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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported):  November 8, 2023
Commission file number 0-21513
DXP Enterprises, Inc.
(Exact name of registrant as specified in its charter)

Texas 76-0509661
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
5301 Hollister (713) 996-4700
Houston,  Texas 77040
(Address of principal executive offices) (Registrant’s telephone number, including area code)
_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class Trading Symbol Name of Exchange on which Registered
Common Stock par value $0.01 DXPE NASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company    ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐




ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following information is furnished pursuant to Regulation FD.
On November 8, 2023, DXP Enterprises, Inc., issued a press release announcing financial results for the third quarter ended September 30, 2023. A copy of the release is furnished herewith as Exhibit 99.1, and incorporated herein by reference. Such exhibit (i) is furnished pursuant to Item 2.02 of Form 8-K, (ii) is not to be considered "filed" under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (iii) shall not be incorporated by reference into any previous or future filings made by or to be made by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act.





ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
99.1     Press Release dated November 8, 2023 announcing the earnings results for the third quarter ended September 30, 2023.



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DXP ENTERPRISES, INC.
(Registrant)
 
By: /s/ Kent Yee
Kent Yee
Senior Vice President/Finance and Chief Financial Officer
By: /s/ David Molero Santos
David Molero Santos
Vice President/Finance and Chief Accounting Officer
 
Dated: November 9, 2023




INDEX TO EXHIBITS
Introductory Note: The following exhibit is furnished pursuant to Item 2.02 of Form 8-K and is not to be considered “filed” under the Exchange Act and shall not be incorporated by reference into any of the Company’s previous or future filings under the Securities Act or the Exchange Act.
Exhibit No. Description
99.1


EX-99.1 2 earningsrelease9302023.htm EX-99.1 Document
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THE INDUSTRIAL DISTRIBUTION EXPERTS

DXP ENTERPRISES, INC. REPORTS THIRD QUARTER 2023 RESULTS

•$27.2 million in cash
•$419.2 million in sales, an 8.2 percent year-over-year increase
•$1,271.6 million in year to date sales, an 18.3 percent year-over-year increase
•Diluted earnings per share of $0.93, up 31.0 percent compared to Q3 2022
•$44.0 million in earnings before interest, taxes, depreciation & amortization and other non-cash charges ("Adjusted EBITDA")
•Free Cash Flow of $38.3 million and $56.7 million for the three and nine months ended September 30, 2023
•Post Q3, successfully reduced borrowing costs by fifty basis points and raised an incremental $125 million

Houston, TX – November 8, 2023 – DXP Enterprises, Inc. (the "Company" or "DXPE") (NASDAQ: DXPE) today announced financial results for the third quarter ended September 30, 2023. The following are results for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, and for the three months ended June 30, 2023, where appropriate. A reconciliation of the non-GAAP financial measures can be found in the back of this press release.

"The Company posted solid third-quarter results in a lessening inflationary market and varied spending by our customers, delivering solid sales, Adjusted EBITDA, earnings per share and Free Cash Flow performance," said David R. Little, Chairman and Chief Executive Officer.
Third Quarter 2023 financial highlights:

•Sales increased 8.2 percent to $419.2 million, compared to $387.3 million for the third quarter of 2022, and decreased 2.1 percent compared to the second quarter of 2023.
•Net income increased 16.1 percent for the third quarter to $16.2 million, compared to $13.9 million for the corresponding prior-year period.
•Earnings per diluted share for the third quarter was $0.93 based upon 17.4 million diluted shares, compared to earnings of $0.71 per diluted share in the third quarter of September 30, 2022, based on 19.7 million diluted shares.
•Adjusted EBITDA for the third quarter of 2023 was $44.0 million compared to $34.3 million for the third quarter of 2022. Adjusted EBITDA as a percentage of sales, or Adjusted EBITDA Margin, was 10.5 percent and 8.9 percent, respectively.
•Free Cash Flow for the third quarter of 2023 was $38.3 million compared to $(5.0) million for the third quarter of 2022
David R. Little, Chairman and Chief Executive Officer continued, “We are pleased with our performance in the third quarter as the team maintained momentum and delivered strong year-over-year results. We achieved 8.2 percent sales growth year-over-year, and solid ten percent plus EBITDA margins and growth. DXP’s third quarter 2023 sales were $419.2 million. Adjusted EBITDA grew 28.3 percent year-over-year. In terms of our business segments for the third quarter of 2023, sales were $294.5 million for Service Centers, $59.0 million for Innovative Pumping Solutions and $65.8 million for Supply Chain Services. Business segment operating income increased 20.3 percent year-over-year. We believe we are well positioned to outgrow the market and to generate improved operating margins and returns for the benefit of our shareholders as we begin to move into 2024.”
Kent Yee, Chief Financial Officer and Senior Vice President, remarked, “Our third quarter year-over-year financial results continue to reflect the growth we have been experiencing in fiscal year 2023, and reflect our financial goals to grow through a combination of organic and acquisition sales. We had a strong quarter of Free Cash Flow generation, producing $38.3 million in Free Cash Flow during the third quarter. Total debt outstanding as of September 30, 2023, was $424.9 million. DXP’s secured leverage ratio or net debt to EBITDA ratio was 2.3:1.0 with a covenant EBITDA of $168.5 million for the last twelve-months ending September 30, 2023. Subsequent to the third quarter, we announced the successful completion of the refinancing of our existing debt plus raising an incremental $125 million. This allowed us to reprice our existing borrowings, saving fifty basis points, while raising incremental monies to help drive anticipated acquisition growth while maintaining liquidity and flexibility. We expect to finish fiscal year 2023 strong with momentum continuing into fiscal year 2024.”
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www.dxpe.com
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Conference Call Information
DXP Enterprises, Inc. management will host a conference call, November 9, 2023, at 10:00 a.m. Central Time, to discuss the Company’s financial results. The conference call may be accessed by going to https://ir.dxpe.com.
Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://ir.dxpe.com. The online replay will be available on the same website immediately following the call. A slide presentation highlighting the Company’s results and key performance indicators will also be available on the Investor Relations section of the Company’s website.

