Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and the accompanying notes, as well as Part I, Item 1. Business , and Part I, Item 1A. Risk Factors , of this Annual Report on Form 10-K.
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Introduction
We are 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, we provide comprehensive building infrastructure solutions, including electrical, energy management, security, and fire safety systems for data centers and other critical facilities. We supply the labor, tools, and equipment necessary to provide these services to our customers.
Demand for high-speed and low-latency connectivity is expanding, driven by data-intensive applications and mobile usage, necessitating extensive wireline network upgrades and extensions, new and expanding fiber and electrical infrastructure for data centers to meet the current and future needs of cloud compute, AI and advanced wireless network deployments. This widespread need for expanded and enhanced connectivity fuels significant opportunities within the digital infrastructure industry. Our relationships, national footprint, and ability to manage increasingly complex services differentiate us and we are confident in our ability to capitalize on industry opportunities.
Our strategy centers on our core maintenance and operations services which provide a strong foundation to capitalize on other drivers of demand for digital infrastructure. These include multi-year fiber-to-the-home deployments throughout the United States, increasing fiber and electrical infrastructure builds to support hyperscaler data center growth, continued state and federal program spending to bridge the digital divide and wireless network modernization programs to meet increasing digital demands.
The cyclical nature of the industries we serve affects demand for our services, and our contract revenues and results of operations exhibit seasonality as a significant portion of our Communications segment work is performed outdoors. The capital expenditure and maintenance budgets of our customers, and the related timing of approvals and seasonal spending patterns, influence our contract revenues and results of operations. Factors affecting our customers and their capital expenditure budgets include, but are not limited to, overall economic conditions, the introduction of new technologies, our customers’ debt levels and capital structures, our customers’ financial performance, and our customers’ positioning and strategic plans. Other factors that may affect our customers and their capital expenditure budgets include the availability of state and federal funding, the implementation or enforcement of regulations or regulatory actions impacting our customers’ businesses, merger or acquisition activity involving our customers, and the physical maintenance needs of our customers’ infrastructure.
Customer Relationships and Contractual Arrangements
We have established relationships with many leading telecommunications providers, including telephone companies, cable multiple system operators, wireless carriers, telecommunications equipment and infrastructure providers, as well as electric and gas utilities and many leading general contractors specializing in data center construction. Our customer base is highly concentrated. The following reflects the percentage of total contract revenues from customers who contributed at least 10% to our total contract revenues during fiscal 2026, fiscal 2025, or fiscal 2024:
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
AT&T, Inc. (1)
Verizon Communications, Inc. (2)
Lumen Technologies, Inc. (1)
Comcast Corporation
(1) On February 2, 2026, AT&T Inc. completed its acquisition of substantially all of the mass markets fiber business from Lumen Technologies Inc. Since this transaction occurred subsequent to fiscal 2026, we have continued to report revenues for the mass markets fiber business under Lumen Technologies Inc.
(2) Includes revenue attributable to Frontier Communications Corporation retrospectively for all periods presented as a result of its acquisition by Verizon Communications, Inc. on January 20, 2026.
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We perform a majority of our services under master service agreements and other contracts that contain customer-specified service requirements. These agreements include discrete pricing for individual tasks. We generally possess multiple agreements with each of our significant customers. To the extent that such agreements specify exclusivity, there are often exceptions, including the ability of the customer to issue work orders valued above a specified dollar amount to other service providers, the performance of work with the customer’s own employees, and the use of other service providers when jointly placing facilities with another utility. In many cases, a customer may terminate an agreement for convenience. Historically, multi-year master service agreements have been awarded primarily through a competitive bidding process; however, occasionally we are able to negotiate extensions to these agreements. We provide the remainder of our services pursuant to contracts for specific projects. These contracts may be long-term (with terms greater than one year) or short-term (with terms less than one year) and at times include retainage provisions under which the customer may withhold 5% to 10% of the invoiced amounts pending project completion and closeout.
The following table summarizes our contract revenues from multi-year master service agreements and other long-term contracts, as a percentage of contract revenues:
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Multi-year master service agreements
Other long-term contracts
Total long-term contracts
Acquisitions
As part of our growth strategy, we may acquire companies that expand, complement, or diversify our business. We regularly review opportunities and periodically engage in discussions regarding possible acquisitions. Our ability to sustain our growth and maintain our competitive position may be affected by our ability to identify, acquire, and successfully integrate companies.
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 i n 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 is 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. Total consideration was $1,995.9 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 a discussion of our business and reportable segments, see Item 1. “Business.”
Fiscal 2025. During the third quarter of fiscal 2025, we acquired certain assets and assumed certain liabilities of a telecommunications construction contractor for a cash purchase price of $150.7 million. The acquired business provides wireless construction services for telecommunications providers in various states. This acquisition expands our geographic presence within our existing customer base.
During the second quarter of fiscal 2025, we acquired a telecommunications construction contractor for a total purchase price of $24.5 million ($20.4 million purchase price plus cash acquired of $4.1 million). The acquired company is located in the northwestern United States and provides construction and maintenance services to telecommunications providers, with the majority of its revenues generated in Alaska. This acquisition expands our geographic presence and our customer base.
During the first quarter of fiscal 2025, we acquired a telecommunications construction contractor for $16.0 million ($12.8 million purchase price, plus cash acquired of $3.2 million). The acquired company provides construction and maintenance services for telecommunications providers in the midwestern United States. This acquisition expands our geographic presence within our existing customer base.
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Fiscal 2024. During August 2023, we acquired Bigham Cable Construction, Inc. (“Bigham”), for $131.2 million ($127.0 million fixed purchase price, plus cash acquired of $8.3 million, less indebtedness of $4.1 million). Bigham provides construction and maintenance services for telecommunications providers in the southeastern United States. This acquisition expands our geographic presence within our existing customer base
Results of the businesses acquired are included in our consolidated financial statements from their respective dates of acquisition. The purchase price allocation of the company acquired in fiscal 2026 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.
Understanding Our Results of Operations
The following information is presented so that the reader may better understand certain factors impacting our results of operations, and should be read in conjunction with Critical Accounting Policies and Estimates below, as well as Note 2, Significant Accounting Policies & Estimates , in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K. Fiscal 2026 had 53 weeks of operations while fiscal 2025 had 52 weeks.
Contract Revenues. We perform a significant amount of our services under master service agreements and other contracts that contain customer-specified service requirements. These agreements include discrete pricing for individual tasks including, for example, the placement of underground or aerial fiber, directional boring, and fiber splicing, each based on a specific unit of measure. Contract revenue is recognized over time as services are performed and customers simultaneously receive and consume the benefits we provide. Output measures, such as units delivered, are utilized to assess progress against specific contractual performance obligations for the majority of our services. For certain contracts, we use the cost-to-cost measure of progress as more fully described within Critical Accounting Policies and Estimates below.
Costs of Earned Revenues. Costs of earned revenues includes all direct costs of providing services under our contracts, including costs for direct labor provided by employees, services by subcontractors, operation of capital equipment (excluding depreciation), direct materials, costs of insuring our risks, and other direct costs. Under our insurance program, we retain the risk of loss, up to certain limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health.
General and Administrative Expenses. General and administrative expenses primarily consist of employee compensation and related expenses, including performance-based compensation and stock-based compensation, legal, consulting and professional fees, information technology and development costs, amortization of implementation costs associated with cloud computing arrangements, provision for or recoveries of bad debt expense, acquisition and integration costs of businesses acquired, and other costs not directly related to the provision of our services under customer contracts. Our provision for bad debt expense is determined by evaluating specific accounts receivable and contract asset balances based on historical collection trends, the age of outstanding receivables, and the creditworthiness of our customers. We incur information technology and development costs primarily to support and enhance our operating efficiency. Our executive management team and the senior management of our subsidiaries perform substantially all of our sales and marketing functions as part of their management responsibilities.
Depreciation and Amortization. Our property and equipment primarily consist of vehicles, equipment and machinery, and computer hardware and software. We depreciate property and equipment on a straight-line basis over the estimated useful lives of the assets. In addition, we have intangible assets, including customer relationships, trade names, and non-compete intangibles, which we amortize over their estimated useful lives. We recognize amortization of customer relationship intangibles on an accelerated basis as a function of the expected economic benefit and amortization of other finite-lived intangibles on a straight-line basis over their estimated useful lives.
Interest Expense, Net. Interest expense, net, consists of interest incurred on outstanding variable rate and fixed rate debt and certain other obligations and the amortization of debt issuance costs. See Note 14, Debt , in the notes to the consolidated financial statements in this Annual Report on Form 10-K for information on debt issuance costs.
Loss on Debt Extinguishment. Loss on debt extinguishment for fiscal 2026 of $7.3 million and fiscal 2025 of $1.0 million includes the write-off of deferred debt issuance costs in connection with the Credit Agreement amendments. See “ Liquidity and Capital Resources - Compliance with Credit Agreement ” for more information.
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Other Income, Net. Other income, net, primarily consists of gains or losses from sales of fixed assets. Other income, net also includes discount fee expense associated with the collection of accounts receivable under a customer-sponsored vendor payment program.
Seasonality and Fluctuations in Operating Results. Our contract revenues and results of operations exhibit seasonality and are impacted by adverse weather changes as we perform a significant portion of our Communications segment work outside. Consequently, adverse weather, which is more likely to occur with greater frequency, severity, and duration during the winter, as well as reduced daylight hours, impact our operations during the fiscal quarters ending in January and April. Additionally, extreme weather conditions such as major or extended winter storms, droughts and tornados, wildfires, and natural disasters, such as floods, hurricanes, tropical storms, whether as a result of climate change or otherwise, could also impact the demand for our services, or impact our ability to perform our services. Also, several holidays fall within the fiscal quarter ending in January, which decreases the number of available workdays in this fiscal quarter. Because of these factors, we are most likely to experience reduced revenue and profitability or losses during the fiscal quarters ending in January and April compared to the fiscal quarters ending in July and October.
We may also experience variations in our profitability driven by a number of factors. These factors include variations and fluctuations in contract revenues, job specific costs, insurance claims, the allowance for credit losses, accruals for contingencies, stock-based compensation expense for performance-based stock awards, the fair value of reporting units for the goodwill impairment analysis, the valuation of intangibles and other long-lived assets, gains or losses on the sale of fixed assets from the timing and levels of capital assets sold, the employer portion of payroll taxes as a result of reaching statutory limits, and our effective tax rate.
Accordingly, operating results for any fiscal period are not necessarily indicative of results we may achieve for any subsequent fiscal period.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In conformity with GAAP, the preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. These estimates and assumptions require the use of judgment as to the likelihood of various future outcomes and, as a result, actual results could differ materially from these estimates.
Below, we have identified those accounting policies that are critical to the accounting of our business operations and the understanding of our results of operations. These accounting policies require making significant judgments and estimates that are used in the preparation of our consolidated financial statements. The impact of these policies affects our reported and expected financial results. We have discussed the development, selection and application of our critical accounting policies with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed the disclosure relating to our critical accounting policies herein.
Other significant accounting policies, primarily those with lower levels of uncertainty than those discussed below, are also important to understanding our consolidated financial statements. The notes to the consolidated financial statements in this Annual Report on Form 10-K contain additional information related to our accounting policies and should be read in conjunction with this discussion.
Revenue Recognition. We perform a significant amount of our services under master service agreements and other contracts that contain customer-specified service requirements. These agreements include discrete pricing for individual tasks including, for example, the placement of underground or aerial fiber, directional boring, and fiber splicing, each based on a specific unit of measure. A contractual agreement exists when each party involved approves and commits to the agreement, the rights of the parties and payment terms are identified, the agreement has commercial substance, and collectability of consideration is probable. Our services are performed for the sole benefit of our customers, whereby the assets being created or maintained are controlled by the customer and the services we perform do not have alternative benefits for us. Contract revenue is recognized over time as services are performed and customers simultaneously receive and consume the benefits we provide. Output measures, such as units delivered, are utilized to assess progress against specific contractual performance obligations for the majority of our services. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. For us, the output method using units delivered best represents the measure of the performance obligations incorporated within the contractual agreements. This method captures the amount of units delivered pursuant to contracts and is used only when our performance does not produce significant amounts of
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work in process prior to complete satisfaction of the performance obligation. For a portion of contract items, units to be completed consist of multiple tasks. For these items, the transaction price is allocated to each task based on relative standalone measurements, such as selling prices for similar tasks, or in the alternative, the cost to perform the tasks. Contract revenue is recognized as the tasks are completed as a measurement of progress in the satisfaction of the corresponding performance obligation.
For certain contracts, representing less than 5% of contract revenues during fiscal 2026, fiscal 2025, and fiscal 2024, we use the cost-to-cost measure of progress. These contracts are generally projects that are completed over a period 12 months or less and for which payment may be received based on project milestones or in a lump sum at the end of the project. Under the cost-to-cost measure of progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs. Contract costs include direct labor, direct materials, and subcontractor costs, as well as an allocation of indirect costs. Contract revenues are recorded as costs are incurred.
We accrue the entire amount of a contract loss, if any, at the time the loss is determined to be probable and can be reasonably estimated. There were no material amounts of unapproved change orders or claims recognized during fiscal 2026, fiscal 2025, and fiscal 2024.
Accounts Receivable, net. We grant credit to our customers, generally without collateral, under normal payment terms (typically 30 to 90 days after invoicing). Generally, invoicing occurs within 45 days after the related services are performed. Accounts receivable represents an unconditional right to consideration arising from our performance under contracts with customers. Accounts receivable include billed accounts receivable, unbilled accounts receivable, and retainage. The carrying value of such receivables, net of the allowance for credit losses, represents their estimated realizable value. Unbilled accounts receivable represent amounts we have an unconditional right to receive payment for that will be billed at a later date due to administrative requirements in the billing processes specified by our customers. Certain of our contracts contain retainage provisions whereby a portion of the revenue earned is withheld from payment as a form of security until contractual provisions are satisfied. The collectability of retainage is included in our overall assessment of the collectability of accounts receivable. We expect to collect the outstanding balance of current accounts receivable, net (including trade accounts receivable, unbilled accounts receivable, and retainage) within the next 12 months. We estimate our allowance for credit losses by evaluating specific accounts receivable balances based on historical collection trends, the age of outstanding receivables, and the credit worthiness of our customers.
