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Dycom Industries Inc  (NYSE:DY)
Q4 2019 Earnings Conference Call
Feb. 27, 2019, 9:00 a.m. ET

Contents:

Prepared Remarks:

Operator

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.

I'll turn the conference over to your host, Mr. Steven Nielsen. Please go ahead sir.

Steven E. Nielsen -- President and Chief Executive Officer

Thank you, John. Good morning everyone. I'd like to thank you for attending this conference call to review our fourth quarter 2019 results. Going to Slide 3. During this call, we will be referring to a slide presentation, which can be found on our website's Investor Center main page. Relevant slides will be identified by number throughout our presentation.

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

Richard B. Vilsoet -- Senior Vice President, Chief Legal Officer and Corporate Secretary

Thank you, Steve. Except for historical information, the statements made by Company management during this call may be forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including those related to the Company's outlook are based on management's current expectations, estimates and projections and involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties are more fully described in the Company's transition report on Form 10-K for the six months ended January 27th, 2018 and other periodic filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking statements.

Steve?

Steven E. Nielsen -- President and Chief Executive Officer

Thanks, Rick. Now moving to Slide 4 and a review of our fourth quarter results. As you review our results, please note that we have presented in our release and comments certain revenue amounts that exclude revenues from storm restoration services during the quarter and the prior year quarter and from a business acquired during the April 2018 quarter. We will also reference adjusted G&A, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, all of these measures are non-GAAP financial measures. See slides 14 through 19 for a reconciliation of non-GAAP measures to GAAP measures.

Before I begin my detailed overview of the quarter, I will provide general comments on the fourth quarter of fiscal 2019 and full year fiscal 2020, highlight one recent development and discuss our approach to guidance for fiscal 2020.

First, fourth quarter results were disappointing. Compared to our expectations, revenue, excluding storm restoration services, was at the upper-end of guidance, but earnings were near the low-end. Gross margin in particular underperformed. This margin outcome primarily resulted from a large customer program whose revenue continued to grow, but whose costs were more than we had expected. These costs reflected in part the customers' evolving objectives, processes and priorities as well as the introduction of new initiatives and the effects of the significant scale of the program.

Likewise, as we go forward on this program, we expect that these factors and their associated complexity will result in margins lower than our overall Company margins and may impact the timing of revenues. We are working hard in a number of areas to improve our performance, but given the current size and complexity of this program, we are unable at this time to provide specific estimates as to the pace and impact of these improvements during fiscal 2020.

Second, as many are aware, on February 25th, our fifth largest customer filed a voluntary petition for reorganization. At the end of the January quarter, this customer owed us approximately $45 million for accounts receivable and contract assets. We look forward to working with this customer on collecting this balance, but have taken a charge of $17.2 million reflecting our current evaluation of recoverability as of January, the end of our fiscal year. We continue providing services to this customer on a business as usual basis.

Finally, in September 2017, we changed our fiscal year end from July to January. We made this change to better align our fiscal year with the budget and planning cycles of our calendar year customers. In addition, we anticipate that this better alignment would facilitate our provision of annual guidance.

As a result, we provided annual guidance for fiscal 2019, our first fiscal year end in January. For a number of reasons, we are modifying this approach for fiscal 2020. Changes to plans or activity levels that occur after the beginning of the calendar year by individual customers have been more than we anticipated when we initiated annual guidance a year ago. Given that our top five customers typically represent almost 80% of total revenue, guidance for us is particularly sensitive to these types of changes. For example, recent unplanned developments at our fifth largest customer make it difficult to predict revenue for that customer for fiscal 2020. Accordingly, for fiscal 2020, we have reverted to our prior practice of providing investor detailed quantitative guidance for the current quarter and directional guidance for the subsequent quarter.

Going to Slide 5 and a review of the fourth quarter. Revenue was $748.6 million, an increase of 14.3%. Organic revenue, excluding $20.4 million of storm restoration services in the quarter and $19.8 million in the year ago quarter, increased 13.7%. As we deployed 1 gigabit wireline networks, wireless/wireline converged networks and wireless networks, this quarter reflected an increase in demand from all of our top five customers.

