Dycom Industries at Goldman Sachs Conference: Strategic Growth and Opportunities

On Thursday, 11 September 2025, Dycom Industries (NYSE:DY) presented at the Goldman Sachs Communicopia + Technology Conference 2025. The discussion, led by CEO Dan Peyovich, highlighted Dycom’s strategic growth in digital infrastructure, with a focus on fiber connectivity, AI, and data centers. While the company faces labor challenges, it remains optimistic about future opportunities, including significant revenue growth and expansion through mergers and acquisitions.

Key Takeaways

• Dycom Industries projects a $20 billion opportunity in the AI and data center space over the next five years.
• The company reported a 14.5% revenue growth in Q2 and aims for a full-year revenue outlook of $5.3 billion.
• Service and maintenance account for over 50% of Dycom’s revenue, providing a stable growth foundation.
• Dycom is actively pursuing M&A opportunities to enhance its market position and growth prospects.
• The BEAD program is anticipated to bring revenue opportunities in Q2 of next year.

Financial Results

• Dycom’s revenue outlook for the year is approximately $5.3 billion.
• Q2 saw a revenue growth of 14.5% and a margin increase of 175 basis points.
• The company sees significant growth from $3.1 billion in revenue four years ago.
• Dycom’s service and maintenance business forms the core of its revenue, exceeding 50%.

Operational Updates

• Dycom is expanding its presence in the AI and data center space, focusing on "inside the fence" work on data center campuses.
• The company is building its supervisory and management layers to support continued growth.
• Challenges include finding supervisors and managers, but Dycom has been successful in securing projects across various states.

Future Outlook

• Dycom anticipates revenue opportunities related to the BEAD program in the second quarter of next year.
• The company is strategically positioned to capitalize on hyperscaler AI data center, fiber-to-the-home, and rural broadband markets.
• Active pursuit of M&A opportunities is part of Dycom’s growth strategy.

Q&A Highlights

• Dycom maintains a conservative view of its backlog, which could see a significant increase upon contract renewals.
• Opportunities for margin and cash flow improvements exist, though they are seasonal.
• The company is committed to ensuring that labor and equipment do not hinder project builds and is exploring M&A partnerships.

In conclusion, Dycom Industries’ participation at the conference underscored its strategic focus on growth and innovation. For further details, readers are encouraged to refer to the full transcript below.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Josh Grants, Analyst, Goldman Sachs: Good morning, everyone, and welcome to day four of the Goldman Sachs Communicopia and Technology Conference. I have the privilege of introducing Dan Peyovich, President and CEO of Dycom Industries. My name is Josh Grants, and I cover telecom here at Goldman Sachs. Thanks for being here this morning.

Dan Peyovich, President and CEO, Dycom Industries: Morning, Josh. Thank you.

Josh Grants, Analyst, Goldman Sachs: I think you have a safe harbor or something to say.

Dan Peyovich, President and CEO, Dycom Industries: Yes, thank you. Please reference our website for safe harbor statements related to any forward-looking statements I might make today.

Josh Grants, Analyst, Goldman Sachs: Perfect.

Dan Peyovich, President and CEO, Dycom Industries: Short and sweet.

Josh Grants, Analyst, Goldman Sachs: Yes.

Dan Peyovich, President and CEO, Dycom Industries: Get to the fun stuff.

Josh Grants, Analyst, Goldman Sachs: Yes. Dan, there are probably a fair amount of people in the room and listening online that are relatively new to the Dycom Industries story. Can you just kind of give us a high-level overview of the company and where you stand today?

Dan Peyovich, President and CEO, Dycom Industries: We’re a premier digital infrastructure solutions provider across all 50 states. We provide engineering, construction, service, and maintenance of both wireline and wireless telecommunication services. We also do a lot of work now leaning in towards the hyperscalers, looking at connecting the grid nationwide through long-haul and middle-mile networks. Significant operations in all 50 states. As you know, it’s a very busy space right now.

Josh Grants, Analyst, Goldman Sachs: Exactly. Fiber deployments both on the consumer and the enterprise side have been quite topical the past few years. To your point, you kind of sit at the middle of that theme. Many of your biggest customers are in the midst of major deployments, passing tens of millions of more homes or putting long-haul networks to connecting data centers. As you think about your business over the next, call it, five to ten years, how do you envision how your customers will change, how the industry will evolve, and ultimately your financial trajectory?

