Q4 2023 Dycom Industries Inc Earnings Call

March 1, 2023

Macroeconomic conditions, including those impacting the cost of capital may influence the execution of some industry players.

In addition, the market for labor remains tight in many regions around the country.

Automotive and equipment supply chains remain challenged particularly for the large truck chassis required for specialty equipment.

Prices for capital equipment continued to increase.

It remains to be seen how long these conditions may persist.

We expect demand to continue to fluctuate amongst customers, but are encouraged that several have newly initiated or reiterated their commitment to programs of significant size and duration.

Within this context, 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 organic revenue increased 25% our top five customers combined produced 65, 8% of revenue increasing 24, 4% organically.

<unk> increased from four of our top five customers all other customers increased 13, 6% organically.

AT&T was our largest customer at 22, 5% of total revenue or $206 $6 million. This was our eighth consecutive quarter of organic growth with AT&T.

<unk> was our second largest customer 12% of revenue or $110 3 billion Rubin.

<unk> grew organically 64, 6% excluding operations sold a bright speed from the year ago period.

This was our fourth consecutive quarter of organic growth with Loopnet.

Revenue from Comcast was $98 7 million or 10, 8% of revenue Comcast was <unk> third largest customer.

Frontier was our fourth largest customer at 97 5 million or 10, 6% of revenue.

Frontier grew 152, 8% organically.

And finally, Verizon was our fifth largest customer at $95 million or nine 9% of revenue.

Verizon grew 17, 6% organically this was our second quarter organic growth with Verizon.

This is the third consecutive quarter, where our top five customers grew organically in excess of 20% and the 16th consecutive quarter, where all of our other customers in aggregate, excluding the top five customers have grown organically.

Of note fiber construction revenue from electric utilities was $74 9 billion in the quarter and increased 34% year over year.

We have extended our geographic reach and expanded our program management and network planning services in fact over the last several years. We believe we have meaningfully increased the long term value of our maintenance and operations business, a trend, which we believe will parallel our deployment of gigabit wireline direct at wireless wireline converged.

<unk> 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 $6 141 billion versus $6 $1 6 billion at the end of the October 2022 quarter, an increase of $25 million of.

Of this backlog approximately 345 9 billion is expected to be completed in the next 12 months.

Backlog activity during the fourth quarter reflects solid performance as we book New work every new existing work, we continue to anticipate substantial future opportunities across a broad array of our customers.

During the quarter, we received from Illumina fiber construction agreements in Nevada, Utah, Nebraska, Iowa, and Florida or.

Or bright speed construction and maintenance agreements in Kansas, Ohio, Pennsylvania, New Jersey for Julia <unk>.

In North Carolina from charter rural fiber construction agreements in Missouri FSC.

Various utility line locating agreements in Ohio, New Jersey, Maryland, and Georgia, and various rural fiber construction agreements in Washington, Nevada, Oklahoma, Missouri, Arkansas, Tennessee, Mississippi, South Carolina and Georgia.

Count was 15400 path now.

Now I will turn the call over to drew for his financial review and outlook.

Thanks, Steve and good morning, everyone going to slide eight.

Contract revenues were $917 5 million and organic revenue increased 25% adjusted.

Adjusted EBITDA was $83 1 million or nine 1% of revenue compared to $43 3 million or five 7% of revenue.

This reflects an improvement of 337 basis points compared to Q4 'twenty two.

Gross margin was 16, 5% of revenue compared to 13, 8% in Q4 'twenty to the.

The increase of 278 basis points reflects improved operating performance at a higher level of revenue in the current period.

G&A expense of seven 8% improved 53 basis points compared to Q4, 'twenty two from improved operating leverage and tight management of costs.

Net income was <unk> 83 per share compared to <unk> <unk> per share in Q4 last year.

The increase in earnings reflects higher adjusted EBITDA, lower depreciation and amortization and higher gains on asset sales, partially offset by higher stock based compensation interest expense and taxes.

The effective income tax rate of 22% this quarter was slightly below our expectation looking ahead to Q1, we expect an effective income tax rate of approximately 26%.

Going to slide nine our financial.

