-
Fiscal 2018 sales of $1.2 billion, up 20.8 percent, including 16.1
percent organic growth
-
Full year GAAP diluted EPS of $1.94, up 108.6 percent versus fiscal
2017
-
Net income of $35.5 million versus $16.8 million compared to fiscal
2017
-
$95.8 million in earnings before interest, taxes, depreciation and
amortization (“EBITDA”)
-
Free cash flow of $29.1 million, including $2.6 million in proceeds
from the sale of assets
-
Net debt of $208.4 million with $40.3 million in cash on the
balance sheet
HOUSTON--(BUSINESS WIRE)--
DXP Enterprises, Inc. (NASDAQ:DXPE) today announced financial
results for the fourth quarter and year ended December 31, 2018. The
following are results for the three months and twelve months ended
December 31, 2018, compared to the three months and twelve months ended
December 31, 2017. A reconciliation of the non-GAAP financial measures
can be found in the back of this press release.
Fourth Quarter 2018 financial highlights:
-
Sales increased 17.1 percent to $311.0 million, compared to $265.6
million for the fourth quarter of 2017.
-
Earnings per diluted share for the fourth quarter was $0.60 based upon
18.4 million diluted shares, compared to $0.36 per share in the fourth
quarter of 2017, based on 18.2 million diluted shares.
-
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the fourth quarter was $26.8 million compared to $15.8
million for the fourth quarter of 2017, an increase of 69.3 percent.
EBITDA as a percentage of sales was 8.6 percent and 6.0 percent,
respectively.
Fiscal Year 2018 financial highlights:
-
Sales increased 20.8 percent to $1.2 billion , compared to $1.0
billion for 2017.
-
Earnings per diluted share for 2018 of $1.94 based upon 18.4 million
diluted shares, compared to $0.93 per share in 2017, based on 18.2
million diluted shares.
-
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the 2018 was $95.8 million compared to $61.7 million for
2017, an increase of 55.2 percent. EBITDA as a percentage of sales was
7.9 percent and 6.1 percent, respectively.
David R. Little, Chairman and CEO commented, “We are pleased with our
fourth quarter results which wrapped up a tremendous fiscal 2018. In
2018, we returned to the sales growth we are accustomed to experiencing.
This was driven through a combination of strong organic sales from our
core, complemented by the acquisition of Application Specialties. This
turned into 20.8 percent total sales growth with 16.1 percent organic
growth. During the year, we delivered strong sales and EBITDA margin
expansion, leading to significant earnings per share. We believe we
continue to gain market share in many of our businesses driven by our
focus on being fast, convenience, and technical experts for our
customers. 'DXPeople you can trust.'
“DXP's fiscal 2018 total sales were $1.2 billion. Fiscal 2018 sales for
Innovative Pumping Solutions grew 43.0 percent, Service Centers grew
17.0 percent and Supply Chain Services grew 8.0 percent. DXP produced
total EBITDA of $95.8 million growing 55.2 percent over fiscal 2017.
“We continue to expect strong organic sales growth, EBITDA margin
enhancement and strong cash flow generation. We are watching our key end
markets closely, as the new normal seems to be periodic episodes of
volatility as we experienced during the back of 2018. In fiscal 2019, we
will build on the positive momentum generated in our business in 2018
and further the execution of our growth strategy, investments in our
people and processes and maintain our cost discipline."
Kent Yee, CFO commented, “Fiscal 2018 financial performance reflects the
execution of our financial goals and strategy. Total sales and EBITDA
grew 20.8 percent and 55.2 percent, respectively. We delivered strong
sales growth, operating margin expansion and thus operating leverage of
2.7x and notable free cash flow generation. Our fiscal 2018 diluted
earnings per share was $1.94. We are pleased with the fourth quarter and
year-end results. Our core business remains sound and continues to
rebound and perform well. Our balance sheet is positioned to support the
business over the long term. DXP ended the year with $40.3 millionin
cash on the balance sheet and net debt of $208.4 million. DXP's secured
leverage ratio or net debt to EBITDA was 2.2:1.0. We have momentum going
to fiscal 2019 and we expect to drive both organic and acquisition
driven growth."
