Dycom Industries Inc (DY) 2019 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Dycom Results Conference Call. (Operator Instructions) As a reminder, today's call is being recorded. I'll turn the call now over to Mr. Steven Nielsen. Please go ahead, sir.

Thank you, John. Good morning, everyone. I'd like to thank you for attending this conference call to review our first quarter of fiscal 2019 results.

Going to Slide 3. During this call, we will be referring to a slide presentation, which can be found on our website's Investor Relations main page. Relevant slides will be identified by numbers throughout our presentation.

Today, we have on the call, Tim Estes, our Chief Operating Officer; Drew DeFerrari, our Chief Financial Officer; and Rick Vilsoet, our General Counsel. Now I will turn the call over to Rick Vilsoet.

Thank you, Steve. Except for historical information, the statements made by company management during this call may be forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including those related to the company's outlook, are based on management's current expectations, estimates and projections and involve known and unknown risks and uncertainties, which may cause the company's actual results and future periods to differ materially from forecasted results.

Those risks and uncertainties are more fully described in the company's transitional report on Form 10-K for the 6 months ended January 27, 2018, and other periodic filings with the Securities and Exchange Commission. The company assumes no obligation to update forward-looking statements.

Steve?

Thanks, Rick. Now moving to Slide 4 and a review of our first quarter results. As you review our results, please note that we have presented in our release and comments certain revenue amounts, excluding revenues from storm restoration services during the quarter and from businesses acquired during the April 2017 and April 2018 quarters, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, all of which are non-GAAP financial measures. See Slides 13 through 21 for a reconciliation of non-GAAP measures to GAAP measures.

Revenue was $731.4 million, a decrease of 7%. Organic revenue excluding $14.8 million of storm restoration services in the quarter declined 10%. As we deployed 1 gigabit wireline networks, wireless/wireline converged networks and grew core market share, this quarter reflected an increase in demand from a key customer offset by the expected moderation from a large customer and revenue declined from certain other customers.

Gross margins were disappointing at 18.02% of revenue, reflecting prolonged winter weather conditions and continuing costs associated with the initiation of large customer programs. General and administrative expenses were 8.52%. All of these factors produced adjusted EBITDA of $73.7 million or 10.1% of revenue and adjusted diluted earnings per share of $0.65 compared to $1.30 in the year-ago quarter.

Operating cash flow was solid totaling $24.6 million in the quarter. Liquidity was ample as cash and availability under our credit facility was $459.3 million. And finally, during the quarter we acquired churn assets and liabilities of a communications construction and maintenance services provider in the Midwest.

Going to Slide 5. Today a number of major industry participants are deploying significant wireline networks across broad sections of the country. These networks are generally designed to provision bandwidth enabling 1 gigabit speeds to individual consumers. In addition, emerging wireless technologies are driving significant wireline deployments. These wireline deployments are necessary to facilitate what is expected to be a decade's long deployment of fully converged wireless/wireline networks that will enable high-bandwidth, low-latency applications. The industry effort required to deploy these converged networks continues to meaningfully broaden our set of opportunities. Total industry opportunities in aggregate are robust.

We are providing program management planning, engineering and design, aerial and underground construction and fulfillment services for 1 gigabit deployments. These services are being provided across the country in dozens of Metropolitan areas to a number of customers. In addition, we have secured a number of converged wireless/wireline multiuse network deployments across the country. Planning, engineering and limited construction have begun. Engineering and construction activities are expected to increase and accelerate throughout 2018. Customers are continuing to reveal with specificity new multiyear initiatives that are being planned and managed on a market-by-market basis. Our ability to provide integrated planning, engineering and design, procurement and construction and maintenance services is of particular value to several industry participants.

As with prior initiations of large-scale network deployments, we expect some normal timing volatility and customer spending modulations as network deployment strategies and technologies evolve and tactical considerations, primarily permitting impact timing. We remain confident that our competitively unparalleled scale and market share as well as our financial strength position us well to deliver valuable service to our customers and robust returns to our shareholders.

