DXP Enterprises Reports Third Quarter 2022 Results
DXP Enterprises, Inc. (NASDAQ: DXPE) reported strong Q3 2022 results, achieving $387.3 million in sales, a 33.8% increase year-over-year and 5.3% sequentially. Net income rose to $13.2 million from $7.1 million in Q3 2021, with GAAP diluted EPS of $0.67 and non-GAAP diluted EPS of $0.75. Adjusted EBITDA was $34.3 million, reflecting a robust 9% margin. The company completed the acquisition of Sullivan Environmental Technologies, focusing on environmentally friendly markets. Total debt stood at $364.8 million, with a secured leverage ratio of 2.86:1.0.
- Sales increased by 33.8% year-over-year to $387.3 million.
- Net income improved to $13.2 million from $7.1 million year-over-year.
- GAAP diluted EPS rose to $0.67, non-GAAP diluted EPS was $0.75.
- Adjusted EBITDA reached $34.3 million, reflecting a 9% margin.
- Acquisition of Sullivan Environmental Technologies strengthens market position.
- Total debt outstanding is $364.8 million, indicating financial leverage concerns.
-
in sales, a 5.3 sequential and 33.8 percent year-over-year increase$387.3 million -
Net income of
versus$13.2 million compared to Q3 2021$7.1 million -
GAAP diluted EPS of
$0.67 -
Non-GAAP diluted EPS of
$0.75 -
in earnings before interest, taxes, depreciation & amortization and other non-cash charges ("Adjusted EBITDA")$34.3 million -
Closed the acquisition of
Sullivan Environmental Technologies, Inc.
Third Quarter 2022 financial highlights:
-
Sales increased 33.8 percent to
, compared to$387.3 million for the third quarter of 2021 and 5.3 percent compared to the second quarter of 2022.$289.5 million -
Earnings per diluted share for the third quarter were
based upon 19.7 million diluted shares, compared to earnings of$0.67 per share in the third quarter of$0.36 September 30, 2021 , based on 19.6 million diluted shares. Excluding one-time non-cash charges of , earnings per diluted share was$1.2 million , assuming a 25.1 percent tax rate.$0.75 -
Net income for the third quarter was
, compared to$13.3 million for the corresponding prior-year period.$7.1 million -
Adjusted earnings before interest, taxes, depreciation and amortization and other non-cash charges (Adjusted EBITDA) for the third quarter of 2022 was
compared to$34.3 million for the third quarter of 2021.$18.8 million
Non-GAAP Financial Measures
DXP supplements reporting of net income with non-GAAP measurements, including EBITDA, Adjusted EBITDA, free cash flow, non-GAAP net income and net debt. This supplemental information should not be considered in isolation or as a substitute for the unaudited GAAP measurements. Additional information regarding EBITDA, Adjusted EBITDA, free cash flow and non-GAAP net income referred to in this press release are 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. Free Cash Flow reconciles to the most directly comparable GAAP financial measure of cash flows from operations as provided below. We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase company shares, and for certain other activities.
