COVER
COVER - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 0-21513 | |
Entity Registrant Name | DXP Enterprises, Inc. | |
Entity Incorporation, State or Country Code | TX | |
Entity Tax Identification Number | 76-0509661 | |
Entity Address, Address Line One | 5301 Hollister | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77040 | |
City Area Code | 713 | |
Local Phone Number | 996-4700 | |
Title of 12(b) Security | Common Stock par value $0.01 | |
Trading Symbol | DXPE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,206,923 | |
Entity Central Index Key | 0001020710 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Sales | $ 245,616 | $ 300,983 |
Cost of sales | 174,007 | 216,998 |
Gross profit | 71,609 | 83,985 |
Selling, general and administrative expenses | 65,397 | 73,070 |
Income from operations | 6,212 | 10,915 |
Other income | (430) | (834) |
Interest expense | 5,243 | 4,377 |
Income before income taxes | 1,399 | 7,372 |
Provision for income taxes | 1,271 | 1,724 |
Net income | 128 | 5,648 |
Net loss attributable to noncontrolling interest | (212) | (62) |
Net income attributable to DXP Enterprises, Inc. | 340 | 5,710 |
Preferred stock dividend | 23 | 23 |
Net income attributable to common shareholders | 317 | 5,687 |
Net income | 128 | 5,648 |
Currency translation adjustments | 5,106 | (1,163) |
Comprehensive income | $ 5,234 | $ 4,485 |
Earnings per share (Note 9) : | ||
Basic (in dollars per share) | $ 0.02 | $ 0.32 |
Diluted (in dollars per share) | $ 0.02 | $ 0.31 |
Weighted average common shares outstanding : | ||
Basic (in shares) | 19,186 | 17,713 |
Diluted (in shares) | 20,026 | 18,553 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 127,361 | $ 117,353 |
Restricted cash | 91 | 91 |
Accounts Receivable, net of allowance of $8,441 and $8,929 | 168,003 | 163,429 |
Inventories | 103,407 | 97,071 |
Costs and estimated profits in excess of billings | 14,415 | 18,459 |
Prepaid expenses and other current assets | 7,534 | 4,548 |
Federal income taxes receivable | 5,773 | 5,632 |
Total current assets | 426,584 | 406,583 |
Property and equipment, net | 54,110 | 56,899 |
Goodwill | 248,499 | 248,339 |
Other intangible assets, net | 76,008 | 80,088 |
Operating lease ROU assets | 59,949 | 55,188 |
Other long-term assets | 4,332 | 4,764 |
Total assets | 869,482 | 851,861 |
Current liabilities: | ||
Current maturities of long-term debt | 3,300 | 3,300 |
Trade accounts payable | 81,595 | 75,744 |
Accrued wages and benefits | 19,179 | 20,621 |
Customer advances | 3,967 | 3,688 |
Billings in excess of costs and estimated profits | 5,950 | 4,061 |
Short-term operating lease liabilities | 17,590 | 15,891 |
Other current liabilities | 21,775 | 20,834 |
Total current liabilities | 153,356 | 144,139 |
Long-term debt, net of unamortized debt issuance costs | 316,741 | 317,139 |
Long-term operating lease liabilities | 41,267 | 38,010 |
Other long-term liabilities | 2,930 | 2,930 |
Deferred income taxes | 2,248 | 1,777 |
Total long-term liabilities | 363,186 | 359,856 |
Total liabilities | 516,542 | 503,995 |
Commitments and contingencies (Note 10) | ||
Shareholders' Equity: | ||
Series A and B preferred stock, $1.00 par value each; 1,000,000 shares authorized each | 16 | 16 |
Common stock, $0.01 par value, 100,000,000 shares authorized; 19,200,923 and 19,208,067 outstanding | 189 | 189 |
Additional paid-in capital | 191,931 | 192,068 |
Retained earnings | 176,954 | 176,637 |
Accumulated other comprehensive loss | (16,736) | (21,842) |
Total DXP Enterprises, Inc. Equity | 352,354 | 347,068 |
Noncontrolling interest | 586 | 798 |
Total Equity | 352,940 | 347,866 |
Total liabilities and Equity | $ 869,482 | $ 851,861 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Allowance for accounts receivable | $ 8,441 | $ 8,929 |
Shareholders' Equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares outstanding (in shares) | 19,200,923 | 19,208,067 |
Series A preferred stock | ||
Shareholders' Equity: | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Series B preferred stock | ||
Shareholders' Equity: | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income attributable to DXP Enterprises, Inc. | $ 340 | $ 5,710 |
Less: net loss attributable to non-controlling interest | (212) | (62) |
Net income | 128 | 5,648 |