Now moving to Slide 6. We continue to experience effects of the strong overall industry environment during the quarter, which saw moderation from 2 large customers, revenue declines from certain other customers, as well as impacts from prolonged winter weather conditions. Organic revenue, excluding storm restoration services, declined 10%. Our top 5 customers combined produced 78.8% of revenue declining 8.8% organically, while all other customers decreased 14.2% organically.

AT&T was our largest customer at 24.2% of total revenue or $177 million. Revenue from Comcast was $159.2 million or 21.8% of revenue. Comcast was our second largest customer. Verizon was Dycom's third largest customer for the quarter at 16.7% of revenue or $122.1 million. Verizon grew 82.7% organically. Revenue from CenturyLink was $89.7 million or 12.3% of revenue. CenturyLink was our fourth largest customer. And finally, revenue from Charter was $28.7 million or 3.9% of revenue. Charter was our fifth largest customer.

Despite a difficult quarter, we are pleased that we have continued to gain profitable market share, expand our geographic reach and expand our program management network planning services. In fact, over the last several years, we have meaningfully increased the long-term value of our maintenance and operations business, a trend which we believe will parallel our deployment of 1 gigabit and wireless/wireline converged networks as those deployments dramatically increase the amount of outside plant network that must be extended and maintained.

Going to Slide 7. Backlog at the end of the first quarter was $5.877 billion versus $5.847 billion at the end of the January 2018 quarter, an increase of approximately $30 million. Of this backlog, approximately $2.976 billion is expected to be completed in the next 12 months, reflecting our tempered expectations of near-term revenue trends. Both backlog calculations reflect solid performance as we booked new work and renewed existing work. We continue to anticipate substantial future opportunities across a broad array of our customers. For Verizon, we were awarded expanded engineering and construction services agreements in multiple markets. With Comcast, we renewed construction and maintenance service agreements in Michigan, Pennsylvania and Florida. For AT&T, we extended a wireless services agreement in Georgia. With CenturyLink, we renewed engineering services agreements for Oregon, Montana, Arizona, Wyoming and Virginia. And finally, we extended our locating services agreement in California with AT&T. Headcount increased during the quarter to 14,607.

Now I will turn the call over to Drew for his financial review and outlook.

Thank, Steve, and good morning, everyone. Going to Slide 8. Contract revenues for Q1 '19 were $731.4 million, and organic revenue decreased 10%, reflecting declines by 2 large customers, partially offset by solid growth from another large customer. Storm restoration services contributed $14.8 million of revenue and businesses acquired contributed $15.4 million of revenue. During Q1 '19, we adopted the new revenue accounting standard and there was no change to our revenue recognition practice.

Adjusted EBITDA was $73.7 million in Q1 '19, which was at 10.1% of revenue. Gross margins were at 18% and compared to the April quarter last year were impacted by prolonged winter weather conditions and costs incurred on large customer programs. Gross margins were approximately 100 basis points below our expectations for the quarter. This margin pressure resulted from the under absorption of labor and field costs as large customer programs mobilized. We expect margins to continue to be impacted in the near term with the pressure dissipating as we gain greater momentum on these large programs.

Accordingly, our outlook has been lowered for the full fiscal year from our prior expectations to reflect the expected margin pressure.

G&A expense increased 72 basis points compared to the April quarter last year, primarily from the impact of labor costs, which were supporting our expanding scale to address growth initiatives. Our non-GAAP adjusted diluted EPS in Q1 '19 was $0.65 per share compared to $1.30 per share in the year-ago period.

Now going forward to Slide 9. Our balance sheet and financial profile continue to reflect the strength of our business. We ended the quarter with $353.3 million of term loans outstanding and no revolver borrowings on our senior credit facility. Our liquidity is robust at $459 million at the end of the quarter consisting of availability from our credit facility and cash on hand. Operating cash flows were at $24.6 million.

Regarding our Q1 adoption of the new revenue accounting standard, our balance sheet classification changed to include unbilled receivables in the caption accounts receivable. Additionally, amounts that were costs and earnings in excess of billings are now captioned contract assets. Amounts that were billings in excess of costs and earnings are now captioned contract liabilities.

