DYCOM INDUSTRIES INCDY
DYCOM INDUSTRIES INC Income Taxes Disclosure
Income Taxes
Dycom Industries, Inc. operates throughout the United States and had no foreign operations in fiscal 2026. Consequently, all income before income taxes was derived entirely from continuing operations within the United States.
The components of the provision for income taxes were as follows (dollars in thousands):
| Fiscal Year Ended | ||||||||||||||||||||
| January 31, 2026 | January 25, 2025 | January 27, 2024 | ||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 21,194 | $ | 73,398 | $ | 65,540 | ||||||||||||||
| Foreign | — | — | 13 | |||||||||||||||||
| State | 12,506 | 18,369 | 18,166 | |||||||||||||||||
| 33,700 | 91,767 | 83,719 | ||||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | 48,097 | (15,411) | (10,000) | |||||||||||||||||
| Foreign | — | — | — | |||||||||||||||||
| State | 4,889 | (1,979) | (643) | |||||||||||||||||
| 52,986 | (17,390) | (10,643) | ||||||||||||||||||
| Provision for income taxes | $ | 86,686 | $ | 74,377 | $ | 73,076 | ||||||||||||||
Our effective income tax rate differs from the statutory rate primarily due to the difference in income tax rates from state to state where work was performed, non-deductible and non-taxable items, tax credits recognized, the tax effects of the vesting and exercise of share-based awards, and changes in unrecognized tax benefits.
On July 4, 2025, the U.S. government enacted tax legislation that reinstated 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025 and restored immediate deductibility of domestic research & experimental expenditures. Accordingly, our cash tax requirements were reduced in the current fiscal year compared to the amount that would have been required prior to enactment.
| Fiscal Year Ended | |||||||||||||||||||||||
| January 31, 2026 | January 25, 2025 | January 27, 2024 | |||||||||||||||||||||
| Statutory rate applied to pre-tax income | $ | 77,254 | 21.0 | % | $ | 64,636 | $ | 61,320 | |||||||||||||||
| State and local income tax, net of federal tax benefit | 14,769 | 4.0 | % | 12,021 | 13,466 | ||||||||||||||||||
| Changes in unrecognized tax benefits | (2,198) | (0.6) | % | 3,797 | 2,331 | ||||||||||||||||||
| Non-taxable or non-deductible items | |||||||||||||||||||||||
| Compensation limitation | 3,994 | 1.1 | % | 9,890 | 2,788 | ||||||||||||||||||
| Other | 1,967 | 0.5 | % | 1,446 | 1,090 | ||||||||||||||||||
| Tax credits | |||||||||||||||||||||||
| Tax credit for research activities | (4,740) | (1.3) | % | — | — | ||||||||||||||||||
| Other | (606) | (0.2) | % | (6,558) | (4,453) | ||||||||||||||||||
Federal benefit of vesting and exercise of share-based awards (1) | — | — | % | (8,410) | (2,413) | ||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | % | 511 | 241 | ||||||||||||||||||
| Changes in valuation allowances | (43) | — | % | — | (546) | ||||||||||||||||||
| Other items | (3,711) | (0.9) | % | (2,956) | (748) | ||||||||||||||||||
| Provision for income taxes | $ | 86,686 | 23.6 | % | $ | 74,377 | $ | 73,076 | |||||||||||||||
(1) The Federal benefit of vesting and exercise of share-based awards is included in “Other items” for fiscal 2026 as the impact was below the separate disclosure threshold.
The majority of the state and local income tax category of approximately $14.8 million was incurred in California, Georgia, Florida, Oregon, New York, Virginia, and North Carolina.
