NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Dycom Industries, Inc. (“Dycom,” the “Company,” “we,” “our,” or “us”) is a leading provider of specialty contracting services focused on the digital infrastructure, telecommunications and utilities industries throughout the United States. These services include program management; planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications and digital infrastructure providers. We also provide underground facility locating services for various utilities, including telecommunications providers, as well as other construction and maintenance services for electric and gas utilities. Additionally, with the acquisition of Power Solutions, LLC (“Power Solutions”) in the fourth quarter of fiscal 2026, we provide comprehensive building infrastructure solutions, including electrical, energy management, security, and fire safety systems for data centers and other critical facilities. Dycom supplies the labor, tools, and equipment necessary to provide these services to its customers.
Accounting Period. Our fiscal year ends on the last Saturday in January. As a result, each fiscal year consists of either 52 weeks or 53 weeks of operations (with the additional week of operations occurring in the fourth quarter). Fiscal 2027 consists of 52 weeks of operations, while fiscal 2026 consisted of 53 weeks of operations.
The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries, all of which are wholly-owned, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2026, filed with the SEC on March 9, 2026. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included. This includes all normal and recurring adjustments and elimination of intercompany accounts and transactions. Operating results for the interim period are not necessarily indicative of the results expected for any subsequent interim or annual period.
Segment Information. The Company operates in two reportable segments, Communications and Building Systems and services are provided on a decentralized basis. Each operating segment consists of a subsidiary (or in certain instances, the combination of two or more subsidiaries), whose results are regularly reviewed by the Company’s Chief Executive Officer, the chief operating decision maker (“CODM”). All of the Company’s Communications operating segments have been aggregated into one reportable segment based on their similar economic characteristics, nature of services and production processes, type of customers, and service distribution methods. During fiscal 2026, following the acquisition of Power Solutions, LLC (“Power Solutions”), the CODM reevaluated the Company’s reportable segments, which resulted in the addition of the Building Systems segment as a component of management’s internal financial information used for operational decision-making. Beginning in fiscal 2026, the Company reports the results of the Building Systems segment separately as a reportable segment. The Building Systems segment specializes in providing comprehensive building infrastructure solutions, including electrical, energy management, security, and fire safety systems for data centers and other critical facilities. See Note 20, Segment Reporting, for additional information.
2. Significant Accounting Policies and Estimates
There have been no material changes to the Company’s significant accounting policies and critical accounting estimates described in the Company’s Annual Report on Form 10-K for fiscal 2026.
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. These estimates are based on our historical experience and management’s understanding of current facts and circumstances. At the time they are made, we believe that such estimates are fair when considered in conjunction with the Company’s consolidated financial position and results of operations taken as a whole. However, actual results could differ materially from those estimates.
Per Share Data. Basic earnings per common share is computed based on the weighted average number of common shares outstanding during the period, excluding unvested restricted share units. Diluted earnings per common share includes the weighted average number of common shares outstanding during the period and dilutive potential common shares arising from
our stock-based awards (including unvested restricted share units) if their inclusion is dilutive under the treasury stock method. Common stock equivalents related to stock-based awards are excluded from diluted earnings per common share calculations if their effect would be anti-dilutive.
3. Accounting Standards
Recently issued accounting pronouncements are disclosed in the Company’s Annual Report on Form 10-K for fiscal 2026. As of the date of this Quarterly Report on Form 10-Q, there have been no changes in the expected dates of adoption or estimated effects on the Company’s condensed consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s Annual Report on Form 10-K for fiscal 2026. Further, there have been no additional accounting standards issued as of the date of this Quarterly Report on Form 10-Q that are applicable to the condensed consolidated financial statements of the Company.
Recently Adopted Accounting Standards
None.
Accounting Standards Not Yet Adopted
Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires public entities to disclose, in the notes to the financial statements, specified information about certain costs and expenses at each interim and annual reporting period. In January 2025, the FASB issued ASU 2025-01, Income Statements (Subtopic 220-40): Clarifying the Effective Date. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of the standard on our condensed consolidated financial statements.
Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU modernizes the approach for internal-use software by eliminating the previous stage-based capitalization model so that the guidance is neutral to different software development projects. Entities may apply the guidance using a prospective, retrospective or modified transition approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027. We are currently evaluating the impact of the standard on our condensed consolidated financial statements.
All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.
4. Computation of Earnings per Common Share
The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts): | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | |
| | May 2, 2026 | | April 26, 2025 | | | | |
| Net income available to common stockholders (numerator) | $ | 91,289 | | | $ | 61,048 | | | | | |
| | | | | | | |
| Weighted-average number of common shares (denominator) | 29,972,366 | | | 28,930,399 | | | | | |
| | | | | | | |
| Basic earnings per common share | $ | 3.05 | | | $ | 2.11 | | | | | |
| | | | | | | |
| Weighted-average number of common shares | 29,972,366 | | | 28,930,399 | | | | | |
| Potential shares of common stock arising from stock options, and unvested restricted share units | 409,904 | | | 333,225 | | | | | |
| Total shares-diluted (denominator) | 30,382,270 | | | 29,263,624 | | | | | |
| | | | | | | |
| Diluted earnings per common share | $ | 3.00 | | | $ | 2.09 | | | | | |
| | | | | | | |
| Anti-dilutive weighted shares excluded from the calculation of earnings per common share | 78,806 | | | 143,121 | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
5. Acquisitions
Fiscal 2026. During the fourth quarter of fiscal 2026, we acquired Power Solutions, LLC (“Power Solutions”), a company that provides comprehensive building infrastructure solutions, including electrical, energy management, security, and fire safety systems for data centers and other critical facilities in the Greater Washington D.C., Maryland, and Virginia area. This acquisition expands our service offerings and our customer base. The purchase price was valued at $1.95 billion as of the signing of the acquisition on a cash-free, debt-free basis. The value was subject to post-closing adjustment, including the final determination of cash, indebtedness and working capital balances. At the closing date, the funding of the acquisition included a cash payment of $1,644.9 million ($1,628.6 million net of cash acquired of $16.3 million), the issuance of 1,011,069 shares of Dycom common stock to the sellers valued at $351.0 million, and the assumption of seller indebtedness of $64.8 million. A post-closing working capital adjustment of $12.8 million was recorded during the first quarter of fiscal 2027. Total consideration was $2,008.7 million. The acquisition of Power Solutions resulted in the addition of a new operating segment which is also a new reportable segment – Building Systems. For additional information on our reportable segments, see Note 20, Segment Reporting. The purchase price allocation for this business is preliminary and will be completed when valuations for intangible assets and other amounts are finalized within the 12-month measurement period from the date of acquisition.
The purchase price of the acquired company was allocated based on the fair value of the assets acquired and the liabilities assumed on the date of acquisition. The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill.
