Attached files
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| EX-99.1 - EXHIBIT 99.1 - DYCOM INDUSTRIES INC | dyfy2017q1earningsreleasee.htm |
| 8-K - 8-K Q1-17 EARNINGS RELEASE - DYCOM INDUSTRIES INC | dycomfy2017q18k-earningsre.htm |
1st Quarter Fiscal 2017
Results Conference Call
November 22, 2016
EXHIBIT 99.2
2
Forward Looking Statements and
Non-GAAP
Information
This presentation contains “forward-looking statements”. Other than statements of historical facts, all statements contained in
this presentation, including statements regarding the Company’s future financial position, future revenue, prospects, plans and
objectives of management, are forward-looking statements. Words such as “outlook,” “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “should,” “could,” “project,” and similar expressions, as well as statements in future tense, identify
forward-looking statements. You should not consider forward-looking statements as a guarantee of future performance or
results. Forward-looking statements are based on information available at the time those statements are made and/or
management’s good faith belief at that time with respect to future events. Such statements are subject to risks and
uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the
forward-looking statements. Important factors, assumptions, uncertainties, and risks that could cause such differences are
discussed in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on
August 31, 2016 and other filings with the SEC. The forward-looking statements in this presentation are expressly qualified in
their entirety by this cautionary statement. The Company undertakes no obligation to update these forward-looking statements
to reflect new information, or events or circumstances arising after such date.
This presentation includes certain “Non-GAAP” financial measures as defined by Regulation G of the SEC. As required by the
SEC, we have provided a reconciliation of those measures to the most directly comparable GAAP measures on the Regulation G
slides included as slides 13 through 19 of this presentation. Non-GAAP financial measures should be considered in addition to,
but not as a substitute for, our reported GAAP results.
3
Participants and Agenda
Participants
Steven E. Nielsen
President & Chief Executive Officer
Timothy R. Estes
Chief Operating Officer
H. Andrew DeFerrari
Chief Financial Officer
Richard B. Vilsoet
General Counsel
Agenda
Introduction and Q1-17 Overview
Industry Update
Financial & Operational Highlights
Outlook
Conclusion
Q&A
4
Strong demand and revenue growth
Contract revenues of $799.2 million in Q1-17
compared to $659.3 million in Q1-16
Organic growth of 18.0% excluding contract
revenues of acquired businesses not included for
the entire period of Q1-17 and Q1-16
Strong operating performance
Non-GAAP Adjusted EBITDA of $129.2 million, or
16.2% of revenues in Q1-17, compared to
$105.7 million, or 16.0% in Q1-16
Non-GAAP Adjusted Diluted EPS increased to $1.67
in Q1-17 compared to $1.24 per share in Q1-16
Strong balance sheet and robust liquidity of
$346.1 million
Financial charts - $ in millions, except earnings per share amounts
Q1-17 Overview and Highlights
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
5
Industry increasing network bandwidth dramatically
Major industry participants deploying significant wireline networks
Newly deployed networks provisioning 1 gigabit speeds; multi-gigabit
speeds planned by some industry participants
Industry developments have produced opportunities which in aggregate
are without precedent
Delivering valuable service to customers
Currently providing services for 1 gigabit full deployments across the
country in dozens of metropolitan areas to a number of customers
Revenues and opportunities driven by this industry standard continue
to grow meaningfully
Customers are revealing with more specificity multi-year initiatives that
are being implemented and managed locally. Calendar 2016
performance to date and outlook clearly demonstrate a massive
investment cycle in wireline networks
