DXP Acquires Four Pumping Distributors, Secures $300M Loan

The acquired companies had $114 million in sales for the 11 months ended Nov. 30.


HOUSTON — DXP Enterprises announced Monday that it has completed the acquisitions of Total Equipment Company (TEC), APO Pumps & Compressors including Corporate Equipment Company (together APO/CEC) and Pumping Solutions, Inc. (PSI). Financial terms of the transactions were not disclosed. DXP funded the acquisitions with cash from the balance sheet..

“We are pleased to announce these acquisitions, as each company provides DXP with exceptional management teams that enhance our ability to collaborate and serve our customers, vendors and other stakeholders," said David Little, DXP Enterprises chairman and CEO. "Total Equipment and APO enhance our aftermarket and service capabilities along with furthering our end market diversification efforts. Pumping Solutions and CEC provide DXP with a growing and deepening presence into the water and wastewater market as well as other commercial and industrial end markets.

"We believe these acquisitions provide a repeatable and sustainable earnings profile that is complementary to our business and consistent with our strategy. We welcome the employees of these companies to the DXP family. These acquisitions provide great opportunities for DXP and provide new opportunities for our vendors, customers and employees to grow with us going forward."

Signing of the definitive agreements occurred on Dec. 31, 2020. Sales and adjusted EBITDA were approximately $114 million and $16 million, respectively for the eleven months ended Nov. 30, 2020. Adjusted EBITDA was calculated as income before tax, plus depreciation and amortization, and non-recurring items.

Kent Yee, CFO added, “We continue to execute on our strategic priorities and strategy of making acquisitions in markets and business models where we can continue to enhance DXP. In today’s market, we were able to not only accomplish our goals but also do it on favorable terms. We are adding over 269 talented employees to the DXP team and we look forward to our growth together. Combined, these acquisitions complement DXP while diversifying our products, services and end mark exposure. We expect this set of transactions to reduce our oil & gas exposure by 200-400 basis points while adding strong recurring revenue fueled by meaningful aftermarket and service capabilities. Additionally, we are adding scale to key end markets like water and waste water, chemical and food & beverage. We anticipate these acquisitions to be accretive to earnings.”

DXP was No. 16 on Industrial Distribution's 2020 Big 50 List.

$300 million loan secured

DXP Enterprises, Inc. announced Dec. 23 that it has closed on a new $330 million Senior Secured Term Loan B (TLB). The TLB matures on Dec. 23, 2027.

DXP intends to use the proceeds to repay the existing Term Loan B, which will be terminated on that payment; and the remaining for general corporate purposes, potential acquisitions and transaction fees and expenses. The transaction provides DXP with operational and financial flexibility to reinvest in the business and pursue its strategy around organic and targeted acquisition growth.

The Term Loan B is priced at 4.75 percent over LIBOR and includes a secured leverage covenant ranging from 5.75:1 to 4.75:1. The new loan under the credit agreement is secured by the company’s consolidated assets.

David R. Little, Chairman and CEO remarked, “We are pleased with the successful execution of this refinancing and our efforts to maintain our existing debt pricing while improving the terms from our existing facility. We will take this positive momentum and close out the year strong and look to drive growth in 2021. The successful closing of this new term loan following the disruptions caused by COVID-19 demonstrates the confidence lenders have in our current and long-term plans.”

Kent Yee, CFO added, “We are pleased to announce the completion of this refinancing, which accomplished several important objectives, including extending our debt maturities and further enhancing our strong liquidity position with a more flexible balance sheet and improving key terms. DXP is well-positioned to support its disciplined growth strategy well into the future. We experienced strong market interest and demand for this transaction, demonstrating the confidence that existing and new lenders, investors and other financial participants have in DXP. We appreciate the support from our advisors and lender group. Based on the transaction closing at the end of the third quarter, DXP’s net debt to EBITDA was 2.6:1”

Additional detail regarding the TLB will be available in DXP’s Current Report on Form 8-K to be filed with the Securities and Exchange Commission by December 31st.

DXP Enterprises is a products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada, Mexico and Dubai. DXP provides innovative pumping solutions, supply chain services MROP services that emphasize and utilize DXP’s vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services. DXP's breadth of MROP products and service solutions allows DXP to be flexible and customer-driven, creating competitive advantages for our customers. DXP’s business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, go to www.dxpe.com.

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