Well, thanks everyone for being here bright and early, and welcome to D.A. Davidson's 25th Annual Diversified Industrials & Services Conference. Appreciate you guys all kicking off the day here with Dycom, and welcome everyone on the webcast as well. I'm Kurt Yinger. I cover building products and infrastructure services here at D.A. Davidson. I'm joined by Dan Peyovich, the CEO of Dycom. Dan—
Good morning.
—thanks so much for being here.
Thanks for having me, Kurt.
Maybe just to start, for investors who aren't as familiar with Dycom and what you do, can you just talk a little bit about the company, provide a quick overview?
If I could just briefly start with, I might make forward-looking statements today, so if everybody could just please reference the Safe Harbor Statement on our website, that would be appreciated. Jumping in, if you think about Dycom today, the best way to think about us is really end-to-end solutions to solve the growing data needs. Data consumption has grown for the last three decades. For a long, long time, Dycom provided all of the fiber, all of the HFC infrastructure around the country to connect people, to connect homes, to connect businesses. And we've extended that recently to get inside the data centers. So whether it's data being computed, data being stored, data being processed, and then now the entirety of the transmission from that data center out ultimately to the end user, that's where Dycom comes into play.
End-to-end solutions, Kurt, and we're pretty excited about the opportunity set and the demand drivers.
Right on. Okay. Maybe big picture, you've been in the CEO seat for almost two years.
Correct.
You've done a great job kind of expanding the platform into Building Systems, improved the overall financial profile, some of those growth opportunities. Can you just talk a bit about the strategy since you've come in, and how that positions Dycom going forward?
The strategy is centered around growth. There is a ton of opportunity and infrastructure needs for the reasons I talked about, right? There's many that say that we will create more data in the next three years than has been created to today from the dawn of time. So all of that is going to need infrastructure, and what we've really done is over time, all of the work we've been doing on the telecommunications side has got closer and closer and closer to the data center. We started spending a lot more time, Kurt, with the hyperscalers, making sure that we could get the fiber ultimately to their data centers, the work that we call inside the fence. As those relationships started to grow, we saw a continued need, and again, it's all centered around the skilled workforce, all centered around the skilled workforce.
We have about 21,000 employees nationwide today. We saw a growing need to also be able to lean into the data center itself. So we were right outside the four walls, bringing fiber to the meet-me room. The conversation said, "Maybe we just take that next step, go to the other side of the wall." Pick up electrical, which was the first move we made in our Building System segment, expanded the breadth of the business, added National Technology Integrators recently. So now we're doing all of the structured cabling inside those facilities. We have a very nice chart that shows this end-to-end step, right? That we can move through and have these conversations. Cross-sell opportunities. We're having tons of conversations across platforms. Even though they come through different contracting ultimately, what everybody's looking for is who's going to meet this need, right?
Who's going to make sure that they have certainty of execution, that they have certainty of delivery in the kind of growth that's happening out there today? Everybody certainly sees the headlines. You see headlines around electricians, you see headlines around data center spend, and you see on the telecommunications side, a lot of headlines, making sure that our customers, the carriers, are going to have enough fiber to meet the needs in the coming years. So all of that is coming together, and Dycom's entire platform is we want to be an excellent partner. We want to lean into our customers and make sure that we can deliver success with them.
The conversations, Kurt, that we are having today with all of our customers, they are three years out, they are four years out, they are five years out, to make sure that we are setting up our workforce, and I am sure we will talk more about our workforce today.
Yep.
We are setting up our workforce to be able to meet that demand and meet that growth.
Got it. Okay. More recently, you guys reported strong Q2 results, really strong backlog growth kind of continuing there, but maybe a little bit of dislocation related to the outlook. What are you hearing from customers? Is there any fundamental change in their messaging to you, their outlooks, anything like that you could communicate to the investment community?
