Dycom Industries, Inc. Price & Performance (DY)

A detailed discussion of these risks and uncertainties is included in our filings with the SEC. Forward looking statements are made as of today's date and we undertake no obligation to update them. Additionally, we will reference certain non GAAP financial measures during today's call. Explanations of these measures and reconciliations to the most directly comparable GAAP measures can be found in our press release and accompanying materials. With that, I will turn the call over to Dan Payovich.

Dan? Thanks, Kelly, and good morning, everyone. Overall, I'm pleased with our performance in fiscal twenty twenty five. Delivered another solid year of growth and continued to focus on creating long term shareholder value. I'll give a brief overview of our Q4 and fiscal twenty twenty five results and Drew will provide more color on our performance. We closed the year with a strong fourth quarter, generating revenues of $1,085,000,000 and adjusted EBITDA of $116,400,000 or 10.7% of revenue.

We accomplished this against the backdrop of unforeseen weather challenges across the country demonstrating the breadth and durability of our business. Our fourth quarter results punctuated another year of profitable growth for the company. With fiscal twenty twenty five revenues of $4,702,000,000 and an adjusted EBITDA margin of 12.3%. Over the past three years, we have increased our revenues by 50% and expanded our EBITDA margin by approximately four fifty basis points. In that same time period, we've further diversified our customer base shifting our top five customers to 55% of revenue in fiscal twenty twenty five from 66% in fiscal twenty twenty two. Backlog at the end of the fiscal year was $7,800,000,000 with $4,600,000,000 expected to be completed over the next twelve months. Finally, we remain committed to a balanced approach to capital allocation. Prioritizing organic growth, augmented by M and A and share repurchases. In fiscal twenty twenty five, we completed three acquisitions and repurchased 410,000 shares of our common stock. Including 200,000 shares during the fourth quarter. Looking ahead, We believe Dicom remains uniquely positioned to capitalize on the significant tailwinds we see driving the industry. As I said before, our strategy remains consistent. We've always sought to differentiate ourselves through our comprehensive footprint, and by offering the highest level of service to our customers and communities.

In every state and across markets, whether rural, We have relationships and understand the municipalities and the challenges at every stage of a project. And we're interfacing with customers on forward planning. Advising on how they can get the highest throughput and how we can best augment their businesses so we can optimize value. Have high aspirations and with projects becoming increasingly more complex, our proven capabilities and unmatched footprint position us with the scale and expertise to partner with them support their digital infrastructure needs. Let me take a minute now to walk through some of the opportunities that we believe we are well positioned to realize that will drive our performance going forward. First, Our customers continue to execute against their fiber to the home programs and in calendar 2024 collectively added more than 35,000,000 incremental passings to their plans, in addition to their already robust fiber to the home builds. In several of our customers' most recent earnings calls, they reiterated their commitment to their fiber to the home plans and some mentioned opportunities for increased velocity of builds while others again increased total expected passings. We believe fiber to the home will continue to be a significant growth driver for our business in fiscal twenty twenty six.

Turning to Q4 twenty twenty five, were awarded new markets for Verizon, and also extended several existing agreements. These awards combine both maintenance and fiber to the home we appreciate our partnership with Verizon and their confidence in our ability to deliver as they increase their programs in calendar 2025. Second, the intensity around new inter and intra city high capacity, private, secure, redundant fiber infrastructure for hyperscalers continues. Our previously announced Lumin Award related to the long haul over pole work commenced in the fourth quarter and has begun ramp ramping in Q1. In addition, customer dialogue around AI digital infrastructure needs remains robust. Two ISPs recently announced their intent to build a total of more than 5,100 long haul fiber route miles across The U. S. To meet the growing demands of AI workloads, connect key data center locations and provide a diverse path to other long haul routes. During Q4 twenty twenty five, we were awarded various long haul route segments by our customers. These deployments will begin in calendar 2025. We maintain our belief that the most significant revenue opportunities for the long haul market will occur in calendar 2026 and beyond. While the market remains competitive, the addressable opportunity is large and we will continue to be disciplined and deliberate in how we evaluate projects, ensuring that our work is priced properly to deliver sustainable profitable growth.

