Detailed narrative
Power Solutions Integration & Data Center Market Entry
The acquisition of Power Solutions, closed on December 23, 2025, has successfully positioned Dycom at the intersection of digital infrastructure and the burgeoning data center market. The integration is proceeding on schedule, and the business is performing in line with expectations.
Cross-selling opportunities, combining Dycom's Inside Defense communications work with Power Solutions' inside-the-four-walls expertise, are emerging earlier than anticipated, receiving positive feedback from hyperscalers. Dycom is actively pursuing organic growth for Power Solutions and complementary M&A within the broader Building Systems segment, beyond just electrical services.
Fiber-to-the-Home & BEAD Program Progress
Fiber-to-the-home deployments remain a dominant growth driver, with customers affirming or raising passing goals, representing nearly 60 million additional passings. The BEAD program is progressing, with nearly all states approved and over $17 billion moving into the funding stage. Dycom has secured verbal awards exceeding $500 million, which are expected to convert to contracted backlog in Q1 or Q2 FY27.
While some revenue opportunities are anticipated in Q2 FY27, the significant ramp-up for BEAD is projected for the second half of FY27 and calendar 2027, as programs transition from planning to active construction.
Long-Haul, Middle-Mile & Hyperscaler Opportunities
The addressable market for long-haul, middle-mile, and inside-defense fiber infrastructure, initially identified at $20 billion, is believed to be growing. Hyperscalers have collectively raised their CapEx guidance to nearly $718 billion, a 70% increase YoY, affirming the need for increased capacity and ultra-low latency for AI.
Dycom is seeing more activity, including additional $2.5 billion awards for Lumen's overpull program, which is expected to ramp revenue this year. New construction builds in this space are anticipated to ramp considerably for projects starting in earnest in calendar 2028.
Workforce Development & Capacity Investment
Dycom is investing heavily in its workforce, which now exceeds 19,500 employees, to meet intensifying customer demand and address anticipated industry-wide skilled labor shortages. This includes breaking ground on a new state-of-the-art training facility outside Atlanta, designed for immersive, multi-week, hands-on training for both Communications and Building Systems employees.
This strategic investment, along with enhanced benefits, aims to ensure Dycom maintains a highly skilled workforce capable of executing large-scale programs.
Margin Expansion & Robust Cash Flow Improvement
The company achieved significant adjusted EBITDA margin expansion of 105 basis points to 13.3% for FY26 and anticipates continued expansion in FY27, driven by productivity gains and operating leverage. Free cash flow more than doubled to $435.3 million in FY26, a 216% increase YoY, attributed to improved internal processes, controls, and a sharpened cash conversion cycle, resulting in a 13-day improvement in DSOs to 101 days.
Fleet optimization through advanced telematics also contributes to reduced capital intensity.
Disciplined Capital Allocation & M&A Strategy
Dycom remains committed to its capital allocation priorities: investing in organic growth, pursuing strategic M&A, and opportunistic share repurchases. Following the Power Solutions acquisition, the company has a clear path to delever from approximately 2.3x pro forma net leverage to 2x within the next 12 months, maintaining financial flexibility.
The M&A focus is predominantly within the Building Systems segment, seeking culturally aligned businesses with strong growth opportunities in digital infrastructure, while remaining patient and disciplined.