Global Arbitrage: Why Green Investing Needs An Ecosystem Approach
When it comes to the climate tech investment landscape, we're no longer in the era of point solutions; we're in the ecosystem era. Across the globe, companies have deployed isolated technologies, such as EV charging stations, but the reality is that these end-point solutions often fall short because they lack coherent integration.
So, what we're seeing now is the emergence of software companies, like WeaveGrid (one of our portfolio companies) and Monta, that are trying to smooth over these transitions and integrate disparate technologies. We're at an inflection point in clean energy, with multiple standards and technologies competing for dominance. I believe the most successful climate tech investors will be those who understand the unique contributions of different regions to the global ecosystem and how true success depends on geographic diversification.
In short: There's an investment arbitrage opportunity in looking across markets and understanding which are artificially accelerating adoption through regulation, which are driven by economics and where gaps in funding create undervalued assets. In this arbitrage game, corporate venture capital (CVC) players may hold an advantage over traditional venture capital (VC) investors.
The U.S. Market: Policy Uncertainty And Capital Reallocation
In the United States, the climate tech investment landscape has been profoundly shaped by policy shifts. The Inflation Reduction Act created a surge of early-stage investment in sustainability-focused startups. New entrants, particularly circularity and recycling startups, used this capital influx to validate technologies through proof of concepts with various partners, while covering expenditures that traditional VC-backed startups couldn't. However, many now face a critical gap as U.S. policies shift while startups attempt to transition to the execution phase.
This gap has widened as venture capital has dramatically shifted toward AI, leaving many promising climate tech companies struggling to secure growth-stage funding. Despite this reallocation of capital, though, certain climate tech segments remain fundamentally relevant regardless of policy changes. As one clean energy startup founder explained to me, the utilities sector continues to invest in innovative solutions because they face ongoing operational challenges that require technology solutions, regardless of whether government incentives are available. For these utilities, climate tech isn't about subsidies but solving real business problems.
One of the most promising opportunities in the U.S. market lies in engaging traditional energy players, like oil and gas companies, in the clean energy transition. They have the capital, scale and infrastructure to make meaningful investments, particularly in technologies like blue hydrogen, which is derived from fossil fuels, allowing them to participate in the transition while leveraging their existing capabilities.
While purists might prefer an immediate jump to green hydrogen, the reality is that transitional technologies may be necessary for the next five to 10 years to build the ecosystem for full decarbonization.
The European Market: Regulation-Driven Innovation
Europe presents a dramatically different investment landscape, driven primarily by stringent regulations that create real costs for noncompliance. Companies operating in Europe face substantial fines—potentially $100 million or more annually for some companies that can't meet emissions standards. These regulations effectively create an artificial market for clean energy. Many corporations will pay premiums for clean solutions because the alternative is expensive regulatory penalties.
For CVCs, the European market offers a unique value proposition traditional VC's can't capitalize on: Investments in sustainability startups can directly help parent companies reduce regulatory fines and compliance costs. This isn't just about generating returns; it's about mitigating real business risks. Corporate investors can be kingmakers by not only providing capital but also connecting startups with business units that need their solutions to avoid costly penalties.
Last year, approximately 50% of all funding for physical climate tech solutions came in the form of debt financing. I see VC becoming more concentrated in larger mega-rounds at the growth stage, with many boom or bust outcomes. In Europe, numerous Series A companies that raised funding in the last 12 months are now facing a softening VC landscape. Our analysis identified many companies like this in that region. With valuations remarkably low, this can allow CVCs to step in with favorable terms.
The Japanese Market: Limited Early-Stage Ecosystem
Japan presents yet another distinct market in the clean tech investment landscape. The country has relatively few early-stage investors focused on sustainability and clean energy, resulting in a limited pipeline of growth-stage companies. However, again, I think this scarcity creates an opportunity for corporate leadership in spaces where traditional VCs aren't active.
Japanese corporations tend to take a longer-term view of sustainability initiatives, in my experience. Some timelines extend decades into the future, which requires laying groundwork far in advance, given the three- to four-year product design cycles in industries like automotive. This long-term orientation enables Japanese corporate investors to make patient capital investments that may not align with the typical five- to seven-year return horizons of traditional venture capitalists. As a prime example, within the automotive industry, development cycles can take years—by design rather than inefficiency—and as a result extending the time required to integrate into the system and become part of the production process.
The challenge in Japan is not necessarily a lack of technology innovation, but what I see as insufficient support for startups to scale these innovations globally, which also creates an uphill battle for talent acquisition. CVC can play a crucial role in bridging this gap by providing funding as well as access to global markets and manufacturing expertise.