Increasingly encouraged that newly emerging wireless technologies
will drive significant additional wireline growth opportunities
Dycom’s scale, market position and financial strength position it
well as opportunities continue to expand
Industry Update
6
Revenue Highlights
Q1-17 organic growth of 18.0%, eighth
straight quarter with double digit organic
growth
Revenues from Q1-17 Top 5 customers
increased 39.5% organically. All other
customers decreased 18.0% organically
Top 5 customers in each period
represented 74.9% of revenues in Q1-17
compared to 64.9% in Q1-16
Each top 5 customer experienced organic
growth in Q1-17:
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
Organic growth over the last 8 quarters reflects Dycom’s continued ability to gain share and expand
geographic reach, meaningfully increasing the long-term value of our maintenance business
AT&T 72.4%
CenturyLink 12.0%
Comcast 52.3%
Verizon
16.2%
Windstream 7.5%
*Q4-16 organic % growth adjusted for additional week in Q4-16
*
7
Customers Description Area
Approximate
Term (in years)
Comcast Construction Services California 3
AT&T Engineering Services Illinois, Indiana, Georgia 3
CenturyLink Construction & Maintenance Services Virginia, Tennessee, North Carolina, Florida 3
Various Rural Broadband North Dakota, Kentucky, Oklahoma, Arkansas 1 - 3
Backlog and Awards
Notes: Our backlog estimates represent amounts under master service agreements and other contractual agreements for services projected to be performed over the terms of the contracts and are based on contract terms, our
historical experience with customers and, more generally, our experience in similar procurements. Backlog is not a measure defined by United States generally accepted accounting principles; however, it is a common measurement
used in our industry. Our methodology for determining backlog may not be comparable to the methodologies used by others.
Selected Current Awards and Extensions
Financial charts - $ in millions
The sequential decline in total backlog at the end of Q1-17 is the
result of $211 million in reduced backlog from lower revenue
expectations from a business acquired in July 2016 and $413 million in
reduced backlog for one project as a customer modified its plans.
8
As a % of Revenues
16.0% 16.2%
Revenues of $799.2 million and organic growth of 18.0%. Revenues from acquired businesses contributed $56.6 million
in Q1-17 and $29.9 million in Q1-16
Non-GAAP Adjusted EBITDA increased to 16.2% of revenue in Q1-17 compared to 16.0% in Q1-16
Gross margin % in-line with prior year. G&A decreased 27 basis points from improved performance and
operating leverage on our increased scale
Non-GAAP Adjusted Diluted EPS of $1.67 in Q1-17 compared to $1.24 diluted EPS in Q1-16, a 34.7% increase
Financial Highlights
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures
Financial charts - $ in millions, except earnings per share amounts
9
Cash Flow Summary
Q1-16 Q1-17
Cash used in operating activities $ (28.9) $ (41.6)
Capital expenditures, net of disposals $ (39.4) $ (37.8)
Cash paid for acquisitions $ (48.6) $ -
Borrowings on credit facility $ 36.0 $ 68.0
Share repurchases $ (70.0) $ -
Prior year debt financing transactions, net $ 151.9 $ -
Other financing & investing activities, net $ (0.5) $ (0.8)
Q1-16 Q4-16 Q1-17
DSO - Accounts receivable 50 41 38
DSO - CIEB, net 44 44 54
Total DSO 94 85 91
Strong balance sheet and liquidity
Liquidity Overview
(a) Availability on Revolver presented net of $57.6 million for outstanding L/C’s under the Senior Credit
Agreement at each of Q4-16 and Q1-17.
Financial tables - $ in millions
Operating cash activity support growth
* Amounts may not add due to rounding. Total days sales outstanding (“DSO”) is calculated as the summation of
current accounts receivable, plus costs and estimated earnings in excess of billings, less billings in excess of costs
and estimated earnings, (“CIEB, net”) divided by average revenue per day during the respective quarter (Q4-16
contained 98 days while Q1-16 and Q1-17 contained 91 days).
