DXP Enterprises Announces 2012 Fourth Quarter And Year End Results

DXP Enterprises, Inc. (NASDAQ:DXPE) today announced that for the fourth quarter ended December 31, 2012 it earned net income of $14.1 million, or $0.92 per fully diluted share. Sequentially, fully diluted earnings per share improved 7.0% from $0.86 per fully diluted share, or $13.1 million in net income for the third quarter ended September 30, 2012. Compared to fourth quarter 2011 earnings of $9.2 million or $0.61 per fully diluted share, fourth quarter 2012 fully diluted earnings per share improved 50.8%.

For the year ended December 31, 2012, DXP reported net income of $51.0 million, with fully diluted EPS of $3.35 compared to year end December 31, 2011 net income of $31.4 million, with EPS of $2.08 for an improvement of $19.5 million in net income or 62.1% per fully diluted share.

Sales for the fourth quarter of 2012 increased $74.6 million, or 34.2% to approximately $293.0 million from $218.4 million for the same period in 2011.

For the year ended December 31, 2012, DXP reported a sales increase of $290.1 million, or 35.9% to approximately $1,097.1 million from $807.0 million for 2011.

David R. Little, Chairman and Chief Executive Officer remarked, “We achieved outstanding results in 2012 and accomplished our goals, achieving sales of $1.1 billion and EBITDA margins of 9.9%. I would like to thank our ‘DXPeople’, as they continue to be the experts in the market while making DXP a fun place to work. We again showed we can deliver consistent organic results in a see-saw market. The execution of our strategy led to a solid year of top-line sales growth, year-over-year margin expansion, solid earnings improvement, accelerated acquisition activity and strong cash flow performance.

“All three segments grew revenue and profits. Innovative Pumping Solutions lead the way again with 58% sales growth and 20% operating income margins. DXP Service Centers experienced 39% sales growth with 11% operating income margins. DXP Supply Chain Services finished with 8% sales growth and a significant improvement in operating income margins to 8%. We grew EBITDA margins from 8.1% in 2011 to 9.9% and we feel there is still room for additional margin improvement as we continue to find ways to instill pricing discipline. We completed seven strategic acquisitions in 2012, including establishing a meaningful presence in Canada. Total employees increased from approximately 2,100 to 2,817.

“In the short term, there are still a lot of questions around the pace of growth in the U.S., an ongoing European distraction which does not materially impact DXP and the timing of a rebound in China which would lift overall industrial activity. We have demonstrated over the past few years our ability to compete successfully and deliver steady revenues and earnings through inconsistent times, and we are confident that we can continue to do so. That means we will continue to be conservative on costs while making sure we are in position to outperform as the market environment improves. DXP will continue our focus on gaining market share and remaining active on the acquisition front in 2013.”

Mac McConnell, Chief Financial Officer added, “We are excited about our annual financial results which reflect accomplishing our sales growth and profitability goals. We grew sales by 36% over 2012 and achieved over 10% EBITDA margins in the second half. DXP generated over $37 million in free cash flow which was primarily used to fund acquisitions. During the fourth quarter, we also amended and increased our credit facility by $75 million. As of December 31, 2012, $110 million was available to be borrowed under our credit facility with pro forma total debt to EBITDA of 1.87:1.”

We will host a conference call regarding 2012 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.

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 and Sonora, Mexico in virtually every industry since 1908. 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 EndingDecember 31,
 

Three Months EndingDecember 31,
    2012   2011   2012   2011
Sales   $ 1,097,110   $ 807,005   $ 293,006   $ 218,388  
Cost of sales     778,019     575,169     205,527     155,715  
Gross profit     319,091     231,836     87,479     62,673  
Selling, general and administrative expense     228,569     176,351     62,223     46,797  
Operating income     90,522     55,485     25,256     15,876  
Other income (expense)     47     28     14     (12 )
Interest expense     5,560     3,518     1,682     713  
Income before provision for income taxes     85,009     51,995     23,588     15,151  
Provision for income taxes     34,024     20,558     9,518     5,941  
Net income     50,985     31,437     14,070     9,210  
                 
Per share and share amounts                
Basic earnings per common share   $ 3.54   $ 2.19   $ 0.98   $ 0.64  
Common shares outstanding     14,374     14,301     14,373     14,281  
Diluted earnings per share   $ 3.35   $ 2.08   $ 0.92   $ 0.61  

Common and common equivalent shares outstanding
    15,214     15,141    

15,213
   

15,121
 
 
 
Sales by Segment

(in thousands)
 
  Years Ended

December 31,
  Three Months Ended

December 31,
2012   2011 2012   2011
 
Service Centers $ 779,038 $ 560,233 $ 206,497 $ 147,362
Innovative Pumping Solutions 161,834 102,305 48,368 32,464
Supply Chain Services   156,238   144,467   38,141   38,562
Total Sales $ 1,097,110 $ 807,005 $ 293,006 $ 218,388
 

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,
2012   2011 2012   2011
 
Income before income taxes $ 85,009 $ 51,995 $ 23,588 $ 15,151
Plus interest expense 5,560 3,518 1,682 713
Plus depreciation and amortization   18,082   10,082   4,974     2,562
EBITDA $ 108,651 $ 65,595 $ 30,244   $ 18,426
 
**EBITDA – earnings before interest, taxes, depreciation and amortization
 

Copyright Business Wire 2010

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