- Fiscal year 2014 sales grew 20.8%,
or $258.2 million with organic growth of 3.8%
- Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”) of $139.9 million, or 9.3%
of sales
- Free Cash Flow of $87.6
million
- $4.0 million increase in B27
amortization
- $117.6 million pretax goodwill
impairment
- Adjusted EPS of $3.83, excluding
impairment charges and B27 amortization increase
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:
- Sales were $382.5 million for the
fourth quarter of 2014, compared to $313.8 million for the fourth
quarter of 2013, an increase of 21.9%. Organic sales increased
5.6%, acquisitions positively impacted sales by $51.1 million.
- Gross profit was $106.7 million, or
27.9% of sales for the fourth quarter of 2014, compared to $94.6
million, or 30.2% of sales for the fourth quarter of 2013.
- Amortization expense for 2014 was
increased by $4.0 million ($1.0 million per quarter) due to DXP
finalizing its purchase accounting for customer relationships for
the B27 acquisition and amortizing the customer relationships on an
accelerated basis. The first three quarters of 2014 have been
revised to reflect the increased amortization.
- Selling, general & administrative
(SG&A) expenses were $81.1 million, or 21.2% of sales for the
fourth quarter of 2014, compared to $66.5 million, or 21.2% of
sales for the fourth quarter of 2013.
- EBITDA was $34.2 million for the
current quarter, compared to $33.6 million for the fourth quarter
of 2013. EBITDA as a percentage of sales was 9.0% and 10.7% in 2014
and 2013, respectively.
- Fourth quarter 2014 net loss includes a
non-cash pre-tax goodwill impairment charge of $117.6 million.
Excluding this non-cash impairment charge and the $1.0 million
increased amortization charge for B27, fourth quarter 2014 adjusted
diluted earnings per share was $0.95.
- Free cash flow (cash flow from
operating activities less capital expenditures) for the fourth
quarter of 2014 was $32.8 million, or 95.7% of EBITDA compared to
$13.2 million, or 39.3% of EBITDA for the fourth quarter of
2013.
Fiscal Year 2014 financial highlights:
- Sales were $1.5 billion for fiscal year
2014, compared to $1.2 billion for the fiscal year 2013, an
increase of 20.8%. Organic sales increased 3.8%, acquisitions
positively impacted sales by $211.5 million for 2014.
- Gross profit was $432.8 million, or
28.9% of sales for the fiscal year 2014, compared to $372.3
million, or 30.0% of sales for the fiscal year 2013.
- Selling, general & administrative
(SG&A) expenses were $327.9 million, or 21.9% of sales for
fiscal 2014, compared to $271.4 million, or 21.9% of sales for
fiscal 2013.
- EBITDA was $139.9 million for the year,
compared to $122.7 million for 2013. EBITDA as a percentage of
sales was 9.3% and 9.9% in 2014 and 2013, respectively.
- Income before taxes, before a non-cash
goodwill impairment charge of $117.6 million and a $4.0 million
amortization charge resulting from finalization of B27 purchase
accounting for customer relationships and amortizing customer
relationships on an accelerated basis, was $96.0 million for 2014
which was up 1.4% compared to $94.7 million for fiscal 2013.
- Earnings per diluted share for the
fiscal year 2014 was a loss of $2.99, excluding a non-cash
impairment charge of $117.6 million and the $4.0 amortization
charge for B27, earnings per diluted share was $3.83 per share,
based on 15.5 million diluted shares, compared to $3.94 per share
in fiscal 2013, based on 15.3 million diluted shares.
- Free cash flow (cash flow from
operating activities less capital expenditures) for 2014 was $87.6
million, or 62.6% of EBITDA compared to $74.5 million, or 60.7% of
EBITDA for the fiscal year 2013.
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:
- Service
Centers revenue for the fiscal year was up 11.6% year over
year with a 10.9% operating income margin. Organic revenue was up
2.5% year over year.
- For the fourth quarter, revenue was up
12.6% with a 11.2% operating income margin
- Innovative
Pumping Solutions revenue for the fiscal year was up 66.4%
year over year with a 14.7% operating income margin. Organic
revenue was up 3.9% year over year.
- For the fourth quarter, revenue was up
66.2% with a 12.2% operating income margin.
- Supply Chain
Services revenue for the fiscal year was up 11.2% year over
year with an 8.4% operating margin.
- For the fourth quarter, revenue was up
14.2% with a 8.2% operating income margin
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 SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
Years ending
December 31,
Three Months Ending
December 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 shares
outstanding
15,479 15,279
15,311
15,303
*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 $ 43,605
Unaudited 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
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