Dycom Industries, Inc. · NYSE:DY
Dycom Industries — Debt Investor Presentation (November 2012)
34 slides from Dycom Industries's debt investor presentation, Nov 28, 2012
Slide 1: $90 million add-on to 7.125% Senior Subordinated Notes
Exhibit 99.1 $90 million add-on to 7.125% Senior Subordinated Notes November 2012
Slide 2: Cautionary Statement about Forward-Looking Statements & Confidential Information
Cautionary Statement about Forward- Looking Statements & Confidential Information This presentation contains “forward-looking statements” which are statements relating to future events, including a proposed acquisition, future financial performance, strategies, expectations, and the competitive envi
Slide 3: Agenda
Agenda Transaction Overview Business Overview Target Overview Credit Strengths Financial Summary Appendix 2
Slide 4: Executive Summary
Executive Summary Dycom Industries, Inc. (the “Company”) is a leading provider of specialty contracting services in the United States for telecommunications, underground facility locating and electric and gas utilities customers th On November 19 , Dycom announced that it signed a definitive agreeme
Slide 5: Acquisition Rationale
Acquisition Rationale Strengthens our customer base, geographic scope and technical service offerings Reinforces our rural engineering and construction capabilities, wireless construction resources and broadband construction competencies Creates scale as industry announcements indicate customer expe
Slide 6: Sources, Uses and PF Capitalization
Sources, Uses and PF Capitalization Sources and Uses Sources of Funds Uses of Funds 1 $275mm Revolver $76.0 Purchase Price $311.8 New Term Loan A 125.0 New Senior Sub. Notes 90.0 Cash on Balance Sheet 20.8 Total Sources $311.8 2 $311.8 Total Uses 3 Pro Forma Capitalization 10/27/12 PF xPF Adj. ($ in
Slide 7: Summary Terms and Conditions
Summary Terms and Conditions New Senior Subordinated Notes Issuer Dycom Investments, Inc., a direct wholly-owned subsidiary of Dycom Industries, Inc. (same as existing) Dycom Industries, Inc. and its existing and future subsidiaries that guarantee any credit facility of Dycom Guarantors Industries,
Slide 8: Agenda
Agenda Transaction Overview Business Overview Target Overview Credit Strengths Financial Summary Appendix 7
Slide 9: Dycom Introduction
Dycom Introduction A leading supplier of specialty contracting services to telecommunication providers nationwide Telecommunications networks are fundamental to economic progress Significant end market opportunities include wireless backhaul, rural fiber networks, fiber deployments to businesses, wi
Slide 10: Dycom Overview (Standalone)
Dycom Overview (Standalone) Dycom is a leading telecommunications infrastructure provider in the United States Fiscal 2012 Revenue by Contract Type Nationwide footprint Short-term — Operates in 48 states and in Canada Contracts 19.4% — 31 operating subsidiaries and hundreds of field offices Master S
Slide 11: Services Crucial to Customer Success
Services Crucial to Customer Success Outside Plant & Equipment Installation Engineering Wireless Services Premise Equipment Installation Underground Facility Locating 10
Slide 12: Dycom Operating Overview
Dycom Operating Overview Dycom’s Nationwide Presence Dycom has field locations well beyond the subsidiary headquarters depicted which enable the Company to extend its coverage footprint Dycom Headquarters Subsidiary Headquarters Subsidiaries Broad national footprint and strong local subsidiaries all
Slide 13: Strong Secular Trend
Strong Secular Trend 10.0% 20,000 8.0% 18,000 6.0% 16,000 4.0% 14,000 2.0% 12,000 0.0% 10,000 -2.0% 8,000 -4.0% 6,000 -6.0% 4,000 -8.0% 2,000 GDP Traffic -10.0% 0 Sources: U.S. Telecom, The Broadband Association Cisco Visual Networking Index U.S. National Bureau of Economic Analysis “When the stabil
Slide 14: Key Driver: Wireless Backhaul
Key Driver: Wireless Backhaul Mobile Data Traffic Growth Relative to 2009 50X 40X 30X 20X 10X 0X 2009 2010 2011 2012E 2013E 2014E Sources: FCC OBI Technical Paper Yankee Group Coda Research Cisco Systems, Inc. Average 6, Mobile Broadband: The Benefits of Additional Spectrum “Our third key strategic
Slide 15: Key Driver: Rural Fiber Networks
Key Driver: Rural Fiber Networks The American Recovery and Reinvestment Act (ARRA) provided the Department of Commerce’s National Telecommunications and Information Administration (NTIA) and the U.S. Department of Agriculture’s Rural Utilities Service (RUS) with $7.2 billion to expand broadband serv
Slide 16: Key Driver: Fiber to Business
Key Driver: Fiber to Business $8.5B $0.6B $1.8B $25.0B $1.5B $20.0B 2011 Business Services Revenue $3.9 Billion Current Addressable Business Services Market Sources: Company Filings, Company Transcripts ~$53.5 Billion “…so give or take $700 million a year I think is the number for capital spending f
Slide 17: Key Driver: Wireless Network Upgrades
Key Driver: Wireless Network Upgrades 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - US cell sites US Towers Sources: CTIA, Collins Stewart, LLC “…We've had a volume surge that is hard to explain what's transpired. The last five years we've had literally in the mobile Internet traffic goin
