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Dycom Industries Inc (NYSE:DY)
Q4 2020 Earnings Call
Feb 26, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Dycom Results Conference Call. At this point, all the participant lines are in a listen-only mode. However, there will be an opportunity for your questions. [Operator Instructions] As a reminder, today's call is being recorded.

I'll turn the call 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 2020 results. Going to Slide 2. 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 Ryan Urness, our General Counsel.

Now I will turn the call over to Ryan Urness.

Ryan F. Urness -- Vice President, General Counsel and Corporate Secretary

Thank you, Steve. The statements made during this call may be forward-looking in future and are provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, include all comments reflecting our expectations, assumptions or beliefs about future events or performance that do not relate solely to historical periods. Forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections, including those risks described in our Annual Report on Form 10-K filed March 4, 2019 and our other filings with the US Securities and Exchange Commission. We assume no obligation to update any forward-looking statements.

Steve?

Steven E. Nielsen -- President and Chief Executive Officer

Thanks, Ryan. As we refer to our results, please note that organic revenue is a non-GAAP measure that excludes revenues from storm restoration services. In our comments today and in the accompanying slides, we reference this and other non-GAAP measures. We refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures. In addition, our fiscal year 2021 is a 53 week year ending January 30, 2021. Accordingly any references to fiscal year 2021 includes the last 11 months of calendar 2020 and the first month of calendar 2021.

Now moving to Slide 4. To begin this call, I will provide general comments on cash flow, debt pay down, backlog, operating results and our current outlook regarding a large customer program. Operating cash flows was strong during the quarter, funding a reduction in net debt of $176.3 million. We ended the quarter with over $54.6 million in cash and no draws on a revolving credit facility. Backlog increased by nearly $1 billion, reflecting strong bookings.

When compared to our expectations at the beginning of the quarter, revenue was above the midpoint, but gross margin was disappointing. On an approximate basis, one quarter of the gross margin pressure was due to several factors including adverse weather and greater seasonal effects. The remainder in equal parts was a slow start with a customer, whose activity is expected to increase this year and ongoing challenges with a large customer program. This large customer program experienced increased costs related primarily to two factors. First, particularly difficult soil conditions in two markets that are approaching completion and second the rollout of a new system by this customer. With respect to this large customer program, we continue to be challenged by the cost driven by the complexity of the program, particularly those costs associated with its initial phase. After detailed review, it is our current expectations that approximately $400 million of revenue during fiscal '21 will be generated by the initial phase of the program, with a significant majority of our markets completing this initial phase during the second half of calendar 2020. As a result, we expect that this initial phase will be substantially complete and 90% of the markets we serve by the end of January '21 with the -- with two markets continuing that have more extended timelines.

Now going to Slide 5. Revenue was $737.6 million, a decrease of 1.5%. Organic revenue excluding storm restoration services of $20.4 million in the year ago quarter, increased 1.3%. As we deployed 1 gigabit wireline networks, wireless/wireline converge networks and wireless networks, this quarter reflected an increase in demand from three of our top five customers. Gross margins were 14.2% of revenue, reflecting the specific items reviewed early in our comments and general and administrative expenses were 8.3%. All of these factors produced adjusted EBITDA of $44.5 million or 6% of revenue and an adjusted diluted earnings per share loss of $0.23 compared to a profit of $0.10 in the year ago quarter. Liquidity was ample, as cash and availability under our credit facility was $337.3 million, an increase of $117.7 million during the quarter.

Now, moving to Slide 6. Today major industry participants are constructing or upgrading significant wireline networks across broad sections of the country. These wireline networks are generally designed to provision 1 gigabit network speeds to individual consumers and businesses, either directly or wirelessly using 5G technologies. We believe wireline deployments are the foundational element of what is expected to be a decades long deployment of fully converged wireless/wireline networks that will enable high bandwidth, low latency 5G applications. This perspective was reinforced when one leader in the small-cell industry stated "fiber is where the vast majority of the capital is in building out a small cell deployment, about 80% of our capital is in the fiber portion". 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, underground and wireless construction and fulfillment services for 1 gigabit deployments. These services are being provided across the country in dozens of metropolitan areas to several customers. These deployments include networks consisting entirely of wired network elements as well as converged wireless/wireline multi-use networks. Potential wired network construction opportunities exist outside of the traditional customer franchise boundaries. Customers are pursuing multi-year 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.

