Ladies and gentlemen, thank you for being here and welcome to the Dycom Results Conference Call. All participants are currently in a listen-only mode. I want to remind you that the call is being recorded. I will now hand it over to our host, President and Chief Executive Officer, Steven Nielsen. Please proceed, sir.

Thank you, Tammy. Good morning, everyone. I would like to thank you for attending this conference call to review our first quarter fiscal 2021 results. Going to slide two. During this call, we will be referring to a slide presentation, which can be found on our website's investor center main page. Relevant slides will be identified by number throughout our presentation. Today, we have on the call Drew DeFerrari, our Chief Financial Officer; and Ryan Urness, our General Counsel. Now, I will turn the call over to Ryan Urness.

Thank you, Steve. The statements made during this call may be forward-looking in nature and are provided pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all comments reflecting our expectations, assumptions or beliefs about future events or performance that do not relate solely to historical periods. Forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections, including those risks described in our Annual Report on Form 10-K filed March 2, 2020 and our other filings with the U.S. Securities and Exchange Commission. We assume no obligation to update any forward-looking statements. Steve?

Thanks, Ryan. As we refer to our results, please note that organic revenue is a non-GAAP measure that excludes revenues from storm restoration services. In our comments today and in the accompanying slides, we reference this and other non-GAAP measures. We refer you to the Quarterly Report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures. To begin, I want to express my sincere hope that everyone listening to this call, as well as their families, are healthy and safe. We are living in truly unprecedented times for our country and our world. During my 21 years as Dycom CEO, I've never witnessed anything like the dislocation we are experiencing as a country. The impacts of 9/11, the dot com crash and the Great Financial Recession pale in comparison to the speed and severity of the effects the COVID-19 pandemic is having on society and the nation's economy. Dycom first tangibly experienced the pandemic’s effects in our business during the week of March 15. Unlike calendar quarter reporting companies, almost half of our first quarter occurred after the pandemic became a reality. As Dycom came to grips with the pandemic, our people demonstrated real fortitude, as we made daily changes to the business. I could not be prouder of our employees. Field technicians served our customers 24/7, helping grow network capacity and maintaining networks whose functioning has never been more necessary for daily life. They work safely and without hesitation. In addition, during the quarter, we transitioned over 2000 employees to work-from-home arrangements, while maintaining our financial closing deadlines and reporting calendar. Together, we made the hard calls necessary to adjust our operating plan to the pandemic environment. Now going to slide four. For employees, keeping them safe was our first priority. We quickly adopted enhanced protection protocols and PPE guidelines for all employees and facilities. We instituted work-from-home policies and responded rapidly to the limited number of incidents we have experienced. With customers, we remained intensely focused on their businesses. We continue to serve as our customers provide critical infrastructure. We are generally considered an essential business provider under state and local pandemic mitigation orders, and we experienced a limited impact on our operations from sporadic, geographically disparate and limited municipal issues. Finally, we decisively and proactively adjusted our operating plans by reducing general and administrative expenses, including executive compensation and overall headcount. We aggressively improved the working capital efficiency through re-norming of vendor payment terms and improving DSOs while tightly managing capital expenditures. Altogether, we significantly enhanced our operational and financial flexibility this quarter. Now moving to slide five for our view of the impacts of the pandemic on our industry. In the intermediate to longer term, we believe that prior investments by major industry participants to construct or upgrade wireline networks have enabled astounding increases in peak demands on telecommunications networks. These programs are likely to accelerate. Not a surprise, our customers' continued commitment to wireline and wireless network investments is evident in recent customer commentary. Social distancing measures have tangibly highlighted the cost of physical proximity and connections throughout the economy. High-capacity, low-latency networks are key to enabling safe virtual connections throughout society, increasing the value of our customers' networks and further creating additional potential new drivers for network investment. In a