This market continues to expand as all the hyperscalers recently reaffirmed their commitment to capital expenditures for AI related data centers and digital infrastructure with several announcing increased levels of CapEx in calendar twenty twenty five. Third, state and federal programs are making progress against their goal to provide broadband to the rural areas of our country. It remains a bipartisan goal to bridge the country's digital divide to despite the present uncertainty related to the Bead program. Separate from bead, there continues to be substantial activity at the state level with over $1,000,000,000 awarded across nine states for broadband infrastructure during the fourth quarter. Many states continue to work for both rural fiber to the home and middle mile programs. We believe these state and federal programs present a significant opportunity for DICOM. Lastly, we continue to add backlog to our service and maintenance work in highlight the importance of these programs as part of our core offerings to our customers. In addition, our AT and T Wireless activity is ramping to the equipment replacement program in the pace continues to meet our expectations. Outlook for fiscal twenty twenty six We have demonstrated our ability to grow both organically and through acquisition and are confident in our strategy to continue that growth this year.

To give you additional perspective, we are providing a full year revenue outlook for fiscal twenty twenty six to provide insight into the opportunities we see for DICOM across our space and how we are positioned to capitalize on them. We expect fiscal twenty twenty six total revenue to increase 10% to 13% over fiscal twenty twenty five. This expectation assumes our customers' fiber to the home expansion programs in hyperscaler long haul network projects proceed as planned. Ramping of wireless equipment replacements Growth from recent maintenance awards and other maintenance activity in line with expected run rates and normal seasonal factors. Opportunities for Embiid are not included in our fiscal twenty twenty six outlook and we remain well positioned to realize revenue from this program once it begins. Of course, we will adjust our expectations as we see these underlying drivers develop, but want to provide you with some additional insight into how we're thinking about growth in the coming year. I would like to finish by highlighting our goals for fiscal twenty twenty six. First and foremost, given the significant opportunity set I described earlier, we remain focused on providing long term value for our shareholders and long term opportunities for our people.

We are purposeful in our pursuit of opportunities and willing to grow grow backlog by taking low margin high risk contracts. That patience and discipline has been evident over these past few years as we've driven top line growth while also expanding margins and broadening both our customer base and the types of programs and builds in our book of work. In addition, and as Drew will discuss, we saw improved free cash flow performance in fiscal twenty twenty five. Improving free cash flow continues to be a priority. Our teams made substantial progress this year in the invoicing cycle and converting earnings into cash flow we have good momentum going into the New Year. Finally, worked hard to differentiate our offering to our customers and communities in what I refer to as quality as a brand. That means delivering our work safely and at the highest level of quality in the field but it goes much further than that. We strive every day to be a partner that delivers quality throughout our engagement from the first interactions as a customer or in a community to staying 10 steps ahead from day one to day done, so our customers and all our stakeholders can have peace of mind knowing we deliver on our commitment.

We believe our customers recognize the difference in working with DICOM. And we continue to work hard to earn their business every day as we pursue our vision to be the people connecting America. Now I'll pass the call to Drew to review our financials. Drew? Thanks, Dan, and good morning, everyone. We finished fiscal twenty twenty five strong, delivering solid top and bottom line growth and margin expansion, while also investing in our business and returning capital to our shareholders through share repurchases. Fourth quarter total contract revenues of $1,085,000,000 grew 13.9% over Q4 of last year. [indiscernible] Revenues in the quarter reflected seasonality and were driven by continued maintenance and operation services for customers, initial revenue contribution from fiber infrastructure programs for hyperscalers and $67,900,000 of storm restoration revenues. For the full year, contract revenues increased 12.6% to $4,702,000,000 Adjusted EBITDA of $116,400,000 or 10.7% of contract revenues increased 89 basis points over Q4 'twenty four and exceeded our expectations for the quarter despite difficult winter weather conditions. For the full year, adjusted EBITDA was 576300000.012.3% of contract revenues. Increasing approximately $95,000,000 compared to $481,200,000 in fiscal twenty twenty four. Fourth quarter adjusted net income was 34,500,000.0 and adjusted diluted EPS increased 48.1% to $1.17 per share.