Reconciliation of net income to net cash provided (used in) by operating activities: | ||
Depreciation | 2,480 | 2,828 |
Amortization of intangible assets | 4,146 | 3,197 |
Gain on sale of property and equipment | (246) | 0 |
Provision for credit losses | (682) | 28 |
Fair value adjustment on contingent consideration | 0 | 13 |
Amortization of debt issuance costs | 427 | 468 |
Stock compensation expense | 380 | 904 |
Deferred income taxes | 459 | 928 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (2,245) | (5,183) |
Costs and estimated profits in excess of billings | 4,052 | (3,381) |
Inventories | (6,310) | (2,215) |
Prepaid expenses and other assets | (7,293) | (1,933) |
Trade accounts payable and accrued expenses | 10,115 | 6,048 |
Billings in excess of costs and estimated profits | 1,884 | (7,327) |
Other long-term liabilities | 3,257 | (1,635) |
Net cash provided by (used in) operating activities | 10,552 | (1,612) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (680) | (3,235) |
Proceeds from the sale of property and equipment | 1,297 | 0 |
Acquisition of business, net of cash acquired | 0 | (14,153) |
Net cash provided by (used in) investing activities | 617 | (17,388) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal debt payments | (825) | (625) |
Dividends paid | (23) | (23) |
Payment for employee taxes withheld from stock awards | (517) | (94) |
Net cash used in financing activities | (1,365) | (742) |
Effect of foreign currency on cash | 204 | (1,730) |
Net change in cash and restricted cash | 10,008 | (21,472) |
Cash and restricted cash at beginning of period | 117,444 | 54,326 |
Cash and restricted cash at end of period | $ 127,452 | $ 32,854 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Common stock | Paid-in capital | Retained earnings | Non controlling interest | Accum other comp loss | Series A preferred stock | Series B preferred stock |
Beginning Balance at Dec. 31, 2019 | $ 344,948 | $ 174 | $ 157,886 | $ 205,680 | $ 1,146 | $ (19,954) | $ 1 | $ 15 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Preferred dividends paid | (23) | (23) | ||||||
Compensation expense for restricted stock | 904 | 904 | ||||||
Tax related items for share based awards | (94) | (94) | ||||||
Issuance of shares of common stock | 2,000 | 1 | 1,999 | |||||
Currency translation adjustment | (1,163) | (1,163) | ||||||
Net income | 5,648 | 5,710 | (62) | |||||
Ending Balance at Mar. 31, 2020 | 352,220 | 175 | 160,695 | 211,367 | 1,084 | (21,117) | 1 | 15 |
Beginning Balance at Dec. 31, 2020 | 347,866 | 189 | 192,068 | 176,637 | 798 | (21,842) | 1 | 15 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Preferred dividends paid | (23) | (23) | ||||||
Compensation expense for restricted stock | 380 | 380 | ||||||
Tax related items for share based awards | (517) | (517) | ||||||
Currency translation adjustment | 5,106 | 0 | 5,106 | |||||
Net income | 128 | 340 | (212) | |||||
Ending Balance at Mar. 31, 2021 | $ 352,940 | $ 189 | $ 191,931 | $ 176,954 | $ 586 | $ (16,736) | $ 1 | $ 15 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSOn April 30, 2021, the Company completed the acquisition of Carter & Verplanck, LLC (“CVI”), a distributor of products and services exclusively focused on serving the water and wastewater markets. The acquisition of CVI was funded with cash on hand as well as issuing DXP's common stock. |
THE COMPANY
THE COMPANY | 3 Months Ended |
Mar. 31, 2021 | |
THE COMPANY [Abstract] | |
THE COMPANY | THE COMPANY DXP Enterprises, Inc. together with its subsidiaries (collectively "DXP," "Company," "us," "we," or "our") was incorporated in Texas on July 26, 1996. DXP Enterprises, Inc. and its subsidiaries are engaged in the business of distributing maintenance, repair and operating ("MRO") products and service to a variety of end markets and industrial customers. Additionally, DXP provides integrated, custom pump skid packages, pump remanufacturing and manufactures branded private label pumps to energy and industrial customers. The Company is organized into three business segments: Service Centers ("SC"), Supply Chain Services ("SCS") and Innovative Pumping Solutions ("IPS"). See Note 11 - Segment Reporting for discussion of the business segments. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES Basis of Presentation The Company's financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity ("VIE"). The accompanying unaudited condensed consolidated financial statements have been prepared on substantially the same basis as our annual consolidated financial statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020. For a more complete discussion of our significant accounting policies and business practices, refer to the consolidated Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2021. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of results expected for the full fiscal year. In the opinion of management, these condensed consolidated financial statements contain all adjustments necessary to present fairly the Company's condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2021 and March 31, 2020, condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, condensed consolidated statements of cash flows for the three months ended March 31, 2021 and March 31, 2020, and condensed consolidated statement of equity for the three months ended March 31, 2021 and March 31, 2020. All such adjustments represent normal recurring items. All inter-company accounts and transactions have been eliminated upon consolidation. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the potential impact of this ASU on the financial statements. All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
LEASES | LEASESThe Company frequently utilizes operating leases for buildings, vehicles, machinery and equipment. For more information on lease accounting, see Note 4 - Lease to the consolidated financial statements of the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Supplemental cash flow information related to leases was as follows (in thousands) : Three Months Ended March 31, Three Months Ended March 31, Lease 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,058 $ 4,672 Right-of-use assets obtained in exchange for lease liabilities Operating leases 10,126 4,326 Supplemental balance sheet information related to leases was as follows (in thousand) : Lease Classification March 31, 2021 March 31, 2020 Assets Operating Operating lease right-of-use assets $ 59,949 $ 65,268 Liabilities Current operating Short-term operating lease liabilities 17,590 15,926 Non-current operating Long-term operating lease liabilities 41,267 47,480 Total operating lease liabilities $ 58,857 $ 63,406 During the three months ended March 31, 2021, the Company paid $0.5 million in current and future lease obligations to entities invested in by the Company’s Chief Executive Officer. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES The carrying values of inventories are as follows ( in thousands ): March 31, 2021 December 31, 2020 Finished goods $ 103,560 $ 105,527 Work in process 24,699 17,021 Obsolescence reserve (24,852) (25,477) Inventories $ 103,407 $ 97,071 |
COSTS AND ESTIMATED PROFITS ON
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS | 3 Months Ended |
Mar. 31, 2021 | |
Contractors [Abstract] | |
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS | COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS Under our customized pump production contracts in our IPS segment, amounts are billed as work progresses in accordance with agreed-upon contractual terms, upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. Our contract assets are presented as “Cost and estimated profits in excess of billings” on our condensed consolidated balance sheets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities that are presented as “Billings in excess of costs and estimated profits” on our condensed consolidated balance sheets. Costs and estimated profits on uncompleted contracts and related amounts billed were as follows ( in thousands ): March 31, 2021 December 31, 2020 Costs incurred on uncompleted contracts $ 29,426 $ 36,969 Estimated profits, thereon 5,259 6,711 Total 34,685 43,680 Less: billings to date 26,217 29,315 Net $ 8,468 $ 14,365 Such amounts were included in the accompanying condensed Consolidated Balance Sheets for March 31, 2021 and December 31, 2020 under the following captions ( in thousands ): March 31, 2021 December 31, 2020 Costs and estimated profits in excess of billings $ 14,415 $ 18,459 Billings in excess of costs and estimated profits (5,950) (4,061) Translation adjustment 3 (33) Net $ 8,468 $ 14,365 During the three months ended March 31, 2021, $0.9 million of the balances that were previously classified as contract liabilities at the beginning of the period shipped. Contract assets and liability changes were primarily due to normal activity and timing differences between our performance and customer payments. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective tax rate from continuing operations was a tax expense of 90.9 percent for the three months ended March 31, 2021 compared to a tax expense of 23.3 percent for the three months ended March 31, 2020. Compared to the U.S. statutory rate for the three months ended March 31, 2021, the effective tax rate was increased by state taxes, foreign taxes, nondeductible expenses, and uncertain tax positions recorded due to tax authorities’ aggressive auditing of research and development tax credits. The effective tax was decreased by research and development tax credits and other credits. Compared to the U.S. statutory rate for the three months ended March 31, 2020, the effective tax rate was increased by state taxes, foreign taxes, and nondeductible expenses and was partially offset by research and development tax credits, foreign tax credits, and other tax credits. To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts would be classified as a component of income tax provision (benefit) in the financial statements consistent with the Company’s policy. |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT The components of the Company's long-term debt consisted of the following ( in thousands ): March 31, 2021 December 31, 2020 Carrying Value (1) Fair Value Carrying Value (1) Fair Value ABL Revolver $ — $ — $ — $ — Term Loan B 329,175 329,175 330,000 325,875 Total long-term debt 329,175 329,175 330,000 325,875 Less: current portion (3,300) (3,300) (3,300) (3,259) Long-term debt less current maturities $ 325,875 $ 325,875 $ 326,700 $ 322,616 (1) Carrying value amounts do not include unamortized debt issuance costs of $9.1 million and $9.6 million for March 31, 2021 and December 31, 2020, respectively . Credit Agreements On March 17, 2020, the Company entered into an Increase Agreement (the "Increase Agreement") that provided for a $135.0 million asset-backed revolving line of credit (the "ABL Revolver") a $50.0 million increase above the $85.0 million original revolver. The Increase Agreement amends and supplements that certain Loan and Security Agreement, dated as of August 29, 2017. As of March 31, 2021, the Company had no amount outstanding under the ABL Revolver and had $131.2 million of borrowing capacity, net of the impact of outstanding letters of credit. On December 23, 2020, DXP entered into a new seven year, $330 million Senior Secured Term Loan B (the “Term Loan B Agreement”), which replaced DXP’s previously existing Senior Secured Term Loan. The fair value measurements used by the Company are considered Level 2 inputs, as defined in the fair value hierarchy. The fair value estimates were based on quoted prices for identical or similar securities. The Company was in compliance with all financial covenants under the ABL Revolver and Term Loan B Agreements as of March 31, 2021. |
EARNINGS PER SHARE DATA
EARNINGS PER SHARE DATA | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE DATA | EARNINGS PER SHARE DATA Basic earnings per share is computed based on weighted average shares outstanding and excludes dilutive securities. Diluted earnings per share is computed including the impacts of all potentially dilutive securities. The following table sets forth the computation of basic and diluted earnings per share for the periods indicated ( in thousands, except per share data ): Three Months Ended March 31, 2021 2020 Basic: Weighted average shares outstanding 19,186 17,713 Net income attributable to DXP Enterprises, Inc. $ 340 $ 5,710 Convertible preferred stock dividend 23 23 Net income attributable to common shareholders $ 317 $ 5,687 Per share amount $ 0.02 $ 0.32 Diluted: Weighted average shares outstanding 19,186 17,713 Assumed conversion of convertible preferred stock 840 840 Total dilutive shares 20,026 18,553 Net income attributable to common shareholders $ 317 $ 5,687 Convertible preferred stock dividend 23 23 Net income attributable to DXP Enterprises, Inc. $ 340 $ 5,710 Per share amount $ 0.02 $ 0.31 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIESFrom time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. While DXP is unable to predict the outcome of these lawsuits, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on DXP's consolidated financial position, cash flows, or results of operations. |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTINGThe Company's reportable business segments are: Service Centers, Innovative Pumping Solutions and Supply Chain Services. The Service Centers segment is engaged in providing maintenance, MRO products, equipment and integrated services, including logistics capabilities, to industrial customers. The Service Centers segment provides a wide range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, industrial supply, safety products and safety services categories. The Innovative Pumping Solutions segment fabricates and assembles custom-made pump packages, re-manufactures pumps and manufactures branded private label pumps. The Supply Chain Services segment provides a wide range of MRO products and manages all or part of a customer's supply chain, including warehouse and inventory management. The high degree of integration of the Company's operations necessitates the use of a substantial number of allocations and apportionments in the determination of business segment information. Sales are shown net of inter-segment eliminations. The following table sets out financial information related to the Company's segments excluding amortization ( in thousands ): Three Months Ended March 31, 2021 2020 SC IPS SCS Total SC IPS SCS Total Product sales 1 $ 165,371 $ — $ 31,777 $ 197,148 $ 169,795 $ — $ 44,152 $ 213,947 Inventory services 2 — — 4,196 $ 4,196 — — 4,225 $ 4,225 Staffing services 3 21,027 — — $ 21,027 12,790 — — $ 12,790 Pump production 4 — 23,245 — $ 23,245 — 70,021 — $ 70,021 Total Revenue $ 186,398 $ 23,245 $ 35,973 $ 245,616 $ 182,585 $ 70,021 $ 48,377 $ 300,983 Income (loss) from operations $ 22,116 $ 947 $ 2,323 $ 25,386 $ 16,926 $ 10,428 $ 3,755 $ 31,109 1 Product sales that are recognized at a point in time. 2 Inventory management services that are recognized over the contract life. 3 Staffing services that are invoiced on a day-rate basis. 4 Custom pump production is recognized over time. The following table presents reconciliations of operating income for reportable segments to the consolidated income before taxes ( in thousands ): Three Months Ended March 31, 2021 2020 Operating income for reportable segments $ 25,386 $ 31,109 Adjustment for: Amortization of intangible assets 4,146 3,197 Impairment and other charges — — Corporate expenses 15,028 16,997 Income (loss) from operations $ 6,212 $ 10,915 Interest expense 5,243 4,377 Other (income) expense, net (430) (834) Income (loss) before income taxes $ 1,399 $ 7,372 |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company's financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity ("VIE"). The accompanying unaudited condensed consolidated financial statements have been prepared on substantially the same basis as our annual consolidated financial statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020. For a more complete discussion of our significant accounting policies and business practices, refer to the consolidated Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2021. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of results expected for the full fiscal year. In the opinion of management, these condensed consolidated financial statements contain all adjustments necessary to present fairly the Company's condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2021 and March 31, 2020, condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, condensed consolidated statements of cash flows for the three months ended March 31, 2021 and March 31, 2020, and condensed consolidated statement of equity for the three months ended March 31, 2021 and March 31, 2020. All such adjustments represent normal recurring items. |
Consolidation | All inter-company accounts and transactions have been eliminated upon consolidation. |
Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the potential impact of this ASU on the financial statements. All other new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations. |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows (in thousands) : Three Months Ended March 31, Three Months Ended March 31, Lease 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,058 $ 4,672 Right-of-use assets obtained in exchange for lease liabilities Operating leases 10,126 4,326 |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows (in thousand) : Lease Classification March 31, 2021 March 31, 2020 Assets Operating Operating lease right-of-use assets $ 59,949 $ 65,268 Liabilities Current operating Short-term operating lease liabilities 17,590 15,926 Non-current operating Long-term operating lease liabilities 41,267 47,480 Total operating lease liabilities $ 58,857 $ 63,406 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Carrying Values of Inventories | The carrying values of inventories are as follows ( in thousands ): March 31, 2021 December 31, 2020 Finished goods $ 103,560 $ 105,527 Work in process 24,699 17,021 Obsolescence reserve (24,852) (25,477) Inventories $ 103,407 $ 97,071 |
COSTS AND ESTIMATED PROFITS O_2
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Contractors [Abstract] | |
Schedule of Costs and Estimated Earnings on Uncompleted Contracts Included in Condensed Consolidated Balance Sheets | Costs and estimated profits on uncompleted contracts and related amounts billed were as follows ( in thousands ): March 31, 2021 December 31, 2020 Costs incurred on uncompleted contracts $ 29,426 $ 36,969 Estimated profits, thereon 5,259 6,711 Total 34,685 43,680 Less: billings to date 26,217 29,315 Net $ 8,468 $ 14,365 Such amounts were included in the accompanying condensed Consolidated Balance Sheets for March 31, 2021 and December 31, 2020 under the following captions ( in thousands ): March 31, 2021 December 31, 2020 Costs and estimated profits in excess of billings $ 14,415 $ 18,459 Billings in excess of costs and estimated profits (5,950) (4,061) Translation adjustment 3 (33) Net $ 8,468 $ 14,365 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Components of Company's Long-term Debt | The components of the Company's long-term debt consisted of the following ( in thousands ): March 31, 2021 December 31, 2020 Carrying Value (1) Fair Value Carrying Value (1) Fair Value ABL Revolver $ — $ — $ — $ — Term Loan B 329,175 329,175 330,000 325,875 Total long-term debt 329,175 329,175 330,000 325,875 Less: current portion (3,300) (3,300) (3,300) (3,259) Long-term debt less current maturities $ 325,875 $ 325,875 $ 326,700 $ 322,616 (1) Carrying value amounts do not include unamortized debt issuance costs of $9.1 million and $9.6 million for March 31, 2021 and December 31, 2020, respectively . |
EARNINGS PER SHARE DATA (Tables
EARNINGS PER SHARE DATA (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings per Share | The following table sets forth the computation of basic and diluted earnings per share for the periods indicated ( in thousands, except per share data ): Three Months Ended March 31, 2021 2020 Basic: Weighted average shares outstanding 19,186 17,713 Net income attributable to DXP Enterprises, Inc. $ 340 $ 5,710 Convertible preferred stock dividend 23 23 Net income attributable to common shareholders $ 317 $ 5,687 Per share amount $ 0.02 $ 0.32 Diluted: Weighted average shares outstanding 19,186 17,713 Assumed conversion of convertible preferred stock 840 840 Total dilutive shares 20,026 18,553 Net income attributable to common shareholders $ 317 $ 5,687 Convertible preferred stock dividend 23 23 Net income attributable to DXP Enterprises, Inc. $ 340 $ 5,710 Per share amount $ 0.02 $ 0.31 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Financial Information Regarding Company's Segments | The following table sets out financial information related to the Company's segments excluding amortization ( in thousands ): Three Months Ended March 31, 2021 2020 SC IPS SCS Total SC IPS SCS Total Product sales 1 $ 165,371 $ — $ 31,777 $ 197,148 $ 169,795 $ — $ 44,152 $ 213,947 Inventory services 2 — — 4,196 $ 4,196 — — 4,225 $ 4,225 Staffing services 3 21,027 — — $ 21,027 12,790 — — $ 12,790 Pump production 4 — 23,245 — $ 23,245 — 70,021 — $ 70,021 Total Revenue $ 186,398 $ 23,245 $ 35,973 $ 245,616 $ 182,585 $ 70,021 $ 48,377 $ 300,983 Income (loss) from operations $ 22,116 $ 947 $ 2,323 $ 25,386 $ 16,926 $ 10,428 $ 3,755 $ 31,109 1 Product sales that are recognized at a point in time. 2 Inventory management services that are recognized over the contract life. 3 Staffing services that are invoiced on a day-rate basis. 4 Custom pump production is recognized over time. |