pandemic world and a post-pandemic world, we believe social equity will demand that access to distance learning, telemedicine and other newly essential applications be unencumbered by rural geography or socioeconomic status. In the near term, we believe macroeconomic uncertainty over the balance of this year may influence some customer plans. Customers are focused on the possible direct impacts of their businesses regarding increased consumer and enterprise demand resulting from work-from-home and shelter-in-place protocols. SMB dislocations due to business closures, or potential decline in new housing formation, overall consumer credit deterioration due to increased unemployment, and reduced churn and new subscriber additions due to a reduced retail presence. In general, some disruptions may be expected within the overall municipal environment, as the parties reengineer application and inspection processes and weigh needed jobsite access against increased social economic openness. On balance, we expect the COVID pandemic will reinforce and eventually accelerate pre-pandemic industry trends, including deployment of fiber deeper into existing telecommunications networks, significant investment in converged wireless wireline networks, and increased wireless capacity and capability through the rollout of 5G technologies. In sum, we believe the pandemic highlights that telecommunication networks are crucial infrastructure for our country and key to its future success. At the same time, we are mindful of the potential near-term impacts on the nation's economy and our customers' businesses, as well as potential impediments to jobsite access that may result from the pandemic. Now going to slide six. Revenue was $814.3 million, a decrease of 2.3%. Organic revenue, excluding storm restoration services of $4.7 million in the year-ago quarter, decreased 1.8%. As we deployed one gigabit wireline networks, wireless wireline converged networks, and wireless networks this quarter, we reflected an increase in demand from two of our top five customers. Gross margins were 16.5% of revenue, reflecting improved performance relative to our expectations, and general and administrative expenses were 8.1%. All of these factors produced adjusted EBITDA of $69.9 million or 8.6% of revenue, and adjusted diluted earnings per share of $0.36 compared to $0.53 in the year-ago quarter. Liquidity was ample as cash and availability under our credit facility was $390.1 million, an increase of $52.8 million during the quarter. Of note, net debt declined by $86.9 million during the quarter and over the last two quarters by over $263 million. Now moving to slide seven. During the quarter, we exceeded our revenue expectations with increased demand from two of our top five customers. Organic revenue decreased 1.8%. Our top five customers combined produced 78.5% of revenue, decreasing 3.9% organically, while all other customers increased 7% organically. Verizon was our largest customer at 21.6% of total revenue or $176.1 million. AT&T was our second-largest customer at 18.9% of revenue or $154 million. Revenue from CenturyLink was $148.8 million or 18.3% of revenue. CenturyLink was Dycom's third-largest customer and grew 40.8% organically. Comcast was our fourth-largest customer at $118 million or 14.5% of revenue. Finally, revenue from Windstream was $42.2 million or 5.2% of revenue. Windstream was our fifth-largest customer and grew 26.1% organically. Of note, this is the fifth consecutive quarter where all of our other customers in aggregate excluding the top five customers have grown organically. Over the last several years, we believe we have meaningfully increased the long-term value of our maintenance and operations business, a trend which we believe will parallel our deployment of one gigabit wireline direct and wireless wireline converged networks, as those deployments dramatically increase the amount of outside plant network that must be extended and maintained. Now moving to slide eight. Backlog at the end of the first quarter was $6.442 billion, versus $7.314 billion at the end of the January 2020 quarter, a decrease of over $872 million. Of this backlog, approximately $2.512 billion is expected to be completed in the next 12 months. The decline in backlog during the quarter reflected, in part, customer reprioritization of components of a large program. For CenturyLink, we received engineering services agreements in Oregon, Montana, Arizona, New Jersey, Pennsylvania, Virginia, and North Carolina. From AT&T, a construction services agreement in Alabama; for Verizon, engineering and construction services agreements in various locations; from Charter, construction and maintenance services agreements for California, Texas, North Carolina, and Florida; a locating services agreement for Portland General Electric in Oregon; and rural fiber services agreements in Oklahoma, Wisconsin, Arkansas, and Tennessee. Headcount decreased during the quarter to 14,292, reflecting adjustments we made to our operating plan. Now, I will turn the call over to Drew for his financial review and outlook.

