I'd now like to turn the conference over to our host, President and Chief Executive Officer, Steven Nielsen. Please go ahead, sir.
Thank you, Tammy. Good morning, everyone. I'd like to thank you for attending this conference call to review our first quarter fiscal 2021 results. Going to slide two. 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 Drew DeFerrari, our Chief Financial Officer, and Ryan Urness, our General Counsel. Now I will turn the call over to Ryan Urness.
Thank you, Steve. The statements made during this call may be forward-looking in nature 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 2nd, 2020, and our other filings with the U.S. Securities and Exchange Commission. We assume no obligation to update any forward-looking statements. Steve?
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. To begin, I want to express my sincere hope that everyone listening to this call, as well as their families, are healthy and safe. We are living in truly unprecedented times for our country and our world. During my 21 years as Dycom's CEO, I have never witnessed anything like the dislocation we are experiencing as a country.
The impacts of 9/11, the dot-com crash, and the Great Recession pale in comparison to the speed and severity of the effects the COVID-19 pandemic is having on society and the nation's economy. Dycom first tangibly experienced the pandemic's effects in our business during the week of March 15th. Unlike calendar quarter reporting companies, almost half of our first quarter occurred after the pandemic became a reality. As Dycom came to grips with the pandemic, our people demonstrated real fortitude as we made daily changes to the business. I could not be prouder of our employees. Field technicians served our customers 24/7, helping grow network capacity and maintaining networks whose functioning has never been more necessary for daily life. They worked safely and unstintingly. In addition, during the quarter, we transitioned over 2,000 employees to work-from-home arrangements while maintaining our financial closing deadlines and reporting calendar.
Together, we made the hard calls necessary to adjust our operating plan to the pandemic environment. Now going to slide four. For employees, keeping them safe was our first priority. We quickly adopted enhanced protection protocols and PPE guidelines for all employees and facilities. We instituted work-from-home policies and responded rapidly to the limited number of incidents we have experienced. With customers, we remained intensely focused on their businesses. We continue to serve as our customers provide critical infrastructure. We are generally considered an essential business provider under state and local pandemic mitigation orders, and we experienced a limited impact on our operations from sporadic, geographically disparate, and limited municipal issues. Finally, we decisively and proactively adjusted our operating plans by reducing general and administrative expenses, including executive compensation and overall headcount.
We aggressively improved working capital efficiency through renorming of vendor payment terms and improving DSOs, and tightly managed capital expenditures. Altogether, we significantly enhanced our operational and financial flexibility this quarter. Now moving to slide five for our view of the impacts of the pandemic on our industry. In the intermediate to longer term, we believe that prior investments by major industry participants to construct or upgrade wireline networks have enabled astounding increases in peak demands on telecommunications networks. These programs are likely to accelerate. Not a surprise, our customers' continued commitment to wireline and wireless network investments is evident in recent customer commentary. Social distancing measures have tangibly highlighted the cost of physical proximity and connections throughout the economy.
High capacity, low latency networks are key to enabling safe virtual connection throughout society, increasing the value of our customers' networks and further creating additional possible new drivers for network investment. In a pandemic world and a post-pandemic world, we believe social equity will demand that access to distance learning, telemedicine, and other newly essential applications be unencumbered by rural geography or socioeconomic status. In the near term, we believe macroeconomic uncertainty over the balance of this year may influence some customer plans. Customers are focused on the possible direct impacts of their businesses of increased consumer and enterprise demand resulting from work-from-home and shelter-in-place protocols, SMB dislocations due to business closures, a potential decline in new housing formation, overall consumer credit deterioration due to increased unemployment, and reduced churn and new subscriber additions due to a reduced retail presence.
In general, some disruptions may be expected within the overall municipal environment as authorities re-engineer application and inspection processes and weigh needed job site access against increased social economic openness. On balance, we expect the COVID pandemic will reinforce and eventually accelerate pre-pandemic industry trends, including deployment of fiber deeper into existing telecommunications networks, significant investment in converged wireless wireline networks, and increased wireless capacity and capability through the rollout of 5G technologies. In sum, we believe the pandemic highlights that telecommunications networks are crucial infrastructure for our country and key to its future success. At the same time, we are mindful of the potential near-term impacts on the nation's economy and our customers' businesses, as well as potential impediments to job site access that may result from the pandemic. Now going to slide six. Revenue was $814.3 million, a decrease of 2.3%.