Gross margins were 15.41% of revenue and adjusted general and administrative expenses were 7.8%. All of these factors produced adjusted EBITDA of $59.8 million or 8% of revenue and adjusted diluted earnings per share of $0.10 compared to $0.12 in the year ago quarter. Operating cash flow was strong at $142.8 million in the quarter. And liquidity was ample as cash from availability under our credit facility was $463 million.

Now moving to Slide 6. Today, a number of major industry participants are deploying significant wireline networks across broad sections of the country. These networks are generally designed to provision bandwidth enabling 1 gigabit speeds to individual consumers. In addition, emerging wireless technologies are driving significant wireline deployments. These wireline deployments are necessary to facilitate what is expected to be a decades-long deployment of fully converged wireless/wireline networks that will enable high bandwidth low latency applications. The industry effort required to deploy these converged networks continues to meaningfully broaden our set of opportunities. Total industry opportunities in aggregate, are robust.

We are providing program management, planning engineering and design, aerial and underground construction of fulfillment services for 1 gigabit deployments. These services are being provided across the country in more than a dozen Metropolitan areas to several customers. In addition, we have secured a number of converged wireless/wireline multiuse network deployments. Customers are pursuing multiyear initiatives that are being planned and managed on a market-by-market basis.

Our ability to provide integrated planning, engineering and design, procurement and construction and maintenance services is of particular value to several industry participants. In addition to the timing challenges presented by a large customer program earlier discussed, we also expect some normal timing volatility and customer spending modulations as network deployment strategies and technologies evolve on other large-scale network deployments. Tactical considerations may also impact timing. We remain confident that our competitively unparalleled scale and our financial strength position us well to deliver valuable service to our customers.

Going to Slide 7. We continue to experience the effects of a strong overall industry environment during the quarter with increases in demand from our top five customers. Organic revenue, excluding storm restoration services, increased 13.7%. Our top five customers combined produced 79.7% of revenue, increasing 19.4% organically while all other customers decreased 3.6% organically.

AT&T was our largest customer with 21% of total revenue or $157.4 million. AT&T grew 12.5% organically. Revenue from Verizon was $156.3 million or 20.9% of revenue. Verizon was Dycom's second largest customer and grew 77.2% organically. Comcast was our third-largest customer at $143.6 million or 19.2% of revenue and grew organically 0.9%. Revenue from CenturyLink was $109.6 million or 14.6% of revenue. CenturyLink was our fourth-largest customer and grew organically 2.5%. And finally revenue from Windstream was $29.5 million or 3.9% of revenue. Windstream was our fifth-largest customer.

Of note, this quarter is the first since April 2017 quarter where all of our top five customers have grown organically. We are encouraged with our second consecutive quarter of double-digit organic growth despite the challenges we have described regarding a large customer program and its impact on margins.

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

Now moving to Slide 8. Backlog at the end of the fourth quarter was $7.33 billion versus $7.313 billion at the end of October 2018, an increase of over $17 million. Of this backlog, approximately $2.739 billion is expected to be completed in the next 12 months. The total backlog calculation reflects solid performance as we booked new work and renewed existing work. We continue to anticipate substantial future opportunities across a broad array of our customers.

For AT&T, we were awarded construction services agreements in Wisconsin, Texas, South Carolina and Florida. For CenturyLink, construction services in South Dakota, Minnesota, Wisconsin and Nebraska. For Comcast, fulfillment services in Michigan and Illinois. For various customers, locating services in California, Virginia, Tennessee and Georgia, and finally we secured rural fiber services agreements in Washington, Maine and West Virginia. Headcount increased during the quarter to 14,920.

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

H. Andrew DeFerrari -- Senior Vice President and Chief Financial Officer

Thanks, Steve and good morning everyone. Going to Slide 9. Contract revenues for Q4 2019 were $748.6 million and organic revenue growth was at 13.7% reflecting increases from our top five customers. Storm restoration services contributed $20.4 million of revenue in Q4 2019 compared to $19.8 million in the year ago period. Also revenue from an acquired business contributed $5.9 million of revenue in Q4 2019.