The following table summarizes the aggregate consideration paid and the estimated fair value of assets acquired and liabilities assumed as of the acquisition date (dollars in millions):
| | | | | |
| Fiscal 2026 |
| Assets | |
| Cash and equivalents | $ | 16.3 | |
| Accounts receivable | 324.2 | |
| Contract assets | 18.9 | |
| |
| Other current assets | 1.8 | |
| Property and equipment | 8.4 | |
| Goodwill | 1,124.4 | |
| Intangible assets | 775.0 | |
| Other assets | 16.9 | |
| Total assets | 2,285.9 | |
| |
| Liabilities | |
| Accounts payable | 56.4 | |
| Contract liabilities | 116.2 | |
| Other accrued liabilities | 90.0 | |
| Other liabilities | 14.6 | |
| Total liabilities | 277.2 | |
| |
| Net Assets Acquired | $ | 2,008.7 | |
The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill. Goodwill and intangible assets total $1,899.4 million and are deductible for tax purposes. Accounts receivable, contract assets (liabilities) and current liabilities were either stated at their historical carrying values, which approximate fair value given the short-term nature of these assets and liabilities, or were stated at their fair values based on an evaluation of the current market value of such assets and liabilities. The estimate of fair value for fixed assets was based on an assessment of acquired assets’ condition as well as an evaluation of the current market value of such assets.
The Company recorded intangible assets based on its estimate of fair value which consisted of the following (dollars in millions):
| | | | | | | | | | | |
| Estimated Useful Life (in years) | | Intangible Assets Acquired |
| Customer relationships | 12.0 | | $ | 580.0 | |
| | | |
| Backlog intangibles | 2.0 | | 155.0 | |
| Trade names | 10.0 | | 40.0 | |
| Total intangible assets acquired | | | $ | 775.0 | |
The valuation of intangible assets was determined using the income approach methodology. More specifically, the fair values of the customer relationships and the backlog intangibles were estimated using the multi-period excess earnings method, while the trade name was estimated using the relief-from-royalty method. Significant judgments and assumptions used in estimating management’s cash flow projections included projected revenue growth rates, profit margins, discount rates, customer attrition rates and royalty rates among others. The projected future cash flows are discounted to present value using an appropriate discount rate.
Results of the business acquired are included our condensed consolidated financial statements from the date of acquisition and represents the newly formed Building Systems reportable segment. For additional information on our reportable segments, including the results of the Building Systems segment, see Note 20, Segment Reporting.
The following unaudited supplemental pro forma results of operations for the Company have been provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future (dollars in thousands).
| | | | | | | | | | | |
| For the Three Months Ended |
| May 2, 2026 | | April 26, 2025 |
| Contract revenues | $ | 1,964,782 | | | $ | 1,476,535 | |
| Net income | 91,289 | | | 36,655 | |
The pro forma combined results of operations for the three months ended April 26, 2025 were prepared by adjusting the historical results of Dycom to include the historical results of the business acquired in fiscal 2026 as if such acquisition had occurred at the beginning of fiscal 2025. These pro forma combined historical results were adjusted for the following: an increase in interest and other financing expenses as a result of the debt incurred by Dycom for the purpose of financing the acquisition of Power Solutions and cash consideration paid for the acquired business and an increase in amortization expense due to the intangible assets recorded. The pro forma combined results of operations do not include any adjustments to eliminate the impact of acquisition-related costs incurred by Dycom or the acquired business or any cost savings or other synergies that resulted or may result from the acquisitions.
6. Accounts Receivable, Contract Assets, and Contract Liabilities
The following provides further details on the balance sheet accounts of accounts receivable, net; contract assets; and contract liabilities.
Accounts Receivable
Accounts receivable, net, classified as current, consisted of the following (dollars in thousands): | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Trade accounts receivable | $ | 761,143 | | | $ | 699,904 | |
| Unbilled accounts receivable | 1,105,804 | | | 880,364 | |
| Retainage | 116,497 | | | 119,321 | |
| Total | 1,983,444 | | | 1,699,589 | |
| Less: allowance for credit losses | (2,886) | | | (2,616) | |
| Accounts receivable, net | $ | 1,980,558 | | | $ | 1,696,973 | |
We maintain an allowance for estimated losses on uncollected balances. The allowance for credit losses changed as follows (dollars in thousands): | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| May 2, 2026 | | April 26, 2025 | | | | |
| Allowance for credit losses at beginning of period | $ | 2,616 | | | $ | 1,094 | | | | | |
| Provision for (recovery of) bad debt | 280 | | | (170) | | | | | |
| Amounts charged against the allowance | (10) | | | (99) | | | | | |
| Allowance for credit losses at end of period | $ | 2,886 | | | $ | 825 | | | | | |
Contract Assets and Contract Liabilities
Net contract assets consisted of the following (dollars in thousands): | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Contract assets | $ | 240,133 | | | $ | 162,327 | |
| Contract liabilities | 155,812 | | | 158,503 | |
| Contract assets, net | $ | 84,321 | | | $ | 3,824 | |
The change in contract assets, net, primarily resulted from increased services performed under contracts consisting of multiple tasks. During the three months ended May 2, 2026, we performed services and recognized $122.7 million of contract revenues related to contract liabilities that existed at January 31, 2026.
Customer Credit Concentration
Customers whose combined amounts of accounts receivable and contract assets, net, exceeded 10% of total combined accounts receivable and contract assets, net as of May 2, 2026 or January 31, 2026 were as follows (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Amount | | % of Total | | Amount | | % of Total |
| | | | | | | |
Verizon Communications Inc. (1) | $ | 276.5 | | | 13.4% | | $ | 173.6 | | | 10.2% |
| Charter Communications | $ | 272.1 | | | 13.2% | | $ | 246.4 | | | 14.5% |
| Lumen Technologies | $ | 266.9 | | | 12.9% | | $ | 259.0 | | | 15.2% |
(1) On January 20, 2026, Verizon Communications, Inc. completed its acquisition of Frontier Communications Corporation. As a result, amounts reported for Verizon Communications, Inc. include the respective balances for Frontier Communications Corporation retrospectively for all periods presented.
We believe that none of our significant customers were experiencing financial difficulties that would materially impact the collectability of our total accounts receivable and contract assets, net, as of May 2, 2026 or January 31, 2026.
