DXP Enterprises Reports Fourth Quarter and Fiscal 2023 Results
-
Fiscal 2023 sales of
$1.7 billion , up 13.4 percent from fiscal 2022 -
Solid full Year GAAP diluted EPS of
$3.89 -
$174.3 million in adjusted earnings before interest, taxes, depreciation, amortization and other non-cash charges ("Adjusted EBITDA") -
Net income of
$68.8 million versus$48.2 million in fiscal 2022 -
Refinanced Senior Secured Term Loan B raising
$550 million -
Repurchased 1.7 million shares for
$54.7 million in fiscal 2023 -
$173.2 million in cash and restricted cash - Closed three acquisitions during the fiscal year - Florida Valve, Riordan, and Alliance Pump & Mechanical
Fourth Quarter 2023 financial highlights:
-
Sales were
$407.0 million or$6.7 million per day for the fourth quarter of 2023, compared to$406.3 million or$6.6 million per day for the fourth quarter of 2022. -
Diluted earnings per share for the fourth quarter was
$0.94 based upon 17.0 million diluted shares, compared to$0.37 per share in the fourth quarter of 2022 based on 19.3 million diluted shares. Adjusted diluted earnings per shares was$1.12 per share compared to$0.50 per share for the fourth quarter of 2022. -
Adjusted earnings before interest, taxes, depreciation and amortization and other non-cash charges ("Adjusted EBITDA") for the fourth quarter of 2023 was
$41.9 million compared to$31.6 million for the fourth quarter of 2022. Adjusted EBITDA as a percentage of sales was 10.3 percent and 7.8 percent, respectively. -
Free cash flow (cash flow from operating activities less capital expenditures) for the fourth quarter was
$37.3 million or 92.1 percent of EBITDA.
Fiscal Year 2023 financial highlights:
-
Sales increased 13.4 percent to
$1.7 billion or$6.7 million per day, compared to$1.5 billion or$5.9 million per day for fiscal 2022. -
Diluted earnings per share for 2023 was
$3.89 based upon 17.7 million diluted shares, compared to$2.47 per share in 2022, based on 19.5 million basic shares. Adjusted diluted earnings per share was$4.09 per share compared to$2.69 per share in 2022. -
Net income for the year increased
$20.7 million to$68.8 million , compared to$48.2 million for fiscal 2022. -
Adjusted EBITDA for 2023 was
$174.3 million compared to$126.8 million for 2022. Adjusted EBITDA as a percentage of sales was 10.4 percent and 8.6 percent, respectively. -
Free cash flow (cash flow from operating activities less capital expenditures) for fiscal 2023 was
$94.0 million or 55.2 percent of EBITDA compared to$1.0 million in fiscal 2022.
Business segment financial highlights:
-
Service Centers’ revenue for the fiscal year was
$1.1 billion , an increase of 13.4 percent year-over-year with a 14.3 percent operating income margin. -
Innovative Pumping Solutions’ revenue for the fiscal year was
$273.2 million , an increase of 18.2 percent year over year with a 16.2 percent operating income margin. -
Supply Chain Services’ revenue for the fiscal year was
$260.4 million , an increase of 8.3 percent year-over-year with a 8.3 percent operating margin.
Non-GAAP Financial Measures
DXP supplements reporting of net income with non-GAAP measurements, including EBITDA, adjusted EBITDA, free cash flow, Adjusted Net Income attributable to
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.