We will host a conference call regarding 2018 fourth quarter and
year-ended results on the Company’s website (www.dxpe.com)
Thursday, March 7, 2019 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 on-line archived replay will be available immediately after the
conference call at www.dxpe.com.
Business Segment financial highlights:
-
Service Centers'
revenue
for the fiscal year was $750.0 million, an increase of 17.0 percent
year-over-year with a 10.8 percent operating income margin.
-
Revenue for the fourth quarter was $193.3 million, an increase of
15.8 percent year-over-year with a 11.6 percent operating income
margin. Organic sales increased 8.4 percent year-over-year.
-
Innovative Pumping Solutions’
revenue for the fiscal year was $291.7 million, an increase of 43.0
percent year over year with an 11.6 percent operating income margin.
-
Revenue for the fourth quarter was $73.1 million, an increase of
23.0 percent year-over-year with a 13.4 percent operating income
margin.
-
Supply Chain Services’
revenue for
the fiscal year was $174.5 million, an increase of 8.0 percent
year-over-year with a 9.3 percent operating margin.
-
Revenue for the fourth quarter was $44.5 million, an increase of
13.6 percent year-over-year with a 9.0 percent operating income
margin.
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 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
($ thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
$
|
311,006
|
|
|
|
$
|
265,627
|
|
|
|
$
|
1,216,197
|
|
|
|
$
|
1,006,782
|
|
Cost of sales
|
|
|
|
224,429
|
|
|
|
194,460
|
|
|
|
883,989
|
|
|
|
735,201
|
|
Gross profit
|
|
|
|
86,577
|
|
|
|
71,167
|
|
|
|
332,208
|
|
|
|
271,581
|
|
Selling, general and administrative expenses
|
|
|
|
66,148
|
|
|
|
62,680
|
|
|
|
263,757
|
|
|
|
238,091
|
|
Operating income
|
|
|
|
20,429
|
|
|
|
8,487
|
|
|
|
68,451
|
|
|
|
33,490
|
|
Other (income) expense, net
|
|
|
|
126
|
|
|
|
(132
|
)
|
|
|
(1,192
|
)
|
|
|
(456
|
)
|
Interest expense
|
|
|
|
4,978
|
|
|
|
4,481
|
|
|
|
20,937
|
|
|
|
17,054
|
|
Income before income taxes
|
|
|
|
15,325
|
|
|
|
4,138
|
|
|
|
48,706
|
|
|
|
16,892
|
|
Provision for (benefit from) income taxes
|
|
|
|
4,223
|
|
|
|
(2,517
|
)
|
|
|
13,185
|
|
|
|
363
|
|
Net income
|
|
|
|
11,102
|
|
|
|
6,655
|
|
|
|
35,521
|
|
|
|
16,529
|
|
Net income (loss) attributable to NCI*
|
|
|
|
(20
|
)
|
|
|
1
|
|
|
|
(111
|
)
|
|
|
(359
|
)
|
Net income attributable to DXP Enterprises, Inc.
|
|
|
|
11,122
|
|
|
|
6,654
|
|
|
|
35,632
|
|
|
|
16,888
|
|
Preferred stock dividend
|
|
|
|
22
|
|
|
|
22
|
|
|
|
90
|
|
|
|
90
|
|
Net income attributable to common shareholders
|
|
|
|
$
|
11,100
|
|
|
|
$
|
6,632
|
|
|
|
$
|
35,542
|
|
|
|
$
|
16,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to DXP Enterprises, Inc.