We expect some normal timing volatility in customer spending modulations as network deployment strategies and technologies evolve, 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 effects of a strong overall industry environment during the quarter, with increased demand from three of our top five customers. Organic revenue increased 1.3%. Our top five customers combined produced 77.2% of revenue, decreasing 1.2% organically, while all other customers increased 10.6% organically. Verizon was our largest customer at 21.9% of total revenue or $161.3 million. Verizon grew organically 3.3%. Revenue from CenturyLink was $135.1 million or 18.3% of revenue. CenturyLink was Dycom's second largest customer and grew 31.1% organically. AT&T was our third largest customer at 18% of revenue or $132.5 million. Comcast was our fourth largest customer at $101.6 million or 13.8% of revenue. And finally revenue from Windstream was $38.8 million or 5.3% of revenue. Windstream was our fifth largest customer and grew 45.9% organically. Of note, this is the fourth consecutive quarter where all of our other customers in aggregate, excluding the top five customers have grown organically.

This quarter was our seventh consecutive of organic growth and we have continued to extend our geographic reach and expand our program management, 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 wireline direct and wireless/wireline converged networks as those deployments dramatically increase the amount of outside plant network that must be extended and maintained.

Now moving to Slide 8. Backlog at the end of the fourth quarter was $7.314 billion versus $6.349 billion at the end of the October 2019 quarter, an increase of over $965 million. Of this backlog, approximately $2.716 billion is expected to be completed in the next 12 months. Backlog activity during the fourth quarter 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 CenturyLink, we were awarded construction and maintenance services agreements in Utah, Colorado, South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri, Louisiana, Ohio, Virginia, Tennessee, North Carolina and Florida. From AT&T, construction services agreements in Ohio, Tennessee, North Carolina, and Georgia. For Verizon, engineering and construction services agreements in various locations. From Comcast, engineering services agreements for Michigan, Massachusetts, Pennsylvania, Maryland, Delaware and Georgia. And with various customers locating services agreements in Oregon, California, Indiana, Ohio, Virginia and New Jersey. Headcount decreased seasonally during the quarter to 15,230.

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 '20 were $737.6 million and organic revenue growth was 1.3%, with increases from three of our top five customers. Adjusted EBITDA was $44.5 million or 6% of revenue. Gross margins were 14.2% and were approximately 175 basis points below our expectations for the quarter. A quarter of the variance was from several factors, including adverse weather and greater seasonal effects. The remaining margin pressure was split between the slow start with a customer who activities are expected to increase this year and margin pressure on a large customer program. Adjusted G&A expense increased 49 basis points, compared to Q4 '19, higher administrative costs were partially offset by a reduction of performance-based incentive compensation and share-based compensation during the quarter. Our non-GAAP adjusted loss per share in Q4 '20 was $0.23 per share.

Now going to Slide 10. Our balance sheet and financial position remained strong. During Q4 '20, the company reduced net debt by approximately $176.3 million, by repaying $103 million of revolver borrowings and $5.6 million of term loan borrowings on the senior credit facility, purchasing $25 million of principal amount of our convertible senior notes at a discount for $24.3 million and by increasing cash by over $42 million. We ended the quarter with $54.6 million of cash and equivalents, no outstanding borrowings on our revolving line of credit, $444.4 million of term loans outstanding and $460 million principal amount of convertible senior notes outstanding. Our liquidity is ample at $337.3 million, consisting of availability from our credit facility and cash on -- and cash balances.

Cash flows from operations were robust at $191.8 million during Q4. We made solid progress invoicing and collecting balances during the quarter as reflected by the $189 million sequential decline in accounts receivable and net contract assets compared to October. The combined DSOs of accounts receivable in net contract assets were 130 days at the end of the quarter. We expect DSOs to improve for large customer program as the initial phase is completed in a number of markets we serve during fiscal 2021 and final invoice documentation is completed. Capital expenditures were $15.8 million during Q4 '20, net of disposal proceeds and gross capex was $18.7 million. For fiscal 2021, we anticipate capital expenditures, net of disposal proceeds to range from $120 million to $130 million.

