Dycom Industries, Inc. (DY) Q2 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Dycom Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. With that being said, I'll turn the conference now to Mr. Steven Nielsen. Please go ahead.

Thank you, John. Good morning, everyone. I'd like to thank you for attending this conference call to review our second quarter fiscal 2013 results. During the call, we will be referring to a slide presentation, which can be found on our website, www.dycomind.com, under the heading, Events. Relevant slides will be identified by number throughout our presentation. Going to Slide 2. 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. Rick?

Thank you, Steve. Referring to Slide 3. 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 in future periods to differ materially from forecasted results. These risks and uncertainties are more fully described in the company's annual report on form 10-K for the year ended July 28, 2012, 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 in the review of our second quarter results. As you review these results, please note that we have included adjusted EBITDA, certain revenue amounts excluding revenues from acquired subsidiaries and storm restoration services, certain expense amounts excluding acquisition-related costs and write-off of deferred financing costs and adjusted earnings per share, all of which are non-GAAP financial measures to our release and comments. See Slide 16 through 20 for a reconciliation of the non-GAAP measures to the GAAP measures in the slide presentation provided for this call. For clarity and to ensure comparability between periods, our comments will now address our non-GAAP results. Revenues for the quarter increased year-over-year to $369.3 million, an increase of 38.1%. After excluding revenues from acquired subsidiaries of $75.9 million and storm restoration services of $16.7 million, revenue grew 3.5% organically. Volumes during the quarter were solid from telephone companies as a whole, with some companies growing meaningfully, while all carefully manage routine capital and maintenance expenditures. The spending by cable customers increased year-over-year. Gross margins increased by 72 basis points year-over-year, reflecting improved operating trends and storm restoration services in part. Despite the integration cost of approximately $1 million, general and administrative expenses declined slightly as a percentage of revenue year-over-year, reflecting continued good cost discipline. All of these factors produced adjusted EBITDA of $37.2 million for the second quarter or 10.1% of revenue. Results from businesses acquired during the quarter, excluded interest cost, were $800,000 after approximately $6.1 million of depreciation in noncash amortization expense. Net income of $0.15 per share for the second quarter increased from last year's earnings per share of $0.10, reflecting improved margins, offset in part by less other income as we reduced the amount of assets we sold during the quarter. After $63.5 million in operating cash flow in the quarter, liquidity was solid with cash and availability under our current credit facility totaling $233.4 million. This operating cash flow enabled us to repay $70 million, which we had borrowed during the quarter to fund the purchase of substantially all of Quanta Services' domestic telecom infrastructure services subsidiaries. Going to Slide 5. The purchase of these subsidiaries was completed on December 3, 2012, for a purchase price of $275 million and other items totaling $45 million. The transaction was structured to produce attractive tax -- cash tax benefits, it has strengthened our company and created scale as industry announcements indicate customer expenditures are growing. The purchase was funded through borrowings under our new 5-year $400 million credit facility and a $90 million add-on to our existing senior subordinated notes, which mature in January of 2021. Moving to Slide 6. During the quarter, we experienced the effects of a steady industry environment. Revenue from CenturyLink was $54.2 million or 14.7% of revenue. CenturyLink was our largest customer. AT&T was our second largest customer at 13.6% of total revenue or $50.1 million. AT&T grew 34.9% organically year-over-year. Revenue from Comcast was $40.8 million or 11% of revenue. Comcast was our third largest customer. Verizon was Dycom's fourth largest customer for the quarter at 9.1% of revenue or $33.5 million. Revenue from Windstream was $32.3 million or 8.8% of revenue. Altogether, our revenue grew 3.5%. After excluding revenues from acquired subsidiaries and storm restoration services, this represents our eighth consecutive quarter of organic growth. Our top 5 customers combined produced 57.1% of revenue, growing 9.1% organically, while all other customers decreased 4.4%. Now going to Slide 7. Backlog at the end of the second quarter was $2.019 billion versus $1.376 billion at the end of the first quarter, an increase of approximately $643 million. Of this backlog, approximately $1.242 billion is expected to be completed in the next 12 months. Both backlog calculations grew sequentially after adjusting for acquired backlog, reflecting solid performance as we continue to book new work, renew existing work and look forward to substantial future opportunities. With Windstream, we renewed 3-year construction and maintenance services agreement to New Mexico, Oklahoma, Mississippi, Kentucky, Alabama, Georgia and Florida. For Comcast, we secured extensions of both cable installation services and construction and maintenance services agreements in Washington, California, Maryland, Vermont, Massachusetts, New Jersey and Florida. With AT&T, we renewed a construction and maintenance services agreement in Florida for 3 years. With CenturyLink, new 3-year underground facility locating services agreements for Washington and Oregon. And finally, we secured rural broadband projects on a number of states including Montana, New Mexico, Oklahoma, Kentucky, Tennessee, West Virginia and Georgia. Headcount increased during the quarter to 10,135. Now I will turn the call over to Drew for his financial review as well as additional information about our recent acquisition.

