- $311.2 million in sales, up 8.8
percent, compared to $285.9 million in sales in Q1 2018, led by
Supply Chain Services
- Net income of $7.3 million versus $4.5
million compared to Q1 2018
- GAAP diluted EPS of $0.40, compared to
$0.24 in Q1 2018
- $21.1 million in earnings before
interest, taxes, depreciation and amortization (“EBITDA”) versus
$17.9 million in Q1 2018
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced
financial results for the first quarter ended March 31, 2019.
The following are results for the three months ended March 31,
2019, compared to the three months ended March 31, 2018. A
reconciliation of the non-GAAP financial measures can be found in
the back of this press release.
First Quarter 2019 financial highlights:
- Sales increased 8.8 percent to $311.2
million, compared to $285.9 million for the first quarter of
2018.
- Earnings per diluted share for the
first quarter was $0.40 based upon 18.4 million diluted shares,
compared to $0.24 per share in the first quarter of 2018.
- Earnings before interest, taxes,
depreciation and amortization (EBITDA) for the first quarter was
$21.1 million compared to $17.9 million for the first quarter of
2018, an increase of 17.7 percent. EBITDA as a percentage of sales
was 6.8 percent and 6.3 percent, respectively, comparing the first
quarter of 2019 versus 2018.
David R. Little, Chairman and CEO commented, “We are off to a
good start again in 2019. Our first quarter performance shows the
team maintained momentum and delivered on expected results. The oil
and gas and industrial economy continues to remain firm with all
key indicators remaining positive. During the first quarter, we
achieved 8.8 percent organic sales growth and believe we continue
to expand our leading market positions across our business
segments. Our strong earnings per share growth speaks to our team's
execution and focus on continuous improvement. DXP’s first quarter
2019 sales were $311.2 million while EBITDA increased 17.7 percent
year-over-year. In terms of our business segments for the first
quarter of 2019, sales were $186.2 million for Service Centers,
$74.7 million for Innovative Pumping Solutions and $50.3 million
for Supply Chain Services. Business segment operating income
increased 13.7 percent year-over-year. We delivered on our
financial results as our markets and customers continue to perform.
Entering the second quarter, we look forward to continued strength
in our end markets while we drive operational excellence.”
Kent Yee, CFO, remarked, “The first quarter of 2019 financial
results were great to see. Our year-over-year financial results
continue to reflect the growth we experienced in fiscal 2018. Solid
sales growth, accompanied by in-line diluted earnings per share.
Our current run rate sales volumes should allow us to leverage
operating expenses, deliver on profitability and will lead to
strong cash flow generation. We remain confident in the momentum
continuing in our business segments and a strong 2019. Total debt
outstanding as of March 31, 2019 was $247.9 million. DXP’s
secured leverage ratio or net debt to EBITDA ratio was
2.2:1.0.”
We will host a conference call regarding 2019 first quarter
results on the Company’s website (www.dxpe.com) Tuesday, May 7,
2019 at 10 am 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.
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 EndedMarch 31, 2019 2018
Sales $ 311,225 $ 285,936 Cost of sales 227,025
209,491 Gross profit 84,200 76,445 Selling, general and
administrative expenses 69,384 65,296 Operating
income 14,816 11,149 Other income, net (33 ) (22 ) Interest expense
5,040 5,041 Income before income taxes 9,809 6,130
Provision for income taxes 2,622 1,636 Net income
7,187 4,494 Net loss attributable to NCI* (104 ) (57 ) Net income
attributable to DXP Enterprises, Inc. 7,291 4,551 Preferred stock
dividend 23 23 Net income attributable to common
shareholders $ 7,268 $ 4,528 Diluted earnings
per share attributable to DXP Enterprises, Inc. $ 0.40 $
0.24 Weighted average common shares and common
equivalent shares outstanding 18,406 18,741
*NCI represents non-controlling interest
Business segment financial highlights:
- Service
Centers’ revenue for the first quarter was $186.2 million,
an increase of 6.2 percent year-over-year with a 10.2 percent
operating income margin.
