Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 21, 2018 | Jun. 30, 2017 | |
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 | $ 536,658,521 | ||
Entity Common Stock, Shares Outstanding | 17,358,186 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 22,047 | $ 1,590 |
Restricted Cash | 3,532 | 0 |
Trade accounts receivable, net of allowances for doubtful accounts of $9,015 in 2017 and $8,160 in 2016 | 167,272 | 148,919 |
Inventories | 91,413 | 83,699 |
Costs and estimated profits in excess of billings on uncompleted contracts | 26,915 | 18,421 |
Prepaid expenses and other current assets | 5,296 | 2,138 |
Federal income taxes recoverable | 1,440 | 2,558 |
Total current assets | 317,915 | 257,325 |
Property and equipment, net | 53,337 | 60,807 |
Goodwill | 187,591 | 187,591 |
Other intangible assets, net of accumulated amortization of $84,624 in 2017 and $70,027 in 2016 | 78,525 | 94,831 |
Other long-term assets | 1,715 | 1,498 |
Total assets | 639,083 | 602,052 |
Current liabilities: | ||
Current maturities of long-term debt | 3,381 | 51,354 |
Trade accounts payable | 80,303 | 78,698 |
Accrued wages and benefits | 18,483 | 16,962 |
Customer advances | 2,189 | 2,441 |
Billings in excess of costs and estimated profits on uncompleted contracts | 4,249 | 2,813 |
Other current liabilities | 16,220 | 14,391 |
Total current liabilities | 124,825 | 166,659 |
Long-term debt, less current maturities and unamortized debt issuance costs | 238,643 | 173,331 |
Deferred income taxes | 7,069 | 9,513 |
Total long-term liabilities | 245,712 | 182,844 |
Commitments and contingencies (Note 15) | ||
Equity: | ||
Common stock, $0.01 par value, 100,000,000 shares authorized; 17,315,573 in 2017 and 17,197,380 in 2016 shares issued | 174 | 173 |
Additional paid-in capital | 153,087 | 152,313 |
Retained earnings | 134,193 | 117,395 |
Accumulated other comprehensive loss | (19,491) | (18,274) |
Total DXP Enterprises, Inc. equity | 267,979 | 251,623 |
Noncontrolling interest | 567 | 926 |
Total equity | 268,546 | 252,549 |
Total liabilities and equity | 639,083 | 602,052 |
Series A Preferred Stock [Member] | ||
Equity: | ||
Preferred stock | 1 | 1 |
Total equity | 1 | 1 |
Series B Convertible Preferred Stock [Member] | ||
Equity: | ||
Preferred stock | $ 15 | $ 15 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Current assets: | ||
Trade accounts receivable, allowances for doubtful accounts | $ 9,015 | $ 8,160 |
Other intangible assets, accumulated amortization | $ 84,624 | $ 70,027 |
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) | 17,315,573 | 17,197,380 |
Common stock shares outstanding (in shares) | 17,315,573 | 17,197,380 |
Series A Preferred Stock [Member] | ||
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) | 112 | 112 |
Preferred stock, liquidation preference (in dollars per share) | $ 100 | $ 100 |
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] | ||
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, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) [Abstract] | |||
Sales | $ 1,006,782 | $ 962,092 | $ 1,247,043 |
Cost of sales | 735,201 | 697,290 | 895,057 |
Gross profit | 271,581 | 264,802 | 351,986 |
Selling, general and administrative expense | 238,091 | 245,470 | 303,819 |
Impairment expense | 0 | 0 | 68,735 |
B27 settlement | 0 | 0 | 7,348 |
Operating income (loss) | 33,490 | 19,332 | (27,916) |
Other expense (income), net | (456) | (5,906) | 72 |
Interest expense | 17,054 | 15,564 | 10,932 |
Income (loss) before income taxes | 16,892 | 9,674 | (38,920) |
Provision for income taxes | 363 | 2,523 | 150 |
Net income (loss) | 16,529 | 7,151 | (39,070) |
Net loss attributable to noncontrolling interest | (359) | (551) | (534) |
Net income (loss) attributable to DXP Enterprises, Inc. | 16,888 | 7,702 | (38,536) |
Preferred stock dividend | 90 | 90 | 90 |
Net income (loss) attributable to common shareholders | 16,798 | 7,612 | (38,626) |
Net income (loss) | 16,529 | 7,151 | (39,070) |
Cumulative translation adjustment, net of income taxes | (1,217) | (7,658) | (4,916) |
Comprehensive income (loss) | $ 15,312 | $ (507) | $ (43,986) |
Basic earnings (loss) per share (in dollars per share) | $ 0.97 | $ 0.51 | $ (2.68) |
Weighted average common shares outstanding (in shares) | 17,400 | 15,042 | 14,423 |
Diluted earnings (loss) per share (in dollars per share) | $ 0.93 | $ 0.49 | $ (2.68) |
Weighted average common shares and common equivalent shares outstanding (in shares) | 18,240 | 15,882 | 14,423 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF 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, 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 |
Tax related items for share based awards | 0 | 0 | 0 | (815) | 0 | 0 | 0 | 0 | (815) |
Issuance of 148,769 treasury shares in connection with an acquisition | 0 | 0 | 0 | (4,825) | 0 | 9,223 | 0 | 0 | 4,398 |
Acquisition of 191,420 shares of treasury stock | 0 | 0 | 0 | 0 | 0 | (8,908) | 0 | 0 | (8,908) |
Issuance of treasury shares upon vesting of restricted stock | 0 | 0 | 0 | (2,632) | 0 | 2,632 | 0 | 0 | 0 |
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 | 3,580 | 0 | 0 | 0 | 0 | 3,580 |
Tax related items for share based awards | 0 | 0 | 0 | (858) | 0 | 0 | 0 | 0 | (858) |
Issuance of shares of Common stock | 0 | 0 | 27 | 51,862 | 0 | 0 | 0 | 0 | 51,889 |
Issuance of treasury shares upon 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) |
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 |
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 | 1,708 | 0 | 0 | 0 | 0 | 1,708 |
Tax related items for share based awards | 0 | 0 | 0 | (933) | 0 | 0 | 0 | 0 | (933) |
Issuance of shares of Common stock | 0 | 0 | 1 | (1) | 0 | 0 | 0 | 0 | 0 |
Cumulative translation adjustment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1,217) | (1,217) |
Net income (loss) | 0 | 0 | 0 | 0 | 16,888 | 0 | (359) | 0 | 16,529 |
BALANCES at Dec. 31, 2017 | $ 1 | $ 15 | $ 174 | $ 153,087 | $ 134,193 | $ 0 | $ 567 | $ (19,491) | $ 268,546 |
CONSOLIDATED STATEMENTS OF EQU6
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) | 12 Months Ended |
Dec. 31, 2016shares | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Issuance of common stock (in shares) | 2,722,858 |
Issuance of treasury shares for vesting of restricted stock (in shares) | 264,297 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income (loss) attributable to DXP Enterprises, Inc. | $ 16,888 | $ 7,702 | $ (38,536) | |
Less net loss attributable to non-controlling interest | (359) | (551) | (534) | |
Net income (loss) | 16,529 | 7,151 | (39,070) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
Depreciation | 10,520 | 11,933 | 12,622 | |
Amortization of intangible assets | 17,266 | 18,061 | 20,621 | |
Impairment of goodwill | 0 | 0 | 68,735 | |
Bad debt expense | 3,416 | 180 | 2,014 | |
Amortization of debt issuance costs | 1,548 | 1,856 | 1,211 | |
Write off of debt issuance costs | 578 | 0 | 0 | |
Gain on sale of subsidiary | 0 | (5,635) | 0 | |