Thanks, Steve, and good morning, everyone. As a reminder in today's conference call materials, there is disclosure of certain non-GAAP measures, including items such as organic revenue growth, adjusted EBITDA and non-GAAP earnings. In the materials, we have provided a reconciliations of these non-GAAP measures to the comparable GAAP measures. Going to Slide 8. Contract revenues for Q2 were $369.3 million, including revenue from acquired subsidiaries and storm-related revenues. On a consolidated basis, approximately 88% of our revenues is from telecommunications customers. Adjusted EBITDA, non-GAAP, was at $37.2 million or 10.1% of revenue. This is over a 50% increase from Q2 last year and resulted from profitable growth in organic operations and the contribution of acquired businesses. Diluted EPS, non-GAAP, for the quarter was $0.15 per share compared to $0.10 per share for Q2 '12. Turning to Slide 9. Organic revenue grew 3.5% from growth within existing contracts and from increases in services derived from wireless service providers. On the cost side, margins increased 72 basis points year-over-year from improved leverage and operating performance. Interest expense increased $1.6 million associated with the borrowings for our recent acquisition. Our 6-month year-to-date effective tax rate was approximately 40.4%. We anticipate this rate to continue through the remainder of fiscal 2013. Turning to Slide 10. Our financial position is strong and our liquidity is robust. Cash flows during the period were dedicated to funding our growth and contributed to the paydown of approximately $70 million of revolver borrowings during the quarter. Operating cash flows were $63.5 million, and we ended the period with approximately $22.6 million of cash on hand. Capital expenditures net of disposals were $15.7 million for the quarter. Gross CapEx was approximately $16.5 million. Acquisition expenditures during the period totaled approximately $315 million, and were financed by a $90 million add-on to our senior subordinated notes due 2021, and a new 5-year senior credit facility maturing in December 2017. The new senior credit facility is comprised of the $125 million term loan and the $275 million revolving credit facility, on which $20 million was outstanding at the end of Q2. Availability for additional borrowings was $210.9 million under the facility, after providing for the outstanding balance, and $44.1 million of outstanding letters of credit. At the end of Q2 2013, we had approximately 33 million shares of common stock outstanding. On a fully diluted basis, weighted average shares were approximately 33.5 million during the period. Turning to Slide 11. Given the size of our recently completed acquisition, we have provided selected baseline financial information that we believe will be helpful for you to further understand the business and for your modeling purposes. The acquired subsidiaries produced contract revenues of $75.9 million during the quarter, along with EBITDA at 9.1% of revenues. Pretax results were approximately $800,000 after approximately $6.1 million of combined amortization and depreciation expense, excluding the impact of interest or transaction costs. On the date of acquisition, we acquired working capital balances of approximately $108 million. The DSOs of the acquired subsidiaries were at 100 days, which is generally higher than the legacy Dycom operations. The preliminary fair values of the acquired PP&E and amortizing intangibles were approximately $32 million and $91 million, respectively. Going to Slide 12. We have provided our initial estimates and amortization of intangible assets and depreciation of newly acquired fixed assets. As you can see, the non-cash expenses of amortization and depreciation is weighted heavier towards the earlier periods of the timeline based on the remaining lives. For intangibles, this results in approximately $5.5 million per quarter of noncash amortization for the remainder of fiscal 2013. And then the amortization begins to decline in fiscal 2014 and beyond. We expect depreciation to display a similar pattern as assets with shorter remaining lives become fully depreciated. With that baseline summary of the acquired companies, I will now turn the call back to Steve.