We participate in a customer-sponsored vendor payment program for one of our customers. All 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 of the customer. 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 reflected as an expense component in other income, net, in the consolidated statements of operations.
Contract assets. Contract assets include unbilled amounts typically resulting from arrangements whereby complete satisfaction of a performance obligation and the right to payment are conditioned on completing additional tasks or services.
Contract liabilities. Contract liabilities consist of amounts invoiced to customers in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period. As of January 31, 2026 and January 25, 2025, the contract liabilities balance is classified as current based on the timing of when we expect to complete the tasks required for the recognition of revenue.
Leases. Our leases are accounted for as operating leases, with lease expense recognized on a straight-line basis over the lease term. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. For leases with initial terms greater than 12 months, we record operating lease right-of-use assets and corresponding operating lease liabilities. Operating lease right-of-use assets represent our right to use the underlying asset for the lease term and operating lease liabilities represent our obligation to make the related lease payments. These assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet.
Goodwill and Intangible Assets. Goodwill and other indefinite-lived intangible assets are assessed for impairment annually, or more frequently, if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. We perform our annual impairment review of goodwill at the reporting unit level. Each of our operating segments with goodwill represents a reporting unit for the purpose of assessing impairment. If we determine the fair value of
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the reporting unit’s goodwill or other indefinite-lived intangible assets is less than their carrying value as a result of an annual or interim test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during the period incurred. The following table sets forth goodwill and other intangible assets, net by reportable segment as of January 31, 2026 (dollars in millions):
Communications
Building Systems
Total
Goodwill
Percentage of total
Other intangible assets, net
Percentage of total
We review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicate that the carrying amount of such assets may not be fully recoverable. Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset and its eventual disposition. Should an asset not be recoverable, an impairment loss is measured by comparing the fair value of the asset to its carrying value. If we determine the fair value of an asset is less than the carrying value, an impairment loss is recognized in operating income or loss in the consolidated statements of operations during the period incurred.
We use judgment in assessing whether goodwill and intangible assets are impaired. Estimates of fair value are based on our projection of revenues, operating costs, and cash flows taking into consideration historical and anticipated future results, general economic and market conditions, as well as the impact of planned business or operational strategies. We determine the fair value of our reporting units using an equal weighting of fair values derived from the income approach and market approach valuation methodologies. The income approach uses the discounted cash flow method and the market approach uses the guideline company method. Changes in our judgments and projections could result in significantly different estimates of fair value, potentially resulting in impairments of goodwill and other intangible assets. The inputs used for fair value measurements of the reporting units and other related indefinite-lived intangible assets are the lowest level (Level 3) inputs.
The Company’s goodwill arising from acquisitions resides in multiple reporting units and primarily relates to the value of expected synergies, anticipated expansion of its geographic presence, and the strengthening of the customer base. Goodwill and other indefinite-lived intangible assets are assessed for impairment annually, or more frequently if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. The profitability of individual reporting units may suffer periodically due to downturns in customer demand, reduced revenues from the termination of contracts or the termination or delay of services under a contract or the loss of a customer, increased costs of providing services, and the level of overall economic activity. The individual reporting unit’s customers may also reduce capital expenditures and defer or cancel pending projects due to changes in technology, a or uncertain economy, merger or acquisition activity, a decision to allocate resources to other areas of their business, or other reasons. The of reporting units may also if actual costs of providing services exceed the costs anticipated when the reporting unit enters into contracts. Additionally, economic conditions and future in the equity and credit markets could impact the valuation of the Company’s reporting units. The cyclical nature of the reporting unit’s business, the high level of competition existing within its industry, and the concentration of its revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units , relative to the Company as a whole. As a result, the performance of one or more of the reporting units could , resulting in an 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. Goodwill and indefinite lived intangible assets are required to be tested for impairment between annual tests if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value.
We performed our annual impairment assessment for fiscal 2026, fiscal 2025, and fiscal 2024, and concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any of the periods. In each of these periods, qualitative assessments were performed on reporting units that comprise a significant portion of our consolidated goodwill balance. For the Company’s indefinite-lived intangible asset we performed a qualitative assessment for fiscal 2026, fiscal 2025 and fiscal 2024. A qualitative assessment includes evaluating all identified events and circumstances that could affect the significant inputs used to determine the fair value of a reporting unit or indefinite-lived intangible asset for the purpose of determining whether it is more likely than not that these assets are impaired. We consider various factors while performing qualitative assessments, including macroeconomic conditions, industry and market conditions, financial performance of the reporting units, changes in market capitalization, and any other specific reporting unit considerations. These qualitative assessments indicated that it was more likely than not that the fair value exceeded carrying value for those reporting
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units. For the remaining reporting units, we performed the quantitative analysis described in ASC Topic 350 in each of these periods. When performing the quantitative analysis, we determine the fair value of our reporting units using an equal weighting of fair values derived from the income approach and market approach valuation methodologies. Under the income approach, the key valuation assumptions used in determining the fair value estimates of our reporting units for each annual test were: (a) expected cash flow for a period of seven years based on our best estimate of revenue growth rates and projected operating margins; (b) terminal value based upon terminal growth rates; and (c) a discount rate based on the Company’s best estimate of the weighted average cost of capital adjusted for certain risks for the reporting units.
The table below outlines certain assumptions used in our annual quantitative impairment analyses for fiscal 2026, fiscal 2025, and fiscal 2024;
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Terminal Growth Rate
Discount Rate
The discount rate reflects risks inherent within each reporting unit operating individually. These risks are greater than the risks inherent in the Company as a whole. Determination of discount rates included consideration of market inputs such as the risk-free rate, equity risk premium, industry premium, and cost of debt, among other assumptions. The discount rate for fiscal 2026 increased compared to the rate used in fiscal 2025. The cost of equity increased as did the weighting for equity which resulted in an increase in the weighted average cost of capital compared to the prior year. We believe the assumptions used in the impairment analysis each year are reflective of the risks inherent in the business models of our reporting units and our industry. Under the market approach, the guideline company method develops valuation multiples by comparing our reporting units to similar publicly traded companies. Key valuation assumptions used in determining the fair value estimates of our reporting units rely on: (a) the selection of similar companies and (b) the selection of valuation multiples as they apply to the reporting unit characteristics.
We determined that the fair values of each of the reporting units were in excess of their carrying values in the fiscal 2026 assessment. Management determined that significant changes were not likely in the factors considered to estimate fair value, and analyzed the impact of such changes were they to occur. Specifically, if the discount rate applied in the fiscal 2026 impairment analysis had been 100 basis points higher than estimated for each of the reporting units, and all other assumptions were held constant, the conclusion of the assessment would remain unchanged and there would be no impairment of goodwill. Additionally, if there was a 25% decrease in the fair value of any of the reporting units due to a decline in their discounted cash flows resulting from lower operating performance, the conclusion of the assessment would remain unchanged for all reporting units. Recent operating performance, along with assumptions for specific customer and industry opportunities, were considered in the key assumptions used during the fiscal 2026 impairment analysis. Management has determined the goodwill of the Company may have an increased likelihood of impairment if a prolonged downturn in customer demand were to occur, or if the reporting units were not to execute customer , and the long-term outlook for their cash flows were impacted. Furthermore, changes in the long-term outlook may result in a change to other valuation assumptions. Factors monitored by management which could result in a change to the reporting units’ estimates include the outcome of customer requests for proposals and subsequent awards, strategies of competitors, labor market conditions and levels of overall economic activity.
The Company determined that there were no events or changes in circumstances for the other reporting units or indefinite lived intangible assets during fiscal 2026 that would indicate a potential reduction in their fair value below their carrying amounts. As of January 31, 2026, the Company continues to believe the remaining goodwill and the indefinite-lived intangible asset are recoverable for all of its reporting units . 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 could be impaired. There can be no assurances that goodwill or the indefinite-lived intangible asset may not be impaired in future periods.
Implementation Costs – Cloud Computing Arrangements. In accordance with ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Internal-Use Software, to the extent costs incurred in a cloud computing arrangement are capitalizable, the corresponding costs are recorded in other assets and the related amortization is included in general and administrative expense in the consolidated statements of operations. The amount of capitalized cloud computing implementation costs included in other non-current assets was $61.7 million and $29.8 million as of January 31, 2026 and January 25, 2025, respectively. The amortization of capitalized
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implementation costs related to cloud computing arrangements was $2.4 million and $1.7 million during fiscal 2026 and fiscal 2025.
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 2026, 2025, and 2024, 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 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.
For automobile liability losses during fiscal 2025, 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 and we retained the risk of loss up to $1.0 million for general liability losses during fiscal 2025. 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 million, if any.
For automobile liability and general liability losses during fiscal 2024, we retained the risk of loss up to $1.0 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 $10.0 million risk of loss on a per occurrence basis for losses between $5.0 million and $15.0 million, if any, and we retained $10.0 million risk of loss on a per occurrence basis for losses between $30.0 million and $40.0 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. In calendar years 2025 and 2024, we retained the risk of loss on an annual basis, up to the first $750,000 and $700,000, respectively, of claims per particip ant.
We have established reserves that we believe to be adequate based on current evaluations and our experience with these types of claims. A liability for unpaid claims and the associated claim expenses, including incurred but not reported losses, is determined with the assistance of an actuary and reflected in the consolidated financial statements as accrued insurance claims. The effect on our financial statements is generally limited to the amount needed to satisfy our insurance deductibles or retentions. Amounts for total accrued insurance claims and insurance recoveries/receivables are as follows (dollars in millions):
January 31, 2026
January 25, 2025
Accrued insurance claims - current
Accrued insurance claims - non-current
Accrued insurance claims
Insurance recoveries/receivables:
Non-current (included in Other assets)
Insurance recoveries/receivables
The liability for total accrued insurance claims included incurred but not reported losses of approximately $56.3 million and $47.9 million as of January 31, 2026 and January 25, 2025, respectively.
We estimate the liability for claims based on facts, circumstances, and historical experience. Recorded loss reserves are settled over time and are not discounted. Factors affecting the determination of the expected cost for existing and incurred but not reported claims include, but are not limited to, the magnitude and quantity of future claims, the payment pattern of claims which have been incurred, changes in the medical condition of claimants, and other factors such as inflation, tort reform or other legislative changes, unfavorable jury decisions, and court interpretations.
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Income Taxes. We account for income taxes under the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Measurement of our tax position is based on the applicable statutes, federal and state case law, and our interpretations of tax regulations. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income during the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all relevant factors, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent financial operations. In the event we determine that we would be able to realize deferred income tax assets in excess of their net recorded amount, we would adjust the valuation allowance, which would reduce the provision for income taxes.
We recognize tax benefits in the amount that we deem more likely than not will be realized upon ultimate settlement of any tax uncertainty. Tax positions that fail to qualify for recognition are recognized during the period in which the more-likely-than-not standard has been reached, when the tax positions are resolved with the respective taxing authority, or when the statute of limitations for tax examination has expired. We recognize applicable interest related to tax amounts in interest expense and penalties within general and administrative expenses.
Fluctuations in our effective income tax rate were attributable 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, impacts of tax filings for prior years, and changes in unrecognized tax benefits.
Stock-Based Compensation. We have stock-based compensation plans under which we grant stock-based awards, including 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. The resulting compensation expense is recognized on a straight-line basis over the vesting period, net of actual forfeitures, and is included in general and administrative expenses in the consolidated statements of operations. 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.
Compensation expense for stock-based awards is based on fair value at the measurement date. The fair value of RSUs and Performance RSUs is estimated on the date of grant and is equal to the closing market price per share of our common stock on that date. RSUs vest ratably over a three-year period starting in fiscal 2026 and prior grants vested ratably over a four-year period. Performance RSUs vest ratably over a three-year period, if certain performance measures are achieved. Each RSU and Performance RSU is settled in one share of our common stock upon vesting. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. This valuation is affected by the Company’s stock price as well as other inputs, including the expected common stock price volatility over the expected life of the options, the expected term of the stock option, risk-free interest rates, and expected dividends, if any. Our outstanding stock options generally vest ratably over a four-year period and are generally exercisable over a period of up to ten years.
For Performance RSUs, we evaluate compensation expense quarterly and recognize expense only if we determine it is probable that the performance measures for the awards will be met. The performance measures for target awards are based on our operating earnings (adjusted for certain amounts) as a percentage of contract revenues and our operating cash flow level (adjusted for certain amounts) for the applicable four-quarter performance period. Additionally, certain awards include three-year performance measures that are more difficult to achieve than those required to earn target awards and, if met, result in supplemental shares awarded. The performance measures for supplemental awards are based on three-year cumulative operating earnings (adjusted for certain amounts) as a percentage of contract revenues and three-year cumulative operating cash flow level (adjusted for certain amounts). If we determine it is no longer probable that we will achieve certain performance measures for the awards, we reverse the stock-based compensation expense that we had previously recognized associated with the portion of Performance RSUs that are no longer expected to vest. The amount of the expense ultimately recognized depends on the number of awards that actually vest. Accordingly, stock-based compensation expense may vary from period to period. For additional information on our stock-based compensation plans, stock options, RSUs, and Performance RSUs, see Note 19, Stock-Based Awards , in the notes to the consolidated financial statements in this Annual Report on Form 10-K.
