. The recipients are people that we have been working for either on their own capital.
<unk> or in some instances, where they received cares act funding.
Under last year's stimulus and so I think part of the acceleration that we saw in the quarter is not necessarily our golf directly fund.
<unk> funded because that's not done yet, but people who based on where they came out in the auction feel increasingly confident about.
There are programs and the scale and the scope of what theyre going to build.
Clearly I think if you look at some other public comments.
From some other larger participants they talked about getting underway in the second half of the year.
Okay. That's helpful. And then yeah, obviously, it seems like Theres more discussion around the industry order activity and where it's taken up more recently.
I guess I wanted to come back to some of their early stage challenges that.
You, all and others have talked about in the past permitting a local level staff you've got to work through.
Do you think thats going to remain a hangar to deployment here as we move through 2021 has there been a lot of progress on that front.
So Brendan you really have to think about it in a couple ways to the extent that the programs are for existing customer.
Customers that have an existing footprint and existing franchises. There are always challenges to large startups, but there is somewhat different from those that somebody would have who's starting afresh. So as a simple example.
If I'm deploying aerial fiber cable and I can lashes to an existing cable, but the customer pre owned.
Lot quicker process to get started than if I have to secure the rights to attach the polls in an area, where they don't have a franchise.
Or in the process of getting a franchise.
So I think if you look at the nature of the awards that we've talked about in our comments generally we're building for people that are in the business already in a geography that they already serve or in the case of these electric utilities Theyre actually poll loaders.
So I would not say that it's ever going to be easy. These are big undertakings, we've got to.
To be.
Closely monitoring developments, but I think that it's a little bit different so the other thing I would tell you is that.
And good for the Oems there are a lot of fiber orders right now and so we're closely monitoring delivery intervals.
As they gear up more manufacturing capacity.
Right Okay.
Yes. The last one just had to ask around the big share repo. Just this last quarter, you, obviously see a lot of value and yourselves, it's been pretty quiet on the M&A front.
Can I take that as a statement you don't see as much deal.
Out there and other entities as mentioned you see in yourself right now.
Well I think as we've always said we were able we had a great year for reducing net leverage we got below two times.
We always want to fund organic growth.
It's the best way to create value for shareholders, but after we make sure that we have that capability.
We're going to look to M&A versus share repurchases.
And I think if you if you look at the number of awards and the strategic nature of a number of them.
Much rather own a piece of those than somebody that didnt get those awards.
[laughter].
I appreciate it thanks, Steve Thanks drew.
Thank you. Our next question comes from Eric <unk> with Wells Fargo. Your line is open.
Great. Thanks for taking the question so Steve two of your largest customers AT&T and Verizon just spent.
$80 billion at the C band auction.
And Verizon to us with maybe a little bit of a surprise to the upside. So have you seen any impact from them in terms of re prioritizing you're pushing out some other capital projects as they clearly need to kind of focus on deleveraging the balance sheets in the near term.
Eric I think we started talking about this probably last summer and fall there clearly has been an impact.
In wireless spending generally as you have a big auction.
Although I'm not sure anybody knew how big the auction would be last fall.
I think as the customers worked through.
The actual close of the auction.
I think the new spectrum is always created.
New opportunities for our industry.
They've got it once they buy it they've got to deploy it.
That requires new new installation of equipment at existing sites it requires new sites.
Given the propagation characteristics, it's going to create a need for more sites and cell site densification.
So.
On the one hand I'm sure they would have been happy to pay less but we're encouraged that they have the conviction to pay more because we know in order to create value it's gotta get deployed.
Yeah got it makes sense Tom.
One more from me so it's somewhat related to <unk> charter had recently announced the 5 billion other broadband buildup early areas.
Haven't been one of your top customers.
But just wondering net for such a large capital program. If you kind of engage with them and if you see kind of additional opportunity for.
For them in additional debt. In addition to Comcast has obviously been one of your one of your top customers for some time.
Yes, Eric.
We're not going to comment on any individual customer about.
Current opportunities, but I would say that we were encouraged generally by the art off results in the information that charter provided the market is really interesting. So the original art auction had about $20 billion to be supplied to the as a subsidy from the FCC over 10 years.
The first auction was expected to.
To require 16 billion then there is another $4 billion coming along the first auction actually cleared at $9 billion, which indicates how much private capital saw the value in rural assets and so as you highlighted charter for one.
