-
$250.7 million in sales, a sequential increase of 5.1 percent
-
GAAP diluted EPS of $0.23
-
$16.9 million in earnings before interest, taxes, depreciation, and
amortization (“EBITDA”), a sequential increase of 9.5 percent
HOUSTON--(BUSINESS WIRE)--
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial
results for the second quarter ended June 30, 2017. The following are
results for the three and six months ended June 30, 2017 compared to the
three and six months ended June 30, 2016 and three months ended March
31, 2017, where appropriate. A reconciliation of the non-GAAP financial
measures is in the back of this press release.
DXPE 2017 Second Quarter Financial Highlights:
-
Sales increased 5.1 percent to $250.7 million, compared to $238.5
million for the first quarter of 2017 and $256.2 million for the
second quarter of 2016, a decrease of 2.2 percent compared to the
second quarter of 2016. Adjusting for the sale of Vertex, sales
increased 0.9 percent.
-
Earnings per diluted share was $0.23 based upon 18.2 million diluted
shares, compared to $0.17 per share in the first quarter of 2017,
based on 18.2 million diluted shares. In the second quarter of 2016,
earnings per diluted share was $0.34 on 15.3 million diluted shares.
-
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $16.9 million, or 6.8 percent of sales, compared to $15.5
million for the first quarter of 2017, an increase of 9.5 percent.
EBITDA increased 3.8 percent compared to the second quarter of 2016.
-
Free cash flow (cash flow from operating activities less capital
expenditures) for the second quarter was $9.5 million or 56 percent of
EBITDA.
David R. Little, Chairman and CEO, remarked, “We are pleased to report a
strong second quarter and our outlook for the second half of 2017
continues to be positive. We continue to believe momentum is building in
our business. DXP’s second quarter sales included sequential increases
across Service Centers and Supply Chain Services. Total DXP EBITDA
increased sequentially along with earnings per diluted share. The oil &
gas and industrial economy remain firm with meaningful sales growth
within Service Centers. Most of our customers and the markets we serve
continue to show improvement. We remain encouraged by the sequential
increases despite the continued choppiness from time-to-time in our key
end markets. Thank you to all our customers and DXPeople for the support
and effort.
“DXP’s second quarter 2017 sales were $250.7 million, or a 5.1 percent
increase over the first quarter. During the second quarter, sales were
$164.7 million for Service Centers, $44.5 million for Innovative Pumping
Solutions and $41.5 million for Supply Chain Services. Business segment
operating income increased 14 percent sequentially and 7 percent
year-over-year. We remain focused on serving existing and new customers,
continuing to focus on enhancing and improving our operational
execution, investing in products and people and pursuing a capital
structure that aligns DXP for the future.”
Kent Yee, CFO, added, “Our second quarter sequential sales growth of 5.1
percent was great to see. Our financial results reflect our continued
focus on our customers and improving market conditions. We turned DXP’s
sales growth into a 9 percent sequential increase in EBITDA and 35
percent increase in earnings per diluted share. Total debt outstanding
as of June 30, 2017 was $221 million. We are excited by our sales team’s
focus on organic sales growth and teamwork as well as the overall tone
at DXP. We look forward to continuing the momentum into the second half
of the year.”
We will host a conference call regarding 2017 second quarter results on
the Company’s website (www.dxpe.com)
Tuesday, July 25, 2017 at 4 pm CDT. 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 second quarter business segment results:
-
Service Centers’ revenue for the
second quarter was $164.7 million, a 10.8 percent sequential increase
and increase of 1.8 percent over the same period in 2016. Adjusting
for the sale of Vertex, sales increased 7.0 percent over the same
period in 2016. Operating income margin was 11.2 percent, a 221 basis
point improvement over the first quarter of 2017 and 366 basis point
improvement over the second quarter of 2016, on a same store sales
basis.
-
Innovative Pumping Solutions’
revenue for the second quarter was $44.5 million, a 9.4 percent
sequential decrease and 18.2 percent decrease year-over-year with a
4.0 percent operating income margin, a 320 basis point decline from
the first quarter.
-
Supply Chain Services’ revenue for
the second quarter was $41.5 million, a 1.8 percent sequential
increase and 3.6 percent increase year-over-year with a 9.0 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 June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$
|
250,698
|
|
|
|
$
|
256,215
|
|
|
|
|
$
|
489,225
|
|
|
|
$
|
509,776
|
|
Cost of sales
|
|
|
|
181,762
|
|
|
|
|
184,612
|
|
|
|
|
|
355,774
|
|
|
|
|
369,355
|
|
Gross profit
|
|
|
|
68,936
|
|
|
|
|
71,603
|
|
|
|
|
|
133,451
|
|
|
|
|
140,421
|
|
Selling, general and administrative expenses
|
|
|
|
58,679
|
|
|
|
|
62,754
|
|
|
|
|
|
114,958
|
|
|
|
|
133,574
|
|
Operating income
|
|
|
|
10,257
|
|
|
|
|
8,849
|
|
|
|
|
|
18,493
|
|
|
|
|
6,847
|
|
Other expense (income), net
|
|
|
|
57
|
|
|
|
|
9
|
|
|
|
|
|
(171
|
)
|
|
|
|
(146
|
)
|
Interest expense
|
|
|
|
3,992
|
|
|
|
|
3,951
|
|
|
|
|
|
7,645
|
|
|
|
|
7,360
|
|
Income (loss) before income taxes
|
|
|
|
6,208
|
|
|
|
|
4,889
|
|
|
|
|
|
11,019
|
|
|
|
|
(367
|
)
|
Provision (benefit) for income taxes
|
|
|
|
2,239
|
|
|
|
|
(197
|
)
|
|
|
|
|
4,056
|
|
|
|
|
(205
|
)
|
Net income (loss)
|
|
|
|
3,969
|
|
|
|
|
5,086
|
|
|
|
|
|
6,963
|
|
|
|
|
(162
|
)
|
Less: Net loss attributable to non-controlling interest
|
|
|
|
(166
|
)
|
|
|
|
(84
|
)
|
|
|
|
|
(305
|
)
|
|
|
|
(220
|
)
|
Net income attributable to DXP Enterprises, Inc.
