Good day and thank you for standing by. Welcome to the DyCAM Industries 2nd Quarter Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your host today, Steve Vice President and Chief Executive Officer, please go ahead.
Thank you, operator. Good morning, everyone. I'd like to thank you for attending this conference call to review our conference call to review our Q2 fiscal 2022 results. Going to slide 2. During this 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 Earnest, our General Counsel. Now I will turn the call over to Ryan Earnest.
Thank you, Steve. All forward looking statements made during this call are provided pursuant Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 ks filed March 5, 2021, together with our other filings With the U.
S. Securities and Exchange Commission, we assume no obligation to update any forward looking statements. Steve? Thanks, Ryan. Now moving to Slide 4 and a review of our Q2 results.
As we review our results, please note that in our comments today and in the Conciliation of these non GAAP measures to their corresponding GAAP measures. To begin, I want to express my sincere thanks to our employees who have served our customers with real fortitude in difficult times over the last 18 months. Now for the quarter, Revenue was $787,600,000 an organic decrease of 4.4%. As we deployed 1 gigabit wireline networks, Wireless, wireline, converged networks and wireless networks, this quarter reflected an increase in demand from 2 of our top 5 customers. Gross margins were 17.29 percent of revenue, reflecting the continued impacts of the complexity of a large customer program And revenue declines year over year with other large customers.
General and administrative expenses were 8.2% And all of these factors produced adjusted EBITDA of $73,800,000 or 9.4 percent of revenue And adjusted earnings per share of $0.60 compared to earnings per share of $1.18 in the year ago quarter. Liquidity was solid at $299,100,000 and operating cash flow was $17,300,000 During the quarter, we repurchased 631,638 shares for $50,000,000 And subsequent to the end of the second quarter, we received a 2 year award for fiber construction in a number of states Valued at approximately $400,000,000 to $500,000,000 Now going to Slide 5. Today, major industry Participants are constructing or upgrading significant wireline networks across broad sections of the country. These wireline networks Generally designed to provision 1 gigabit network speeds to individual consumers and businesses either directly or wirelessly using 5 gs technologies. Industry participants have stated their belief that a single high capacity fiber network can most cost effectively deliver services to both consumers and businesses, Enabling multiple revenue streams from a single investment.
This view is increasing the appetite for fiber deployments And we believe that the industry effort to deploy high capacity fiber networks continues to meaningfully broaden our industry's set of opportunities. Over the last year, 6 of our top ten customers have announced substantial new plans for deployments of fiber to the home, totaling over $40,000,000 passings. In fact, one key customer recently announced plans for strategic divestiture Whose stated purpose is to increase fiber investment in both its divested and retained service territories. Increasing access to high capacity telecommunications continues to be crucial to society, especially in rural America. The wide and active participation in the FCC Ardagh auction augurs well for dramatically increased rural network investment.
In addition, an increasing number of states are commencing initiatives that will provide funding for telecommunications networks separate from the FCC RDOT program. 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 numerous geographic areas to multiple customers, including customers who have initiated broad fiber deployments as well as customers who have resumed broad deployments. These deployments include networks consisting entirely of wired network elements as well as converged wirelesswirelinemultiuse networks. Fiber network deployment opportunities are increasing in rural America as new industry participants respond to emerging societal incentives.
We continue to provide integrated planning, engineering and design, procurement and construction and maintenance services to several industry participants. Macroeconomic effects and potential supply constraints may influence the near term execution of some customer plans. Broad increases in demand for fiber optic cable and related equipment may impact delivery lead times in the short to intermediate term. In addition, the market for labor continues to tighten in regions around the country. It remains to be seen how extensive these conditions will be and how long they may Furthermore, the automotive supply chain is currently challenged, particularly for the large truck chassis required for specialty equipment.
As we contend with these factors, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers. Moving to Slide 6. During the quarter, organic revenue decreased 4.4%. Our top five Customers combined produced 65.7 percent of revenue, decreasing 18% organically. Demand increased for 2 of our top five customers.
All other customers increased 39.9% organically. AT and T was our largest customer at 22.5 percent of total revenue or 177,500,000 AT and T grew 31.9 percent organically. This was our 2nd consecutive quarter of organic growth with AT and T. Revenue from Comcast was $121,700,000 or 15.5 percent of revenue. Comcast was Dycom's 2nd largest customer.
