HOUSTON — DXP Enterprises, Inc. (NASDAQ: DXPE), No. 19 on Industrial Distribution's 2014 Big 50 List, on Monday announced results for its third quarter ended Sept. 30.
Sales were $387.1 million for the third quarter, compared to $329.7 million for Q3 2013, an increase of 17.4 percent. Organic sales increased $11 million or 3.33 percent, and acquisitions positively impacted sales by $46.4 million.
Gross profit was $113.4 million, or 29.3 percent of sales, for the third quarter, compared to $97.1 million, or 29.5 percent of sales, for Q3 2013.
Selling, general & administrative (SG&A) expenses were $81.6 million, or 21.1 percent of sales, compared to $70.2 million, or 21.3 percent of sales, Q3 2013.
EBITDA (earnings before interest, taxes, depreciation and amortization) was $39.8 million for the current quarter, compared to $32.6 million for Q3 2013, an increase of 22.1 percent. EBITDA as a percentage of sales was 10.3 percent in 2014 and 9.9 percent in 2013.
Operating income was $31.8 million for the current quarter, compared to $26.9 million for Q3 2013. Operating profit as a percentage of sales was 8.2 percent in 2014 and 2013.
Net income of $17.6 million for the current quarter was up 7.9 percent compared to $16.4 million, for the third quarter of 2013.
Earnings per diluted share for the third quarter of 2014 were $1.14 per share, based on 15.5 million diluted shares, compared to $1.07 per share in the third quarter of 2013, based on 15.3 million diluted shares.
David R. Little, Chairman and Chief Executive Officer, remarked, “Thanks to solid execution by our employees, DXP posted strong results for its third quarter of 2014. The DXP team continues to improve throughout the year and execute well in an inconsistent market environment. We continue to see progress at Natpro and B27. We have improved operating income margins, delivered better-than-expected earnings and generated strong cash flow for the third quarter. We experienced 17 percent year-over-year sales growth, a year-high 8 percent operating income margin and 7 percent year-over-year diluted earnings per share growth.
“During the third quarter, we continued to have strong organic growth within Supply Chain Services, slight organic growth in Service Centers and a small decline in Innovative Pumping Solutions. Profitable growth remains a primary focus, including M&A opportunities and organic initiatives, as we position DXP to deliver and drive increased shareholder value.
“As we close out the year and begin planning for 2015, we remain mindful of the challenging macroeconomic environment including the impact of lower oil prices on our markets; nevertheless, our focus more on oil & gas production activity, on our other end markets, our diverse product and service offering, our terrific team of DXPeople and our ability to produce free cash flow, all give us confidence in the bright long-term prospects for DXP.”
Mac McConnell, Chief Financial Officer, added, “We are pleased at our continued year-over year and sequential organic sales and earnings growth. We experienced significant improvements in our cash flow generation, producing over $39 million in free cash flow (cash flow from operating activities less capital expenditures) for the third quarter and over $54 million year-to-date. Our leverage ratio under our credit facility at September 30, 2014 was 2.9:1 and subsequent to the quarter we have continued to deleverage the business. We are pleased with the progress we have made from the first quarter of this year.”
DXP Enterprises 2014 third quarter business segment results:
- Service Centers revenue was up 9.7 percent year over year with a 11.5 percent operating income margin. Organic revenue was up 2.5 percent year over year.
- Innovative Pumping Solutions revenue was up 45.0 percent year over year with a 16.9 percent operating income margin. Organic revenue was down 3.5 percent year over year.
- Supply Chain Services revenue was up 20.2 percent year over year with a 8.6 percent operating margin.
DXP Enterprises, Inc. is a products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada and Mexico. DXP provides innovative pumping solutions, supply chain services and maintenance, repair, operating and production services that emphasize and utilize DXP's vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, industrial supplies and safety products and services.