Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | DXP ENTERPRISES INC | ||
Entity Central Index Key | 1,020,710 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 191,050,521 | ||
Entity Common Stock, Shares Outstanding | 17,348,663 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 1,590 | $ 1,693 |
Trade accounts receivable, net of allowances for doubtful accounts of $8,160 in 2016 and $9,364 in 2015 | 148,919 | 162,925 |
Inventories | 83,699 | 103,819 |
Costs and estimated profits in excess of billings on uncompleted contracts | 18,421 | 22,045 |
Prepaid expenses and other current assets | 2,138 | 2,644 |
Federal income taxes recoverable | 2,558 | 1,839 |
Deferred income taxes | 9,473 | 8,996 |
Total current assets | 266,798 | 303,961 |
Property and equipment, net | 60,807 | 68,503 |
Goodwill | 187,591 | 197,362 |
Other intangible assets, net of accumulated amortization of $70,027 in 2016 and $85,098 in 2015 | 94,831 | 112,297 |
Other long-term assets | 1,498 | 1,857 |
Total assets | 611,525 | 683,980 |
Current liabilities: | ||
Current maturities of long-term debt | 51,354 | 50,829 |
Trade accounts payable | 78,698 | 77,108 |
Accrued wages and benefits | 16,962 | 20,864 |
Customer advances | 2,441 | 1,076 |
Billings in excess of costs and estimated profits on uncompleted contracts | 2,813 | 8,021 |
Other current liabilities | 14,391 | 22,220 |
Total current liabilities | 166,659 | 180,118 |
Long-term debt, less current maturities | 174,323 | 300,726 |
Less unamortized debt issuance costs | (992) | (2,046) |
Long-term debt less unamortized debt issuance costs | 173,331 | 298,680 |
Non-current deferred income taxes | 18,986 | 6,312 |
Commitments and contingencies (Note 14) | ||
Shareholders' equity: | ||
Common stock, $0.01 par value, 100,000,000 shares authorized; 17,197,380 in 2016 and 14,655,356 in 2015 shares issued | 172 | 146 |
Additional paid-in capital | 152,313 | 110,306 |
Retained earnings | 117,396 | 109,783 |
Accumulated other comprehensive loss | (18,274) | (10,616) |
Treasury stock, at cost (zero shares at December 31, 2016 and 264,297 shares at December 31, 2015) | 0 | (12,577) |
Total DXP Enterprises, Inc. shareholders' equity | 251,623 | 197,058 |
Noncontrolling interest | 926 | 1,812 |
Total shareholders' equity | 252,549 | 198,870 |
Total liabilities and shareholders' equity | 611,525 | 683,980 |
Series A Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock | 1 | 1 |
Total shareholders' equity | 1 | 1 |
Series B Convertible Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock | $ 15 | $ 15 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current assets: | ||
Trade accounts receivable, allowances for doubtful accounts | $ 8,160 | $ 9,364 |
Other intangible assets, accumulated amortization | $ 70,027 | $ 85,098 |
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 17,197,380 | 14,655,356 |
Common stock shares outstanding (in shares) | 17,197,380 | 14,655,356 |
Treasury stock (in shares) | 0 | 264,297 |
Series A Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock, voting rights | 1/10th vote per share | 1/10th vote per share |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, liquidation preference (in dollars per share) | $ 112 | $ 112 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 1,122 | 1,122 |
Preferred stock, outstanding (in shares) | 1,122 | 1,122 |
Series B Convertible Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock, voting rights | 1/10th vote per share | 1/10th vote per share |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, stated value (in dollars per share) | 100 | 100 |
Preferred stock, liquidation preference (in dollars per share) | $ 1,500 | $ 1,500 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 15,000 | 15,000 |
Preferred stock, outstanding (in shares) | 15,000 | 15,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) [Abstract] | |||
Sales | $ 962,092 | $ 1,247,043 | $ 1,499,662 |
Cost of sales | 697,290 | 895,057 | 1,066,822 |
Gross profit | 264,802 | 351,986 | 432,840 |
Selling, general and administrative expense | 245,470 | 303,819 | 327,899 |
Impairment expense | 0 | 68,735 | 117,569 |
B27 settlement | 0 | 7,348 | 0 |
Operating income (loss) | 19,332 | (27,916) | (12,628) |
Other expense (income), net | (5,906) | 72 | 131 |
Interest expense | 15,564 | 10,932 | 12,797 |
Income (loss) before income taxes | 9,674 | (38,920) | (25,556) |
Provision for income taxes | 2,523 | 150 | 19,682 |
Net income (loss) | 7,151 | (39,070) | (45,238) |
Net loss attributable to noncontrolling interest | (551) | (534) | 0 |
Net income (loss) attributable to DXP Enterprises, Inc. | 7,702 | (38,536) | (45,238) |
Preferred stock dividend | 90 | 90 | 90 |
Net income (loss) attributable to common shareholders | 7,612 | (38,626) | (45,328) |
Net income (loss) | 7,151 | (39,070) | (45,238) |
Loss on long-term investment, net of income taxes | 0 | 0 | (55) |
Cumulative translation adjustment, net of income taxes | (7,658) | (4,916) | (3,277) |
Comprehensive loss | $ (507) | $ (43,986) | $ (48,570) |
Basic earnings (loss) per share (in dollars per share) | $ 0.51 | $ (2.68) | $ (3.10) |
Weighted average common shares outstanding (in shares) | 15,042 | 14,423 | 14,639 |
Diluted earnings (loss) per share (in dollars per share) | $ 0.49 | $ (2.68) | $ (3.10) |
Weighted average common shares and common equivalent shares outstanding (in shares) | 15,882 | 14,423 | 14,639 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Common Stock [Member] | Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Non-Control Interest [Member] | Accum. Other Comp. Income [Member] | Total |
BALANCES at Dec. 31, 2013 | $ 1 | $ 15 | $ 144 | $ 109,892 | $ 193,737 | $ (5,171) | $ 0 | $ (2,368) | $ 296,250 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends paid | 0 | 0 | 0 | 0 | (90) | 0 | 0 | 0 | (90) |
Compensation expense for restricted stock | 0 | 0 | 0 | 3,560 | 0 | 0 | 0 | 0 | 3,560 |
Net loss on sale of long-term investment for comprehensive income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (55) | (55) |
Issuance of shares in connection with an acquisitions | 0 | 0 | 2 | 4,031 | 0 | 0 | 0 | 0 | 4,033 |
Vesting of restricted stock for 69,675 shares of common stock | 0 | 0 | 0 | (376) | 0 | 0 | 0 | 0 | (376) |
Acquisition of treasury stock | 0 | 0 | 0 | 0 | 0 | (11,855) | 0 | 0 | (11,855) |
Issuance of treasury shares for vesting of restricted stock | 0 | 0 | 0 | (1,502) | 0 | 1,502 | 0 | 0 | 0 |
Cumulative translation adjustment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (3,277) | (3,277) |
Net income (loss) | 0 | 0 | 0 | 0 | (45,238) | 0 | 0 | 0 | (45,238) |
BALANCES at Dec. 31, 2014 | 1 | 15 | 146 | 115,605 | 148,409 | (15,524) | 0 | (5,700) | 242,952 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends paid | 0 | 0 | 0 | 0 | (90) | 0 | 0 | 0 | (90) |
Compensation expense for restricted stock | 0 | 0 | 0 | 2,973 | 0 | 0 | 0 | 0 | 2,973 |
Issuance of shares in connection with an acquisitions | 0 | 0 | 0 | (4,825) | 0 | 9,223 | 0 | 0 | 4,398 |
Acquisition of treasury stock | 0 | 0 | 0 | 0 | 0 | (8,908) | 0 | 0 | (8,908) |
Issuance of treasury shares for vesting of restricted stock | 0 | 0 | 0 | (3,447) | 0 | 2,632 | 0 | 0 | (815) |
Noncontrolling interest holder contributions, net of tax benefits | 0 | 0 | 0 | 0 | 0 | 0 | 2,346 | 0 | 2,346 |
Cumulative translation adjustment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (4,916) | (4,916) |
Net income (loss) | 0 | 0 | 0 | 0 | (38,536) | 0 | (534) | 0 | (39,070) |
BALANCES at Dec. 31, 2015 | 1 | 15 | 146 | 110,306 | 109,783 | (12,577) | 1,812 | (10,616) | 198,870 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends paid | 0 | 0 | 0 | 0 | (90) | 0 | 0 | 0 | (90) |
Compensation expense for restricted stock | 0 | 0 | 0 | 1,172 | 0 | 0 | 0 | 0 | 1,172 |
Issuance of 2,722,858 common stock | 0 | 0 | 27 | 51,862 | 0 | 0 | 0 | 0 | 51,889 |
Issuance of treasury shares for vesting of restricted stock | 0 | 0 | 0 | (12,577) | 0 | 12,577 | 0 | 0 | 0 |
Noncontrolling interest holder contributions, net of tax benefits | 0 | 0 | 0 | 0 | 0 | 0 | (335) | 0 | (335) |
Stock compensation expense | 0 | 0 | 0 | 1,550 | 0 | 0 | 1,550 | ||
Cumulative translation adjustment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (7,658) | (7,658) |
Net income (loss) | 0 | 0 | 0 | 0 | 7,702 | 0 | (551) | 0 | 7,151 |
BALANCES at Dec. 31, 2016 | $ 1 | $ 15 | $ 173 | $ 152,313 | $ 117,395 | $ 0 | $ 926 | $ (18,274) | $ 252,549 |
CONSOLIDATED STATEMENTS OF SHA6
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Issuance of shares in connection with acquisitions (in shares) | 148,769 | 36,000 | |
Vesting of restricted stock for common stock (in shares) | 69,675 | ||
Acquisition of treasury stock (in shares) | 191,420 | 200,000 | |
Issuance of common stock (in shares) | 2,722,858 | ||
Issuance of treasury shares for vesting of restricted stock (in shares) | 264,297 | 57,401 | 66,676 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) attributable to DXP Enterprises, Inc. | $ 7,702 | $ (38,536) | $ (45,238) |
Less net loss attributable to noncontrolling interest | (551) | (534) | 0 |
Net income (loss) | 7,151 | (39,070) | (45,238) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation | 11,933 | 12,622 | 12,598 |
Amortization of intangible assets | 18,061 | 20,621 | 22,480 |
Impairment of goodwill | 0 | 68,735 | 117,569 |
Bad debt expense | 180 | 2,014 | 2,365 |
Amortization of debt issuance costs | 1,856 | 1,211 | 1,157 |
Gain on sale of subsidiary | (5,635) | 0 | 0 |
Stock compensation expense | 3,580 | 2,973 | 3,560 |
Tax (benefit) loss related to vesting of restricted stock | 619 | 0 | (960) |
Deferred income taxes | 2,687 | (9,024) | (12,122) |
Changes in operating assets and liabilities, net of assets and liabilities acquired in business acquisitions: | |||
Trade accounts receivable | 12,080 | 71,261 | (14,002) |
Cost in excess of billings on uncompleted contracts | 3,457 | (2,047) | (405) |
Inventories | 5,453 | 12,724 | (1,913) |
Prepaid expenses and other assets | 620 | 159 | 1,948 |
Accounts payable and accrued expenses | (8,833) | (43,677) | 11,099 |
Billings in excess of costs & estimated profits on uncompleted contracts | (5,203) | (513) | 2,359 |
Net cash provided by operating activities | 48,006 | 97,989 | 100,495 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (4,868) | (13,992) | (11,104) |
Proceeds from the sale of fixed assets | 1,206 | 0 | 0 |
Proceeds from sale of subsidiary | 31,476 | 0 | 0 |
Sale of investments | 0 | 0 | 1,688 |
Acquisitions of businesses, net of cash acquired | 0 | (15,501) | (300,844) |
Net cash provided by (used in) investing activities | 27,814 | (29,493) | (310,260) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from debt | 517,689 | 393,551 | 744,050 |
Principal payments on revolving line of credit and other long-term debt | (643,568) | (453,480) | (527,030) |
Debt issuance fees | (801) | (543) | (1,823) |
Noncontrolling interest holder contributions, net of tax benefits | 2,346 | 0 | |
Noncontrolling interest holder payments, net of tax benefits | (335) | ||
Preferred dividends paid | (90) | (90) | (90) |
Purchase of treasury stock | 0 | (8,908) | (11,855) |
Proceeds from issuance of common shares, net | 51,889 | 0 | 0 |
Tax (loss) benefit related to vesting of restricted stock | (619) | 0 | 960 |
Net cash used in financing activities | (75,835) | (67,124) | 204,212 |
EFFECT OF FOREIGN CURRENCY ON CASH | (88) | 274 | 131 |
(DECREASE) INCREASE IN CASH | (103) | 1,646 | (5,422) |
CASH AT BEGINNING OF YEAR | 1,693 | 47 | 5,469 |
CASH AT END OF YEAR | 1,590 | 1,693 | 47 |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||
Cash paid for Interest | 13,708 | 9,721 | 11,641 |
Cash paid for Income Taxes | $ 4,780 | $ 13,792 | $ 28,784 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] | ||
Exclusion of stock issued in connection with acquisitions | $ 4.4 | $ 4 |
THE COMPANY
THE COMPANY | 12 Months Ended |
Dec. 31, 2016 | |
THE COMPANY [Abstract] | |
THE COMPANY | NOTE 1 - THE COMPANY DXP Enterprises, Inc. together with its subsidiaries (collectively “DXP,” “Company,” “us,” “we,” or “our”) was incorporated in Texas on July 26, 1996, to be the successor to SEPCO Industries, Inc. DXP Enterprises, Inc. and its subsidiaries are engaged in the business of distributing maintenance, repair and operating (MRO) products, and service to energy 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, Supply Chain Services (SCS) and Innovative Pumping Solutions (IPS). See Note 17 for discussion of the business segments. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES Basis of Presentation The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“USGAAP”). The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity (“VIE”). DXP is the primary beneficiary of a VIE in which DXP owns 47.5% of the equity. DXP consolidates the financial statements of the VIE with the financial statements of DXP. As of December 31, 2016, the total assets of the VIE were approximately $5.2 million including approximately $5.2 million of fixed assets. DXP is the primary customer of the VIE. Consolidation of the VIE increased cost of sales by approximately $1.3 million and $1.4 million for the twelve months ended December 31, 2016 and 2015, respectively. The Company recognized a related income tax benefit of $0.3 million and $0.3 million related to the VIE for the years ended December 31, 2016 and 2015, respectively. At December 31, 2016, the owners of the 52.5% of the equity not owned by DXP included employees of DXP. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation; none affected net income. Out-of-Period Items During the first quarter of 2015, we identified a $2.5 million ($1.6 million net of tax) overstatement of an accrual at December 31, 2014, which overstated 2014 selling, general and administrative expense. We recorded an out-of-period adjustment to correct this overstatement in the quarter ended March 31, 2015. During the fourth quarter of 2015, we realized $1.5 million of net tax benefits related to events which occurred in earlier years. These out-of-period items reduced the 2015 net loss by $3.1 million and 2015 basic and diluted net loss per share by $0.21. We assessed the materiality of this overstatement and concluded the overstatement was not material to the results of operations or financial condition for the years ended December 31, 2016, 2015 and 2014. Foreign Currency The financial statements of the Company’s Canadian subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss). Gains and losses on transactions denominated in foreign currency are reported in consolidated statements of income (loss). Use of Estimates The preparation of financial statements in conformity with requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates. Cash and Cash Equivalents The Company’s presentation of cash includes cash equivalents. Cash equivalents are defined as short-term investments with maturity dates of 90 days or less at time of purchase. The Company places its cash and cash equivalents with institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. Receivables and Credit Risk Trade receivables consist primarily of uncollateralized customer obligations due under normal trade terms, which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and customers may not pay within stated trade terms. The Company has trade receivables from a diversified customer base located primarily in the Rocky Mountain, Northeastern, Midwestern, Southeastern and Southwestern regions of the United States, and Canada. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers' financial positions and monitors accounts on a regular basis, but generally does not require collateral. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of the collectability of such accounts. The Company writes-off uncollectible trade accounts receivable when the accounts are determined to be uncollectible. No customer represents more than 10% of consolidated sales. We maintain an allowance for losses based upon the expected collectability of accounts receivable. Changes in this allowance for 2016, 2015 and 2014 were as follows: Years Ended December 31, 2016 2015 2014 Balance at beginning of year $ 9,364 $ 8,713 $ 8,798 Charged to costs and expenses 180 2,014 2,365 Charged to other accounts (17 ) 2 1,255 2 1,140 2 Deductions (1,367 ) 1 (2,618 ) 1 (3,590 ) 1 Balance at end of year $ 8,160 $ 9,364 $ 8,713 ( 1) Uncollectible accounts written off, net of recoveries (2) Includes allowance for doubtful accounts from acquisitions and divestiture Fair Value of Financial Instruments The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. USGAAP establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. USGAAP prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. See Note 4 for further information regarding the Company’s financial instruments. Inventories Inventories consist principally of finished goods and are priced at lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Reserves are provided against inventories for estimated obsolescence based upon the aging of the inventories and market trends and are applied as a reduction in cost of associated inventory. Property and Equipment Property and equipment are carried on the basis of cost. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives. Maintenance and repairs of depreciable assets are charged against earnings as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and gains or losses are credited or charged to earnings. The principal estimated useful lives used in determining depreciation are as follows: Buildings 20-39 years Building improvements 10-20 years Furniture, fixtures and equipment 3-20 years Leasehold improvements Shorter of estimated useful life or related lease term Impairment of Goodwill and Other Intangible Assets The Company tests goodwill and other indefinite lived intangible assets for . The Company assigns the carrying value of these intangible assets to its "reporting units" and applies the test for goodwill at the reporting unit level. A reporting unit is defined as an operating segment or one level below a segment (a "component") if the component is a business and discrete information is prepared and reviewed regularly by segment management. The Company’s goodwill impairment assessment first permits evaluating qualitative factors to determine if a reporting unit's carrying value would more likely than not exceed its fair value. If the Company concludes, based on the qualitative assessment, that a reporting unit's carrying value would more likely than not exceed its fair value, the Company would perform a two-step quantitative test for that reporting unit. When a quantitative assessment is performed, the first step is to identify a potential impairment, and the second step measures the amount of the impairment loss, if any. Goodwill is deemed to be impaired if the carrying amount of a reporting unit’s goodwill exceeds its estimated fair value. During the third and fourth quarter of 2015, DXP performed interim impairment tests using a quantitative approach and recognized goodwill impairments of $57.8 million and $9.8 million, respectively. During the fourth quarter ended December 31, 2014, the Company performed its annual goodwill impairment test using a quantitative approach and recognized a goodwill impairment of $117.6 million (see Note 8). No impairment of goodwill was required in 2016. Impairment of Long-Lived Assets, Excluding Goodwill The Company tests long-lived assets or asset groups for recoverability on an annual basis and when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. Share-based Compensation The Company uses restricted stock for share-based compensation programs. The Company measures compensation cost with respect to equity instruments granted as stock-based payments to employees based upon the estimated fair value of the equity instruments at the date of the grant. The cost as measured is recognized as expense over the period which an employee is required to provide services in exchange for the award. Revenue Recognition For binding agreements to fabricate tangible assets to customer specifications, the Company recognizes revenues using the percentage of completion method. Under this method, revenues are recognized as costs are incurred and include estimated profits calculated on the basis of the relationship between costs incurred and total estimated costs at completion. If at any time expected costs exceed the value of the contract, the loss is recognized immediately. Revenues of approximately $31.5 million, $47.5 million, and $65.9 million were recognized on contracts in process for the years ended December 31, 2016, 2015, and 2014, respectively. The typical time span of these contracts is approximately one to two years. For other sales, the Company recognizes revenues when an agreement is in place, the price is fixed, title for product passes to the customer or services have been provided and collectability is reasonably assured. Revenues are recorded net of sales taxes. The Company reserves for potential customer returns based upon the historical level of returns. Shipping and Handling Costs The Company classifies shipping and handling charges billed to customers as sales. Shipping and handling charges paid to others are classified as a component of cost of sales. Self-insured Insurance and Medical Claims We generally retain up to $100,000 of risk for each claim for workers compensation, general liability, automobile and property loss. We accrue for the estimated loss on the self-insured portion of these claims. The accrual is adjusted quarterly based upon reported claims information. The actual cost could deviate from the recorded estimate. We generally retain up to $175,000 of risk on each medical claim for our employees and their dependents with the exception of less than 0.05% of employees where a higher risk is retained. We accrue for the estimated outstanding balance of unpaid medical claims for our employees and their dependents. The accrual is adjusted monthly based on recent claims experience. The actual claims could deviate from recent claims experience and be materially different from the reserve. The accrual for these claims at December 31, 2016 and 2015 was approximately $3.1 million and $3.4 million, respectively. Purchase Accounting DXP estimates the fair value of assets, including property, machinery and equipment and their related useful lives and salvage values, intangibles and liabilities when allocating the purchase price of an acquisition. The fair value estimates are developed using the best information available. Cost of Sales and Selling, General and Administrative Expense Cost of sales includes product and product related costs, inbound freight charges, internal transfer costs and depreciation. Selling, general and administrative expense includes purchasing and receiving costs, inspection costs, warehousing costs, depreciation and amortization. Debt Issuance Cost Amortization Fees paid to DXP’s lender to secure a firm commitment on a term loan and revolving line of credit are presented as a direct deduction from the carrying amount of the debt liability. For the term loan, fees paid by DXP are amortized over the life of the loan as additional interest. Fees paid to secure a firm commitment from our lender on a revolving line of credit are amortized on a straight-line basis over the entire term of the arrangement. The total unamortized debt issuance costs reported on the consolidated balance sheets as of December 31, 2016 and 2015 was $1.0 million and $2.0 million, respectively. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established to reduce deferred income tax assets to the amounts expected to be realized under a more likely than not criterion. Accounting for Uncertainty in Income Taxes A position taken or expected to be taken in a tax return is recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U. S. federal, state and local tax examination by tax authorities for years prior to 2009. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. Comprehensive Income (Loss) Comprehensive income (loss) includes net income, foreign currency translation adjustments and unrealized gains and losses on certain investments in debt and equity securities. The Company’s other comprehensive (loss) income is comprised of changes in the market value of an investment with quoted market prices in an active market for identical instruments and translation adjustments from translating foreign subsidiaries to the reporting currency. Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016, 2015 and 2014. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. In December 2016, the FASB issued ASU 2016-19, Technical Corrections and Improvements. In October 2016, the FASB issued ASU 2016-17, Consolidation - Interests Held Through Related Parties That Are Under Common Control. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): classification as a finance or operating lease. The criteria for determining whether a lease is a finance or operating lease has not been significantly changed by this ASU. The ASU also requires additional disclosure of the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. This pronouncement is effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. In July 2015, the FASB issued ASU No. 2015-11, Inventory ("ASU 2015-11"). The amendments in ASU 2015-11 clarify the subsequent measurement of inventory requiring an entity to subsequently measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU applies only to inventory that is measured using the first-in, first-out (FIFO) or average cost method. Subsequent measurement is unchanged for inventory measured using last-in, first-out (LIFO) or the retail inventory method. The amendments in ASU 2015-11 should be applied prospectively and are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The company is currently assessing the impact that this standard will have on its consolidated financial statements. This ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), |
FAIR VALUE OF FINANCIAL ASSETS
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES [Abstract] | |
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | NOTE 4 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES Authoritative guidance for financial assets and liabilities measured on a recurring basis applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis. Fair value, as defined in the authoritative guidance, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. During the third and fourth quarters of 2015, in connection with interim tests for impairment, DXP recorded impairment charges of $57.8 million and $9.8 million, respectively, in order to reflect the implied fair values of goodwill, which is a non-recurring fair value adjustment. The fair values of goodwill used in the impairment calculations were estimated based on discounted estimated future cash flows with the discount rates of 10.0% to 11.5%. The measurements utilized to determine the implied fair value of goodwill represent significant unobservable inputs (Level 3) in accordance with the fair value hierarchy. During the fourth quarter of 2014, in connection with the annual test for impairment, DXP recorded total impairment charges of $117.6 million in order to reflect the implied fair values of goodwill, which is a non-recurring fair value adjustment. The fair values of goodwill used in the impairment calculations were estimated based on discounted estimated future cash flows with the discount rates of 10.0% to 13.5%. The measurements utilized to determine the implied fair value of goodwill represent significant unobservable inputs (Level 3) in accordance with the fair value hierarchy. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORY [Abstract] | |
INVENTORY | NOTE 5 - INVENTORY The carrying values of inventories are as follows ( in thousands December 31, 2016 December 31, 2015 Finished goods $ 74,269 $ 94,524 Work in process 9,430 9,295 Inventories $ 83,699 $ 103,819 |
COSTS AND ESTIMATED PROFITS ON
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS | 12 Months Ended |
Dec. 31, 2016 | |
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS [Abstract] | |
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS | NOTE 6 – COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS Costs and estimated profits in excess of billings on uncompleted contracts arise in the consolidated balance sheets when revenues have been recognized but the amounts cannot be billed under the terms of the contracts. Such amounts are recoverable from customers upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract. Costs and estimated profits on uncompleted contracts and related amounts billed for 2016 and 2015 were as follows ( in thousands December 31, 2016 2015 Costs incurred on uncompleted contracts $ 25,214 $ 34,400 Estimated earnings, thereon 6,274 13,119 Total 31,488 47,519 Less: billings to date 15,864 33,422 Net $ 15,624 $ 14,097 Such amounts were included in the accompanying Consolidated Balance Sheets for 2016 and 2015 under the following captions (in thousands): December 31, 2016 2015 Costs and estimated profits in excess of billings on uncompleted contracts $ 18,421 $ 22,045 Billings in excess of costs and estimated profits on uncompleted contracts (2,813 ) (8,021 ) Translation adjustment 16 73 Net $ 15,624 $ 14,097 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7 - PROPERTY AND EQUIPMENT The carrying values of property and equipment are as follows ( in thousands December 31, 2016 December 31, 2015 Land $ 2,346 $ 2,386 Buildings and leasehold improvements 16,259 16,631 Furniture, fixtures and equipment 94,784 102,494 Less – Accumulated depreciation (52,582 ) (53,008 ) Total Property and Equipment $ 60,807 $ 68,503 Depreciation expense was $11.9 million, $12.6 million, and $12.6 million for the years ended December 31, 2016, 2015, and 2014, respectively. Capital expenditures by segment are included in Note 17. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2016 ( in thousands Goodwill Other Intangible Assets Total Balances as of December 31, 2015 $ 197,362 $ 112,297 $ 309,659 Sale of subsidiary (9,620 ) - (9,620 ) Purchase accounting adjustment (151 ) - (151 ) Translation adjustment - 595 595 Amortization - (18,061 ) (18,061 ) Balances as of December 31, 2016 $ 187,591 $ 94,831 $ 282,422 The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2015 ( in thousands Goodwill Other Intangible Assets Total Balances as of December 31, 2014 $ 253,312 $ 130,333 $ 383,645 Acquired during the period 11,713 7,263 18,976 Impairment (67,663 ) (1,072 ) (68,735 ) Translation adjustment - (3,606 ) (3,606 ) Amortization - (20,621 ) (20,621 ) Balances as of December 31, 2015 $ 197,362 $ 112,297 $ 309,659 The following table presents goodwill balance by reportable segment as of December 31, 2016 and 2015 (in thousands) As of December 31, 2016 2015 Service Centers $ 154,473 $ 164,244 Innovative Pumping Solutions 15,980 15,980 Supply Chain Services 17,138 17,138 Total $ 187,591 $ 197,362 During the third quarter of 2015, the price of DXP’s common stock and the price of crude oil declined over 40% and over 20%, respectively. This decline in oil prices reduced spending by our customers and reduced our revenue expectations. This sustained decline in crude oil prices, reduced capital spending by customers and reduced revenue expectations were determined to be a triggering event during the third quarter of 2015. This triggering event required us to perform testing for possible goodwill impairment in two of our reporting units, and our step one testing indicated there was an impairment in the B27 IPS and B27 SC reporting units. No triggering event was identified in our other reporting units during the third quarter. ASC 350 step two of the goodwill impairment testing for the reporting units was performed preliminarily during the third quarter of 2015. Our preliminary analysis concluded that $48.0 million of our B27 IPS reporting unit’s goodwill and $9.8 million of our B27 SC reporting unit’s goodwill was impaired. The remaining goodwill for the B27 IPS and B27 SC reporting units at September 30, 2015 was $4.9 million and $10.3 million, respectively. The September 30, 2015 ASC 350 step two testing was completed in the fourth quarter of 2015 without any adjustment to the amount recorded in the third quarter of 2015. Fair value was based on expected future cash flow using Level 3 inputs under Account Standards Codification 820 Fair Value Measurements DXP recorded $1.1 million of impairment expense in the third quarter of 2015 to write off an acquired intangible asset related to an ITT Goulds distribution agreement, which was terminated by ITT Goulds during 2015. The remaining intangible asset value of vendor distribution agreements for the year ended December 31, 2015 was zero. None of the impairment is expected to be deductible for tax purposes. During the fourth quarter of 2015, the price of DXP’s common stock and the price of crude oil declined over 16% and over 18%, respectively. This decline in oil prices reduced spending by our customers during the fourth quarter and resulted in fourth quarter actual earnings for the B27 IPS and B27 SC reporting units declining significantly from the forecasts used in the impairment analysis at the end of the third quarter of 2015. The declines in forecasted earnings for these two reporting units were determined to be a triggering event during the fourth quarter of 2015. This triggering event required us to perform testing for possible goodwill impairment in these two reporting units, and our step one testing indicated there may be an impairment in the B27 IPS and B27 SC reporting units. No triggering event was identified in our other reporting units during the fourth quarter. ASC 350 step two of the goodwill impairment testing for the reporting units was performed during the fourth quarter of 2015. Our analysis concluded that $4.9 million of our B27 IPS reporting unit’s goodwill and $5.0 million of our B27 SC reporting unit’s goodwill was impaired. Fair value was based on expected future cash flow using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by market participants, discounted at a rate of return market participants would expect. The remaining goodwill for the B27 IPS and B27 SC reporting units at December 31, 2015 was zero and $5.3 million, respectively. Approximately 60% of the goodwill associated with the B27 acquisition is not deductible for tax purposes. Accordingly, the financial statement tax benefit is calculated for only 40% of the goodwill impairment. The pretax impairment impacted DXP’s effective tax rate for 2015. After recording the fourth quarter impairment loss, accumulated impairment for the B27 IPS and B27 SC reporting units were $148.0 million and $25.0 million, respectively, for the year ended December 31, 2015. As none of the Company’s other reporting units recorded impairment losses in 2015, accumulated impairment for these units remained at $12.3 million. During the fourth quarter of 2014, DXP performed its annual goodwill impairment test at its B27 IPS reporting unit and recognized impairment expense of $95.1 million. In performing the goodwill impairment test, Step 1 of the test failed as the fair value of the reporting unit no longer exceeded its carrying amount primarily due to actual revenues being lower than revenues forecasted as of the date of acquisition and the decline in oil prices during the third quarter of 2014. Fair value was based on expected future cash flow using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by market participants, discounted at a rate of return market participants would expect. In Step 2, goodwill with a carrying amount of $148.0 million was determined to have an implied fair value of $52.9 million after the hypothetical purchase price allocation under US GAAP guidance for business combinations. Approximately 60% of the goodwill associated with the B27 acquisition is not deductible for tax purposes. Accordingly, the financial statement tax benefit is calculated for only 40% of the goodwill impairment. The pretax impairment impacted DXP’s effective tax rate for 2014. B27 IPS is reported in the IPS reportable segment. The Company has not previously recorded an impairment loss for the reporting unit. For the year ended December 31, 2014, accumulated impairment for the B27 IPS reporting unit was $95.1 million. During the fourth quarter of 2014, DXP performed its annual goodwill impairment test at its NatPro IPS reporting unit and recognized impairment expense of $12.3 million consisting of goodwill. Fair value was based on expected future cash flows using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by the market participants, discounted at a rate of return market participants would expect. Goodwill was determined to have an implied fair value of zero after the hypothetical purchase price allocation under US GAAP guidance for business combinations. None of the goodwill associated with the NatPro acquisition is deductible for tax purposes. The pretax goodwill impairment impacted DXP's effective tax rate for 2014. NatPro IPS is reported in the IPS reportable segment. The Company has not previously recorded an impairment loss for the reporting unit. For the year ended December 31, 2014, accumulated impairment for the NatPro IPS reporting unit was $12.3 million. During the fourth quarter of 2014, DXP performed its annual goodwill impairment test at its B27 SC reporting unit and recognized a goodwill impairment expense of $10.2 million. In performing the goodwill impairment test, Step 1 of the test failed as the fair value of the reporting unit no longer exceeded its carrying amount primarily due to actual revenues being lower than revenues forecasted as of the date of acquisition and the decline in oil prices during the third quarter of 2014. Fair value was based on expected future cash flow using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by market participants, discounted at a rate of return market participants would expect. In Step 2, goodwill was determined to have an implied fair value of $20.1 million after the hypothetical purchase price allocation under USGAAP guidance for business combinations. Approximately 60% of the goodwill associated with the B27 acquisition is not deductible for tax purposes. Accordingly, the financial statement tax benefit is calculated for only 40% of the impairment. The pretax impairment impacted DXP’s effective tax rate for 2014. B27 Service Centers is reported in the Service Centers reportable segment. The Company has not previously recorded an impairment loss for the reporting unit. For the year ended December 31, 2014, accumulated impairment for the B27 Service Centers reporting unit was $10.2 million. The impairment losses during the years ended December 31, 2015 and 2014 are included in the “impairment expense” line item on the consolidated statements of income (loss). The following table presents a summary of amortizable other intangible assets ( in thousands As of December 31, 2016 As of December 31, 2015 Gross Carrying Amount Accumulated Amortization Carrying Amount, net Gross Carrying Amount Accumulated Amortization Carrying Amount, net Customer relationships 163,022 (68,446 ) 94,576 195,580 (83,741 ) 111,839 Non-compete agreements 1,836 (1,581 ) 255 1,815 (1,357 ) 458 Total $ 164,858 $ (70,027 ) $ 94,831 $ 197,395 $ (85,098 ) $ 112,297 Gross carrying amounts as well as accumulated amortization are partially affected by the fluctuation of foreign currency rates. Other intangible assets are amortized according to estimated economic benefits over their estimated useful lives Customer relationships are amortized over their estimated useful lives. Amortization expense is recognized according to estimated economic benefits and was $18.1 million, $20.6 million, and $22.5 million for the years ended December 31, 2016, 2015, and 2014, respectively. The estimated future annual amortization of intangible assets for each of the next five years and thereafter are as follows (in thousands) 2017 $ 17,209 2018 15,558 2019 14,114 2020 10,680 2021 8,427 Thereafter 28,843 The weighted average remaining estimated life for customer relationships and non-compete agreements are 9.2 years and 2.4 years, respectively. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT [Abstract] | |