Conference Call Information
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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 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; 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 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) |
|||||||||||
|
Twelve Months Ended |
||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
||||||
Sales |
$ |
1,678,600 |
|
|
$ |
1,480,832 |
|
|
$ |
1,113,921 |
|
Cost of sales |
|
1,173,309 |
|
|
|
1,058,794 |
|
|
|
785,415 |
|
Gross profit |
|
505,291 |
|
|
|
422,038 |
|
|
|
328,506 |
|
Selling, general and administrative expenses |
|
366,569 |
|
|
|
324,286 |
|
|
|
288,649 |
|
Income from operations |
|
138,722 |
|
|
|
97,752 |
|
|
|
39,857 |
|
Other (income) expense, net |
|
(1,355 |
) |
|
|
2,716 |
|
|
|
(414 |
) |
Interest expense |
|
53,146 |
|
|
|
29,135 |
|
|
|
21,089 |
|
Income before income taxes |
|
86,931 |
|
|
|
65,901 |
|
|
|
19,182 |
|
Provision for income tax expense |
|
18,119 |
|
|
|
17,799 |
|
|
|
3,431 |
|
Net income |
|
68,812 |
|
|
|
48,102 |
|
|
|
15,751 |
|
Net loss attributable to noncontrolling interest |
|
— |
|
|
|
(53 |
) |
|
|
(745 |
) |
Net income attributable to |
|
68,812 |
|
|
|
48,155 |
|
|
|
16,496 |
|
Preferred stock dividend |
|
90 |
|
|
|
90 |
|
|
|
90 |
|
Net income attributable to common shareholders |
$ |
68,722 |
|
|
$ |
48,065 |
|
|
$ |
16,406 |
|
|
|
|
|
|
|
||||||
Net income |
$ |
68,812 |
|
|
$ |
48,102 |
|
|
$ |
15,751 |
|
Foreign currency translation adjustments |
|
435 |
|
|
|
(2,393 |
) |
|
|
747 |
|
Comprehensive income |
$ |
69,247 |
|
|
$ |
45,709 |
|
|
$ |
16,498 |
|
|
|
|
|
|
|
||||||
Basic |
$ |
4.07 |
|
|
$ |
2.58 |
|
|
$ |
0.87 |
|
Diluted |
$ |
3.89 |
|
|
$ |
2.47 |
|
|
$ |
0.83 |
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding: |
|
|
|
|
|
||||||
Basic |
|
16,870 |
|
|
|
18,631 |
|
|
|
18,949 |
|
Diluted |
|
17,710 |
|
|
|
19,471 |
|
|
|
19,789 |
|
UNAUDITED CONSOLIDATED BALANCE SHEETS ($ thousands, except per share amounts) |
|||||||
|
As of |
||||||
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash |
$ |
173,120 |
|
|
$ |
46,026 |
|
Restricted cash |
|
91 |
|
|
|
91 |
|
Accounts receivable, net of allowance of |
|
311,171 |
|
|
|
320,880 |
|
Inventories |
|
103,805 |
|
|
|
101,392 |
|
Costs and estimated profits in excess of billings |
|
42,323 |
|
|
|
23,588 |
|
Prepaid expenses and other current assets |
|
18,044 |
|
|
|
24,137 |
|
Total current assets |
|
648,554 |
|
|
|
516,114 |
|
Property and equipment, net |
|
61,618 |
|
|
|
45,964 |
|
|
|
343,991 |
|
|
|
333,759 |
|
Other intangible assets, net |
|
63,895 |
|
|
|
79,585 |
|
Operating lease right of use assets, net |
|
48,729 |
|
|
|
57,402 |
|
Other long-term assets |
|
10,649 |
|
|
|
4,456 |
|
Total assets |
$ |
1,177,436 |
|
|
$ |
1,037,280 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Current maturities of debt |
$ |
5,500 |
|
|
$ |
4,369 |
|
Trade accounts payable |
|
96,469 |
|
|
|
92,805 |
|
Accrued wages and benefits |
|
36,238 |
|
|
|
26,260 |
|
Customer advances |
|
12,160 |
|
|
|
20,128 |
|
Billings in excess of costs and estimated profits |
|
9,506 |
|
|
|
10,411 |
|
Short-term operating lease liabilities |
|
15,438 |
|
|
|
18,083 |
|
Other current liabilities |
|
48,854 |
|
|
|
40,845 |
|
Total current liabilities |