For the year, adjusted net income was $248,700,000 and adjusted diluted EPS increased 24.5% to $8.44 per share compared to $6.78 in fiscal twenty twenty four After excluding the impacts of a change order and closeout of several projects in fiscal twenty twenty four. [indiscernible] For the fourth quarter, our top five customers were 56.7% of total revenue and grew 14.2%. And all other customers grew 13.5%. These metrics demonstrate the depth and breadth of our business, and we are pleased with the diversification and strong relationships across our [indiscernible] AT and T was our largest customer at $251,400,000 and grew 54.5% in total and 22.7% on an organic basis Details on other customers are included in the presentation materials posted on our IR website. Backlog at the end of Q4 was $7,760,000,000 including $4,642,000,000 that is expected to be completed in the next twelve months. Operating cash flows were strong at $328,200,000 in the quarter, The combined DSOs of accounts receivable and contract assets for one hundred and fourteen days a reduction of six days compared to one hundred and twenty days in Q4 twenty four, For the full year, operating cash flows totaled 349,100,000.0 After annual capital expenditures net of disposal proceeds, free cash flow increased 82% to $137,800,000 for the full year Strong cash flows remain a key focus area for the company in fiscal During the quarter, we repaid $155,000,000 of revolver borrowings and repurchased 200,000 shares of our common stock for 35,900,000.0 bringing our total repurchases for the year to 410,000 shares for 65,600,000.0 This week, our Board of Directors approved a new $150,000,000 authorization for share repurchases through August 2026.

This authorization replaces the remaining amount from our prior authorization. As Dan highlighted, we're excited about the opportunities ahead of us. And believe that an annual revenue outlook provides visibility For the full year of fiscal twenty twenty six, we expect total contract revenues to increase 10% to 13% compared to FY 'twenty five revenues. Fiscal twenty twenty six will include fifty three weeks of operations due to our fiscal calendar with the extra week occurring in the fourth quarter when operations are normally seasonally impacted by winter weather. Fiscal twenty twenty five included $114,200,000 of revenue from storm restoration services completed in Q3 and Q4, are pleased that we could help customers and communities that were impacted by the storms. We have not included any storm restoration revenues the fiscal twenty twenty six outlook. Finally, we expect capital expenditures net of disposal proceeds to range from $220,000,000 to $230,000,000,000 for fiscal twenty twenty six. [indiscernible] For our Q1 of fiscal twenty twenty six outlook, we expect contract revenues of $1,160,000,000 to $1,200,000,000 Adjusted EBITDA of $130,600,000 to $140,600,000 and diluted EPS of 1.5 to $1.73 per share. We believe we are well positioned for another successful year in fiscal twenty twenty six.

Operator, this concludes our prepared remarks. And our first question will come from Frank Lauzon from Raymond James and Associates. Line is open. Great. Thank you. Just a quick clarification. So on the $26,000,000 guide, I want to be clear on the jumping off point. Is that on the reported revenue and including the $114,000,000 from the storm growing 10% to 13% off of that? Just want to be clear on that. And then the 5,100 miles of long haul build that you discussed, are those private builds that are announced Or I assume that's not part of the Lumen activity that's going on? Thanks.

