-
Fiscal year 2016 sales of $962 million
-
Solid full year GAAP diluted EPS of $0.49
-
Adjusted Earnings Before Interest, Taxes, Depreciation, and
Amortization (“EBITDA”) of $55.2 million, or 5.7 percent of sales.
-
Recorded $5.6 million gain on sale of Vertex from $31.5 million of
proceeds
-
Solid free cash flow of $43.1 million, excluding Q1 cash outflow of
$9.4 million, free cash flow for fiscal 2016 was $52.5 million
-
Net proceeds of $52.2 million via common stock offerings with the
issuance of 2.7 million shares
-
Reduced total debt by $125.9 million for the year
HOUSTON--(BUSINESS WIRE)--
DXP Enterprises, Inc. (NASDAQ:DXPE) today announced financial
results for the fourth quarter and fiscal year ending December 31, 2016.
A reconciliation of the non-GAAP financial measures is in the back of
this press release.
Fourth Quarter 2016 financial highlights:
-
Sales were $222.3 million for the fourth quarter of 2016, a decrease
of 3.4 percent from the third quarter and a decrease of 20.2 percent
compared to $278.7 million for the fourth quarter of 2015. Adjusting
the third quarter of 2016 and fourth quarter of 2015 for the sale of
Vertex, sales decreased 0.3 percent compared to the third quarter and
18.1 percent compared to the fourth quarter of 2015, respectively.
-
Earnings per diluted share for the fourth quarter was $0.42 based upon
17.4 million diluted shares, compared to $0.02 per share in the third
quarter of 2016, based on 15.4 million diluted shares. In the fourth
quarter of 2015, the loss per diluted share was $0.20 on 14.5 million
shares which includes impairment expense of $9.8 million.
-
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the fourth quarter was $20.4 million compared to $12.8
million for the third quarter of 2016, an increase of 59.9 percent.
The increase includes a $5.6 million gain on the sale of Vertex.
Excluding the gain, EBITDA for the fourth quarter was $14.8 million or
6.7 percent of sales. EBITDA as a percentage of sales was 9.2 percent
and 5.6 percent for the fourth and third quarter, respectively, as
reported. In the fourth quarter of 2015, EBITDA was $13.6 million or
4.9 percent of sales.
-
Free cash flow (cash flow from operating activities less capital
expenditures) for the fourth quarter was $10.9 million or 53 percent
of EBITDA.
Fiscal Year 2016 financial highlights:
-
Sales were $962.1 million for fiscal year 2016, compared to $1.2
billion for fiscal year 2015, a decrease of 22.9 percent. Organic
sales decreased 23.6 percent, acquisitions positively impacted sales
by $15.1 million for 2016.
-
Gross profit was $264.8 million, or 27.5 percent of sales for the
fiscal year 2016, compared to $352.0 million, or 28.2 percent of sales
for the fiscal year 2015.
-
Selling, general and administrative (SG&A) expenses were $245.5
million, or 25.5 percent of sales for fiscal 2016, compared to $303.8
million, or 24.4 percent of sales for fiscal 2015.
-
Earnings per diluted share for the fiscal year 2016 was $0.49 based
upon 15.9 million diluted shares, compared to a loss of $2.68 per
share in fiscal 2015, based on 14.4 million diluted shares.
-
Adjusted EBITDA was $55.2 million for fiscal 2016, compared to $74.0
million for fiscal 2015. EBITDA as a percentage of sales was 5.7
percent and 5.9 percent in fiscal 2016 and 2015, respectively.
-
Free cash flow (cash flow from operating activities less capital
expenditures) for fiscal 2016 was $43.1 million compared to $84.0
million for fiscal 2015.