7. Other Current Assets and Other Assets
Other current assets consisted of the following (dollars in thousands): | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Prepaid expenses | $ | 37,379 | | | $ | 27,764 | |
| Deposits and other current assets | 10,288 | | | 11,021 | |
| | | |
| Receivables on equipment sales | 1,614 | | | 55 | |
| Restricted cash | 1,372 | | | 1,372 | |
| Other current assets | $ | 50,653 | | | $ | 40,212 | |
Other assets consisted of the following (dollars in thousands): | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Capitalized cloud computing implementation costs | 65,738 | | 61,678 | |
| Insurance recoveries/receivables for accrued insurance claims | 13,768 | | | 8,570 | |
| Deferred financing costs | 10,015 | | | 10,576 | |
| Restricted cash | 332 | | | 332 | |
| Other non-current assets | 27,634 | | | 26,724 | |
| Other assets | $ | 117,487 | | | $ | 107,880 | |
Amortization of capitalized cloud computing implementation costs that are included in general and administrative expense was $1.0 million and $0.4 million for the three months ended May 2, 2026 and April 26, 2025, respectively. See Note 11, Accrued Insurance Claims, for information on our Insurance recoveries/receivables.
8. Cash and Equivalents and Restricted Cash
Amounts of cash and equivalents and restricted cash reported in the condensed consolidated statement of cash flows consisted of the following (dollars in thousands): | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Cash and equivalents | $ | 538,826 | | | $ | 709,165 | |
| Restricted cash included in: | | | |
| Other current assets | 1,372 | | | 1,372 | |
| Other assets (long-term) | 332 | | | 332 | |
| Cash and equivalents and restricted cash | $ | 540,530 | | | $ | 710,869 | |
9. Property and Equipment
Property and equipment consisted of the following (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| Estimated Useful Lives (Years) | | May 2, 2026 | | January 31, 2026 |
| Land | — | | $ | 11,809 | | | $ | 8,471 | |
| Buildings | 10-35 | | 25,308 | | | 25,005 | |
| Leasehold improvements | 1-10 | | 29,444 | | | 26,706 | |
| Vehicles | 1-5 | | 1,038,944 | | | 1,008,988 | |
| Equipment and machinery | 1-10 | | 484,936 | | | 467,666 | |
| Computer hardware and software | 1-7 | | 146,133 | | | 142,881 | |
| Office furniture and equipment | 1-10 | | 8,038 | | | 8,137 | |
| Total | | | 1,744,612 | | | 1,687,854 | |
| Less: accumulated depreciation | | | (1,153,042) | | | (1,112,478) | |
| Property and equipment, net | | | $ | 591,570 | | | $ | 575,376 | |
Depreciation expense was $53.4 million and $46.4 million for the three months ended May 2, 2026 and April 26, 2025, respectively.
10. Goodwill and Intangible Assets
Goodwill
The Company’s goodwill balance was $1,457.1 million and $1,443.4 million as of May 2, 2026 and January 31, 2026, respectively. Changes in the carrying amount of goodwill consisted of the following (dollars in thousands): | | | | | | | | | | | | | | | | | |
| Communications | | Building Systems | | Total |
Balance as of January 31, 2026 | $ | 332,645 | | | $ | 1,110,790 | | | $ | 1,443,435 | |
| | | | | |
| Goodwill adjustment from fiscal 2026 acquisitions | — | | | 13,642 | | | 13,642 | |
Balance as of May 2, 2026 | $ | 332,645 | | | $ | 1,124,432 | | | $ | 1,457,077 | |
The aggregate goodwill balance as of May 2, 2026 and January 31, 2026 includes $249.0 million of accumulated impairment charges all of which relate to the Communications segment.
The Company’s goodwill resides in multiple reporting units and primarily consists of expected synergies, together with the expansion of our geographic presence and service offerings, and the strengthening and expansion of our customer base from acquisitions. The profitability of individual reporting units may suffer periodically due to downturns in customer demand, increased costs of providing services, and the level of overall economic activity. Our customers may reduce capital expenditures and defer or cancel pending projects due to changes in technology, a slowing or uncertain economy, merger or acquisition activity, a decision to allocate resources to other areas of their business, or other reasons. The profitability of reporting units may also suffer if actual costs of providing services exceed the costs anticipated when the Company enters into contracts. Additionally, adverse conditions in the economy and future volatility in the equity and credit markets could impact the valuation of our reporting units. The cyclical nature of our business, the high level of competition existing within our industry, and the concentration of our revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units disproportionately, relative to the Company as a whole. As a result, the performance of one or more of the reporting units could decline, resulting in an impairment of goodwill or intangible assets.
The Company performs its annual goodwill assessment as of the first day of the fourth fiscal quarter of each fiscal year. As a result of the Company’s fiscal 2026 period assessment, the Company determined that the fair values of each of the reporting units and the indefinite-lived intangible asset were in excess of their carrying values and no impairment had occurred. As of May 2, 2026, we believe the carrying amounts of goodwill and the indefinite-lived intangible asset are recoverable for all of our reporting units.
Intangible Assets
Our intangible assets consisted of the following (dollars in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Weighted Average Remaining Useful Lives (Years) | | Gross Carrying Amount | | Accumulated Amortization | | Intangible Assets, Net | | Gross Carrying Amount | | Accumulated Amortization | | Intangible Assets, Net |
| Customer relationships | 13.4 | | $ | 1,032,417 | | | $ | 330,753 | | | $ | 701,664 | | | $ | 1,032,417 | | | $ | 306,094 | | | $ | 726,323 | |
| Trade names, finite | 13.9 | | 54,080 | | | 10,989 | | | 43,091 | | | 54,080 | | | 10,178 | | | 43,902 | |
| Trade name, indefinite | Indefinite | | 4,700 | | | — | | | 4,700 | | | 4,700 | | | — | | | 4,700 | |
| Contract backlog | 1.1 | | 192,900 | | | 74,724 | | | 118,176 | | | 192,900 | | | 41,903 | | | 150,997 | |
| Non-compete agreements | 1.5 | | 75 | | | 52 | | | 23 | | | 75 | | | 49 | | | 26 | |
| | | $ | 1,284,172 | | | $ | 416,518 | | | $ | 867,654 | | | $ | 1,284,172 | | | $ | 358,224 | | | $ | 925,948 | |
Amortization of our customer relationship intangibles and our backlog intangibles are recognized on an accelerated basis as a function of the expected economic benefit. Amortization of our other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life. Amortization expense for finite-lived intangible assets was $58.3 million and $12.0 million for the three months ended May 2, 2026 and April 26, 2025, respectively.
As of May 2, 2026, total amortization expense for existing finite-lived intangible assets for the next five fiscal years and thereafter is as follows (dollars in thousands):
| | | | | | | | |
| | Amount |
| Remainder of 2027 | | $ | 163,830 | |
| 2028 | | 128,621 | |
| 2029 | | 91,808 | |
| 2030 | | 91,335 | |
| 2031 | | 63,774 | |
| 2032 | | 61,039 | |
| Thereafter | | 262,547 | |
| Total | | $ | 862,954 | |
As of May 2, 2026, we believe that the carrying amounts of our intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and the assets could be impaired.
11. Accrued Insurance Claims
For claims within our insurance program, we retain the risk of loss, up to certain annual stop-loss limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health. Losses for claims beyond our retained risk of loss are covered by insurance up to our coverage limits. Our Building Systems segment is fully insured for these risks through third-party insurance policies, and we do not retain the risk of loss for claims related to those operations.