Deferred Income Taxes
The deferred tax provision represents the change in the deferred tax assets and the liabilities representing the tax consequences of changes in the amount of temporary differences and changes in tax rates during the year. The significant components of deferred tax assets and liabilities consisted of the following (dollars in thousands):
| January 31, 2026 | January 25, 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Capitalized research expenditures (IRC Section 174) | $ | 31,109 | $ | 65,763 | |||||||
| Insurance | 23,879 | 22,251 | |||||||||
| Leases | 44,321 | 28,088 | |||||||||
| Stock-based compensation | 5,625 | 4,635 | |||||||||
| Allowance for credit losses accounts and reserves | 2,325 | 5,970 | |||||||||
| Net operating loss carryforwards | 85 | 114 | |||||||||
| Other | 6,320 | 4,315 | |||||||||
| Total deferred tax assets | 113,664 | 131,136 | |||||||||
| Valuation allowance | (38) | (77) | |||||||||
| Deferred tax assets, net of valuation allowance | $ | 113,626 | $ | 131,059 | |||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | $ | 108,594 | $ | 89,295 | |||||||
| Goodwill and intangibles | 32,792 | 39,106 | |||||||||
| Leases | 42,434 | 27,951 | |||||||||
| Capitalized costs | 14,153 | 5,843 | |||||||||
| Other | 812 | 1,036 | |||||||||
| Deferred tax liabilities | $ | 198,785 | $ | 163,231 | |||||||
| Net deferred tax liabilities | $ | 85,159 | $ | 32,172 | |||||||
The valuation allowance above reduces the deferred tax asset balances to the amount that we have determined is more likely than not to be realized. The valuation allowance relates to immaterial tax attributes which are not more-likely-than-not to be realized prior to expiration, based on current objective evidence. Our tax attributes generally begin to expire in fiscal 2027.
Uncertain Tax Positions
As of January 31, 2026 and January 25, 2025, we had total unrecognized tax benefits of $18.9 million and $21.6 million, respectively, resulting from uncertain tax positions. Our effective tax rate will be reduced by $18.9 million during future periods if it is determined these unrecognized tax benefits are realizable. We had approximately $5.4 million and $5.4 million accrued for the payment of interest and penalties as of January 31, 2026 and January 25, 2025, respectively. Interest related to unrecognized tax benefits for the Company was a negligible benefit for fiscal 2026, an expense of $1.7 million for fiscal 2025, and was not material for fiscal 2024.
A summary of unrecognized tax benefits is as follows (dollars in thousands):
| Fiscal Year Ended | ||||||||||||||||||||
| January 31, 2026 | January 25, 2025 | January 27, 2024 | ||||||||||||||||||
| Balance at beginning of year | $ | 21,563 | $ | 17,606 | $ | 15,771 | ||||||||||||||
| Additions based on tax positions related to the fiscal year | 2,339 | 2,682 | 1,884 | |||||||||||||||||
| Additions based on tax positions related to prior years | 500 | 1,369 | 587 | |||||||||||||||||
| Reductions based on tax positions related to prior years | (910) | (94) | (636) | |||||||||||||||||
| Reductions related to the expiration of statutes of limitation | (4,552) | — | — | |||||||||||||||||
| Balance at end of year | $ | 18,940 | $ | 21,563 | $ | 17,606 | ||||||||||||||
Income Taxes Paid (Net of Refunds Received)
A summary of income taxes paid (net of refunds received) in fiscal 2026 is as follows (dollars in thousands):
| Fiscal Year Ended | |||||
| January 31, 2026 | |||||
| Federal income taxes paid (net of refunds received) | $ | 67,600 | |||
| State income taxes paid (net of refunds received) | 16,517 | ||||
| Total income taxes paid (net of refunds received) | $ | 84,117 | |||
No single state or local jurisdiction accounts for 5% or more of the total income taxes paid (net of refunds received).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 9, 2026 | Showing above |
| 2025 | Feb 28, 2025 | |
| 2024 | Mar 1, 2024 | |
| 2023 | Mar 3, 2023 | |
| 2022 | Mar 4, 2022 | |
| 2021 | Mar 5, 2021 | |
| 2020 | Mar 2, 2020 | |
| 2019 | Mar 4, 2019 | |
| 2017 | Sep 1, 2017 | |
| 2016 | Aug 31, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.