On the first question, related to the guide, yes, I think in addition to $114,000,000 of storm work that we had in fiscal twenty twenty five. But we are not including storm in the fiscal twenty twenty six moving to your second question, the 5,100 miles, that's public statements from other customers than Lumen. And again, we're just trying to show the breadth of the hyper opportunity Obviously, Lumen has been quite vocal about it. We're very excited to be working on the on the over pull work, which we've already started. We actually have crews out there today pulling fiber on that project. But there are a number of other opportunities we're talking to about with our customers, we're talking to hyperscalers themselves. Really, we're in early innings overall. So we just wanted to kind of signal that, hey, there's a lot of work out there, a lot of Glad that we're in there at the beginning, but we see this playing out over a multiyear period.

Okay, great.

And just one quick other quick clarification on the Verizon, the new Verizon business, is that expansion of the Fios network or can you give us a little bit more color on the nature of those new awards? Thanks.

Sure. So some of those are extending current awards. Those Those awards themselves include both service and maintenance work as well as fiber to the home. None of this is related to the previous Fiber One program. This is all the more typical Fiber to the Homework also added additional markets. And again, those are a combination of both the maintenance work and fiber to the home.

Home. Great. Thank you very much.

Thank you. And our next question will come from Alex Waters from B of A. Your line is open.

Hey guys, thanks so much for taking my question. Maybe first, thanks for providing the 2026 revenue [indiscernible] But could you maybe just talk about your expectations for margins throughout the year? And then secondly, obviously very strong performance from Black and Veatch in 4Q. Does this change the way you guys think about that previous revenue guidance you gave back in 2Q, 3Q this past year? Thanks so much. Hi, good morning, Alex. So for 2026, we're just providing revenue. Obviously, Drew, just as we have in the past has provided the Q1 outlook that would include EBITDA. When we look at margins overall, we're very pleased again, I talked about it in my comments, very pleased with what we've done over the last three years. I would think about margins going forward as we look at margins going forward, I would think about it. We continue to work in the business looking for efficiencies. Investing in innovation and doing everything we can to try and certainly increase margins from that perspective. I'd also look to operating leverage as we continue to grow. Now sometimes we're going to use that and reinvest it back business we're going to invest in innovation, sometimes we're going to invest in growth.

Other times it will fall through the bottom line. Not seeing any downward pressure in margins, but again, not something we're going to give specific full year outlook on. And then sorry on your Black and Beach question, so yes, it ramped up a little bit faster this Q4 than we had anticipated. What that's really doing is just pulling some work forward So we still feel good about that initial projection that we gave for this year of $250,000,000 to $275,000,000 Perfect. Thank you. Thank you. Our next question will come from Stephen Fisher from UBS. Dycom line is open. Thanks. Good morning. What are you just give us some sense of how the organic revenues in the quarter were relative to your expectations ex [indiscernible] like in November or early before you gave the guidance. You already kind of knew what it was. Just trying to gauge if there was more kind of core customer activity than you thought because of the 7% roughly point 5% organic growth was higher than you had forecasted So just trying to separate whether that was the storm work or if actually the core under business was a bit better? And similarly for Q1, can you give us any help on the sort of organic assumption there?

Because it seems like it might be implying a decline Thanks, Steve. Let me start and then Drew can add additional color. The first part on the storm, that work happened throughout the quarter. So no, we didn't have insight into that in its entirety initial outlook. And then the other thing I would add is it was obviously there was a lot going on. We had the virus in California. We had a number of we had 10 inches of snow in New Orleans, for example. Obviously, we didn't anticipate that. So you had both. You had the storm work coming back from the hurricanes that we experienced last season, that wasn't a positive, but you had a bunch of debits on the other side And that's really the aggregate of both, which is how you see it play out. And then, Stephen, as far as Q1 goes, as we highlighted last few quarters, We did have a couple of customers that started the year strong last year and then slowed. We're still lapping those kind of higher periods in the front half of this year.

But I think that's one of the considerations when we look at the full year and how we're positioning for the full year. That we would expect the work to pick up further after Q1.

Q1 is also one of those quarters a little bit difficult call sometimes because it's typically back end loaded.

As the work ramps into the spring, we've got some new awards Well, and the acquired businesses are still ramping this year.