Organic revenue, excluding storm restoration services of $4.7 million in the year-ago quarter, decreased 1.8%. As we deployed one gigabit wireline networks, wireless wireline converged networks, and wireless networks this quarter reflected an increase in demand from two of our top five customers. Gross margins were 16.5% of revenue, reflecting improved performance relative to our expectations, and general and administrative expenses were 8.1%. All of these factors produced adjusted EBITDA of $69.9 million or 8.6% of revenue and adjusted diluted earnings per share of $0.36 compared to $0.53 in the year-ago quarter. Liquidity was ample as cash and availability under our credit facility was $390.1 million, an increase of $52.8 million during the quarter. Of note, net debt declined by $86.9 million during the quarter and over the last two quarters by over $263 million. Now moving to slide seven.
During the quarter, we exceeded our revenue expectations with increased demand from two of our top five customers. Organic revenue decreased 1.8%. Our top five customers combined produced 78.5% of revenue, decreasing 3.9% organically, while all other customers increased 7% organically. Verizon was our largest customer at 21.6% of total revenue, or $176.1 million. AT&T was our second-largest customer at 18.9% of revenue or $154 million. Revenue from CenturyLink was $148.8 million or 18.3% of revenue. CenturyLink was Dycom's third-largest customer and grew 40.8% organically. Comcast was our fourth-largest customer at $118 million or 14.5% of revenue. Finally, revenue from Windstream was $42.2 million or 5.2% of revenue. Windstream was our fifth-largest customer and grew 26.1% organically. Of note, this is the fifth consecutive quarter where all of our other customers in aggregate, excluding the top five customers, have grown organically.
Over the last several years, we believe we have meaningfully increased the long-term value of our maintenance and operations business, a trend which we believe will parallel our deployment of one 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. Moving to slide eight. Backlog at the end of the first quarter was $6.442 billion versus $7.314 billion at the end of the January 2020 quarter, a decrease of over $872 million. Of this backlog, approximately $2.512 billion is expected to be completed in the next 12 months. The decline in backlog during the quarter reflected in part a customer's reprioritization of the components of a large program. For CenturyLink, we received engineering services agreements in Oregon, Montana, Arizona, New Jersey, Pennsylvania, Virginia, and North Carolina.
From AT&T, a construction services agreement in Alabama. For Verizon, engineering and construction services agreements in various locations. From Charter, construction and maintenance services agreements for California, Texas, North Carolina and Florida, a locating services agreement for Portland General Electric in Oregon, and rural fiber services agreements in Oklahoma, Wisconsin, Arkansas, and Tennessee. Headcount decreased during the quarter to 14,292, reflecting adjustments we made to our operating plan. Now I will turn the call over to Drew for his financial review and outlook.
Thanks, Steve, and good morning, everyone. Going to slide nine. Contract revenues for Q1 2021 were $814.3 million, which was above the high end of our expectations despite a challenging economic backdrop. Organic revenue declined 1.8%, we had solid growth from two of our top five customers. Adjusted EBITDA was $69.9 million or 8.6% of revenue. Gross margins were at 16.5% and were approximately 80 basis points above the high end of our expectations for the quarter from improved operating performance at higher revenue levels. Adjusted G&A expense decreased 18 basis points compared to Q1 2020. During the quarter, we took actions to reduce administrative costs responsive to the current economic conditions. There was a reduction of performance-based compensation compared to Q1 2020. Non-GAAP adjusted income per share in Q1 2021 was $0.36 per share.
Excluded from this non-GAAP result was the impact of a goodwill impairment charge of $53.3 million for a reporting unit that provides installation services inside third-party premises. In response to the impact of COVID-19, certain customers have modified their protocols to increase the self-installation of customer premise equipment by their subscribers. This reporting unit generated less than 4% of annual revenue and did not incur losses in fiscal 2020. Now going to slide 10. Our balance sheet and financial position remain solid. Since Q3 of 2020, we have reduced net debt by $263.3 million. In Q1 of 2021, net debt was reduced by $86.9 million from solid free cash flow, and by purchasing $167 million of principal amount of our convertible senior notes at a discount for $147 million.
