-
$238.5 million in sales, a sequential increase of 7.3 percent
-
GAAP diluted EPS of $0.17
-
$15.5 million in earnings before interest, taxes, depreciation, and
amortization (“EBITDA”), a sequential increase of 4.6 percent,
adjusting for the one-time sale of Vertex
HOUSTON--(BUSINESS WIRE)--
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial
results for the first quarter ended March 31, 2017. The following are
results for the three months ended March 31, 2017 compared to the three
months ended March 31, 2016 and December 31, 2016, where appropriate. A
reconciliation of the non-GAAP financial measures is in the back of this
press release.
DXPE 2017 First Quarter Financial Highlights:
-
Sales increased 7.3 percent to $238.5 million, compared to $222.3
million for the fourth quarter of 2016 and $253.6 million for the
first quarter of 2016, a decrease of 5.9 percent compared to the first
quarter of 2016. Adjusting for the sale of Vertex, sales decreased 3.0
percent.
-
Earnings per diluted share was $0.17 based upon 18.2 million diluted
shares, compared to $0.42 per share in the fourth quarter of 2016,
based on 17.4 million diluted shares. In the first quarter of 2016,
the loss per diluted share was $0.35 on 14.5 million shares.
-
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $15.5 million, or 6.5 percent of sales, compared to $20.4
million for the fourth quarter of 2016, a decrease of 24.2 percent.
The decrease 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. Adjusting for the one-time sale of Vertex, first
quarter 2016 EBITDA sequentially increased 4.6 percent.
David R. Little, Chairman and CEO remarked, “Our first quarter results
reflect momentum building in our business. We are pleased with DXP’s
first quarter sales results which included sequential sales and
operating income growth across all three business segments. Total DXP
EBITDA also increased sequentially, adjusting for the one-time sale of
Vertex. We are encouraged by the sequential increases and believe we
could be in the early stages of a cyclical recovery. Thank you to all
our customers and DXPeople for the support and effort. DXP’s first
quarter 2017 sales were $238.5 million, or a 7.3 percent increase over
the fourth quarter. DXP’s industrial end markets, which is 51 percent of
our business, appears to have found some legs and shows signs of
positive upward movement. Oil and gas, which is the remaining 49 percent
of DXP, found a bottom in the third quarter of last year and is showing
signs of gradual improvement. During the first quarter, sales were
$148.7 million for Service Centers, $49.1 million for Innovative Pumping
Solutions and $40.8 million for Supply Chain Services. Business segment
operating income increased 13 percent sequentially and 57 percent
year-over-year.
We continue to anticipate a better fiscal year 2017. As such, we remain
focused on improving our ability to serve existing and new customers,
continuing to focus on enhancing and improving our operational
execution, investing in products and people and strategically aligning
DXP for the future.”
Mac McConnell, CFO added, “Our first quarter sequential sales growth of
7.3 percent was great to see after experiencing continual declines since
the fourth quarter of 2014. We turned this into a 9 percent sequential
increase in operating income during a period where DXP has seasonally
higher expenses. Total debt outstanding as of March 31, 2017 was $228.0
million. As discussed during our Q4 earnings call, we look forward to
and anticipate refinancing our debt structure in the near future. This
should provide DXP with more flexibility as we move towards growth. We
are excited by the tone at DXP and anticipate that this should begin to
show in our financial results.”
We will host a conference call regarding 2017 first quarter results on
the Company’s website (www.dxpe.com)
Monday, May 15, 2017 at 4 pm 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.
DXP Enterprises 2017 first quarter business segment results:
-
Service Centers’ revenue for the
first quarter was $148.7 million, a 6.5 percent sequential increase
and decline of 11.2 percent over the same period in 2016. Operating
income margin was 9.0 percent, a 27 basis point improvement over the
fourth quarter of 2016.
-
Innovative Pumping Solutions’
revenue for the first quarter was $49.1 million, a 7.8 percent
sequential increase and 3.4 percent increase year-over-year with a 7.2
percent operating income margin, a 178 basis point improvement from
the fourth quarter.