Dan Peyovich, President and CEO, Dycom Industries: Consolidation is the first word I’d use. You see that with our customers today. I think five of our major customers are either in the middle of some kind of acquisition or recently completed an acquisition. By the way, that’s a positive for Dycom Industries. As our customers get bigger, what they’re generally going to do is invest more capital into these new markets, into the businesses that they’re buying. When they do combine and create bigger businesses, bigger build programs, generally they’re going to lean towards a bigger solutions provider like Dycom Industries. The consolidation for us is a plus. I think that that’s going to continue. You hear a lot of conversation, Josh, around the convergence, wireline and wireless convergence. You’ve heard that at this conference as well from many of our carrier customers. We think that that trend continues over time.

In our own space, we’ve been a major consolidator for the past couple of decades, been active the last couple of years as well. We do continue to lean into M&A, and we’ll probably talk a little bit more about that later today. We think consolidation both in our peer set, consolidation specific to our space, consolidation continues with our customers. Like I said, we think all of that is a positive for us. Going to kind of the 30,000-foot view, the fiber-to-the-home builds are well underway today. I think they’re three, almost four years in. Our customers have continued to either add or reiterate their passings. It’s a very unique time where all of our customers, virtually all of our customers, are creating these large-scale builds. They are having a huge commitment towards building fiber and getting fiber to the home, getting fiber out to businesses around the country.

For a long time, we have said that we believe 80% of addressable homes in the U.S. will get covered by private capital with at least one fiber passing. If you add up all the fiber passings to date, which is getting high 70 million, getting close to 80 million, if you add that and incrementally add what our customers have said that they’re going to go do over the next five plus years, that does get you to that 125 or so million homes out of, call it, 145 total. That 80% is on track. Of course, there’s some other government spending that’s coming into play, which I’m sure we’ll talk about later. What that really means is it’s just on the fiber to the home, which has been going for a while. Tons of opportunity to continue, tons of growth opportunity that continues.

We’re very well positioned for that. Now you layer in the AI space, the data center space, and all of the infrastructure, specifically all the telecommunications infrastructure, significant fiber accounts that have to happen. It’s a lot happening right now. What I would say is the two stories would be consolidation and a lot of growth opportunity.

Josh Grants, Analyst, Goldman Sachs: If I can follow up on that, I guess one of the questions becomes labor. If there’s that much work to do, do you have the labor you need, or is that something that you need to execute on? What’s your strategy for procuring labor?

Dan Peyovich, President and CEO, Dycom Industries: I’m a huge advocate for the trade. I came up through the trades myself, started in the field myself. Huge plug, by the way, for wood and metal shop and auto shop at the high school level. That’s something we’re going to be talking more about in the future. We have a clear strategy around our labor. We’ve had quarters where we’ve grown over 20% organically. As you can imagine, that takes a lot of labor to be able to do that. You’re talking about a mix of skilled trades, you know, delivering the work out in the field. Obviously, a lot of management supervision has to happen as well. The question is, how do you ready that engine? How do you make sure that the engine is in the right spot to continue the growth cycle that we’ve already been on?

For those that are newer to Dycom Industries, we’ve grown significantly over the last several years. This year, if you look at our outlook, we’re $5.3 billion-ish is what we’re talking about. When I started four years ago, we were $3.1 billion. We’ve grown considerably over these last several years, but we see a ton of growth opportunity ahead. How do you set your labor force up for that? One is you’ve got to have an attractive labor proposition. What does that look like? How do you differentiate there? For us, if you look at me, if you look at many of our leaders, we started in the field. That’s a pretty attractive thing, right? If you’re coming in, you’re 18, you’re 22, maybe you’re changing careers, and you can look up and say, at every single role throughout the organization, there’s somebody that started where I am.

That is a huge, huge thing. I don’t think a lot of folks can say that. We get a lot of attraction that comes because people say, I can have a whole career here. I can start and I can retire in the same place. That’s a pretty cool thing. Second is, how do you intentionally invest in people? We’re trying to make people grow their skill sets. We’re trying to challenge them every day. You’ve got to build a culture and a structure around how you do that. Building the right training programs, building the right training facilities, always taking a look at those things so that you make sure you’re addressing the right points in time in their career. Super important. Again, something we’re proactive on.

Today, what I would tell you, Josh, to kind of get to the point, what I would tell you is we will grow considerably. We have to meet that with labor forces. Finding kind of that entry-level field force is not as difficult as finding that tier of supervisors or managers that have to lead them every day. What we’re intensely focused on today, and just being crystal clear with our strategy, we’re very intently building that layer. We’re very intently looking at that layer, making sure that it’s going to be able to adapt and be nimble to the needs that we’re going to have as we continue this growth.