|
224,165 |
|
|
|
212,901 |
|
Long-term debt, net of unamortized debt issuance costs and discounts |
|
520,697 |
|
|
|
409,205 |
|
Long-term operating lease liabilities |
|
34,336 |
|
|
|
40,189 |
|
Other long-term liabilities |
|
17,359 |
|
|
|
9,593 |
|
Total long-term liabilities |
|
572,392 |
|
|
|
458,987 |
|
Total liabilities |
|
796,557 |
|
|
|
671,888 |
|
Shareholders' Equity: |
|
|
|
||||
Series A preferred stock, |
|
1 |
|
|
|
1 |
|
Series B convertible preferred stock, |
|
15 |
|
|
|
15 |
|
Common stock, |
|
345 |
|
|
|
345 |
|
Additional paid-in capital |
|
216,482 |
|
|
|
213,937 |
|
Retained earnings |
|
319,271 |
|
|
|
250,549 |
|
Accumulated other comprehensive loss |
|
(31,240 |
) |
|
|
(31,675 |
) |
|
|
(123,995 |
) |
|
|
(67,780 |
) |
|
|
380,879 |
|
|
|
365,392 |
|
Total liabilities and equity |
$ |
1,177,436 |
|
|
$ |
1,037,280 |
|
SEGMENT DATA ($ thousands, unaudited) |
|||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
Sales |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Service Centers |
$ |
256,966 |
|
$ |
279,378 |
|
$ |
1,145,082 |
|
$ |
1,009,356 |
Innovative Pumping Solutions |
|
88,748 |
|
|
61,212 |
|
|
273,150 |
|
|
231,102 |
Supply Chain Services |
|
61,330 |
|
|
65,704 |
|
|
260,368 |
|
|
240,374 |
Total DXP Sales |
$ |
407,044 |
|
$ |
406,294 |
|
$ |
1,678,600 |
|
$ |
1,480,832 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
Operating Income |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Service Centers |
$ |
33,603 |
|
$ |
31,807 |
|
$ |
163,877 |
|
$ |
127,174 |
Innovative Pumping Solutions |
|
12,622 |
|
|
6,826 |
|
|
44,260 |
|
|
30,037 |
Supply Chain Services |
|
5,001 |
|
|
5,238 |
|
|
21,524 |
|
|
19,530 |
Total segment operating income |
$ |
51,226 |
|
$ |
43,871 |
|
$ |
229,661 |
|
$ |
176,741 |
Reconciliation of Operating Income for Reportable Segments ($ thousands, unaudited) |
||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
|||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
Operating income for reportable segments |
$ |
51,226 |
|
|
$ |
43,871 |
|
|
$ |
229,661 |
|
|
$ |
176,741 |
Adjustment for: |
|
|
|
|
|
|
|
|||||||
Amortization of intangibles |
|
3,025 |
|
|
|
4,957 |
|
|
|
18,231 |
|
|
|
18,915 |
Corporate and other expense, net |
|
18,214 |
|
|
|
15,180 |
|
|
|
72,708 |
|
|
|
60,074 |
Total operating income |
$ |
29,987 |
|
|
$ |
23,734 |
|
|
$ |
138,722 |
|
|
$ |
97,752 |
Interest expense |
|
17,078 |
|
|
|
11,525 |
|
|
|
53,146 |
|
|
|
29,135 |
Other (income) expense, net |
|
(1,876 |
) |
|
|
(227 |
) |
|
|
(1,355 |
) |
|
|
2,716 |
Income before income taxes |
$ |
14,785 |
|
|
$ |
12,436 |
|
|
$ |
86,931 |
|
|
$ |
65,901 |
Unaudited Reconciliation of Non-GAAP Financial Information
($ thousands, unaudited)
The following table is a reconciliation of EBITDA and adjusted EBITDA, a non-GAAP financial measure, to income (loss) before income taxes, calculated and reported in accordance with
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income attributable to |
$ |
16,005 |
|
|
$ |
7,154 |
|
$ |
68,812 |
|
$ |
48,155 |
|
Less: Net loss attributable to non-controlling interest (NCI) |
|
— |
|
|
|
885 |
|
|
— |
|
|
(53 |
) |
Plus: Interest expense |
|
17,078 |
|
|
|
11,525 |
|
|
53,146 |
|
|
29,135 |
|
Plus: Provision for income tax expense |
|
(1,220 |
) |