Lumen was our 3rd largest customer at 12.1 percent of revenue or $95,400,000 Verizon was our 4th largest customer $90,800,000 or 11.5 percent of revenue. And finally, revenue from Frontier was $31,900,000 or 4 percent of revenue. Frontier grew 161.4 percent organically and was a top 5 customer for the first time. This is the 10th consecutive quarter where all of our other customers in aggregate excluding the top five customers have grown organically. In fact, the 39.9 percent organic growth rate with these customers is the highest growth rate in at least 9 years.
Of note, fiber construction revenue from electric utilities was $51,600,000 in the quarter or 6.6 percent of total revenue. This activity increased organically 92.1% year over year. We have extended our geographic reach and expanded our program management and network planning services. In fact, over the last several years, we believe we have meaningfully Increase 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 wirelesswireline converged networks as those deployments dramatically increase the amount of outside plant network that must be extended and maintained. Now going to Slide 7.
Backlog at the end of the second quarter was $5,895,000,000 versus $6,528,000,000 At the end of the April 2021 quarter, decreasing approximately 633,000,000 Of this backlog approximately $2,655,000,000 is expected to be completed in the next 12 months. We continue to anticipate substantial future opportunities across a broad array of our customers. For Windstream, a construction and maintenance agreement in Kentucky From AT and T Construction and Maintenance Agreements in Wisconsin and Ohio for Comcast, a fulfillment agreement for Washington, Illinois, Michigan, Massachusetts, New Jersey and Pennsylvania from Lumen, an engineering agreement for Washington, Oregon, Idaho, Montana, Wyoming, Utah, Arizona, Colorado, New Jersey, Virginia and North Carolina. For DISH Network, a wireless construction agreement in North Carolina and South Carolina From various electric utilities fiber construction agreements in Missouri, Tennessee, Mississippi and Georgia and various rural fiber deployments in Wisconsin, Indiana, Tennessee, South Carolina and Georgia. Headcount increased during the quarter to 14,674.
Now I will turn the call over to Drew for his financial review and outlook. Thanks, Steve, and good morning, everyone. Going to slide 8. Contract revenues for Q2 were $787,600,000
a decrease of 4.4% Compared to Q2 of last year, adjusted EBITDA was $73,800,000 or 9.4 percent of revenue, Gross margins of 17.3 percent in Q2 decreased 285 basis points from the year ago period. Gross margins were approximately 85 basis points lower than our expectations as revenue was lower than expected for several large customers and this impacted our operating leverage. G and A expense was at 8.2% of revenue, in line with Q2 'twenty 1, non GAAP adjusted net income was $0.60 per share in Q2 'twenty two compared to net income of $1.18 per share In Q2, 2021, the variance resulted from the after tax decline in adjusted EBITDA, higher interest expense And lower gains on asset sales offset by lower stock based compensation, depreciation and amortization. Now going to slide 9. Our financial position and balance sheet remains strong.
We ended the quarter with $500,000,000 of senior unsecured notes, $350,000,000 of term loan, no revolver borrowings and $58,300,000 principal amount of convertible notes. Cash and equivalents were $261,900,000 at the end of Q2, dollars 58,300,000 is expected to be used to repay Our convertible notes due September 2021. Liquidity was solid at $299,100,000 at Q2. Our capital allocation prioritizes organic growth followed by opportunistic share repurchases and M and A within the context of our historical range of net leverage. Going to Slide 10.
Operating cash flows were $17,300,000 in the quarter. Capital expenditures were $35,500,000 during Q2, net of disposal proceeds and gross CapEx was 36,700,000 During Q2, we repurchased 631,638 shares of our common stock At an average price of $79.16 per share for $50,000,000 As At the end of Q2, we have a remaining authorization of $100,000,000 for share repurchases through August 2022. The combined DSOs of accounts receivable and net contract assets were at 125 days, an improvement of 3 days Now going to Slide 11. For Q3 2022, The company expects contract revenues in line as compared to Q3 2021 and non GAAP adjusted EBITDA as a percentage of contract revenues to decrease compared to Q3 2021. We expect year over year gross margin decline of approximately 125 basis points And G and A increase of approximately 50 basis points.
