- $251.9 million in sales, a
year-over-year increase of 9.5 percent
- GAAP diluted EPS of $0.16
- $13.5 million in earnings before
interest, taxes, depreciation, and amortization (“EBITDA”)
- Closed on new $85 million Asset Based
Revolving Credit Facility and $250 million Senior Secured Term Loan
B
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced
financial results for the third quarter ended September 30, 2017.
The following are results for the three and nine months ended
September 30, 2017 compared to the three and nine months ended
September 30, 2016 and three months ended June 30, 2017, where
appropriate. A reconciliation of the non-GAAP financial measures is
in the back of this press release.
DXPE 2017 Third Quarter Financial Highlights:
- Sales increased 9.5 percent to $251.9
million, compared to $230.0 million for the third quarter of 2016
and $250.7 million for the second quarter of 2017, a sequential
increase of 0.5 percent. Adjusting for the sale of Vertex, sales
increased 13.0 percent year-over-year.
- Earnings per diluted share was $0.16
based upon 18.2 million diluted shares, compared to $0.02 per share
in the third quarter of 2016, based on 15.4 million diluted shares.
In the second quarter of 2017, earnings per diluted share was $0.23
on 18.2 million diluted shares.
- Earnings before interest, taxes,
depreciation and amortization (EBITDA) was $13.5 million, or 5.4
percent of sales, compared to $12.8 million for the third quarter
of 2016, an increase of 5.7 percent.
David R. Little, Chairman and CEO remarked, “We are pleased to
report our third quarter financial results. DXP’s third quarter
sales included year-over-year increases across all three business
segments. Total DXP sales increased sequentially despite the
disruptions from the hurricanes. We appreciate the outpouring of
concern for DXP and our employees. The oil & gas and industrial
economy remain firm with all key indicators remaining positive.
Thank you to all our customers and DXPeople for the support and
effort.
DXP’s third quarter 2017 sales were $251.9 million, or a 13.0
percent increase over the third quarter of 2016, adjusting for the
sale of Vertex. This resulted in a 0.5 percent increase versus the
second quarter. During the third quarter, sales were $160.9 million
for Service Centers, $51.0 million for Innovative Pumping Solutions
and $40.0 million for Supply Chain Services. Business segment
operating income increased 13 percent year-over-year and decreased
11 percent sequentially. We remain focused on enhancing and
improving our customer service with speed, convenience and
technical products and people. As we invest in products and people,
our goal is to grow the top line and the bottom line at the same
time. Our capital structure is now aligned for DXP to proactively
move forward.”
Kent Yee, CFO added, “Our third quarter year-over-year financial
results were great to see. The hurricanes presented obstacles for
DXP and our customers. Our sequential financial results reflect
these dynamics as well as the ongoing macro recovery in our end
markets. DXP maintained a resilient focus to finish the quarter
strong. During the quarter we closed on a new $85 million ABL
credit facility and $250 million Term Loan B. DXP’s new debt
structure provides us with flexibility going forward and positions
us for growth.
We turned DXP’s sales growth into a 5.7 percent year-over-year
increase in EBITDA and $0.16 in earnings per diluted share versus
$0.02 in 2016. Total debt outstanding as of September 30, 2017 was
$252.9 million. Additionally, DXP had $23.1 million in cash on the
balance sheet. DXP’s Secured Leverage Ratio or net debt to EBITDA
was 3.4:1.00. We look forward to closing out the year on a strong
note and continuing the momentum into fiscal year 2018.”
We will host a conference call regarding 2017 third quarter
results on the Company’s website (www.dxpe.com) Friday, November 3,
2017 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 online archived replay will be available immediately
after the conference call at www.dxpe.com.
DXP Enterprises 2017 third quarter business segment
results:
- Service
Centers’ revenue for the third quarter was $160.9 million, a
5.8 percent increase over the same period in 2016 and a sequential
decrease of 2.4 percent. Adjusting for the sale of Vertex, sales
increased 11.0 percent over the same period in 2016. Operating
income margin was 9.7 percent, a 120 basis point improvement over
the third quarter of 2016, on a same store sales basis and 151
basis point decline versus the second quarter of 2017.