|
|
4,397 |
|
|
18,119 |
|
|
17,799 |
|
Plus: Depreciation and amortization |
|
8,637 |
|
|
|
7,175 |
|
|
30,105 |
|
|
28,500 |
|
EBITDA |
$ |
40,500 |
|
|
$ |
31,136 |
|
$ |
170,182 |
|
$ |
123,536 |
|
Plus: NCI income before tax |
|
— |
|
|
|
— |
|
|
— |
|
|
227 |
|
Plus: other non-recurring items(1) |
|
500 |
|
|
|
— |
|
|
1,051 |
|
|
1,193 |
|
Plus: stock compensation expense |
|
861 |
|
|
|
482 |
|
|
3,072 |
|
|
1,850 |
|
Adjusted EBITDA |
$ |
41,861 |
|
|
$ |
31,618 |
|
$ |
174,305 |
|
$ |
126,806 |
|
(1) Other non-recurring items primarily include the loss associated with closing an international location for the year ended |
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 |
|
Twelve Months Ended |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash from operating activities |
$ |
42,444 |
|
|
$ |
3,638 |
|
|
$ |
106,222 |
|
|
$ |
5,894 |
|
Less: purchases of property and equipment, net |
|
(5,160 |
) |
|
|
(1,490 |
) |
|
|
(12,263 |
) |
|
|
(4,916 |
) |
Free Cash Flow |
$ |
37,284 |
|
|
$ |
2,148 |
|
|
$ |
93,959 |
|
|
$ |
978 |
|
|
|
|
|
|
|
|
|
Unaudited Reconciliation of Non-GAAP Financial Information
($ thousands, unaudited)
The following table is a reconciliation of adjusted net income attributable to
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Net Income attributable to |
$ |
16,005 |
|
$ |
7,154 |
|
$ |
68,812 |
|
$ |
48,155 |
One-time non-cash loss |
|
— |
|
|
— |
|
|
— |
|
|
1,193 |
One-time debt financing costs |
|
1,981 |
|
|
1,972 |
|
|
1,981 |
|
|
2,103 |
Other non-recurring items |
|
500 |
|
|
— |
|
|
1,051 |
|
|
— |
Adjustment for taxes* |
|
517 |
|
|
533 |
|
|
632 |
|
|
890 |
Adjusted Net Income attributable to |
$ |
19,003 |
|
$ |
9,659 |
|
$ |
72,476 |
|
$ |
52,341 |
|
|
|
|
|
|
|
|
||||
Weighted average common shares and common equivalent shares outstanding |
|
|
|
|
|
|
|
||||
Basic |
|
16,177 |
|
|
18,422 |
|
|
16,870 |
|
|
18,631 |
Diluted |
|
17,017 |
|
|
19,262 |
|
|
17,710 |
|
|
19,471 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
Diluted Earnings per Share |
$ |
0.94 |
|
$ |
0.37 |
|
$ |
3.89 |
|
$ |
2.47 |
Adjusted Diluted Earnings per Share |
$ |
1.12 |
|
$ |
0.50 |
|
$ |
4.09 |
|
$ |
2.69 |
|
|
|
|
|
|
|
|
||||
* Adjustment for taxes relates to the tax effects of the adjustments that we incorporated into non-GAAP measures in order to provide a more meaningful measure of Adjusted Net Income attributable to |
2023 Sales Per Business Day Reconciliation ($ thousands, except Business days, unaudited) |
||||
|
Q1 |
Q2 |
Q3 |
Q4 |
Total Sales |
|
|
|
|
Business Days |
64 |
64 |
63 |
61 |
Sales Per Business Day |
|
|
|
|
Organic Sales and Acquisition Sales ($ thousands, unaudited) |
|||||||||
|
|
Twelve Months Ended |
|||||||
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
Service Centers |
|
$ |
1,145,082 |
|
$ |
1,009,356 |
|
$ |
816,496 |
Innovative Pumping Solutions |
|
|
273,150 |
|
|
231,102 |
|
|
139,591 |
Supply Chain Services |
|
|
260,368 |
|
|
240,374 |
|
|
157,834 |
Total DXP Sales |
|
|
1,678,600 |
|
|
1,480,832 |
|
|
1,113,921 |
Acquisition Sales |
|
|
33,078 |
|
|
41,527 |
|
|
147,472 |
Organic Sales |
|
$ |
1,645,522 |
|
$ |
1,439,305 |
|
$ |
966,449 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240307539845/en/
Senior Vice President, CFO - 713-996-4700
www.dxpe.com
Source: