DXP Enterprises (DXPE) Misses Q1 EPS by 18c

DXP Enterprises (NASDAQ: DXPE) reported Q1 EPS of $0.63, $0.18 worse than the analyst estimate of $0.81. Revenue for the quarter came in at $341.6 million versus the consensus estimate of $361 million.

David R. Little, Chairman and Chief Executive Officer, remarked, “Total DXP revenue of $341.6 million for the first quarter was down 2% year-over-year, significantly less than the 42% decline in the rig count and 53% drop in oil prices from March of last year through the end of the quarter this year. We appreciate all the hard work from our DXPeople as we work as a team through these tough market conditions. That said, the first quarter results were in line with our expectations and reflect our end market exposure discussed during our Q4 earnings call. Our customer base during the first quarter has responded to market conditions by cutting capital budgets, seeking pricing concessions and delaying order placement and project timing. However, our plans remain unchanged. We will continue to focus on generating cash, cutting costs where appropriate and driving gains in market share. During the first quarter, we experienced strong organic growth within Supply Chain Services. Sales were down within our Service Centers and Innovative Pumping Solutions businesses. This was primarily driven by softness in the upstream drilling, development and completion; upstream production; and mining markets. DXP’s first quarter results were also negatively impacted by the strengthening U.S. dollar. These declines were mitigated by strength in our chemical, food & beverage and MRO industrial markets. From a strategic perspective, we will use our financial resources and positive cash flow to navigate through this cycle and pursue strategic opportunities arising from the current market.

“We believe certain end markets will continue to be challenged in the coming quarters but we will continue to manage through this downturn focusing on reducing costs, protecting our market position and delivering the superior execution and solution our customers expect of DXP.”

Mac McConnell, Chief Financial Officer, added, “Our first quarter results reflect our end-market exposure and the reverse operating leverage you get within distribution when sales decline. However, I am pleased that we generated $18.4 million in free cash flow, and our leverage ratio was 2.95:1. Subsequent to the quarter end, we completed the acquisition of Tool Supply, Inc., a leading distributor of cutting tools, abrasives, coolants and machine shop supplies. Tool Supply provides us additional end-market diversification and geographic reach. As we move through the year, we will monitor our free cash flow generation, costs and working capital.”

For earnings history and earnings-related data on DXP Enterprises (DXPE) click here.

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