DXP Enterprises Announces Third Quarter Results
Wednesday November 1, 5:44 pm ET
Net Income Increases 181% - Sales Increase 57%
HOUSTON--(BUSINESS WIRE)--DXP Enterprises, Inc. (NASDAQ:DXPE - News) today announced a 181% increase in net income to $2,981,000 for the third quarter ending September 30, 2006 with diluted earnings per share of $0.52 compared to net income of $1,061,000 and diluted earnings per share of $0.18 for the third quarter of 2005. Sales increased 57.2% to $68.2 million from $43.4 million for the third quarter of 2005. Sales by the businesses acquired in 2005 and 2006 accounted for $9.3 million of the sales increase. Excluding sales by the acquired businesses, sales for the third quarter of 2006 increased 36.2% from the third quarter of 2005.
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Year-to-date net income as of September 30, 2006 increased 148.6% to $8.4 million, or $1.47 per diluted share, compared to $3.4 million, or $0.59 per diluted share for the first nine months of 2005. Sales increased 53.5% to $200.5 million from $130.6 million for the first nine months of 2005. Sales by the businesses acquired in 2005 and 2006 accounted for $26.9 million of the sales increase. Excluding sales of the acquired businesses, sales for the first nine months of 2006 increased 33.0% from the same period in 2005.
David R. Little, Chairman and Chief Executive Officer, said, "Our industrial customer base continues to indicate a strong outlook in the upstream and downstream energy sectors of oil, gas and coal. The outlook for the remainder of 2006 and for 2007 is especially strong for our SmartSource and innovative pumping solutions units."
Mac McConnell, Senior Vice President & CFO, said, "Debt declined $8.8 million, to $29.6 million, during the third quarter of 2006. The debt to equity ratio declined to 0.93 at September 30, 2006 from 1.33 at June 30, 2006."
DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to MRO and OEM customers in virtually every industry since 1908. DXP provides innovative pumping solutions, integrated supply 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.
SmartSource, a DXP integrated supply program, allows a more efficient way to manage the customer's supply chain needs for MROP products. The program allows the customer to transfer all or part of their supply chain needs to DXP, so the customer can focus on his core business. SmartSource effectively lowers costs by outsourcing purchasing, accounting, and on-site supply management to DXP, which reduces the duplication of effort by the customer and supplier. 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.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ---------------------
2006 2005 2006 2005
---------- --------------------- ----------
Sales $68,189 $43,378 $200,469 $130,630
Cost of sales 48,468 31,927 144,275 95,966
---------- ---------- ---------- ----------
Gross profit 19,721 11,451 56,194 34,664
Selling, general and
administrative expense 14,578 9,618 41,348 28,813
---------- ---------- ---------- ----------
Operating income 5,143 1,833 14,846 5,851
Other income 220 9 238 36
Interest expense (501) (216) (1,344) (733)
Minority interest in
(income) loss of
consolidated subsidiary - 29 20 126
---------- ---------- ---------- ----------
Income before taxes 4,862 1,655 13,760 5,280
Provision for income taxes 1,881 594 5,327 1,888
---------- ---------- ---------- ----------
Net income 2,981 1,061 8,433 3,392
Preferred stock dividend 23 23 68 68
---------- ---------- ---------- ----------
Net income attributable to
common shareholders $2,958 $1,038 8,365 $3,324
========== ========== ========== ==========
Basic income per share $0.58 $0.24 $1.66 $0.79
========== ========== ========== ==========
Weighted average common
shares outstanding 5,124 4,406 5,043 4,213
========== ========== ========== ==========
Diluted income per share $0.52 $0.18 $1.47 $0.59
========== ========== ========== ==========
Weighted average common and
common equivalent shares
outstanding 5,749 5,895 5,733 5,792
========== ========== ========== ==========
Unaudited Reconciliation of Non-GAAP Financial Information
The following table is a reconciliation of EBITDA(a); 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,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Income before income taxes $4,862 $1,655 $13,760 $5,280
Plus interest expense 501 216 1,344 733
Plus depreciation and
amortization 307 243 860 717
--------- --------- --------- ---------
EBITDA $5,670 $2,114 $15,964 $6,730
========= ========= ========= =========
(a)EBITDA - earnings before interest, income taxes, depreciation and
amortization
Contact:
DXP Enterprises, Inc., Houston
Mac McConnell, 713-996-4700
Senior Vice President, Finance
www.dxpe.com
