The telecommunications industry dials up Dycom Industries for construction and engineering assistance. Operating through more than 30 subsidiaries, the company primarily designs, builds, and maintains coaxial, copper, and fiber-optic cable systems for local and long-distance phone companies and cable television operators. Dycom also provides wiring services for businesses and government agencies, installs and maintains electrical lines for utilities, and locates underground wires and pipelines for excavators. Dycom's operating subsidiaries are located in 18 states and Alberta, Canada. AT&T, Comcast, and Verizon Communications are its top customers, together accounting for nearly half of sales.
As a specialty contractor, Dycom is dependent upon the needs of telecom and utility companies. It has a limited number of customers, with the top five (including Time Warner Cable and CenturyLink) representing almost two-thirds of sales. Work for telecom companies make up the majority of sales; revenue from utility companies accounts for less than 5%.
Spending on the telecom infrastructure was not immune to the recession, and sales dropped 10% in fiscal 2009 and 2010. In 2009 Dycom cut its workforce by about 15% and went into the red after taking a $94 million charge against earnings for impaired goodwill. In fiscal 2010 the company became profitable again but earned less than $1 billion for the first time in four years.
Dycom has benefited from the growing demand for converged voice, video, and data services, a trend that requires the expansion and enhancement of telecommunications networks. The company is expected to boost its earnings with federal dollars provisioned by the American Recovery and Reinvestment Act. More than $6 billion has been allocated to expand the broadband network to rural areas. Dycom is in direct competition for these projects with its rival, MasTec, since both of them work for AT&T and Verizon.
While Dycom had grown through acquisitions in the past, it hadn't bought another company since 2006. However, it announced in late 2010 that it was buying Georgia-based NeoCom Solutions for $27.5 million in cash. NeoCom provides engineering services, such as tower construction, for telecom, government, and energy companies. NeoCom had revenues of $13.6 million in 2009, down from a high of $20 million in 2008. More recently, Dycom acquired the telecommunications infrastructure services operations of Quanta Services for $275 million. – less