Slide 18: Key Driver: FTTx Deployments
Key Driver: FTTx Deployments Cumulative Subscribers 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2Q 07 4Q 07 2Q 08 4Q 08 2Q 09 4Q 09 2Q 10 4Q 10 2Q 11 4Q 11 2Q 12 Verizon FiOS Video AT&T U-Verse Source: Company Filings "We feel good about the success we've had in the IP broadband and U-verse
Slide 19: Agenda
Agenda Transaction Overview Business Overview Target Overview Credit Strengths Financial Summary Appendix 18
Slide 20: Target Overview
Target Overview Target provides network services and solutions for the telecommunications and cable television industries, including: Design, installation, repair and maintenance of fiber optic, copper and coaxial cable networks used for video, data and voice transmission Design, installation and up
Slide 21: Agenda
Agenda Transaction Overview Business Overview Target Overview Credit Strengths Financial Summary Appendix 20
Slide 22: Key Credit Highlights
Key Credit Highlights Long-standing relationship with blue chip customers Stable revenue base Breadth of service offering to meet customer requirements Variable and scalable operating structure Operating model focused on cash flow generation Proven and experienced management team 21
Slide 23: Blue Chip Customer Base
Blue Chip Customer Base Dycom Pro Forma Customer Mix AT&T 9.9% CenturyLink 12.9% Other 47.2% Comcast 9.5% Verizon 10.8% Windstream 9.6% Blue chip, predominantly investment grade, clients comprise the vast majority of revenue Dycom has established relationships with many leading telephone companies,
Slide 24: Durable Customer Relationships
Durable Customer Relationships 1 Revenue by Customer $300 Developed and maintained $250 strong, long-term relationships that help $200 manage cyclical nature of $150 telecom and cable capex $100 spending $50 Significant number of these $0 customer relationships span 2003 2004 2005 2006 2007 2008 200
Slide 25: Stable Revenue Base
Stable Revenue Base 1 Fiscal 2012 Revenue by Contract Type Master Service Agreements (MSAs) — Multi-year, multi-million dollar arrangements covering thousands of individual work orders — Generally exclusive requirement contracts that extend for one or more years Short-term Long-term contracts relate
Slide 26: Stable Revenue Base
Stable Revenue Base Historical Revenue by Contract Type 1 MSA and other long-term contracts represent 80% or greater of total contract 100.0% 13.3% 9.4% 14.1% 19.4% 80.0% 17.2% 14.6% 10.4% revenues in recent periods 10.3% 60.0% Increase in short-term contracts in fiscal 2012 from broadband stimulus
Slide 27: Breadth of Service Offering
Breadth of Service Offering Leading provider of services in a fragmented industry, with breadth and scope of operations to support national customer base — As a service provider operating on a national basis, Dycom benefits from its customers trending towards a consolidated vendor base with broad se
Slide 28: Variable and Scalable Operating Structure
Variable and Scalable Operating Structure Scalable business model provides operating flexibility Number of Employees1 11,500 10,899 Highly variable cost structure allows for 10,746 efficient responses to changes in the 10,500 9,352 business environment as largest direct cost 9,231 9,500 is labor 8,8
Slide 29: Operating Model Focused on Cash Flow Generation
Operating Model Focused on Cash Flow Generation Cash from Operations and Capex1 140 $127 14.00% Solid cash flow from $104 operations and prudent 120 12.00% management of capital 100 10.00% $65 80 8.00% 60 $54 $44 6.00% expenditures has provided 40 20 5.1% 4.7% 4.7% 4.4% 4.00% 2.00% strong liquidity
Slide 30: Proven and Experienced Senior Management Team
Proven and Experienced Senior Management Team Seasoned management team with several decades of combined industry experience Executive Industry Tenure Comment Steven E. Nielsen 19 years with Dycom; prior experience with Henkels & 27 years President & CEO McCoy Timothy R. Estes 39 years 18 years with
Slide 31: Agenda
Agenda Transaction Overview Business Overview Target Overview Credit Strengths Financial Summary Appendix 30
Slide 32: Historical and Pro Forma Financials
Historical and Pro Forma Financials Revenue Adjusted EBITDA $1,736 $179 $131 $1,230 $117 $110 $1,107 $1,036 $989 $86 FY2008 FY2009 FY2010 FY2011 PF 2012¹ FY2008 FY2009 FY2010 FY2011 PF 2012¹ Dycom Revenue Target Revenue Dycom Adj. EBITDA Target Adj. EBITDA 2 Adjusted EBITDA less Capex Leverage 2.7x
Slide 33: Agenda
Agenda Transaction Overview Business Overview Target Overview Credit Strengths Financial Summary Appendix 32
Slide 34: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 1 2 2 Pro Forma LTM Fiscal Year Ended July 28, October 27, July 28, July 30, July 31, July 25, July 26, ($ in millions) 2012 2012 2012 2011 2010 2009 2008 Net Income from continuing operations $40.2 $38.3 $39.4 $16.1 $5.8 $(53.2) $24.4 Interest expense, net 28.9 16.7 1
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