There were some things that we talked about related to the second half of the year that did not resonate with the investment community. But I would bring it back to, you talked about the backlog. If you look at the entire year, and you look at the revenue for our fiscal 2027, we are looking at 10%-12% organic growth, which is all coming through the telecommunications business. Dycom has never been a quarterly business. It has never been a quarterly business. The way that the projects come through, whether you are on our communication sector or segment, you have tens of thousands of work orders that are stacking at any given point in time. Those projects, those big build programs from the different customers, they move around all the time. They ebb, they flow. You might have permanent challenges at one point in time.
You might have a huge influx of needs and passings that you are trying to push through. They are always moving, and so you do get some irregularities between the quarters that has nothing to do with the overall demand. What investors should really be thinking about is that 10%-12% organic growth. That is a huge number coming off of a $5.4 billion communications year last year. That is really a much better indicator of where this is going as we talk further into the demand drivers. Then again, as you look at the entirety of the business, part of the reason that we are diversifying, look at the consolidated results, right? We got very strong margins coming out of the Building System segment. Fantastic growth there as well, to meet the needs that we talked about before in the data center space.
If you bring all that together, it was a great quarter for Dycom from an overall margin perspective. Great quarter for Dycom from a backlog. We are 1.4 times book-to-bill in the year. Again, I think that is another really good indicator of what the future looks like and what that demand is.
Yep. Okay. It is a good segue. The communication business has these three large fiber deployment opportunity sets. You got fiber- to- the- home. Long- haul and middle- mile infrastructure, a lot of that is data centers and BEAD. Where are we in terms of the phasing of those opportunities? Maybe what you have already experienced and timeline thinking about when some of those might hit?
Yeah. I am happy to talk about them in detail, but what you will hear us start to talk about going forward is we have service and maintenance, which everybody, we really highlighted how large a part of our business that was, I think about a year ago. So that is about half of Dycom's revenue.
So rough numbers on communications, it is around $3 billion ± . That has growth that really comes more with the overall footprint as we expand, but it is a completely different growth curve than the program work. So if you think about that, I talked about being the bottom of the iceberg continuing over time, right? That is a highly recurrent nature to it, a lot of infrastructure to maintain. Then you have the other half, which is program work collectively, which is the demand drivers that you talked about.
If you think about that program work, you see a huge amount of growth coming through there. Our fiber- to- the- home in the first half of the year grew 60% year-over-year. That's a very big number. If you look at the actual number of passings that increased year-over-year, industry reports have put it more like 10%, maybe 12%, maybe 15%. So, a huge opportunity for Dycom to lean further into that. We look at it across all of those growth drivers, all of those demand drivers. So service and maintenance, and then you have program work. What we see for a very long trajectory today is that program work providing a lot of growth opportunity for Dycom. Today, fiber- to- the- home, obviously, you heard the 60%+, 60%. A lot of growth opportunity in that.
We still have several years of significant growth opportunity, and then at some point, we will see some taper that's starting to happen. On the other side, you have the long- haul and middle- mile work, right? We talked about $100 million of work that we've put in place over the last couple of years. We talked about over $1 billion of, and when I talk about pure backlog, I want to make sure we're not confusing it with anything else. This is literally just fiber connecting data centers nationwide. That's the only thing that's in that over $1 billion, and that's after we're already burning. So you can see that starting to ramp up. Over a year ago, we talked about $20 billion of addressable market over the next five years. That's going to really start to feather in nicely.
Then you throw BEAD on top of that, taking a long time to get to where we are, but we are starting to see those green shoots of things getting through financing, or excuse me, funding, getting through permitting. So we're going to see that start to move as well. What that means is, when you get to calendar 2028, you're going to have fiber- to- the- home going completely hot and heavy like it is today. You're going to have these other demand drivers really coming on strong. What Dycom is doing today is making sure that we're investing. We are leaning into our customers very deeply, you actually see that in our backlog, to make sure that we can build the workforce ahead of that need.
Because you're going to have this huge balloon of all this activity starting in 2028, that the industry's got to get ready for. What we believe is there's going to be too much industry wide, and ultimately, that's going to push a lot of these builds out for a much longer time horizon. So again, you can see evidence of that in our customers, the partnerships that they have with Corning, for fiber, making sure that they have the fiber that they're going to need for these big builds. You can imagine they're doing the same thing, with the services folks like Dycom, to make sure that we have the labor force.