LONG-TERM DEBT | NOTE 9 – LONG-TERM DEBT Long-term debt consisted of the following ( in thousands December 31, 2016 2015 Line of credit $ 147,600 $ 172,147 Term loan 74,500 175,000 Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment 3,577 4,408 Less unamortized debt issuance costs (992 ) (2,046 ) Total Debt 224,685 349,509 Less: Current maturities (51,354 ) (50,829 ) Total Long-term Debt $ 173,331 $ 298,680 On July 11, 2012, DXP entered into a credit facility with Wells Fargo Bank National Association, as Issuing Lender, Swingline Lender and Administrative Agent for the lenders (as amended, the “Original Facility”). On January 2, 2014, the Company entered into an Amended and Restated Credit Agreement with Wells Fargo Bank, National Association, as Issuing Lender and Administrative Agent for other lenders (as amended by that certain First Amendment to the Amended and Restated Credit Agreement, dated as of August 6, 2015 (the “First Amendment”), that certain Second Amendment to the Amended and Restated Credit Agreement, dated as of September 30, 2015 (the “Second Amendment”), that certain Third Amendment to the Amended and Restated Credit Agreement, dated as of May 12, 2016 (the “Third Amendment”), that certain Fourth Amendment to the Amended and Restated Credit Agreement, dated as of August 15, 2016 (the “Fourth Amendment”), and that certain Fifth Amendment to the Amended and Restated Credit Agreement, dated as of November 28, 2016 (the “Fifth Amendment” and as so amended, the “Facility”), amending and restating the Original Facility. Pursuant to the Facility, as of December 31, 2016, the lenders named therein provided to DXP a $74.5 million term loan and a $205 million revolving line of credit. The Facility expires on March 31, 2018. Loans made from the Facility may be used for working capital and general corporate purposes of DXP and its subsidiaries. As of December 31, 2016, the aggregate principal amount of revolving loans outstanding under the facility was $147.6 million. Amortization payments are required with respect to the Facility on the last business day of each fiscal quarter, payable at $15.625 million per quarter for the fiscal quarter periods ending March 31, 2017 and thereafter. On October 31, 2016, DXP prepaid $12 million of the $15.625 million amortization payment due on March 31, 2017. The Fourth Amendment required additional term loan principal reductions of $17 million by December 31, 2016 and $14 million by March 31, 2017. During October, 2015 DXP paid the mandatory $17 million and $14 million principal reductions. At December 31, 2016, the aggregate principal amount of term loans outstanding under the Facility was $74.5 million. Substantially all of the Company’s assets are pledged as collateral to secure the credit facilities. Consolidated EBITDA as defined under the Facility for financial covenant purposes means, without duplication, for any period the consolidated net income of DXP plus, to the extent deducted in calculating consolidated net income, depreciation, amortization (except to the extent that such non-cash charges are reserved for cash charges to be taken in the future), non-cash compensation including stock option or restricted stock expense, interest expense and income tax expense for taxes based on income, certain one-time costs associated with our acquisitions, integration costs, facility consolidation and closing costs, severance costs and expenses, write-down of cash expenses incurred in connection with the existing credit agreement and extraordinary losses less interest income and extraordinary gains. Consolidated EBITDA shall be adjusted to give pro forma effect to disposals or business acquisitions assuming that such transaction(s) had occurred on the first day of the period excluding all income statement items attributable to the assets or equity interests that are subject to such disposition made during the period and including all income statement items attributable to property or equity interests of such acquisitions permitted under the Facility. Under the terms of the Fourth and Fifth Amendments: · The revolving line of credit was reduced from $250 million to $205 million, as of August 15, 2016, and shall be reduced to $190 million, as of March 31, 2017. · A permitted overadvance facility (the “Permitted Overadvance Facility”) has been added with amounts to be determined but which shall permit drawings in excess of the ratio of (i) the sum of 85% of net accounts receivable and 65% of net inventory to (ii) the aggregate amount of revolving credit outstandings (the “Asset Coverage Ratio”). · Certain modifications were made to the pricing grid set forth in the Facility to increase the rate at which the Facility bears interest to a rate equal to LIBOR (or CDOR for Canadian dollar loans) plus 5.00% and Base Rate (or Canadian Base Rate for Canadian dollar loans) plus 4.00%; provided, that drawings under the Permitted Overadvance Facility shall bear interest at a rate equal to LIBOR (or CDOR for Canadian dollar loans) plus 6.00% and Base Rate (or Canadian Base Rate for Canadian dollar loans) plus 5.00%. · The maturity date of the Facility was modified from January 2, 2019 to March 31, 2018. · Additional mandatory prepayments were added in an amount equal to $30 million (including $17 million to be applied to the term loan) by December 31, 2016 and $25 million (including $14 million to be applied to the term loan) by March 31, 2017. As of October 31, 2016, both of these mandatory prepayments have been paid. · The negative covenants were modified to reduce certain debt baskets, including for purchase money, capital lease and unsecured debt and to limit the ability of the Company to conduct asset sales in excess of $3.5 million without the consent of the Required Lenders. · A financial covenant holiday has been provided through March 31, 2018 for the Consolidated Leverage Ratio and the Consolidated Fixed Charge Coverage Ratio. · The minimum Asset Coverage Ratio was adjusted to 0.95 to 1.00 beginning June 30, 2016. · A Minimum Consolidated EBITDA and capital expenditure covenant were added to the Facility. On December 31, 2016, the LIBOR based rate in effect under the Facility was LIBOR plus 5.0% and the prime based rate of the Facility was prime plus 4.0%. At December 31, 2016, $222.1 million was borrowed under the Facility at a weighted average interest rate of approximately 5.89%. At December 31, 2016, the Company had $37.3 million available for borrowing under the Facility. Commitment fees of 0.50% per annum are payable on the portion of the Facility capacity not in use at any given time on the line of credit. Commitment fees are included as interest in the condensed consolidated statements of operations. The Facility’s principal financial covenants included: Consolidated Leverage Ratio – The Facility requires that the Company’s Consolidated Leverage Ratio, determined at the end of each fiscal quarter, not to exceed 3.50 to 1.00 from July 1, 2017 through December 31, 2017, and not to exceed 3.25 to 1.00 on January 1, 2018 and thereafter. The Consolidated Leverage Ratio is defined as the outstanding indebtedness divided by Consolidated EBITDA for the period of four consecutive fiscal quarters ending on or immediately prior to such date. Indebtedness is defined under the Facility for financial covenant purposes as: (a) all obligations of DXP for borrowed money including but not limited to obligations evidenced by bonds, debentures, notes or other similar instruments; (b) obligations to pay deferred purchase price of property or services; (c) capital lease obligations; (d) obligations under conditional sale or other title retention agreements relating to property purchased; and (e) contingent obligations for funded indebtedness. At December 31, 2016, the Company’s Leverage Ratio was 3.78 to 1.00, but the Facility does not require compliance with a Consolidated Leverage Ratio from June 30, 2016 through March 31, 2018. Consolidated Fixed Charge Coverage Ratio – The Facility requires that the Consolidated Fixed Charge Coverage Ratio on the last day of each quarter be not less than 1.25 to 1.00 from July 1, 2017 and thereafter, with “Consolidated Fixed Charge Coverage Ratio” defined as the ratio of (a) Consolidated EBITDA for the period of 4 consecutive fiscal quarters ending on such date minus capital expenditures during such period (excluding acquisitions) minus income tax expense paid minus the aggregate amount of restricted payments defined in the agreement to (b) the interest expense paid in cash, scheduled principal payments in respect of long-term debt and the current portion of capital lease obligations for such 12-month period, determined in each case on a consolidated basis for DXP and its subsidiaries. At December 31, 2016, the Company's Consolidated Fixed Charge Coverage Ratio was 0.77 to 1.00, but the Facility does not require compliance with a Consolidated Fixed Charge Coverage Ratio from June 30, 2016 through March 31, 2018. Asset Coverage Ratio – The Facility requires that the Asset Coverage Ratio at any time be not less than 0.95 to 1.00 from June 30, 2016 and thereafter, with “Asset Coverage Ratio” defined as the ratio of (a) the sum of 85% of net accounts receivable plus 65% of net inventory to (b) the aggregate outstanding amount of the revolving credit on such date and excluding the Permitted Overadvance Facility. At December 31, 2016, the Company's Asset Coverage Ratio was 1.18 to 1.00. Minimum Consolidated EBITDA– The Facility requires that the Company’s Consolidated EBITDA for any twelve month period as of the last day of any calendar month ending during the periods specified below not be less than the corresponding amount set forth below: Period Minimum Consolidated EBITDA December 31, 2016 $ 39,891,000 January 31, 2017 $ 40,576,000 February 28, 2017 $ 42,257,000 March 31, 2017 $ 43,276,000 April 30, 2017 $ 41,266,000 May 31, 2017 $ 39,283,000 June 30, 2017 $ 36,210,000 July 31, 2017 $ 42,968,000 August 31, 2017 $ 42,411,000 September 30, 2017 $ 39,306,000 October 31, 2017 and thereafter $ 39,000,000 At December 31, 2016, the Company’s Consolidated EBITDA was $59,698,000. The following table sets forth the computation of the Leverage Ratio as of December 31, 2016 ( in thousands, except for ratios For the Twelve Months ended December 31, 2016 Leverage Ratio Income before taxes $ 9,674 Before tax loss attributable to noncontrolling interest 886 Interest expense 15,564 Depreciation and amortization 29,994 Stock compensation expense 3,580 (A) $ 59,698 As of December 31, 2016 Total long-term debt, including current maturities $ 224,685 Unamortized debt issuance costs 992 (B) $ 225,677 Leverage Ratio (B)/(A) 3.78 The following table sets forth the computation of the Fixed Charge Coverage Ratio as of December 31, 2016 ( in thousands, except for ratios For the Twelve Months ended December 31, 2016 Defined EBITDA $ 59,698 Cash paid for income taxes 4,780 Capital expenditures 4,868 (A) $ 50,050 Cash interest payments $ 13,708 Dividends 90 Scheduled principal payments 50,831 (B) $ 64,629 Fixed Charge Coverage Ratio (A)/(B) 0.77 The following table sets forth the computation of the Asset Coverage Ratio as of December 31, 2016 ( in thousands, except for ratios Credit facility outstanding balance $ 147,600 Outstanding letters of credit 5,564 Defined indebtedness $ 153,164 Accounts receivable (net), valued at 85% of gross $ 126,581 Inventory, valued at 65% of gross 54,405 $ 180,986 Asset Coverage Ratio 1.18 As of December 31, 2016, the maturities of long-term debt for the next five years and thereafter were as follows ( in thousands 2017 $ 51,354 2018 172,479 2019 905 2020 940 Thereafter - |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 10 - INCOME TAXES The components of income before income taxes are as follows ( in thousands Years Ended December 31, 2016 2015 2014 Domestic $ 11,079 $ (42,179 ) $ (21,349 ) Foreign (1,405 ) 3,259 (4,207 ) Total income before taxes $ 9,674 $ (38,920 ) $ (25,556 ) The provision for income taxes consists of the following ( in thousands Years Ended December 31, 2016 2015 2014 Current - Federal $ (902 ) $ 5,182 $ 24,050 State 136 1,499 5,604 Foreign 602 2,493 2,150 (164 ) 9,174 31,804 Deferred - Federal 4,174 (7,090 ) (10,544 ) State 120 - (1,769 ) Foreign (1,607 ) (1,934 ) 191 2,687 (9,024 ) (12,122 ) $ 2,523 $ 150 $ 19,682 The difference between income taxes computed at the federal statutory income tax rate (35%) and the provision for income taxes is as follows ( in thousands Years Ended December 31, 2016 2015 2014 Income taxes computed at federal statutory rate $ 3,386 $ (13,622 ) $ (8,945 ) State income taxes, net of federal benefit 166 974 2,492 Non-tax deductible impairment expense computed at federal statutory rate - 15,765 24,444 Foreign adjustment 140 689 1,353 Meals and entertainment 361 620 801 Gain on sale of Vertex (1,971 ) - - Domestic Production Activity Deduction - (1,143 ) (1,040 ) Research and development tax credit (886 ) (1,730 ) (587 ) Foreign tax credit (383 ) (921 ) (343 ) Provision to return adjustments 927 - - Other 783 (482 ) 1,507 $ 2,523 $ 150 $ 19,682 The net current and noncurrent components of deferred income tax balances are as follows ( in thousands December 31, 2016 2015 Net current assets $ 9,473 $ 8,996 Net non-current liabilities (18,986 ) (6,312 ) Net assets (liabilities) $ (9,513 ) $ 2,684 Deferred tax liabilities and assets were comprised of the following ( in thousands December 31, 2016 2015 Deferred tax assets: Goodwill $ 4,029 $ 9,136 Allowance for doubtful accounts 2,469 2,692 Inventories 3,944 3,312 Accruals 1,978 2,354 Research and development credit carryforward 886 - Net operating loss carryforward 760 730 Cumulative translation adjustment - 8,605 Capital loss carryforward 18,903 - Other 309 730 Total deferred tax assets 33,278 27,559 Less valuation allowance (19,633 ) (730 ) Total deferred tax asset, net of valuation Deferred tax liabilities 13,645 26,829 Intangibles (10,042 ) (13,314 ) Property and equipment (12,762 ) (10,824 ) Unremitted foreign earnings (354 ) (259 ) Other - 252 Net deferred tax asset (liability) $ (9,513 ) $ 2,684 At December 31, 2016, the Company had $49.9 million of capital loss carryforward and $2.7 million of foreign net operating loss carryforward. The Company has recorded a valuation allowance for 100% of these carryforward amounts. The valuation allowance represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and the deferred tax assets that may not be realized. Total deferred tax assets at December 31, 2016 were reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors of $1.3 million, $2.7 million and $4.6 million which were recorded during 2013, 2014 and 2015, respectively, due to the Company improperly recognizing a deferred tax asset related to cumulative translation adjustment losses. The Company evaluated the misstatement of each period and concluded the effects were immaterial. Therefore, the Company decided to correct the accumulated $8.6 million error in the fourth quarter of 2016. We assessed the materiality of this misstatement and concluded the mistatement was not material to the results of operations or financial condition for the years ended December 31, 2016, 2015 and 2014. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