In summary, we continue to maintain ample liquidity and a strong balance sheet.

Going to Slide 11. For the quarter ending April 2020, we expect total revenue to range from $730 million to $780 million. During Q1 '21, we expect the margin pressure that we experienced in Q4 '20 to continue for large customer program and for our customer with a slow start whose activities are expected to increase this year. In addition, we have experienced an increase of approximately $3 million per quarter for insurance premiums, primarily in our excess coverage layers for auto and general liability. These premiums reflect market driven increases as the company has not had any meaningful claims experience in these excess layers of the program. Considering these factors, we currently expect non-GAAP adjusted EPS to range from a loss of $0.09 per share to income of $0.08 per share and adjusted EBITDA percent of contract revenue, which decreases from the Q1 '20 results.

Now going to Slide 12. For Q2 '21, we currently expect revenue to range from a low single-digit decrease to a low single-digit increase as a percentage of revenue compared to total contract revenues of $884.2 million in the Q2 '20 period. For comparative purposes, prior year non-GAAP adjusted EBITDA was 10.2% for Q2 '20 after excluding a net benefit of a contract modification we recognized in that period. For Q2 '21, we expect non-GAAP adjusted EBITDA margin percent of contract revenue to be in line with the 10.2% result from Q2 2020. Finally as a reminder, for our 52 -- 53-week calendar, our fiscal 2021 will include 53 weeks of operations with the extra week of operations included in the fourth quarter ending January 2021.

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 maintained strong customer presence throughout our markets. Second, our extensive market presence has allowed us to be at the forefront of evolving industry opportunities. The end market drivers of these opportunities remain firm and are strengthening.

Fiber deployments enabling new wireless technologies are under way in many regions of the country. Wireless construction activity in support of expanded coverage and capacity continue to grow through the deployment of enhanced macro cells and new small cells. In fact, we have recently completed or begun work associated with several thousand 5G small cell sites across 11 states. 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 are increasing. Dramatically increased speeds to consumers are being provisioned and consumer data usage is growing dramatically.

Customers are consolidating supply chains creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business. In addition, we are increasingly providing integrated planning, engineering and design, procurement and construction and maintenance services for wired and converged wireless/wireline networks. We remain encouraged that our major customers are committed to multi-year 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] Adam Thalhimer with Thompson Davis. Please go ahead.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Hey, good morning guys. Sorry, about the tough finish to the year.

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, we understand Adam.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

I wanted to ask about the Q1 revenue guide. It seems kind of abnormally low, you had two customers who were down in Q4 and are those two customers -- is that the weakness that you see in Q1?

Steven E. Nielsen -- President and Chief Executive Officer

So Adam, as we talked about on the call in November, if you recall, we had -- we disclosed we have a little over $60 million [Phonetic] of AT&T fiber-to-the home revenue in the April 2019 quarter. And that's what's come -- that's come out of the business. We've been encouraged by some of their comments recently that as they demonstrate success in selling into that footprint, they may resumes some build, but right now that's what's coming out of the business.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Okay. And then a lots of awards with CenturyLink, it seems like you picked up some new states in fact, their capex forecast is up low-single digits, I'm just curious with some new territory, if you can do kind of meaningfully better than that?

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

Well, as you saw, both in the October quarter, which I think we grew organically at 38%, then this winter quarter at 31%. I think we've had some nice growth with CenturyLink. They had some encouraging comments on their -- on a recent call where they've decided to invest in expanding their fiber footprint as for fiber-to-the-home. In fact, don't see any near-term limits to that level of activity and then also we're bringing off net buildings on net to their own network where we're also seeing activity there. So I think fundamentally increased activity as they implement those strategies as well as some additional footprint.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Okay. And then last one from me, just curious on the -- on the DSOs. Drew, are you trying to signal that those will really come down kind of January of calendar '21 or does that process start midyear of calendar 2020?