- Innovative
Pumping Solutions’ revenue for the third quarter was $51.0
million, a 28.1 percent increase year-over-year and a 14.8 percent
sequential increase with a 3.6 percent operating income margin, a
49 basis point decline versus the third quarter of 2016 and 35
basis point decline from the second quarter.
- Supply Chain
Services’ revenue for the third quarter was $40.0 million, a
4.9 percent increase year-over-year and a 3.5 percent decrease
sequentially with a 9.9 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 referred
to in this press release is 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
September 30,
Nine Months Ended
September 30,
2017 2016 2017
2016 Sales $ 251,930 $ 230,025 $ 741,155 $ 739,801
Cost of sales 184,967 166,205
540,741 535,560 Gross profit 66,963 63,820
200,414 204,241 Selling, general and administrative expenses
60,453 58,887 175,411
192,461 Operating income 6,510 4,933 25,003 11,780 Other
income, net (153 ) (251 ) (324 ) (397 ) Interest expense
4,928 4,338 12,573 11,698
Income before income taxes 1,735 846 12,754 479 Provision
(benefit) for income taxes (1,176 ) 664
2,880 459 Net income 2,911 182 9,874 20 Less:
Net loss attributable to non-controlling interest (55 )
(81 ) (360 ) (301 ) Net income attributable to
DXP Enterprises, Inc. 2,966 263 10,234 321 Preferred stock dividend
23 23 68 68
Net income attributable to common shareholders
$
2,943
$
240
$
10,166
$
253
Diluted earnings per share attributable to DXP
Enterprises, Inc. $ 0.16 $ 0.02 $ 0.56 $ 0.02
Weighted average common shares and common equivalent
shares outstanding
18,234
15,440
18,242
15,369
SEGMENT DATA
($ thousands, unaudited)
Sales by Segment Three
Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Service Centers $ 160,863 $ 152,018 $ 474,324 $ 481,352 Innovative
Pumping Solutions 51,027 39,830 144,555 141,614 Supply Chain
Services 40,040 38,177 122,276 116,835
Total DXP $ 251,930 $ 230,025
$ 741,155 $ 739,801
Operating Income by
Segment Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Service Centers $ 15,550 $ 13,345 $ 47,308 $ 35,479 Innovative
Pumping Solutions 1,838 1,630 7,103 7,423 Supply Chain Services
3,982 3,929 11,758 11,611
Total
DXP $ 21,370 $ 18,904 $
66,169 $ 54,513
Reconciliation of Operating Income for
Reportable Segments
($ thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016 2017 2016 Operating income
for reportable segments $ 21,370 $ 18,904 $ 66,169 $ 54,513
Adjustment for: Amortization of intangibles 4,336 4,519 12,943
13,557 Corporate expense 10,524 9,452
28,223 29,176 Total operating income
6,510 4,933 25,003 11,780 Interest expense 4,928 4,338 12,573
11,698 Other income, net (153 ) (251 ) (324 )
(397 )
Income before income taxes $
1,735 $ 846 $
12,754 $ 479
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)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017
2016 Income before income taxes $ 1,735 $ 846 $
12,754 $ 479 Plus: interest expense 4,928 4,338 12,573 11,698 Plus:
depreciation and amortization 6,836 7,592 20,598 22,627
EBITDA $ 13,499 $
12,776 $ 45,925 $ 34,804
Plus: NCI loss before tax 85 131 578 486 Plus: Stock compensation
expense 382 691 1,392 1,944
Adjusted
EBITDA $ 13,966 $ 13,598 $
47,895 $ 37,234 **EBITDA
– earnings before impairments, interest, taxes, depreciation and
amortization
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171102006883/en/
DXP Enterprises, Inc.Kent Yee, 713-996-4700Senior Vice President
CFOwww.dxpe.com
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