Dycom completes purchase of Goodman assets

Dycom Industries has completed its $107 million purchase of assets from Goodman Networks. Dycom, one of the largest providers of infrastructure services to the wireless industry, is buying parts of Goodman’s services business to support wireless carrier construction and maintenance projects in areas of California, Texas and Georgia.
The Goodman assets are expected to produce at least $150 million in revenue during the next 12 months, according to the company. At this time, however, the assets may not be cash flow positive. Analyst Jennifer Fritzsche of Wells Fargo said Dycom expects operating income from the acquired assets “to approximate Dycom’s current percentage in the 2018 fiscal year.” Goodman said the sale also includes certain “related liabilities used in Goodman’s current wireless network deployment and wireline businesses.”
Goodman Networks and Dycom both count AT&T as their largest customer. AT&T supplied 27% of Dycom’s revenue during the company’s most recent quarter. Dycom’s latest quarterly numbers also exceeded analysts’ expectations, leading some to speculate that AT&T’s network spending is starting to pick up again.
Goodman is even more reliant on AT&T than is Dycom. The company has been a steady supplier of infrastructure services to AT&T for years, and in 2013 Goodman bought Multiband, one of the largest DirecTV installers. Last year DirecTV became part of AT&T.
“We served over 150 customers in 2015 and the vast majority of our revenue is from subsidiaries of AT&T Inc., including AT&T Mobility, AT&T Services and DIRECTV,” Goodman Networks wrote in a recent 10-K filing. (The company files with the SEC because it has publicly traded debt.) “Our customer list includes several of the largest carriers and [original equipment manufacturers] in the telecommunications industry. Revenues earned from customers other than subsidiaries of AT&T Inc. (including DIRECTV) were 19.0% of total revenues for the year ended December 31, 2013, 12.8% of total revenues for the year ended December 31, 2014 and 10.7% of total revenue for the year ended December 31, 2015.”
With 90% of Goodman revenue coming from AT&T or its subsidiaries, Dycom’s bet on Goodman assets is clearly a bet on AT&T. According to Fritzsche, Dycom is using this acquisition to add to “the tools in its toolbox to help it better serve the needs of its largest customer.”
Image source: Glassdoor