Position and balance sheet remains strong we ended Q4 with $500 million of senior notes $332 5 million of term loan and no revolver borrowings.

Cash and equivalents were $224 2 million and liquidity was strong at $757 8 million or.

Our capital allocation prioritizes organic growth, followed by opportunistic share repurchases and M&A within the context of our of our historical range of net leverage.

Going to slide 10.

Cash flows from operating activities were strong at $246 2 million in Q4 capital expenditures were $62 3 million net of disposal proceeds and gross Capex was $65 2 million.

Capital expenditures net for the full year of fiscal 2023 or $183 6 million looking.

Looking ahead to fiscal year 2024, we expect net capex to range from $220 million to $230 million.

During Q4, we repurchased 210000 shares of our common stock for $20 2 million.

The combined Dsos of accounts receivable and net contract assets was 108 days a decrease of four days sequentially as we had solid collections from customers during the quarter.

Going to slide 11.

As we look ahead to the quarter ending April 29, 2023, we expect contract revenues to increase mid to high single digit as a percentage of contract revenues as compared to Q1 of last year.

And non-GAAP adjusted EBITDA percentage of contract revenues to increase modestly compared to Q1 of last year.

We also expect $10 6 million of net interest expense, reflecting higher market interest rates compared to the prior year period and an increase in interest income lastly, we expect a 26% effective income tax rate and $29 8 million diluted shares now I will turn the <unk>.

Call back to Steve Thanks, drew moving to slide 12, this quarter, we experienced solid activity and capitalized on our significant strengths first and foremost we maintained significant customer presence throughout our markets. We are encouraged by the breadth in our business.

Our extensive market presence has allowed us to be at the forefront of evolving industry opportunities.

Allophone companies are deploying fiber to the home to enable gigabit high speed connections increasingly rural electric utilities are doing to say.

Dramatically increased speeds for consumers are being provisioned and consumer data usage is growing particularly upstream.

In fact during the fourth quarter gigabit connections doubled to over 25% of all broadband subscribers.

Wireless construction activity in support of newly available spectrum bands continues this year.

Federal and state support for roll deployments of communications networks is dramatically increasing in scale and duration.

Operators are increasing fiber deployments for rural America capacity expansion projects are underway.

Customers are consolidating supply chains, creating opportunities for market share growth and increasing the long term value of our maintenance and operations business.

As our nation and industry navigate economic uncertainty, we remain encouraged that a growing number of our customers are committed to multiyear capital spending initiatives. We are confident in our strategies the prospects for our company.

Capabilities of our dedicated employees and the experience of our management team.

Now operator, we will open the call for questions.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Steven Fisher with UBS.

Thanks, Good morning, So Steve it sounds like you still have a positive view of the bigger picture cycle on fiber investments can you just maybe give us some sense of of how you see the rest of the year playing out after Q1 is to what extent do you think.

That range of outcomes has narrowed a bit now.

Your language is a bit more positive than last quarter I'm. Just curious how you kind of see that the net of some customer puts and takes on some of their comments.

Sure Pete.

Obviously, there has been lots of commentary in the industry about how calendar 'twenty two finished and how people are thinking about calendar 'twenty three.

Research just this week.

That had about $6 6 million homes completed.

In 'twenty to an expectation of about seven 5 million homes. This year, so a nice increase.

I think thats something that that we certainly see as as an opportunity in the business for us to grow.

We also are encouraged about and customer commentary on their earnings calls.

Our analyst days, where they either initiated a reiterated commitments to programs.

Pretty significant size in duration, so it's a year.

Obviously no.

No guarantees but.

We feel pretty good.

In this year.

Based on the <unk>.

Everything that we see.

Okay.

And then I guess from a margin perspective, it seemed like some of the customers, where maybe pulling back on the number of fiber passengers just because of the costs were higher and I'm curious how you see that playing out through your margins are you kind of passing along dollar for dollar inflation and Thats may be a drag on the margin percentages.

Yes.

Or can we expect maybe some acceleration in margins over the course of the year.

It seems like you should now be done with with that challenging legacy projects Youre getting higher scale of revenues just curious how you see the margin trajectory from here.

