HOUSTON - DXP Enterprises , Inc. (NASDAQ: NASDAQ:DXPE), a distributor of products and services to industrial customers, has announced the completion of two acquisitions, Burt Gurney & Associates (BGA) and MaxVac Inc. These acquisitions were funded with cash from DXP's balance sheet.
BGA, based in Omaha, Nebraska, is a manufacturer's representative for the municipal water and wastewater treatment markets. MaxVac operates in the Central Valley (NASDAQ:CVCY) and San Francisco, California, providing vacuum pump sales, repair, and maintenance services to the electronics, semiconductor, food & beverage, pharmaceutical, and biomedical industries.
David R. Little, Chairman and CEO of DXP, expressed enthusiasm for the new additions, noting that both companies bring valuable geographic reach and capabilities to DXP's existing operations. He highlighted the strategic importance of BGA in expanding DXP's Water division and MaxVac in enhancing the company's vacuum pump offerings.
The definitive agreements for these acquisitions were signed on November 1, 2024. BGA and MaxVac have reported a combined sales and adjusted EBITDA of approximately $11.7 million and $1.6 million, respectively, for the twelve months ending September 30, 2024. Adjusted EBITDA was calculated by adding back to income before tax, items such as interest, depreciation, and amortization, as well as non-recurring items not expected to continue post-acquisition.
Kent Yee, CFO of DXP, remarked on the acquisitions' alignment with the company's growth strategy, particularly in building DXP Water into a full-line service platform and enhancing vacuum pump capabilities. He looks forward to further progress in 2025.
DXP Enterprises uses non-GAAP financial measures like EBITDA and Adjusted EBITDA to provide a clearer picture of operating performance and effectiveness of operational strategies by eliminating non-cash expenses and items not resulting from core operations.
This expansion is part of DXP's ongoing efforts to provide comprehensive solutions and services to its industrial customer base across North America and Dubai. The information regarding these acquisitions is based on a press release statement from DXP Enterprises.
In other recent news, DXP Enterprises reported a notable increase in Q3 sales and adjusted EBITDA, with sales rising by 12.8% year-over-year to reach $472.9 million and adjusted EBITDA growing by 19.1%. The company's Innovative Pumping Solutions (IPS) segment led this growth with a 52.3% sales surge. DXP Enterprises also emphasized its strategic growth through acquisitions, having completed seven this year and expecting more by the end of Q1 2025.
Despite the company's Q4 revenue expected to be slightly softer historically, DXP Enterprises remains optimistic about maintaining solid sales growth and EBITDA margins in the upcoming quarters. The company has also expressed confidence in executing their strategic pipeline and maintaining reasonable valuations, even in a higher interest rate environment.
These recent developments show DXP Enterprises' commitment to growth through strategic acquisitions and enhancing financial controls, having resolved all noted material weaknesses. The company is well-positioned for continued success in the market.
InvestingPro Insights
DXP Enterprises' recent acquisitions of Burt Gurney & Associates and MaxVac Inc. align with the company's strong financial performance and growth trajectory. According to InvestingPro data, DXP's revenue for the last twelve months as of Q3 2024 stood at $1.74 billion, with a quarterly revenue growth of 12.81% in Q3 2024. This robust growth is reflected in the company's stock performance, with a remarkable 84.68% price return over the past year.
The acquisitions are likely to further bolster DXP's financial position. The company's operating income margin of 7.86% and EBITDA of $169.7 million for the last twelve months indicate a solid operational efficiency, which could be enhanced by the integration of these new businesses.
InvestingPro Tips highlight that DXP is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.87. This suggests that the stock may be undervalued considering its growth prospects. Additionally, the company's liquid assets exceed short-term obligations, indicating a strong financial position to support its acquisition strategy.
It's worth noting that DXP's stock is trading near its 52-week high, with the current price at 98.52% of the 52-week high. This, coupled with the significant return over the last week (23.45%), month (18.26%), and three months (26.11%), suggests strong investor confidence in the company's growth strategy.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for DXP Enterprises, providing deeper insights into the company's financial health and market position.
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