Q2 2025 Dycom Industries Inc Earnings Call

August 21, 2024

Operator: Good day and thank you for standing by.

Operator: Good day, and thank you for standing by.

Operator: Good day, and thank you for standing by. Welcome to the Dycom Industries Inc. 2nd quarter, 2025 results conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded.

Good day, and thank you for standing by.

Operator: Welcome to the Dycom Industries Inc. second quarter 2025 results conference call.

Operator: Welcome to the Dycom Industries Inc. Second Quarter 2025 Results Conference Call.

Speaker Change: Welcome to the Dotcom Industries, Inc. Second quarter 2025 results conference call.

Operator: At this time, all participants are in a listen-only mode.

Operator: Thank you.

Operator: At this time, all participants are in a listen-only mode.

At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Operator: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: Ask a question during the session you will need to press star one on your telephone.

Operator: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: You will then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 1 1 again, please be advised that today's conference is being recorded.

Speaker Change: To withdraw your question. Please press star one again.

Operator: To withdraw your question, please press star 11 again.

Speaker Change: Please be advised that today's conference is being recorded.

Unknown Executive: I would not like to hand the conference over to your speaker today.

Operator: I would now like to hand the conference over to your speaker today, Mr. Steven Nielsen, Chief Executive Officer.

Operator: This concludes today's conference call.

Speaker Change: I'd now like to hand, the conference over to your Speaker today, Mr. Steven Nielsen Chief Executive Officer. Please go ahead Sir.

Steven Nielsen: Mr. Steven Nielsen, Chief Executive Officer, please go ahead, sir. Good morning, everyone. Thank you for attending this conference call to review our 2nd quarter fiscal 2025 results.

Steven Nielsen: Please go ahead, sir.

Operator: Thank you for your participation.

Operator: Please be advised that today's conference is being recorded.

Steven Nielsen: Good morning, everyone. Thank you for attending this conference call to review, our second quarter fiscal 2025 results going to slide two.

Steven Nielsen: Going to slide to 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.

Operator: You may now disconnect.

Steven Nielsen: 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.

Steven Nielsen: Presentation.

Steven Nielsen: Today we have on the call, Dan Payvich, our President and Chief Operating Officer, Drew DeFarrari, our Chief Financial Officer, and Ryan Ernest, our General Counsel.

Speaker Change: Today, we have on the call Dan Chard, President and Chief operating Officer drew that Ferrari, our Chief Financial Officer.

Ryan Urness: Ryan Urness, our general counsel.

Steven Nielsen: Good morning, everyone.

Ryan Ernest: Now I will turn the call over to Ryan Ernest. Thank you, Steve.

Ryan Urness: I will turn the call over to Ryan or deaths.

Steven Nielsen: Thank you for attending this conference call to review our second quarter fiscal 2025 results.

Ryan Urness: Steve.

Steven Nielsen: Going to slide two.

Ryan Ernest: 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 1995. Forward-looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events. These forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from current projections, including those risks discussed in the company's filings with the U.S. Securities and Exchange Commission. Forward-looking statements are made solely as of the original broadcast state of this conference call, and we assume no obligation to update any forward-looking statements.

Ryan Urness: 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 1995.

Steven Nielsen: During this call, we will be referring to a slide presentation which can be found on our website's Investor Center main page.

Ryan Urness: Forward looking statements include all comments, reflecting our expectations assumptions or beliefs about future events.

Ryan Urness: These forward looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from current projections, including those risks discussed in the company's filings with the U S Securities and Exchange Commission.

Ryan Urness: Forward looking statements are made only as of the original broadcast date of this conference call and we assume no obligation to update any forward looking statements.

Steven Nielsen: Steve. Thanks, Ryan.

Operator: I would now like to hand the conference over to your speaker today, Mr. Steven Nielsen, Chief Executive Officer.

Ryan Urness: Steve.

Steve: Thanks Ryan.

Steven Nielsen: On June 17, after over 25 years as CEO, I announced my retirement effective November 30th. Upon my retirement, Dan Payvich will become our CEO.

Speaker Change: On June 17th after over 25 years as <unk> CEO.

Speaker Change: It's my retirement effective November 30.

Speaker Change: My retirement and pave it will become our CEO now I will turn the call over to Dan for some opening comments.

Dan Payvich: Now I will turn the call over to Dan for some opening comments. Thank you, Steve. Most importantly, thank you for your decades of leadership. You have built Vycom into a true leader in our industry, and I look forward to continuing to work alongside you over the coming months.

Steven Nielsen: Relevant slides will be identified by number throughout our presentation.

Operator: Everyone have a wonderful day.

Steven Nielsen: Please go ahead, sir.

Steven Nielsen: Today we have on the call Dan Payovich, our President and Chief Operating Officer, Drew Deferrari, our Chief Financial Officer, and Ryan Urness, our General Counsel.

Operator: Thank you for watching!

Dan Chard: Thank you Steve.

Most importantly, thank you for your decades of leadership you.

Dan Chard: <unk> built icon into a true leader in our industry and I look forward to continuing to work alongside of you over the coming months.

Dan Payvich: Congratulations on your upcoming retirement. I would like to thank all my teammates at Vycom for welcoming me and for your support for the past three and a half years. I am constantly impressed by your focus on executing our work safely, your passion for our business, and your dedication to delivering quality for our customers. Our success is because of you. The opportunities in our industry are unprecedented, and I believe we are well positioned to continue our growth as we pursue our vision to connect America.

Speaker Change: Congratulations on your upcoming retirement.

Steven Nielsen: Good morning, everyone.

Dan Chard: I would like to thank all of my teammates at <unk>.

Dan Chard: Tom for welcoming me and for your support for the past three and a half years I am constantly impressed by your focus on executing our work safely their passion for our business and their dedication to delivering quality for our customers.

Dan Chard: Our success is because of you.

Dan Chard: The opportunities in our industry are unprecedented and I believe we are well positioned to continue our growth as we pursue our vision to connect America.

Dan Payvich: I am honored and excited to lead Vycom in this next chapter.

Speaker Change: Hi, I'm honored and excited to lead Thaicom and this next chapter.

Steven Nielsen: Steve, back to you. Dan, I'm excited for you and Vycom as you lead our company to a bright future. Before I review our results and industry opportunities, I would like to thank my fellow employees for their hard work and dedication. Your efforts make Vycom the special place it is. to our Directors. Thanks for your wisdom, guidance, and oversight. I finished my time as CEO, a much better leader because of you. And finally, to my fellow shareholders, your support as I have led our company has been invaluable. Thanks for the opportunity to benefit from your counsel and the market's discipline.

Steve: Steve back to you.

Steven Nielsen: Now I will turn the call over to Ryan Urness.

Steve: Dan I'm excited for you.

Steve: Matthew lead our company to a bright future.

Ryan Urness: Thank you, Steve.

Speaker Change: For a review of our results and industry opportunities I would like to thank my fellow employees for their hard work and dedication.

Speaker Change: Our efforts make dot com the special place it adds to our directors. Thanks for your wisdom guidance and oversight.

Speaker Change: As my time as CEO, a much better leader because of you and finally to my fellow shareholders for your support as I have led our company has been invaluable thanks for the opportunity to benefit from your counsel and the market's disciplined.

Novembers earnings call will be my last for purposes of this call I will be handling the Q&A.

Steven Nielsen: Thank you for attending this conference call to review our second quarter fiscal 2025 results.

Speaker Change: Now moving to slide four and a review of our second quarter results.

Steven Nielsen: Going to slide two.

Steven Nielsen: As we review our results, please note that in our comments today and in the accompanying slides, we refer to certain non-GAAP measures. We refer you to slides 15 through 20 for a reconciliation of these non-GAAP measures to their corresponding GAAP measures. Now for the quarter. Revenue increased year over year to 1.203 billion, an increase of 15.5%. Organic revenue increased 9.2%. As we deploy gigabit wireline networks, wireless wireline converts networks and wireless networks, this quarter reflected an increase in demand from free of our top five customers. Gross margin was 20.8% of revenue and increased 52 basis points compared to the second quarter of fiscal 2024.

Ryan Urness: 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 1995.

Speaker Change: 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 slides 15 through 20 for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.

Ryan Urness: Forward-looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events.

Ryan Urness: These forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from current projections, including those risks discussed in the company's filings with the U.S. Securities and Exchange Commission.

Speaker Change: For the quarter.

Speaker Change: Revenue increased year over year to $1 203 billion, an increase of 15, 5% organic revenue increased nine 2%.

Ryan Urness: Forward-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 statement.

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

Steven Nielsen: Steve.

Steven Nielsen: Thanks, Ryan.

Speaker Change: Gross margin was 28% of revenue and increased 52 basis points compared to the second quarter of fiscal 2024.

Steven Nielsen: General administrative expenses were 8.3% of revenue, and all of these factors produced adjusted EBITDA of 158.3 million, or 13.2% of revenue, and adjusted earnings per share of $2.46. Liquidity was strong at 622 million; now going to slide five. In August, subsequent to the end of our second quarter, we completed the acquisition of Black and Beach's public carrier wireless telecommunications infrastructure business for $150 million. This business provides wireless construction services primarily in the states of New York, New Jersey, Missouri, Kansas, Colorado, Utah, Wyoming, Idaho, and Montana, and is our largest ever wireless services acquisition. It strategically expands our geographic presence, enabling us to more broadly address growth opportunities and wireless network modernization, including open RAN transformation initiatives and deployment services.

Steven Nielsen: On June 17th, after over 25 years as Dycom CEO, I announced my retirement effective November 30th. Upon my retirement, Dan Paivits will become our CEO.

Speaker Change: General and administrative expenses were eight 3% of revenue at all of these factors produced adjusted EBITDA of $158 3 million or 13, 2% of revenue.

Speaker Change: Adjusted earnings per share of $2 46.

Dan Payovich: Now I will turn the call over to Dan for some opening comments.

Speaker Change: Liquidity was strong at $622 million.

Steven Nielsen: During this call, we will be referring to a slide presentation, which can be found on our website's Investor Center main page.

Speaker Change: Now going to slide five.

Steven Nielsen: Relevant slides will be identified by number throughout our presentation.

Dan Payovich: Thank you, Steve.

Speaker Change: In August subsequent to the end of our second quarter, we completed the acquisition of Black and Veatch as public carrier wireless telecommunications infrastructure business for $150 million.

Steven Nielsen: Today, we have on the call Dan Paivich, our President and Chief Operating Officer, Drew Deferrari, our Chief Financial Officer, and Ryan Urness, our General Counsel.

Ryan Urness: Now, I will turn the call over to Ryan Urness.

Speaker Change: This business provides wireless construction services, primarily in the states of New York New Jersey.

Speaker Change: During Kansas, Colorado, Utah, Wyoming, Idaho, and Montana, and is our largest ever wireless services acquisition.

Ryan Urness: Thank you, Steve.

Ryan Urness: 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 1995.

Speaker Change: It's strategically expands our geographic presence, enabling us to more broadly address growth opportunities in wireless network modernization, including open ran transformation initiatives and deployment services.

Steven Nielsen: During our third and fourth quarter of fiscal 25, we expect modest revenues as the business is currently focused on site acquisition for next year's construction program. For fiscal year 26, we anticipate this acquisition to contribute $250 to $275 million of revenue, with post integration EBITDA margins in line with our consolidated average. Finally, while our review of acquired backlog is still preliminary, we currently expect this acquisition to add approximately $1 billion of total backlog, which we will reflect in our third quarter report. Now moving to slide six. Today, an increasing number of diverse industry participants are constructing or upgrading wireline networks throughout the country.

Ryan Urness: Forward-looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events.

Speaker Change: During our third and fourth quarter of fiscal 'twenty five we expect modest revenues as the business is currently focused on site acquisition for next year's construction program.

Ryan Urness: Forward-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.

Speaker Change: For fiscal year 2006, we anticipate this acquisition to contribute $250 million to $275 million of revenue with post integration of EBITDA margins in line with our consolidated average.

Speaker Change: Finally, while our review of acquired backlog is still preliminary we currently expect this acquisition to add approximately $1 billion of total backlog, which we will reflect in our third quarter report.

Steven Nielsen: Steve?

Dan Payovich: Most importantly, thank you for your decades of leadership.

Dan Payovich: You have built Dycom into a true leader in our industry, and I look forward to continuing to work alongside you over the coming months.

Speaker Change: Now moving to slide six.

Steven Nielsen: Thanks, Ryan.

Dan Payovich: Congratulations on your upcoming retirement.

Steven Nielsen: On June 17th, after over 25 years as DICOM CEO, I announced my retirement effective November 30th. Upon my retirement, Dan Paivich will become our CEO.

Speaker Change: Today, an increasing number of diverse industry participants are constructing or upgrading wireline networks throughout the country. These wireline network to enable the delivery of gigabit network speeds to consumers and businesses. In addition to the advent of AI data centers has sparked interest in broad new mash slow deployments of high.

Dan Payovich: I would like to thank all my teammates at Dycom for welcoming me and for your support for the past three and a half years. I am constantly impressed by your focus on executing our work safely, your passion for our business, and your dedication to delivering quality for our customers. Our success is because of you.

Steven Nielsen: These wireline networks enable the delivery of gigabit network speeds, consumers, and business. In addition, the advent of AI data centers has sparked interest in broad new national deployments of high capacity, low latency, intercity networks, as well as metro rings. The level of interest in intercity networks is the highest we have seen in the last 25 years. Finally, wireless networks are deploying additional spectrum bands and equipment so as to more broadly and efficiently provision higher broadband services for both fixed and mobile access. Industry participants have stated their belief that a single high-capacity fiber network can most cost-effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment.

Dan Paivich: Now, I will turn the call over to Dan for some opening comments.

Dan Payovich: The opportunities in our industry are unprecedented, and I believe we are well positioned to continue our growth as we pursue our vision to connect America.

Dan Paivich: Thank you, Steve.

Dan Payovich: I am honored and excited to lead Dycom in this next chapter.

Dan Paivich: Most importantly, thank you for your decades of leadership.

Dan Paivich: You have built DICOM into a true leader in our industry, and I look forward to continuing to work alongside you over the coming months.

Dan Paivich: Congratulations on your upcoming retirement.

Dan Paivich: I would like to thank all my teammates at DICOM for welcoming me and for your support for the past three and a half years. I am constantly impressed by your focus on executing our work safely, your passion for our business, and your dedication to delivering quality for our customers.

Dan Paivich: Our success is because of you.

Dan Paivich: The opportunities in our industry are unprecedented, and I believe we are well-positioned to continue our growth as we pursue our vision to connect America.

Dan Paivich: I am honored and excited to lead DICOM in this next chapter.

Speaker Change: Capacity low latency intercity networks as well as metro rings, the level of interest in Intercity networks is the highest we have seen in the last 25 years.

Steven Nielsen: Steve, back to you.

Steven Nielsen: Dan, I'm excited for you and Dycom as you lead our company to a bright future.

Steven Nielsen: Dan, I'm excited for you and DICOM as you lead our company to a bright future.

Steven Nielsen: Before I review our results and industry opportunities, I would like to thank my fellow employees for their hard work and dedication.

Speaker Change: Finally wireless networks are deploying additional spectrum bands and equipment, so as to more broadly and efficiently provision higher broadband services for both fixed and mobile access.

Steven Nielsen: Your efforts make Dycom the special place it is.

Steven Nielsen: To our directors, thanks for your wisdom, guidance, and oversight.

Steven Nielsen: I finished my time as CEO a much better leader because of you.

Steven Nielsen: And finally, to my fellow shareholders, your support, as I have led our company, has been invaluable.

Steven Nielsen: Thanks for the opportunity to benefit from your counsel and the market's discipline.

Steven Nielsen: November's earning call will be my last.

Speaker Change: 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.

Steven Nielsen: For purposes of this call, I will be handling the Q&A.

Steven Nielsen: Some of these same industry participants will also provide wireless services strongly believe that the ability to provision converts wireline fiber and wireless services creates significant competitive advantages. This belief is evident as some wireless providers have recently invested in new fiber providers, while another wireline wireless provider is deploying fiber networks outside its traditional geographic footprint. These views support I believe that the appetite for massive fiber deployments is irreversible. As a result, we continue to see a meaningfully broader set of opportunities for our industry. We are pleased that a number of our customers have entered into strategic transactions, including refinancing, intended to provide the capital necessary for the incremental deployment of fiber to more than 9.5 million homes over the next several years.

Steven Nielsen: Now moving to slide four, a review of our second quarter results.

Speaker Change: Some of these same industry participants will also provide wireless services strongly believe that the ability to provision converged wireline fiber and wireless services create significant competitive advantages.

Felipe: Felipe as evident as some wireless providers have recently invested in new fiber providers, while another wireline wireless provider is deploying fiber networks outside its traditional geographic footprint.

Speaker Change: These new support our belief that the appetite for massive fiber deployments. It's irreversible as a result, we continue to see a meaningfully broader set of opportunities for our industry.

Steven Nielsen: As we review our results, please note that in our comments today and in the accompanying slides, we reference certain non-GAAP measures.

Steven Nielsen: Before I review our results and industry opportunities, I would like to thank my fellow employees for their hard work and dedication.

Steven Nielsen: Your efforts make DICOM the special place it is.

Speaker Change: We are pleased that a number of our customers have entered into a strategic transactions, including refinancings intended to provide the capital necessary for the incremental deployment of fiber to more than $9 5 million homes over the next several years. These individual transactions are currently awaiting regulatory approval, which is currently.

Steven Nielsen: To our directors, thanks for your wisdom, guidance, and oversight.

Steven Nielsen: I finished my time as CEO, a much better leader because of you.

Steven Nielsen: And finally, to my fellow shareholders, your support as I have led our company has been invaluable.

Steven Nielsen: These individual transactions are currently awaiting regulatory approval, which is currently expected over the next 12 to 18 months. In addition to the incremental private capital associated with these transactions, a wide variety of programs are providing public capital to support broadband deployments. The largest of these programs, the Broadband Equity Access Deployment Program or BE, includes over $40 billion for the construction of rural communications networks and underserved areas across the country. This represents an unprecedented level of support and meaningfully increases the rural market that we expect will ultimately be addressed. As of early this week, 35 states and territories have completed all 10 approval steps as required by the NTIA, while 21 others have completed 9 of the 10.

Speaker Change: As expected over the next 12 to 18 months.

Speaker Change: In addition to the incremental private capital associated with these transactions a wide variety of programs are providing public capital to support broadband deployments.

Speaker Change: The largest of these programs the broadband equity access deployment program or bead includes over $40 billion for the construction of rural communications networks, and Unserved and underserved areas across the country.

Speaker Change: This represents an unprecedented level of support and meaningfully increases the rural market that we expect will ultimately be addressed.

Speaker Change: As of early this week 35 states and territories have completed all 10 approval steps as required by the NTIA, while 21, others have completed nine of the tap today.

Steven Nielsen: Today, approximately 22 billion, or 53 percent, of the program total has received initial proposal approval. We believe the magnitude and importance of B should not be underappreciated as it addresses some of the most difficult and expensive locations to deploy in America and represents a generational deployment opportunity. For planning purposes, we currently expect to see deed opportunities during the third quarter of calendar year 2025. As deed continues to develop, we are seeing also seeing significant deployment activity funded by other state and federal programs. Macroeconomic conditions appear stable. In addition, the market for labor has improved in many regions around the country.

Speaker Change: To date, approximately $22 billion or 53% of our program total as received initial proposal approval.

Speaker Change: We believe the magnitude and importance of bead should not be underappreciated as it addresses some of the most difficult and expensive locations to deploy in America.

Speaker Change: It represents a generational deployment opportunity.

Speaker Change: For planning purposes, we currently expect to see bead opportunities during the third quarter of calendar year 2025.

Speaker Change: As <unk> continues to develop we are seeing also seeing significant deployment activity funded by other state and federal programs.

Steven Nielsen: Thanks for the opportunity to benefit from your counsel and the market's discipline.

Speaker Change: Macroeconomic conditions appear stable in addition to market for labor has approved in many regions around the country.

Steven Nielsen: November's earning call will be my last.

Steven Nielsen: Automotive and equipment supply chains have normalized, and prices for capital equipment have been stable since the first of the year. 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 7, during the quarter, revenue increased 15.5%, or top 5 customers combined produced 54.9% of revenue, increasing 7.1% organically. Demand increased from 3 of our top 5 customers; all other customers increased 12.3% organically. AT&T was our largest customer at 17.5% of revenue, or 210.2 million. AT&T grew organically 20.6%, its first quarter of organic growth since the January of 2023 quarter. Lumen was our second largest customer, 13.6% of total revenue, or 163.7 million. Lumen grew organically 1%.

Speaker Change: Automotive and equipment supply chains have normalized and prices for capital equipment had been stable since the first of the year.

Steven Nielsen: For purposes of this call, I will be handling the Q&A.

Speaker Change: Within this context, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.

Steven Nielsen: Now moving to slide four in a review of our second quarter results.

Steven Nielsen: We refer you to slides 15 through 20 for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.

Speaker Change: Moving to slide seven.

Steven Nielsen: Now for the quarter.

Speaker Change: During the quarter revenue increased 15, 5% our top five customers combined produced 54, 9% of revenue increasing seven 1% organically.

Steven Nielsen: As we review our results, please note that in our comments today and in the accompanying slides, we reference certain non-GAAP measures.

Steven Nielsen: Revenue increased year-over-year to $1.203 billion, an increase of 15.5%. Organic revenue increased 9.2%.

Steven Nielsen: We refer you to slides 15 through 20 for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.

Speaker Change: Demand increased from three of our top five customers all other customers increased 12, 3% organically.

Steven Nielsen: As we deployed gigabit wireline networks, wireless wireline converge networks, and wireless networks, this quarter reflected an increase in demand from three of our top five customers.

Steven Nielsen: Now for the quarter.

Speaker Change: AT&T was our largest customer at 17, 5% of revenue or $210 2 billion.

Speaker Change: AT&T grew organically, 26% this first quarter of organic growth since the January of 2023 quarter.

Speaker Change: <unk> was our second largest customer at 13, 6% of total revenue or $163 7 million lumen grew organically 1%.

Steven Nielsen: Revenue from Comcast was 105.6 million or 8.8% of revenue. Comcast was Dycom's third largest customer. The customer who asked that we not identify them was our fourth largest customer at 95.8 million or 8% of revenue. This customer grew 73.2% organically, and finally, Verizon was our fifth largest customer at 85.3 million or 7.1% of revenue. This is the 22nd consecutive quarter where all of our other customers in aggregate, excluding the top 5 customers, have grown organically. Of no fiber construction revenue from electric utilities was 88.7 million in the quarter. 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 and wireless wireline converge networks, as those deployments dramatically increased the amount of outside plant network that must be extended and maintained. Now going to slide eight, backlog at the end of the second quarter was 6.834 billion versus 6.364 billion at the end of the April 2024 quarter, an increase of 470 million. Of this backlog, approximately 3.83 billion is expected to be completed in the next 12 months. Backlog activity during the second 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, including those who have recently entered into strategic transactions and partnerships. During the quarter, we received from Verizon the construction agreement in New York, from Brightspeed a construction agreement in Ohio, Pennsylvania, New Jersey, Virginia, and North Carolina, from Comcast a nationwide maintenance and construction agreement, from AT&T a utility light locating agreement in California, and various rural fiber construction agreements in Arizona, Oklahoma, Arkansas, Alabama, and North Carolina. Headcount was 15,901.

Speaker Change: Revenue from Comcast was 105 6 million or eight 8% of revenue Comcast was <unk> third largest customer <unk>.

Speaker Change: A customer who asked that we not identify them was our fourth largest customer at $95 8 million or 8% of revenue. This customer grew 73, 2% organically.

Speaker Change: And finally, Verizon was our fifth largest customer at $85 3 million or seven 1% of revenue.

This is the 20 <unk> consecutive quarter, where all of our other customers in aggregate, excluding the top five customers have grown organically.

Speaker Change: Of note fiber construction revenue from electric utilities was $88 7 million in the quarter.

Speaker Change: We have extended our geographic reach and expanded our program management and network planning services.

Speaker Change: In fact over the last several years, we believe we have meaningfully increased the long term value of our maintenance and operations business.

Speaker Change: The trend, which we believe will parallel our deployment of gigabit wireline correct and wireless wireline converged networks as those deployments dramatically increase the amount of outside plant network that must be extended and maintained.

Speaker Change: Now going to slide eight.

Speaker Change: Backlog at the end of the second quarter was $6 834 billion versus 636 4 billion at the end of the April 2024 quarter, an increase of $470 million.

Speaker Change: Of this backlog approximately 383 billion is expected to be completed in the next 12 months.

Speaker Change: Backlog activity during the second 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, including those who have recently entered into strategic transactions and partnerships.

Speaker Change: During the quarter, we received from Horizon construction agreement in New York, where bright speed a construction agreement in Ohio, Pennsylvania, New Jersey, Virginia, and North Carolina.

Speaker Change: From Comcast a nationwide maintenance and construction agreement.

Speaker Change: Our AT&T a utility line locating agreement in California, and various rural fiber construction agreements in Arizona, Oklahoma, Arkansas, Alabama, and North Carolina.

Speaker Change: Head count was 15901.

Drew DeFarrari: Now I will turn the call over to Drew for his financial review and outlook. Thanks, Steven. Good morning, everyone. Going to slide 9. Contract revenues were 1.203 billion and organic revenue increased 9.2%. Revenues from our recently acquired businesses were $65.9 million. Adjusted EBITDA was 158.3 million, or 13.2% of contract revenues, compared to 130.8 million, or 12.6% in Q224, an increase of 60 basis points. Gross margin improved 52 basis points to 20.8% of revenue compared to 20.3% in Q224. GNA expense was 8.3% of revenue compared to 8.1% in Q224. GNA this year included incremental stock-based compensation of 2.2 million related to the CEO succession transition.

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

Steven Nielsen: Revenue increased year-over-year to $1.203 billion, an increase of 15.5%. Organic revenue increased 9.2%.

Drew Ferrari: Thanks, Steve and good morning, everyone going to slide nine.

Drew Ferrari: Contract revenues were $1, two zero to 3 billion and organic revenue increased nine 2%.

Drew Ferrari: Revenues from our recently acquired businesses were $65 9 million.

Speaker Change: Adjusted EBITDA was $158 3 million or 13, 2% of contract revenues compared to $130 8 million or 12, 6% in Q2 24, an increase of 60 basis points.

Steven Nielsen: Gross margin was 20.8% of revenue and increased 52 basis points compared to the second quarter of fiscal 2024.

Speaker Change: Gross margin improved 52 basis points to 28% of revenue compared to 23% in Q2 24.

Steven Nielsen: General and administrative expenses were 8.3% of revenue, and all of these factors produced adjusted EBITDA of $158.3 million, or 13.2% of revenue, and adjusted earnings per share of $2.46.

Speaker Change: G&A expense was eight 3% of revenue compared to eight 1% in Q2 24.

Speaker Change: G&A. This year included incremental stock based compensation of $2 2 million related to the CEO succession transition.

Drew DeFarrari: Non-GAAP net income was $2.46 per share compared to $2.30 per share in Q2 last year. The change in net income reflects the $27.5 million increase in adjusted EBITDA and higher gains on asset sales. Offset by 8.6 million of higher depreciation and numberization, 2.4 million of higher interest expense, and higher stock base compensation and income tax expense. Going to slide 10. Our financial position and balance sheet remains strong. Cash and equivalence were 19.6 million, and liquidity was 622 million. During Q2, we amended our senior credit facility to extend term loan capacity and extend the maturity to January 2029.

Speaker Change: non-GAAP net income was $2 46 per share compared to $2 <unk> per share in Q2 last year.

Speaker Change: The change in net income reflects the 27 $5 million increase in adjusted EBITDA and higher gains on asset sales offset by $8 6 million of higher depreciation and amortization $2 4 million of higher interest expense and higher stock based compensation and income tax expense.

Speaker Change: <unk>.

Speaker Change: Going to slide 10.

Speaker Change: Our financial position and balance sheet remains strong cash and equivalents were $19 6 million in liquidity was $622 million.

Steven Nielsen: Liquidity was strong at $622 million.

Steven Nielsen: Now going to slide five.

Speaker Change: During Q2, we amended our senior credit facility to expand term loan capacity and extend the maturity to January 2029 at.

Steven Nielsen: In August, subsequent to the end of our second quarter, we completed the acquisition of Black & Veatch's public carrier wireless telecommunications infrastructure business for $150 million. This business provides wireless construction services primarily in the states of New York, New Jersey, Missouri, Kansas, Colorado, Utah, Wyoming, Idaho, and Montana, and is our largest ever wireless services acquisition. It strategically expands our geographic presence, enabling us to more broadly address growth opportunities in wireless network modernization, including Open RAN transformation initiatives and deployment services.

Drew DeFarrari: At the end of Q2, we had 450 million of term loan outstanding and an undrawn $650 million revolving credit facility. Additionally, we have 500 million of senior notes outstanding. Our capital allocation continues to prioritize organic growth, followed by M&A and opportunistic share repurchases within the context of historical range of net leverage.

Steven Nielsen: During our third and fourth quarter fiscal 25, we expect modest revenues as the business is currently focused on site acquisition for next year's construction program. For fiscal year 26, we anticipate this acquisition to contribute $250 to $275 million of revenue, with post-integration EBITDA margins in line with our consolidated average. Finally, while our review of acquired backlog is still preliminary, we currently expect this acquisition to add approximately $1 billion of total backlog, which we will reflect in our third quarter report.

Speaker Change: At the end of Q2, we had $450 million of term loan outstanding and an undrawn $650 million revolving credit facility. Additionally.

Steven Nielsen: Now moving to slide seven.

Speaker Change: Additionally, we have $500 million of senior notes outstanding.

Speaker Change: Our capital allocation continues to prioritize organic growth followed by M&A and opportunistic share repurchases within the context of our historical range of net leverage.

Drew DeFarrari: Going to slide 11. Cash flows used in operating activities were $7.5 million to support the sequential growth in Q2. The combined DSOs of accounts receivable and net contract assets were 117 days and an increase of 7 days sequentially. Capital expenditures were $55.9 million net of disposal proceeds, and gross catbacks was $65.4 million. During Q2, we acquired a telecommunications construction contractor for 20.8 million net of cash required, expanding our geographic footprint to Alaska. And this morning we announced that the company has acquired Black and Beach's public carrier wireless telecommunications infrastructure business for $150 million in cash during Q3.