Thanks, Drew. Moving to Slide 13. In summary, within the slowly growing economy, we experienced the effects of a solid industry environment and capitalized on our significant strengths, which were enhanced through our recent acquisition. First and foremost, we maintained solid customer relationship throughout our markets, we continue to win projects 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 after recent industry announcements, are strengthening. Industry participants continued to aggressively extend fiber networks for wireless backhaul services. These services are now planned for small cells as well as macro cells. Cable operators are continuing to deploy fiber to small and medium businesses and with increasing urgency. Some are planning to do so in anticipation of the customer sales process. Wireless carriers are upgrading to 4G technologies, creating meaningful growth opportunities in the near to intermediate term, as well as planning to increase macro cell density. And finally, telephone companies are deploying fiber to the home or node, technologies to enable video offerings and in fact, as in one notable and very significant instance, announced a reacceleration in spending over the next 3 years. A reacceleration, which is beginning to impact to our business. Across all of these opportunities, we have increased profitable market share, as our customers are consolidating vendor relationships and rewarding scale. A recent acquisition will support this trend. In sum, we believe that our leading presence in recently enhanced scale enables us to take advantage of industry developments. Among service providers of our size or larger, we believe we are uniquely positioned to manage and capitalize and meaningfully experience an improving industry environment to the benefit of our shareholders. Now going to Slide 14. As we look ahead to a solid industry environment, our expectations reflect the following views: Improving the legacy revenue and margin trends as wireless continues to grow, cable construction strengthens and a significant customer continues to reaccelerate its capital expenditures. Stable performance from acquired subsidiaries with real opportunities to improve margins through integration activities, offset in part by significant depreciation and amortization expense during Q3 and Q4 of 2013. Strong cash flows dedicated to funding growth and debt repayment. And finally, we are confident that solid operations will continue for a sustained period. Moving to Slide 15. Given the significance of a recent acquisition and the additional amortization, depreciation and interest expense generated by that acquisition, we have expanded the amount of information provided regarding our third quarter outlook. Specifically, we have disaggregated our total outlook into separate information about our legacy operations and separate information about our newly acquired subsidiaries. Ranges of anticipated performance for revenue and gross margin are wider for our newly acquired subsidiaries as we are currently integrating those subsidiaries into our existing monthly and quarterly forecasting systems. With all that said, for the third quarter of fiscal 2013, we anticipate revenues, which are expected to range from $390 million to $415 million, including $300 million to $310 million from legacy operations, which are slightly up year-over-year, and $90 million to $105 million from our new subsidiaries. Gross margins, which are in line on an overall basis but approached 20% within our legacy operation, while in the mid-teens for our new subsidiaries. General and administrative expenses, which are in line year-over-year as a percentage of revenue, include ongoing integration costs and slightly higher stock-based compensation expense associated with performance-based awards, depreciation which reflects the addition of the newly acquired asset fleet, some of which is relatively short lived. Amortization expense, which is substantial at $7.1 million during the quarter, reflecting the significant near-term amortization of acquired intangible assets. And other income, which decreases by $6.3 million, to approximately $1.3 million, reflecting a significant reduction in assets sold as we integrate our fleet of vehicles with the newly acquired subsidiaries. These factors contribute to earnings per share, which benefit from higher EBITDA. A decline from Q3 of 2012, as a result of the over $6 million reduction in other income, $5.5 million of incremental non-cash amortization and $4.2 million of depreciation from our newly acquired subsidiaries is expected during the quarter. As the nation's economy continues to slowly grow, we remain encouraged that our major customers possess significant financial strength and remain committed to multi-year capital spending initiatives which in some cases they are meaningfully reaccelerating. We remain confident in our strategies and prospects for our company the capabilities of our dedicated employees and the experience of our management team who have grown our business many times before. We are excited to have the strengths of our newly acquired subsidiaries and look forward to improving performance as we fully integrate those businesses. Now, John, we will open the call for questions.