A Global Investment Strategy
The most successful investors in climate tech recognize that different regions complement each other in the ecosystem. Europe's regulatory environment creates demand for solutions that can then be refined and scaled in markets like the U.S., while Japanese manufacturing expertise can help reduce costs once technologies are proven.
The traditional venture capital model is being tested by climate tech investments, which often require patient capital. This, as well as the current volatility in markets and technology preferences, makes flexibility crucial. This should extend to investment strategies as well. Geographic diversification can help create resilience in an uncertain technology landscape and provide multiple paths to exits and returns.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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Third Quarter Fiscal 2026 Outlook For the quarter ending October 25, 2025, the Company expects the following: Contract revenues $1.38 billion to $1.43 billion Non-GAAP Adjusted EBITDA $198 million to $213 million Diluted Earnings per Common Share $3.03 to $3.36 For additional information regarding the Company's outlook, please see the presentation materials available on the Company's website posted in connection with the conference call discussed below. Use of Non-GAAP Financial Measures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company's quarterly results releases, slide presentations, conference calls, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. See Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Financial Measures in the press release tables that follow. Conference Call Information and Other Selected Data The Company will host a conference call to discuss fiscal 2026 second quarter results on Wednesday, August 20, 2025 at 9:00 a.m. ET. Interested parties may participate in the question and answer session of the conference call by registering at Upon registration, participants will receive a dial-in number and unique PIN to access the call. Participants are encouraged to join approximately ten minutes prior to the scheduled start time. For all other attendees, a live listen-only audio webcast of the call, including an accompanying slide presentation, can be accessed directly at A replay of the live webcast and the related materials will be available on the Company's Investor Center website at for approximately 120 days following the event. About Dycom Industries, Inc. Dycom is a leading provider of specialty contracting services to the telecommunications infrastructure and utility industries throughout the United States. These services include program management, planning, engineering and design; aerial, underground, and wireless construction; maintenance; and fulfillment services for telecommunications providers. Additionally, Dycom provides underground facility locating services for various utilities, including telecommunications providers, as well as other construction and maintenance services for electric and gas utilities. Forward Looking Information This press release contains forward-looking statements within the meaning of the 1995 Private Securities Litigation Reform Act. These forward-looking statements include those related to the Company's current assumptions regarding future business and financial performance, including, but not limited to, those statements found under the 'Outlook' section of this press release. Forward-looking statements are based on management's expectations, estimates and projections, are made solely as of the date these statements are made, and are subject to both known and unknown risks and uncertainties that may cause the actual results and occurrences discussed in these forward-looking statements to differ materially from those referenced or implied in the forward-looking statements contained in this press release. The most significant of these known risks and uncertainties are described in the Company's Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) and include future economic conditions and trends including the potential impacts of an inflationary economic environment, changes in government policies and laws affecting our business, including related to funding for infrastructure projects and tariff policies or changes to tax laws, changes to customer capital budgets and spending priorities, the availability and cost of materials, equipment and labor necessary to perform our work, the adequacy of the Company's insurance and other reserves and allowances for credit losses, whether the carrying value of the Company's assets may be impaired, the future impact of any acquisitions or dispositions, adjustments and cancellations of the Company's projects, the impact to the Company's backlog from project cancellations or postponements, the impacts of pandemics and public health emergencies, the impact of varying climate and weather conditions, the anticipated outcome of other contingent events, including litigation or regulatory actions involving the Company, potential liabilities or other adverse effects arising from occupational health, safety, and other regulatory matters, the adequacy of our liquidity, the