Industrial equipment wholesaler, DXP Enterprises, Inc. DXPE recently completed the acquisition of Tualatin, OR-based Tool Supply, Inc. Financial terms of the transaction have been kept under wraps.
Tool Supply, Inc. is a well-known distributor of state-of-the-art cutting tools, abrasives, coolants and machine shop supplies. The firm generated revenues of approximately $4.8 million in the last twelve months ended Mar 31, 2015, while its earnings before interest, tax, depreciation and amortization (“EBITDA”) totaled $1.2 million.
This acquisition will enable DXP Enterprises to expand its Metal Working division in end-markets like transportation-aircraft, general industrial machining, wood processing, aerospace and original equipment manufacturer (“OEM”), served by Tool Supply. The company expects the buyout to be accretive to its earnings in the years ahead.
We believe the acquisition of Tool Supply is in sync with DXP Enterprises’ strategic business expansion policy, involving both organic and inorganic means. It is also indicative of the company’s strong balance sheet and healthy cash position. In 2014, the company generated approximately $99 million of cash from its operating activities.
The Zacks Consensus Estimate for DXP Enterprises is currently pegged at $3.39 for 2015 and $3.59 for 2016. Earnings are projected to grow 20% over the next 5 years.
With a market capitalization of $622 million, DXP Enterprises presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the machinery industry include ESCO Technologies Inc. ESE, Astec Industries, Inc. ASTE and RBC Bearings Inc. ROLL. While ESCO Technologies sports a Zacks Rank #1 (Strong Buy), both Astec Industries and RBC Bearings carry a Zacks Rank #2 (Buy).
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