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): May
15, 2017
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. |
_________________________
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 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following information is furnished pursuant to Regulation FD.
On May 15, 2017, DXP Enterprises, Inc., issued a press release announcing financial results for the quarter ended March 31, 2017 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 May 15, 2017 announcing the earnings results for the first quarter ended March 31, 2017.
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. |
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(Registrant) |
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By: |
/s/ Mac McConnell |
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Mac McConnell |
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Senior Vice President/Chief Financial Officer |
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Dated: |
May 15, 2017 |
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 May 15, 2017 announcing the earnings results for the quarter ended March 31, 2017. |
Exhibit 99.1
DXP Enterprises Reports 2017 First Quarter Results
HOUSTON--(BUSINESS WIRE)--May 15, 2017--DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial results for the first quarter ended March 31, 2017. The following are results for the three months ended March 31, 2017 compared to the three months ended March 31, 2016 and December 31, 2016, where appropriate. A reconciliation of the non-GAAP financial measures is in the back of this press release.
DXPE 2017 First Quarter Financial Highlights:
David R. Little, Chairman and CEO remarked, “Our first quarter results reflect momentum building in our business. We are pleased with DXP’s first quarter sales results which included sequential sales and operating income growth across all three business segments. Total DXP EBITDA also increased sequentially, adjusting for the one-time sale of Vertex. We are encouraged by the sequential increases and believe we could be in the early stages of a cyclical recovery. Thank you to all our customers and DXPeople for the support and effort. DXP’s first quarter 2017 sales were $238.5 million, or a 7.3 percent increase over the fourth quarter. DXP’s industrial end markets, which is 51 percent of our business, appears to have found some legs and shows signs of positive upward movement. Oil and gas, which is the remaining 49 percent of DXP, found a bottom in the third quarter of last year and is showing signs of gradual improvement. During the first quarter, sales were $148.7 million for Service Centers, $49.1 million for Innovative Pumping Solutions and $40.8 million for Supply Chain Services. Business segment operating income increased 13 percent sequentially and 57 percent year-over-year.
We continue to anticipate a better fiscal year 2017. As such, we remain focused on improving our ability to serve existing and new customers, continuing to focus on enhancing and improving our operational execution, investing in products and people and strategically aligning DXP for the future.”
Mac McConnell, CFO added, “Our first quarter sequential sales growth of 7.3 percent was great to see after experiencing continual declines since the fourth quarter of 2014. We turned this into a 9 percent sequential increase in operating income during a period where DXP has seasonally higher expenses. Total debt outstanding as of March 31, 2017 was $228.0 million. As discussed during our Q4 earnings call, we look forward to and anticipate refinancing our debt structure in the near future. This should provide DXP with more flexibility as we move towards growth. We are excited by the tone at DXP and anticipate that this should begin to show in our financial results.”
We will host a conference call regarding 2017 first quarter results on the Company’s website (www.dxpe.com) Monday, May 15, 2017 at 4 pm 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.
DXP Enterprises 2017 first 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 referred to in this press release is included below under "--Unaudited Reconciliation of Non-GAAP Financial Information."
The Company believes EBITDA provides additional information about: (i) operating performance, because it assists in comparing the operating performance of the business, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii) the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a component of a measure of the Company’s financial covenants under its credit facility. Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors’ understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation from net income, the Company believes it is enhancing investors’ understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives.
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. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or the negative of such terms or other comparable terminology. For more information, review the Company’s filings with the Securities and Exchange Commission.
DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS ($ thousands, except per share amounts) |
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Three Months Ended
March 31, |
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2017 | 2016 | ||||||||||||
Sales | $ | 238,527 | $ | 253,561 | |||||||||
Cost of sales | 174,012 | 184,743 | |||||||||||
Gross profit | 64,515 | 68,818 | |||||||||||
Selling, general and administrative expenses | 56,279 | 70,820 | |||||||||||
Operating income (loss) | 8,236 | (2,002 | ) | ||||||||||
Other expense (income), net | (228 | ) | (155 | ) | |||||||||
Interest expense | 3,653 | 3,409 | |||||||||||
Income (loss) before income taxes | 4,811 | (5,256 | ) | ||||||||||
Provision (benefit) for income taxes | 1,817 | (8 | ) | ||||||||||
Net income (loss) | 2,994 | (5,248 | ) | ||||||||||
Less: Net income (loss) attributable to non-controlling interest | (139 | ) | (136 | ) | |||||||||
Net income (loss) attributable to DXP Enterprises, Inc. | 3,133 | (5,112 | ) | ||||||||||
Preferred stock dividend | 23 | 23 | |||||||||||
Net income (loss) attributable to common shareholders |
$ |
3,110 |
$ |
(5,135 |
) |
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Diluted earnings (loss) per share attributable to DXP Enterprises, Inc. | $ | 0.17 | $ | (0.35 | ) | ||||||||
Weighted average common shares and common equivalent shares outstanding |
18,249 |
14,486 |
SEGMENT DATA ($ thousands, unaudited) |
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Sales |
Operating Income |
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2017 |
2016 |
2017 |
2016 |
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Service Centers | $ | 148,713 | $ | 167,502 | $ | 13,340 | $ | 9,536 | ||||||||||||
Innovative Pumping Solutions | 49,058 | 47,431 | 3,510 | 306 | ||||||||||||||||
Supply Chain Services | 40,756 | 38,628 | 4,058 | 3,480 | ||||||||||||||||
Total DXP | $ | 238,527 | $ | 253,561 | $ | 20,908 | $ | 13,322 | ||||||||||||
Reconciliation of Operating Income for Reportable Segments ($ thousands) |
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Three Months Ended |
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2017 |
2016 |
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Operating income for reportable segments | $ | 20,908 | $ | 13,322 | ||||||||||||||||
Adjustment for: | ||||||||||||||||||||
Amortization of intangibles | 4,316 | 4,528 | ||||||||||||||||||
Corporate expense | 8,356 | 10,796 | ||||||||||||||||||
Total operating income (loss) | 8,236 | (2,002 | ) | |||||||||||||||||
Interest expense | 3,653 | 3,409 | ||||||||||||||||||
Other expense (income), net | (228 | ) | (155 | ) | ||||||||||||||||
Income (loss) before income taxes | $ | 4,811 | $ | (5,256 | ) | |||||||||||||||
Unaudited Reconciliation of Non-GAAP Financial Information
The following table is a reconciliation of Adjusted EBITDA**, a non-GAAP financial measure, to income before income taxes, calculated and reported in accordance with U.S. GAAP ($ thousands)
Three Months |
Three Months |
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2017 | 2016 | 2016 | |||||||||||
Income (loss) before income taxes | $ | 4,811 | $ | (5,256 | ) | $ | 9,195 | ||||||
Plus: interest expense | 3,653 | 3,409 | 3,866 | ||||||||||
Plus: depreciation and amortization | 7,015 | 7,546 | 7,367 | ||||||||||
EBITDA | $ | 15,479 | $ | 5,699 | $ | 20,428 | |||||||
Plus: NCI before tax | 224 | 219 | 400 | ||||||||||
Plus: Stock compensation expense | 533 | 848 | 1,636 | ||||||||||
Adjusted EBITDA | $ | 16,236 | $ | 6,766 | $ | 22,464 | |||||||
**Adjusted 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