Speaker Change: Going to slide 11 cash.

Speaker Change: Cash flows used in operating activities were $7 5 million to support the sequential growth in Q2.

Speaker Change: The combined Dsos of accounts receivable and net contract assets were 117 days, an increase of seven days sequentially cash.

Capital expenditures were $55 9 million net of disposal proceeds and gross Capex was $65 4 million.

Speaker Change: During Q2, we acquired a telecommunications construction contractor for $28 million net of cash acquired expanding our geographic footprint to Alaska.

Speaker Change: And this morning, we announced that the company has acquired black and beaches public carrier wireless telecommunications infrastructure business for $150 million in cash during Q3.

Drew DeFarrari: going to slide 12. As we look ahead to the third quarter ending October 26, 2024, we expect total contract revenues to increase mid to high single digit as a percentage of contract revenues compared to 1.136 billion in Q324. Included in the expectation for the current quarter is approximately 75 million of acquired revenues compared to the prior year period that included 45.2 million of acquired revenues and 26.5 million of revenues from the impacts of a change order and the close out of several projects. We also expect non-GAAP adjusted EBITDA percentage of contract revenues to increase 25 to 50 basis points compared to 12.9% in Q324 after excluding 1.8% of incremental benefit in the Q324 EBITDA margin from the impacts of the change order and close out of several projects.

Speaker Change: Going to slide 12.

Speaker Change: As we look ahead to the third quarter ending October 26, 2024, we expect total contract revenues to increase mid to high single digit as a percentage of contract revenues compared to one $103 6 billion in Q3 'twenty four.

Speaker Change: Included in the expectation for the current quarter is approximately $75 million of acquired revenues compared to the prior year period that included $45 2 million of acquired revenues and $26 5 million of revenues from the impacts of a change order and the closeout of several projects.

Speaker Change: We also expect non-GAAP adjusted EBITDA percentage of contract revenues to increase 25 to 50 basis points compared to 12, 9% in Q3 dollars 24, after excluding one 8% of incremental benefit in the Q3 24 <unk>.

Speaker Change: <unk> margin from the impacts of the change order and close out of several projects.

Drew DeFarrari: The expectation of non-gap adjusted EBITDA excludes 5.5 million of pre-tax acquisition integration costs related to the Q325 acquisition. Other expectations about the Q325 Outlook include 9.5 million of amortization expense, 14.3 million of stock-based compensation that includes 7.1 million of incremental expense related to the CEO succession transition, 17.5 million of net interest expense, a 26.5% non-GAAP effective income tax rate, and 29.6 million diluted shares. The Q325 acquisition is a carve-out from an existing business, and we expect pre-tax integration costs of 5.5 million that we will disclose separately and exclude from our presentation of non-GAAP adjusted EBITDA.

Speaker Change: The expectation of non-GAAP adjusted EBITDA excludes $5 5 million of pretax acquisition integration costs related to the Q3 dollars 25 acquisition.

Speaker Change: Other expectations about the Q3 dollars 25 outlook include $9 5 million of amortization expense $14 3 million of stock based compensation that includes $7 1 million of incremental expense related to the CEO succession transition.

Speaker Change: $17 5 million of net interest expense of 26, 5% non-GAAP effective income tax rate and $29 6 million diluted shares.

Unknown Executive: Good day and thank you for standing by.

Operator: Good day and thank you for standing by. Welcome to the Dycom Industries Inc. 2nd quarter, 2025 results conference call. At this time, all participants are in the listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again.

Unknown Executive: Welcome to the Dycom Industries Inc.

The Q3 dollars 25 acquisition as a carve out from an existing business and we expect pre tax integration costs of $5 $5 million that we will disclose separately and exclude from our presentation of non-GAAP adjusted EBITDA.

Unknown Executive: 2nd quarter, 2025 results conference call.

Unknown Executive: At this time, all participants are in the listen only mode.

Unknown Executive: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising your hand is raised.

Unknown Executive: To withdraw your question, please press star one one again.

Drew DeFarrari: Other pre-tax costs related to the acquisition that are included in the company's consolidated Outlook are 3.7 million of amortization expense that is included in the 9.5 million dollar expectation and 2.4 million of interest expense that is included in the 17.5 million dollar expectation. On a gap basis, the combined pre-tax integration and other costs are expected to total approximately 11.6 million, or 29 cents per common share diluted on an after-tax basis.

Speaker Change: Other pre tax costs related to the acquisition that are included in the company's consolidated outlook or $3 7 million of amortization expense that is included in the $9 5 million expectation.

Unknown Executive: Please be advised that today's conference is being recorded.

Operator: Please be advised that today's conference is being recorded.

Unknown Executive: I would not like to hand the conference over to your speaker today.

Operator: I would not like to hand the conference over to your speaker today.

Speaker Change: And $2 4 million of interest expense that is included in the $17 $5 million expectation.

Steven Nielsen: Mr. Steven Nielsen, Chief Executive Officer, please go ahead sir.

Steven Nielsen: Mr. Steven Nielsen, Chief Executive Officer, please go ahead sir. Good morning everyone. Thank you for attending this conference call to review our 2nd quarter fiscal 2025 results. Going to slide to 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, Dan Payvich, our President and Chief Operating Officer, Drew DeFarrari, our Chief Financial Officer, and Ryan Ernest, our General Counsel.

Steven Nielsen: Good morning everyone.

Steven Nielsen: Thank you for attending this conference call to review our 2nd quarter fiscal 2025 results.

Speaker Change: On a GAAP basis, the combined pretax integration and other costs are expected to total approximately $11 6 million or <unk> 29 per common share diluted on an after tax basis now.

Steven Nielsen: Going to slide to during this call, we will be referring to a slide presentation which can be found on our website's investor center main page.

Steven Nielsen: Now it will turn the call back to Steve. Thanks, Drew, moving to slide 13. This quarter we experienced solid activity and capitalized on our significant strengths. First and foremost, we maintain significant customer presence throughout our markets. We are encouraged by the increasing breadth in our business and pleased with the opportunities accompanying our acquisition from Black and Beach. Our extensive market presence has allowed us to be at the forefront of evolving industry opportunities. Telephone companies are deploying fiber of the home to enable gigabit high-speed connections. Rural electric utilities are doing the same. Dramatically increased fees for consumers are being provisioned, and consumer data usage is growing, particularly upstream.

Speaker Change: Now I will turn the call back to Steve.

Steven Nielsen: Relevant slides will be identified by number throughout our presentation.

Steven Nielsen: As we deployed gigabit wireline networks, wireless wireline, converged networks, and wireless networks, this quarter reflected an increase in demand from three of our top five customers.

Steve: Thanks drew moving to slide 13, this quarter, we experienced solid activity and capitalized on our significant strengths.

Steven Nielsen: Today we have on the call, Dan Payvich, our President and Chief Operating Officer, Drew DeFarrari, our Chief Financial Officer, and Ryan Ernest, our General Counsel.

Steve: First and foremost we maintained significant customer presence throughout our markets. We are encouraged by the increasing breadth in our business and pleased with the opportunities accompanying our acquisition from Black can beach, our extensive market presence has allowed us to be at the forefront of evolving industry opportunities.

Ryan Urness: Now I will turn the call over to Ryan Ernest.

Ryan Ernest: Now I will turn the call over to Ryan Ernest. Thank you, Steve.

Ryan Urness: Thank you, Steve.

Ryan Urness: All forward looking statements made during this conference call are provided pursuant to the safe harbor provisions of the Private Security's litigation reform act of 1995.

Ryan Ernest: All forward looking statements made during this conference call are provided pursuant to the safe harbor provisions of the Private Security's litigation reform act of 1995. Forward looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events. These forward looking statements are subject to risks and uncertainties which may cause actual results to differ materially from current projections, including those risks discussed in the company's filings with the US Securities and Exchange Commission. Forward looking statements are made solely as of the original broadcast state of this conference call, and we assume no obligation to update any forward looking statements.

Ryan Urness: Forward looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events.

Steven Nielsen: Today, an increasing number of diverse industry participants are constructing or upgrading wireline networks throughout the country. These wireline networks enable the delivery of gigabit network speeds to consumers and businesses.

Speaker Change: Telephone companies are deploying fiber to the home to enable gigabit high speed connections.

Speaker Change: The electric utilities are doing to say <unk>.

Ryan Urness: These forward looking statements are subject to risks and uncertainties which may cause actual results to differ materially from current projections, including those risks discussed in the company's filings with the US Securities and Exchange Commission.

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

Steven Nielsen: Wireless construction activity in support of newly available spectrum bands and fixed wireless access continues this year. The man for low latency, AI data center connectivity is growing rapidly. Federal and state support for role deployments of communications networks is dramatically increasing in scale and duration. Cable operators are increasing fiber deployments in 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. We are pleased that many of our customers are committed to multi-year capital spending initiatives as our nation and industry experience more stable economic conditions.

Speaker Change: Wireless construction activity in support of newly available spectrum bands at fixed wireless access continues this year.

Ryan Urness: Forward looking statements are made solely as of the original broadcast state of this conference call, and we assume no obligation to update any forward looking statements.

Steven Nielsen: In addition, the advent of AI data centers has sparked interest in broad new national deployments of high-capacity, low-latency intercity networks, as well as metro rings. The level of interest in intercity networks is the highest we have seen in the last 25 years.

Speaker Change: Demand for low latency AI data center connectivity is growing rapidly.

Steven Nielsen: Industry participants have stated their belief that a single high-capacity fiber network can most cost-effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment.

Steven Nielsen: Some of these same industry participants who also provide wireless services strongly believe that the ability to provision converged wireline fiber and wireless services, create significant competitive advantage.

Steven Nielsen: Steve.

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

Steven Nielsen: Thanks, Ryan.

Steven Nielsen: On June 17, after over 25 years as I come CEO, I announced my retirement effective November 30th. Upon my retirement Dan Payvich will become our CEO.

Steven Nielsen: Steve. Thanks, Ryan.

Cable operators are increasing fiber deployments in rural America capacity expansion projects are underway.

Steven Nielsen: On June 17, after over 25 years as I come CEO, I announced my retirement effective November 30th.

Dan Payvich: Now I will turn the call over to Dan for some opening comments.

Steven Nielsen: Upon my retirement Dan Payvich will become our CEO.

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

Dan Payvich: Thank you, Steve.

Dan Payvich: Most importantly, thank you for your decades of leadership.

Dan Payvich: You have built Vycom into a true leader in our industry, and I look forward to continuing to work alongside you over the coming months.

Steven Nielsen: These views support our belief that the appetite for massive fiber deployments is irreversible.

Speaker Change: We are pleased that many of our customers are committed to multiyear capital spending initiatives as our nation and industry experience more stable economic conditions.

Dan Payvich: Congratulations on your upcoming retirement.

Steven Nielsen: We are confident in our strategies of prospects for our company, the capabilities of our dedicated employees, and the experience of our management team.

Dan Payvich: I would like to thank all my teammates at Vycom for welcoming me and for your support for the past three and a half years.

Speaker Change: We are confident in our strategies the prospects for our company the capabilities of our dedicated employees and the experience of our management team.

Dan Payvich: I am constantly impressed by your focus on executing our work safely, your passion for our business, and your dedication to delivering quality for our customers.

Steven Nielsen: Gross margin was 20.8% of revenue and increased 52 basis points compared to the second quarter of fiscal 2024.

Operator: Now operator, we will open the call for questions. Thank you. As a reminder to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. Please stand by when we compile the Q&A roster.

Steven Nielsen: General and administrative expenses were 8.3% of revenue, and all of these factors produced adjusted EBITDA of 158.3 million or 13.2% of revenue, and adjusted earnings per share of $2.46.

Speaker Change: Now operator, we will open the call for questions.

Speaker Change: Thank you.

Steven Nielsen: As a result, we continue to see a meaningfully broader set of opportunities for our industry.

Dan Payvich: Our success is because of you.

Steven Nielsen: We are pleased that a number of our customers have entered into strategic transactions, including refinancings, intended to provide the capital necessary for the incremental deployment of fiber to more than 9.5 million homes over the next several years. These individual transactions are currently awaiting regulatory approval, which is currently expected over the next 12 to 18 months.

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

Steven Nielsen: In addition to the incremental private capital associated with these transactions, a wide variety of programs are providing public capital to support broadband deployment.

Dan Payvich: The opportunities in our industry are unprecedented, and I believe we are well positioned to continue our growth as we pursue our vision to connect America.

Wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again.

Dan Payvich: I am honored and excited to lead Vycom in this next chapter.

Speaker Change: Standby, while we compile the Q&A roster.

Alex Regal: And our first question will come from Alex Regal from B. Riley Securities. Your line is open.

Steven Nielsen: Liquidity was strong at $622 million.

Steven Nielsen: Steve, back to you.

Steven Nielsen: Steve, back to you. Dan, I'm excited for you and Vycom as you lead our company to a bright future.

Speaker Change: And our first question will come from Alex Rygiel from B Riley Securities. Your line is open.

Steven Nielsen: Dan, I'm excited for you and Vycom as you lead our company to a bright future.

Steven Nielsen: Now going to slide 5.

Alex Regal: Good morning, Steve and Dan, and Dan. Welcome to the call here. I look forward to hearing from you over the next few quarters and many years to come. Thank you.

Speaker Change: Yes.

Steven Nielsen: The largest of these programs, the Broadband Equity Access Deployment Program, or BEAD, includes over $40 billion for the construction of rural communications networks in unserved and underserved areas across the country. This represents an unprecedented level of support and meaningfully increases the rural market that we expect will ultimately be addressed.

Steven Nielsen: In August, subsequent to the end of our second quarter, we completed the acquisition of Black & Veatch's public carrier wireless telecommunications infrastructure business, for $150 million. This business provides wireless construction services primarily in the states of New York, New Jersey, Missouri, Kansas, Colorado, Utah, Wyoming, Idaho, and Montana, and is our largest ever wireless services acquisition. It strategically expands our geographic presence, enabling us to more broadly address growth opportunities in wireless network modernization, including open RAN transformation initiatives and deployment services.

Alex Rygiel: Good morning, Steve and Dan and Dan welcome to the call here and look forward to hearing from you over the next few quarters and many years to come.

Steven Nielsen: As of early this week, 35 states and territories have completed all 10 approval steps as required by the NTIA, while 21 others have completed 9 of the 10. To date, approximately $22 billion, or 53% of the program total, has received initial proposal approval.

Steven Nielsen: Before I review our results and industry opportunities, I would like to thank my fellow employees for their hard work and dedication. Your efforts make Vycom the special place it is, to our directors. Thanks for your wisdom, guidance and oversight. I finished my time as CEO, a much better leader because of you. And finally, to my fellow shareholders, your support as I have led our company has been invaluable. Thanks for the opportunity to benefit from your council and the market's discipline.

Steven Nielsen: During our third and fourth quarter of fiscal 25, we expect modest revenues as the business is currently focused on site acquisition for next year's construction program. For fiscal year 26, we anticipate this acquisition to contribute $250 to $275 million of revenue, with post-integration EBITDA margins in line with our consolidated average. Finally, while our review of acquired backlog is still preliminary, we currently expect this acquisition to add approximately $1 billion of total backlog, which we will reflect in our third quarter report.

Steven Nielsen: Now moving to slide six.

Steven Nielsen: We believe the magnitude and importance of BEEJ should not be underappreciated as it addresses some of the most difficult and expensive locations to deploy in America and represents a generational deployment opportunity.

Steven Nielsen: For planning purposes, we currently expect to see DEED opportunities during the third quarter of calendar year 2025, macroeconomic conditions appear stable.

Steven Nielsen: In addition, the market for labor has improved in many regions around the country.

Steven Nielsen: Automotive and equipment supply chains have normalized, and prices for capital equipment have been stable since the first of the year.

Steven Nielsen: Within this context, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.

Steven Nielsen: Moving to slide seven.

Steven Nielsen: During the quarter, revenue increased 15.5%.

Steven Nielsen: Our top five customers combined produced 54.9% of revenue, increasing 7.1% organically. Demand increased from three of our top five customers. All other customers increased 12.3% organically.

Drew Deferrari: Going to slide 11.

Steven Nielsen: AT&T was our largest customer at 17.5% of revenue or $210.2 million.

Drew Deferrari: Cash flows used in operating activities were $7.5 million to support the sequential growth in Q2. The combined DSOs of accounts receivable and net contract assets were 117 days, an increase of seven days sequential.

Speaker Change: Thank you.

Alex Regal: A couple of quick questions here. First, Steve, your commentary on AI seemed very bullish, particularly about intercity networks. However, you know, more recently, Dicons opportunity has been Interest City.

Drew Deferrari: Going to slide 12.

Unknown Executive: to our directors.

Steven Nielsen: AT&T grew organically 20.6% its first quarter of organic growth since the January of 2023 quarter.

Drew Deferrari: Capital expenditures were $55.9 million, net of disposal proceeds, gross capex was $65.4 million.

Steven Nielsen: In addition, the advent of AI data centers has sparked interest in broad new national, deployments of high-capacity, low-latency intercity networks, as well as metro rings.

Alex Rygiel: Couple of quick questions here first.

Steven Nielsen: Lumen was our second largest customer, 13.6% of total revenue, or $163.7 million. Lumen grew organically 1%.

Drew Deferrari: During Q2, we acquired a telecommunications construction contractor for $20.8 million net of cash required, expanding our geographic footprint to Alaska. And this morning we announced that the company has acquired Black & Veatch's public carrier wireless telecommunications infrastructure business for $150 million in cash during Q3.

Unknown Executive: Thanks for your wisdom, guidance and oversight.

Steven Nielsen: Revenue from Comcast was $105.6 million, or 8.8% of revenue. Comcast was Dycom's third-largest customer.

Steven Nielsen: Customer who asked that we not identify them was our fourth largest customer at 95.8 million or 8% of revenue. This customer grew 73.2% organically. And finally, Verizon was our fifth largest customer at $85.3 million or 7.1% of revenue.

Steven Nielsen: This is the 22nd consecutive quarter where all of our other customers in aggregate, excluding the top five customers, have grown organically.

Speaker Change: Steve your commentary on AI.

Steven Nielsen: I finished my time as CEO, a much better leader because of you.

Steven Nielsen: Of note, fiber construction revenue from electric utilities was $88.7 million in the quarter.

Steven Nielsen: 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 and Wireless Wireline Converged Network, as those deployments dramatically increase the amount of outside plant network that must be extended and maintained.

Steven Nielsen: Now going to slide 8. Backlog at the end of the second quarter was $6.834 billion versus $6.364 billion at the end of the April 2024 quarter, an increase of $470 million. Of this backlog, approximately $3.83 billion is expected to be completed in the next 12 months. Backlog activity during the second quarter reflects solid performance as we booked new work and renewed existing work.

Speaker Change: Very bullish, particularly about intercity networks. However.

Steven Nielsen: We continue to anticipate substantial future opportunity, across a broad array of our customers, including those who have recently entered into strategic transactions and partnerships, during the quarter we received from Verizon, the construction agreement in New York.

Steven Nielsen: And finally, to my fellow shareholders, your support as I have led our company has been invaluable.

Steven Nielsen: For Brightspeed, a construction agreement in Ohio, Pennsylvania, New Jersey, Virginia, and North Carolina, from Comcast, a nationwide maintenance and construction agreement for AT&T, a utility light locating agreement in California, and various rural fiber construction agreements in Arizona, Oklahoma, Arkansas, Alabama, and North Carolina.

Steven Nielsen: Head count was 15,901.

Steven Nielsen: Now I will turn the call over to Drew for his financial review and outcome.

Speaker Change: More recently <unk> opportunity has been intra city. So can you talk about how <unk> is positioned in the inter city opportunity.

Drew Deferrari: Thanks, Steve, and good morning, everyone.

Drew Deferrari: Going to slide nine.

Steven Nielsen: So can you talk about how Dicons is positioned in the intercity opportunity, or are you like highlighting this sort of as the leading demand driver to interest city work? No, I think Alex, we have had exposure to intercity work. When the most recent industry announcements came out, I looked back and over the last several years we placed over 2,000 miles of intercity fiber. Essentially, you know, in an analogous situation to what we anticipate coming ahead. So I think we're as experienced in that market as anyone because we have long histories here in the subsidiaries. We worked a number of the routes that I think will anticipate some activity.

Drew Deferrari: Contract revenues were $1.203 billion and organic revenue increased 9.2%. Revenues from our recently acquired businesses were $65.9 million.

Steven Nielsen: Thanks for the opportunity to benefit from your council and the market's discipline.

Drew Deferrari: Adjusted EBITDA was $158.3 million, or 13.2% of contract revenues, compared to $130.8 million, or 12.6% in Q2-24, an increase of 60 basis points. Gross margin improved 52 basis points to 20.8% of revenue compared to 20.3% in Q2'24.

Drew Deferrari: G&A expense was 8.3% of revenue compared to 8.1% in Q2'24. GMA this year included incremental stock-based compensation of $2.2 million related to the CEO succession transition.

Drew Deferrari: Non-GAAP net income was $2.46 per share compared to $2.03 per share in Q2 last year. The change in net income reflects the $27.5 million increase in adjusted EBITDA and higher gains on asset sales, offset by $8.6 million of higher depreciation and amortization, $2.4 million of higher interest expense, and higher stock-based compensation and income tax.

Drew Deferrari: Going to slide 10.

Drew Deferrari: Our financial position and balance sheet remain strong. Cash and equivalents were $19.6 million and liquidity was $622 million. During Q2, we amended our senior credit facility to expand term loan capacity and extend the maturity to January 2029. At the end of Q2, we had $450 million of term loan outstanding and an undrawn $650 million revolving credit. Additionally, we have 500 million of senior notes out.

Drew Deferrari: Our capital allocation continues to prioritize organic growth, followed by M&A and opportunistic share repurchases within the context of our historical range of net leverage.

Speaker Change: Or are you like highlighting this sort of as a leading demand driver to entrust city work.

Steven Nielsen: The level of interest in intercity networks is the highest we have seen in the last 25, years.

Steven Nielsen: Finally, wireless networks are deploying additional spectrum bands and equipment so as to more, broadly and efficiently provision higher broadband services for both fixed and mobile access.

No I think Alex we have had exposure to inter city work.

Steven Nielsen: Industry participants have stated their belief that a single high-capacity fiber network, can most cost-effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment.

Steven Nielsen: Some of these same industry participants who also provide wireless services strongly believe, that the ability to provision converged wireline fiber and wireless services creates significant competitive advantages. This belief is evident as some wireless providers have recently invested in new fiber providers, while another wireline wireless provider is deploying fiber networks outside its traditional geographic footprint.

Steven Nielsen: As we review our results, please note that in our comments today and in the accompanying slides, we refer in certain non-gap measures.

Steven Nielsen: As we review our results, please note that in our comments today and in the accompanying slides, we refer in certain non-gap measures. We refer you to slides 15 through 20 for a reconciliation of these non-gap measures to their corresponding gap measures.

Steven Nielsen: These views support our belief that the appetite for massive fiber deployments is irreversible.

Speaker Change: When when the most recent industry announcements came out I look back over the last several years, we've placed over 2000 miles of intercity fiber.

Steven Nielsen: We refer you to slides 15 through 20 for a reconciliation of these non-gap measures to their corresponding gap measures.

Speaker Change: Sensually.

Speaker Change: Analogous situation to what we anticipate coming ahead, so I think we're as experienced.

Steven Nielsen: Now for the quarter.

Steven Nielsen: Now for the quarter. Revenue increased year over year to 1.203 billion, an increase of 15.5%. Organic revenue increased 9.2%. As we deploy gigabit wireline networks, wireless wireline converts networks and wireless networks, this quarter reflected an increase in demand from free of our top five customers. Gross margin was 20.8% of revenue and increased 52 basis points compared to the second quarter of fiscal 2024. General administrative expenses were 8.3% of revenue and all of these factors produced adjusted EBITDA of 158.3 million or 13.2% of revenue and adjusted earnings per share of $2.46, liquidity was strong at 622 million, now going to slide five.

Steven Nielsen: Revenue increased year over year to 1.203 billion, an increase of 15.5%. Organic revenue increased 9.2%.

Speaker Change: In that market as anyone.

Speaker Change: Because we have long histories here.

Speaker Change: In the subsidiaries.

Steven Nielsen: As we deploy gigabit wireline networks, wireless wireline converts networks and wireless networks, this quarter reflected an increase in demand from free of our top five customers.

Speaker Change: We've worked with a number of the routes that I think will anticipate some activity and if you go back far enough, we probably built shuttle so I think thats a significant opportunity for us.

Steven Nielsen: And if you go back far enough, we've probably built some of them.

Steven Nielsen: So I think that's a significant opportunity for us. I think more directly on the AI opportunity in general is that you've seen the announcements from Lumen and Microsoft at Corning. But probably as interesting is the fact that in a number of industries, advanced people highlighted the importance of low latency to AI as it moves from training to inference. And so I think that's going to create an opportunity around moving data processing or data centers to the edge of the network. And as the friend of the edge takes place. And I think you'll also see intercity, as you put it, or metro fiber rings also be affected.

Steven Nielsen: Gross margin was 20.8% of revenue and increased 52 basis points compared to the second quarter of fiscal 2024.

Speaker Change: I think more directly on the AI opportunity in general.

Speaker Change: Is that you have seen the announcements for luminaire, Microsoft at Corning.

Steven Nielsen: General administrative expenses were 8.3% of revenue and all of these factors produced adjusted EBITDA of 158.3 million or 13.2% of revenue and adjusted earnings per share of $2.46, liquidity was strong at 622 million, now going to slide five.

Speaker Change: But probably as interesting is the fact that in a number of industry events people have highlighted the importance of low latency to AI as it moves from training to endpoints.

Speaker Change: And so I think thats going to create an opportunity around moving data processing or data centers to the edge of the network and as that as the trend of the edge.

Steven Nielsen: In August, subsequent to the end of our second quarter, we completed the acquisition of black and beaches public carrier wireless telecommunications infrastructure business for $150 million. This business provides wireless construction services primarily in the states of New York, New Jersey, Missouri, Kansas, Colorado, Utah, Wyoming, Idaho and Montana, and is our largest ever wireless services acquisition. It strategically expands our geographic presence enabling us to more broadly address growth opportunities and wireless network modernization, including open ran transformation initiatives and deployment services.

Speaker Change: <unk> takes place that I think Youll also see.

Speaker Change: Intra city as you put it in our metro fiber rings also be affected.

Steven Nielsen: and we've had some preliminary discussions with some of the hyperscalers at a very high level, but that seems to be the way they're thinking about the opportunity.

Speaker Change: We've had some preliminary discussions with some of the hyper scaler at a very high level, but that seems to be.

Speaker Change: The way they are thinking about.

Speaker Change: The opportunity.

Alex Regal: Very helpful.

Speaker Change: Very helpful. And then secondly, total backlog increased nearly $500 million sequentially in the quarter.

Alex Regal: And then secondly, total backlog increased nearly 500 million sequentially in a quarter. Historically, you know, fiscal to Q is sort of a week or quarter for backlog growth and generally declines from the first quarter. So I guess. The question here is, what would the catalyst to the sequential increase in backlog, and are you starting to see bead awards built into your backlog?

Steven Nielsen: It strategically expands our geographic presence enabling us to more broadly address growth opportunities and wireless network modernization, including open ran transformation initiatives and deployment services.

Speaker Change: Historically fiscal Q as sort of a.

Speaker Change: A weaker quarter for backlog growth and generally declines from the first quarter. So.

Steven Nielsen: During our third and fourth quarter of fiscal 25, we expect modest revenues as the business is currently focused on site acquisition for next year's construction program. For fiscal year 26, we anticipate this acquisition to contribute $250 to $275 million of revenue with post integration EBITDA margins in line with our consolidated average. Finally, while our review of acquired backlog is still preliminary, we currently expect this acquisition to add approximately $1 billion of total backlog, which we will reflect in our third quarter report.

Speaker Change: I guess the question here is what was the catalyst to the sequential increase in back click log in or are you starting to see bead awards built into your backlog.

Steven Nielsen: So Alice, answer your second question. There is no bead in the backlog. As we said in the comments, we do expect bead opportunities next year. So sometime mid year and beyond, but there were none in the backlog. I just think we've had a broad set of opportunities that we highlighted and some that we didn't, that it was their time. And we're pleased with the performance and the backlog this quarter.

Alex Rygiel: So Alex to answer your second question. There is no beat in the backlog as we said in the comments, we do expect feed opportunities next year, so sometime mid year and beyond but there were none in the backlog I just think we had a broad set of opportunities that we highlighted.

Steven Nielsen: As a result, we continue to see a meaningfully broader set of opportunities for our industry.

Alex Rygiel: And some that we didn't that that it was their time.

Steven Nielsen: Now moving to slide six.

Steven Nielsen: Now moving to slide six. Today, an increasing number of diverse industry participants are constructing or upgrading wireline networks throughout the country. These wireline networks enable the delivery of gigabit network speeds, consumers, and business. In addition, the advent of AI data centers has sparked interest in broad new national deployments of high capacity, low latency, intercity networks, as well as metro rings. The level of interest in intercity networks is the highest we have seen in the last 25 years.

Alex Rygiel: And we're pleased that.

With the performance in the backlog this quarter.

Alex Regal: And just a quick follow-up on that. Do you see any risk to bead awards given the pending presidential election? Yeah, it's always hard to forecast what's going to happen with the government, but if you recall, bead was part of the Infrastructure Act that that was passed, I think, with 70 votes in the Senate on a pretty bipartisan basis. Historically, rural fiber deployments have enjoyed both support from both parties, particularly if there's a change in control with those states that are Republican.

Speaker Change: And just a quick follow up on that.

Speaker Change: Do you see any risk to feed awards, given the pending presidential election.

Steven Nielsen: In addition, the advent of AI data centers has sparked interest in broad new national deployments of high capacity, low latency, intercity networks, as well as metro rings.