Stock compensation expense | 1,708 | 3,580 | 2,973 | |
Tax loss related to vesting of restricted stock | 0 | 619 | 0 | |
Deferred income taxes | (3,827) | 2,687 | (9,024) | |
Changes in operating assets and liabilities, net of assets and liabilities acquired in business acquisitions: | ||||
Trade accounts receivable | (20,539) | 12,080 | 71,261 | |
Costs and estimated profits in excess of billings on uncompleted contracts | (8,419) | 3,457 | (2,047) | |
Inventories | (7,544) | 5,453 | 12,724 | |
Prepaid expenses and other assets | (3,287) | 620 | 159 | |
Trade accounts payable and accrued expenses | 3,189 | (8,595) | (42,862) | |
Billings in excess of costs & estimated profits on uncompleted contracts | 1,406 | (5,203) | (513) | |
Net cash provided by operating activities | 12,544 | 48,244 | 98,804 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Purchase of property and equipment | (2,811) | (4,868) | (13,992) | |
Proceeds from the sale of fixed assets | 0 | 1,206 | 0 | |
Proceeds from sale of subsidiary | 0 | 31,476 | 0 | |
Acquisitions of businesses, net of cash acquired | 0 | 0 | (15,501) | [1] |
Net cash provided by (used in) investing activities | (2,811) | 27,814 | (29,493) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from debt | 728,822 | 517,689 | 393,551 | |
Principal payments on revolving line of credit and other long-term debt | (702,402) | (643,568) | (453,480) | |
Debt issuance costs | (11,208) | (801) | (543) | |
Noncontrolling interest holder contributions, net of tax benefits | 2,346 | |||
Noncontrolling interest holder distributions, net of tax benefits | 0 | (335) | ||
Preferred dividends paid | (90) | (90) | (90) | |
Purchase of treasury stock | 0 | 0 | (8,908) | |
Proceeds from issuance of common shares, net | 0 | 51,889 | 0 | |
Payment for employee taxes withheld from stock awards | (934) | (238) | (815) | |
Tax (loss) related to vesting of restricted stock | 0 | (619) | 0 | |
Net cash provided by (used in) financing activities | 14,188 | (76,073) | (67,939) | |
EFFECT OF FOREIGN CURRENCY ON CASH | 68 | (88) | 274 | |
(DECREASE) INCREASE IN CASH | 23,989 | (103) | 1,646 | |
CASH AT BEGINNING OF YEAR | 1,590 | 1,693 | 47 | |
CASH AT END OF YEAR | 25,579 | 1,590 | 1,693 | |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||
Cash paid for Interest | 15,205 | 13,708 | 9,721 | |
Cash paid for Income Taxes | $ 714 | $ 4,780 | $ 13,792 | |
[1] | Purchases of businesses in 2015 exclude $4.4 million in common stock issued in connection with an acquisition. |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] | |
Stock issued in connection with acquisitions | $ 4.4 |
THE COMPANY
THE COMPANY | 12 Months Ended |
Dec. 31, 2017 | |
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. 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 (“SC”), Supply Chain Services (“SCS”) and Innovative Pumping Solutions (“IPS”). See Note 18 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
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 (“US GAAP”). 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, 2017, the total assets of the VIE were approximately $5.2 million including approximately $4.5 million of fixed assets. DXP is the primary customer of the VIE. Consolidation of the VIE increased cost of sales by approximately $0.6 million and $1.3 million for the twelve months ended December 31, 2017 and 2016, respectively. The Company recognized a related income tax benefit of $0.2 million and $0.3 million related to the VIE for the years ended December 31, 2017 and 2016, respectively. At December 31, 2017, 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. 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. The Company has not historically experienced any losses when in excess of these 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. 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. Changes in this allowance for 2017, 2016 and 2015 were as follows ( in thousands Years Ended December 31, 2017 2016 2015 Balance at beginning of year $ 8,160 $ 9,364 $ 8,713 Charged to costs and expenses 3,367 180 2,014 Charged to other accounts 22 3 (17 ) 2 1,255 2 Deductions (2,534 ) 1 (1,367 ) 1 (2,618 ) 1 Balance at end of year $ 9,015 $ 8,160 $ 9,364 ( 1) Uncollectible accounts written off, net of recoveries (2) Includes allowance for doubtful accounts from acquisitions and divestiture (3) Primarily due to translation adjustments 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. US GAAP 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. US GAAP 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 net realizable value Provisions 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. No impairment of goodwill was required in 2017 and 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. No impairment of long-lived assets excluding goodwill, was required in 2017, 2016 and 2015. 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 $40.6 million, $31.5 million, and $47.5 million were recognized on contracts in process for the years ended December 31, 2017, 2016, and 2015, 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, which is generally upon delivery to the customer. 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, 2017 and 2016 was approximately $2.7 million and $3.1 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 lenders 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, 2017 and 2016 was $10.1 million and $1.0 million, respectively. In connection with the extinguishment of the previously existing credit facility we recorded a $0.6 million write-off of debt issuance costs, which was included in interest expense during the third quarter of 2017. 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 2012. 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 and 2015. Out-of-Period Items Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial. 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 year ended December 31, 2015. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2017 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS Standards Effective in 2017 or Earlier Accounting Changes and Error Corrections. Compensation – Stock Compensation. Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. he Company’s Condensed Consolidated Financial Statements Topic Method of Adoption Impact on Consolidated Financial Statements Recognize all excess tax benefits and tax deficiencies as income tax benefit or expense Prospective The Company recognized $0.1 million of excess tax benefit in income taxes for the year ended December 31, 2017, decreasing the effective tax rate for the year. Excess tax benefits and deficiencies on the statement of cash flows are classified as an operating activity Prospective The Company recognized $0.1 million of excess tax benefit for the year ended December 31, 2017 as an operating activity. Prior to the adoption of the ASU 2016-09, the excess tax expense for the year ended December 31, 2016 of $0.6 million was recognized as a financing activity. The excess tax expense for the year ended December 31, 2015 was zero. Employee taxes paid when an employer withholds shares for tax-withholding purposes on the statement of cash flows are classified as financing activity Retrospective The Company reclassified $0.2 million and $0.8 million of employee taxes paid from cash flows from operating activities to cash flows from financing activities on the Consolidated Statements of Cash Flows for the years ended December 31, 2016 and December 31, 2015. Accounting for forfeitures and tax withholding elections Prospective The Company has not changed its accounting policy for forfeitures. There is no significant impact on Consolidated Financial Statements. Income Taxes. Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. reclassified $9.5 million of current deferred income tax assets from current assets to non-current deferred income tax liabilities on the Condensed Consolidated Balance Sheet as of December 31, 2016. Inventory. Inventory (Topic 330), Simplifying the Measurement of Inventory. Statement of Cash Flows. Statement of Cash Flows (Topic 230) Classification of Restricted Cash classified $3.5 million of cash to restricted cash on the Condensed Consolidated Balance Sheet as of December 31, 2017. This cash deposit was required as collateral for letters of credit outstanding under our previously existing credit facility. Standards Effective in 2018 or Later Compensation - Stock Compensation. Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. Intangibles-Goodwill and Other. Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The Company early adopted this ASU December 31, 2017. T he Company’s annual tests of goodwill for impairment, including qualitative assessments of all of its reporting units goodwill, determined a quantitative impairment test was not necessary. Business Combinations. Business Combinations (Topic 805): Clarifying the Definition of a Business. Statement of Cash Flows. Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. Financial Instruments – Credit Losses. Financial Instruments – Credit Losses, . Leases. 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. Financial Instruments. Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities Revenue Recognition. Revenue from Contracts with Customers (Topic 606), The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes and financial statement disclosures. We have engaged third party consultants to assist us in assessing our contracts with customers, processes and controls required to address the impact that ASU No. 2014-09 will have on our business. The Company has elected the modified retrospective method and will adopt the new revenue guidance effective January 1, 2018, with an expected immaterial impact to the opening retained earnings. The analysis of contracts with customers under the new revenue recognition standard was consistent with the Company’s current revenue recognition model, whereby revenue is recognized primarily on the date products are shipped to the customer. The ASU also requires expanded qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, significant judgments and accounting policy. Based on our overall assessment performed to date, the adoption of the new standard is not expected to have an ongoing material impact on the Company’s Consolidated Financial Statements. |
FAIR VALUE OF FINANCIAL ASSETS
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
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. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES [Abstract] | |
INVENTORIES | NOTE 5 - INVENTORIES The carrying values of inventories were as follows ( in thousands December 31, 2017 December 31, 2016 Finished goods $ 79,820 $ 74,269 Work in process 11,593 9,430 Inventories $ 91,413 $ 83,699 |
COSTS AND ESTIMATED PROFITS ON
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS | 12 Months Ended |
Dec. 31, 2017 | |
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 2017 and 2016 were as follows ( in thousands December 31, 2017 2016 Costs incurred on uncompleted contracts $ 37,899 $ 25,214 Estimated earnings, thereon 2,665 6,274 Total 40,564 31,488 Less: billings to date 17,881 15,864 Net $ 22,683 $ 15,624 Such amounts were included in the accompanying Consolidated Balance Sheets for 2017 and 2016 under the following captions ( in thousands December 31, 2017 2016 Costs and estimated profits in excess of billings on uncompleted contracts $ 26,915 $ 18,421 Billings in excess of costs and estimated profits on uncompleted contracts (4,249 ) (2,813 ) Translation Adjustment 17 16 Net $ 22,683 $ 15,624 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7 - PROPERTY AND EQUIPMENT The carrying values of property and equipment were as follows ( in thousands December 31, 2017 December 31, 2016 Land $ 2,346 $ 2,346 Buildings and leasehold improvements 16,724 16,259 Furniture, fixtures and equipment 94,475 94,784 Less – Accumulated depreciation (60,208 ) (52,582 ) Total Property and Equipment $ 53,337 $ 60,807 Depreciation expense was $10.5 million, $11.9 million, and $12.6 million for the years ended December 31, 2017, 2016, and 2015, respectively. Capital expenditures by segment are included in Note 18 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 ( in thousands Goodwill Other Intangible Assets Total Balances as of December 31, 2016 $ 187,591 $ 94,831 $ 282,422 Translation adjustment - 960 960 Amortization - (17,266 ) (17,266 ) Balances as of December 31, 2017 $ 187,591 $ 78,525 $ 266,116 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 goodwill balance by reportable segment as of December 31, 2017 and 2016 (in thousands) As of December 31, 2017 2016 Service Centers $ 154,473 $ 154,473 Innovative Pumping Solutions 15,980 15,980 Supply Chain Services 17,138 17,138 Total $ 187,591 $ 187,591 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. The impairment losses during the year ended December 31, 2015 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, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Carrying Amount, net Gross Carrying Amount Accumulated Amortization Carrying Amount, net Customer relationships $ 162,200 $ (83,806 ) $ 78,394 $ 163,022 $ (68,446 ) $ 94,576 Non-compete agreements 949 (818 ) 131 1,836 (1,581 ) 255 Total $ 163,149 $ (84,624 ) $ 78,525 $ 164,858 $ (70,027 ) $ 94,831 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 $17.3 million, $18.1 million, and $20.6 million for the years ended December 31, 2017, 2016, and 2015, respectively. The estimated future annual amortization of intangible assets for each of the next five years and thereafter are as follows (in thousands) 2018 $ 15,615 2019 14,170 2020 10,292 2021 8,911 2022 7,264 Thereafter 22,273 Total $ 78,525 The weighted average remaining estimated life for customer relationships and non-compete agreements are 8.3 years and 1.8 years, respectively. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