You just talked about making those investments ahead of time. How do you think about that in the context of margins? We get into 2028, the latter part of this decade. Do you start to leverage those much more meaningfully in the context of margins, or do you have to continue to invest? Is there a cycle element in there?
Yeah. We had significant investments specifically on the communication side this quarter, for the reasons I just talked about. I would say that's a big part of it. The other part is, there's times we're investing in our customers. We have customers that call us up and say, "We want you to go as fast as you can through these different markets in fiber- to- the- home." "We want you to go as fast as you can on this long haul work." We're going to rise to that challenge and go do everything we can to meet that need. That's the kind of partner that we want to be for our customers. It's not as efficient up front. But everything we're doing is with a long-term lens.
The more that we can do that, the more that we can really lean into the customers and deliver success for them, the better we know it's going to be in the longer term. So you have those kind of investments coming through. We talked about where the margin profile in the communications business is for this year, which is that ±13% range. I'll remind folks, last year, 13.3% adjusted EBITDA for really what ended up being the communications business. That's a really good range for us. That's a great return on our people. That's a great return on what we do. We feel really good with how that compares, if you look across the landscape. It's really important that management, as we do continue to grow, absolutely there's opportunities for operating leverage as we grow.
You can bring some of these efficiencies up as we grow. But we really want people to center around that ±13%. Again, very strong return, because we need to make sure that we can reinvest for the long term when we need to. Then at other times, sure, it'll drop through to the bottom line.
Okay.
Then if I could just quickly touch on margins for the Building System segment. Really, really proud of the team and the integration that has happened there. A lot of people working really, really hard. Very quickly growing business. We wanted to make sure we bought them in right. We are able to really lever them up into all of that. So you have seen that margins go up and up.
Then now what we are saying is over the longer term, we believe that high teens to low 20s adjusted EBITDA for that segment of the business, which again, accretive for the overall position for Dycom, goes to our diversification strategy. That is a good range to be looking forward.
Okay. Yep. That is still very healthy relative to a lot of the peer set too, in terms of the margin profile of that business.
Yeah. Again, we are looking on the returns, right?
Yeah.
What are the returns on our people? What are the returns on our investment? How does that come through the business? Again, we think that's a great profile for us to continue to lean into as we continue to grow.
Okay. A lot of discussion around bottlenecks across the construction space. Is it 2028? Is there a specific point in time where it's either labor or equipment that you think can get particularly tight? What are you doing today to make sure you're positioned to address that?
Sure. It would surprise nobody on the Building System segment that electricians are in short, right? They are absolutely a bottleneck there. You have power, you have electricians, and that is keeping the flow of the data center builds. It's definitely going fast and faster than it was.
Yeah
It is keeping that flow restrained, and that's not going to go anywhere anytime soon, right? There are limitations on how quickly you can grow that labor force. We've obviously shown that we can grow, and grow well, even in spite of that. I think you hear that from a lot of our peers as well. On the communication side, today, labor is not a constraining factor for us. Really, the constraint today on the communication side comes down to permitting. We think that's going to continue overall, and in Dycom, what we're leaning into is making sure that our labor force continues not to be what hinders our customers from meeting their programs. That's why we're having these longer-term conversations. That's why most of my time is looking in that three to five-year range today, right?
It's not looking in the one to two- year range, to make sure that we are set up well to be able to deliver on that. That said, we do think that industry-wide, yes, as you start to get to 2028, you are going to have labor constraints. Again, you see the customers talking about making sure that they have fiber secured. What that would say, excuse me, is that there could be fiber shortages for people that haven't done that. Excuse me. Then from an equipment perspective, we do feel good about the landscape today being able to meet that need.
Okay. When we think kind of big picture around some of those constraints, and maybe this goes back to fiber- to- the- home growing 60% this year, how do you prioritize those opportunities? What are some of the different factors you're looking at in selecting which of these you want to pursue, which offer the best returns?
