DXP Enterprises, Inc. (NASDAQ:DXPE) today announced
financial results for the first quarter ended March 31, 2016. The
following are results for the three months ended March 31, 2016
compared to the three months ended March 31, 2015 and December 31,
2015, where appropriate. A reconciliation of the non-GAAP financial
measures is in the back of this press release.
DXP Enterprises 2016 First Quarter Financial
Highlights:
- Sales were $253.6 million for the first
quarter of 2016, compared to $278.7 million for the fourth quarter
of 2015 and $341.6 million for the first quarter of 2015, a
decrease of 9.0 percent from the fourth quarter and a decrease of
25.8 percent compared to the first quarter of 2015.
- Adjusted EBITDA was $6.8 million for
the current quarter versus $14.7 million in the fourth quarter and
$27.4 million for the first quarter of 2015. Adjusted EBITDA as a
percentage of sales was 2.7 percent versus 5.3 percent for the
fourth quarter of 2015 and 8.0 percent in the first quarter of
2015.
- Loss per diluted share for the first
quarter was $0.35, based on 14.5 million diluted shares, compared
to a loss of $0.20 per share in the fourth quarter of 2015, also
based on 14.5 million diluted shares.
David R. Little, Chairman and CEO remarked, “Completing the
first quarter, I am pleased with the collective effort to win new
business and aggressively cut costs in an effort to try and keep
pace with continued sales declines. Total DXP revenue of $253.6
million for the first quarter was down 9.0 percent sequentially. We
appreciate the continued hard work, perseverance and sacrifices
from our DXPeople as we work through the prolonged oil and gas
downturn and industrial softness. DXP’s industrial end markets,
which is 60 percent of our business today, appears to have bottomed
and shows signs of positive upward movement. Oil and gas, which
today is 40 percent of DXP, is attempting to find a bottom as
declines are decreasing. During the first quarter sales were $167.5
million for Service Centers, $47.4 million for Innovative Pumping
Solutions and $38.6 million for Supply Chain Services. The
continued sequential declines reflect the ongoing challenges in oil
and gas and the mining markets and the associated cut in spending
and activity by these customers. These declines were mitigated by
stability in the food & beverage and chemical markets.
In such a prolonged and difficult environment, we are taking
substantial steps to reorganize DXP without hurting sales efforts
and our ability to capitalize on the eventual turnaround of the oil
and gas market. Should conditions improve, the combination of
strong early feedback on DXP’s pump offering, a gradual return of
project work and continued improvements to our cost structure will
result in strong earnings growth. We will maintain strong focus on
those areas that we control, continue to right size and align our
businesses and optimize cost structures. We remain steadfast in our
ability to manage through the current cycle, maintaining our
customer focus while creating long-term stakeholder value.”
Mac McConnell, CFO added, "Our first quarter results reflect the
continued sales decline we experienced during the first half of the
first quarter. During the second half of the first quarter we took
steps to cut costs with an effort to optimize costs and sustain
earnings going forward. Our first quarter adjusted EBITDA for bank
purposes was $6.8 million. Also, in May, we were able to negotiate
an amendment to DXP’s credit facility providing a waiver of key
financial covenant ratios as of March 31, 2016."
We will host a conference call regarding 2016 first quarter
financial results on the Company’s website (www.dxpe.com) Friday,
May 13, 2016 at 10am 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 and at
www.viavid.net.
DXP Enterprises 2016 First Quarter Business Segment
Results:
- Service
Centers’ revenue for the first quarter was $167.5 million, a
decline of 10.6 percent sequentially with a 5.7 percent operating
income margin.
- Innovative
Pumping Solutions’ revenue for the first quarter was $47.4
million, a decline of 9.1 sequentially with a 0.6 percent operating
income margin.
- Supply Chain
Services’ revenue for the first quarter was $38.6 million, a
decline of 1.2 percent sequentially with a 9.0 percent operating
margin or 112 basis points improvement over the first quarter of
2015.
Non-GAAP Financial Measures
DXP supplements reporting of net income (loss) with non-GAAP
measurements, including 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 Adjusted EBITDA
referred to in this press release is included below under
"--Reconciliation of Non-GAAP Measures."
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. For more information, review the Company’s filings with
the Securities and Exchange Commission.
DXP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS ($ thousands,
except per share amounts) (unaudited)
Three Months Ended March 31, 2016
2015 Sales $ 253,561 $ 341,594 Cost of sales
184,743 243,545 Gross profit 68,818 98,049
Selling, general and administrative expenses 70,820
79,950 Operating income (loss) (2,002 ) 18,099 Other
expense (income), net (155 ) (249 ) Interest expense 3,409
2,683 Income (loss) before income taxes (5,256
) 15,665 Provision (benefit) for income taxes (8 )
6,014 Net income (loss) (5,248 ) 9,651 Less: Net income
(loss) attributable to non-controlling interest (136 )
- Net income (loss) attributable to DXP Enterprises,
Inc. (5,112 ) 9,651 Preferred stock dividend 23
23 Net income (loss) attributable to common
shareholders
$
(5,135
)
$
9,628
Diluted earnings (loss) per share attributable to DXP
Enterprises, Inc. $ (0.35 ) $ 0.63
Weighted average common shares and common
equivalent shares outstanding
14,486
15,231
SEGMENT DATA ($ thousands,
unaudited) Sales Operating
Income by Segment by Segment Three Months
Ended Three Months Ended March 31, March
31,
2016
2015
2016
2015
Service Centers $ 167,502 $ 225,792 $ 9,536 $ 22,866 Innovative
Pumping Solutions 47,431 74,263 306 8,626 Supply Chain Services
38,628 41,539 3,480 3,279 Total $
253,561 $ 341,594 $ 13,322 $ 34,771
Reconciliation
of Operating Income for Reportable Segments ($ thousands,
unaudited) Three Months Ended March
31,
2016
2015
Operating income for reportable segments $ 13,322 $ 34,771
Adjustment for: Amortization of intangibles 4,528 5,358 Corporate
expense 10,796 11,314 Total operating
income (loss) (2,002 ) 18,099 Interest expense 3,409 2,683 Other
expense (income), net (155 ) (249 ) Income (loss)
before income taxes $ (5,256 ) $ 15,665
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
Three Months
Ended
Ended
March 31,
December 31,
2016 2015 2015 Income (loss)
before income taxes $ (5,256 ) $ 15,665 $ (7,564 ) Plus: impairment
expense - - 9,847 Plus: interest expense 3,409 2,683 3,027 Plus:
depreciation and amortization 7,546 8,259 8,328
EBITDA $ 5,699 $ 26,607 $ 13,638 Plus:
NCI before tax 219 - 433 Plus: Stock compensation expense 848 834
669 Adjusted EBITDA $ 6,766 $ 27,441 $
14,740 **Adjusted EBITDA – earnings before
impairments, interest, taxes, depreciation and amortization
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version on businesswire.com: http://www.businesswire.com/news/home/20160512006668/en/
DXP Enterprises, Inc.Mac McConnell, 713-996-4700Senior Vice
President, Finance & CFOwww.dxpe.com
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