STOCK-BASED COMPENSATION [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 11 - SHARE-BASED COMPENSATION Restricted Stock Under the restricted stock plans approved by our shareholders, directors, consultants and employees may be awarded shares of DXP’s common stock. The shares of restricted stock granted to employees and that are outstanding as of December 31, 2016 vest in accordance with one of the following vesting schedules: 100% one year after date of grant; 33.3% each year for three years after date of grant; 20% each year for five years after date of grant; or 10% each year for ten years after date of grant. The shares of restricted stock granted to non-employee directors of DXP vest one year after the grant date. The fair value of restricted stock awards is measured based upon the closing prices of DXP’s common stock on the grant dates and is recognized as compensation expense over the vesting period of the awards. Once restricted stock vests, new shares of the Company’s stock are issued. At December 31, 2016, 419,597 shares were available for future grant. Changes in restricted stock for the twelve months ended December 31, 2016 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2015 137,507 $ 54.58 Granted 108,553 $ 17.07 Forfeited (39,000 ) $ 65.41 Vested (63,680 ) $ 46.65 Non-vested at December 31, 2016 143,380 $ 26.76 Changes in restricted stock for the twelve months ended December 31, 2015 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2014 179,942 $ 52.71 Granted 35,821 $ 40.95 Forfeited (20,855 ) $ 41.34 Vested (57,401 ) $ 44.99 Non-vested at December 31, 2015 137,507 $ 54.58 Changes in restricted stock for the twelve months ended December 31, 2014 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2013 211,510 $ 36.17 Granted 52,219 $ 93.12 Forfeited (14,112 ) $ 38.68 Vested (69,675 ) $ 35.41 Non-vested at December 31, 2014 179,942 $ 52.71 Compensation expense, associated with restricted stock, recognized in the years ended December 31, 2016, 2015 and 2014 was $2.0 million, $3.0 million, and $3.6 million, respectively. Related income tax benefits recognized in earnings in the years ended December 31, 2016, 2015 and 2014 were approximately $0.8 million, $1.2 million and $1.4 million, respectively. Unrecognized compensation expense under the Restricted Stock Plan at December 31, 2016 and December 31, 2015 was $2.7 million and $4.9 million, respectively. As of December 31, 2016, the weighted average period over which the unrecognized compensation expense is expected to be recognized is 15.2 months. |
EARNINGS PER SHARE DATA
EARNINGS PER SHARE DATA | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE DATA [Abstract] | |
EARNINGS PER SHARE DATA | NOTE 12 - 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. For the years ended December 31, 2015 and 2014, we excluded the potential dilution of convertible preferred stock, which could be converted into 840,000 shares because they would be anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share for the periods indicated ( in thousands, except per share data December 31, 2016 2015 2014 Basic: Weighted average shares outstanding 15,042 14,423 14,639 Net income (loss) attributable to DXP Enterprises, Inc. $ 7,702 $ (38,536 ) $ (45,238 ) Convertible preferred stock dividend (90 ) (90 ) (90 ) Net income (loss) attributable to common shareholders $ 7,612 $ (38,626 ) $ (45,328 ) Per share amount $ 0.51 $ (2.68 ) $ (3.10 ) Diluted: Weighted average shares outstanding 15,042 14,423 14,639 Assumed conversion of convertible preferred stock 840 - - Total dilutive shares 15,882 14,423 14,639 Net income (loss) attributable to common shareholders $ 7,612 $ (38,626 ) $ (45,328 ) Convertible preferred stock dividend 90 - - Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share $ 7,702 $ (38,626 ) $ (45,328 ) Per share amount $ 0.49 $ (2.68 ) $ (3.10 ) Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the period and excludes dilutive securities. Diluted earnings per share reflects the potential dilution that could occur if the preferred stock was converted into common stock. Restricted stock is considered a participating security and is included in the computation of basic earnings per share as if vested. Because holders of Preferred Stock do not participate in losses, the loss was not allocated to Preferred Stock for fiscal years 2015 and 2014. The Preferred Stock is convertible into 840,000 shares of common stock. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 12 Months Ended |
Dec. 31, 2016 | |
BUSINESS ACQUISITIONS [Abstract] | |
BUSINESS ACQUISITIONS | NOTE 13 - BUSINESS ACQUISITIONS All of the Company’s acquisitions have been accounted for using the purchase method of accounting. Revenues and expenses of the acquired businesses have been included in the accompanying consolidated financial statements beginning on their respective dates of acquisition. The allocation of purchase price to the acquired assets and liabilities is based on estimates of fair market value and may be revised if and when additional information the Company is awaiting concerning certain asset and liability valuations is obtained, provided that such information is received no later than one year after the date of acquisition. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. It specifically includes the expected synergies and other benefits that we believe will result from combining the operations of our acquisitions with the operations of DXP and any intangible assets that do not qualify for separate recognition such as the assembled workforce. On April 1, 2015, the Company completed the acquisition of all of the equity interests of Tool Supply, Inc. (“TSI”) to expand DXP’s cutting tools offering in the Northwest region of the United States. DXP paid approximately $5.0 million for TSI, which was borrowed under the Facility. Estimated goodwill of $2.9 million and intangible assets of $2.0 were recognized for this acquisition. All of the estimated goodwill is included in the Service Centers segment. None of the estimated goodwill or intangible assets are expected to be tax deductible. On September 1, 2015, the Company completed the acquisition of all of the equity interests of Cortech Engineering, LLC (“Cortech”) to expand DXP’s rotating equipment offering to the Western seaboard. DXP paid approximately $14.9 million for Cortech. The purchase was financed with borrowings under the Facility as well as by issuing $4.4 million (148.8 thousand shares) of DXP common stock. Estimated intangible assets of $5.2 were recognized for this acquisition. In the first quarter of 2016, DXP adjusted the deferred tax liability associated with the acquisition by $151 thousand, which resulted in an adjusted goodwill balance of $8.7 million. All of the estimated goodwill is included in the Service Centers segment. Approximately $4.5 million of the goodwill and intangible assets are not deductible for tax purposes. The value assigned to the non-compete agreements and customer relationships for business acquisitions were determined by discounting the estimated cash flows associated with non-compete agreements and customer relationships as of the date the acquisition was consummated. The estimated cash flows were based on estimated revenues net of operating expenses and net of capital charges for assets that contribute to the projected cash flow from these assets. The projected revenues and operating expenses were estimated based on management estimates. Net capital charges for assets that contribute to projected cash flow were based on the estimated fair value of those assets. For the twelve months ended December 31, 2016, businesses acquired during 2015 contributed sales of $25.2 million and earnings (loss) before taxes of approximately $(0.3) million. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed during 2015 in connection with the acquisitions described above ( in thousands 2015 TSI CORTECH Cash $ - $ - Accounts Receivable, net 442 2,293 Inventory 475 1,243 Property and equipment 42 253 Goodwill and intangibles 4,929 13,897 Other assets 100 21 Assets acquired 5,988 17,707 Current liabilities assumed (335 ) (2,610 ) Non-current liabilities assumed 1 (653 ) (198 ) Net assets acquired $ 5,000 $ 14,899 (1) Includes deferred tax liability of $0.6 million related to intangible assets acquired for 2015. The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2016 and 2015, assuming the acquisition of businesses completed in 2015 and the divestiture of a business completed in 2016 (previously discussed in Item 1, Business in millions, except per share amounts Years Ended December 31, 2016 2015 Net sales $ 939.4 $ 1,228.9 Net income (loss) attributable to DXP Enterprises, Inc. $ 5.5 $ (40.7 ) Per share data attributable to DXP Enterprises, Inc. Basic earnings (loss) $ 0.37 $ (2.83 ) Diluted earnings (loss) $ 0.35 $ (2.83 ) The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2015 and 2014, assuming the acquisition of businesses completed in 2015 and 2014 (previously discussed in Item 1, Business in millions, except per share amounts Years Ended December 31, 2015 2014 Net sales $ 1,263 $ 1,541 Net income (loss) $ (37 ) $ (44 ) Per share data Basic earnings (loss) $ (2.60 ) $ (2.99 ) Diluted earnings (loss) $ (2.60 ) $ (2.99 ) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 - COMMITMENTS AND CONTINGENCIES The Company leases equipment, automobiles and office facilities under various operating leases. The future minimum rental commitments as of December 31, 2016, for non-cancelable leases are as follows ( in thousands 2017 $ 19,412 2018 13,785 2019 8,886 2020 5,125 2021 3,814 Thereafter 3,141 Rental expense for operating leases was $27.6 million, $32.7 million and $32.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. From 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. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE BENEFIT PLANS [Abstract] | |
EMPLOYEE BENEFIT PLANS | NOTE 15 - EMPLOYEE BENEFIT PLANS The Company offers a 401(k) plan which is eligible to substantially all employees in the United States. For the years ended December 31, 2015 and 2014 as well as the first quarter of 2016, the Company elected to match employee contributions at a rate of 50 percent of up to 4 percent of salary deferral. The Company contributed $0.4 million, $2.6 million, and $2.5 million to the 401(k) plan in the years ended December 31, 2016, 2015, and 2014, respectively. In 2016 the Company suspended indefinitely the employee match program. The Company contributed in the first quarter of 2016 $0.4 million to the 401(k). No other contributions were made during the remainder of 2016. |
OTHER COMPREHENSIVE INCOME
OTHER COMPREHENSIVE INCOME | 12 Months Ended |
Dec. 31, 2016 | |
OTHER COMPREHENSIVE INCOME [Abstract] | |
OTHER COMPREHENSIVE INCOME | NOTE 16 - OTHER COMPREHENSIVE INCOME Other comprehensive income generally represents all changes in shareholders’ equity during the period, except those resulting from investments by, or distributions to, shareholders. During 2014 the Company had net other comprehensive (loss) income of ($0.1) million, respectively, related to changes in the market value of an investment with quoted market prices in an active market for identical instruments. The Company recognized a $0.1 million loss in 2014 on the sale of this investment. During 2012 and 2013, the Company acquired four entities that operate in Canada. These Canadian entities maintain financial data in Canadian dollars. Upon consolidation, the Company translates the financial data from these foreign subsidiaries into U.S. dollars and records cumulative translation adjustments in other comprehensive income. The Company recorded $(7.7) million, ($4.9) million and ($3.3) million in translation adjustments, net of tax, in other comprehensive income during the years ended December 31, 2016, 2015 and 2014, respectively. Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016, 2015 and 2014. |
SEGMENT AND GEOGRAPHICAL REPORT
SEGMENT AND GEOGRAPHICAL REPORTING | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT AND GEOGRAPHICAL REPORTING [Abstract] | |
SEGMENT AND GEOGRAPHICAL REPORTING | NOTE 17 – SEGMENT AND GEOGRAPHICAL REPORTING The 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 and equipment, 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, fastener, industrial supply, safety products and safety services categories. The Innovative Pumping Solutions segment fabricates and assembles custom-made pump packages, remanufactures pumps and manufactures branded private label pumps. The Supply Chain Services segment manages all or part of a customer's MRO products 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 intersegment eliminations. Business Segmented Financial Information The following table sets out financial information relating the Company’s segments ( in thousands Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total 2016 Sales $ 621,007 $ 187,124 $ 153,961 $ 962,092 Operating income for reportable segments, excluding amortization 47,634 9,867 15,449 72,950 Identifiable assets at year end 370,261 175,198 44,796 590,255 Capital expenditures 447 3,827 129 4,403 Proceeds from sale of fixed assets 1,038 168 - 1,206 Depreciation 6,520 3,834 126 10,480 Amortization 9,152 7,826 1,083 18,061 Interest expense 9,290 4,422 1,852 15,564 2015 Sales $ 826,588 $ 254,829 $ 165,626 $ 1,247,043 Operating income for reportable segments, excluding impairment expense 78,170 21,584 14,213 113,967 Identifiable assets at year end 451,333 159,365 50,012 660,710 Capital expenditures 3,185 8,383 604 12,172 Depreciation 7,734 2,930 227 10,891 Amortization 10,334 8,406 1,881 20,621 Interest expense 2,967 6,881 1,084 10,932 Impairment expense by segment 15,842 52,893 - 68,735 2014 Sales $ 987,561 $ 348,134 $ 163,967 $ 1,499,662 Operating income for reportable segments, excluding impairment expense 107,699 51,162 13,794 172,655 Identifiable assets at year end 568,182 202,228 54,637 825,047 Capital expenditures 4,100 4,043 122 8,265 Depreciation 8,416 2,381 397 11,194 Amortization 11,281 8,993 2,206 22,480 Interest expense 3,422 8,451 924 12,797 Impairment expense by segment 10,210 107,359 - 117,569 Years Ended December 31, 2016 2015 2014 Operating income for reportable segments, excluding impairment expense $ 72,950 $ 113,967 $ 172,655 Adjustments for: B27 settlement - 7,348 - Impairment expense - 68,735 117,569 Amortization of intangibles 18,061 20,621 22,480 Corporate and other expense, net 35,557 45,179 45,234 Total operating income (loss) 19,332 (27,916 ) (12,628 ) Interest expense 15,564 10,932 12,797 Other expenses (income), net (5,906 ) 72 131 Income (loss) before income taxes $ 9,674 $ (38,920 ) $ (25,556 ) The Company had capital expenditures at Corporate of $0.5 million, $1.8 million, and $0.8 million for the years ended December 31, 2016, 2015, and 2014, respectively. The Company had identifiable assets at Corporate of $18.3 million, $23.3 million, and $19.3 million as of December 31, 2016, 2015, and 2014, respectively. Corporate depreciation was $1.4 million, $1.7 million, and $1.4 million for the years ended December 31, 2016, 2015, and 2014, respectively. Geographical Information Revenues are presented in geographic area based on location of the facility shipping products or providing services. Long-lived assets are based on physical locations and are comprised of the net book value of property. The Company’s revenues and property and equipment by geographical location are as follows (in thousands) Years Ended December 31, 2016 2015 2014 Revenues United States $ 873,926 $ 1,119,210 $ 1,300,493 Canada 88,166 127,833 195,633 Other - - 3,536 Total $ 962,092 $ 1,247,043 $ 1,499,662 As of December 31, 2016 2015 Property and Equipment, net United States $ 48,635 $ 53,695 Canada 12,172 14,724 Dubai - 84 Total $ 60,807 $ 68,503 |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) [Abstract] | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | NOTE 18 - QUARTERLY FINANCIAL INFORMATION (unaudited) Summarized quarterly financial information for the years ended December 31, 2016, 2015 and 2014 is as follows ( in millions, except per share data First (1) Second (1) Third (1) Fourth 2016 Sales $ 253.6 $ 256.2 $ 230.0 $ 222.3 Gross profit 68.8 71.6 63.8 60.6 Impairment expense - - - - Net income (loss) (5.2 ) 5.1 0.1 7.1 Net income (loss) attributable to DXP Enterprises, Inc. (5.1 ) 5.1 0.2 7.4 Earnings (loss) per share - basic $ (0.36 ) $ 0.36 $ 0.02 $ 0.44 Earnings (loss) per share - diluted $ (0.36 ) $ 0.34 $ 0.02 $ 0.42 2015 Sales $ 341.6 $ 323.7 $ 303.1 $ 278.6 Gross profit 98.1 91.3 85.7 76.9 Impairment expense - - 58.9 9.8 Net income (loss) 9.7 7.2 (52.7 ) (3.2 ) Net income (loss) attributable to DXP Enterprises, Inc. 9.7 7.2 (52.4 ) (3.0 ) Earnings (loss) per share - basic $ 0.67 $ 0.50 $ (3.64 ) $ (0.20 ) 2014 Sales $ 348.5 $ 381.6 $ 387.0 $ 382.6 Gross profit 101.7 111.0 113.4 106.7 Impairment expense - - - 117.6 Net income (loss) 10.9 14.9 17.0 (88.1 ) Earnings (loss) per share - basic $ 0.74 $ 1.01 $ 1.16 $ (6.09 ) The sum of the individual quarterly earnings per share amounts may not agree with year-to-date earnings per share as each quarter’s computation is based on the weighted average number of shares outstanding during the quarter, the weighted average stock price during the quarter and the dilutive effects of the stock options and restricted stock in each quarter. (1) During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. The first three quarters of 2014 were revised as follows: Previously Reported First Quarter Adjusted Quarter Previously Reported Second Quarter Adjusted Quarter Previously Reported Third Quarter Adjusted Quarter Sales $ 348.5 $ 348.5 $ 381.6 $ 381.6 $ 387.0 $ 387.0 Gross profit 101.7 101.7 111.0 111.0 113.4 113.4 Net income (loss) 11.6 10.9 15.5 14.9 17.6 17.0 Earnings (loss) per share Basic $ 0.79 $ 0.74 $ 1.06 $ 1.01 $ 1.20 $ 1.16 Diluted $ 0.75 $ 0.70 $ 1.00 $ 0.96 $ 1.14 $ 1.10 |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTIES [Abstract] | |
RELATED PARTIES | NOTE 19 – RELATED PARTIES The Board uses policies and procedures, to be applied by the Audit Committee of the Board, for review, approval or ratification of any transactions with related persons. Those policies and procedures will apply to any proposed transactions in which DXP is a participant, the amount involved exceeds $120,000 and any director, executive officer or significant shareholder or any immediate family member of such a person has a direct or material indirect interest. Any related party transaction will be reviewed by the Audit Committee of the Board of Directors to determine, among other things, the benefits of any transaction to DXP, the availability of other sources of comparable products or services and whether the terms of the proposed transaction are comparable to those provided to unrelated third parties. For the year ended December 31, 2016, the Company paid approximately $1.3 million in lease expenses to entities controlled by the Company’s Chief Executive Officer, David Little, $1.3 million in lease expenses to an entity in which a retired senior vice president holds a minority interest, and $0.3 million in lease expenses to an entity in which a retired senior vice president holds an interest, and the children of David Little hold a majority interest. The Company employs six people who work for David Little, and Mr. Little reimbursed the Company for the cost. Total cost to Mr. Little for the year ended December 31, 2016 for payroll, related payroll expenses, vehicles, fuel and supplies was $0.4 million. The Company employs two sons and two sons-in-laws of executives. Total wages and other compensation for 2016 was approximately $0.7 million for the four employees. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20 – SUBSEQUENT EVENTS We have evaluated subsequent events through the date the consolidated financial statements were issued. There were no subsequent events that required recognition for disclosure unless elsewhere identified in this report. |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“USGAAP”). The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity (“VIE”). DXP is the primary beneficiary of a VIE in which DXP owns 47.5% of the equity. DXP consolidates the financial statements of the VIE with the financial statements of DXP. As of December 31, 2016, the total assets of the VIE were approximately $5.2 million including approximately $5.2 million of fixed assets. DXP is the primary customer of the VIE. Consolidation of the VIE increased cost of sales by approximately $1.3 million and $1.4 million for the twelve months ended December 31, 2016 and 2015, respectively. The Company recognized a related income tax benefit of $0.3 million and $0.3 million related to the VIE for the years ended December 31, 2016 and 2015, respectively. At December 31, 2016, the owners of the 52.5% of the equity not owned by DXP included employees of DXP. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation; none affected net income. |