Sure. First, just to say, don't expect fiber- to- the- home to always be growing 60% year-over-year, right? That's not how it works. That goes back to the quarterly conversation that we had. But continued strong growth for fiber- to- the- home for several years in front of us, and that's been fantastic work. We've got a great footprint that overlays our service and maintenance. Let me just talk a little bit about service and maintenance and how it sets us up for these other programs. When we're across 50 states, we're not in every community and every zip code, but we're in a whole lot of them. We know how to build there. We know the municipalities. We know the difference in traffic control requirements. We have relationships in those markets. We know how to hire in those markets.
When things like fiber- to- the- home come, when things like long-haul, middle-mile come, even when opportunities like BEAD come, we have this knowledge, years of experience on how we can lever into those. Years of experience on what those cost dynamics should look like, that we can make sure we price in for success for us and for success for our customers. That's really how we're leaning into it. Then we're thinking about the portfolio approach. The fiber- to- the- home's been great work. We're going to continue to lean into that because we have such a great footprint, a lot of great relationships there, and a ton of growth. But we're also going to be balancing that with long-haul and middle-mile. We are investing in that space. There is a huge amount of training.
There's a big difference between fiber-to-the-home training and long-haul, middle-mile training. Because there hasn't been a lot of the long-haul, middle-mile work actually put in place to date, even though we've been doing it for two years and we've learned a lot of those lessons. But remember, for the entire industry, there was three decades of quiet, right? There was three decades of quiet in doing the long-haul work, and now it's different technology. How you handle these fiber bundles that are extremely large, 864 fiber count, 1,728 fiber count, is completely different than how you are doing something in a community, feeding homes or housing developments. How you're splicing that and what the testing requirements are. The industry's never seen that kind of rigor. So you're talking about a vast difference. So we're leaning into that. We're training into that today.
We've been working on that work today, and we think that really positions us incredibly well to meet the customer's needs because, as everybody knows, there is a lot of fiber that needs to get connected around the country. I think that $20 billion is just going to be the starting point, and we see that being a very long arc curve.
Okay. That sort of ties into maybe the discussion around complexity.
Whether it's maybe some of the more rural areas of fiber- to- the- home, the less easy passings or the long-haul and middle mile. How does that differ from maybe the work you've been doing for the last decade? How does that ultimately impact sort of the competitor set when you're going to bid these jobs or looking at those opportunities?
Sure. Complexity has gone up just in general if you think about the skilled workforce. When I started in the skilled workforce, many decades ago, very different. Today, all of our folks are using technology, right? They are using technology in everything they do. The pace of deployment, and this does not matter what industry you are in, the pace of deployment is way faster today, probably twice as fast today as it was a few decades ago.
All of those things come together to add complexity. Then you throw, let us take fiber- to- the- home. In fiber- to- the- home, you have our customers, the carriers, making commitments on how many passings that they are going to do in a given year. They have build programs that they are trying to hit for internal metrics. That means that you cannot fail, right? You have to meet those commitments.
That is just a different arena with a huge, huge ramp into the projects, and then a huge expectation that happens month, after month, after month. Where we have really excelled, again, is leaning into that training up front, leaning into using Dycom as a whole, bringing in services like program management to really partner with our customers to make sure that across their portfolio, that we are delivering success month, after month, after month, and we are planning well ahead.
But I think that complexity, what we saw, created a lot of challenges in the industry. I think there were a lot of people that really struggled with that opportunity, and it was a differentiator for Dycom. It sets us up really well for the work that is coming. BEAD is going to have a lot of pressure behind it when it comes out. Again, you are going to have time-based pressure, cost-based pressure.
You are also going to have a very busy industry on top of that. But the one really to look at is this long- haul and middle- mile. The complexity, if you look at fiber- to- the- home, which incredibly complex, but if you are going to miss a few passings in one neighborhood, you might be able to pick them up somewhere else. On fiber- to- the- home, it is a straight shot, right?
