Exchange: NYSE | Sector: Industrials | Industry: Engineering Construction
Q3 2025
Published: Nov 21, 2024
Earnings Highlights
Revenue of $1.01B down 11.3% year-over-year
EPS of $2.37 decreased by 16.1% from previous year
Net income of 69.79M
"Revenue increased year-over-year to $1.272 billion, an increase of 12%." - Steven Nielsen
Dycom Industries Inc (DY) QQ3 2025 Results Analysis: Posture Strengthened by Growth Backlog, BEAD Upside, and AI/Hyperscale Fiber Opportunities
Executive Summary
Dycom Industries reported a solid QQ3 2025 showing with revenue of $1.272 billion, up 12% year over year (organic growth 7.6%), and a meaningful improvement in non-GAAP operating metrics as the company capitalizes on a broad set of secular demand drivers. Management highlighted accelerated opportunities from fiber deployments including BEAD rural broadband, AI-enabled data-center interconnects, and hyperscaler private networks, alongside the integration of Black & Veatch’s public carrier wireless business. Backlog swelled to $7.856 billion, with roughly $4.467 billion expected to be completed within the next 12 months, underscoring durable visibility as the company expands its maintenance and operations (M&O) services in parallel with wireline and converged network deployments. In the near term, Dycom guided to mid- to high-single-digit total contract revenue growth for Q4 2025 and a modest margin uptick, reflecting seasonal headwinds and integration costs from recent acquisitions. The combination of robust backlog, strategic wireless integration, and rising BEAD/wireless opportunities supports a constructive long-term investment thesis, albeit with near-term execution and macro risks to monitor.
Key Performance Indicators
Revenue
1.01B
QoQ: -16.26% | YoY:-11.33%
Operating Income
101.82M
QoQ: -32.39% | YoY:-13.69%
Net Income
69.79M
QoQ: 2.03% | YoY:-16.66%
EPS
2.39
QoQ: 1.70% | YoY:-16.14%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $1.272 billion, up 12% YoY; organic growth 7.6% ex acquisitions and storm work (Q3’25 vs Q3’24).
Non-GAAP gross margin: 20.8% of revenue, +45 bps YoY.
Adjusted EBITDA: $170.7 million, 13.4% of revenue, +52 bps YoY.
Operating income: $101.8 million (operating margin ~10.1%).
Net income: $69.8 million; GAAP margin ~6.93%; Non-GAAP EPS (adjusted) $2.68 vs $2.23 prior year; Diluted EPS $2.37.
Financial Highlights
- Revenue: $1.272 billion, up 12% YoY; organic growth 7.6% ex acquisitions and storm work (Q3’25 vs Q3’24).
- Non-GAAP gross margin: 20.8% of revenue, +45 bps YoY.
- Adjusted EBITDA: $170.7 million, 13.4% of revenue, +52 bps YoY.
- Operating income: $101.8 million (operating margin ~10.1%).
- Net income: $69.8 million; GAAP margin ~6.93%; Non-GAAP EPS (adjusted) $2.68 vs $2.23 prior year; Diluted EPS $2.37.
- Backlog: $7.856 billion, up from $6.834 billion (YoY); ~ $4.467 billion of backlog expected to be completed in the next 12 months.
- Cash flow: Operating cash flow $65.8 million; free cash flow negative at $-8.79 million; cash at period end $15.3 million; liquidity $462.8 million.
- Leverage and liquidity: Total debt $1.205 billion; net debt $1.190 billion; interest coverage ~5.83x.
- Strategic actions: Acquisition of Black & Veatch’s public carrier wireless infrastructure business completed; wireless integration ramp underway.
- Customer concentration: Top five customers accounted for 55.7% of revenue; AT&T 20.9%, Lumen 11.5%, Comcast 8.1%, Brightspeed 7.0% (organic growth noted in several top customers).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.01B
-11.33%
-16.26%
Operating Income
101.82M
-13.69%
-32.39%
Net Income
69.79M
-16.66%
2.03%
EPS
2.39
-16.14%
1.70%
Key Financial Ratios
currentRatio
3.12
operatingProfitMargin
10.1%
netProfitMargin
6.93%
returnOnAssets
2.24%
returnOnEquity
5.66%
debtEquityRatio
0.98
operatingCashFlowPerShare
$2.26
freeCashFlowPerShare
$-0.3
priceToBookRatio
4.54
priceEarningsRatio
20.06
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the QQ3 2025 earnings call:
- Strategy and opportunities: Steven Nielsen emphasized the long-term growth potential from AI and hyperscale fiber deployments, noting “expansive new national deployments of high capacity, low latency inter and intracity networks” and that Dycom is at the early stage of a broad opportunity with hyperscalers. Dan Peyovich highlighted BEAD-driven rural broadband opportunities ramping in 2H 2025 into 2026 and the data-center/data-network expansion as core growth themes.
- Execution and inorganic growth: Dan Peyovich and Drew DeFerrari discussed the Black & Veatch wireless integration ramp and the ongoing integration cost cadence, with additional costs related to the CEO transition and acquisition synergies.
- Operational results and customer dynamics: The call reiterated that 55.7% of revenue came from the top five customers (AT&T, Lumen, Comcast, Brightspeed, and others) with continued organic growth, and that backlog exceeded $7.8B, with a significant portion expected to be converted in the near term.