We ended the quarter with $643.9 million of cash and equivalents and $675 million of outstanding borrowings on our revolving line of credit. These borrowings were made in March and deposited as cash balances on hand as a protective measure to preserve financial flexibility in light of general economic and financial market uncertainty resulting from the COVID-19 outbreak. As of the end of Q1 2021, we also had $438.8 million of term loans outstanding and $293 million principal amount of convertible senior notes outstanding. In May 2020, we announced a tender offer to purchase any and all of the $293 million of convertible senior notes outstanding. We expect to use cash on hand to fund the purchases. Cash flow from operations were robust at $85.2 million during Q1.
We made solid progress invoicing and collecting balances during the quarter. The combined DSOs of accounts receivable and net contract assets sequentially improved by five days from Q4 2020 to 125 days at the end of Q1. Capital expenditures were $18.3 million during Q1, net of disposal proceeds. Gross CapEx was $20.7 million. For fiscal 2021, we anticipate capital expenditures net of disposal proceeds to range from $60 million-$70 million, a reduction of $60 million from our prior outlook. As of Q1 2021, our liquidity was ample at $390.1 million. In summary, we continue to maintain a strong balance sheet and ample liquidity. Going to slide eleven. To date during the COVID-19 pandemic, our services have generally been considered to be essential in nature and have not been materially interrupted. The company is closely monitoring the impact of the pandemic on all aspects of our business.
We've taken proactive measures to maintain business continuity, manage costs, and preserve the solid financial position of our company. We're encouraged by the Q1 performance since the onset of the pandemic. At the current time, we are seeing stable overall demand for our services as we look ahead to Q2 2021, and we anticipate non-GAAP adjusted EBITDA percentage of revenue, which is broadly consistent with the Q2 2021 outlook we provided in February 2020. However, given the difficulty to project our revenues and results of operations during this period of greater economic uncertainty, we are not providing detailed financial guidance for Q2 2021 or subsequent quarters at this time. The ultimate impact of our future operating results, cash flows, and financial condition is likely to be determined by factors which are uncertain, unpredictable, and outside of our control. Now I will turn the call back to Steve.
Thanks, Drew. Moving to slide 12. Within a challenged economy, we experienced firm end market activity 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 evolving industry opportunities. Fiber deployments enabling new wireless technologies are underway in many regions of the country. Wireless construction activity in support of expanding 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 13 states. Telephone companies are deploying fiber to the home to enable one 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 underway. 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. As our nation and industry contend with the COVID-19 pandemic, we remain encouraged that our major customers are committed to multi-year capital spending initiatives. 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 navigate challenging times. Now, Tammy, we will open the call for questions.
Ladies and gentlemen, if you wish to ask a question, please press one, then zero on your phone. You may withdraw your question at any time by repeating the one-zero command. If you are using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, you may press one, then zero. We do have a question coming from the line, Sean Eastman with KeyBanc. Please go ahead.
Hi, gentlemen. Thanks for taking my questions. Hope everybody's well on your end. I just wanted to start on the decision not to provide guidance. Overall, I understand the uncertainty, but it just seems like disruption is pretty limited here near term, and demand trends are stable. I'm just trying to get a little more color on where the big unknown is and what visibility is like around order flow near term.
Sean, look, we had a good quarter. The trends are stable into May. We're confident in the business to date, but we have all of our major customers who are not providing guidance to their investors.
We just weren't comfortable or presumptuous to get in front of that approach from the customers. Clearly, there's always different approaches to providing guidance in uncertain times. First and foremost is your current period performance, and that was good.
Got it. All right. Really nice improvement on the cash generation last two quarters here. Just wondering if you could help us with expectations around conversion of free cash flow from EBITDA this year, maybe relative to Dycom's normalized trend, or whether there's some moving parts we should be considering as we move through the rest of the fiscal year here.
