IES to buy DBM Global for $650M on data center boom

IES Holdings plans to buy structural steel fabricator DBM Global for about $650 million, its largest acquisition, as data center demand lifts operating margins above 11 percent. The deal, expected to close around Dec. 31 pending regulatory approval, would add a fifth operating segment and 3,400 employees to the electrical and technology services company.

"We have bridged a lot of silos in our business," Matt Simmes, chief executive officer at IES Holdings, said. "As we have become more sales driven and look at opportunities where we can add value creation across that same customer base, we have blended those resources."

IES reported fiscal 2025 revenue of about $3.4 billion, operating income of $384 million and adjusted earnings per share of $13.66. Over five years, revenue grew at a 23 percent compound annual rate and operating income at 50 percent, with operating margins climbing from just under 4 percent to more than 11 percent.

The acquisition extends IES's push into data center infrastructure, where fiber deployment has risen tenfold in four years and custom generator enclosures are the fastest-growing product line. IES had no debt as of June 30 and expects to borrow for the deal while keeping leverage below one times trailing 12-month EBITDA.

Data centers reshape the revenue mix

Data center spending tied to generative AI, cloud computing and digital usage is now the largest growth driver across IES's communications, infrastructure solutions and commercial and industrial businesses. The company's revenue mix has shifted sharply: residential work represented more than half of revenue two years ago, fell to 39 percent in fiscal 2025 and was tracking below 30 percent year to date in fiscal 2026.

Simmes said data center-related growth was "probably an even split between price and volume." Labor rates have risen while the amount of fiber installed in data centers is now about 10 times the level of four years ago, as modern facilities require more interconnections among network nodes, server banks, buildings and campuses. Some fiber optic cables now cost $2 million to $3 million apiece.

Operating income for the first nine months ended June 30 totaled $389 million, up 39 percent from the comparable 2025 period, Chief Financial Officer Tracy McLauchlin said. Commercial and industrial revenue more than doubled in the June quarter, and the segment exited with record backlog. Infrastructure Solutions, which manufactures generator enclosures, switchgear and bus duct, grew 57 percent year to date, including 32 percent organic growth excluding the January Gulf Island acquisition that contributed $89 million in revenue.

Capacity and the DBM deal

IES now operates about 3 million square feet of manufacturing space, with roughly one-third still being redeveloped or retooled and expected to contribute to results in fiscal 2027. The company has more than 170 locations and over 11,000 employees across the United States.

DBM Global works with many general contractors that are already IES customers and would expand exposure to arenas, stadiums and marquee commercial developments such as Golden 1 Arena in Sacramento and 270 Park Avenue. The deal follows a year in which IES shares returned 86 percent, with the stock up 70 percent year to date, trading at a price-to-earnings ratio of 29.4 and a PEG ratio of 0.4, according to InvestingPro data.

The residential segment remains the weak spot, with single-family housing starts pressured by elevated mortgage costs and weaker consumer sentiment. Multifamily backlog, which declined through 2024 and 2025, has stabilized, though newly booked work is expected to begin benefiting results in 2027. IES remains the largest provider of electrical contracting services to U.S. home builders and is expanding plumbing and HVAC offerings into markets where it previously offered only electrical work.

This article is for informational purposes only and does not constitute investment advice.