availability of financing to address our financials needs, the Company's ability to generate sufficient cash to service its indebtedness, the impact of restrictions imposed by the Company's credit agreement, and other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update its forward-looking statements. For more information, contact:Callie Tomasso, Vice President Investor RelationsEmail: investorrelations@ (561) 627-7171 ---Tables Follow--- DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) Unaudited July 26,2025 January 25,2025 ASSETS Current assets: Cash and equivalents $ 28,460 $ 92,670 Accounts receivable, net 1,587,961 1,373,738 Contract assets 119,655 63,375 Inventories 122,560 127,255 Income tax receivable 35,838 2,963 Other current assets 44,448 34,629 Total current assets 1,938,922 1,694,630 Property and equipment, net 564,678 541,921 Operating lease right-of-use assets 112,128 112,151 Goodwill and other intangible assets, net 528,484 550,076 Other assets 75,712 46,589 Total assets $ 3,219,924 $ 2,945,367 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 264,908 $ 223,490 Current portion of debt 20,000 10,000 Contract liabilities 69,897 73,548 Accrued insurance claims 46,345 46,686 Operating lease liabilities 39,217 35,823 Income taxes payable — 30,636 Other accrued liabilities 172,335 166,970 Total current liabilities 612,702 587,153 Long-term debt 1,009,058 933,212 Accrued insurance claims - non-current 54,602 49,836 Operating lease liabilities - non-current 78,575 76,928 Deferred tax liabilities, net - non-current 67,678 32,172 Other liabilities 27,578 26,969 Total liabilities 1,850,193 1,706,270 Total stockholders' equity 1,369,731 1,239,097 Total liabilities and stockholders' equity $ 3,219,924 $ 2,945,367 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share amounts) Unaudited Quarter Quarter Six Months Six Months Ended Ended Ended Ended July 26, 2025 July 27, 2024 July 26, 2025 July 27, 2024 Contract revenues $ 1,377,944 $ 1,203,059 $ 2,636,551 $ 2,345,482 Costs of earned revenues, excluding depreciation and amortization 1,070,450 952,882 2,081,562 1,874,518 General and administrative1 106,794 99,583 210,519 194,138 Depreciation and amortization 60,854 46,572 119,243 91,777 Total 1,238,098 1,099,037 2,411,324 2,160,433 Interest expense, net (15,558 ) (14,657 ) (29,603 ) (27,490 ) Loss on debt extinguishment2 — (965 ) — (965 ) Other income, net 6,830 6,419 14,093 15,669 Income before income taxes 131,118 94,819 209,717 172,263 Provision for income taxes3 33,635 26,419 51,187 41,309 Net income $ 97,483 $ 68,400 $ 158,530 $ 130,954 Earnings per common share: Basic earnings per common share $ 3.37 $ 2.35 $ 5.48 $ 4.50 Diluted earnings per common share $ 3.33 $ 2.32 $ 5.42 $ 4.44 Shares used in computing earnings per common share: Basic 28,941,976 29,096,224 28,936,188 29,105,081 Diluted 29,242,455 29,435,895 29,253,040 29,508,906 DYCOM INDUSTRIES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURESTO COMPARABLE GAAP FINANCIAL MEASURES (Dollars in thousands) Unaudited CONTRACT REVENUES, NON-GAAP ORGANIC CONTRACT REVENUES, AND GROWTH % Quarter Quarter Six Months Six Months Ended Ended Ended Ended July 26, 2025 July 27, 2024 July 26, 2025 July 27, 2024 Contract Revenues - GAAP $ 1,377,944 $ 1,203,059 $ 2,636,551 $ 2,345,482 Contract Revenues - GAAP Growth % 14.5 % 12.4 % Contract Revenues - GAAP $ 1,377,944 $ 1,203,059 $ 2,636,551 $ 2,345,482 Revenues from acquired businesses4 (139,766 ) (5,732 ) (256,575 ) (13,529 ) Non-GAAP Organic Contract Revenues $ 1,238,178 $ 1,197,327 $ 2,379,976 $ 2,331,953 Non-GAAP Organic Contract Revenues Growth % 3.4 % 2.1 % NET INCOME AND NON-GAAP ADJUSTED EBITDA Quarter Quarter Six Months Six Months Ended Ended Ended Ended July 26, 2025 July 27, 2024 July 26, 2025 July 27, 2024 Reconciliation of net income to Non-GAAP Adjusted EBITDA: Net income $ 97,483 $ 68,400 $ 158,530 $ 130,954 Interest expense, net 15,558 14,657 29,603 27,490 Provision for income taxes 33,635 26,419 51,187 41,309 Depreciation and amortization 60,854 46,572 119,243 91,777 EBITDA 207,530 156,048 358,563 291,530 Gain on sale of fixed assets (10,103 ) (8,160 ) (19,875 ) (20,564 ) Stock-based compensation expense 8,100 9,482 17,199 17,305 Loss on debt extinguishment2 — 965 — 965 Non-GAAP Adjusted EBITDA $ 205,527 $ 158,335 $ 355,887 $ 289,236 Non-GAAP Adjusted EBITDA % of contract revenues 14.9 % 13.2 % 13.5 % 12.3 % DYCOM INDUSTRIES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURESTO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED) (Dollars in thousands, except share amounts) Unaudited NET INCOME, NON-GAAP ADJUSTED NET INCOME, DILUTED EARNINGS PER COMMON SHARE, AND NON-GAAP ADJUSTED DILUTED EARNINGS PER COMMON SHARE Quarter Quarter Six Months Six Months Ended Ended Ended Ended July 26, 2025 July 27, 2024 July 26, 2025 July 27, 2024 Reconciliation of net income to Non-GAAP Adjusted Net Income: Net income $ 97,483 $ 68,400 $ 158,530 $ 130,954 Pre-Tax Adjustments: Loss on debt extinguishment2 — 965 — 965 Stock-based compensation modification5 — 2,231 — 2,231 Tax Adjustments: Tax impact of pre-tax adjustments — 899 — 899 Total adjustments, net of tax — 4,095 — 4,095 Non-GAAP Adjusted Net Income $ 97,483 $ 72,495 $ 158,530 $ 135,049 Reconciliation of diluted earnings per common share to Non-GAAP Adjusted Diluted Earnings per Common Share: GAAP diluted earnings per common share $ 3.33 $ 2.32 $ 5.42 $ 4.44 Total adjustments, net of tax — 0.14 — 0.14 Non-GAAP Adjusted Diluted Earnings per Common Share $ 3.33 $ 2.46 $ 5.42 $ 4.58 Shares used in computing Non-GAAP Adjusted Diluted Earnings per Common Share 29,242,455 29,435,895 29,253,040 29,508,906 Amounts in tables above may not add due to rounding. DYCOM INDUSTRIES, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL MEASURESTO COMPARABLE GAAP FINANCIAL MEASURES (CONTINUED) Explanation of Non-GAAP Financial Measures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). In the Company's quarterly results releases, slide presentations, conference calls, and webcasts, it may use or discuss Non-GAAP financial measures, as defined by Regulation G of the Securities and Exchange Commission. The Company believes that the presentation of certain Non-GAAP financial measures in these materials provides information that is useful to investors because it allows for a more direct comparison of the Company's performance for the period reported with the Company's performance in prior periods. The Company cautions that Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. Management defines the Non-GAAP financial measures used as follows: Non-GAAP Organic Contract Revenues - contract revenues from businesses that are included for the entirety of both the current and prior year periods, excluding certain non-recurring items. Non-GAAP Organic Contract Revenue change percentage is calculated as the change in Non-GAAP Organic Contract Revenues from the comparable prior year period divided by the comparable prior year period Non-GAAP Organic Contract Revenues. Management believes Non-GAAP Organic Contract Revenues is a helpful measure for comparing the Company's revenue performance with prior periods. Non-GAAP Adjusted EBITDA - EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for gain on sale of fixed assets, stock-based compensation expense, and certain non-recurring items. Management believes Non-GAAP Adjusted EBITDA is a helpful measure for comparing the Company's operating performance with prior periods as well as with the performance of other companies with different capital structures or tax rates. Non-GAAP Adjusted Net Income - GAAP net income before certain non-recurring items and the related tax impact. Management believes Non-GAAP Adjusted Net Income is a helpful measure for comparing the Company's operating performance with prior periods. Non-GAAP Adjusted Diluted Earnings per Common Share - Non-GAAP Adjusted Net Income divided by weighted average diluted shares outstanding. Management excludes or adjusts each of the items identified below from Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted Earnings per Common Share: Loss on debt extinguishment - Loss on debt extinguishment includes the write-off of deferred financing fees in connection with the amendment of the Company's credit agreement during the quarter ended July 27, 2024. Management believes excluding the loss on debt extinguishment from the Company's Non-GAAP financial measures assists investors' overall understanding of the Company's current financial performance and provides management with a consistent measure for assessing the current and historical financial results. Stock-based compensation modification - In connection with the Company's CEO succession plan and transition completed in November 2024, the Company incurred stock-based compensation modification expense. The Company excludes the impact of the modification because the Company believes it is not indicative of its underlying results or ongoing operations. Tax impact of pre-tax adjustments - The tax impact of pre-tax adjustments reflects the Company's estimated tax impact of specific adjustments and the effective tax rate used for financial planning for the applicable period. Notes 1 Includes stock-based compensation expense of $8.1 million and $9.5 million for the quarters ended July 26, 2025 and July 27, 2024, respectively, and $17.2 million and $17.3 million for the six months ended July 26, 2025 and July 27, 2024, respectively. 2 During the quarter ended July 27, 2024, the Company recognized a loss on debt extinguishment of approximately $1.0 million in connection with the amendment of its credit agreement. 3 Provision for income taxes includes tax benefits resulting from the vesting and exercise of share-based awards of approximately $0.6 million and $0.1 million for the quarters ended July 26, 2025 and July 27, 2024, respectively, and approximately $2.8 million and $6.0 million for the six months ended July 26, 2025 and July 27, 2024, respectively. 4 Amounts represent contract revenues from acquired businesses that were not owned for the entirety of both the current and prior year periods. 5 In connection with the Company's CEO succession plan and transition completed in November 2024, the Company incurred stock-based compensation modification expense of $2.2 million during the quarter and six months ended July 27, 2024 related to previously issued equity awards.