We expect approximately $8,800,000 of non GAAP adjusted interest expense And $300,000 for the amortization of the debt discount on convertible notes for total interest expense of approximately $9,100,000 during Q3. We expect a non GAAP effective income tax rate of approximately 27% And diluted shares of $30,600,000 Now I will turn the call back to Steve.
Thanks, Drew. Moving to slide 12. Within a recovering economy, we experienced solid activity and capitalized on our significant strengths. 1st and foremost, we maintain significant customer presence throughout our markets. We are encouraged with the emerging breadth in our business.
Our extensive market presence has allowed us to be at Forefront of evolving industry opportunities. Telephone companies are deploying fiber to the home to enable 1 gigabit high speed connections. Increasingly, rural electric utilities are doing the same. 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.
Deployments to expand capacity as well as new build opportunities are underway. Dramatically increased speeds to consumers are being provisioned and consumer data usage is growing, Wireless construction activity in support of newly available spectrum bands is beginning and expected to Next year. Customers are consolidating supply chains, creating opportunities for market share growth and increasing the long term value of our maintenance and operations As our nation and industry continue to contend with the COVID-nineteen pandemic, we remain encouraged that a growing number of our customers are committed Multi year capital spending initiatives. We are confident in our strategies, the prospects for our company, the capabilities of our dedicated And the experience of our management team. Now, operator, we will open the call for questions.
Thank you. And it looks like our first question is going to come from the line of Adam Thalhimer with Thompson Davis, your line is open. Please go ahead.
Hey, good morning, guys. Hey, Adam. Steve, how much
did the large customer program Negatively impact margins in Q2. And what's your thought on when that begins to ease?
Yes. So if you look at Controlling for that program to impact on margins, the EBITDA margin would have been in line as it has been in other periods with the long term average. And I would say just an additional color that some of the new programs were net positives to that and some of the Customers who seem to be a little bit slower were a little bit of drag, but the central tendency was around that long term average controlling for that program.
And then just on the second part of that, when do you think that the headwind begins to ease?
Well, we continue to work down and close out the project. The balance year over year that we're working on closing out is down about 25%, the amount of cash that came in sequentially reduced it in excess of $25,000,000 So I think we continue to make Progress and we hope that that progress will continue if not accelerate through the balance of the fiscal year.
Okay. And then the $400,000,000 to $500,000,000 fiber award, can you tell us if that was from an MSO or from a telco customer? And then how do you think about the revenue?
So we have more to
say about it on the next call, but I would say we were encouraged by the breadth of the award geographically.
Okay. I'll
turn it over. Thank you.
Thank you. And our next question comes from the line of Brent Follman with D. A. Davidson, your line is open. Please go ahead.
Hey, thanks. Good morning, Steve and Drew. Good morning, Brent.
Hey, Steve, some of the supply and labor constraints discussed last quarter, and I think you noted it again in this call, What impact do you think that's having on the ramp and deployment right now?
So I think it's as we talked about On the last call, Brent, I mean, clearly, we're able to grow the business. So we're encouraged with AT and T growing in excess of 31% total. But probably The more interesting number, Brent, is that on the wireline side of the business, it was in excess of 75% year over year organically. So we're certainly able to grow the business, grew the business with Frontier. But I would say that there have That rate of growth might have been even higher absent the constraints.
I think the other thing that was more Impactful towards the end of the quarter was clearly the delta variant has had an impact on the number of people that we've had in quarantine. And unlike the last peak during the winter when we weren't all that busy, we're busier now. And so that certainly had some impact What we were able to deliver and certainly had some impact on cost with respect to overtime.
Okay. That's helpful. And Steve, lumen was I think was expected to slow, but was a little more than I would have expected. Can you just talk about what you're seeing with that customer?
So with respect to Lumin, Yes. With respect to Lumin, so clearly, after the end of our quarter, they announced Strategic divestiture of a number of their states, primarily east of the Mississippi, they represent about Quarter of the revenue that we have with that customer. And so, it was a little bit slow. I think in general, we're really encouraged by that transaction because I think as they said, They've identified kind of an incremental 12,000,000 to 13,000,000 homes of potential for fiber to the home in the Service territory they're retaining and Apollo has spoken that the purpose of the transaction was to invest in fiber In the 20 states that they're acquiring. So I think it may have impacted some of the slowness in the business in the first half of the year with the benefit of the news in hindsight, but certainly encouraging, as to what the transaction can untap Or unleash from the rest of the business.
