Houston-based pumping solutions and MROP products distributor and supply chain provider DXP Enterprises reported its 2021 first quarter results on Friday, showing year-over-year sales that are still in the red but improving, while sequential sales showed solid growth that was driven by acquisitions the company completed during Q4 2020.
The company posted total Q1 sales of $246 million, down 18.4 percent year-over-year (-17.1 percent on a daily sales basis). That year-over-year decline has shrunk from 32.7 percent in Q3 of last year and 21.2 percent in Q4. Sequentially, Q1 sales improved 5.6 percent, on par with the 5.7 percent increase from Q3 to Q4 2020.
DXP's had a Q1 gross profit of $72 million on margin of 29.2 percent, up 130 basis points year-over-year and up 160 points from Q4. Q1 operating profit was $6.2 million on margin of 2.5 percent, trailing $11 million and 3.6 percent of a year earlier and $8 million and 3.3 percent in Q4.
During Q1, DXP completed the acquisition of Carter & Verplanck, Inc., a distributor of products and services exclusively focused on serving the water and wastewater markets. C&V has 17 employees and had 2020 total sales of $29.5 million. That followed a busy Q4 in which DXP completed the refinancing of a $300 million Term Loan B, and four acquisitions that brought $114 million in combined revenue into the company. Those four acquisitions added 269 employees to DXP's headcount are expected to reduce the company's oil & gas exposure by 200-400 basis points.
"Our first quarter results reflect sequential sales growth driven by acquisitions, strong free cash flow and continued efforts to match costs to the demand of our business," said David Little, DXP chairman and CEO. "We are encouraged by the sequential increases. As we look ahead to the rest of 2021, we remain optimistic that the global and U.S. economy will recover from the impact of the pandemic, in particularly, oil demand and capital projects spending which typically lags most cycles."
By DXP business segment in Q1
- Service Centers revenue of $186 million grew 2.1 percent year-over-year and grew 15.6 percent sequentially, with an 11.9 percent operating margin (10.9 percent margin in Q4).
- Innovative Pumping Solutions revenue of $23 million fell 66.8 percent year-over-year and fell 34.7 percent sequentially, with a 4.1 percent operating margin (10.0 percent margin in Q4)
- Supply Chain Services revenue of $36 million fell 25.6 percent year-over-year and increased 0.5 percent sequentially, with an 6.5 percent operating profit (8.5 percent margin in Q4)
"DXP’s industrial end markets, which is 67 percent of our business (including the recent acquisitions), appears to have found some legs and shows signs of positive upward movement," Little noted.