Adjusted EBITDA was $59.8 million or 8% of revenue. Gross margins were at 15.4% and were below our expectations. Margins in the quarter were impacted by costs of a large customer program. On February 25, 2019, our fifth-largest customer filed a voluntary petition for reorganization. As of January 26, 2019, the Company had approximately $45 million of total contract -- of total accounts receivable and contract assets related to this customer. Against this amount, we have taken a pre-tax non-cash charge of $17.2 million as a component of G&A expense during Q4 2019 as required to account for our current evaluation of the recoverability of the accounts receivable and contract assets. We look forward to working with this customer on collecting the balances owed to us.

Excluding the non-cash charge and the related impact on stock compensation, G&A expense decreased approximately 140 basis points compared to the January quarter last year. Our lower financial performance this year resulted in a reduction of performance-based incentive compensation and share-based compensation during the quarter. Our non-GAAP adjusted diluted EPS in Q4 2019 was $0.10 per share.

Now going to Slide 10. Our balance sheet and financial position remains strong. We ended the quarter with $450 million of term loans outstanding and no revolver borrowings. Liquidity is ample at $463 million at the end of the quarter consisting of availability from our credit facility and cash on hand. Cash flow from operations was substantial at $142.8 million during the current quarter.

For Q4 2019, the combined DSOs of accounts receivable and net contract assets were 103 days including accounts receivable, net of allowance, classified as non-current that are owed from a customer that recently filed a voluntary petition for reorganization.

Capital expenditures were $33.8 million during Q4 2019 net of disposal proceeds and gross CapEx was $37.2 million. For fiscal 2020, we anticipate capital expenditures net of disposal proceeds to range from $150 million to $160 million. In summary, we continue to maintain ample liquidity and a strong balance sheet.

Going to Slide 11. For the quarter ending April 2019, we currently expect total revenue to range from $750 million to $800 million, non-GAAP adjusted diluted EPS to range from $0.34 per share to $0.56 per share and adjusted EBITDA percent of contract revenue which decreases from the Q1 2019 result.

Other expectations include depreciation of $40.6 million to $41.4 million and amortization of $5.3 million. Share-based compensation included in G&A of $5 million to $5.5 million. Adjusted interest expense of approximately $7.3 million, excluding $4.9 million of interest from a non-cash debt discount amortization of our notes. Other income net is expected to range from $3.4 million to $4 million. The effective tax rate is expected at 27.5% before any tax effects on the settlement of share-based awards.

Now going to Slide 12. Looking ahead to the July 2019 quarter, we currently expect revenue growth of mid-single digit as a percentage of revenue compared to the Q2 2019 results and adjusted EBITDA margin percent of contract revenue, which decreases from the Q2 2019 results.

Now I will turn the call back to Steve.

Steven E. Nielsen -- President and Chief Executive Officer

Thanks, Drew. Moving to Slide 13. Within a growing economy, we experienced the effects of a strong industry environment and capitalized on our significant strengths. First and foremost, we maintain strong customer presence throughout our markets. Second our extensive market presence has allowed us to be at the forefront of the evolving industry opportunities. The end market drivers of these opportunities remain firm and are strengthening.

Fiber deployments and contemplation of emerging wireless technologies are under way in many regions of the country. Wireless construction activity in support of expanded coverage and capacity has begun to accelerate through the deployment of enhanced macro cells and new small cells.

Telephone companies are deploying fiber-to-the-home to enable 1 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 as well as newbuild opportunities are under way. Dramatically increased speeds to consumers are being provisioned. Customers are consolidating supply chains, creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business. In addition, we are increasingly providing integrated planning, engineering and design, procurement and construction and maintenance services.

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 grow our business.

Now, John, we will open the call for questions.

Questions and Answers:

Operator

(Operator Instructions) First, the line of Alex Rygiel with B. Riley FBR. Please go ahead.

Alex Rygiel -- B. Riley FBR -- Analyst

Thank you. Good morning, gentlemen.

Steven E. Nielsen -- President and Chief Executive Officer

Good morning, Alex.

