DXP Enterprises, Inc. (NASDAQ:DXPE) today announces
results for its first quarter ended March 31, 2015. The following
are results for the three months ended March 31, 2015 compared to
the three months ended March 31, 2014. A reconciliation of the
Non-GAAP Financial Measures is in the back of this press
release.
DXP Enterprises 2015 first quarter financial
highlights:
- Sales were $341.6 million for the first
quarter of 2015, compared to $348.5 million for the first quarter
of 2014, a decrease of 2.0%. Organic sales decreased 5.2%,
acquisitions positively impacted sales by $11.3 million.
- Gross profit was $98.0 million, or
28.7% of sales, for the first quarter of 2015, compared to $101.7
million, or 29.2% of sales, for the first quarter of 2014.
- Selling, general & administrative
(SG&A) expenses were $80.0 million, or 23.4% of sales, for the
first quarter of 2015, compared to $80.6 million, or 23.1% of
sales, for the first quarter of 2014.
- Operating income was $18.1 million for
the current quarter, compared to $21.2 million for the first
quarter of 2014. Operating profit as a percentage of sales was 5.3%
and 6.1% in 2015 and 2014, respectively.
- Net income attributable to common
shareholders of $9.6 million for the current quarter was down 12.0%
compared to $10.9 million, for the first quarter of 2014.
- Earnings per diluted share for the
first quarter of 2015 were $0.63 per share, based on 15.2 million
diluted shares, compared to $0.70 per share in the first quarter of
2014, based on 15.6 million diluted shares.
- Free cash flow for the first quarter of
2015 was $18.4 million, or 191% of net income compared to $19.0
million, or 173% of net income for the first quarter of 2014.
David R. Little, Chairman and Chief Executive Officer, remarked,
“Total DXP revenue of $341.6 million for the first quarter was down
2% year-over-year, significantly less than the 42% decline in the
rig count and 53% drop in oil prices from March of last year
through the end of the quarter this year. We appreciate all the
hard work from our DXPeople as we work as a team through these
tough market conditions. That said, the first quarter results were
in line with our expectations and reflect our end market exposure
discussed during our Q4 earnings call. Our customer base during the
first quarter has responded to market conditions by cutting capital
budgets, seeking pricing concessions and delaying order placement
and project timing. However, our plans remain unchanged. We will
continue to focus on generating cash, cutting costs where
appropriate and driving gains in market share. During the first
quarter, we experienced strong organic growth within Supply Chain
Services. Sales were down within our Service Centers and Innovative
Pumping Solutions businesses. This was primarily driven by softness
in the upstream drilling, development and completion; upstream
production; and mining markets. DXP’s first quarter results were
also negatively impacted by the strengthening U.S. dollar. These
declines were mitigated by strength in our chemical, food &
beverage and MRO industrial markets. From a strategic perspective,
we will use our financial resources and positive cash flow to
navigate through this cycle and pursue strategic opportunities
arising from the current market.
“We believe certain end markets will continue to be challenged
in the coming quarters but we will continue to manage through this
downturn focusing on reducing costs, protecting our market position
and delivering the superior execution and solution our customers
expect of DXP.”
Mac McConnell, Chief Financial Officer, added, “Our first
quarter results reflect our end-market exposure and the reverse
operating leverage you get within distribution when sales decline.
However, I am pleased that we generated $18.4 million in free cash
flow, and our leverage ratio was 2.95:1. Subsequent to the quarter
end, we completed the acquisition of Tool Supply, Inc., a leading
distributor of cutting tools, abrasives, coolants and machine shop
supplies. Tool Supply provides us additional end-market
diversification and geographic reach. As we move through the year,
we will monitor our free cash flow generation, costs and working
capital.”
We will host a conference call regarding 2015 first quarter
results on the Company’s website (www.dxpe.com) on Thursday, May 7,
2015 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.
DXP Enterprises 2015 first quarter business segment
results:
- Service
Centers revenue was down 2.4% year-over-year with a 10.1%
operating income margin. Organic revenue was down 7.3%
year-over-year.
- Innovative
Pumping Solutions revenue was down 7.0% year-over-year with
a 11.6% operating income margin.
- Supply Chain
Services revenue was up 11.1% year-over-year with a 7.9%
operating 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 share and per share
amounts) Three Months Ending March 31,
2015 2014 Sales $ 341,594
$ 348,504 Cost of sales 243,545 246,797
Gross profit 98,049 101,707 Selling,
general and administrative expense 79,950
80,553 Operating income 18,099
21,154
Other income
(249) (150) Interest expense
2,683 3,397 Income before provision for income
taxes 15,665 17,907 Provision for
income taxes 6,014 6,944 Net income
9,651 10,963
Per share and share amounts
Basic earnings per common share $ 0.67 $ 0.74
Common shares outstanding 14,391 14,724
Diluted earnings per share $ 0.63 $ 0.70 Common and
common equivalent shares
outstanding
15,231 15,564
Sales Operating
Income by Segment by Segment
Three Months Ended Three Months Ended
March 31, March 31, 2015
2014 2015 2014
Service Centers $ 225,792 $ 231,224
$ 22,866 $ 24,425 Innovative Pumping Solutions
74,263 79,881 8,626
9,549 Supply Chain Services 41,539
37,399 3,279 3,125
Total $ 341,594 $ 348,504 $ 34,771
37,099
Three Months Ended March 31, 2015
2014 Operating income for
reportable segments $ 34,771 $ 37,099 Adjustment for:
Amortization of intangibles
5,358 5,577 Corporate and other expense, net
11,314 10,368 Total operating income
$ 18,099 $ 21,154 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):
Three Months Ended March 31, 2015 2014 Income
before income taxes $ 15,665 $ 17,907 Plus interest expense 2,683
3,397 Plus depreciation and amortization 8,259
8,561 EBITDA $ 26,607 $ 29,865 **EBITDA – earnings
before interest, taxes, depreciation and amortization
DXP Enterprises, Inc.Mac McConnell, 713-996-4700Senior Vice
President, Finance & CFOwww.dxpe.com
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