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Share Name | Share Symbol | Market | Type |
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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 | |
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0.52 | 1.00% | 52.33 | 51.80 | 54.65 | 53.39 | 51.895 | 52.49 | 89,040 | 22:30:00 |
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:
Fiscal Year 2018 financial highlights:
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:
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 interestSEGMENT 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 $ 1,006,782Three 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 $ 90,124Reconciliation 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 $ 16,892Unaudited 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 64,017DXP 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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