Liquidity of $346.1 million at the end of Q1-17 consisting of
availability under our Credit Facility and cash on hand
Operating cash activity support strong sequential growth in Q1-17
and normal fiscal payment patterns for annual performance
compensation and other costs
Total DSO’s at 91 days at Q1-17, down year-over-year and up
sequentially from 85 days in Q4-16
Liquidity Summary
Q4-16 Q1-17
Cash and equivalents $ 33.8 $ 21.7
$450 million revolver $ - $ 68.0
Term Loan Facilities 346.3 346.3
Notional Value 485.0 485.0
Total Notional Debt $ 831.3 $ 899.3
Net Debt (Notional Debt less Cash) $ 797.5 $ 877.5
Total Notional Debt (see above) $ 831.3 $ 899.3
Unamortized debt discount and debt fees on 0.75% Convertible Senior Notes (111.9) (107.2)
Debt, net of debt discount and fees $ 719.3 $ 792.0
Availability on revolver(a) $ 392.4 $ 324.4
Letters of Credit outstanding $ 57.6 $ 57.6
Cash and availability on revolver $ 426.1 $ 346.1
Senior Credit Facility, matures April 2020:
0.75% Convertible Senior Notes, matures September 2021:
*
10
Q2-2016
Included for
comparison
Q2-2017 Outlook and Commentary
Contract Revenues $ 559.5 $640 - $670 Expectations of normal winter weather
Broad range of demand from several large customers
Robust 1 gigabit deployments, cable capacity projects accelerating, CAF II firmly
underway, core market share growth
Total revenue expected to include approximately $10.0 million in Q2-17 from
businesses acquired in Q4-16. For organic growth calculations, there were no
acquired revenues in Q2-16
Gross Margin % 19.5% Gross Margin % which
increases from Q2-16
Solid mix of customer growth opportunities
Q2 margins display impacts of seasonality including:
* inclement winter weather
* fewer available workdays due to holidays
* reduced daylight work hours
* restart of calendar payroll taxes
G&A Expense % 8.4% G&A as a % of revenue
which increases from
Q2-16
G&A as a % of revenue supports our increased scale
Outlook for G&A expense % includes share-based compensation Share-based compensation $ 4.2 $ 5.3
Depreciation &
Amortization
$ 29.9 $35.6 - $36.3 Depreciation reflects cap-ex supporting growth and maintenance
Includes amortization of approximately $6.1 million in Q2-17 compared to
$4.7 million in Q2-16
Non-GAAP Adjusted Interest
Expense
$ 3.7 Approximately $ 4.8
Non-GAAP Adjusted Interest Expense excludes non-cash amortization of debt
discount of $4.4 million in Q2-17 compared to $4.1 million in Q2-16
Other Income, net $ 1.1 $ 0.6 - $ 1.1 Other income, net primarily includes gain (loss) on sales of fixed assets and discount
charges related to non-recourse sales of accounts receivable in connection with a
customer’s supplier payment program
Non-GAAP Adjusted EBITDA
%
11.9% Non-GAAP Adjusted
EBITDA % which increases
from Q2-16
Adjusted EBITDA amount increases from revenue growth and strong operating
performance
Non-GAAP Adjusted Diluted
Earnings per Share
$ 0.54
$ 0.61 - $ 0.73
Non-GAAP Adjusted Diluted EPS excludes non-cash amortization of debt discount
on Senior Convertible Notes. See slide 18 for reconciliation of guidance for Non-
GAAP Adjusted Diluted Earnings per Common Share
Diluted Shares 33.5 million 32.3 million
Q2-2017 Outlook
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
Financial table- $ in millions, except earnings per share amounts (% as a percent of contract revenues)
11
Looking Ahead to Q3-2017
Q3-2016
Included for comparison
Q3-2017 Outlook and Commentary
Contract Revenues $ 664.6 Total revenue growth %
of mid to high single
digits as a % of revenue
compared to Q3-16
Expectation of normal winter weather
Broad range of demand from several large customers
Robust 1 gigabit deployments, cable capacity projects accelerating, CAF II
firmly underway, core market share growth
