Dycom Closes Buyout Of Goodman's Telecom Related Assets

Dycom Industries Inc. (NYSE:DY) announced the completion of the acquisition of certain telecom-related assets of Goodman Networks Incorporated for about $107.5 million in cash.

Dycom purchased certain assets and associated liabilities in Goodman's current wireline and wireless network deployment businesses. The deal was financed through a combination of cash and borrowings under its senior secured credit facility.

Goodman agreed to sell the assets as part of its efforts to shift its strategic focus towards its professional services and field services business segments, while de-leveraging its business and strengthening its financial position.

Inherently, Dycom’s acquisition is likely to generate about $150–$165 million in revenues over the next 12 months, by providing services like wireless network constructionin Texas, Georgia, Southern California and other markets. Dycom expects the EBITDA (earnings before interest, taxes, depreciation and amortization) of the acquired business, as a percentage of revenue to be roughly in line with its own ratio in the 2018 fiscal year.

Dycom’s operations encompass engineering, program management, construction and maintenance for utility and telecom companies. In recent times, Dycom has been generating higher sales and earnings as telecom providers continue to upgrade their networks.

As telecommunications networks face increased demand, customers need to expand the capacity and improve the performance of existing networks and in certain instances deploy new networks. We believe that Dycom’s business stands to benefit greatly from proliferating demand for network bandwidth and mobile broadband.

The company is particularly benefiting from extensive deployment of 1-Gigabyte wireline networks by major industry participants. Surging demand for 1-Gigabyte deployments from several large customers, huge investments in wireline networks, cable capacity projects and the ongoing Connect America Fund II project will significantly drive expansion in Dycom’s market share.

These positive industry trends are unlocking rewarding opportunities for Dycom across a broad range of its existing customers, indicating robust future growth prospects for this Zacks Rank #1 (Strong Buy) company.

Some other stocks in the broader construction sector that are worth a look include Installed Building Products, Inc. (NYSE:IBP) , Gibraltar Industries, Inc. (NYSE:OC) and Owens Corning (NYSE:OC) , each sporting the same rank as Dycom.