- $327.2 million in sales, up 6.2 percent, compared to $308.0
million in sales in Q3 2018
- Net income of $13.1 million versus $8.4 million compared to Q3
2018
- GAAP diluted EPS of $0.71, compared to $0.46 in Q3 2018
- $28.2 million in earnings before interest, taxes, depreciation
and amortization (“EBITDA”)
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced
financial results for the third quarter ended September 30, 2019.
The following are results for the three months and nine months
ended September 30, 2019, compared to the three months and nine
months ended September 30, 2018. A reconciliation of the non-GAAP
financial measures can be found in the back of this press
release.
Third Quarter 2019 financial highlights:
- Sales increased 6.2 percent to $327.2 million, compared to
$308.0 million for the third quarter of 2018.
- Earnings per diluted share for the third quarter was $0.71
based upon 18.4 million diluted shares, compared to $0.46 per share
in the third quarter of 2018, based on 18.4 million diluted
shares.
- Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the third quarter was $28.2 million compared to $23.2
million for the third quarter of 2018, an increase of 21.4
percent.
David R. Little, Chairman and CEO commented, “DXP reported
excellent sales and net income for the third quarter. We are
pleased with our results, which reflect continued execution of our
strategy and a focus on being customer driven experts in MROP
solutions. Underlying demand in our end markets has wavered but we
continue to take market share and focus on execution. We achieved
6.2 percent sales growth, maintained EBITDA margins and drove
outstanding diluted earnings per share growth. During the third
quarter of 2019, sales were $193.7 million for Service Centers,
$82.2 million for Innovative Pumping Solutions and $51.3 million
for Supply Chain Services. Business segment operating income
increased 15.1 percent year-over-year. DXP’s third quarter 2019
total sales were $327.2 million and EBITDA grew 21.4 percent
year-over-year. Overall, we maintained margin performance,
continued to improve cash flow and executed in a changing end
market backdrop. We will remain focused on growing the top-line and
bottom-line as we move into fiscal 2020.”
Kent Yee, CFO, commented, “We are pleased with 6.2 percent sales
growth and 8.6 percent EBITDA margins. This translated into $0.71
diluted earnings per share or 54.3 percent earnings growth
year-over-year. Total debt outstanding as of September 30, 2019 was
$245.0 million. DXP’s secured leverage ratio or net debt to EBITDA
was 2.0:1.0. Our strong execution with our focus on sales growth
and margin improvement delivered strong earnings, generated cash
flow and continues to position us drive shareholder value.”
We will host a conference call regarding 2019 third quarter
results on the Company’s website (www.dxpe.com) Thursday, November
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 Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Sales
$
327,178
$
308,028
$
971,721
$
905,191
Cost of sales
234,474
223,958
702,830
659,560
Gross profit
92,704
84,070
268,891
245,631
Selling, general and administrative
expenses
70,987
67,257
209,511
197,609
Operating income
21,717
16,813
59,380
48,022
Other (income) expense, net
(25
)
120
127
(1,318
)
Interest expense
4,986
4,781
14,911
15,959
Income before income taxes
16,756
11,912
44,342
33,381
Provision for income taxes
3,606
3,550
10,655
8,962
Net income
13,150
8,362
33,687
24,419
Net income (loss) attributable to NCI*
41
(35
)
(172
)
(91
)
Net income attributable to DXP
Enterprises, Inc.
$
13,109
$
8,397
$
33,859
$
24,510
Preferred stock dividend
23
23
68
68
Net income attributable to common
shareholders
$
13,086
$
8,374
$
33,791
$
24,442
Diluted earnings per share attributable to
DXP Enterprises, Inc.
$
0.71
$
0.46
$
1.84
$
1.33
Weighted average common shares and common
equivalent shares outstanding
18,442
18,404
18,428
18,387
*NCI represents non-controlling
interest
Business segment financial highlights:
- Service Centers’ revenue for the
third quarter was $193.7 million, an increase of 3.2 percent
year-over-year with a 12.9 percent operating income margin.
- Innovative Pumping Solutions’
revenue for the third quarter was $82.2 million, an increase of 7.2
percent year-over-year with a 12.3 percent operating income
margin.