[Operator Instructions] And first to the line, we have Rich Paget with Imperial Capital.

Steve, wondering if you could talk a little bit about the housing market with new housing starts and a lot of those statistics looking better and continuing to trend up. And I realize it's still below historical levels, but are you guys starting to see any benefit from that, which would be incremental to what's happening with your telecom customers?

Sure, Rich. I mean, we're certainly encouraged by the new home sales and the fact that starts and permits are headed back, although not anywhere near kind of peak levels. I think the right way to think about the housing recovery with our industry is that this year, I think we will see a lot of absorption. So those projects that were stopped and have remaining lots available to build on, and we've seen plenty of activity there. Although that creates limited sales. But I think in the second half of this year, if current trends continue, we will see new phases of subdivisions started -- new subdivisions started, and all of those require additional, not only plant within the subdivision that we would place, but also reinforcement of the existing feeder facilities to get there. So I think this is -- I've been through 3 housing recoveries and that's how they've always played out before.

Okay. And then I realize any Sandy recovery work has been done. But is there a longer-term opportunity with any reconfigurations of infrastructure or with some of the Sandy bill money coming in with a longer-term rebuild that you guys can participate in?

It's hard to say at this point. But the vast majority of the restoration work that we did during the quarter was for cable operators in the Northeast, although we did some for another telephone customer. I think there are some portions of the barrier islands that still remain to be decided what they do with them. So I think there's some opportunity there, Richard, but nothing that's well-defined at this point.

All right. And then finally, you talked about reacceleration of CapEx spending. I mean, what kind of organic growth range do you think, from what you are seeing now that, that could translate into?

Well, I think what we'd say is that we see recovery in the third quarter and going into the fourth quarter. Clearly, the CapEx numbers were encouraging from most of our customers. And I think if you refer to Slide 15, Richard, at least for Q3, you can get kind of our sense of on the legacy operations where we see organic growth. But we think it probably gets better from there in the fourth quarter.

And next, we'll go to Adam Thalhimer with BB&T Capital Markets. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Can you address, Steve, the Quanta subsidiaries that you purchased, the margins, why they're lower than your legacy business and how might you bridge that gap over time?

So we had talked about this on the acquisition call, Adam, that when we did the diligence on those businesses, that if you look like-for-like, that their margins were not as quite as good as our construction margins. We are very comfortable that kind of the book of business that they have is good business. We have developed over time systems, because of our customer concentration, that we think as we integrate into those new businesses, just as we said in November, that we think their margins can approach ours. But there's going to be a process that we have to go through to get there. But I really just think it's just a question of focus. We're getting good cooperation from the management teams and it's just going to take us time to get them integrated into our management systems. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Okay. And I wanted to ask because -- you had good -- organic growth is starting to accelerate again. But the organic backlog is still down year-over-year. Is it down on stimulus coming out of the business? And then maybe we should expect to see the backlog continue to increase?

