UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington,
D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (date of earliest event
reported): August
9, 2016
Commission file number 0-21513
DXP Enterprises, Inc.
(Exact
name of registrant as specified in its charter)
Texas |
76-0509661 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
7272 Pinemont, Houston, Texas 77040 |
(713) 996-4700 |
(Address of principal executive offices) |
Registrant’s telephone number, including area code. |
_________________________
Registrant’s telephone number, including area code:
(713)
996-4700
_________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 REGULATION FD DISCLOSURE
The following information is furnished pursuant to Regulation FD.
On August 9, DXP Enterprises, Inc., issued a press release announcing financial results for the quarter ended June 30, 2016 and a conference call in connection therewith. A copy of the release is furnished herewith as Exhibit 99.1, and incorporated herein by reference. Such exhibit (i) is furnished pursuant to Item 2.02 of Form 8-K, (ii) is not to be considered “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (iii) shall not be incorporated by reference into any previous or future filings made by or to be made by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
99.1 Press Release dated August 9, 2016 announcing the earnings results for the second quarter ended June 30, 2016.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
DXP ENTERPRISES, INC. |
|
(Registrant) |
|
|
|
By: |
/s/ Mac McConnell |
|
Mac McConnell |
|
Senior Vice President/Chief Financial Officer |
Dated: August 9, 2016 |
INDEX TO EXHIBITS
Introductory Note: The following exhibit is furnished
pursuant to Item 2.02 of Form 8-K and is not to be considered “filed”
under the Exchange Act and shall not be incorporated by reference into
any of the Company’s previous or future filings under the Securities Act
or the Exchange Act.
Exhibit No. |
Description |
99.1 |
Press Release dated August 9, 2016 announcing the earnings results for the quarter ended June 30, 2016. |
Exhibit 99.1
DXP Enterprises Announces 2016 Second Quarter Results
HOUSTON--(BUSINESS WIRE)--August 9, 2016--DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial results for the second quarter ended June 30, 2016. The following are results for the three and six months ended June 30, 2016 compared to the three and six months ended June 30, 2015 and three months ended March 31, 2016, where appropriate. A reconciliation of the non-GAAP financial measures is in the back of this press release.
DXP Enterprises 2016 second quarter financial highlights:
David R. Little, Chairman and CEO, remarked, “We are pleased with the second quarter performance. Total DXP revenue of $256.2 million for the second quarter was up 1.0 percent sequentially. We feel strongly that our sales team is taking market share as we continue to battle volatility in our industrial markets. We appreciate the continued hard work of our DXPeople and the support of our suppliers during these tough economic times. We managed expenses tightly in the quarter given the continued low sales volume. During the second quarter sales were $161.8 million for Service Centers, $54.4 million for Innovative Pumping Solutions and $40.0 million for Supply Chain Services. The market continues to show volatility and remains uncertain but we are responding by aggressively removing costs and improving operations. Our goal is to take market share, manage working capital, capital expenditures and cash flow in order to maximize our return on invested capital for our shareholders. Despite the challenging environment, we remain confident in our future and the opportunities ahead for DXP. With the work we have done and continue to do in terms of managing costs, aligning the business and strategically positioning our product segments, DXP is poised for the earnings leverage and sales growth that we are accustomed to delivering once the market turns.”
Mac McConnell, CFO, added, "Diluted earnings per share during the second quarter was $0.34. This was the result of sequential improvement on the gross margin line and significant reductions within selling, general and administrative expenses. Gross margins improved 81 basis points sequentially, despite the challenging market environment. Selling, general and administrative expenses declined significantly year-over-year due to our focus on managing costs and maximizing our sales efforts to grow. Free cash flow for the quarter was $17.7 million. As we move forward, we will keep our focus on costs and maintaining and improving cash flow."