The combined DSOs of accounts receivable and contract assets net were 92 days for Q1 '19, which represents a slight sequential decline from the January quarter.

Capital expenditures were $26.5 million during Q1 '19 net of disposal proceeds. And gross CapEx was $34.5 million. During the quarter, we acquired certain assets and liabilities of a communications construction and maintenance services provider in the Midwest for $20.9 million.

In summary, we're well positioned with a strong balance sheet and ample liquidity.

Going to our outlook on Slides 10 and 11. For fiscal 2019, we are engaged on a broad range of large customer programs, which are expected to drive meaningful growth in the back half of the fiscal year. Based on our Q1 '19 actual results and current expectations of the timing of activity on these programs, we have tempered our annual guidance. And for the full year, we currently expect revenues, which range from $3.23 billion to $3.43 billion. We expect accelerating fiber deployments for emerging wireless technologies, increasing wireless services and solid demand from several large customers reflecting 1 gigabit deployments and fiber deep cable capacity projects.

Non-GAAP adjusted diluted EPS is expected to range from $4.26 to $5.15 per share based on estimated diluted shares of approximately 31.9 million. Adjusted EBITDA margin is expected to range from 12.4% to 12.9% of revenue. Other expectations reflected in the annual guidance include depreciation, which is expected to range from $155 million to $160 million and amortization expected at $23 million.

Share-based compensation included in G&A expense is estimated to range from $25 million to $26 million. Adjusted interest expense is expected to range from $23 million to $24 million, excluding $19.1 million of interest from the noncash amortization of the debt discount on our notes. Other income net is expected to range from $11 million to $13 million. The effective tax rate is expected at 27.5%, which is before the tax effects of the settlement of share-based awards.

Now going to Slide 11. For the July 2018 quarter, we currently expect total revenue to range from $830 million to $860 million. Non-GAAP adjusted diluted EPS is to range from $1.13 to $1.28 per share based on estimated diluted shares of approximately 31.9 million. And non-GAAP adjusted EBITDA to range from 12.4% to 12.8%.

Other expectations included in the outlook for the July quarter includes depreciation, which is expected to range from $39 million to $39.8 million and amortization is expected at $5.8 million.

Share-based compensation included in G&A expense is estimated at approximately $6.6 million. Adjusted interest expense is expected at $5.8 million, excluding $4.8 million of interest for the noncash amortization of the debt discount on our notes. Other income net is expected to range from $2.9 million to $3.5 million. The effective tax rate is expected at 27.5%, which is before the tax effects for the settlement of share-based awards.

And now I will turn the call back to Steve.

Thanks, Drew. Going to Slide 12. Within a growing economy, we experienced the effects of a strong industry environment and capitalized on our significant strengths. First and foremost, we maintained strong customer relationships throughout our markets, we continue to win and extend contracts at attractive pricing. Secondly, the strength of those relationships and the extensive market presence they have created has allowed us to be at the forefront of evolving industry opportunities. The end market drivers of these opportunities remain firm and are strengthening.

Fiber deployments in contemplation of emerging wireless technologies have begun in many regions of the country. A significant number of new project initiations are occurring. Wireless construction activity in support of expanded coverage and capacity is poised to accelerate through the deployment of enhanced macro cells and new small cells. Telephone companies are deploying fiber-to-the-home to enable video offerings and 1 gigabit high-speed connections. This activity has begun to increase. Cable operator deploying fiber to small and medium businesses and enterprises. These deployments are often in anticipation of the customer sales process as confidence in the number of existing customers continues to increase. Fiber deep deployments to expand capacity as well as new build opportunities and overall capital expenditures are increasing. Dramatically increased speeds to consumers are being provisioned.

Customers are consolidating supply chains, creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business. In addition, we are increasingly providing integrated planning, engineering and design, procurement and construction and maintenance services, creating more visibility around future revenue streams.