David R. Little, Chairman and CEO remarked, “We are encouraged by our
finish to the fiscal year and DXP’s operational execution against the
challenging oil & gas and industrial environment. While we fought
through difficult market conditions, 2016 was a successful year as we
were able to improve our balance sheet and position DXP in a volatile
period in our history. We maintained a collective focus while advancing
and positioning DXP for long-term growth. DXP’s fourth quarter results
indicate we have bottomed and full-year 2016 results were in-line with
our expectations after we adjusted during the first half of the year. We
are also encouraged by the general increased optimism about the
macroeconomic environment. Our efforts to win business, serve our
customers, reduce costs and improve efficiencies through the past two
years are driving performance. We are grateful for the continued hard
work and dedication of all our “DXPeople”.
As we look at our financial performance, DXP’s fiscal 2016 sales were
$962.1 million, or a 22.9 percent decline over fiscal 2015. Fiscal 2016
sales were $621.0 million for Service Centers, $187.1 million for
Innovative Pumping Solutions and $154.0 million for Supply Chain
Services. DXP produced adjusted EBITDA of $55.2 million. Free cash flow
combined with proceeds from the sale of Vertex and equity issuance,
allowed DXP to pay down debt by $125.9 million since the end of fiscal
2015. We remain pleased with our ability to generate cash and manage our
resources while continuing to position DXP for the future.
We are cautiously optimistic that certain energy and industrial
customers’ budgets may improve off current low levels and we anticipate
a better fiscal year 2017. As such, we remain focused on controlling
what we can by improving our ability to serve existing and new
customers, continually focus on enhancing and improving our operational
execution, investing in products and people and strategically aligning
DXP for the next up cycle. We believe these efforts will pivot DXP
towards growth and position the Company successfully through cycles
regardless of market conditions over the short and long term. DXP
remains well positioned to drive value for all our stakeholders as the
market begins to turn.”
Mac McConnell, CFO added, “DXP 2016 financial performance reflects the
challenges we continued to experience during fiscal 2016. During fiscal
2016, selling, general and administrative (“SG&A”) costs were reduced by
19.2 percent or by $58.3 million. Since 2014, we have reduced SG&A by
over $82.4 million or 25.1 percent. Also, DXP generated $43.1 million in
free cash flow. DXP paid down debt by $125.9 million. Total debt
outstanding as of December 31, 2016 was $225.7 million. DXP’s debt pay
down was driven by free cash flow, as well as proceeds from the sales of
Vertex and issuance of shares in conjunction with DXP’s common stock
offerings. During the fiscal year, DXP also successfully amended its
credit facility three times and met all requirements including prepaying
the $30 million mandatory payment due by December 31, 2016 and the $25
million payment due by March 31, 2017. We look forward to refinancing
our debt in the near future. Today, the primary covenant DXP has is a
minimum monthly trailing twelve months EBITDA covenant ranging from
$39.0 million to $43.3 million. As we move into fiscal 2017, we are
excited by the tone at DXP and externally.”
We will host a conference call regarding 2016 fourth quarter and fiscal
2016 financial results on the Company’s website (www.dxpe.com)
Friday, March 31, 2017 at 9 am 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.
DXP Enterprises 2016 fourth quarter and fiscal 2016 business segment
results:
-
Service Centers’ revenue for the
fiscal year was $621.0 million, a decline of 24.9 percent
year-over-year with a 7.7 percent operating income margin. Organic
revenue declined 26.1 percent year-over-year as the Tool Supply and
Cortech acquisitions positively contributed $15.1 million in sales
during 2016.
-
For the fourth quarter, revenue declined 8.1 percent sequentially
with an 8.7 percent operating income margin. Adjusting for the
sale of Vertex, revenue declined 3.7 percent.
-
Innovative Pumping Solutions’
revenue for the fiscal year was $187.1 million, a decline of 26.6
percent year-over-year with a 5.3 percent operating income margin.
-
For the fourth quarter, revenue increased 14.3 percent
sequentially with a 5.4 percent operating income margin.
-
Supply Chain Services’ revenue for
the fiscal year was $154.0 million, a decline of 7.0 percent
year-over-year with a 10.0 percent operating margin.