Right. Okay. And lastly, Steve, do you think Verizon continues to shrink as a percentage of the business over the near term? I mean, I don't see any new award activity or extensions, at least listed in the presentation here.
Yes. I think Brent, we continue to work through closing out programs. I think there may be some opportunities as they get into another budget year, But we'll just have to see. Recently, they made comments which were encouraging about revisiting some of their fiber Build plans in their existing ILEC service territory. So we'll just see how they play out.
Okay, great. Thank you.
Thank you. And our next question comes from the line of Eric Luebchow with Wells Fargo. Your line is open. Please go ahead.
Great. Thanks for taking the question. So Steve, on the there's been some concerns about labor cost inflation just generally in the industry. So maybe could Talk through like any contractual provisions you have with your customers to kind of help pass through some of those higher labor expenses and kind of what impact That could have on your margins, if you've seen any of that yet or if there's any implied in your guidance for the October quarter.
Right. So I think within the existing book of business, there are some agreements we have that have annual increases. Some of those are index related or they're just a Negotiated amount. There are others, where there are the opportunity is on the renewal of the agreement. I think where it's more important that we're focused on is to be careful about how we think about the forward cost curve.
And so that as we sign up for new business, which is of real importance to our customers that we're in a position to be able to Successfully supply the labor that they need. And I think we've been able to do that so far, but we're going to continue to work hard on that. We've been through these cycles before. This one may be a little more pronounced than what I've seen before, but it's always a combination of Provide valuable service and make sure that as you commit resources to incremental opportunity that you get the price right.
Great, great. I guess related to that Steve, I mean, in other periods of labor market tightness like this, do you see any opportunities to actually Increase your share as some of your larger customers may be less likely or less able to in source, some of their fiber deployments?
Historically, Eric, in sourcing has not been a big factor in the business. So I don't know that we've seen that in prior periods. I do think that it certainly Gives every incentive to continue to focus on building a broad labor pool through outsourcing, where we can reach across the I mean, we have one program right now where we move resources literally from one quarter of the country to the other Because that was where the opportunity was and we had the ability to ship those resources.
Great. And then just one more for me, Steve. I might have missed what you said on the wireless business, but I was interested, it looks like you got a DISH award. Wondering if you're seeing more broad opportunities within wireless today, whether that's C band deployments, T Mobile's network integration or the DISH network build, just any color on what you're seeing from the wireless side of the business would be helpful.
Yes. I think our wireless business in total, Eric, was still down year over year. And I think that Flex this, what I'll call the gathering phase for C band deployments primarily. We have received something in excess of 500 sites That are in site acquisition right now for C band deployments. And I think as you know, probably better as well as we do, As we look into 2022 and 2023, those C band deployments will accelerate.
Have to understand the geography and When the which band is where and when it clears, but clearly, I think the entire wireless industry is looking ahead to a better
22. Okay, great. Thanks, Steve.
Thank you. And our next Question comes from the line of John Lopez with Vertical Group. Your line is open. Please go ahead.
Hey, thanks very much. Good morning, guys. I had a couple of quick ones, if I could. The first one, I just wanted to clarify on the guidance. I think a year ago, there was like $8,000,000 or $9,000,000 of storm work.
So I think, Drew, you're saying nominal contract revenue is flat, so organically, theoretically up a bit year on year. Is that the right way to think about those things?
Yes, John, this is Drew. That's what we have in
the slide and spoke of. Yes. And the other thing, John, is in the current guidance for this October quarter, we have not factored in any storm work. It's just too early to see the consequences of this Hurricane Ida, whether there'll be some amount in there. So Drew's guidance does not include in accordance with how we've always done it.
We have no storm in there for the current quarter.
Got you. Helpful. Second thing, I'm wondering if you could spin back. I think a couple of questions ago, you mentioned something about the Verizon contract and there was Down 25% reference. That reference is to the sort of troubled portion of that business down 25% year on year in fiscal Q2.
Do I have those parts right?
No, John. That was with respect to the working capital tied up in the program that we've continued to be able to get working capital We'll back out of that program. We hope that that actually picks up through the balance of this fiscal year. So it's moving in the right direction. We'd all like it to move more quickly, but we are continuing to make progress on the closeout.