Yes, I think Steve with respect to kind of our customers' cost of past I mean, there is lots of inputs into that calculation, we're certainly one of them.

I think at least in our experience and this is not for any specific customer but generally.

Their costs reflect the mix of types of work that they are performing.

Aerial work is obviously less expensive been buried work.

Work for up to serve multiple dwelling units as comparable to Ariel.

And so from our perspective.

We are comfortable with where we are with customers.

We're having good conversations and I don't think we would we would characterize them any more than that but.

But we have seen.

Fluctuation in the overall number.

Cost per homes past over time.

I think with respect to the margins I mean, we certainly will have less margin headwind as we've talked about before out of this closing out of this large customer.

Program, we've had good conversations about the cost of the business right now in that period of time, where where labor is tight.

No guarantees, but again, we feel optimistic about this year.

Great. Thank you.

Our next question comes from the line of Adam <unk> with Thompson Davis.

Hey, good morning, guys, great great quarter.

Good morning, Adam.

Hey, Steve.

The unnamed customer this is actually your best quarter from them and it was the January quarter is there anything.

Our lineup for this year that would cause you to expect growth there.

Again, Adam I, just reiterate what we were talking about with steep is that there have been a number of customers that have publicly.

<unk> talked about expanding their programs either in markets that they currently serve or or in expansion markets and we're pleased to participate where we can provide good valuable service.

And then just hoping to get some color on bright speed curious if.

And the revenue that you reported in Q4.

It was kind of legacy maintenance work and then you also had a bunch of.

The new territories announced with then.

I'm curious if they are kind of on the path to be.

I guess the question is I know you're on a path to be a top five customer.

Well I don't know that we ever speculate Adam who is going to be in or out. We hope everybody goes up and that we get our fair share of the business. The states that we announced this quarter are really an extension of our current maintenance agreements you might recall a couple of quarters ago, we've talked about some.

Some fiber awards with them in four states.

Those projects are underway.

They are very focused on deploying fiber at a very experienced management team we've worked with.

With them, where they were.

We're with other folks in the industry.

And.

We're working hard to meet their expectations every day.

Got it I'll turn it over thanks.

Our next question comes from the line of Alex Dwyer with Keybanc capital markets.

Hi, guys. This is Alex on for Sean Good morning, Thanks for taking my question.

So I guess I guess your Capex in theory came in higher.

Higher than the high end of your range for this year.

Thank you guys are waiting on a pretty sizeable equipment owner as the last corner.

And then in your Capex guide for this upcoming year reflects quite a bit of growth.

Can you just talk about what this increase in spending.

This is about your growth expectation.

And maybe the equipment supply chain conditions.

Sure. So we were pleased in the fourth quarter Alex that.

We received a little bit more equipment, but what we had expected when last we talked.

I think we had said on last call. If it all showed up we'd be happy to put it to work and so we got.

We certainly did receive a little more than we expected.

We have a positive bias on investing in the business organic growth supported by Capex is always a good use of it.

The cash flow that we generate in the business I think I just checked yesterday, we have an excess of $86 million of capital equipment on order right now so we continue to order equipment.

Delays are.

Or deliveries are long cycle. So we're trying to anticipate where we need to order equipment and.

And continue to try to meet the needs of the customers.

By investing in the business.

Got it and I just wanted to ask about cable and it looks like the path things in Capex growth expectations for 2023 are pretty robust across a couple of your key customers.

Just curious what you're seeing from the cable companies. If there is any change in how youre thinking about the cable opportunities that going forward.

Sure.

Theres certainly been some.

Pretty good increase in expectation of around the technical upgrades to their equipment.

So with a capacity expansion.

That's less construction intensive but something that we're pleased to participate in and then I think they are.

Generally the cable industry has been reasonably aggressive or maybe really aggressive around fiber deployments in rural America.

Theres lots of state level funding that's available.

Prior to the beat funding and we're encouraged with the opportunities that we're seeing.

For cable operators as they edge out their networks into rural America.

Thank you.

Our next question comes from the line of Brent Thielman with D. A Davidson.