Thanks, Steve and good morning everyone. Going to slide nine. Contract revenues for Q1, 2021, were $814.3 million, which was above the high end of our expectations despite a challenging economic backdrop. Organic revenue declined 1.8%, but we had solid growth from two of our top five customers. Adjusted EBITDA was $69.9 million or 8.6% of revenue. Gross margins were at 16.5%, which were approximately 80 basis points above the high-end of our expectations for the quarter from improved operating performance at higher revenue levels. Adjusted G&A expense decreased 18 basis points compared to Q1, 2020. During the quarter, we took actions to reduce administrative costs responsive to the current economic conditions. Additionally, there was a reduction of performance-based compensation compared to Q1, 2020. Non-GAAP adjusted income per share in Q1, 2021, was $0.36 per share. Excluded from this non-GAAP result was the impact of a goodwill impairment charge of $53.3 million for a reporting unit that provides installation services inside third-party premises. In response to the impact of COVID-19, certain customers have modified their protocols to increase the self-installation of customer premise equipment by their subscribers. This reporting unit generated less than 4% of annual revenue and did not incur losses in fiscal 2020. Now going to slide 10. Our balance sheet and financial position remain solid. Since Q3 of 2020, we have reduced net debt by $263.3 million. In Q1 of 2021, net debt was reduced by $86.9 million from solid free cash flow and by purchasing $167 million of principal amount of our convertible senior notes at a discount for $147 million. We ended the quarter with $643.9 million of cash and equivalents, and $675 million of outstanding borrowings on our revolving line of credit. These borrowings were made in March and deposited as cash balances on hand as a protective measure to preserve financial flexibility in light of general economic and financial market uncertainty resulting from the COVID-19 outbreak. As of the end of Q1, 2021, we also had $438.8 million of term loans outstanding, and $293 million principal amount of convertible senior notes outstanding. In May 2020, we announced a tender offer to purchase any and all of the 293 million of convertible senior notes outstanding. We expect to use cash on hand to fund the purchases. Cash flows from operations were robust at $85.2 million during Q1. We made solid progress invoicing and collecting balances during the quarter and the combined DSOs of accounts receivable and net contract assets sequentially improved by five days from Q4, 2020, to 125 days at the end of Q1. Capital expenditures were $18.3 million during Q1, net of disposal proceeds, and gross CapEx was $20.7 million. For fiscal 2021, we anticipate capital expenditures net of disposal proceeds to range from $60 million to $70 million, a reduction of $60 million from our prior outlook. As of Q1, 2021, our liquidity was ample at $390.1 million. In summary, we continue to maintain a strong balance sheet and ample liquidity. Going to slide 11. To date during the COVID-19 pandemic, our services have generally been considered to be essential in nature and have not been materially interrupted. The company is closely monitoring the impact of the pandemic on all aspects of our business. We've taken proactive measures to maintain business continuity, manage costs and preserve the solid financial position of our company. We're encouraged by the Q1 performance since the onset of the pandemic. At the current time, we are seeing stable overall demand for our services. As we look ahead to Q2, 2021, we anticipate non-GAAP adjusted EBITDA percentage of revenue, which is broadly consistent with the Q2, 2021, outlook we provided in February 2020. However, given the difficulty to project our revenues and results of operations during this period of greater economic uncertainty, we are not providing detailed financial guidance for Q2, 2021, or subsequent quarters at this time. The ultimate impact of our future operating results, cash flows and financial condition is likely to be determined by factors, which are uncertain, unpredictable and outside of our control. Now, I will turn the call back to Steve.

Thanks Drew. Moving to slide 12. Within a challenged economy, we experienced firm end market activity and capitalized on our significant strengths. First and foremost, we maintained strong customer presence throughout our markets. Second, our extensive market presence has allowed us to be at the forefront of evolving industry opportunities. Fiber deployments enabling new wireless technologies are underway in many regions of the country. Wireless construction activity in support of expanded coverage and capacity continues to grow through the deployment of enhanced macro cells and new small cells. In fact, we have recently completed or begun work associated with several thousand 5G small cell sites across 13 states. Telephone companies are deploying fiber-to-the-home to enable one gigabit high-speed connections. Cable operators are deploying fiber to small and medium businesses and enterprises. A portion of these deployments are in anticipation of the customer sales process. Fiber deep deployments to expand capacity are underway. Dramatically increased fees to consumers are being provisioned and consumer data usage is growing dramatically. 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 for wired and converged wireless wireline networks. As our nation and industry contend with the COVID-19 pandemic, we remain encouraged that our major customers are committed to multiyear capital spending initiatives. And we are confident in our strategies, the prospects for our company, the capabilities of our dedicated employees, and the experience of our management team as we navigate challenging times. Now, Tammy, we will open the call for questions.