LONG-TERM DEBT [Abstract] | |
LONG-TERM DEBT | NOTE 9 – LONG-TERM DEBT Long-term debt consisted of the following ( in thousands December 31, 2017 2016 ABL Revolver $ - $ - Term Loan B 249,375 - Line of credit - 147,600 Term loan - 74,500 Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment 2,722 3,577 Less unamortized debt issuance costs (10,073 ) (992 ) Total Debt 242,024 224,685 Less: Current maturities (3,381 ) (51,354 ) Total Long-term Debt $ 238,643 $ 173,331 ABL Facility On August 29, 2017, DXP entered into a five year, $85 million Asset Based Loan and Security Agreement (the “ABL Credit Agreement”). The ABL Credit Agreement provides for asset-based revolving loans in an aggregate principal amount of up to $85.0 million (the “ABL Loans”). The ABL Loans may be increased, in increments of $10.0 million, up to an aggregate of $50.0 million. The facility will mature on August 29, 2022. Interest accrues on outstanding borrowings at a rate equal to LIBOR or CDOR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average daily excess availability under the facility for the most recently completed calendar quarter. Fees ranging from 0.25% to 0.375% per annum are payable on the portion of the facility not in use at any given time. The interest rate for the ABL facility was 2.9% at December 31, 2017. The unused line fee was 0.375% at December 31, 2017. The obligations of the Borrowers are guaranteed by the Company and its direct and indirect material wholly-owned subsidiaries other than certain excluded subsidiaries. The ABL Credit Agreement contains a financial covenant restricting the Company from allowing its Fixed Charge Coverage Ratio be less than 1.00 to 1.00 during a compliance period, which is triggered when the availability under ABL facility falls below a threshold set forth in the ABL Credit Agreement. As of December 31, 2017, the Company's consolidated Fixed Charge Coverage Ratio was 3.67 to 1.00. The ABL Loan is secured by substantially all of the assets of the Company. Senior Secured Term Loan B: On August 29, 2017, DXP entered into a six year Senior Secured Term Loan B (the “Term Loan”) with an original principal amount of $250 million which amortizes in equal quarterly installments of 0.25% with the balance payable in August 2023, when the facility matures. Subject to securing additional lender commitments, the Term Loan allows for incremental increases in facility size up to an aggregate of $30 million, in minimum increments of $10 million, plus an additional amount such that DXP’s Secured Leverage Ratio (as defined under the Term Loan) would not exceed 3.60 to 1.00. We are required to repay the Term Loan in connection with certain asset sales and insurance proceeds, certain debt proceeds and 50% of excess cash flow, reducing to 25%, if our total leverage ratio is no more than 3.00 to 1.00 and 0%, if our total leverage ratio is no more than 2.50 to 1.00. In addition, the Term Loan contains a number of customary restrictive covenants. The interest rate for the Term Loan was 7.1 % as of December 31, 2017. The Term Loan requires that the company’s Secured Leverage Ratio, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of restricted cash, not to exceed $30 million) as of such day to EBITDA, beginning with the fiscal quarter ending December 31, 2017, is either equal to or less than as indicated in the table below: Fiscal Quarter Secured Leverage Ratio December 31, 2017 5.75:1.00 March 31, 2018 5.75:1.00 June 30, 2018 5.50:1.00 September 30, 2018 5.50:1.00 December 31, 2018 5.25:1.00 March 31, 2019 5.25:1.00 June 30, 2019 5.00:1.00 September 30, 2019 5.00:1.00 December 31, 2019 4.75:1.00 March 31, 2020 4.75:1.00 June 30, 2020 and each Fiscal Quarter thereafter 4.50:1.00 As of December 31, 2017, the Company's consolidated Secured Leverage Ratio was 3.59 to 1.00. The Term Loan is guaranteed by each of the Company’s direct and indirect material wholly owned subsidiaries, other than any of the Company’s Canadian subsidiaries and certain other excluded subsidiaries. The Term Loan is secured by substantially all of the assets of the Company. Extinguishment of Previously Existing Credit Facility As set forth above, on August 29, 2017, the Company terminated its previously existing credit agreement and facility and replaced it with the Term Loan and the ABL Credit Agreement. The terminated facility was under the Amended and Restated Credit Agreement, dated as of January 2, 2014, by and among the Company, as borrower, and Wells Fargo Bank, National Association, as issuing lender and administrative agent for other lenders (the “Original As of December 31, 2017, the maturities of long-term debt for the next five years and thereafter were as follows ( in thousands 2018 $ 3,381 2019 3,405 2020 3,436 2021 2,500 2022 2,500 Thereafter 236,875 Total $ 252,097 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 10 - INCOME TAXES The components of income before income taxes were as follows ( in thousands Years Ended December 31, 2017 2016 2015 Domestic $ 13,183 $ 11,079 $ (42,179 ) Foreign 3,709 (1,405 ) 3,259 Total income before taxes $ 16,892 $ 9,674 $ (38,920 ) The provision for income taxes consisted of the following ( in thousands Years Ended December 31, 2017 2016 2015 Current - Federal $ 1,400 $ (902 ) $ 5,182 State 698 136 1,499 Foreign 2,092 602 2,493 4,190 (164 ) 9,174 Deferred - Federal 686 4,174 (7,090 ) State (464 ) 120 - Foreign (4,049 ) (1,607 ) (1,934 ) (3,827 ) 2,687 (9,024 ) $ 363 $ 2,523 $ 150 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, 2017 2016 2015 Income taxes computed at federal statutory rate $ 5,912 $ 3,386 $ (13,622 ) State income taxes, net of federal benefit 152 166 974 Non-tax deductible impairment expense computed at federal statutory rate - - 15,765 Foreign adjustment 255 140 689 Meals and entertainment 422 361 620 Gain on sale of Vertex - (1,971 ) - Domestic Production Activity Deduction (98 ) - (1,143 ) Research and development tax credit (641 ) (886 ) (1,730 ) Foreign tax credit - (383 ) (921 ) Valuation Allowance (791 ) - - Tax Reform Deferred Tax Remeasurement (1,294 ) - - Canadian Acquisition Deferred Tax Liability True Up (2,180 ) - - Foreign rate difference (297 ) 112 (261 ) Other (1,077 ) 1,598 (221 ) $ 363 $ 2,523 $ 150 Deferred tax liabilities and assets were comprised of the following ( in thousands December 31, 2017 2016 Deferred tax assets: Goodwill $ 2,668 $ 4,029 Allowance for doubtful accounts 1,707 2,469 Inventories 2,365 3,944 Accruals (61 ) 97 Research and development credit carryforward 1,115 886 Foreign Tax Credit Carryforward 64 64 Charitable Contribution Carryforward 559 138 Net operating loss carryforward 136 760 Capital loss carryforward 12,225 18,903 Deferred Compensation 475 1,881 Other Accruals 266 - Other 65 107 Total deferred tax assets 21,584 33,278 Less valuation allowance (12,220 ) (19,633 ) Total deferred tax asset, net of valuation Deferred tax liabilities : 9,364 13,645 Intangibles (8,695 ) (10,042 ) Property and equipment (6,860 ) (12,762 ) Unremitted foreign earnings (354 ) (354 ) Cumulative translation adjustment (67 ) - Other (457 ) - Net deferred tax liability $ (7,069 ) $ (9,513 ) At December 31, 2017, the Company had $51.4 million of capital loss carryforward, which will expire in 2021. The Company has recorded a valuation allowance for nearly all of this carryforward amount. 