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

So Adam, we continue to work at it. We've got a large program, we're working at that every day and as you look back at the comments that I had we made solid progress in the quarter, but we got work to do still there as we -- as we work our way through the initial phase and complete documentation around that, that's something that we think can improve.

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, I think Adam, I would just add, look we had a good cash flow quarter. We paid down some debt, but we still got work to do. We're working hard at it, we've got to increase operating cash flow and we got to increase cash collections and we're exploring -- we're working in a number of areas to do that and we want to do it in a sustainable way.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Okay, thanks guys.

Operator

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

Chad Dillard -- Deutsche Bank -- Analyst

Hi, good morning guys.

Steven E. Nielsen -- President and Chief Executive Officer

Good morning.

Chad Dillard -- Deutsche Bank -- Analyst

So just to pick up on Adam's question, just with respect to the DSO, you had 130 days right now, how do you think about like what should be the normalized level? And then, if you can break out just how much would be tied to kind of the big program? And then lastly, just thinking about your leverage comfort, how do you think about that and do you expect to continue reducing that through pay down through fiscal 2021?

Steven E. Nielsen -- President and Chief Executive Officer

Drew, why don't you take DSO?

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

Yeah so Chad, I mean we made progress on the program in the period and it's something we continue to work through and improve that amount. So, we made progress kind of across the board with customers.

Steven E. Nielsen -- President and Chief Executive Officer

And then with respect to kind of normalized DSO, I think for the mix of customers that we have Adam -- Chad, excuse me, we need to be in the 90s, I mean that's the objective that we've set. In the company we have a number of customers that are there. We have others that once again we're working with to get there in a sustainable way. And so I think that's where we need to be.

In terms of leverage, I think over a long period of time, we've had kind of a kind of a two area net leverage objective. We're not there now, we'd like to get there over time. We continue to have growth opportunities. As we discussed on the prior question, we have been able to grow footprint, we're going to have the capital to expand the business, but we'd like to get leverage to continue to move down over time.

Chad Dillard -- Deutsche Bank -- Analyst

Got it. And then just on gross margins, I think you called out a couple of issues with soil conditions and delay in terms of ramp of a customer and you know understanding that it's going to continue into the first quarter. I just want to get a sense for how to think about that as we go through the balance of the year?

Steven E. Nielsen -- President and Chief Executive Officer

So I think with respect to the -- to the soil conditions and the large customer program, if you recall it was two quarters ago, we were able to negotiate a contract modification that provided a benefit in that quarter. And so this is a program where there have been some challenges both ways on forecasting. I think we continue to work hard to get at better the program. The initial phase is the most challenging as we complete that, structurally we need to get better.

Chad Dillard -- Deutsche Bank -- Analyst

Great, thank you.

Operator

Our next question from Brent Thielman with D.A. Davidson. Please go ahead.

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

Hey thanks, good morning.

Steven E. Nielsen -- President and Chief Executive Officer

Good morning.

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

Steve, as you wrap up this initial phase of this large customer program, can you talk about what sort of changed for you as you move into the next stages of this? Just trying to get a better understanding kind of how these cost pressures should abate kind of beyond this F '21.

Steven E. Nielsen -- President and Chief Executive Officer

Well, I think as we talked about last November, Brent that as we go beyond the initial phase we negotiated some new arrangements for subsequent portions of the work that we think more adequately reflect the cost of providing the service. So we think we made adjustments there. We continue to work on systems and we continue to work hard on improving performance, but I think at a structural level, we think we have an arrangement that more appropriately reflects cost and risks of providing the service.

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

Okay. And the actual work that you'll be doing, we'll that change at all?

Steven E. Nielsen -- President and Chief Executive Officer

So in as you go deeper into any network build, the core or the backbone, the center part of the build, which ties together in the cable world head-ends and hubs and other customers they use different nomenclature, but in that portion of build, you tend to be more urban heavier construction areas and that's created some risk here.