Out-of-Period Items | Out-of-Period Items During the first quarter of 2015, we identified a $2.5 million ($1.6 million net of tax) overstatement of an accrual at December 31, 2014, which overstated 2014 selling, general and administrative expense. We recorded an out-of-period adjustment to correct this overstatement in the quarter ended March 31, 2015. During the fourth quarter of 2015, we realized $1.5 million of net tax benefits related to events which occurred in earlier years. These out-of-period items reduced the 2015 net loss by $3.1 million and 2015 basic and diluted net loss per share by $0.21. We assessed the materiality of this overstatement and concluded the overstatement was not material to the results of operations or financial condition for the years ended December 31, 2016, 2015 and 2014. |
Foreign Currency | Foreign Currency The financial statements of the Company’s Canadian subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss). Gains and losses on transactions denominated in foreign currency are reported in consolidated statements of income (loss). |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company’s presentation of cash includes cash equivalents. Cash equivalents are defined as short-term investments with maturity dates of 90 days or less at time of purchase. The Company places its cash and cash equivalents with institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. |
Receivables and Credit Risk | Receivables and Credit Risk Trade receivables consist primarily of uncollateralized customer obligations due under normal trade terms, which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and customers may not pay within stated trade terms. The Company has trade receivables from a diversified customer base located primarily in the Rocky Mountain, Northeastern, Midwestern, Southeastern and Southwestern regions of the United States, and Canada. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers' financial positions and monitors accounts on a regular basis, but generally does not require collateral. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of the collectability of such accounts. The Company writes-off uncollectible trade accounts receivable when the accounts are determined to be uncollectible. No customer represents more than 10% of consolidated sales. We maintain an allowance for losses based upon the expected collectability of accounts receivable. Changes in this allowance for 2016, 2015 and 2014 were as follows: Years Ended December 31, 2016 2015 2014 Balance at beginning of year $ 9,364 $ 8,713 $ 8,798 Charged to costs and expenses 180 2,014 2,365 Charged to other accounts (17 ) 2 1,255 2 1,140 2 Deductions (1,367 ) 1 (2,618 ) 1 (3,590 ) 1 Balance at end of year $ 8,160 $ 9,364 $ 8,713 ( 1) Uncollectible accounts written off, net of recoveries (2) Includes allowance for doubtful accounts from acquisitions and divestiture |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. USGAAP establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. USGAAP prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. See Note 4 for further information regarding the Company’s financial instruments. |
Inventories | Inventories Inventories consist principally of finished goods and are priced at lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Reserves are provided against inventories for estimated obsolescence based upon the aging of the inventories and market trends and are applied as a reduction in cost of associated inventory. |
Property and Equipment | Property and Equipment Property and equipment are carried on the basis of cost. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives. Maintenance and repairs of depreciable assets are charged against earnings as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and gains or losses are credited or charged to earnings. The principal estimated useful lives used in determining depreciation are as follows: Buildings 20-39 years Building improvements 10-20 years Furniture, fixtures and equipment 3-20 years Leasehold improvements Shorter of estimated useful life or related lease term |
Impairment of Goodwill and Other Intangible Assets | Impairment of Goodwill and Other Intangible Assets The Company tests goodwill and other indefinite lived intangible assets for . The Company assigns the carrying value of these intangible assets to its "reporting units" and applies the test for goodwill at the reporting unit level. A reporting unit is defined as an operating segment or one level below a segment (a "component") if the component is a business and discrete information is prepared and reviewed regularly by segment management. The Company’s goodwill impairment assessment first permits evaluating qualitative factors to determine if a reporting unit's carrying value would more likely than not exceed its fair value. If the Company concludes, based on the qualitative assessment, that a reporting unit's carrying value would more likely than not exceed its fair value, the Company would perform a two-step quantitative test for that reporting unit. When a quantitative assessment is performed, the first step is to identify a potential impairment, and the second step measures the amount of the impairment loss, if any. Goodwill is deemed to be impaired if the carrying amount of a reporting unit’s goodwill exceeds its estimated fair value. During the third and fourth quarter of 2015, DXP performed interim impairment tests using a quantitative approach and recognized goodwill impairments of $57.8 million and $9.8 million, respectively. During the fourth quarter ended December 31, 2014, the Company performed its annual goodwill impairment test using a quantitative approach and recognized a goodwill impairment of $117.6 million (see Note 8). No impairment of goodwill was required in 2016. |
Impairment of Long-Lived Assets, Excluding Goodwill | Impairment of Long-Lived Assets, Excluding Goodwill The Company tests long-lived assets or asset groups for recoverability on an annual basis and when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. |
Share-based Compensation | Share-based Compensation The Company uses restricted stock for share-based compensation programs. The Company measures compensation cost with respect to equity instruments granted as stock-based payments to employees based upon the estimated fair value of the equity instruments at the date of the grant. The cost as measured is recognized as expense over the period which an employee is required to provide services in exchange for the award. |
Revenue Recognition | Revenue Recognition For binding agreements to fabricate tangible assets to customer specifications, the Company recognizes revenues using the percentage of completion method. Under this method, revenues are recognized as costs are incurred and include estimated profits calculated on the basis of the relationship between costs incurred and total estimated costs at completion. If at any time expected costs exceed the value of the contract, the loss is recognized immediately. Revenues of approximately $31.5 million, $47.5 million, and $65.9 million were recognized on contracts in process for the years ended December 31, 2016, 2015, and 2014, respectively. The typical time span of these contracts is approximately one to two years. For other sales, the Company recognizes revenues when an agreement is in place, the price is fixed, title for product passes to the customer or services have been provided and collectability is reasonably assured. Revenues are recorded net of sales taxes. The Company reserves for potential customer returns based upon the historical level of returns. |
Shipping and Handling Costs | Shipping and Handling Costs The Company classifies shipping and handling charges billed to customers as sales. Shipping and handling charges paid to others are classified as a component of cost of sales. |
Self-insured Insurance and Medical Claims | Self-insured Insurance and Medical Claims We generally retain up to $100,000 of risk for each claim for workers compensation, general liability, automobile and property loss. We accrue for the estimated loss on the self-insured portion of these claims. The accrual is adjusted quarterly based upon reported claims information. The actual cost could deviate from the recorded estimate. We generally retain up to $175,000 of risk on each medical claim for our employees and their dependents with the exception of less than 0.05% of employees where a higher risk is retained. We accrue for the estimated outstanding balance of unpaid medical claims for our employees and their dependents. The accrual is adjusted monthly based on recent claims experience. The actual claims could deviate from recent claims experience and be materially different from the reserve. The accrual for these claims at December 31, 2016 and 2015 was approximately $3.1 million and $3.4 million, respectively. |
Purchase Accounting | Purchase Accounting DXP estimates the fair value of assets, including property, machinery and equipment and their related useful lives and salvage values, intangibles and liabilities when allocating the purchase price of an acquisition. The fair value estimates are developed using the best information available. |
Cost of Sales and Selling, General and Administrative Expense | Cost of Sales and Selling, General and Administrative Expense Cost of sales includes product and product related costs, inbound freight charges, internal transfer costs and depreciation. Selling, general and administrative expense includes purchasing and receiving costs, inspection costs, warehousing costs, depreciation and amortization. |
Debt Issuance Cost Amortization | Debt Issuance Cost Amortization Fees paid to DXP’s lender to secure a firm commitment on a term loan and revolving line of credit are presented as a direct deduction from the carrying amount of the debt liability. For the term loan, fees paid by DXP are amortized over the life of the loan as additional interest. Fees paid to secure a firm commitment from our lender on a revolving line of credit are amortized on a straight-line basis over the entire term of the arrangement. The total unamortized debt issuance costs reported on the consolidated balance sheets as of December 31, 2016 and 2015 was $1.0 million and $2.0 million, respectively. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established to reduce deferred income tax assets to the amounts expected to be realized under a more likely than not criterion. |
Accounting for Uncertainty in Income Taxes | Accounting for Uncertainty in Income Taxes A position taken or expected to be taken in a tax return is recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U. S. federal, state and local tax examination by tax authorities for years prior to 2009. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) includes net income, foreign currency translation adjustments and unrealized gains and losses on certain investments in debt and equity securities. The Company’s other comprehensive (loss) income is comprised of changes in the market value of an investment with quoted market prices in an active market for identical instruments and translation adjustments from translating foreign subsidiaries to the reporting currency. Comprehensive income for the year ended December 31, 2016 was reduced by an $8.6 million charge recorded during the fourth quarter of 2016 to correct errors which accumulated during 2013, 2014 and 2015 due to the Company improperly recognizing an $8.6 million deferred tax asset on unrealized foreign currency losses not expected to be realized within one year. We assessed the materiality of this misstatement and concluded the misstatement was not material to the results of operations or financial condition for the years ended December 31, 2016, 2015 and 2014. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract] | |
Schedule of Changes in Allowance | Changes in this allowance for 2016, 2015 and 2014 were as follows: Years Ended December 31, 2016 2015 2014 Balance at beginning of year $ 9,364 $ 8,713 $ 8,798 Charged to costs and expenses 180 2,014 2,365 Charged to other accounts (17 ) 2 1,255 2 1,140 2 Deductions (1,367 ) 1 (2,618 ) 1 (3,590 ) 1 Balance at end of year $ 8,160 $ 9,364 $ 8,713 ( 1) Uncollectible accounts written off, net of recoveries (2) Includes allowance for doubtful accounts from acquisitions and divestiture |
Principal Estimated Useful Lives Used in Determining Depreciation | The principal estimated useful lives used in determining depreciation are as follows: Buildings 20-39 years Building improvements 10-20 years Furniture, fixtures and equipment 3-20 years Leasehold improvements Shorter of estimated useful life or related lease term |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORY [Abstract] | |
Carrying Values of Inventories | The carrying values of inventories are as follows ( in thousands December 31, 2016 December 31, 2015 Finished goods $ 74,269 $ 94,524 Work in process 9,430 9,295 Inventories $ 83,699 $ 103,819 |
COSTS AND ESTIMATED PROFITS O32
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS [Abstract] | |
Schedule of Costs and Estimated Profits on Uncompleted Contracts | Costs and estimated profits on uncompleted contracts and related amounts billed for 2016 and 2015 were as follows ( in thousands December 31, 2016 2015 Costs incurred on uncompleted contracts $ 25,214 $ 34,400 Estimated earnings, thereon 6,274 13,119 Total 31,488 47,519 Less: billings to date 15,864 33,422 Net $ 15,624 $ 14,097 |
Schedule of Costs and Estimated Earnings on Uncompleted Contracts Included in Balance Sheet | Such amounts were included in the accompanying Consolidated Balance Sheets for 2016 and 2015 under the following captions (in thousands): December 31, 2016 2015 Costs and estimated profits in excess of billings on uncompleted contracts $ 18,421 $ 22,045 Billings in excess of costs and estimated profits on uncompleted contracts (2,813 ) (8,021 ) Translation adjustment 16 73 Net $ 15,624 $ 14,097 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Property and Equipment | The carrying values of property and equipment are as follows ( in thousands December 31, 2016 December 31, 2015 Land $ 2,346 $ 2,386 Buildings and leasehold improvements 16,259 16,631 Furniture, fixtures and equipment 94,784 102,494 Less – Accumulated depreciation (52,582 ) (53,008 ) Total Property and Equipment $ 60,807 $ 68,503 |
GOODWILL AND OTHER INTANGIBLE34
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract] | |
Goodwill and Other Intangible Assets | The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2016 ( in thousands Goodwill Other Intangible Assets Total Balances as of December 31, 2015 $ 197,362 $ 112,297 $ 309,659 Sale of subsidiary (9,620 ) - (9,620 ) Purchase accounting adjustment (151 ) - (151 ) Translation adjustment - 595 595 Amortization - (18,061 ) (18,061 ) Balances as of December 31, 2016 $ 187,591 $ 94,831 $ 282,422 The following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2015 ( in thousands Goodwill Other Intangible Assets Total Balances as of December 31, 2014 $ 253,312 $ 130,333 $ 383,645 Acquired during the period 11,713 7,263 18,976 Impairment (67,663 ) (1,072 ) (68,735 ) Translation adjustment - (3,606 ) (3,606 ) Amortization - (20,621 ) (20,621 ) Balances as of December 31, 2015 $ 197,362 $ 112,297 $ 309,659 |
Goodwill Balance by Reportable Segment | The following table presents goodwill balance by reportable segment as of December 31, 2016 and 2015 (in thousands) As of December 31, 2016 2015 Service Centers $ 154,473 $ 164,244 Innovative Pumping Solutions 15,980 15,980 Supply Chain Services 17,138 17,138 Total $ 187,591 $ 197,362 |
Amortizable Other Intangible Assets | The following table presents a summary of amortizable other intangible assets ( in thousands As of December 31, 2016 As of December 31, 2015 Gross Carrying Amount Accumulated Amortization Carrying Amount, net Gross Carrying Amount Accumulated Amortization Carrying Amount, net Customer relationships 163,022 (68,446 ) 94,576 195,580 (83,741 ) 111,839 Non-compete agreements 1,836 (1,581 ) 255 1,815 (1,357 ) 458 Total $ 164,858 $ (70,027 ) $ 94,831 $ 197,395 $ (85,098 ) $ 112,297 |
Estimated Future Annual Amortization of Intangible Assets | The estimated future annual amortization of intangible assets for each of the next five years and thereafter are as follows (in thousands) 2017 $ 17,209 2018 15,558 2019 14,114 2020 10,680 2021 8,427 Thereafter 28,843 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT [Abstract] | |
Long Term Debt | Long-term debt consisted of the following ( in thousands December 31, 2016 2015 Line of credit $ 147,600 $ 172,147 Term loan 74,500 175,000 Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment 3,577 4,408 Less unamortized debt issuance costs (992 ) (2,046 ) Total Debt 224,685 349,509 Less: Current maturities (51,354 ) (50,829 ) Total Long-term Debt $ 173,331 $ 298,680 |
Computation of Minimum Consolidated EBITDA | Minimum Consolidated EBITDA– The Facility requires that the Company’s Consolidated EBITDA for any twelve month period as of the last day of any calendar month ending during the periods specified below not be less than the corresponding amount set forth below: Period Minimum Consolidated EBITDA December 31, 2016 $ 39,891,000 January 31, 2017 $ 40,576,000 February 28, 2017 $ 42,257,000 March 31, 2017 $ 43,276,000 April 30, 2017 $ 41,266,000 May 31, 2017 $ 39,283,000 June 30, 2017 $ 36,210,000 July 31, 2017 $ 42,968,000 August 31, 2017 $ 42,411,000 September 30, 2017 $ 39,306,000 October 31, 2017 and thereafter $ 39,000,000 |