Contingencies and Litigation. In the ordinary course of our business, we are involved in certain legal proceedings and other claims, including claims for indemnification by our customers. In determining whether a loss should be accrued, we evaluate, among other factors, the probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. If only a range of probable loss can be determined, we accrue for our best estimate within the range for the contingency. In those cases where none of the estimates within the range is better than another, we accrue for the amount representing the low
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end of the range. As additional information becomes available, we reassess the potential liability related to our pending litigation and other contingencies and revise our estimates as applicable. Revisions of our estimates of the potential liability could materially impact our results of operations. Additionally, if the final outcome of such litigation and contingencies differs adversely from that currently expected, it would result in a charge to operating results when determined.
Business Combinations . We account for business combinations under the acquisition method of accounting. The purchase price of each business acquired is allocated to the tangible and intangible assets acquired and the liabilities assumed based on information regarding their respective fair values on the date of acquisition. Any excess of the purchase price over the fair value of the separately identifiable assets acquired and liabilities assumed is allocated to goodwill. We determine the fair values used in purchase price allocations for intangible assets based on historical data, estimated discounted future cash flows, expected royalty rates for trademarks and trade names, as well as other information. The valuation of assets acquired and liabilities assumed requires a number of judgments and is subject to revision as additional information about the fair value of assets and liabilities becomes available. Additional information, which existed as of the acquisition date but unknown to us at that time, may become known during the remainder of the measurement period. This measurement period may not exceed 12 months from the acquisition date. The Company will recognize any adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined. Additionally, in the same period in which adjustments are recognized, the Company will record the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting adjustment had been completed at the acquisition date. Acquisition costs are expensed as incurred. The results of operations of businesses acquired are included in the consolidated financial statements from their dates of acquisition.
Results of Operations
The following table sets forth our consolidated statements of operations for the periods indicated and the amounts as a percentage of contract revenues (totals may not add due to rounding) (dollars in millions):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Contract revenues
Expenses:
Costs of earned revenues, excluding depreciation and amortization
General and administrative
Depreciation and amortization
Total
Interest expense, net
Loss on debt extinguishment
Other income, net
Income before income taxes
Provision for income taxes
Net income
Fiscal 2026 included 53 weeks of operations, whereas fiscal 2025 included 52 weeks, which impacts the comparability of the financial results and year-over-year variances discussed below.
Contract Revenues. Contract revenues were $5.546 billion during fiscal 2026 compared to $4.702 billion during fiscal 2025. Contract revenues from acquired businesses were $563.8 million during fiscal 2026 and $109.1 million during fiscal 2025. Acquired revenues represent contract revenues from acquired businesses that were not owned for the full period in both the current and comparable prior periods. Excluding amounts generated by the acquired businesses, contract revenues increased by $389.2 million during fiscal 2026 compared to fiscal 2025, primarily due to net increases in fiber-to-the-home deployments, including rural fiber deployment programs.
Costs of Earned Revenues, excluding Depreciation and Amortization. Costs of earned revenues increased to $4.406 billion, or 79.4% of contract revenues, during fiscal 2026 compared to $3.770 billion, or 80.2% of contract revenues, during fiscal 2025. The primary component of the increase was a $492.3 million aggregate increase in direct labor and subcontractor
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costs. The increase was further due to a $78.3 million increase in direct materials, a $52.0 million increase in other direct costs and a $13.3 million increase in equipment maintenance and fuel costs combined.
Costs of earned revenues as a percentage of contract revenues decreased 0.7% during fiscal 2026 compared to fiscal 2025. As a percentage of contract revenues, direct materials increased 0.6% primarily as a result of our mix of work in which we provide materials for our customers. Equipment maintenance and fuel costs combined decreased 0.3% as a percentage of contract revenues. Labor and subcontracted labor costs decreased 1.0% as a percentage of contract revenues, primarily due to the mix of work performed.
General and Administrative Expenses. General and administrative expenses increased to $445.5 million, or 8.0% of contract revenues, during fiscal 2026 compared to $393.0 million, or 8.4% of contract revenues, during fiscal 2025. The increase in total general and administrative expenses primarily resulted from increased administrative, payroll, performance based compensation, $18.8 million of acquisition and integration costs during fiscal 2026 (compared to $4.2 million during fiscal 2025) and other costs, including incremental general administrative expenses from acquired businesses. This increase was partially offset by lower stock-based compensation expense in the current year, as the prior year included $11.4 million incremental stock-based compensation expense resulting from the CEO transition. See Note 19, Stock-Based Awards, for additional information regarding the CEO transition.
Depreciation and Amortization. Depreciation expense was $200.8 million, or 3.6% of contract revenues, during fiscal 2026, compared to $167.2 million, or 3.6% of contract revenues, during fiscal 2025. The increase in depreciation expense during fiscal 2026 was primarily due to incremental capital expenditures to support our growth in operations, normal replacement cycle of fleet assets, and depreciation from acquired businesses. Amortization expense was $68.8 million and $31.4 million during fiscal 2026 and fiscal 2025, respectively. The increase in amortization expense during fiscal 2026 is due to the increase in amortizing intangibles from acquired businesses.
Interest Expense, Net. Interest expense, net increased to $66.5 million during fiscal 2026 from $61.0 million during fiscal 2025 as a result of higher outstanding borrowings during the current period, which was partially offset by higher interest income on invested cash balances.
Loss on Debt Extinguishment. Loss on debt extinguishment during fiscal 2026 of $7.3 million and fiscal 2025 of $1.0 million includes the write-off of deferred debt issuance costs in connection with the Credit Agreement amendments. See “ Liquidity and Capital Resources - Compliance with Credit Agreement ” for more information.
Other Income, Net. Other income, net was $16.6 million and $29.2 million during fiscal 2026 and fiscal 2025, respectively. The change in other income, net was primarily a function of the number of assets sold and prices obtained for those assets during each respective period. Gain on sale of fixed assets was $26.7 million and $36.5 million during fiscal 2026 and fiscal 2025, respectively. Other income, net also includes expense associated with the non-recourse sale of accounts receivable under a customer-sponsored vendor payment program.
Income Taxes. The following table presents our income tax provision and effective income tax rate for fiscal 2026 and fiscal 2025 (dollars in millions):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Income tax provision
Effective income tax rate
Our effective income 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.
Net Income. Net income was $281.2 million for fiscal 2026 compared to $233.4 million for fiscal 2025.
Non-GAAP Adjusted EBITDA. Adjusted EBITDA is a Non-GAAP measure. We define Adjusted EBITDA as 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 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
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tax rates. The following table provides a reconciliation of net income to Non-GAAP Adjusted EBITDA (totals may not add due to rounding) (dollars in millions):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Net income
Interest expense, net
Provision for income taxes
Depreciation and amortization
Earnings Before Interest, Taxes, Depreciation & Amortization (“EBITDA”)
Gain on sale of fixed assets
Stock-based compensation expense
Acquisition and integration costs
Loss on debt extinguishment
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA % of contract revenues
A discussion of our financial results for fiscal 2025 compared to our financial results for fiscal 2024 can be found in the “Item 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations” section in our Annual Report on Form 10-K for the fiscal year ended January 25, 2025, filed on February 28, 2025.
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Segment Results
Through October 25, 2025, we reported our results under a single reportable segment. During the fourth quarter of fiscal 2026, in connection with the acquisition of Power Solutions, we reevaluated our reportable segments which resulted in the transition from a single reportable segment to two reportable segments: Communications and Building Systems. See Part I, Item 1. Business for additional information. Common administrative support for operating companies require that certain allocations be made to determine segment profitability, including allocations of corporate shared and indirect operating costs, as well as general and administrative costs. Certain corporate costs are not allocated, including certain acquisition and integration costs, interest expense (income); and loss on debt extinguishment. The following table sets forth segment and consolidated contract revenues, segment and consolidated income before income taxes and segment and consolidated Non-GAAP Adjusted EBITDA for the periods indicated and the amounts as a percentage of segment and consolidated contract revenues, respectively, as well as the dollar and percentage change from the prior period (totals may not add due to rounding) (dollars in millions):
Fiscal Year Ended
Change
January 31, 2026
January 25, 2025
Amount
Contract Revenues:
Communications
Building Systems
Consolidated contract revenues
Income (loss) before Income Taxes:
Communications
Building Systems
Corporate and Non-Allocated Costs
Consolidated income before income taxes
Non-GAAP Adjusted EBITDA:
Communications
Building Systems
Consolidated Non-GAAP Adjusted EBITDA
Fiscal 2026 included 53 weeks of operations, whereas fiscal 2025 included 52 weeks, which impacts the comparability of the financial results and year-over-year variances discussed below.
Communications Segment Results
Contract Revenues. The increase in contract revenues for the fiscal year ended January 31, 2026 was primarily due to net increases in fiber-to-the-home deployments, including rural fiber deployment programs and revenues from businesses acquired in fiscal 2025.
Income before income taxes. The increase in income before income taxes for the fiscal year ended January 31, 2026 was primarily due improved operating leverage resulting from higher contract revenues.
Non-GAAP Adjusted EBITDA. The increase in Non-GAAP Adjusted EBITDA for the fiscal year ended January 31, 2026 was primarily due improved operating leverage resulting from higher contract revenues.
Building Systems Segment Results
Contract Revenues. The increase in contract revenues for the fiscal year ended January 31, 2026 was due to revenues from the business acquired in fiscal 2026.
Loss before income taxes. The loss before income taxes for the fiscal year ended January 31, 2026 is attributable to amortization expense resulting from the application of acquisition accounting for the acquired business, which resulted in $20.4 million of amortization expense associated with finite-lived intangible assets related to customer relationships, backlog and
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trade names identified during the preliminary purchase price allocation. We expect these non-cash charges to continue to impact segment operating results in future periods as the economic value of the acquired intangibles is realized.
Non-GAAP Adjusted EBITDA. The increase in Non-GAAP Adjusted EBITDA for the fiscal year ended January 31, 2026 was due to the results of the business acquired in fiscal 2026.
Corporate and Non-Allocated Costs
The increase in corporate and non-allocated costs during the fiscal year ended January 31, 2026 resulted from increased interest expense, loss on debt extinguishment and acquisition costs.
Liquidity and Capital Resources
We are subject to concentrations of credit risk relating primarily to our cash and equivalents, accounts receivable, and contract assets. Cash and equivalents primarily include balances on deposit with banks and totaled $709.2 million as of January 31, 2026, compared to $92.7 million as of January 25, 2025. We maintain our cash and equivalents at financial institutions we believe to be of high credit quality. For all periods presented, we have not experienced any loss or lack of access to cash in our operating accounts.
Sources of Cash. Our sources of cash are operating activities, long-term debt, equity offerings, bank borrowings, proceeds from the sale of idle and surplus equipment and real property, and stock option proceeds. Cash flow from operations is primarily influenced by demand for our services and operating margins, but can also be influenced by working capital needs associated with the services that we provide. In particular, working capital needs may increase when we have growth in operations and where project costs, primarily associated with labor, subcontractors, equipment, and materials, are required to be paid before the related customer balances owed to us are invoiced and collected. Our working capital (total current assets less total current liabilities, excluding the current portion of debt) was $1,754.0 million as of January 31, 2026 compared to $1,117.5 million as of January 25, 2025.
Capital resources are used primarily to purchase equipment and maintain sufficient levels of working capital to support our contractual commitments to customers. We periodically draw upon and repay our revolving credit facility depending on our cash requirements. We currently intend to retain any earnings for use in the business and other capital allocation strategies which may include investment in acquisitions and share repurchases. Consequently, we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Our level of capital expenditures can vary depending on the customer demand for our services, the replacement cycle we select for our equipment, and overall growth. We intend to fund these expenditures primarily from operating cash flows, availability under our Credit Agreement (as defined below), and cash on hand. We expect capital expenditures, net of disposals, to range from $210.0 million to $220.0 million during fiscal 2027 to support growth opportunities and the replacement of certain fleet assets.
Sufficiency of Capital Resources. We believe that our capital resources, including existing cash balances and amounts available under our credit agreement, are sufficient to meet our financial obligations. These obligations include payments on our debt, working capital requirements, and the purchase of equipment at our expected level of operations for at least the next 12 months. Our capital requirements may increase to the extent we seek to grow by acquisitions that involve consideration other than our stock, experience difficulty or delays in collecting amounts owed to us by our customers, increase our working capital in connection with new or existing customer programs, or we repurchase our common stock, or repay credit agreement borrowings. Changes in financial markets or other components of the economy could adversely impact our ability to access the capital markets, in which case we would expect to rely on a combination of available cash and our credit agreement to provide short-term funding. Management regularly monitors the financial markets and assesses general economic conditions for possible impact on our financial position. We believe our cash investment policies are prudent and expect that any volatility in the capital markets would not have a material impact on our cash investments.
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Net Cash Flows. The following table presents our net cash flows for fiscal 2026 and fiscal 2025 (dollars in millions):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Net cash flows:
Provided by operating activities
Used in investing activities
Provided by financing activities
Cash Provided by Operating Activities. During fiscal 2026, net cash provided by operating activities was $642.5 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $35.8 million of operating cash flow during fiscal 2026. Working capital changes that provided operating cash flow during fiscal 2026 included an increase in accounts payable of $223.2 million. Working capital changes that used operating cash flow during fiscal 2026 included an increase in contract assets, net of $111.3 million, an increase in other assets of $50.2 million, a decrease in income tax payable of $46.8 million, a decrease in accrued liabilities of $41.7 million, an increase in accounts receivable, net of $0.8 million, and an increase in other current assets and inventory of $8.2 million.
The primary non-cash items in cash flows from operating activities during the current and prior periods are depreciation and amortization, non-cash lease expense, stock-based compensation, amortization of debt issuance costs, deferred income taxes, gain on sale of fixed assets, provision for bad debt and loss on debt extinguishment.