Speaker Change: It's always hard to forecast, what's going to happen with the government, but if you recall <unk> was part of the infrastructure Act.

Steven Nielsen: In addition to the incremental private capital associated with these transactions, a wide, variety of programs are providing public capital to support broadband deployments.

Steven Nielsen: The level of interest in intercity networks is the highest we have seen in the last 25 years.

Speaker Change: That was passed I think with 70 votes in the Senate on a pretty bipartisan basis, historically rural fiber deployment Seth have enjoyed.

Steven Nielsen: This represents an unprecedented level of support and meaningfully increases the rural, market that we expect will ultimately be addressed.

Steven Nielsen: As of early this week, 35 states and territories have completed all 10 approval steps as required, by the NTIA, while 21 others have completed 9 of the 10. To date, approximately $22 billion, or 53 percent of the program total, has received, initial proposal approval.

Steven Nielsen: We believe the magnitude and importance of BEAD should not be underappreciated as it, addresses some of the most difficult and expensive locations to deploy in America and represents a generational deployment opportunity.

Steven Nielsen: Finally, wireless networks are deploying additional spectrum bands and equipment so as to more broadly and efficiently provision higher broadband services for both fixed and mobile access. Industry participants have stated their belief that a single high capacity fiber network can most cost effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment. Some of these same industry participants will also provide wireless services strongly believe that the ability to provision converts wireline fiber and wireless services creates significant competitive advantages.

Steven Nielsen: For planning purposes, we currently expect to see BEAD opportunities during the third, quarter of calendar year 2025. As BEAD continues to develop, we are also seeing significant deployment activity funded, by other state and federal programs.

Steven Nielsen: Macroeconomic conditions appear stable.

Steven Nielsen: In addition, the market for labor has improved in many regions around the country.

Steven Nielsen: Automotive and equipment supply chains have normalized, and prices for capital equipment, have been stable since the first of the year.

Steven Nielsen: Within this context, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers.

Steven Nielsen: Moving to slide 7.

Speaker Change: Both support from both parties.

Speaker Change: Particularly if there is a change in control.

Steven Nielsen: Industry participants have stated their belief that a single high capacity fiber network can most cost effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment.

Speaker Change: With.

Speaker Change: With those states that are Republican it's interesting not only have those states been actively allocated beat body, but those states have also had active state programs. So.

Steven Nielsen: It's interesting. Not only have those states been actively allocated bead money, but those states have also had active state programs. So I think you know, there's no guarantees, but I think the support for rural fiber is both deep. And, as we said in our comments, you're reversible at this point.

Speaker Change: Theres no guarantees, but I think the support for rural fiber.

Speaker Change: As both deep and as we said in our comments irreversible at this point.

Alex Regal: Very helpful. Thank you.

Very helpful. Thank you.

Steven Nielsen: This belief is evident as some wireless providers have recently invested in new fiber providers while another wireline wireless provider is deploying fiber networks outside its traditional geographic footprint. These views support I believe that the appetite for massive fiber deployments is irreversible. As a result, we continue to see a meaningfully broader set of opportunities for our industry. We are pleased that a number of our customers have entered into strategic transactions, including refinancing, intended to provide the capital necessary for the incremental deployment of fiber to more than 9.5 million homes over the next several years.

Speaker Change: Thank you.

Adam Tolheimer: Our next question will come from Adam Tolheimer from Thompson Davis. Your line is open.

Adam <unk>: Our next question will come from Adam <unk> from Thompson Davis Your line is open.

Adam Tolheimer: Hey, good morning, guys. Nice quarter.

Steven Nielsen: During the quarter, revenue increased 15.5%.

Adam <unk>: Hey, good morning, guys nice quarter, Steve Congrats on the.

Steven Nielsen: Our top 5 customers combined produced 54.9% of revenue, increasing 7.1% organically.

Adam Tolheimer: Steve, congrats on your retirement, and Dan. Congrats on your promotion.

Steven Nielsen: Demand increased from 3 of our top 5 customers. All other customers increased 12.3% organically.

Steven Nielsen: These views support I believe that the appetite for massive fiber deployments is irreversible.

Steven Nielsen: AT&T was our largest customer at 17.5% of revenue, or $210.2 million.

Steven Nielsen: AT&T grew organically 20.6%, its first quarter of organic growth since the January of 2023 quarter.

Adam <unk>: On your retirement and Dan Congrats on your promotion.

Steven Nielsen: Lumen was our second largest customer at 13.6% of total revenue, or $163.7 million. Lumen grew organically 1%.

Steven Nielsen: Revenue from Comcast was $105.6 million, or 8.8% of revenue. Comcast was Dycom's third largest customer.

Dan Chard: Thank you. Thank you.

Steven Nielsen: As a result, we continue to see a meaningfully broader set of opportunities for our industry.

Adam Tolheimer: Okay, so the question I probably got in the most this morning is, and maybe I'm reading this wrong. There's a lot of moving pieces, but it looks like organic revenue growth. Decelerates from call at 9% in Q2 to maybe half of that in Q3.

Speaker Change: Okay. So the question I, probably gotten the most this morning is and maybe I'm reading. This wrong. There is a lot of moving pieces, but it looks like organic revenue growth.

Steven Nielsen: We are pleased that a number of our customers have entered into strategic transactions, including refinancing, intended to provide the capital necessary for the incremental deployment of fiber to more than 9.5 million homes over the next several years. These individual transactions are currently awaiting regulatory approval, which is currently expected over the next 12 to 18 months.

Speaker Change: Celebrates from call it 9% in Q2 to maybe half of that in Q3.

Adam Tolheimer: And the question will be, is that analysis correct? And then if so, you know, are there specific customers that take a step back in Q3 versus Q2?

Speaker Change: And the question would be.

Speaker Change: Is that analysis correct.

Speaker Change: And then if so are there specific customers that take a step back in Q3 versus Q2.

Steven Nielsen: These individual transactions are currently awaiting regulatory approval, which is currently expected over the next 12 to 18 months. In addition to the incremental private capital associated with these transactions, a wide variety of programs are providing public capital to support broadband deployments. The largest of these programs, the broadband equity access deployment program or be includes over $40 billion for the construction of rural communications networks and underserved areas across the country. This represents an unprecedented level of support and meaningfully increases the rural market that we expect will ultimately be addressed.

Drew DeFarrari: Hey, Adam. It's true.

Drew Deferrari: As we look ahead to the third quarter ending October 26, 2024, we expect total contract revenues to increase mid to high single digit as a percentage of contract revenues compared to $1.136 billion in Q3-24. Included in the expectation for the current quarter is approximately $75 million of acquired revenue, compared to the prior year period that included $45.2 million of acquired revenue, and $26.5 million of revenues from the impacts of a change order and the closeout of several projects.

Drew Ferrari: Hey, Adam it's drew I'll jump in here so.

Drew DeFarrari: I'll jump in here. So recall that last year in Q3, we had both acquired revenues of 45 million. And then we also had the change order and close out of several projects; that was another 26. Million. So if you take that out of last year's number, and then you take the expected 75 million out of this year's number, I think you'll get to, you know, organic growth similar to overall growth, which is in that bid to high single digit range.

Call that last year in Q3, we had both acquired revenues of $45 million.

Steven Nielsen: In addition to the incremental private capital associated with these transactions, a wide variety of programs are providing public capital to support broadband deployments.

Speaker Change: And then we also had a change order and close out of several projects that was another $26 million.

Steven Nielsen: The largest of these programs, the broadband equity access deployment program or be includes over $40 billion for the construction of rural communications networks and underserved areas across the country. This represents an unprecedented level of support and meaningfully increases the rural market that we expect will ultimately be addressed.

Drew Deferrari: We also expect non-GAAP-adjusted EBITDA percentage of contract revenues to increase 25 to 50 basis points, compared to 12.9% in Q3-24 after excluding 1.8% of incremental benefit in the Q3-24 EBITDA margin from the impacts of a change order and closeout of several projects. The expectation of non-GAAP-adjusted EBITDA excludes $5.5 million of pre-tax acquisition integration costs related to the Q3-25 acquisition.

Drew Deferrari: Other expectations about the Q325 outlook include $9.5 million of amortization expense. $14.3 million of stock-based compensation that includes $7.1 million of incremental expense related to the CEO succession transition.

Speaker Change: So if you take that out of last year's number and then you takes the expected $75 million out of this year's number.

Drew Deferrari: $17.5 million of net interest expense, a 26.5% non-GAAP effective income tax rate and $29.6 million diluted share.

Drew Deferrari: The Q3-25 acquisition is a carve-out from an existing business, and we expect pre-tax integration costs of $5.5 million that we will disclose separately and exclude from our presentation of non-GAAP adjusted EBITDA. Other pre-tax costs related to the acquisition that are included in the company's consolidated outlook are, $3.7 million of amortization expense that is included in the $9.5 million expectation, and $2.4 million of interest expense that is included in the $17.5 million expectation. On a gap basis, the combined pre-tax integration and other costs are expected to total approximately $11.6 million, or $0.29 per common share diluted on an after-tax basis.

Speaker Change: I think youll get to.

Speaker Change: Organic growth similar to overall growth, which is in that mid to high single digit range and I think I just add it would be nice if we could have a $26 million change order and close out every third quarter, Adam but that's why we called it out a year ago.

Steven Nielsen: Yeah, and I think I just I had it be nice if we could have a $26 million change order and close out every third quarter, Adam, but that's why we called it out a year ago was that people would be aware of that. I think the other thing supporting our guidance for mid to high is it has been a wet August so far. Hopefully, things will dry out, but we wanted to make sure that we reflected that in the guidance.

Steven Nielsen: As of early this week, 35 states and territories have completed all 10 approval steps as required by the NTIA, while 21 others have completed 9 of the 10.

Steven Nielsen: As of early this week, 35 states and territories have completed all 10 approval steps as required by the NTIA, while 21 others have completed 9 of the 10. Today, approximately 22 billion or 53 percent of the program total has received initial proposal approval. We believe the magnitude and importance of B should not be underappreciated as it addresses some of the most difficult and expensive locations to deploy in America and represents a generational deployment opportunity.

Adam <unk>: That people would be aware of it I think the other thing supporting our guidance for mid to high as it has been a wet August so far.

Steven Nielsen: Today, approximately 22 billion or 53 percent of the program total has received initial proposal approval. We believe the magnitude and importance of B should not be underappreciated as it addresses some of the most difficult and expensive locations to deploy in America and represents a generational deployment opportunity.

Things will dry out, but we wanted to make sure that we reflected that in the guidance.

Steven Nielsen: We have one customer that we think may be a little bit slower, that's had a pretty strong first half of the year. And then, and this is always hard to deal with or calculate with certainty, but, you know, we've been encouraged by the pace of need approvals, the state level approvals by NTIA. It picked up over the summer, and it may be a little bit counterintuitive, but for some of the smaller customers that they've seen evidence that, hey, this B thing is coming, these states are getting approved. And so we know that within a year, there's going to be real activity on that plan that they may have slowed a little bit going into the back half of the year.

We have one customer that we think maybe a little bit slower thats had a pretty strong first half of the year.

Adam <unk>: And this is always hard to.

Adam <unk>: Deal with calculate with certainty, but we've been encouraged by the pace of.

Steven Nielsen: For planning purposes, we currently expect to see deed opportunities during the third quarter of calendar year 2025.

Steven Nielsen: For planning purposes, we currently expect to see deed opportunities during the third quarter of calendar year 2025. As deed continues to develop, we are seeing also seeing significant deployment activity funded by other state and federal programs. Macroeconomic conditions appear stable. In addition, the market for labor has improved in many regions around the country. Automotive and equipment supply chains have normalized and prices for capital equipment have been stable since the first of the year.

Adam <unk>: Bead approvals at the state level approvals by NTIA has picked up over the summer and it may be a little bit counterintuitive, but for some of the smaller customers that they have seen evidence that <unk> thing is coming these states states are getting approved.

Steven Nielsen: As deed continues to develop, we are seeing also seeing significant deployment activity funded by other state and federal programs.

Adam <unk>: And so we know that within a year theres going to be real activity that plan that they may have slowed a little bit going into the back half of the year.

Steven Nielsen: Macroeconomic conditions appear stable.

Steven Nielsen: Again, hard to tell with real certainty, but it has been an impressive run of state approvals in the last, call it six weeks.

Steven Nielsen: In addition, the market for labor has improved in many regions around the country.

Adam <unk>: Again hard to tell with.

Adam <unk>: With real certainty, but.

Adam <unk>: It has been an impressive run up state approvals in the last call it six weeks.

Steven Nielsen: Automotive and equipment supply chains have normalized and prices for capital equipment have been stable since the first of the year.

Steven Nielsen: 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 7 During the quarter revenue increased 15.5% or top 5 customers combined produced 54.9% of revenue increasing 7.1% organically Demand increased from 3 of our top 5 customers, all other customers increased 12.3% organically AT&T was our largest customer at 17.5% of revenue or 210.2 million AT&T grew organically 20.6% its first quarter of organic growth since the January of 2023 quarter Lumen was our second largest customer 13.6% of total revenue or 163.7 million Lumen grew organically 1%.

Adam Tolheimer: Okay, all that makes sense.

Speaker Change: Okay, No that makes sense and then I wanted to ask about black and veatch.

Adam Tolheimer: And then wanted to ask about black and beach; a billion dollar backlog seems high. And I'm curious how diversified it is from a customer standpoint. And the other thing I'm curious about is their model is different than yours, right? They don't; they practically don't do any self-performed construction.

Speaker Change: The $1 billion backlog seems high.

Speaker Change: Curious how diversified it is from a customer standpoint, and the other thing I'm curious about is their model is different than years right.

Speaker Change: They don't they practically dunkin' any self performed construction so im curious how youre going to change that model.

Adam Tolheimer: So I'm curious how you're going to change that model.

Adam Tolheimer: Well, first on the backlog, Adam, it comes primarily from perfect arrangements in the stage that we listed in the press release, as well as new site builds. And it worked that we're well familiar with a very good customer.

Speaker Change: Well first on the backlog Adam It comes primarily from Turkey arrangements in the states as we've listed.

Speaker Change: The press release as well as new site builds.

Speaker Change: And it's work that we are well familiar with a very good customer.

Adam Tolheimer: I think there are significant synergies as we've looked at the transaction. We've spent a lot of time and effort and money in the last several years enhancing our program and project management systems for the prosecution of wireless work. We think our folks do it well. And we think that this acquisition was a great way for us to create even more value out of the investments we've made in those systems over the last several years. Great.

Speaker Change: I think there are significant synergies as we've looked at the transaction.

Speaker Change: We've spent a lot of time and effort and money in the last several years enhancing our program and project management.

Steven Nielsen: Revenue from Comcast was 105.6 million or 8.8% of revenue Comcast was Dycom's third largest customer The customer who asked that we not identify them was our fourth largest customer at 95.8 million or 8% of revenue This customer grew 73.2% organically and finally Verizon was our fifth largest customer at 85.3 million or 7.1% of revenue This is the 22nd consecutive quarter where all of our other customers in aggregate excluding the top 5 customers have grown organically Of no fiber construction revenue from electric utilities was 88.7 million in the quarter 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 and wireless wireline converge networks As those deployments dramatically increased the amount of outside plant network that must be extended and maintained Now going to slide eight Backlog at the end of the second quarter was 6.834 billion versus 6.364 billion at the end of the April 2024 quarter An increase of 470 million of this backlog approximately 3.83 billion is expected to be completed in the next 12 months Backlog activity during the second 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 including those who have recently entered into strategic transactions and partnerships During the quarter we received from Verizon the construction agreement in New York We're bright speed a construction agreement in Ohio, Pennsylvania, New Jersey, Virginia and North Carolina From concast a nationwide maintenance and construction agreement We're AT&T utility light locating agreement in California And various rural fiber construction agreements in Arizona, Oklahoma, Arkansas, Alabama and North Carolina Headcount was 15,901.

Speaker Change: Systems for the prosecution of wireless work, we think our folks do it well and we think that this acquisition was a great way for us to create even more value out of the investments we've made in those systems over the last several years.

Steven Nielsen: Now it'll turn the call back.

Adam Tolheimer: I'll turn it over. Thank you.

Speaker Change: Great I'll turn it over thank you.

Speaker Change: Thank you.

Sangita Jain: And our next question will come from San Gita Jane from KeyBank Capital Markets. Your line is open.

Steven Nielsen: Thanks Drew.

Speaker Change: And our next question will come from Sandeep Jain from Keybanc capital markets. Your line is open.

Sangita Jain: Good morning. Thanks for taking my question. If I can ask a follow-up on the Black and Green acquisition, Steve, maybe from a strategic point of view, you're seeing so much growth on the wireline side. Can you tell us what made you think about making an acquisition on the wireless side here? Well, Sangita, to begin with, you know, we're not even, but we not only thought about it, but this is something that we actually surfaced and approached them. So I think this is, you know, something that is strategic to us. We've been in the wireless business now for kind of north of 12 years.

Steven Nielsen: Moving to slide 13.

Sandeep Jain: Yes. Good morning, Thanks for taking my question.

Sandeep Jain: If I can ask a follow up on the black and Veatch acquisition, Steve maybe from a strategic point of view Youre seeing so much growth on the wireline side can you tell us what made you.

Steve: Think about making an acquisition on the wireless idea.

Steven Nielsen: This quarter we experienced solid activity and capitalized on our significant strengths.

Steve: Well sangeeta to begin with.

Steven Nielsen: First and foremost, we maintain significant customer presence throughout our markets.

Even but we not only thought about it but this is something that we actually surfaced.

Steve: And approach them. So I think this is something that is strategic to us we've been in the wireless business now for kind of north of 12 years.

Steve: We think we do a good job at it we're careful and where we apply those efforts, but we have made significant investments.

Sangita Jain: But us, it's just a broader theme of becoming a better partner for all of our customers, particularly those that do both wireline and wireless. I mean, ultimately, in those customer organizations, we work for the same people. And so this was a solid enhancement to our business. And, you know, we're excited about the, not only the business we've acquired, but potential opportunities that may bring in the future.

Steve: And to US, it's just a broader theme of becoming a better partner for all of our customers, particularly those that do both wireline and wireless I mean, ultimately those customer organizations, we work with the same people.

Steve: So this was a solid enhancement.

Steven Nielsen: We are encouraged by the increasing breadth in our business, and pleased with the opportunities accompanying our acquisition from Black & Veatch.

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

Steve: Our business.

Steven Nielsen: Telephone companies are deploying fiber to the home to enable gigabit high-speed connections.

Steven Nielsen: Rural electric utilities are doing the same, dramatically increased fees for consumers are being provisioned and consumer data usage is growing, particularly upstream.

Steve: We're excited about the <unk>.

Steven Nielsen: Wireless construction activity in support of newly available spectrum bands and fixed wireless access continues this year.

Steve: Not only the business, we've acquired but but potential opportunities that may bring.

Steve: In the future.

Sangita Jain: Great.

Sangita Jain: And if I can ask and follow up, the acquired revenue in your F3Q guide seems a little bit higher than what we would have expected. So I was wondering if there's a specific call out on where the acquisition is outperforming because it seems like Black and Rich is going to be a modest contributor at the next couple quarters. Sure, this is true again.

Speaker Change: Great and if I can ask one follow up.

Speaker Change: Acquired revenue in your <unk> guide seems a little bit higher than what we would have expected.

Speaker Change: I was wondering if there's a specific call out on.

Speaker Change: The acquisition is outperforming because it seems like black and veatch is going to be a modest contributor in the next couple of quarters.

Speaker Change: Sure.

Speaker Change: This is drew again, so on the acquisition if you recall last year in the third quarter, we made an acquisition as.

Sangita Jain: So, on the acquisition, if you recall, last year in the third quarter, we made an acquisition as well. And so we're backing out within this year's the 75 million, that includes the acquisition since the Q3 of last year as well as the two that we've done earlier this year. And now the new acquisition and Q3 of this year. So it's a combination of all of those businesses in the acquired results. Yeah. And I think saying, you know, modest in our mind, it's preliminary. We're still working. We've owned the business now since August 5th. So we're still tightening down our revenue forecast, but you know, 10 to 15 million of the score.

Speaker Change: As well and so we're backing out within this year is the $75 million that includes the acquisition.

Speaker Change: Since the Q3 of last year as well as to.

Speaker Change: Two that we've done earlier this year and now the new acquisition in Q3 of this year. So it's a combination of all of those businesses and the acquired results, yes and.

Drew DeFarrari: Now I will turn the call over to Drew for his financial review and outlook. Thanks, Steven. Good morning, everyone. Going to slide 9. Contract revenues were 1.203 billion and organic revenue increased 9.2%. Revenues from our recently acquired businesses were 65.9 million. Adjusted EBITDA was 158.3 million or 13.2% of contract revenues compared to 130.8 million or 12.6% in Q224, an increase of 60 basis points. Gross margin improved 52 basis points to 20.8% of revenue compared to 20.3% in Q224.

Drew DeFarrari: Now I will turn the call over to Drew for his financial review and outlook.

Sangeeta: And I think sangeeta modest in our minds. It's preliminary we are still working we've owned the business now since August 5th So we're still tightening down our revenue forecast, but 10% to $15 billion this quarter seeing through Stifel.

Drew DeFarrari: Thanks, Steven.

Drew DeFarrari: Good morning, everyone.

Sangita Jain: Hopefully, but that's what we're expecting at the moment. Thank you.

Drew DeFarrari: Going to slide 9.

Sangeeta: Hopefully <unk> got it.

Sangeeta: But that's that's what we're expecting at the moment.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Alex Waters: And our next question will come from Alex Waters from B of A. Your line is open.

Speaker Change: And our next question will come from Alex waters from Bofa. Your line is open.

Drew DeFarrari: Contract revenues were 1.203 billion and organic revenue increased 9.2%. Revenues from our recently acquired businesses were 65.9 million.

Alex Waters: Hey, good morning, guys. Thanks so much for taking my questions. Steve, congrats on their retirement and Dan. Congratulations to you as well.

Alex Waters: Hey, good morning, guys. Thanks, so much for taking my questions, Steve Congrats on the retirement and Dan Congratulations to you as well.

Drew DeFarrari: GNA expense was 8.3% of revenue compared to 8.1% in Q224. GNA this year included incremental stock base compensation of 2.2 million related to the CEO succession transition. Non-GAP net income was $2.46 per share compared to $2.3 per share in Q2 last year. The change in net income reflects the $27.5 million increase in adjusted EBITDA and higher gains on asset sales. Offset by 8.6 million of higher depreciation and numberization 2.4 million of higher interest expense and higher stock base compensation and income tax expense.

Alex Waters: Maybe just first off here, kind of going back to Alex's first question.

Speaker Change: Maybe just first off here kind of going back to Alex's first question, Steve in the past you've noted kind of that data center opportunity has been modest and revenues heavier.

Alex Waters: Steve, in the past, you noted, kind of, that data center opportunity has been modest to revenues. Have your, have your thoughts evolved much more than that to what it could be a contributor for Diacom.

Speaker Change: Have your thoughts evolved much more than that to what it could be a contributor for daikon and then maybe just secondly saw really strong growth from customer number for this quarter I know you spoke to it a little bit in your prepared remarks, but can you can you discuss a little bit more about what's really driving that growth and your expectations for them gone.

Drew DeFarrari: Adjusted EBITDA was 158.3 million or 13.2% of contract revenues compared to 130.8 million or 12.6% in Q224, an increase of 60 basis points. Gross margin improved 52 basis points to 20.8% of revenue compared to 20.3% in Q224.

Alex Waters: And then maybe the secondly, some really strong growth from customer number four. This court, I know you spoke to a little bit and prepare remarks, but can you discuss a little bit more about what's really driving that growth and your expectations for them going forward.

Steven Nielsen: A customer who asked that we not identify them was our fourth largest customer at 95.8 million, or 8% of revenue. This customer grew 73.2% organically. And finally, Verizon was our fifth largest customer at 85.3 million, or 7.1% of revenue.

Steven Nielsen: This is the 22nd consecutive quarter where all of our other customers in aggregate, excluding the top 5 customers, have grown organically.

Steven Nielsen: Of note, fiber construction revenue from electric utilities was $88.7 million in the quarter.

Steven Nielsen: Thanks. Sure, so Alex, with respect to data centers, as we talked about them and at least what we had observed previously, there were clearly new data centers being constructed. In some cases, they were being construction constructed in areas of the country that were not closely associated with existing Internet backbone. So there were certainly some opportunities for laterals. If you look at the announcement between Lumen and Microsoft and then the subsequent supply announcement by Corning that these are not small projects. These are projects that point routes that are measured in the thousands of miles. I mean, we don't know exactly, exactly what's going to transpire.

Speaker Change: Forward. Thanks.

Steven Nielsen: Demand for low-latency AI data center connectivity is growing rapidly.

Alex: Sure. So so Alex with respect to data centers as we've talked about them in at least what we had observed previously there were clearly new data centers being constructed in some cases, they were being construction constructed in areas of the country.

Steven Nielsen: Federal and state support for role deployments of communications networks is dramatically increasing in scale and duration. Cable operators are increasing piper deployments in rural America. Capacity expansion projects are underway.

Drew DeFarrari: Going to slide 10. Our financial position and balance sheet remains strong. Cash and equivalence were 19.6 million and liquidity was 622 million.

Alex: That were not closely associated with existing <unk>.

That backbone. So there were certainly some opportunities.

Drew DeFarrari: During Q2 we amended our senior credit facility to extend term loan capacity and extend the maturity to January 2029. At the end of Q2 we had 450 million of term loan outstanding and an undrawn $650 million revolving credit facility. Additionally we have 500 million of senior notes outstanding. Our capital allocation continues to prioritize organic growth followed by M&A and opportunistic share repurchases within the context or historical range of net leverage.

Alex: Short laterals, if you look at.

Speaker Change: Announcement between lumen and Microsoft and then the subsequent supply announcements by by Corning.

Speaker Change: These are not small projects these are projects that.

Speaker Change: And routes that are measured in the thousands of miles.

Speaker Change: We don't know exactly.

Speaker Change: Exactly.

Steven Nielsen: But if you think about Corning's announcement of having an order for 10% of their annual capacity each year for the next few years, that's a pretty sizable opportunity for us in the outside plant portion of the network. So I think what we're really seeing is essentially a nationwide opportunity for an enhancement to the inner city network, which we haven't seen for a long time. So how that stacks up against a whole bunch of other robust opportunities remains to be seen, but we think it's pretty significant.

Speaker Change: It's going to transpire, but if you think about corning's announcement of having an order for 10% of their annual capacity each year for the next two years, that's a pretty sizable opportunity.

Speaker Change: <unk>.

Speaker Change: For us in the outside plant portion of the network. So I think what we're really saying is.

Drew DeFarrari: Going to slide 11. Cash flows used in operating activities were $7.5 million to support the sequential growth in Q2.

Speaker Change: Essentially a nationwide opportunity for an enhancement to the inner city network, which we haven't seen for a long time, so how that stacks up against a whole bunch of other robust robust opportunities remains to be seen.

Drew DeFarrari: The combined DSOs of accounts receivable and net contract assets were 117 days and increase of 7 days sequentially.

Drew DeFarrari: Capital expenditures were $55.9 million net of disposal proceeds and gross catbacks was $65.4 million.

Speaker Change: But we think it's pretty significant.

Steven Nielsen: And then I think, with respect to the customer, you referenced into just more broadly. We were really pleased with the news flow over the last, let's call it, two to three months in that you had a number of strategic transactions where you had new sources of capital coming in to support the deployment of new high-capacity networks. And so I think what that indicates to me is the several things. So first, if you look at our customers like number four, as well as a number of others that are traditionally very significant to us, they really seem pleased with the returns to their deployment of capital to build out new high-capacity infrastructure.

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

Speaker Change: And then I think with respect to the customer you referenced and just more broadly we were really pleased with the news flow over the last let's call. It two to three months and that you had a number of strategic transactions, where you had new sources of capital coming in to support that apply.

Steven Nielsen: We are pleased that many of our customers are committed to multi-year capital spending initiatives as our nation and industry experience more stable economic conditions.

Steven Nielsen: We are confident in our strategies, the prospects for our company.

Steven Nielsen: The capabilities of our dedicated employees and the experience of our management team.

Drew DeFarrari: During Q2 we acquired a telecommunications construction contractor for 20.8 million net of cash required expanding our geographic footprint to Alaska.

Drew DeFarrari: And this morning we announced that the company has acquired black and beaches public carrier wireless telecommunications infrastructure business for $150 million in cash during Q3, going to slide 12. As we look ahead to the third quarter ending October 26, 2024, we expect total contract revenues to increase mid to high single digit as a percentage of contract revenues compared to 1.136 billion in Q324, included in the expectation for the current quarter is approximately 75 million of acquired revenues compared to the prior year period that included 45.2 million of acquired revenues and 26.5 million of revenues from the impacts of a change order and the close out of several projects.

Speaker Change: The deployment of new high capacity networks.

Speaker Change: And so I think what that indicates to me as several things. So so first if you look at our customers like number four as well as a number of others that are our traditional eight.

Very significant to us they really seem pleased with the returns to their deployment of capital.

Speaker Change: To build out new high capacity infrastructure. So so we're seeing programs broaden either geographically or in duration. So we're seeing more.

Steven Nielsen: So we're seeing programs broaden either geographically or in duration. So we're seeing more and for longer.

Steven Nielsen: We have extended our geographic reach and expanded our program management and network planning services.

Steven Nielsen: In fact, over the last several years, we believe we have meaningfully increased the long-term value of our maintenance and operations business.

Steven Nielsen: A trend which we believe will parallel our deployment of gigabit wireline direct and wireless wireline converge networks. As those deployments dramatically increase the amount of outside plant network that must be extended and maintained.

Speaker Change: For longer.

Steven Nielsen: We talked a little bit about the federal and state support. If you think about it over the last three years, that's been a phenomenal amount of capital that's been committed by both federal and state governments.

Speaker Change: We talked a little bit about the federal and state support if you think about over the last three years, that's been a phenomenal amount of capital Thats been committed.

By both federal and state governments.