If you miss 200 ft, it is not connected. If you miss 250 ft, you cannot test it. If you splice poorly and you are back digging up splices, you could be delayed for a very long time. All of those things come together to mean that you really have to know and really be able to plan out what that looks like. Then your workforce, you are talking at least six months of training if you are going to take somebody from fiber- to- the- home to bring them over to long haul, middle mile. Six months of training to get them ready for the difference in that environment. Simple things like traffic control, right? People do not think a lot about traffic control. We drive past it every day.
The difference of traffic control requirements, if you're in one municipality or another, and in a lot of cases, it could be just across one bridge, you go from one county to the next. The difference in how you price that, think about that, how it interrupts your flow of work, your speed of work, can be completely night and day. It can be two, three, four times, five times the cost to do it in one municipality as compared to the other. If you haven't spent time in those municipalities, and you don't have those relationships, I think that's going to be a really big challenge for folks. Again, I think that's where Dycom's just incredibly well-positioned to continue to lean into the complexity. Kurt, one of my favorite sayings, "Complexity favors Dycom.
Okay. I like that. It's got a good ring. Maybe tying it back to kind of fundamentals, when I think of complexity, I think better pricing, better economics. Is that what you see in practice, and maybe how does that 50% maintenance and service blend together with maybe some of the opportunity on the program side?
Sure. Yeah, I think if you look back historically, pick a period with Dycom, you'd see 13% is a very strong, especially if you're looking at over time, is a very strong return. So we are very pleased with that. As I said, are there opportunities as we go forward where you could see more margin opportunity come through, where you could see the complexities programs maybe change some of that profile? That could happen. That absolutely could happen. We will find opportunities where that is going to come through. Then there's other times we're going to make sure we continue to invest it in our workforce, continue to invest it to make sure that we can meet the growing needs.
Okay. That's great. Maybe just shifting to Building Systems. It's performed extremely well since you've acquired it. What are you hearing or seeing from customers in regards to that more comprehensive Dycom service offering?
Really good reception. Conversations, again, cross-sell. This is not a cost-out type of synergy, right? This is a complementary platform synergy, where we can go be having conversations with customers on more of end-to-end solutions. There is a lot of receptivity there. Why is that? Because they want certainty, right? They want proven execution, and they would rather have one relationship across many different, whether it is many different parts of the business or many different geographies, than they would have 40 or 50 that they have to manage when they are also moving so fast.
We have seen great reception there. We are working on multiple of those things on the same sites today. We do believe that that will continue over time. Very pleased in how that is coming together. To your point with the acquisitions, Power Solutions was a big acquisition for Dycom, right?
That was a $2 billion acquisition. Let us see, getting close to a year now since we closed it, and a lot of planning that went into that from a strategy perspective. What is really important, and how people should think about how Dycom is approaching that M&A landscape is fit is the absolute most important thing, right? We are looking for cultures that just like Dycom are frontline first, right?
When I get up every day, my most important job is to make sure that I am driving value to the folks that are out working with their tools. That is my job. That is the job of everybody in the business that is not out there working with their tools. If we drive value to them, they are going to drive value to our customers, and they are going to ultimately drive value to our investors.
That really is how we operate the business, right? We have a team-based business. We sit down with large groups, and we plan out how we are going to make sure that we continue to grow, how we are going to have profitability, and all those things. It is not a top-down structure. When we meet with different companies and different prospects, it is really important that they have that same belief, right? That they are really looking at their skilled workforce as the lifeblood and what really drives it. That filters out a lot of opportunities. We have a ton of discipline there. We are not just growing for growth's sake. We are not just trying to diversify for diversification's sake. This is about really leaning into the overall platform. Then as we talked about, complementary services.
Bringing all those together, when we find teams that have a growth mindset, and that means they have proven they can grow, but when we talk to them, they get really excited about how if you bring Dycom together with their business that may be 10, 20, 30, 40 years old, maybe even 100 years old, when you bring those together, that you can have this inflection, right? That you can have this growth opportunity that maybe wasn't there before. That is what we have been looking for. That is what we have found in the acquisitions that we have done of late, and we are really excited and pleased to have them as part of the team. Incredibly strong leadership teams. We do expect to continue to be active over time, where it makes sense.