Clearly we had DSOs come in. We renormed a number of our vendor relationships to get more in line with what I'd call industry benchmarks. We continue to work hard to tighten our collections process, manage CapEx, and manage working capital more broadly. We were pleased with the reduction in net debt. We were pleased with the reduction in leverage, and we expect those to continue, once again, given the uncertainties of the environment that we're operating in.
Got it. I'm going to sneak one last one in. The CapEx flex down is pretty notable. I'm just curious whether that should be an indication to us on where revenue's trending, just in terms of capital intensity and whether a component of that CapEx is sort of being deferred into fiscal 2022. Just how to think about that.
We have always had an aggressive replacement cycle where, depending on the residual value of the equipment, we can sell it earlier than most people do in the industry because we've seen good returns. In a way, it's the arbitrage, the discounts we get when we buy equipment new to what it's worth in the aftermarket. Typically, in periods of uncertainty, we're able to extend the useful lives of the equipment with a modest, if any, increase in our maintenance costs. Once again, in periods of uncertainty, we're just managing the cash. Clearly, we had good revenue performance in this quarter. We don't see any impediments based on our capital plan to continuing to grow the business when it makes sense.
Got it. I appreciate the time. Thanks.
Our next question comes from the line of Noelle Dilts with Stifel. Please go ahead.
Hi, guys. Good morning.
Good morning, Noelle.
Thanks. For my first question, I was hoping you could give us a little bit more detail on the large customer program that you've discussed in the past. You've talked about moving from phase 1, which has been a little bit more challenged, into phase 2. Curious if the timing there that you've kind of previously communicated has changed at all. You also mentioned a reprioritization of that large customer program. Maybe if you could clarify a little bit what that means, that would be helpful.
Noelle, we really don't have anything to add to what we talked about in February in terms of our expectation around moving through the initial portions of that large customer program. Nothing real noteworthy there. In terms of the reprioritization of a large customer program, it was for a portion of the work that the customer reprioritized. When we evaluated the realizability of the backlog, it's more uncertain, and so we reduced that. It's not of concern to us.
Okay. Thank you. That's helpful. Just in terms of your employee count and your head count, could you talk about how much of the reduction was permanent versus temporary, how you're thinking about ramping the workforce back up when the work comes back? Any thoughts there on kind of how to manage through these changes?
Sure. If you look at the headcount reduction of, call it just north of 900 employees sequentially, about a third of those were non-revenue producing positions. We've had a number of efficiency initiatives underway. We took a hard look, given the uncertainty on what we needed on the G&A side and other non-revenue producing positions, and we made some hard calls. We were able to reduce those folks in a period of uncertainty. On the revenue-producing side, so roughly the other two-thirds, a good portion of those relate to what I'll call our short-cycle businesses where they're almost exclusively performed in-house, and where seasonally, we typically have lots of trainees during this quarter. When we looked at the activity of those short-cycle businesses being depressed, we released a number of folks that were in training.
The work appears to have bottomed in those short-cycle businesses towards the end of April. We'll bring them back as we need them. We made the adjustment because we didn't have the business at the time that they were in training.
Thanks. That makes sense.
Thank you. Our next question comes from the line of Alex Rygiel with B. Riley. Please go ahead.
Good morning, Steve.
Good morning, Alex.
Steve, your backlog was down due to a customer reprioritizing a large program. Is this the in-house customer premise work shift?
No. It was really, as I just said on the answer to Noelle, it was really just a shifting in priorities. When we looked at the realizability of the backlog, we made an adjustment. Doesn't mean the work's been canceled, just means from a backlog perspective, we needed to be more conservative given the reprioritization.
Can you quantify the negative impact in revenue and EBITDA from COVID in the first quarter?
I think that the impacts were generally limited to the short-cycle business, and it was pretty insignificant.
How does your activity in May compare to April?
As I told Noelle, and we don't have a lot of business that's short cycle, but in those short-cycle businesses, it appears that activity bottomed kind of somewhere in the weeks of April 18th to April 25th, and it's up slightly coming into May.
Thank you.
The rest of the business was unaffected in any significant way.
Thank you.
Thank you. Our next question comes from the line of Brent Thielman with D.A. Davidson. Please go ahead.
Hey, thanks. Good morning, guys.
Good morning, Brent.