And we have a question from Sean Eastman with KeyBanc. Please go ahead.

Hi, gentlemen. Thanks for taking my questions. I hope everybody is well on your end. I just wanted to start on the decision not to provide guidance. Overall, I understand the uncertainty. But it just seems like disruption is pretty limited here near-term, and demand trends are stable. So, I'm just trying to get a little more color on where the big unknown is, and what visibility is like around order flow near-term?

So, Sean, look, we had a good quarter. The trends are stable into May. We're confident in the business to date, but we have all of our major customers who are not providing guidance to their investors. And we just weren't comfortable or presumptuous to get in front of that approach from the customers. Clearly, there are always different approaches to providing guidance in uncertain times. But first and foremost, is your current period performance, and that was good.

We have seen a significant improvement in cash generation over the last two quarters. Can you provide insight into the expectations for converting free cash flow from EBITDA this year, particularly in relation to Dycom's normalized trend? Also, are there any factors we should take into account as we progress through the rest of the fiscal year?

Well, clearly, we had DSOs come in. We re-normed a number of our vendor relationships to get more in line with what I call industry benchmarks. We continue to work hard to tighten our collections process, manage CapEx, and manage working capital more broadly. And so, we were pleased with the reduction in net debt. We were pleased with the reduction in leverage. And we expect those to continue, once again, given the uncertainties of the environment that we're operating in.

Got it. And I'm going to sneak one last one in. So, the CapEx flex down is pretty notable. I'm just curious whether that should be an indication to us on where revenue is trending, just in terms of capital intensity. And whether a component of that CapEx is sort of being deferred into fiscal 2022. Just how to think about that?

So, we have always had an aggressive replacement cycle where depending on the residual value of the equipment, we can sell it earlier than most people do in the industry, because we've seen good returns. In a way, it's the arbitrage, the discounts we get when we buy equipment new to what it's worth in the aftermarket. And typically, in periods of uncertainty, we're able to extend the useful life of the equipment with a modest, if any, increase in our maintenance costs. And once again, in periods of uncertainty, we're just managing cash. Clearly, we had good revenue performance in this quarter. And we don't see any impediments based on our capital plan to continuing to grow the business when it makes sense.

Got it. I appreciate the time. Thanks.

And our next question comes from the line of Noelle Dilts with Stifel. Please go ahead.

Hi, guys. Good morning.

Good morning, Noelle.

Thanks. So, for my first question, I was hoping you could give us a little bit more detail on the large customer program that you have discussed in the past. You've talked about moving from Phase 1, which has been a little bit more challenged, into Phase 2. Curious if the timing there that you've kind of previously communicated has changed at all? And you also mentioned a reprioritization of that large customer program, maybe if you could clarify a little bit what that means, that would be helpful?

So, Noelle, we really don't have anything to add to what we talked about in February in terms of our expectation around moving through the initial portions of that large customer program. So, nothing real noteworthy there. In terms of the reprioritization of a large customer program, it was for a portion of the work that the customer reprioritized. And so, when we evaluated the realizability of the backlog, it's more uncertain, and so we reduce that. It's not of concern to us.

Thank you. That's helpful. Could you discuss how much of the employee reduction was permanent versus temporary? How do you plan to ramp the workforce back up when business picks up, and what are your thoughts on managing these changes?

We reduced our headcount by just over 900 employees sequentially, with about a third of those being non-revenue producing roles. We initiated several efficiency measures and carefully assessed our needs in general and administrative areas, leading to tough decisions. As a result, we reduced staff during this uncertain period. On the revenue-producing side, the majority of the remaining cuts were related to our short-cycle businesses, which are primarily handled in-house. Typically, during this quarter, we have many trainees, but due to the decline in activity in those short-cycle businesses, we let go of several trainees. We expect that work in those areas has bottomed out by the end of April, and we will bring back the staff as needed. The adjustments were necessary because there wasn't enough business while they were in training.

Thanks. That makes sense.

Thank you. And our next question comes from the line of Alex Rygiel with B. Riley. Please go ahead.

Good morning, Steve.

Good morning, Alex.

