DXP Enterprises, Inc. Announces Acquisition of Hartwell Environmental Corporation

Rhea-AI Summary

DXP Enterprises, Inc. (NASDAQ: DXPE) has acquired Hartwell Environmental , a leading manufacturer's representative of pumps, controls, and process equipment for the water and wastewater industry. The acquisition, completed on September 1, 2024, strengthens DXP's National Water & Wastewater efforts and establishes its presence in Texas and Oklahoma.

Hartwell's last twelve months' performance ending July 31, 2024, showed sales of $18.4 million and adjusted EBITDA of $4.1 million. This strategic move is expected to enhance DXP's technical products and services offerings, while providing access to new talent and resources to better serve customers.

Positive

• Acquisition expands DXP's presence in Texas and Oklahoma markets
• Hartwell's LTM sales of $18.4 million and adjusted EBITDA of $4.1 million
• Enhances DXP's water and wastewater platform
• Transaction funded with cash from balance sheet, indicating strong liquidity
• Eleventh acquisition under DXP Water efforts, showing consistent growth strategy

Negative

• None.

Financial Analyst

The acquisition of Hartwell Environmental by DXP Enterprises is a strategic move to expand its water and wastewater business. With Hartwell's $18.4 million in sales and $4.1 million in adjusted EBITDA, this deal strengthens DXP's market position, particularly in Texas and Oklahoma. The attractive margins and cash flow from Hartwell should positively impact DXP's financials. However, investors should note that the purchase price was not disclosed, making it difficult to assess the deal's immediate value. The acquisition, funded from the balance sheet, suggests DXP's strong cash position but may impact short-term liquidity. Long-term, this move aligns with DXP's growth strategy in the water sector, potentially driving future revenue and profitability.

Market Research Analyst

This acquisition marks DXP's eleventh in the water sector, indicating a clear strategic focus on becoming a major player in the water and wastewater industry. The move capitalizes on the growing importance of water infrastructure, a sector likely to see increased investment due to aging systems and environmental concerns. Hartwell's expertise in pumps, controls and process equipment complements DXP's existing offerings, potentially leading to cross-selling opportunities and improved customer retention. The expansion into Texas and Oklahoma markets is particularly noteworthy, as these regions face significant water management challenges. This geographic expansion could position DXP favorably for future growth, especially if water scarcity issues intensify in these areas.

Industry Expert

The acquisition of Hartwell Environmental is a strategic fit for DXP Enterprises, enhancing its water and wastewater platform. Hartwell's 22.3% adjusted EBITDA margin ($4.1 million on $18.4 million sales) is impressive for the industry, suggesting efficient operations and strong market positioning. This move not only expands DXP's geographical footprint but also adds valuable expertise in pumps, controls and process equipment. The focus on Texas, a state facing significant water challenges, could prove particularly lucrative. However, investors should monitor how well DXP integrates Hartwell's operations and whether it can maintain the high profitability post-acquisition. The success of this deal could set the stage for further consolidation in the fragmented water and wastewater equipment market.

• Furthers and continues to scale DXP’s National Water & Wastewater efforts
• Establishes presence in Texas and Oklahoma
• Attractive Margins and Cash Flow

HOUSTON--(BUSINESS WIRE)-- DXP Enterprises, Inc. (NASDAQ: DXPE) today announced that it has completed the acquisition of Hartwell Environmental Corporation (“Hartwell”). Founded in 1976, Hartwell is headquartered in Tomball, Texas and operates out of three locations servicing the Texas, Oklahoma and surrounding markets.

Hartwell is a leading manufacturer’s representative of pumps, controls and process equipment focused on serving the water and wastewater industry. DXP funded the acquisition with cash from the balance sheet.

“We are pleased to announce the acquisition of Hartwell Environmental. Hartwell adds another great company to our water and wastewater platform. Hartwell provides DXP with exceptional sales expertise that will enhance our efforts and ability to collaborate and serve our customers and grow DXP Water. Hartwell provides us with a clear leader in our home market of Texas,” commented David Little, Chairman, and Chief Executive Officer of DXP.

The signing of the definitive agreement occurred on September 1, 2024. Sales and adjusted EBITDA for Hartwell for the last twelve months ending July 31, 2024, were approximately $18.4 million and $4.1 million, respectively. Adjusted EBITDA was calculated as income before tax, plus interest, plus depreciation and amortization, plus non-recurring items less go-forward selling costs.

"Hartwell’s expertise and strategic presence in Texas and Oklahoma will complement DXP's breadth of technical products and services. This transaction will not only allow us to continue with our existing marketing strategies, but also gives us notable talent as we continue to find resources to serve our customers better," added David Little.

Kent Yee, Chief Financial Officer, stated "We are very excited to have Hartwell as a part of DXP. We have dialogued for some time and welcome Hartwell’s talented and hardworking employees to the DXP team. We continue to execute on our strategy of making acquisitions in markets and business models where we can continue to enhance DXP. Hartwell complements our recent focus on water and wastewater acquisitions and provides us with platforms in both Texas and Oklahoma and completes our eleventh acquisition under our DXP Water efforts. This transaction will be positive for Hartwell and DXP’s customers, employees, and shareholders."

About DXP Enterprises, Inc.

DXP Enterprises, Inc. is a leading 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 and maintenance, repair, operating and production ("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.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made by or to be made by the Company) contains statements that are forward-looking. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future; and accordingly, such results may differ from those expressed in any forward-looking statement made by or on behalf of the Company. These risks and uncertainties include but are not limited to; ability to obtain needed capital, dependence on existing management, leverage, and debt service, domestic or global economic conditions, and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or the negative of such terms or other comparable terminology. For more information, review the Company’s filings with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240904875838/en/

Kent Yee

Senior Vice President CFO

713-996-4700 – www.dxpe.com

Source: DXP Enterprises, Inc.

FAQ

What company did DXP Enterprises (DXPE) acquire on September 1, 2024?

DXP Enterprises (DXPE) acquired Hartwell Environmental , a leading manufacturer's representative of pumps, controls, and process equipment for the water and wastewater industry.

How much were Hartwell Environmental 's sales for the last twelve months ending July 31, 2024?

Hartwell Environmental 's sales for the last twelve months ending July 31, 2024, were approximately $18.4 million.

What markets does the acquisition of Hartwell Environmental give DXP Enterprises (DXPE) access to?

The acquisition of Hartwell Environmental gives DXP Enterprises (DXPE) access to the Texas and Oklahoma markets, as well as surrounding areas.

How did DXP Enterprises (DXPE) fund the acquisition of Hartwell Environmental ?

DXP Enterprises (DXPE) funded the acquisition of Hartwell Environmental with cash from its balance sheet.