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

Okay, OK and then just on the 2Q [Phonetic] outlook and kind of the basis around the margins kind of nearing prior year levels, is that -- is that more a function of one program kind of expected to ramp up and offset the one where you're incurring the higher costs or is it a little more line of sight to kind of winding down this initial phase on the larger kind of higher cost program?

Steven E. Nielsen -- President and Chief Executive Officer

Well, I think we're encouraged across the customers that we see good growth with CenturyLink and Windstream. We have another customer, where we have a pretty detailed plan and understanding where not only is activity on current projects increasing, but we're initiating new projects and I think as we see that come into the business and less of a drag from the roll off of the AT&T fiber-to-the-home program, I think that's where what we're looking to.

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

Okay. And then just lastly, it looks like an uptick here in capex expected for fiscal '21, is that just ramp up spending on equipment to support the bigger bookings, any sort of one timers embedded in that?

Steven E. Nielsen -- President and Chief Executive Officer

There is really no onetime -- I mean in every year there is something you have to do. I think once again, we know we have work to do on operating cash flow, we're going to be prudent in our capex, but where we have good opportunities for growth, we're going to fund those.

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

Okay, great. Thanks for taking the questions.

Operator

Next, we'll go to Jennifer Fritzsche with Wells Fargo. Please go ahead.

Jennifer M. Fritzsche -- Wells Fargo Securities, LLC -- Analyst

Great. Thank you, Steve. I wanted to explore your small cell comment and specifically on AT&T and Verizon, sorry if you announced this, but can you disclose your wireless revenue? And then as you look at AT&T, I know you're lapping on that $60 million, but do you see small cells and the fiber related to small cells picking up for that flask [Phonetic]?

And then I guess more importantly Verizon, a few weeks ago at their Analyst Day spoke of significant densification and much of their densification efforts are small cells being connected to their own fiber. Are you playing a role in that? Can you kind of explore that a little bit?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah. So with respect to wireless revenue, it was actually 10.1% of total revenue. So first time it's been north of 10% in many years. So we were encouraged with that. We had organic growth in wireless of 22.3% and our largest customer there is AT&T and it was actually up 65%. So we're seeing lots of opportunities in wireless, a mix of macro cell and small cell. And we think that continues to increase, which I think is consistent with customer commentary.

With respect to densification, I think particularly as 5G is deployed on millimeter wave, but even other mid-band, but higher frequency spectrum you need more cell sites to deliver the true promise of 5G. We expect a number of participants to continue to deploy those and we will both install the small cells themselves as well as connect them with fiber. One of the interesting things that we're beginning to see and it's small, but it's illustrative of kind of the theme behind your question is, we're actually seeing on some of our master contracts where we're actually incorporating what historically would be considered small cell wireless work right into our core wireline master service agreements, either in the provisioning of the fiber or actually in one instance, we're actually starting to set the structures. So we think this is -- I think this is a trend that will continue for a period of time.

Jennifer M. Fritzsche -- Wells Fargo Securities, LLC -- Analyst

Sorry, if I could just -- there is some questions about Verizon needing more spectrum and participating in upcoming [Indecipherable] auctions. Is there anything you're seeing from them imply like a whole back of capital or anything that would suggest that? It sounds like no, but I want to confirm that.

Steven E. Nielsen -- President and Chief Executive Officer

I think as the comments that they've made publicly, I think they're enthusiastic about the pace and runway for their fiber deployments. And I think they, we see no sign that, that's changing.

Jennifer M. Fritzsche -- Wells Fargo Securities, LLC -- Analyst

Okay, thank you.

Operator

And next we'll go to Sean Eastman with KeyBanc Capital Markets. Please go ahead.

Sean Eastman -- KeyBanc Capital Markets Inc. -- Analyst

Hi guys, thanks for taking the questions. I hate to beat a dead -- beat a dead horse here, but just going back to the sort of Phase 1, Phase 2, dynamic on the challenging customer program. I'm just trying to understand, so Phase 1 runs through fiscal '21 as you've indicated, I'm just wondering at what point does -- is there a point in fiscal '21 that Phase 2 kind of overtakes Phase 1 in terms of revenue contribution or does the Phase 2 not really take off in earnest until fiscal '22, just trying to understand that dynamic?

