Dycom (DY) Grew Revenue 46% but Nearly $400M Came from Acquisitions. Is Organic Growth Strong Enough?

Dycom Industries, Inc. reported a 46% increase in fiscal second-quarter revenue, but nearly $400 million of that growth came from acquisitions rather than organic growth. Contract revenue surged 45.6% to $2.01 billion, with acquired businesses adding $397.5 million. Organic contract revenue, which excludes acquired businesses, grew 16.7% to $1.61 billion.

The Communications segment benefited from fiber-to-the-home programs, long-haul and middle-mile construction, inside-the-fence fiber projects, and expanding maintenance services. The Communications backlog increased 37.5% to $10.98 billion for the quarter, with a 16.5% expectation of backlog over the next 12 months. Despite the strong demand, Communications margins declined to 13.6% from 14.9%, attributed to investments, higher fuel costs, and delayed wireless revenue.

Dycom Industries expects its adjusted EBITDA margin in the high teens to low twenties for the remainder of fiscal 2027. The company paid $225.5 million in acquisitions during the quarter, increasing its notional net debt to $2.50 billion. While Dycom Industries' core fiber-infrastructure business is healthy, future results will depend on converting backlog into revenue and integrating acquisitions without sacrificing margins or balance-sheet flexibility.