-
$285.9 million in sales, up 19.9 percent compared to Q1 2017, and a
sequential increase of 7.6 percent
-
GAAP diluted EPS of $0.24, up 41.5 percent compared to Q1 2017
-
$17.9 million in earnings before interest, taxes, depreciation and
amortization (“EBITDA”)
-
Net debt of $238.6 million with $12.6 million in cash on the
balance sheet
HOUSTON--(BUSINESS WIRE)--
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial
results for the first quarter ended March 31, 2018. The following are
results for the three months ended March 31, 2018, compared to the three
months ended March 31, 2017. A reconciliation of the non-GAAP financial
measures can be found in the back of this press release.
First Quarter 2018 financial highlights:
-
Sales increased 19.9 percent to $285.9 million, compared to $238.5
million for the first quarter of 2017, and 7.6 percent compared to the
fourth quarter of 2017.
-
Earnings per diluted share for the first quarter was $0.24 based upon
18.7 million diluted shares, compared to $0.17 per share in the first
quarter of 2017, based on 18.2 million diluted shares
-
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the first quarter was $17.9 million compared to $15.5
million for the first quarter of 2017, an increase of 15.5 percent.
EBITDA as a percentage of sales was 6.3 percent and 6.5 percent,
respectively, comparing the first quarter of 2018 versus 2017.
David R. Little, Chairman and CEO, remarked, “During the first quarter
of 2018 we experienced broad-based demand improvement across our key end
markets and regions. DXP’s first quarter 2018 sales were $285.9 million,
or a 19.9 percent increase over the first quarter of 2017. DXP’s
positive results demonstrate how we have strengthened our business
organically and through acquisitions. Organic sales increased 15.4
percent and acquisitions added $10.6 million in sales. EBITDA grew 15.5
percent. During the first quarter, sales were $175.4 million for Service
Centers, $67.6 million for Innovative Pumping Solutions and $42.9
million for Supply Chain Services. Business segment operating income
increased 25.6 percent year-over-year and increased 9.6 percent
sequentially. Total DXP operating profit and EPS both grew on a
double-digit percentage basis versus the prior year, reflecting the
positive pull through and operating leverage we expect to continue. Our
customers and suppliers look to DXP to provide a broad portfolio of
products, value-added services and leading supply chain solutions.
Overall, we are very pleased with the progress DXP is making. I am
confident in our team’s ability to be customer driven experts in MROP
solutions and deliver value to our customer operations and supply chains
in 2018 and beyond.”
Kent Yee, CFO, added, “Our first quarter sequential and year-over-year
financial results were great to see. This is our fifth consecutive
quarter of sequential sales increases. We announced the acquisition of
Application Specialties, Inc., a leading provider of high tolerance and
standard cutting tools, abrasives, coolants and machine shop supplies.
We closed the ASI acquisition on January 1st and are excited
to welcome the ASI team to DXP. Total debt outstanding as of March 31,
2018 was $251.3 million. DXP’s secured leverage ratio or net debt to
EBITDA ratio was 3.4:1.0. We look forward to the momentum continuing and
a positive fiscal year 2018.”
We will host a conference call regarding 2018 first quarter results on
the Company’s website (www.dxpe.com)
Tuesday, May 8, 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.
Non-GAAP Financial Measures
DXP supplements reporting of net income 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
and free cash flow referred to in this press release are 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,
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
$
|
285,936
|
|
|
$
|
238,527
|
|
|
Cost of sales
|
|
|
|
|
|
|
209,491
|
|
|
|
174,012
|
|
|
Gross profit
|
|
|
|
|
|
|
76,445
|
|
|
|
64,515
|
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
65,296
|
|
|
|
56,279
|
|
|
Operating income
|
|
|
|
|
|
|
11,149
|
|
|
|
8,236
|
|
|
Other income, net
|
|
|
|
|
|
|
(22
|
)
|
|
|
(228
|
)
|
|
Interest expense
|
|
|
|
|
|
|
5,041
|
|
|
|
3,653
|
|
|
Income before income taxes
|
|
|
|
|
|
|
6,130
|
|
|
|
4,811
|
|
|
Provision for income taxes
|
|
|
|
|
|
|
1,636
|
|
|
|
1,817
|
|
|
Net income
|
|
|
|
|
|
|
4,494
|
|
|
|
2,994
|
|
|
Less: Net loss attributable to non-controlling interest
|
|
|
|
|
|
|
(57
|
)
|
|
|
(139
|
)
|
|
Net income attributable to DXP Enterprises, Inc.
