Executive Summary
Dycom delivered a strong start to fiscal 2026, surpassing the high end of guidance across key metrics. Q1 revenue of $1.259 billion rose 10.2% year over year, with adjusted EBITDA of $150.4 million (11.9% of revenue) and GAAP/EPS metrics above Street expectations. The company boosted its full-year 2026 revenue outlook to $5.29–$5.425 billion, underscoring confidence in fiber-to-the-home (FTTH) ramp, maintenance and services, and hyperscaler programs. Backlog reached a record $8.13 billion, including $4.685 billion of next-12-month revenue, signaling robust visibility into future growth. Management highlighted ongoing diversification across drivers (FTTH, long-haul/middle-mile, hyperscalers, maintenance) as a key pillar of resiliency, with service and maintenance acting as a stabilizing, recurring revenue engine. While BEAD remains a meaningful long-term opportunity, it is not included in 2026 guidance, with potential awards anticipated in calendar 2026/fiscal 2027. The company also returned capital to shareholders through a $30.2 million stock repurchase and maintained a disciplined approach to cost and cash flow management, though free cash flow remained negative in Q1 due to working capital dynamics and capex intensity. Investors should monitor BEAD timing, tariff developments, hyperscaler award momentum, and the pace of backlog conversion as primary near-term risk/operating levers.
Key Performance Indicators
Key Insights
Revenue: $1.259B (+10.2% YoY); Gross Profit: $247.5M (Gross Margin 19.66%); Operating Income: $85.38M (Operating Margin 6.78%); EBITDA: $151.03M (EBITDA Margin 12.00%); Net Income: $61.05M (Net Margin 4.85%); Diluted EPS: $2.09; Backlog: $8.13B (Next 12 months: $4.685B); DSO/Working Capital: Combined DSOs 111 days; Free Cash Flow: -$133.47M; Cash at end: $17.82M; Total Debt: $1.145B; Net Debt: $1.129B; Guidance: FY2026 Revenues $5.29–$5.425B; Q2 Revenues $1.38–$1.43B; Adj. EBITDA (Q2): $185â...
Financial Highlights
Revenue: $1.259B (+10.2% YoY); Gross Profit: $247.5M (Gross Margin 19.66%); Operating Income: $85.38M (Operating Margin 6.78%); EBITDA: $151.03M (EBITDA Margin 12.00%); Net Income: $61.05M (Net Margin 4.85%); Diluted EPS: $2.09; Backlog: $8.13B (Next 12 months: $4.685B); DSO/Working Capital: Combined DSOs 111 days; Free Cash Flow: -$133.47M; Cash at end: $17.82M; Total Debt: $1.145B; Net Debt: $1.129B; Guidance: FY2026 Revenues $5.29–$5.425B; Q2 Revenues $1.38–$1.43B; Adj. EBITDA (Q2): $185–$200M; EPS (Q2): $2.74–$3.05; Share Buybacks: 200k shares ($30.2M).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.26B |
10.17% |
16.05% |
| Gross Profit |
247.50M |
40.96% |
25.90% |
| Operating Income |
85.38M |
5.37% |
59.09% |
| Net Income |
61.05M |
-2.41% |
86.86% |
| EPS |
2.11 |
-1.86% |
88.39% |
Management Commentary
Key insights from management, grouped by themes:
- Strategy & Growth: Dycom is expanding the TAM via service/Maintenance, FTTH, long-haul/middle-mile, hyperscalers and BEAD opportunities. Dan Peyovich highlighted: backlog reaching a record level and growth across multiple drivers, with BEAD potential in 2027, and a strategy centered on diversification to mitigate any single customer risk.
- Operational Momentum: The integration of Black & Veatch (wireless acquisition) is ramping faster than expected and is contributing meaningfully to the top line. The company emphasized the importance of a stable, recurring maintenance business underpinning broader growth.
- Market Conditions & Tariffs: Management argued tariff/import cost impacts are manageable and unlikely to materially affect current build plans due to the labor-heavy, domestic nature of most costs. They noted a broad base of FTTH and hyperscaler activity remains robust.
- BEAD and Hyperscalers: BEAD is not in 2026 outlook but remains a meaningful longer-term driver; new opportunities include inside-the-fence and meet-me vault work with hyperscalers, which Dycom expects to begin in 2025 and ramp into 2027.
- Financial Discipline & Shareholder Value: The quarter included a $30.2 million buyback; management underscored ongoing focus on free cash flow improvement and disciplined capital allocation.
- Quantitative outcomes: Q1 results beat high end of guidance (revenue, EBITDA, EPS) and backlog remains a key indicator of visibility and quality of the growth trajectory.
Backlog at the end of Q1 was $8.127 billion, including $4.685 billion that is expected to be completed in the next 12 months.
— Dan Peyovich
We increased our revenue expectations for the year to a range of $5.29 billion to $5.425 billion.
— Dan Peyovich
Forward Guidance
Outlook assessment based on management guidance and market indicators:
- Revenue trajectory: FY2026 guidance raised to $5.29B–$5.425B, implying 12.5%–15.4% YoY growth, supported by FTTH ramp, maintenance-revenue stability, and hyperscaler/mid-mile opportunities. Q2 guidance of $1.38B–$1.43B revenue and continued execution across FTTH and wireless/hyperscaler programs suggests a constructive second quarter that sustains the full-year outlook.
- Margin trajectory: Management cited operating leverage and ongoing efficiency programs as the primary drivers of potential margin expansion; though gross margins were ~19.7% in Q1, the company expects continued EBITDA margin expansion via scale efficiencies and higher-margin programs (maintenance, FTTH, hyperscaler work).
- BEAD exposure: BEAD remains outside the 2026 financial outlook; potential awards could materialize in late 2026 or 2027. Investors should monitor BEAD timing, as well as state sub-grantee awards and federal allocations, for incremental upside to the base case.
- Risks and monitoring: Tariff and import-cost dynamics remain a variable; however, Dycom views the overall impact as manageable. Key monitoring metrics include backlog conversion rate, win-rate on large hyperscaler and FTTH programs, and the pace of DSOs improvement and free cash flow stabilization.
- Bottom-line factors for investors: Positive indicators include a diversified backlog, expanding TAM (FTTH, hyperscalers, long-haul/middle-mile), and a disciplined capital allocation strategy, offset by BEAD timing risk and potential regulatory/tariff shifts.