DXP Enterprises (DXPE) Tops Q1 EPS by 11c, Revenues Beat

DXP Enterprises (NASDAQ: DXPE) reported Q1 EPS of $0.31, $0.11 better than the analyst estimate of $0.20. Revenue for the quarter came in at $301 million versus the consensus estimate of $282.02 million.

First Quarter 2020 financial highlights:

Sales decreased 3.3 percent to $301.0 million, compared to $311.2 million for the first quarter of 2019.
Earnings per diluted share for the first quarter was $0.31 based upon 18.6 million diluted shares, compared to $0.40 per share in the first quarter of March 31, 2019, based on 18.4 million diluted shares.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter was $17.8 million compared to $21.1 million for the first quarter of 2019.
Expanded ABL facility from $85 million to $135 million with no changes in pricing or terms.

David R. Little, Chairman and CEO commented, “These are unprecedented times and I want to thank each of our DXPeople for their efforts and commitment. DXP appreciates the help of all medical professionals and first responders in our various communities. Also, DXP appreciates the support of our DXP suppliers as we navigate our new normal together. As an ‘essential business’, we felt responsible to provide excellent service to our customers (who themselves were deemed as 'essential'). By providing products and services, we were assisting them in keeping the economy functioning during these difficult times. In terms of our priorities at DXP, our first priority was the health and safety of our DXPeople and supporting national efforts to stop the spread of the Coronavirus. We took immediate steps in the U.S.A, Canada and Dubai at our facilities by working in small teams and or through work rotations. We did this so that if we needed to quarantine one team, we could still continue to serve our customers. Additionally, we had our facilities deploy social distancing in the workplace, frequent hand washing and sanitizing, temperature testing, quarantines, and remote work habits in the situations and circumstances where we could. We strongly encouraged our employees to not just maintain some of these protocols at work but also while at home or outside of the workplace. Out of DXP’s 2,700 plus DXPeople, I am proud that we have had only two confirmed cases of coronavirus thus far. Our second priority has been to continue to provide exceptional service and support to our customers, as we support various industries that keep the wheels of the North America economy going. We are thankful that we had the opportunity to support and serve our customers and make a difference. During these times, DXPeople have done some amazing things for our customers to keep them safe and running as an ‘essential business’. The letters and emails that we have received showing appreciation and regards for our support, have been truly heart-warming. Our third priority has been to manage our balance sheet on expected lower near-term demand to remain strong and posed for an eventual recovery. I am very proud of how our DXP team has managed and balanced these priorities in what is an unprecedented and unique environment.”

Mr. Little continued, “We executed well in this challenging environment. During the first quarter, we achieved $301.0 million in sales, including $5.2 million from acquisitions. Our improvement in diluted earnings per share from the fourth quarter speaks to our team’s execution and focus on continuous improvement. In terms of our business segments for the first quarter, sales were $182.6 million for Service Centers, $70.0 million for Innovative Pumping Solutions and $48.4 million for Supply Chain Services. We delivered on our financial results as the market adjusted to various shelter-in-place orders. DXP has a model that is characterized by high levels of MRO spend, low fixed costs, low capital expenditure requirements, and high levels of operating cash flow when the business cycles. For these reasons, and many others, we are highly confident in our ability to successfully navigate the situation. We believe our strong balance sheet and financial liquidity will allow us to continue making strategic investments in our business, where appropriate. Similar to the 2008, 2015 and 2016 business downturns, we believe our experienced management team positions us to best take advantage of a return to more normal business conditions in the future.”

Kent Yee, CFO commented, “The first quarter of 2020 financial results were great to see. Creating a safe haven while continuing to work has been our goal from the beginning, especially once deemed an ‘essential business’. As we adjusted to the impact of the Coronavirus, from a business standpoint, we quickly transitioned to focusing on maintaining the strength in our balance sheet by ensuring debt capacity and liquidity, driving efficiencies throughout the business, and ensuring our cash flow profile would perform in today’s environment. In March, we expanded our asset based loan facility to $135 million with no change to pricing or terms. At March 31st, we were undrawn and had $131.6 million in capacity. The ABL matures in August 2022 and our term loan matures in August 2023, therefore, we have no near term maturities. As of March 31, 2020, we had $32.9 million in cash and cash equivalents on the balance sheet. Our senior leverage was 2.2:1 with a covenant at the end of Q1 of 4.75:1.”

Mr. Yee added, “DXP is well-positioned to support its customers, employees and suppliers. We will continue to take the steps to manage our business by tightening our expenses and capital spending and actively managing our balance sheet. We believe that we have ample flexibility to navigate through the uncertain times ahead. As a leading distributor to essential industries, DXP remains well positioned to support our customers, suppliers and communities during this extraordinary time, while continuing to build our capabilities and keeping our eyes on the future.”

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

You May Also Be Interested In

• Citi agrees to acquire rewards platform Kard Financial
• 4D Molecular Therapeutics, Inc. (FDMT) Misses Q2 EPS by 3c
• Inhibrx, Inc. (INBX) Misses Q2 EPS by 54c