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Share Name | Share Symbol | Market | Type |
---|---|---|---|
DXP Enterprises Inc | NASDAQ:DXPE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 49.67 | 34.80 | 54.65 | 0 | 09:05:28 |
DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial results for the fourth quarter and fiscal year ending December 31, 2014. A reconciliation of the non-GAAP financial measures is in the back of this press release.
Fourth Quarter 2014 financial highlights:
Fiscal Year 2014 financial highlights:
David R. Little, Chairman and Chief Executive Officer, remarked, “DXP accomplished a lot in 2014 and we would like to thank all our 'DXPeople' for their efforts this year. We were focused on improving and managing our growth, culture, expenses, working capital, and ease of doing business with our business segments and product divisions. We made meaningful progress at Natpro and positioned ourselves at B27 for success in 2015 and beyond. Additionally, during the last quarter of the year, we were faced with increased volatility in the upstream oil and gas market and the large drop in oil prices. That said, we remain focused on executing our strategy, achieving our goals of growing sales and EBITDA, efficient working capital management and strong cash flow generation.
“DXP’s fiscal year 2014 sales grew 20.8%. Innovative Pumping Solutions lead the way with 66.4% sales growth driven primarily from the acquisition of B27. DXP’s Service Centers sales grew 11.6%, followed by Supply Chain Services which grew 11.2%. Operating margins for Innovative Pumping Solutions, DXP Service Centers and Supply Chain Services were 14.2%, 10.9% and 8.4%, respectively. With acquisitions fueling a majority of our sales growth in 2014, similar to 2013, DXP’s ability to gain operating leverage remained dampened with EBITDA margins for the full year of 9.3%. We completed two strategic acquisitions in 2014, B27 and Machinery Tooling & Supply, which helped grow our Rotating Equipment and Metal Working divisions. Total employees for the fiscal year increased 16% from approximately 3,207 to 3,715.
“As we enter 2015, we face a challenging market environment on the oil and gas front. The recent decline in crude oil prices has and will challenge certain aspects of our business. DXP reviewed its 2014 end-market exposure and believes that an estimated 19% of our business is tied to upstream drilling, development and completion. Obviously, this segment will be impacted the most by the recent decline in oil prices and drilling activity and as such, DXP expects a sales decline with these customers. In contrast, however, the remaining pieces of our business are tied to various end markets that we believe will experience differing levels of organic growth. Specifically, DXP’s oil and gas production and midstream exposure is an estimated 41% and DXP expects this business to be steady for 2015. The lower spending on upstream activity will inevitably affect midstream activity at some point in the future but more modestly. The remaining 40% of our business is tied to markets DXP believes will see organic growth in 2015.
“For fiscal 2015, we will focus on driving sales and operating leverage in those markets that should give us growth while managing the challenges in upstream oil and gas drilling, development and completion. We will continue to expect to get operating leverage within our business model and make acquisitions opportunistically. We remain excited about our prospects and entering the year with strong financial resources and our experienced group of expert employees.”
Mac McConnell, Chief Financial Officer added, "Our annual financial results reflect year-over-year sales growth driven by acquisitions and organic growth. Supply Chain Services led DXP’s business segments with 11.2% organic growth, followed by Innovative Pumping Solutions with 3.9% and Service Centers with 2.5% organic growth. Overall, we grew sales organically by 3.8% over 2013 and achieved stronger EBITDA margins during the second half of the year versus the first half driven by a strong third quarter. EBITDA for fiscal 2014 was $139.9 million and grew 14% over 2013. Throughout the year we saw a continual sequential decline of SG&A expense as a percentage of sales with our continued focus on expense control as we moved from a lackluster oil and gas market to high volatility towards the end of the year. DXP generated over $87 million in free cash flow, which was primarily used to fund acquisitions and pay down debt, up 18% over 2013. Fiscal 2014 includes a non-cash after-tax goodwill impairment charge of $102.0 million, or $6.66 per share, relating to B27 and Natpro, two acquisitions which we have discussed throughout the year. Excluding the impact of this non-cash goodwill impairment charge and a $4.0 million amortization charge for B27, net income was $59.4 million or $3.83 per share for the fiscal year 2014. Finally, DXP continued to deleverage by reducing debt by $38.1 million during the fourth quarter, and ended the fiscal year with total debt to EBITDA of 2.9:1."