Total revenue expected to include approximately $10.0 million in Q3-17
from businesses acquired in Q4-16. For organic growth calculations, there
were no acquired revenues in Q3-16
Gross Margin %
21.7% Gross Margin % which
increases from Q3-16
Solid mix of customer growth opportunities
G&A Expense % 8.5% G&A as a % of revenue
which declines from
Q3-16
G&A as a % of revenue supports our increased scale
Outlook for G&A expense % includes share-based compensation Share-based compensation $ 3.9 $ 4.9
Depreciation &
Amortization
$ 31.6 $36.0 - $36.7
Depreciation reflects cap-ex supporting growth and maintenance
Includes amortization of approximately $6.1 million in Q3-17 compared to
$4.5 million in Q3-16
Non-GAAP Adjusted
Interest Expense
$ 3.8 Approximately $ 4.8 Non-GAAP Adjusted Interest Expense excludes non-cash amortization of
debt discount of $4.4 million in Q3-17 compared to $4.2 million in Q3-16
Other Income, net $ 4.3 $ 2.6 - $ 3.2 Other income, net primarily includes gain (loss) on sales of fixed assets and
discount charges related to non-recourse sales of accounts receivable in
connection with a customer’s supplier payment program
Non-GAAP Adjusted
EBITDA %
13.8% Non-GAAP Adjusted
EBITDA % which
increases from Q3-16
Adjusted EBITDA amount increases from revenue growth and strong operating
performance
See “Regulation G Disclosure” slides 13-19 for a reconciliation of GAAP to Non-GAAP financial measures.
Financial table- $ in millions (% as a percent of contract revenues)
12
Conclusion
Firm and strengthening end market opportunities
Telephone companies deploying FTTX to enable video offerings and 1 gigabit
connections
Cable operators continuing to deploy fiber to small and medium businesses with
overall cable capital expenditures, new build opportunities, and capacity expansion
projects increasing
Connect America Fund (“CAF”) II projects in planning, engineering, and construction,
with activity firmly underway. We are executing meaningful assignments from one
recipient for fixed wireless deployments.
Customers are consolidating supply chains creating opportunities for market share
growth and increasing the long-term value of our maintenance business
Encouraged that industry participants are committed to multi-year
capital spending initiatives which in most cases are meaningfully
accelerating and expanding in scope
13
Appendix: Regulation G Disclosure
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Organic Contract Revenue
Unaudited
($ in millions)
14
Notes: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Adjusted EBITDA
Unaudited
($ in 000's)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
15
Note: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Organic Contract Revenue – certain customers
Unaudited
($ in millions)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
Total
Contract
Revenue
Top 5
Customers
combined*
All customers
(excluding
Top 5
Customers) AT&T CenturyLink Comcast Verizon Windstream
GAAP Contract Revenue
Q1-17 799.2$ 598.9$ 200.4$ 231.9$ 125.6$ 120.8$ 74.4$ 46.0$
Q1-16 659.3$ 414.1$ 245.2$ 125.8$ 102.9$ 79.3$ 64.1$ 42.1$
GAAP Contract Revenue - % Changes 21.2% 44.6% (18.3)% 84.4% 22.1% 52.3% 16.2% 9.4%
Non-GAAP Adjustments
Q1-17 - Revenue from businesses acquired in fiscal 2016 (56.6)$ (48.9)$ (7.7)$ (16.2)$ (31.9)$ (0.0)$ (0.0)$ (0.8)$
Q1-16 - Revenue from businesses acquired in fiscal 2016 (29.9)$ (19.9)$ (10.0)$ (0.7)$ (19.2)$ -$ (0.0)$ -$
Non-GAAP Organic Contract Revenue
Q1-17 742.6$ 549.9$ 192.7$ 215.7$ 93.8$ 120.8$ 74.4$ 45.2$
Q1-16 629.4$ 394.3$ 235.1$ 125.1$ 83.8$ 79.3$ 64.0$ 42.1$
Non-GAAP Organic Contract Revenue - % Changes
Organic Contract Revenue % Change 18.0% 39.5% (18.0)% 72.4% 12.0% 52.3% 16.2% 7.5%
* Includes AT&T, CenturyLink, Comcast, Verizon, and Windstream in both Q1-17 and Q1-16.