|
|
|
|
|
|
|
4,551
|
|
|
|
3,133
|
|
|
Preferred stock dividend
|
|
|
|
|
|
|
23
|
|
|
|
23
|
|
|
Net income attributable to common shareholders
|
|
|
|
|
|
$
|
4,528
|
|
|
$
|
3,110
|
|
|
Diluted earnings per share attributable to DXP Enterprises, Inc.
|
|
|
|
|
|
$
|
0.24
|
|
|
$
|
0.17
|
|
|
Weighted average common shares and common equivalent shares
outstanding
|
|
|
|
|
|
|
18,741
|
|
|
|
18,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment financial highlights:
-
Service Centers’ revenue for the
first quarter was $175.4 million, an increase of 17.9 percent
year-over-year with a 9.0 percent operating income margin. Organic
sales increased 10.8 percent year-over-year.
-
Innovative Pumping Solutions’
revenue for the first quarter was $67.6 million, an increase of 37.9
percent year-over-year with a 9.4 percent operating income margin.
-
Supply Chain Services’ revenue for
the first quarter was $42.9 million, an increase of 5.3 percent
year-over-year with a 9.4 percent operating margin.
|
|
|
|
|
|
|
|
|
SEGMENT DATA
($ thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
by Segment
Three Months Ended
March
31,
|
|
|
Operating Income
by Segment
Three
Months Ended
March 31,
|
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
Service Centers
|
|
|
$
|
175,362
|
|
$
|
148,713
|
|
|
$
|
15,830
|
|
$
|
13,340
|
|
Innovative Pumping Solutions
|
|
|
|
67,642
|
|
|
49,058
|
|
|
|
6,382
|
|
|
3,510
|
|
Supply Chain Services
|
|
|
|
42,932
|
|
|
40,756
|
|
|
|
4,054
|
|
|
4,058
|
|
Total DXP
|
|
|
$
|
285,936
|
|
$
|
238,527
|
|
|
$
|
26,266
|
|
$
|
20,908
|
|
|
|
|
|
|
Reconciliation of Operating Income for Reportable Segments
($ thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Operating income for reportable segments
|
|
|
|
|
$
|
26,266
|
|
|
|
$
|
20,908
|
|
|
Adjustment for:
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles
|
|
|
|
|
|
4,358
|
|
|
|
|
4,316
|
|
|
Corporate expense
|
|
|
|
|
|
10,759
|
|
|
|
|
8,356
|
|
|
Total operating income
|
|
|
|
|
|
11,149
|
|
|
|
|
8,236
|
|
|
Interest expense
|
|
|
|
|
|
5,041
|
|
|
|
|
3,653
|
|
|
Other income, net
|
|
|
|
|
|
(22
|
)
|
|
|
|
(228
|
)
|
|
Income before income taxes
|
|
|
|
|
$
|
6,130
|
|
|
|
$
|
4,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, unaudited).