Computation of the Leverage Ratio | The following table sets forth the computation of the Leverage Ratio as of December 31, 2016 ( in thousands, except for ratios For the Twelve Months ended December 31, 2016 Leverage Ratio Income before taxes $ 9,674 Before tax loss attributable to noncontrolling interest 886 Interest expense 15,564 Depreciation and amortization 29,994 Stock compensation expense 3,580 (A) $ 59,698 As of December 31, 2016 Total long-term debt, including current maturities $ 224,685 Unamortized debt issuance costs 992 (B) $ 225,677 Leverage Ratio (B)/(A) 3.78 |
Computation of the Fixed Charge Coverage Ratio | The following table sets forth the computation of the Fixed Charge Coverage Ratio as of December 31, 2016 ( in thousands, except for ratios For the Twelve Months ended December 31, 2016 Defined EBITDA $ 59,698 Cash paid for income taxes 4,780 Capital expenditures 4,868 (A) $ 50,050 Cash interest payments $ 13,708 Dividends 90 Scheduled principal payments 50,831 (B) $ 64,629 Fixed Charge Coverage Ratio (A)/(B) 0.77 |
Computation of the Asset Coverage Ratio | The following table sets forth the computation of the Asset Coverage Ratio as of December 31, 2016 ( in thousands, except for ratios Credit facility outstanding balance $ 147,600 Outstanding letters of credit 5,564 Defined indebtedness $ 153,164 Accounts receivable (net), valued at 85% of gross $ 126,581 Inventory, valued at 65% of gross 54,405 $ 180,986 Asset Coverage Ratio 1.18 |
Maturities of Long-Term Debt | As of December 31, 2016, the maturities of long-term debt for the next five years and thereafter were as follows ( in thousands 2017 $ 51,354 2018 172,479 2019 905 2020 940 Thereafter - |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES [Abstract] | |
Income Before Income Taxes | The components of income before income taxes are as follows ( in thousands Years Ended December 31, 2016 2015 2014 Domestic $ 11,079 $ (42,179 ) $ (21,349 ) Foreign (1,405 ) 3,259 (4,207 ) Total income before taxes $ 9,674 $ (38,920 ) $ (25,556 ) |
Provision for Income Taxes | The provision for income taxes consists of the following ( in thousands Years Ended December 31, 2016 2015 2014 Current - Federal $ (902 ) $ 5,182 $ 24,050 State 136 1,499 5,604 Foreign 602 2,493 2,150 (164 ) 9,174 31,804 Deferred - Federal 4,174 (7,090 ) (10,544 ) State 120 - (1,769 ) Foreign (1,607 ) (1,934 ) 191 2,687 (9,024 ) (12,122 ) $ 2,523 $ 150 $ 19,682 |
Difference between Income Taxes Computed at the Federal Statutory Income Tax Rate and the Provision for Income Taxes | The difference between income taxes computed at the federal statutory income tax rate (35%) and the provision for income taxes is as follows ( in thousands Years Ended December 31, 2016 2015 2014 Income taxes computed at federal statutory rate $ 3,386 $ (13,622 ) $ (8,945 ) State income taxes, net of federal benefit 166 974 2,492 Non-tax deductible impairment expense computed at federal statutory rate - 15,765 24,444 Foreign adjustment 140 689 1,353 Meals and entertainment 361 620 801 Gain on sale of Vertex (1,971 ) - - Domestic Production Activity Deduction - (1,143 ) (1,040 ) Research and development tax credit (886 ) (1,730 ) (587 ) Foreign tax credit (383 ) (921 ) (343 ) Provision to return adjustments 927 - - Other 783 (482 ) 1,507 $ 2,523 $ 150 $ 19,682 |
Net Current and Noncurrent Components of Deferred Income Tax Balances | The net current and noncurrent components of deferred income tax balances are as follows ( in thousands December 31, 2016 2015 Net current assets $ 9,473 $ 8,996 Net non-current liabilities (18,986 ) (6,312 ) Net assets (liabilities) $ (9,513 ) $ 2,684 Deferred tax liabilities and assets were comprised of the following ( in thousands December 31, 2016 2015 Deferred tax assets: Goodwill $ 4,029 $ 9,136 Allowance for doubtful accounts 2,469 2,692 Inventories 3,944 3,312 Accruals 1,978 2,354 Research and development credit carryforward 886 - Net operating loss carryforward 760 730 Cumulative translation adjustment - 8,605 Capital loss carryforward 18,903 - Other 309 730 Total deferred tax assets 33,278 27,559 Less valuation allowance (19,633 ) (730 ) Total deferred tax asset, net of valuation Deferred tax liabilities 13,645 26,829 Intangibles (10,042 ) (13,314 ) Property and equipment (12,762 ) (10,824 ) Unremitted foreign earnings (354 ) (259 ) Other - 252 Net deferred tax asset (liability) $ (9,513 ) $ 2,684 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
STOCK-BASED COMPENSATION [Abstract] | |
Changes in Restricted Stock | Changes in restricted stock for the twelve months ended December 31, 2016 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2015 137,507 $ 54.58 Granted 108,553 $ 17.07 Forfeited (39,000 ) $ 65.41 Vested (63,680 ) $ 46.65 Non-vested at December 31, 2016 143,380 $ 26.76 Changes in restricted stock for the twelve months ended December 31, 2015 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2014 179,942 $ 52.71 Granted 35,821 $ 40.95 Forfeited (20,855 ) $ 41.34 Vested (57,401 ) $ 44.99 Non-vested at December 31, 2015 137,507 $ 54.58 Changes in restricted stock for the twelve months ended December 31, 2014 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2013 211,510 $ 36.17 Granted 52,219 $ 93.12 Forfeited (14,112 ) $ 38.68 Vested (69,675 ) $ 35.41 Non-vested at December 31, 2014 179,942 $ 52.71 |
EARNINGS PER SHARE DATA (Tables
EARNINGS PER SHARE DATA (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE DATA [Abstract] | |
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 December 31, 2016 2015 2014 Basic: Weighted average shares outstanding 15,042 14,423 14,639 Net income (loss) attributable to DXP Enterprises, Inc. $ 7,702 $ (38,536 ) $ (45,238 ) Convertible preferred stock dividend (90 ) (90 ) (90 ) Net income (loss) attributable to common shareholders $ 7,612 $ (38,626 ) $ (45,328 ) Per share amount $ 0.51 $ (2.68 ) $ (3.10 ) Diluted: Weighted average shares outstanding 15,042 14,423 14,639 Assumed conversion of convertible preferred stock 840 - - Total dilutive shares 15,882 14,423 14,639 Net income (loss) attributable to common shareholders $ 7,612 $ (38,626 ) $ (45,328 ) Convertible preferred stock dividend 90 - - Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share $ 7,702 $ (38,626 ) $ (45,328 ) Per share amount $ 0.49 $ (2.68 ) $ (3.10 ) |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
BUSINESS ACQUISITIONS [Abstract] | |
Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed during 2015 in connection with the acquisitions described above ( in thousands 2015 TSI CORTECH Cash $ - $ - Accounts Receivable, net 442 2,293 Inventory 475 1,243 Property and equipment 42 253 Goodwill and intangibles 4,929 13,897 Other assets 100 21 Assets acquired 5,988 17,707 Current liabilities assumed (335 ) (2,610 ) Non-current liabilities assumed 1 (653 ) (198 ) Net assets acquired $ 5,000 $ 14,899 (1) Includes deferred tax liability of $0.6 million related to intangible assets acquired for 2015. |
Pro Forma Unaudited Results of Operations | The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2016 and 2015, assuming the acquisition of businesses completed in 2015 and the divestiture of a business completed in 2016 (previously discussed in Item 1, Business in millions, except per share amounts Years Ended December 31, 2016 2015 Net sales $ 939.4 $ 1,228.9 Net income (loss) attributable to DXP Enterprises, Inc. $ 5.5 $ (40.7 ) Per share data attributable to DXP Enterprises, Inc. Basic earnings (loss) $ 0.37 $ (2.83 ) Diluted earnings (loss) $ 0.35 $ (2.83 ) The pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2015 and 2014, assuming the acquisition of businesses completed in 2015 and 2014 (previously discussed in Item 1, Business in millions, except per share amounts Years Ended December 31, 2015 2014 Net sales $ 1,263 $ 1,541 Net income (loss) $ (37 ) $ (44 ) Per share data Basic earnings (loss) $ (2.60 ) $ (2.99 ) Diluted earnings (loss) $ (2.60 ) $ (2.99 ) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Future Minimum Rental Commitments for Non-cancelable Leases | The future minimum rental commitments as of December 31, 2016, for non-cancelable leases are as follows ( in thousands 2017 $ 19,412 2018 13,785 2019 8,886 2020 5,125 2021 3,814 Thereafter 3,141 |
SEGMENT AND GEOGRAPHICAL REPO41
SEGMENT AND GEOGRAPHICAL REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT AND GEOGRAPHICAL REPORTING [Abstract] | |
Segment Reporting Financial Information | The following table sets out financial information relating the Company’s segments ( in thousands Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total 2016 Sales $ 621,007 $ 187,124 $ 153,961 $ 962,092 Operating income for reportable segments, excluding amortization 47,634 9,867 15,449 72,950 Identifiable assets at year end 370,261 175,198 44,796 590,255 Capital expenditures 447 3,827 129 4,403 Proceeds from sale of fixed assets 1,038 168 - 1,206 Depreciation 6,520 3,834 126 10,480 Amortization 9,152 7,826 1,083 18,061 Interest expense 9,290 4,422 1,852 15,564 2015 Sales $ 826,588 $ 254,829 $ 165,626 $ 1,247,043 Operating income for reportable segments, excluding impairment expense 78,170 21,584 14,213 113,967 Identifiable assets at year end 451,333 159,365 50,012 660,710 Capital expenditures 3,185 8,383 604 12,172 Depreciation 7,734 2,930 227 10,891 Amortization 10,334 8,406 1,881 20,621 Interest expense 2,967 6,881 1,084 10,932 Impairment expense by segment 15,842 52,893 - 68,735 2014 Sales $ 987,561 $ 348,134 $ 163,967 $ 1,499,662 Operating income for reportable segments, excluding impairment expense 107,699 51,162 13,794 172,655 Identifiable assets at year end 568,182 202,228 54,637 825,047 Capital expenditures 4,100 4,043 122 8,265 Depreciation 8,416 2,381 397 11,194 Amortization 11,281 8,993 2,206 22,480 Interest expense 3,422 8,451 924 12,797 Impairment expense by segment 10,210 107,359 - 117,569 |
Reconciliation of Operating Income for Reportable Segments to Consolidated Income before Taxes | Years Ended December 31, 2016 2015 2014 Operating income for reportable segments, excluding impairment expense $ 72,950 $ 113,967 $ 172,655 Adjustments for: B27 settlement - 7,348 - Impairment expense - 68,735 117,569 Amortization of intangibles 18,061 20,621 22,480 Corporate and other expense, net 35,557 45,179 45,234 Total operating income (loss) 19,332 (27,916 ) (12,628 ) Interest expense 15,564 10,932 12,797 Other expenses (income), net (5,906 ) 72 131 Income (loss) before income taxes $ 9,674 $ (38,920 ) $ (25,556 ) |
Schedule of Revenue by Geographic Area | The Company’s revenues and property and equipment by geographical location are as follows (in thousands) Years Ended December 31, 2016 2015 2014 Revenues United States $ 873,926 $ 1,119,210 $ 1,300,493 Canada 88,166 127,833 195,633 Other - - 3,536 Total $ 962,092 $ 1,247,043 $ 1,499,662 |
Schedule of Property and Equipment by Geographical Areas | As of December 31, 2016 2015 Property and Equipment, net United States $ 48,635 $ 53,695 Canada 12,172 14,724 Dubai - 84 Total $ 60,807 $ 68,503 |
QUARTERLY FINANCIAL INFORMATI42
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) [Abstract] | |
Summarized Quarterly Financial Information | Summarized quarterly financial information for the years ended December 31, 2016, 2015 and 2014 is as follows ( in millions, except per share data First (1) Second (1) Third (1) Fourth 2016 Sales $ 253.6 $ 256.2 $ 230.0 $ 222.3 Gross profit 68.8 71.6 63.8 60.6 Impairment expense - - - - Net income (loss) (5.2 ) 5.1 0.1 7.1 Net income (loss) attributable to DXP Enterprises, Inc. (5.1 ) 5.1 0.2 7.4 Earnings (loss) per share - basic $ (0.36 ) $ 0.36 $ 0.02 $ 0.44 Earnings (loss) per share - diluted $ (0.36 ) $ 0.34 $ 0.02 $ 0.42 2015 Sales $ 341.6 $ 323.7 $ 303.1 $ 278.6 Gross profit 98.1 91.3 85.7 76.9 Impairment expense - - 58.9 9.8 Net income (loss) 9.7 7.2 (52.7 ) (3.2 ) Net income (loss) attributable to DXP Enterprises, Inc. 9.7 7.2 (52.4 ) (3.0 ) Earnings (loss) per share - basic $ 0.67 $ 0.50 $ (3.64 ) $ (0.20 ) 2014 Sales $ 348.5 $ 381.6 $ 387.0 $ 382.6 Gross profit 101.7 111.0 113.4 106.7 Impairment expense - - - 117.6 Net income (loss) 10.9 14.9 17.0 (88.1 ) Earnings (loss) per share - basic $ 0.74 $ 1.01 $ 1.16 $ (6.09 ) The sum of the individual quarterly earnings per share amounts may not agree with year-to-date earnings per share as each quarter’s computation is based on the weighted average number of shares outstanding during the quarter, the weighted average stock price during the quarter and the dilutive effects of the stock options and restricted stock in each quarter. (1) During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. The first three quarters of 2014 were revised as follows: Previously Reported First Quarter Adjusted Quarter Previously Reported Second Quarter Adjusted Quarter Previously Reported Third Quarter Adjusted Quarter Sales $ 348.5 $ 348.5 $ 381.6 $ 381.6 $ 387.0 $ 387.0 Gross profit 101.7 101.7 111.0 111.0 113.4 113.4 Net income (loss) 11.6 10.9 15.5 14.9 17.6 17.0 Earnings (loss) per share Basic $ 0.79 $ 0.74 $ 1.06 $ 1.01 $ 1.20 $ 1.16 Diluted $ 0.75 $ 0.70 $ 1.00 $ 0.96 $ 1.14 $ 1.10 |
THE COMPANY (Details)
THE COMPANY (Details) | 12 Months Ended |
Dec. 31, 2016Segment | |
THE COMPANY [Abstract] | |
Number of segments | 3 |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Basis of Presentation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | ||
Ownership percentage in VIE | 47.50% | |
Assets of VIE | $ 5.2 | |
Increase cost of sales from consolidation of the VIE | 1.3 | $ 1.4 |
Income tax benefit of VIE | $ 0.3 | $ 0.3 |
Employees [Member] | ||
Risks and Uncertainties [Abstract] | ||
Ownership percentage in VIE | 52.50% | |
Fixed Assets [Member] | ||
Risks and Uncertainties [Abstract] | ||
Assets of VIE | $ 5.2 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Out-of-Period Items (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | [1] | Jun. 30, 2015 | [1] | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | [1] | Jun. 30, 2014 | [1] | Mar. 31, 2014 | [1] | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Out-of-Period Items [Abstract] | ||||||||||||||||||||||||
Selling, general and administrative expense | $ 245,470 | $ 303,819 | $ 327,899 | |||||||||||||||||||||
Provision for income taxes | 2,523 | 150 | 19,682 | |||||||||||||||||||||
Net income (loss) | $ 7,100 | $ 100 | $ 5,100 | $ (5,200) | $ (3,200) | $ (52,700) | $ 7,200 | $ 9,700 | [1] | $ (88,100) | $ 17,000 | $ 14,900 | $ 10,900 | $ 7,151 | $ (39,070) | $ (45,238) | ||||||||
Basic earnings (loss) per share (in dollars per share) | $ 0.44 | $ 0.02 | $ 0.36 | $ (0.36) | $ (0.20) | $ (3.64) | $ 0.50 | $ 0.67 | [1] | $ (6.09) | $ 1.16 | $ 1.01 | $ 0.74 | $ 0.51 | $ (2.68) | $ (3.10) | ||||||||
Diluted earnings (loss) per share (in dollars per share) | $ 0.42 | $ 0.02 | $ 0.34 | $ (0.36) | $ 0.49 | $ (2.68) | $ (3.10) | |||||||||||||||||
Overstatement of Accrual at December 31, 2014 [Member] | ||||||||||||||||||||||||
Out-of-Period Items [Abstract] | ||||||||||||||||||||||||
Selling, general and administrative expense | $ 2,500 | |||||||||||||||||||||||
Out-of-period adjustment, net of tax | $ 1,600 | |||||||||||||||||||||||
Provision for income taxes | $ 1,500 | |||||||||||||||||||||||
Net income (loss) | $ 3,100 | |||||||||||||||||||||||
Basic earnings (loss) per share (in dollars per share) | $ (0.21) | |||||||||||||||||||||||
Diluted earnings (loss) per share (in dollars per share) | $ (0.21) | |||||||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Receivables and Credit Risk (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Changes in allowance [Roll Forward] | ||||
Balance at beginning of year | $ 9,364 | $ 8,713 | $ 8,798 | |
Charged to cost and expenses | 180 | 2,014 | 2,365 | |
Charged to other accounts | [1] | (17) | 1,255 | 1,140 |
Deductions | [2] | (1,367) | (2,618) | (3,590) |
Balance at end of year | $ 8,160 | $ 9,364 | $ 8,713 | |
[1] | Includes allowance for doubtful accounts from acquisitions and divestiture | |||
[2] | Uncollectible accounts written off, net of recoveries |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Buildings [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 20 years |
Buildings [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 39 years |
Building Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Building Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 20 years |
Furniture, Fixtures and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture, Fixtures and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 20 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | Shorter of estimated useful life or related lease term |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Impairment of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | [1] | Mar. 31, 2015 | [1] | Dec. 31, 2014 | Sep. 30, 2014 | [1] | Jun. 30, 2014 | [1] | Mar. 31, 2014 | [1] | Dec. 31, 2016 | Dec. 31, 2015 | ||
Goodwill [Line Items] | |||||||||||||||||||||||
Impairment of goodwill | $ 0 | $ 0 | $ 0 | $ 0 | $ 9,800 | $ 58,900 | [1] | $ 0 | $ 0 | $ 117,600 | $ 0 | $ 0 | $ 0 | $ 67,663 | |||||||||
Goodwill [Member] | |||||||||||||||||||||||
Goodwill [Line Items] | |||||||||||||||||||||||
Impairment of goodwill | $ 9,800 | $ 57,800 | $ 117,600 | $ 0 | |||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue Recognition [Abstract] | |||
Revenues recognized on contracts in process | $ 31.5 | $ 47.5 | $ 65.9 |
Minimum [Member] | |||
Deferred Revenue Arrangement [Line Items] | |||
Service revenue contract term | 1 year | ||
Maximum [Member] | |||
Deferred Revenue Arrangement [Line Items] | |||
Service revenue contract term | 2 years |
SUMMARY OF SIGNIFICANT ACCOUN50
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Self-insured Insurance and Medical Claims (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Self-insured Insurance and Medical Claims [Abstract] | ||
Workers compensation insurance reserves, per claim | $ 100,000 | |
Medical insurance reserves, per claim | $ 175,000 | |
Maximum retention percentage of employee higher risk claims | 0.05% | |
Accrual for claims | $ 3,100,000 | $ 3,400,000 |
SUMMARY OF SIGNIFICANT ACCOUN51
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Debt Issuance Cost Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Issuance Cost Amortization [Abstract] | ||
Total unamortized debt issuance costs | $ 992 | $ 2,046 |
SUMMARY OF SIGNIFICANT ACCOUN52
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract] | ||
Reduction of comprehensive income | $ (8.6) | $ (8.6) |
Deferred tax asset on unrealized foreign currency losses | $ 8.6 | $ 8.6 |
FAIR VALUE OF FINANCIAL ASSET53
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | [1] | Mar. 31, 2015 | [1] | Dec. 31, 2014 | Sep. 30, 2014 | [1] | Jun. 30, 2014 | [1] | Mar. 31, 2014 | [1] | Dec. 31, 2015 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||
Impairment expense | $ 0 | $ 0 | $ 0 | $ 0 | $ 9,800 | $ 58,900 | [1] | $ 0 | $ 0 | $ 117,600 | $ 0 | $ 0 | $ 0 | $ 67,663 | ||||||||
Level 3 [Member] | ||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||