Josh Grants, Analyst, Goldman Sachs: Got it. As we just kind of finish out some of the higher-level strategic things, one of the things that is probably overlooked in your business is the services and maintenance part, which I think you said in results was a little over 50% of your business today. Most people think it’s fiber-to-the-home builds and AI data center services is quite large. How do you think about the trajectory of that part? How do you think about the margin of the services business versus the more specific kind of project builds?

Dan Peyovich, President and CEO, Dycom Industries: It’s another differentiator for us. We’ve been focused on the service and maintenance business for decades. That’s a very difficult business to do. It’s highly capital intensive. If you think about it, you’ve got to have people that are highly trained. You’ve got to have equipment. You’ve got to have facilities all over the country. We’re in all 50 states. We’re certainly not in every municipality, but we’re in a lot. Just to have the capital intensity around that is one huge barrier. We have a really good recipe to do that. We’ve proven we can over time. Second is you’ve got to be able to attack the work. Take a holiday weekend. We have to have people that within usually two hours can get out and service an issue, whatever that issue might be, it might come up.

The infrastructure you have to build to be able to support that, again, highly complex, highly difficult. We do that extremely well. As you said, that’s a really good recurring revenue stream. If you look at it year over year, it doesn’t mean everything fires exactly the same. That’s why we size it to say it’s over 50%, you know, which can be a broader range, admittedly. Over half of our business is an important thing, right? That gives us this excellent foundation that underpins the rest of the demand drivers. Again, coming back, if you look at us across the competitive set, we’re almost everywhere, almost all the time.

As you lever into fiber-to-the-home builds, as you think about what’s coming with BEAD, and especially if you think about all the infrastructure that has to get built for the data centers, to be there, to understand how the municipality works, to understand soil types are a big deal in what we do, to understand, you know, what kind of terrain it is that you’re going to be dealing with, what the right-of-way and the traffic control requirements are going to be as you price these significant builds is critical. Having the infrastructure to support all that is very difficult for someone to stand up. We think it’s a really good recurring revenue base, but it also stands us up really well to lever into these other demand drivers.

Josh Grants, Analyst, Goldman Sachs: As the fiber-to-the-home passings get larger and AI-driven data center builds get larger and there’s more fiber in the ground, that is a nice trajectory for the services business overall. Is that the right way to think about it?

Dan Peyovich, President and CEO, Dycom Industries: Yeah, we just simply like to say every foot we put in the ground today is something that we’re going to maintain tomorrow. That’s a focus for us. It doesn’t mean we always get contracts for both, but that is our focus. Everything we do today creates more plant. As we continue to grow, don’t just think about the growth that we have from these very specific project type work. Think about growing that underlying business. Everything that gets put in the ground, and by the way, I’ll just answer this question straight off. Yes, fiber does cost less to maintain than copper. That is absolutely true. Without question, it performs better. The world’s going to do what the world does. Somebody’s still going to dig things up. Things are still going to need a lot of service. There is still a significant revenue opportunity regardless.

As we put more and more fiber plants in, it creates more future revenue opportunity.

Josh Grants, Analyst, Goldman Sachs: Got it. I think the past three days of the conference, AI has been kind of the talk of everything.

Dan Peyovich, President and CEO, Dycom Industries: Yeah.

Josh Grants, Analyst, Goldman Sachs: Moving, and when you think AI, you think data centers.

Dan Peyovich, President and CEO, Dycom Industries: 100%.

Josh Grants, Analyst, Goldman Sachs: The data center connectivity part of your business has garnered a lot more attention in the past year or so, probably, than it has in the prior 20. We know that data centers already have fiber connectivity today. What’s changed in the past few years that makes this a bigger theme for your company?

Dan Peyovich, President and CEO, Dycom Industries: Yeah, this is something that we think a lot of people don’t understand about how we’re positioned in this space, and it’s really important as we talk about it. If I think about where the enterprise is spending its energy today, like we talked, we have service and maintenance business. We’ve been doing that forever. Fiber-to-the-home has been going very well. We’re spending a massive amount of energy and time and conversation in the AI space. How do you get fiber to all these data centers? We’re talking to our carrier customers. We’re spending a lot of time with the hyperscalers themselves. When you hear some of the hyperscalers talk about all the data centers that they’ve built to date are dwarfed by what their expectation of what they have to build in the future is, that’s a significant statement.