Hey, Steve. I know you guys aren't providing a sales outlook. I know there's a lot of factors in play there, but it does look like you guys feel pretty good that you're stabilizing the margins with this quarter and sort of the commentary around the second quarter. Is that fair?
Yeah. I think if you look back at the guidance we provided in February as a whole, we feel for the July quarter, we're comfortable with that, but we're not providing any detailed guidance given the factors we've talked about with earlier questions.
Okay. I guess, bigger picture, I mean, a lot of excitement here this year, Sprint T-Mobile kind of merge, Dish enters the foray. Can you talk about are discussions progressing with any of those customers? Do you expect those to become customers or bigger customers for you? Maybe anything that's happening behind the scenes that might give us some flavor of what's ramping up here?
Well, look, we're clearly aware of the programs. We're having some discussions. I would say just generally in wireless, it represented about 10.5% of this quarter's revenue. Kind of on a run rate basis, approaching $350 million in revenue. We had good growth with AT&T. I think we feel good about our opportunities there. I think it's taking some time to develop. There's been some industry commentary about that, but we're still confident overall in the wireless business.
Maybe one quick one, too. On the progress on cash flow and DSOs. I know you guys have been kind of targeting this 90s level. Do you think you can get there this year versus maybe having to wait into FY 2021, which I think we talked about last quarter?
I think we continue to make progress. Whether we get there this fiscal year or not, we'll be moving in the right direction.
Okay. That's great. Thank you, guys.
Thank you. Our next question comes from the line of Jennifer Fritzsche with Wells Fargo. Go ahead.
Great. Thank you for taking the question. Two, if I may. Just this morning, CenturyLink, which I think saw the most growth of any of your customers, announced an initiative to put out an additional 400,000 homes with gigabit speeds. I guess maybe I'll ask, did that surprise you? Do you expect them to continue to lean in here and be offensive in their fiber push? Secondly, on cable, I noticed you had a new contract from Charter. Charter has not appeared in your top five customer list. Is that something we could expect to see them come in in a more offensive and aggressive way? Thank you.
With respect to CenturyLink, Jennifer, we've been actively participating with them in their Fiber to the Home initiative now for probably going back to 2015, 2016. We weren't surprised in the list of markets that were identified. We are encouraged that they feel good about the program, and believe that it's successful. We're happy with the progress we made with them. As you identified, we grew 40% plus organically year-over-year. With respect to Charter, those are not new contracts. Those are contracts we have in place, and have active work under. I think in general, what I would say about cable is clearly they had a great subscriber addition quarter.
The work from home and the amount of video conferencing and other bandwidth-intensive applications that have been exposed or increased by the pandemic, I think that's over time, going to be supportive of continued expansion of capacity in cable networks and all networks, in general.
Steve, if I may, can I just add on to that last point on cable? From what I've read, it seems like the uplink is really being challenged here for the Zoom and Microsoft Teams, et cetera. Is that something that can be helped through a more fiber deep architecture from cable?
Sure. There's a number of ways that cable can provision more upstream bandwidth, but the most basic is to reduce the number of subscribers that connect to an individual fiber at a node location, and ergo, pushing fiber deeper certainly helps with that. On a shorter term basis, there can certainly be node splitting activities that I think one of our customers has talked about, and of which we've been very active in supporting those efforts.
Thank you.
Thank you. Once again, ladies and gentlemen, that is 1, 0 for a question. We do have a question from the line of Blake Hirschman with Stephens. Please go ahead.
Yeah, good morning, guys.
Good morning, Blake.
Steve, it sounds like the short cycle pieces are really what's all any kind of impact. Can you frame up what percentage of the overall mix would fall under that short cycle definition?
Well, let's have Drew give the split between cable, telco, and locating, and I think we can frame our answer that way.
Yeah.
Okay.
Sure. Good morning, Blake. Telco was at 72.1%, Cable was 17.1%, Facility Locating was at 6.5%, and Electrical and Other was at 4.3%.
Blake, typically, the short cycle businesses that we're referring to are really around the locating and the cable installation business. As you can tell, between our disclosures, they're less than 10%. That doesn't mean they stopped. They just had slower activity. A minor impact.