Okay. Got you. And then, sorry, the last one, I want to ask my obligatory backlog question. So your 12 month backlog Has now increased year on year for 3 consecutive quarters and sort of high single digits each of the last 2. Your greater than 12 month backlog is going the opposite direction.
Why is that?
So John, as we've talked about before, the total backlog is a function of the duration of the agreements And so you go through renewal cycles and if you're in the last of a renewal cycle on a 5 year agreement, right, you have 12 months backlog, but you don't have anything in addition for total. The other thing I would say as we talked about last quarter is particularly on this rural work, it tends to be The projects are quite large, but they tend to be awarded contractually in phases. So you might just Illustrative numbers, you might have $100,000,000 project, but you never have more than $10,000,000 in backlog as you work through phase to phase to phase. So I just think it's just structurally a little bit different environment than what we've seen From other portions of the business.
Got it. Okay, understood. Thanks very much.
Thank
you. And our next question comes from the line of Noelle Dilts with Stifel, your line is open. Please go ahead.
Hi, good morning, Steve and Drew.
Good morning.
Morning. I just wanted to start with a question on AT and T. At a recent conference, they talked about They kind of lowered their planned, fiber home passings, to 2,500,000 from 3,000,000 This year, and they did talk a bit about cyber availability, being a factor. That's not necessarily something that we're hearing broadly across the industry and didn't seem to be Something that you cited, so is that a concern, as it relates to, again, the pace of the build out, Fiber availability or not really something you're seeing?
So I think as we said in our comments, Noelle, that there There are certainly some extended lead times around fiber. So customers are having to plan farther ahead, although I don't think that was the case in AT and T's situation. So we've talked about in our comments about some potential extended lead times. I think to keep the AT and T Comment in perspective. I mean 2,500,000 homes in a year from a year where they were essentially Doing very little.
I think it's been an aggressive ramp. I think they continue to grow. And as you can see in our numbers, the business has grown nicely year over year, might have grown a little bit more with a little more fiber. But I think we are pleased with our progress with AT and T. And from the outside looking in, I'm impressed With the sheer magnitude of their ambition to grow this year.
Right. Okay. Got it. And then second, You mentioned in your discussion about margin that some of the new work is a positive margin contribution. I'm just curious, do you think at this point industry participants are kind of recognizing what's coming in terms of the work next year and are Potential stimulus, are we at a point now where these participants are looking to secure capacity earlier and are willing Do you pay more for capacity or do you think we're still getting to that point?
Yes. Look, Noelle, we work for a lot of smart customers. They're always taking in market inputs. They have lots of Suppliers beyond us, so they're forming their own view of where the market's going. I think what was probably more important than Kind of the supply demand dynamic in the industry for our customers is that they're launching a number of really strategic initiatives.
And so when you have a strategic initiative that extends over 5, 6, 7, 8 years, I think you've taken a very intentional approach to how you secure I asked it easy to get the work done. So I think it's really I think customers are really driven by how Strategic services are in support of their programs as much as trying to kind of Figure out what's it going to cost next Tuesday.
Okay. Thank you.
Thank you. And our next question comes from the line of Alex Rygiel with B. Riley. Your line is open. Please go ahead.
Thank you. Good morning, Steve and Drew.
Hey, Alex.
Steve, Can we come back to sort of the equipment availability and more about sort of the equipment that you use to provide the services and And that being yellow equipment and whatnot rolling stock. Are you seeing
being clearly one of the largest out there
in the marketplace, are you seeing opportunities where you have That's available that could possibly take advantage of market share opportunities in the foreseeable future?
I think that's always a possibility, Alex. I mean, we have strong and long term relationships with our We're in dialogue with them all the time. This chip situation is a challenge for everybody. I think There are certainly opportunities given the size of our fleet to extend the operating lives and that can be meaningful in terms of incremental capacity. I think there are financial opportunities.
I mean, we had a call about a month ago and we had a supplier that had an order that was canceled by somebody else We were there first call and we took all 14 aerial devices. So I think there are opportunities Forced to do that, but I don't want to diminish, which is why we put it in the comments. I mean, this Constraints on the automotive supply chain are real. And so we've just got to be aware of those as we plan the business.