-
For the fourth quarter, revenue declined 2.8 percent sequentially
with a 10.3 percent operating income margin.
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 "--Unaudited Reconciliation of Non-GAAP Financial Information."
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, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
Three Months Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
$
|
962,092
|
|
|
|
$
|
1,247,043
|
|
|
|
$
|
222,291
|
|
|
|
$
|
278,681
|
|
Cost of sales
|
|
|
|
|
697,290
|
|
|
|
|
895,057
|
|
|
|
|
161,730
|
|
|
|
|
201,749
|
|
Gross profit
|
|
|
|
|
264,802
|
|
|
|
|
351,986
|
|
|
|
|
60,561
|
|
|
|
|
76,932
|
|
Selling, general and administrative expenses
|
|
|
|
|
245,470
|
|
|
|
|
303,819
|
|
|
|
|
53,009
|
|
|
|
|
71,483
|
|
Impairment expense
|
|
|
|
|
-
|
|
|
|
|
68,735
|
|
|
|
|
-
|
|
|
|
|
9,847
|
|
B27 settlement
|
|
|
|
|
-
|
|
|
|
|
7,348
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Operating income (loss)
|
|
|
|
|
19,332
|
|
|
|
|
(27,916
|
)
|
|
|
|
7,552
|
|
|
|
|
(4,398
|
)
|
Other expense (income), net
|
|
|
|
|
(5,906
|
)
|
|
|
|
72
|
|
|
|
|
(5,509
|
)
|
|
|
|
139
|
|
Interest expense
|
|
|
|
|
15,564
|
|
|
|
|
10,932
|
|
|
|
|
3,866
|
|
|
|
|
3,027
|
|
Income (loss) before income taxes
|
|
|
|
|
9,674
|
|
|
|
|
(38,920
|
)
|
|
|
|
9,195
|
|
|
|
|
(7,564
|
)
|
Provision (benefit) for income taxes
|
|
|
|
|
2,523
|
|
|
|
|
150
|
|
|
|
|
2,064
|
|
|
|
|
(4,360
|
)
|
Net income (loss)
|
|
|
|
|
7,151
|
|
|
|
|
(39,070
|
)
|
|
|
|
7,131
|
|
|
|
|
(3,204
|
)
|
Less: Net income (loss) attributable to non-controlling interest
|
|
|
|
|
(551
|
)
|
|
|
|
(534
|
)
|
|
|
|
(250
|
)
|
|
|
|
(285
|
)
|
Net income (loss) attributable to DXP Enterprises, Inc.
|
|
|
|
|
7,702
|
|
|
|
|
(38,536
|
)
|
|
|
|
7,381
|
|
|
|
|
(2,919
|
)
|
Preferred stock dividend
|
|
|
|
|
90
|
|
|
|
|
90
|
|
|
|
|
22
|
|
|
|
|
22
|
|
Net income (loss) attributable to common shareholders
|
|
|
|
$
|
7,612
|
|
|
|
$
|
(38,626
|
)
|
|
|
$
|
7,359
|
|
|
|
$
|
(2,941
|
)
|
Diluted earnings (loss) per share attributable to DXP Enterprises,
Inc.