You have, to answer your question, Josh, you have aging infrastructure. Fiber is not future-proof, right? A lot of these networks, these long-haul networks, are over two decades old, sometimes three decades old. Nobody could have possibly envisioned the kind of capacity that we’re thinking about today. Where today, you might have a couple hundred fiber connections, now we’re talking about, I always get this number wrong, 864, 1728, 1720, a bundle of 1728 fiber cables that are going to go in a two-inch conduit. That is a significant deal. That capacity isn’t there today. I think where we’re talking about every day, but a lot of people don’t think about from the outside, the difference between training and inference, the difference about what happens when we go to the edge. We talk about that with the hyperscalers collectively.

They’re not differentiating, I want to build something today and something tomorrow. The pressure behind these networks, the pressure behind, we all know the power is a constraint for the data center demand. We all know that today, right? What they want to make sure does not happen is all the data centers get built and they’re not connected. Getting these long-haul and middle-mile connection routes done and complete, and keep in mind these are all linear things, right? If you miss 100 feet, you’re not connected. Highly, highly complex, highly linear, tons of permitting. You’re talking decades-long build plus. To get all that done, to make sure that as they evolve, as we move to inference, as we know AI needs are going to grow, as latency has to go down from what it is today, we’re planning all of that as we speak, right?

We’re starting to build all that as we speak. It’s going to take time because they’re really, really complex. It’s going to take time to get them ramped up. You heard us recently talk about today, we see $20 billion of opportunity, and that’s billion with a B, of opportunity just in the workstreams that Dycom Industries does today. That’s in the next five years alone. That’s from us quite literally looking at very specific information to build that model and using the data that we have because we’re everywhere in the United States to build that model. That doesn’t mean at 2030 it stops. In fact, by 2030, everybody says it’s only going to be going exponential to what it is today. We have really good information for the next five years, even more on top of that.

That’s a significant opportunity and a lot of fiber that’s got to get put in place. You got to build that for tomorrow. This is time-bound construction. This is not bound around cost. This is very small cost if you think about the hyperscalers’ total CapEx. What it does have is a huge time constraint. A lot of energy going into it today. It takes, you know, we’ve been building the Lumen Overpole for eight or nine months now. It’s going very well, but it takes that long to really get these builds up on plane. You’re going to see more of that. We think that as you get towards the end of 2026 and end of 2027, much, much more of this is going to continue to build, and we think that’s going to build over time.

Josh Grants, Analyst, Goldman Sachs: Just following up on that, of that $20 billion total addressable market, what’s the best way to think about your share of what that could be?

Dan Peyovich, President and CEO, Dycom Industries: Yeah, it would be tough to give a % today. Obviously, we have a strategy. We’ve built out how we’re thinking about that. We’re doing very well with awards. We’ve announced some of them. Many we have not announced. Some of them are smaller. Some of them are larger. There’s a lot of competition. You’ve heard our carrier customers talk about the competitive set as they work with the hyperscalers to see who’s going to carry that route and how that plays out over time. You also have a lot of folks, when you talk about these big numbers, a lot of competitors, they come rushing into the space. A lot of these folks haven’t really done these kind of networks before. That has to play through some of the pricing that we’re seeing out there that people are putting forward. That has to play through.

We’re winning a lot of work today. Great opportunities, work we’re already working on. We think there’s going to be a whole another set from builds that are probably going to be challenged down the road. Josh, don’t have a number, but we think we’re incredibly well positioned to capitalize on the opportunity. Certainly, we wouldn’t throw out the $20 billion if we didn’t think we had a pretty good shot to do a portion of that.

Josh Grants, Analyst, Goldman Sachs: Got it. Some of the data center work you’ve talked about is inside the fence. Maybe can you take a step back and explain what exactly that entails? For those of us who’ve been in a data center and those who haven’t, what exactly you’re connecting that hasn’t been connected today?

Dan Peyovich, President and CEO, Dycom Industries: Inside the fence is included in the $20 billion for us because that’s work that we’re doing today and work that we’re talking to the hyperscalers about. If I can first, Josh, let me just talk about why. As our conversations evolve with the hyperscalers, one of the things that came up is right now they’re using a lot of local, a lot of regional vendor partners to do this inside the fence fiber. It’s a struggle for them, right? It’s a challenge because they don’t have control across many, many campuses. Maybe they’re not seeing the kind of timely response that they want. Maybe they’re not seeing the level of certainty that they want. They came to us and in conversation said, is this something that you can solve for?

Just like with our carrier customers, where our size and our scale allows us to lean into that, we’ve already been awarded across different campuses in different states, across different hyperscalers, opportunities now to come in and do this work. We think that that’s just kind of the tip of the iceberg and there’s more opportunities out there. Specific to what the work is, for those that have been out to data center campuses, and by the way, in my past life, I’ve built a lot of data centers as a general contractor for many years. When you go out to these campuses, one of the first things that’s going to happen when they’re doing the infrastructure is they’re going to bury just a ton of conduit. A lot of that’s going to carry the power for the data center.