Within this context, we believe we are uniquely positioned, managed and capitalized to meaningfully experience an improving industry environment to the benefit of our shareholders. While we are disappointed with current revenue and margin softness and the adjustment to our near-term outlook, we see that softness abating in the second half of the fiscal year and remain encouraged that our major customers possess significant financial strength and are committed to multiyear capital spending initiatives. These initiatives are increasing in number across multiple customers. And improved regulatory environment is supportive of these initiatives. We remain confident in our strategies, the prospects for our company, the capabilities of our dedicated employees and the experience of our management team as we grow our business and capitalization.

Now John, we'll open the call for questions.

(Operator Instructions) First we'll go to line of Matt Duncan with Stephens.

So, Steve, obviously the big question on everyone's mind this morning is the pressure on margin and a little more specifics around what's causing it. And it sounds like you're still expecting a big ramp in the business, the timing has maybe changed a little bit. But I think what we're all trying to get at is, a little more specific around the near-term margin pressure, and do you believe you can still get this business back to a mid-teens EBITDA margin, once things ramp up and you are better absorbing those costs?

So to the second question, Matt, yes. I mean, we have not changed our view on mid-teens EBITDA. With respect to the pressure on the business, we have a number of large programs, some of which require extensive permitting and other governmental authorities. We've been through this before, the timing of when you build up a cadence in that process that will allow you to efficiently deploy resources. It's hard to forecast. I mean, we understand that and we're disappointed that we didn't get it as right as you would have liked last quarter. But that doesn't change, that the projects are there that we're confident in our ability to execute. We just got to get enough work in hand so that we can both absorb the fixed cost around warehousing and supervision and general management, as well as be efficient in the field as we get more permitted backlog that we can really go to work on. And it's getting better every day. It's just not getting better as quickly as we would have hoped 91 days ago.

So is this customer shifting the timing of work or is it simply the permitting process?

We're all working together with our customers, with the permitting authorities. It's just a -- these are large programs. In fact, I think they're substantial programs and that means there is a substantial buildup in activities from the permitting authorities. And it's taking a little time, but it's getting better.

And then second thing, I'll hop back in queue, just on backlog. Total backlog is pretty flat. 12-month backlog tick down. And I think people are struggling to try and understand the tick down in 12-month backlog given the cadence and ramp in the business that you were expecting, I'm assuming it's probably as simple as the timing of awards, you probably got some contracts that are going to have to renew in the next 12 months. So maybe you don't have all of the revenue you theoretically would get from those programs in that 12-month backlog currently. But give us a little help on the cadence of that line. Do you expect it to continue to trend higher generally over time? And why that 12-month backlog may have ticked down a little bit here sequentially?

So recall, Matt, that there are some contracts and portions of our business that are annual that we renew the first of each year. So there's always going to be little burn off, right, on those contracts. There's only going to be 8 months of backlog at the end of April. I think the other thing is there was some shifting from the 12-month number out a little bit, just based on our re-forecast of the revenue. Doesn't mean it isn't there, it's just more timing related. And then there's always a number of contract renewals and those fluctuate from quarter-to-quarter and until you get them renewed, that can impact the near-term and total backlog.

Our next question is from Alex Rygiel with B. Riley FBR.

Steve, this is actually Min for Alex this morning. So I guess, I mean, I just wanted to get a little more information about the acquisition that you made in the Midwest, obviously added to some revenue in the quarter. Can you tell us how much of that acquisition is included in the annual backlog -- I'm sorry, the annual guidance that you provided?

So, I mean, Min, we paid just a little over $20 million for it. So we have not provided revenue other than in line with an acquisition of that size. So it's really not material. This is not moving the revenue or the backlog number in any significant way.

Okay. So it looks like you've really -- your guidance for EBITDA looks like you're just really taking into consideration the miss in the first quarter. Second quarter looks like it's going to be a little bit lighter but definitely more second half loaded. So overall for the full year, outside of this 1Q miss, you're really not changing expectations too much. So things should get back to expectations by the second half of the year is kind of how you're thinking about it?