Steven Nielsen: We just talked about the AI opportunity. You know what's always interesting in this industry is just when you think you know where all the money's going to come from. There's a new source. So thinking that the hyper scalers could be active participants in providing capital of our industry is encouraging. You know, for them, a big fiber program is, I'm sure, a significant commitment. But when you think that they an aggregate are supposedly going to spend something like $200 billion in capital this year, their involvement is helpful. And then, if you look at the strategic announcements over the last couple of months, we've seen some M&A, mergers amongst customers; we've seen joint ventures established with new, deep-pocketed, very well-respected companies coming into the industry.

Speaker Change: We just talked about the AI opportunity, what's always interesting in this industry is just when do you think you know where all the money is going to come from there as a new source, so thinking that the hyperscale orders.

Drew DeFarrari: We also expect non-gap adjusted EBITDA percentage of contract revenues to increase 25 to 50 basis points compared to 12.9% in Q324 after excluding 1.8% of incremental benefit in the Q324 EBITDA margin from the impacts of the change order and close out of several projects. The expectation of non-gap adjusted EBITDA excludes 5.5 million of pre-tax acquisition integration costs related to the Q325 acquisition. Other expectations about the Q325 Outlook include 9.5 million of amortization expense, 14.3 million of stock based compensation that includes 7.1 million of incremental expense related to the CEO succession transition, 17.5 million of net interest expense, a 26.5% non-gap effective income tax rate, and 29.6 million diluted shares.

Speaker Change: It could be active participants of providing capital to our industry is encouraging.

Speaker Change: For them, a big fiber program as I am sure a significant commitment, but when do you think that they are an aggregator.

Speaker Change: Supposedly going to spend something like $200 billion in Capex this year.

Speaker Change: Their involvement is helpful.

Speaker Change: And then if you look at the strategic announcements over the last couple of months, we've seen some M&A.

Drew DeFarrari: GNA expense was 8.3% of revenue compared to 8.1% in Q224. GNA this year included incremental stock base compensation of 2.2 million related to the CEO succession transition.

Speaker Change: Mergers amongst customers, we've seen joint ventures established with.

Speaker Change: New deep pocketed very well respected.

Speaker Change: Companies coming into the industry I, just think there's just a broad set of opportunities and wireline.

Steven Nielsen: I just think there's just a broad set of opportunities in wire line.

Alex Waters: Thank you, guys. Thank you.

Steven Nielsen: Now going to slide 8.

Speaker Change: Thank you guys.

Steven Nielsen: Backlog at the end of the second quarter was $6.834 billion versus $6.364 billion at the end of the April 2024 quarter. An increase of $470 million. Of this backlog, approximately $3.83 billion is expected to be completed in the next 12 months. Backlog activity during the second quarter reflects solid performance as we booked new work and renewed existing work.

Steven Nielsen: We continue to anticipate substantial future opportunities across a broad array of our customers, including those who have recently entered into strategic transactions and partnerships.

Steven Nielsen: During the quarter, we received from Verizon, a construction agreement in New York.

Steven Nielsen: From Comcast, a nationwide maintenance and construction agreement.

Steven Nielsen: For Brightspeed, a construction agreement in Ohio, Pennsylvania, New Jersey, Virginia, and North Carolina.

Speaker Change: Thank you.

Stephen Fisher: And our next question will come from Stephen Fisher from UBS. Your line is open. Well, thanks.

Operator: Now operator, we will open the call for questions.

Speaker Change: And our next question will come from Steven Fisher from UBS. Your line is open.

Steven Nielsen: For AT&T, a utility line locating agreement in California.

Operator: Thank you.

Stephen Fisher: Good morning and best wishes, Stephen Dan. Maybe just to start off with some follow-ups on black and beach, just curious what the growth rate embedded in that 250 to 275 million of revenues is for 2020 for your fiscal 26. So what's the trailing right now or what's the calendar 24 expected to be, and how much of that 250 to 275 is in backlog.

Steven Fisher: Thanks, Good morning, and best wishes, Steve and Dan.

Drew DeFarrari: The Q325 acquisition is a carve out from an existing business and we expect pre-tax integration costs of 5.5 million that we will disclose separately and exclude from our presentation of non-gap adjusted EBITDA. Other pre-tax costs related to the acquisition that are included in the company's consolidated Outlook are 3.7 million of amortization expense that is included in the 9.5 million dollar expectation and 2.4 million of interest expense that is included in the 17.5 million dollar expectation. On a gap basis, the combined pre-tax integration and other costs are expected to total approximately 11.6 million, or 29 cents per common share diluted on an after-tax basis.

Steven Fisher: Maybe just to start off with some follow ups on black and Veatch, just curious what the growth rate embedded in that $250 million to $275 million.

Speaker Change: Revenues is for 2020 for your fiscal 'twenty six.

Speaker Change: The trailing right now or what.

Speaker Change: The calendar 'twenty four expected to be.

Speaker Change: And how much of that $2 50 to $275 in backlog.

Stephen Fisher: And then I guess I'm just curious on sort of the bigger picture of how you see the shape of the cyclical curve and investment for things like Iran and other wireless investment relative to the fiber curve. Yeah.

Speaker Change: And then I guess I'm, just curious on sort of the bigger picture of how you see the the shape of the cyclical curve in investment.

Speaker Change: For things like O ran and other wireless investment.

Speaker Change: Relative to the fiber curves.

Drew DeFarrari: So, Steve, just to take your first question about the trailing revenues, I mean, we didn't buy the business that way that in wireless, there's lots of visibility when new programs are initiated down to the site level, and we use that information to create a good forecast for. Let's call it the next 30 months. So the back half of this year and the two years following, and that's really literally down to the number of sites in each one of these states. So we have good visibility from our growth perspective, as we just indicated. You know, we're not looking at more than 10 to 15 million in revenue each of these last two quarters.

Speaker Change: Yes, so Steve just just to take your first question about the trailing revenues I mean, we didn't buy the business that way.

Speaker Change: In wireless there is lots of visibility when new programs are initiated down to the site level and we use that information to create a good forecast for let's call. It. The next 30 months. So the back half of this year and the two years following.

Drew DeFarrari: Non-GAP net income was $2.46 per share compared to $2.3 per share in Q2 last year. The change in net income reflects the $27.5 million increase in adjusted EBITDA and higher gains on asset sales.

Drew DeFarrari: Offset by 8.6 million of higher depreciation and numberization 2.4 million of higher interest expense and higher stock base compensation and income tax expense.

Drew DeFarrari: Going to slide 10.

Speaker Change: And that's really literally down to the number of sites.

Drew DeFarrari: Our financial position and balance sheet remains strong. Cash and equivalence were 19.6 million and liquidity was 622 million. During Q2 we amended our senior credit facility to extend term loan capacity and extend the maturity to January 2029. At the end of Q2 we had 450 million of term loan outstanding and an undrawn $650 million revolving credit facility. Additionally we have 500 million of senior notes outstanding.

Speaker Change: And each one of these.

Speaker Change: States. So we have good visibility from a growth perspective, as we just indicated we're not looking at more than 10% to $15 billion in revenue. Each of these last two quarters. So when you comp that next year, obviously essentially all of the revenue that we see in the back half of next year is going to be organic.

Drew DeFarrari: Our capital allocation continues to prioritize organic growth followed by M&A and opportunistic share repurchases within the context or historical range of net leverage.

Steven Nielsen: Telephone companies are deploying fiber of the home to enable gigabit high-speed connections. Rural electric utilities are doing the same. Dramaticly increased fees for consumers are being provisioned and consumer data usage is growing, particularly upstream. Wireless construction activity in support of newly available spectrum bands and fixed wireless access continues this year. The man for low latency, AI data center connectivity is growing rapidly. Federal and state support for role deployments of communications networks is dramatically increasing in scale and duration.

Drew DeFarrari: Going to slide 11.

Drew DeFarrari: So when you comp that next year, obviously, essentially all of the revenue that we see in the back half of next year is going to be organic out of the acquisition in the way that we calculate organic growth. So we think it's a good organic growth opportunity. We think that the construction activity as scheduled will increase beginning at the first of the year. And so we think that's a, you know, a very good solid plan. In terms of revenue forecast, that's all in backlog. I mean, that billion dollars in backlog really extends through the end of calendar 27.

Drew DeFarrari: Cash flows used in operating activities were $7.5 million to support the sequential growth in Q2.

Drew DeFarrari: The combined DSOs of accounts receivable and net contract assets were 117 days and increase of 7 days sequentially.

Speaker Change: Out of the acquisition and the way that we.

Calculate organic growth. So we think it's a good organic growth opportunity, we think that the construction activity as schedule will increase.

Speaker Change: Beginning at the first of the year and so we think thats up.

Speaker Change: A very good solid.

Steven Nielsen: Cable operators are increasing fiber deployments in 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. We are pleased that many of our customers are committed to multi-year capital spending initiatives as our nation and industry experience more stable economic conditions.

Speaker Change: <unk>.

Speaker Change: In terms of the revenue forecast that's all in backlog.

Speaker Change: $1 billion in backlog really extends through the end of calendar 'twenty seven.

Drew DeFarrari: And then I think, in general, we're just pleased to participate in this deployment of new equipment to modernize the network. I think that's a trend that we expect to continue for a while. There's clearly been one very major announcement in that space. And I believe it was a, you know, a several year announcement.

Speaker Change: And then I think in general we're just pleased to participate in this.

Speaker Change: Deployment of new equipment to modernize the network I think that's a trend that we expect to continue for a while there's clearly been one very major.

Drew DeFarrari: Capital expenditures were $55.9 million net of disposal proceeds and gross catbacks was $65.4 million.

Drew DeFarrari: During Q2 we acquired a telecommunications construction contractor for 20.8 million net of cash required expanding our geographic footprint to Alaska.

Steven Nielsen: We are confident in our strategies of prospects for our company, the capabilities of our dedicated employees and the experience of our management team.

Speaker Change: <unk> in that space and I believe it was.

Speaker Change: A several year announcement and that's what we're going to be in support.

Drew DeFarrari: And that's what we're going to be in support of.

Stephen Fisher: Okay, that's helpful. And then just maybe to follow up on Adam's question earlier about the growth in the third quarter, agree that it's all slower than we would have expected, and you gave some color there. I guess I'm just kind of curious about the bigger picture on organic growth here.

Speaker Change: Okay. That's helpful. And then just maybe to follow up on Adam's question earlier about the growth in the third quarter agree that.

Drew DeFarrari: going to slide 12.

Drew DeFarrari: As we look ahead to the third quarter ending October 26, 2024, we expect total contract revenues to increase mid to high single digit as a percentage of contract revenues compared to 1.136 billion in Q324, included in the expectation for the current quarter is approximately 75 million of acquired revenues compared to the prior year period that included 45.2 million of acquired revenues and 26.5 million of revenues from the impacts of a change order and the close out of several projects.

Speaker Change: It is a little slower than we would've expected and you gave some color there I guess just kind of curious about the bigger picture on organic growth here.

Drew DeFarrari: The expectation of non-gap adjusted EBITDA excludes 5.5 million of pre-tax acquisition integration costs related to the Q325 acquisition. Other expectations about the Q325 Outlook include 9.5 million of amortization expense, 14.3 million of stock based compensation that includes 7.1 million of incremental expense related to the CEO succession transition, 17.5 million of net interest expense, a 26.5% non-gap effective income tax rate, and 29.6 million diluted shares. The Q325 acquisition is a carve out from an existing business and we expect pre-tax integration costs of 5.5 million that we will disclose separately and exclude from our presentation of non-gap adjusted EBITDA.

Drew DeFarrari: You know, with so much private investment and all the public funding, it seems like there should be potential for double-digit organic growth here. Should we assume that, you know, we should be kind of building on this kind of need to offer single-digit growth from here, or is there something that's still kind of restraining it when we think about the next kind of handful of quarters? I think, Steve, you know, what's we're always factoring into our outlook is that we understand the big growth drivers to the business. They're significant. We've been able to grow double digits before.

Speaker Change #100: So much private investment in all the public funding it seems like there should be potential for double digit organic growth here should we assume.

Alex Regal: And our first question will come from Alex Regal from B. Riley Securities. Your line is open. Good morning, Steve and Dan and Dan. Welcome to the call here. I look forward to hearing from you over the next few quarters and many years to come. Thank you. A couple of quick questions here. First, Steve, your commentary on AI seemed very bullish, particularly about intercity networks. However, you know, more recently, Dicons opportunity has been interest city.

Drew DeFarrari: On a gap basis, the combined pre-tax integration and other costs are expected to total approximately 11.6 million, or 29 cents per common share diluted on an after-tax basis.

Steven Nielsen: Now it will turn the call back to Steve.

Steven Nielsen: Thanks, Drew, moving to slide 13.

Speaker Change #101: That we should be kind of building on this kind of mid to upper single digit growth.

Steven Nielsen: This quarter we experienced solid activity and capitalized on our significant strengths.

Speaker Change #102: From here.

Speaker Change #103: Or is there.

Speaker Change #104: It's something that's still kind of restraining it when we think about the next kind of handful of quarters.

Steven Nielsen: First and foremost, we maintain significant customer presence throughout our markets.

Steve: I think Steve.

Steven Nielsen: We are encouraged by the increasing breadth in our business and pleased with the opportunities accompanying our acquisition from Black and Beach.

Steve: We're always factoring into our outlook is that we understand the big growth drivers to the business. They are significant we've been able to grow double digits.

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

Alex Regal: So can you talk about how Dicons is positioned in the intercity opportunity or are you like highlighting this sort of as the leading demand driver to interest city work? No, I think Alex, we have had exposure to intercity work. When the most recent industry announcements came out, I looked back and over the last several years we placed over 2000 miles of intercity fiber. Essentially, you know, in an analogous situation to what we anticipate coming ahead.

Drew DeFarrari: We had sizable growth, as you recall, over the last two, three fiscal years. And there's nothing structurally that would say there's a lack of opportunity that wouldn't support that kind of growth again, but there's no guarantees the system service business. We earn the business one day at a time. We think we're a well-positioned. And it is always encouraging when we see customers announcing new initiatives, for example, to take advantage of hyperscaler capital. Or just, you know, new capital coming into the space to do more of what we already do. You know, it's interesting that just the most recent announcements in the space in the last couple, you know, over the last six months have added over 9.5 million homes incrementally to everybody's plans over the next four or five years.

Speaker Change #105: Before we had sizable growth as you recall over the last two or three fiscal years and Theres nothing structurally that would say there is a lack of opportunity that wouldnt support that kind of growth again, but there is no guarantees this as a service business. We earned the business one day at a time, we think we are.

Steven Nielsen: Telephone companies are deploying fiber of the home to enable gigabit high-speed connections.

Steven Nielsen: Rural electric utilities are doing the same.

Steve: Well positioned.

Speaker Change #106: It is always encouraging when we see customers announced.

Steven Nielsen: Dramaticly increased fees for consumers are being provisioned and consumer data usage is growing, particularly upstream.

Steven Nielsen: Wireless construction activity in support of newly available spectrum bands and fixed wireless access continues this year.

Alex Regal: So I think we're as experienced in that market as anyone because we have long histories here in the subsidiaries. We worked a number of the routes that I think will anticipate some activity. And if you go back far enough, we've probably built some of them. So I think that's a significant opportunity for us. I think more directly on the AI opportunity in general is that you've seen the announcements from Lumen and Microsoft at Corning.

Announcing new new initiatives for example to take advantage of hyper scaler.

Speaker Change #106: Capital or just new capital coming into the space to do more of what we already do.

It's interesting that just the most recent announcements in this space in the last couple.

Speaker Change #106: Over the last six months have added over $9 5 million homes.

Steven Nielsen: The man for low latency, AI data center connectivity is growing rapidly.

Speaker Change #106: Incrementally to everybody's plans over the next four or five years. So so we're encouraged.

Drew DeFarrari: So, so we're encouraged.

Stephen Fisher: Perfect. Thanks very much.

Speaker Change #107: Perfect. Thanks very much.

Rob Paul Masano: Thank you. Our next question will come from Rob Paul Masano from Raymond James. Your line is open.

Alex Regal: But probably as interesting is the fact that in a number of industry, advanced people highlighted the importance of low latency to AI as it moves from training to inference. And so I think that's going to create an opportunity around moving data processing or data centers to the edge of the network. And as the friend of the edge takes place. And I think you'll also see intercity as you put it, or metro fiber rings also be affected, and we've had some preliminary discussions with some of the hyperscalers at a very high level, but that seems to be the way they're thinking about the opportunity.

Speaker Change #108: Thank you.

Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Speaker Change #108: Our next question will come from Rob Palmisano from Raymond James Your line is open.

Operator: To withdraw your question, please press star 11 again.

Rob Paul Masano: Hey guys, this is Rob one for Frank Steve. Congratulations on your retirement and Dan. Congratulations on your new opportunity.

Operator: Please stand by while we compile the Q&A roster.

Rob Palmisano: Hey, guys. This is Rob on for Frank Steve Congratulations on your retirement and Dan Congratulations on your new opportunity.

Operator: And our first question will come from Alex Riegel from B. Reilly Securities.

Rob Paul Masano: Curious, do you expect to get a decent amount of business from the Lumen AI fiber build? How much, you know, do you guys do more generally with blowing fiber? How profitable is that business versus putting a shovel in the ground? You know, have you talked with these guys, and, you know, do you expect to be a part of that process?

Rob Palmisano: Curious do you expect to get a decent amount of business from the lumen AI fiber build.

Speaker Change #110: How much do you guys do more generally with blowing fiber.

Speaker Change #111: How profitable is that business versus putting a shovel in the ground.

Speaker Change #112: Have you talked with these guys and do you expect to be a part of that process. Thank you.

Rob Paul Masano: Thank you.

Steven Nielsen: And various rural fiber construction agreements in Arizona, Oklahoma, Arkansas, Alabama, and North Carolina.

Steven Nielsen: Headcount was 15,901.

Steven Nielsen: Yeah, Rob, I guess what I can say, as I mentioned earlier, we're in process or have completed over 2,000 miles of this type of work. So we think we understand that part of the network reasonably well, or as well as anybody else.

Drew Deferrari: Now I will turn the call over to Drew for his financial review and outlook.

Speaker Change #113: Yes, Rob I guess, what I can say as I mentioned earlier, we are in process or have completed over 2000 miles of this type of work.

Drew Deferrari: Thanks, Steven.

Steven Nielsen: Very helpful. And then secondly, total backlog increased nearly 500 million sequentially in a quarter. Historically, you know, fiscal to Q is sort of a week or quarter for backlog growth and generally declines from the first quarter. So I guess. The question here is, what would the catalyst to the sequential increase in back like log, and are you starting to see bead awards built into your backlog? So Alice, answer your second question.

Speaker Change #114: So we think we understand that part of the network reasonably well or as well as anybody else.

Steven Nielsen: If you go back long enough, some of the intercity routes are a good portion of some of the regions of the country. We actually were part of the construction process. So we have lots of history in that part of the network.

Speaker Change #114: If you go back long enough some of some of the intercity routes or good portion of some of the regions of the country. We actually were part of the construction process.

Speaker Change #114: So we have lots of history and that part of the network.

Steven Nielsen: I wouldn't ever comment specifically on an individual customer opportunity. But what I would say is that we don't see generally in any of our growth catalysts anything structural that would say that we can't achieve our current margins and hopefully do better. And as we've talked about before, that's what we're all about: trying to figure out how to make those better with each incremental opportunity.

Speaker Change #115: I wouldn't ever comment specifically on an individual customer opportunity.

Steven Nielsen: There is no bead in the backlog. As we said in the comments, we do expect bead opportunities next year. So sometime mid year and beyond, but there were none in the backlog. I just think we've had a broad set of opportunities that we highlighted and some that we didn't that it was their time. And we're pleased with the performance and the backlog this quarter. And just a quick follow up on that.

Speaker Change #115: But what I would say is that we don't see generally in any of our growth catalyst anything structural that would say that we can't.

Speaker Change #116: <unk>, our current margins and hopefully do better and as we talked about before that's what we're all about is trying to figure out how to make those better with each incremental opportunity.

Rob Paul Masano: Got it, thanks, guys. Thank you.

Speaker Change #117: Got it thanks guys.

Speaker Change #118: Thank you.

Steven Nielsen: Do you see any risk to bead awards given the pending presidential election? Yeah, it's always hard to forecast what's going to happen with the with the government, but if you recall, bead was part of the infrastructure act that that was passed, I think, with 70 votes in the Senate on a pretty bipartisan basis. Historically, rural fiber deployments have have enjoyed both support from both parties, particularly if there's a change in control with those states that are Republican.

Brent Thielman: Our next question will come from Brent Philman from DA Davidson. Your line is open.

Speaker Change #118: Our next question will come from Brent Thielman from D. A Davidson your line is open.

Operator: Your line is open.

Drew Deferrari: Good morning, everyone.

Drew Deferrari: Going to slide 9.

Brent Thielman: Yes, thanks.

Operator: Good morning, Steve and Dan, and Dan, welcome to the call here.

Drew Deferrari: Contract revenues were $1.203 billion and organic revenue increased 9.2%. Revenues from our recently acquired businesses were $65.9 million.

Brent Thielman: Yeah. Thanks, Good morning, Steve just.

Operator: Look forward to hearing from you over the next few quarters and many years to come.

Brent Thielman: Good morning. Steve, I just curious what actions you need to take at Black and Beach just to get the margins up to the corporate average or the big investments need to make their legacy agreements, anything like that. Yeah, Brent, I think the good news is the investments that we made in our own business to create scalability and to improve the efficiency and tightness of service delivery. All exist. Now, it's a big organization. We're getting good cooperation from the new folks. But it's really a blocking and tackling exercise. This is a business that we understand where we have complete familiarity with the customer's administrative systems. And so it's really just an execution and people investment, systems investment, that's in place.

Drew Deferrari: Adjusted EBITDA was $158.3 million or 13.2% of contract revenues compared to $130.8 million or 12.6% in Q2-24, an increase of 60 basis points. Gross margin improved 52 basis points to 20.8% of revenue compared to 20.3% in Q2-24.

Drew Deferrari: G&A expense was 8.3% of revenue compared to 8.1% in Q2-24. G&A this year included incremental stock-based compensation of $2.2 million related to the CEO succession transition.

Drew Deferrari: Non-GAAP net income was $2.46 per share compared to $2.03 per share in Q2 last year. The change in net income reflects the $27.5 million increase in adjusted EBITDA and higher gains on asset sales offset by $8.6 million of higher depreciation and amortization, $2.4 million of higher interest expense and higher stock-based compensation and income tax expense.

Brent Thielman: Just curious what action you need to take and black and Veatch just to get the margins up to the corporate average or are there investments you need to make their legacy.

Drew Deferrari: Going to slide 10.

Drew Deferrari: Our financial position and balance sheet remained strong. Cash and equivalents were $19.6 million and liquidity was $622 million. During Q2, we amended our senior credit facility to expand term loan capacity and extend the maturity to January 2029. At the end of Q2, we had $450 million of term loan outstanding and an undrawn $650 million revolving credit facility. Additionally, we have $500 million of senior notes outstanding.

Drew Deferrari: Our capital allocation continues to prioritize organic growth, followed by M&A and opportunistic share repurchases within the context of our historical range of net leverage.

Drew Deferrari: Going to slide 11.

Drew Deferrari: Capital expenditures were $55.9 million net of disposal proceeds and gross capex was $65.4 million. During Q2, we acquired a telecommunications construction contractor for $20.8 million net of cash required, expanding our geographic footprint to Alaska.

Drew Deferrari: And this morning, we announced that the company has acquired Black & Veatch's public carrier wireless telecommunications infrastructure business for $150 million in cash during Q3.

Drew Deferrari: Going to slide 12.

Speaker Change #120: Legacy agreement anything like that.

Speaker Change #120: Yes, Brian I think I think the good news is the investments that we made in our own business to create scalability and to improve the efficiency and timeliness of service delivery all exist.

Steven Nielsen: Federal and state support for role deployments of communications networks is dramatically increasing in scale and duration. Cable operators are increasing fiber deployments in rural America, capacity expansion projects are underway.

Speaker Change #121: Big Big organization, we're getting good cooperation.

Speaker Change #122: For the new folks.

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

Steven Nielsen: It's interesting. Not only have those states been actively allocated bead money, but those states have also had active state programs. So I think you know, there's no guarantees, but I think the support for rural fiber is both deep. And as we said in our comments, you're reversible at this point.

Steven Nielsen: We are pleased that many of our customers are committed to multi-year capital spending initiatives as our nation and industry experience more stable economic conditions.

Steven Nielsen: Very helpful. Thank you.

Speaker Change #122: But it's really a blocking and tackling exercise this is a business that we understand.

Speaker Change #122: Where we have complete familiarity with the customer's administrative systems and so it's really just an execution.

Speaker Change #122: And people investment systems investment that's in place.

Steven Nielsen: We are confident in our strategies of prospects for our company, the capabilities of our dedicated employees and the experience of our management team.

Brent Thielman: Okay. And I guess, in context to the revenue contributions you're talking about from fiscal 2026, would you also expect the margins for that business to reach that in-line sort of guidance you provided by that? Yeah, absolutely. And we'll work hard to make it better, but we've seen no reason, based on our performance in that, providing wireless services more generally. We have confidence. The team will be able to execute and deliver.

Speaker Change #123: Okay, and I guess in context to the revenue contributions you're talking about from fiscal 2026 would you also expect the margins to that business too.

Unknown Executive: Now operator, we will open the call for questions.

Adam Tolheimer: Our next question will come from Adam Tolheimer from Thompson Davis. Your line is open. Hey, good morning, guys. Nice quarter. Steve, congrats on your retirement and Dan. Congrats on your promotion. Thank you. Okay, so the question I probably got in the most this morning is, and maybe I'm reading this wrong. There's a lot of moving pieces, but it looks like organic revenue growth. Decelerates from call at 9% in Q2 to maybe half of that in Q3.

Unknown Executive: Thank you.

Unknown Executive: As a reminder to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again.

Speaker Change #124: Reached that in line soon as guidance you've provided.

Unknown Executive: Please stand by when we compile the Q&A roster.

Alex Regal: And our first question will come from Alex Regal from B.

Alex Regal: Riley Securities.

Speaker Change #125: Yes, yes, absolutely and we will work hard to make it better, but but we see no reason based on our performance in that.

Alex Regal: Your line is open.

Alex Regal: Good morning, Steve and Dan and Dan.

Alex Regal: Welcome to the call here.

Alex Regal: I look forward to hearing from you over the next few quarters and many years to come.

Speaker Change #126: Providing wireless services more generally.

We have confidence the team will be able to execute and deliver.

Alex Regal: Thank you.

Brent Thielman: Okay. And then, in the context of the third quarter outlook, Steve, and using the 12.9% EBITDA margin as the base here, I guess. I mean, is there anything that's restraining your ability to expand margins faster? Seems to me still an environment that should be in your favor in that regard? I think as we look ahead, friend, as we've always talked before or commented before, that if we get broadly distributed growth, that's always helpful. So even in organic growth like this acquisition, that helps us give us another catalyst and another pool of revenue over which we can leverage operating costs and NGNA.

Speaker Change #126: Okay.

Alex Regal: A couple of quick questions here.

Adam Tolheimer: And the question will be, is that analysis correct? And then if so, you know, are there specific customers that take a step back in Q3 versus Q2? Hey, Adam. It's true. I'll jump in here. So recall that last year in Q3, we had both acquired revenues of 45 million. And then we also had the change order and close out of several projects that was another 26. Million. So if you take that out of last year's number, and then you take the expected 75 million out of this year's number, I think you'll get to, you know, organic growth similar to overall growth, which is in that bid to high single digit range.

Drew Deferrari: As we look ahead to the third quarter ending October 26, 2024, we expect total contract revenues to increase mid to high single digit as a percentage of contract revenues compared to 1.136 billion in Q3-24. Included in the expectation for the current quarter is approximately $75 million of acquired revenues compared to the prior year period that included $45.2 million of acquired revenues and $26.5 million of revenues from the impacts of a change order and the closeout of several projects.

Speaker Change #127: Okay, and then in the context of the third quarter outlook, even using a $12 nine.

Drew Deferrari: We also expect non-GAAP adjusted EBITDA percentage of contract revenues to increase 25 to 50 basis points compared to 12.9% in Q3-24 after excluding 1.8% of incremental benefit in the Q3-24 EBITDA margin from the impacts of a change order and closeout of several projects. The expectation of non-GAAP adjusted EBITDA excludes $5.5 million of pre-tax acquisition integration costs related to the Q3-25 acquisition.

Drew Deferrari: Other expectations about the Q3-25 outlook include $9.5 million of amortization expense, $14.3 million of stock-based compensation that includes $7.1 million of incremental expense related to the CEO succession transition, $17.5 million of net interest expense, a 26.5% non-GAAP effective income tax rate, and $29.6 million diluted shares.

Speaker Change #127: Percent EBIDTA margin in the base year and guests meeting.

Alex Regal: First, Steve, your commentary on AI seemed very bullish, particularly about intercity networks.

Speaker Change #128: Is there anything thats restraining.

Alex Regal: However, you know, more recently, Dicons opportunity has been interest city.

Alex Regal: So can you talk about how Dicons is positioned in the intercity opportunity or are you like highlighting this sort of as the leading demand driver to interest city work?

Steven Nielsen: No, I think Alex, we have had exposure to intercity work.

Speaker Change #127: Our annuity.

Speaker Change #129: Margins faster seems to me, there's still an environment that should be in your favor in that regard.

Steven Nielsen: When the most recent industry announcements came out, I looked back and over the last several years we placed over 2000 miles of intercity fiber.

Speaker Change #129: I think as we look ahead, Brent as we've always talked.

Steven Nielsen: Essentially, you know, in an analogous situation to what we anticipate coming ahead.

Speaker Change #129: <unk>.

Speaker Change #130: <unk> commented before that if we get broadly distributed growth Thats always helpful. So even inorganic growth like this acquisition that helped us it gives us another catalyst in another pool of revenue over which we can leverage operating costs and G&A.

Drew Deferrari: The Q3-25 acquisition is a carve-out from an existing business and we expect pre-tax integration costs of $5.5 million that we will disclose separately and exclude from our presentation of non-GAAP adjusted EBITDA. Other pre-tax costs related to the acquisition that are included in the company's consolidated outlook are $3.7 million of amortization expense that is included in the $9.5 million expectation, and $2.4 million of interest expense that is included in the $17.5 million expectation.