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. On December 22, 2017, the Tax Cuts and Jobs Act (“The Act”) was enacted into law. The majority of the provisions signed into law in 2017 do not take effect until January 1, 2018. The Act is a comprehensive tax reform legislation that contains significant changes to corporate taxation. Provisions on the enacted law include a permanent reduction of the corporate income tax rate from 35% to 21%, imposing a mandatory one-time tax on un-repatriated accumulated earnings of foreign subsidiaries, a partial limitation on the deductibility of business interest expense, a limitation on net operating losses to 80% of taxable income each year, a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a partial territorial system (along with rules that create a new U.S. minimum tax on earnings of foreign subsidiaries), and other related provisions to maintain the U.S. tax base. In accordance with SAB 118 issued by the Securities and Exchange Commission on December 22, 2017, companies are allowed a one year measurement period to complete the accounting related to The Act. Specifically, SAB 118 permits companies to record a provisional amount which can be remeasured during the measurement period due to obtaining, preparing, or analyzing additional information about facts and circumstances that existed as of the enacted date. As a result, we remeasured our net deferred income tax liabilities by a provisional $1.3 million benefit and a corresponding provisional decrease in the net deferred tax liability as of December 31, 2017. We are still in the process of analyzing The Act's impact as permitted under SAB 118. The largest impact to the Company being the remeasurement of deferred taxes due to the U.S. statutory tax rate change. The mandatory repatriation and resulting toll charge on accumulated foreign earnings and profits has limited impact on the Company as unremitted earnings from non-US jurisdictions is minimal. The Company is provisional in its approach and assertion that there is no financial statement impact as of December 31, 2017. Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial. 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 misstatement was not material to the results of operations or financial condition for the years ended December 31, 2017, 2016 and 2015. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
SHARE-BASED COMPENSATION [Abstract] | |
SHARE-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, 2017 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, 2017, 401,223 shares were available for future grant. Changes in restricted stock for the twelve months ended December 31, 2017 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2016 143,380 $ 26.76 Granted 18,672 $ 34.07 Forfeited (298 ) $ 59.60 Vested (83,853 ) $ 24.92 Non-vested at December 31, 2017 77,901 $ 30.36 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 Compensation expense, associated with restricted stock, recognized in the years ended December 31, 2017, 2016 and 2015 was $1.7 million, $2.0 million, and $3.0 million, respectively. Related income tax benefits recognized in earnings in the years ended December 31, 2017, 2016 and 2015 were approximately $0.7 million, $0.8 million and $1.2 million, respectively. Unrecognized compensation expense under the DXP Enterprises, Inc. 2016 Omnibus Incentive Plan at December 31, 2017, December 31, 2016 and December 31, 2015 was $1.6 million, $2.7 million and $4.9 million, respectively. As of December 31, 2017, 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, 2017 | |
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 year ended December 31, 2015, 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, 2017 2016 2015 Basic: Weighted average shares outstanding 17,400 15,042 14,423 Net income (loss) attributable to DXP Enterprises, Inc. $ 16,888 $ 7,702 $ (38,536 ) Convertible preferred stock dividend (90 ) (90 ) (90 ) Net income (loss) attributable to common shareholders $ 16,798 $ 7,612 $ (38,626 ) Per share amount $ 0.97 $ 0.51 $ (2.68 ) Diluted: Weighted average shares outstanding 17,400 15,042 14,423 Assumed conversion of convertible preferred stock 840 840 - Total dilutive shares 18,240 15,882 14,423 Net income (loss) attributable to common shareholders $ 16,798 $ 7,612 $ (38,626 ) Convertible preferred stock dividend 90 90 - Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share $ 16,888 $ 7,702 $ (38,626 ) Per share amount $ 0.93 $ 0.49 $ (2.68 ) 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 year 2015. The Preferred Stock is convertible into 840,000 shares of common stock. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2017 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | NOTE 13 – CAPITAL STOCK The Company has Series A and Series B preferred stock of 1,122 shares and 15,000 shares outstanding as of year-end 2017, 2016 and 2015, respectively. The preferred stock did not have any activity during 2017, 2016 and 2015. The activity related to outstanding common stock and common stock held in treasury was as follows: December 31, 2017 2016 2015 Common Stock: Quantity (in thousands) Balance, beginning of period 17,197 14,390 14,375 Issuance of shares for compensation net of withholding 119 84 15 Issuance of common stock related to equity distribution agreements - 2,723 - Balance, end of period 17,316 17,197 14,390 December 31, 2017 2016 2015 Treasury Shares: Quantity (in thousands) Balance, beginning of period - 264 280 Issuance of treasury shares for acquisition - - (149 ) Purchase of treasury shares - - 191 Issuance of treasury shares upon vesting of restricted shares net of withholding - (264 ) (58 ) Balance, end of period - - 264 |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS ACQUISITIONS [Abstract] | |
