DXP Enterprises Announces 2013 Third Quarter Results

DXP Enterprises, Inc. (NASDAQ:DXPE) today announced net income of $16.4 million for the third quarter ended September 30, 2013, with diluted earnings per share of $1.07 compared to net income of $13.1 million and diluted earnings per share of $0.86 for the third quarter of 2012. Sales increased $39.8 million, or 13.7%, to approximately $329.7 million from $289.9 million for the same period in 2012. After excluding sales from acquisitions of $28.9 million, on a same store sales basis, sales for the third quarter of 2013 increased $10.9 million, or 3.8% from 2012 on a same store sales basis.

Net income for the nine months ended September 30, 2013 was $43.3 million, with diluted earnings per share of $2.84 compared to net income of $36.9 million and diluted earnings per share of $2.43 for the first nine months of 2012. Sales for the nine months ended September 30, 2013 increased $123.7 million, or 15.4%, to approximately $927.8 million from $804.1 million for the same period in 2012.

Net income for the third quarter sequentially increased 18.9% from $13.7 million to $16.4 million in the third quarter of 2013. Likewise, sales sequentially increased 7.1% from $307.9 million in the second quarter to $329.7 million in the third quarter.

David R. Little, Chairman and Chief Executive Officer remarked, “Our DXPeople continue to execute well, delivering solid revenue growth and margin improvement. We are pleased to report third quarter sales increases of 7% sequentially and 14% year over year. EBITDA margins continue to move in the right direction having improved 38 basis points since the beginning of the year. Strong execution enabled DXP to achieve solid results again this quarter. We believe our focus on growth, productivity and efficiency, combined with our optimism on the acquisition front, position us well for the balance of 2013 and beyond.”

Mac McConnell, Senior Vice President and CFO, added, “We are pleased with our third quarter financial performance. Specifically, we are realizing solid free cash flow, having spent over $19 million on acquisitions while also paying down over $11 million in debt during the quarter. Through the first nine months of 2013, DXP spent approximately $61 million on acquisitions achieving our goal of 10% inorganic growth, all while deleveraging the balance sheet. Our leverage ratio under our credit facility at September 30, 2013 is 1.8:1, giving us substantial room for future acquisitions.”

DXP will host a conference call to be web cast live on the Company’s website ( www.dxpe.com) at 5:00 p.m. Eastern time today.

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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (unaudited)
 
 

Three Months EndedSeptember 30,
 

Nine Months EndedSeptember 30,
2013   2012 2013   2012
 
Sales $ 329,719 $ 289,923 $ 927,758 $ 804,104
Cost of sales   232,598     206,414     650,015     572,492  
Gross profit 97,121 83,509 277,743 231,612

Selling, general and administrative expense
  70,223     58,995     204,876    

166,346
 
Operating income 26,898 24,514 72,867 65,266
Other income, net (38 ) (21 ) (16 ) (33 )
Interest expense   1,614     2,287     4,930     3,878  
Income before income taxes 25,322 22,248 67,953 61,421
Provision for income taxes   8,970     9,156     24,620     24,506  
Net income 16,352 13,092 43,333 36,915
Preferred stock dividend   23     23     68     68  

Net income attributable to common shareholders

$

16,329
 

$

13,069
 

$

43,265
 

$

36,847
 
 
Basic earnings per share $ 1.13   $ 0.91   $ 3.00   $ 2.56  

Weighted average common shares outstanding
 

14,444
   

14,411
   

14,430
   

14,375
 
Diluted earnings per share $ 1.07   $ 0.86   $ 2.84   $ 2.43  

Weighted average common shares and common equivalent shares outstanding
 

15,284
   

15,251
   

15,270
   

15,215
 
 
 

SEGMENT DATA(in thousands)
    Three Months Ended September 30,   Nine Months Ended September 30,
   

ServiceCenters
 

IPS
 

SCS
 

Total
 

ServiceCenters
 

IPS
 

SCS
 

Total
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
                                 
2012                                
Sales   $ 212,497   $ 38,854   $ 38,572   $ 289,923   $ 571,675   $ 113,466   $ 118,963   $ 804,104
Operating income for reportable segments   $ 26,410   $ 7,227   $ 2,781   $ 36,418   $ 67,455   $ 22,414   $ 9,500   $ 99,369
 

The following table presents reconciliations of operating income for reportable segments to the consolidated income before taxes ( in thousands):
 
 

Three Months EndedSeptember 30,
 

Nine Months EndedSeptember 30,
2013   2012

2013
 

2012
Operating income for reportable segments $ 39,818 $ 36,418 $ 109,793 $ 99,369
Adjustment for:
Amortization of intangibles 3,434 3,474 9,221 8,264
Corporate and other expense, net   9,486     8,430     27,705     25,839  
Total operating income 26,898 24,514 72,867 65,266
Interest expense, net 1,614 2,287 4,930 3,878
Other income, net   (38 )   (21 )   (16 )   (33 )
Income before income taxes $ 25,322   $ 22,248   $ 67,953   $ 61,421  
 

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 endedSeptember 30,
 

Nine months endedSeptember 30,
    2013   2012   2013   2012
                 
Income before income taxes   $ 25,322   $ 22,248   $ 67,953   $ 61,421
Plus interest expense     1,614     2,287     4,930     3,878
Plus depreciation and amortization     5,663     6,299     16,155     13,108
EBITDA*   $ 32,599   $ 30,834   $ 89,038   $ 78,407
 

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

Copyright Business Wire 2010

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