Hey, Thanks, Good morning, Steve Q team.

Steve I mean this is the best January quarter margins I think we've seen through 2018, and I guess Im wondering R&D.

Inflationary headwinds you've seen in past quarters. Thank.

Secondly, negligible at this point when you look at it from a year on year comparison or indeed.

When you cross that line where.

Thank you Lee.

Beyond you.

Certainly labor is still tight it's a little bit easier to secure that it was last summer, but I think what I'd point to.

More than that Brent was we have pretty solid November December period, and then than january's weather not everywhere, but generally.

Was unseasonably good so it allowed us to really address.

Substantial amount of work.

So so so good solid performance.

And the first couple of months and that just really much better weather.

On average not California kind of the Rocky Mountains, but.

The bulk of the country, just a little better.

<unk> at which to operate.

Okay, and then I guess a question on cash flow.

To the extent that you do see growth moderate from 20%.

Thank you me what the guidance is suggesting.

Should there be any change to potential sequence of cash flow.

In fiscal 2024, maybe compared to what we saw in 2023 and then also as their.

Maintenance capex level to think about for your business, we think about what.

You are putting into year end 'twenty four.

This is Pat.

So let me take the second question that will pass that to drew so I think historically maintenance capex is somewhere around 40% of the spend.

Little harder to identify.

In the current environment, Brent because we did extend useful lives of some of our assets just because we couldnt get replacements, we've always had a pretty.

We've had we have a well maintained fleet. So we were able to do that.

And so so I think it may be a little bit higher number now, but still there is a substantial proportion of the capex is for growth.

And then drew breath. So if you look at the balance sheet.

We're thinking the outlook is on revenue so we do see some growth there.

But with Dsos they got better this quarter. They were at 108 days, we continue to work on that as a factor, but this was after a year, where we had 20% organic growth.

Florida put a point on it for at $677 $8 million of organic growth.

Yes, certainly.

Certainly.

Put some demands on working capital.

But we finished the year strong in terms of cash collections were able to improve on the DSO sequentially. So pleased with that.

Okay.

We anticipate those dsos continue to come down.

Okay.

In a business that's grown as rapidly as we have and with customers that are growing their own infrastructure to support these growth rates.

All working hard to get the bills and to get the cash in.

And so we can always do better.

Okay. Thank you guys.

Our next question comes from the line of Noelle Dilts with Stifel.

Hi, Thanks.

So Steve this is <unk>.

Conference call.

It seems to me to have a decidedly more positive tone than you did at the third quarter and it turned out that your fourth quarter guidance.

With conservative from both.

As Ken pointed out.

And a margin improvement standpoint, so can you kind of help me understand.

The key factors that sort of changed and.

That that drove some of the outperformance relative to the.

The kind of the third quarter call and what's driving some of that confidence I understand you said several of your customers reiterated.

Reiterated plans, but I'm curious if there's anything a little bit more specific that helped to drive the outperformance.

Well I think that well first as we've talked about with respect to the weather.

Year over year, the weather was a bigger factor as we got deeper into the quarter as we've always said our fourth quarter is hard to forecast because January is it has two holidays in our calendar the week between Christmas and new year's as well as the.

The potential risks that you get a bunch of bad weather broadly across the country in the back half of January . So so I would tell you that the revenue got it on a year over year basis and against expectation.

What was really outperformed the deeper we got into the quarter I think we were encouraged.

As the quarter went by.

With with some analyst day presentation from some customers as well as.

Their comments on their calls.

And specifically for example, with luminous as.

A reassessed.

The program and then.

<unk> disclosed that they expect to spend 200 $250 million incremental this year over last on the quantum fiber program. So I just think we had a number of data points that came in.

Either late in the quarter or <unk> or subsequent to the end of the quarter.

Sure, Okay, and then on lunar and that was one of my other questions.

<unk> been pretty vocal about pausing the quantum type of builder, they actually used the word stock.

Stop spending kind of in their fourth quarter. It doesn't and then you come out with 65% growth with lumen. It doesn't seem like it's really hitting your numbers.

How do I sort of reconcile their comments that they are basically at least pause for a period of time.

