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): July 25, 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 July 25, 2017, DXP Enterprises, Inc., issued a press release announcing financial results for the quarter ended June 30, 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 July 25, 2017 announcing the earnings results for the second quarter ended June 30, 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/ Kent Yee |
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Kent Yee |
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Senior Vice President/Chief Financial Officer |
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By: |
/s/ Mac McConnell |
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Mac McConnell |
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Senior Vice President/Chief Accounting Officer |
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Dated: |
July 25, 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 July 25, 2017 announcing the earnings results for the quarter ended June 30, 2017. |
DXP Enterprises Reports 2017 Second Quarter Results
HOUSTON--(BUSINESS WIRE)--July 25, 2017--DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial results for the second quarter ended June 30, 2017. The following are results for the three and six months ended June 30, 2017 compared to the three and six months ended June 30, 2016 and three months ended March 31, 2017, where appropriate. A reconciliation of the non-GAAP financial measures is in the back of this press release.
DXPE 2017 Second Quarter Financial Highlights:
David R. Little, Chairman and CEO, remarked, “We are pleased to report a strong second quarter and our outlook for the second half of 2017 continues to be positive. We continue to believe momentum is building in our business. DXP’s second quarter sales included sequential increases across Service Centers and Supply Chain Services. Total DXP EBITDA increased sequentially along with earnings per diluted share. The oil & gas and industrial economy remain firm with meaningful sales growth within Service Centers. Most of our customers and the markets we serve continue to show improvement. We remain encouraged by the sequential increases despite the continued choppiness from time-to-time in our key end markets. Thank you to all our customers and DXPeople for the support and effort.
“DXP’s second quarter 2017 sales were $250.7 million, or a 5.1 percent increase over the first quarter. During the second quarter, sales were $164.7 million for Service Centers, $44.5 million for Innovative Pumping Solutions and $41.5 million for Supply Chain Services. Business segment operating income increased 14 percent sequentially and 7 percent year-over-year. We remain focused on serving existing and new customers, continuing to focus on enhancing and improving our operational execution, investing in products and people and pursuing a capital structure that aligns DXP for the future.”
Kent Yee, CFO, added, “Our second quarter sequential sales growth of 5.1 percent was great to see. Our financial results reflect our continued focus on our customers and improving market conditions. We turned DXP’s sales growth into a 9 percent sequential increase in EBITDA and 35 percent increase in earnings per diluted share. Total debt outstanding as of June 30, 2017 was $221 million. We are excited by our sales team’s focus on organic sales growth and teamwork as well as the overall tone at DXP. We look forward to continuing the momentum into the second half of the year.”
We will host a conference call regarding 2017 second quarter results on the Company’s website (www.dxpe.com) Tuesday, July 25, 2017 at 4 pm CDT. 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 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 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 |
Six Months Ended |
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2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Sales | $ | 250,698 | $ | 256,215 | $ | 489,225 | $ | 509,776 | |||||||||||||
Cost of sales | 181,762 | 184,612 | 355,774 | 369,355 | |||||||||||||||||
Gross profit | 68,936 | 71,603 | 133,451 | 140,421 | |||||||||||||||||