Drew Deferrari: On a GAAP basis, the combined pre-tax integration and other costs are expected to total approximately $11.6 million or $0.29 per common share diluted on an after-tax basis.

Steven Nielsen: Now I will turn the call back to Steve.

Steven Nielsen: Thanks Drew.

Steven Nielsen: Moving to slide 13.

Steven Nielsen: So I think we're as experienced in that market as anyone because we have long histories here in the subsidiaries.

Adam Tolheimer: Yeah, and I think I just I had it be nice if we could have a $26 million change order and close out every third quarter Adam, but that's why we called it out a year ago was that people would be aware of that. I think the other thing supporting our guidance for mid to high is it has been a wet August so far. Hopefully things will dry out, but we wanted to make sure that we reflected that in the guidance.

Steven Nielsen: So we feel good about that. And as always, we'd always like to make more, and we're working hard to make sure that we match our resources to the best opportunities so that we can do a really good job for the customer. and typically if we do a good job for the customer, then we're delivering for shareholders also.

So we feel good about that.

Speaker Change #130: As always we would always like to make more and we're working hard to make sure that we match our resources to the best opportunities. So that we can do a really good job for the customer.

Steven Nielsen: This quarter we experienced solid activity and capitalized on our significant strengths. First and foremost, we maintained significant customer presence throughout our markets.

Steven Nielsen: We worked a number of the routes that I think will anticipate some activity.

Steven Nielsen: We are encouraged by the increasing breadth in our business and pleased with the opportunities accompanying our acquisition from Black & Veatch.

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

Steven Nielsen: Telephone companies are deploying fiber-to-the-home to enable gigabit high-speed connections.

Steven Nielsen: Rural electric utilities are doing the same.

Steven Nielsen: Dramatically increased fees for consumers are being provisioned and consumer data usage is growing, particularly upstream.

Speaker Change #130: Typically if we do a good job for the customer than we're delivering for shareholders also.

Steven Nielsen: Wireless construction activity in support of newly available spectrum bands and fixed wireless access continues this year.

Steven Nielsen: And if you go back far enough, we've probably built some of them.

Steven Nielsen: So I think that's a significant opportunity for us.

Adam Tolheimer: We have one customer that we think may be a little bit slower, that's had a pretty strong first half of the year. And then, and this is always hard to to deal with or calculate with certainty, but, you know, we've been encouraged by the pace of need approvals, the state level approvals by NTIA, it picked up over the summer, and it may be a little bit counterintuitive, but for some of the smaller customers that they've seen evidence that hey, this B thing is coming these states are getting approved.

Brent Thielman: Okay, thank you. Thank you.

Speaker Change #131: Got it okay. Thank you.

Speaker Change #132: Thank you.

Eric Luebchow: Our next question will come from Eric Luebchow from Wells Fargo. Your line is open.

Operator: Thank you.

Steven Nielsen: I think more directly on the AI opportunity in general is that you've seen the announcements from Lumen and Microsoft at Corning.

Eric <unk>: Our next question will come from Eric <unk> from Wells Fargo. Your line is open.

Operator: A couple quick questions here.

Eric Luebchow: Thanks.

Eric <unk>: Thanks.

Eric Luebchow: Best of luck, Steven, retirement; and Dan, great to have you on board. So I wanted to touch on the beat opportunity. You brought this up. You're prepared to mark Steve. A lot of recent states, you know, that have recently, you know, been approved for the application process. I think you mentioned kind of second half of calendar year 25 is when you think we'll see more contribution from the beat program, but I just wanted to get confirmation there. On when do you think construction timing could be. And as you look at your current labor force, you know, is there any incremental investment.

Speaker Change #134: Best of luck, Steve in retirement, and Dan Great to have you onboard so.

I wanted to touch on on the beat opportunity you brought this up in your prepared remarks, Steve.

Speaker Change #135: A lot of recent states that have recently.

Speaker Change #136: <unk> been improved through the application process.

Speaker Change #137: I think you mentioned kind of second half of calendar year 'twenty. Five is when you think we will see more contribution from from the <unk> program and I just wanted to get confirmation there.

Steven Nielsen: But probably as interesting is the fact that in a number of industry, advanced people highlighted the importance of low latency to AI as it moves from training to inference.

Adam Tolheimer: And so we know that within a year, there's going to be real activity on that plan that they may have slowed a little bit going into the back half of the year. Again, hard to tell with with real certainty, but it has been an impressive run of state approvals in the last call it six weeks.

Speaker Change #138: When do you think construction timing can be and as you look at your current Labor Force is there any incremental investment you need to make either direct labor or potential sub contractors to get ready for.

Steven Nielsen: And so I think that's going to create an opportunity around moving data processing or data centers to the edge of the network.

Eric Luebchow: You need to make either direct labor or potential subcontractors to get ready for, you know, a bigger wave of real builds that's coming in the next year or so. Yeah, Eric, again, in any government program, they're all a little bit different. We'll have to see how it plays out, but there are requirements in the program that once these approvals are secure, that starts a calendar that has to be met. And so we think that this increased cadence of approvals could drive more activity. Let's call it within the next year. Of course, we've got to get through, you know, design and permitting and material on all those other things, but when this comes, it's going to be significant.

Steven Nielsen: And as the friend of the edge takes place.

Dan Payvich: Okay, all that makes sense. And then wanted to ask about black and beach, a billion dollar backlog seems high. And I'm curious how diversified it is from a customer standpoint. And the other thing I'm curious about is their model is different than yours, right? They don't, they practically don't do any self-performed construction. So I'm curious how you're going to change that model. Well, first on the backlog, Adam, it comes primarily from from perfect arrangements in the stage that we listed in the in the press release as well as new site builds.

Speaker Change #138: A bigger wave of rural builds thats coming in the next year or so.

Yeah, Eric again, and any government program. They are all a little bit different we'll have to see how it plays out but there are requirements in the program that once these approvals of secured debt starts a calendar that has to be met and so we think that this this.

Speaker Change #138: Increased cadence of approvals should drive more activity, let's call. It within the next year of course, we've got to get through design and permitting immaterial on all those other things, but when this comes.

Dan Payvich: And it worked that we're well familiar with with a very good customer. I think there are significant synergies as we've looked at the transaction. We've spent a lot of time and effort and money in the last several years enhancing our program and project management systems for the prosecution of wireless work. We think our folks do it well. And we think that this acquisition was a great way for us to create even more value out of the investments we've made in those systems over the last several years. Great.

Steven Nielsen: And I think that's always the attention on the street, right? Not not to over anticipate, but then again, also don't under appreciate the significance of a program that's going to be addressing some of the most difficult and expensive passings for communications infrastructure that's ever been built. And so we're excited. I think we will see at least unfold from folks in DC that we use as experts that we think this cadence of approvals will continue. And then, in terms of labor and subcontractors, and we talked about this before, we have a long history in rural America.

Speaker Change #138: It's going to be significant and I think thats always to the tension on the street right not to over anticipate but then again also don't under appreciate the significance of a program that's going to be addressing.

Speaker Change #138: Some of the most difficult and expensive.

<unk>.

Speaker Change #139: For communications infrastructure, that's ever been built so so we're excited I think we will see at least I'm told from.

Speaker Change #140: Folks in DC that we use as experts that we think this cadence of approvals will continue.

Dan Payvich: I'll turn it over. Thank you.

Speaker Change #140: And then in terms of labor and sub contractors and we've talked about this before we have a long history.

Sangita Jain: And our next question will come from San Gita Jane from Keybank Capital Markets. Your line is open.

Eric Luebchow: We have a broad footprint for both cable and telephone company, where we provide master services agreements across broad sections of the country. And so I think we will make prudent investments, but we typically don't make speculative investments before we see the size of the opportunity. We think this one's going to be pretty big, but we want to be a little bit closer before we start pulling the trigger on increased expenditures to support it. Yep, no, understood.

Rural America, we have a broad footprint for both cable and telephone.

Sangita Jain: Good morning. Thanks for taking my question. If I can ask a follow-up on the black and green acquisition, Steve, maybe from a strategic point of view, you're seeing so much growth on the wireline side. Can you tell us what made you think about making acquisition on the wireless side here? Well, Sangita to begin with, you know, we're not even, but we not only thought about it, but this is something that we, we actually surfaced and approach them.

Speaker Change #140: Telephone company, where we provide master services agreements across broad sections of the country and so.

Steven Nielsen: And I think you'll also see intercity as you put it, or metro fiber rings also be affected, and we've had some preliminary discussions with some of the hyperscalers at a very high level, but that seems to be the way they're thinking about the opportunity.

Speaker Change #140: I think we will we will make prudent investments.

Alex Regal: Very helpful.

We typically don't make speculative investments before we see the size of the opportunity.

Alex Regal: And then secondly, total backlog increased nearly 500 million sequentially in a quarter.

Speaker Change #140: We think this one is going to be pretty big but we wanted to be a little bit closer before we start pulling the trigger.

Speaker Change #140: Increased expenditures to support it.

Alex Regal: Historically, you know, fiscal to Q is sort of a week or quarter for backlog growth and generally declines from the first quarter.

Sangita Jain: So I think this is, you know, something that is strategic to us. We've been in the wireless business now for kind of north of 12 years. But us, it's just a broader theme of becoming a better partner for all of our customers, particularly those that do both wireline and wireless. I mean, ultimately in those customer organizations, we work for the same people. And so this was a solid enhancement to our business.

Operator: First, Steve, your commentary on AI seemed very bullish, particularly about inter-city networks.

Speaker Change #141: Yeah, No I understood and I guess, just one follow up on the data center and AI fiber conversations.

Alex Regal: So I guess.

Steven Nielsen: And I just want to follow up on the data center AI fiber conversations. It seems like a lot of these may be dark fiber, I or you turn some cases selling empty conduit in the ground. I mean, how do you view these over time? Are they more one-off project-based type of revenues or something that you think could be more reoccurring over time for these types of routes in terms of maintenance opportunity or other activity that could come after the initial build. Yeah, and it's early to tell, but given the ambition and the size of the orders at Corning, I think these have got to be very large network builds that substantially serve most of the country.

Speaker Change #142: It seems like a lot of these may be dark fiber I or use or in some cases selling.

Speaker Change #142: The conduit into ground.

Alex Regal: The question here is, what would the catalyst to the sequential increase in back like log, and are you starting to see bead awards built into your backlog?

Speaker Change #143: Do you view these overtime or are they more one off project based type of revenues or something that you think could be more reoccurring over time for these types of routes in terms of maintenance opportunity here.

Steven Nielsen: So Alice, answer your second question.

Speaker Change #144: Other activity that could come after the initial builds.

Steven Nielsen: There is no bead in the backlog. As we said in the comments, we do expect bead opportunities next year. So sometime mid year and beyond, but there were none in the backlog.

Speaker Change #145: Yes, and it's early to tell but given the ambition and the size of the orders at Corning I think these are its got to be very large network builds that substantially serve most of the country.

Steven Nielsen: I just think we've had a broad set of opportunities that we highlighted and some that we didn't that it was their time.

Sangita Jain: And, you know, we're excited about the, not only the business we've acquired, but potential opportunities that may bring in the future.

Steven Nielsen: If you look at commentary from Lumen, they not only highlighted this, you know, first series of orders, but that there were substantial opportunities coming behind. And I am no expert in the data center side of the business, but I do recall about 18 months ago, there was like a switch that flipped and everybody who could lease data center space started leasing it. And, you know, there is some possibility that that happens in this inner city and metro, inter city market as this whole move to reduce latency and increase capacity occurs. I mean, one of the things that's interesting in the Corning announcement is the size of the cables.

Steven Nielsen: And we're pleased with the performance and the backlog this quarter.

Drew DeFarrari: Great. And if I can ask and follow up the acquired revenue in your F3Q guide seems a little bit higher than what we would have expected. So I was wondering if there's a specific call out on where the acquisition is outperforming because it seems like black and rich is going to be a modest contributor at the next couple quarters. Sure, this is true again. So on the acquisition, if you recall, last year in the third quarter, we made an acquisition as well.

Alex Regal: And just a quick follow up on that.

Speaker Change #146: If you look at commentary from <unk> not only highlighted this first.

Speaker Change #147: A series of orders, but that there were substantial opportunities coming behind it.

Alex Regal: Do you see any risk to bead awards given the pending presidential election?

Operator: However, more recently, Dycom's opportunity has been intra-city.

Speaker Change #148: I have no expert in.

Speaker Change #149: The data center side of the business, but I do recall about 18 months ago. There was like a switch that flipped and everybody who could lease data center space started leasing it.

Alex Regal: Yeah, it's always hard to forecast what's going to happen with the with the government, but if you recall, bead was part of the infrastructure act that that was passed, I think, with 70 votes in the Senate on a pretty bipartisan basis.

Operator: So can you talk about how Dycom is positioned in the inter-city opportunity?

Speaker Change #149: And there is some possibility that that happens of this inner city and metro.

Drew DeFarrari: And so we're backing out within this year's the 75 million, that includes the acquisition since the Q3 of last year as well as the two that we've done earlier this year. And now the new acquisition and Q3 of this year. So it's a combination of all of those businesses in the acquired results. Yeah. And I think saying, you know, modest in our mind, it's preliminary. We're still working. We've owned the business now since August 5th. So we're still tightening down our revenue forecast, but you know, 10 to 15 million of the score. Hopefully, but that's that's what we're expecting at the moment.

Speaker Change #149: Intra city.

Speaker Change #149: The market is.

Steven Nielsen: Demand for low-latency AI data center connectivity is growing rapidly.

Steven Nielsen: Federal and state support for rural deployments of communications networks is dramatically increasing in scale and duration. Cable operators are increasing fiber deployments in rural America. Capacity expansion projects are underway.

Speaker Change #149: This whole move to reduce latency and increased capacity occurs I mean, one of the thing is it's interesting.

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

Steven Nielsen: We are pleased that many of our customers are committed to multi-year capital spending initiatives as our nation and industry experience more stable economic conditions.

Steven Nielsen: We are confident in our strategies, the prospects for our company, the capabilities of our dedicated employees, and the experience of our management team.

Operator: or are you like highlighting this sort of as a leading demand driver to interest city?

Alex Waters: Thank you.

Speaker Change #150: Corning announcement is the size of the cables.

Operator: No, I think, Alex, we have had exposure to intercity work. When the most recent industry announcements came out, I looked back, and over the last several years, we've placed over 2,000 miles of intercity fiber, essentially, you know, in an analogous situation to what we anticipate coming ahead.

Steven Nielsen: I mean, these are massive amounts of capacity that they anticipating anticipate deploying. And I think that's a good sign that there's some legs to the trend.

Operator: So I think we're as experienced, in that market as anyone.

Operator: Because we have long histories here in the subsidiaries, we've worked a number of the routes that I think will anticipate some activity. And if you go back far enough, we probably built some of them.

Speaker Change #150: These are massive amounts of capacity.

Speaker Change #151: Hey, anticipating anticipate deploying.

Speaker Change #151: And I think Thats a good sign.

Speaker Change #152: Some some legs to the trend.

Eric Luebchow: Okay, thanks. Thanks.

Speaker Change #153: Okay. It makes sense.

Alan Matroni: Thank you. And our next question will come from Alan Matroni from Sylvan Lake Asset Management. The line is open.

Speaker Change #152: Thank you.

Operator: Now, operator, we will open the call for questions.

Alan <unk>: And our next question will come from Alan <unk> from Sylvan Lake asset management. Your line is open.

Alex Waters: And our next question will come from Alex Waters from B of A. Your line is open. Hey, good morning, guys. Thanks so much for taking my questions. Steve congrats on their retirement and Dan. Congratulations to you as well.

Operator: Thank you.

Alan Matroni: Hi, thank you. Just a couple of quick ones. What were the wireless revenues this quarter? About 3% of revenue. So so fairly small. Okay.

Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Alan <unk>: Hi, Thank you just a couple of quick ones what were the wireless revenues this quarter.

Operator: To withdraw your question, please press star 11 again.

Operator: Please stand by while we compile the Q&A roster.

Speaker Change #155: It was about 3% of revenue.

Speaker Change #156: So fairly small.

Operator: And our first question will come from Alex Regal from B. Reilly Securities.

Alex Regal: Your line is open.

Alan Matroni: And were they, were they up in line with the sort of the overall revenue growth this quarter?

Speaker Change #157: Okay, and where they were they up in line with the sort of the overall revenue growth this quarter.

Steven Nielsen: Maybe just first off here, kind of going back to Alex's first question. Steve, in the past, you noted kind of that data center opportunity has been modest to revenues. Have your, have your thoughts evolved much more than that to what it could be a contributor for diacom. And then maybe the secondly, some really strong growth from customer number four. This court, I know you spoke to a little bit and prepare remarks, but can you can you discuss a little bit more about what's really driving that growth and your expectations for them going forward.

Alan Matroni: No, Alan. And I think this is a broad industry trend. The businesses down call it 10-12% year over year, but I think that's in line with other commentary as the industry gets ready for this network modernization effort. So it actually was down a little bit less this quarter than it was the prior quarter.

Speaker Change #158: No Alan and I think this is a broad industry trend the business is down call it 10% to 12% year over year, but I think thats in line with with other commentary.

Speaker Change #157: As the industry gets ready for this network modernization effort.

Speaker Change #159: So it actually was down a little bit less this quarter than it was the prior quarter.

Drew DeFarrari: Okay, thank you.

Drew DeFarrari: And also, Drew, maybe can you update us on the CapEx guide for the year and the cadence of that in the next second half? Yeah, Alan, we would we have not changed the outlook there. We were still anticipating the 220 to 230. And there's no issue anymore in terms of deliveries. Yeah, I think I'll jump in there. You know, as we said in our comments, Alan, that the equipment supply has normalized. That's encouraging. I mean, that's why we did spend what we did this quarter. I mean, we've had some orders that were a little bit stopped up, and they freed up.

Speaker Change #160: Thank you and also drew maybe can you update us on the Capex guide for the year and the cadence of that in the next second half.

Steven Nielsen: Thanks. Sure, so Alex with respect to data centers as we talked about them and at least what we had observed previously, there were clearly new data centers being constructed. In some cases, they were being construction constructed in areas of the country that were not closely associated with existing internet backbone. So there were certainly some opportunities for laterals. If you look at the announcement between Lumen and Microsoft and then the subsequent supply announcement by by corning that these are not small projects.

Yes Alan.

Alan <unk>: Have not changed the outlook there we are still anticipating the $2 1 million to 30.

Speaker Change #160: Okay.

Speaker Change #161: There is no issue anymore in terms of deliveries.

Speaker Change #162: Yes, I think I'll jump in there as we said in our comments Alan that the equipment supply.

Has normalized that's encouraging I mean, thats why we did spend what we did this quarter I mean, we've had some orders that were a little bit stopped up and they freed up.

Operator: So I think that's a significant opportunity for us.

Drew DeFarrari: And given the magnitude of the opportunities that we see, it's encouraging that when we need to get capital equipment, that we'll be able to do it.

Operator: I think more directly on the AI opportunity in general is that you've seen the announcements from Lumen and Microsoft and Corning.

Speaker Change #162: And given the magnitude of the opportunities that we see it is encouraging that when we need to get capital equipment that will be able to do it.

Operator: But probably as interesting is the fact that in a number of industry events, people have highlighted the importance of low latency to AI as it moves from training to inference.

Operator: And so I think that's going to create an opportunity around moving data processing or data centers, to the Edge of the Network, and as the friend of the Edge, takes place, then I think you'll also see intra-city, as you put it, or metro fiber rings also be affected.

Operator: We've had some preliminary discussions with some of the hyperscalers at a very high level, but that seems to be the way they're thinking about the opportunity.

Alan Matroni: Okay, that's helpful. And then, with regard to the beat, Steve, maybe I misheard you, but I want to understand: 35 states and territories are all finished. And 21 others, you said, adding up to about 56 states and territories. It’s 50 states and six other territories that we’re talking about. That's correct. Obviously, Alan, our primary focus is on the 50 states, not the territories, but that is the total program. Okay, and just to understand, I mean, it obviously there's been a lot of talk about the cost of this and whether it could be done, sort of by fatal, a lot cheaper. People are worried, but nevertheless, I never discount the ability of the government to spend a lot of money they don't need, at least in some people's views, or at least to spend it, you know, the way they've always spent it, which is through the traditional providers.

Steven Nielsen: These are projects that point routes that are measured in the thousands of miles. I mean, we don't know exactly exactly what's going to transpire. But if you think about cornings announcement of having an order for 10% of their annual capacity each year for the next few years, that's a pretty sizable opportunity for us in the outside plant portion of the network. So I think what we're really seeing is essentially a nationwide opportunity for an enhancement to the inner city network, which we haven't seen for a long time. So how that stacks up against a whole bunch of other robust opportunities remains to be seen, but we think it's pretty significant.

Speaker Change #163: Okay. That's helpful and then with regard to the beat Steve maybe I misheard, you, but I.

Allen: I want to understand 35 states and territories are all finished in 'twenty. One others, you said, adding up to about 56 states and territories is that its 50 states and six other territories that were talking about Thats correct. Obviously Allen our primary focus is on the 50 states not the territories, but but that is the total program.

Speaker Change #164: Okay and just to understand.

Speaker Change #166: Obviously theres been a lot of talk about the cost of this and whether it can be done sort of by satellites a lot cheaper people are worried but nevertheless, I never discount the ability of the government to spend a lot of money. They don't need at least in some people's views or at least to spend it the way they've always spent which is through the traditional providers if they end up spending.

Steven Nielsen: If they end up spent, it just seems like there's a lot of preparatory work going. You said you'd think you see revenues in the third quarter of calendar 25, is that correct? Yeah, I think we'll see impacts in the business timing, whether it's third quarter, beginning of fourth quarter, and then it's too early to tie that down. But again, I just want to emphasize how big this program is, and you know, it shows up one month or the next month. I don't think that's significant in the big scheme of things.

Speaker Change #167: It seems like there is a lot of preparatory work going you said that you think you see revenues in the third quarter of calendar 'twenty five is that correct.

Steven Nielsen: And then I think with respect to the customer, you referenced into just more broadly. We were really pleased with the news flow over the last let's call it two to three months in that you had a number of strategic transactions where you had new sources of capital coming into support to deploy the deployment of new high capacity networks. And so I think what that indicates to me is the several things. So first, if you look at our customers like number four, as well as a number of others that are traditionally very significant to us, they really seem pleased with the returns to their deployment of capital to build out new high capacity infrastructure.

Speaker Change #168: Yes, I think we will see impacts in the business timing, whether it's third quarter beginning of fourth quarter, and that's too early to tie that down but again.

Speaker Change #169: I just wanted to emphasize how big this program is.

Speaker Change #169: But shows up one month of the next month I don't think Thats significant.

Speaker Change #169: The.

Speaker Change #169: In the big scheme of things.

Alan Matroni: Right, so you guys went out, I mean, this next year, let's call it before the end of this comes, just seems like you have a lot of things going on between the three, four acquisitions you've made over this last year, counting as late as one in terms of the timing of integrating all of them and getting everything ready with all the permissions and speaking to customers. It just seems like, as you said, we're set up for a step function in the business, starting at some point in the next 12 months, which once these programs get started last, I mean, in my experience, decades, typically.

Speaker Change #170: So you guys went out I mean this this next year, let's call. It before this comes just seems like you have a lot of things going on between the three or four acquisitions you've made over this last year accounting this latest one.

Speaker Change #171: In terms of the timing of integrating all of them and getting everything ready with all the permissions and speaking to customers. It just seems like as you said, we're set up for a step function in the business starting at some point in the next 12 months, which once these programs get started last.

Steven Nielsen: So we're seeing programs broaden either geographically or in duration. So we're seeing more and for longer. We talked a little bit about the federal and state support. If you think about it over the last three years, that's been a phenomenal amount of capital that's been committed by both federal and state governments. We just talked about the AI opportunity. You know what's always interesting in this industry is just when you think, you know where all the money's going to come from.

Alex Regal: Historically, rural fiber deployments have have enjoyed both support from both parties, particularly if there's a change in control with those states that are Republican.

Alex Regal: It's interesting.

Speaker Change #171: My experience decades, typically with fits and starts in between but meaningful step ups in the business.

Alan Matroni: With fits and starts in between, but meaningful step-ups in the business, you know, I know you built this business over the last, let's call it 25 to 30 years. Dan's taking over a business that, in essence, is already a completed business in the sense that you're operating now in all 50 states. You have the scale in wireless and wire line with room to grow obviously with different customers and different regions; you're not as concentrated as you were.

Alex Regal: Not only have those states been actively allocated bead money, but those states have also had active state programs.

Alex Regal: So I think you know, there's no guarantees, but I think the support for rural fiber is both deep.

Speaker Change #171: You built this business over the last let's call. It 25 to 30 years, Dan is taking over.

Alex Regal: And as we said in our comments, you're reversible at this point.

Steven Nielsen: There's a new source. So thinking that the hyper scalers could be active participants in providing capital of our industry is encouraging. You know, for them, a big fiber program is I'm sure a significant commitment. But when you think that they an aggregate are supposedly going to spend something like $200 billion in capital this year, their involvement is helpful. And then if you look at the strategic announcements over the last couple of months, we've seen some M&A, mergers amongst customers, we've seen joint ventures established with new, deep pocketed, very well respected companies coming into the industry. I just think there's just a broad set of opportunities in wire line. Thank you, guys. Thank you.

Speaker Change #172: <unk> debt.

Alex Regal: Very helpful.

Speaker Change #173: Essence is already a completed business in the sense that you're operating now in all 50 states.

Speaker Change #174: <unk> scale and in wireless and wireline with room to grow obviously with different customers in different regions Youre not as concentrated as you were so my thought process and just question for well for you Steve but also for Dan is where do you see the next phase of Dicom going in terms of its Steve built the business and set up the table.

Alex Regal: Thank you.

Steven Nielsen: So my thought process and just question for you, Steve, but also for Dan, is where do you see the next phase of die-come going in terms of if Steve built the business and set up the table? So, you know, as this next gigantic billions of dollars comes in potentially starting the next 12, 24, 36 months, however long it lasts, you know, how do you see die-come playing out in the next few years? I mean, I think Alan, as always, right? We start within a framework of strategic capital allocation, right? So we want to spend on growing the business, reinvesting the cash flows that we can create inside the business to make it bigger.

As this next gigantic billions of dollars comes in potentially starting in the next 12 to 24 to 36 months, however, long it lasts.

Speaker Change #175: Do you see Dicom playing out in the next few years.

Speaker Change #175: Well I mean, I think Alan as always right, we start within a framework.

Dan Chard: Our strategic capital allocation right. So we want to spend on growing the business reinvesting the cash flows that we can create inside the business to make it bigger.

Steven Nielsen: We'll look at acquisitions as we have over the last year. I mean, it's interesting that if you aggregate the acquisitions over the last year, they approximate in size what we did in 2012 with the acquisitions from Quanta that have worked out well for us. So we think that these, you know, are good long-term investments in the business. And this is a business right where you're always, your ultimate success is based on your ability to execute, which is why we've always focused on having operating people lead the company with that.

Adam Tolheimer: Our next question will come from Adam Tolheimer from Thompson Davis.

Stephen Fisher: And our next question will come from Stephen Fisher from UBS. Your line is open. Well, thanks. Good morning and best wishes, Stephen Dan.

We will look at acquisitions as we have over the last year.

Adam Tolheimer: Your line is open.

Dan Chard: Year I mean, it's interesting that if you aggregate the acquisitions over the last year. They approximating size, what we did in 2012 with the acquisitions from Quanta that have worked out well for us. So we think that these.

Adam Tolheimer: Hey, good morning, guys.

Adam Tolheimer: Nice quarter.

Drew DeFarrari: Maybe just to start off with some follow ups on black and beach, just curious what the growth rate embedded in that 250 to 275 million of revenues is for 2020 for your fiscal 26. So what's the trailing right now or what's the calendar 24 expected to be and how much of that 250 to 275 is in backlog. And then I guess I'm just curious on sort of the bigger picture of how you see the shape of the cyclical curve and investment for things like Iran and other wireless investment relative to the fiber curve.

Dan Chard: Our good long term investments in the business.

Dan Chard: And this is a business right, where your OE Youre Ultimate success is based on your ability to execute.

Adam Tolheimer: Steve, congrats on your retirement and Dan.

Deb: Which is why we've always focused on having operating people leave the company with that I'll turn it over to Deb.

Adam Tolheimer: Congrats on your promotion.

Dan Payvich: I'll turn it over to Dan. Yeah, Alan, what I would say is, you know, the past four years that I've almost been here now, I've worked closely with Steven Drew, and what I can tell you is, you know, I'm very much aligned on the strategy that they help create a very long time ago, and it's been successful for Die-Com, and we see that continuing in the future. He might, one might only say, you might say out, Alan, that he set up to really generate the reward from that generation of strategy, or he and Drew anyway.

Deb: Yes Alan.

Deb: But I would say the past four years that have almost been here now I've worked closely with Steven drew but I can tell you is I'm very much aligned on the strategy to take helped create a very long time ago and that's been successful for Datacom and we see that continuing in the future.

Adam Tolheimer: Thank you.

Adam Tolheimer: Okay, so the question I probably got in the most this morning is, and maybe I'm reading this wrong.

Drew DeFarrari: Yeah. So, Steve, just to take your first question about the trailing revenues, I mean, we didn't buy the business that way that in wireless, there's lots of visibility when new programs are initiated down to the site level and we use that information to create a good forecast for. Let's call it the next 30 months. So the back half of this year and the two years following and that's really literally down to the number of sites in each one of these states.

Speaker Change #177: He might one might only say you might say out Alan would be set up to really generate the rewards from that generation of strategy.

Speaker Change #177: Or he them through anyway.

Dan Payvich: The rewards are all about execution, so that's what shareholders, we hope, you know, we hope will work out well over the next couple years.

Speaker Change #179: Awards and all about execution.

Speaker Change #180: Shareholders look we hope we hope will work out well over the next couple of years. We know you don't control the purse strings. So it's just a question of capitalizing them in doing that and best of luck to you.