Steve, your backlog was down due to a customer reprioritizing a large program? Is this the in-house customer premise work shift?

No. It was really just a shifting in priorities. When we assessed the realizability of the backlog, we made an adjustment. This does not mean the work has been canceled; it simply indicates that, from a backlog perspective, we needed to adopt a more conservative approach due to the reprioritization.

And can you quantify the negative impact in revenue and EBITDA from COVID in the first quarter?

So, I think the impacts were generally limited to the short-cycle business, and it was pretty insignificant.

And how does your activity in May compare to April?

As I mentioned to Noelle, we don't have much short cycle business. However, in the short cycle businesses, it seems that activity reached its lowest point around the weeks of April 18 to April 25 and has seen a slight increase as we move into May.

Thank you.

Thank you. Our next question comes from the line of Brent Thielman with D.A. Davidson. Please go ahead.

Hey, thanks. Good morning, guys.

Good morning, Brent.

Hey, Steve, I know you guys aren't providing a sales outlook. I know there's a lot of factors in play there. But it does look like you guys feel pretty good that you're stabilizing the margins with this quarter and sort of the commentary around the second quarter. Is that fair?

Yeah. I think, if you look back at the guidance we provided in February as a whole, we feel for the July quarter, we're comfortable with that. But we're not providing any detailed guidance given the factors we've talked about with earlier questions.

Okay. Looking at the bigger picture, there is a lot of excitement this year with the Sprint/T-Mobile merger. Can you share if discussions are advancing with any of those customers? Do you anticipate these companies becoming customers or increasing their business with you? Perhaps you can provide any insights on what might be developing behind the scenes that indicates growth is on the way?

Well, look, we are clearly aware of the programs. We are having some discussions, I would say just generally in wireless; it represented about 10.5% of this quarter's revenue. So, kind of on a run rate basis, approaching $350 million in revenue. We had good growth with AT&T. And so, I think we feel good about our opportunities there. I think it's taking some time to develop. There has been some industry commentary about that, but we're still confident overall in the wireless business.

Okay. Maybe one quick one too. Just on the progress on cash flow and DSOs. I know you guys have been kind of targeting this 90s level. Do you think you can get there this year versus maybe have to wait in fiscal 2021, which I think we talked about last quarter?

I think we continue to make progress whether we get there this fiscal year or not, we'll be moving in the right direction.

Okay. That's great. Thank you, guys.

Thank you. And our next question comes from the line of Jennifer Fritzsche with Wells Fargo. Please go ahead.

Thank you for taking my questions. I have two. This morning, CenturyLink, which has seen significant growth among your customers, announced plans to expand gigabit speed to an additional 400,000 homes. Does that surprise you? Do you expect them to continue being aggressive in their fiber expansion? Secondly, I noticed you secured a new contract with Charter, which has not been in your top five customer list. Can we expect them to become more aggressive in the future? Thank you.

So, with respect to CenturyLink, Jennifer, we've been actively participating with them in their fiber-to-the-home initiative now for probably going back to 2015/2016. We weren't surprised in the list of markets that were identified. We are encouraged that they feel good about the program and believe that it's successful. And so, we're happy with the progress we made with them. As you identified, we grew kind of 40%-plus organically year-over-year. And then with respect to Charter, those are not new contracts. Those are contracts we have in place and have active work under. I think, in general, what I would say about cable is clearly they had a great subscriber addition quarter. The work-from-home and the amount of video conferencing and other bandwidth-intensive applications that have been exposed or increased by the pandemic, I think over time is going to be supportive of continued expansion of capacity in cable networks and all networks, in general.

Steve, if I may, can I just add on to that last point on cable? From what I've read, it seems like the uplink is really being challenged here for Zoom and Microsoft Teams, et cetera. Is that something that can be helped through a more fiber-deep architecture from cable?

Sure. So, there's a number of ways that cable can provision more upstream bandwidth, but the most basic is to reduce the number of subscribers that connect to an individual fiber at a node location, and ergo, pushing fiber deeper certainly helps with that. On a shorter-term basis, there can certainly be no splitting activity that I think one of our customers has talked about, and of which we've been very active in supporting those efforts.