16
Note: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share
Unaudited
($ in 000's, except per share amounts)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
GAAP
Reconciling
Item
Adjusted
Non-GAAP
Contract revenues 799,223$ -$ 799,223$
Cost of earned revenues, excluding
depreciation and amortization 614,990 - 614,990
General and administrative expenses 60,204 - 60,204
Depreciation and amortization 34,546 - 34,546
Total 709,740 - 709,740
Interest expense, net (9,067) 4,307 (4,760)
Other i come, net 940 - 940
Income before income taxes 81,356 4,307 85,663
Provision for income taxes 30,306 1,611 31,917
Net income 51,050$ 2,696$ 53,746$
Diluted earnings per share 1.59$ 0.08$ 1.67$
Shares used in computing Diluted EPS (in 000's): 32,200 32,200
Three Months Ended
October 29, 2016
Q1-17
GAAP
Reconciling
Item
Adjusted
Non-GAAP
Contract revenues 659,268$ -$ 659,268$
Cost of earned revenues, excluding
depreciation and amortization 506,978 - 506,978
General and administrative expenses 51,464 - 51,464
Depreciation and amortization 27,449 - 27,449
Total 585,891 - 585,891
Interest expense, net (9,131) 1,780 (7,351)
Loss on debt extinguishment (16,260) 16,260 -
Other income, net 1,469 - 1,469
Income before income taxes 49,455 18,040 67,495
Provision for income taxes 18,631 6,837 25,468
Net income 30,824$ 11,203$ 42,027$
Diluted earnings per share 0.91$ 0.33$ 1.24$
Shares used in computing Diluted EPS (in 0's): 33,887 33,887
Three Months Ended
October 24, 2015
Q1-16
17
Note: Amounts above may not add due to rounding.
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share
Unaudited
($ in 000's, except per share amounts)
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
Appendix: Regulation G Disclosure
For comparison purposes for slides 10 and 11
GAAP
Reconciling
Item
Adjusted
Non-GAAP
Contract revenues 664,645$ -$ 664,645$
Cost of earned revenues, excluding
depreciation and amortization 520,408 - 520,408
General and administrative expenses 56,519 - 56,519
Depreciation and amortization 31,583 - 31,583
Total 608,510 - 608,510
Interest expense, net (8,007) 4,192 (3,815)
Other income, net 4,323 - 4,323
Income before income taxes 52,451 4,192 56,643
Provision for income taxes 19,368 1,580 20,948
Net income 33,083$ 2,612$ 35,695$
Diluted earnings per share 1.00$ 0.08$ 1.08$
Shares used in computing Diluted EPS (in 000's): 33,051 33,051
Three Months Ended
April 23, 2016
Q3-16
GAAP
Reconciling
Item
Adjusted
Non-GAAP
Contract revenues 559,470$ -$ 559,470$
Cost of earned revenues, excluding
depreciation and amo tization 450,284 - 450,284
General and administrative expenses 47,020 - 47,020
Depreciation and amo tization 29,898 - 29,898
Total 527,202 - 527,202
Interest expense, net (7,872) 4,148 (3,724)
O her i come, net 1,072 - 1,072
Income before income taxes 25,468 4,148 29,616
Provision for income taxes 9,995 1,628 11,623
Net income 15,473$ 2,520$ 17,993$
Diluted earnings per share 0.46$ 0.08$ 0.54$
Shares used in computing Diluted EPS (in 000's): 33,520 33,520
Three Months Ended
January 23, 2016
Q2-16
18
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
Outlook – Diluted Earnings per Common Share
Unaudited
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In our quarterly results releases, trend schedules,
conference calls, slide presentations, and webcasts, we may use or discuss Non-GAAP financial measures, as defined by Regulation G of the SEC. See Explanation of
Non-GAAP Measures on slide 19.