Impairment expense | $ 9,800 | $ 57,800 | $ 117,600 | |||||||||||||||||||
Level 3 [Member] | Minimum [Member] | ||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||
Estimated future cash flows, discount rate | 10.00% | 10.00% | 10.00% | |||||||||||||||||||
Level 3 [Member] | Maximum [Member] | ||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||
Estimated future cash flows, discount rate | 11.50% | 11.50% | 13.50% | |||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
INVENTORY [Abstract] | ||
Finished goods | $ 74,269 | $ 94,524 |
Work in process | 9,430 | 9,295 |
Inventories | $ 83,699 | $ 103,819 |
COSTS AND ESTIMATED PROFITS O55
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule of costs and estimated earnings on uncompleted contracts [Abstract] | ||
Costs incurred on uncompleted contracts | $ 25,214 | $ 34,400 |
Estimated earnings, thereon | 6,274 | 13,119 |
Total | 31,488 | 47,519 |
Less: billings to date | 15,864 | 33,422 |
Net | 15,624 | 14,097 |
Schedule of Costs and Estimated Earnings on Uncompleted Contracts Included in Condensed Consolidated Balance Sheets [Abstract] | ||
Costs and estimated profits in excess of billings on uncompleted contracts | 18,421 | 22,045 |
Billings in excess of costs and estimated profits on uncompleted contracts | (2,813) | (8,021) |
Translation adjustment | 16 | 73 |
Net | $ 15,624 | $ 14,097 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Less - Accumulated depreciation | $ (52,582) | $ (53,008) | |
Total property and equipment | 60,807 | 68,503 | |
Depreciation expense | 11,933 | 12,622 | $ 12,598 |
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 2,346 | 2,386 | |
Buildings and Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 16,259 | 16,631 | |
Furniture, Fixtures and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 94,784 | $ 102,494 |
GOODWILL AND OTHER INTANGIBLE57
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | [1] | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | [1] | Jun. 30, 2014 | [1] | Mar. 31, 2014 | [1] | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Goodwill and Intangible Asset Impairment [Abstract] | ||||||||||||||||||||||||
Percentage of decrease in common stock | 16.00% | 40.00% | 16.00% | |||||||||||||||||||||
Percentage on decrease in price of crude oil | 18.00% | 20.00% | 18.00% | |||||||||||||||||||||
Accumulated impairment of goodwill | $ 12,300 | $ 12,300 | ||||||||||||||||||||||
Impairment expense of write off an acquired intangible asset | $ 1,100 | 1,072 | ||||||||||||||||||||||
Remaining intangible asset value of vendor distribution agreements | 0 | 0 | ||||||||||||||||||||||
Goodwill [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | $ 197,362 | $ 253,312 | $ 197,362 | 253,312 | ||||||||||||||||||||
Acquired during the year | 11,713 | |||||||||||||||||||||||
Sale of subsidiary | (9,620) | |||||||||||||||||||||||
Purchase accounting adjustment | (151) | |||||||||||||||||||||||
Impairment | $ 0 | $ 0 | $ 0 | 0 | [1] | (9,800) | (58,900) | [1] | $ 0 | 0 | [1] | $ (117,600) | $ 0 | $ 0 | $ 0 | (67,663) | ||||||||
Translation adjustment | 0 | 0 | ||||||||||||||||||||||
Balance at end of period | 187,591 | 197,362 | 253,312 | 187,591 | 197,362 | $ 253,312 | ||||||||||||||||||
Other Intangibles Assets [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | 112,297 | 130,333 | 112,297 | 130,333 | ||||||||||||||||||||
Sale of subsidiary | 0 | |||||||||||||||||||||||
Purchase price adjustment | 0 | |||||||||||||||||||||||
Acquired during the year | 7,263 | |||||||||||||||||||||||
Impairment | (1,100) | (1,072) | ||||||||||||||||||||||
Translation adjustment | 595 | (3,606) | ||||||||||||||||||||||
Amortization | (18,061) | (20,621) | (22,480) | |||||||||||||||||||||
Balance at end of period | 94,831 | 112,297 | 130,333 | 94,831 | 112,297 | 130,333 | ||||||||||||||||||
Total Goodwill and Intangible Assets [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | 309,659 | 383,645 | 309,659 | 383,645 | ||||||||||||||||||||
Sale of subsidiary | (9,620) | |||||||||||||||||||||||
Purchase price adjustment | (151) | |||||||||||||||||||||||
Acquired during the year | 18,976 | |||||||||||||||||||||||
Impairment | 0 | (68,735) | (117,569) | |||||||||||||||||||||
Translation adjustment | 595 | (3,606) | ||||||||||||||||||||||
Amortization | (18,061) | (20,621) | (22,480) | |||||||||||||||||||||
Balance at end of period | 282,422 | 309,659 | $ 383,645 | 282,422 | $ 309,659 | 383,645 | ||||||||||||||||||
B27, LLC [Member] | ||||||||||||||||||||||||
Goodwill and Intangible Asset Impairment [Abstract] | ||||||||||||||||||||||||
Percentage of goodwill not deductible for tax purpose | 60.00% | 60.00% | ||||||||||||||||||||||
Percentage Goodwill impairment | 40.00% | 40.00% | ||||||||||||||||||||||
Service Centers [Member] | ||||||||||||||||||||||||
Goodwill [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | 164,244 | 164,244 | ||||||||||||||||||||||
Balance at end of period | 154,473 | 164,244 | 154,473 | $ 164,244 | ||||||||||||||||||||
Service Centers [Member] | B27, LLC [Member] | ||||||||||||||||||||||||
Goodwill and Intangible Asset Impairment [Abstract] | ||||||||||||||||||||||||
Accumulated impairment of goodwill | 25,000 | 20,000 | $ 10,200 | 25,000 | 10,200 | |||||||||||||||||||
Fair value of goodwill | 20,100 | 20,100 | ||||||||||||||||||||||
Goodwill [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | 5,300 | 10,300 | 5,300 | |||||||||||||||||||||
Impairment | (5,000) | (9,800) | (10,200) | |||||||||||||||||||||
Balance at end of period | 5,300 | 10,300 | 5,300 | |||||||||||||||||||||
Innovative Pumping Solutions [Member] | ||||||||||||||||||||||||
Goodwill [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | 15,980 | 15,980 | ||||||||||||||||||||||
Balance at end of period | 15,980 | 15,980 | 15,980 | 15,980 | ||||||||||||||||||||
Innovative Pumping Solutions [Member] | B27, LLC [Member] | ||||||||||||||||||||||||
Goodwill and Intangible Asset Impairment [Abstract] | ||||||||||||||||||||||||
Accumulated impairment of goodwill | 148,000 | 143,100 | 95,100 | 148,000 | 95,100 | |||||||||||||||||||
Fair value of goodwill | 52,900 | 52,900 | ||||||||||||||||||||||
Goodwill [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | 0 | 4,900 | $ 148,000 | 0 | 148,000 | |||||||||||||||||||
Impairment | (4,900) | (48,000) | (95,100) | |||||||||||||||||||||
Balance at end of period | 0 | $ 4,900 | 148,000 | 0 | 148,000 | |||||||||||||||||||
Innovative Pumping Solutions [Member] | NatPro [Member] | ||||||||||||||||||||||||
Goodwill and Intangible Asset Impairment [Abstract] | ||||||||||||||||||||||||
Accumulated impairment of goodwill | 12,300 | $ 12,300 | ||||||||||||||||||||||
Goodwill [Roll Forward] | ||||||||||||||||||||||||
Impairment | $ (12,300) | |||||||||||||||||||||||
Supply Chain Services [Member] | ||||||||||||||||||||||||
Goodwill [Roll Forward] | ||||||||||||||||||||||||
Balance at beginning of period | $ 17,138 | 17,138 | ||||||||||||||||||||||
Balance at end of period | $ 17,138 | $ 17,138 | $ 17,138 | $ 17,138 | ||||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
GOODWILL AND OTHER INTANGIBLE58
GOODWILL AND OTHER INTANGIBLE ASSETS, Finite-lived intangible assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 164,858 | $ 197,395 | |
Accumulated amortization | (70,027) | (85,098) | |
Carrying amount, net | 94,831 | 112,297 | $ 130,333 |
Amortization expense | 18,061 | 20,621 | $ 22,480 |
The estimated future annual amortization of intangible assets for each of the next five years and thereafter [Abstract] | |||
2,017 | 17,209 | ||
2,018 | 15,558 | ||
2,019 | 14,114 | ||
2,020 | 10,680 | ||
2,021 | 8,427 | ||
Thereafter | 28,843 | ||
Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 163,022 | 195,580 | |
Accumulated amortization | (68,446) | (83,741) | |
Carrying amount, net | $ 94,576 | 111,839 | |
Weighted average remaining estimated life | 9 years 2 months 12 days | ||
Non-Compete Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 1,836 | 1,815 | |
Accumulated amortization | (1,581) | (1,357) | |
Carrying amount, net | $ 255 | $ 458 | |
Weighted average remaining estimated life | 2 years 4 months 24 days |
GOODWILL AND OTHER INTANGIBLE59
GOODWILL AND OTHER INTANGIBLE ASSETS, Goodwill balance by reportable segment (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill [Line Items] | |||
Goodwill | $ 187,591 | $ 197,362 | $ 253,312 |
Service Centers [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 154,473 | 164,244 | |
Innovative Pumping Solutions [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 15,980 | 15,980 | |
Supply Chain Services [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 17,138 | $ 17,138 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Oct. 31, 2016 | Oct. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2017 | Aug. 15, 2016 |
Borrowings [Abstract] | |||||||
Less unamortized debt issuance costs | $ (992) | $ (2,046) | |||||
Total Debt | 224,685 | 349,509 | |||||
Less: Current maturities | (51,354) | (50,829) | |||||
Total Long-term debt | 173,331 | 298,680 | |||||
Amount outstanding | 147,600 | ||||||
Computation of the Leverage Ratio [Abstract] | |||||||
Loss before taxes | 9,674 | (38,920) | $ (25,556) | ||||
Before tax loss attributable to noncontrolling interest | 886 | ||||||
Interest expense | 15,564 | 10,932 | 12,797 | ||||
Depreciation and amortization | 29,994 | ||||||
Stock compensation expense | 3,580 | 2,973 | 3,560 | ||||
(A) Defined EBITDA | 59,698 | ||||||
Total long-term debt, including current maturities | 224,685 | 349,509 | |||||
Unamortized debt issuance costs | 992 | 2,046 | |||||
(B) Defined indebtedness | $ 225,677 | ||||||
Leverage ratio | 3.78% | ||||||
Computation of Fixed Charge Coverage Ratio [Abstract] | |||||||
Defined EBITDA | $ 59,698 | ||||||
Cash paid for income taxes | 4,780 | 13,792 | 28,784 | ||||
Capital expenditures | 4,868 | ||||||
(A) Defined EBITDA minus capital expenditures & cash income taxes | 50,050 | ||||||
Cash interest payments | 13,708 | 9,721 | 11,641 | ||||
Dividends | 90 | 90 | $ 90 | ||||
Scheduled principal payments | 50,831 | ||||||
(B) Fixed Charges | $ 64,629 | ||||||
Fixed Charge Coverage Ratio (A)/(B) | 0.77 | ||||||
Computation of the Asset Coverage Ratio [Abstract] | |||||||
Credit facility outstanding balance | $ 147,600 | ||||||
Outstanding letters of credit | 5,564 | ||||||
Defined indebtedness | 153,164 | ||||||
Accounts receivable (net), valued at 85% of gross | 126,581 | ||||||
Inventory, valued at 65% of gross | 54,405 | ||||||
Gross amount utilized for computation of asset coverage ratio | $ 180,986 | ||||||
Asset Coverage Ratio | 1.18 | ||||||
Minimum Consolidated EBITDA [Abstract] | |||||||
December 31, 2016 | $ 39,891 | ||||||
January 31, 2017 | 40,576 | ||||||
February 28, 2017 | 42,257 | ||||||
March 31, 2017 | 43,276 | ||||||
April 30, 2017 | 41,266 | ||||||
May 31, 2017 | 39,283 | ||||||
June 30, 2017 | 36,210 | ||||||
July 31, 2017 | 42,968 | ||||||
August 31, 2017 | 42,411 | ||||||
September 30, 2017 | 39,306 | ||||||
October 31, 2017 and thereafter | 39,000 | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | |||||||
2,017 | 51,354 | ||||||
2,018 | 172,479 | ||||||
2,019 | 905 | ||||||
2,020 | 940 | ||||||
Thereafter | 0 | ||||||
Term Loan [Member] | |||||||
Borrowings [Abstract] | |||||||
Total Debt | 74,500 | 175,000 | |||||
Computation of the Leverage Ratio [Abstract] | |||||||
Total long-term debt, including current maturities | 74,500 | 175,000 | |||||
Promissory Note Payable [Member] | |||||||
Borrowings [Abstract] | |||||||
Total Debt | $ 3,577 | $ 4,408 | |||||
Monthly installments | 2.90% | 2.90% | |||||
Computation of the Leverage Ratio [Abstract] | |||||||
Total long-term debt, including current maturities | $ 3,577 | $ 4,408 | |||||
Revolving Credit Facility [Member] | |||||||
Borrowings [Abstract] | |||||||
Total Debt | $ 147,600 | 172,147 | |||||
Minimum asset coverage ratio, from June 30, 2016 and thereafter | 0.95 | ||||||
Computation of the Leverage Ratio [Abstract] | |||||||
Total long-term debt, including current maturities | $ 147,600 | $ 172,147 | |||||
Computation of the Asset Coverage Ratio [Abstract] | |||||||
Percentage of net accounts receivable for calculating asset coverage ratio | 85.00% | ||||||
Percentage of net inventory for calculating asset coverage ratio | 65.00% | ||||||
Revolving Credit Facility [Member] | Minimum [Member] | |||||||
Consolidated Fixed Charge Coverage Ratio Covenant [Abstract] | |||||||
July 1, 2017 and thereafter | 1.25 | ||||||
Revolving Credit Facility [Member] | Maximum [Member] | |||||||
Consolidated Leverage Ratio Covenant [Abstract] | |||||||
July 1, 2017 through December 31, 2017 | 3.50 | ||||||
January 1, 2018 and thereafter | 3.25 | ||||||
Wells Fargo Bank, National Association [Member] | |||||||
Borrowings [Abstract] | |||||||
Asset sales without the consent of the required lenders | $ 3,500 | ||||||
Wells Fargo Bank, National Association [Member] | Term Loan [Member] | |||||||
Borrowings [Abstract] | |||||||
Maximum borrowing capacity | 74,500 | ||||||
Wells Fargo Bank, National Association [Member] | Revolving Credit Facility [Member] | |||||||
Borrowings [Abstract] | |||||||
Maximum borrowing capacity | $ 205,000 | $ 250,000 | |||||
Expiration date | Mar. 31, 2018 | ||||||
Debt amortization expenses payable per quarter in year two and thereafter | $ 15,625 | ||||||
Amount outstanding | $ 222,100 | ||||||
Weighted average interest rate | 5.89% | ||||||
Available for borrowing under the facility | $ 37,300 | ||||||
Commitment fee | 0.50% | ||||||
Payments on long term debt due next fiscal year | $ 12,000 | $ 14,000 | |||||
Payments on long term debt due current fiscal year | $ 17,000 | ||||||
Reduction amount in principal term loan, current fiscal year | $ 17,000 | ||||||
Reduction amount in principal term loan, next fiscal year | 14,000 | ||||||
Additional mandatory prepayments, current fiscal year | 30,000 | ||||||
Additional mandatory prepayments, next fiscal year | 25,000 | ||||||
Computation of the Asset Coverage Ratio [Abstract] | |||||||
Credit facility outstanding balance | $ 222,100 | ||||||
Wells Fargo Bank, National Association [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | |||||||
Borrowings [Abstract] | |||||||
Maximum borrowing capacity | $ 190,000 | ||||||
Wells Fargo Bank, National Association [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||||||
Borrowings [Abstract] | |||||||
Basis spread on base rate | 5.00% | ||||||
Wells Fargo Bank, National Association [Member] | Revolving Credit Facility [Member] | LIBOR Rate & CDOR Rate [Member] | |||||||
Borrowings [Abstract] | |||||||
Basis spread on base rate | 5.00% | ||||||
Wells Fargo Bank, National Association [Member] | Revolving Credit Facility [Member] | Prime rate [Member] | |||||||
Borrowings [Abstract] | |||||||
Basis spread on base rate | 4.00% | ||||||
Wells Fargo Bank, National Association [Member] | Revolving Credit Facility [Member] | Base Rate & Canadian Base Rate [Member] | |||||||
Borrowings [Abstract] | |||||||
Basis spread on base rate | 4.00% | ||||||
Wells Fargo Bank, National Association [Member] | Permitted Overadvance Facility [Member] | |||||||
Borrowings [Abstract] | |||||||
Percentage of net accounts receivable | 85.00% | ||||||
Percentage of net inventory | 65.00% | ||||||
Wells Fargo Bank, National Association [Member] | Permitted Overadvance Facility [Member] | LIBOR Rate & CDOR Rate [Member] | |||||||
Borrowings [Abstract] | |||||||
Basis spread on base rate | 6.00% | ||||||
Wells Fargo Bank, National Association [Member] | Permitted Overadvance Facility [Member] | Base Rate & Canadian Base Rate [Member] | |||||||
Borrowings [Abstract] | |||||||
Basis spread on base rate | 5.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components of income before income taxes [Abstract] | |||||
Domestic | $ 11,079 | $ (42,179) | $ (21,349) | ||
Foreign | (1,405) | 3,259 | (4,207) | ||
Income (loss) before income taxes | 9,674 | (38,920) | (25,556) | ||
Current [Abstract] | |||||
Federal | (902) | 5,182 | 24,050 | ||
State | 136 | 1,499 | 5,604 | ||
Foreign | 602 | 2,493 | 2,150 | ||
Total current | (164) | 9,174 | 31,804 | ||
Deferred [Abstract] | |||||
Federal | 4,174 | (7,090) | (10,544) | ||
State | 120 | 0 | (1,769) | ||
Foreign | (1,607) | (1,934) | 191 | ||
Total Deferred | 2,687 | (9,024) | (12,122) | ||
Total | $ 2,523 | 150 | 19,682 | ||
Federal statutory income tax rate | 35.00% | ||||
The difference between income taxes computed at the federal statutory income tax rate and the provision for income taxes [Abstract] | |||||
Income taxes computed at federal statutory rate | $ 3,386 | (13,622) | (8,945) | ||
State income taxes, net of federal benefit | 166 | 974 | 2,492 | ||
Non-tax deductible impairment expense computed at federal statutory rate | 0 | 15,765 | 24,444 | ||
Foreign adjustment | 140 | 689 | 1,353 | ||
Meals and entertainment | 361 | 620 | 801 | ||
Gain on sale of Vertex | (1,971) | 0 | 0 | ||
Domestic Production Activity Deduction | 0 | (1,143) | (1,040) | ||
Research and development tax credit | (886) | (1,730) | (587) | ||
Foreign tax credit | (383) | (921) | (343) | ||
Provision to return adjustments | 927 | 0 | 0 | ||
Other | 783 | (482) | 1,507 | ||
Total | 2,523 | 150 | 19,682 | ||
The net current and noncurrent components of deferred income tax balances [Abstract] | |||||
Net current assets | $ 9,473 | 9,473 | 8,996 | ||
Net non-current liabilities | (18,986) | (18,986) | (6,312) | ||
Total deferred tax assets | 2,684 | ||||
Net liabilities | (9,513) | (9,513) | |||
Deferred tax assets [Abstract] | |||||
Goodwill | 4,029 | 4,029 | 9,136 | ||
Allowance for doubtful accounts | 2,469 | 2,469 | 2,692 | ||
Inventories | 3,944 | 3,944 | 3,312 | ||
Accruals | 1,978 | 1,978 | 2,354 | ||
Research and development credit carryforward | 886 | 886 | 0 | ||
Net operating loss carryforward | 760 | 760 | 730 | ||
Cumulative translation adjustment | 0 | 0 | 8,605 | ||
Capital loss carryforward | 18,903 | 18,903 | 0 | ||
Other | 309 | 309 | 730 | ||
Total deferred tax assets | 33,278 | 33,278 | 27,559 | ||
Less valuation allowance | (19,633) | (19,633) | (730) | ||
Total deferred tax asset, net of valuation Deferred tax liabilities | 13,645 | 13,645 | 26,829 | ||
Intangibles | (10,042) | (10,042) | (13,314) | ||
Property and equipment | (12,762) | (12,762) | (10,824) | ||
Unremitted foreign earnings | (354) | (354) | (259) | ||
Other | 0 | 0 | 252 | ||
Total deferred tax assets | 2,684 | ||||
Net liabilities | $ (9,513) | $ (9,513) | |||
Operating Loss Carryforwards [Line Items] | |||||
Percentage of valuation allowance to carryforward amounts | 100.00% | 100.00% | |||
Reduction in deferred tax assets | $ 8,600 | ||||
Capital Loss Carryforward [Member] | |||||
Tax Credit Carryforward [Line Items] | |||||
Capital loss carryforward | 49,900 | $ 49,900 | |||
Restatement Adjustment [Member] | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Error corrections for deferred tax assets | 8,600 | $ 4,600 | $ 2,700 | $ 1,300 | |
