DXP Enterprises Announces 2014 Third Quarter Results

HOUSTON--()--DXP Enterprises, Inc. (NASDAQ: DXPE) today announces results for its third quarter ended September 30, 2014. The following are results for the three months ended September 30, 2014 compared to the three months ended September 30, 2013. A reconciliation of the Non-GAAP Financial Measures is at the end of this press release.

DXP Enterprises 2014 third quarter financial highlights:

  • Sales were $387.1 million for the third quarter of 2014, compared to $329.7 million for the third quarter of 2013, an increase of 17.4%. Organic sales increased $11 million or 3.33%, and acquisitions positively impacted sales by $46.4 million.
  • Gross profit was $113.4 million, or 29.3% of sales, for the third quarter of 2014, compared to $97.1 million, or 29.5% of sales, for the third quarter of 2013.
  • Selling, general & administrative (SG&A) expenses were $81.6 million, or 21.1% of sales, for the third quarter of 2014, compared to $70.2 million, or 21.3% of sales, for the third quarter of 2013.
  • EBITDA (earnings before interest, taxes, depreciation and amortization) was $39.8 million for the current quarter, compared to $32.6 million for the third quarter of 2013, an increase of 22.1%. EBITDA as a percentage of sales was 10.3% in 2014 and 9.9% in 2013.
  • Operating income was $31.8 million for the current quarter, compared to $26.9 million for the third quarter of 2013. Operating profit as a percentage of sales was 8.2% in 2014 and 2013.
  • Net income of $17.6 million for the current quarter was up 7.9% compared to $16.4 million, for the third quarter of 2013.
  • Earnings per diluted share for the third quarter of 2014 were $1.14 per share, based on 15.5 million diluted shares, compared to $1.07 per share in the third quarter of 2013, based on 15.3 million diluted shares.

David R. Little, Chairman and Chief Executive Officer, remarked, “Thanks to solid execution by our employees, DXP posted strong results for its third quarter of 2014. The DXP team continues to improve throughout the year and execute well in an inconsistent market environment. We continue to see progress at Natpro and B27. We have improved operating income margins, delivered better-than-expected earnings and generated strong cash flow for the third quarter. We experienced 17% year-over-year sales growth, a year-high 8% operating income margin and 7% year-over-year diluted earnings per share growth.

“During the third quarter, we continued to have strong organic growth within Supply Chain Services, slight organic growth in Service Centers and a small decline in Innovative Pumping Solutions. Profitable growth remains a primary focus, including M&A opportunities and organic initiatives, as we position DXP to deliver and drive increased shareholder value.

“As we close out the year and begin planning for 2015, we remain mindful of the challenging macroeconomic environment including the impact of lower oil prices on our markets; nevertheless, our focus more on oil & gas production activity, on our other end markets, our diverse product and service offering, our terrific team of DXPeople and our ability to produce free cash flow, all give us confidence in the bright long-term prospects for DXP.”

Mac McConnell, Chief Financial Officer, added, “We are pleased at our continued year-over year and sequential organic sales and earnings growth. We experienced significant improvements in our cash flow generation, producing over $39 million in free cash flow (cash flow from operating activities less capital expenditures) for the third quarter and over $54 million year-to-date. Our leverage ratio under our credit facility at September 30, 2014 was 2.9:1 and subsequent to the quarter we have continued to deleverage the business. We are pleased with the progress we have made from the first quarter of this year.”

We will host a conference call regarding 2014 third quarter results on the Company’s website (www.dxpe.com) today, Monday, November 3, 2014 at 4:00 P.M. Central 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 2014 third quarter business segment results:

  • Service Centers revenue was up 9.7% year over year with a 11.5% operating income margin. Organic revenue was up 2.5% year over year.
  • Innovative Pumping Solutions revenue was up 45.0% year over year with a 16.9% operating income margin. Organic revenue was down 3.5% year over year.
  • Supply Chain Services revenue was up 20.2% year over year with a 8.6% 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 and Mexico. 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(in thousands, except per share amounts) (unaudited)

         

Three Months Ended
September 30,

Nine Months Ended
September 30,

2014   2013 2014   2013
 
Sales $ 387,053 $ 329,719 $ 1,117,160 $ 927,758
Cost of sales   273,644   232,598     790,998   650,015  
Gross profit 113,409 97,121 326,162 277,743

Selling, general and administrative expense

 

  81,605  

70,223

   

243,798

 

204,876

 
Operating income 31,804 26,898 82,364 72,867
Other expense (income), net 10 (38 ) 1 (16 )
Interest expense   3,295   1,614     9,868   4,930  
Income before income taxes 28,499 25,322 72,495 67,953
Provision for income taxes   10,856   8,970     27,695   24,620  
Net income $ 17,643 $ 16,352   $ 44,800 $ 43,333  
 
Diluted earnings per share $ 1.14 $ 1.07   $ 2.88 $ 2.84  

Weighted average common shares and common equivalent shares outstanding

  15,496  

 

15,284

   

 

15,536

 

 

15,270

 
 
 

 

SEGMENT DATA

(in thousands)

   

 

Three Months ended September 30,

   

 

Nine Months ended September 30,

     

Service
Centers

  IPS   SCS  

Total

 

 

Service
Centers

  IPS   SCS  

Total

2014                                    
Sales     $ 255,041   $ 88,614   $ 43,398   $ 387,053     $ 735,104   $ 259,070   $ 122,986   $ 1,117,160
Operating income for reportable segments     $ 29,444   $ 14,979   $ 3,721   $ 48,144     $ 79,355   $ 40,328   $ 10,424   $ 130,107
                                     
2013                                    
Sales     $ 232,529   $ 61,094   $ 36,096   $ 329,719     $ 660,552   $ 155,572   $ 111,634   $ 927,758
Operating income for reportable segments     $ 27,557   $ 9,059   $ 3,202   $ 39,818     $ 75,976   $ 24,267   $ 9,550   $ 109,793
                 
 

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

September 30,

    Nine months ended

September 30,

      2014   2013     2014   2013
                     
Income before income taxes     $ 28,499   $ 25,322     $ 72,495   $ 67,953
Plus interest expense       3,295     1,614       9,868     4,930
Plus depreciation and amortization       7,993     5,663       23,293     16,155
EBITDA*     $ 39,787   $ 32,599     $ 105,656   $ 89,038

*EBITDA - earnings before interest, taxes, depreciation and amortization

 
 

Contacts

DXP Enterprises, Inc.
Mac McConnell, 713-996-4700
Senior Vice President, Finance & CFO
www.dxpe.com

Contacts

DXP Enterprises, Inc.
Mac McConnell, 713-996-4700
Senior Vice President, Finance & CFO
www.dxpe.com