For workers’ compensation losses during fiscal 2027 and 2026, we retained the risk of loss up to $1.0 million on a per occurrence basis. This retention amount is applicable to all of the states in which we operate, except with respect to workers’ compensation insurance in two states in which we participate in state-sponsored insurance funds.
For automobile liability and general liability losses during fiscal 2027 and 2026, we retained the risk of loss up to $2.0 million on a per-occurrence basis for the first $5.0 million of insurance coverage. We also retained the risk of loss for the next $5.0 million on a per-occurrence basis for losses between $5.0 million and $10.0 million, if any.
We are party to a stop-loss agreement for losses under our employee group health plan. For calendar year 2026, we retain the risk of loss on an annual basis, up to the first $750,000 of claims per participant.
Amounts for total accrued insurance claims and insurance recoveries/receivables are as follows (dollars in thousands):
| | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Accrued insurance claims - current | $ | 50,406 | | | $ | 47,594 | |
| Accrued insurance claims - non-current | 66,024 | | | 57,977 | |
| Accrued insurance claims | $ | 116,430 | | | $ | 105,571 | |
| | | |
| Insurance recoveries/receivables: | | | |
| | | |
| Non-current (included in Other assets) | 13,768 | | | 8,570 | |
| Insurance recoveries/receivables | $ | 13,768 | | | $ | 8,570 | |
Insurance recoveries/receivables represent the amount of accrued insurance claims that are covered by insurance as the amounts exceed the Company’s loss retention. During the three months ended May 2, 2026, total insurance recoveries/receivables increased as a result of additional claims that exceeded our loss retention. Accrued insurance claims increased by a corresponding amount.
12. Leases
We lease the majority of our office facilities as well as certain equipment, all of which are accounted for as operating leases. These leases have remaining terms ranging from less than 1 year to approximately 12 years. Some leases include options to extend the lease for up to 5 years and others include options to terminate.
The following table summarizes the components of lease cost recognized in the condensed consolidated statements of operations for the three months ended May 2, 2026 and April 26, 2025 (dollars in thousands): | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| May 2, 2026 | | April 26, 2025 | | | | |
| Lease cost under long-term operating leases | $ | 15,587 | | | $ | 12,982 | | | | | |
| Lease cost under short-term operating leases | 5,202 | | | 3,724 | | | | | |
Variable lease cost under short-term and long-term operating leases(1) | 1,854 | | | 1,191 | | | | | |
| Total lease cost | $ | 22,643 | | | $ | 17,897 | | | | | |
(1) Variable lease cost primarily includes insurance, maintenance, and other operating expenses related to our leased office facilities.
Our operating lease liabilities related to long-term operating leases were $183.2 million as of May 2, 2026 and $177.5 million as of January 31, 2026. Supplemental balance sheet information related to these liabilities is as follows:
| | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Weighted average remaining lease term | 6.2 years | | 6.0 years |
| Weighted average discount rate | 5.7 | % | | 5.8 | % |
Supplemental cash flow information related to our long-term operating lease liabilities for the three months ended May 2, 2026 and April 26, 2025 is as follows (dollars in thousands): | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| May 2, 2026 | | April 26, 2025 | | | | |
| Cash paid for amounts included in the measurement of lease liabilities | $ | 17,749 | | | $ | 12,231 | | | | | |
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 19,762 | | | $ | 10,913 | | | | | |
As of May 2, 2026, maturities of our lease liabilities under our long-term operating leases for the next five fiscal years and thereafter are as follows (dollars in thousands):
| | | | | | | | |
| Fiscal Year | | Amount |
| Remainder of 2027 | | $ | 37,518 | |
| 2028 | | 43,107 | |
| 2029 | | 34,087 | |
| 2030 | | 23,916 | |
| 2031 | | 18,148 | |
| 2032 | | 12,932 | |
| Thereafter | | 51,992 | |
| Total lease payments | | 221,700 | |
| Less: imputed interest | | (38,479) | |
| Total | | $ | 183,221 | |
As of May 2, 2026, the Company had additional operating leases with total lease costs of $6.4 million that have not yet commenced. These leases will commence in fiscal 2027.
13. Other Accrued Liabilities
Other accrued liabilities consisted of the following (dollars in thousands): | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Accrued construction costs and other accrued purchase orders | $ | 71,699 | | | $ | 47,931 | |
| Accrued payroll and related taxes | 68,275 | | | 49,653 | |
| Accrued employee benefit and incentive plan costs | 54,937 | | | 117,515 | |
| Other current liabilities | 30,815 | | | 41,382 | |
| Other accrued liabilities | $ | 225,726 | | | $ | 256,481 | |
14. Debt
The following table summarizes the net carrying value of our outstanding indebtedness (dollars in thousands): | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Credit Agreement - Term Loan A Facility (matures December 2030) | $ | 1,526,170 | | | $ | 1,525,422 | |
| Credit Agreement - Term Loan B Facility (matures January 2033) | $ | 792,280 | | | $ | 792,041 | |
4.50% senior notes, net (mature April 2029) | 497,264 | | | 497,034 | |
| 2,815,714 | | | 2,814,497 | |
| Less: current portion | (6,000) | | | (4,000) | |
| Long-term debt | $ | 2,809,714 | | | $ | 2,810,497 | |
Credit Agreement
The Company and certain of its subsidiaries are party to a credit agreement (defined below). The Company, the Guarantors (as defined therein) party thereto, the Term Loan B lender (as defined therein) party thereto and Bank of America, N.A. (“Bank of America”) as administrative and collateral agent (in such capacities and together with its successors and permitted assigns, the “Administrative Agent”), entered into that certain First Amendment to the Third Amended and Restated Credit Agreement (the “Amendment”), which amends that Third Amended and Restated Credit Agreement, dated as of December 23, 2025 by and among, the Company, the Guarantors from time to time party thereto, the Lenders (as defined therein) from time to time party thereto and the L/C Issues (as defined therein) from time to time party thereto and the Administrative Agent (the “Existing Credit Agreement”, and, the Existing Credit Agreement, as amended by the Amendment, the “Credit Agreement”). On December 23, 2025, we amended and restated the Credit Agreement to, among other things, establish a $600.0 million 364 day secured bridge loan facility (the “Bridge Facility”), increase the existing senior secured term loan A facility from $440.0 million to $1,540.0 million (the “Term Loan A Facility”), increase the commitments under the senior secured revolving credit facility from $650.0 million to $800.0 million (the “Revolving Credit Facility”) and extend the maturity date of the Term Loan A Facility and the Revolving Credit Facility. On January 27, 2026, we entered into the First Amendment to, among other things, establish an $800 million senior secured term loan B facility (the “Term Loan B Facility”), the proceeds of which were used to (i) refinance the Bridge Facility, (ii) pay the fees and expenses incurred in connection therewith and (iii) fund cash to the balance sheet of the Company. The Credit Agreement includes a revolving facility with a maximum revolver commitment of $800.0 million, a Term Loan A Facility in the principal amount of $1,540.0 million, and a Term Loan B Facility in the principal amount of $800.0 million. The Credit Agreement also includes a $225.0 million sublimit for the issuance of letters of credit and a $50.0 million sublimit for swingline loans. The maturity of the Revolving Credit Facility and Term Loan A Facility is December 23, 2030. The maturity of the Term Loan B Facility is January 27, 2033.
