DXP Enterprises Announces Third Quarter Results
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HOUSTON--(BUSINESS WIRE)-- DXP Enterprises, Inc. (NASDAQ: DXPE) today announced net income of $2,684,000 for the third quarter ended September 30, 2009, with diluted earnings per share of $0.19 compared to net income of $7,026,000 and diluted earnings per share of $0.51 for the third quarter of 2008. Sales decreased $43.5 million, or 23.3%, to approximately $143.4 million from $186.9 million for the same period in 2008. Sales by businesses acquired in 2008, on a same store sales basis, accounted for $8.6 million of 2009 sales for the three month period. Excluding these sales by the acquired businesses, sales decreased 27.9%.
Net income for the third quarter of 2009 increased 23.9% compared to the second quarter of 2009. Sales for the third quarter of 2009 declined 0.7% compared to the second quarter of 2009.
Net income for the nine months ended September 30, 2009 was $8,022,000, with diluted earnings per share of $0.57 compared to net income of $18,838,000 and diluted earnings per share of $1.36 for the first nine months of 2008. Sales for the nine months ended September 30, 2009 decreased $97.8 million, or 18.0%, to approximately $445.4 million from $543.2 million for the same period in 2008. Excluding first nine months 2009 sales of $34.8 million by the businesses acquired in 2008, sales decreased 24.4% from the first nine months of 2008.
David R. Little, Chairman and Chief Executive Officer said, "Thanks to everyone involved in converting 50 Precision Service Centers to DXP's Information Technology System. Your resilience, determination and long hours allowed us to accomplish this task with minimum customer disruptions and I am truly appreciative. This conversion will give us the ability to streamline operations and maximize inventory fill rates resulting in increased customer service and profits. We will continue to proactively grow our market share, invest in our growth strategies and position ourselves to take advantage of opportunities as the economy recovers."
Mac McConnell, Senior Vice President and Chief Financial Officer said, "We continue to aggressively manage our costs and working capital to strengthen our balance sheet and profits. We reduced selling, general and administrative expense by approximately $1.1 million, or 3.1% during the third quarter of 2009 from the second quarter of 2009 and by $6.9 million, or 17.6%, from the third quarter of 2008 excluding two businesses acquired after June 30, 2008. We continue to manage our working capital which resulted in reducing total debt by approximately $16.1 million from June 30, 2009."
DXP Enterprises, Inc. is a leading products and service distributor focused on adding value and total cost savings solutions to MRO and OEM customers in virtually every industry since 1908. DXP provides innovative pumping solutions, supply chain services and MROP (maintenance, repair, operating and production) services that emphasize and utilize DXP's vast product knowledge and technical expertise in pumps, bearings, power transmission, seals, hose, safety, fluid power, electrical and industrial supplies. 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 innovative pumping solutions provide engineering, fabrication and technical design to meet the capital equipment needs of its global customer base. DXP provides solutions by utilizing manufacturer authorized equipment and certified personnel. Pump packages require MRO and OEM equipment such as pumps, motors and valves, and consumable products. DXP leverages its MROP inventories and technical knowledge to lower the total cost and maintain the quality of the pump package.
Precision Supply Chain Services, a DXP integrated supply and category management program, provides a more efficient way to manage the customer's supply chain needs for indirect products. Our programs allow the customer to transfer all or part of its supply chain needs to DXP, so the customer can focus on its core business. By outsourcing purchasing, accounting, and on-site supply management to DXP, our customers effectively lower their supply chain costs and eliminate redundancies in the supply chain. DXP's broad range of first-tier products provides an efficient measurable solution to reduce cost and streamline procurement and sourcing operations.
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
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2008
2009 2009
(Restated) (Restated)
Sales $ 143,422 $ 186,937 $ 445,400 $ 543,238
Cost of sales 102,644 134,687 317,164 393,166
Gross profit 40,778 52,250 128,236 150,072
Selling, general and
35,145 39,460 110,790 115,229
administrative expense
Operating income 5,633 12,790 17,446 34,843
Other income 9 67 71 107
Interest expense (1,232 ) (1,456 ) (4,020 ) (4,015 )
Income before income taxes 4,410 11,401 13,497 30,935
Provision for income taxes 1,726 4,375 5,475 12,097
Net income 2,684 7,026 8,022 18,838
Preferred stock dividend (22 ) (23 ) (60 ) (68 )
Net income attributable to
$ 2,662 $ 7,003 $ 7,962 $ 18,770
common shareholders
Basic income per share $ 0.20 $ 0.54 $ 0.61 $ 1.45
Weighted average common
13,132 12,999 13,105 12,904
shares outstanding
Diluted income per share $ 0.19 $ 0.51 $ 0.57 $ 1.36
Weighted average common and
common 14,004 13,861 13,978 13,845
equivalent shares outstanding
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;
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Income before income taxes $ 4,410 $ 11,401 $ 13,497 $ 30,935
Plus interest expense 1,232 1,456 4,020 4,015
Plus depreciation and amortization 2,974 2,671 8,774 7,166
EBITDA $ 8,616 $ 15,528 $ 26,291 $ 42,166
*EBITDA - earnings before interest, taxes, depreciation and amortization
DXP ENTERPRISES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
September 30, 2009 December 31, 2008
ASSETS (unaudited)
Current assets:
Cash $ 2,163 $ 5,698
Trade accounts receivable, net 78,336 101,191
Inventories, net 91,088 119,097
Prepaid expenses and other current assets 4,096 2,851
Deferred income taxes 6,234 3,863
Total current assets 181,917 232,700
Property and equipment, net 17,750 20,331
Goodwill 100,993 98,718
Other intangibles, net 39,807 45,227
Other assets 801 880
Total assets $ 341,268 $ 397,856
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 13,545 $ 13,965
Trade accounts payable 42,119 57,539
Accrued wages and benefits 8,190 12,869
Customer advances 486 2,719
Federal income taxes payable 7,406 7,894
Other accrued liabilities 3,816 8,660
Total current liabilities 75,562 103,646
Long-term debt, less current portion 115,331 154,591
Deferred income taxes 10,719 9,419
Other liabilities 12 12
Shareholders' equity 139,644 130,188
Total liabilities and shareholders' equity $ 341,268 $ 397,856
Source: DXP Enterprises, Inc.
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