And then coming back to the hurricane that's sort of working its way through the United States right now. Can you remind us, how that initially hurts your business and then possibly offers you opportunities? And would you anticipate sort of all the negatives and positives to offset each other in this current quarter? Or do you think there could be Extended negatives and positives that stretch into the future quarters?
Yes, Alex, I think it's too early for us to With respect to anything beyond the October quarter, communications is always the restoration effort around communications It's not 1st and foremost when you have electricity that's out for the big area of the size of New Orleans And the surrounding areas. So I think it's a little bit too early to tell. I would say generally and we've done lots of storm work here over the years. It may provide a benefit in terms of providing restoration services, but it also has some negative effects And the rest of the business and all things being equal, we'd adjust soon there not be any hurricanes or tornadoes or floods. That'd be fine by us.
Thank you very much.
Thank you. And our next question comes from the line of Alan Margarini with Slane Lake Asset Management. Your line is open. Please go ahead.
Great. Thanks. Stephen, in response to the question about backlog, you talked about possibly being in the last year of some of your contracts, You didn't say that you were. Is that the reason why backlog hasn't grown more? Or do you expect more awards in the next number of months that are you're at End of contracts?
Alan, that was an illustrative comment that says there's a portfolio of agreements that go through Movements in duration, and as you may not be the last year of agreement, you may have signed a 5 Your agreement and after you booked that initial backlog and have been through 2 years of it, it's going to be down 40%, That doesn't indicate what the operating run rates are going forward. So it's more of a kind of a Technical observation that it is anything about the actual portfolio.
No, I understand what it is, but I'm just saying you guys are buying back stock. You must you're at the bottom of a margin cycle for years, it seems like, or a new bottom. So I'm just saying it seems like and all the indications we're getting from Customers are that in the next few years they're going to spend whether that takes a while for them to get started or not depending on an infrastructure bill or RDOF or whatever it is Or closing of private equity deals, it is what it is in terms of timing. My question is, since you know what your Backlog portfolio looks like, do you guys feel that you have substantial awards coming in the next 12 months, 18 months based on the contracts that you have?
Yes. So, Alan, I wouldn't necessarily focus with the contracts we have, but I think the contracts and prospects. So you mentioned the share repurchase we did buy $50,000,000 worth of stock in the quarter, but I can tell you as we got through the quarter, there were a number of substantial organic growth opportunities that emerged. And from a capital allocation perspective, we always focus on making sure that we can meet customer needs and new growth opportunities. And so we throttled back on the share repurchase because as we saw these opportunities emerge, we want to make sure that we're in a Great financial position, which we are, to take advantage of them.
Great. And then on CapEx, Can you talk about what maybe I missed it. What's your guidance for this year in CapEx, Drew? Has that changed?
Yes. It hasn't changed since last quarter, Alan. It's 100 and $5,000,000 to
$125,000,000 net. And we did take in about $36,000,000 in gross CapEx in the quarter.
Okay. And then it's a strange question, but it seems like used car prices and obviously F-one hundred and fifty prices are really high. I know that's a good portion of some of your vehicle fleet and yet other income for you guys was really low. Do you have a sense of where that's going to be? Did you not sell as much fleet Because there were shortages, can you just talk about where you see that line item?
I mean, it's not an operational line item, so I know it's impacted your earnings a bit this year, but I'd rather see your business grow than that line necessarily move one way or the other.
Yes. As we said earlier, Alan, we've been really prudent about Making sure that we keep operating assets because as the supply chain has been constrained, again, we want to be able to grow When opportunities present themselves. And so I don't expect that we'll have an active disposal program. It's kind of A related loop, right? If we could get new assets, we'd sell more, but then the prices wouldn't be as high in the used market.
Okay. And then one more question, if I can, just a bigger picture in terms of the infrastructure bill as it relates to your business. Are you worried that in general guys may push off some spending until the bill is passed and the effects come in, because they want to take advantage of government money And matching money and others as opposed to spending privately?