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

Yeah Sean, I think we got to be limited in our comments. We're not going to get ahead of the customer, other than to say we have started a modest amount of work under the new arrangements and the customer is working through their priorities for this year's plan.

Sean Eastman -- KeyBanc Capital Markets Inc. -- Analyst

Got it. And so I guess maybe beyond this transition from Phase 1 to Phase 2, is there any other important dynamics, we should be thinking about from a margin progression standpoint or is that really the big driver here as we look to see this kind of year-over-year margin expansions positively inflect?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, I don't think that we have much to add beyond, but we do have other customers that are growing throughout the year. Some, particularly as the year progresses through the summer. Utilization goes up, we get more balanced growth across the customers. That's always been helpful to our margins, doesn't mean we don't have to work hard to execute it. We can always do better at things, but -- but I think that's how we're looking at the year.

Sean Eastman -- KeyBanc Capital Markets Inc. -- Analyst

Okay, great. And then just on the working capital unwind piece, I think commentary on the last call was quite positive on the progress in navigating this difficult invoicing process, would you say that the progress in the quarter was kind of in line with your expectations and kind of continuing to improve or as there been any kind of set back there in terms of where your expectations where the last time we spoke?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, I guess Sean what I would say is what we had a good cash flow quarter. There is still work to do across a number of customers, we're working hard in a number of areas to improve operating cash flow and cash collections and do it in a way that's sustainable.

Sean Eastman -- KeyBanc Capital Markets Inc. -- Analyst

Got it. And would you be able to give us maybe a rough guideline on what EBITDA to free cash flow conversion should look like in fiscal '21?

Steven E. Nielsen -- President and Chief Executive Officer

You know we haven't given guidance for the full fiscal year Sean, but what I would tell you is based on Drew's guidance for the April quarter and the July quarter, there is going to be some use of working capital as we grow seasonally that happens every year. But if you look at it on a full-year basis, we expect to have better conversion this year than last year, because last year was not a good conversion year.

Sean Eastman -- KeyBanc Capital Markets Inc. -- Analyst

Okay, fair enough. I appreciate the time.

Operator

Our next question is from Alex Rygiel with B. Riley FBR. Please go ahead.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Thanks. Good morning, Steve.

Steven E. Nielsen -- President and Chief Executive Officer

Good morning, Alex.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

From a big picture Steve, where do you think normalized margins should be?

Steven E. Nielsen -- President and Chief Executive Officer

So I think if you look over a long period of time and you have a lot of history with the company, we've been able to achieve the low teens EBITDA, low double -- low double-digit EBITDA generally, and there have been years where we've had broadly distributed growth when it has been better. We're not there now, but we are working hard in a number of areas to get back into that normalized range and better if we can.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

And as it relates to this large customer program, the $400 million, is that the revenue you expect to burn in fiscal '21 and in your 12 month and total backlog, how much backlog is associated with this large customer program? In future phases.

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, so Alex that is the burn rate that we expect as we complete 90% of the markets on that initial phase, it could be a little more, a little less, it's an estimate, but what we're trying to communicate is that there is a runway here for us to take some of the complexity out of the business, it's been associated with the number of markets that we're in on this program. For those, for the initial phase that continues to be on as we talked about in a couple of markets, they have extended timelines and so we'll have a lesser impact, significantly lesser impact on the overall business.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Again as it relates to future period backlog associated with this, can you quantify that?

Steven E. Nielsen -- President and Chief Executive Officer

So Alex as we've said before, we're trying to provide additional information to help people understand the business. We don't typically break out the low total backlog, backlog by customer, subject to estimates it moves up and down. We think that the burn rate is what's important to understand for this fiscal year.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Thank you.

