Dycom Industries, Inc. Non-GAAP Reconciliations

Q2 2022

Explanation of Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company's quarterly results releases, trend schedules, conference calls, slide presentations, and webcasts, it may use or discuss Non- GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the Company's performance for the period reported with the Company's performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. Management defines the Non-GAAP financial measures used as follows:

  • Non-GAAPOrganic Contract Revenues - contract revenues from businesses that are included for the entire period in both the current and prior year periods, excluding contract revenues from storm restoration services, adjusted for the additional week in the fourth quarter of fiscal 2021, as a result of the Company's 52/53 week fiscal year. Non-GAAP Organic Contract Revenue change percentage is calculated as the change in Non-GAAP Organic Contract Revenues from the comparable prior year period divided by the comparable prior year period Non-GAAP Organic Contract Revenues. Management believes Non-GAAP Organic Contract Revenues is a helpful measure for comparing the Company's revenue performance with prior periods.
  • Non-GAAPAdjusted EBITDA - net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, and certain non-recurring items. Management believes Non-GAAP Adjusted EBITDA is a helpful measure for comparing the Company's operating performance with prior periods as well as with the performance of other companies with different capital structures or tax rates.
  • Non-GAAPAdjusted Net Income - GAAP net income before the non-cash amortization of the debt discount and the related tax impact, certain tax impacts resulting from vesting and exercise of share-based awards, and certain non-recurring items. Management believes Non-GAAP Adjusted Net Income is a helpful measure for comparing the Company's operating performance with prior periods.
  • Non-GAAPAdjusted Diluted Earnings per Common Share - Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding.
  • Notional Net Debt - Notional net debt is a Non-GAAP financial measure that is calculated by subtracting cash and equivalents from the aggregate face amount of outstanding debt. Management believes notional net debt is a helpful measure to assess the Company's liquidity.

Management excludes or adjusts each of the items identified below from Non-GAAPAdjusted Net Income and Non-GAAPAdjusted Diluted Earnings per Common Share:

  • Non-cashamortization of debt discount on 2021 Convertible Notes - The Company's 0.75% convertible senior notes due September 2021 (the "2021 Convertible Notes") were allocated between debt and equity components. The difference between the principal amount and the carrying amount of the liability component of the 2021 Convertible Notes represents a debt discount. The debt discount is being amortized over the term of the 2021 Convertible Notes but does not result in periodic cash interest payments. The Company excludes the non-cash amortization of the debt discount from its Non-GAAP financial measures because it believes it is useful to analyze the component of interest expense for the 2021 Convertible Notes that will be paid in cash. The exclusion of the non-cash amortization from the Company's Non-GAAP financial measures provides management with a consistent measure for assessing financial results..
  • Goodwill impairment charge - During the six months ended July 25, 2020, the Company incurred a goodwill impairment charge of $53.3 million for a reporting unit that performs installation services inside third party premises. Management believes excluding the goodwill impairment charge from the Company's Non-GAAP financial measures assists investors' overall understanding of the Company's current financial performance and provides management with a consistent measure for assessing the current and historical financial results.
  • Loss (gain) on debt extinguishment - During the six months ended July 31, 2021, the Company recognized a loss on debt extinguishment of $0.1 million in connection with the amendment and restatement of its credit agreement maturing in April 2026. During the six months ended July 25, 2020, the Company recognized a gain on debt extinguishment of $12.0 million in connection with its purchase of $401.7 million aggregate principal amount of the Company's 2021 Convertible Notes for $371.4 million, including interest and fees. Management believes excluding the loss (gain) on debt extinguishment from the

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Company's Non-GAAP financial measures assists investors' overall understanding of the Company's current financial performance and provides management with a consistent measure for assessing the current and historical financial results.

  • Tax impact of the vesting and exercise of share-basedawards - The Company excludes certain tax impacts resulting from the vesting and exercise of share-based awards as these amounts may vary significantly from period to period. Excluding these amounts from the Company's Non-GAAP financial measures provides management with a more consistent measure for assessing financial results.
  • Tax effect from a net operating loss carryback under enacted CARES Act - During the six months ended July 25, 2020, the Company recognized an income tax benefit of $2.6 million from a net operating loss carryback under the enacted U.S. Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The Company excludes this impact because the Company believes it is not indicative of the Company's underlying results or ongoing operations.
  • Tax impact of pre-taxadjustments - The tax impact of pre-tax adjustments reflects the Company's estimated tax impact of specific adjustments and the effective tax rate used for financial planning for the applicable period.

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Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures

Non-GAAP Organic Contract Revenues

Unaudited

(Dollars in millions)

Additional

Growth (Decline)%

week as a

Contract

Revenues

result of the

Non-GAAP -

Non-GAAP

from storm

Company's

GAAP -

Quarter Ended

Revenues -

restoration

52/53 week

Organic

- Organic

GAAP

services

fiscal year

Revenues

Organic %

%

July 31, 2021

$

787.6

$

-

$

-

$

787.6

(4.4)%

(4.4)%

July 25, 2020

$

823.9

$

-

$

-

$

823.9

May 1, 2021

$

727.5

$

(3.9)

$

-

$

723.6

(10.7)%

(11.1)%

April 25, 2020

$

814.3

$

-

$

-

$

814.3

January 30, 20211

$

750.7

$

(5.7)

$

(53.2)

$

691.8

1.8 %

(6.2)%

January 25, 2020

$

737.6

$

-

$

-

$

737.6

October 24, 2020

$

810.3

$

(8.9)

$

-

$

801.4

(8.4)%

(9.4)%

October 26, 2019

$

884.1

$

-

$

-

$

884.1

July 25, 2020

$

823.9

$

-

$

-

$

823.9

(6.8)%

(6.8)%

July 27, 2019

$

884.2

$

-

$

-

$

884.2

April 25, 2020

$

814.3

$

-

$

-

$

814.3

(2.3)%

(1.8)%

April 27, 2019

$

833.7

$

(4.7)

$

-

$

829.0

January 25, 2020

$

737.6

$

-

$

-

$

737.6

(1.5)%

1.3 %

January 26, 2019

$

748.6

$

(20.4)

$

-

$

728.2

October 26, 2019

$

884.1

$

-

$

-

$

884.1

4.2 %

4.7 %

October 27, 2018

$

848.2

$

(3.9)

$

-

$

844.4

Note: Amounts above may not add due to rounding.

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Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures

Non-GAAP Adjusted EBITDA

Unaudited

(Dollars in thousands)

Quarter Ended

July 31, 2021

July 25, 2020

Net income

$

18,165

$

37,024

Interest expense, net

9,334

7,853

Provision for income taxes

6,496

12,244

Depreciation and amortization

38,462

44,129

Earnings Before Interest, Taxes, Depreciation & Amortization ("EBITDA")

72,457

101,250

Gain on sale of fixed assets

(992)

(3,418)

Stock-based compensation expense

2,309

4,373

Loss on debt extinguishment2

-

458

Non-GAAP Adjusted EBITDA

$

73,774

$

102,663

Non-GAAP Adjusted EBITDA % of contract revenues

9.4 %

12.5 %

Note: Amounts above may not add due to rounding.

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Dycom Industries Inc. published this content on 01 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 September 2021 10:11:03 UTC.