About
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. These forward-looking statements include without limitation those about the Company’s expectations regarding the impact of the COVID-19 pandemic and the impact of low commodity prices of oil and gas; the Company's expectations regarding the filing of the Form 10-Q; the description of the anticipated changes in the Company's consolidated balance sheet and the results of operations and the Company's assessment of the impact of such anticipated changes; the Company’s business, the Company’s future profitability, cash flow, liquidity, and growth. 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; decreases in oil and natural gas prices; decreases in oil and natural gas industry expenditure levels, which may result from decreased oil and natural gas prices or other factors; inability of the Company or its independent auditors to complete the work necessary in order to file the Form 10-Q, in the expected time frame; unanticipated changes to the Company's operating results in the Form 10-Q as filed or in relation to prior periods, including as compared to the anticipated changes stated here; unanticipated impact of such changes and its materiality; ability to obtain needed capital, dependence on existing management, leverage and debt service, domestic or global economic conditions, economic risks related to the impact of COVID-19, ability to manage changes and the continued health or availability of management personnel 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
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ thousands, except for share and per share amounts) |
||||||||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
||||||||
Sales |
|
$ |
387,314 |
|
|
$ |
289,494 |
|
|
$ |
1,074,537 |
|
|
$ |
820,772 |
|
Cost of sales |
|
|
275,681 |
|
|
|
202,551 |
|
|
|
763,758 |
|
|
|
576,921 |
|
Gross profit |
|
|
111,633 |
|
|
|
86,943 |
|
|
|
310,779 |
|
|
|
243,851 |
|
Selling, general and administrative expenses |
|
|
85,094 |
|
|
|
75,758 |
|
|
|
236,761 |
|
|
|
211,587 |
|
Operating income |
|
|
26,539 |
|
|
|
11,185 |
|
|
|
74,018 |
|
|
|
32,264 |
|
Other (income) loss |
|
|
1,566 |
|
|
|
(450 |
) |
|
|
2,942 |
|
|
|
(985 |
) |
Interest expense |
|
|
6,833 |
|
|
|
5,264 |
|
|
|
17,610 |
|
|
|
15,844 |
|
Income before income taxes |
|
|
18,140 |
|
|
|
6,371 |
|
|
|
53,466 |
|
|
|
17,405 |
|
Provision for income taxes |
|
|
5,097 |
|
|
|
(565 |
) |
|
|
13,402 |
|
|
|
2,380 |
|
Net income |
|
|
13,043 |
|
|
|
6,936 |
|
|
|
40,064 |
|
|
|
15,025 |
|
Net income (loss) attributable to NCI* |
|
|
(212 |
) |
|
|
(189 |
) |
|
|
(265 |
) |
|
|
(590 |
) |
Net income attributable to |
|
|
13,255 |
|
|
|
7,125 |
|
|
|
40,329 |
|
|
|
15,615 |
|
Preferred stock dividend |
|
|
22 |
|
|
|
23 |
|
|
|
67 |
|
|
|
68 |
|
Net income attributable to common shareholders |
|
$ |
13,233 |
|
|
$ |
7,102 |
|
|
$ |
40,262 |
|
|
$ |
15,547 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share attributable to |
|
$ |
0.67 |
|
|
$ |
0.36 |
|
|
$ |
2.06 |
|
|
$ |
0.78 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares and common equivalent shares outstanding |
|
|
19,660 |
|
|
|
19,550 |
|
|
|
19,552 |
|
|
|
19,900 |
|
|
|
|
|
|
|
|
|
|
||||||||
*NCI represents non-controlling interest |
|
|
|
|
Business segment financial highlights:
-
Service Centers’ revenue for the third quarter was
, a 3.6 percent sequential increase and an increase of 22.4 percent year-over-year with a 13.7 percent operating income margin.$260.1 million
-
Innovative Pumping Solutions’ revenue for the third quarter was
