DXP Enterprises Completes Acquisition of Application Specialties, Inc.

DXP Enterprises, Inc. (NASDAQ: DXPE) today announced the completion of the acquisition of Application Specialties, Inc. ("ASI”), a leading distributor of cutting tools, abrasives, coolants and machine shop supplies. DXP funded the acquisition with cash on the balance sheet.

Founded in 1989, ASI is headquartered in Auburn, Washington and operates out of three locations in the state of Washington including Auburn, Everett and Vancouver. ASI is focused on serving customers in the aerospace, construction, medical and firearm markets with approximately 33 employees.

Financial terms of the transaction were not disclosed. Signing of the definitive agreement occurred on January 1, 2018. Sales and adjusted EBITDA were approximately $37 million and $2.9 million, respectively. Adjusted EBITDA was calculated as income before tax, plus interest, depreciation and amortization, and non-recurring items that will not continue after the completion of the acquisition.

David R. Little, Chairman and CEO remarked, "We are pleased to welcome the ASI employees to the DXP team. ASI is a unique, well-run business focused on providing value-added solutions to its customers. ASI will provide DXP’s Metal Working division with new geographic territory and enhance DXP’s end market mix. With ASI, we continue to build on our strategy of providing a breadth of technical products and services on a regional and local level. ASI provides us scale and access to the U.S. Pacific Northwest market, while allowing us to continue to serve our customer's evolving needs. ASI is a great company with key differentiators and provides us with high caliber people.”

"ASI is pleased to be part of the dynamic DXP family. This is a great opportunity for our employees and customers. DXP has a great legacy of growth and we plan to continue that growth. We are excited for the next stage of ASI and helping DXP become a dominant force within cutting tools, the aerospace industry and on the Western side of the United States,” added Mel Whitney, President of ASI.

Kent Yee, CFO added, "We are excited to welcome the talented and hardworking employees of ASI to the DXP team. ASI is our first acquisition in some time and is another exciting addition to DXP. ASI provides us with scale and access into a geographic region we have not historically served. ASI complements and diversifies DXP’s products and end markets. This transaction will be positive for ASI and DXP’s customers, employees and shareholders.”

ASI was advised by Cascadia Capital, LLC.

Non-GAAP Financial Measures

DXP supplements reporting of net income with non-GAAP measurements, including EBITDA, Adjusted EBITDA and free cash flow. This supplemental information should not be considered in isolation or as a substitute for the unaudited GAAP measurements.

The Company believes EBITDA provides additional information about: (i) operating performance, because it assists in comparing the operating performance of the business, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii) the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a component of a measure of the Company’s financial covenants under its credit facility. Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors’ understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation from net income, the Company believes it is enhancing investors’ understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives.

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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