So it's an interesting question, Alan, and it's one that we can really only But I would say there's really been a couple of effects that we could I mean, one is remember that the infrastructure money is for unserved and underserved areas. And so to the extent that we have customers that are Incumbents in those areas and they have plans to upgrade, the capacity of the networks, I think if anything that the prospect Our government funding in those areas may encourage them to go faster, so that as the broadband mapping works out that the areas that they serve no longer All in the area that's eligible for government funding. So actually, I would think it the other way. I think on the other hand, there are a number of statewide programs that are operating independent of the infrastructure bill. And so regardless of whether it passes or in what form, we've seen a number of announcements of substantial sums at the state level.
So for example, in California, about a month ago or 6 weeks ago, They passed a law. So it is a law that they're going to fund $3,250,000,000 in middle mile Network construction and then another $1,000,000,000 or $2,000,000 for last mile construction. So if you think about it, In total in California, that's call it $5,000,000,000 that state alone is almost as much as what the federal stimulus was In 2009, so there's a lot of state level programs around the country that I think our customers will be taking advantage of or in the case of California, it's actually an Independent new entity.
Great. Thank you.
Thank you. And our next question comes from the line of John Lopez with Vertical Group. Your line is open. Please go ahead.
Hey, thanks very much. So I had 2 quick follow ups. The first one is just Drew, can you give us a sense for the gross margin Versus a year ago, you're talking down like 100 basis points, 125 basis points. It feels like a lot flattish or say sequentially. So like what are the factors Year on year that are driving that?
Yes, John. I think in part that's going to be fuel driven. So if you look back at where the price of gas was a year ago, That certainly ticked up some. And then it's really as we talked about last quarter, there's certain customers that have spent less this year than last year.
Got you. Okay. That helps. And then, Steve, the, like customer who remains unnamed, has kind of been You know, hovering at or above $20,000,000 here for a couple of quarters. That hasn't happened, I think, if we have our numbers right, since like 2015, 2016.
Is there anything you can tell us about sustainability or visibility into that activity?
I think John, it's just of the amount of interest in deploying fiber networks and the amount of capital that's available Across a whole number of suppliers to do it. I mean, there's an alignment in the industry around fiber to the home That we've never seen. So for example, if you think about what we mentioned in our comments in the slides that we had 6 of our top 10 customers just in Last year, initiate plans for over 40,000,000 homes of fiber to the home. I think and you may have the exact number, but I think the approximate number that's been built kind of industry life to date is in the low 40s. So you have plans now to double what's been done over the last 17 years and it won't take any other plans are not to take 17 years to do the next launch.
So it's I think it's more just illustrative of the appetite For companies and capital to invest in fiber to the home.
Got you. Okay, really helpful. Thanks guys.
Thank you. And our next question comes from the line of Alex Dwyer with KeyBanc Capital. Your line is open. Please go ahead.
Hi, guys. This is Alex on for Sean. Thanks for taking our questions.
Hey, Alex.
So 6 of the top 10 customers have new fiber build plans, dollars 40,000,000 passed planned. Firstly, how does this does this include Lumin? And how would you compare this level of activity planned over the next 5 years to what you saw over the past 5 years? So some context there would be helpful.
Yes. I think Alex, as I just said on the last call, I mean, one way to think about it is that the plans, The announced plans are approximately equal to what the entire industry has built since life to date, which when it started in 2000 and three, 2000 So that's one way to think about it. And yes, Lumin provided an estimate Of what they thought was addressable by fiber, they're working on the plan. We don't we're not going to say how big it is eventually or how long, but certainly they talked about It does not include any impact from the folks that they're divesting to because that's Yes, it could be fleshed out. But I mean there is other research out there that might get you to even a bigger number than 40,000,000 But that's what we could support directly.
Very helpful. And secondly, new bookings were light in 2Q. Was something pulled out of backlog or is this all just due to timing?
It's just due to timing. I mean, the summer months And the increase in the tilt of Airgain, just what we just didn't see the number of awards, But summer is not typically a time where we see a lot of those anyway. Thank you.
Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Steve Nielsen for any further remarks.
Well, we thanks everybody for their participation on the call. Just before we go, Drew had a couple of other statistics to share.
Sure. So for the customer split, Telco was at 66.6 percent, cable was at 22%, facility locating was at 8.3% And electrical and other was at 3.1%.
And wireless Drew was about 6.5%, 7% of the total. Correct. Okay. Well, thanks everybody for your time and attendance and we'll talk to you again just before Thanksgiving.
This concludes today's conference call. Thank you for participating. You may now disconnect.