The following table summarizes the net carrying value of the Term Loan A Facility as of May 2, 2026 and January 31, 2026 (dollars in thousands):
| | | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 | | |
| Principal amount of Term Loan A Facility | $ | 1,540,000 | | | $ | 1,540,000 | | | |
| Less: Debt issuance costs | (13,830) | | (14,579) | | |
| Net carrying amount of Term Loan A Facility | $ | 1,526,170 | | | $ | 1,525,422 | | | |
The following table summarizes the net carrying value of the Term Loan B Facility as of May 2, 2026 and January 31, 2026 (dollars in thousands):
| | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Principal amount of Term Loan B Facility | $ | 800,000 | | | $ | 800,000 | |
| Less: Debt issuance costs | (5,797) | | (5,963) |
| Less: Original Issue Discount | (1,923) | | (1,996) |
| Net carrying amount of Term Loan B Facility | $ | 792,280 | | | $ | 792,041 | |
Subject to certain conditions, the Credit Agreement provides us with the ability to enter into one or more incremental facilities either by increasing the revolving commitments under the Credit Agreement and/or by establishing one or more additional term loans, up to the sum of (i) $927.0 million and (ii) an aggregate amount such that, after giving effect to such incremental facilities on a pro forma basis (assuming that the amount of the incremental commitments are fully drawn and funded), the consolidated senior secured net leverage ratio does not exceed 3.50 to 1.00. The consolidated senior secured net leverage ratio is the ratio of our consolidated senior secured indebtedness reduced by (i) unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined by the Credit Agreement, (ii) subordinated indebtedness, as defined in the Credit Agreement and (iii) unsecured indebtedness, as defined in the Credit Agreement. Borrowings under the Credit Agreement are guaranteed by substantially all of our domestic subsidiaries and secured by substantially all of the assets of the Borrowers and the Guarantors (subject to customary exceptions).
Under our Credit Agreement, borrowings bear interest at the rates described below based upon our consolidated net leverage ratio, which is the ratio of our consolidated total funded debt reduced by unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated EBITDA, as defined by our Credit Agreement. In addition, we incur certain fees for unused balances and letters of credit at the rates described below, also based upon our consolidated net leverage ratio. The weighted average interest rates and fees for balances under our Credit Agreement as of May 2, 2026 and January 31, 2026 were as follows:
| | | | | | | | | | | | | | |
| | Weighted Average Rate End of Period |
| | May 2, 2026 | | January 31, 2026 |
| Borrowings - Term A SOFR Loans | 1.375% - 2.00% plus Term SOFR | 5.40% | | 6.02% |
| Borrowings - Base Rate Loans | 0.375% - 1.00% plus Base rate(1) | —% | | —% |
| Borrowings - Term B SOFR Loans | 1.75% plus Term SOFR | 5.40% | | —% |
| Unused Revolver Commitment | 0.20% - 0.40% | 0.35% | | 0.30% |
| Standby Letters of Credit | 1.375% - 2.00% | 1.75% | | 1.63% |
| Commercial Letters of Credit | 0.6875% -1.00% | —% | | —% |
(1) Base rate is described in the Credit Agreement as the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the administrative agent’s prime rate, and (iii) the Term Secured Overnight Financing Rate (“SOFR”) plus 1.00% and, if such rate is less than zero, such rate shall be deemed zero. “Term SOFR” will be the published forward-looking SOFR rate for the applicable interest period plus a 0.10% spread adjustment and if such rate is less than zero, such rate shall be deemed zero. There were no outstanding borrowings under our revolving facility as of May 2, 2026 and January 31, 2026.
Standby letters of credit of approximately $53.6 million issued as part of our insurance program, were outstanding under our Credit Agreement as of May 2, 2026 and January 31, 2026.
Our Credit Agreement contains a financial covenant that requires us to maintain a consolidated net leverage ratio of not greater than (A) until the last day of the first fiscal quarter ending after the second anniversary of December 23, 2025, 4.50 to 1.00, and (B) thereafter, 4.00:1.00, as measured at the end of each fiscal quarter, and provides for certain increases to this ratio in connection with permitted acquisitions. The consolidated net leverage ratio is the ratio of our consolidated indebtedness reduced by unrestricted cash and cash equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization as defined by our Credit Agreement. The agreement also contains a financial covenant that requires us to maintain a consolidated interest coverage ratio, which is the ratio of our trailing four-quarter consolidated EBITDA to our consolidated interest expense, each as defined by our Credit Agreement, of not less than 2.50 to 1.00, as measured at the end of each fiscal quarter. At May 2, 2026 and January 31, 2026, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under our revolving facility of $746.4 million as determined by the most restrictive covenant. For calculation purposes, applicable cash on hand is netted against the funded debt amount as permitted in the Credit Agreement.
4.50% Senior Notes Due 2029
On April 1, 2021, we issued $500.0 million aggregate principal amount of 4.50% senior notes due 2029 (the “2029 Notes”). The 2029 Notes are guaranteed on a senior unsecured basis, jointly and severally, by all of our domestic subsidiaries that guarantee the Credit Agreement.
The indenture governing the 2029 Notes contains certain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to (i) incur additional debt and issue certain preferred stock, (ii) pay certain dividends on, repurchase, or make distributions in respect of, our and our subsidiaries’ capital stock or make other payments restricted by the indenture, (iii) enter into agreements that place limitations on distributions made from certain of our subsidiaries, (iv) guarantee certain debt, (v) make certain investments, (vi) sell or exchange certain assets, (vii) enter into transactions with affiliates, (viii) create certain liens, and (ix) consolidate, merge or transfer all or substantially all of our or our Subsidiaries’ assets. These covenants are subject to a number of exceptions, limitations and qualifications as set forth in the indenture governing the 2029 Notes.