- BEAD and policy outlook: Executives stressed bipartisan support for rural broadband deployment (BEAD) and potential acceleration from state programs, while acknowledging timeline variability and the importance of engineering/permitting work to unlock revenue in late 2025 and 2026.
- Margin trajectory and seasonality: Management signaled that Q4 would be impacted by seasonality (fewer workdays, winter weather) and onboarding costs for large programs, while reiterating confidence in mid-to-high single-digit organic growth for the period and a modest EBITDA-margin uplift of roughly 25 bps on a contract-revenue basis.
Revenue increased year-over-year to $1.272 billion, an increase of 12%.
— Steven Nielsen
The integration of our recent wireless acquisition is going well and we are seeing an anticipated ramp in wireless network modernization and deployment services.
— Daniel Peyovich
Forward Guidance
Dycom’s Q4 2025 outlook centers on continued expansion of contract revenues with mid-to-high single-digit growth versus Q4’24, and organic growth in the low-to-mid single digits. Management projects non-GAAP adjusted EBITDA as a percentage of contract revenues to rise by about 25 basis points versus Q4’24. The company also provided near-term cost specifics: approximately $9.9 million of amortization, $9.3 million of stock-based compensation (including $2.1 million tied to CEO succession), and about $16.5 million in net interest expense, with a 26% non-GAAP effective tax rate and ~29.5 million diluted shares. The BEAD opportunity is a focal point of the 2025–2026 outlook, with Louisiana and other states already signaling fiber-centric awards and subgrantee participation; the company expects to begin realizing meaningful BEAD revenue in the back half of calendar 2025, ramping into 2026. Risks include seasonality, integration costs, labor ramp constraints, project execution, and potential policy/timing shifts around BEAD or federal programs. Investors should monitor: (1) BEAD award cadence and sub-grantee activity, (2) Lumen AI and hyperscale data-center opportunities and their contractual ramps, (3) wireless integration milestones from the Black & Veatch acquisition, (4) backlog conversion pace and project execution risk, (5) labor supply and subcontractor mix, and (6) macro demand for telecommunications network expansion, particularly in rural and urban fiber builds.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DY Focus
0.00%
10.10%
5.66%
20.06%
EME
19.90%
9.83%
9.80%
18.48%
MYRG
8.70%
2.29%
1.81%
39.08%
BLD
30.70%
17.80%
7.99%
17.91%
APG
31.10%
7.78%
2.33%
32.90%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Dycom enters a multi-year growth phase anchored by BEAD-driven rural fiber deployments, AI-enabled data-center interconnects, and hyperscaler network expansions. The QQ3 2025 results demonstrated durable top-line growth (revenue +12% YoY) and margin discipline (non-GAAP gross margin +45 bps; EBITDA margin 13.4%), supported by a robust backlog that provides meaningful revenue visibility. The Black & Veatch wireless acquisition broadens Dycom’s service mix and should yield synergistic gains as integration completes and wireless deployment ramps. The company’s liquidity remains ample, with $462.8 million in available liquidity and a prudent balance-sheet stance, though near-term cash flows reflect acquisition-related investments and seasonal working-capital dynamics. Management’s guidance for Q4 2025—mid-to-high single-digit revenue growth and ~25 bps EBITDA-margin uplift—appears achievable given current momentum in large programs and the BEAD pipeline, albeit exposed to seasonality (fewer workdays, winter weather) and integration costs. The key investment thesis centers on: (1) BEAD-driven revenue ramp into 2026, (2) AI/hyperscale data-center builds and related network deployments, and (3) ongoing M&O growth offsetting wireline deployment intensities. Valuation indicators (e.g., EV/EBITDA and price-to-book) suggest a premium reflecting Dycom’s long-duration backlog and strategic positioning, which supports a constructive but measured stance for investors. Recommended stance: Favorable long-term stance with selective exposure given execution/timing risks and macro volatility; monitor BEAD awards cadence, Lumen AI opportunities, wireless integration progress, and labor capacity planning as near-term catalysts.
Key Investment Factors
Growth Potential
BEAD-driven rural broadband deployments expected to ramp in 2H'2025 and accelerate into 2026, with Louisiana and other states signaling fiber-first awards; hyperscale data-center interconnection and long-haul private networks create durable, multi-year demand for Dycom's maintenance and deployment services; AI-enabled network deployments and national fiber builds position Dycom to secure longer-duration, higher-complexity projects.
Profitability Risk
High customer concentration with the top five customers generating ~55-56% of revenue; BEAD program timing and state allocation risk; integration costs and ramp-related labor constraints; weather/storm-related variability; regulatory/policy shifts potentially affecting funding flows; cyclicality in storm-related and commercial fiber projects.
Financial Position
Strong liquidity of $462.8 million with modest near-term debt maturities; total debt $1.206 billion and net debt $1.190 billion; net debt to capitalization ~0.49; EBITDA margin 13.4% and operating margin 10.1%; backlogs provide substantial visibility with $7.856 billion total and $4.467 billion in the next 12 months; cash from operations $65.8 million in Q3; free cash flow negative at $-8.79 million indicating near-term capex and acquisition-related outlays.
SWOT Analysis
Strengths
Very large backlog ($7.856B) with ~$4.467B in the next 12 months, providing strong revenue visibility.
Diversified top customers (AT&T, Lumen, Comcast, Brightspeed) with 55.7% of revenue from the top five.