DXP Enterprises, Inc. Announces Acquisition of Kappe Associates, Inc.
- DXP Enterprises, Inc. has completed the acquisition of Kappe Associates, Inc.
- The acquisition will deepen DXP's presence in the Mid-Atlantic region of the U.S. and further scale its National Water & Wastewater efforts
- Sales and adjusted EBITDA for Kappe for the last twelve months ending December 31, 2023, were approximately $25.4 million and $3.8 million, respectively
- The transaction is consistent with DXP's growth strategy and will provide exceptional sales expertise and talent to serve its customers better
- None.
Insights
The acquisition of Kappe Associates, Inc. by DXP Enterprises, Inc. represents strategic consolidation within the distribution and manufacturing sector for water and wastewater equipment. This move is indicative of DXP's intent to fortify its presence in the Mid-Atlantic region and enhance its national water and wastewater efforts. The acquisition is financed through cash reserves, which suggests a strong liquidity position for DXP.
From a market perspective, the integration of Kappe's operations, which reported $25.4 million in sales and $3.8 million in adjusted EBITDA, is likely to bolster DXP's revenue streams and profitability margins. The mention of 'Attractive Margins and Cash Flow' indicates that Kappe's business model aligns well with DXP's financial health and operational efficiency. This move could potentially create shareholder value and enhance competitive advantage in the niche market of water and wastewater solutions.
DXP's acquisition of Kappe Associates is financially significant, with Kappe's adjusted EBITDA standing at $3.8 million. The financial metric of EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation and Amortization, is a widely used indicator of a company's operational profitability. Adjusted EBITDA further excludes non-recurring items, providing a clearer picture of ongoing business performance.
Investors should note the strategic nature of this acquisition, as it is the tenth under DXP's Water efforts, signifying a targeted growth strategy in the water and wastewater sector. The transaction is expected to be accretive, meaning it should increase DXP's earnings per share, which is an important consideration for stockholders assessing the impact on their investments.
The water and wastewater industry is critical for infrastructure and public health and companies like DXP and Kappe play a vital role in providing necessary equipment and services. The acquisition deepens DXP's technical expertise and market reach, especially considering Kappe's established presence since 1946. The mention of Kappe's 'youthful energy' suggests an infusion of innovation and potentially new technology into DXP's offerings.
Furthermore, the acquisition's timing, at the start of the year, is likely a strategic move to capitalize on the annual budget cycles of municipalities and other entities that operate in the water and wastewater sector. This could lead to immediate synergies and sales opportunities for the combined entity.
- Furthers and continues to scale DXP’s National Water & Wastewater efforts
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Deepens presence in the Mid-Atlantic region of the
U.S. - Attractive Margins and Cash Flow
Kappe is a leading distributor and manufacturers 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 Kappe and start the year with great additions to our water and wastewater growth efforts. We are excited to have Kappe and Hennesy join our DXP family. Each company provides DXP with exceptional sales expertise that will enhance our efforts and ability to collaborate and serve our customers and grow our DXP Water platform. These acquisitions are consistent with our growth strategy and demonstrate our commitment to expanding DXP into the water and wastewater treatment markets as well as maintaining our leading position as the largest distributor of rotating equipment in North America,” commented David Little, Chairman, and Chief Executive Officer of DXP.
The signing of the definitive agreement occurred on February 1, 2024. Sales and adjusted EBITDA for Kappe for the last twelve months ending December 31, 2023, were approximately
"Kappe’s expertise and youthful energy in the water and wastewater markets 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 welcome Kappe’s talented and hardworking employees to the DXP team. We continue to execute on our strategic priorities and strategy of making acquisitions in markets and business models where we can continue to enhance DXP. Kappe complements our recent focus on water and wastewater acquisitions and provides us with platforms in their respective markets to effectively serve the water and wastewater customer needs and completes our tenth acquisition under our DXP Water efforts. This transaction will be positive for Kappe 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 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/20240205202370/en/
Kent Yee
Senior Vice President CFO
713-996-4700 – www.dxpe.com
Source: DXP Enterprises, Inc.
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