- 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
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 million in 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 MeasuresDXP 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 EndedDecember
31,
Twelve Months EndedDecember
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 EndedDecember
31,
Twelve Months EndedDecember
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 EndedDecember
31,
Twelve Months EndedDecember
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 EndedDecember
31,
Twelve Months EndedDecember
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 EndedDecember
31,
Twelve Months EndedDecember
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 EndedDecember
31,
Twelve Months EndedDecember
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 Yee713-996-4700Senior Vice President, CFOwww.dxpe.com
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