- Supply Chain Services’ revenue for
the third quarter was $51.3 million, an increase of 17.6 percent
year-over-year with a 6.1 percent operating income margin.
SEGMENT DATA
($ thousands, unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
Sales
2019
2018
2019
2018
Service Centers
$
193,727
$
187,763
$
579,884
$
556,700
Innovative Pumping Solutions
82,169
76,662
237,920
218,561
Supply Chain Services
51,282
43,603
153,917
129,930
Total DXP Sales
$
327,178
$
308,028
$
971,721
$
905,191
Three Months Ended September
30,
Nine Months Ended September
30,
Operating Income
2019
2018
2019
2018
Service Centers
$
25,071
$
20,590
$
67,281
$
58,353
Innovative Pumping Solutions
10,097
8,773
28,924
24,109
Supply Chain Services
3,110
3,886
10,980
12,196
Total segments operating income
$
38,278
$
33,249
$
107,185
$
94,658
Reconciliation of Operating
Income for Reportable Segments
($ thousands, unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Operating income for reportable
segments
$
38,278
$
33,249
$
107,185
$
94,658
Adjustment for:
Amortization of intangibles
3,806
4,098
11,424
12,575
Corporate expenses
12,755
12,338
36,381
34,061
Total operating income
21,717
16,813
59,380
48,022
Interest expense
4,986
4,781
14,911
15,959
Other expense (income), net
(25
)
120
127
(1,318
)
Income before income taxes
$
16,756
$
11,912
$
44,342
$
33,381
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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Income before income taxes
$
16,756
$
11,912
$
44,342
$
33,381
Plus: interest expense
4,986
4,781
14,911
15,959
Plus: depreciation and amortization
6,422
6,506
18,693
19,710
EBITDA
$
28,164
$
23,199
$
77,946
$
69,050
Plus: NCI (income) loss before tax
(55
)
64
228
120
Plus: Stock compensation expense
473
526
1,502
2,023
Adjusted EBITDA
$
28,582
$
23,789
$
79,676
$
71,193
DXP ENTERPRISES, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
($ thousands, except per share
amounts)
September 30, 2019
December 31, 2018
ASSETS
Current assets:
Cash
$
28,436
$
40,304
Restricted Cash
124
215
Accounts receivable, net of allowances for
doubtful accounts
210,098
191,829
Inventories
131,916
114,830
Costs and estimated profits in excess of
billings
33,898
32,514
Prepaid expenses and other current
assets
6,328
4,938
Federal income taxes receivable
1,518
960
Total current assets
412,318
385,590
Property and equipment, net
58,516
51,330
Goodwill
194,052
194,052
Other intangible assets, net of
accumulated amortization
56,072
67,207
Operating lease ROU asset
67,296
—
Other long-term assets
3,300
1,783
Total assets
$
791,554
$
699,962
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt
$
2,500
$
3,407
Trade accounts payable
83,174
87,407
Accrued wages and benefits
20,242
21,275
Customer advances
4,606
3,223
Billings in excess of costs and estimated
profits
7,201
10,696
Short-term operating lease liability
17,711
—
Other current liabilities
16,544
17,269
Total current liabilities
151,978
143,277
Long-term debt, less unamortized debt
issuance costs
235,576
236,979
Long-term operating lease liability
49,602
—
Other long-term liabilities
951
2,819
Deferred income taxes
11,056
8,633
Total long-term liabilities
297,185
248,431
Total Liabilities
449,163
391,708
Equity:
Total DXP Enterprises, Inc.
equity
341,157
306,848
Non-controlling interest
1,234
1,406
Total Equity
342,391
308,254
Total liabilities and equity
$
791,554
$
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 Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net cash provided by operating
activities
$
10,943
$
16,825
$
7,483
$
9,842
Less: capital expenditures
(5,663
)
(2,189
)
(14,247
)
(7,705
)
Free cash flow
$
5,280
$
14,636
$
(6,764
)
$
2,137
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106006101/en/
Kent Yee Senior Vice President, CFO kent.yee@dxpe.com
www.dxpe.com
DXP Enterprises (NASDAQ:DXPE)
Historical Stock Chart
From Mar 2024 to Apr 2024
DXP Enterprises (NASDAQ:DXPE)
Historical Stock Chart
From Apr 2023 to Apr 2024