The following table summarizes the net carrying value of the 2029 Notes as of May 2, 2026 and January 31, 2026 (dollars in thousands):
| | | | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 | | |
| Principal amount of 2029 Notes | $ | 500,000 | | | $ | 500,000 | | | |
| Less: Debt issuance costs | (2,736) | | | (2,966) | | | |
| Net carrying amount of 2029 Notes | $ | 497,264 | | | $ | 497,034 | | | |
The following table summarizes the fair value of the 2029 Notes, net of debt issuance costs. The fair value of the 2029 Notes is based on the closing trading price per $100 of the 2029 Notes as of the last day of trading (Level 2), which was $97.73 and $98.44 as of May 2, 2026 and January 31, 2026, respectively (dollars in thousands):
| | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Fair value of principal amount of 2029 Notes | $ | 488,650 | | | $ | 492,200 | |
| Less: Debt issuance costs | (2,736) | | | (2,966) | |
| Fair value of 2029 Notes | $ | 485,914 | | | $ | 489,234 | |
15. Income Taxes
Our effective income tax rate was 14.5% and 22.3% for the three months ended May 2, 2026 and April 26, 2025, respectively. The interim income tax provisions are based on the effective income tax rate expected to be applicable for the full fiscal year, adjusted for specific items that are required to be recognized in the period in which they occur. The effective tax rate differs from the statutory rate primarily due to the difference in income tax rates from state to state where work was performed, non-deductible and non-taxable items, tax credits recognized, the tax effects of the vesting and exercise of share-based awards, and changes in unrecognized tax benefits. Deferred tax assets and liabilities are based on the enacted tax rate that will apply in future periods when such assets and liabilities are expected to be settled or realized.
16. Other (Expense) Income, Net
The components of other (expense) income, net, were as follows (dollars in thousands): | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| May 2, 2026 | | April 26, 2025 | | | | |
| Gain on sale of fixed assets | $ | 1,995 | | | $ | 9,773 | | | | | |
| | | | | | | |
| Miscellaneous expense, net | (3,505) | | | (2,509) | | | | | |
| Other (expense) income, net | $ | (1,510) | | | $ | 7,264 | | | | | |
We participate in a vendor payment program sponsored by one of our customers. Eligible accounts receivable from this customer are included in the program and payment is received pursuant to a non-recourse sale to a bank partner. This program effectively reduces the time to collect these receivables as compared to that customer’s standard payment terms. We incur a
discount fee to the bank on the payments received that is included as an expense component in miscellaneous expense, net, in the table above.
17. Capital Stock
Repurchases of Common Stock. On February 26, 2025, the Company announced that its Board of Directors authorized a new $150 million program to repurchase shares of the Company’s outstanding common stock through August 25, 2026 in open market or private transactions. During the three months ended May 2, 2026, the Company repurchased 100,000 shares of common stock, at an average price of $359.63, for $36.0 million. As of May 2, 2026, $83.9 million of the authorization was available for repurchases.
Restricted Stock Tax Withholdings. During the three months ended May 2, 2026 and April 26, 2025, we withheld 85,724 shares totaling $29.3 million and 83,835 shares totaling $12.9 million, respectively, to meet payroll tax withholding obligations arising from the vesting of restricted share units. All shares withheld have been cancelled. Shares of common stock withheld for tax withholdings do not reduce our total share repurchase authority.
Upon cancellation of shares repurchased or withheld for tax withholdings, the excess over par value is recorded as a reduction of additional paid-in capital until the balance is reduced to zero, with any additional excess recorded as a reduction of retained earnings.
18. Stock-Based Awards
We have certain stock-based compensation plans under which we grant stock-based awards, including common stock, stock options, time-based restricted share units (“RSUs”), and performance-based restricted share units (“Performance RSUs”) to attract, retain, and reward talented employees, officers, and directors, and to align stockholder and employee interests.
Compensation expense for stock-based awards is based on fair value at the measurement date. This expense fluctuates over time as a function of the duration of vesting periods of the stock-based awards and the Company’s performance, as measured by criteria set forth in performance-based awards. Stock-based compensation expense is included in general and administrative expenses in the condensed consolidated statements of operations and the amount of expense ultimately recognized depends on the quantity of awards that actually vest. Accordingly, stock-based compensation expense may vary from period to period.
The performance criteria for the Company’s performance-based equity awards utilize the Company’s operating earnings (adjusted for certain amounts) as a percentage of contract revenues for the applicable annual period (a “Performance Year”) and its Performance Year operating cash flow level (adjusted for certain amounts). Additionally, certain awards include three-year performance measures that, if met, result in supplemental shares awarded. For Performance RSUs, the Company evaluates compensation expense quarterly and recognizes expense for performance-based awards only if it determines it is probable that performance criteria for the awards will be met.
Stock-based compensation expense and the related tax benefit recognized during the three months ended May 2, 2026 and April 26, 2025 were as follows (dollars in thousands): | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| May 2, 2026 | | April 26, 2025 | | | | |
| Stock-based compensation | $ | 10,573 | | | $ | 9,099 | | | | | |
| Income tax effect of stock-based compensation | $ | 2,580 | | | $ | 2,239 | | | | | |
During the three months ended May 2, 2026 and April 26, 2025, the Company realized $12.5 million and $2.2 million of net excess tax benefits, respectively, related to the vesting and exercise of share-based awards.
As of May 2, 2026, we had unrecognized compensation expense related to stock options, RSUs, and target Performance RSUs (based on the Company’s expected achievement of performance measures) of $0.6 million, $53.9 million, and $20.1 million, respectively. This expense will be recognized over a weighted-average number of years of 1.6, 2.4, and 1.5, respectively, based on the average remaining service periods for the awards. We may recognize an additional $13.7 million in compensation expense in future periods after May 2, 2026 if the maximum number of Performance RSUs is earned based on certain performance measures being met.
Stock Options
The following table summarizes stock option award activity during the three months ended May 2, 2026: | | | | | | | | | | | |
| Stock Options |
| Shares | | Weighted Average Exercise Price |
| Outstanding as of January 31, 2026 | 72,240 | | | $ | 109.55 | |
| Granted | — | | | $ | — | |
| Options exercised | — | | | $ | — | |
| | | |
| Outstanding as of May 2, 2026 | 72,240 | | | $ | 109.55 | |
| | | |
| Exercisable options as of May 2, 2026 | 48,859 | | | $ | 97.91 | |
RSUs and Performance RSUs
The following table summarizes RSU and Performance RSU award activity during the three months ended May 2, 2026: | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock Units |
| RSUs | | Performance RSUs |
| Share Units | | Weighted Average Grant Date Fair Value | | Share Units | | Weighted Average Grant Date Fair Value |
| Outstanding as of January 31, 2026 | 339,118 | | | $ | 149.51 | | | 269,403 | | | $ | 139.92 | |
| Granted | 74,507 | | | $ | 350.00 | | | 52,694 | | | $ | 349.68 | |
| Share units vested | (115,998) | | | $ | 128.40 | | | (125,052) | | | $ | 123.85 | |
| Forfeited or cancelled | (5,801) | | | $ | 153.95 | | | (31,296) | | | $ | 130.83 | |
| Outstanding as of May 2, 2026 | 291,826 | | | $ | 206.98 | | | 165,749 | | | $ | 220.45 | |
The total number of granted Performance RSUs presented above consists of 26,347 target shares and 26,347 supplemental shares. The total number of Performance RSUs outstanding as of May 2, 2026 consists of 92,650 target shares and 73,099 supplemental shares. With respect to the Company’s Performance Year ended January 31, 2026, the Company added 26,799 supplemental shares and cancelled 27,890 supplemental shares during the three months ended May 2, 2026, as a result of the performance period criteria not being met.