It's really it doesn't seem to be.

Touching what youre seeing in your numbers at all.

Well I think it's important to remember that we provide other services for <unk>. So we're actively employed in supporting their network.

Across a large.

Part of the country I think the other thing.

But as we looked at their comments I think it was pretty clear that they had.

Reassessed, how they had been planning their fiber build.

And then as that completed.

They have have targets for this year that we're pleased to help accomplish and so I think more.

The way I would put it as they may have stopped in the approach that they were taking but to the extent we were working on.

Projects that fit that new approach then we clearly wanted to continue.

Great.

Okay, Great and then lastly, I was hoping you could comment just on AT&T vape reiterated their 30 plus million home target for 2025.

About sort of the slower pace of corps passing on it.

There may be some.

No.

Differences in how they are defining those homes, but then obviously they've talked about this JV.

Filled with Blackrock could you maybe talk about how youre thinking about.

<unk> had the opportunity compares.

When you look at the core opportunity versus the JV.

Yes, I think I think again.

I think again, well, we'd be lots of things for AT&T as we talked about last quarter, we started a pretty sizable locating.

Contract for them at the first of the year. So we've added a couple of hundred employees.

For them.

In terms of the <unk> I mean, we may see some moderation of our business. We don't work for them everywhere they are big customer.

But we're still encouraged with the commitment that more generally that customers have made to the targets that we've set forth and generally frame those as those are the target state like to hit or more if that makes sense in their business.

Thanks.

Our next question comes from the line of Christian Schwab with Craig Hallum.

Hey, good morning, guys. Thanks for taking my questions just a follow up on the previous question on lumen.

And their new approach kind of targeting.

More NFL cities, if I understand there.

They are conveying correctly.

I just wanted to make sure that what I heard there Steve is that new approach in that new shift do you feel are extremely well positioned to benefit from is that what I heard.

Yes.

Widely support lumen and their efforts not only on this program, but in other areas.

As we as we always say Kristen we've got to earn the business every day, but we feel like we're in a good position.

To provide.

Valuable service to the customer again, one day at a time.

Yes, understood and then as far as the.

Follow up on the lines of questioning first of all have question on the top line growth.

All of our checks versus your competitors.

Public and private are extremely excited about the growth opportunities in wireline.

The broad cross current of claims that you highlighted.

And theyre looking for strong double digit growth rates.

Is that something we should be assuming.

You will see as well.

Well I think first and as always it's a big industry depends on the size of the entity, you're talking to and which particular pockets of demand are addressing I think we still we certainly see good growth opportunities, we've got to execute against them I.

I think as we work our way through the year that will be increased opportunities that are resulting out of.

Government funding not just the bead program, which may be late in the year, but certainly some of the ARPA funds are still coming into the into the economy.

Art off funds.

And it's not to be underappreciated, the amount of state level activity.

But that is.

Our funds are coming out based on the state program. So I think theres lots of opportunities, we're not giving guidance for the year, we had a really strong quarter again.

Strong quarter and a strong year, so the comps may be a little tougher.

This year compared to last but we're still optimistic on our prospects.

Okay, great no other questions in the <unk>.

Hopefully you can bring better weather to Minnesota as soon as possible and do more work here calculators that may be that may be a global warming opportunity 40 to Christian I am not sure we can change Minnesota weather.

Our next question comes from the line of Alex Rygiel with B Riley.

Thank you good morning, Steve very nice quarter.

Can you remind us what you believe the industry can provide.

Thaicom like services deserve as it relates to gross margin and EBITDA margin.

Alex.

We'll focus our comments on EBITDA margin. There has certainly been periods of time, where we've had broadly distributed growth.

Where EBITDA margins.

Margins that have approached.

Mid teens, we're not there now.

We have opportunities to improve the business, we're working hard to do that I think we've had good control around our G&A. We've had some inflationary impacts certainly over the last year or so.

And the cost of goods.

And so we've got lots of work to do we're continuing to do that and I think there's nothing structural that says we can't get back there.

But it's going to be the result of a sustained effort to do that.

