About DXP Enterprises

DXP Enterprises, Inc. (DXP) engages in the business of distributing maintenance, repair and operating (MRO) products, equipment and service to customers in a variety of end markets, including the general industrial, energy, food & beverage, chemical, transportation, water and wastewater. As of December 31, 2022, the company operated from 180 locations which included 37 states in the U.S., nine provinces in Canada and one location in Dubai serving customers engaged locations and becoming customer driven experts in maintenance, repair and operating solutions. Segments The company operates through three segments: Service Centers (SC), Supply Chain Services (SCS), and Innovative Pumping Solutions (IPS). Service Centers This segment engages in providing MRO products, equipment and services, including technical expertise and logistics capabilities, to a variety of customers serving varied end markets with the ability to provide same day delivery. The company offers its customers a single source of supply on an efficient and competitive basis by being a first-tier distributor that can purchase products directly from manufacturers. The company offers a wide range of industrial MRO products, equipment and services through a continuum of customized and efficient MRO solutions. The company also provides services, such as field safety supervision, in-house and field repair and predictive maintenance. A majority of the company’s Service Center segment sales are derived from customer purchase orders for products. Sales are directly solicited from customers by the company’s sales force. The company's Service Centers are stocked and staffed with knowledgeable sales associates and backed by a centralized customer service team of experienced industry professionals. As of December 31, 2022, the company’s Service Centers’ products and services were distributed from 156 service centers and 4 distribution centers. The company's Service Centers provide a wide range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, industrial supply and safety product and service categories. The company serves as a first-tier distributor of more than 1,000,000 items of which more than 60,000 are stock keeping units (SKUs) for use primarily by customers engaged in the oil and gas, food and beverage, petrochemical, transportation and other general industrial industries. Other industries served by the company’s Service Centers include mining, construction, chemical, municipal, agriculture and pulp and paper. This segment’s long-lived assets are located in the United States, Canada and Dubai. Approximately 6.9% of the Service Centers segment’s revenues were in Canada and the remainder was virtually all in the U.S. Innovative Pumping Solutions This segment provides integrated, custom pump skid packages, pump remanufacturing and manufactures branded private label pumps to meet the capital equipment needs of its global customer base. Additionally, the company’s IPS segment provides project solutions and capital equipment to the water and wastewater treatment markets, including potable water, bio-solid and residual management and wastewater treatment. The company’s IPS segment provides a single source for engineering, systems design and fabrication for unique customer specifications. The company’s sales of integrated pump packages, remanufactured pumps or branded private label pumps are generally derived from customer purchase orders containing the customers’ unique specifications. Sales are directly solicited from customers by the company’s dedicated sales force. The company's engineering staff can design a complete custom pump package to meet its customers’ project specifications. Drafting programs, such as Solidworks and AutoCAD allow the company’s engineering team to verify the design and layout of packages with its customers prior to the start of fabrication. Finite Elemental Analysis programs, such as Cosmos Professional are used to design the package to meet all normal and future loads and forces. This process helps maximize the pump packages’ life and minimizes any impact to the environment. The company utilizes manufacturer authorized equipment and manufacturer certified personnel. Pump packages require MRO products and original equipment manufacturers’ (OEM) equipment, such as pumps, motors, valves, and consumable products, such as welding supplies. The company leverages its MRO product inventories and breadth of authorized products to maintain the quality of its pump packages. The company's fabrication facilities provide convenient technical support and pump repair services. Examples of the company’s innovative pump packages include, but are not limited to, diesel and electric driven fire and water packages; pipeline booster packages; potable water packages; pigging pump packages; lease automatic custody transfer (LACT) charge units; chemical injection pump packages wash down units; seawater lift pump packages; and seawater/produced water injection packages; and variety of packages to meet customer required industry specifications, such as API, ANSI and NFPA. As of December 31, 2022, the Innovative Pumping Solutions segment operated out of 20 facilities, 18 of which are located in the United States and two in Canada. All of the IPS segment’s long-lived assets are located in the U.S. Approximately 4.7% of the IPS segment’s 2022 revenues were recognized in Canada and 95.3% were in the U.S. Supply Chain Services This segment manages all or part of its customers’ supply chains, including procurement and inventory management. This segment enters into long-term contracts with its customers that can be canceled on little or no notice under certain circumstances. This segment provides