Alexander Waters

Alex Waters inquired about how the Power Solutions acquisition is additive to the previously stated $20 billion data center total addressable market (TAM) for Dycom's core business. He also asked about the synergies and strategic importance of the combined skilled labor force.

Answer

President and CEO Daniel Peyovich clarified that the $20 billion TAM for outside plant data center networks is separate and distinct from Power Solutions' opportunities, which significantly expands Dycom's reach. He emphasized that the combined 19,000-person skilled workforce is a massive competitive differentiator, crucial for delivering on the infrastructure demands of the AI race, and that managing complex projects with this scale is a core strength for both companies.

Alex Waters inquired about how the Power Solutions acquisition adds to Dycom's previously stated $20 billion data center TAM and discussed the synergies related to the skilled labor force between the combined entities.

Answer

President and CEO Dan Peyovich clarified that the $20 billion TAM for outside plant data center network construction is separate and distinct from Power Solutions, which expands opportunities through cross-sell with hyperscalers and addresses a $240 billion labor market for data infrastructure over five years. He highlighted that Power Solutions' skilled electrical workforce, while different, shares similar management and execution complexities with Dycom's existing labor base, creating a massive competitive differentiator.

Alexander Waters from Bank of America asked if revenue softness was due to smaller private companies and questioned the expected ramp and nature of the wireless business heading into calendar 2026.

Answer

CEO Daniel Peyovich clarified that revenue timing relates to the natural modulation of large customer programs rather than any specific segment. Regarding wireless, he stated the business is performing ahead of expectations, the total scope of work has increased, and it primarily consists of equipment replacements, which positions Dycom well for future densification work.

Alexander Waters of B. Riley Securities inquired about the performance of the Black & Veatch wireless acquisition, asking if it represented a pull-forward of activity or a larger opportunity, and also requested the size of Dycom's maintenance business.

Answer

President and CEO Dan Peyovich explained that the wireless acquisition's strength is a combination of some pull-forward and, more significantly, a faster-than-expected ramp-up. Regarding the maintenance business, he noted it's a core strategic element that underpins other growth drivers and has historically represented over 50% of Dycom's business, providing a stable base of recurring revenue.

Alexander Waters inquired about margin expectations for fiscal 2026 and whether the strong Q4 performance from the Black & Veatch acquisition alters its full-year revenue outlook.

Answer

President and CEO Daniel Peyovich stated that Dycom is not providing a full-year margin outlook but noted the company is not seeing downward pressure and will seek operating leverage while also reinvesting in the business. He explained that the strong Q4 from the acquired business was a pull-forward of work and the company's initial full-year projection of $250 million to $275 million remains intact.

Alexander Waters asked for clarification on the updated timeline for the BEAD program opportunity and questioned the drivers behind the year-over-year revenue decline from the 'all other customers' category.

Answer

President & incoming CEO Daniel Peyovich clarified that while some BEAD revenue is still possible in the second half of 2025, the significant ramp is now expected in 2026. Regarding the 'all other customers' bucket, Peyovich explained that the metric is skewed by customers moving in and out of the top 5. He suggested looking at the top 10 customers, which grew 17% combined, as a better indicator of broad customer health.

Alexander Waters from Bank of America inquired about the expected trend for wavelength ARPU throughout the year. He also asked for details on the timing, scale, and potential structure of the company's data center monetization efforts.

Answer

CEO David Schaeffer suggested that a wavelength ARPU of around $1,900 to $2,000 is a reasonable modeling assumption, noting a high uptake of 100 gig and 400 gig waves. Regarding data center monetization, he confirmed that Cogent is in contract negotiations with multiple parties for the sale or long-term lease of surplus facilities. While highly motivated to complete these deals to deleverage, he could not provide an exact timeframe due to ongoing due diligence by counterparties.

Alexander Waters asked CFO Sunit Patel about his strategic priorities, particularly his preference between leverage reduction and buybacks. He also inquired about the services side of the business.

Answer

CFO Sunit Patel stated the top priority is closing the fiber sale transaction. Beyond that, the focus is on positioning the tower-only company for operational and systems improvements. He reiterated the firm's commitment to the stated capital allocation framework, which includes maintaining an investment-grade rating, debt paydown, buybacks, and dividends. CEO Daniel Schlanger added that while services demand is good, Crown Castle is no longer in the construction services business, which some peers highlighted as a growth driver.

Alexander Waters of Bank of America asked for context on the size of the quarter's largest lease and what portion of the greater-than-1-megawatt leasing was related to AI.

Answer

CEO Andrew Power stated that AI-related deals constituted just over two-thirds of the quarter's total signings, representing a new high for the company. He clarified that these AI wins were concentrated in core markets that also host cloud availability zones. Power noted that the AI demand was primarily hyperscale-driven in Q1, but the enterprise AI pipeline is also growing in both deal size and power density.