That and there has been a little bit of difficult weather at the February here. The news reports a lot of things about the polar vortex and other things impacting. So we just wanted to be mindful of that.

Okay. That's helpful. And then maybe just, we can get caught up in a lot of these quarter to quarter numbers, which are still important. But I'm just kind of wondering if on the the big picture perspective here, Dan, as you talked about in the beginning of the comments, like a lot of your customers are are stepping up and getting more positive about their investment plans. So I guess I'm just curious, if you see this as as a result of those increasing plans by our customers, do you think this will be a longer than expected investment cycle or perhaps faster growth in kind of a similar period than you might have thought. Previously before these kind of announcements?

And Stephen, just so unfair, are you talking about long than the year that we gave the outlook for? Is that the question? Yes. Just thinking about the big picture over the next few years of how the is going to play out. I mean, is this going to be now a do you have more more visibility over a greater number of years or do you think it's just that's going to basically represent just faster growth opportunities and a better organic growth rate for you. I'm just trying to think again about we're talking about kind of mid ish single digit upper and maybe mid to upper single digit growth organic near term, but should this be an accelerating growth market over the next several years and you now have more visibility to that as a result of some of these announcements?

Yes. And I think that's part of why we gave the full year outlook on revenue [indiscernible] what really the trajectory of the business and the trajectory trajectory of the capital coming into the business can be. And so if we look at the fiber to the home and we've talked about over 35,000,000 passing added incremental by our customers last year. That's a significant number. We talked about what kind of impact that can have. You're certainly seeing that in the projection we're giving for this year as those customers ramp up. For the most part, they've talked about those being multiyear. Going out all the way to 2,030 in a lot of cases. So we see that playing out over longer term. Talked a little bit about the hyperscaler side. Like I said, very happy to be in the early innings there. Doing work as we speak. We still think that's very, very early innings. I mean, we're not even having got a second batter up to the plate, so to speak. We think that's going to be at least five years of opportunity. And we'll have to see how TAM plays out exactly. I think a lot of people have seen there's been industry reports out there talking about $100,000,000,000 of addressable market over a five or so year period.

Again, we'll see exactly what those numbers are. But regardless, we think that's just going to be a significant investment Even after DeepSeq, the hyperscalers came back quite quickly and said, still committed to their capital allocation. Still going to be over $300,000,000,000 in CapEx this year. Again, we got to see exactly how that moves into our space. But when we look at that over this year, like I said, early innings, just ramping into some programs, but as you get into calendar '26, and after we do expect that to continue to ramp. And then the last is the state and federal programs and there's work that we're doing today and I think it's important and I put it in my comments the states continue to fund. There's $1,000,000,000 of funding issued in Q4 related to state programs reaching rural America. Other federal programs that are happening. A lot of that is coming to our business. A lot of it's coming through active contracts. There's other things and opportunities that we're pursuing. But again, that's going to be a multiyear to get that satisfied. Whatever ultimately evolves to. But I'll go back to comments we've been making for some time.

Still think 80% of addresses in the country are going to get fiber and high speed Internet of some sort and that's going to be done mostly by private capital. Everything that we're hearing reinforces that. So we're optimistic and excited about one, our position, how we're set up to capitalize and two, the results that we've been able to provide so far.

Terrific. Thank you.

Thank you. And our next question will come from Eric Luebkow from Wells Fargo. Your line is open.

Hi, great. Thanks for taking the question. I wanted to dive a little more into the AI data center opportunity. You made a comment that a lot of the work you're doing now is really over pull work.