Operator

Our 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

Good morning, Noelle.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Just want -- I guess clarification point, for my own benefit, you talked about the slow start to the customer program being a drag on margins, but you sort of look at revenue and revenue was in line with your expectations. So how should we think about that? I mean, was there a customer that was -- where revenue came in better than you were expecting that offset maybe some of the expected revenue you were thinking about under the program that was going to ramp? I'm just trying to kind of rectify the revenues in line versus the profitability missed there?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah. So I think -- I think Noelle, clearly, we had strong growth with a couple of customers and weaker growth with others. I think on this program -- on this particular program, we have a pretty good detailed understanding of the ramp for this year. It got a little bit, it started a little slower than we expected, but we expect to have good growth on that program this year. And so yes they are obviously for where we came in the range, we did better with some and not quite as well as we would have liked in two cases.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Got it, thank you. And then going back to -- you touched on this a little bit with the discussion of the Phase 1 versus Phase 2 work for the large customer program. But what I'm trying to understand is if this is more of a -- if the confidence you have in the margin opportunity there is tied more to pricing or if it's tied more to the structure of the contract. In other words, are we looking at more of like a cost plus type of arrangement. So that the contract better captures the cost side of that -- of the equation or is it just that you feel you have a better sense of the cost and so it's been baked in more accurately into maybe more of a unit type agreement?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah -- no, I'm not going to characterize the agreement with the customers other than to say that what we said in November. And what we've seen on the initial work that we've done is that we, that we have reached an arrangement that more appropriately reflects not only the cost of providing the service but the risks. So there's really two dimensions.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Okay, got it. And then any comments on just Sprint -- T-Mobile Sprint I should say, and the opportunity that you see there as that relates to the industry overall on the wireless side?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, I think what we would say Noelle is that we are encouraged with the recent court ruling that allows the merger to proceed, apparently has some state approvals that they are still working through. But generally in our industry when the, when customers combine and grow larger they create greater capabilities, there are certainly some requirements that T-Mobile agreed to in terms of deploying broadband capable wireless in many parts of rural America that will require more infrastructure. And I think in the past as companies have combined that's created competition for the other providers and that's generally spurred investment as a response. So we think overall it's a good thing.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Thank you.

Operator

And next we'll go to a Blake Hirschman with Stephens. Please go ahead.

Blake Hirschman -- Stephens Inc. -- Analyst

Good morning, guys.

Steven E. Nielsen -- President and Chief Executive Officer

Good morning, Blake.

Blake Hirschman -- Stephens Inc. -- Analyst

The backlog was up nicely quarter-over-quarter. Can you give us any sense as to how the margins look on the new work coming in and if they are in line with that kind of low teens, low double-digits that you would normally expect to see?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, they are certainly in line with our expectations. The pricing was attractive and reflects current cost in the market, with existing customers. I mean in a number of cases these were renewables, where we have a detailed understanding of our cost and even in the footprint expansions it tended to be an adjacent service territory. So we feel good about the new awards.

Blake Hirschman -- Stephens Inc. -- Analyst

Got it. And then on AT&T fiber-to-the-home, I think you said $60 million was the hit you expect in the fiscal first quarter really is what's baked into the guide. Can you kind of remind us how that headwind looks for the rest of the year? And if it, winds down in the second quarter and kind of how much you expect?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, so Blake, we talked about this back in November. It's a little over $60 million in the April quarter, a little over $30 million in the July quarter. And essentially negligible thereafter.

Blake Hirschman -- Stephens Inc. -- Analyst

Okay, got it. All right, thanks a lot. And that's it for me.

Operator

And we'll go to Adam Thalhimer with Thompson Davis. Please go ahead.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Hey, good morning guys. What would you say your margin expectations are for the back half, Steve?

Steven E. Nielsen -- President and Chief Executive Officer

Well, I mean, Adam, as you know, we're giving quantitative guidance on the April quarter and qualitative on the July quarter. We need to get better, but we're not guiding. I mean we're not in no way are we satisfied with current performance.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

But it seems like you're guiding to a better trend because you got a significant decline in Q1 followed by flat in Q2? And then in the back half you should have this kind of rotation from Phase 1 to Phase 2?

