DXP Enterprises, Inc. Refinances Existing Debt and Raises an Incremental $125M to Drive Acquisition Growth
October 16 2023 - 4:32PM
Business Wire
- $107 million in cash on the balance sheet at close
- Reduces applicable margin for borrowings by fifty basis
points
- Aligns ongoing capital structure actions to support 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 $125 million in TLB
borrowings. Including the new borrowings, DXP will have $550.0
million in Senior Secured Term Loan B borrowings. The TLB
borrowings mature on October 30, 2030, and are priced at Term SOFR
plus an applicable margin of 4.75 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 operational and
financial flexibility to reinvest in the business and pursue its
organic and targeted acquisition growth strategy.
The Term Loan B borrowings are priced at 4.75 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 the company’s consolidated assets.
David R. Little, Chairman and Chief Executive Officer remarked,
“We are pleased with the successful execution of our refinancing.
We will take this positive momentum, close out the year strong and
look to drive growth in 2024. This successful capital raising
demonstrates the confidence lenders have in our current and
long-term plans. This financing will support us in executing our
strategy and funding both working capital, acquisition growth and
reinvesting in the business. Our capital allocation strategy at
this point in the cycle includes a mix of continuing to fund
growth, applying excess cash flow to debt service, when
appropriate, 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 to
announce the successful completion of our $550 million refinancing,
consisting of our existing $425 million in TLB borrowings plus
raising an incremental $125 million. This accomplished several
important objectives, including repricing our existing TLB
borrowings, saving on interest expense and creating liquidity and
flexibility going forward as we look to drive growth via
acquisitions and strategically reinvest in the business. We are
proactively putting DXP in a position to take advantage of market
opportunities on behalf of all our stakeholders. DXP continues to
be well-positioned to support its disciplined growth strategy. We
continue to experience strong market interest and demand for DXP in
these types of transactions, demonstrating the confidence that
existing and new lenders, investors and other financial
participants have in DXP and our efforts to diversify and transform
the business as evidenced by covenant compliance adjusted EBITDA
growing from $64.9 million in 2020 to over $161.9 million through
the second quarter of 2023. 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
2.65:1”
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 17th.
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/20231016085051/en/
Kent Yee Senior Vice President CFO 713-996-4700 –
www.dxpe.com
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