It’s going to carry it from, ultimately, you’re going to go from the right-of-way vault to the data center, and then you’re going to interconnect the data centers within the campus. All that pipe’s going to get put underground before we ever get there. That’s going to be utilized by the, often put in by the electrical contractor, utilized by the electrical contractor to do all the connections. They will leave empty pipe for us then to come in when the time is right and connect that now from the right-of-way vault, which, by the way, in some cases, we’ll be doing the connection from the right-of-way back through middle-mile and long-haul networks to other states, other areas. From that, the very same vault, you will take it now into the data center complex, into the data center campus, connecting each of the data centers.

By footage, it’s not as much obviously as you’re going to get when you’re going across the country. These are massive, massive, when I say massive, massive bundles of fiber. You are doing interconnections for redundancy between data centers. There’s actually quite a bit you have to pull. As many of you know, these data center campuses can be quite physically large. There’s quite a bit of opportunity there, and there’s recurring work because many of these campuses build data center after data center after data center. That’s work that we can stay there and continue to pull over time.

Josh Grants, Analyst, Goldman Sachs: Got it. If we shift to the kind of fiber-to-the-home part of the story, you mentioned earlier there’s a lot of consolidation, Verizon, Frontier Communications, AT&T, Lumen Technologies. All four of them are your customers. How should we think about your ability to do, again, incremental part of that business as those two mergers kind of happen?

Dan Peyovich, President and CEO, Dycom Industries: The first point I would make is the increased capital intensity that they’re going to have, right? Whether that’s additional CapEx or they’re just going to go faster with the builds, nearly all of these customers that are growing, that are acquiring, are bringing more capital in. They’re talking about AT&T with Lumen, talking about many more passings that they’re going to do and much more quickly over time than Lumen was doing with their mass market segment before. The first part is you just simply have a lot more coming through. All of these customers we have great relationships with. We’ve been working with them for a long time. We absolutely cherish the partnerships, and these are deep partnerships, you know, between us and them. Our question to them is how can we best solve for what you need? We spend a lot of time talking to them.

If they think about these expansions, if they move into new markets, as they think about BEAD, where can we best fit? Where do we have the best opportunities? I think there’s a good point to make here. We’ve done a really good job of expanding our margin. We’ve done that. We’ve done that as we’ve grown. We’ve done that. I talked about increased productivity in our last call. We have conversations with our customers where we can give them a price discount. If they give us additional volume in a market or give us a connected market or give us a market where we have some really good adjacencies to, we can actually make it less expensive for them and margin increased for us. As you think about these customers combining, having more to do, having more overlap, it just creates more of those opportunities over time.

Not going to forecast exactly how that plays out, but what I would tell you is we’re very excited and again, just very much appreciate the partnerships we have there.

Josh Grants, Analyst, Goldman Sachs: Is it fair to say that most of the business you get with Lumen is from their enterprise side versus the resi side?

Dan Peyovich, President and CEO, Dycom Industries: The bulk today, the bulk of our revenue is through their mass market segment. Now, within some of that, we do have enterprise work, kind of more traditional enterprise work. Now, of course, we have the overpull long-haul work. We count all of that under the kind of telecommunications group as we think about things. The bulk of what we’re doing for Lumen today is in the fiber-to-the-home work.

Josh Grants, Analyst, Goldman Sachs: Got it.

Dan Peyovich, President and CEO, Dycom Industries: Service and maintenance, I should add, both.

Josh Grants, Analyst, Goldman Sachs: Got it. You specifically have not put BEAD in your forecasts. It’s been a long process and doesn’t feel like it’s ever going to really end.

Dan Peyovich, President and CEO, Dycom Industries: We’re getting close.

Josh Grants, Analyst, Goldman Sachs: Where do we stand, and how do you think about the opportunity to take advantage of this?

Dan Peyovich, President and CEO, Dycom Industries: I’ll get right to the headline. The headline is, you know, we think there’s revenue opportunity in the second quarter of next year. It’s been a long time coming for sure. A lot of things are working through the process. You’ve heard 34 states have announced sub-grantees to date. As you calculate all that together, we’ve said for quite some time, even through the iterations, we’ve still speculated that it was going to be 60 to 70% fiber. If you look at everything that we’ve currently heard about in those 34 states, about two-thirds of that by address location is fiber or HSE today. That actually equates to about 75% of the dollars. Those are a little bit disconnected. Of course, you know, going with terrestrial networks is going to cost a little bit more. There are a few important points that I’d like to hit on BEAD.