Okay. Got it. Great. On AP, it looks like your days payable went up a bit. That's obviously not a bad thing at all. Just trying to get a sense for how much of that might be more timing versus sustainable as we look forward.
Go ahead, Drew.
Yeah. As Steve mentioned, Blake, just around the payables. We looked at vendors and renormed where the payment terms are on those, more in line with what Steve referred to as industry standard. That's something that we spent time on during the quarter, and we'll continue to look at that.
Got it. That sounds great. I'll hop back in queue. Thanks.
Thank you. Our next question comes from the line of Alan Mitrani with Sylvan Lake Asset Management. Please go ahead.
Hi. Thank you. Just a couple quick ones. Steve, can you talk about how work from home for, I'm assuming a lot of your employees did work from home this past quarter, but how technology and work from home is going to change the business over the next year or two? Maybe just talk about some of the software packages you've put in, or is it not, and this is just going to be a standard normal outdoor business the same way it's always been for 20 years?
I think, Alan Mitrani, as we said in our comments, we moved over 2,000 people, I think it was actually north of 2,400 people, to working off-site or work from home. We're going to be very thoughtful and not in a hurry to come back on-site because we found good productivity. We think generally employees like it, and we think it's been good for the business. Clearly, the investments we made around moving applications to the cloud, making sure that we were ready with sufficient capacity to move folks off-site, I think was good investments over the last several years. We suspect that we're not the only company thinking that way, we think there are going to be more demands on residential networks where actually what's traditionally been in facility or in-office activity goes to the edge of the network.
We think that's good. I think the other trend that I think is just emerging and probably will accelerate over time is all numbers of industries thinking about how they deal with social distancing and using 5G networks, everything from warehousing to logistics to manufacturing. I just think there's going to be substantial new applications developed that take advantage of 5G technology and fiber deeper into the networks. I like the comment one of our customers made, that even in this period of slow time, people will pay their phone bills, their cellular or wireless bills, when they're skipping rent payments and mortgages, right? It says how important the networks that we work on are to the country.
Great, thank you. Can you talk about the competitive dynamic as it relates to 5G? We haven't really seen, I mean, there's no 5G handsets, nobody's really doing anything with 5G. Do you think the work from home dynamic, the fact that everybody needs cable or connectivity will push people to invest even faster, maybe through an infrastructure bill if it comes through? Do you think that the delay in handsets that might come out from a 5G, or people buying anything might delay any sort of consumer application for it? I'm just wondering why some of your customers either might accelerate or decide to pull off the gas in terms of spending CapEx for the next year or so.
Yeah. Certainly on the capacity side, right, they've all highlighted that they're investing to create capacity. I think in terms of 5G, Alan, there's lots of preparatory work that has to be done that's well underway. We're working on thousands of sites across 13 states. We think it's real. I think if anything, particularly on the industrial side and on the residential side, that all of the changes in the economy only will reinforce the trends around deployment. I think the other thing that we highlighted in our comments is, I think when you look at work from home, telemedicine, distance learning, all of the things that we've rolled out rapidly as a country to contend with the pandemic, access is absolutely crucial to all those applications. We're hopeful that that's reflected in future infrastructure bills.
Certainly, we've done lots of rural telecom deployments over a long period of time, but we did lots coming out of the last recession that were funded in part by federal dollars. I think that's something we're paying close attention to.
Okay. Last, if I can, the sequential drop in backlog, it's your biggest in a long time. Is there something that you pulled out of backlog, or is it just people didn't release some of the work? Can you just remind us or what you think in terms of what that reflects?
Alan, as we said earlier, roughly a third of the decline was this revaluation or of this reprioritization of the backlog. It wasn't canceled, but it was reprioritized. On a probability basis, we just marked that down. The rest of the business had a normal burn. In fact, subsequent to the end of the quarter, we had a pretty substantial renewal in our small cell business with a key customer. We've renewed some other business. We are not concerned about that trend.
Thank you.
Thank you. Our next question comes from the line of Adam Thalhimer with Thompson Davis. Please go ahead.
Hey, good morning, Steve.
Hey, good morning, Adam.
