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Dycom Industries to Buy Quanta Assets
By Tess Stynes; Cai, Debbie. Dow Jones DBR High Yield (Nov 20, 2012): n/a.
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Abstract (summary)
Dycom Industries Inc.'s fiscal first-quarter earnings fell 8.5% as margins weakened and the telecommunications contractor also unveiled plans to buy assets
of Quanta Services Inc. for about $275 million in cash, a deal that strengthens the company's customer base, geographic scope and technical service
offerings.
Full Text
Dycom Industries Inc.'s fiscal first-quarter earnings fell 8.5% as margins weakened and the telecommunications contractor also unveiled plans to buy assets
of Quanta Services Inc. for about $275 million in cash, a deal that strengthens the company's customer base, geographic scope and technical service
offerings.
Dycom said it intends to acquire substantially all of Quanta's domestic telecommunications infrastructure services subsidiaries. Quanta's facilities are located
in Arizona, California, Florida, Georgia, Minnesota, New York, Pennsylvania, and Washington.
President and Chief Executive Steven Nielsen said the Quanta acquisition "significantly enhances our rural telecommunications engineering and construction
capabilities, provides additional construction resources for wireless carriers and reinforces our already robust competence in broadband construction."
The deal is expected to be completed by Dec. 31 and is projected to be accretive to annual earnings by five cents to 10 cents a share.
Dycom provides engineering, construction, installation and maintenance services to telecom companies and utilities. The company had been posting doubledigit
revenue growth for several quarters before the pace moderated in the fiscal fourth quarter amid soft capital spending trends in the telecom sector.
For the quarter ended Oct. 27, Dycom reported a profit of $11.9 million, or 35 cents a share, down from $13 million, or 38 cents a share, a year earlier.
Excluding $710,000 in acquisition-related costs, earnings were down at 36 cents from 38 cents. Analysts polled by Thomson Reuters most recently projected
earnings of 34 cents.
Contract revenue increased 1.2%, to $323.3 million, including $3.7 million in storm restoration revenue. The company in August expected that revenue
would be slightly down to flat year-over-year.
Gross margin narrowed to 6.8% from 7.2% as total costs rose 1.6%.
Quanta, which installs and maintains networks for electric power, gas and telephone companies, has seen increased revenue in recent quarters as more
renewable projects break ground on construction. But the company has warned that regulatory and permitting hurdles may damp demand for its services in
the near term. Its recent third-quarter earnings surged 85% on significant revenue gains.
Write to Tess Stynes at tess.stynes@dowjones.com and Debbie Cai at debbie.cai@dowjones.com
(c) 2012 Dow Jones & Company, Inc.
Indexing (details)
Subject Acquisitions & mergers;
Construction companies;
Financial performance;
Earnings
Location United States--US
Company/organization Name: Dycom Industries Inc
NAIC: 238210, 541310;
Name: Quanta Services Inc
NAIC: 237130, 238210
Classification 8370: Construction & engineering industry, 9190: United States,
3100: Capital & debt management
Title Dycom Industries to Buy Quanta Assets
Author By Tess Stynes; Cai, Debbie
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