Min, this is Drew. So yes, as you've recognized, in the first quarter, we were down about 100 basis points on margin versus our expectations. And then we've taken down the second quarter some as these programs, the ramp on those are -- has pushed out a little bit. So we took that down, call it approximately 200 or so relative to our expectations and then the back half of the year something less than 100 basis points on our margin expectations. So it dissipate -- that pressure dissipates as the year goes on.

Okay. And Drew, while I have you, can I just get the revenue breakout?

Sure. So Windstream was #6 at 3.3% of revenue, Frontier was #7 at 1.6% of revenue, OFS Fitel was #8 at 1.3% of revenue, Dominion Energy was #9 at 1% and customer #10 was at 0.9%. And telco was at 65%, cable was at 22-point -- I'm sorry, 26.2%, facility locating was 6.2% and then the electrical and other was 2.6%.

And inside the telecom, the wireless was about 8% of total revenue.

Okay, great. And then Steve, if you can just talk generally about any change in competition that you're seeing, any increased competition in some of your markets. I know that you guys obviously have great market share and there is a lot of work to be done. But if you can just talk to some competition?

There is a lot of work to go around. I think everybody is busy and getting busier, particularly as you see kind of the ramp in the industry that I think will be very similar to the ramp that we have. And we're focused on executing well on what we have and confident that we'll maintain our fair share of opportunity going forward.

Next we'll go to Tahira Afzal with KeyBanc.

Steve, you know, when you look back and when you set guidance and where we are right now, is the new guidance that you set assuming a bit of cushion given what you've learned in terms of the modulation of these clients. And the reason I ask it is, when I go back a year, we were kind of at the same place since these guys are taking a bit more time and pushing things around a bit. Permitting is something that will continue to be an issue. So have all those been factored in into that second half ramp as well?

So we go through a process where we build up our expectations kind of contract by contract from the business units. And Tahira, we did exactly what you're looking at. We went back and said from those expectations, now that we know how things have turned out, what was an appropriate discount, and we look backwards and we reflected that in the guidance. So what we did exactly what you're -- the way you're thinking about it.

Okay. And then if you were to look at the margins in a sense, given that it seems that these modulations are probably going to go going forward as well. I know you're still confident about that mid-teens sort of EBITDA range. But do we sort of hit it at -- do you hit a sweet point on that more in the 2020 timeframe, or is that still possible in 2019?

I think in the back half of the fiscal year, I think we can do mid-teens, I think that's what -- if you do the math, that's what it would imply.

Got it. And so you think that's something that can be sustained then going forward as well into the 2020?

We think that gets better as we get more momentum in the project.

Our next question is from Chad Dillard with Deutsche Bank.

So it seem like we started to see AT&T's contribution revenue during the quarter a little bit after several quarters of decline. And based on the work that you see ahead in your annual backlog, I mean, do you start to -- do you expect to see a quarter-over-quarter acceleration in revenue came from this customer? And then just secondly, on CenturyLink, I was just curious whether you have enough visibility to say that you're going to see that, that customer decline starting to hit bottom in the very near term?

So, Chad, with respect to AT&T, we have a number of projects associated with the FirstNet program. And I think AT&T was at a -- an investor conference last week where they shared that on that particular program, they had spent about $140 million in the calendar first quarter, but they expected to spend $2 billion for the full year. So clearly our efforts for them on that program are going to have to pick up to align with their expectations. And we do see that in the business. I think with respect to CenturyLink, that they have guided and spoke at another conference last week to kind of 16% of revenue. They spent 13% on CapEx in the first quarter and they -- there is a -- through the integration of Level 3 in CenturyLink, there is a new management team. They are being very disciplined in reviewing their CapEx. But they also at that conference said that they saw spending picking up and developing a steadier rhythm on the consumer side, which is not where all our revenue is but a significant majority of the revenue with them is on the consumer side and on the CAF side. So based on those comments, I think they see things getting a little better.

That's helpful. And then can you spend some time on FirstNet? How much contribution to revenue could this grow to at peak spending levels for your business. Have you started to see AT&T start to bundle 5G work with FirstNet work? And like how do you think that impacts your ability to compete for that work? And then lastly, just from a labor perspective, do you have enough tower workers to support the buildout or will that be a bigger hiring or focus for hiring going forward?