Just curious, what's the impact of, I guess, the virus on kind of short-term trends from the standpoint of I mean, is there almost a fair amount of emergency work as customers struggle to keep up?
Look, I wouldn't call it emergency work. I think our customers' networks are performing well. A number of them have provided lots of disclosure about the rapid growth. I think what I would say is, it's as if a year or a year and a half's worth of normal network growth got accelerated into a two-week period or a three-week period. I think the networks have done well. That being said, we've had a fair amount of activity in different geographies across the country to create some capacity to backfill that acceleration of the growth.
It's got to make you feel more confident about, yes, your customers, they're economically sensitive, and they can cut CapEx if they get nervous about the economy or if their cash flow gets impacted. I got to think that the importance of networks in this time kind of insulates you a little bit.
Yeah. I think as always, and we said this in our comments, right, we view as what we work on, these networks that our customers provide as essential in the fullest sense for the country. I think that's been more evident over the last two months than maybe it has been in several years, right? I think it's absolutely crucial. I think they will continue to invest. You just have to be aware that in the economy that's had some short-term challenges, that there may be some effects on their behavior. Intermediate long-term, I think this makes all of the drivers of our business ever clearer and stronger.
Okay. Can you talk about the decision to pull in the converts now, and then how that impacts quarterly D&A and interest expense going forward?
All right, Drew, why don't you take the D&A and interest expense?
Yeah. Just on the interest side of it, Adam, the converts, there's two elements to it. One of those we add back, which is a non-cash amortization, and then there's the coupon, which is at 0.75. Where the senior credit facility is now and where LIBOR is at a low rate, it's certainly attractive debt currently, and there's capacity within the facility to repurchase those notes. We anticipate using cash on hand to do that.
Yeah, I think in terms of the way we think about the repurchase at the tender offer is investors have other opportunities in the marketplace to invest capital that may be more attractive than holding this convert to maturity. To the extent that we could provide liquidity for them at the right return for us, it just was a proactive way to manage the capital structure.
Okay. I guess I was hoping Drew would make it easy for us and give us some targets for Q2 on D&A and interest expense.
Well, we'll see how many of the notes come in, and then we'll consider helping folks out when that's done.
Okay, understood. Thank you.
Thank you. Our next question comes from the line of Jon Lopez with Vertical Group. Please go ahead.
Hey, guys. Thanks so much.
Good morning, Jon.
Good morning. I have a couple just quick ones on the backlog stuff, just to clarify to make sure I'm clear on the moving pieces. The first thing, was there anything explicit or specific related to just lower on-time installation activity? Is that a specific contributor here in any way?
Jon, I'm not sure I followed the question. We certainly had less in-home activity. That was not a primary driver of the change in the backlog. Certainly, as most of our customers have identified, their customers are not particularly comfortable, understandably, with having folks come into their homes, and so there's been an impact on that business.
Okay, understood. In that context, if I just look, and I don't know what your comment was quarter-to-quarter or year-to-year, you have kind of $870 million down from prior quarter. Just to be clear, you're saying that there wasn't a specific portion of that where in-home just gets removed?
No, because we continue to have some levels of activity. It's at reduced levels. A third or a little better of that was this reprioritization dynamic, which is not of concern to us. The rest of it was ordinary course. We've talked about this, Jon, before. Our backlog is an estimate using a number of methodologies that are consistent over a long period of time. It correlates over the intermediate and long term with revenue, but in quarter to quarter, it's not all that meaningful. Had we gotten the renewal in three days earlier than we did, it would've been a different number based on the small cell activity.
No, that's understood. Thank you. The second, just to come back to the remeasurement part, I think what I hear you saying here is that activity likely resurfaces, and I know you don't want to put a timeframe on it, but is it fair to say that that likely re-becomes backlog, for lack of a better term, in calendar 2021 or at some point?
Well, it hasn't been canceled. It was reprioritized, and it was reprioritized with enough uncertainty that we just didn't feel comfortable not making some adjustment to the backlog. It was not a material driver to the overall company. It's just something that we had to do in the ordinary course based on new information.