Our days sales outstanding (“DSO”) was 101 days and 114 days as of January 31, 2026 and January 25, 2025, respectively. DSO is calculated based on the ending balance of total current and non-current accounts receivable (including unbilled accounts receivable), net of the allowance for credit losses, and current contract assets, net of contract liabilities, divided by the average daily revenue for the most recently completed quarter. DSO as of January 31, 2026 is calculated on a pro forma basis by adjusting contract revenues during the fourth quarter of fiscal 2026 to include the historical contract revenues of the business acquired in fiscal 2026 as if such acquisition had occurred as of the beginning of the fiscal quarter.
See Note 6, Accounts Receivable, Contract Assets, and Contract Liabilities , for further information on our customer credit concentration as of January 31, 2026 and January 25, 2025 and Note 20, Customer Concentration and Revenue Information, for further information on our significant customers. 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 (liabilities), net as of January 31, 2026 or January 25, 2025.
During fiscal 2025, net cash provided by operating activities was $349.1 million. Changes in working capital (excluding cash) and changes in other long-term assets and liabilities used $114.6 million of operating cash flow during fiscal 2025. Working capital changes that used operating cash flow during fiscal 2025 included an increase in accounts receivable, net of $117.8 million, a decrease in accrued liabilities of $21.0 million, an increase in other assets of $21.0 million, and a decrease in accounts payable of $16.8 million. Working capital changes that provided operating cash flow during fiscal 2025 included an increase in contract liabilities, net of $31.2 million, an increase in income tax payable of $26.5 million, and a decrease in other current assets and inventory of $4.3 million.
Cash Used in Investing Activities. Net cash used in investing activities was $1,835.7 million during fiscal 2026. Capital expenditures of $240.8 million were primarily for the replacement of certain fleet assets and other equipment for new work opportunities and cash paid for the fiscal 2026 acquisition, net of cash acquired, was $1,628.6 million. Proceeds from sale of assets were $33.6 million.
Net cash used in investing activities was $395.2 million during fiscal 2025. Capital expenditures of $250.5 million were for the replacement of certain fleet assets and new work opportunities and cash paid for acquisitions was $183.9 million. Proceeds from sale of assets were $39.1 million.
Cash Provided by Financing Activities. Net cash provided by financing activities was $1,809.6 million during fiscal 2026. During fiscal 2026, borrowings under our credit agreement were $2,969.0 million. We used approximately $1,079.0 million to repay borrowings under our Credit Agreement. We also borrowed and repaid $600.0 million on a 364 day secured bridge loan facility related to the fiscal 2026 acquisition. We repurchased 200,000 shares of our common stock in open market transactions, at an average price of $150.93 per share, for $30.2 million, during fiscal 2026. Average price paid per share excludes 1% excise
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tax on share repurchases. We also paid $14.4 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during fiscal 2026. In addition, we paid $1.9 million, net, to tax authorities for payroll tax withholding obligations on the exercise of stock options. We paid approximately $33.9 million in issuance costs and third party fees and expenses related to our financing transactions.
Net cash provided by financing activities was $37.7 million during fiscal 2025. During fiscal 2025, borrowings under our credit agreement were $987.4 million. We used approximately $852.4 million to repay borrowings under our Credit Agreement. We repurchased 410,000 shares of our common stock in open market transactions, at an average price of $160.10 per share, for $65.6 million, during fiscal 2025. Average price paid per share excludes 1% excise tax on share repurchases. We also paid $17.0 million to tax authorities in order to meet the payroll tax withholding obligations on restricted share units that vested during fiscal 2025. In addition, we paid $8.0 million, net, to tax authorities for payroll tax withholding obligations on the exercise of stock options. We paid approximately $6.7 million in issuance costs and third party fees and expenses related to our financing transactions.
Supplemental Disclosure of Non-Cash Activities : During fiscal 2026, in connection with the Power Solutions acquisition, we issued 1,011,069 shares of Dycom common stock to the sellers valued at $351.0 million.
Compliance with Credit Agreement. The Company and certain of its subsidiaries are party to a credit agreement (as 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 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.
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 are 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. 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 January 31, 2026 and January 25, 2025, respectively, were as follows:
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Weighted Average Rate End of Period
January 31, 2026
January 25, 2025
Borrowings - Term A SOFR Loans
1.375% - 2.00% plus Term SOFR
Borrowings - Base Rate Loans
0.375% - 1.00% plus Base rate (1)
Borrowings - Term B SOFR Loans
1.75% plus Term SOFR
Unused Revolver Commitment
Standby Letters of Credit
Commercial Letters of Credit
(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. There were no outstanding borrowings under our revolving facility as of January 25, 2025 and January 31, 2026, respectively.
Standby letters of credit of approximately $53.6 million and $47.5 million, issued as part of our insurance program, were outstanding under our Credit Agreement as of January 31, 2026 and January 25, 2025, respectively.
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, 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 January 31, 2026 and January 25, 2025, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under our revolving facility of $746.4 million and $602.5 million, respectively, 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.
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.
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Contractual Obligations. The following table sets forth our outstanding contractual obligations as of January 31, 2026 (dollars in thousands):
Due in Fiscal 2027
Due Thereafter
Total
2029 Notes
Credit agreement – Term Loan A Facility
Credit agreement – Term Loan B Facility
Fixed interest payments on long-term debt (1)
Obligations under long-term operating leases (2)
Obligations under short-term operating leases (3)
Employment agreements
Purchase and other contractual obligations (4)
Total
(1) Includes interest payments on our $500.0 million principal amount of 2029 Notes outstanding, and excludes interest payments on our variable rate debt. Variable rate debt as of January 31, 2026 consisted of $1,540.0 million outstanding under our Term Loan A Facility and $800.0 million outstanding under our Term Loan B Facility.
(2) Amounts represent undiscounted lease obligations under long-term operating leases and exclude long-term operating leases that have not yet commenced of $6.2 million as of January 31, 2026.
(3) Amounts represent lease obligations under short-term operating leases that are not recorded on our consolidated balance sheet as of January 31, 2026.
(4) Amounts represent committed capital for the expansion of our vehicle fleet, equipment and other assets in order to accommodate manufacturer lead times, as well as other purchase commitments not reflected in our consolidated balance sheet, primarily for inventory and general and administrative services, including information technology services.
Our consolidated balance sheet as of January 31, 2026 includes a long-term liability of approximately $58.0 million for accrued insurance claims. This liability has been excluded from the table above as the timing of payments is uncertain.
The liability for unrecognized tax benefits for uncertain tax positions was approximately $18.9 million and $21.6 million, as of January 31, 2026 and January 25, 2025, respectively, and is included in other liabilities in the consolidated balance sheets. This amount has been excluded from the contractual obligations table because we are unable to reasonably estimate the timing of the resolution of the underlying tax positions with the relevant tax authorities.
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 January 31, 2026 and January 25, 2025 we had $917.9 million and $413.5 million of outstanding performance and other surety contract bonds, respectively. The estimated cost to complete projects secured by our outstanding performance and other surety contract bonds was approximately $655.7 million as of January 31, 2026. 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 January 31, 2026 and January 25, 2025, we had $31.0 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 standby letters of credit issued under our Credit Agreement as part of our insurance program. These letters of credit collateralize obligations to our insurance carriers in connection with the settlement of potential claims. In connection with these collateral obligations, we had $53.6 million and $47.5 million outstanding standby letters of credit issued under our Credit Agreement as of January 31, 2026 and January 25, 2025, respectively.
Backlog. Backlog is not a measure defined by United States generally accepted accounting principles (“GAAP”) and should be considered in addition to, but not as a substitute for, GAAP results. Participants in our industry often disclose a calculation of their backlog; however, our methodology for determining backlog may not be comparable to the methodologies used by others. We utilize our calculation of backlog to assist in measuring aggregate awards under existing contractual
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relationships with our customers. We believe our backlog disclosures will assist investors in better understanding this estimate of the services to be performed pursuant to awards by our customers under existing contractual relationships.
Our backlog is an estimate of the uncompleted portion of services to be performed under contractual agreements with our customers. The following table sets forth our backlog as of January 31, 2026 and January 25, 2025 (dollars in millions):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Total Backlog
Next 12 Months (included in Total Backlog)
Total Backlog
Next 12 Months (included in Total Backlog)
Communications
Building Systems
Total
Our backlog represents an estimate of services to be performed pursuant to master service agreements and other contractual agreements over their terms. These estimates are based on contract terms and evaluations regarding the timing of the services to be provided. In the case of master service agreements which are commonly used within our Communications segment, backlog is estimated based on the work performed in the preceding 12-month period, when applicable. When estimating backlog for newly initiated master service agreements and other long and short-term contracts, we also consider the anticipated scope of the contract and information received from the customer during the procurement process and, where applicable, other ancillary information. Building Systems segment backlog represents management’s estimate of contract revenues expected to be realized related to remaining performance obligations from the portion of firm orders under fixed price and modified fixed-price contracts not yet completed or for which work has not yet begun. The majority of our backlog comprises services under master service agreements and other long-term contracts.
Generally, our customers are not contractually committed to procure specific volumes of services. Contract revenue estimates reflected in our backlog can be subject to change due to a number of factors, including contract cancellations or changes in the amount of work we expect to be performed under a contract. In addition, contract revenues reflected in our backlog may be realized in different periods from those previously anticipated due to these factors as well as project accelerations or delays due to various reasons, including, but not limited to, changes in customer spending priorities, project cancellations, regulatory interruptions, scheduling changes, commercial issues, such as permitting, engineering revisions, job site conditions and adverse weather. The amount or timing of our backlog can also be impacted by the merger or acquisition activity of our customers. Many of our contracts may be cancelled by our customers, or work previously awarded to us pursuant to these contracts may be cancelled, regardless of whether or not we are in default. The amount of backlog related to uncompleted projects in which a provision for estimated was recorded is not material.
Legal Proceedings
Refer to Note 22, Commitments and Contingencies , in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10‑K.
Recently Issued Accounting Pronouncements
Refer to Note 3, Accounting Standards , in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10‑K for a discussion of recent accounting standards and pronouncements.
Item 7A . Quantitative and Qualitative Disclosures About Market Risk.
Our primary exposure to market risk relates to unfavorable changes in interest rates on our fixed-rate and variable-rate debt. Fluctuations in interest rates impact the fair value of our fixed-rate debt and interest expense on our variable-rate debt. At January 31, 2026, 18% of our debt, on a gross basis, incurred interest at a fixed-rate and the remaining 82% of the debt incurred interest at a variable-rate.
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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 fair value of the fixed rate 2029 Notes will change with changes in market interest rates. Generally, the fair value of the fixed rate 2029 Notes will increase as interest rates fall and decrease as interest rates rise. The following table summarizes the carrying amount and 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 $98.44 and $94.65 as of January 31, 2026 and January 25, 2025, respectively (dollars in thousands):
January 31, 2026
January 25, 2025
Principal amount of 2029 Notes
Less: Debt issuance costs
Net carrying amount of 2029 Notes
January 31, 2026
January 25, 2025
Fair value of principal amount of 2029 Notes
Less: Debt issuance costs
Fair value of 2029 Notes
A hypothetical 50 basis point change in the market interest rates in effect would result in an increase or decrease in the fair value of the 2029 Notes of approximately $7.2 million, calculated on a discounted cash flow basis as of January 31, 2026.
Our Credit Agreement provides borrowings at a variable rate of interest. On January 31, 2026, we had variable rate debt outstanding of $1,540.0 million under our Term Loan A Facility and $800.0 million under our Term Loan B Facility. Interest related to these borrowings fluctuates based on Term SOFR or the Base rate, each, as defined in the Credit Agreement and as described above. At the current level of borrowings, for every 50 basis point change in the interest rate, interest expense associated with such borrowings would correspondingly change by approximately $11.7 million annually.
Item 8 . Financial Statements and Supplementary Data.
Index to Consolidated Financial Statements
Page
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
January 31, 2026
January 25, 2025
ASSETS
Current assets:
Cash and equivalents
Accounts receivable, net (Note 6)
Contract assets
Inventories
Income tax receivable
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Current portion of debt
Contract liabilities
Accrued insurance claims
Operating lease liabilities
Income taxes payable
Other accrued liabilities
Total current liabilities
Long-term debt
Accrued insurance claims - non-current
Operating lease liabilities - non-current
Deferred tax liabilities, net - non-current
Other liabilities
Total liabilities
COMMITMENTS AND CONTINGENCIES (Note 22)
Stockholders’ equity:
Preferred stock, par value $ 1.00 per share: 1,000,000 shares authorized: no shares issued and outstanding
Common stock, par value $ 0.33 1/3 per share: 150,000,000 shares authorized: 29,969,648 and 28,978,949 issued and outstanding, respectively
Additional paid-in capital
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
See notes to the consolidated financial statements.
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Contract revenues
Costs of earned revenues, excluding depreciation and amortization
General and administrative
Depreciation and amortization
Total
Interest expense, net
Loss on debt extinguishment
Other income, net
Income before income taxes
Provision for income taxes
Net income
Earnings per common share:
Basic earnings per common share
Diluted earnings per common share
Shares used in computing earnings per common share:
Basic
Diluted
See notes to the consolidated financial statements.
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Net income
Foreign currency translation gains, net of tax
Disposal of foreign entity
Comprehensive income
See notes to the consolidated financial statements.