Foreign Tax Authority [Member] | |||||
Operating Loss Carryforwards [Line Items] | |||||
Net operating loss carryforward | $ 2,700 | $ 2,700 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - Restricted Stock [Member] - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentages of vesting for one year | 100.00% | ||
Percentages of vesting for three years | 33.30% | ||
Percentages of vesting for five years | 20.00% | ||
Percentages of vesting for ten years | 10.00% | ||
Award vesting period | 1 year | ||
Number of shares available for future grants (in shares) | 419,597 | ||
Restricted Stock [Roll Forward] | |||
Non-vested, beginning balance (in shares) | 137,507 | 179,942 | 211,510 |
Granted (in shares) | 108,553 | 35,821 | 52,219 |
Forfeited (in shares) | (39,000) | (20,855) | (14,112) |
Vested (in shares) | (63,680) | (57,401) | (69,675) |
Nonvested, ending balance (in shares) | 143,380 | 137,507 | 179,942 |
Weighted Average Grant Price [Roll Forward] | |||
Non vested, beginning balance (in dollars per share) | $ 54.58 | $ 52.71 | $ 36.17 |
Granted (in dollars per share) | 17.07 | 40.95 | 93.12 |
Forfeitures (in dollars per share) | 65.41 | 41.34 | 38.68 |
Vested (in dollars per share) | 46.65 | 44.99 | 35.41 |
Nonvested, ending balance (in dollars per share) | $ 26.76 | $ 54.58 | $ 52.71 |
Stock compensation expense | $ 2 | $ 3 | $ 3.6 |
Related income tax benefit recognized | 0.6 | 1.2 | $ 1.4 |
Unrecognized compensation expense | $ 2.7 | $ 4.9 | |
Compensation cost not yet recognized, period for recognition | 15 months 6 days |
EARNINGS PER SHARE DATA (Detail
EARNINGS PER SHARE DATA (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | [1] | Jun. 30, 2015 | [1] | Mar. 31, 2015 | [1] | Dec. 31, 2014 | Sep. 30, 2014 | [1] | Jun. 30, 2014 | [1] | Mar. 31, 2014 | [1] | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic [Abstract] | ||||||||||||||||||||||||
Weighted average shares outstanding (in shares) | 15,042 | 14,423 | 14,639 | |||||||||||||||||||||
Net income (loss) attributable to DXP Enterprises, Inc. | $ 7,400 | $ 200 | $ 5,100 | $ (5,100) | $ (3,000) | $ (52,400) | $ 7,200 | $ 9,700 | $ 7,702 | $ (38,536) | $ (45,238) | |||||||||||||
Convertible preferred stock dividend | (90) | (90) | (90) | |||||||||||||||||||||
Net income (loss) attributable to common shareholders | $ 7,612 | $ (38,626) | $ (45,328) | |||||||||||||||||||||
Per share amount (in dollars per share) | $ 0.44 | $ 0.02 | $ 0.36 | $ (0.36) | $ (0.20) | $ (3.64) | $ 0.50 | $ 0.67 | $ (6.09) | $ 1.16 | $ 1.01 | $ 0.74 | $ 0.51 | $ (2.68) | $ (3.10) | |||||||||
Diluted [Abstract] | ||||||||||||||||||||||||
Weighted average shares outstanding (in shares) | 15,042 | 14,423 | 14,639 | |||||||||||||||||||||
Assumed conversion of convertible preferred stock (in shares) | 840 | 0 | 0 | |||||||||||||||||||||
Total dilutive shares (in shares) | 15,882 | 14,423 | 14,639 | |||||||||||||||||||||
Net income (loss) attributable to common shareholders | $ 7,612 | $ (38,626) | $ (45,328) | |||||||||||||||||||||
Convertible preferred stock dividend | 90 | 0 | 0 | |||||||||||||||||||||
Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share | $ 7,702 | $ (38,626) | $ (45,328) | |||||||||||||||||||||
Per share amount (in dollars per share) | $ 0.42 | $ 0.02 | $ 0.34 | $ (0.36) | $ 0.49 | $ (2.68) | $ (3.10) | |||||||||||||||||
Preferred Stock [Member] | ||||||||||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||||||||||||||
Antidilutive securities excluded from earnings per share calculation (in shares) | 840 | |||||||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
BUSINESS ACQUISITIONS (Details)
BUSINESS ACQUISITIONS (Details) - USD ($) $ in Thousands | Sep. 01, 2015 | Apr. 01, 2015 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 02, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||||||
Goodwill acquired | $ 187,591 | $ 197,362 | $ 253,312 | ||||
Goodwill adjustment | (151) | ||||||
Business Acquired during 2015 [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Sales from business acquisitions | 25,200 | ||||||
Earnings (loss) before taxes and impairment from business acquisitions | $ (300) | ||||||
Tool Supply, Inc. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price | $ 5,000 | ||||||
Intangible assets acquired | $ 2,000 | ||||||
Goodwill acquired | $ 2,900 | ||||||
Cortech Engineering, LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price | $ 14,900 | ||||||
Purchase price financed under common stock issued | $ 4,400 | ||||||
Number of shares issued on acquisition (in shares) | 148,800 | ||||||
Intangible assets acquired | $ 5,200 | ||||||
Goodwill acquired | $ 8,700 | ||||||
Goodwill adjustment | $ 151 | ||||||
Nontax deductible goodwill or intangible assets | $ 4,500 |
BUSINESS ACQUISITIONS, Purchase
BUSINESS ACQUISITIONS, Purchase Price Allocation (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 01, 2015 | Apr. 02, 2015 | |
Purchase price allocation [Abstract] | ||||
Deferred tax liability | $ 600 | |||
Tool Supply, Inc. [Member] | ||||
Purchase price allocation [Abstract] | ||||
Cash | $ 0 | |||
Accounts Receivable, net | 442 | |||
Inventory | 475 | |||
Property and equipment | 42 | |||
Goodwill and intangibles | 4,929 | |||
Other assets | 100 | |||
Assets acquired | 5,988 | |||
Current liabilities assumed | (335) | |||
Non-current liabilities assumed | [1] | (653) | ||
Net assets acquired | $ 5,000 | |||
Cortech Engineering, LLC [Member] | ||||
Purchase price allocation [Abstract] | ||||
Cash | $ 0 | |||
Accounts Receivable, net | 2,293 | |||
Inventory | 1,243 | |||
Property and equipment | 253 | |||
Goodwill and intangibles | 13,897 | |||
Other assets | 21 | |||
Assets acquired | 17,707 | |||
Current liabilities assumed | (2,610) | |||
Non-current liabilities assumed | [1] | (198) | ||
Net assets acquired | $ 14,899 | |||
[1] | Includes deferred tax liability of $0.6 million related to intangible assets acquired for 2015. |
BUSINESS ACQUISITIONS, Pro Form
BUSINESS ACQUISITIONS, Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Units Acquired In 2015 and 2016 [Member] | |||
Pro Forma Information [Abstract] | |||
Net sales | $ 939.4 | $ 1,228.9 | |
Net income (loss) | $ 5.5 | $ (40.7) | |
Per share data attributable to DXP Enterprises, Inc. [Abstract] | |||
Basic earnings (loss) (in dollars per share) | $ 0.37 | $ (2.83) | |
Diluted earnings (loss) (in dollars per share) | $ 0.35 | $ (2.83) | |
Units acquired in 2014 and 2015 [Member] | |||
Pro Forma Information [Abstract] | |||
Net sales | $ 1,263 | $ 1,541 | |
Net income (loss) | $ (37) | $ (44) | |
Per share data attributable to DXP Enterprises, Inc. [Abstract] | |||
Basic earnings (loss) (in dollars per share) | $ (2.60) | $ (2.99) | |
Diluted earnings (loss) (in dollars per share) | $ (2.60) | $ (2.99) |
COMMITMENTS AND CONTINGENCIES67
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Future minimum rental commitments for non-cancelable leases [Abstract] | |||
2,017 | $ 19,412 | ||
2,018 | 13,785 | ||
2,019 | 8,886 | ||
2,020 | 5,125 | ||
2,021 | 3,814 | ||
Thereafter | 3,141 | ||
Rental expense for operating leases | $ 27,600 | $ 32,700 | $ 32,300 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
EMPLOYEE BENEFIT PLANS [Abstract] | ||||
Rate of company matching | 50.00% | 50.00% | 50.00% | |
Percentage of deferred salary which is matched | 4.00% | 4.00% | 4.00% | |
Company contribution to the 401(K) plan | $ 0.4 | $ 0.4 | $ 2.6 | $ 2.5 |
OTHER COMPREHENSIVE INCOME (Det
OTHER COMPREHENSIVE INCOME (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016USD ($)Company | Dec. 31, 2016USD ($)Company | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
OTHER COMPREHENSIVE INCOME [Abstract] | ||||
Other comprehensive (loss) income related to investment valuation | $ (100) | |||
Loss on sale of investments | 100 | |||
Number of companies acquired | Company | 4 | 4 | ||
Cumulative translation adjustment | $ (7,658) | $ (4,916) | $ (3,277) | |
Reduction of comprehensive income | $ (8,600) | (8,600) | ||
Deferred tax asset on unrealized foreign currency losses | $ 8,600 | $ 8,600 |
SEGMENT AND GEOGRAPHICAL REPO70
SEGMENT AND GEOGRAPHICAL REPORTING, Business Segmented Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | [1] | Jun. 30, 2015 | [1] | Mar. 31, 2015 | [1] | Dec. 31, 2014 | Sep. 30, 2014 | [1] | Jun. 30, 2014 | [1] | Mar. 31, 2014 | [1] | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Sales | $ 222,300 | $ 230,000 | $ 256,200 | $ 253,600 | $ 278,600 | $ 303,100 | $ 323,700 | $ 341,600 | $ 382,600 | $ 387,000 | $ 381,600 | $ 348,500 | $ 962,092 | $ 1,247,043 | $ 1,499,662 | |||||||||
Operating income for reportable segments, excluding impairment expense | 72,950 | 113,967 | 172,655 | |||||||||||||||||||||
Identifiable assets at year end | 590,255 | 660,710 | 825,047 | 590,255 | 660,710 | 825,047 | ||||||||||||||||||
Capital expenditures | 4,403 | 12,172 | 8,265 | |||||||||||||||||||||
Proceeds from sale of fixed assets | 1,206 | 0 | 0 | |||||||||||||||||||||
Depreciation | 10,480 | 10,891 | 11,194 | |||||||||||||||||||||
Amortization | 18,061 | 20,621 | 22,480 | |||||||||||||||||||||
Interest expense | 15,564 | 10,932 | 12,797 | |||||||||||||||||||||
Impairment of goodwill and other intangible assets | 0 | 68,735 | 117,569 | |||||||||||||||||||||
Reportable Segment [Member] | Service Centers [Member] | ||||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Sales | 621,007 | 826,588 | 987,561 | |||||||||||||||||||||
Operating income for reportable segments, excluding impairment expense | 47,634 | 78,170 | 107,699 | |||||||||||||||||||||
Identifiable assets at year end | 370,261 | 451,333 | 568,182 | 370,261 | 451,333 | 568,182 | ||||||||||||||||||
Capital expenditures | 447 | 3,185 | 4,100 | |||||||||||||||||||||
Proceeds from sale of fixed assets | 1,038 | |||||||||||||||||||||||
Depreciation | 6,520 | 7,734 | 8,416 | |||||||||||||||||||||
Amortization | 9,152 | 10,334 | 11,281 | |||||||||||||||||||||
Interest expense | 9,290 | 2,967 | 3,422 | |||||||||||||||||||||
Impairment of goodwill and other intangible assets | 15,842 | 10,210 | ||||||||||||||||||||||
Reportable Segment [Member] | Innovative Pumping Solutions [Member] | ||||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Sales | 187,124 | 254,829 | 348,134 | |||||||||||||||||||||
Operating income for reportable segments, excluding impairment expense | 9,867 | 21,584 | 51,162 | |||||||||||||||||||||
Identifiable assets at year end | 175,198 | 159,365 | 202,228 | 175,198 | 159,365 | 202,228 | ||||||||||||||||||
Capital expenditures | 3,827 | 8,383 | 4,043 | |||||||||||||||||||||
Proceeds from sale of fixed assets | 168 | |||||||||||||||||||||||
Depreciation | 3,834 | 2,930 | 2,381 | |||||||||||||||||||||
Amortization | 7,826 | 8,406 | 8,993 | |||||||||||||||||||||
Interest expense | 4,422 | 6,881 | 8,451 | |||||||||||||||||||||
Impairment of goodwill and other intangible assets | 52,893 | 107,359 | ||||||||||||||||||||||
Reportable Segment [Member] | Supply Chain Services [Member] | ||||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Sales | 153,961 | 165,626 | 163,967 | |||||||||||||||||||||
Operating income for reportable segments, excluding impairment expense | 15,449 | 14,213 | 13,794 | |||||||||||||||||||||
Identifiable assets at year end | $ 44,796 | $ 50,012 | $ 54,637 | 44,796 | 50,012 | 54,637 | ||||||||||||||||||
Capital expenditures | 129 | 604 | 122 | |||||||||||||||||||||
Proceeds from sale of fixed assets | 0 | |||||||||||||||||||||||
Depreciation | 126 | 227 | 397 | |||||||||||||||||||||
Amortization | 1,083 | 1,881 | 2,206 | |||||||||||||||||||||
Interest expense | $ 1,852 | 1,084 | 924 | |||||||||||||||||||||
Impairment of goodwill and other intangible assets | $ 0 | $ 0 | ||||||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
SEGMENT AND GEOGRAPHICAL REPO71
SEGMENT AND GEOGRAPHICAL REPORTING, Adjustments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Adjustment for [Abstract] | |||
B27 settlement | $ 0 | $ 7,348 | $ 0 |
Impairment expense | 0 | 68,735 | 117,569 |
Amortization of intangibles | 18,061 | 20,621 | 22,480 |
Total operating income (loss) | 19,332 | (27,916) | (12,628) |
Interest expense | 15,564 | 10,932 | 12,797 |
Other expense (income), net | (5,906) | 72 | 131 |
Income (loss) before income taxes | 9,674 | (38,920) | (25,556) |
Capital expenditures | 4,868 | ||
Identifiable assets at year end | 611,525 | 683,980 | |
Depreciation | 11,933 | 12,622 | 12,598 |
Corporate [Member] | |||
Adjustment for [Abstract] | |||
Capital expenditures | 500 | 1,800 | 800 |
Identifiable assets at year end | 18,300 | 23,300 | 19,300 |
Depreciation | 1,400 | 1,700 | 1,400 |
Reportable Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Operating income for reportable segments, excluding impairment expense | 72,950 | 113,967 | 172,655 |
Segment Reconciling Items [Member] | |||
Adjustment for [Abstract] | |||
B27 settlement | 0 | 7,348 | 0 |
Impairment expense | 0 | 68,735 | 117,569 |
Amortization of intangibles | 18,061 | 20,621 | 22,480 |
Corporate and other expense, net | $ 35,557 | $ 45,179 | $ 45,234 |
SEGMENT AND GEOGRAPHICAL REPO72
SEGMENT AND GEOGRAPHICAL REPORTING, Geographical Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | [1] | Jun. 30, 2015 | [1] | Mar. 31, 2015 | [1] | Dec. 31, 2014 | Sep. 30, 2014 | [1] | Jun. 30, 2014 | [1] | Mar. 31, 2014 | [1] | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Revenues | $ 222,300 | $ 230,000 | $ 256,200 | $ 253,600 | $ 278,600 | $ 303,100 | $ 323,700 | $ 341,600 | $ 382,600 | $ 387,000 | $ 381,600 | $ 348,500 | $ 962,092 | $ 1,247,043 | $ 1,499,662 | |||||||||
Property and equipment, net | 60,807 | 68,503 | 60,807 | 68,503 | ||||||||||||||||||||
Reportable Geographical Components [Member] | United States [Member] | ||||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Revenues | 873,926 | 1,119,210 | 1,300,493 | |||||||||||||||||||||
Property and equipment, net | 48,635 | 53,695 | 48,635 | 53,695 | ||||||||||||||||||||
Reportable Geographical Components [Member] | Canada [Member] | ||||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Revenues | 88,166 | 127,833 | 195,633 | |||||||||||||||||||||
Property and equipment, net | 12,172 | 14,724 | 12,172 | 14,724 | ||||||||||||||||||||
Reportable Geographical Components [Member] | Dubai [Member] | ||||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Property and equipment, net | $ 0 | $ 84 | 0 | 84 | ||||||||||||||||||||
Reportable Geographical Components [Member] | Other [Member] | ||||||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||||||
Revenues | $ 0 | $ 0 | $ 3,536 | |||||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
QUARTERLY FINANCIAL INFORMATI73
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | [1] | Jun. 30, 2016 | [1] | Mar. 31, 2016 | [1] | Dec. 31, 2015 | Sep. 30, 2015 | [1] | Jun. 30, 2015 | [1] | Mar. 31, 2015 | [1] | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Quarterly Financial Information [Line Items] | ||||||||||||||||||||||||
Sales | $ 222,300 | $ 230,000 | $ 256,200 | $ 253,600 | $ 278,600 | $ 303,100 | $ 323,700 | $ 341,600 | $ 382,600 | $ 387,000 | [1] | $ 381,600 | [1] | $ 348,500 | [1] | $ 962,092 | $ 1,247,043 | $ 1,499,662 | ||||||
Gross profit | 60,600 | 63,800 | 71,600 | 68,800 | 76,900 | 85,700 | 91,300 | 98,100 | 106,700 | 113,400 | [1] | 111,000 | [1] | 101,700 | [1] | 264,802 | 351,986 | 432,840 | ||||||
Impairment expense | 0 | 0 | 0 | 0 | 9,800 | 58,900 | 0 | 0 | 117,600 | 0 | [1] | 0 | [1] | 0 | [1] | 67,663 | ||||||||
Net income (loss) | 7,100 | 100 | 5,100 | (5,200) | (3,200) | (52,700) | 7,200 | 9,700 | $ (88,100) | $ 17,000 | [1] | $ 14,900 | [1] | $ 10,900 | [1] | 7,151 | (39,070) | (45,238) | ||||||
Net income (loss) attributable to DXP Enterprises, Inc. | $ 7,400 | $ 200 | $ 5,100 | $ (5,100) | $ (3,000) | $ (52,400) | $ 7,200 | $ 9,700 | $ 7,702 | $ (38,536) | $ (45,238) | |||||||||||||
Earnings (loss) per share - basic (in dollars per share) | $ 0.44 | $ 0.02 | $ 0.36 | $ (0.36) | $ (0.20) | $ (3.64) | $ 0.50 | $ 0.67 | $ (6.09) | $ 1.16 | [1] | $ 1.01 | [1] | $ 0.74 | [1] | $ 0.51 | $ (2.68) | $ (3.10) | ||||||
Earnings (loss) per share - diluted (in dollars per share) | $ 0.42 | $ 0.02 | $ 0.34 | $ (0.36) | $ 0.49 | $ (2.68) | $ (3.10) | |||||||||||||||||
Increase in amortization expense | $ 1,000 | |||||||||||||||||||||||
Previously Reported [Member] | ||||||||||||||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||||||||||||||
Sales | $ 387,000 | $ 381,600 | $ 348,500 | |||||||||||||||||||||
Gross profit | 113,400 | 111,000 | 101,700 | |||||||||||||||||||||
Net income (loss) | $ 17,600 | $ 15,500 | $ 11,600 | |||||||||||||||||||||
Earnings (loss) per share - basic (in dollars per share) | $ 1.20 | $ 1.06 | $ 0.79 | |||||||||||||||||||||
Earnings (loss) per share - diluted (in dollars per share) | $ 1.14 | $ 1 | $ 0.75 | |||||||||||||||||||||
Adjusted [Member] | ||||||||||||||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||||||||||||||
Sales | $ 387,000 | $ 381,600 | $ 348,500 | |||||||||||||||||||||
Gross profit | 113,400 | 111,000 | 101,700 | |||||||||||||||||||||
Net income (loss) | $ 17,000 | $ 14,900 | $ 10,900 | |||||||||||||||||||||
Earnings (loss) per share - basic (in dollars per share) | $ 1.16 | $ 1.01 | $ 0.74 | |||||||||||||||||||||
Earnings (loss) per share - diluted (in dollars per share) | $ 1.10 | $ 0.96 | $ 0.70 | |||||||||||||||||||||
[1] | During the fourth quarter of 2014, DXP finalized its purchase accounting for customer relationships for the acquisition of B27 and amortized the customer relationships on an accelerated basis. The revision increased amortization expense by $1.0 million per quarter. |
RELATED PARTIES (Details)
RELATED PARTIES (Details) | 12 Months Ended |
Dec. 31, 2016USD ($)Employee | |
Related Party Transaction [Line Items] | |
Wages and other compensation | $ 700,000 |
Minimum [Member] | |
Related Party Transaction [Line Items] | |
Transaction amount | 120,000 |
Chairman of the Board, President and Chief Executive Officer [Member] | |
Related Party Transaction [Line Items] | |
Lease expenses | $ 1,300,000 |
Number of related party employees | Employee | 6 |
Payroll, related payroll expenses, vehicles, fuel and supplies | $ 400,000 |
Senior Vice President [Member] | |
Related Party Transaction [Line Items] | |
Lease expenses | 1,300,000 |
Children of Chairman of the Board, President and Chief Executive Officer [Member] | |
Related Party Transaction [Line Items] | |
Lease expenses | $ 300,000 |
Sons of Executives [Member] | |
Related Party Transaction [Line Items] | |
Number of related party employees | Employee | 2 |
Sons-in-laws of Executives [Member] | |
Related Party Transaction [Line Items] | |
Number of related party employees | Employee | 2 |
Sons and Sons in Law of Executives [Member] | |
Related Party Transaction [Line Items] | |
Number of related party employees | Employee | 4 |