Received will receive about $1 billion to an FCC subsidy, but is willing to spend kind of $3 for every dollar that they're receiving from the FCC.
And while we don't have clarity from others to the extent that charters disclosed it.
I think it is encouraging.
A data point for those who have followed the company for a long time in 2009.
There was a stimulus program under the Obama administration that had about.
$657 billion of rural broadband spending that we participated in.
It's amazing to me the charterer alone is committing to call it 80% of that number.
And they were only about <unk>.
10, 15% of the total.
Receipts of the subsidy under the first round of Argos never mind subsequent rounds.
Okay.
That's great color.
Thank you. Our next question comes from Noelle Dilts with Stifel. Your line is open.
Hi, Thanks.
Firstly I just had kind of a housekeeping question could you comment on the timing of the share repurchase in the fourth quarter.
And sort of how we should think about the share base moving forward.
And to answer the first part.
Yes, Noelle, we're not going to provide any color other than as drew said it was not open market. We did not use an accelerated buyback we did not do anything via tender.
Yes, and then Noel just just for planning purposes for the diluted share count in Q1 of fiscal 'twenty, two we're estimating $31 3 million diluted shares okay.
Great.
Sure.
And then Steve I know for a long time, we sort of talked about.
This idea that as you start to see more consistent spending out of your customer base.
Really when we could start to see.
The margins pick up and move toward.
Historical peaks it sounds like we're starting to get there.
So as you sort of look past the weather impact in the first quarter and the completion of this large customer program is there anything.
You should keep in mind that sort of changed relative to history or do you think you can get can get back to that kind of 12% plus margins that we were seeing in <unk>.
You've been closer to 13, plus that we were seeing in 2016 and 2017 calendar year.
So noelle, but not surprisingly, we're not providing guidance, but I think there are a couple of things that your question highlights that are interesting. So for example, this is the first quarter in many years that our top five customers represented less than 70%.
Total revenue so we are seeing.
Breadth of the customer base, if you look at.
Frontier simply in a number of other customers or the fact that if you aggregate services to electric utilities for fiber.
For the quarter was about five 9% of revenue.
So it would have been our fifth largest customer if we aggregated them.
I think the other thing to keep in mind and once again, we're not providing guidance no guarantees here, but if you look at the footprint that we have with AT&T today.
It is actually has expanded geographically.
From where it was in 2015 and 2016.
Both on the wireless and the wireline side.
So so clearly we have to execute we've got to get the job done, but there is more potential in the business.
With that particular customer.
Then there was in the past.
Okay, great Yeah that makes sense from that's helpful. Thank you.
Yeah.
Thank you. Our next question comes from Jon Lopez with vertical group. Your line is open.
Yeah.
Hey, thanks very much.
Two the first I guess is sort of a clarification, Steve you mentioned the order flow.
You had some commentary around order flow.
Also had what was a pretty nice uptick in backlog.
I guess the thing I want to make sure I just hear a little more about is are these sort of separate.
So in other words was there a nice uptick in backlog.
And there is order flow or was there a nice uptick in order flow and that resulted in the backlog.
Sure John.
Happy to clarify so think about it this way the backlog is the initiation of new contract or extension or expansion of existing contracts.
Order flow was what we're holding so so we have electronic.
Connections back and forth with our customer and this is actual orders where we have.
Work order numbers, we have locations we have quantities.
Debt, we received that we have to get the material in with cable place those things, but that those are specific identified locations, where we will provide services underneath the contracts for which we have backlog.
I understood Okay. Thanks for that clarification.
Second one I just wanted to come back to the large customer program and I guess I just wanted to ask the question this way.
I suppose from my perspective I sense.
A couple of months ago lets say six nine months ago, maybe just a little more confidence in the timing of what you used to call. This shift from like phase one to phase two.
I guess my question in between then and now you've had some re scoping and obviously theres been some complications I suppose my question for you has anything re scoping or otherwise.
Fanged, either the expected benefits or the timing around sort of that cutover.
Well, John just to be clear, we've only talked about the initial arrangement under that large customer program and then subsequent arrangement. So.
Kind of Wall Street construct of phase one phase two.
One.
At least the way we think about the program. What we would say is and I think this has been evident in commentary by.
That particular customer is that there seems to have been.
Somewhat.
Elongation over the period of time or the pace at which they're going to build the program.
And the example, I would give you John is that we did a very large fiber program per customer that started in 2003.
We're still doing work on that program today.