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
Three Months
Ended
December 31,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
$
|
6,130
|
|
|
$
|
4,811
|
|
|
$
|
4,138
|
|
|
Plus: interest expense
|
|
|
|
|
|
5,041
|
|
|
|
3,653
|
|
|
|
4,481
|
|
|
Plus: depreciation and amortization
|
|
|
|
|
|
6,714
|
|
|
|
7,015
|
|
|
|
7,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
$
|
17,885
|
|
|
$
|
15,479
|
|
|
$
|
15,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: NCI before tax
|
|
|
|
|
|
57
|
|
|
|
224
|
|
|
|
(1
|
)
|
|
Plus: Stock compensation expense
|
|
|
|
|
|
446
|
|
|
|
533
|
|
|
|
316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
$
|
18,388
|
|
|
$
|
16,236
|
|
|
$
|
16,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**Adjusted EBITDA – earnings before interest, taxes, depreciation
and amortization
|
|
|
|
|
|
DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
($ thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
March 31, 2018
|
|
|
|
As of
December 31, 2017
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
$
|
12,646
|
|
|
|
$
|
22,047
|
|
Restricted Cash
|
|
|
|
|
|
399
|
|
|
|
|
3,532
|
|
Trade accounts receivable, net of allowances for doubtful accounts
|
|
|
|
|
|
168,176
|
|
|
|
|
167,272
|
|
Inventories
|
|
|
|
|
|
103,194
|
|
|
|
|
91,413
|
|
Costs and estimated profits in excess of billings on
|
|
|
|
|
|
|
|
|
|
|
uncompleted contracts
|
|
|
|
|
|
35,534
|
|
|
|
|
26,915
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
4,580
|
|
|
|
|
5,296
|
|
Federal income taxes recoverable
|
|
|
|
|
|
-
|
|
|
|
|
1,440
|
|
Total current assets
|
|
|
|
|
|
324,529
|
|
|
|
|
317,915
|
|
Property and equipment, net
|
|
|
|
|
|
52,257
|
|
|
|
|
53,337
|
|
Goodwill
|
|
|
|
|
|
194,074
|
|
|
|
|
187,591
|
|
Other intangible assets, net of accumulated amortization
|
|
|
|
|
|
80,037
|
|
|
|
|
78,525
|
|
Other long-term assets
|
|
|
|
|
|
1,707
|
|
|
|
|
1,715
|
|
Total assets
|
|
|
|
|
$
|
652,605
|
|
|
|
$
|
639,083
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
|
|
$
|
3,387
|
|
|
|
$
|
3,381
|
|
Trade accounts payable
|
|
|
|
|
|
90,930
|
|
|
|
|
80,303
|
|
Accrued wages and benefits
|
|
|
|
|
|
14,411
|
|
|
|
|
18,483
|
|
Customer advances
|
|
|
|
|
|
2,718
|
|
|
|
|
2,189
|
|
Billings in excess of costs and estimated profits on uncompleted
contracts
|
|
|
|
|
|
4,156
|
|
|
|
|
4,249
|
|
Other current liabilities
|
|
|
|
|
|
16,152
|
|
|
|
|
16,220
|
|
Total current liabilities
|
|
|
|
|
|
131,754
|
|
|
|
|
124,825
|
|
Long-term debt, less current maturities and unamortized debt
issuance costs
|
|
|
|
|
|
238,217
|
|
|
|
|
238,643
|
|
Deferred income taxes
|
|
|
|
|
|
8,429
|
|
|
|
|
7,069
|
|
Total long-term liabilities
|
|
|
|
|
|
246,646
|
|
|
|
|
245,712
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
Total DXP Enterprises, Inc. equity
|
|
|
|
|
|
273,914
|
|
|
|
|
267,979
|
|
Non-controlling interest
|
|
|
|
|
|
291
|
|
|
|
|
567
|
|
Total Equity
|
|
|
|
|
|
274,205
|
|
|
|
|
268,546
|
|
Total liabilities and equity
|
|
|
|
|
$
|
652,605
|
|
|
|
$
|
639,083
|
|
|
The following table is a reconciliation of Free Cash Flow***, a non-GAAP
financial measure, to cash flow from operating activities, calculated
and reported in accordance with U.S. GAAP ($ thousands, unaudited).
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
|
$
|
(1,606
|
)
|
|
|
|
$
|
(2,190
|
)
|
|
Less: purchase of equipment
|
|
|
|
|
|
791
|
|
|
|
|
|
601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
|
$
|
(2,397
|
)
|
|
|
|
$
|
(2,791
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Outstanding Checks
|
|
|
|
|
|
17,130
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
|
|
|
$
|
14,733
|
|
|
|
|
$
|
(2,791
|
)
|
|
|
***Outstanding Checks – Accounting rules require companies to net
outstanding check balances against cash that is available. Prior to
DXP’s Q3 refinancing, DXP did not have cash on its balance sheet with
its primary lender to net the outstanding checks, thus they were
included in the accounts payable balance.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180508006616/en/
Source: DXP Enterprises, Inc.