Presumably for Lumen. As you look at the conversations you're having, it sounded like maybe you booked some additional deals in the fourth quarter. I mean, are you seeing a bigger opportunity coming with new routes that might be a little bit more construction and labor intensive and maybe even a bigger addressable revenue market for you? And have you started to do work down the path of diversifying that away from just Lumen, but talking directly to hyperscalers itself perform or other operators out there who have announced some pretty large wins so far? That's exactly right, Eric, and a really good point. This opportunity continues to increase. The conversations have not lost steam. I mentioned before, even when DeepSeq came out, the conversations didn't slow down and in fact have only increased. What Lumen had in that first set of projects that they issued was existing conduit. That's not common on larger scale. Larger scale long haul builds. Certainly, there's some infill work and there's available routes that our customers, the ISPs, are talking about negotiating with the hyperscalers directly. But the appetite is much, much larger than that. And so we're seeing it play out in conversations.

We are talking hyperscalers themselves. We're certainly talking to a number of customers and we're seeing a number of different opportunities. Sometimes those come in bigger chunks, sometimes they come in smaller chunks. Sometimes they come by route or segment. So that really just depends on the way it's coming through the hyperscalers themselves. And through our customers. So again, what I would say is we still believe the opportunity over time is massive. Exactly the timing and how it comes in the industry, we're going to all have to pay attention to. And there's things in the news and conversations out there that maybe one hyper adds Dycom We would suggest that the opportunity is so large coming into our space. The need is there to get these high capacity, low latency networks. They want the redundancy they want these private routes, as it plays out over time. That's a lot of miles. It's thousands and thousands of miles. It's something that we're paying very close attention to, highly active Dycom Great. Thanks, Dan. And Drew, you made a comment about a focus on free cash flow this year.

I know it's obviously lumpy from quarter to quarter, but maybe you could talk about your ability to generate cash this year and also maybe a question for NAND just on capital allocation. How are you thinking about potential tuck in acquisitions, what the pipeline looks like versus buying back your stock given the authorization that you announced today?

Sure. Thanks, Eric. So I'll take the first one. So far as free cash flow, it continues to be a focus for us.

We made solid progress by the teams, pleased to see that the DSOs improved by six days year over year.

I think what's important to note here too is that net leverage is low. At about 1.5x. And so substantial room to grow the business and maintain comfortable net leverage overall.

Working on DSO every day, we've got working on more timely conversion of the work completed into an invoice and then obviously process for payment. And then the other area focus on the capital expenditures We provided the outlook there. This year, we spent about $211,000,000 net we see that going to $220,000,000 to $230,000,000 next year. So happy to invest in growth and replacement of assets and would certainly [indiscernible] invest more there as we see more growth opportunities as we look ahead. But we'll take a prudent approach on that and go from there.

And Eric, just commenting on capital allocation. So as I talked about we did three acquisitions last year. We're obviously active in the pipeline looking. They've got to fit. Our strategy. They have to fit our culture. Where those opportunities come out, there's certainly something that we would be entertaining and talking about. But if you look at last year and if you look at this year, a lot of similar things. We've got a lot of growth. We need to make sure that we've got capital set up for that growth. We continue to innovate, but we want to stay ahead of the curve. We're investing in AI in our own business. We're certainly investing in safety and in quality. And you heard me talk about this concept of quality as a brand. We want to stay out in front of our customers. We want to deliver absolute best in class performance from the very beginning to the very end of a project. And that does take capital. That takes capital to make sure that we're ahead of that curve. So that we can deliver another level of service and another level of value to our customers, which we believe that they appreciate.

And that they see. So we have to balance those two. And then as those together then we look for share repurchases. And again, we were active this last quarter, we were active last year. Certainly something that we're going to continue to look at going forward where it makes sense. So a little bit of a balance, but again, we're excited about 10% to 13% growth year over year this year especially when you add in $114,000,000 of storm work we're going to make sure that we can prioritize that first and then the other two will follow. And then Eric, if I could just add one yes, thanks, Eric.

And if I could just add one more point. Relative to the CapEx. I think if you look year over year, we obviously have increased the spending there. And so that's come through as increased depreciation as well. So that's a trend as we continue to step up on the CapEx. We would expect some increases there. And then the other area and it's in the in the outlook and it's in our filings, but the non cash amortization has increased to about $12,000,000 a quarter now.