Thank you. And we do have a question from the line of Blake Hirschman with Stephens. Please go ahead.

Yeah. Good morning, guys.

Good morning, Blake.

Steve, it sounds like the short cycle pieces are really what saw any kind of impact. Can you kind frame up what percentage of the overall mix would fall under that short cycle definition?

Well, let's have Drew give the split between cable, telco, and locating. And I think we can frame our answer that way.

Okay. Good morning, Blake. So, telco was at 72.1%, cable was 17.1%, facility locating was at 6.5%, and electrical and other was at 4.3%.

So, Blake, typically the short cycle businesses that we're referring to are really around the locating and the cable installation business. And as you can tell, between our disclosures, they're less than 10%. That doesn't mean they stopped. They just had slower activity, so a minor impact.

Okay. Got it. Great. And then on AT, it looks like your payables went up a bit. That's obviously not a bad thing at all. Just trying to get a sense for how much of that might be more kind of timing versus sustainable kind of as we look forward?

Go ahead, Drew.

Yeah. As Steve mentioned, Blake, just around the payables, we looked at vendors and re-normed where the payment terms are on those more in line with what Steve referred to as industry standard. So, that's something that we've spent time on during the quarter, and we'll continue to look at that.

Got it. That sounds great. I'll hop back in queue. Thanks.

Thank you. And our next question comes from the line of Alan Mitrani with Sylvan Lake Asset Management. Please go ahead.

Hi. Thank you. I have a couple of quick questions. Steve, can you discuss how remote work has impacted your employees this past quarter? Specifically, how do you think technology and remote work will influence the business in the next year or two? Could you also share any details about the software packages you've implemented, or do you believe the business will continue to operate as it always has for the past 20 years?

Sure. I think, Alan, as we said in our comments, we moved over 2400 people to working offsite or work-from-home. We're going to be very thoughtful and not in a hurry to come back onsite because we found good productivity. We think generally employees like it, and we think it's been good for the business. So, clearly, the investments we made around moving applications to the cloud and ensuring that we were ready with sufficient capacity to move those offsite, I think, were good investments over the last several years. We suspect that we're not the only company thinking that way. And so, we think there are going to be more demands on residential networks where actually what's traditionally been in facility or in-office activity goes to the edge of the network on the residential side. So, we think that's good. I think the other trend that I think is just emerging and probably will accelerate over time is all numbers of industries thinking about how they deal with social distancing and using 5G networks everything from warehousing to logistics to manufacturing. I just think there's going to be substantial new applications developed that take advantage of 5G technology and fiber deeper into the networks. And I like the comment one of our customers made that even in this period of slow time, people will pay their phone bills, their cellular or wireless bills when they're skipping rent payments and mortgages, right? So, it says how important the networks that we work on are to the country.

Thank you. Can you discuss the competitive landscape regarding 5G? So far, we haven't seen 5G handsets, which means there's not much activity in that area. Do you believe that the need for better connectivity as more people work from home will encourage quicker investments, possibly through an infrastructure bill if it's approved? Or might the delay in 5G handsets and consumer purchases slow down any applications for it? I'm curious why some of your customers may either choose to increase or decrease their capital expenditures in the upcoming year.

Certainly, on the capacity side, there has been significant investment to create more capacity. Regarding 5G, a lot of preparatory work is already in progress. We are currently active at thousands of sites across 13 states, which we believe is substantial. Particularly on the industrial and residential fronts, the economic changes will only strengthen deployment trends. Additionally, in our comments, we pointed out that with work-from-home, telemedicine, and distance learning—innovations we quickly adopted during the pandemic—access remains essential for these services. We are optimistic that this will be taken into account in future infrastructure legislation. We have a long history of rural telecom deployments, including many initiated after the last recession, partly funded by federal dollars, which is something we are monitoring closely.

Okay. And then lastly, if I can. The sequential drop in backlog, it's your biggest in a long time. Is there something that you pulled out of backlog, or is it just people didn't release some of the work? Can you just remind us, or what you think in terms of what that reflects?

So, Alan, as we said earlier, roughly a third of the decline was this revaluation of this reprioritization of the backlog. It wasn’t canceled, but it was reprioritized. And so on a probability basis, we just marked that down. The rest of the business had normal burn. And in fact, subsequent to the end of the quarter, we had a pretty substantial renewal in our small cell business with a key customer. We've renewed some other business. And so, we are not concerned about that trend.