- Innovative
Pumping Solutions’ revenue for the first quarter was $74.7
million, an increase of 10.5 percent year-over-year with a 9.1
percent operating income margin.
- Supply Chain
Services’ revenue for the first quarter was $50.3 million,
an increase of 17.2 percent year-over-year with an 8.1 percent
operating income margin.
SEGMENT DATA
($ thousands, unaudited)
Sales Operating Income
Three Months EndedMarch 31, Three Months
EndedMarch 31, Business Segment 2019
2018 2019 2018 Service Centers $
186,179 $ 175,362 $ 18,980 $ 15,830 Innovative Pumping Solutions
74,723 67,642 6,799 6,382 Supply Chain Services 50,323
42,932 4,086 4,054
Total DXP Sales $
311,225 $ 285,936 $
29,865 $ 26,266
Reconciliation of Operating Income for
Reportable Segments
($ thousands, unaudited)
Three Months EndedMarch 31,
2019 2018 Operating income for reportable
segments $ 29,865 $ 26,266 Adjustment for: Amortization of
intangibles 3,814 4,358 Corporate expenses 11,235 10,759
Total operating income 14,816 11,149 Interest expense 5,040
5,041 Other income, net (33 ) (22 )
Income before income
taxes 9,809 6,130
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 net income, calculated and
reported in accordance with U.S. GAAP.
Three Months EndedMarch 31,
Three MonthsEndedDecember
31,
2019 2018 2018 Net income 7,187 4,494
11,102 Plus: income tax expense 2,622 1,636 4,223 Plus: interest
expense 5,040 5,041 4,978 Plus: depreciation and amortization 6,206
6,714 6,454
EBITDA 21,055
17,885 26,757 Plus: NCI loss before tax
137 57 37 Plus: stock compensation expense 505 736 526
Adjusted EBITDA 21,697
18,678 27,320
DXP ENTERPRISES, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
($ thousands, except per share
amounts)
As of March 31,2019
As of December 31,2018
ASSETS Current assets: Cash $ 30,606 $ 40,304
Restricted cash 122 215 Accounts receivable, net of allowances for
doubtful accounts 197,267 191,829 Inventories 121,754 114,830 Costs
and estimated profits in excess of billings 38,150 32,514 Prepaid
expenses and other current assets 5,597 4,938 Federal income taxes
receivable — 960
Total current assets $
393,496 $ 385,590 Property and equipment, net
51,404 51,330 Goodwill 194,052 194,052 Other intangible assets, net
of accumulated amortization 63,609 67,207 Operating lease
right-of-use assets 70,851 — Other long-term assets 1,795
1,783
Total assets $ 775,207 $
699,962 LIABILITIES AND EQUITY Current
liabilities: Current maturities of long-term debt $ 3,414 $
3,407 Trade accounts payable 92,460 87,407 Accrued wages and
benefits 16,882 21,275 Customer advances 3,867 3,223 Billings in
excess of costs and estimated profits 8,207 10,696 Federal income
taxes payable 67 — Current-portion operating lease liability 17,660
— Other current liabilities 16,075 17,269
Total current
liabilities $ 158,632 $ 143,277
Long-term debt, less unamortized debt issuance costs 236,591
236,979 Long-term operating lease liability 52,993 — Other
long-term liabilities 988 2,819 Deferred income taxes 9,422
8,633
Total long-term liabilities $ 299,994
$ 248,431 Total Liabilities $
458,626 $ 391,708 Equity:
Total DXP Enterprises, Inc. equity 315,279
306,848 Non-controlling interest 1,302 1,406
Total
Equity $ 316,581 $ 308,254
Total liabilities and equity $ 775,207
$ 699,962
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 EndedMarch 31, 2019
2018 Net cash used in operating activities
(5,310 ) (808 ) Less: purchase of equipment 2,312 791 Plus:
proceeds from sales of assets 29 —
Free cash
flow (7,593 ) (1,599 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190507005264/en/
Kent Yee713-996-4700Senior Vice President, CFOwww.dxpe.com
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