Schedule of Reconciliation of Operating Income for Reportable Segments to Consolidated Income Before Taxes | The following table presents reconciliations of operating income for reportable segments to the consolidated income before taxes ( in thousands ): Three Months Ended March 31, 2021 2020 Operating income for reportable segments $ 25,386 $ 31,109 Adjustment for: Amortization of intangible assets 4,146 3,197 Impairment and other charges — — Corporate expenses 15,028 16,997 Income (loss) from operations $ 6,212 $ 10,915 Interest expense 5,243 4,377 Other (income) expense, net (430) (834) Income (loss) before income taxes $ 1,399 $ 7,372 |
THE COMPANY (Details)
THE COMPANY (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
THE COMPANY [Abstract] | |
Number of business segments | 3 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 5,058 | $ 4,672 |
Right-of-use assets obtained in exchange for lease liabilities | ||
Right-of-use assets obtained in exchange for lease liabilities | $ 10,126 | $ 4,326 |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Assets | |||
Operating lease right-of-use assets | $ 59,949 | $ 55,188 | $ 65,268 |
Liabilities | |||
Short-term operating lease liabilities | 17,590 | 15,891 | 15,926 |
Long-term operating lease liabilities | 41,267 | $ 38,010 | 47,480 |
Total operating lease liabilities | $ 58,857 | $ 63,406 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Chief Executive Officer | |
Lessee, Lease, Description [Line Items] | |
Operating lease expense | $ 0.5 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 103,560 | $ 105,527 |
Work in process | 24,699 | 17,021 |
Obsolescence reserve | (24,852) | (25,477) |
Inventories | $ 103,407 | $ 97,071 |
COSTS AND ESTIMATED PROFITS O_3
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Schedule of costs and estimated earnings on uncompleted contracts [Abstract] | ||
Costs incurred on uncompleted contracts | $ 29,426 | $ 36,969 |
Estimated profits, thereon | 5,259 | 6,711 |
Total | 34,685 | 43,680 |
Less: billings to date | 26,217 | 29,315 |
Net | 8,468 | 14,365 |
Schedule of Costs and Estimated Earnings on Uncompleted Contracts Included in Condensed Consolidated Balance Sheets [Abstract] | ||
Costs and estimated profits in excess of billings | 14,415 | 18,459 |
Billings in excess of costs and estimated profits | (5,950) | (4,061) |
Translation adjustment | 3 | (33) |
Net | 8,468 | $ 14,365 |
Balances previously classified as contract liabilities at the beginning of the period that have shipped | $ 900 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate from continuing operations | 90.90% | 23.30% |
LONG-TERM DEBT - Components of
LONG-TERM DEBT - Components of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Borrowings [Abstract] | ||
Less: current portion | $ (3,300) | $ (3,300) |
Unamortized debt issuance costs | 9,100 | 9,600 |
Carrying Value | ||
Borrowings [Abstract] | ||
Total long-term debt | 329,175 | 330,000 |
Less: current portion | (3,300) | (3,300) |
Long-term debt less current maturities | 325,875 | 326,700 |
Carrying Value | ABL Revolver | ||
Borrowings [Abstract] | ||
Total long-term debt | 0 | 0 |
Carrying Value | Term Loan B | ||
Borrowings [Abstract] | ||
Total long-term debt | 329,175 | 330,000 |
Fair Value | ||
Borrowings [Abstract] | ||
Total long-term debt | 329,175 | 325,875 |
Less: current portion | (3,300) | (3,259) |
Long-term debt less current maturities | 325,875 | 322,616 |
Fair Value | ABL Revolver | ||
Borrowings [Abstract] | ||
Total long-term debt | 0 | 0 |
Fair Value | Term Loan B | ||
Borrowings [Abstract] | ||
Total long-term debt | $ 329,175 | $ 325,875 |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) - USD ($) | Dec. 23, 2020 | Mar. 17, 2020 | Mar. 31, 2021 | Aug. 29, 2017 |