One, there’s conversations. We’re having a lot of conversations today. We’ve been talking to the state broadband agencies for, I’ll say, going on five years now. We’ve been talking to our customers for a long time. We’re talking to them today. We see opportunities where we have existing contracts with our customers that we can just quickly, very quickly lever in with a new pricing sheet to move into some of these markets. That’s why we think the speed will be there. We also think there’s going to be a lot of pre-planning as they get to that funding button finally getting pushed as it gets through NTIA. What’s happened is, I called it, I think last week, this kind of Kentucky Derby setup. Before, you had a lot of states that were going to progress at different rates and start construction at different timelines.

Now you’ve got everybody in the starting block and you’ve got a lot of horses that have, you know, been walking around ready to go for quite some time. You’re going to have everybody launch off in a very similar timeframe. I do think in the 90-day NTIA approval window, you’re going to have some that get approved sooner and some later because some, I think, are much kind of more vanilla as far as what they’re trying to do and some maybe are trying to push the envelope a little more. You’re going to get just a tiny bit of variation, but you’re really going to get a lot of people launching off. A lot of pre-planning to happen there.

Specific to the changes that have been made, and I think a few things that maybe people aren’t aware of, the new administration made changes that made it more appetizing for our larger customers to participate. Not as intensive in the requirements they have to fulfill across many levels. What you’re seeing today, and if you look at some of the top, our largest customers are now some of the, I think, number one and number three by total awards. They’re very much playing in the BEAD space. That’s obviously a positive overall. You’re also seeing them contribute high dollars per dollar that they’re going to get from the government. The minimum match requirement is 25%. If you look at just our customers that have been awarded alone and we added that up, that’s over 90% match that they’ve done. They’re investing more capital into these passings as well.

A lot of positives to come through there. I do think it’s going to take time to ramp up next year because everybody’s going to hit going at the same time. We do think that we’ll be talking about it more as the year goes on, maybe even some, you know, prospective awards ahead of the formal awards and then likely in Q2 that we can see revenue.

Josh Grants, Analyst, Goldman Sachs: Got it. If we can shift to the kind of financials for a minute, you provided an annual revenue guide, which you reiterated last quarter. People are still very much focused on kind of quarter to quarter, month to month, changes and timing of build plans. Can you give us like or elaborate on build cycles and how the impact results as we kind of think about the sequentials and timing through the year?

Dan Peyovich, President and CEO, Dycom Industries: It’s a good point. When I moved into this role here nine or ten months ago, one of the very first things we did is we said we’re going to give you a revenue outlook for the full year. We want everybody to understand what our growth opportunity looks like and our ability to capitalize on that. We’ve also moved away from giving a ton of customer detail to get away from conversations of why did customer X move by $4 million? The story, Josh, to your point, the story around Dycom Industries really is what is the need that exists today? The need is that you have 75 million homes passed and our customers have committed to 125 million. We have to go build that 50 million. Dycom Industries is very well positioned to go do that.

The need is we have all these data centers that exist today that need more capacity, that need lower latency, that have to happen quickly. It’s highly complex. Dycom Industries is well positioned to do that. $20 billion plus, whatever that number is going to be. All of those parts and pieces that come together, we think that we’re incredibly well positioned to be there for. That’s how we’re trying to communicate with our investors, with our shareholders, is how are we set up to capitalize on the opportunities. When you think about that full-year outlook we gave and raised in the first quarter and then reiterated this last quarter, that shows you our confidence in our ability to capitalize on those builds and it shows you our confidence in the long-term trajectory of those builds. Our customers continue to either raise or reaffirm what their fiber-to-the-home expectations are.

The hyperscalers continue to, frankly, mostly raise what their CapEx is going to be related to data center and AI-driven fiber infrastructure. We’re part of all those conversations. There are a lot of things that obviously I can’t share on stage. We have a lot of confidence in all that coming through. Within a given quarter, one, you’re talking about, you know, we operate on very small work orders. Our average work order is probably $10,000. You’re stacking all those up to get to $1.38 billion. That’s a lot of work orders. Our customers very often, because many of them are publicly traded, many of them are like us, they’re managing other initiatives, they’re managing CapEx, they’re managing a very large business, which doesn’t mean that they’re always going to build at the exact same pace.

Sometimes they’re going to slow down a little bit, sometimes they’re going to go a little bit faster. Quite often we can see that ahead of a quarter, sometimes in a quarter, that will change a little bit. That’s why we give a range within the quarters. We feel really good about our performance in Q2. We grew over 14.5% of revenue. We grew our margin 175 bps. Those all point in the right direction. Those are durable outcomes when you think about it over time. We’re really trying to get people to think about the nature of these builds and how Dycom Industries is positioned to do it and then give you confidence by telling you what we think we can do for the year.