Thank you.

Thank you. And our next question comes from the line of Adam Thalhimer with Thompson Davis. Please go ahead.

Hey, good morning, Steve.

Hey, good morning, Adam.

I'm curious about the impact of the virus on short-term trends. Is there a significant amount of emergency work as customers try to keep up?

Yeah. Look, I wouldn't call it emergency work. I think, our customers' networks are performing well. A number of them have provided lots of disclosure about the rapid growth. I think, what I would say is, it's as if a year or year and a half worth of normal network growth got accelerated into a two-week period or a three-week period. And so, I think the networks have done well. That being said, we've had a fair amount of activity in different geographies across the country to create some capacity to backfill that acceleration of the growth.

Doesn't that make you feel more confident about your customers? They are economically sensitive and can cut capital expenditures if they become concerned about the economy or if their cash flow is affected. However, I believe the importance of networks during this time offers some insulation.

I believe, as we've mentioned previously, that the work we do on these networks provided by our customers is vital for the country. This has become increasingly clear over the past couple of months, more so than in recent years. It is essential, and I expect ongoing investment in these areas. However, we must recognize that the current economic climate presents some short-term challenges that could influence customer behavior. Nevertheless, in the intermediate and long-term, I see this as reinforcing the fundamental drivers of our business more clearly and powerfully.

Okay. Can you talk about the decision to pull in the converts now and then how that impacts quarterly D&A and interest expense going forward?

All right. Drew, why don't you take the D&A and interest expense?

Yeah. So, just on the interest side of it, Adam, the converts, there's two elements to it. One of those we add back, which is a non-cash amortization, and then there's the coupon, which is at 0.75, and where the senior credit facility is now and where LIBOR is at a low rate, it's certainly attractive debt currently and there's capacity within the facility to repurchase those notes. And so, we anticipate using cash on hand to do that.

I believe that when considering the repurchase during the tender offer, we recognize that investors have other investment options available that may be more appealing than holding this convertible debt until it matures. By providing liquidity to them at an appropriate return for us, we are taking a proactive approach to manage our capital structure.

Okay. I guess, I was hoping Drew would make it easy for us and give us some targets for Q2 on D&A and interest expense.

Well, we'll see how many of the notes come in, and then we'll consider helping folks out when that's done.

Okay. Understood. Thank you.

Thank you. Our next question comes from the line of Jon Lopez with Vertical Group. Please go ahead.

Hey, guys. Thanks so much.

Good morning, Jon.

Good morning. I have a couple of quick questions about the backlog to clarify the details. First, was there anything specific related to the lower on-time installation activity that contributed to this in any way?

So, Jon, I'm not sure I understood the question. We definitely saw a decrease in in-home activity, but that wasn't the main factor affecting the backlog. However, as most of our customers have noted, their customers are understandably not very comfortable with having people come into their homes, which has impacted that business.

Okay. Understood. But in that context, if I just look at the $870 million drop from the prior quarter, can you clarify if there was a specific portion of that where in-home was just removed?

No, because we continue to have some levels of activity. It's at reduced levels. A third or a little better of that was this reprioritization dynamic, which is not of concern to us. The rest of it was ordinary course. And we've talked about this, Jon, before. Our backlog is an estimate using a number of methodologies that are consistent over a long period of time. It correlates over the intermediate and long-term with revenue. But in quarter-to-quarter, it's not all that meaningful. I mean, have we gotten the renewal in three days earlier than we did, it would have been a different number based on the small cell activity.

No, that's understood. Thank you. To revisit the re-measurement, it seems you are suggesting that activity is likely to return. I know you prefer not to specify a timeframe, but would it be reasonable to assume that this could translate back into backlog, perhaps in 2021 or at some point?

It hasn’t been canceled; it was reprioritized. We made this change due to enough uncertainty that we felt it necessary to adjust the backlog. However, it wasn’t a significant factor for the company overall. It was just a routine adjustment based on new information.