Relative to the acquisitions that we've done. And so I just wanted to point that out our outlook.

Great.

Thank you.

And our next question will come from Sangeetha Jain from KeyBanc. Your line is open.

Thank you. Good morning and thanks for taking my question. So two brief ones for you. One on the headcount that you have in your slide deck, just wondering if there's anything to read into the sequential reduction in headcount this quarter?

Pignita, nothing to read there. We use a mix of announced labor and subcontractors. Sometimes that mix varies. The nature of the projects themselves can change that. So we feel really good about one, how we're set up just from a a discipline standpoint on our labor and our employment opportunities and we feel really good about being able to support the growth that's in front of us.

Got it. And then one on, I know we've talked a lot about fiber already on this call. So I was wondering if you can talk about if you're seeing any radio replacement work beyond the work that you're doing currently with the Black and Veatch acquisition?

So important to remember, we we have a wireless business that existed and has been around for certainly more than ten years prior to that business. So that business still operating. We're still doing work there, including some equipment replacements. And of course, as we've talked about, the wireless acquisition that we did has a heavy round of equipment places that we're ramping into right now. Today, that's really our focus. We do a little bit of work outside of that, but that is a core part of what we're doing. And we want to make sure that we can deliver and execute on that program as it ramps into these next few years.

Got it. Thank you.

Thank you.

And our next question will come from Adam Thalhimer from Thompson Davis. Your line is open.

Hey, good morning guys. Nice quarter, nice outlook.

I wanted to ask about Windstream, which is talking about doubling the pace of their fiber deployments this year. Is that something you could benefit from or does the merger with Unity possibly impact the relationship?

So Windstream has been a long time customer of ours. Even in the prior years, we continue to do work for them and have some strong relationships there. We have to see how it plays out, but we believe that we're well positioned as they like many others talk about ramping up and look to ramp up their fiber to the home program in the coming years. So we feel like we're well positioned then. And then Drew, maybe a quick one on Q1.

Cash flow, I'm wondering if that could be a little better than normal seasonality given all the storm work from Q4?

Yes, Adam, thanks. It could be there, but seasonality does always play a big factor in Q1, the work ramps kind of in the back half of the quarter. And so typically, we do consume some some operating cash flow in that period of time.

Last one for me, just curious, think Gigapower was in the top 10 for the second quarter in a row, curious what the outlook is there?

Definitely appreciate the opportunities we've had with Gigapower and appreciate their trust in us to be able to execute for them. Not anything that we're going to talk about in detail to the program other than it's been successful for us thus far and we hope that we continue to deliver for them. I'll turn it over. Thanks, Gus. Thank you. And our next question comes from Alan Mitrani from Sylvan Lake Asset Management.

Hi, thank you. I just have a few cleanup questions Can you tell us what the and then a bigger one. Can you tell us what the gross CapEx was for the quarter?

Sure, Alan. It was 60 just over $68,000,000 Okay.

And what about the cadence for the CapEx for the year for this coming year.

Yes. I mean, we've got a lot of things on order now. You'll see it in the filing with we've got a little over $80,000,000 kind of on order right now. It comes in we've got more to order beyond that to meet our our outlook. And I think you'll see typical typical spend as we have it during the year. Okay.

And then what were the wireless revenues this quarter? Yes, it was a little over 7%. [indiscernible] Okay. Great. And then I'm trying to just to be clear, are you guiding with no storm revenues this year, which I understand, which is great, the conservative. And then did you say that you were guiding for no bead revenues as well for the year? Or did I mishear that?