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY
(Dollars in thousands)
Common Stock
Additional
Paid-in Capital
Accumulated Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
Equity
Shares
Amount
Balances as of January 28, 2023
Stock options exercised
Stock-based compensation
Issuance of restricted stock, net of tax withholdings
Repurchase of common stock, including applicable excise tax
Other comprehensive income
Net income
Balances as of January 27, 2024
Stock options exercised
Stock-based compensation
Issuance of restricted stock, net of tax withholdings
Repurchase of common stock, including applicable excise tax
Disposal of foreign entity
Net income
Balances as of January 25, 2025
Stock options exercised
Stock-based compensation
Issuance of restricted stock, net of tax withholdings
Shares issued in connection with acquisition
Repurchase of common stock, including applicable excise tax
Net income
Balances as of January 31, 2026
See notes to the consolidated financial statements.
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Non-cash lease expense
Deferred income tax provision (benefit)
Stock-based compensation
Provision for (recovery of) bad debt, net
Gain on sale of fixed assets
Loss on debt extinguishment
Amortization of debt issuance costs and other
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable, net
Contract assets/liabilities, net
Other current assets and inventories
Other assets
Income taxes receivable/payable
Accounts payable
Accrued liabilities, insurance claims, operating lease liabilities, and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from sale of assets
Cash paid for acquisitions, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from borrowings on senior credit agreement, including term loans
Principal payments on senior credit agreement, including term loans
Debt issuance costs
Repurchase of common stock
Proceeds from borrowings on senior secured bridge loan
Principal payments on senior secured bridge loan
Exercise of stock options
Restricted stock tax withholdings
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DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Dollars in thousands)
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period (Note 8)
Cash, cash equivalents and restricted cash at end of period (Note 8)
Supplemental disclosure of other cash flow activities and non-cash investing and financing activities:
Cash paid for interest
Cash paid for taxes, net
Purchases of capital assets included in accounts payable or other accrued liabilities at period end
Deferred financing costs included in accounts payable or other accrued liabilities at period end
Supplemental disclosure of non-cash information:
Common stock issued for acquisitions
See notes to the consolidated financial statements.
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NOTES TO THE 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 provid e 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 2026 consisted of 53 weeks while fiscal 2025 and fiscal 2024 each consisted of 52 weeks of operations.
The accompanying 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”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments considered necessary for a fair presentation of such statements have been included. This includes all normal and recurring adjustments and elimination of intercompany accounts and transactions.
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, 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 21, Segment Reporting, for additional information.
2. Significant Accounting Policies and Estimates
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 consolidated financial statements and accompanying notes. These key estimates include: the recognition of revenue under the cost-to-cost method of progress, accrued insurance claims, the allowance for credit losses, accruals for contingencies, stock-based compensation expense for performance-based stock awards, the fair value of reporting units for the goodwill impairment analysis, the assessment of impairment of intangibles and other long-lived assets, the purchase price allocations of businesses acquired, and income taxes. 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.
Revenue Recognition. We perform a significant amount of our services under master service agreements and other contracts that contain customer-specified service requirements. These agreements include discrete pricing for individual tasks including, for example, the placement of underground or aerial fiber, directional boring, and fiber splicing, each based on a specific unit of measure. A contractual agreement exists when each party involved approves and commits to the agreement, the rights of the parties and payment terms are identified, the agreement has commercial substance, and collectability of consideration is probable. Our services are performed for the sole benefit of our customers, whereby the assets being created or maintained are controlled by the customer and the services we perform do not have alternative benefits for us. Contract revenue is recognized over time as services are performed and customers simultaneously receive and consume the benefits we provide. Output measures, such as units delivered, are utilized to assess progress against specific contractual performance obligations for
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the majority of our services. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. For us, the output method using units delivered best represents the measure of progress against the performance obligations incorporated within the contractual agreements. This method captures the amount of units delivered pursuant to contracts and is used only when our performance does not produce significant amounts of work in process prior to complete satisfaction of the performance obligation. For a portion of contract items, units to be completed consist of multiple tasks. For these items, the transaction price is allocated to each task based on relative standalone measurements, such as selling prices for similar tasks, or in the alternative, the cost to perform the tasks. Contract revenue is recognized as the tasks are completed as a measurement of progress in the satisfaction of the corresponding performance obligation.
For certain contracts, representing less than 5 % of contract revenues during fiscal 2026, fiscal 2025, and fiscal 2024, we use the cost-to-cost measure of progress. These contracts are generally projects that are completed over a period 12 months or less and for which payment may be received based on project milestones or in a lump sum at the end of the project. Under the cost-to-cost measure of progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs. Contract costs include direct labor, direct materials, and subcontractor costs, as well as an allocation of indirect costs. Contract revenues are recorded as costs are incurred.
We accrue the entire amount of a contract loss, if any, at the time the loss is determined to be probable and can be reasonably estimated. There were no material amounts of unapproved change orders or claims recognized during fiscal 2026, fiscal 2025, and fiscal 2024.
Accounts Receivable, net. We grant credit to our customers, generally without collateral, under normal payment terms (typically 30 to 90 days after invoicing). Generally, invoicing occurs within 45 days after the related services are performed. Accounts receivable represents an unconditional right to consideration arising from our performance under contracts with customers. Accounts receivable include billed accounts receivable, unbilled accounts receivable, and retainage. The carrying value of such receivables, net of the allowance for credit losses, represents their estimated realizable value. Unbilled accounts receivable represent amounts we have an unconditional right to receive payment for that will be billed at a later date due to administrative requirements in the billing processes specified by our customers. Certain of our contracts contain retainage provisions whereby a portion of the revenue earned is withheld from payment as a form of security until contractual provisions are satisfied. The collectability of retainage is included in our overall assessment of the collectability of accounts receivable. We expect to collect the outstanding balance of current accounts receivable, net (including trade accounts receivable, unbilled accounts receivable, and retainage) within the next 12 months. We estimate our allowance for credit losses by evaluating specific accounts receivable balances based on historical collection trends, the age of outstanding receivables, and the credit worthiness of our customers.
We participate in a customer-sponsored vendor payment program for one of our customers. All 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 of the customer. 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 reflected as an expense component in other income, net, in the consolidated statements of operations.
Contract Assets. Contract assets include unbilled amounts typically resulting from arrangements whereby complete satisfaction of a performance obligation and the right to payment are conditioned on completing additional tasks or services.
Contract Liabilities. Contract liabilities consist of amounts invoiced to customers in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period. As of January 31, 2026 and January 25, 2025, the contract liabilities balance is classified as current based on the timing of when we expect to complete the tasks required for the recognition of revenu e and contract completion.
Cash and Equivalents. Cash and equivalents primarily include balances on deposit in banks. We maintain our cash and equivalents at financial institutions we believe to be of high credit quality. To date, we have not experienced any loss or lack of access to cash in our operating accounts.
Inventories. Inventories consist of materials and supplies used in the ordinary course of business and are carried at the lower of cost (using the first-in, first-out method) or net realizable value. Inventories also include certain job specific materials that are valued using the specific identification method. For contracts where we are required to supply part or all of the materials on behalf of a customer, the loss of a customer or declines in contract volumes could result in an impairment of the value of materials purchased.
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Property and Equipment. Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives (see Note 9, Property and Equipment , for the range of useful lives). Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the asset or the remaining lease term. Maintenance and repairs are expensed as incurred and major improvements are capitalized. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in other income. Capitalized software consists primarily of costs to purchase and develop internal-use software and is amortized over its useful life as a component of depreciation expense. Property and equipment includes internally developed capitalized computer software at net book value of $ 12.7 million and $ 14.3 million as of January 31, 2026 and January 25, 2025, respectively.
Leases. Our leases are accounted for as operating leases, with lease expense recognized on a straight-line basis over the lease term. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. For leases with initial terms greater than 12 months, we record operating lease right-of-use assets and corresponding operating lease liabilities. Operating lease right-of-use assets represent our right to use the underlying asset for the lease term and operating lease liabilities represent our obligation to make the related lease payments. These assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet.
Goodwill and Intangible Assets. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment as of the first day of the fourth fiscal quarter of each year, or more frequently if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. We perform our annual impairment review of goodwill at the reporting unit level. Each of our operating segments with goodwill represents a reporting unit for the purpose of assessing impairment. If we determine the fair value of the reporting unit’s goodwill or other indefinite-lived intangible assets is less than their carrying value as a result of an annual or interim test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during the period incurred.
We review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicate that the carrying amount of such assets may not be fully recoverable. Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset and its eventual disposition. If an asset is not recoverable, an impairment loss is measured by comparing the fair value of the asset to its carrying value. If we determine the fair value of an asset is less than the carrying value, an impairment loss is recognized in operating income or loss in the consolidated statements of operations during the period incurred.
We use judgment in assessing whether goodwill and intangible assets are impaired. Estimates of fair value are based on our projection of revenues, operating costs, and cash flows taking into consideration historical and anticipated future results, general economic and market conditions, as well as the impact of planned business or operational strategies. We determine the fair value of our reporting units using a weighing of fair values derived in equal proportions from the income approach and market approach valuation methodologies. The income approach uses the discounted cash flow method and the market approach uses the guideline company method. Changes in our judgments and projections could result in significantly different estimates of fair value, potentially resulting in impairments of goodwill and other intangible assets. The inputs used for fair value measurements of the reporting units and other related indefinite-lived intangible assets are the lowest level (Level 3) inputs. See Note 10, Goodwill and Intangible Assets , for additional information regarding our annual assessment of goodwill and other indefinite-lived intangible assets.
Implementation Costs – Cloud Computing Arrangements. In accordance with ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Internal-Use Software, to the extent costs incurred in a cloud computing arrangement are capitalizable, the corresponding costs are recorded in other assets and the related amortization is included in general and administrative expense in the consolidated statements of operations. The amount of capitalized cloud computing implementation costs included in other non-current assets was $ 61.7 million and $ 29.8 million as of January 31, 2026 and January 25, 2025, respectively. The amortization of capitalized implementation costs related to cloud computing arrangements was $ 2.4 million and $ 1.7 million during fiscal 2026 and fiscal 2025.
Long-Lived Tangible Assets. We review long-lived tangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of an asset group and its eventual disposition. Measurement of an impairment loss is based on the fair value of the asset compared to its carrying value. Long-lived tangible assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell.
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Accrued Insurance Claims. For claims within our insurance program, we retain the risk of loss, up to certain limits, for matters related to automobile liability, general liability (including damages associated with underground facility locating services), workers’ compensation, and employee group health. Additionally, within our aggregate coverage limits and above our base layer of third-party insurance coverage, we have retained the risk of loss at certain levels of exposure. 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. We have established reserves that we believe to be adequate based on current evaluations and our experience with these types of claims. A liability for unpaid claims and the associated claim expenses, including incurred but not reported losses, is determined with the assistance of an actuary and reflected in the consolidated financial statements as accrued insurance . The effect on our financial statements is generally limited to the amount needed to our insurance deductibles or retentions.
We estimate the liability for claims based on facts, circumstances, and historical experience. Even though they will not be paid until sometime in the future, recorded loss reserves are not discounted. Factors affecting the determination of the expected cost for existing and incurred but not reported claims include, but are not limited to, the magnitude and quantity of future claims, the payment pattern of claims which have been incurred, changes in the medical condition of claimants, and other factors such as inflation, tort reform or other legislative changes, unfavorable jury decisions and court interpretations.
Income Taxes. We account for income taxes under the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Measurement of our tax position is based on the applicable statutes, federal and state case law, and our interpretations of tax regulations. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income during the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all relevant factors, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we determine that we would be able to realize deferred income tax assets in excess of their net recorded amount, we would adjust the valuation allowance, which would reduce the provision for income taxes.
We recognize tax benefits in the amount that we deem, more likely than not, will be realized upon ultimate settlement of any tax uncertainty. Tax positions that fail to qualify for recognition are recognized during the period in which the more-likely-than-not standard has been reached, when the tax positions are resolved with the respective taxing authority or when the statute of limitations for tax examination has expired. We recognize applicable interest related to tax amounts in interest expense and penalties within general and administrative expenses.
We believe our provision for income taxes is adequate; however, any assessment would affect our results of operations and cash flows. With few exceptions, we are no longer subject to U.S. federal, state and local, or Canadian income tax examinations for fiscal years ended 2018 and prior.
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), convertible senior notes, and warrants 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.
Stock-Based Compensation. We have stock-based compensation plans under which we grant stock-based awards, including 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. The resulting compensation expense is recognized on a straight-line basis over the vesting period, net of actual forfeitures, and is included in general and administrative expenses in the consolidated statements of operations. This expense fluctuates over time as a result of the vesting periods of the stock-based awards and, for our Performance RSUs, the expected achievement of performance measures.
Compensation expense for stock-based awards is based on fair value at the measurement date. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. This valuation is affected by our stock price as well as other inputs, including the expected common stock price volatility over the expected life of the options, the expected term of the stock option, risk-free interest rates, and expected dividends, if any. Stock options vest ratably over a four-year period and are exercisable over a period of up to ten years . The fair value of RSUs and Performance RSUs is estimated on
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the date of grant and is equal to the closing market price per share of our common stock on that date. RSUs generally vest ratably over a three-year period starting in fiscal 2026 and prior grants vested ratably over a four-year period. Performance RSUs vest ratably over a three-year period, if certain performance measures are achieved. Each RSU and Performance RSU is settled in one share of the Company’s common stock upon vesting.
For Performance RSUs, we evaluate compensation expense quarterly and recognize expense only if we determine it is probable that the performance measures for the awards will be met. The performance measures for target awards are based on our operating earnings (adjusted for certain amounts) as a percentage of contract revenues and our operating cash flow level (adjusted for certain amounts) for the applicable four-quarter performance period. Additionally, certain awards include three-year performance measures that are more difficult to achieve than those required to earn target awards and, if met, result in supplemental shares awarded. The performance measures for supplemental awards are based on three-year cumulative operating earnings (adjusted for certain amounts) as a percentage of contract revenues and three-year cumulative operating cash flow level (adjusted for certain amounts). In a period we determine it is no longer probable that we will achieve certain performance measures for the awards, we reverse the stock-based compensation expense that we had previously recognized and associated with the portion of Performance RSUs that are no longer expected to vest. The amount of the expense ultimately recognized depends on the number of awards that actually vest. Accordingly, stock-based compensation expense may vary from period to period. For additional information on our stock-based compensation plans, stock options, RSUs, and Performance RSUs, see Note 19, Stock-Based Awards .