|
|
|
|
$
|
0.60
|
|
|
|
$
|
0.36
|
|
|
|
$
|
1.94
|
|
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and common equivalent shares
outstanding
|
|
|
|
18,410
|
|
|
|
18,232
|
|
|
|
18,393
|
|
|
|
18,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*NCI represents non-controlling interest
|
|
|
|
|
|
|
|
|
|
SEGMENT DATA
|
($ thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
Sales
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Service Centers
|
|
|
|
$
|
193,343
|
|
|
|
$
|
166,951
|
|
|
|
$
|
750,044
|
|
|
|
$
|
641,275
|
Innovative Pumping Solutions
|
|
|
|
73,137
|
|
|
|
59,474
|
|
|
|
291,697
|
|
|
|
204,030
|
Supply Chain Services
|
|
|
|
44,526
|
|
|
|
39,201
|
|
|
|
174,456
|
|
|
|
161,477
|
Total DXP Sales
|
|
|
|
$
|
311,006
|
|
|
|
$
|
265,626
|
|
|
|
$
|
1,216,197
|
|
|
|
$
|
1,006,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
Operating Income
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Service Centers
|
|
|
|
$
|
22,366
|
|
|
|
$
|
15,941
|
|
|
|
$
|
80,718
|
|
|
|
$
|
63,250
|
Innovative Pumping Solutions
|
|
|
|
9,833
|
|
|
|
4,321
|
|
|
|
33,943
|
|
|
|
11,423
|
Supply Chain Services
|
|
|
|
4,008
|
|
|
|
3,693
|
|
|
|
16,204
|
|
|
|
15,451
|
Total Segment Operating Income
|
|
|
|
$
|
36,207
|
|
|
|
$
|
23,955
|
|
|
|
$
|
130,865
|
|
|
|
$
|
90,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Income for Reportable Segments
|
($ thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Operating income for reportable segments
|
|
|
|
$
|
36,207
|
|
|
|
$
|
23,955
|
|
|
|
$
|
130,865
|
|
|
|
$
|
90,124
|
|
Adjustment for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles
|
|
|
|
4,011
|
|
|
|
4,323
|
|
|
|
16,586
|
|
|
|
17,266
|
|
Corporate expenses
|
|
|
|
11,767
|
|
|
|
11,145
|
|
|
|
45,828
|
|
|
|
39,368
|
|
Total operating income
|
|
|
|
$
|
20,429
|
|
|
|
$
|
8,487
|
|
|
|
$
|
68,451
|
|
|
|
$
|
33,490
|
|
Interest expense
|
|
|
|
4,978
|
|
|
|
4,481
|
|
|
|
20,937
|
|
|
|
17,054
|
|
Other expense (income), net
|
|
|
|
126
|
|
|
|
(132
|
)
|
|
|
(1,192
|
)
|
|
|
(456
|
)
|
Income before income taxes
|
|
|
|
$
|
15,325
|
|
|
|
$
|
4,138
|
|
|
|
$
|
48,706
|
|
|
|
$
|
16,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of Non-GAAP Financial Information
($
thousands, unaudited)
The following table is a reconciliation of EBITDA and adjusted EBITDA, a
non-GAAP financial measure, to income before income taxes, calculated
and reported in accordance with U.S. GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Income before income taxes
|
|
|
|
$
|
15,325
|
|
|
|
$
|
4,138
|
|
|
|
$
|
48,706
|
|
|
|
$
|
16,892
|
Plus: interest expense
|
|
|
|
4,978
|
|
|
|
4,481
|
|
|
|
20,937
|
|
|
|
17,054
|
Plus: depreciation and amortization
|
|
|
|
6,454
|
|
|
|
7,188
|
|
|
|
26,164
|
|
|
|
27,786
|
EBITDA
|
|
|
|
26,757
|
|
|
|
15,807
|
|
|
|
95,807
|
|
|
|
61,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: NCI loss(gain) before tax
|
|
|