Looking to continue to add certainly both organically, but also looking for more M&A on the Building Systems side.
Okay. On the M&A point, you also acquired National Technology Integrators. For a lay person, can you help us understand how that's working with Power Solutions?
Sure.
Did they historically work together, and what does that opportunity look like?
Sure. That's a great story because that comes from a relationship. Power Solutions, after we did the acquisition, after they spent some time with us, they've been working with and know the leadership at National Technology Integrators for a long time. They said, "Hey, you guys should talk to Dycom. There could be something interesting here." That's really the best case scenario, right? That's somebody that's just come into the business saying that this is working so well, we want to recommend it to somebody else. The first time we met the leadership team at National Technology Integrators, we had that immediate connection. Again, another growth mindset. So they have been working together for a long time. In the data center, you have Power Solutions doing all the electrical connections, ultimately powering racks.
National Technology Integrators is doing all the cabling in there, all of the fiber, and bringing it back to that same meet-me room that other Dycom operating companies are connecting out back to, ultimately, to the long haul. Now we can sell not just electrical, but infrastructure cabling inside, but we can also say, "Hey, let's pick up the inside the fence work. Hey, we're going to be working with the carrier, bringing it to the right-of-way." There's a lot of synergies and a lot of opportunity there that make us stronger as a platform.
How do you think about saving a contractor time bringing these together? How important is that in the synergy opportunity? Are there any examples you've already seen with that?
Well, first, prefabrication, and folks have talked about that quite a bit. The data center builds, they're so fast. The first data center I worked on in the late 1990s, in total, was $30 million. That's like the paint today. These have gotten so big and so fast. You have a lot of trade stacking, right? You have a lot of people, the electricians, could be 100 - 300 electricians at a time, and you have a lot of other people in the building at the same time. Anything you can do offsite is going to save that. Anything that you can essentially pre-build and then bring in, you're going to do it much more efficiently, effectively, and be able to add to that. That's the first part.
The other is when you do have all that trade stacking, and this is a former general contractor talking, when you have all that trade stacking, you need the trades to get along. When they're going to be on top of each other, you need them to be able to work well together, and that's part of the pitch. If we have two businesses that have proven that's just another sigh of relief that you're going to get from that general contractor, another sigh of relief you're going to get from that hyperscaler. That means certainty of execution.
Okay. Maybe just one more on this topic. How important is your financial strength, what Dycom can bring in terms of funding some of that growth opportunity for these companies that you acquired? Is that something that make you a compelling partner? How do you think about that relative to the acquisitions you've done and maybe any future opportunities in that area?
It's a very good question. We talk about it from risk. Private companies often get to a place with incredibly strong leadership teams, incredibly strong proven growth, but still, owners, operators, they get to a place where they start to think about risk, not putting capital back into a business, not growing too fast and maybe breaking what they've built, creating opportunities for their people to continue to grow while doing that, and that's where Dycom comes in. Of course, you have the balance sheet, of course you have bonding, but it's more than that. It's how you lean in to have those conversations. It's how you sit down with the teams and give confidence. I like to say, private companies, and I worked for a private company in general contractor side for over a decade before we were acquired in my past life.
Private companies typically operate in a - 1 mentality. So if you think about back office staff, one less, a little bit leaner than what you need. You think about going and taking work, one less to make sure that you don't break everything you've built. What we do is we go and partner with them. We talk about, how do we go from -1 to +1 ? We can bring the resources to give that confidence and make sure that we really have that wrapped around risk covered, so we can go from a -1 mentality to a +1 mentality, and that's where you really start to unlock significant growth.
Okay. Clearly, a lot of noise around NIMBYism, moratoriums. I guess, what are you hearing from your customers and your footprint? Any direct impacts, or just what are you hearing more generally?