Alex Rygiel -- B. Riley FBR -- Analyst

Steve, obviously there's not a revenue issue here. Your backlog is strong. Your revenues were pretty solid in the quarter. Guidance is pretty firm. But the costs are absolutely an issue here. Could you add a little bit more color as to how we should think about the cost challenges that relates to pricing in the industry and your product versus productivity and efficiency versus cost inflation from what they were, et cetera?

Steven E. Nielsen -- President and Chief Executive Officer

Yes. I think Alex, as we highlighted in our comments, the issues on the costs that we highlighted are really around the complexity that's developed around a large customer program for a number of reasons. I mean, there's been evolving initiatives and priorities and objectives and that's really where the issue is as we look at its complexity. I mean, clearly we're in a 4% unemployment world, which we've been there before, but it's really the complexity that's created the costs particularly in this fourth quarter.

Alex Rygiel -- B. Riley FBR -- Analyst

And what is your view on sort of market share and pricing in the industry in a more broader sense?

Steven E. Nielsen -- President and Chief Executive Officer

So I think what was encouraging in some of the disclosures we made around backlog is that we were able to extend our master contract business into other portions of a very large customer outside the Southeast. That's a first for us. And not only was it in one part of the country, but it was in several parts of the country. So I think that was helpful. We had other extensions that we highlighted there of new business in different parts of the country for existing customers, we've had some renewals after the end of the quarter and actually picked up some fairly significant new business with an existing customer. So we feel good about the competitive positioning. We're working hard to get ahead of the complexity on this large program. But we've got work to do.

Alex Rygiel -- B. Riley FBR -- Analyst

And lastly, you've got plenty of liquidity. Can you prioritize M&A and share buyback and talk about opportunities in M&A?

Steven E. Nielsen -- President and Chief Executive Officer

Yes. So as always, Alex, our capital allocation always runs to taking care of the organic growth that's in the business. I mean, we're going to be making some investments to start these or have made some investments to start some of these new master service agreements and so we always want to make sure we have enough liquidity there. We had this unfortunate situation with one customer, so you always want to make sure that you have a cushion there. Although, we are encouraged with that customer with some of their first emotions (ph). So I think we're going to take care of our customers and the growth opportunities and then we'll look at M&A versus share repurchases. I'd not tell you that M&A right now is as big a focus on the business as we are working hard in a number of areas.

Alex Rygiel -- B. Riley FBR -- Analyst

Very helpful. Thank you.

Operator

Next question is from Brent Thielman with D.A. Davidson. Please go ahead.

Brent Thielman -- D.A. Davidson -- Analyst

Hi, thanks. Good morning, Steve.

Steven E. Nielsen -- President and Chief Executive Officer

Hi, Brent.

Brent Thielman -- D.A. Davidson -- Analyst

Steve, I guess, given what you've seen in this particular large program, does that change at all how you're thinking about preparing the business for kind of this next wave of spend? I mean, it looks like you continue to add people. But are there other things that you can do or do you think you can do to optimize profitability just given how the demand seem to be evolving? And I guess second, Steve, is do you feel like you still have the appropriate suite of services to fully address these changing strategies?

Steven E. Nielsen -- President and Chief Executive Officer

So I think, Brent, as we mentioned to Alex, I mean, we're working ahead -- hard to get ahead of the increasing complexity, we're putting new processes in place on our side of the business, we are implementing new IT systems. I mean, we're doing things that ultimately make us a better business. They have a cost impact today that we didn't expect. But we're not spending money on things that won't have a long-term benefit. So it's a tough time, but we are optimistic that what we are working on makes us a better business. And then I think in terms of suite of services, I think we're very comfortable with the portfolio of services that we provide. I mean, increasingly on these large programs for all of our customers, there's a significant IT element to the deployment, both remotely in the field and then in the back office and I think we're investing substantially in that area because I think that's where the future is.

Brent Thielman -- D.A. Davidson -- Analyst

Okay. And I guess, as you're having sort of ongoing customer dialogue elsewhere beyond this single large customer, are you getting any sense that maybe some of these other programs are going to follow a similar path?