Alan Matroni: We know you don't control the purse strings, so it's just a question of capitalizing on doing that in best of luck to you. Thank you.

Speaker Change #181: Thank you.

Steven Nielsen: Good morning, Steve and Dan.

Operator: Thank you, and I am showing no further questions from our phone lines.

Operator: Very helpful.

Dan Paivich: And, Dan, welcome to the call here.

Speaker Change #181: Thank you and I am showing no further questions from our phone lines I'd now like to turn the conference back over to Steven Nielsen for any closing remarks.

Operator: And then secondly, total backlog increased nearly 500 million sequentially in a quarter.

Alex Regal: I look forward to hearing from you over the next few quarters and many years to come.

Operator: Historically, fiscal 2Q is sort of a weaker quarter for backlog growth and generally declines from the first quarter.

Dan Paivich: Thank you.

Operator: So I guess the question here is, what was the catalyst to the sequential increase of backlog?

Alex Regal: A couple quick questions here.

Steven Nielsen: I'd now like to turn the conference back over to Steven Nielsen for any closing remarks. Thank you.

Operator: And are you starting to see BEID awards built into your backlog?

Operator: How do you see Dycom playing out in the next few years?

Steven Nielsen: First, Steve, your commentary on AI seemed very bullish, particularly about intercity networks.

Drew DeFarrari: So we have good visibility from our growth perspective as we just indicated, you know, we're not looking at more than 10 to 15 million in revenue each of these last two quarters. So when you comp that next year, obviously essentially all of the revenue that we see in the back half of next year is going to be organic out of the acquisition in the way that we calculate organic growth. So we think it's a good organic growth opportunity.

Operator: So, Alex, to answer your second question, there is no beat in the backlog.

Operator: I mean, I think Alan, as always, right, we start within a framework of, strategic capital allocation, right? So we want to spend on growing the business, reinvesting the cash flows that we can create inside the business to make it bigger.

Alex Regal: However, you know, more recently, DICOM's opportunity has been intracity.

Operator: As we said in the comments, we do expect beat opportunities next year, so sometime mid-year and beyond, but there were none in the backlog. I just think we've had a broad set of opportunities that we highlighted and some that we didn't, that it was their time and we're pleased that, with the performance in the backlog.

Operator: We'll look at acquisitions as we have over the last year. I mean, it's interesting that if you aggregate the acquisitions over the last year, they approximate in size what we did in 2012 with the acquisitions from Quanta that have worked out well for us.

Steven Nielsen: So can you talk about how DICOM is positioned in the intercity opportunity?

Operator: And just a quick follow up on that.

Operator: So we think that these, you know, are good long-term investments in the business.

Alex Regal: Or are you, like, highlighting this sort of as a leading demand driver to intracity work?

Operator: Do you see any risk to bead awards?

Operator: And this is a business, right, where you're always, your ultimate success is based on your ability to execute, which is why we've always focused on having operating people lead the company.

Steven Nielsen: No, I think, Alex, we have had exposure to intercity work. When the most recent industry announcements came out, I looked back, and over the last several years, we've placed over 2,000 miles of intercity fiber, essentially, you know, in an analogous situation to what we anticipate coming ahead. So I think we're as experienced in that market as anyone.

Steven Nielsen: Do you see any risk to bead awards given the pending presidential election?

Steven Nielsen: Well, we thank everybody for your time and attendance and interest in the company, and we look forward to speaking to you again on our next quarter call.

Operator: given the pending presidential election.

Operator: With that, I'll turn it over to Dan.

Steven Nielsen: Because we have long histories here in the subsidiaries, we've worked a number of the routes that I think will anticipate some activity.

Alex Regal: Yeah, it's always hard to forecast what's going to happen with the government, but if you recall, bead was part of the Infrastructure Act that was passed, I think, with 70 votes in the Senate on a pretty bipartisan basis.

Steven Nielsen: Well, we thank everybody for your time and attendance and interest in the company.

Operator: Yeah, it's always hard to forecast what's going to happen with the with the government.

Operator: Yeah, Alan, what I would say is, you know, the past four years that I've almost been here now, I've worked closely with Steve and Drew, and what I can tell you is, you know, I'm very much aligned on the strategy that they helped create a very long time ago, and it's been successful for Dycom, and we see that continuing in the future.

Steven Nielsen: And if you go back far enough, we've probably built some of them.

Steven Nielsen: Historically, rural fiber deployments have enjoyed support from both parties, particularly if there is a change in control with those states that are Republican.

Operator: But if you recall, B was part of the Infrastructure Act, that was passed, I think, with 70 votes in the Senate on a pretty bipartisan basis.

Operator: One might only say, you might say, Alan, that he's set up to really generate the rewards from that generation of strategy, or he and Drew, anyway.

Steven Nielsen: So I think that's a significant opportunity for us.

Steven Nielsen: It's interesting, not only have those states been actively allocated bead money, but those states have also had active state programs.

Operator: Historically, rural fiber deployments have enjoyed support from both parties, particularly if there is a change in control with those states that are Republican.

Operator: The rewards are all about execution, so that's something that shareholders, we hope will work out well over the next couple years.

Steven Nielsen: I think more directly on the AI opportunity in general is that you've seen the announcements, from Lumen and Microsoft and Corning.

Steven Nielsen: So, I think there's no guarantees, but I think the support for rural fiber, is both deep and, as we said in our comments, irreversible at this point.

Operator: It's interesting, not only have those states been actively allocated bead money, but those states have also had active state programs.

Operator: We know you don't control the purse strings, so it's just a question of capitalizing on doing that, and best of luck to you.

Steven Nielsen: But probably as interesting is the fact that in a number of industry events, people have highlighted the importance of low latency to AI as it moves from training to inference.

Alex Regal: Very helpful.

Operator: So I think there's no guarantees, but I think the support for rural fiber is both deep and, as we said in our comments, irreversible at this point.

Operator: Thank you.

Steven Nielsen: And so I think that's going to create an opportunity around moving data processing, or data centers to the edge of the network.

Steven Nielsen: Thank you.

Operator: Very helpful, thank you.

Speaker Change #182: We look forward to speaking to you again on our next quarter call just want everybody to know it is this year. It's the third week of November.

Operator: Thank you.

Steven Nielsen: And as the trend to the edge takes place, then I think you'll also see intracity, as you put it, or metro fiber rings also be affected.

Operator: Thank you.

Steven Nielsen: And I am showing no further questions from our phone lines.

Steven Nielsen: We've had some preliminary discussions with some of the hyperscalers at a very high level, but that seems to be the way they're thinking about the opportunity.

Adam Talheimer: Our next question will come from Adam Talheimer from Thompson Davis.

Steven Nielsen: Just want everybody to know this year it's the third week of November, which thankfully for everybody is the week before Thanksgiving and not the week of Thanksgiving.

Operator: Our next question will come from Adam Thalhimer from Thompson Davis.

Steven Nielsen: Just want everybody to know, this year it's the third week of November, which thankfully for everybody is the week before Thanksgiving and not the week of Thanksgiving.

Steven Nielsen: I'd now like to turn the conference back over to Steven Nielsen for any closing remarks.

Alex Regal: Very helpful.

Operator: Your line is open.

Steven Nielsen: So we'll talk to you again then.

Operator: Your line is open.

Steven Nielsen: So we'll talk to you again then.

Alex Regal: And then secondly, total backlog increased nearly 500 million sequentially in a, quarter.

Adam Talheimer: Hey, good morning, guys.

Operator: Thank you.

Operator: Hey, good morning, guys.

Alex Regal: Historically, you know, fiscal 2Q is sort of a weaker quarter for backlog growth and generally declines from the first quarter.

Steven Nielsen: Nice quarter.

Operator: Thank you.

Operator: Nice quarter.

Steven Nielsen: So I guess the question here is, what was the catalyst to the sequential increase in backlog?

Dan Paivich: Steve, congrats on your retirement, and Dan, congrats, on your promotion.

Operator: This concludes today's conference call.

Operator: Steve, congrats on your retirement, and Dan, congrats on your promotion.

Alex Regal: And are you starting to see bead awards build into your backlog?

Adam Talheimer: Thank you.

Operator: Thank you for your participation.

Operator: Thank you.

Steven Nielsen: So Alex, to answer your second question, there is no bead in the backlog.

Dan Paivich: Yeah, thank you.

Operator: You may now disconnect.

Operator: Thank you.

Steven Nielsen: As we said in the comments, we do expect bead opportunities next year, so sometime mid-year and beyond, but there were none in the backlog.

Adam Talheimer: Okay, so the question I've probably gotten the most this morning is, and maybe I'm reading this wrong, there's a lot of moving pieces, but it looks like organic revenue growth decelerates from, call it, 9 percent in Q2 to maybe half of that in Q3.

Thankfully for everybody is the week before Thanksgiving and not the week of Thanksgiving. So we'll talk to you again that thank you.

Operator: Okay, so the question I've probably gotten the most this morning is, and maybe I'm reading this wrong, there's a lot of moving pieces, but it looks like organic revenue growth, decelerates from call it 9% in Q2 to maybe half of that in Q3.

Steven Nielsen: I just think we've had a broad set of opportunities that we highlighted and some that we didn't, that it was their time and we're pleased with the performance in the backlog this quarter.

Adam Talheimer: And the question would be, is that analysis correct?

Operator: And the question would be, is that analysis correct?

Alex Regal: And just a quick follow-up on that.

Adam Talheimer: And then, if so, are there specific customers that take a step back in Q3 versus Q2?

Operator: And then if so, are there specific customers that take a step back in Q3 versus?

Drew Deferrari: Hey, Adam, it's Drew.

Operator: Hey, Adam, it's Drew.

Drew Deferrari: I'll jump in here.

Operator: I'll jump in here.

Drew Deferrari: So, recall that last year in Q3, we had both acquired, revenues of $45 million, and then we also had a change order and closeout of several projects that was another $26 million.

Operator: So recall that last year in Q3, we had both acquired revenues of $45 million.

Drew Deferrari: So if you take that out of last year's number, and then you take the expected $75 million, out of this year's number, I think you'll get organic growth similar to overall growth, which is in that mid to high single-digit range.

Operator: Everyone have a wonderful day.

Operator: And then we also had the change order and close out of several projects that was another $26, So if you take that out of last year's number, and then you take the expected $75 million out of this year's number, I think you'll get organic growth similar to overall growth, which is in that mid to high single-digit range.

Drew Deferrari: And I think I just add it'd be nice if we could have a $26 million change order and, close out every third quarter, Adam, but that's why we called it out a year ago was that people would be aware of it.

Operator: And I think I just, I had it be nice if we could have a $26 million change order and close out every third quarter, Adam, but that's why we called it out a year ago, was that people would be aware of it.

Drew DeFarrari: We think that the construction activity as scheduled will increase beginning at the first of the year. And so we think that's a, you know, a very good solid plan. In terms of revenue forecast, that's all in backlog. I mean, that that billion dollars in backlog really extends through the end of calendar 27. And then I think in general, we're just pleased to participate in this deployment of new equipment to modernize the network.

Drew Deferrari: I think the other thing supporting our guidance for mid to high is it has been a wet August, so far.

Operator: I think the other thing supporting our guidance for mid to high is it has been a wet August so far.

Steven Nielsen: This concludes today's conference call. Thank you for your participation.

Speaker Change #183: Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

Drew Deferrari: Hopefully, things will dry out, but we wanted to make sure that we reflected that in the, guidance.

Operator: Hopefully things will dry out, but we wanted to make sure that we reflected that in the guidance.

Drew Deferrari: We have one customer that we think may be a little bit slower that's had a pretty strong, first half of the year.

Operator: We have one customer that we think may be a little bit slower that's had a pretty strong first half of the year.

Drew Deferrari: And then, and this is always hard to deal with or calculate with certainty, but we've, been encouraged by the pace of bead approvals, the state-level approvals by NTIA have picked up over the summer, and it may be a little bit counterintuitive, but for some of the smaller customers that they've seen evidence that, hey, this bead thing is coming, these states are getting approved, and so we know that within a year, there's going to be real activity on that plan that they may have slowed a little bit going into the back half of the year.

Operator: And then, and this is always hard to to deal with or calculate with certainty, but, you know, we've been encouraged by the pace of deed approvals, the state level approvals by NTIA, it picked up over the summer.

Drew Deferrari: But again, hard to tell with real certainty, but it has been an impressive run of state, approvals in the last, call it, six weeks.

Operator: And it may be a little bit counterintuitive, but for some of the smaller customers that they've seen evidence that, hey, this meat thing is coming, these states are getting approved.

Operator: You may now disconnect. Everyone have a wonderful day.

Adam Talheimer: Okay.

Operator: And so we know that within a year, there's going to be real activity on that plan, that they may have slowed a little bit going into the back half of the year.

Adam Talheimer: All that makes sense.

Operator: But again, hard to tell with real certainty, but it has been an impressive run of state approvals in the last, call it, six weeks.

Adam Talheimer: And then, I wanted to ask about Black & Veatch, a billion-dollar backlog seems high, and I'm, curious how diversified it is from a customer standpoint.

Operator: Okay, all that makes sense.

Steven Nielsen: And the other thing I'm curious about is their model is different than yours, right?

Operator: And then wanted to ask about Black & Veatch.

Adam Talheimer: They practically don't do any self-performed construction, so I'm curious how you're going, to change that model.

Operator: Billion-dollar backlog seems high, and I'm curious how diversified it is from a customer standpoint.

Steven Nielsen: Well, first, on the backlog, Adam, it comes primarily from turfing arrangements in the, states that we listed in the press release, as well as new site builds, and it's work that we're well familiar with with a very good customer.

Operator: And the other thing I'm curious about is their model is different than yours, right?

Steven Nielsen: I think there are significant synergies as we've looked at the transaction.

Operator: They practically don't do any self-performed construction.

Steven Nielsen: We've spent a lot of time and effort and money in the last several years enhancing our program, and project management systems for the prosecution of wireless work.

Operator: So I'm curious how you're going to change that model.

Steven Nielsen: We think our folks do it well, and we think that this acquisition was a great way for, us to create even more value out of the investments we've made in those systems over the last several years.

Operator: Well, first on the backlog, Adam, it comes primarily from turfing arrangements in the states that we listed in the press release, as well as new site builds.

Adam Talheimer: Great.

Operator: And it's work that we're well familiar with, with a very good customer.

Operator: Thank you.

Operator: I'll turn it over.

Operator: I think there are significant synergies as we've looked at the transaction.

Adam Talheimer: Thank you.

Operator: We've spent a lot of time and effort, and money in the last several years, enhancing our program and project management systems for the prosecution of wireless work. We think our folks do it well, and we think that this acquisition was a great way for us to create even more value out of the investments we've made in those systems over the last several years.

Speaker Change #183: [music].

Operator: And our next question will come from Sandita Jain from KeyBank Capital Markets.

Operator: Great.

Sangita Jain: Your line is open.

Operator: I'll turn it over.

Operator: Yes.

Operator: Thank you.

Sangita Jain: Good morning.

Operator: Thank you.

Steven Nielsen: Thanks for taking my question.

Operator: And our next question will come from Sangita Jain from KeyBank Capital Markets.

Sangita Jain: If I can ask a follow-up on the Black & Veatch acquisition, Steve, maybe from a strategic, point of view, you're seeing so much growth on the wireline side.

Operator: Your line is open.

Speaker Change #183: Okay.

Steven Nielsen: Can you tell us what made you think about making acquisition on the wireless side here?

Operator: Yes, good morning.

Speaker Change #183: Good.

Sangita Jain: Well, Sangita, to begin with, you know, we not only thought about it, but this is something that we actually surfaced and approached them.

Operator: Thanks for taking my question.

Steven Nielsen: So I think this is, you know, something that is strategic to us.

Speaker Change #183: Yes.

Operator: If I can ask a follow up on the Black & Veatch acquisition, Steve, maybe from a strategic point of view, you're seeing so much growth on the wireline side.

Steven Nielsen: We've been in the wireless business now for kind of north of 12 years.

Speaker Change #183: Okay.

Operator: Can you tell us what made you think about making an acquisition on the wireless side here?

Steven Nielsen: We think we do a good job at it. We're careful in where we apply those efforts, but we have made significant investments.

Speaker Change #183: [music].

Operator: Well, Sangita, to begin with, you know, we not only thought about it, but this is something that we actually surfaced, and approach them.

Steven Nielsen: And to us, it's just a broader theme of becoming a better partner for all of our customers, particularly those that do both wireline and wireless.

Operator: So I think this is, you know, something that is strategic to us.

Steven Nielsen: I mean, ultimately, in those customer organizations, we work for the same people.

Operator: We've been in the wireless business now for kind of north of 12 years.

Steven Nielsen: And so this was a solid enhancement to our business.

Operator: We think we do a good job at it. We're careful in where we apply those efforts, but we have made significant investment.

Steven Nielsen: And, you know, we're excited about not only the business we've acquired, but potential opportunities that may bring in the future.

Operator: And to us, it's just a broader theme of becoming a better partner for all of our customers, particularly those that do both wireline and wireless.

Sangita Jain: Great.

Speaker Change #183: Okay.

Operator: I mean, ultimately, in those customer organizations, we work for the same people.

Sangita Jain: And if I can ask a follow-up, the acquired revenue in your F3Q guide seems a little bit higher than what we would have expected.

Operator: And so this was a solid enhancement, to our business and we're excited about not only the business we've acquired, but potential opportunities that may bring in the future.

Sangita Jain: So I was wondering if there's a specific call-out on where the acquisition is outperforming, because it seems like Black & Veatch is going to be a modest contributor the next couple quarters.

Speaker Change #183: Okay.

Operator: Great, and if I can ask a follow-up, the acquired revenue in your F3Q guide seems a little bit higher than what we would have expected.

Drew Deferrari: Sure.

Operator: So I was wondering if there's a specific call-out on where the acquisition is outperforming, because it seems like Black & Veatch is going to be a modest contributor the next couple of quarters.

Speaker Change #183: Thank you.

Drew Deferrari: This is Drew again.

Operator: Sure, this is Drew again.

Drew Deferrari: So on the acquisition, if you recall, last year in the third quarter, we made an acquisition as well.

Drew DeFarrari: I think that's a trend that we expect to continue for a while. There's clearly been one very major announcement in that space. And I believe it was a, you know, a several year announcement. And that's what we're going to be in support of.

Operator: So on the acquisition, if you recall, last year in the third quarter, we made an acquisition as well.

Speaker Change #183: [music].

Drew Deferrari: And so we're backing out within this year, the $75 million. That includes the acquisition since the Q3 of last year, as well as the two that we've done earlier this year, and now the new acquisition in Q3 of this year. So it's a combination of all of those businesses in the acquired results.

Operator: And so we're backing out within this year's the $75 million. That includes the acquisition, since the Q3 of last year, as well as, The two that we've done earlier this year, and now the new acquisition in Q3 of this year, so it's a combination, all of those businesses in the acquired.

Drew Deferrari: Yeah.

Operator: Yeah, and I think Sangita, you know, modest in our mind, it's preliminary, we're still working, we've owned the business now since August 5, so we're still tightening down our revenue forecast, but you know, 10 to 15 million this quarter seems, Hopefully more, but that's what we're expecting at the moment.

Sangita Jain: And I think, Sangeeta, you know, modest in our mind.

Drew DeFarrari: Okay, that's helpful.

Operator: Got it.

Drew Deferrari: It's preliminary.

Operator: Thank you.

Drew Deferrari: We're still working.

Operator: Thank you.

Drew Deferrari: We've owned the business now since August 5th, so we're still tightening down our revenue forecast.

Operator: And our next question will come from Alex Waters from B of A.

Drew Deferrari: But, you know, $10 million to $15 million this quarter seems reasonable.

Operator: Your line is open.

Sangita Jain: Hopefully more.

Operator: Hey, good morning, guys.

Drew Deferrari: Okay.

Operator: Thanks so much for taking my questions.

Sangita Jain: Got it.

Operator: Steve, congrats on the retirement and Dan, congratulations to you as well.

Sangita Jain: But that's what we're expecting at the moment.

Operator: Maybe just first off here, kind of going back to Alex's first question.

Sangita Jain: Got it.

Operator: Steve, in the past, you've noted kind of that data center opportunity has been modest to revenues.

Operator: Thank you.

Operator: Have your thoughts evolved much more than that to what it could be a contributor for Dycom?

Sangita Jain: Thank you.

Operator: And then maybe just secondly, some really strong growth from customer number four this quarter.

Operator: And our next question will come from Alex Waters from B of A.

Operator: I know you spoke to it a little bit in your prepared remarks, but can you can you discuss a little bit more about what's really driving that growth and your expectations for them going forward?

Alexander Waters: Your line is open.

Operator: Thanks.

Operator: Hey, good morning, guys.

Operator: Sure.

Alexander Waters: Thanks so much for taking my questions.

Drew DeFarrari: And then just maybe to follow up on Adam's question earlier about the growth in the third quarter, agree that it's all slower than we would have expected and you gave some color there. I guess I'm just kind of curious about the bigger picture on organic growth here. You know, with so much private investment and all the public funding, it seems like there should be potential for double digit organic growth here. Should we assume that, you know, we should be kind of building on this kind of need to offer single digit growth from here or is there something that's still kind of restraining it when we think about the next kind of handful of quarters.

Operator: So, Alex, with respect to data centers, as we talked about them and at least what we had observed previously, there were clearly new data centers being constructed. In some cases, they were being constructed in areas of the country that were not closely associated with the existing Internet backbone. So, there were certainly some opportunities for laterals.

Steven Nielsen: Steve, congrats on the retirement, and Dan, congratulations to you as well.

Operator: If you look at the announcement between Lumen and Microsoft and then the subsequent supply announcement by Corning, these are not small projects. These are projects that are measured in the thousands of miles.

Alexander Waters: Maybe just first off here, kind of going back to Alex's first question, Steve, in the past, you've noted kind of that data center opportunity has been modest to revenues.

Operator: I mean, we don't know exactly what's going to transpire, but if you think about Corning's announcement of having an order for 10% of their annual capacity each year for the next two years, that's a pretty sizable opportunity, for us in the outside plant portion of the network.

Steven Nielsen: Have your thoughts evolved much more than that to what it could be a contributor for DICOM?

Operator: So I think what we're really seeing is essentially a nationwide opportunity for an enhancement to the inner city network, which we haven't seen for a long time.

Alexander Waters: And then maybe just secondly, some really strong growth from customer number four this quarter.

Operator: So how that stacks up against a whole bunch of other robust opportunities remains to be seen, but we think it's pretty significant.

Steven Nielsen: I know you spoke to it a little bit in your prepared remarks, but can you discuss a little bit more about what's really driving that growth and your expectations for them going forward?

Operator: And then I think with respect to the customer you referenced, and just more broadly, we were really pleased with the news flow over the last, let's call it two to three months, in that you had a number of strategic transactions where you had new sources of capital coming in to support the deployment of new high-capacity networks, And so I think what that indicates to me is several things.

Alexander Waters: Thanks.

Operator: So first, if you look at our customers, like number four, as well as a number of others that are traditionally very significant to us, they really seem pleased with the returns to their deployment of capital to build out new high-capacity infrastructure.

Steven Nielsen: Sure.

Operator: So we're seeing programs broaden, either geographically or in duration. So we're seeing more and for longer.

Steven Nielsen: So, Alex, with respect to data centers, as we talked about them in at least what we had observed previously, there were clearly new data centers being constructed. In some cases, they were being constructed in areas of the country that were not closely associated with existing Internet backbone. So there were certainly some opportunities for laterals.

Operator: We talked a little bit about the federal and state support. If you think about over the last three years, that's been a phenomenal amount of capital that's been committed.

Steven Nielsen: If you look at the announcement between Lumen and Microsoft and then the subsequent supply announcement by Corning, these are not small projects. These are projects and routes that are measured in the thousands of miles.

Operator: We just talked about the AI opportunity, you know, what's always interesting in this industry is just when you think you know where all the money is going to come from, there's a new source.

Steven Nielsen: I mean, we don't know exactly what's going to transpire. But if you think about Corning's announcement of having an order for 10 percent of their annual capacity each year for the next two years, that's a pretty sizable opportunity for us in the outside plant portion of the network.

Operator: So, thinking that the hyperscalers could be active participants in providing capital to our industry is encouraging. You know, for them, a big fiber program is, I'm sure, a significant commitment, but when you think that they, an aggregator...

Steven Nielsen: So I think what we're really seeing is essentially a nationwide opportunity for an enhancement to the inner city network, which we haven't seen for a long time.

Operator: Supposedly going to spend something like 200 billion dollars in capex this year.

Steven Nielsen: So how that stacks up against a whole bunch of other robust opportunities remains to be seen, but we think it's pretty significant.

Operator: Their involvement is helpful.

Adam Tolheimer: There's a lot of moving pieces, but it looks like organic revenue growth.

Steven Nielsen: And then I think with respect to the customer you referenced and just more broadly, we were really pleased with the news flow over the last, let's call it two to three months, in that you had a number of strategic transactions where you had new sources of capital coming in to support the deployment of new high-capacity networks.

Operator: And then if you look at the, you know, the strategic announcements over the last couple months, we've seen some M&A, of Mergers Amongst Customers.

Steven Nielsen: And so I think what that indicates to me is several things.

Operator: We've seen joint ventures established with new, deep-pocketed, very well-respected companies coming into the industry.

Steven Nielsen: So first, if you look at our customers like number four, as well as a number of others that are traditionally very significant to us, they really seem pleased with the returns to their deployment of capital to build out new high-capacity infrastructure.

Operator: I just think there's just a broad set of opportunities in wireline.

Steven Nielsen: So we're seeing programs broaden either geographically or in duration.

Operator: Thank you, guys.

Steven Nielsen: So we're seeing more and for longer.

Operator: Thank you.

Adam Tolheimer: Decelerates from call at 9% in Q2 to maybe half of that in Q3.

Steven Nielsen: We talked a little bit about the federal and state support. If you think about over the last three years, that's been a phenomenal amount of capital that's been committed by both federal and state governments.

Operator: And our next question will come from Steven Fisher from UBS.

Steven Nielsen: For them, a big fiber program is, I'm sure, a significant commitment.

Operator: Your line is open.

Steven Nielsen: But when you think that they, in aggregate, are supposedly going to spend something like $200 billion in CapEx this year, their involvement is helpful.

Operator: Thanks, good morning, and best wishes, Steve and Dan.

Steven Nielsen: And then if you look at the strategic announcements over the last couple months, we've seen some M&A, mergers amongst customers.

Operator: Maybe just to start off with some follow-ups on Black & Veatch, just curious what the growth rate embedded in that $250 to $275 million of revenues is for 2020, for your fiscal 26.

Steven Nielsen: We've seen joint ventures established with new, deep-pocketed, very well-respected companies coming into the industry.

Operator: So, what's the trailing right now, or what's the calendar 24 expected to be, and how much of that $250 to $275 is in backlog?

Steven Nielsen: I just think there's just a broad set of opportunities in Wireline.

Operator: And then, I guess I'm just curious on sort of the bigger picture of how you see the shape of the cyclical curve and investment for things like O-RAN and other wireless investment relative to the fiber curve.

Alexander Waters: Thank you, guys.

Operator: Yeah, so Steve, just to take your first question about the trailing revenues, I mean, we didn't buy the business that way.

Operator: Thank you.

Operator: In wireless, there's lots of visibility when new programs are initiated down to the site level.

Alexander Waters: And our next question will come from Stephen Fisher from UBS.

Adam Tolheimer: And the question will be, is that analysis correct?

Operator: And we use that information to create a good forecast for, let's call it the next 30 months, so the back half of this year and the two years following. And that's really, literally down to the number of sites in each one of these states.

Operator: Your line is open.

Operator: So we have good visibility from a growth perspective.

Steven Fisher: Thanks.

Operator: As we just indicated, you know, we're not looking at more than 10 to 15 million in revenue each of these last 2 quarters.

Operator: Good morning and best wishes, Steve and Dan.

Operator: So when you comp that next year, obviously, essentially all of the revenue that we see in the back half of next year.

Steven Fisher: Maybe just to start off with some follow-ups on Black & Veatch, just curious what the growth rate embedded in that $250 to $275 million of revenues is for 2020, for your fiscal 26.

Operator: Is going to be organic out of the acquisition in the way that we calculate organic growth.

Steven Fisher: So, what's the trailing right now or what's the calendar 24 expected to be and how much of that $250 to $275 is in backlog?

Operator: So we think it's a good organic growth opportunity.

Steven Nielsen: And then I guess I'm just curious on sort of the bigger picture of how you see the shape of the cyclical curve and investment for things like O-RAN and other wireless investment relative to the fiber curve.

Operator: We think that the construction activity as scheduled will increase, beginning at the first of the year and so we think that's a you know a very good solid plan.

Steven Fisher: Yeah.

Operator: In terms of the revenue forecast, that's all in backlog. I mean, that billion dollars in backlog really extends through the end of calendar 27.

Steven Nielsen: So, Steve, just to take your first question about the trailing revenues, I mean, we didn't buy the business that way.

Operator: And then, I think, in general, we're just pleased to participate in this.

Steven Nielsen: In wireless, there's lots of visibility when new programs are initiated down to the site level.

Operator: Deployment of new equipment to modernize the network, I think that's a trend that we expect to continue for a while.

Steven Nielsen: And we use that information to create a good forecast for, let's call it the next 30 months. So, the back half of this year and the two years following.

Operator: There's clearly been one very major announcement in that space, and I believe it was a, you know, a several year announcement, and that's what we're going to be in support of.

Steven Nielsen: And that's really literally down to the number of sites in each one of these states.

Operator: Okay, that's helpful.

Steven Nielsen: So, we have good visibility.

Operator: And then just maybe to follow up on Adam's question earlier about the growth in the third quarter, I agree that it's a little slower than we would have expected, and you gave some color there.

Steven Nielsen: From a growth perspective, as we just indicated, we're not looking at more than $10 to $15 million in revenue each of these last two quarters.

Operator: I guess I'm just kind of curious about the bigger picture on organic growth here.

Steven Nielsen: So, when you comp that next year, obviously, essentially all of the revenue that we see in the back half of next year is going to be organic out of the acquisition in the way that we calculate organic growth.