To learn more about DXP Enterprises, Inc., please visit the Company's website at https://ir.dxpe.com

About DXP Enterprises, Inc.

DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout North America and Dubai. DXP provides innovative pumping solutions, supply chain services and maintenance, repair, operating and production ("MROP") services that emphasize and utilize DXP’s vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services. 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 business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, go to www.dxpe.com.

Non-GAAP Financial Measures

DXP supplements reporting of net income with certain non-GAAP measurements, including EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Free Cash Flow, 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, EBITDA Margin, Adjusted EBITDA Margin, Free Cash Flow and net debt 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 facilities. 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 to its most directly comparable GAAP financial measure, 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 shares of the Company's common stock, and for certain other activities.

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Information Related to Forward-Looking Statements

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 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: the effectiveness of management’s strategies and decisions; our ability to implement our internal growth and acquisition growth strategies; general economic and business conditions specific to our primary customers; changes in government regulations; our ability to effectively integrate businesses we may acquire; new or modified statutory or regulatory requirements; availability of materials and labor; inability to obtain or delay in obtaining government or third-party approvals and permits; non-performance by third parties of their contractual obligations; unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response thereto; cyber-attacks adversely affecting our operations; other geological, operating and economic considerations and declining prices and market conditions, including reduced oil and natural gas prices and supply or demand for maintenance, repair and operating products, equipment and service; decreases in oil and natural gas industry capital 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, 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. More information on these risks and other potential factors that could affect the Company’s business and financial results is included in the Company’s filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

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www.dxpe.com
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DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Sales $ 419,249  $ 387,314  $ 1,271,556  $ 1,074,537 
Cost of sales 293,687  275,681  889,101  763,758 
Gross profit 125,562  111,633  382,455  310,779 
Selling, general and administrative expenses 89,706  85,094  273,720  236,761 
Income from operations 35,856  26,539  108,735  74,018 
Other expense, net
1,234  1,565  522  2,941 
Interest expense 12,684  6,833  36,068  17,610 
Income before income taxes 21,938  18,141  72,145  53,467 
Provision for income taxes 5,766  5,097  19,339  13,402 
Net income 16,172  13,044  52,806  40,065 
Net loss attributable to NCI*
—  (885) —  (938)
Net income attributable to DXP Enterprises, Inc. 16,172  13,929  52,806  41,003 
Preferred stock dividend 22  22  67  67 
Net income attributable to common shareholders $ 16,150  $ 13,907  $ 52,739  $ 40,936 
Diluted earnings per share attributable to DXP Enterprises, Inc. $ 0.93  $ 0.71  $ 2.94  $ 2.10 
Weighted average common shares and common equivalent shares outstanding 17,356  19,660  17,944  19,552 
*NCI represents non-controlling interest

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www.dxpe.com
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DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
($ thousands)

September 30, 2023 December 31, 2022
ASSETS
Current assets:
Cash $ 27,176  $ 46,026 
Restricted cash 91  91 
Accounts receivable, net of allowances for doubtful accounts 320,972  320,880 
Inventories 105,145  101,392 
Costs and estimated profits in excess of billings 47,211  23,588 
Prepaid expenses and other current assets 15,799  21,644 
Income taxes receivable 393  2,493 
Total current assets $ 516,787  $ 516,114 
Property and equipment, net 56,277  45,964 
Goodwill 342,122  333,759 
Other intangible assets, net of accumulated amortization 67,913  79,585 
Operating lease right-of-use assets, net 48,462  57,402 
Other long-term assets 13,543  4,456 
Total assets $ 1,045,104  $ 1,037,280 
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of debt $ 4,369  $ 4,369 
Trade accounts payable 101,439  100,784 
Accrued wages and benefits 35,540  26,260 
Customer advances 12,595  20,128 
Billings in excess of costs and estimated profits 7,181  10,411 
Current-portion operating lease liabilities 15,459  18,083 
Other current liabilities 45,275  32,866 
Total current liabilities $ 221,858  $ 212,901 
Long-term debt, less unamortized debt issuance costs 408,105  409,205 
Long-term operating lease liabilities 34,028  40,189 
Other long-term liabilities 15,469  4,701 
Deferred income taxes 2,068  4,892 
Total long-term liabilities $ 459,670  $ 458,987 
Total Liabilities $ 681,528  $ 671,888 
Equity:
Total DXP Enterprises, Inc. equity 363,576  365,392 
Total liabilities and equity $ 1,045,104  $ 1,037,280 
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www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS
Business segment financial highlights:

•Service Centers’ revenue for the third quarter was $294.5 million, a 1.3 percent sequential decrease and an increase of 13.2 percent year-over-year with a 14.1 percent operating income margin and a revenue increase of 21.7 percent for the nine months ended September 30, 2023 compared to the same period in 2022.
•Innovative Pumping Solutions’ revenue for the third quarter was $59.0 million, a sequential decrease of 7.1 percent and a decrease of 0.1 percent year-over-year with a 18.9 percent operating income margin and a revenue increase of 8.5 percent for the nine months ended September 30, 2023 compared to the same period in 2022.
•Supply Chain Services’ revenue for the third quarter was $65.8 million, a 0.5 percent sequential decrease and a decrease of 3.5 percent year-over-year with a 8.5 percent operating income margin and a revenue increase of 14.0 percent for the nine months ended September 30, 2023 compared to the same period in 2022.


SEGMENT DATA
($ thousands, unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
Sales 2023 2022 2023 2022
Service Centers $ 294,458  $ 260,083  $ 888,116  $ 729,977 
Innovative Pumping Solutions 58,963  59,044  184,402  169,890 
Supply Chain Services 65,828  68,187  199,038  174,670 
Total Sales $ 419,249  $ 387,314  $ 1,271,556  $ 1,074,537 
Three Months Ended September 30, Nine Months Ended September 30,
Operating Income 2023 2022 2023 2022
Service Centers $ 41,441  $ 35,718  $ 130,274  $ 95,437 
Innovative Pumping Solutions 11,155  7,327  31,638  23,122 
Supply Chain Services 5,593  5,332  16,522  14,311 
Total Segments operating income $ 58,189  $ 48,377  $ 178,434  $ 132,870 

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www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS
Reconciliation of Operating Income for Reportable Segments
($ thousands, unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Income from operations for reportable segments $ 58,189  $ 48,377  $ 178,434  $ 132,870 
Adjustment for:
Amortization of intangibles and fixed assets
5,866  5,132  15,206  13,958 
Corporate expenses 16,467  16,706  54,493  44,894 
Income from operations $ 35,856  $ 26,539  $ 108,735  $ 74,018 
Interest expense 12,684  6,833  36,068  17,610 
Other (income) expense, net 1,234  1,565  522  2,941 
Income before income taxes $ 21,938  $ 18,141  $ 72,145  $ 53,467 

Unaudited Reconciliation of Non-GAAP Financial Information
($ thousands)

The following table sets forth the reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin to the most comparable U.S. GAAP financial measure (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Net income attributable to DXP Enterprises, Inc.
$ 16,172  $ 13,929  $ 52,806  $ 41,003 
Less: Net loss attributable to non-controlling interest
—  (885) —  (938)
Plus: Interest expense
12,684  6,833  36,068  17,610 
Plus: Provision for income taxes
5,766  5,097  19,339  13,402 
Plus: Depreciation and amortization
7,983  7,493  21,468  21,325 
EBITDA $ 42,605  $ 32,467  $ 129,681  $ 92,402 
Plus: NCI income (loss) before tax(1)
—  159  —  433 
Plus: other non-recurring items(2)
551  1,193  551  1,193 
Plus: stock compensation expense 864  505  2,211  1,368 
Adjusted EBITDA $ 44,020  $ 34,324  $ 132,443  $ 95,396 
Operating Income Margin 8.6  % 6.9  % 8.6  % 6.9  %
EBITDA Margin 10.2  % 8.4  % 10.2  % 8.6  %
Adjusted EBITDA Margin 10.5  % 8.9  % 10.4  % 8.9  %
(1) NCI represents non-controlling interest.
(2) Other non-recurring items includes the loss associated with closing an international location for the three and nine months ended September 30, 2023 and the loss associated with the sale of a VIE for the three and nine months ended September 30, 2022.
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Unaudited Reconciliation of Non-GAAP Financial Information
($ thousands)

The following table sets forth the reconciliation of Free Cash Flow to the most comparable GAAP financial measure (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Net cash from operating activities $ 39,758  $ (3,432) $ 63,775  $ 2,256 
Less: purchases of property and equipment (1,486) (1,578) (7,103) (3,426)
Free Cash Flow $ 38,272  $ (5,010) $ 56,672  $ (1,170)
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