, a sequential increase of 2.2 percent and an increase of 62.0 percent year-over-year with a 12.4 percent operating income margin.$59.0 million
-
Supply Chain Services’ revenue for the third quarter was
, a 15.7 percent sequential increase and an increase of 68.3 percent year-over-year with a 7.8 percent operating income margin.$68.2 million
SEGMENT DATA ($ thousands, unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
Sales |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Service Centers |
$ |
260,083 |
|
$ |
212,539 |
|
$ |
729,977 |
|
$ |
608,542 |
Innovative Pumping Solutions |
|
59,044 |
|
|
36,440 |
|
|
169,890 |
|
|
96,411 |
Supply Chain Services |
|
68,187 |
|
|
40,515 |
|
|
174,670 |
|
|
115,819 |
Total DXP Sales |
$ |
387,314 |
|
$ |
289,494 |
|
$ |
1,074,537 |
|
$ |
820,772 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
Operating Income |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Service Centers |
$ |
35,718 |
|
$ |
29,381 |
|
$ |
95,437 |
|
$ |
77,819 |
Innovative Pumping Solutions |
|
7,327 |
|
|
277 |
|
|
23,122 |
|
|
6,027 |
Supply Chain Services |
|
5,332 |
|
|
3,181 |
|
|
14,311 |
|
|
8,991 |
Total segments operating income |
$ |
48,377 |
|
$ |
32,839 |
|
$ |
132,870 |
|
$ |
92,837 |
Reconciliation of Operating Income for Reportable Segments ($ thousands, unaudited) |
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
Operating income for reportable segments |
$ |
48,377 |
|
$ |
32,839 |
|
|
$ |
132,870 |
|
$ |
92,837 |
|
Adjustment for: |
|
|
|
|
|
|
|
||||||
Amortization of intangibles |
|
5,132 |
|
|
4,238 |
|
|
|
13,958 |
|
|
12,690 |
|
Corporate expenses |
|
16,706 |
|
|
17,416 |
|
|
|
44,894 |
|
|
47,883 |
|
Total operating income |
$ |
26,539 |
|
$ |
11,185 |
|
|
$ |
74,018 |
|
$ |
32,264 |
|
Interest expense |
|
6,833 |
|
|
5,264 |
|
|
|
17,610 |
|
|
15,844 |
|
Other (income) loss |
|
1,566 |
|
|
(450 |
) |
|
|
2,942 |
|
|
(985 |
) |
Income before income taxes |
$ |
18,140 |
|
$ |
6,371 |
|
|
$ |
53,466 |
|
$ |
17,405 |
|
|
|
|
|
|
|
|
Unaudited Reconciliation of Non-GAAP Financial Information ($ thousands) |
|||||||||||
The following table is a reconciliation of EBITDA and Adjusted EBITDA, non-GAAP financial measures, to income before taxes, calculated and reported in accordance with |
|||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Income before income taxes |
$ |
18,140 |
|
$ |
6,371 |
|
$ |
53,466 |
|
$ |
17,405 |
Plus: interest expense |
|
6,833 |
|
|
5,264 |
|
|
17,610 |
|
|
15,844 |
Plus: depreciation and amortization |
|
7,493 |
|
|
6,486 |
|
|
21,325 |
|
|
20,070 |
EBITDA |
$ |
32,466 |
|
$ |
18,121 |
|
$ |
92,401 |
|
$ |
53,319 |
|
|
|
|
|
|
|
|
||||
Plus: NCI income (loss) before tax* |
$ |
159 |
|
$ |
190 |
|
$ |
433 |
|
$ |
787 |
Plus: One-time non-cash loss |
|
1,193 |
|
|
— |
|
|
1,193 |
|
|
— |
Plus: stock compensation expense |
|
505 |
|
|
514 |
|
|
1,368 |
|
|
1,354 |
Adjusted EBITDA |
$ |
34,323 |
|
$ |
18,825 |
|
$ |
95,395 |
|
$ |
55,460 |
* NCI represents non-controlling interest |
|
|
|
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ($ thousands) |
|||||||
|
|
|
|
|
|||
|
|
|
|
|
|||
ASSETS |
|
|
|
|
|||
Current assets: |
|
|
|
|
|||
Cash |
|
$ |
16,972 |
|
|
$ |
48,989 |
Restricted cash |
|
|
91 |
|
|
|
91 |
Accounts receivable, net of allowances for doubtful accounts |
|
|
283,522 |
|
|
|
218,137 |
Inventories |
|
|
131,290 |
|
|
|
100,894 |
Costs and estimated profits in excess of billings |
|
|
30,122 |
|
|
|
17,193 |
Prepaid expenses and other current assets |
|
|
11,652 |
|
|
|
9,522 |
Income taxes receivable |
|
|
652 |
|
|
|
9,748 |
Total current assets |
|
$ |
474,301 |
|
|
$ |
404,574 |
Property and equipment, net |
|
|
46,657 |
|
|
|
51,880 |
|
|
|
332,988 |
|
