DRX made a $19M acquisition yesterday, but it looks quite good. Buying LAR Group out of bankruptcy, the price is right. It adds $104M to the backlog and did $80M in sales last year. LAR makes and installs mechanically welded steel structures, focusing on the large scale hydro-electric market. There will be some synergistic cost savings. DRX won some big contracts in July and the stock popped. It remains very cheap at 7X earnings, but revenue and profit are 'chunky' due to large contracts. We still think it is a decent small cap but it was moving the wrong way and we wanted to deploy funds elsewhere in the growth model. We would like to see more consistency in results. Due to its nature this is difficult but as it gets bigger (and makes more acquisitions) we think revenue volatiity should diminish over time. It remains in strong financial shape and decent earnings growth is expected next year after a dip this fiscal year.
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