BUSINESS ACQUISITIONS | NOTE 14 - 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 Company’s credit facility in effect at the date of acquisition. 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 Company’s credit facility in effect at the date of acquisition, 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 pro forma unaudited results of operations for the Company on a consolidated basis for the twelve months ended December 31, 2017 and 2016, assuming the divestiture of a business completed in 2016 were consummated as of January 1, 2016 are as follows ( in millions, except per share amounts Years Ended December 31, 2017 2016 Net sales $ 1,006.8 $ 939.4 Net income attributable to DXP Enterprises, Inc. $ 16.9 $ 5.5 Per share data Basic earnings $ 0.97 $ 0.36 Diluted earnings $ 0.93 $ 0.35 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 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 Basic earnings (loss) $ 0.36 $ (2.83 ) Diluted earnings (loss) $ 0.35 $ (2.83 ) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 15 - COMMITMENTS AND CONTINGENCIES The Company leases equipment, automobiles and office facilities under various operating leases. The future minimum rental commitments as of December 31, 2017, for non-cancelable leases are as follows ( in thousands 2018 $ 19,419 2019 15,002 2020 11,492 2021 9,435 2022 6,637 Thereafter 3,441 Rental expense for operating leases was $27.7 million, $27.6 million and $32.7 million for the years ended December 31, 2017, 2016 and 2015, 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, 2017 | |
EMPLOYEE BENEFIT PLANS [Abstract] | |
EMPLOYEE BENEFIT PLANS | NOTE 16 - EMPLOYEE BENEFIT PLANS The Company offers a 401(k) plan which is eligible to substantially all employees in the United States. For the year ended December 31, 2015 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 $0.2 million, $0.4 million, and $2.6 million to the 401(k) plan in the years ended December 31, 2017, 2016, and 2015, respectively. In 2016 the Company suspended indefinitely the employee match program. The Company contributed $0.4 million in the first quarter of 2016 to the 401(k ) plan. |
OTHER COMPREHENSIVE INCOME
OTHER COMPREHENSIVE INCOME | 12 Months Ended |
Dec. 31, 2017 | |
OTHER COMPREHENSIVE INCOME [Abstract] | |
OTHER COMPREHENSIVE INCOME | NOTE 17 - 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 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 $(1.2) million, $(7.7) million and ($4.9) million in translation adjustments, net of tax, in other comprehensive income during the years ended December 31, 2017, 2016 and 2015, 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 and 2015. |
SEGMENT AND GEOGRAPHICAL REPORT
SEGMENT AND GEOGRAPHICAL REPORTING | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT AND GEOGRAPHICAL REPORTING [Abstract] | |
SEGMENT AND GEOGRAPHICAL REPORTING | NOTE 18 – 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 2017 Sales $ 641,275 $ 204,030 $ 161,477 $ 1,006,782 Operating income for reportable segments, excluding amortization 63,250 11,423 15,451 90,124 Identifiable assets at year end 385,744 172,538 59,942 618,224 Capital expenditures 1,076 1,488 82 2,646 Depreciation 5,162 4,198 103 9,463 Amortization 8,989 7,194 1,083 17,266 Interest expense 9,712 5,352 1,990 17,054 2016 Sales $ 621,007 $ 187,124 $ 153,961 $ 962,092 Operating income for reportable segments, excluding impairment expense 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 Years Ended December 31, 2017 2016 2015 Operating income for reportable segments, excluding impairment expense $ 90,124 $ 72,950 $ 113,967 Adjustments for: B27 settlement - - 7,348 Impairment expense - - 68,735 Amortization of intangibles 17,266 18,061 20,621 Corporate and other expense, net 39,368 35,557 45,179 Total operating income (loss) 33,490 19,332 (27,916 ) Interest expense 17,054 15,564 10,932 Other expenses (income), net (456 ) (5,906 ) 72 Income (loss) before income taxes $ 16,892 $ 9,674 $ (38,920 ) The Company had capital expenditures at Corporate of $0.2 million, $0.5 million, and $1.8 million for the years ended December 31, 2017, 2016, and 2015, respectively. The Company had identifiable assets at Corporate of $19.4 million, $18.3 million, and $23.3 million as of December 31, 2017, 2016, and 2015, respectively. Corporate depreciation was $1.8 million, $1.4 million, and $1.7 million for the years ended December 31, 2017, 2016, and 2015, 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, 2017 2016 2015 Revenues United States $ 902,636 $ 873,926 $ 1,119,210 Canada 104,146 88,166 127,833 Total $ 1,006,782 $ 962,092 $ 1,247,043 As of December 31, 2017 2016 Property and Equipment, net United States $ 42,683 $ 48,635 Canada 10,654 12,172 Total $ 53,337 $ 60,807 |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) [Abstract] | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) | NOTE 19 - QUARTERLY FINANCIAL INFORMATION (unaudited) Summarized quarterly financial information for the years ended December 31, 2017, 2016 and 2015 is as follows ( in millions, except per share data First Quarter Second Quarter Third Quarter Fourth Quarter 2017 Sales $ 238.5 $ 250.7 $ 251.9 $ 265.7 Gross profit 64.5 68.9 67.0 71.2 Net income (loss) 3.1 4.1 3.0 6.6 Net income (loss) attributable to DXP Enterprises, Inc. 3.0 4.0 2.9 6.6 Earnings (loss) per share - basic $ 0.18 $ 0.24 $ 0.17 $ 0.38 Earnings (loss) per share - diluted $ 0.17 $ 0.23 $ 0.16 $ 0.37 2016 Sales $ 253.6 $ 256.2 $ 230.0 $ 222.3 Gross profit 68.8 71.6 63.8 60.6 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 ) 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. |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTIES [Abstract] | |
RELATED PARTIES | NOTE 20 – 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, 2017, the Company paid approximately $1.4 million in lease expenses to entities controlled by the Company’s Chief Executive Officer, David Little, $1.2 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, 2017 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 2017 was approximately $1.3 million for the four employees. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 21 – SUBSEQUENT EVENTS On January 1, 2018, the Company completed the acquisition of Application Specialties, Inc. (“ASI”), a distributor of cutting tools, abrasives, coolants and machine shop supplies. DXP paid approximately $11.5 million for ASI. The purchase was financed with $10.6 million of cash on hand as well as issuing $0.9 million of DXP common stock. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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 (“US GAAP”). 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, 2017, the total assets of the VIE were approximately $5.2 million including approximately $4.5 million of fixed assets. DXP is the primary customer of the VIE. Consolidation of the VIE increased cost of sales by approximately $0.6 million and $1.3 million for the twelve months ended December 31, 2017 and 2016, respectively. The Company recognized a related income tax benefit of $0.2 million and $0.3 million related to the VIE for the years ended December 31, 2017 and 2016, respectively. At December 31, 2017, 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. |
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. The Company has not historically experienced any losses when in excess of these 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. 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. Changes in this allowance for 2017, 2016 and 2015 were as follows ( in thousands Years Ended December 31, 2017 2016 2015 Balance at beginning of year $ 8,160 $ 9,364 $ 8,713 Charged to costs and expenses 3,367 180 2,014 Charged to other accounts 22 3 (17 ) 2 1,255 2 Deductions (2,534 ) 1 (1,367 ) 1 (2,618 ) 1 Balance at end of year $ 9,015 $ 8,160 $ 9,364 ( 1) Uncollectible accounts written off, net of recoveries (2) Includes allowance for doubtful accounts from acquisitions and divestiture (3) Primarily due to translation adjustments |