|
|
|
|
4,135
|
|
|
|
|
5,170
|
|
|
|
|
|
7,268
|
|
|
|
|
58
|
|
Preferred stock dividend
|
|
|
|
22
|
|
|
|
|
22
|
|
|
|
|
|
45
|
|
|
|
|
45
|
|
Net income attributable to common shareholders
|
|
|
$
|
4,113
|
|
|
|
$
|
5,148
|
|
|
|
|
$
|
7,223
|
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to DXP Enterprises, Inc.
|
|
|
$
|
0.23
|
|
|
|
$
|
0.34
|
|
|
|
|
$
|
0.40
|
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and common equivalent shares
outstanding
|
|
|
|
18,244
|
|
|
|
|
15,343
|
|
|
|
|
|
18,246
|
|
|
|
|
15,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT DATA
|
($ thousands, unaudited)
|
|
|
|
|
|
|
|
Sales by Segment
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
Service Centers
|
|
|
$
|
164,749
|
|
|
$
|
161,832
|
|
|
|
$
|
313,461
|
|
|
$
|
329,334
|
Innovative Pumping Solutions
|
|
|
|
44,470
|
|
|
|
54,353
|
|
|
|
|
93,528
|
|
|
|
101,784
|
Supply Chain Services
|
|
|
|
41,479
|
|
|
|
40,030
|
|
|
|
|
82,236
|
|
|
|
78,658
|
Total DXP
|
|
|
$
|
250,698
|
|
|
$
|
256,215
|
|
|
|
$
|
489,225
|
|
|
$
|
509,776
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income by Segment
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
Service Centers
|
|
|
$
|
18,417
|
|
|
$
|
12,597
|
|
|
|
$
|
31,758
|
|
|
$
|
22,134
|
Innovative Pumping Solutions
|
|
|
|
1,755
|
|
|
|
5,487
|
|
|
|
|
5,264
|
|
|
|
5,793
|
Supply Chain Services
|
|
|
|
3,718
|
|
|
|
4,202
|
|
|
|
|
7,776
|
|
|
|
7,682
|
Total DXP
|
|
|
$
|
23,890
|
|
|
$
|
22,286
|
|
|
|
$
|
44,798
|
|
|
$
|
35,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Income for Reportable Segments
|
($ thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
Operating income for reportable segments
|
|
|
$
|
23,890
|
|
|
$
|
22,286
|
|
|
|
$
|
44,798
|
|
|
|
$
|
35,609
|
|
Adjustment for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles
|
|
|
|
4,291
|
|
|
|
4,510
|
|
|
|
|
8,607
|
|
|
|
|
9,038
|
|
Corporate expense
|
|
|
|
9,342
|
|
|
|
8,927
|
|
|
|
|
17,698
|
|
|
|
|
19,724
|
|
Total operating income
|
|
|
|
10,257
|
|
|
|
8,849
|
|
|
|
|
18,493
|
|
|
|
|
6,847
|
|
Interest expense
|
|
|
|
3,992
|
|
|
|
3,951
|
|
|
|
|
7,645
|
|
|
|
|
7,360
|
|
Other expense (income), net
|
|
|
|
57
|
|
|
|
9
|
|
|
|
|
(171
|
)
|
|
|
|
(146
|
)
|
Income (loss) before income taxes
|
|
|
$
|
6,208
|
|
|
$
|
4,889
|
|
|
|
$
|
11,019
|
|
|
|
$
|
(367
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
$
|
6,208
|
|
|
$
|
4,889
|
|
|
|
$
|
11,019
|
|
|
$
|
(367
|
)
|
Plus: interest expense
|
|
|
|
3,992
|
|
|
|
3,951
|
|
|
|
|
7,645
|
|
|
|
7,360
|
|
Plus: depreciation and amortization
|
|
|
|
6,747
|
|
|
|
7,489
|
|
|
|
|
13,762
|
|
|
|
15,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
$
|
16,947
|
|
|
$
|
16,329
|
|
|
|
$
|
32,426
|
|
|
$
|
22,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: NCI loss before tax
|
|
|
|
269
|
|
|
|
136
|
|
|
|
|
493
|
|
|
|
355
|
|
Plus: Stock compensation expense
|
|
|
|
477
|
|
|
|
487
|
|
|
|
|
1,010
|
|
|
|
1,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
17,693
|
|
|
$
|
16,952
|
|
|
|
$
|
33,929
|
|
|
$
|
23,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**EBITDA – earnings before impairments, interest, taxes,
depreciation and amortization
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170725006358/en/
Source: DXP Enterprises, Inc.