(a) Guidance for diluted earnings per common share and Non-GAAP Adjusted Diluted Earnings per Common Share for the three months ending January 28, 2017
were computed using approximately 32.3 million in diluted weighted average shares outstanding.
(b) The Company expects to recognize approximately $4.4 million in pre-tax interest expense during the three months ending January 28, 2017 for non-cash
amortization of the debt discount associated with its 0.75% Senior Convertible Notes. The Company excludes the effect of this non-cash amortization in its Non-
GAAP financial measures.
Outlook for the
Three Months Ending
January 28, 2017(a)
Diluted earnings per common share $0.53 - $ 0.65
Adjustment
After-tax non-cash amortization of debt discount (b) $ 0.08
Non-GAAP Adjusted Diluted Earnings per Common Share $0.61 - $ 0.73
Appendix: Regulation G Disclosure
19
Explanation of Non-GAAP Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company’s quarterly results releases, trend schedules, conference
calls, slide presentations, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes
that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the
Company’s performance for the period reported with the Company’s performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in
addition to, but not as a substitute for, the Company’s reported GAAP results. Management defines the Non-GAAP financial measures as follows:
• Non-GAAP Organic Contract Revenues - contract revenues from businesses that are included for the entire period in both the current and prior year periods and adjusted for the
additional week in Q4-16 as a result of our 52/53 week fiscal year. Non-GAAP Organic Revenue growth (decline) is calculated as the percentage change in Non-GAAP Organic Contract
Revenues over those of the comparable prior year period. Management believes organic growth (decline) is a helpful measure for comparing the Company’s revenue performance with
prior periods.
• Non-GAAP Adjusted EBITDA - net income before interest, taxes, depreciation and amortization, gain on sale of fixed assets, stock-based compensation expense, loss on debt
extinguishment, and certain non-recurring items. Management believes Non-GAAP Adjusted EBITDA is a helpful measure for comparing the Company’s operating performance with prior
periods as well as with the performance of other companies with different capital structures or tax rates.
• Non-GAAP Adjusted Net Income - GAAP net income before loss on debt extinguishment, non-cash amortization of the debt discount, certain non-recurring items and any tax impact
related to these items. Non-GAAP Adjusted Diluted Earnings per Common Share - Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding.
Management excludes or adjusts each of the items identified below from Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per Common Share:
• Non-cash amortization of the debt discount - The Company’s 0.75% convertible senior notes due 2021 (the "Notes") were allocated between debt and equity components. The
difference between the principal amount and the carrying amount of the liability component of the Notes represents a debt discount. The debt discount will be amortized over
the term of the Notes but will not result in periodic cash interest payments. The Company has excluded the non-cash amortization of the debt discount from its Non-GAAP
financial measures because it believes it is useful to analyze the component of interest expense for the Notes that will be paid in cash. The exclusion of the non-cash
amortization from the Company’s Non-GAAP financial measures provides management with a consistent measure for assessing financial results.
• Loss on debt extinguishment - The Company incurred a pre-tax charge of approximately $16.3 million for early extinguishment of debt in connection with the redemption of its
7.125% senior subordinated notes during the first quarter of fiscal 2016. Management believes excluding the loss on debt extinguishment from the Company’s Non-GAAP
financial measures assists investors’ overall understanding of the Company's current financial performance. The Company believes this type of charge is not indicative of its
core operating results. The exclusion of the loss on debt extinguishment from the Company’s Non-GAAP financial measures provides management with a consistent measure
for assessing the current and historical financial results.
• Tax impact of adjusted results - The tax impact of the adjusted results was calculated utilizing a Non-GAAP effective tax rate which approximates the Company’s effective tax
rate used for financial planning. The tax impact included in the Company’s guidance for the quarter ending January 28, 2017 was calculated using an effective tax rate used for
financial planning and forecasting future results.
Appendix: Regulation G Disclosure
1st Quarter Fiscal 2017
Results Conference Call
November 22, 2016