And you highlighted your maintenance and operations business I suspect that's increasing as a percentage of total is that accretive or dilutive to your margins right now.

Alex we always think about any activity that we provide.

Customers as a function of the amount of capital that we invest if we have the similar levels of capital and the maintenance and operations business compare to.

Construction of our capital related business that will have about the same returns I mean, there are some activities we do.

Where projects are small and so dsos are lower.

We performed well in those businesses too. So I think it's really a function of the capital.

Thats required that ultimately drives margins of course, we have to perform.

Order to earn those margins.

And one last one if I could.

Here's your customers start slowly in the new year, sometimes driven by economic uncertainty or other reasons.

It sounds like January started out strong any comment on February and any risk that maybe.

Because of the favorable weather, you've gotten sort of ahead of your customer plans.

The weather really isn't an effect on customer plans I mean, what we got done in January had to be planned and permitted and ready to go long before January so I really think that was just the opportunity to get out and execute the work.

With respect to the April quarter. This is another one that is backend loaded april's weather, obviously is better than February and March I would say February weather generally was a little more challenged than January .

And certainly there has been some more weather impacts in California.

But this was a quarter that always.

Results itself.

<unk> performed based on how we do.

In April just because more daylight.

Better weather.

And just just more to get done.

Very helpful. Thank you.

As a reminder to ask a question. Please press star one one on your telephone.

Our next question comes from the line of Alan <unk> with Sylvan Lake asset management.

Hi, Thank you I have a couple of just quick housekeeping questions and then the main question drew can you talk about tax rate for the year as opposed to just the quarter, where do you expect that to be.

Yes.

Alan I mean, we provided for the quarter, but typically that based on an annual analysis. So if you look back at this past year. We did have some credits that came through and Thats why it came in lower.

But I think that 26% range is generally been.

The planning target.

Okay, that's fair.

And then bright speed.

Contracts were for one year contracts versus three year for lumen is this more than nature of the ownership or the kind of assets. They have can you just talk about the duration of the contracts you highlighted.

Yes Alan.

Im not going to get into characterize any individual customer behavior, but it's not unusual when you have an ownership change and there are a lot of things that they are working on for them just to extend the agreements that we have with them as they work on other things that that are a priority.

I wouldn't read a lot into that one way or another.

Anytime there is a transaction there is a lot of things for the customer to work out okay.

Okay and then thank you and then wireless revenues in the quarter.

Yes, it was a little bit less than the.

5% of total.

The growth rate of about 4% year over year.

This is a year element in 'twenty three that we see a solid year, but we are seeing.

Much less small cell activity.

And so that's having some impact on the growth rate.

Okay.

And then I understand you're spending capex at like 20, plus percent year over year on a net basis. This year play this coming year and your backlog and your revenues grew 20%, but it seems like you are.

Seemingly guiding to and where the street is and all the rest and backlog is only growing as well mid single digits and yet your revenues were up 20% can you help us with that disconnect and where revenues are going to because it sounds like the way it should be hearing competitors and customers things should be building through the year.

Given all the money coming from the government as these results come out although we're mindful of Alex's question as it relates to customer cadence in.

Higher cost of capital and all the rest of an economic slowdown I'm just trying to reconcile the 20 plus percent revenue growth and capex spend with the single digit.

Backlog growth and seemingly single digit guidance as it heads out so could you help us with that with respect to the revenue guidance again on the April quarter, Alan as we mentioned earlier and anytime you have a growth year like we did last year, the comps get a little bit harder.

As we've talked about before there can be fluctuation amongst customers.

As programs come in and then other programs moderate and so we're trying to give you a kind of a reasonable view of where we see the business.

And then with respect to backlog as we've always talked about before.

The way, we calculate backlog backlog total backlog.

As loosely correlated with the next 12 months revenue.

I would probably point you more to the growth that we've seen in the next 12 months backlog, which I think is consistent with our view.

You that we have some good opportunities this year.

Okay, and then finally on Noel's question.

Last time, you guided in November .

You blew those numbers away you blew your cautiousness away.

And now this quarter Youre guiding I realized January was better so maybe you get a little weather effect, but if you look seasonally revenues this quarter.