Steven E. Nielsen -- President and Chief Executive Officer

So I think the complexity here is unique. I think there's an increasing openness to us being involved in more of the engineering planning and the procurement and managing of the materials and that's across all of our customers. So I think that's -- I think that's a factor. I think the other thing is, with the rest of the business, there's always issues, but it's nothing like this program, and I think you know, that's part of our frustration and I'm sure investors. We had top five organic growth, good quarter in wireless, which is continuing to grow and we've got a good business, and in fact, if you looked at the rest of the business, it really exceeded our Q4 expectations.

Brent Thielman -- D.A. Davidson -- Analyst

Okay. And then I guess maybe just one for probably, Drew. But the $45 million in total AR you mentioned, I guess, you're still evaluating that remaining $28 million you didn't write off. What's the status there?

H. Andrew DeFerrari -- Senior Vice President and Chief Financial Officer

Yes. Thanks, Brent. So we took a look at the total receivables and contract assets. We've made our estimate of the recoverability that's there. As Steve mentioned before, there were some first emotions that were encouraging and so we'll continue to evaluate that. And as a Steve said, we continue to work with the customer.

Steven E. Nielsen -- President and Chief Executive Officer

Yes. I think Brent, just to add to that, we had to look at it as of the end of January because the lawsuit existed at the end of January. We're working with the customer and we've had some experience in this area before and we'll work our way through it.

Brent Thielman -- D.A. Davidson -- Analyst

Okay. Thank you guys.

Operator

Next question is from Tahira Afzal with KeyBanc Capital Markets. Please go ahead.

Tahira Afzal -- KeyBanc Capital Markets -- Analyst

Hi, thank you very much. Steve, I guess my question is, as we look at this big program and little bit terms and embedded contractual risk ownership, and you look at other -- the rollout of 5G and what have you going forward, product line, is there any risk that you could end up with similar contractual terms, glitches in a sense with any of the others as they start to build out that program? So are you pretty confident this is attached to the terms of this one particular program?

Steven E. Nielsen -- President and Chief Executive Officer

So I think, Tahira, as we said earlier, it's really the processes and objectives and the priorities that evolve that's somewhat accelerated in the last quarter. So it's really not -- from our perspective, it's really that complexity that we have to manage and we're not seeing that with other customers. And as I said before, we are working hard to get ahead of that. So we think we can manage it going forward, but it's something that we're going to continue to work hard to get ahead of.

Tahira Afzal -- KeyBanc Capital Markets -- Analyst

And then Steve, I guess the reason I'm asking is, you guys are pretty good once you have a problem trying to fix it. But if it spreads, I guess, what's the risk or how confident are you that this is something that you can box in 2019 -- calendar 2019 and your fiscal year 2020 and doesn't really trickle (ph) into the next year?

Steven E. Nielsen -- President and Chief Executive Officer

Well, with respect to the rest of the business, Tahira, the contract forms are all different. Our customers have different approaches. There are big themes as we talked about in terms of planning and engineering and procurement. But the contract terms, as we've said before, are often fixed for many years. I mean, so the backlog that we booked last quarter was on the same contract forms that those customers have used for a long period of time. So I think that's the issue. In terms of the large program as what we've said is, we've called it out, we wanted investors to understand that we reset our perspective there based on the costs. Those are going to extend at this point through fiscal 2020. We're working hard to change that. That won't be a happy outcome, but that's something that we're working hard to change.

Tahira Afzal -- KeyBanc Capital Markets -- Analyst

All right. Thank you, Steve.

Operator

Our next question is from Adam Thalhimer with Thompson Davis. Please go ahead.

Adam Thalhimer -- Thompson Davis -- Analyst

Good morning, Steve and Drew.

Steven E. Nielsen -- President and Chief Executive Officer

Hi, Adam.

Adam Thalhimer -- Thompson Davis -- Analyst

You referenced some customer modulations ahead of other large deployments. Is that incremental weakness that you expect to see in the first half of 2020? Or were you seeing some of that in Q4 as well?

Steven E. Nielsen -- President and Chief Executive Officer

I think that's a general statement that we've had in our comments, Adam, for a period of time, there's always going to be things with a customer where you get some modulations. We have customers that are rolling out a number of new technologies. But we consider that different and more part of the back drop for the business than what we've talked about in this large program. So I don't think that's a particularly new disclosure for us.