Steven E. Nielsen -- President and Chief Executive Officer

Look Adam, I think there are certainly elements here that we are working through in this challenging period of time to make things better. I think the other thing to just keep in mind with respect to the April quarter, February's weather has not been particularly helpful in the Southeast and other regions of the country, so we wanted to make sure that we reflected that prudently in the guide.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Okay. That makes sense. The other question I'm getting from clients kind of during the call is just about the size of Phase 2 versus Phase 1 and is it kind of a seamless transition to the total revenue from that customer stay flattish as that transition happens?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah and Adam I understand the question, I think all we can say at this point as we've done a modest amount of work. The customers working through the plan for the year and the priorities. And we will report how that's going, as we learn more.

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Okay, thank you.

Operator

And we'll go to Noelle Dilts with Stifel. Please go ahead.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Hi, just with some of the supply chain disruptions we've heard about on the telecom side associated with coronavirus anything -- concerns that you're thinking about as it relates to just the availability of equipment and the supply chain?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, we have not -- I'm not aware that we've had any issues with any of the equipment that we install. I mean there is a pretty robust supply chain for big telecom companies and fair amount of inventory along the way. I mean it's obviously something that bears watching, but at this point, we've not seen that. I think if there were an impact it would be more around the wireless part of the business in the -- in the -- in the more construction and master contract related areas. I think we have much more construction content less equipment.

Noelle Dilts -- Stifel Nicolaus -- Analyst

Got it. That makes sense, thank you.

Operator

And we'll go to Alex Rygiel with B. Riley FBR. Please go ahead.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Quick follow-up. Steve, can you remind us what your share buyback authorization is today? And whether not, you have any restrictions in that -- to be in the market currently?

Steven E. Nielsen -- President and Chief Executive Officer

Yeah, so Alex, what I would say is we have a program that's expiring. We have the ability to renew it, but at this point we are really focused on operating cash flow funding the organic growth of the business and getting leveraged out.

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Thank you.

Operator

And we'll go to Jennifer Fritzsche with Wells Fargo. Please go ahead.

Jennifer M. Fritzsche -- Wells Fargo Securities, LLC -- Analyst

Thanks, Steve. I just wanted to ask about CenturyLink because, excuse me Comcast, because it really hasn't come up much on this call and there is growing more evidence even since you've reported last quarter that the broadband pipe usage is going through the roof, especially with cord cutters action. So I think the number like double, a non-cord cutters. Are you seeing -- your revenue with Comcast is down, is that a trend you would expect to kind of occur continue to happen, or how do you think about customer?

Steven E. Nielsen -- President and Chief Executive Officer

No, I think we're optimistic about opportunities with that customer in specific and with the cable industry in general. I think the numbers that I saw showed that the average consumer used 340 gig of data in the fourth quarter compared to 270 in the year ago period and cord cutters were over 500. I think all other cable operators have talked about and Comcast as specific -- as commented specifically about pivoting from a video-centric strategy to connectivity. And as they pivot those dollars from CPE and other more equipment intensive deployments, we think that's good for our business and I think we'll see a pickup there.

Jennifer M. Fritzsche -- Wells Fargo Securities, LLC -- Analyst

Got it. Thank you.

Operator

And with no further questions in queue, Mr. Nielsen, I'll turn it back to you for any closing comments.

Steven E. Nielsen -- President and Chief Executive Officer

I'll just turn it over to Drew for one final comment and some certain details.

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

So on the customer split for the quarter, the telco was at 73.8%, cable was at 16.8%, facility locating was 6.3% and electrical and other was 3.1%. Steve?

Steven E. Nielsen -- President and Chief Executive Officer

All right. Well, thank you everybody for attending the call, we'll speak to you again in -- at the end of May. Thank you.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Steven E. Nielsen -- President and Chief Executive Officer

Ryan F. Urness -- Vice President, General Counsel and Corporate Secretary

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

Adam R. Thalhimer -- Thompson Davis & Co. -- Analyst

Chad Dillard -- Deutsche Bank -- Analyst

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

Jennifer M. Fritzsche -- Wells Fargo Securities, LLC -- Analyst

Sean Eastman -- KeyBanc Capital Markets Inc. -- Analyst

Alex Rygiel -- B. Riley FBR, Inc. -- Analyst

Noelle Dilts -- Stifel Nicolaus -- Analyst

Blake Hirschman -- Stephens Inc. -- Analyst

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