I think, Adam, the primary driver to that, and we talked about it on the year-ago call, is we renewed CenturyLink's backlog for 2 years. So that would be calendar '12 and '13 a year ago, and in this period, our largest customer, we did not have a renewal, just because of the way that the contracts fell. So I think that the backlog trends are solid as we see acceleration in our master contracts, that will be reflected each quarter in the run rates, which will drive total and next 12 months backlog. But I think it's primarily that CenturyLink affect. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Got it. Okay. That's helpful. And last question for me, you -- the G&A expense guidance that you gave for Q3 include some of the ongoing integration expenses. And we backed out some expenses from the acquisition this quarter. So as we think through the EPS or the adjusted EPS line, are there -- are some of those items going to get backed out?

At this point, the transaction and financing costs that impacted the second quarter, we backed out, those are have through -- they've all run through the P&L.

Yes, not the integration, but the...

Right. The integration cost, we will identify for you, Adam, but we're not going to reverse those out. So in the second quarter, there was about $1 million of integration cost. There's more to come as we put systems in. We'll identify those each quarter but we're not going to Reg G those on adjusted number.

Our next question is from Saagar Parikh with KeyBanc Capital Markets.

Real quick one on -- when you go through the firm end market opportunities, Steve, can you kind of walk through your legacy business and versus the acquired assets from Quanta, and I think everyone on -- majority of the people in the call know where your opportunities are for your legacy business. But can you take those new acquired assets and correlate it with where those firm end market opportunities are?

They're all in the same places with the exception that with respect to AT&T specifically, that we have a much stronger position legacy with AT&T, primarily in the Southeast and in wireless. But with respect to the other drivers, certainly, we're seeing opportunities with cable companies in both businesses, we're seeing significant opportunities in fiber-to-the-node, and we see opportunities in wireless. So I think the only caveat in terms of difference is we just -- legacy has always just had a better positioning with respect to AT&T.

Okay. And then looking on your -- on Slide 6 where -- on the bottom right where you go through your organic growth and you said organic growth from your top 5 customers is up 9.1% organically but then from other customers is down 4.4%. Could you walk us through really quickly those numbers why the other customers outside the top 5 are down 4.4%? What are you seeing with trends there? And then for the top 5 customers, why you saw the trend there?

Yes, we had a large pipeline business that was finishing up in the year-ago period. That was about $4 million worth of revenue. And I think the balance of the decline, conceptually, is around stimulus. We still see stimulus in the legacy business at a reasonable level for the next couple, 3 quarters. But it's clearly -- going to be somewhat down versus last year while we have lots of other things that are going the other way. And so that's why we feel good about a firming outlook.

Next, go to Simon Leopold with Raymond James. Victor W. Chiu - Morgan Keegan & Company, Inc., Research Division: This is Victor Chiu in for Simon Leopold. Can you speak about how the acquisition is progressing relative to your previous guidance for like $400 million to $450 million of annualized contribution? I mean, with few months of business under your belt, do you see anything that makes you incrementally more or less confident in that guidance?

No, I think we're -- we feel as good about the business today as we did when we closed on it. We think the range on revenue and EBITDA is achievable. I think, if anything, we're probably encouraged about the opportunities that full integration will present with respect to margin. And we're also seeing some cross-selling opportunities. So yes, we feel good about the deal. Victor W. Chiu - Morgan Keegan & Company, Inc., Research Division: Okay. And just quickly on margins, so it looks like the acquired business gross margins are slightly below Dycom's. But it didn't seem to have much impact this quarter. Was there a reason why it didn't really move -- impact gross margins kind of relative to what we were expecting for the...

Well, we didn't disaggregate the second quarter results but I think the theme in the third quarter would hold for the second quarter. And we're still, as we said, getting these businesses integrated. We think there are a number of margin improvement opportunities that we'll be able to work into the business. But it -- this is a similar performance forward as what we experienced in the second quarter. Victor W. Chiu - Morgan Keegan & Company, Inc., Research Division: And I guess, just kind of generally, what are your initial impressions for the year, I guess, for carriers' plans for deployment and construction spending compared to the last year, I guess, just kind of your general impressions.

