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DXP Enterprises acquires Pro-Seal, boosts market reach

Published 05/03/2024, 15:24
© Reuters.
DXPE
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HOUSTON - DXP Enterprises , Inc. (NASDAQ: NASDAQ:DXPE), a leading distributor of industrial products and services, has announced the completion of its acquisition of Pro-Seal, Inc., a distributor of pumping systems and industrial equipment. The acquisition, which was funded with cash from DXP's balance sheet, aims to enhance DXP's rotating equipment division, add scale, and expand its geographic footprint into the Great Lakes Region and Alaska.

Pro-Seal, founded in 1987 with headquarters in Pontiac, Michigan, has been recognized for its distribution of fluid sealing, pump systems, and related support systems, as well as industrial pumping equipment and services. The definitive agreement for the acquisition was signed on March 1, 2024.

David Little, Chairman and CEO of DXP, expressed enthusiasm for the acquisition, highlighting that Pro-Seal aligns with DXP's strategy to provide a wide range of technical products and services at the regional and local levels. He noted that the acquisition marks a strong start to fiscal 2024, with Pro-Seal being one of three companies acquired this year, each bringing valuable management teams to DXP.

Pro-Seal's financial performance for the last twelve months ending December 31, 2023, reported sales of approximately $19.9 million and an adjusted EBITDA of $1.5 million, where adjusted EBITDA accounts for income before tax, interest, depreciation, amortization, and non-recurring items.

Kent Yee, Chief Financial Officer of DXP, added that Pro-Seal not only complements DXP's market but also offers entry into a new geographic region. He anticipates that the acquisition will be accretive to earnings and will benefit customers, employees, and shareholders by combining local expertise with DXP's size and scale for enhanced customer solutions.

DXP Enterprises operates in the United States, Canada, Mexico, and Dubai, providing a variety of products and services, including pumping solutions, supply chain services, and maintenance, repair, operating, and production solutions.

The information in this report is based on a press release statement.

InvestingPro Insights

In light of DXP Enterprises' recent expansion through the acquisition of Pro-Seal, Inc., current and prospective investors may find the following insights from InvestingPro particularly relevant. DXP Enterprises (NASDAQ: DXPE) has been actively managing its share structure, as management has been aggressively buying back shares, reflecting confidence in the company's value proposition and future prospects.

An analysis of DXP Enterprises' financial metrics reveals that the company is trading at a low P/E ratio relative to its near-term earnings growth. Specifically, the P/E ratio stands at 10.28, and when adjusted for the last twelve months as of Q3 2023, it is even more attractive at 8.85. This suggests that the company's stock may be undervalued considering its earnings potential. Additionally, with a PEG ratio for the same period at a mere 0.18, the company's share price growth could be considered well-aligned with its earnings growth rate, indicating a potentially favorable investment opportunity.

Moreover, DXP Enterprises has demonstrated a solid financial performance, with a robust revenue growth of 22.68% in the last twelve months as of Q3 2023. This financial vigor is complemented by the company's liquidity position, where liquid assets exceed short-term obligations, providing a cushion for operational flexibility and further strategic initiatives such as the Pro-Seal acquisition.

For those interested in deeper analysis and additional insights, there are more InvestingPro Tips available for DXP Enterprises, including predictions about the company's profitability this year and its stock price volatility. To explore these tips, visit https://www.investing.com/pro/DXPE and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are seven additional InvestingPro Tips available, which could further inform investment decisions surrounding DXP Enterprises.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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