Josh Grants, Analyst, Goldman Sachs: Got it. At the beginning of the year, you kind of gave some margin and cash flow improvements and thoughts out there. We saw pretty good results this past quarter on that. Can you kind of talk about the additional improvements or additional opportunities for improvements on margins and cash flows, and how should we think about the long-term profile of the company?

Dan Peyovich, President and CEO, Dycom Industries: I’m a huge believer that we can get better every day, and that’s very much ingrained to the Dycom culture. We’re never going to be satisfied with where we are. If that means growth, which it does, we’re absolutely leaning into growth. If that means leaning into new demand drivers as we are today, like the AI data center set, we’re going to go do that. Internally, when I moved into the chair, our CFO, Drew, and I sat down and we spent a lot of time thinking about where our position was from operating cash, free cash, our DSOs. We spent a lot of time looking at margin, and we could see opportunities to improve. You’ve seen that come through.

Quite quickly, I would add, quite quickly, we’ve been able to capitalize on a lot of those through increased efficiencies, through dropping operating leverage, through those strategic initiatives and how we’re going about them. What I would tell you today is even though we’ve had really good progress, we see additional opportunity. For margin improvement, absolutely. For cash flow improvement, absolutely. We’re working really hard. They’re not always going to be linear. We are seasonal, very much we’re seasonal. If you think about it in a longer horizon, what we’re trying to do is continually raise the waterline. Josh, what I would tell you is when we get to a point where we think that there’s nothing left, we’ll be clear about that. We will be clear about that. Today, we see continued opportunity.

Josh Grants, Analyst, Goldman Sachs: I guess improving cash flow kind of leads me to leverage, which is pretty low. What are your plans to do with the cash? You do some buybacks, but you probably have capacity for more than what you do. How should we think about your capital allocation in total?

Dan Peyovich, President and CEO, Dycom Industries: We’re growing, continuing to grow. You can see the growth opportunity. You can see the organic growth as you look at the tail end of the year. I think everybody can do the math if you look at it. There’s going to be a lot more organic growth now that we’ve lapped the acquisition that we did in the wireless business. We have to make sure that we can always invest in that. We’ve got to stay ahead of labor. We talked about we’ve got to stay ahead of our equipment. Our commitment to our customers is that we’re going to do everything in our power to make sure that our labor, our equipment, that our processes don’t ever hold up their builds. We have to stay in front of that. We’re going to invest in that first and foremost.

I would tell you that today we’re very aggressively looking at the M&A market. We’re very aggressively looking for partners out there that fit our strategy, that fit our culture, and fit where we’re trying to go ultimately. We think that there are opportunities. It’s obviously got to be the right value overall. It’s got to make sense in long-term returns for our shareholders. We are seeing some incredible opportunities that we think, you know, will be the next springboard for Dycom Industries.

Josh Grants, Analyst, Goldman Sachs: What exactly does this kind of opportunity look like? Is it more of your type of kind of construction or is it something adjacent? What is, what’s kind of the most interesting?

Dan Peyovich, President and CEO, Dycom Industries: Yeah, I don’t want to give away the secret sauce, so to speak. What I would say is, you know, we’ve got a clear strategy. I’ve talked about the opportunities that we have to continue to build on our existing business. What I would tell you is because we’re in all 50 states, because we’re across so many customers, we don’t have a hole to fill. We very much look at how do we add opportunistically. I talked about how there’s continued consolidation that we’ll see in our space. I very much talked about the data center hyperscaler world. What does that look like? How can these partnerships continue to develop over time? Where do we find the need with the hyperscalers that we think that Dycom can bring any, excuse me, bring a unique solution set, a unique solve for?

That’s where we’re spending our time and energy today, Josh.

Josh Grants, Analyst, Goldman Sachs: Got it. The other thing is your backlog is growing quite quickly, which in theory gives us a pretty good indication of where top line is going. I’m a big proponent of kind of thinking about, you know, if revenue grows X, EBITDA grows Y, EPS grows Z. Is there like an algorithm that we should think about as to when we see the backlog, what that actually kind of foreshadows into what earnings and cash flow can really grow?