Okay. So I mean in terms of resources, Chad, I mean, we assess that as we're looking at the guidance, we think we'll be able to execute on the work that we provided. We've grown that business essentially over the last 5 years from a startup to a run rate of $200 million or thereabouts and we think it grows from there. I don't think we're going to isolate individual programs with customers, but we see it as that part of our business with AT&T probably growing faster than the total. So we see that incrementally positive. I think on your question on 5G, I think if you look at some of AT&T's comments recently, that they've talked about integrating 5G radios in the FirstNet deployment. So for us, we don't isolate quite the 5G work separate from the FirstNet, it's all an integrated one tower climb approach to both programs. So we have the skill set because we are doing the work.

Next we'll go to Brent Thielman with D.A. Davidson.

Steve, you are looking for revenue to pick up here in the second quarter relative to last year. I guess, my -- have you started to see that develop yet? Have you seen it turn maybe in the latter part of last quarter? Or is it kind of June-July where you think things start to pick up?

No, I mean, we see good improvement throughout the quarter. Brent, I think the difficulty in April is, it clearly picked up from March, but it wasn't seasonal just because of the prolonged winter weather conditions. I mean in the upper Midwest, some of the road moratoriums didn't get released until the 1st of May; a year ago, it's the first week of April. So I mean, it certainly was delayed seasonality this year, but we see that picking up in May in a number of parts of the business.

Got it. Okay. And then I guess, Steve, with the investments you've made in the business in terms of people and equipment, I mean, are you nearing the point here of critical mass where you feel like you've got what you need to begin to leverage these spending cycles coming and that should ratchet it down?

Well, we've built lots of infrastructure, right. As the programs get bigger, we'll continue to add to it, but not at the same rate, right, given that we've got the foundation in place. We have a large program. Management office, obviously, there's leverage there as the programs get bigger. There is the warehousing and field office facilities, right. If program run rates go up 50%, your rent doesn't go up 50%. So there is leverage as the programs gain momentum.

Okay. Great. And then maybe just one quick one, Drew. The other income line was I think quite a bit higher than you guided. Can you remind me, are those fixed assets sales and should those run higher for the year?

Yes, Brent, if you -- those number did come in a little bit higher in the quarter. And then for the year, we did update that number in the outlook.

Used equivalent prices were stronger than we expected, which is probably a leading indicator that people are trying to find capacity wherever they can.

And that goes to competitors, Steve or...

They're typically subcontractors or it could be -- more broadly, it could be a general construction. I mean, we sell assets through public auctions, and so there's broad demand. But the economy is good and demand for equipment is good. When you can sell an asset 8 years after you bought it for 75% of what you paid for, that's a good market.

Not too bad, okay.

Our next question is from Adam Thalhimer with Thompson, Davis.

Steve, when I talk to your competitors, both public and private, the general sense I get is that people are basically sold out for the next 3 years. Would you say you're generally in agreement with that statement?

Well, I'm not sure I agree with the framework. But I think people are busy. I mean, we're here to grow capacity for customers. So I guess, we're sold out today, but we could always do a little more tomorrow, right. So I mean, that's why we're spending the money on the CapEx. And as Brent mentioned, that's why we've invested in the infrastructure and the people to get bigger. Private companies may have a different approach to thinking about that. But for us, we've positioned the company to grow and we don't -- no subsidiary comes back and says, we can't contemplate another project because we're "sold out." It's a question of getting the right returns to make future investments to add the capacity.

I guess the reason I made the comment was just to try to get people sense of how long these programs could last and how much revenue we're talking about here?

I mean, I think if you look at customer comments, they're indicative of long-range programs, you know what, we had a customer that had a sell-side event yesterday and clearly pretty excited about opportunities around deploying more infrastructure, and that's not going to just be for a year or 2.

The near-term revenue weakness, can you help us get a sense for how much of that was the permitting issue and how much of that was modulations at 2 customers?