Selling, general and administrative expenses | 58,679 | 62,754 | 114,958 | 133,574 | |||||||||||||||||
Operating income | 10,257 | 8,849 | 18,493 | 6,847 | |||||||||||||||||
Other expense (income), net | 57 | 9 | (171 |
) |
(146 | ) | |||||||||||||||
Interest expense | 3,992 | 3,951 | 7,645 | 7,360 | |||||||||||||||||
Income (loss) before income taxes | 6,208 | 4,889 | 11,019 | (367 | ) | ||||||||||||||||
Provision (benefit) for income taxes | 2,239 | (197 | ) | 4,056 | (205 | ) | |||||||||||||||
Net income (loss) | 3,969 | 5,086 | 6,963 | (162 | ) | ||||||||||||||||
Less: Net loss attributable to non-controlling interest | (166 | ) | (84 | ) | (305 | ) | (220 | ) | |||||||||||||
Net income attributable to DXP Enterprises, Inc. | 4,135 | 5,170 | 7,268 | 58 | |||||||||||||||||
Preferred stock dividend | 22 | 22 | 45 | 45 | |||||||||||||||||
Net income attributable to common shareholders |
$ |
4,113 |
$ |
5,148 |
$ |
7,223 |
$ |
13 |
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Diluted earnings per share attributable to DXP Enterprises, Inc. |
$ |
0.23 |
$ | 0.34 | $ | 0.40 | $ | 0.00 | |||||||||||||
Weighted average common shares and common equivalent shares outstanding |
|
18,244 |
15,343 |
18,246 |
15,334 |
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SEGMENT DATA | |||||||||||||||||
($ thousands, unaudited) |
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Sales by Segment | |||||||||||||||||
Three Months Ended |
Six Months Ended |
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2017 |
2016 |
2017 |
2016 |
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Service Centers | $ | 164,749 | $ | 161,832 | $ | 313,461 | $ | 329,334 | |||||||||
Innovative Pumping Solutions | 44,470 | 54,353 | 93,528 | 101,784 | |||||||||||||
Supply Chain Services | 41,479 | 40,030 | 82,236 | 78,658 | |||||||||||||
Total DXP | $ | 250,698 | $ | 256,215 | $ | 489,225 | $ | 509,776 | |||||||||
Operating Income by Segment | |||||||||||||||||
Three Months Ended |
Six Months Ended |
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2017 |
2016 |
2017 |
2016 |
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Service Centers | $ | 18,417 | $ | 12,597 | $ | 31,758 | $ | 22,134 | |||||||||
Innovative Pumping Solutions | 1,755 | 5,487 | 5,264 | 5,793 | |||||||||||||
Supply Chain Services | 3,718 | 4,202 | 7,776 | 7,682 | |||||||||||||
Total DXP | $ | 23,890 | $ | 22,286 | $ | 44,798 | $ | 35,608 | |||||||||
Reconciliation of Operating Income for Reportable Segments | |||||||||||||||||||
($ thousands) |
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Three Months Ended |
Six Months Ended |
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2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Operating income for reportable segments | $ | 23,890 | $ | 22,286 | $ | 44,798 | $ | 35,609 | |||||||||||
Adjustment for: | |||||||||||||||||||
Amortization of intangibles | 4,291 | 4,510 | 8,607 | 9,038 | |||||||||||||||
Corporate expense | 9,342 | 8,927 | 17,698 | 19,724 | |||||||||||||||
Total operating income | 10,257 | 8,849 | 18,493 | 6,847 | |||||||||||||||
Interest expense | 3,992 | 3,951 | 7,645 | 7,360 | |||||||||||||||
Other expense (income), net | 57 | 9 | (171 | ) | (146 | ) | |||||||||||||
Income (loss) before income taxes | $ | 6,208 | $ | 4,889 | $ | 11,019 | $ | (367 | ) | ||||||||||
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 Ended |
Six Months Ended |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||
Income (loss) before income taxes | $ | 6,208 | $ | 4,889 | $ | 11,019 | $ | (367 | ) | |||||||||
Plus: interest expense | 3,992 | 3,951 | 7,645 | 7,360 | ||||||||||||||
Plus: depreciation and amortization | 6,747 | 7,489 | 13,762 | 15,035 | ||||||||||||||
EBITDA | $ | 16,947 | $ | 16,329 | $ | 32,426 | $ | 22,028 | ||||||||||
Plus: NCI loss before tax | 269 | 136 | 493 | 355 | ||||||||||||||
Plus: Stock compensation expense | 477 | 487 | 1,010 | 1,253 | ||||||||||||||
Adjusted EBITDA | $ | 17,693 | $ | 16,952 | $ | 33,929 | $ | 23,636 | ||||||||||
**EBITDA – earnings before impairments, interest, taxes, depreciation and amortization |
CONTACT:
DXP Enterprises, Inc.
Kent Yee, 713-996-4700
Senior Vice President CFO
www.dxpe.com