A couple of key points to start. What we are hearing on the ground every day is recently, as two days ago, was the last time I personally checked in, absolutely no change. Still massive demand, still massive velocity that needs to get done. There are challenges that are getting worked through, and that is going to take time for some of these things to get worked through.
You definitely see the hyperscalers leaning into that conversation more and more, which I think is going to help over time. But the impact on the ground really is not happening today. The other part is, we do need to differentiate. Not all data centers are AI data centers. There are many cloud computing data centers that are getting built today. If you think about Dycom's focus, we are not trying to just play AI. AI upside, for sure. Are we getting revenue?
Are we building AI data centers today? For sure. But the basis for it, again, goes back to data creation and consumption. As long as we are creating more data, you need more cloud computing storage. As long as we are all pushing more to the cloud and enterprises are pushing more to the cloud, and all of that data I talked about is getting created, it has got to go somewhere. You need that infrastructure.
So that is where we are playing with AI upside. We are not playing the AI race specifically. In that space, again, those data centers have been getting built. I think the CAGR is over 15% going back a long time, if I have that number right. That had nothing to do with AI itself. Growth opportunity there. That is our starting point. Look for that AI upside. That is our starting point.
I think it is going to take time to play out. Like I said, we are not seeing any direct impacts. A lot of what you are hearing about, moratoriums and other things, remember, those are projects that have not even got to permitting yet.
Those are years out, right? Those are years out from today. There is time to work through this, and it is great to see good conversations happening to try to do that.
Okay. And within Building Systems, can you just touch on the backlog and maybe more importantly, any visibility you have beyond that? Just customer conversations. I do not know. You do not have to say a specific how far these discussions are stretching out and maybe how real you think some of those opportunities are?
That is always going to be an understated number. Even if you look at the correlation between our Building Systems backlog and their next 12 months, they are very tightly correlated. In fact, those are even under the numbers that we are saying that we are going to deliver this year. That is purely just an industry mechanic.
The way that those are contracted is basically just in time by phases. Even though you know you are 99.9% likely to build the whole data center, you are still only going to get that first phase and that first award. Even though you might build multiple buildings on that campus, you are still only going to get the first phase of the first building when you start. The conversations that we are having today, at the earliest, are two years out, but more like three and four years out.
Then remember, these are typically multi-year builds. Most of these data centers take a couple of years to build at least. If you are doing a new set of data centers, you could be talking about five, six, eight years of total build cycle. Those are the conversations we are having today. If you were to look at that, we call it awarded but not contracted backlog. That is the whole data center, for example, if you are just starting that first phase. That would be multiples of what we report as that contracted backlog today.
Okay. Going back to the M&A discussion and acquisitions. Is there interest in acquiring similar businesses that may not offer that same synergy or overlap between communications and Power Solutions with the data centers? How do you think about maybe some different adjacency from an inorganic growth perspective?
First, let me just touch on capital allocation, if I could.
Yeah.
We are always going to prioritize organic growth, and you can see that we have considerable organic growth. We are going to make sure that we are feeding that first. Then we do balance M&A with share repurchases, and you can see over time, we have bought back nearly half of the outstanding shares of Dycom over time. We are always looking at the different mechanics around that. It is not just all systems go for M&A.
I just want to be really clear there. We are being thoughtful on the M&A side. Right now, our focus is in that space, right? Geographic expansion would be our priority, and we think over time, again, there is highly unconsolidated space, lots of opportunities out there. We believe that over time, where and when it makes sense, that there will be other opportunities to continue to grow that platform.
Okay. You touched on your background a little bit. Just given that, I am curious what you see as core competencies or strengths of Dycom that gives you the confidence that you have the right to win within that electrical or low voltage space or that core competency that would maybe be the North Star as you look at other M&A type of opportunities.