Really any different in seasonality over business.

Many years in this coming quarter, you're guiding to a quarter of what you'd normally do from a seasonal perspective so.

Is it is it just the cautiousness as April goes so goes the quarter or <unk>.

US understand that.

Well with respect to last quarter, there was better year over year and against expectation revenue performance in December and January we certainly had unseasonable weather in January which means that the normal patterns of sequential.

Revenue growth from the January quarter into April we're going to be different when you have a stronger January than what you would expect right I mean, typically what you don't get them in January .

As to get.

Or most likely has to get done.

In the April quarter. The other thing is if you we provide lots of detail on our trend schedule. There is fluctuation amongst customers and as that works that way into the business. There can be some timing issues around programs that are moderating and programs that are coming in.

In our industry environment, where we had a great organic growth year last year, we just don't want to get ahead of ourselves this year.

Okay. Thank you.

Yes.

That concludes today's question and answer session I would like to turn the call back to Steven Nielsen for closing remarks.

Well, we appreciate everybody's time and attention and participation in the call and we'll look forward to speaking to you at the end of May.

After the April quarter. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect.

The conference will begin shortly.

Lower Johan during Q&A, you can dial one one.

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Sure.

Yes.

Good evening.

Good day, and thank you for standing by.

The Dotcom industries fourth quarter 2023 results conference call.

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I would now like to hand, the conference over to your host today, Mr. Steven Nielsen President and Chief Executive Officer. Please go ahead Sir.

Thank you operator, good morning, everyone. Thank you for attending this conference call to review, our fourth quarter fiscal 2023 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 drew that Ferrari, our Chief Financial Officer, and Ryan Urness, Our General Counsel now I will turn the call over to Ryan Urness.

Thank you Steve.

All forward looking statements made during this conference call are provided pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.

Forward looking statements include all comments, reflecting our expectations assumptions or beliefs about future events or performance that do not.

Not relate to historical periods.

These forward looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from current projections.

Including those risks described in our annual report on Form 10-K filed March four 2022.

Together with our other filings with the U S Securities and Exchange Commission.

Looking statements are made solely as of the original broadcast date of this conference call and we assume no obligation to update any forward looking statements.

Steve.

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 certain 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.

Now for the quarter revenue was $917 5 million, an organic increase of 25%.

As we deploy gigabit wireline networks wireless wireline converged networks and wireless networks. This quarter reflected an increase in demand from four of our top five customers.

Gross margin was 16, 5% of revenue and increased 278 basis points compared to the fourth quarter of fiscal 2022.

General and administrative expenses were seven 8% of revenue at all of these factors produced adjusted EBITDA of $83 1 billion or nine 1% of revenue and earnings per share of <unk> 83, compared to <unk> a year ago quarter.

Liquidity was strong at $757 8 million improving sequentially and operating cash flow was $246 2 million in the fourth quarter.

During the quarter, we repurchased 210000 shares of our common stock.

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 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 is increasing the appetite for fiber deployments and we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden our set of opportunities for our industry.

The increasing access to high capacity telecommunications continues to be crucial to society, especially in rural America.

Infrastructure investment and jobs acts includes over $40 billion for the construction of rural Communications networks, and Unserved and underserved areas across the country.

This represents an unprecedented level of support.

In addition, substantially all states have commenced programs that will provide funding for telecommunications networks, even prior to the initiation of funding under the infrastructure.

We are providing program management planning engineering and design aerial underground and wireless construction and fulfillment services for gigabit deployments.

These services are being provided across the country and numerous geographic areas for multiple customers.

These deployments include networks, consisting entirely of wired network elements and converged wireless wireline multi use networks.

Fiber network deployment opportunities are increasing in rural America, as new industry participants respond to emerging societal initiatives.

We continue to provide integrated planning engineering and design procurement and construction and maintenance services to several industry participants.

Macroeconomic conditions, including those impacting the cost of capital may influence the execution of some industry plants.

In addition, the market for labor remains tight in many regions around the country.

Automotive and equipment supply chains remain challenged particularly for the large truck chassis required for specialty equipment.

For capital equipment continue to increase.