Dycom Eyes 10%-12% Growth as Data Center, Fiber Demand Accelerates

Key Points

• Dycom expects 10%–12% organic growth in fiscal 2027, driven by telecommunications demand, including fiber-to-the-home, long-haul and middle-mile deployments, and emerging BEAD-funded projects.
• The company has more than $1 billion in backlog for fiber connecting data centers and expects data-center-related demand to remain strong across cloud, storage, transmission and AI infrastructure.
• Dycom is expanding its higher-margin Building Systems segment through electrical and structured-cabling acquisitions; the segment now represents more than 20% of the business and is expected to generate long-term adjusted EBITDA margins in the high teens to low 20% range.

Dycom Industries NYSE: DY is positioning itself as an end-to-end infrastructure services provider for growing data consumption, expanding from its traditional telecommunications work into data-center electrical and structured-cabling services, Chief Executive Officer Dan Peyovich said at D.A. Davidson’s 25th Annual Diversified Industrials & Services Conference.

Peyovich said Dycom historically built fiber and hybrid fiber-coaxial infrastructure connecting homes and businesses, and has increasingly moved closer to data centers. The company now provides work spanning fiber transmission to data centers, electrical systems within facilities and structured cabling.

Growth outlook and communications demand

Dycom expects 10% to 12% organic growth in fiscal 2027, with that growth coming through its telecommunications business, Peyovich said. He characterized the company’s communications operations as roughly split between recurring service and maintenance work and program work tied to major infrastructure deployments.

Service and maintenance accounts for about half of Dycom’s revenue and has a recurring profile tied to the size of the infrastructure footprint, according to Peyovich. The remaining program work includes fiber-to-the-home, long-haul and middle-mile fiber deployments, and work associated with the Broadband Equity, Access, and Deployment, or BEAD, program.

Fiber-to-the-home revenue grew 60% year over year in the first half, Peyovich said, while cautioning investors not to expect that rate in every period. He said the company still sees several years of significant fiber-to-the-home growth before activity eventually tapers.

Long-haul and middle-mile fiber work is also beginning to build. Dycom has installed about $100 million of such work over the past several years and has more than $1 billion of pure backlog for fiber connecting data centers nationwide, Peyovich said. He said the company had previously identified a $20 billion addressable market over five years for this category and expects the opportunity to extend over a long period.

BEAD-related activity is beginning to show “green shoots” as projects move through funding and permitting, he added. Dycom expects multiple demand drivers to be active by calendar 2028, including fiber-to-the-home, long-haul and middle-mile work, and BEAD-related deployments.

Workforce investment and margins

Peyovich said Dycom is investing ahead of anticipated demand to ensure its workforce does not constrain customer projects. The company has approximately 21,000 employees nationwide and is holding customer discussions that extend three to five years into the future, he said.

He said permitting, rather than labor, is currently the principal constraint in Dycom’s communications business. However, he expects industrywide labor constraints to emerge as deployment activity increases around 2028. Dycom believes equipment availability is currently sufficient to meet demand.

For its communications business, Peyovich said investors should focus on an adjusted EBITDA margin range of about 13%. He noted that the comparable business produced 13.3% adjusted EBITDA margin last year. While operating leverage may emerge as the company grows, he said Dycom intends to retain the ability to reinvest in workforce capacity and customer support.

Dycom’s Building Systems segment, which includes data-center electrical and cabling operations, is expected to generate adjusted EBITDA margins in the high teens to low 20% range over the longer term, Peyovich said. He said the segment’s margin profile is additive to the company’s overall diversification strategy.

Building Systems expansion and acquisitions

The company has expanded its Building Systems capabilities through acquisitions, including Power Solutions and National Technology Integrators. Peyovich said Power Solutions performs electrical connections powering data-center racks, while National Technology Integrators provides structured cabling and fiber within facilities.

He described the combination as a complementary platform rather than a cost-cutting effort. Dycom can now offer customers electrical work, internal infrastructure cabling, “inside the fence” fiber work and connections extending to carrier right-of-way infrastructure, he said.

Customer reception to the broader offering has been strong, according to Peyovich, as customers seek certainty of execution and fewer contractor relationships. Building Systems represented slightly more than 20% of Dycom’s business this year, and he said the segment should become a larger portion of the company over time.

Peyovich said Building Systems backlog can understate future activity because data-center contracts are typically awarded in phases. Customer conversations related to the segment are occurring two to four years ahead, he said, while individual data-center developments can have total build cycles of five to eight years.

Complexity and data-center conditions

Peyovich said Dycom views execution complexity as a competitive advantage. Long-haul and middle-mile fiber projects require different training, large fiber bundles, extensive testing and more demanding traffic-control and permitting requirements than fiber-to-the-home work. Moving workers from fiber-to-the-home projects to long-haul work can require at least six months of training, he said.

On concerns around data-center moratoriums and local opposition, Peyovich said he had seen no change in customer demand or project velocity. He also emphasized that Dycom’s data-center opportunity is not limited to artificial intelligence projects, citing continuing demand for cloud computing, data storage and transmission infrastructure.

Peyovich said Dycom will prioritize organic growth in capital allocation, while balancing selective acquisitions with share repurchases. The company has repurchased nearly half of its outstanding shares over time, he said. Future Building Systems acquisitions would focus primarily on geographic expansion and businesses with proven execution capabilities and workforce-oriented cultures.

He concluded that Dycom’s skilled workforce remains its primary differentiator, pointing to investments in benefits, paid time off, training and career development as central to the company’s strategy for supporting what he described as a generational infrastructure deployment cycle.

About Dycom Industries (NYSE:DY)

Dycom Industries, Inc is a specialty contractor that provides infrastructure construction and maintenance services for the telecommunications and utility industries. The company supports the expansion, upgrade and upkeep of communications networks, including fiber-optic, broadband, wireless and other voice and data systems.

Its services include engineering and design, aerial and underground construction, fiber and cable installation, wireless infrastructure deployment, network maintenance, utility locating, vegetation management and emergency restoration.

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