DXP Enterprises, Inc. Refinances Existing Debt and Raises an Incremental $105M to Drive Growth
October 08 2024 - 2:25PM
Business Wire
- $110 million in cash on the balance sheet at
close
- Reduces applicable margin for borrowings by
one hundred basis points
- Aligns actions to support accelerating
acquisition strategy
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced that
it has closed on refinancing existing Senior Secured Term Loan B
(“TLB”) borrowings and raising an incremental $105 million in TLB
borrowings. Including the new borrowings, DXP will have $649.5
million in Senior Secured Term Loan B borrowings. The TLB
borrowings mature on October 13, 2030, and are priced at Term SOFR
plus an applicable margin of 3.75 percent.
DXP intends to use the proceeds to repay borrowings under DXP’s
existing Senior Secured Term Loan B, and the remaining for general
corporate purposes, potential acquisitions, and transaction fees
and expenses. The transaction provides DXP with continued
operational and financial flexibility to reinvest in the business
and pursue its organic and acquisition growth strategy.
The Term Loan B borrowings are priced at 3.75 percent over Term
SOFR and continue to include a secured leverage covenant ranging
from 5.75:1 to 4.75:1. The new loan under the credit agreement is
secured by substantially all of the company’s consolidated
assets.
David R. Little, Chairman and Chief Executive Officer remarked,
“We are pleased with another successful refinancing. Like last year
at this time, we will take this positive momentum, close out the
year strong and look to drive growth in 2025. Our capital
allocation strategy includes a mix of continuing to fund growth;
applying excess cash flow to debt service, when appropriate;
reinvesting in the business through our facilities, equipment and
software; and supporting DXP in the market. We plan to maintain
liquidity and flexibility while pursuing growth opportunities and
reinvesting in the business.”
Kent Yee, Chief Financial Officer added, “We are pleased with
another successful refinancing of $649.5 million, consisting of our
existing $544.5 million in TLB borrowings plus raising an
incremental $105 million. This accomplished several objectives,
including repricing our existing TLB borrowings, saving an
estimated six million in annual interest expense and creating
liquidity and flexibility going forward as we look to accelerate
growth via acquisitions and strategically reinvest in the business.
DXP continues to be well-positioned to support its disciplined
growth strategy. DXP continues to diversify and transform the
business as evidenced by sales growing from $1.0 billion in 2020 to
$1.7 billion for the last twelve months ending June 30, 2024, and
covenant compliance adjusted EBITDA growing from $64.9 million in
2020 to over $187.6 million through the twelve months ending June
30, 2024. We appreciate the support from our advisors and lender
group. Based on the transaction closing at the end of the second
quarter, DXP’s pro forma net debt to EBITDA was 2.75:1.”
Additional details regarding the refinanced TLB borrowings will
be available in DXP’s Current Report on Form 8-K to be filed with
the Securities and Exchange Commission by October 8th.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20241008038082/en/
Kent Yee Senior Vice President CFO 713-996-4700 –
www.dxpe.com
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