Operator: You know, with so much private investment and all the public funding, it seems like there should be potential for double-digit organic growth here.

Steven Nielsen: So, we think it's a good organic growth opportunity.

Operator: Should we assume that we should be kind of building on this kind of mid to upper single-digit growth from here?

Steven Nielsen: We think that the construction activity as scheduled will increase beginning at the first of the year.

Operator: Or is there something that's still kind of restraining it when we think about the next kind of handful of quarters?

Steven Nielsen: And so we think that's a very good, solid plan.

Operator: I think, Steve, what we're always factoring into our outlook is that we understand the big growth drivers to the business.

Steven Nielsen: In terms of the revenue forecast, that's all in backlog. I mean, that billion dollars in backlog really extends through the end of calendar 27.

Operator: They're significant.

Steven Nielsen: And then I think in general, we're just pleased to participate in this deployment of new equipment to modernize the network.

Operator: We've been able to grow double digits, before.

Steven Nielsen: I think that's a trend that we expect to continue for a while.

Operator: We had sizable growth, as you recall, over the last two, three fiscal years.

Adam Tolheimer: And then if so, you know, are there specific customers that take a step back in Q3 versus Q2?

Drew DeFarrari: I think Steve, you know, what's what's we're always factoring into our outlook is that we understand the big growth drivers to the business. They're significant. We've been able to grow double digits before. We had sizable growth as you recall over the last two, three fiscal years. And there's nothing structurally that would say there's a lack of opportunity that wouldn't support that kind of growth again, but there's no guarantees the system service business.

Steven Nielsen: There's clearly been one very major announcement in that space, and I believe it was a several-year announcement.

Operator: And there's nothing structurally that would say there's a lack of opportunity that wouldn't support that kind of growth again, but there's no guarantees.

Steven Nielsen: And that's what we're going to be in support of.

Operator: This is a service business.

Steven Fisher: Okay, that's helpful.

Operator: We earn the business one day at a time.

Steven Fisher: And then just maybe to follow up on Adam's question earlier about the growth in the third quarter, I agree that it's a little slower than we would have expected, and you gave some color there.

Operator: We think we're well positioned. And it is always encouraging when we see customers announcing new initiatives, for example, to take advantage of hyperscaler capital or just new capital coming into the space to do more of what we already do.

Steven Fisher: I guess I'm just kind of curious about the bigger picture on organic growth here.

Operator: You know, it's interesting that just the most recent announcements in the space in the last couple, you know, over the last six months have added over 9.5 million homes, incrementally to everybody's plans over the next four or five years.

Steven Fisher: With so much private investment and all the public funding, it seems like there should be potential for double-digit organic growth here.

Operator: So we're encouraging.

Steven Nielsen: Should we assume that we should be kind of building on this kind of mid- to upper-single-digit growth from here, or is there something that's still kind of restraining it when we think about the next kind of handful of quarters?

Operator: Perfect.

Steven Nielsen: I think, Steve, what we're always factoring into our outlook is that we understand the big growth drivers to the business.

Operator: Thanks very much.

Steven Nielsen: They're significant.

Adam Tolheimer: Hey, Adam.

Operator: Thank you.

Steven Nielsen: We've been able to grow double digits before.

Operator: Our next question will come from Rob Palmisano from Raymond James.

Adam Tolheimer: It's true.

Steven Nielsen: We had sizable growth, as you recall, over the last two, three fiscal years, and there's nothing structurally that would say there's a lack of opportunity that wouldn't support that kind of growth again.

Operator: Your line is open.

Steven Nielsen: But there's no guarantees.

Operator: Hey guys, this is Rob Warren for Frank.

Steven Nielsen: This is a service business.

Operator: Steve, congratulations on your retirement and Dan, congratulations on your new opportunity.

Steven Nielsen: We earn the business one day at a time. We think we're well-positioned, and it is always encouraging when we see customers announcing new initiatives, for example, to take advantage of hyperscaler capital or just new capital coming into the space to do more of what we already do.

Adam Tolheimer: I'll jump in here.

Operator: Curious, do you expect to get a decent amount of business from the Lumen AI fiber build?

Steven Nielsen: It's interesting that just the most recent announcements in the space over the last six months have added over 9.5 million homes, incrementally to everybody's plans over the next four or five years.

Operator: How much, you know, do you guys do more generally with blowing fiber?

Steven Nielsen: So we're encouraged.

Operator: How profitable is that business versus putting a shovel in the ground?

Steven Fisher: Perfect.

Operator: You know, have you talked with these guys and, you know, do you expect to be a part of that process?

Steven Fisher: Thanks very much.

Operator: Thank you.

Adam Tolheimer: So recall that last year in Q3, we had both acquired revenues of 45 million. And then we also had the change order and close out of several projects that was another 26.

Operator: Yeah, Rob, I guess what I can say, as I mentioned earlier, we're in process or have completed over 2000 miles of this type of work.

Rob Palmisano: Our next question will come from Rob Palmisano from Raymond James.

Operator: So we think we understand that part of the network reasonably well, or as well as anybody else.

Operator: Your line is open.

Operator: If you go back long enough, some of the intercity routes are a good portion of some of the regions of the country.

Rob Palmisano: Hey, guys, this is Rob one for Frank.

Operator: We actually were part of the construction process. So we have lots of history in that part of the network.

Steven Nielsen: Steve, congratulations on your retirement and Dan, congratulations on your new opportunity.

Operator: I wouldn't ever comment specifically on an individual customer opportunity.

Rob Palmisano: Curious, do you expect to get a decent amount of business from the Lumen AI fiber build?

Operator: But what I would say is that we don't see, generally, in any of our growth catalysts, anything structural that would say that we can't achieve our current margins and hopefully do better.

Rob Palmisano: How much do you guys do more generally with blowing fiber?

Operator: And as we've talked about before, that's what we're all about, is trying to figure out how to make those better, with each incremental opportunity.

Rob Palmisano: How profitable is that business versus putting a shovel in the ground?

Operator: Got it.

Steven Nielsen: You know, have you talked with these guys and do you expect to be a part of that process?

Operator: Thanks, guys.

Rob Palmisano: Thank you.

Operator: Thank you.

Steven Nielsen: Yeah, Rob, I guess what I can say, as I mentioned earlier, we're in process or have completed, over 2,000 miles of this type of work.

Operator: Our next question will come from Brent Thielman from D.A.

Adam Tolheimer: Million.

Drew DeFarrari: We earn the business one day at a time. We think we're a well-positioned. And it is always encouraging when we see customers announcing new initiatives, for example, to take advantage of hyperscaler capital. Or just, you know, new capital coming into the space to do more of what we already do. You know, it's interesting that just the most recent announcements in the space in the last couple, you know, over the last six months have added over 9.5 million homes incrementally to everybody's plans over the next four or five years. So, so we're encouraged.

Steven Nielsen: So we think we understand that part of the network reasonably well, or as well as anybody, else.

Operator: Davidson.

Steven Nielsen: If you go back long enough, some of the intercity routes are a good portion of some of the regions, of the country.

Operator: Your line is open.

Steven Nielsen: We actually were part of the construction process. So we have lots of history in that part of the network.

Operator: Yeah, thanks.

Steven Nielsen: I wouldn't ever comment specifically on an individual customer opportunity.

Adam Tolheimer: So if you take that out of last year's number, and then you take the expected 75 million out of this year's number, I think you'll get to, you know, organic growth similar to overall growth, which is in that bid to high single digit range.

Drew DeFarrari: Perfect. Thanks very much.

Operator: Good morning, Steve.

Steven Nielsen: But what I would say is that we don't see generally in any of our growth catalyst, anything, structural that would say that we can't achieve our current margins and hopefully do better.

Operator: Just curious what actions you need to take at Black & Veatch just to get the margins up to the corporate average?

Rob Palmisano: And as we've talked about before, that's what we're all about is trying to figure out how, to make those better with each incremental opportunity.

Rob Paul Masano: Thank you.

Operator: Are there big investments you need to make there, legacy agreements, anything like that?

Operator: Got it.

Operator: Yeah, Brent, I think that I think the good news is the investments that we made in our own business to create scalability, and to improve the efficiency and timeliness of service delivery all exist.

Rob Palmisano: Thanks, guys.

Operator: Now that it's a big, big organization, we're getting good cooperation from the new folks.

Operator: Thank you.

Operator: But it's really a blocking and tackling exercise.

Brent Thielman: Our next question will come from Brent Thielman from DA Davidson.

Operator: This is a business that we understand, where we have complete familiarity with the customer's administrative systems. And so it's really just an execution and a people investment, systems investment that's in place.

Operator: Your line is open.

Operator: Okay, and I guess in context to the revenue contributions you're talking about for fiscal 2026, would you also expect the margins for that business to?

Brent Thielman: Yeah, thanks.

Operator: you know, reach that end line sort of guidance you've provided.

Steven Nielsen: Good morning.

Operator: Yeah, yeah, absolutely, and you know, we'll work hard to make it better, but we see no reason based on our performance in that, providing wireless services more generally, we have confidence that the team will be able to execute and deliver.

Brent Thielman: Steve, I'm just curious what actions you need to take at Black & Veatch just to get the, margins up to the corporate average or the big investments you need to make there, legacy agreements, anything like that?

Operator: Okay, and then in the context of the third quarter outlook, Steve, and using the 12.9, and Eva Da Margin is the base here, I guess.

Steven Nielsen: Yeah, Brent, I think the good news is the investments that we made in our own business, to create scalability and to improve the efficiency and timeliness of service delivery all exist.

Operator: Is there anything that's restraining your ability to expand margins faster?

Steven Nielsen: Now, it's a big, big organization.

Operator: It seems to me it's still an environment that should be in your favor.

Steven Nielsen: We're getting good cooperation from the new folks.

Operator: I think as we look ahead, Brent, as we've always talked before, we're, I commented before that if we get broadly distributed growth, that's always helpful.

Steven Nielsen: But it's really a blocking and tackling exercise.

Operator: So even inorganic growth, like this acquisition, that helps us, that gives us another catalyst and another pool of revenue over which we can leverage operating costs and G&A.

Steven Nielsen: This is a business that we understand where we have complete familiarity with the customer's, administrative systems.

Adam Tolheimer: I think the other thing supporting our guidance for mid to high is it has been a wet August so far.

Operator: So we feel good about that. And as always, we'd always like to make more, and we're working hard to make sure that we match our resources to the best opportunities so that we can do a really good job for the customer. And typically, if we do a good job for the customer, then we're delivering for shareholders also.

Steven Nielsen: And so it's really just an execution and a people investment, systems investment that's, in place.

Operator: Got it.

Brent Thielman: Okay.

Operator: Okay.

Steven Nielsen: And I guess in context to the revenue contributions you're talking about for fiscal 2026, would, you also expect the margins for that business to reach that inline sort of guidance you've provided by that?

Operator: Thank you.

Brent Thielman: Yeah, absolutely.

Operator: Thank you.

Steven Nielsen: And we'll work hard to make it better.

Operator: Our next question will come from Eric Luebchow from Wells Fargo.

Steven Nielsen: But we see no reason based on our performance in that providing wireless services more generally, we have confidence that the team will be able to execute and deliver.

Adam Tolheimer: Hopefully things will dry out, but we wanted to make sure that we reflected that in the guidance.

Operator: Your line is open.

Brent Thielman: Okay.

Operator: Thanks.

Brent Thielman: And in the context of the third quarter outlook, Steve, and using the 12.9% EBITDA margin as, the base here, I guess, I mean, is there anything that's restraining your ability to expand margins faster?

Operator: Best of luck, Steve, in retirement, and Dan, great to have you on board.

Steven Nielsen: It seems to me it's still an environment that should be in your favor in that regard.

Operator: So I wanted to touch on the BEAT opportunity.

Steven Nielsen: I think as we look ahead, Brent, as we've always talked before or commented before that, if we get broadly distributed growth, that's always helpful.

Operator: You brought this up in your prepared remarks, Steve, a lot of recent states, you know, that have recently, You know, been approved for the application process.

Steven Nielsen: So even inorganic growth like this acquisition that helps us, that gives us another catalyst, and another pool of revenue over which we can leverage operating costs and G&A.

Operator: I think you mentioned kind of second half of calendar year 25 is when you think we'll see more contribution from from the BEAD program.

Steven Nielsen: So we feel good about that. And as always, we'd always like to make more and we're working hard to make sure that we, match our resources to the best opportunities so that we can do a really good job for the customer.

Operator: But I just wanted to get confirmation there on when do you think construction timing can be and as you look at your current labor force, you know, is there any incremental investment?

Steven Nielsen: And typically, if we do a good job for the customer, then we're delivering for shareholders also.

Operator: You need to make either direct labor or potential subcontractors to get ready for, you know, a bigger wave of rural builds that's coming in the next year or so.

Brent Thielman: Got it.

Operator: Yeah, Eric, again, in any government program, they're all a little bit different.

Brent Thielman: Okay.

Operator: We'll have to see how it plays out.

Operator: Thank you.

Operator: But there are requirements in the program that once these approvals are secured, that starts a calendar that has to be met. And so we think that this increased cadence of approvals should drive more activity, let's call it, within the next year.

Brent Thielman: Thank you.

Operator: Of course, we've got to get through design and permitting and material and all those other things.

Operator: Our next question will come from Eric Luebchow from Wells Fargo.

Operator: But when this comes, it's going to be significant.

Eric Luebchow: Your line is open.

Operator: I think that's always the tension on the street, right?

Operator: Thanks.

Operator: Not to over anticipate, but then again, also don't underappreciate the significance of a program that's going to be addressing, some of the most difficult and expensive passing, for communications infrastructure that's ever been built, and so we're excited.

Eric Luebchow: Best of luck, Steve, in retirement.

Operator: I think we will see, at least I'm told from folks in D.C. that we use as experts, that we think this cadence of approvals will continue.

Steven Nielsen: Dan, great to have you on board.

Operator: And then in terms of labor and subcontractors, and we talked about this before, we have a long history in rural America.

Dan Paivich: So I wanted to touch on the BEED opportunity.

Operator: We have a broad footprint for both cable and telephone company where we provide master services agreements across broad sections of the country.

Eric Luebchow: You brought this up when you prepared to mark, Steve.

Operator: And so I think we will make prudent investments, but we typically don't make speculative investments before we see the size of the opportunity. We think this one's going to be pretty big, but we want to be a little bit closer before we start pulling the trigger on increased expenditures to support it.

Steven Nielsen: A lot of recent states that have recently been approved for the application process.

Operator: Yeah, understood.

Eric Luebchow: I think you mentioned kind of second half of calendar year 25 is when you think we'll see more contribution from from the BEED program.

Operator: And I guess just one follow-up on the data center AI fiber conversations.

Steven Nielsen: But I just wanted to get confirmation there on when you think construction timing can be.

Operator: It seems like a lot of these may be dark fiber IRUs or in some cases selling empty conduit in the ground.

Eric Luebchow: And as you look at your current labor force, is there any incremental investment you need to make either direct labor or potential subcontractors to get ready for a bigger wave of rural builds that's coming in the next year or so?

Operator: I mean, how do you view these over time?

Steven Nielsen: Yeah, Eric, again, in any government program, they're all a little bit different.

Operator: Are they more one-off project-based type of revenues or something that you think could be more reoccurring over time for these types of routes in terms of maintenance opportunity or you know, other activity that could come after the initial builds?

Steven Nielsen: We'll have to see how it plays out.

Operator: Yeah, and it's early to tell, but given the ambition and the size of the orders at Corning, I think these have got to be very large network bills that substantially serve most of the country.

Adam Tolheimer: We have one customer that we think may be a little bit slower, that's had a pretty strong first half of the year.

Steven Nielsen: Our next question will come from Rob Paul Masano from Raymond James. Your line is open. Hey guys, this is Rob one for Frank Steve. Congratulations on your retirement and Dan. Congratulations on your new opportunity. Curious, do you expect to get a decent amount of business from the Lumen AI fiber build? How much, you know, do you guys do more generally with blowing fiber? How profitable is that business versus putting a shovel in the ground?

Steven Nielsen: But but there are requirements in the program that once these approvals are secured, that starts a calendar that has to be met.

Operator: If you look at commentary from Lumen, they not only highlighted this first series of orders, but that there were substantial opportunities coming behind.

Steven Nielsen: And so we think that this this increased cadence of approvals should drive more activity.

Operator: And I am no expert in the data center side of the business, but I do recall about 18 months ago, there was like a switch that flipped and everybody who could lease data center space started leasing it.

Steven Nielsen: Let's call it within the next year.

Operator: And, you know, there is some possibility that that happens in this intercity and metro, intercity market as this whole move to reduce latency and increase capacity occurs.

Steven Nielsen: Of course, we've got to get through, you know, design and permitting and material and all those other things.

Operator: I mean, one of the things that's interesting in the Corning announcement is the size of the cables.

Steven Nielsen: But when this comes, it's going to be significant.

Adam Tolheimer: And then, and this is always hard to to deal with or calculate with certainty, but, you know, we've been encouraged by the pace of need approvals, the state level approvals by NTIA, it picked up over the summer, and it may be a little bit counterintuitive, but for some of the smaller customers that they've seen evidence that hey, this B thing is coming these states are getting approved.

Operator: These are massive amounts of capacity that they anticipate deploying.

Steven Nielsen: And I think that's always the tension on the street, right?

Operator: And I think that's a good sign that there's some legs to the trail.

Steven Nielsen: Not not to over anticipate, but then again, also don't underappreciate the significance of a program that's going to be addressing some of the most difficult and expensive passings for communications infrastructure that's ever been built.

Operator: Okay, thanks, Chads.

Steven Nielsen: And so so we're excited.

Operator: Thank you.

Steven Nielsen: I think we will see at least I'm told from from folks in D.C. that we use as experts that we think this cadence of approvals will continue.

Operator: And our next question will come from Alan Mitrani from Sylvan Lake Asset Management.

Steven Nielsen: And then in terms of labor and subcontractors, and we talked about this before, we have a long history in rural America.

Operator: Your line is open.

Steven Nielsen: We have a broad footprint for both cable and telephone company where we provide master services agreements across broad sections of the country.

Operator: Hi, thank you.

Steven Nielsen: And so I think we will we'll make prudent investments, but we typically don't make speculative investments before we see the size of the opportunity.

Operator: Just a couple of quick ones.

Steven Nielsen: We think this one's going to be pretty big, but we want to be a little bit closer before we start pulling the trigger on increased expenditures to support it.

Operator: What were the wireless revenues this quarter?

Eric Luebchow: Yeah, no, understood.

Operator: This is about 3% of revenue. So fairly small.

Eric Luebchow: And I guess it's one follow up on the the data center fiber conversations.

Operator: Okay, and were they up in line with sort of the overall revenue growth this quarter?

Eric Luebchow: It seems like a lot of these may be dark fiber IRUs or in some cases selling empty conduit in the ground.

Operator: No, Alan, and I think this is a broad industry trend that the business is down, call it 10-12% year over year, but I think that's in line with other commentary as the industry gets ready for this network modernization effort. So, it actually was down a little bit less this quarter than it was the prior quarter.

Eric Luebchow: I mean, how do you view these over time?

Operator: Thank you.

Adam Tolheimer: And so we know that within a year, there's going to be real activity on that plan that they may have slowed a little bit going into the back half of the year.

Steven Nielsen: Are they more one off project based type of revenues or something that you think could be more reoccurring over time for these types of routes in terms of maintenance opportunity or other activity that could come after the initial build?

Operator: And also, Drew, maybe can you update us on the CapEx guide for the year and the cadence of that in the next second half?

Steven Nielsen: Yeah, and it's early to tell, but given the ambition and the size of the orders at Corning, I think these have got to be very large network bills that substantially serve most of the country.

Operator: Yeah, Alan, we have not changed the outlook there.

Steven Nielsen: If you look at commentary from Lumen, they not only highlighted this first series of, orders, but that there were substantial opportunities coming behind.

Operator: We're still anticipating the 220 to 230, and there's no issue anymore in terms of deliveries.

Steven Nielsen: I am no expert in the data center side of the business, but I do recall about 18 months, ago, there was like a switch that flipped and everybody who could lease data center space started leasing it.

Operator: Yeah, I think I'll jump in there.

Steven Nielsen: There is some possibility that that happens in this inner city and metro, intercity market, as this whole move to reduce latency and increase capacity occurs.

Operator: You know, as we said in our comments, Alan, that the equipment supply has normalized. That's encouraging.

Steven Nielsen: One of the things that is interesting in the Corning announcement is the size of the cables. These are massive amounts of capacity that they anticipate deploying.

Operator: I mean, that's why we did spend what we did this quarter.

Steven Nielsen: I think that is a good sign that there are some legs to the trend.

Operator: I mean, we've had some orders that were a little bit stopped up and they freed up.

Eric Luebchow: Okay, thanks, Jens.

Adam Tolheimer: Again, hard to tell with with real certainty, but it has been an impressive run of state approvals in the last call it six weeks.

Operator: And given the magnitude of the opportunities that we see, it's encouraging that when we need to get capital equipment that we'll be able to do it.

Operator: Thank you.

Operator: And then with regard to the bead, Steve, maybe I misheard you, but I...

Alan Matroni: Our next question will come from Alan Matroni from Sylvan Lake Asset Management.

Operator: I want to understand, 35 states and territories are all finished and 21 others, you said, adding up to about 56 states and territories, is that it's 50 states and 6 other territories that we're talking about?

Operator: Your line is open.

Operator: That's correct.

Alan Matroni: Hi, thank you.

Operator: Obviously, Alan, our primary focus is on the 50 states, not the territories, but that is the total program.

Adam Tolheimer: Okay, all that makes sense.

Alan Matroni: Just a couple of quick ones.

Operator: Okay, and just to understand, I mean, obviously, there's been a lot of talk about the cost of this, and whether it could be done sort of by satellites a lot cheaper, people are worried.

Steven Nielsen: What were the wireless revenues this quarter?

Operator: But nevertheless, I never discount the ability of the government to spend a lot of money they don't need, at least in some people's views, or at least to spend it, you know, the way they've always spent it, which is through the traditional providers.

Alan Matroni: About 3% of revenue, so fairly small.

Operator: If they end up spending, it just seems like there's a lot of preparatory work going.

Steven Nielsen: Okay.

Operator: You said you think you see revenues in the third quarter of calendar 25.

Alan Matroni: Were they up in line with the overall revenue growth this quarter?

Operator: Is that correct?

Steven Nielsen: No, Alan, I think this is a broad industry trend. The business is down, call it 10-12% year over year, but I think that is in line with, other commentary as the industry gets ready for this network modernization effort. It actually was down a little bit less this quarter than it was the prior quarter.

Steven Nielsen: You know, have you talked with these guys and, you know, do you expect to be a part of that process? Thank you. Yeah, Rob, I guess what I can say, as I mentioned earlier, we're in process or have completed over 2,000 miles of this type of work. So we think we understand that part of the network reasonably well, or as well as anybody else. If you go back long enough, some of the intercity routes are good portion of some of the regions of the country, we actually were part of the construction process.

Operator: Yeah, I think we'll see impacts in the business timing, whether it's third quarter, beginning of fourth quarter, it's too early to tie that down.

Steven Nielsen: Okay, thank you.

Operator: But again, I just want to emphasize how big this program is.

Alan Matroni: Also, Drew, can you update us on the CapEx guide for the year and the cadence of that, in the next second half?

Operator: And, you know, if it shows up one month or the next month, I don't think that's significant in the.., in the big scheme of things.

Drew Deferrari: Yeah, Alan, we have not changed the outlook there.

Operator: This next year, let's call it, before this comes, just seems like you have a lot of things going on between the three, four acquisitions you've made over this last year, counting this latest one in terms of the timing of integrating all of them and getting everything ready with all the permissions and speaking to customers.

Alan Matroni: We are still anticipating the 220 to 230.

Operator: It just seems like, as you said, we're set up for a step function in the business starting at some point in the next 12 months, which, once these programs get started, last, In my experience, decades typically with fits and starts in between but meaningful step ups in the business.

Drew Deferrari: Okay.

Operator: I know you built this business over the last, let's call it 25 to 30 years.

Alan Matroni: There is no issue anymore in terms of deliveries?

Operator: Dan's taking over a business that in essence is already a completed business in the sense that you're operating now in all 50 states.

Steven Nielsen: Yeah, I think I will jump in there.

Operator: You have scale in wireless and wireline with room to grow obviously with different customers and different regions.

Steven Nielsen: As we said in our comments, Alan, the equipment supply has normalized. That is encouraging.

Operator: You're not as concentrated as you were.

Steven Nielsen: That is why we did spend what we did this quarter. We have had some orders that were a little bit stopped up and they freed up.

Operator: My thought process and just question for you, Steve, but also for Dan is where do you see the next phase of Dycom going in terms of if Steve built the business and set up the table as this next gigantic billions of dollars comes in potentially starting the next 12, 24, 36 months, however long it lasts.

Steven Nielsen: Given the magnitude of the opportunities that we see, it is encouraging that when we need, to get capital equipment that we will be able to do it.

Alan Matroni: Okay, that is helpful.

Alan Matroni: Then with regard to the BEAD, Steve, maybe I misheard you, but I want to understand.

Steven Nielsen: Thirty-five states and territories are all finished and 21 others, you said, adding up, to about 56 states and territories.

Alan Matroni: Is that 50 states and six other territories that we are talking about?

Steven Nielsen: That is correct.

Steven Nielsen: Obviously, Alan, our primary focus is on the 50 states, not the territories, but that is, the total program.

Alan Matroni: Okay, and just to understand, I mean, obviously, there's been a lot of talk about the cost of this, and whether it could be done sort of by satellites a lot cheaper, people are worried.

Alan Matroni: But nevertheless, I never discount the ability of the government to spend a lot of money they, don't need, at least in some people's views, or at least to spend it, you know, the way they've always spent it, which is through the traditional providers.

Alan Matroni: If they end up spending, it just seems like there's a lot of preparatory work going.

Alan Matroni: You said you think you see revenues in the third quarter of calendar 25.

Steven Nielsen: Is that correct?

Steven Nielsen: Yeah, I think we'll see impacts in the business timing, whether it's third quarter, beginning of fourth quarter, it's too early to tie that down.

Steven Nielsen: But again, I just want to emphasize how big this program is.

Steven Nielsen: And you know, if it shows up one month or the next month, I don't think that's significant in the in the big scheme of things.

Alan Matroni: Right, so you guys went out, I mean, this this next year, let's call it before this comes, just seems like you have a lot of things going on between the three, four acquisitions you've made, you know, over this last year, counting this latest one, in terms of the timing of integrating all of them, and getting everything ready with all the permissions, and speaking to customers, it just seems like, as you said, we're set up for a step function in the business, starting at some point in the next 12 months, which once these programs get started last, I mean, in my experience, decades, typically, with fits and starts in between, but meaningful, step ups in the business, you know, I know you built this business over the last, let's call it 25 to 30 years, Dan's taking over a business that, in essence, is already a completed business in, the sense that you're operating now in all 50 states, you have the scale and, you know, in wireless and wire line with room to grow, obviously, with different customers in different regions, you're not as concentrated as you were.

Alan Matroni: So my thought process, and just question for, well, for you, Steve, but also for Dan, is where do you see the next phase of DICOM going in terms of if Steve built the business and set up the table, you know, as this next gigantic billions of dollars comes in potentially starting the next 12, 24, 36 months, however long it lasts, you know, how do you see DICOM playing out in the next few years?

Dan Paivich: I mean, I think, Alan, as always, right, we start within a framework of strategic capital, allocation, right? So we want to spend on growing the business, reinvesting the cash flows that we can create inside the business to make it bigger.

Dan Paivich: So we think that these, you know, are good long-term investments in the business.

Steven Nielsen: And this is a business, right, where you're always, your ultimate success is based on your ability to execute, which is why we've always focused on having operating people lead the company.

Dan Paivich: With that, I'll turn it over to Dan.

Dan Paivich: Yeah, Alan, what I would say is, you know, the past four years that I've almost been here now, I've worked closely with Steve and Drew, and what I can tell you is, you know, I'm very much aligned on the strategy that they helped create a very long time ago, and it's been successful for DICOM, and we see that continuing in the future.

Alan Matroni: He might, one might only say, you might say, Alan, that he set up to really generate the rewards from that generation of strategy.

Steven Nielsen: Or he and Drew, anyway.

Steven Nielsen: So we have lots of history in that part of the network. I wouldn't ever comment specifically on an individual customer opportunity. But what I would say is that we don't see generally in any of our growth catalyst, anything structural that would say that we can't achieve our current margins and hopefully do better. And as we've talked about before, that's what we're all about is trying to figure out how to make those better with each incremental opportunity. Got it, thanks, guys. Thank you.

Alan Matroni: The rewards are all about execution, so that's something that shareholders, we look, we hope, you know, we hope will work out well over the next couple years.

Alan Matroni: We know you don't control the purse strings, so it's just a question of capitalizing on doing that, and best of luck to you.

Dan Paivich: Thank you.

Operator: Thank you.

Steven Nielsen: And I am showing no further questions from our phone lines.

Steven Nielsen: I'd now like to turn the conference back over to Steven Nielsen for any closing remarks.

Steven Nielsen: Well, we thank everybody for your time and attendance and interest in the company.

Steven Nielsen: And we look forward to speaking to you again on our next quarter call.

Brent Thielman: Our next question will come from Brent Philman from DA Davidson. Your line is open. Yes, thanks.

Adam Tolheimer: And then wanted to ask about black and beach, a billion dollar backlog seems high.

Adam Tolheimer: And I'm curious how diversified it is from a customer standpoint.

Adam Tolheimer: And the other thing I'm curious about is their model is different than yours, right?

Adam Tolheimer: They don't, they practically don't do any self-performed construction.

Adam Tolheimer: So I'm curious how you're going to change that model.

Brent Thielman: We're getting good cooperation from the new folks. But it's really a blocking and tackling exercise. This is a business that we understand where we have complete familiarity with the customer's administrative systems. And so it's really just an execution and people investment, systems investment, that's in place.

Adam Tolheimer: Well, first on the backlog, Adam, it comes primarily from from perfect arrangements in the stage that we listed in the in the press release as well as new site builds.