|
|
|
|
$
|
0.49
|
|
|
|
$
|
(2.68
|
)
|
|
|
$
|
0.42
|
|
|
|
$
|
(0.20
|
)
|
Weighted average common shares and common equivalent shares
outstanding
|
|
|
|
|
15,882
|
|
|
|
|
14,423
|
|
|
|
|
17,411
|
|
|
|
|
14,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT DATA
|
($ thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
Three Months ended December 31,
|
|
|
|
|
Service Centers
|
|
|
IPS
|
|
|
SCS
|
|
|
Total
|
|
|
Service Centers
|
|
|
IPS
|
|
|
SCS
|
|
|
Total
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
$
|
621,007
|
|
|
$
|
187,124
|
|
|
$
|
153,961
|
|
|
$
|
962,092
|
|
|
$
|
139,655
|
|
|
$
|
45,510
|
|
|
$
|
37,126
|
|
|
$
|
222,291
|
Operating income for reportable segments
|
|
|
|
$
|
47,634
|
|
|
$
|
9,867
|
|
|
$
|
15,449
|
|
|
$
|
72,950
|
|
|
$
|
12,155
|
|
|
$
|
2,444
|
|
|
$
|
3,838
|
|
|
$
|
18,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
$
|
826,588
|
|
|
$
|
254,829
|
|
|
$
|
165,626
|
|
|
$
|
1,247,043
|
|
|
$
|
187,376
|
|
|
$
|
52,202
|
|
|
$
|
39,103
|
|
|
$
|
278,681
|
Operating income for reportable segments
|
|
|
|
$
|
78,170
|
|
|
$
|
21,584
|
|
|
$
|
14,213
|
|
|
$
|
113,967
|
|
|
$
|
16,228
|
|
|
$
|
906
|
|
|
$
|
3,378
|
|
|
$
|
20,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Income for Reportable Segments
|
($ thousands)
|
|
|
|
|
|
Years Ended December 31,
|
|
|
Three Months Ended December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Operating income for reportable segments
|
|
|
|
$ 72,950
|
|
|
|
$
|
113,967
|
|
|
|
$
|
18,437
|
|
|
|
$
|
20,512
|
|
Adjustment for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B27 Settlement
|
|
|
|
-
|
|
|
|
|
7,348
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Impairment
|
|
|
|
-
|
|
|
|
|
68,735
|
|
|
|
|
-
|
|
|
|
|
9,847
|
|
Amortization of intangibles
|
|
|
|
18,061
|
|
|
|
|
20,621
|
|
|
|
|
4,504
|
|
|
|
|
4,714
|
|
Corporate expense
|
|
|
|
35,557
|
|
|
|
|
45,179
|
|
|
|
|
6,381
|
|
|
|
|
10,349
|
|
Total operating income (loss)
|
|
|
|
19,332
|
|
|
|
|
(27,916
|
)
|
|
|
|
7,552
|
|
|
|
|
(4,398
|
)
|
Interest expense
|
|
|
|
15,564
|
|
|
|
|
10,932
|
|
|
|
|
3,866
|
|
|
|
|
3,027
|
|
Other expense (income), net
|
|
|
|
(5,906
|
)
|
|
|
|
72
|
|
|
|
|
(5,509
|
)
|
|
|
|
139
|
|
Income (loss) before income taxes
|
|
|
|
$ 9,674
|
|
|
|
$
|
(38,920
|
)
|
|
|
$
|
9,195
|
|
|
|
$
|
(7,564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of Non-GAAP Financial Information
The following table is a reconciliation of Adjusted EBITDA**, a non-GAAP
financial measure, to income before income taxes, calculated and
reported in accordance with U.S. GAAP ($ thousands)
|
|
|
|
Years Ended December 31,
|
|
|
Three Months Ended December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
$
|
9,674
|
|
|
$
|
(38,920
|
)
|
|
|
$
|
9,195
|
|
|
$
|
(7,564
|
)
|
Plus: impairment expense
|
|
|
|
|
-
|
|
|
|
68,735
|
|
|
|
|
-
|
|
|
|
9,847
|
|
Plus: interest expense
|
|
|
|
|
15,564
|
|
|
|
10,932
|
|
|
|
|
3,866
|
|
|
|
3,027
|
|
Plus: depreciation and amortization
|
|
|
|
|
29,994
|
|
|
|
33,243
|
|
|
|
|
7,367
|
|
|
|
8,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
55,232
|
|
|
$
|
73,990
|
|
|
|
$
|
20,428
|
|
|
$
|
13,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**Adjusted EBITDA – earnings before impairments, interest, taxes,
depreciation and amortization
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170331005159/en/
Source: DXP Enterprises, Inc.