Exhibit 99.1
News Release Contact: Mac McConnell
Senior Vice President, Finance
713-996-4700
www.dxpe.com
DXP ENTERPRISES ANNOUNCES 2010 FIRST QUARTER RESULTS
Houston, TX, -- May 3, 2010 – DXP Enterprises, Inc. (NASDAQ: DXPE) today announced net income of $3.6 million for the first quarter ending March 31, 2010 with diluted income per share (“EPS”) of $0.26 compared to net income of $3.2 million and EPS of $0.23 for the first quarter of 2009. Sales for the first quarter of 2010 increased 6.6% from the fourth quarter of 2009 and decreased $10.6 million, or 6.7%, to approximately $147 million from $157.6 million for the first quarter of 2009.
David R. Little, Chairman and Chief Executive Officer remarked, “We are optimistic about our outlook as our markets begin to improve. Our growth strategies are solid and we have continued to invest in people and products that have positioned us to grow market share as the economy continues to recover. We continue to take cost out of our processes and to serve our customers better which will enhance our profits and growth.”
Mac McConnell, Senior Vice President and CFO, added, “We continue to drive efficiencies and manage working capital. I’m pleased we reduced total long-term debt by $5.3 million during the first quarter of 2010.”
DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to MRO and OEM customers in virtually every industry since 1908. DXP provides innovative pumping solutions, supply chain services and MROP (maintenance, repair, operating and production) services that emphasize and utilize DXP’s vast product knowledge and technical expertise in pumps, bearings, power transmission, seals, hose, safety, fluid power, electrical and industrial supplies. 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 innovative pumping solutions provide engineering, fabrication and technical design to meet the capital equipment needs of its global customer base. DXP provides solutions by utilizing manufacturer authorized equipment and certified personnel. Pump packages require MRO and OEM equipment such as pumps, motors and valves, and consumable products. DXP leverages its MROP inventories and technical knowledge to lower the total cost and maintain the quality of the pump package.
Precision Supply Chain Services, a DXP supply chain services program, allows a more efficient way to manage the customer’s supply chain needs for MROP products. The program allows the customer to transfer all or part of their supply chain needs to DXP, so the customer can focus on his core business. SmartSource effectively lowers costs by outsourcing purchasing, accounting, and on-site supply management to DXP, which reduces the duplication of effort by the customer and supplier. DXP’s broad range of first-tier products provides an efficient measurable solution to reduce cost and streamline procurement and sourcing operations.
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. 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; ability to obtain needed capital, dependence on existing management, leverage and debt service, domestic or global economic cond itions, and changes in customer preferences and attitudes. For more information, review the Company’s filings with the Securities and Exchange Commission.
DXP ENTERPRISES, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
March 31, 2010 | December 31, 2009 | ||
ASSETS | (unaudited) | ||
Current assets: | |||
Cash | $ 4,186 | $ 2,344 | |
Trade accounts receivable, net of allowances for doubtful accounts | |||
of $3,076 in 2010 and $3,006 in 2009 | 82,977 | 77,066 | |
Inventories, net | 70,112 | 72,581 | |
Prepaid expenses and other current assets | 4,442 | 3,533 | |
Federal income tax recoverable | - | 235 | |
Deferred income taxes | 8,003 | 7,833 | |
Total current assets | 169,720 | 163,592 | |
Property and equipment, net | 15,955 | 16,955 | |
Goodwill | 60,542 | 60,542 | |
Other intangibles, net of accumulated amortization of $15,078 in 2010 and $13,779 in 2009 | 24,428 | 25,727 | |
Non-current deferred income taxes | 3,042 | 3,289 | |
Other assets | 736 | 822 | |
Total assets | $ 274,423 | $ 270,927 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
Current liabilities: | |||
Current portion of long-term debt | $ 12,137 | $ 12,595 | |
Trade accounts payable | 53,636 | 51,185 | |
Accrued wages and benefits | 7,884 | 6,633 | |
Federal income taxes payable | 1,652 | - | |
Customer advances | 685 | 1,008 | |
Other accrued liabilities | 6,203 | 6,377 | |
Total current liabilities | 82,197 | 77,798 | |
Long-term debt, less current portion | 98,065 | 102,916 | |
Total shareholders’ equity | 94,161 | 90,213 | |
Total liabilities and shareholders’ equity | $ 274,423 | $ 270,927 |
DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended | |||
March 31, | |||
2010 | 2009 | ||
Sales | $ 146,992 | $ 157,604 | |
Cost of sales | 105,037 | 111,530 | |
Gross profit | 41,955 | 46,074 | |
Selling, general and administrative expense | 35,208 | 39,382 | |
Operating income | 6,747 | 6,692 | |
Other income | 203 | 14 | |
Interest expense | (994) | (1,453) | |
Income before income taxes | 5,956 | 5,253 | |
Provision for income taxes | 2,364 | 2,081 | |
Net income | 3,592 | 3,172 | |
Preferred stock dividend | (23) | (15) | |
Net income attributable to common shareholders | $ 3,569 | $ 3,157 | |
Basic income per share | $ 0.27 | $ 0.24 | |
Weighted average common shares outstanding | 13,159 | 13,079 | |
Diluted income per share | $ 0.26 | $ 0.23 | |
Weighted average common and common equivalent shares outstanding | 14,028 | 13,952 |
DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS ENDED | |||
MARCH 31 | |||
2010 | 2009 | ||
OPERATING ACTIVITIES: | |||
Net income | $ 3,592 | $ 3,172 | |
Adjustments to reconcile net income to net cash provided | |||
by operating activities – net of acquisitions and divestitures | |||
Depreciation | 923 | 1,098 | |
Amortization of intangibles | 1,299 | 1,806 | |
Compensation expense for restricted stock | 252 | 262 | |
Tax benefit related to exercise of stock options and vesting of restricted stock | (101) | - | |
Deferred income taxes | 77 | (356) | |
Gain on sale of property and equipment | (188) | - | |
Changes in operating assets and liabilities, net of assets and liabilities acquired in business combinations: | |||
Trade accounts receivable | (6,144) | 19,123 | |
Inventories | 1,487 | 7,373 | |
Prepaid expenses and other current assets | (648) | (1,222) | |
Accounts payable and accrued expenses | 5,265 | (9,424) | |
Net cash provided by operating activities | 5,814 | 21,832 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (169) | (921) | |
Purchase of businesses, net of cash acquired | - | (52) | |
Proceeds from the sale of business | 1,428 | - | |
Net cash provided by (used in) investing activities | 1,259 | (973) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from debt | 33,935 | 24,809 | |
Principal payments on revolving line of credit and other long-term debt | . (39,244) | . (45,068) | |
Dividends paid in cash | (23) | (15) | |
Tax benefit related to exercise of stock options and vesting of restricted stock | 101 | - | |
Net cash used in financing activities | (5,231) | (20,274) | |
INCREASE IN CASH | 1,842 | 585 | |
CASH AT BEGINNING OF PERIOD | 2,344 | 5,698 | |
CASH AT END OF PERIOD | $ 4,186 | $ 6,283 |