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HOUSTON - DXP Enterprises , Inc. (NASDAQ: NASDAQ:DXPE), a prominent distributor of industrial products and services, announced the completion of its acquisition of Hartwell Environmental Corporation, a company specializing in water and wastewater industry equipment. This move, which was finalized on September 1, 2024, marks DXP's eleventh acquisition under its DXP Water strategy and establishes its presence in the Texas and Oklahoma markets.
Hartwell, founded in 1976 and based in Tomball, Texas, has a history of serving the Texas and Oklahoma regions through three locations. The acquisition was funded through DXP's cash reserves, and the financial details highlight Hartwell's strong performance with sales of approximately $18.4 million and adjusted EBITDA of $4.1 million for the twelve months ending July 31, 2024.
David Little, Chairman and CEO of DXP, praised the acquisition, stating that Hartwell provides DXP with a leadership position in Texas and complements their technical product and service offerings. He emphasized the synergy between the two companies and the potential for enhanced customer service and growth in the water and wastewater sector.
Kent Yee, DXP's CFO, echoed Little's sentiments, expressing excitement over the addition of Hartwell to the DXP family and welcoming its dedicated employees. Yee noted that the acquisition aligns with DXP's strategy of enhancing its market position through strategic acquisitions.
DXP Enterprises serves a wide range of industries with innovative pumping solutions, supply chain services, and maintenance, repair, operating, and production (MROP) services. The company operates across the United States, Canada, Mexico, and Dubai, providing solutions that leverage its extensive product knowledge and technical expertise.
As with all business ventures, this acquisition comes with risks and uncertainties that could impact future results. These include the need for capital, reliance on management, economic conditions, and changing customer preferences. DXP has cautioned that forward-looking statements related to the acquisition involve such risks and uncertainties.
The information regarding the acquisition is based on a press release statement from DXP Enterprises, Inc.
In other recent news, DXP Enterprises has announced a new stock buyback initiative of up to $85 million. This follows the successful completion of the previous repurchase program, reflecting the company's confidence in the value of its shares. The new program is set to take place over the next 24 months, subject to market conditions.
In terms of financial performance, DXP Enterprises reported a 4.1% year-over-year and 8% sequential growth in sales for Q2 2024. The company's adjusted EBITDA margins exceeded 10% for the fifth consecutive quarter, despite a slight decline in service center sales. The Innovative Pumping Solutions (IPS) segment led the sales growth, while the Supply Chain Services segment remained steady.
DXP Enterprises also completed an acquisition and continued its share repurchase program, with plans to close at least two more acquisitions by the end of 2024. The company's backlog in energy-related sectors is increasing, and operating income has increased across all business segments. These recent developments suggest a continued positive outlook for DXP Enterprises.
InvestingPro Insights
DXP Enterprises, Inc. (NASDAQ: DXPE) has shown a robust financial profile, which strengthens the strategic value of its recent acquisition of Hartwell Environmental Corporation. Key metrics from InvestingPro provide a snapshot of the company's performance:
- The company's market capitalization stands at approximately $846.28 million, reflecting investor confidence in its business model and growth prospects.
- DXPE is currently trading at a P/E ratio of 14.4, which is considered low relative to its near-term earnings growth potential. This indicates that the stock may be undervalued in the context of its future earnings capacity.
- With a PEG ratio of 0.91, DXPE appears to be favorably positioned when factoring in its earnings growth rate, suggesting that investors could be looking at a potential growth-at-a-reasonable-price (GARP) scenario.
InvestingPro Tips highlight that management's aggressive share buyback program is a sign of confidence in the company's future performance. Additionally, analysts predict that DXPE will be profitable this year, which is corroborated by the company's profitability over the last twelve months. It is also worth noting that DXPE's liquid assets exceed its short-term obligations, providing financial stability and flexibility.
For investors seeking more detailed analysis and additional insights, there are a total of eight InvestingPro Tips available for DXPE, which can be found at InvestingPro. These tips, along with real-time metrics, can help investors make informed decisions about the company's stock in light of the recent acquisition and overall market conditions.
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