-
Supply Chain Services’ revenue for
the first quarter was $40.8 million, a 9.8 percent sequential increase
and 5.5 percent increase year-over-year with a 10.0 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
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
($ thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
$
|
238,527
|
|
|
|
|
$
|
253,561
|
|
Cost of sales
|
|
|
|
|
|
174,012
|
|
|
|
|
|
184,743
|
|
Gross profit
|
|
|
|
|
|
64,515
|
|
|
|
|
|
68,818
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
56,279
|
|
|
|
|
|
70,820
|
|
Operating income (loss)
|
|
|
|
|
|
8,236
|
|
|
|
|
|
(2,002
|
)
|
Other expense (income), net
|
|
|
|
|
|
(228
|
)
|
|
|
|
|
(155
|
)
|
Interest expense
|
|
|
|
|
|
3,653
|
|
|
|
|
|
3,409
|
|
Income (loss) before income taxes
|
|
|
|
|
|
4,811
|
|
|
|
|
|
(5,256
|
)
|
Provision (benefit) for income taxes
|
|
|
|
|
|
1,817
|
|
|
|
|
|
(8
|
)
|
Net income (loss)
|
|
|
|
|
|
2,994
|
|
|
|
|
|
(5,248
|
)
|
Less: Net income (loss) attributable to non-controlling interest
|
|
|
|
|
|
(139
|
)
|
|
|
|
|
(136
|
)
|
Net income (loss) attributable to DXP Enterprises, Inc.
|
|
|
|
|
|
3,133
|
|
|
|
|
|
(5,112
|
)
|
Preferred stock dividend
|
|
|
|
|
|
23
|
|
|
|
|
|
23
|
|
Net income (loss) attributable to common shareholders
|
|
|
|
|
$
|
3,110
|
|
|
|
|
$
|
(5,135
|
)
|
Diluted earnings (loss) per share attributable to DXP Enterprises,
Inc.
|
|
|
|
|
$
|
0.17
|
|
|
|
|
$
|
(0.35
|
)
|
Weighted average common shares and common equivalent shares
outstanding
|
|
|
|
|
|
18,249
|
|
|
|
|
|
14,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT DATA
($ thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales by Segment Three Months Ended
March 31,
|
|
|
|
Operating Income by Segment Three
Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
Service Centers
|
|
|
$
|
148,713
|
|
|
$
|
167,502
|
|
|
|
$
|
13,340
|
|
|
|
|
$
|
9,536
|
|
Innovative Pumping Solutions
|
|
|
|
49,058
|
|
|
|
47,431
|
|
|
|
|
3,510
|
|
|
|
|
|
306
|
|
Supply Chain Services
|
|
|
|
40,756
|
|
|
|
38,628
|
|
|
|
|
4,058
|
|
|
|
|
|
3,480
|
|
Total DXP
|
|
|
$
|
238,527
|
|
|
$
|
253,561
|
|
|
|
$
|
20,908
|
|
|
|
|
$
|
13,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Income for Reportable Segments
($ thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
2016
|
Operating income for reportable segments
|
|
|
|
|
|
|
|
|
|
$
|
20,908
|
|
|
|
|
$
|
13,322
|
|
Adjustment for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles
|
|
|
|
|
|
|
|
|
|
|
4,316
|
|
|
|
|
|
4,528
|
|
Corporate expense
|
|
|
|
|
|
|
|
|
|
|
8,356
|
|
|
|
|
|
10,796
|
|
Total operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
8,236
|
|
|
|
|
|
(2,002
|
)
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
3,653
|
|
|
|
|
|
3,409
|
|
Other expense (income), net
|
|
|
|
|
|
|
|
|
|
|
(228
|
)
|
|
|
|
|
(155
|
)
|
Income (loss) before income taxes
|
|
|
|
|
|
|
|
|
|
$
|
4,811
|
|
|
|
|
$
|
(5,256
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
Three Months Ended March 31,
|
|
|
Three Months Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
$
|
4,811
|
|
|
$
|
(5,256
|
)
|
|
|
$
|
9,195
|
Plus: interest expense
|
|
|
|
3,653
|
|
|
|
3,409
|
|
|
|
|
3,866
|
Plus: depreciation and amortization
|
|
|
|
7,015
|
|
|
|
7,546
|
|
|
|
|
7,367
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
$
|
15,479
|
|
|
$
|
5,699
|
|
|
|
$
|
20,428
|
|
|
|
|
|
|
|
|
|
|
Plus: NCI before tax
|
|
|
|
224
|
|
|
|
219
|
|
|
|
|
400
|
Plus: Stock compensation expense
|
|
|
|
533
|
|
|
|
848
|
|
|
|
|
1,636
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
16,236
|
|
|
$
|
6,766
|
|
|
|
$
|
22,464
|
|
|
|
|
|
|
|
|
|
|
**Adjusted EBITDA – earnings before impairments, interest, taxes,
depreciation and amortization
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170515006503/en/
Source: DXP Enterprises, Inc.