Well, clearly the permitting issue was more impactful of growth, whereas the decline year-over-year is really just the winding up. As we mentioned, there was 1 customer that commented that they had spent kind of 7% of what they expected for full year on a large program in the first calendar quarter. Clearly, they've got to ramp up. And then there certainly was some weather impacts both in the Northeast. I think they had a snowstorm about every weekend through April, as well as the limitations on construction activity in the Midwest.

Okay. And lastly, as you think out over a multiyear period, would you say that the opportunity for telco is larger than for cable?

I think they are both pretty good. And it's hard -- it will be interesting to see the interaction of 5G fixed broadband with the cable consumer and small and medium enterprise business. And I think competition has always been good for our business and as for our investment as people create new capabilities.

Our next question is from Noelle Dilts with Stifel.

So looking at the sequential uptick in headcount, can you give us a sense of how much of that was organic versus acquired?

There was about 150 acquired, Noelle. So it was -- majority was still -- or right about half was organic and half was the acquisition.

Okay, great. And then just looking at this 82.7% growth at Verizon, I mean, for me that was ahead of my expectations. How did that compare to what you guys were expecting internally?

Well, I mean, we are not going to comment specifically other than to say that we've had big ramps. There has been some permitting issues. And I think we all would be happy to say we were growing faster for every customer, including that one.

Okay, perfect. And then in terms -- sorry, if I missed this number, but did you give a CapEx expectation for the year?

Yes. Noelle, this is Drew. So if you recall on the last call, we talked about $190 million to $200 million net for this year and we still anticipate it to be there. The number for the current quarter was a little bit lower than where we had expected. So it's really a timing issue on that.

And next we'll to Jennifer Fritzsche with Wells Fargo.

Two if I may, I believe you said this, Steve, but I do wanted to stress on pricing a little bit. You mentioned a customer having in the Analyst Day yesterday. That customer also has a large cost-cutting initiative. And I was just wondering the concern for some of these customers is they're really pressuring the vendors to cut pricing. And I just -- can you comment a little bit on pricing and maybe just in general, not on a specific customer basis? And then secondly, if I could just ask a bigger picture question of your capacity as it stands right now. I know you certainly might be full today but open tomorrow, or however you said it. But how do you deem your capacity to service more work given the employee base you have now?

Jennifer, I think we're not going to comment on pricing for individual customers or programs. In our comments, we talked about pricing being attractive. Now the way we think about attractive as a comment is that we see pricing that's sufficient for us to invest and grow the business. And if we find that there's opportunity where the pricing is not attractive then we concentrate on where it is and make sure that we grow the business for customers where we're going to get a fair return, not anything more than we should, but a fair return. So I don't -- we are in the business right now of investing and we've got to make sure that, that we have adequate resources financially that make those investments. In terms of capacity, clearly, we've added headcount over the last year, we're going to have to continue to add headcount as these programs grow. I think from a management perspective, we continue to add to that infrastructure. And right now, I think we can get some leverage, I think, we're not as fully utilized from a management perspective in terms of the scale of the enterprise as it could be. So I think we've got the management capacity here, we've got to get permitted work in front of us, and we've got to get the resources in place to get it done.

Great. Can I just add one more follow-up. You touched on CAF, but CenturyLink did mention CAF, the opportunity there would just really haven't been talked about for them in a while. Are you seeing -- onetime we thought CAF dollars will be a top, I think, 10 customer. Are you seeing more pickup in that silo?

Yes, I think, we're seeing more as they discussed last week at an investor conference, they have a new management. They wanted to walk through the program and make sure that the money that they've received is spent wisely. And we've seen them work through that and we see more opportunity picking up there. There is an additional CAF auction that's going to occur over the summer for another couple of hundred million dollars of support for the next 10 years. And we're seeing lots of real activity. We've spoken about this before even with the electric co-ops. We've seen that grow to be a pretty meaningful piece of business across a whole bunch of small customers. So we see some opportunities in rural also.

And next we'll go to Alan Mitrani with Sylvan Lake Asset Management.