19. Customer Concentration and Revenue Information
Geographic Location
We provide services throughout the United States.
Significant Customers
Our customer base is highly concentrated. Customers whose contract revenues exceeded 10% of total contract revenues during the three months ended May 2, 2026 or April 26, 2025, as well as total contract revenues from all other customers combined, were as follows (dollars in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| May 2, 2026 | | April 26, 2025 | | | | |
| Amount | | % of Total | | Amount | | % of Total | | | | | | | | |
AT&T Inc. (1) | $ | 403.8 | | | 20.6% | | $ | 325.1 | | | 25.8% | | | | | | | | |
Verizon Communications Inc. (2) | 248.2 | | | 12.6% | | 171.8 | | | 13.7% | | | | | | | | |
| Total other customers combined | 1,312.8 | | | 66.8% | | 761.7 | | 60.5% | | | | | | | | |
| Total contract revenues | $ | 1,964.8 | | | 100.0% | | $ | 1,258.6 | | | 100.0% | | | | | | | | |
(1) On February 2, 2026, AT&T Inc. completed its acquisition of substantially all of the mass markets fiber business from Lumen Technologies Inc. As a result, amounts reported for AT&T Inc. in the current fiscal year include revenues from the mass markets fiber business to the extent they have transferred from Lumen Technologies Inc.
(2) On January 20, 2026, Verizon Communications, Inc. completed its acquisition of Frontier Communications Corporation. As a result, amounts reported for Verizon Communications, Inc. include the respective balances for Frontier Communications Corporation retrospectively for all periods presented.
See Note 6, Accounts Receivable, Contract Assets, and Contract Liabilities, for information on our customer credit concentration and collectability of trade accounts receivable and contract assets.
Customer Type
Total contract revenues by customer type during the three months ended May 2, 2026 and April 26, 2025 were as follows (dollars in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| May 2, 2026 | | April 26, 2025 | | | | |
| Amount | | % of Total | | Amount | | % of Total | | | | | | | | |
| Communications | $ | 1,569.4 | | | 79.9% | | $ | 1,258.6 | | | 100.0% | | | | | | | | |
| Building Systems | 395.4 | | | 20.1 | | — | | | — | | | | | | | | |
| Total contract revenues | $ | 1,964.8 | | | 100.0% | | $ | 1,258.6 | | | 100.0% | | | | | | | | |
Remaining Performance Obligations
Master service agreements and other contractual agreements with customers contain customer-specified service requirements, such as discrete pricing for individual tasks. In most cases, our customers are not contractually committed to procure specific volumes of services under these agreements.
Services are generally performed pursuant to these agreements in accordance with individual work orders. An individual work order generally is completed within one year. As a result, our remaining performance obligations under the work orders not yet completed is not meaningful in relation to our overall revenue at any given point in time. We apply the practical expedient in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, and do not disclose information about remaining performance obligations that have original expected durations of one year or less.
20. Segment Reporting
The Company operates in two reportable segments which derive revenues by providing specialty contracting services throughout the United States on a decentralized basis. Dycom’s reportable segments are: Communications and Building Systems. This segment structure reflects the financial information and reports used by the Company's Chief Executive Officer, the chief operating decision maker (CODM), to make decisions regarding the Company's business, including performance assessments and strategic and operational planning in compliance with ASC 280, Segment Reporting.
Communications. The Communications segment provides specialty contracting services, including program management, planning; engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications and digital infrastructure providers. The Communications segment also provides underground facility locating services for various utilities and other construction and maintenance services for electric and gas utilities. The Communications segment services are provided by its operating segments that consist of a subsidiary (or in certain instances, the combination of two or more subsidiaries), whose results are regularly reviewed by the CODM. The Communications segment’s operating segments have been aggregated into one reportable segment based on their similar economic characteristics, nature of services and production processes, type of customers, and service distribution methods.
Building Systems. During fiscal 2026, following the acquisition of Power Solutions, the CODM reevaluated the Company’s reportable segments, which resulted in the addition of the Building Systems segment as a component of management’s internal financial information used for operational decision-making. Beginning in fiscal 2026, the Company has reported the results of the Building Systems segment separately as a reportable segment. The Building Systems segment reflects the results of Power Solutions following the acquisition on December 23, 2025. The Building Systems segment specializes in providing comprehensive building infrastructure solutions, including electrical, energy management, security, and fire safety systems for data centers and other critical facilities.
The key measure of segment profit or loss utilized by the CODM to assess performance of and allocate resources to the Company’s operating segments is income before income taxes. Significant segment expenses included in income before income taxes are cost of earned revenues, depreciation and amortization, and other segment items, which include general and administrative expenses, segment interest expense and other income (expense). The measure of segment assets regularly provided to the CODM is consistent with total assets as reported on the consolidated balance sheets.
The CODM reviews contract revenues and income before income taxes compared to historical, forecasted and budgeted amounts to assess the performance of the Company’s operating segments and allocate resources.
Certain corporate costs are not allocated, including certain acquisition and integration costs, interest expense, net and senior notes, and loss on debt extinguishment.
Segment financial information for the three months ended May 2, 2026 and April 26, 2025, was as follows (dollars in millions):
| | | | | | | | | | | | | | | | | |
For the Three Months Ended May 2, 2026 | Communications | | Building Systems | | Total |
| Contract revenues | $ | 1,569.4 | | | $ | 395.4 | | | $ | 1,964.8 | |
| Costs of earned revenues, excluding depreciation and amortization | 1,266.6 | | | 311.5 | | | 1,578.1 | |
| Depreciation and amortization | 65.2 | | | 46.4 | | | 111.6 | |
Other segment items (1) | 118.8 | | | 13.7 | | | 132.5 | |
| Segment income before income taxes | $ | 118.8 | | | $ | 23.8 | | | $ | 142.6 | |
Corporate and non-allocated costs (2) | | | | | 35.9 | |
| Total consolidated income before income taxes | | | | | $ | 106.7 | |
| | | | | | | | | | | | | | | | | |
For the Three Months Ended April 26, 2025 | Communications | | Building Systems | | Total |
| Contract revenues | $ | 1,258.6 | | | $ | — | | | $ | 1,258.6 | |
| Costs of earned revenues, excluding depreciation and amortization | 1,011.1 | | | — | | | 1,011.1 | |
| Depreciation and amortization | 58.4 | | | — | | | 58.4 | |
Other segment items (1) | 96.5 | | | — | | | 96.5 | |
| Segment income before income taxes | $ | 92.6 | | | $ | — | | | $ | 92.6 | |
Corporate and non-allocated costs (2) | | | | | 14.0 | |
| Total consolidated income before income taxes | | | | | $ | 78.6 | |
(1) Other segment items include general and administrative expenses, interest expense and other income (expense).