We will host a conference call regarding 2014 fourth quarter and year end results to be web cast live on the Company’s website (www.dxpe.com) today at 5:00 P.M. Eastern time. 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 and at www.viavid.net.
Fiscal 2014 and fourth quarter business segment results:
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, 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. For more information, review the Company’s filings with the Securities and Exchange Commission.
DXP ENTERPRISES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Years endingDecember 31,
Three Months EndingDecember 31,
2014* 2013 2014* 2013 Sales $ 1,499,662 $ 1,241,510 $ 382,502 $ 313,752 Cost of sales 1,066,822 869,165 275,824 219,150 Gross profit 432,840 372,345 106,678 94,602 Selling, general and administrative expense 327,899 271,421 81,081 66,545 Impairment expense 117,569 - 117,569 - Operating income (loss) (12,628 ) 100,924 (91,972 ) 28,057 Other income (expense) (131 ) 75 (130 ) 59 Interest expense 12,797 6,282 2,929 1,352 Income (loss) before provision for income taxes (25,556 ) 94,717 (95,031 ) 26,764 Provision for income taxes 19,682 34,480 6,956 9,860 Net income (loss) (45,238 ) 60,237 (88,075 ) 16,904 Diluted earnings (loss) per share $ (2.99 ) $ 3.94 $ (5.75 ) $ 1.10 Common and common equivalent sharesoutstanding
15,479 15,279 15,31115,303
*During the fourth quarter of 2014 DXP finalized the purchase accounting for customer relationships for the acquisition of B27 and is amortizing customer relationships on an accelerated basis. This revision resulted in increasing amortization of intangibles by $4,027,000 for the year and $1,007,000 per quarter. The first three quarters of 2014 have been revised to reflect this increased amortization. SEGMENT DATA(in thousands)
Year Ended December 31, Three Months Ended December 31,ServiceCenters
IPS
SCS
Total
ServiceCenters
IPS
SCS
Total
2014 Sales $ 987,561 $ 348,134 $ 163,967 $ 1,499,662 $ 252,456 $ 89,064 $ 40,982 $ 382,502 Operating income for reportable segments $ 107,699 $ 51,162 $ 13,794 $ 172,655 $ 28,344 $ 10,833 $ 3,370 $ 42,547 2013 Sales $ 884,821 $ 209,175 $ 147,514 $ 1,241,510 $ 224,269 $ 53,603 $ 35,880 $ 313,752 Operating income for reportable segments $ 107,142 $ 33,766 $ 12,490 $ 153,398 $ 31,166 $ 9,499 $ 2,940 $ 43,605Unaudited Reconciliation of Non-GAAP Financial Information
The following table is a reconciliation of EBITDA**, a non-GAAP financial measure, to income before income taxes, calculated and reported in accordance with U.S. GAAP (in thousands)
Years EndedDecember 31,
Three Months EndedDecember 31,
2014 2013 2014 2013 Income (loss) before income taxes $ (25,556 ) $ 94,717 $ (95,031 ) $ 26,764 Impairment expense 117,569 - 117,569 - Plus interest expense 12,797 6,282 2,929 1,352 Plus depreciation and amortization 35,078 21,660 8,765 5,505 EBITDA $ 139,888 $ 122,659 $ 34,232 $ 33,621 **EBITDA – earnings before impairments, interest, taxes, depreciation and amortization
DXP Enterprises, Inc.Mac McConnell, 713-996-4700Senior Vice President, Finance & CFOwww.dxpe.com
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