HOUSTON - DXP Enterprises , Inc. (NASDAQ: NASDAQ:DXPE), a leading distributor of products and services to industrial customers, announced the completion of its acquisition of Kappe Associates, Inc., a distributor and representative specializing in the water and wastewater industry. The acquisition, which was funded with cash from DXP's balance sheet, deepens the company's presence in the Mid-Atlantic region and is a strategic addition to its national water and wastewater efforts.
Kappe, headquartered in Frederick, Maryland, and founded in 1946, operates out of three locations and services areas including Maryland, the District of Columbia, Delaware, Virginia, Pennsylvania, Southern New Jersey, and West Virginia. The company is recognized for its distribution and representation of pumps, controls, and process equipment.
David Little, Chairman and Chief Executive Officer of DXP, expressed enthusiasm about the acquisition, stating that it aligns with the company's growth strategy and its focus on the water and wastewater treatment markets. Little highlighted that Kappe's sales expertise and resources will enhance DXP's ability to serve customers and grow its water platform.
The transaction, with a definitive agreement signed on February 1, 2024, is expected to bolster DXP's market position. Kappe's sales and adjusted EBITDA for the last twelve months ending December 31, 2023, were approximately $25.4M and $3.8 million, respectively.
Kent Yee, Chief Financial Officer of DXP, welcomed Kappe's employees to the team and emphasized the strategic nature of the acquisition. He mentioned that Kappe's integration will positively impact customers, employees, and shareholders, marking it as the tenth acquisition under DXP's water efforts.
DXP Enterprises offers a wide range of products and services, including innovative pumping solutions, supply chain services, and maintenance, repair, operating, and production services across the United States, Canada, Mexico, and Dubai. The company is known for its expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies, and safety products and services.
This expansion is part of DXP's strategic priorities to enhance its service offerings and market reach. The acquisition is based on a press release statement and involves standard risks and uncertainties that could affect the anticipated results.
InvestingPro Insights
In the context of DXP Enterprises' recent acquisition of Kappe Associates, the company's financial health and market performance are of particular interest to investors. According to real-time data from InvestingPro, DXP Enterprises boasts a robust market capitalization of $524.92M. The company's attractiveness is further underscored by its low P/E ratio of 9.44, which drops to an even more enticing 8.18 when adjusted for the last twelve months as of Q3 2023. This metric is complemented by a PEG Ratio of 0.17 for the same period, suggesting that the company's earnings growth is not fully reflected in its current share price.
An InvestingPro Tip highlights that DXP's management has been aggressively buying back shares, a move that typically signals confidence in the company's future prospects. Additionally, the company is trading at a low earnings multiple and has liquid assets that exceed short-term obligations, indicating a stable financial position. With analysts predicting profitability for the current year and a solid track record of profitability over the last twelve months, DXP appears to be on a steady financial footing.
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