We will host a conference call regarding 2016 second quarter financial results on the Company’s website (www.dxpe.com) Tuesday, August 9, 2016 at 4pm 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 second quarter business segment results:
Non-GAAP Financial Measures
DXP supplements reporting of net income (loss) with non-GAAP measurements, including EBITDA, 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 EBITDA and 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 |
Six Months Ended |
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Sales | $ | 256,215 | $ | 323,688 | $ | 509,776 | $ | 665,282 | |||||||||
Cost of sales | 184,612 | 232,389 | 369,355 | 475,934 | |||||||||||||
Gross profit | 71,603 | 91,299 | 140,421 | 189,348 | |||||||||||||
Selling, general and administrative expenses | 62,754 | 77,304 | 133,574 | 157,254 | |||||||||||||
Operating income (loss) | 8,849 | 13,995 | 6,847 | 32,094 | |||||||||||||
Other expense (income), net | 9 | (145 | ) | (146 | ) | (394 | ) | ||||||||||
Interest expense | 3,951 | 2,592 | 7,360 | 5,275 | |||||||||||||
Income (loss) before income taxes | 4,889 | 11,548 | (367 | ) | 27,213 | ||||||||||||
Provision (benefit) for income taxes | (197 | ) | 4,381 | (205 | ) | 10,395 | |||||||||||
Net income (loss) | 5,086 | 7,167 | (162 | ) | 16,818 | ||||||||||||
Less: Net income (loss) attributable to non-controlling interest | (84 | ) | - | (220 | ) | - | |||||||||||
Net income (loss) attributable to DXP Enterprises, Inc. | 5,170 | 7,167 | 58 | 16,818 | |||||||||||||
Preferred stock dividend | 22 | 22 | 45 | 45 | |||||||||||||
Net income (loss) attributable to common shareholders |
$ |
5,148 |
$ |
7,145 |
$ |
13 |
$ |
16,773 |
|||||||||
Diluted earnings (loss) per share attributable to DXP Enterprises, Inc. |
$ | 0.34 | $ | 0.47 | $ | 0.00 | $ | 1.11 | |||||||||
Weighted average common shares and common equivalent shares outstanding |
15,343 |
15,208 |
15,334 |
15,220 |
SEGMENT DATA ($ thousands, unaudited) |
|||||||||||||||||
Sales |
Operating Income |
||||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||||
Service Centers | $ | 161,832 | $ | 214,116 | $ | 12,597 | $ | 21,119 | |||||||||
Innovative Pumping Solutions | 54,353 | 66,905 | 5,487 | 5,912 | |||||||||||||
Supply Chain Services | 40,030 | 42,667 | 4,202 | 3,736 | |||||||||||||
Total | $ | 256,215 | $ | 323,688 | $ | 22,286 | $ | 30,767 | |||||||||
Sales |
Operating Income |
||||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||||
Service Centers | $ | 329,334 | $ | 439,907 | $ | 22,134 | $ | 43,985 | |||||||||
Innovative Pumping Solutions | 101,784 | 141,169 | 5,793 | 14,539 | |||||||||||||
Supply Chain Services | 78,658 | 84,206 | 7,682 | 7,014 | |||||||||||||
Total | $ | 509,776 | $ | 665,282 | $ | 35,609 | $ | 65,538 | |||||||||
Reconciliation of Operating Income for Reportable Segments ($ thousands, unaudited) |
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Three Months Ended |
Six Months Ended |
||||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||||
Operating income for reportable segments | $ | 22,286 | $ | 30,767 | $ | 35,609 | $ | 65,538 | |||||||||
Adjustment for: | |||||||||||||||||
Amortization of intangibles | 4,510 | 5,309 | 9,038 | 10,667 | |||||||||||||
Corporate expense | 8,927 | 11,463 | 19,724 | 22,777 | |||||||||||||
Total operating income (loss) | 8,849 | 13,995 | 6,847 | 32,094 | |||||||||||||
Interest expense | 3,951 | 2,592 | 7,360 | 5,275 | |||||||||||||
Other expense (income), net | 9 | (145 | ) | (146 | ) | (394 | ) | ||||||||||
Income (loss) before income taxes | $ | 4,889 | $ | 11,548 | $ | (367 | ) | $ | 27,213 |
Unaudited Reconciliation of Non-GAAP Financial Information |
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The following table is a reconciliation of EBITDA and Adjusted EBITDA**, non-GAAP financial measures, to income before income taxes, calculated and reported in accordance with U.S. GAAP ($ thousands) |
||||||||||||||
Three Months Ended |
Six Months Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||
Income (loss) before income taxes | $ | 4,889 | $ | 11,548 | $ | (367 | ) | $ | 27,213 | |||||
Plus: interest expense | 3,951 | 2,592 | 7,360 | 5,275 | ||||||||||
Plus: depreciation and amortization | 7,489 | 8,327 | 15,035 | 16,586 | ||||||||||
EBITDA | $ | 16,329 | $ | 22,467 | $ | 22,028 | $ | 49,074 | ||||||
Plus: NCI loss before tax | 133 | - | 345 | - | ||||||||||
Plus: Stock compensation expense | 487 | 723 | 1,253 | 1,557 | ||||||||||
Adjusted EBITDA | $ | 16,949 | $ | 23,190 | $ | 23,626 | $ | 50,631 | ||||||
**EBITDA – earnings before impairments, interest, taxes, depreciation and amortization |
CONTACT:
DXP Enterprises, Inc.
Mac McConnell, 713-996-4700
Senior
Vice President, Finance & CFO
www.dxpe.com