DXP Enterprises, Inc. Announces the Acquisition of Arroyo Process Equipment
DXP Enterprises, Inc. (NASDAQ: DXPE) has officially announced the successful completion of its acquisition of Arroyo Process Equipment (“Arroyo”). This strategic move underscores DXP’s commitment to expanding its footprint in the North American market and further solidifying its position as a leader in rotating equipment. Arroyo, a well-established distributor, has been serving various industries with its high-quality pumps, process equipment, and comprehensive repair services for over five decades.
About Arroyo Process Equipment
Founded in 1968 and headquartered in Bartow, Florida, Arroyo Process Equipment has long been recognized as a premier distributor in the industrial sector. With operations spanning three key locations across northern, central, and southern Florida, Arroyo has built a strong presence across the state and surrounding markets. The company specializes in providing pumps, process equipment, and related services, focusing on industries such as asphalt, mining, industrial water treatment, chemicals, and other diverse industrial applications.
Arroyo’s reputation for high-quality products and customer service has earned it a strong foothold in the market, with a loyal customer base that includes leading industrial players. Through its expertise in process equipment and repair services, Arroyo has positioned itself as a trusted partner for businesses across multiple industries in Florida.
The Acquisition Deal
The definitive agreement for the DXP acquisition was signed on January 31, 2025, marking a significant milestone for Enterprises. Financially, the acquisition was funded entirely through cash from balance sheet, reflecting the company’s strong financial position and its strategic focus on enhancing its capabilities and market reach.
In the twelve months ending December 31, 2024, Arroyo reported impressive financial results, including sales of approximately $26.3 million and an adjusted EBITDA of $1.3 million. Adjusted EBITDA, which represents income before tax, interest, depreciation, and amortization, along with non-recurring items and go-forward selling costs, serves as an important indicator of Arroyo’s operational efficiency and growth potential.
Strategic Vision and Synergy
David Little, Chairman and CEO of DXP Enterprises, expressed his enthusiasm about the acquisition, noting, “We are pleased to announce the acquisition of Arroyo Process Equipment. We have always respected and followed Arroyo’s success over the years. Arroyo adds another great company to our rotating equipment platform and furthers our vision around being the leading North American rotating equipment company.” He emphasized the strategic value that Arroyo brings to stating that it significantly strengthens s position within the rotating equipment market.
According to Little, the acquisition not only enhances DXP’s technical product offerings but also brings a wealth of sales expertise that will play a crucial role in expanding reach and capabilities. The acquisition is expected to open new opportunities for collaboration and customer service, allowing DXP to better serve its existing client base while also driving growth in the future. Furthermore, Little highlighted that the acquisition gives a strong leadership position in Florida, a region that has long been a key target for expansion.
“Arroyo’s expertise and strategic presence in Florida will complement DXP’s breadth of technical products and services. This transaction will not only allow us to continue with our existing marketing strategies but also provides us with exceptional talent that will help us continue to find resources to serve our customers better,” added Little. This sentiment underscores DXP’s focus on bringing together the right talent and resources to deliver superior value to its customers across all markets it serves.
Positive Outlook for DXP and Arroyo Employees
Kent Yee, DXP’s Chief Financial Officer, also expressed his excitement about the acquisition, noting the long-standing dialogue between the two companies. “We are very excited to have Arroyo as a part of DXP. We have dialogued for some time and welcome Arroyo’s talented and hardworking employees to the team,” Yee stated. He emphasized that the acquisition is aligned with strategy of pursuing opportunities in markets and business models that complement and enhance the company’s existing capabilities.
The deal also marks an important milestone in DXP’s ongoing efforts to diversify its end markets. By incorporating Arroyo into its portfolio, DXP is strengthening its position in Florida, a market that the company has historically found challenging to penetrate. The expansion into Florida provides DXP with an opportunity to tap into a new and dynamic market, offering potential for increased growth and expansion in the years to come.
Benefits for Customers, Employees, and Shareholders
Both DXP and Arroyo are confident that the acquisition will bring significant benefits to various stakeholders, including customers, employees, and shareholders. For customers, the merger creates an expanded product portfolio, improved service offerings, and increased operational capacity. Arroyo’s specialized knowledge and expertise will enhance DXP’s ability to provide tailored solutions to meet the specific needs of customers in a wide array of industries.
For employees, the acquisition offers exciting new opportunities for growth and development within a larger, more diversified organization. DXP’s extensive resources and infrastructure will provide Arroyo employees with additional tools and support, enabling them to continue excelling in their roles and advancing their careers.
Shareholders are expected to see positive long-term returns from this acquisition, as it strengthens DXP’s competitive position and broadens its reach in key markets. The acquisition also adds valuable scale to DXP’s operations, positioning the company for sustained growth in the future.