|
|
296,541 |
Other intangible assets, net of accumulated amortization |
|
|
84,516 |
|
|
|
79,205 |
Operating lease right-of-use assets |
|
|
54,054 |
|
|
|
57,221 |
Other long-term assets |
|
|
3,559 |
|
|
|
4,806 |
Total assets |
|
$ |
996,075 |
|
|
$ |
894,227 |
|
|
|
|
|
|||
LIABILITIES AND EQUITY |
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|||
Current maturities of debt |
|
$ |
43,906 |
|
|
$ |
3,300 |
Trade accounts payable |
|
|
97,948 |
|
|
|
77,842 |
Accrued wages and benefits |
|
|
27,455 |
|
|
|
23,006 |
Customer advances |
|
|
25,496 |
|
|
|
12,924 |
Billings in excess of costs and estimated profits |
|
|
4,265 |
|
|
|
3,581 |
Federal income taxes payable |
|
|
587 |
|
|
|
0 |
Current-portion operating lease liabilities |
|
|
17,526 |
|
|
|
18,203 |
Other current liabilities |
|
|
28,679 |
|
|
|
42,206 |
Total current liabilities |
|
$ |
245,862 |
|
|
$ |
181,062 |
Long-term debt, less unamortized debt issuance costs |
|
|
313,739 |
|
|
|
315,397 |
Long-term operating lease liabilities |
|
|
37,279 |
|
|
|
39,922 |
Other long-term liabilities |
|
|
4,637 |
|
|
|
3,603 |
Deferred income taxes |
|
|
8,947 |
|
|
|
7,516 |
Total long-term liabilities |
|
$ |
364,602 |
|
|
$ |
366,438 |
Total Liabilities |
|
$ |
610,464 |
|
|
$ |
547,500 |
Equity: |
|
|
|
|
|||
|
|
|
385,823 |
|
|
|
346,674 |
Non-controlling interest |
|
|
(212 |
) |
|
|
53 |
Total Equity |
|
$ |
385,611 |
|
|
$ |
346,727 |
Total liabilities and equity |
|
$ |
996,075 |
|
|
$ |
894,227 |
Unaudited Reconciliation of Non-GAAP Financial Information ($ thousands) |
||||||||||||||||
The following table is a reconciliation of free cash flow, a non-GAAP financial measure, to cash flow from operating activities, calculated and reported in accordance with |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net cash from operating activities |
|
$ |
(3,432 |
) |
|
$ |
6,625 |
|
|
$ |
2,256 |
|
|
$ |
22,831 |
|
Less: purchases of property and equipment |
|
|
(1,578 |
) |
|
|
(1,458 |
) |
|
|
(3,426 |
) |
|
|
(2,984 |
) |
Plus: proceeds from sales of property & equipment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,297 |
|
Free cash flow |
|
$ |
(5,010 |
) |
|
$ |
5,167 |
|
|
$ |
(1,170 |
) |
|
$ |
21,144 |
|
|
|
|
|
|
|
|
|
|
||||||||
Note: Supplemental non-cash items include share repurchases which have been excluded. |
The following table is a reconciliation of adjusted net income, a non-GAAP financial measure, to net income, calculated and reported in accordance with |
|||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
|
|
|
|
|
|
|
|
||||
GAAP Net Income: |
$ |
13,233 |
|
$ |
7,102 |
|
$ |
40,262 |
|
$ |
15,547 |
One-time non-cash loss |
|
1,193 |
|
|
— |
|
|
1,193 |
|
|
— |
Adjustment for taxes* |
|
299 |
|
|
— |
|
|
299 |
|
|
— |
Non-GAAP net income |
$ |
14,725 |
|
$ |
7,102 |
|
$ |
41,754 |
|
$ |
15,547 |
|
|
|
|
|
|
|
|
||||
Diluted earnings per share: |
|
|
|
|
|
|
|
||||
GAAP |
$ |
0.67 |
|
$ |
0.36 |
|
$ |
2.06 |
|
$ |
0.78 |
Non-GAAP |
$ |
0.75 |
|
$ |
0.36 |
|
$ |
2.14 |
|
$ |
0.78 |
* Adjustment for taxes relates to the tax effects of the adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income. For tax purposes the year-to-date effective tax rate of 25.1 percent was applied to the one-time non-cash loss for conservative purposes. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221109005428/en/
Senior Vice President, CFO
Phone: (713) 996-4700
www.dxpe.com
Source:
FAQ
What were DXP Enterprises' Q3 2022 sales figures?
What is the earnings per share for DXP Enterprises in Q3 2022?
How much net income did DXP Enterprises report for Q3 2022?
What is DXP Enterprises' Adjusted EBITDA for Q3 2022?