Dycom Industries shares fell 21.6% this week following its second-quarter 2027 earnings report. Whilst the company beat revenue estimates with $2.01 billion against analyst expectations of $1.98 billion, investors focused on margin compression. The communications segment's adjusted EBITDA margin narrowed to 13.6% from 14.9% year-over-year. Management attributed this to operational scaling investments, deferred wireless projects, and fuel cost pressures. Analysts responded with price target reductions. KeyBanc lowered its target to $423 from $610, whilst Cantor Fitzgerald reduced its target to $476 from $654. However, the company reported record backlog of $12.2 billion and free cash flow of $37.9 billion, up from $18.4 billion in the previous year's quarter.

Dycom Industries Q2 earnings call highlights. Dycom Industries (NYSE:DY) reported record fiscal 2027 second-quarter revenue and raised its full-year outlook, citing continued demand for fiber-to-the-home, long-haul fiber, data-center infrastructure and building systems work. President and Chief Executive Officer Dan Peyovich said quarterly revenue reached $2.01 billion, up 45.6% from a year earlier and 16.7% higher organically. Adjusted EBITDA rose 54% to $315.5 million, representing 15.7% of revenue, while adjusted diluted earnings per share increased 45% to $5.29. The company said both EBITDA and adjusted EPS exceeded the high end of its outlook. "Demand across our portfolio remains robust," Peyovich said, pointing to activity in fiber-to-the-home, long-haul and data-center interconnects, as well as data-center electrical and structured cabling systems. He said customer demand was as strong as, or stronger than, the prior quarter and that Dycom has discussions underway regarding projects extending years into the future. Communications growth led by fiber and long-haul work. Communications segment revenue was $1.61 billion and grew 16.7% organically from the prior-year quarter. Chief Financial Officer Drew DeFerrari said the increase reflected fiber-to-the-home programs, long-haul and middle-mile fiber construction, and maintenance and operations services. Fiber-to-the-home revenue increased nearly 60% during the fiscal first half compared with the prior-year period, according to Peyovich. He said approximately half of Dycom's communications business consists of service and maintenance work, which provides recurring revenue but is growing at a slower pace than fiber deployment programs. Dycom reported more than $1 billion of contracted backlog for long-haul, middle-mile and "inside the fence" fiber work intended to connect data centers. Peyovich said the company has already completed hundreds of millions of dollars of work in the category and views its opportunity as part of a previously identified $20 billion addressable market. He said the opportunity is weighted toward the latter half of the decade, though Dycom has already secured work across multiple customers and geographic markets. The company also said it recognized revenue during the quarter from Broadband Equity, Access, and Deployment, or BEAD, field-engineering work in the Northeast. Dycom expects engineering work to remain nominal through the remainder of fiscal 2027, with construction beginning in earnest in fiscal 2028, which corresponds with calendar 2027. Communications adjusted EBITDA was $218.3 million, up about $12.8 million from the prior-year quarter. However, the segment's adjusted EBITDA margin fell 134 basis points to 13.6%. DeFerrari attributed the decline to investments needed to scale operations, lower operating leverage from deferred wireless projects and roughly 35 basis points of pressure from higher fuel prices. Wireless revenue shifted into fiscal 2028. Dycom said it now expects approximately $150 million in revenue from a wireless equipment-replacement program to shift from the second half of fiscal 2027 into fiscal 2028. Peyovich said the shift reflects normal changes in deployment schedules and does not change the overall scope or backlog of the multiyear program. "We have line of sight to the projects," Peyovich said in response to an analyst question, adding that some scope has been added and that the company has "a ton of confidence" the deferred work will proceed next year. The company expects the wireless equipment-replacement program to conclude in fiscal 2028. Peyovich said the program has delivered returns above initial expectations for Dycom's wireless acquisition, while the company continues to see service, maintenance, densification and upgrade opportunities in wireless infrastructure. Building systems outperformed as acquisitions contribute. Building systems revenue totaled $397.5 million, representing about 20% of consolidated revenue. The segment's adjusted EBITDA was $97.2 million, or 24.5% of revenue. DeFerrari said the result benefited from favorable changes in project cost estimates and service scope, in addition to operating leverage. During the quarter, Dycom completed its acquisition of National Technology Integrators, which contributed approximately $22.9 million in revenue. Peyovich said the acquired business was performing above expectations and that Dycom has identified cross-selling opportunities with Power Solutions and its communications businesses. The company increased its outlook for building systems revenue to a range of $1.58 billion to $1.65 billion for the full fiscal year, including approximately $90 million of acquired National Technology Integrators revenue expected during the second half. Dycom expects building systems adjusted EBITDA margins in the high teens to low 20% range for the year. Peyovich said the company is seeking to expand the building systems business into additional geographies and markets through further acquisitions. He also noted that electricians remain in short supply and that the company has turned away some projects because of workforce constraints. Outlook, backlog and capital allocation. Dycom ended the quarter with total backlog of $12.2 billion, including $10.98 billion in communications and $1.26 billion in building systems. Backlog expected to be completed over the next 12 months was $6.47 billion. The company raised its fiscal 2027 total revenue outlook to $7.48 billion to $7.66 billion, an increase of approximately $55 million at the midpoint from its prior forecast. Communications revenue is now expected to range from $5.90 billion to $6.01 billion, reflecting the wireless deferral, while Dycom continues to expect consolidated adjusted EBITDA margin expansion for the full year. For the third quarter, Dycom forecast revenue of $1.90 billion to $1.98 billion, adjusted EBITDA of $281 million to $302 million and adjusted diluted EPS of $4.33 to $4.79, excluding intangible amortization expense. Operating cash flow was $103.7 million in the quarter, while combined days sales outstanding for accounts receivable and contract assets improved seven days year over year to 101 days. Dycom ended the quarter with $340.1 million in cash and equivalents, more than $1.086 billion of total liquidity and pro forma net leverage of about 2.3 times adjusted EBITDA. The board authorized a new $150 million share-repurchase program through February 2028, replacing the remaining authorization under the prior program. DeFerrari said Dycom's capital-allocation priorities remain investments in organic growth, acquisitions and opportunistic share repurchases. About Dycom Industries (NYSE:DY). Dycom Industries, Inc (NYSE: DY) is a leading provider of specialty contracting services to the telecommunications industry in North America. The company delivers engineering, construction, installation and maintenance solutions for communications infrastructure, supporting a broad range of network technologies and system architectures. Dycom's services span outside plant construction, cable placement, fiber optic deployment, wireless and wireline network engineering, as well as testing and turn-up services for voice, data and video applications. Dycom's customer base includes major telecommunications carriers, cable operators, utility companies and competitive local exchange carriers.

Dycom Industries reported Q2 2027 revenue of approximately $2.01 billion, with fibre-to-the-home programmes rising nearly 60% year-over-year in the first half. The company secured over $1 billion in contracted backlog for long-haul and data centre interconnects. The Building Systems segment achieved exceptional margins of 24.5%, whilst Communications segment margins faced pressure from investments in workforce benefits and training. A strategic deferral of $150 million in wireless revenue shifted into the next fiscal year. Dycom raised its full-year revenue outlook to $7.48 billion–$7.66 billion. The company expects BEAD-related construction to start during fiscal 2028. Management is constructing a new training facility in Georgia, scheduled to open in the first half of calendar 2027. The board approved a new $150 million share repurchase authorisation through February 2028.