News Column

DXP Enterprises Announces 2014 Second Quarter Results

July 31, 2014

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

DXP Enterprises 2014 second quarter financial highlights:

  • Sales were $381.6 million for the second quarter of 2014, compared to $307.9 million for the second quarter of 2013, an increase of 23.9%. Organic sales increased $13.1 million or 4.2%, and acquisitions positively impacted sales by $60.6 million.
  • Gross profit was $111.0 million, or 29.1% of sales, for the second quarter of 2014, compared to $91.5 million, or 29.7% of sales, for the second quarter of 2013.
  • Selling, general & administrative (SG&A) expenses were $82.6 million, or 21.7% of sales, for the second quarter of 2014, compared to $68.3 million, or 22.2% of sales, for the second quarter of 2013.
  • Operating income was $28.4 million for the current quarter, compared to $23.3 million for the second quarter of 2013. Operating profit as a percentage of sales was 7.4% and 7.6% in 2014 and 2013, respectively.
  • Net income of $15.5 million for the current quarter was up 13.0% compared to $13.7 million, for the second quarter of 2013.
  • Earnings per diluted share for the second quarter of 2014 were $1.00 per share, based on 15.5 million diluted shares, compared to $0.90 per share in the second quarter of 2013, based on 15.3 million diluted shares.

    David R. Little, Chairman and Chief Executive Officer remarked, “Reviewing our second quarter results, we are pleased with the progress we have made since our first quarter but believe we still have plenty of work ahead of us. We experienced 23.9% sales growth year over year and saw improvement in both Natpro and B27. We continue to feel that the overall economy is only going to provide modest growth but DXP remains committed to executing strategies that will take market share, improve operating performance and provide returns to shareholders. During the second quarter, we had strong organic growth within Supply Chain Services, organic sales were essentially flat within our Innovative Pumping Solutions and we had a modest increase within Service Centers. As we focus on the second half of 2014, we are excited about the opportunities to grow in excess of the market and improve our operations while continuing to focus on understanding, serving and meeting our customer’s needs.”

    Mac McConnell, Chief Financial Officer added, "We are pleased to report sequential and year over year organic sales and earnings growth. While we experienced growth, our cash flow and leverage was impacted by project related contracts within Innovative Pumping Solutions, the purchase of MT&S and seasonality in Canada. Our leverage ratio under our credit facility at June 30, 2014 was 3.1:1. During the second half of the year, we look forward to improving our cash flow generation and continuing the progress from the first quarter."

    We will host a conference call regarding 2014 second quarter results on the Company’s website (www.dxpe.com) on Thursday, July 31, 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 second quarter business segment results:

  • Service Centers revenue was up 14.2% year over year with a 10.2% operating income margin. Organic revenue was up 3.7% year over year.
  • Innovative Pumping Solutions revenue was up 71% year over year with a 17.4% operating income margin. Organic revenue was down 0.3% year over year.
  • Supply Chain Services revenue was up 13.8% year over year with a 8.5% 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 EndedSix Months Ended
    June 30,June 30,
    2014201320142013
     
    Sales $ 381,603 $ 307,942 $ 730,107 $ 598,039
    Cost of sales   270,557   216,427   517,354     417,417
    Gross profit 111,046 91,515 212,753 180,622
    Selling, general and
    administrative expense   82,647   68,250   162,193     134,653
    Operating income 28,399 23,265 50,560 45,969
    Other expense (income) 141 21 (9 ) 22
    Interest expense   3,176   1,689   6,573     3,316
    Income before income taxes 25,082 21,555 43,996 42,631
    Provision for income taxes   9,543   7,806   16,839     15,650
    Net income $ 15,539 $ 13,749 $ 27,157   $ 26,981
     
    Diluted earnings per share $ 1.00 $ 0.90 $ 1.75   $ 1.77
    Weighted average common shares
    and common equivalent
    shares outstanding   15,548   15,291   15,556     15,264
     
     
    SEGMENT DATA
    (in thousands)
     
            Three Months Ended June 30,       Six Months Ended June 30,
          Service                   Service            
            Centers     IPS     SCS     Total       Centers     IPS     SCS     Total
    2014                                                    
    Sales       $ 248,839     $ 90,575     $ 42,189     $ 381,603       $ 480,063     $ 170,456     $ 79,588     $ 730,107
    Operating income
    for reportable
    segments       $ 25,486     $ 15,800     $ 3,579     $ 44,865       $ 49,111     $ 25,350     $ 6,703     $ 81,964
                                                         
    2013                                                    
    Sales       $ 217,925     $ 52,954     $ 37,063     $ 307,942       $ 428,023     $ 94,477     $ 75,539     $ 598,039
    Operating income
    for reportable
    segments       $ 23,376     $ 8,090     $ 3,160     $ 34,626       $ 48,420     $ 15,208     $ 6,347     $ 69,975
     

    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     Six months ended
            June 30,     June 30,
            2014     2013     2014     2013
                     
    Income before income taxes       $ 25,082     $ 21,555     $ 43,996     $ 42,631
    Plus interest expense         3,176       1,689       6,573       3,316
    Plus depreciation and amortization         7,746       5,602       15,300       10,492
    EBITDA*       $ 36,004     $ 28,846     $ 65,869     $ 56,439
     

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

     





    DXP Enterprises, Inc.

    Mac McConnell, 713-996-4700

    Senior Vice President, Finance & CFO

    www.dxpe.com

    Source: DXP Enterprises, Inc.


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