Steve, can you talk a bit about cable and the urgency of their spend, do you think in general that urgency has modulated a little bit? Or in general over the next couple of years, you think they will be just as active as maybe the telco participants?

So, Alan, I think we have -- we're very optimistic about opportunities in the cable industry. There's some new technology coming into the industry over the next 6 to 9 months. It's going to make deployments more efficient in terms of on the equipment side of the business for them, but predominantly around headend. And we think that will be good for the business because that will just make what we do have higher returns for our customers. So, yes, we're optimistic about cable.

Okay. And then, I know you don't like to speak about specific customers, but there seems to be a lot of acquisition or potential very, very large acquisitions in that industry going on. Given your customer concentration, how do you deal with a customer -- I'll give you an example. This quarter like CenturyLink who seemingly spends a lot less of their CapEx than you thought they might have if that focus is on one of your bigger customers, then how do you deal with that from a modulation perspective, when you don't want to drop any management or field expertise given it could come back?

To redeploy those assets in other parts of the business that are going to continue to grow pretty substantially, if it occurs, I'm not sure. I'm not sure in the instance that you mentioned, right, you have an integration of 2 businesses and that's not unheard of to have some reassessment if you have -- if you had a horizontal or a different geographic merger, I'm not sure that impacts the customer behavior in the same way.

Okay. And also can you remind us what's left on your share buyback?

$95 million.

Is there a timetable on that?

It's through August. But I mean it was an 18-month approval. And we've had 1 open now for probably more than a decade. So I don't think there is anything magic about August.

And our next question is from Bobby Burleson with Canaccord.

This is Jon DeCourcey on for Bobby. Most of my questions have been answered. Just want to touch upon one more thing with the large customer program. Can you touch on some experience on kind of similar huge ramps in investment from the past, whether permitting hurdles can kind of provide a continued headwind beyond what they've done already? I guess, said another way what's the risk that pushouts go on further beyond even the foreseeable future?

Well, I mean, the uncertainty, Bobby, is always around starting the process. Once there's a cadence to the process, once more municipalities are involved, so the builds get broader, it becomes less uncertain. We had similar experiences with large programs 15 years ago and we're still at them. And today, permitting or even after the initial kind of 12-month period, it just becomes something of an advantage, it's the initiation of the programs that is where the most uncertainty is.

And we do have a follow-up from Alan Mitrani.

Sorry, I forget one. Inflationary pressures, are you seeing any? I see that gas has moved up. I know gas isn't a big piece of your fuel -- excuse me, is a big piece of your COGS. But can you just talk about other businesses talking about inflation just tell us where you think you see that and whether you feel that your current -- the current bidding in the industry is reflecting some of those at a increased cost?

Well, I think, Alan, on fuel, it was basis points, it's not a major COGS factor at this point at this price level. It has been higher in the past, but that was a long time ago. And then, look, I think to attract resources, you are going to make sure that the product is priced appropriately to track those resources. And so we don't say anything different about this ramp up than anything else. In our core business, that's not involved with those ramps. We're not seeing significant price escalation.

Okay. And then, Steve, just a bigger picture. You are clearly staffed up for a much bigger revenue base. It hasn't come to the timeframe you expected or we've expected or others. But do you feel -- you said you need to add a little headcount and you're still going to spend the CapEx and keep the same budget even though revenues may not be as robust as you thought this year. Once that comes, so many other businesses are being priced in the stock market as if it's peak earnings or the fear of peak earnings, no one wants you to get to mid-teens EBITDA and then have a drop off. We're just thinking how many years do you feel, it sounds like once you hit that ramp, this is a ramp that could be sustained for a number of years given the spending implications from your customers, is that correct?

I think we're at the beginning of a number of large programs. We're also seeing opportunities to grow market share, which is not unusual, but that follows large programs. And right now, we're focused on growing the business.

And Mr. Nielsen, there are no further questions in queue.

All right. We thank everybody for your time and attention. And we'll talk to you again at the end of August. Thank you.

Ladies and gentlemen, that does conclude your conference. Thank you for your participation. You may now disconnect.