Contingencies and Litigation. In the ordinary course of our business, we are involved in certain legal proceedings and other claims, including claims for indemnification by our customers. In determining whether a loss should be accrued, we evaluate, among other factors, the probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. If only a range of probable loss can be determined, we accrue for our best estimate within the range for the contingency. In those cases where none of the estimates within the range is better than another, we accrue for the amount representing the low end of the range. As additional information becomes available, we reassess the potential liability related to our pending litigation and other contingencies and revise our estimates as applicable. Revisions of our estimates of the potential liability could materially impact our results of operations. Additionally, if the final outcome of such and contingencies differs from that currently expected, it would result in a charge to operating results when determined.
Business Combinations. We account for business combinations under the acquisition method of accounting. The purchase price of each business acquired is allocated to the tangible and intangible assets acquired and the liabilities assumed based on information regarding their respective fair values on the date of acquisition. Any excess of the purchase price over the fair value of the separately identifiable assets acquired and the liabilities assumed is allocated to goodwill. We determines the fair values used in purchase price allocations for intangible assets based on historical data, estimated discounted future cash flows, expected royalty rates for trademarks and trade names, as well as certain other information. The valuation of assets acquired and liabilities assumed requires a number of judgments and is subject to revision as additional information about the fair value of assets and liabilities becomes available. Additional information, which existed as of the acquisition date but unknown to us at that time, may become known during the remainder of the measurement period. This measurement period may not exceed 12 months from the acquisition date. We will recognize any adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined. Additionally, in the same period in which adjustments are recognized, we will record the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting adjustment had been completed at the acquisition date. Acquisition costs are expensed as incurred. The results of operations of businesses acquired are included in the consolidated financial statements from their dates of acquisition.
Fair Value of Financial Instruments. Our financial instruments primarily consist of cash and equivalents, restricted cash, accounts receivable, income taxes receivable and payable, accounts payable, certain accrued expenses, and long-term debt. The carrying amounts of these items approximate fair value due to their short maturity, except for the fair value of our long-term debt, which is based on observable market-based inputs (Level 2). See Note 14, Debt , for further information regarding the fair value of such financial instruments. Our cash and equivalents are based on quoted market prices in active markets for identical assets (Level 1) as of January 31, 2026 and January 25, 2025. During fiscal 2026, fiscal 2025, and fiscal 2024 we had no material nonrecurring fair value measurements of assets or liabilities subsequent to their initial recognition.
Taxes Collected from Customers. ASC Topic 606, Taxes Collected from Customers and Remitted to Governmental Authorities, addresses the income statement presentation of any taxes collected from customers and remitted to a government authority and provides that the presentation of taxes on either a gross basis or a net basis is an accounting policy decision that should be disclosed. Our policy is to present contract revenues net of sales taxes.
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Reclassification . Certain prior year amounts in Note 13, Other Accrued Liabilities, have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the total reported amount of other accrued liabilities or on the reported results of operations.
3. Accounting Standards
Recently Adopted Accounting Standards
Income Taxes: Improvements to Income Tax Disclosures . In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires entities to disclose disaggregated information about their effective tax rate reconciliation, as well as expanded information on income taxes paid by jurisdiction. We adopted the provisions of ASU 2023-09 in the fourth quarter of fiscal 2026, on a prospective basis, which resulted in incremental disclosure in the notes to our consolidated financial statements. See Note 15, Income Taxes . The adoption of the provisions of ASU 2023-09 did not impact our financial position or results of operations.
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.
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to Dycom’s financial position, results of operations or cash flows.
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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):
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Net income available to common stockholders (numerator)
Weighted-average number of common shares (denominator)
Basic earnings per common share
Weighted-average number of common shares
Potential shares of common stock arising from stock options and unvested restricted share units
Total shares-diluted (denominator)
Diluted earnings per common share
Anti-dilutive weighted shares excluded from the calculation of earnings per common share
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 i n 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 is 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. Total consideration was $ 1,995.9 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 21, Segment Reporting .
Fiscal 2025. During the third quarter of fiscal 2025, we acquired certain assets and assumed certain liabilities of a telecommunications construction contractor for a cash purchase price of $ 150.7 million. The acquired business provides wireless construction services for telecommunications providers in various states. This acquisition expands our geographic presence within our existing customer base.
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During the second quarter of fiscal 2025, we acquired a telecommunications construction contractor for a total purchase price of $ 24.5 million ($ 20.4 million purchase price plus cash acquired of $ 4.1 million). The acquired company is located in the northwestern United States and provides construction and maintenance services to telecommunications providers, with the majority of its revenues generated in Alaska. This acquisition expands our geographic presence and our customer base.
During the first quarter of fiscal 2025, we acquired a telecommunications construction contractor for $ 16.0 million ($ 12.8 million purchase price, plus cash acquired of $ 3.2 million). The acquired company provides construction and maintenance services for telecommunications providers in the midwestern United States. This acquisition expands our geographic presence within our existing customer base.
Fiscal 2024. During August 2023, we acquired Bigham Cable Construction, Inc. (“Bigham”), for $ 131.2 million ($ 127.0 million fixed purchase price, plus cash acquired of $ 8.3 million, less indebtedness of $ 4.1 million). Bigham provides construction and maintenance services for telecommunications providers in the southeastern United States. This acquisition expands our geographic presence within our existing customer base.
Purchase Price Allocations
The purchase price allocation of the company acquired in fiscal 2026 is preliminary and will be completed when valuations for intangible assets and other amounts are finalized within the 12-month measurement period from the respective date of acquisition.
The following table summarizes the aggregate consideration paid and the estimated fair value of assets acquired and liabilities assumed for each of the acquisitions described above as of the respective acquisition dates (dollars in millions):
Fiscal 2026
Fiscal 2025
Fiscal 2024
Assets
Cash and equivalents
Accounts receivable
Contract assets
Inventories
Other current assets
Property and equipment
Goodwill
Intangible assets
Other assets
Total assets
Liabilities
Accounts payable
Contract liabilities
Other accrued liabilities
Income taxes payable
Other liabilities
Total liabilities
Net Assets Acquired
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The excess purchase price over the estimated fair value of the net assets acquired was recognized as goodwill. Goodwill and intangible assets total $ 1,885.8 million, $ 163.1 million, and $ 81.4 million for the 2026 acquisition, 2025 acquisitions, and 2024 acquisition, respectively, 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 inventories and 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 in fiscal 2026
Intangible Assets Acquired in fiscal 2025
Intangible Assets Acquired in fiscal 2024
Customer relationships
Backlog intangibles
Trade names
Total intangible assets acquired
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 businesses acquired are included in the condensed consolidated financial statements from the date of acquisition. The results from the businesses acquired in fiscal 2025 and fiscal 2024 were not considered material to the Company’s condensed consolidated financial statements. The business acquired in fiscal 2026 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 21, Segment Reporting .
The pro forma results for the acquisitions completed during fiscal 2025 and 2024 have been excluded as their impact was not material to the Company’s consolidated financial statements. The following unaudited supplemental pro forma results of operations for the Company, which incorporate the acquisition completed in fiscal 2026, 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).
Fiscal Year Ended
January 31, 2026
January 25, 2025
Contract revenues
Net income (1)
(1) The pro forma combined results of operations for the fiscal year ended January 31, 2026 include one-time acquisition-related expenses of $ 41.0 million ($ 30.3 million net of tax) for pre-acquisition transaction costs incurred by Power Solutions and acquisition costs of $ 18.8 million ($ 14.0 million, net of tax) incurred by Dycom in connection with the acquisition. In addition, fiscal 2026 included 53 weeks of operations, whereas fiscal 2025 included 52 weeks.
The pro forma combined results of operations for the fiscal years ended January 31, 2026 and January 25, 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 January 28, 2024. 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.
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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. See Note 2, Significant Accounting Policies and Estimates , for further information on our policies related to these balance sheet accounts, as well as our revenue recognition policies.
Accounts Receivable
Accounts receivable, net, classified as current, consisted of the following (dollars in thousands):
January 31, 2026
January 25, 2025
Trade accounts receivable
Unbilled accounts receivable
Retainage
Total
Less: allowance for credit losses
Accounts receivable, net
We maintain an allowance for estimated losses on uncollected balances. The allowance for credit losses changed as follows (dollars in thousands):
January 31, 2026
January 25, 2025
Allowance for credit losses at beginning of period
Provision for (recovery of) bad debt
Amounts charged against the allowance
Allowance for credit losses at end of period
Contract Assets and Contract Liabilities
Net contract liabilities consisted of the following (dollars in thousands):
January 31, 2026
January 25, 2025
Contract assets
Contract liabilities
Contract assets (liabilities), net
The change in contract assets (liabilities), net, in fiscal 2026 from fiscal 2025 primarily resulted from increased services performed, net of billings, under contracts consisting of multiple tasks and the addition of balances from acquired companies. During fiscal 2026, we performed services and recognized $ 41.2 million of contract revenues related to contract liabilities that existed at January 25, 2025.
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Customer Credit Concentration
Customers whose combined amounts of accounts receivable and contract assets (liabilities), net exceeded 10% of total combined accounts receivable and contract assets (liabilities), net as of January 31, 2026 or January 25, 2025 were as follows (dollars in millions):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Amount
% of Total
Amount
% of Total
Lumen Technologies (1)
Charter Communications
Verizon Communications (2)
(1) On February 2, 2026, AT&T Inc. completed its acquisition of substantially all of the mass markets fiber business from Lumen Technologies Inc. Since this transaction occurred subsequent to fiscal 2026, we have continued to report amounts for the mass markets fiber business under 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.
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 (liabilities), net, as of January 31, 2026 or January 25, 2025.
7. Other Current Assets and Other Assets
Other current assets consisted of the following (dollars in thousands):
January 31, 2026
January 25, 2025
Prepaid expenses
Deposits and other current assets
Restricted cash
Receivables on equipment sales
Other current assets
Other assets consisted of the following (dollars in thousands):
January 31, 2026
January 25, 2025
Capitalized cloud computing implementation costs
Deferred financing costs
Insurance recoveries/receivables for accrued insurance claims
Restricted cash
Other non-current assets
Other assets
Amortization of capitalized cloud computing implementation costs that are included in general and administrative expense was $ 2.4 million and $ 1.7 million for the fiscal years ended January 31, 2026 and January 25, 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, cash equivalents and restricted cash reported in the consolidated statement of cash flows consisted of the following (dollars in thousands):
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January 31, 2026
January 25, 2025
Cash and equivalents
Restricted cash included in:
Other current assets
Other assets (long-term)
Cash, cash equivalents and restricted cash
9. Property and Equipment
Property and equipment consisted of the following (dollars in thousands):
Estimated Useful Lives (Years)
January 31, 2026
January 25, 2025
Land
Buildings
Leasehold improvements
Vehicles
Equipment and machinery
Computer hardware and software
Office furniture and equipment
Total
Less: accumulated depreciation
Property and equipment, net
Depreciation expense and repairs and maintenance expense were as follows (dollars in thousands):
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Depreciation expense
Repairs and maintenance expense
10. Goodwill and Intangible Assets
Goodwill
The Company’s goodwill balance was $ 1,443.4 million and $ 330.3 million as of January 31, 2026 and January 25, 2025, respectively. Changes in the carrying amount of goodwill during fiscal 2026 and fiscal 2025 were as follows (dollars in thousands):
Communications
Building Systems
Total
Balance as of January 27, 2024
Goodwill adjustment from fiscal 2024 acquisition
Goodwill from fiscal 2025 acquisition
Balance as of January 25, 2025
Goodwill adjustment from fiscal 2025 acquisitions
Goodwill from fiscal 2026 acquisition
Balance as of January 31, 2026
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The aggregate goodwill balance as of January 31, 2026 and January 25, 2025 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 , relative to the Company as a whole. As a result, the performance of one or more of the reporting units could , resulting in an of goodwill or intangible assets.
We evaluate current operating results, including any losses, in the assessment of goodwill and other intangible assets. The estimates and assumptions used in assessing the fair value of the reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties. Changes in judgments and estimates could result in significantly different estimates of the fair value of the reporting units and could result in impairments of goodwill or intangible assets of the reporting units. In addition, adverse changes to the key valuation assumptions contributing to the fair value of our reporting units could result 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. Goodwill and indefinite lived intangible assets are required to be tested for impairment between annual tests if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value.
We performed our annual impairment assessment for fiscal 2026, fiscal 2025, and fiscal 2024, and concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any of the periods. In each of these periods, qualitative assessments were performed on reporting units that comprise a significant portion of our consolidated goodwill balance. For the Company’s indefinite-lived intangible asset we performed a qualitative assessment for fiscal 2026, fiscal 2025 and fiscal 2024. A qualitative assessment includes evaluating all identified events and circumstances that could affect the significant inputs used to determine the fair value of a reporting unit or indefinite-lived intangible asset for the purpose of determining whether it is more likely than not that these assets are impaired. We consider various factors while performing qualitative assessments, including macroeconomic conditions, industry and market conditions, financial performance of the reporting units, changes in market capitalization, and any other specific reporting unit considerations. These qualitative assessments indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units. For the remaining reporting units, we performed the quantitative analysis described in ASC Topic 350 in each of these periods. When performing the quantitative analysis, we determine the fair value of our reporting units using an equal weighting of fair values derived from the income approach and market approach valuation methodologies. Under the income approach, the key valuation assumptions used in determining the fair value estimates of our reporting units for each annual test were: (a) expected cash flow for a period of seven years based on our estimate of revenue growth rates and projected operating margins; (b) terminal value based upon terminal growth rates; and (c) a discount rate based on the Company’s estimate of the weighted average cost of capital adjusted for certain risks for the reporting units.