First is proven execution, right? If you look at the companies that we brought into the family that stood up in that segment, these are folks that for a very long time have proven that level of certainty, that level of quality. We're looking for partners that customers say, "If I get to pick anybody, I want to pick those folks." Right? That's really how we believe we've become known on the communication side, and it's the same thing here. That is first and foremost, that right to win partner. I talk a lot about if you're out there in the space competing for work, what is it that differentiates you, right? What is that thing that customers look to differentiate? For us, level of service is number one, right?
Our customers know across the enterprise that if we say we're going to do it's going to get done. We're not perfect. But in those instances where we fall a little bit behind, they know that we're going to bring the entire horsepower of the enterprise to make sure that we deliver on their success time and time and time again. Same thing in the Building System segment. I do talk about for folks that aren't differentiating that way, then the only thing you have to compete on is price, right? That's not where we want to play, right? We want to differentiate, excuse me, by the level of service.
Are there opportunities you're seeing as maybe other competitors haven't delivered that proven execution, taken on projects, whether it's on the communications, Building System sides, getting a little bit over their skis where you're getting asked to come in and fix the problem, so to speak, more often, or I guess broadly speaking, are you seeing that?
Yeah, that's part of being a solutions partner, right? That they're looking to us to say, "What can you do to help us?" On the fiber- to- the- home builds that we've been doing for years now, very common for us to get a call near the end of a quarter from a customer saying, "We've had some challenges with some other folks. Can you find another 3,000 passings? Can you find another 5,000 passings? By the way, you have a week to do it." That happens. If you look at our growth in fiber- to- the- home, a lot of that is because of the challenges that we talked about, and the complexity and our proven ability to deliver, where I think some other folks had some challenges coming through. Those projects are very fast and very complex.
The first one for anybody is going to be incredibly painful. The barriers to entry are high, and being in locality, that regionalization of that business really gives you a solid footprint.
Okay, perfect. I think Building Systems is going to be a little bit over 20% of the mix this year. Is there a loose mix target longer term for the business? How do you think about that going forward?
First, on the communication side, you have a lot of growth that's going to continue to happen that we talked about before. On the Building System side, a lot of organic growth opportunity there, but as we talked about, doing some M&A selectively over time. We do believe that that 20% will grow larger in comparison to the 80/20 it is today.
Okay. Perfect.
Diversification's a positive thing.
Yeah. Yep, that makes sense. All right, perfect. Maybe lastly, just to close, what do you want to leave investors with, better understand the story, the opportunity set? Anything you want to emphasize that we've already touched on?
Dycom differentiates through our skilled workforce. That really is where it starts and ends. The investments that we've been making, the investments that we've done from a benefit perspective, giving skilled workforce time off that equals people that have desk jobs. Two weeks when somebody starts with Dycom, up to five weeks. No different if you're sitting behind a desk or out working in the field. 10 holidays. No different if you're sitting behind a desk or working out in the field.
Yeah.
Bringing up their medical benefits in a very difficult, rising cost environment to give them better coverage, better peace of mind. Providing them life insurance coverage. A lot of these things that folks that are sitting in the office are used to, the skilled workforce has really been lagging behind. We've been investing there, and we absolutely believe that when you can do that, and when you can really start to impact the hearts and minds of our employees, that you're going to produce phenomenal long-term results. Leaning into your workforce means that they're going to lean right back into you. They're going to have that pride of delivering, pride of being part of Dycom. I talk about, to me, the perfect picture for Dycom is a world where anybody can come out of high school, maybe they didn't even graduate high school.
They can start at any level of the company. We're going to provide them the opportunity. How do we do that? Through growth. We're going to provide them the opportunity, and we're going to provide them all of the training at every level. Too often that we assume that somebody's good at one role can automatically be promoted to the next. We're going to step in and provide that training to make sure that they're ready for that next role, so that they can move to any level of our organization. If you looked at our leadership across so much of the organization, you would see that that's exactly how many of us started and have come through that. That, to us, is what we're leaning into.
That, to us, is what really differentiates us, and that's what sets us up to continue to deliver for our customers in an absolute generational growth deployment of infrastructure.
Got it. Okay. Well, Dan—
Thank you, Kurt.
—thank you for the time this morning.