(2) Corporate and non-allocated costs include certain acquisition and integration costs, interest expense, net, and loss on debt extinguishment.
| | | | | | | | | | | |
| May 2, 2026 | | January 31, 2026 |
| Total Assets: | | | |
| Communications | $ | 3,187.4 | | | $ | 2,842.5 | |
Building Systems | 2,231.1 | | | 2,263.3 | |
| Corporate | 761.9 | | | 873.4 | |
| Consolidated total assets | $ | 6,180.4 | | | $ | 5,979.2 | |
| | | | | | | | | | | |
| For the Three Months Ended |
| May 2, 2026 | | April 26, 2025 |
| Capital Expenditures: | | | |
| Communications | $ | 62.5 | | | $ | 72.7 | |
Building Systems | 0.8 | | | — | |
| Corporate | 7.0 | | | 6.8 | |
| Consolidated capital expenditures: | $ | 70.3 | | | $ | 79.5 | |
21. Commitments and Contingencies
From time to time, we are party to various claims and legal proceedings arising in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, it is the opinion of management, based on information available at this time, that the ultimate resolution of any such claims or legal proceedings will not, after considering applicable insurance coverage or other indemnities to which we may be entitled, have a material effect on our financial position, results of operations, or cash flow.
Commitments
Performance and Payment Bonds and Guarantees. We have obligations under performance and other surety contract bonds related to certain of our customer contracts. Performance bonds generally provide a customer with the right to obtain payment and/or performance from the issuer of the bond if we fail to perform our contractual obligations. As of May 2, 2026 and January 31, 2026, we had $1,054.5 million and $917.9 million, respectively, of outstanding performance and other surety contract bonds. In addition to performance and other surety contract bonds, as part of our insurance program we also provide surety bonds that collateralize our obligations to our insurance carriers. At both May 2, 2026 and January 31, 2026, we had $43.6 million of outstanding surety bonds related to our insurance obligations. Additionally, we have periodically guaranteed certain obligations of our subsidiaries, including obligations in connection with obtaining state contractor licenses and leasing real property and equipment.
Letters of Credit. We have issued standby letters of credit under our credit agreement that collateralize our obligations to our insurance carriers. As of May 2, 2026 and January 31, 2026, we had $53.6 million of outstanding standby letters of credit issued under our credit agreement.
22. Supplier Finance Program
Beginning in fiscal 2026, the Company has provided certain suppliers with access to a supplier finance program administered through a third party, which facilitates participating suppliers’ ability to finance payments due from the Company through third-party financial institutions. Participating suppliers may, at their sole discretion, receive payment of the Company’s obligation prior to the scheduled due dates, at a discounted price from the third party. The Company agrees to pay the financial institution the stated amount generally within 60 days of receipt of the invoice. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by the supplier’s decision to finance amounts under these arrangements. The Company does not have pledged assets or other guarantees under the program. Our outstanding payment obligations are included in accounts payable on our consolidated balance sheets and are reported as operating activities in our consolidated statements of cash flows when paid.
The following table presents the change in the supplier financing obligation for the three months ended May 2, 2026 (dollars in millions):
| | | | | | | | | | | |
| For the Three Months Ended |
| May 2, 2026 | | April 26, 2025 |
| Confirmed obligations outstanding at the beginning of the year | $ | 226.4 | | | $ | — | |
| Invoices received | 548.8 | | | — | |
| Invoices paid | 425.8 | | | — | |
| Confirmed obligations outstanding at the end of the year | $ | 349.4 | | | $ | — | |
23. Subsequent Events
On May 22, 2026, the Company entered into a definitive agreement to acquire National Technology Integrators, LLC, (“National Technology Integrators”), a low-voltage engineering and construction firm based in Maryland, for a total consideration of $275.0 million. The transaction is subject to customary closing and post-closing adjustments and is expected to close before the end of the second fiscal quarter. National Technology Integrators will be reported as part of the Company’s Building Systems segment.
Cautionary Note Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. These statements are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. These statements may relate to future events, financial performance, strategies, expectations, and the competitive environment. Words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “forecast,” “target,” “outlook,” “may,” “should,” “could,” and similar expressions, as well as statements written in the future tense, identify forward-looking statements.
You should not consider forward-looking statements as guarantees of future performance or results. When made, forward-looking statements are based on information known to management at such time and/or management’s good faith belief with respect to future events. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors, assumptions, uncertainties, and risks that could cause such differences include, but are not limited to: projections of revenues, income or loss, or capital expenditures; future economic conditions and trends in the industries we serve, including as a result of changes in government regulation, policies and programs related to trade and infrastructure investment and tariffs; our highly concentrated customer base; the competitive environment in which we operate; customer capital budgets and spending priorities; our plans for future operations, growth and services, including contract backlog; our plans for future acquisitions, dispositions, or financial needs; expected benefits and synergies of businesses acquired and future opportunities for the combined businesses; our significant accounts receivable and contract assets; availability of capital; restrictions imposed by our senior notes and credit agreement; use of our cash flow to service our debt; the effect of changes in tax law; potential liabilities and other adverse effects arising from occupational health, safety, and other regulatory matters; potential exposure to environmental liabilities; our potential exposure to litigation, indemnity claims, warranty claims, and other liabilities and disputes; determinations as to whether the carrying value of our assets is impaired; the duration and severity of public health emergencies and their ultimate impact across our business; the impact of seasonality and adverse weather conditions on demand for our services; the impact of technological change on our customers’ spending and our ability to keep pace with technological developments; our ability to attract and retain qualified employees and subcontractors; the impact of a failure, outage or cybersecurity breach of our technology or information technology systems or those of third-party providers; and the other risks and uncertainties discussed within Item 1, Business, Item 1A, Risk Factors, and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for fiscal 2026, filed with the U.S. Securities and Exchange
Commission (“SEC”) on March 9, 2026, the risks discussed in this Quarterly Report on Form 10-Q, and our other periodic filings with the SEC. These forward-looking statements also include those related to the ability of the Company to consummate the anticipated transaction to acquire National Technology Integrators on a timely basis, or at all; the ability to retain the key employees of the acquired business; unfavorable reaction to the anticipated transaction by key stakeholders, including customers and employees; the ability of the Company to identify and recognize the anticipated benefits of the proposed transaction; and the ability to successfully integrate the acquired business and related operations. Our forward-looking statements are expressly qualified in their entirety by this cautionary statement and are only made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements to reflect new information or events or circumstances arising after such date.