DXP Announces Three Acquisitions, Q4 Results

Sequentially, earnings per share improved 10.9% from $0.55 per fully diluted share, or $8.3 million in net income . . .

DXP ENTERPRISES, INC. ANNOUNCES THREE TUCK-IN ACQUISITIONS

Houston, TX - DXP Enterprises, Inc. announced today the completion of three acquisitions: Pump & Power Equipment, Inc., Aledco, Inc. and Force Engineered Products, Inc. Pump & Power, Aledco and Force are all leading distributors of pump products, process equipment and services in their respective markets with approximately 32 employees. With these three acquisitions, DXP continues to grow its key Rotating Equipment product division while adding significant talent and local market expertise.

Pump & Power is focused on serving customers in the industrial and municipal markets. Industrial customers served include food processing and production, engineering, energy and construction firms. Municipal customers include water and municipal and wastewater treatment plants. Aledco & Force are focused on serving customers in the oil & gas, water and waste water treatment, pharmaceutical and general industrial markets. Aledco has had recent success serving the Marcellus Shale. DXP is looking forward to leveraging its oil and gas expertise into this fast growing market opportunity.

Financial terms of the transactions were not disclosed. Signing of the definitive agreements occurred on February 29th for Pump & Power and March 30, 2012 for Aledco and Force. Sales and adjusted EBITDA for the three acquisitions for the last twelve months ending January 31, 2012 were approximately $12 million and $2 million, respectively. Adjusted EBITDA was calculated as income before tax, plus interest, depreciation and amortization, and non-recurring items that will not continue after the completion of the acquisitions.

David Little, Chief Executive Officer, stated, β€œWith these three acquisitions, DXP continues to deliver on its strategy of building a breadth of technical products and services on the regional and local level. We are excited to add Pump & Power, Aledco and Force employees to the DXP team.”

Bill Biron, President of Pump & Power stated, "Pump & Power is glad to be a part of the DXP team and become a partner to their history which came from pump products, processing equipment and services. Our local market expertise combined with DXP's size and scale will help us provide better customer solutions, accelerate our growth and provide expansion opportunities."

Al Manganiello, Director and Vice President of Aledco & Force commented, "We are very excited to be part of the DXP family. Our expertise in sales, service and pump rentals in the Northeast will compliment DXP's existing strength in Pump and Rotating Equipment and we will now be able to offer additional services to better serve our customers."

"Pump & Power, Aledco and Force all bring technical expertise that complements DXP. We are excited to have both teams join us and each will be integral businesses within our regions. We have a great group of partners joining our team, and we are excited for the next stage of growth under DXP," stated Todd Hamlin, Senior Vice President of Service Centers.

Kent Yee, Senior Vice President Corporate Development, added further, "These acquisitions strengthen our regional offering and complement DXP's end markets, especially oil and gas. We anticipate these acquisitions to be accretive to earnings and further expand our Rotating Equipment products and services platform."

DXP ENTERPRISES ANNOUNCES 2011 FOURTH QUARTER AND YEAR END RESULTS

DXP Enterprises, Inc. announced that for the fourth quarter ended December 31, 2011 it earned net income of $9.2 million, or $0.61 per fully diluted share.

Sequentially, earnings per share improved 10.9% from $0.55 per fully diluted share, or $8.3 million in net income for the third quarter ended September 30, 2011. Compared to fourth quarter 2010 earnings of $5.9 million or $0.39 per fully diluted share, fourth quarter 2011 earnings per share improved 56.4%.
For the year ended December 31, 2011, DXP reported net income of $31.4 million, with diluted EPS of $2.08 compared to year end December 31, 2010 net income of $19.4 million, with EPS of $1.32 for an improvement of $12 million in net income or 57.6% per fully diluted share.

Sales for the fourth quarter of 2011 increased $48.7 million, or 28.7% to approximately $218.4 million from $169.7 million for the same period in 2010.
For the year ended December 31, 2011, DXP reported a sales increase of $150.8 million, or 23.0% to approximately $807.0 million from $656.2 million for 2010.

David R. Little, Chairman and Chief Executive Officer remarked, β€œWe are pleased to report a strong fourth quarter and a rewarding 2011. Our expert workforce ("DXPeople") continue to do an amazing job. All three segments grew revenues and profits with Innovative Pumping Solutions leading the way with 33% and 64% revenue and profit growth, respectively. DXP Service Centers was second with an excellent 24% and 28% revenue and profit growth, respectively. DXP Supply Chain Services finished with 14% and 19% revenue and profit growth, respectively. We are excited about our two acquisitions, Kenneth Crosby and C.W. Rod, which will now make a fifth product division called Metal Workings Products. Note that the other four product divisions; Rotating Equipment, Bearings & Power Transmissions, Safety Services and Industrial Supply all had excellent revenue growth in 2011. We grew EBITDA margins from 7.1% in 2010 to 8.1% and we still feel good about our 10% EBITDA margin goal by 2013. Our after tax return on invested capital is one of the highest returns in our Industry at 30 plus percent. DXPeople increased from approximately 1,800 to 2,100. Our DXP Service Center Segment added six new SuperCenters for a total of 28. We built a new Atlantic ballistic distribution center to improve customer service in the South Atlantic area. Our total number of DXP Service Centers increased from 112 to 123. I added two new members to our senior executive team for growth. Our balance sheet is strong as we continue to manage working capital and our debt structure. Our bank increased our line of credit from $150 million to $200 million. DXPeople certainly had many accomplishments in 2011 and I feel that this will position us to have an even stronger 2012."

Mac McConnell, Senior Vice President and CFO, added, β€œWe are excited about our fourth quarter and annual financial results which reflect our continued focus on customers and growth in the market. The revenue growth, combined with our operating discipline, helped us improve margins quarter-over-quarter and year-over-year, while growing EBITDA. I was also very pleased that DXP was able to generate over $21.7 million in free cash flow which was primarily used to complete two significant acquisitions. As of December 31, 2011, $78.2 million was available to be borrowed under our credit facility. Our balance sheet is strong and our pipeline of future acquisitions is full."

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