Houston-based pumping solutions and MROP products distributor DXP Enterprises reported its 2020 first quarter financial results on Friday, which showed a modest decline in year-over-year sales and profit.
DXP — No. 16 on Industrial Distribution's 2019 Big 50 List — posted total Q1 sales of $301 million, down 3.3 percent year-over-year (YoY) and up 1.9 percent sequentially from Q4 2019. Gross profit margin of 27.9 percent was up from 27.1 percent a year earlier and up from 26.5 percent in Q4, while operating profit of $10.9 million was down from $14.8 million a year earlier and up from $6.7 million in Q4.
The company's total Q1 profit of $5.6 million was down from $7.2 million a year earlier and up from $2.2 million in Q4.
During Q1, DXP closed on the acquisition of Richmond, CA-based Turbo Machinery Repair on Jan. 31. Operating out of a single location near Oakland, Turbo is a pump and industrial equipment repair, maintenance, machining and labor services company.
By DXP business segment in Q1
- Service Centers’ revenue of $182.6 million, a decrease of 1.9 percent YoY, with a 9.3 percent operating income margin.
- Innovative Pumping Solutions’ revenue of $70.0 million, a decrease of 6.3 percent YoY, with a 14.9 percent operating income margin.
- Supply Chain Services’ revenue of $48.4 million decreased of 3.9 percent YoY, with a 7.8 percent operating income margin.
"We delivered on our financial results as the market adjusted to various shelter-in-place orders," said David Little, DXP chairman and CEO. "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."
Responding to the COVID-19 pandemic's business impacts, DXP has enacted cost-savings measures that include:
- Emphasizing and implementing good hygiene protocol at all facilities
- Implementing a temporary hiring freeze, travel restrictions and wage freeze
- Expanding our $85 million asset-based-loan facility to $135 million
- Internal focus on cash management and monitoring likely areas of exposure
Little said that only two of DXP's 2,700-plus employees has had confirmed cases of COVID-19 so far.