HOUSTON--(BUSINESS WIRE)--
DXP Enterprises, Inc. (NASDAQ: DXPE) today released preliminary
unaudited selected financial information for its fiscal quarter ended
September 30, 2016. The information that follows is preliminary and
based upon information available as of today. DXP expects to release its
full fiscal quarter results on November 7, 2016.
As of the date of this release, DXP has not completed its financial
close process for the quarter. During the course of that process, the
Company may identify items that would require it to make adjustments,
which may be material, to the information presented below. As a result,
the estimates below constitute forward-looking information and are
subject to risks and uncertainties, including possible adjustments to
preliminary operating results.
DXP Enterprises 2016 third quarter preliminary financial highlights:
-
Sales are anticipated to be between $228.0 million and $231.0 million
for the third quarter of 2016, compared to $256.2 million for the
second quarter of 2016, a decrease between 9.8 percent to 11.0
percent. Compared to sales for the third quarter of 2015 of $303.1
million, this represents a decrease of between 23.8 percent and 24.8
percent. The above comparisons include sales from Vertex, which was
sold on October 3, 2016.
-
Gross profit is anticipated to be between $62.0 million and $64.0
million, for the third quarter 2016, compared to $71.6 million for the
second quarter of 2016 and $85.7 million in the third quarter of 2015.
-
Net income (loss) is anticipated to be between $(500) thousand to $500
thousand for the third quarter of 2016, compared to $5.1 million for
the second quarter of 2016 and $(52.4) million in the third quarter of
2015 which included a $58.9 million non-cash impairment charge.
-
Earnings before interest, taxes, depreciation and amortization
(EBITDA) is anticipated to be between $11.0 million and $13.0 million
for the third quarter 2016, compared to $16.3 million in the second
quarter of 2016 and $11.3 million in the third quarter of 2015.
Preliminary Unaudited Financial Disclosures
The sales decline in the third quarter is mainly attributable to
softness in July sales. This was driven by bookings and shipments
softening around the days before and after the July 4th
holiday across all three business segments.
David R. Little, Chairman and CEO remarked, “Our third quarter
performance reflects a departure from our recent trends, which was
primarily associated with lagging sales during the month of July. August
and September sales were more in line with average year-to-date monthly
performance. That said, we do expect seasonality which can be
exacerbated by the upcoming holiday season, the elections, seasonal
customer facility shutdowns as well as the recent sale of Vertex. We are
pleased with our cost containment measures year-to-date. Free cash flow
performance, cash flow from operations less capital expenditures,
continues to be in line with expectations and, along with our recent
announcement regarding Vertex, continues to provide DXP with resiliency.
We look forward to discussing more detailed financial results on our
third quarter earnings call.”
Balance Sheet and Liquidity
The Company estimates cash and cash equivalents to be approximately $3.4
million as of September 30, 2016. Total debt is expected to be
approximately $319.3 million as of September 30, 2016, which includes
$6.2 million in net proceeds from issuance of 238,858 shares of common
stock, during the quarter. Compared to the second quarter, debt declined
by approximately $28.4 million during the third quarter. After including
the payoff of debt associated with the sale of Vertex, a non-core master
distributor of industrial fasteners, announced on October 4, 2016, total
debt was approximately $286.3 million as of October 14, 2016.
Mac McConnell, CFO added, “We have a goal of continuing to reduce the
amount outstanding under our credit facility and to improve terms. While
we are pleased with our debt reduction year-to-date, we intend to, from
time to time, opportunistically access the equity or debt capital
markets, sell non-core assets, and engage in prudent liability or
capital structure management transactions. Ultimate terms and the
successful pursuit of these transactions will be, however, dependent in
part on prevailing economic conditions and other factors, including
factors beyond our control.”
We currently expect that our final results will be within the ranges
described above. It is possible, however, that our final results will
not be within the ranges we currently estimate. We undertake no
obligation to update or supplement the information provided above until
we release our results of operations for the three and nine months ended
September 30, 2016. Hein & Associates LLP, our independent registered
public accounting firm, has not audited, reviewed, compiled or performed
any procedures with respect to this financial data.
We will host a conference call regarding 2016 third quarter financial
results on the Company’s website (www.dxpe.com)
Monday, November 7, 2016 at 9 a.m. CST. Web participants are encouraged
to go to the Company’s website at least 15 minutes prior to the start of
the call to register, download and install any necessary audio software.
The online archived replay will be available immediately after the
conference call at www.dxpe.com
and at www.viavid.net.
Non-GAAP Financial Measures
DXP supplements reporting of net income (loss) 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. Additional information
regarding EBITDA referred to in this press release is included below
under "--Reconciliation of Non-GAAP Measures."
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.
|
DXP ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ thousands) (unaudited) |
|
|
| |
|
| |
| | | Three Months Ended September 30, |
| | | 2016 | | | 2015 |
| | | Low |
|
| High | | | Actual |
| | | | | | | | |
|
Sales
| | |
$
|
228,000
|
| | |
$
|
231,000
| | |
$
|
303,080
|
|
| | | | | | | | |
|
Gross Profit
| | |
$
|
62,000
|
| | |
$
|
64,000
| | |
$
|
85,706
|
|
| | | | | | | | |
|
Net Income (loss) attributable to DXPE
| | |
$
|
(500
|
)
| | |
$
|
500
| | |
$
|
(52,435
|
)
|
| | | | | | | | |
|
Interest expense; Provision for income taxes; Impairments; and
Depreciation and amortization
| | | |
11,500
| | | | |
12,500
| | | |
63,713
| |
| | |
|
|
|
|
|
|
|
EBITDA
| | |
$
|
11,000
|
|
|
|
$
|
13,000
|
|
|
$
|
11,278
|
|
| | | | | | | | |
|
**EBITDA – earnings before impairments, interest, taxes,
depreciation and amortization
|
|
|
| Nine Months Ended September 30, |
| | | 2016 |
|
| 2015 |
| | | Low |
|
| High | | | Actual |
| | | | | | | | |
|
Sales
| | |
$
|
737,776
|
| | |
$
|
740,776
| | |
$
|
968,362
|
|
| | | | | | | | |
|
Gross Profit
| | |
$
|
202,421
|
| | |
$
|
204,421
| | |
$
|
275,054
|
|
| | | | | | | | |
|
Net Income (loss) attributable to DXPE
| | |
$
|
(442
|
)
| | |
$
|
558
| | |
$
|
(35,617
|
)
|
| | | | | | | | |
|
Interest expense; Provision for income taxes; Impairments; and
Depreciation and amortization
| | | |
33,470
| | | | |
34,470
| | | |
95,969
| |
| | |
|
|
|
|
|
|
|
EBITDA
| | |
$
|
33,028
|
|
|
|
$
|
35,028
|
|
|
$
|
60,352
|
|
| | | | | | | | |
|
**EBITDA – earnings before impairments, interest, taxes,
depreciation and amortization
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161019006413/en/
DXP Enterprises, Inc.
Mac McConnell, 713-996-4700
Senior Vice
President, Finance & CFO
www.dxpe.com
Source: DXP Enterprises, Inc.