The table below outlines certain assumptions used in our annual quantitative impairment analyses for fiscal 2026, fiscal 2025, and fiscal 2024:
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Terminal Growth Rate
Discount Rate
The discount rate reflects risks inherent within each reporting unit operating individually. These risks are greater than the risks inherent in the Company as a whole. Determination of discount rates included consideration of market inputs such as the risk-free rate, equity risk premium, industry premium, and cost of debt, among other assumptions. The discount rate for fiscal 2026 increased compared to the rate used in fiscal 2025. The cost of equity increased as did the weighting for equity which resulted in an increase in the weighted average cost of capital compared to the prior year. We believe the assumptions used in
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the impairment analysis each year are reflective of the risks inherent in the business models of our reporting units and our industry. Under the market approach, the guideline company method develops valuation multiples by comparing our reporting units to similar publicly traded companies. Key valuation assumptions used in determining the fair value estimates of our reporting units rely on: (a) the selection of similar companies and (b) the selection of valuation multiples as they apply to the reporting unit characteristics.
We determined that the fair values of each of the reporting units were in excess of their carrying values in the fiscal 2026 assessment. Management determined that significant changes were not likely in the factors considered to estimate fair value, and analyzed the impact of such changes were they to occur. Specifically, if the discount rate applied in the fiscal 2026 impairment analysis had been 100 basis points higher than estimated for each of the reporting units, and all other assumptions were held constant, the conclusion of the assessment would remain unchanged and there would be no impairment of goodwill. Additionally, if there was a 25 % decrease in the fair value of any of the reporting units due to a decline in their discounted cash flows resulting from lower operating performance, the conclusion of the assessment would remain unchanged for all reporting units. Recent operating performance, along with assumptions for specific customer and industry opportunities, were considered in the key assumptions used during the fiscal 2026 impairment analysis. Management has determined the goodwill of the Company may have an increased likelihood of impairment if a prolonged downturn in customer demand were to occur, or if the reporting units were not to execute customer , and the long-term outlook for their cash flows were impacted. Furthermore, changes in the long-term outlook may result in a change to other valuation assumptions. Factors monitored by management which could result in a change to the reporting units’ estimates include the outcome of customer requests for proposals and subsequent awards, strategies of competitors, labor market conditions and levels of overall economic activity.
The Company determined that there were no events or changes in circumstances for the other reporting units or indefinite lived intangible assets during fiscal 2026 that would indicate a potential reduction in their fair value below their carrying amounts. As of January 31, 2026, the Company continues to believe the remaining goodwill and the indefinite-lived intangible asset are recoverable for all of its reporting units . 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 could be impaired. There can be no assurances that goodwill or the indefinite-lived intangible asset may not be impaired in future periods.
Intangible Assets
Our intangible assets consisted of the following (dollars in thousands):
January 31, 2026
January 25, 2025
Weighted Average Remaining Useful Lives (Years)
Gross Carrying Amount
Accumulated Amortization
Intangible Assets, Net
Gross Carrying Amount
Accumulated Amortization
Intangible Assets, Net
Customer relationships
Trade names, finite
Trade name, indefinite
Contract backlog
Non-compete agreement
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 $ 68.8 million, $ 31.4 million, and $ 19.8 million for fiscal 2026, fiscal 2025, and fiscal 2024, respectively.
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As of January 31, 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
Thereafter
Total
As of January 31, 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 2026, 2025, and 2024, 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 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.
For automobile liability losses during fiscal 2025, 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 and we retained the risk of loss up to $ 1.0 million for general liability losses during fiscal 2025. 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 million, if any.
For automobile liability and general liability losses during fiscal 2024, we retained the risk of loss up to $ 1.0 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 $ 10.0 million risk of loss on a per occurrence basis for losses between $ 5.0 million and $ 15.0 million, if any, and we retained $ 10.0 million risk of loss on a per occurrence basis for losses between $ 30.0 million and $ 40.0 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. In calendar years 2025 and 2024, we retained the risk of loss on an annual basis, up to the first $ 750,000 and $ 700,000 , respectively, of claims per particip ant.
A mounts for total accrued insurance claims and insurance recoveries/receivables are as follows (dollars in thousands):
January 31, 2026
January 25, 2025
Accrued insurance claims - current
Accrued insurance claims - non-current
Accrued insurance claims
Insurance recoveries/receivables:
Non-current (included in Other assets)
Insurance recoveries/receivables
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The liability for total accrued insurance claims included incurred but not reported losses of approximately $ 56.3 million and $ 47.9 million as of January 31, 2026 and January 25, 2025, respectively.
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 fiscal 2026, total insurance recoveries/receivables increased approximately $ 5.2 million primarily as a results 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 consolidated statement of operations for fiscal 2026 and fiscal 2025 (dollars in thousands):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Lease cost under long-term operating leases
Lease cost under short-term operating leases
Variable lease cost under short-term and long-term operating leases (1)
Total lease cost
(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 $ 177.5 million and $ 112.8 million as of January 31, 2026 and January 25, 2025, respectively. Supplemental balance sheet information related to these liabilities is as follows:
January 31, 2026
January 25, 2025
Weighted average remaining lease term
6.0 years
4.6 years
Weighted average discount rate
Supplemental cash flow information related to our long-term operating lease liabilities as of January 31, 2026 and January 25, 2025 is as follows (dollars in thousands):
Fiscal Year Ended
January 31, 2026
January 25, 2025
Cash paid for amounts included in the measurement of lease liabilities
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
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As of January 31, 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
Thereafter
Total lease payments
Less: imputed interest
Total
As of January 31, 2026, the Company had additional operating leases with total lease costs of $ 6.2 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):
January 31, 2026
January 25, 2025
Accrued employee benefit and incentive plan costs
Accrued payroll and related taxes
Accrued construction costs
Other current liabilities
Other accrued liabilities
14. Debt
The following table summarizes the net carrying value of our outstanding indebtedness (dollars in thousands):
January 31, 2026
January 25, 2025
Credit Agreement - Revolving facility (matures December 2030)
Credit Agreement - Term Loan A Facility (matures December 2030)
Credit Agreement - Term Loan B Facility (matures January 2033)
4.50 % senior notes, net (mature April 2029)
Less: current portion
Long-term debt
Credit Agreement
The Company and certain of its subsidiaries are party to a credit agreement (as 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
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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 (dollars in thousands):
January 31, 2026
January 25, 2025
Principal amount of Term Loan A Facility
Less: Debt issuance costs
Net carrying amount of Term Loan A Facility
The following table summarizes the net carrying value of the Term Loan B Facility (dollars in thousands):
January 31, 2026
January 25, 2025
Principal amount of Term Loan B Facility
Less: Debt issuance costs
Less: Original Issue Discount
Net carrying amount of Term Loan B Facility
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 are 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 January 31, 2026 and January 25, 2025 were as follows:
Weighted Average Rate End of Period
January 31, 2026
January 25, 2025
Borrowings - Term A SOFR Loans
1.375 %- 2.00 % plus Term SOFR
Borrowings - Base Rate Loans
0.375 % - 1.00 % plus Base rate (1)
Borrowings - Term B SOFR Loans
1.75 % plus Term SOFR
Unused Revolver Commitment
Standby Letters of Credit
Commercial Letters of Credit
(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 borrowing under our revolving facility as of January 31, 2026 and January 25, 2025.
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Standby letters of credit of approximately $ 53.6 million and $ 47.5 million, issued as part of our insurance program, were outstanding under our Credit Agreement as of January 31, 2026 and January 25, 2025, respectively.
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 January 31, 2026 and January 25, 2025, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under our revolving facility of $ 746.4 million and $ 602.5 million, respectively, 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 (dollars in thousands):
January 31, 2026
January 25, 2025
Principal amount of 2029 Notes
Less: Debt issuance costs
Net carrying amount of 2029 Notes
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 $ 98.44 and $ 94.65 as of January 31, 2026 and January 25, 2025, respectively (dollars in thousands):
January 31, 2026
January 25, 2025
Fair value of principal amount of 2029 Notes
Less: Debt issuance costs
Fair value of 2029 Notes
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15. Income Taxes
Dycom Industries, Inc. operates throughout the United States and had no foreign operations in fiscal 2026. Consequently, all income before income taxes was derived entirely from continuing operations within the United States.
The components of the provision for income taxes were as follows (dollars in thousands):
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Current:
Federal
Foreign
State
Deferred:
Federal
Foreign
State
Provision for income taxes
Our effective income 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.
On July 4, 2025, the U.S. government enacted tax legislation that reinstated 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025 and restored immediate deductibility of domestic research & experimental expenditures. Accordingly, our cash tax requirements were reduced in the current fiscal year compared to the amount that would have been required prior to enactment.
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Statutory rate applied to pre-tax income
State and local income tax, net of federal tax benefit
Changes in unrecognized tax benefits
Non-taxable or non-deductible items
Compensation limitation
Other
Tax credits
Tax credit for research activities
Other
Federal benefit of vesting and exercise of share-based awards (1)
Effect of changes in tax laws or rates enacted in the current period
Changes in valuation allowances
Other items
Provision for income taxes
(1) The Federal benefit of vesting and exercise of share-based awards is included in “Other items” for fiscal 2026 as the impact was below the separate disclosure threshold.
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The majority of the state and local income tax category of approximately $ 14.8 million was incurred in California, Georgia, Florida, Oregon, New York, Virginia, and North Carolina.
Deferred Income Taxes
The deferred tax provision represents the change in the deferred tax assets and the liabilities representing the tax consequences of changes in the amount of temporary differences and changes in tax rates during the year. The significant components of deferred tax assets and liabilities consisted of the following (dollars in thousands):
January 31, 2026
January 25, 2025
Deferred tax assets:
Capitalized research expenditures (IRC Section 174)
Insurance
Leases
Stock-based compensation
Allowance for credit losses accounts and reserves
Net operating loss carryforwards
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Property and equipment
Goodwill and intangibles
Leases
Capitalized costs
Other
Deferred tax liabilities
Net deferred tax liabilities
The valuation allowance above reduces the deferred tax asset balances to the amount that we have determined is more likely than not to be realized. The valuation allowance relates to immaterial tax attributes which are not more-likely-than-not to be realized prior to expiration, based on current objective evidence. Our tax attributes generally begin to expire in fiscal 2027.
Uncertain Tax Positions
As of January 31, 2026 and January 25, 2025, we had total unrecognized tax benefits of $ 18.9 million and $ 21.6 million, respectively, resulting from uncertain tax positions. Our effective tax rate will be reduced by $ 18.9 million during future periods if it is determined these unrecognized tax benefits are realizable. We had approximately $ 5.4 million and $ 5.4 million accrued for the payment of interest and penalties as of January 31, 2026 and January 25, 2025, respectively. Interest related to unrecognized tax benefits for the Company was a negligible benefit for fiscal 2026, an expense of $ 1.7 million for fiscal 2025, and was not material for fiscal 2024.
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A summary of unrecognized tax benefits is as follows (dollars in thousands):
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Balance at beginning of year
Additions based on tax positions related to the fiscal year
Additions based on tax positions related to prior years
Reductions based on tax positions related to prior years
Reductions related to the expiration of statutes of limitation
Balance at end of year
Income Taxes Paid (Net of Refunds Received)
A summary of income taxes paid (net of refunds received) in fiscal 2026 is as follows (dollars in thousands):
Fiscal Year Ended
January 31, 2026
Federal income taxes paid (net of refunds received)
State income taxes paid (net of refunds received)
Total income taxes paid (net of refunds received)
No single state or local jurisdiction accounts for 5% or more of the total income taxes paid (net of refunds received).
16. Other Income, Net
The components of other income, net, were as follows (dollars in thousands):
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Gain on sale of fixed assets
Miscellaneous expense, net
Other income, net
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. Employee Benefit Plans
We sponsor a defined contribution plan that provides retirement benefits to eligible employees who elect to participate (the “Dycom Plan”). Under the plan, participating employees may defer up to 75 % of their base pre-tax eligible compensation up to the IRS limits. From fiscal 2024 through December 31, 2025, we contributed 50 % of the first 6 % of base eligible compensation that a participant contributes to the plan and may make discretionary matching contributions from time to time. Effective January 1, 2026, we increased our contribution to 100 % of the first 3 % of base eligible compensation and 50 % of the next 2 % of base eligible compensation. Our contributions were $ 13.9 million, $ 12.3 million, and $ 10.9 million related to fiscal 2026, fiscal 2025, and fiscal 2024, respectively.
Certain of the Company’s subsidiaries, including Power Solutions, contribute amounts to multiemployer defined benefit pension plans under the terms of collective bargaining agreements (“CBA”) that cover employees represented by unions.
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Contributions are generally based on fixed amounts per hour per employee for employees covered by the plan. Participating in a multiemployer plan entails risks different from single-employer plans in the following aspects:
• assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers;
• if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be allocated to the remaining participating employers; and
• if the Company stops participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan. This payment is referred to as a withdrawal liability.