Got you. Sorry, the last part on this. It sounds as though any of these changes, they don't really seem like they're having much of an impact on your view of what working capital improvement can look like as we get to the back half of the calendar year. Is that a fair assessment? And I guess, maybe my question that would spit off that is maybe like why? If you are having this re-measurement now like, why would that have no impact on your cash flow capabilities in the back half of the year?

So, Jon, I'm not sure I follow. With respect to the backlog, it's an estimate. It's different than our view in terms of working capital. I mean, the working capital is going to be a function of the revenue levels, the EBITDA margin, and then the way we manage accounts receivable and payables. And we think that we will continue to de-lever the business through the balance of the year based on those factors.

Right. Okay. No. That’s helpful. I guess, what I was just kind of driving at, it doesn’t seem like this change in backlog is really driving much of a change in your view of the business over the intermediate term? Maybe I could just simplify it that way.

I think that's exactly correct. That is correct.

Okay. Thank you. Just one last question. You have mentioned this a bit in previous answers, but this marks the fifth or sixth quarter of year-on-year decline with one of your major cable customers. I'm curious if you think this trend might shift from being a hindrance to a benefit over the next 18 to 24 months.

Well, look, I think we've talked about this before. We were encouraged that Comcast grew sequentially. We've talked about and they've talked about their increasing deployment of fiber deeper into their networks. I think there was some focus on dealing with near-term capacity. But they are clearly committed to pushing fiber deeper into the network. And we were encouraged that sequentially, the revenue went up as opposed to the declining trend that it had been on. So, I think, in general, we were pleased with where that business was.

Very good. Thanks for all the help. Sorry for the tortured questions.

Thank you. And we have a follow-up question with Neil Miller, a private investigator. Please go ahead.

Hey, Steve. Hi.

Hey, Neil.

In your opening comments, you referenced latency. And I am kind of wondering whether that was a small micro cell commentary or a node splitting or a 5G overlay, or just kind of help with why the emphasis on latency?

Well, I think, Neil, latency standards are key to the 5G standard. And I think, latency, if you think about it, is crucial to all of these deployments around whether it's video conferencing or industrial applications. I mean, the return cycle of the signal in the network is really important and becoming even more important as we think about autonomous vehicles and other future applications that need the network, they need a network that has a quick response time.

Thank you. And we have a final question coming from the line of Jennifer Fritzsche with Wells Fargo. Please go ahead.

Just a quick follow-up. Depending on what you believe coming from Washington, it doesn't seem debatable that if there is a force stimulus, broadband is going to be a part of it. I know you saw some benefit in the last stimulus, which I believe was 2009. I mean, any thoughts there? I am not asking you to predict what's going on in Washington, but just would love your thoughts.

Sure. So, as you mentioned, Jennifer, in the 2009 stimulus, there was roughly $7 billion that was allocated to broadband, rural broadband deployments. And between the Dycom business at the time as well as the businesses that we acquired from others subsequent, if you put those together we did there sort of $600 million of that stimulus work. So, kind of an interesting number, almost 10% of what was in the bill eventually wound up as revenue to us. And so, clearly, as we said in our comments, if you think about distance learning and telemedicine and all the things that have become essential, I think it's a reasonable area to look towards as future investment in a stimulus. There's already the rural digital opportunities fund, which is underway. But I think, clearly, with the magnitude of the federal expenditures in the first stimulus bills, my guess is it would be bigger. If that were involved, then it was 10, 12 years ago, and I think that would be a good opportunity for us. No guarantees, but we have a broad rural presence across the country.

And we do have a question from Alex Rygiel with B. Riley. Please go ahead.

Steve, how did your subcontractor workforce headcount change in the quarter? And can you also help us understand the cadence of completion of a large project for a particular customer?

So, Alex, this is always a backend loaded quarter seasonally until April was a good month. And so, our usage of subcontractors certainly increased month-to-month throughout the quarter. And we had plenty of availability there. So, we feel good about that. And that, as we said earlier, I think we were in the same place where we were three months ago in terms of our progress in working through that large customer program in the initial phase.

Thank you.

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

Okay, Tammy. Thanks everybody for attending this call. We look forward to speaking to you again on our next earnings call at the end of August. Hope everybody stays healthy and safe. Thank you.

Thank you for your participation today. You may now disconnect.