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. US GAAP 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. US GAAP 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 net realizable value Provisions |
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. No impairment of goodwill was required in 2017 and 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. No impairment of long-lived assets excluding goodwill, was required in 2017, 2016 and 2015. |
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 $40.6 million, $31.5 million, and $47.5 million were recognized on contracts in process for the years ended December 31, 2017, 2016, and 2015, 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, which is generally upon delivery to the customer. 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, 2017 and 2016 was approximately $2.7 million and $3.1 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 lenders 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, 2017 and 2016 was $10.1 million and $1.0 million, respectively. In connection with the extinguishment of the previously existing credit facility we recorded a $0.6 million write-off of debt issuance costs, which was included in interest expense during the third quarter of 2017. |
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 2012. 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 and 2015. |
Out-of-Period Items | Out-of-Period Items Deferred tax liabilities related to intangibles for customer relationships acquired in Canada during 2012 and 2013 were reduced by $2.2 million during the fourth quarter of 2017 to correct the tax rate used to establish the deferred tax liabilities at the dates of acquisition. The Company evaluated the misstatement of each period since these acquisitions were completed and concluded the effects were immaterial. 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 year ended December 31, 2015. |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES [Abstract] | |
Schedule of Changes in Allowance | Changes in this allowance for 2017, 2016 and 2015 were as follows ( in thousands Years Ended December 31, 2017 2016 2015 Balance at beginning of year $ 8,160 $ 9,364 $ 8,713 Charged to costs and expenses 3,367 180 2,014 Charged to other accounts 22 3 (17 ) 2 1,255 2 Deductions (2,534 ) 1 (1,367 ) 1 (2,618 ) 1 Balance at end of year $ 9,015 $ 8,160 $ 9,364 ( 1) Uncollectible accounts written off, net of recoveries (2) Includes allowance for doubtful accounts from acquisitions and divestiture (3) Primarily due to translation adjustments |
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 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES [Abstract] | |
Carrying Values of Inventories | The carrying values of inventories were as follows ( in thousands December 31, 2017 December 31, 2016 Finished goods $ 79,820 $ 74,269 Work in process 11,593 9,430 Inventories $ 91,413 $ 83,699 |
COSTS AND ESTIMATED PROFITS O33
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS [Abstract] | |
Costs and Estimated Profits on Uncompleted Contracts | Costs and estimated profits on uncompleted contracts and related amounts billed for 2017 and 2016 were as follows ( in thousands December 31, 2017 2016 Costs incurred on uncompleted contracts $ 37,899 $ 25,214 Estimated earnings, thereon 2,665 6,274 Total 40,564 31,488 Less: billings to date 17,881 15,864 Net $ 22,683 $ 15,624 |
Schedule of Costs and Estimated Earnings on Uncompleted Contracts Included in Balance Sheet | Such amounts were included in the accompanying Consolidated Balance Sheets for 2017 and 2016 under the following captions ( in thousands December 31, 2017 2016 Costs and estimated profits in excess of billings on uncompleted contracts $ 26,915 $ 18,421 Billings in excess of costs and estimated profits on uncompleted contracts (4,249 ) (2,813 ) Translation Adjustment 17 16 Net $ 22,683 $ 15,624 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Property and Equipment | The carrying values of property and equipment were as follows ( in thousands December 31, 2017 December 31, 2016 Land $ 2,346 $ 2,346 Buildings and leasehold improvements 16,724 16,259 Furniture, fixtures and equipment 94,475 94,784 Less – Accumulated depreciation (60,208 ) (52,582 ) Total Property and Equipment $ 53,337 $ 60,807 |
GOODWILL AND OTHER INTANGIBLE35
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 ( in thousands Goodwill Other Intangible Assets Total Balances as of December 31, 2016 $ 187,591 $ 94,831 $ 282,422 Translation adjustment - 960 960 Amortization - (17,266 ) (17,266 ) Balances as of December 31, 2017 $ 187,591 $ 78,525 $ 266,116 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 |
Goodwill Balance by Reportable Segment | The following table presents goodwill balance by reportable segment as of December 31, 2017 and 2016 (in thousands) As of December 31, 2017 2016 Service Centers $ 154,473 $ 154,473 Innovative Pumping Solutions 15,980 15,980 Supply Chain Services 17,138 17,138 Total $ 187,591 $ 187,591 |
Amortizable Other Intangible Assets | The following table presents a summary of amortizable other intangible assets ( in thousands As of December 31, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Carrying Amount, net Gross Carrying Amount Accumulated Amortization Carrying Amount, net Customer relationships $ 162,200 $ (83,806 ) $ 78,394 $ 163,022 $ (68,446 ) $ 94,576 Non-compete agreements 949 (818 ) 131 1,836 (1,581 ) 255 Total $ 163,149 $ (84,624 ) $ 78,525 $ 164,858 $ (70,027 ) $ 94,831 |
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) 2018 $ 15,615 2019 14,170 2020 10,292 2021 8,911 2022 7,264 Thereafter 22,273 Total $ 78,525 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
LONG-TERM DEBT [Abstract] | |
Long Term Debt | Long-term debt consisted of the following ( in thousands December 31, 2017 2016 ABL Revolver $ - $ - Term Loan B 249,375 - Line of credit - 147,600 Term loan - 74,500 Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment 2,722 3,577 Less unamortized debt issuance costs (10,073 ) (992 ) Total Debt 242,024 224,685 Less: Current maturities (3,381 ) (51,354 ) Total Long-term Debt $ 238,643 $ 173,331 |
Computation of Secured Leverage Ratio to EBITDA | The Term Loan requires that the company’s Secured Leverage Ratio, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of restricted cash, not to exceed $30 million) as of such day to EBITDA, beginning with the fiscal quarter ending December 31, 2017, is either equal to or less than as indicated in the table below: Fiscal Quarter Secured Leverage Ratio December 31, 2017 5.75:1.00 March 31, 2018 5.75:1.00 June 30, 2018 5.50:1.00 September 30, 2018 5.50:1.00 December 31, 2018 5.25:1.00 March 31, 2019 5.25:1.00 June 30, 2019 5.00:1.00 September 30, 2019 5.00:1.00 December 31, 2019 4.75:1.00 March 31, 2020 4.75:1.00 June 30, 2020 and each Fiscal Quarter thereafter 4.50:1.00 |