No, that's correct. So, we again, the guided the outlook is on top of the storm relative from last year, but we are not including And we are also not including any B dollars or opportunities in the outlook for FY 2026. Just a couple of comments on the first is we're having a lot of conversations both with the potentially awarded sub grantees and also continued with the state broadband offices. Is a little bit of a pause for some of the sub grantees that are waiting for the final for their awards to be finalized. We'll see exactly what that timeline plays out as the new administration puts their fingerprints on the program. But the rest of the states are still all systems go as far as figuring out exactly how it's going to play out in the police. So So we'll certainly have more updates in the future. But that's an opportunity in the plus column. And we still think there are large part of that is going to be cyber. Once it gets finalized in each state, each state is going to vary a little bit. But we still believe that's a real opportunity. Small potential for the back half of this year, probably more likely for FY 'twenty I'm sorry, for calendar 2026.

Calendar 2026, right. And do you have any bead work in your backlog though?

No. All the customers that the potential customers that we're talking to, they're not at a place to issue issue the awards yet.

Got it.

Okay, perfect. Just want to understand. But again, sorry, Alan, conversations that we are in though and we do expect to have some opportunities for those RFPs once they issue them.

Okay, great. And then Drew, you talked about depreciation amortization going up obviously because you're spending money. Can you give us I mean you were at a little under $53,000,000 this past quarter. You expect that to ramp ratably this coming year? I mean last year, but basically or is there a step function? So two things, Alan.

So and we provided this in last quarter's October as well, the outlook on the amortization for the full year. But that's running about this is just on the non cash amortization, it's about $12,000,000 a quarter.

And then on the depreciation the depreciation has increased last year over the year before. And so as that or I'm sorry, the CapEx rather has increased. And so that's caused the step up And then we've got it going up again this year as well. And so I would expect that to to kind of increase throughout the year.

Okay.

Yes, it looks like with the acquisitions you did, the amortization of intangibles, you're adding about $1.25 something like that in terms of non cash EPS. If you look at a cash EPS versus non cash, some years obviously you have a lot of acquisitions this past year. You did a bunch, so that should impact the non cash earnings. Number meaningfully. So cash flow will be better. Yes.

The other thing, Alan, on the just back on the CapEx, we did have good disposal proceeds throughout the year. And so that's just another Point to emphasize there, we had about $200,000,000 gross CapEx and then off of that was call it $38,000,000 $39,000,000 of disposal proceeds. So those were strong results. Okay.

Okay.

We'll take a look at that. Dan, I wanted to ask a bigger question.

In terms of and I asked it the other quarter to Steve, but your SG and A expense, the company's SG and A expense has grown faster than revenues the last couple of years. You're talking about getting operating leverage on the margins. It doesn't sound like we're going to see it much from from the gross margins this year based on the way you're talking. It seems like there's going to be obviously a lower gross margin [indiscernible] for the year to get gross margin expansion. So where help me understand, I want to know the SG and A expense, are you going to look to grow to grow that at some point slower or in line with revenue, so you get some of that operating leverage? Do we see that this year? When does that come in?

Yes. Alan, if you look growth that we've had over the last few years, I talked about it in my early comments, 50% growth in three years' time. As you can imagine, have to invest considerably in the business to make sure that you're set up to be able to do that and to do it well. On top of that, we've been bringing in acquisitions, making sure that we integrate acquisitions the right way as we ramp them into the business. And then of course, we're always trying to improve our service delivery for our customers. So there are parts and pieces to that. Obviously, it's something that we always want to work on, something we're we're very conscious of and spend a lot of time internally in discussions about But first and foremost, we need to make sure that we can be set up for the growth that's ahead of us. And over time, we certainly believe that dollars will drop through. From operating leverage.

Now we need to make sure that we can grow the business responsibly and continue to deliver at the level that we do for our customers. And then Alan, just a point to make here. I mean, and I'm sure you're focused on it too, but just the take a look at the stock compensation [indiscernible] that we call out on our materials.

Okay. Thank you. Thank you.

And I am showing no further questions from our phone lines. I'd now like to turn the conference back to Mr. Dan Payovich for closing remarks.

Thank you, operator. We thank everybody for joining this morning. Look forward to updating you on our first quarter results. Be safe and be well.

Your participation. You may now disconnect. Everyone have a wonderful day.