Asset-backed Revolving Line of Credit | ABL Revolver | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity under credit agreement | $ 135,000,000 | $ 85,000,000 | ||
Increase in borrowing capacity under credit agreement | $ 50,000,000 | |||
Amount outstanding under credit facility | $ 0 | |||
Borrowing capacity, including impact of letter of credit | $ 131,200,000 | |||
Secured Debt | Term Loan B | ||||
Debt Instrument [Line Items] | ||||
Debt term | 7 years | |||
Debt issued | $ 330,000,000 |
EARNINGS PER SHARE DATA (Detail
EARNINGS PER SHARE DATA (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Basic: | ||
Weighted average shares outstanding (in shares) | 19,186 | 17,713 |
Net income attributable to DXP Enterprises, Inc. | $ 340 | $ 5,710 |
Convertible preferred stock dividend | 23 | 23 |
Net income attributable to common shareholders | $ 317 | $ 5,687 |
Per share amount (in dollars per share) | $ 0.02 | $ 0.32 |
Diluted: | ||
Weighted average shares outstanding (in shares) | 19,186 | 17,713 |
Assumed conversion of convertible preferred stock (in shares) | 840 | 840 |
Diluted (in shares) | 20,026 | 18,553 |
Net income attributable to common shareholders | $ 317 | $ 5,687 |
Convertible preferred stock dividend | 23 | 23 |
Net income attributable to DXP Enterprises, Inc. | $ 340 | $ 5,710 |
Diluted (in dollars per share) | $ 0.02 | $ 0.31 |
SEGMENT REPORTING - Financial I
SEGMENT REPORTING - Financial Information of Company's Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | $ 245,616 | $ 300,983 |
Income (loss) from operations | 25,386 | 31,109 |
Product Sales | Recognized at a point in time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 197,148 | 213,947 |
Inventory Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 4,196 | 4,225 |
Staffing Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 21,027 | 12,790 |
Pump Production | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 23,245 | 70,021 |
SC | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 186,398 | 182,585 |
Income (loss) from operations | 22,116 | 16,926 |
SC | Product Sales | Recognized at a point in time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 165,371 | 169,795 |
SC | Inventory Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 0 | 0 |
SC | Staffing Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 21,027 | 12,790 |
SC | Pump Production | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 0 | 0 |
IPS | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 23,245 | 70,021 |
Income (loss) from operations | 947 | 10,428 |
IPS | Product Sales | Recognized at a point in time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 0 | 0 |
IPS | Inventory Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 0 | 0 |
IPS | Staffing Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 0 | 0 |
IPS | Pump Production | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 23,245 | 70,021 |
SCS | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 35,973 | 48,377 |
Income (loss) from operations | 2,323 | 3,755 |
SCS | Product Sales | Recognized at a point in time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 31,777 | 44,152 |
SCS | Inventory Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 4,196 | 4,225 |
SCS | Staffing Services | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | 0 | 0 |
SCS | Pump Production | Recognized over time | ||
Segment Reporting Information, Profit (Loss) [Abstract] | ||
Total Revenue | $ 0 | $ 0 |
SEGMENT REPORTING - Reconciliat
SEGMENT REPORTING - Reconciliation of Operating Income to Consolidated Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information, Operating Income (Loss) [Abstract] | ||
Operating income for reportable segments | $ 25,386 | $ 31,109 |
Adjustment for: | ||
Amortization of intangible assets | 4,146 | 3,197 |
Income from operations | 6,212 | 10,915 |
Interest expense | 5,243 | 4,377 |
Other (income) expense, net | (430) | (834) |
Income before income taxes | 1,399 | 7,372 |
Operating Segments | ||
Segment Reporting Information, Operating Income (Loss) [Abstract] | ||
Operating income for reportable segments | 25,386 | 31,109 |
Segment Reconciling Items | ||
Adjustment for: | ||
Amortization of intangible assets | 4,146 | 3,197 |
Impairment and other charges | 0 | 0 |
Corporate | ||
Adjustment for: | ||
Corporate expenses | $ 15,028 | $ 16,997 |