Adam Thalhimer -- Thompson Davis -- Analyst

Okay, that's helpful. And then, Steve, you have one large customer who's talking about a fiber-to-the-home program coming to the end in the middle of this year. What are your high-level thoughts on that?

Steven E. Nielsen -- President and Chief Executive Officer

So clearly they've stated publicly that they are going to wind it down through the middle of the year. We also have a good wireless business with that customer that actually is growing faster than the wireline business. So we think that there's some opportunity to have some rotation. And I think that customer has also said that when they have deployed fiber, they have lower churn in the customer base, they are higher value customers, and we'll just see as they assess their priorities going into calendar 2020, what their perspectives are. But clearly, with that customer, they've got a lot on their plate and that's how they prioritize that this year particularly given the large wireless ramp.

Adam Thalhimer -- Thompson Davis -- Analyst

I got it. And the last one for me, just curious, I mean, how do you think Dycom plays in 5G? What are the big opportunities for you around 5G?

Steven E. Nielsen -- President and Chief Executive Officer

I think as we've said before, 5G rest on getting wireless signals into fiber as quick as possible, right? So the old saying is that the core of a wireless network is fiber. And so I think we play there. I think we have a growing wireless business. It was 8.3% of revenue in the quarter. So at a $250 million run rate, roughly, I think that will be more as we go through the rest of the year. We're able to gain some share there. So I think we can play really across the board there.

Adam Thalhimer -- Thompson Davis -- Analyst

Okay, thanks.

Operator

Next question is from Chad Dillard with Deutsche Bank. Please go ahead.

George Kasiaras -- Deutsche Bank -- Analyst

Hi, this is George Kasiaras on for Chad. Thanks for taking the question. Just wanted to get some commentary on, I guess, basically the cadence of, both the EBITDA margins and revenues in the next year in terms of kind of first half second half weighting. And also longer-term, whether mid-teens EBITDA margins are still possible, I guess, maybe pushed out perhaps a year in line with this recent cost change? Thank you.

Steven E. Nielsen -- President and Chief Executive Officer

Sure, George. Let me take the second question and I'll let Drew address your first. So look, in a good environment, we have achieved double-digit EBITDA. Given the challenges that we've highlighted here and that we've discussed, it's not expected for fiscal 2020. That doesn't mean that we've given up. That doesn't mean that we're not working hard to take cost out of the business and deploy new ways of managing the business. But I think right now, that's our best expectation for this year. And then Drew, in terms of kind of the EBITDA?

H. Andrew DeFerrari -- Senior Vice President and Chief Financial Officer

Yes. And then for -- George, for the first two quarters, we've provided that that we believe it's down some versus the prior year quarter that we've provided in the outlook.

Steven E. Nielsen -- President and Chief Executive Officer

Yes. And I mean, we haven't -- as we've talked about in our comments, we're not doing annual guidance, but we think that's enough to kind of give you at least a trajectory for the -- through the first half of the year.

George Kasiaras -- Deutsche Bank -- Analyst

Got it. Great. Thank you.

Operator

Next question is from Eric Luebchow with Wells Fargo. Please go ahead.

Eric Luebchow -- Wells Fargo -- Analyst

Hi, Steve. How are you doing?

Steven E. Nielsen -- President and Chief Executive Officer

Hi, Eric.

Eric Luebchow -- Wells Fargo -- Analyst

Just a question on the kind of uncertainty around timing. Just curious if it's still a little bit more of a permitting issue or those issues have been largely resolved or is it kind of more specific to the customers themselves and how they're choosing to deploy capital?

Steven E. Nielsen -- President and Chief Executive Officer

I'm not sure that's either one Eric. I mean, what we've really talked about is that the complexity of the project has evolved and accelerated and that's really where the costs are coming from. The constraints on actually getting work done, as you look at the numbers, I mean, have diminished. We got -- on a seasonally adjusted basis, we grew revenue sequentially. So it's really a different set of issues other than any constraints.

Eric Luebchow -- Wells Fargo -- Analyst

Got it. And just a quick question on the guidance. For the first -- the next two quarters, it looks like your revenue growth kind of decelerated into the single-digit. So I'm just curious if that's more related to the complexity of some of these large customer deals and uncertainty around timing or anything else to call out there?

