DXP Enterprises (DXPE) Misses Q4 EPS by 48c, Revenues Miss

DXP Enterprises (NASDAQ: DXPE) reported Q4 EPS of $0.12, $0.48 worse than the analyst estimate of $0.60. Revenue for the quarter came in at $295.5 million versus the consensus estimate of $319.97 million.

Fourth Quarter 2019 financial highlights:

• Sales decreased 5.0 percent to $295.5 million, compared to $311.0 million for the fourth quarter of 2018.
• Earnings per diluted share for the fourth quarter was $0.12 based upon 18.4 million diluted shares, compared to $0.60 per share in the fourth quarter of 2018, based on 18.4 million diluted shares.

David R. Little, Chairman and CEO commented, “DXP reported fiscal 2019 sales of $1.3 billion, a 4.2 percent growth over 2018. We invested in expanding our facilities, products and corporate support capabilities in FY 2019. Overall performance was positive with more strength during the first half of the year versus the third and fourth quarter. Despite the changing market environment, we made a decision to invest in the business and position DXP to continue to take market share. We believe our financial performance during the second half of the year reflects our oil and gas customers reaching their budget limits towards the end of the third quarter and remaining disciplined on the capital spending side through the fourth quarter. Our IPS segment was impacted the most but we expect to show improvement as we move through fiscal 2020. Underlying demand in our end markets has wavered but we continue to take market share and focus on execution. Fiscal 2019 sales for Supply Chain Services grew 15.4 percent, Innovative Pumping Solutions grew 4.1 percent and Service Centers grew 1.6 percent. DXP produced total EBITDA of $91.3 million in fiscal 2019 along with $26 million in free cash flow generation during the fourth quarter.

“We opened Fiscal 2020 closing two acquisitions and we will continue to focus on delivering margin expansion, strong returns on capital and free cash flow generation. We remain committed to taking market share, growing the business, both organically and through acquisitions. We are focused on providing the right solutions for our customers, while continuously improving our operational performance even in a changing end market backdrop. Fiscal 2020 will be a year where we cannot take anything for granted but focus on executing our strategy and business plan.”

Kent Yee, CFO commented, “Fiscal 2019 financial performance reflects our plan to invest in the business while operating in a changing macro and industry environment. During the first and second quarter, we were on pace to grow the business 8 percent on a year-over-year basis. In the second half of fiscal 2019, we essentially grew the business 0.6 percent. Total sales for the fiscal year grew 4.2 percent. Our fiscal 2019 diluted earnings per share was $1.96. We spent $22.1 million on capital expenditures, of which $13.1 million was growth related versus maintenance. Our balance sheet remains positioned to support the business over the long term. DXP ended the year with $54.3 million in cash on the balance sheet and net debt of $190.2 million. DXP\'s secured leverage ratio or net debt to EBITDA was 2.23 :1.0. We have momentum going into fiscal 2020, closing two acquisitions and we expect to drive more acquisition growth.”

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

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