Dycom gains after strong earnings, guidance; WebMD launches deal; TimkenSteel prices

By Rebecca Melvin

New York, May 25 – Dycom Industries Inc.’s 0.75% convertibles due 2021 jumped in active trade on Wednesday, rising more than 6 points on an outright basis and expanding about 0.75 point on dollar-neutral, or hedged, basis after the Palm Beach Gardens, Fla.-based specialty contracting company reported better-than-expected quarterly results and guided higher for current quarter earnings.

The Dycom 0.75% convertibles due 2021 traded up to 109.6 by late morning from 103.2 previously, according to Trace data. Dycom shares were up $8.50, or nearly 12%, to $80.72 at that point.

After the market close, WebMD Health Corp. launched an offering of $300 million of seven-year convertibles that was expected to price before the market open on Thursday. The convertibles were talked to yield 2.125% to 2.625% with an initial conversion premium of 30% to 35%, according to market sources.

The Elmwood Park, N.J.-based provider of health information services said proceeds will be used for general corporate purposes, which may include acquisitions, repurchases of common shares and/or outstanding convertibles and working capital.

WebMD’s two existing convertible bond issues traded mixed on Wednesday. The WebMD 1.5% convertibles due 2020, a $300 million issue that priced in November 2013, traded up slightly, and the WebMD 2.5% convertibles due 2018, a $400 million issue that priced in January 2011, traded down a few points.

TimkenSteel Corp. priced $75 million of five-year convertible bullets ahead of the market open at the cheap end of talked terms for a 6% coupon and 20% initial conversion premium. But the new bonds were not heard in trade as shares slid 13% in the early going.

“We’re not trading them. It’s too small of a deal for us,” a New York-based trader said.

TimkenSteel shares slid $1.40, or 13.4%, to $9.08. The Canton, Ohio-based steel products maker launched the registered deal, which has an $11.25 million greenshoe, after the market close on Tuesday.

U.S. equities rallied again after notching their strongest gains in about two months on Tuesday. The Dow Jones industrial average gained 145.46 points, or 0.8%, at 17,851.51, the S&P 500 stock index rose 14.48 points, or 0.7%, to 2,090.53, and the Nasdaq composite index rose 33.84 points, or 0.7%, to 4,894.89.

Dycom expands

Dycom’s 0.75% convertibles due 2021 traded up to 109.6 in the early going from 103.2 previously, according to Trace data. Dycom shares rose $8.48, or 11.6%, to $80.70.

The bond was positive on a swap basis by 0.75 point, a New York-based trader said.

By the end of the session the Dycom shares had gained $9.78, or 13.5%, to $82.30, and the bonds were indicated at 111. But a late print for the bonds was not immediately available.

The specialty contracting services company, providing telecommunications contracting, posted net income of $35.7 million, or $1.08 per common share, for the quarter ended April 23, compared to net income of $20.3 million, or $0.58 per common share, for the quarter ended April 25.

WebMD to price

WebMD’s new Rule 144A deal is for a base deal of $300 million and an additional $50 million for over-allotment of notes.

Mizuho Securities USA Inc. is the bookrunner.

The notes are non-callable and will mature June 15, 2023. They have dividend and takeover protection.

WebMD’s existing 2.5% convertibles due 2018 traded lower in trade on Wednesday, dropping to 114.25 from about 117.25 on Tuesday.

WebMD’s 1.5% convertibles due 2020 traded at 142.42, which was up from about 141 on Tuesday.

WebMD shares closed up 24 cents, or 0.3%, at $66.98. In after-hours action, the shares sank about 5% to $63.50.

Mentioned in this article:

Dycom Industries Inc. NYSE: DY

TimkenSteel Corp. Nasdaq: TMST

WebMD Health Corp. Nasdaq: WBMD

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