Steven E. Nielsen -- President and Chief Executive Officer

Yes. I don't think -- I think what we talked about is one, for everybody on the call, February hadn't been a sterling month for weather, right, so we're calling out that impact. And clearly we have this -- as we discussed earlier, we have this customer that will accelerate early in the year and then probably decelerate through the middle of the year as they complete this project and we just wanted to reflect that and not get ahead of ourselves.

Eric Luebchow -- Wells Fargo -- Analyst

Okay, great. Thank you.

Operator

Next question is from Noelle Dilts with Stifel. Please go ahead.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Hi, good morning.

Steven E. Nielsen -- President and Chief Executive Officer

Hi, Noelle.

Noelle Dilts -- Stifel Nicolaus -- Analyst

First, just to start with a housekeeping question. Could you just give us -- provide us with the facilities locating and utility revenues? And then also if you could give us the wireless as a percentage of sales, that would be helpful?

H. Andrew DeFerrari -- Senior Vice President and Chief Financial Officer

Yes, good morning, Noelle. So I'll give the split first and then the rest of the top 10. So Telco was at 69.8%; cable was at 22.2%; facility locating was at 5.3%; electrical and other was at 2.7%; Charter was our number six customer at 3.2% of revenue; Frontier was number seven at 1.7%; Crown Castle was number eight at 1.3%; Edison International was number nine at 1.2%; and Southwest Gas was number 10 at 1%.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Okay. Thank you. And then I know we've talked a lot about this program with evolving complexity. I think what I'm struggling to understand here is as a large valued partner for your customers, typically when things like complexity evolve and accelerate, are you able to work with the customer to some extent on -- with sort of the contract and how you're getting compensated? Are you seeing some of that here? Or is the market just kind of competitive and that makes that sort of contract evolution and negotiation challenging?

Steven E. Nielsen -- President and Chief Executive Officer

Noelle, I don't think we're going to get into the specifics of any communications with any customer. I think we've given you what we can in terms of how we feel the programs evolve and the cost impacts associated with that. But I don't think we have anything to add.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Okay. All right. Thanks.

Operator

Next question is from Christian Schwab with Craig-Hallum Capital. Please go ahead.

Christian Schwab -- Craig-Hallum Capital -- Analyst

Great, thanks for taking my question. Steve, I just want to make sure I heard it correctly that the large customer program will be running at lower than overall company margins through fiscal year 2020 and then you would expect to renegotiate that contract potentially, did I hear that correctly?

Steven E. Nielsen -- President and Chief Executive Officer

Well you heard the first half correctly, Christian. I mean, it's going to run where it is. We're working hard to make it better. We're not commenting beyond fiscal 2020 other than we are working hard to make it -- to improve our performance in a number of areas and get ahead of this complexity.

Christian Schwab -- Craig-Hallum Capital -- Analyst

Okay. Can you just give us like a simple real-life example of the complex -- one of the biggest complexities that you're facing that was unanticipated?

Steven E. Nielsen -- President and Chief Executive Officer

I think, Christian, we are -- once again, we're careful to describe these kinds of situations and these are large complex programs. It's in a number of geographies across the country. There are things that come up that have created complexity that we didn't expect. We've applied cost to get ahead of that and I don't think we have anything more to add to that.

Christian Schwab -- Craig-Hallum Capital -- Analyst

That's fair. All right. Thank you.

Operator

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

Steven E. Nielsen -- President and Chief Executive Officer

Okay. Well, we thank everybody for your attendance on the call and we look forward to speaking to you at the end of the May after our first quarter. Thank you.

Operator

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

Duration: 38 minutes

Call participants:

Steven E. Nielsen -- President and Chief Executive Officer

Richard B. Vilsoet -- Senior Vice President, Chief Legal Officer and Corporate Secretary

H. Andrew DeFerrari -- Senior Vice President and Chief Financial Officer

Alex Rygiel -- B. Riley FBR -- Analyst

Brent Thielman -- D.A. Davidson -- Analyst

Tahira Afzal -- KeyBanc Capital Markets -- Analyst

Adam Thalhimer -- Thompson Davis -- Analyst

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