And there have been periods of times, where it was busy and slow and back end and I think thats, where this large customer program ultimately is.
Or at least where it is right now I got you I got you that helps sorry, one very last one and I apologize I might make you repeat something you said earlier, but this bucket the sort of fiber activities for electric utilities.
Which is now mid single digits plus of your revenue.
I guess I'm wondering underneath that sort of within that bucket can you just give us a rough feel for like how many customers you're dealing with there and is there the potential for I don't know any one two or three of them to eventually on their own become let's say material contributors like low single digit type contributors.
<unk>.
John It's a little early to tell but what I would say what we're seeing now is it dozens of individual utilities.
They don't overlap one and other geographically, but they're often adjacent to one another and so there are times, particularly if you look at the <unk>.
Consortiums that were pulled together to bid on hard off where they have worked together to secure funding.
And to have their programs manner.
Managed and Bill.
So it's unlikely that any single customer would be a substantial or even a low single digit, but if you you might have six or eight.
Electrical co ops that all serve one portion of the state that if they aggregated together.
Would be would be significant.
Got it really helpful. Thanks very much.
Thank you. Our next question comes from Alan with Johnny with Sylvan Lake Asset management. Your line is open.
Hi, Thanks, just a couple of busy questions did I Miss the split between telco and cable strategy.
Yes, Alan I'll answer that so telco was at 63, 8%.
Cable was at 23, 8% facility locating was seven 8% and then electrical work and other was four 6%.
Thank you.
And also.
Your unnamed customer has been filling up some of your capacity the last couple of quarters, making almost more than charter is this what I worry about is that customers very finicky and it seems like it goes from spending money to net spending at all.
Is this a one off or do you think there's more of a consistent program there that we can forecast out.
I think generally Alan as we said earlier on the call there is.
Hard to understate, how much interest there is in fiber to the home right now.
So if you think about the rural markets you think about the number of change of control transactions are significant strategic investments that have been made.
In rural operators as well as.
The large programs like the program that AT&T has talked about or frontier.
And so at least.
My sense is that that the industry is coalescing.
Around the view that this stuff is important and it's valuable.
That doesn't mean customers won't go up and down or rethink strategies, but in that case that particular customer has been at it now for seven or eight years.
Mike and.
And its sheer speculation is that theyre, obviously more comfortable with it today.
As they have been operating the business for a period of time than they might have been three or four years ago.
Okay.
So do you have the percent of the business that was wireless this quarter with the revenue was yes. It was about six 5% Alan so as a percentage was up a little bit.
From last quarter.
Slightly down.
Sequentially on revenue.
Okay, and then lastly on the problem customer contracts that you've had for a while and you're working through.
That customer one off lot of debt on a lot of spectrum, but it's not going away.
How do we as shareholders deal with the fact that you'll be working with them forever pretty much and how do we not get into a similar boat in the next 12 months or more as they start letting out a lot of contracts start.
Connecting with all of the spectrum that they bought.
What have you learned and how can you do it differently.
Alan I think what we'd say is we have learned I don't know that we're going to talk about publicly exactly what we've learned but we always take into account what we learn as we work through programs.
In challenging programs typically create capabilities that debt or to return sometimes for that customer, but oftentimes for another customer.
So as challenging as that program has been.
We've created more talent better systems, more focus and will be a better business because of it it just hasnt been a lot of fun.
Okay, and then I just wanted to thank Tim for all of his work over the years. It was good to get to know him if he's still if he's on the call and wish him best in his next endeavors.
Much appreciated and it will be.
His next call, which will be his last call.
Thank you.
Thank you once again, ladies and gentlemen, if you wish to ask a question at this time. Please press Star then one or it has some telephone our next question as follows from Alex Rygiel with B Riley. Your line is open.
Steve in the 90 S electric utilities invested heavily into telecom.
How is this developing cycle different.
Alex it's been a long time ago that there was a little bit of investment by electric utilities I recall about 20 years ago. They had this technology that they were briefly.
Interested in to where they could do a day.
Data over power lines in this particular case this is traditional rural utilities, they own Poles theres typically.
Limited cable TV.
Competition in telco.
Networks that may or may not have been upgraded.
And I think what's different this time around is that the technology around fiber to the home, particularly using G. PON is pretty settled.
And it is clearly something that people are comfortable investing in.
Thank you.
Thank you. Our next question comes from Sean Eastman with Keybanc capital markets. Your line is open.