The information available to us about the multiemployer plans in which we participate is generally dated due to the nature of the reporting cycle of multiemployer plans and legal requirements under the Employee Retirement Income Security Act (“ERISA”) as amended by the Multiemployer Pension Plan Amendments Act. All plans are presented in the aggregate in the following table (dollars in thousands):
Company Contributions
Expiration Date of CBA
Fiscal Year Ended
Fiscal Year Ended
Fiscal Year Ended
Fund
All Plans
Various
The following table lists all multiemployer defined benefit pension plans to which our contributions exceeded $1.0 million and/or represented more than 5% of total plan contributions in fiscal 2026 (in thousands):
Pension Fund
Employee Identification Number
Pension Protection Act of 2006 (PPA) Zone Status
Subject to Financial Improvement/Rehabilitation Plan
Fiscal 2026 Contributions
Surcharge Imposed
CBA Expiration
Date
Electrical Workers Local No. 26 Pension Trust Fund
Green
There were no multiemployer defined benefit pension plans to which our contributions exceeded $1.0 million and/or represented more than 5% of total plan contributions in fiscal 2025 or fiscal 2024,
18. Capital Stock
Repurchases of Common Stock. The Company made the following repurchases during fiscal 2026, fiscal 2025, and fiscal 2024 (all shares repurchased have been cancelled).
Period
Number of Shares Repurchased
Total Consideration
(In thousands)
Average Price Per Share (1)
Fiscal 2026
Fiscal 2025
Fiscal 2024
(1) Average price paid per share excludes 1% excise tax on share repurchases.
On February 26, 2025 the Company announced that its Board of Directors had authorized a new $ 150.0 million program to repurchase shares of the Company’s outstanding common stock through August 25, 2026 in open market or private transactions. During fiscal 2026 we repurchased 200,000 shares of common stock, at an average price of $ 150.93 , for $ 30.2 million. As of January 31, 2026, $ 119.8 million of the authorization remained available for repurchases.
On August 23, 2023, the Company announced that its Board of Directors authorized a $ 150.0 million program to repurchase shares of the Company’s outstanding common stock through February 2025 in open market or private transactions. During fiscal 2025 we repurchased 410,000 shares of common stock, at an average price of $ 160.10 , for $ 65.6 million,
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including 200,000 shares of common stock, at an average price of $ 179.27 , repurchased during the fourth quarter of fiscal 2025 for $ 35.9 million. During fiscal 2024, we repurchased 485,000 shares of our common stock, at an average price of $ 102.39 , for $ 49.7 million.
Restricted Stock Tax Withholdings. During fiscal 2026, fiscal 2025, and fiscal 2024, we withheld 88,949 shares, 117,465 shares, and 103,910 shares, respectively, totaling $ 14.4 million, $ 17.0 million, and $ 9.9 million, respectively, to meet payroll tax withholding obligations arising from the vesting of restricted share units. In addition, during fiscal 2026 and fiscal 2025, we withheld 25,927 shares and 105,825 shares, respectively totaling $ 5.8 million and $ 18.6 million, respectively to meet payroll tax withholding obligations arising from the exercise of stock options. No shares were withheld during fiscal 2024 related to the exercise of stock options. 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. During fiscal 2026, fiscal 2025, and fiscal 2024 $ 12.8 million, $ 10.3 million, and $ 3.9 million, respectively, was charged to retained earnings related to shares cancelled during the fiscal year.
Issuance of Common Stock for Acquisition. In connection with the acquisition of Power Solutions on December 23, 2025, the Company issued 1,011,069 shares of Dycom common stock to the sellers valued at $ 351.0 million, as partial consideration for the purchase. These shares were issued in a private placement exempt from registration under the Securities Act of 1933.
19. Stock-Based Awards
We have outstanding stock-based awards under our 2012 Long-Term Incentive Plan, and 2017 Non-Employee Directors Equity Plan (collectively, the “Plans”). No further awards will be granted under the 2003 Long-Term Incentive Plan or 2007 Non-Employee Directors Equity Plan. As of January 31, 2026, the total number of shares available for grant under the Plans was 539,256 .
In June 2024, the Company announced its CEO succession plan and transition. In connection with this transition, the Company incurred approximately $ 11.4 million of incremental stock-based compensation modification expense through the former CEOs retirement date of November 30, 2024 related to previously issued equity awards.
Stock-based compensation expense and the related tax benefit recognized during fiscal 2026, fiscal 2025, and fiscal 2024 were as follows (dollars in thousands):
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Stock-based compensation
Income tax effect of stock-based compensation
In addition, we realized approximately $ 3.4 million, $ 9.8 million, and $ 2.9 million of net excess tax benefits during fiscal 2026, fiscal 2025, and fiscal 2024, respectively.
As of January 31, 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 $ 0.7 million, $ 34.4 million, and $ 11.7 million, respectively. This expense will be recognized over a weighted-average number of years of 1.8 , 2.1 , and 1.2 , respectively, based on the average remaining service periods for the awards. As of January 31, 2026, we may recognize an additional $ 12.9 million in compensation expense in future periods if the maximum number of Performance RSUs is earned based on certain performance measures being met.
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The following table summarizes the valuation of stock options and restricted share units granted during fiscal 2026, fiscal 2025, and fiscal 2024, and the significant valuation assumptions:
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Weighted average fair value of RSUs granted
Weighted average fair value of Performance RSUs granted
Weighted average fair value of stock options granted (1)
Stock option assumptions:
Risk-free interest rate
Expected life (in years)
Expected volatility
Expected dividends
(1) There were no stock options granted during fiscal 2026.
Stock Options
The following table summarizes stock option award activity during fiscal 2026:
Stock Options
Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life
(In years)
Aggregate Intrinsic Value
(In thousands)
Outstanding as of January 25, 2025
Granted
Options exercised
Cancelled
Outstanding as of January 31, 2026
Exercisable options as of January 31, 2026
The aggregate intrinsic values presented above represent the total pre-tax intrinsic values (the difference between the Company’s closing stock price of $ 364.39 on the last trading day of fiscal 2026 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last trading day of fiscal 2026. The amount of aggregate intrinsic value will change based on the price of the Company’s common stock. The total intrinsic value of stock options exercised was $ 4.9 million, $ 20.9 million, and $ 0.8 million for fiscal 2026, fiscal 2025, and fiscal 2024, respectively. We received cash from the exercise of stock options of $ 3.9 million, $ 10.6 million, and $ 1.1 million during fiscal 2026, fiscal 2025, and fiscal 2024, respectively. During fiscal 2026 and fiscal 2025, we paid $ 5.8 million and $ 18.6 million, respectively, to tax authorities for payroll tax withholding obligations on the exercise of stock options.
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RSUs and Performance RSUs
The following table summarizes RSU and Performance RSU award activity during fiscal 2026:
Restricted Stock
RSUs
Performance RSUs
Share Units
Weighted Average Grant Price
Share Units
Weighted Average Grant Price
Outstanding as of January 25, 2025
Granted
Share units vested
Forfeited or cancelled
Outstanding as of January 31, 2026
The total number of granted Performance RSUs presented above consists of 47,757 target shares and 47,757 supplemental shares. During fiscal 2026, we added 17,287 supplemental shares and cancelled 41,466 supplemental shares of Performance RSUs, as a result of performance criteria for attaining those shares being partially met for the applicable performance periods. Approximately 27,317 supplemental shares outstanding as of January 31, 2026 will be cancelled during the three months ending May 2, 2026 as a result of the fiscal 2026 performance period criteria being partially met. The total amount of Performance RSUs outstanding as of January 31, 2026 consists of 166,610 target shares and 102,793 supplemental shares.
The total fair value of restricted share units vested during fiscal 2026, fiscal 2025, and fiscal 2024 was $ 42.2 million, $ 49.3 million, and $ 29.6 million, respectively.
20. 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 fiscal 2026, fiscal 2025, or fiscal 2024, as well as total contract revenues from all other customers combined, were as follows:
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Amount
% of Total
Amount
% of Total
Amount
% of Total
AT&T Inc. (1)
Lumen Technologies (1)
Verizon Communications Inc. (2)
Comcast Corporation
Total other customers combined
Total contract revenues
(1) On February 2, 2026, AT&T Inc. completed its acquisition of substantially all of the mass markets fiber business from Lumen Technologies Inc. Since this transaction occurred subsequent to fiscal 2026, we have continued to report revenues for the mass markets fiber business under Lumen Technologies Inc.
(2) Includes revenue attributable to Frontier Communications Corporation retrospectively for all periods presented as a result of its acquisition by Verizon Communications, Inc. on January 20, 2026.
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 (liabilities).
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Customer Type
Total contract revenues by customer type during fiscal 2026, fiscal 2025, and fiscal 2024, were as follows (dollars in millions):
Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Amount
% of Total
Amount
% of Total
Amount
% of Total
Communications
Building Systems
Total contract revenues
For additional information on our reportable segments, see Note 21, Segment Reporting .
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.
21. 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.
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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 (income) and senior notes, and loss on debt extinguishment.
Segment financial information during fiscal 2026, fiscal 2025, and fiscal 2024, was as follows (dollars in millions):
Fiscal Year Ended January 31, 2026
Communications
Building Systems
Total
Contract revenues
Costs of earned revenues, excluding depreciation and amortization
Depreciation and amortization
Other segment items (1)
Segment income (loss) before income taxes
Corporate and non-allocated costs (2)
Total consolidated income before income taxes
Fiscal Year Ended January 25, 2025
Communications
Building Systems
Total
Contract revenues
Costs of earned revenues, excluding depreciation and amortization
Depreciation and amortization
Other segment items (1)
Segment income before income taxes
Corporate and non-allocated costs (2)
Total consolidated income before income taxes
Fiscal Year Ended January 27, 2024
Communications
Building Systems
Total
Contract revenues
Costs of earned revenues, excluding depreciation and amortization
Depreciation and amortization
Other segment items (1)
Segment income before income taxes
Corporate and non-allocated costs (2)
Total consolidated income before income taxes
(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.
Fiscal Year Ended
January 31, 2026
January 25, 2025
Total Assets:
Communications
Building Systems
Corporate
Consolidated total assets
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Fiscal Year Ended
January 31, 2026
January 25, 2025
January 27, 2024
Capital Expenditures:
Communications
Building Systems
Corporate
Consolidated capital expenditures:
22. Commitments and Contingencies
From time to time, we are party to other 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 January 31, 2026 and January 25, 2025, we had $ 917.9 million and $ 413.5 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 January 31, 2026 and January 25, 2025, we had $ 31.0 million of outstanding surety bonds related to our insurance obligations. Additionally, the Company periodically guarantees certain obligations of its 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 January 31, 2026 and January 25, 2025, we had $ 53.6 million and $ 47.5 million, respectively, of outstanding standby letters of credit issued under our credit agreement.
23. 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 year ended January 31, 2026 (dollars in millions):
Fiscal Year Ended
January 31, 2026
Confirmed obligations outstanding at the beginning of the year
Invoices received
Invoices paid
Confirmed obligations outstanding at the end of the year
There were no supplier financing obligations for the year ended January 25, 2025.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Dycom Industries, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Dycom Industries, Inc. and its subsidiaries (the “Company”) as of January 31, 2026 and January 25, 2025, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended January 31, 2026, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and January 25, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Power Solutions, LLC from its assessment of internal control over financial reporting as of January 31, 2026, because it was acquired by the Company in a purchase business combination during fiscal 2026. We have also excluded Power Solutions, LLC from our audit of internal control over financial reporting. Power Solutions, LLC is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 6.7% and 1.7%, respectively, of the related consolidated financial statement amounts as of and for the year ended January 31, 2026.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
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company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition
As described in Notes 2 and 20 to the consolidated financial statements, the Company’s total contract revenue was $5.5 billion for the year ended January 31, 2026. The Company performs a significant amount of its services under master service agreements and other contracts that contain customer-specified service requirements. Contract revenue is recognized over time as the Company’s services are performed and customers simultaneously receive and consume the benefits provided. Output measures, such as units delivered, are utilized to assess progress against specific contractual performance obligations for the majority of the Company’s master service agreements and other contracts. The output method captures the amount of units delivered pursuant to master service agreements and other contracts and is used only when the Company’s performance does not produce significant amounts of work in process prior to complete satisfaction of the performance obligation. For certain contracts, the Company uses the cost-to-cost measure of progress, under which the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs. Contract costs include direct labor, direct materials, and subcontractor costs, as well as an allocation of indirect costs. Contract revenues are recorded as costs are incurred. The Company accrues the entire amount of a contract , if any, at the time the is determined to be probable and can be reasonably estimated.
The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recording of revenue once the customer simultaneously receives and consumes the benefits. These procedures also included, among others, (i) testing revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as signed master service agreements and other contracts, records of units delivered and work performed, invoices, and payment receipts and (ii) testing a sample of outstanding customer invoice balances as of January 31, 2026 by obtaining and inspecting source documents, such as signed master service agreements and other contracts, records of units delivered and work performed, and payment receipts subsequent to January 31, 2026.
Acquisition of Power Solutions, LLC - Valuation of Customer Relationships
As described in Note 5 to the consolidated financial statements, during the fourth quarter of fiscal 2026, the Company acquired Power Solutions for approximately $2 billion, which resulted in the recognition of $775 million of intangible assets, including $580 million of customer relationships. The fair value of the customer relationships was estimated using the multi-period excess earnings method. Significant judgments and assumptions included projected revenue growth rates, profit margins, discount rate, and customer attrition rates.
The principal considerations for our determination that performing procedures relating to the valuation of customer relationships acquired in the acquisition of Power Solutions is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected revenue growth rates, profit margins, discount rate, and customer attrition rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
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acquisition accounting, including controls over management’s valuation of the customer relationships acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the customer relationships acquired; (iii) evaluating the appropriateness of the multi-period excess earnings method used by management; (iv) testing the completeness and accuracy of the underlying data used by management in the multi-period excess earnings method; and (v) evaluating the reasonableness of the significant assumptions used by management related to projected revenue growth rates, profit margins, discount rate, and customer attrition rates. Evaluating management’s assumptions related to projected revenue growth rates and profit margins involved considering (i) Power Solutions’ historical performance; (ii) the consistency with economic and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the significant assumptions related to the discount rate and customer attrition rates.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
March 9, 2026
We have served as the Company’s auditor since 2014.
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