fully outsourced MRO solutions for sourcing MRO products, including, but not limited to, the following: inventory optimization and management; store room management; transaction consolidation and control; vendor oversight and procurement cost optimization; productivity improvement services; and customized reporting. The company’s standardized programs include SmartAgreement, a planned, pro-active MRO products procurement solution leveraging DXP’s local Service Centers; SmartBuy, DXP’s on-site or centralized MRO procurement solution; SmartSource, DXP’s on-site procurement and storeroom management by DXP personnel; SmartStore, DXP’s customized e-Catalog solution; SmartVend, DXP’s industrial dispensing solution, which allows for inventory-level optimization, user accountability and item usage reduction by an initial 20-40%; and SmartServ, DXP’s integrated service pump solution. It provides a more efficient way to manage the entire life cycle of pumping systems and rotating equipment. As of December 31, 2022, the SCS segment operated supply chain installations in 95 of its customers’ facilities. All of the SCS segment’s long-lived assets are in the U.S. and the majority of the SCS segment’s 2022 revenues were recognized in the U.S. Products As a first-tier distributor, the company’s network of service and distribution centers stock more than 60,000 SKUs and provide customers with access to more than 1,000,000 items. Given the company’s breadth of product and its industrial distribution customers’ focus around specific product categories, it has become customer driven experts in five key product categories. As such, the company’s three business segments are supported by the following five key product categories: rotating equipment; bearings & power transmission; industrial supplies; metal working; and safety products & services. Each business segment tailors its inventory and leverages product experts to meet the needs of its local customers. Key product categories that the company offers include: Rotating Equipment: The company’s rotating equipment products include a full line of centrifugal pumps for transfer and process service applications, such as petrochemicals, refining and crude oil production; rotary gear pumps for low- to- medium pressure service applications, such as pumping lubricating oils and other viscous liquids; plunger and piston pumps for high-pressure service applications, such as disposal of produced water and crude oil pipeline service; and air-operated diaphragm pumps. The company also provides a large variety of pump accessories. Bearings & Power Transmission: The company’s bearing products include several types of mounted and unmounted bearings for a variety of applications. The power transmission products the company distributes include speed reducers, flexible-coupling drives, chain drives, sprockets, gears, conveyors, clutches, brakes and hoses. Industrial Supplies: The company offers a broad range of industrial supplies, such as abrasives, tapes and adhesive products, coatings and lubricants, fasteners, hand tools, janitorial products, pneumatic tools, welding supplies and welding equipment. Metal Working: The company’s metal working products include a broad range of cutting tools, abrasives, coolants, gauges, industrial tools and machine shop supplies. Safety Products & Services: The company sells a broad range of safety products, including eye and face protection, first aid, hand protection, hazardous material handling, instrumentation and respiratory protection products. Additionally, the company provides safety services, including hydrogen sulfide (H2S) gas protection and safety, specialized and standby fire protection, safety supervision, training, monitoring, equipment rental and consulting. The company’s safety services include safety supervision, medic services, safety audits, instrument repair and calibration, training, monitoring, equipment rental and consulting. Strategy The key component of the company’s growth strategy includes acquiring businesses with complementary or desirable product lines, locations or customers. Acquisitions In September 2022, the company completed the acquisition of Sullivan Environmental Technologies, Inc. (Sullivan). Sullivan is a leading distributor for the municipal and industrial water and wastewater treatment industries in Ohio, Kentucky, and Indiana. Sullivan is included within its IPS business segment. In May 2022, the company completed the acquisition of Cisco Air Systems, Inc. (Cisco). Cisco is a leading distributor of air compressors and related products and services focused on serving the food and beverage, transportation and general industrial markets in the Northern California and Nevada territories. Cisco is included within its SC business segment. In March 2022, the company completed the acquisition of Drydon Equipment, Inc. (Drydon), a distributor and manufacturers’ representative of pumps, valves, controls and process equipment focused on serving the water and wastewater industry in the Midwest. As a result, Drydon has been included in the IPS business segment. In March 2022, the company completed the acquisition of certain assets of Burlingame Engineers, Inc. (Burlingame), a provider of water and wastewater equipment in the industrial and municipal sectors. Burlingame is included within its SC business segment. Government Regulation The company is subject to various laws and regulations relating to its business and operations and various health and safety regulations, including those established by the Occupational Safety and Health Administration and Canadian Occupational Health and Safety. History DXP Enterprises, Inc. was founded in 1908. The company was incorporated in Texas in 1996.