Clearly, right now, if you're involved in working for AT&T, you can feel that capital spending is up and the intensity and urgency is up. That's a good thing for our business. I think we were pleasantly not surprised but would recognize where Comcast increased their CapEx about $500 million year-over-year on the cable side. Going through some transcripts this morning from investor conference presentations in the last 1 or 2 days, it's interesting to hear a number of our customers extolling the virtues of CapEx that produces future growth. And so that's always a good thing to hear from our customers. Victor W. Chiu - Morgan Keegan & Company, Inc., Research Division: Do you break out the telco cable split?

Go ahead, Drew, and we'll give you, Victor, the 6 through 10 on the key customers.

Thanks, Victor. The telco cable split, telco was 62.6% and cable was 25.2%. And then customers 6 through 10, Charter was at 6.2%; Time Warner Cable, 4.3%; Cablevision was at 3%; Frontier was at 2.7%; and Ericsson was at 1.9%.

The next question is from John Rogers with D.A. Davidson. John B. Rogers - D.A. Davidson & Co., Research Division: Steve, just going back to the acquisition, and I don't have the slides in front of me, but from the was it the November call, I think you've talked about $12 million to $15 million of acquisition costs.

Right. And if you think about that, John, in a couple of buckets, one is transaction-related which is spent and we Reg G-ed that for the quarter and there's no tail to any of that, that's all been recognized expense and the cash has been paid. The balance is integration expense, $1 million of which was incurred in the second quarter and the balance to that estimate will be in -- will be spent probably over the rest of the calendar year, both in 2 places. There'll be some in expense dollars but there will also some capital dollars, we're doing some IT upgrades, some capital software purchases and those kind of things that are in that number. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. So that's still a good rough bucket...

It's a good number but as we said on it to an earlier answer, we'll let you know what that is. We don't see anything that says it's going to be more. But we'll let it know what it is, but we don't expect to Reg G that number. We'll just identify it in our comments going forward. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. Okay. And then in terms of the micro towers you were talking about, can you give us a rough idea what the opportunity is versus a larger, more traditional tower? I mean, is it roughly the same opportunity for Dycom?

Well, it's emerging technology. AT&T highlighted it in their comments back in November that they were going to spend money on 40,000 plus small cells, that they would generally connect through fiber, some of which would be fiber to commercial businesses. So it's sort of multi-purposes. And that's kind of in the front window. So it's -- it's hard to say yet, but it was clearly a number that they highlighted. We are currently doing some what we call distributed antenna systems for a couple of folks. And these projects, John, one example would be we have a project in the state of Florida, where we're installing 150 miles of fiber to connect all of these small cells together. So it's hard to say. It's early days. But clearly, I think a large opportunity, particularly to supply capacity in very high traffic areas -- high traffic geographic areas on wireless networks. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. And then just in terms of the customer response to the additional -- the former Quanta operations, can you point to any -- I mean, you'd indicated that it's been a good response but has there been any specifics that you can point to or you've been able to get the 1 and 1 has added up to more than 2 in the sense that they've given you more work to do or broader regions?

Yes, we clearly went through a renewal cycle, John, so we have lots of backlog that we disclosed. I think there are a number of opportunities right now where we may have deployed inside legacy some management systems that are of value to customers that we're now going to be able to deploy more broadly for that customer. And I think that will grow opportunity. I think, quite honestly, there are also some relationships. This was a large organization. They had lots of relationships with customers and we think that they had some unique relationships that we'll be able to add some value to in terms of focus and attention. And clearly, it's been additive to this point. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. And then lastly, and I apologize if I missed this, through the utility line locating business and the other, how much were those this quarter?

Sure. The utility underground facility locating was 7.5% and then the electrical and other is 4.7%.

Next question is from Alex Rygiel with FBR. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: A couple of questions. First, Steve, if we were to look at the telco revenue of 62.6%, what portion of that is from activities associated with wireless services? So that would include DAS and micro cell and your tower work.