Adam Tolheimer: And it worked that we're well familiar with with a very good customer.

Adam Tolheimer: I think there are significant synergies as we've looked at the transaction.

Adam Tolheimer: We've spent a lot of time and effort and money in the last several years enhancing our program and project management systems for the prosecution of wireless work.

Brent Thielman: Okay. And I guess in context to the revenue contributions you're talking about from fiscal 2026, would you also expect the margins for that business to reach that in line sort of guidance you provided by that? Yeah, absolutely. And we'll work hard to make it better, but we've seen no reason based on our performance in that providing wireless services more generally. We have confidence. The team will be able to execute and deliver.

Adam Tolheimer: We think our folks do it well.

Brent Thielman: Okay. And then in the context of the third quarter outlook, Steve and using the 12.9% EBITDA margin as the base here I guess. I mean, is there anything that's restraining your ability to expand margins faster seems to me still an environment that should be in your favor in that regard? I think as we look ahead, friend, as we've always talked before or commented before that if we get broadly distributed growth, that's always helpful.

Adam Tolheimer: And we think that this acquisition was a great way for us to create even more value out of the investments we've made in those systems over the last several years.

Brent Thielman: So even in organic growth like this acquisition, that helps us give us another catalyst and another pool of revenue over which we can leverage operating costs and NGNA. So we feel good about that. And as always, we'd always like to make more and we're working hard to make sure that we match our resources to the best opportunities so that we can do a really good job for the customer, and typically if we do a good job for the customer, then we're delivering for shareholders also.

Adam Tolheimer: Great.

Eric Luebchow: Okay, thank you.

Adam Tolheimer: I'll turn it over.

Eric Luebchow: Thank you.

Adam Tolheimer: Thank you.

Sangita Jain: And our next question will come from San Gita Jane from Keybank Capital Markets.

Alan Mitrani: Our next question will come from Eric Luebchow from Wells Fargo. Your line is open. Thanks.

Sangita Jain: Your line is open.

Sangita Jain: Good morning.

Sangita Jain: Thanks for taking my question.

Alan Mitrani: Best of luck, Steven, retirement and Dan, great to have you on board. So I wanted to touch on on the beat opportunity. You brought this up. You're prepared to mark Steve. A lot of recent states, you know, that have recently, you know, been approved for the application process. I think you mentioned kind of second half of calendar year 25 is when you think we'll see more contribution from from the beat program, but I just wanted to get confirmation there.

Sangita Jain: If I can ask a follow-up on the black and green acquisition, Steve, maybe from a strategic point of view, you're seeing so much growth on the wireline side.

Sangita Jain: Can you tell us what made you think about making acquisition on the wireless side here?

Steven Nielsen: Well, Sangita to begin with, you know, we're not even, but we not only thought about it, but this is something that we, we actually surfaced and approach them.

Steven Nielsen: So I think this is, you know, something that is strategic to us.

Steven Nielsen: We've been in the wireless business now for kind of north of 12 years.

Steven Nielsen: But us, it's just a broader theme of becoming a better partner for all of our customers, particularly those that do both wireline and wireless.

Alan Mitrani: On when do you think construction timing could be. And as you look at your current labor force, you know, is there any incremental investment. You need to make either direct labor or potential subcontractors to get ready for, you know, a bigger wave of real builds that's coming in the next year or so. Yeah, Eric, again, in any government program, they're all a little bit different. We'll have to see how it plays out, but, but there are requirements in the program that once these approvals are secure, that starts a calendar that has to be met.

Steven Nielsen: I mean, ultimately in those customer organizations, we work for the same people.

Steven Nielsen: And so this was a solid enhancement to our business.

Alan Mitrani: And so we think that this this increased cadence of approvals could drive more activity. Let's call it within the next year. Of course, we've got to get through, you know, design and permitting and material on all those other things, but when this comes, it's going to be significant. And I think that's always the attention on the street, right? Not not to over anticipate, but then again, also don't under appreciate the significance of a program that's going to be addressing some of the most difficult and expensive passings for communications infrastructure that's ever been built.

Steven Nielsen: And, you know, we're excited about the, not only the business we've acquired, but potential opportunities that may bring in the future.

Alan Mitrani: And so we're excited. I think we will see at least unfold from folks in DC that we use as experts that we think this cadence of approvals will continue. And then in terms of labor and subcontractors and we talked about this before, we have a long history in rural America. We have a broad footprint for both cable and telephone company, where we provide master services agreements across broad sections of the country.

Sangita Jain: Great.

Sangita Jain: And if I can ask and follow up the acquired revenue in your F3Q guide seems a little bit higher than what we would have expected.

Sangita Jain: So I was wondering if there's a specific call out on where the acquisition is outperforming because it seems like black and rich is going to be a modest contributor at the next couple quarters.

Sangita Jain: Sure, this is true again.

Alan Mitrani: And so I think we will we'll make prudent investments, but we typically don't make speculative investments before we see the size of the opportunity. We think this one's going to be pretty big, but we want to be a little bit closer before we start pulling the trigger on increased expenditures to support it. Yep, no, understood.

Sangita Jain: So on the acquisition, if you recall, last year in the third quarter, we made an acquisition as well. And so we're backing out within this year's the 75 million, that includes the acquisition since the Q3 of last year as well as the two that we've done earlier this year.

Sangita Jain: And now the new acquisition and Q3 of this year.

Sangita Jain: So it's a combination of all of those businesses in the acquired results.

Steven Nielsen: And I just just want to follow up on the the data center AI fiber conversations. It seems like a lot of these may be dark fiber, I or you turn some cases selling empty conduit in the ground. I mean, how do you view these over time, are they more one off project based type of revenues or something that you think could be more reoccurring over time for these types of routes in terms of maintenance opportunity or other activity that could come after the initial build.

Sangita Jain: Yeah.

Sangita Jain: And I think saying, you know, modest in our mind, it's preliminary.

Steven Nielsen: Yeah, and it's early to tell, but given the ambition and the size of the orders at Corning, I think these have got to be very large network builds that substantially serve most of the country. If you look at commentary from Lumen, they not only highlighted this, you know, first series of orders, but that there were substantial opportunities coming behind. And I am no expert in the data center side of the business, but I do recall about 18 months ago, there was like a switch that flipped and everybody who could lease data center space started leasing it.

Sangita Jain: We're still working.

Sangita Jain: We've owned the business now since August 5th.

Sangita Jain: So we're still tightening down our revenue forecast, but you know, 10 to 15 million of the score.

Steven Nielsen: And, you know, there is some possibility that that happens in this inner city and metro, inter city market as this whole move to reduce latency and increase capacity occurs. I mean, one of the things that's interesting in the in the Corning announcement is the size of the cables. I mean, these are massive amounts of capacity that they anticipating anticipate deploying. And I think that's a good sign that there's some some legs to the trend.

Sangita Jain: Hopefully, but that's that's what we're expecting at the moment.

Steven Nielsen: Okay, thanks. Thanks.

Sangita Jain: Thank you.

Alex Waters: And our next question will come from Alex Waters from B of A.

Steven Nielsen: Thank you. And our next question will come from Alan Matroni from Sylvan Lake Asset Management. The line is open. Hi, thank you. Just a couple of quick ones. What were the wireless revenues this quarter? About 3% of revenue. So so fairly small. Okay. And were they were they up in line with the sort of the overall revenue growth this quarter? No, Alan. And I think this is a broad industry trend. The businesses down call it 10 12% year over year, but I think that's in line with with other commentary as the industry gets ready for this network modernization effort.

Alex Waters: Your line is open.

Alex Waters: Hey, good morning, guys.

Alex Waters: Thanks so much for taking my questions.

Steven Nielsen: So it actually was down a little bit less this quarter than it was the prior quarter. Okay, thank you. And also Drew, maybe can you update us on the CapEx guide for the year and the cadence of that in the next second half? Yeah, Alan, we would we have not changed the outlook there. We we're still anticipating the 220 to 230. And there's no issue anymore in terms of deliveries. Yeah, I think I'll jump in there.

Steven Nielsen: You know, as we said in our comments, Alan, that the equipment supply has normalized. That's encouraging. I mean, that's why we did spend what we did this quarter. I mean, we've had some orders that were a little bit stopped up and they freed up. And given the magnitude of the opportunities that we see, it's encouraging that when we need to get capital equipment that we'll be able to do it. Okay, that's helpful.

Steven Nielsen: And then with regard to the beat, Steve, maybe I misheard you, but I I want to understand 35 states and territories are all finished. And 21 others, you said, adding up to about 56 states and territories is that it's 50 states and six other territories that we're talking about. That's correct. Obviously, Alan, our primary focus is on the 50 states, not the territories, but that is the total program. Okay, and just to understand, I mean, it obviously there's been a lot of talk about the cost of this and whether it could be done, sort of by fatal, a lot cheaper people are worried, but nevertheless, I never discount the ability of the government to spend a lot of money they don't need, at least in some people's views, or at least to spend it, you know, the way they've always spent it, which is through the traditional providers.

Steven Nielsen: If they end up spent, it just seems like there's a lot of preparatory work going. You said you'd think you see revenues in the third quarter of calendar 25, is that correct? Yeah, I think we'll see impacts in the business timing, whether it's third quarter, beginning of fourth quarter, and then it's too early to tie that down. But again, I just want to emphasize how big this program is, and you know, it shows up one month or the next month, I don't think that's significant in the in the big scheme of things.

Steven Nielsen: Right, so you guys went out, I mean, this next year, let's call it before the end of this comes, just seems like you have a lot of things going on between the three, four acquisitions you've made over this last year, counting as late as one in terms of the timing of integrating all of them and getting everything ready with all the permissions and speaking to customers. It just seems like, as you said, we're set up for a step function in the business, starting at some point in the next 12 months, which once these programs get started last, I mean, in my experience, decades, typically.

Alex Waters: Steve congrats on their retirement and Dan.

Steven Nielsen: With fits and starts in between, but meaningful stepups in the business, you know, I know you built this business over the last, let's call it 25 to 30 years, Dan's taking over a business that in essence is already a completed business in the sense that you're operating now in all 50 states. You have the scale in wireless and wire line with room to grow obviously with different customers and different regions, you're not as concentrated as you were.

Alex Waters: Congratulations to you as well.

Alex Waters: Maybe just first off here, kind of going back to Alex's first question.

Alex Waters: Steve, in the past, you noted kind of that data center opportunity has been modest to revenues.

Alex Waters: Have your, have your thoughts evolved much more than that to what it could be a contributor for diacom.

Steven Nielsen: I mean, I think Alan, as always, right, we start within a framework of strategic capital allocation, right? So we want to spend on growing the business, reinvesting the cash flows that we can create inside the business to make it bigger. We'll look at acquisitions as we have over the last year. I mean, it's interesting that if you aggregate the acquisitions over the last year, they approximate and size what we did in 2012 with the acquisitions from Quanta that have worked out well for us.

Alex Waters: And then maybe the secondly, some really strong growth from customer number four.

Alex Waters: This court, I know you spoke to a little bit and prepare remarks, but can you can you discuss a little bit more about what's really driving that growth and your expectations for them going forward.

Alex Waters: Thanks.

Steven Nielsen: Sure, so Alex with respect to data centers as we talked about them and at least what we had observed previously, there were clearly new data centers being constructed. In some cases, they were being construction constructed in areas of the country that were not closely associated with existing internet backbone.

Steven Nielsen: So we think that these, you know, are good long-term investments in the business. And this is a business right where you're always, your ultimate success is based on your ability to execute, which is why we've always focused on having operating people lead the company with that. I'll turn it over to Dan. Yeah, Alan, what I would say is, you know, the past four years that I've almost been here now, I've worked closely with Steven Drew, and what I can tell you is, you know, I'm very much aligned on the strategy that they help create a very long time ago, and it's been successful for die-com, and we see that continuing in the future.

Steven Nielsen: So there were certainly some opportunities for laterals.

Steven Nielsen: If you look at the announcement between Lumen and Microsoft and then the subsequent supply announcement by by corning that these are not small projects. These are projects that point routes that are measured in the thousands of miles.

Steven Nielsen: I mean, we don't know exactly exactly what's going to transpire. But if you think about cornings announcement of having an order for 10% of their annual capacity each year for the next few years, that's a pretty sizable opportunity for us in the outside plant portion of the network.

Steven Nielsen: So I think what we're really seeing is essentially a nationwide opportunity for an enhancement to the inner city network, which we haven't seen for a long time.

Steven Nielsen: He might, one might only say, you might say out, Alan, that he set up to really generate the reward from that generation of strategy, or he and Drew anyway. The rewards are all about execution, so that's what shareholders, we hope, you know, we hope we'll work out well over the next couple years. We know you don't control the purse strings, so it's just a question of capitalizing on doing that in best of luck to you. Thank you.

Steven Nielsen: So how that stacks up against a whole bunch of other robust opportunities remains to be seen, but we think it's pretty significant.

Operator: Thank you, and I am showing no further questions from our phone lines.

Steven Nielsen: And then I think with respect to the customer, you referenced into just more broadly.

Steven Nielsen: We were really pleased with the news flow over the last let's call it two to three months in that you had a number of strategic transactions where you had new sources of capital coming into support to deploy the deployment of new high capacity networks.

Steven Nielsen: And so I think what that indicates to me is the several things.

Steven Nielsen: So we're seeing programs broaden either geographically or in duration.

Steven Nielsen: I'd now like to turn the conference back over to Steven Nielsen for any closing remarks. Thank you.

Steven Nielsen: So we're seeing more and for longer.

Steven Nielsen: We just talked about the AI opportunity.

Steven Nielsen: You know what's always interesting in this industry is just when you think, you know where all the money's going to come from.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Steven Nielsen: There's a new source.

Steven Nielsen: So thinking that the hyper scalers could be active participants in providing capital of our industry is encouraging.

Steven Nielsen: You know, for them, a big fiber program is I'm sure a significant commitment.

Operator: Everyone have a wonderful day.

Steven Nielsen: But when you think that they an aggregate are supposedly going to spend something like $200 billion in capital this year, their involvement is helpful.

Steven Nielsen: And then if you look at the strategic announcements over the last couple of months, we've seen some M&A, mergers amongst customers, we've seen joint ventures established with new, deep pocketed, very well respected companies coming into the industry.

Steven Nielsen: I just think there's just a broad set of opportunities in wire line.

Alex Waters: Thank you, guys.

Alex Waters: Thank you.

Stephen Fisher: And our next question will come from Stephen Fisher from UBS.

Stephen Fisher: Your line is open.

Stephen Fisher: Well, thanks.

Stephen Fisher: Good morning and best wishes, Stephen Dan.

Stephen Fisher: Maybe just to start off with some follow ups on black and beach, just curious what the growth rate embedded in that 250 to 275 million of revenues is for 2020 for your fiscal 26.

Stephen Fisher: So what's the trailing right now or what's the calendar 24 expected to be and how much of that 250 to 275 is in backlog.

Stephen Fisher: Yeah.

Stephen Fisher: So, Steve, just to take your first question about the trailing revenues, I mean, we didn't buy the business that way that in wireless, there's lots of visibility when new programs are initiated down to the site level and we use that information to create a good forecast for.

Stephen Fisher: Let's call it the next 30 months.

Stephen Fisher: So the back half of this year and the two years following and that's really literally down to the number of sites in each one of these states.

Stephen Fisher: So we have good visibility from our growth perspective as we just indicated, you know, we're not looking at more than 10 to 15 million in revenue each of these last two quarters.

Stephen Fisher: So when you comp that next year, obviously essentially all of the revenue that we see in the back half of next year is going to be organic out of the acquisition in the way that we calculate organic growth.

Stephen Fisher: So we think it's a good organic growth opportunity.

Stephen Fisher: We think that the construction activity as scheduled will increase beginning at the first of the year.

Stephen Fisher: And so we think that's a, you know, a very good solid plan.

Stephen Fisher: In terms of revenue forecast, that's all in backlog. I mean, that that billion dollars in backlog really extends through the end of calendar 27.

Stephen Fisher: And then I think in general, we're just pleased to participate in this deployment of new equipment to modernize the network.

Stephen Fisher: I think that's a trend that we expect to continue for a while.

Stephen Fisher: There's clearly been one very major announcement in that space.

Stephen Fisher: And I believe it was a, you know, a several year announcement.

Stephen Fisher: And that's what we're going to be in support of.

Stephen Fisher: Okay, that's helpful.

Stephen Fisher: And then just maybe to follow up on Adam's question earlier about the growth in the third quarter, agree that it's all slower than we would have expected and you gave some color there.

Stephen Fisher: I guess I'm just kind of curious about the bigger picture on organic growth here.

Stephen Fisher: You know, with so much private investment and all the public funding, it seems like there should be potential for double digit organic growth here.

Stephen Fisher: Should we assume that, you know, we should be kind of building on this kind of need to offer single digit growth from here or is there something that's still kind of restraining it when we think about the next kind of handful of quarters.

Stephen Fisher: I think Steve, you know, what's what's we're always factoring into our outlook is that we understand the big growth drivers to the business.

Stephen Fisher: They're significant.

Stephen Fisher: We've been able to grow double digits before.

Stephen Fisher: We had sizable growth as you recall over the last two, three fiscal years.

Stephen Fisher: And there's nothing structurally that would say there's a lack of opportunity that wouldn't support that kind of growth again, but there's no guarantees the system service business.

Stephen Fisher: We earn the business one day at a time.

Stephen Fisher: We think we're a well-positioned.

Stephen Fisher: And it is always encouraging when we see customers announcing new initiatives, for example, to take advantage of hyperscaler capital. Or just, you know, new capital coming into the space to do more of what we already do.

Stephen Fisher: You know, it's interesting that just the most recent announcements in the space in the last couple, you know, over the last six months have added over 9.5 million homes incrementally to everybody's plans over the next four or five years.

Stephen Fisher: So, so we're encouraged.

Stephen Fisher: Perfect.

Stephen Fisher: Thanks very much.

Stephen Fisher: Thank you.

Rob Paul Masano: Our next question will come from Rob Paul Masano from Raymond James.

Rob Paul Masano: Your line is open.

Rob Paul Masano: Hey guys, this is Rob one for Frank Steve.

Rob Paul Masano: Congratulations on your retirement and Dan.

Rob Paul Masano: Congratulations on your new opportunity.

Rob Paul Masano: Curious, do you expect to get a decent amount of business from the Lumen AI fiber build?

Rob Paul Masano: How much, you know, do you guys do more generally with blowing fiber?

Rob Paul Masano: How profitable is that business versus putting a shovel in the ground?

Rob Paul Masano: You know, have you talked with these guys and, you know, do you expect to be a part of that process?

Rob Paul Masano: Thank you.

Rob Paul Masano: Yeah, Rob, I guess what I can say, as I mentioned earlier, we're in process or have completed over 2,000 miles of this type of work.

Rob Paul Masano: So we think we understand that part of the network reasonably well, or as well as anybody else.

Rob Paul Masano: If you go back long enough, some of the intercity routes are good portion of some of the regions of the country, we actually were part of the construction process.

Rob Paul Masano: So we have lots of history in that part of the network.

Rob Paul Masano: I wouldn't ever comment specifically on an individual customer opportunity.

Rob Paul Masano: But what I would say is that we don't see generally in any of our growth catalyst, anything structural that would say that we can't achieve our current margins and hopefully do better.

Rob Paul Masano: And as we've talked about before, that's what we're all about is trying to figure out how to make those better with each incremental opportunity.

Rob Paul Masano: Got it, thanks, guys.

Rob Paul Masano: Thank you.

Brent Thielman: Our next question will come from Brent Philman from DA Davidson.

Brent Thielman: Your line is open.

Brent Thielman: Yes, thanks.

Brent Thielman: Good morning.

Brent Thielman: Steve, I just curious what actions you need to take at Black and Beach just to get the margins up to the corporate average or the big investments need to make their legacy agreements, anything like that.

Brent Thielman: Yeah, Brent, I think the good news is the investments that we made in our own business to create scalability and to improve the efficiency and tightliness of service delivery.

Brent Thielman: All exist.

Brent Thielman: Now, it's a big organization.

Brent Thielman: We're getting good cooperation from the new folks.

Brent Thielman: But it's really a blocking and tackling exercise.

Brent Thielman: This is a business that we understand where we have complete familiarity with the customer's administrative systems. And so it's really just an execution and people investment, systems investment, that's in place.

Brent Thielman: Okay.

Brent Thielman: And I guess in context to the revenue contributions you're talking about from fiscal 2026, would you also expect the margins for that business to reach that in line sort of guidance you provided by that?

Brent Thielman: Yeah, absolutely.

Brent Thielman: And we'll work hard to make it better, but we've seen no reason based on our performance in that providing wireless services more generally.

Brent Thielman: We have confidence.

Brent Thielman: The team will be able to execute and deliver.

Brent Thielman: Okay.

Brent Thielman: And then in the context of the third quarter outlook, Steve and using the 12.9% EBITDA margin as the base here I guess.

Brent Thielman: I mean, is there anything that's restraining your ability to expand margins faster seems to me still an environment that should be in your favor in that regard?

Brent Thielman: I think as we look ahead, friend, as we've always talked before or commented before that if we get broadly distributed growth, that's always helpful. So even in organic growth like this acquisition, that helps us give us another catalyst and another pool of revenue over which we can leverage operating costs and NGNA.

Brent Thielman: So we feel good about that.

Brent Thielman: And as always, we'd always like to make more and we're working hard to make sure that we match our resources to the best opportunities so that we can do a really good job for the customer, and typically if we do a good job for the customer, then we're delivering for shareholders also.

Brent Thielman: Okay, thank you.

Brent Thielman: Thank you.

Eric Luebchow: Our next question will come from Eric Luebchow from Wells Fargo.

Eric Luebchow: Your line is open.

Eric Luebchow: Thanks.

Eric Luebchow: Best of luck, Steven, retirement and Dan, great to have you on board.

Eric Luebchow: So I wanted to touch on on the beat opportunity.

Eric Luebchow: You brought this up.

Eric Luebchow: You're prepared to mark Steve.

Eric Luebchow: A lot of recent states, you know, that have recently, you know, been approved for the application process.

Eric Luebchow: I think you mentioned kind of second half of calendar year 25 is when you think we'll see more contribution from from the beat program, but I just wanted to get confirmation there.

Eric Luebchow: On when do you think construction timing could be.

Eric Luebchow: And as you look at your current labor force, you know, is there any incremental investment. You need to make either direct labor or potential subcontractors to get ready for, you know, a bigger wave of real builds that's coming in the next year or so.

Eric Luebchow: Yeah, Eric, again, in any government program, they're all a little bit different.

Eric Luebchow: We'll have to see how it plays out, but, but there are requirements in the program that once these approvals are secure, that starts a calendar that has to be met.

Eric Luebchow: And so we think that this this increased cadence of approvals could drive more activity.

Eric Luebchow: Let's call it within the next year.

Eric Luebchow: Of course, we've got to get through, you know, design and permitting and material on all those other things, but when this comes, it's going to be significant.

Eric Luebchow: And I think that's always the attention on the street, right?

Eric Luebchow: Not not to over anticipate, but then again, also don't under appreciate the significance of a program that's going to be addressing some of the most difficult and expensive passings for communications infrastructure that's ever been built.

Eric Luebchow: And so we're excited.

Eric Luebchow: I think we will see at least unfold from folks in DC that we use as experts that we think this cadence of approvals will continue.

Eric Luebchow: And then in terms of labor and subcontractors and we talked about this before, we have a long history in rural America.

Eric Luebchow: We have a broad footprint for both cable and telephone company, where we provide master services agreements across broad sections of the country.

Eric Luebchow: And so I think we will we'll make prudent investments, but we typically don't make speculative investments before we see the size of the opportunity.

Eric Luebchow: We think this one's going to be pretty big, but we want to be a little bit closer before we start pulling the trigger on increased expenditures to support it.

Eric Luebchow: Yep, no, understood.

Eric Luebchow: And I just just want to follow up on the the data center AI fiber conversations.

Eric Luebchow: It seems like a lot of these may be dark fiber, I or you turn some cases selling empty conduit in the ground.

Eric Luebchow: I mean, how do you view these over time, are they more one off project based type of revenues or something that you think could be more reoccurring over time for these types of routes in terms of maintenance opportunity or other activity that could come after the initial build.

Eric Luebchow: Yeah, and it's early to tell, but given the ambition and the size of the orders at Corning, I think these have got to be very large network builds that substantially serve most of the country.

Eric Luebchow: If you look at commentary from Lumen, they not only highlighted this, you know, first series of orders, but that there were substantial opportunities coming behind.

Eric Luebchow: And I am no expert in the data center side of the business, but I do recall about 18 months ago, there was like a switch that flipped and everybody who could lease data center space started leasing it.

Eric Luebchow: And, you know, there is some possibility that that happens in this inner city and metro, inter city market as this whole move to reduce latency and increase capacity occurs.

Eric Luebchow: I mean, one of the things that's interesting in the in the Corning announcement is the size of the cables.

Eric Luebchow: I mean, these are massive amounts of capacity that they anticipating anticipate deploying.

Eric Luebchow: And I think that's a good sign that there's some some legs to the trend.

Eric Luebchow: Okay, thanks.

Eric Luebchow: Thanks.

Eric Luebchow: Thank you.

Alan Matroni: And our next question will come from Alan Matroni from Sylvan Lake Asset Management.

Alan Matroni: The line is open.

Alan Matroni: Hi, thank you.

Alan Matroni: Just a couple of quick ones.

Alan Matroni: What were the wireless revenues this quarter?

Alan Matroni: About 3% of revenue. So so fairly small.

Alan Matroni: Okay.

Alan Matroni: And were they were they up in line with the sort of the overall revenue growth this quarter?

Alan Matroni: No, Alan.

Alan Matroni: And I think this is a broad industry trend.

Alan Matroni: The businesses down call it 10 12% year over year, but I think that's in line with with other commentary as the industry gets ready for this network modernization effort. So it actually was down a little bit less this quarter than it was the prior quarter.

Alan Matroni: Okay, thank you.

Alan Matroni: And also Drew, maybe can you update us on the CapEx guide for the year and the cadence of that in the next second half?

Alan Matroni: Yeah, Alan, we would we have not changed the outlook there.

Alan Matroni: We we're still anticipating the 220 to 230.

Alan Matroni: And there's no issue anymore in terms of deliveries.

Alan Matroni: Yeah, I think I'll jump in there.

Alan Matroni: You know, as we said in our comments, Alan, that the equipment supply has normalized. That's encouraging.

Alan Matroni: I mean, that's why we did spend what we did this quarter.

Alan Matroni: I mean, we've had some orders that were a little bit stopped up and they freed up.

Alan Matroni: And given the magnitude of the opportunities that we see, it's encouraging that when we need to get capital equipment that we'll be able to do it.

Alan Matroni: Okay, that's helpful.

Alan Matroni: And then with regard to the beat, Steve, maybe I misheard you, but I I want to understand 35 states and territories are all finished.

Alan Matroni: And 21 others, you said, adding up to about 56 states and territories is that it's 50 states and six other territories that we're talking about.

Alan Matroni: That's correct.

Alan Matroni: Obviously, Alan, our primary focus is on the 50 states, not the territories, but that is the total program.

Alan Matroni: Okay, and just to understand, I mean, it obviously there's been a lot of talk about the cost of this and whether it could be done, sort of by fatal, a lot cheaper people are worried, but nevertheless, I never discount the ability of the government to spend a lot of money they don't need, at least in some people's views, or at least to spend it, you know, the way they've always spent it, which is through the traditional providers.

Alan Matroni: If they end up spent, it just seems like there's a lot of preparatory work going.

Alan Matroni: You said you'd think you see revenues in the third quarter of calendar 25, is that correct?

Alan Matroni: Yeah, I think we'll see impacts in the business timing, whether it's third quarter, beginning of fourth quarter, and then it's too early to tie that down.

Alan Matroni: But again, I just want to emphasize how big this program is, and you know, it shows up one month or the next month, I don't think that's significant in the in the big scheme of things.

Alan Matroni: It just seems like, as you said, we're set up for a step function in the business, starting at some point in the next 12 months, which once these programs get started last, I mean, in my experience, decades, typically.

Alan Matroni: With fits and starts in between, but meaningful stepups in the business, you know, I know you built this business over the last, let's call it 25 to 30 years, Dan's taking over a business that in essence is already a completed business in the sense that you're operating now in all 50 states.

Alan Matroni: You have the scale in wireless and wire line with room to grow obviously with different customers and different regions, you're not as concentrated as you were.

Alan Matroni: So my thought process and just question for you, Steve, but also for Dan, is where do you see the next phase of die-come going in terms of if Steve built the business and set up the table?

Alan Matroni: So, you know, as this next gigantic billions of dollars comes in potentially starting the next 12, 24, 36 months, however long it lasts, you know, how do you see die-come playing out in the next few years?

Steven Nielsen: So we think that these, you know, are good long-term investments in the business.

Steven Nielsen: And this is a business right where you're always, your ultimate success is based on your ability to execute, which is why we've always focused on having operating people lead the company with that.

Dan Payvich: I'll turn it over to Dan.

Dan Payvich: Yeah, Alan, what I would say is, you know, the past four years that I've almost been here now, I've worked closely with Steven Drew, and what I can tell you is, you know, I'm very much aligned on the strategy that they help create a very long time ago, and it's been successful for die-com, and we see that continuing in the future.

Dan Payvich: He might, one might only say, you might say out, Alan, that he set up to really generate the reward from that generation of strategy, or he and Drew anyway.

Dan Payvich: The rewards are all about execution, so that's what shareholders, we hope, you know, we hope we'll work out well over the next couple years.

Dan Payvich: We know you don't control the purse strings, so it's just a question of capitalizing on doing that in best of luck to you.

Unknown Executive: Thank you.

Unknown Executive: Thank you, and I am showing no further questions from our phone lines.

Steven Nielsen: I'd now like to turn the conference back over to Steven Nielsen for any closing remarks.

Steven Nielsen: Thank you.

Steven Nielsen: This concludes today's conference call.

Unknown Executive: Thank you for your participation.

Unknown Executive: You may now disconnect.

Everyone have a wonderful day.

Q2 2025 Dycom Industries Inc Earnings Call

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