|
37
|
|
|
|
(1
|
)
|
|
|
157
|
|
|
|
577
|
Plus: Stock compensation expense
|
|
|
|
526
|
|
|
|
316
|
|
|
|
2,549
|
|
|
|
1,708
|
Adjusted EBITDA
|
|
|
|
27,320
|
|
|
|
16,122
|
|
|
|
98,513
|
|
|
|
64,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DXP ENTERPRISES, INC. AND SUBSIDIARIES
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
($ thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
December 31, 2017
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
|
40,304
|
|
|
|
$
|
22,047
|
Restricted Cash
|
|
|
|
215
|
|
|
|
3,532
|
Accounts receivable
|
|
|
|
191,829
|
|
|
|
167,272
|
Inventories
|
|
|
|
114,830
|
|
|
|
91,413
|
Costs and estimated profits in excess of billings
|
|
|
|
32,514
|
|
|
|
26,915
|
Prepaid expenses and other current assets
|
|
|
|
4,938
|
|
|
|
5,296
|
Federal income taxes receivable
|
|
|
|
960
|
|
|
|
1,440
|
Total current assets
|
|
|
|
$
|
385,590
|
|
|
|
$
|
317,915
|
Property and equipment, net
|
|
|
|
51,330
|
|
|
|
53,337
|
Goodwill
|
|
|
|
194,052
|
|
|
|
187,591
|
Other intangible assets
|
|
|
|
67,207
|
|
|
|
78,525
|
Other long-term assets
|
|
|
|
1,783
|
|
|
|
1,715
|
Total assets
|
|
|
|
$
|
699,962
|
|
|
|
$
|
639,083
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
|
$
|
3,407
|
|
|
|
$
|
3,381
|
Trade accounts payable
|
|
|
|
87,407
|
|
|
|
80,303
|
Accrued wages and benefits
|
|
|
|
21,275
|
|
|
|
18,483
|
Customer advances
|
|
|
|
3,223
|
|
|
|
2,189
|
Billings in excess of costs and estimated profits
|
|
|
|
10,696
|
|
|
|
4,249
|
Other current liabilities
|
|
|
|
17,269
|
|
|
|
16,220
|
Total current liabilities
|
|
|
|
$
|
143,277
|
|
|
|
$
|
124,825
|
Long-term debt, less unamortized debt issuance costs
|
|
|
|
236,979
|
|
|
|
238,643
|
Other long-term liabilities
|
|
|
|
2,819
|
|
|
|
—
|
Deferred income taxes
|
|
|
|
8,633
|
|
|
|
7,069
|
Total long-term liabilities
|
|
|
|
$
|
248,431
|
|
|
|
$
|
245,712
|
Total Liabilities
|
|
|
|
$
|
391,708
|
|
|
|
$
|
370,537
|
Equity:
|
|
|
|
|
|
|
|
Total DXP Enterprises, Inc. equity
|
|
|
|
$
|
306,848
|
|
|
|
$
|
267,979
|
Non-controlling interest
|
|
|
|
1,406
|
|
|
|
567
|
Total Equity
|
|
|
|
$
|
308,254
|
|
|
|
$
|
268,546
|
Total liabilities and equity
|
|
|
|
$
|
699,962
|
|
|
|
$
|
639,083
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of Non-GAAP Financial Information
($
thousands, unaudited)
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.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
25,998
|
|
|
|
$
|
4,017
|
|
|
|
$
|
35,840
|
|
|
|
$
|
12,544
|
Less: purchase of equipment
|
|
|
|
1,618
|
|
|
|
654
|
|
|
|
9,323
|
|
|
|
2,811
|
Plus: proceeds from sales of assets
|
|
|
|
12
|
|
|
|
—
|
|
|
|
2,558
|
|
|
|
—
|
Free cash flow
|
|
|
|
$
|
24,392
|
|
|
|
$
|
3,363
|
|
|
|
$
|
29,075
|
|
|
|
$
|
9,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190307005796/en/
Kent Yee
713-996-4700
Senior Vice President, CFO
www.dxpe.com
Source: DXP Enterprises, Inc.