Hi, This is Alex on for Sean Thanks for taking my questions.
So I'd start off by asking.
The operating environment currently as we sit today compared to the first wave of Covid.
Is it tougher to get labor on site move people around or how to frontline's adapted from the job site productivity perspective.
Just any thoughts on this would be helpful.
Sure.
Good question, so so in our business we track.
Incidents and we tracked positives and I would tell you that we saw the curve inside the company looks a lot like the curve for the country and so clearly cases have declined over the last month, but there were periods of time in January where we had over 200 people or 200.
Employees that were quarantined.
Because of the impact of Covid. So we're we're encouraged it's coming down.
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For the vaccine.
More broadly available.
Be happy to be looking at this in the rearview mirror, but it still has an impact in the business, we got to pay attention to obviously the variance.
And other things could change that outlook, but but we are better today than we were six weeks ago.
Got it.
And then aside from the broader macro implications.
What are you tracking from a legislative perspective from this new administration that could impact the industry specifically.
As the potential for rural broadband and the primary one or is there anything else you would highlight.
Well theres been lots of discussions.
Discussions in Congress about potential subsidies for rural broadband.
It has come and gone in and out of bills. So I guess at this point, we're paying attention to them, but I think we're probably more encouraged by the art off.
Outcome, just because of the substantial amounts of private capital.
So that auction.
Here's to have attracted.
And so anything that we would get on top of that would just be incremental not not.
Not based to the way, we're thinking about the business.
Thank you I'll hop back in the queue.
Thank you. Our next question is a follow up from Noelle Dilts.
Stifel. Your line is open.
Hi, guys. This is sort of a basic question so I apologize.
When you start to look at doing more of this rural work is there a way that we should be thinking about the addressable construction content that.
You know materially different from what you might see in a suburban Dallas, obviously, there's much more distance covered but there are fewer.
Obstacles or disruptions is there a way we should be we should be thinking about the addressable content per U S. URL becomes a bigger part of fitness.
Sure Noelle good good question. So so typically rural will be more aerial and less barrick because.
Theres just more room on hold split less they're less congested.
I would I would point you to some other charters disclosures they talked about the number of locations that theyre going to serve they talked about how much money they expect it.
To take there's been some speculation on the other.
The sales side in terms of how many miles a plant that would require and I think thats probably.
They and other art off recipients I think youll see more disclosure there theres also been.
A small investor owned.
Telephone company consolidated that announced a build funded in part by an investment by private equity.
That would give you some idea of cash.
I have a blend of suburban and rural so those would be the two places to look.
Okay.
Okay.
Thank you our next total that comes from Adam Delaware.
Im from Davis and company your line is open.
Operator, we don't have Adam do we have any other questions.
Oh, sorry about that Hey, Steve I wanted to see if I can get your help on a couple of specific customers.
Starting with lumen.
They were up a lot in the first half down a lot in the back half, which I think you telegraphed flat for the full year.
Is flat a good expectation for 'twenty two.
Well again, we're not providing guidance I think with respect to aluminum.
<unk> had some public comments that they are committed to their fiber to the home program, they're extremely disciplined about how they're deploying capital.
And they've also commented that as they work through their Caf II.
Commitments through the balance of this calendar year that they that they provided some commentary that they would look to.
Rotate the resources that have been supporting the Caf II deployment.
Into their fiber to the home strategy.
I think in general.
Encourage that they're committed to it they are extremely discipline, they are careful and where they deploy capital to make sure. It gets a good return.
Okay and then.
What do I do with horizon.
As a large program comes out how.
How do we think does that go to some kind of a maintenance level I know you do kind of $300 million of east coast maintenance work.
Or is there kind of follow on work from the large program that gives your growth versus the maintenance level.
Look at them I would say that we're heavily focused.
On.
With a large customer program on closing markets getting the collecting the cash I think there will continue to be opportunities under that program that stretch for a long period of time, just as other programs have like the <unk> program.
But it's too early for us to focus on that.
We're much more focused on the closeout and the collections and clearly we'd like to grow business with them, but right now thats, where the focus is.
And clearly there is plenty of other growth opportunities in the industry broadly.
Okay. Thanks for the help.
Yes.
Thank you and I'm currently showing no further questions at this time I'd like to turn the call back over to Steve Nelson for closing remarks, well, we appreciate everybody's time and attention on the call and we look forward to speaking to you at the end of May. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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