Dan Peyovich, President and CEO, Dycom Industries: Yeah, first I have to qualify the way that we represent our backlog. Our business is very different for folks that aren’t very familiar with Dycom Industries. Our business is different in the way that we report and record total backlog. It’s a very conservative view. We are only looking at current contracts that we have and the length of time they go to using a trailing 12-month run rate. Build projects we can look at separately, but if you think about service and maintenance business, it’s over half. If I have a contract with AT&T, one of our largest customers, that expires tomorrow, I have zero backlog that we’re reporting out to you all. If I renew it tomorrow, I’m going to have this huge jump up. What it means in the underlying business is absolutely nothing, right? Our underlying business is still operating at the same level.

We’re trying to think about ways that we can improve our communication to investors so people understand that better. Next 12 months does give a much better overall view of the business. It still has the same criteria within it, but it gives a much better view. That’s just my quick thought about how you think about our backlog. We continue to, obviously we have a strategy around our growth. We continue to receive awards in markets that we’re not in today. You’ve heard that on the last few calls. I’ve been mentioning that, which means that we’re growing share, right? That’s an important factor. We’re not only growing with what’s happening today, but we’re growing share in addition to that. I think that’s a really important takeaway. If you try and connect the dots between revenue and EBITDA and EPS, it’s not always going to be linear.

What we’ve been working hard on, and I think showing, is that we’re trying to improve the margins and the EPS independent of revenue as well. We don’t want to just grow with revenue. We want to grow it ahead of revenue. Like I said, we still see continued opportunity to do that. Not a direct corollary. Don’t forget the seasonality that’s in the business. I would kind of put a wrap on that whole thing. We still see a lot of opportunity across all of those today.

Josh Grants, Analyst, Goldman Sachs: Got it. Just kind of circling back to the AI side, you know, you’ve talked about your kind of conversations you’ve had with hyperscalers. Do you foresee conversations with kind of major enterprises as they figure out what their applications will be, or is it they’re just going to ride on the networks that are already there and there’s really nothing incremental on that side?

Dan Peyovich, President and CEO, Dycom Industries: Yes, generally those are going to come through our carrier customers in a similar way as the hyperscalers. It is an important point though, Josh. You have the big hyperscalers that we all talk about, but there are other, both enterprises and other hyperscalers beneath that, that still have a lot of network need that has to get built for. You’re seeing some of those conversations happen. I mean, even in the news recently, Oracle, Oracle in the news yesterday. Obviously, there’s infrastructure related to that kind of data center investment. Those are going to come through as well.

Josh Grants, Analyst, Goldman Sachs: Got it. Real quickly, T-Mobile was relatively new to fiber. Do you have any kind of relationship with them or any of their kind of subsidiaries that they’ve been working with?

Dan Peyovich, President and CEO, Dycom Industries: First, congrats to T-Mobile, Metronet, and Lumos for closing those joint ventures. We’ve been working with Metronet and Lumos for some time. We’re excited about their increased appetite and what they’re going to do now that they have T-Mobile as a partner. We see that as a continued opportunity.

Josh Grants, Analyst, Goldman Sachs: Got it. With the time we have left, what are the one or two things that we should take away from the conversation today, and what makes you most excited about where you stand?

Dan Peyovich, President and CEO, Dycom Industries: A lot of excitement, a lot of energy overall in our business and thinking about the landscape in front of us. The first is, you know, we really have a unique solution set. We’re all over the country. It’s a very hard and difficult thing to stand up. When you’re talking about two, three, four, five-person crews across 50 states, rural, suburban, urban, that’s a very difficult thing for folks to replicate. As I’m aware, nobody else is in all 50 states like we are. Leveraging that into these demand drivers, we have a strategy about how we can do that. We don’t want to overcommit to one. We think that we can build off all three of these as we think about them.

All three being the hyperscaler AI data center set, fiber-to-the-home, and the rural, whether that’s your BEAD or others, while we continue to underpin with the service and maintenance business. We see opportunities for significant growth. Where that ends up, where does that go? What I would tell you today is that is a very long horizon of growth. Yes, we talk about a lot between now and 2030. We don’t think that the world instantly changes when you get to 2030. We think that a lot of these other things are going to continue to increase in intensity, capital intensity, build intensity when we come through there. What we’re really doing is spending a lot of time on is gearing up. We’re gearing up, right?

How do we continue to grow and make sure that we can, that what we’ve built with our customers, that level of certainty that they expect from Dycom, that we think that we’ve raised the bar in the industry, how do we make sure that we can continue that with all of the growth that we see in front of us?

Josh Grants, Analyst, Goldman Sachs: That’s a fantastic place to stop.

Dan Peyovich, President and CEO, Dycom Industries: Thanks so much for being here.

Josh Grants, Analyst, Goldman Sachs: Thank you, Josh.

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