We do not break out the DAS or the micro cells. I'll make an estimate off the top of my head, but it would be in the -- in kind of the $30 million to $35 million range in the quarter on a combined basis. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: So is the $30 million to $35 million just sort of tower activities or does the $30 million to $35 million include fiber to the tower?

That does not include fiber to the tower just like -- that's separate and in our wireline business. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: So if you were to qualitatively just look at that 62.5% from telco, qualitatively, how much of that is from, at the end of the day, a wireless service, so fiber to the tower, DAS, tower construction?

Well, and then we're using approximate numbers, but if we think about kind of in the trailing quarter, we see this business growing quite nicely. If you look at the wireless and call it $29 million to $30 million, then kind of an incremental $4 million or $5 million for kind of DAS and small cell-type opportunities. On the fiber to the tower, it's a substantial number. It's not near as large as those 2 numbers but it was still a pretty good contributor. So it's probably a $40 million, $45 million number for the quarter. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: Is that $40 million to $45 million for fiber to the tower or $40 million to $45 million in total including fiber to the tower?

Probably including, and it may be -- that may be a little bit low, Alex, on the fiber to the tower. I think the numbers that I'm most comfortable with because of the way -- it's often difficult to separate jobs that serve certain multiple purposes, so we are often doing a fiber to the tower job that's also a Metro E job on the cable site and we don't count that as a wireless job. If you think about wireless, as we talked about in November, that's kind of $125 million to $140 million run rate business and growing nicely. I think, that, we're comfortable with in terms of the wireless impact. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: That's helpful. When you think about the Quanta assets that you acquired, could you characterize them today as sort of the results you're getting and the opportunity is better than expected? Or the results you're getting or the opportunity you had is maybe in line or a little bit below expectations and what is better or below?

Yes, I think we had a pretty good handle on the business when we acquired it. So I wouldn't say that our expectations are changed. So I think we're getting good cooperation from the management. And if anything, I would say that we're more comfortable with the book of business because we've been able to take a look at contracts and compare them to our legacy contracts. And I think we've been able to identify a number of integration opportunities where we can, on a combined basis, be a better business. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: And lastly, the breadth of your customer base continues to improve. Can you highlight the benefits of that?

Well, certainly, with -- I think about it in 2 ways. So certainly, our top 5 concentration is coming down as we've gotten larger. We still are -- we still have a great customer list. When you go down the list of our top 5 and with AT&T in a substantial growth phase, I think we're going to continue to see that top 5 be very important to us. But clearly, the geographic and customer diversity allows you to be selective in the opportunities that you're addressing and make sure that you address those that you're going to be best able to execute for the benefit of the customer and the shareholder.

We're going to James Kitchell with Goldman Sachs.

Just -- I just had a modeling question, actually. Given, I guess, the seasonal sort of build and release dynamics for Dycom's working capital, and then your comments, it sounded like the Quanta business is maybe carrying a bit more working capital than legacy Dycom has historically. Just curious if you could just sort of give us some help in understanding what kind of working capital investment you may be expecting in the second half of the year, how we should sort of think about those dynamics?

Yes, I mean, we've always had strong cash flows on the January quarter just based on the seasonality of the revenue coming back in. As margins improve, we'll be able to self fund a good portion of that working capital build without taking any external debt we may have to. If we do that, a good thing, because that means growth is there. But we were encouraged that we're able to take our leverage down about $70 million intra quarter and that's where it is today on the revolver. In terms of the DSOs, that's another opportunity. That we think that there are a number of opportunities where on light customers that we have some billing and management systems that we'd be able to install that will help really acquired subsidiaries do a better job of getting the bills out the door. I mean they're motivated but it's always helpful when you have some tools, and that's a function of our customer concentration that we developed some tools that we'd be able to share with the new businesses.

And Mr. Nielsen, no further questions in queue.

Well, we thank everybody for your time and attention, and we look forward to speaking to you on our next quarter in May. Thank you.

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