DXP Enterprises, Inc. Announces New Share Repurchase Program

Rhea-AI Summary

DXP Enterprises (NASDAQ: DXPE) has announced a new stock repurchase program authorized by its Board of Directors. The program allows for the acquisition of up to $85.0 million or 2.5 million shares of outstanding common stock over the next 24 months. This follows the successful completion of a previous program where the company repurchased $85 million or 2.8 million shares.

The new program demonstrates confidence in DXP's future and aims to create additional shareholder value. The company views its shares as an attractive investment opportunity and believes that repurchasing shares is an accretive use of cash. DXP's management highlights the company's resilience, transformed end markets, and diversified business as factors supporting this decision.

Positive

• Authorization of a new $85 million stock repurchase program
• Successful completion of previous $85 million repurchase program
• Confidence in future business performance and cash flow generation
• Flexibility in capital allocation strategy
• Reaching new sales highs and strong backlog

Negative

• None.

Insights

Financial Analyst

DXP Enterprises' new $85 million share repurchase program signals strong confidence in the company's financial health and future prospects. This move, following the successful completion of a previous $85 million buyback, demonstrates a consistent capital allocation strategy focused on shareholder value creation.

The program's flexibility, allowing for up to 2.5 million shares to be repurchased over 24 months, provides management with a valuable tool to opportunistically support the stock price. With approximately 16.7 million diluted weighted average shares outstanding, this program could potentially reduce the share count by up to 15%, which could boost earnings per share and return on equity metrics.

However, investors should note that share repurchases don't guarantee stock price appreciation and may limit funds available for other growth initiatives or acquisitions. The company's ability to generate sufficient free cash flow to fund both this program and other strategic initiatives will be important for long-term value creation.

Market Research Analyst

DXP's decision to initiate another share repurchase program reflects a broader trend among companies with strong cash positions in the current market environment. This move suggests management's belief that the stock is undervalued relative to its future potential, which could be seen as a positive signal by the market.

The company's mention of reaching new sales highs and strength in backlog indicates robust demand for its products and services. This positive outlook, combined with the repurchase program, could potentially attract more investor interest and support the stock price in the near term.

However, it's important to consider the cyclical nature of DXP's end markets. While the company claims to have diversified its business, investors should carefully assess the sustainability of current growth trends and the potential impact of any economic slowdowns on DXP's performance and ability to continue share repurchases.

HOUSTON--(BUSINESS WIRE)-- DXP Enterprises, Inc. (NASDAQ: DXPE) today announced that its Board of Directors authorized a new stock repurchase program (the “program”) under which up to $85.0 million or 2.5 million shares of its outstanding common stock may be acquired in the open market over the next 24 months at the discretion of management. This is after the successful completion of the previous program, whereby, the Company completed the repurchase of $85 million or 2.8 million shares, under the 2-year program which began in December of 2022.

The shares under the new program may be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending upon market conditions. There is no guarantee as to the exact number of shares that will be repurchased, and DXP may discontinue the program at any time management determines additional purchases are not warranted. As of June 30, 2024, DXP had approximately 16.7 million diluted weighted average shares outstanding.

David R. Little, Chairman and Chief Executive Officer commented, "The last few years have demonstrated the resilience of DXP. With continued confidence in our business, the Board of Directors, and the senior management team believe that the Company shares are an attractive investment opportunity. We have transformed our end markets and diversified our business. The Board’s approval of another program reflects confidence in DXP’s future and puts us in a position to create additional shareholder value. We continue to believe that the most accretive and beneficial use of cash at times is the repurchase of our shares. We are confident in our business and committed to opportunistically allocating capital to maximize shareholder value. In order to continue doing so, we are announcing another share repurchase program to maintain flexibility going forward."

Kent Yee, Chief Financial Officer commented, “Today’s announcement illustrates our belief in DXP and maintains our capital allocation options. The continuation of our share repurchase program reflects the Board’s commitment to our disciplined capital allocation strategy and the confidence in our business. Our share repurchase programs demonstrate the confidence we have in our future, our ability to produce free cash flow through different cycles, and our ongoing commitment to create shareholder and stakeholder value. With our growing cash flow, we have the ability to invest in growth, innovate DXP, execute acquisitions, and take this action to deliver shareholder returns and drive long-term growth. We continue to reach new sales highs and see strength in our backlog, while executing on our customer driven focus. We believe the future of DXP is substantial and we look forward to the next chapter."

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/20240828142306/en/

Kent Yee

Senior Vice President CFO

713-996-4700 – www.dxpe.com

Source: DXP Enterprises, Inc.

FAQ

What is the size of DXP Enterprises' new stock repurchase program?

DXP Enterprises' new stock repurchase program allows for the acquisition of up to $85.0 million or 2.5 million shares of its outstanding common stock over the next 24 months.

How long will DXP Enterprises' new stock repurchase program last?

The new stock repurchase program for DXP Enterprises (DXPE) will last for 24 months, during which time the company may repurchase shares at its discretion.

How many shares did DXP Enterprises repurchase in its previous program?

In its previous repurchase program, DXP Enterprises (DXPE) completed the repurchase of $85 million or 2.8 million shares over a 2-year period that began in December 2022.

What is the current number of outstanding shares for DXP Enterprises?

As of June 30, 2024, DXP Enterprises (DXPE) had approximately 16.7 million diluted weighted average shares outstanding.