Got you. Sorry, the last part on this. It sounds as though many of these changes, they don't really seem like they're having much of an impact on your view of what working capital improvement can look like as we get to the back half of the calendar year. Is that a fair assessment? I guess maybe my question that would spit off that is maybe why? If you're having this remeasurement now, why would that have no impact on your cash flow capabilities in the back half of the year?
Jon, I'm not sure I follow. With respect to the backlog, it's an estimate. It's different than our view in terms of working capital. The working capital is going to be a function of the revenue levels, the EBITDA margin, the way we manage accounts receivable and payables. We think that we will continue to delever the business through the balance of the year based on those factors.
Right. Okay. No, that's helpful. I guess what I was just kind of driving at, it doesn't seem like this change in backlog is really driving much of a change in your view of the business over the intermediate term. Maybe I could just simplify it that way.
I think that's exactly correct.
Okay. All right, great. Very good. I have one last question here, and you've talked around this a little bit in response to other questions, but this is kind of the fifth or sixth quarter of year-on-year decline at one of your key cable customers. I guess I'm just wondering, and again, you talked to this a little bit, but is that a vertical that you would expect to invert from kind of tailwind to headwind as we look out over the next 18 to 24 months?
Well, look, I think we've talked about this before. We were encouraged that Comcast grew sequentially. We've talked about, and they've talked about, their increasing deployment of fiber deeper into their networks. I think there was some focus on dealing with near-term capacity. They are clearly committed to pushing fiber deeper into the network, and we were encouraged that sequentially, the revenue went up as opposed to the declining trend that it had been on. I think in general, we were pleased with where that business was.
Very good. Thanks for all the help. Sorry for the tortured questions.
Not a problem.
Thank you. Our next question comes on the line of Noam Miller, a private investor. Please go ahead.
Hey, Steven.
Hi. Hey, Noam.
In your opening comments, you referenced latency, I'm kind of wondering whether that was a small microcell commentary or a node splitting or a 5G overlay, or just kind of help with why the emphasis on latency?
Well, I think, Noam, latency standards are key to the 5G standard, and I think latency, if you think about it, is crucial to all of these deployments around, whether it's video conferencing or industrial applications. I mean, the return cycle of the signal in the network is really important and becoming even more important as we think about autonomous vehicles and other future applications that need the network. They need a network that has a quick response time.
Great. Thanks.
Please go ahead with Wells Fargo.
Hi, Steve. Just one more question. Depending on what you believe coming from Washington, it doesn't seem debatable that if there is a fourth stimulus, broadband is going to be a part of it. I know you saw some benefit in the last stimulus, which I believe was 2009. Any thoughts there? I'm not asking you to predict what's going on in Washington, but just would love your thoughts.
Sure. As you mentioned, Jennifer, in the 2009 stimulus, there was roughly $7 billion that was allocated to rural broadband deployments. Between the Dycom business at the time as well as the businesses that we acquired from others subsequent, if you put those two together, we did just short of $600 million of that stimulus work, so kind of an interesting number. Almost 10% of what was in the bill eventually wound up as revenue to us. Clearly, as we said in our comments, if you think about distance learning and telemedicine and all the things that have become essential, I think it's a reasonable area to look towards as future investment in a stimulus.
There's already the Rural Digital Opportunity Fund, which is underway, but I think clearly with the magnitude of the federal expenditures in the first stimulus bills, my guess is it would be bigger if it were involved than it was 10, 12 years ago, and I think that would be a good opportunity for us. No guarantees, but we have a broad rural presence across the country.
Thank you.
We have a follow-up question with Alex Rygiel. Please go ahead.
Steve, how did your subcontractor workforce headcount change in the quarter? Can you also help us to understand the cadence of completion of a large project for a particular customer?
Alex, this is always a back-end loaded quarter seasonally, April was a good month. Our usage of subcontractors certainly increased month to month throughout the quarter. We had plenty of availability there, so we feel good about that. Then, as we said earlier, I think we're in the same place where we were three months ago in terms of our progress in working through that large customer program in the initial phase.
Thank you.
Mr. Nielsen, there are no questions in the queue. Once again, that is one, then zero.
Okay, Tammy. Thanks, everybody, for attending this call. We look forward to speaking to you again on our next earnings call at the end of August. Hope everybody stays healthy and safe. Thank you.