Maturities of Long-Term Debt | As of December 31, 2017, the maturities of long-term debt for the next five years and thereafter were as follows ( in thousands 2018 $ 3,381 2019 3,405 2020 3,436 2021 2,500 2022 2,500 Thereafter 236,875 Total $ 252,097 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES [Abstract] | |
Income Before Income Taxes | The components of income before income taxes were as follows ( in thousands Years Ended December 31, 2017 2016 2015 Domestic $ 13,183 $ 11,079 $ (42,179 ) Foreign 3,709 (1,405 ) 3,259 Total income before taxes $ 16,892 $ 9,674 $ (38,920 ) |
Provision for Income Taxes | The provision for income taxes consisted of the following ( in thousands Years Ended December 31, 2017 2016 2015 Current - Federal $ 1,400 $ (902 ) $ 5,182 State 698 136 1,499 Foreign 2,092 602 2,493 4,190 (164 ) 9,174 Deferred - Federal 686 4,174 (7,090 ) State (464 ) 120 - Foreign (4,049 ) (1,607 ) (1,934 ) (3,827 ) 2,687 (9,024 ) $ 363 $ 2,523 $ 150 |
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, 2017 2016 2015 Income taxes computed at federal statutory rate $ 5,912 $ 3,386 $ (13,622 ) State income taxes, net of federal benefit 152 166 974 Non-tax deductible impairment expense computed at federal statutory rate - - 15,765 Foreign adjustment 255 140 689 Meals and entertainment 422 361 620 Gain on sale of Vertex - (1,971 ) - Domestic Production Activity Deduction (98 ) - (1,143 ) Research and development tax credit (641 ) (886 ) (1,730 ) Foreign tax credit - (383 ) (921 ) Valuation Allowance (791 ) - - Tax Reform Deferred Tax Remeasurement (1,294 ) - - Canadian Acquisition Deferred Tax Liability True Up (2,180 ) - - Foreign rate difference (297 ) 112 (261 ) Other (1,077 ) 1,598 (221 ) $ 363 $ 2,523 $ 150 |
Deferred Tax Liabilities and Assets | Deferred tax liabilities and assets were comprised of the following ( in thousands December 31, 2017 2016 Deferred tax assets: Goodwill $ 2,668 $ 4,029 Allowance for doubtful accounts 1,707 2,469 Inventories 2,365 3,944 Accruals (61 ) 97 Research and development credit carryforward 1,115 886 Foreign Tax Credit Carryforward 64 64 Charitable Contribution Carryforward 559 138 Net operating loss carryforward 136 760 Capital loss carryforward 12,225 18,903 Deferred Compensation 475 1,881 Other Accruals 266 - Other 65 107 Total deferred tax assets 21,584 33,278 Less valuation allowance (12,220 ) (19,633 ) Total deferred tax asset, net of valuation Deferred tax liabilities : 9,364 13,645 Intangibles (8,695 ) (10,042 ) Property and equipment (6,860 ) (12,762 ) Unremitted foreign earnings (354 ) (354 ) Cumulative translation adjustment (67 ) - Other (457 ) - Net deferred tax liability $ (7,069 ) $ (9,513 ) |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SHARE-BASED COMPENSATION [Abstract] | |
Changes in Restricted Stock | Changes in restricted stock for the twelve months ended December 31, 2017 were as follows: Number of Shares Weighted Average Grant Price Non-vested at December 31, 2016 143,380 $ 26.76 Granted 18,672 $ 34.07 Forfeited (298 ) $ 59.60 Vested (83,853 ) $ 24.92 Non-vested at December 31, 2017 77,901 $ 30.36 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 |
EARNINGS PER SHARE DATA (Tables
EARNINGS PER SHARE DATA (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 2016 2015 Basic: Weighted average shares outstanding 17,400 15,042 14,423 Net income (loss) attributable to DXP Enterprises, Inc. $ 16,888 $ 7,702 $ (38,536 ) Convertible preferred stock dividend (90 ) (90 ) (90 ) Net income (loss) attributable to common shareholders $ 16,798 $ 7,612 $ (38,626 ) Per share amount $ 0.97 $ 0.51 $ (2.68 ) Diluted: Weighted average shares outstanding 17,400 15,042 14,423 Assumed conversion of convertible preferred stock 840 840 - Total dilutive shares 18,240 15,882 14,423 Net income (loss) attributable to common shareholders $ 16,798 $ 7,612 $ (38,626 ) Convertible preferred stock dividend 90 90 - Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share $ 16,888 $ 7,702 $ (38,626 ) Per share amount $ 0.93 $ 0.49 $ (2.68 ) |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CAPITAL STOCK [Abstract] | |
Activity of Outstanding Common Stock | December 31, 2017 2016 2015 Common Stock: Quantity (in thousands) Balance, beginning of period 17,197 14,390 14,375 Issuance of shares for compensation net of withholding 119 84 15 Issuance of common stock related to equity distribution agreements - 2,723 - Balance, end of period 17,316 17,197 14,390 |
Activity of Common Stock Held in Treasury | December 31, 2017 2016 2015 Treasury Shares: Quantity (in thousands) Balance, beginning of period - 264 280 Issuance of treasury shares for acquisition - - (149 ) Purchase of treasury shares - - 191 Issuance of treasury shares upon vesting of restricted shares net of withholding - (264 ) (58 ) Balance, end of period - - 264 |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS ACQUISITIONS [Abstract] | |
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, 2017 and 2016, assuming the divestiture of a business completed in 2016 were consummated as of January 1, 2016 are as follows ( in millions, except per share amounts Years Ended December 31, 2017 2016 Net sales $ 1,006.8 $ 939.4 Net income attributable to DXP Enterprises, Inc. $ 16.9 $ 5.5 Per share data Basic earnings $ 0.97 $ 0.36 Diluted earnings $ 0.93 $ 0.35 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 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 Basic earnings (loss) $ 0.36 $ (2.83 ) Diluted earnings (loss) $ 0.35 $ (2.83 ) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Future Minimum Rental Commitments for Non-cancelable Leases | The Company leases equipment, automobiles and office facilities under various operating leases. The future minimum rental commitments as of December 31, 2017, for non-cancelable leases are as follows ( in thousands 2018 $ 19,419 2019 15,002 2020 11,492 2021 9,435 2022 6,637 Thereafter 3,441 |
SEGMENT AND GEOGRAPHICAL REPO43
SEGMENT AND GEOGRAPHICAL REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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 2017 Sales $ 641,275 $ 204,030 $ 161,477 $ 1,006,782 Operating income for reportable segments, excluding amortization 63,250 11,423 15,451 90,124 Identifiable assets at year end 385,744 172,538 59,942 618,224 Capital expenditures 1,076 1,488 82 2,646 Depreciation 5,162 4,198 103 9,463 Amortization 8,989 7,194 1,083 17,266 Interest expense 9,712 5,352 1,990 17,054 2016 Sales $ 621,007 $ 187,124 $ 153,961 $ 962,092 Operating income for reportable segments, excluding impairment expense 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 |
Reconciliation of Operating Income for Reportable Segments to Consolidated Income before Taxes | Years Ended December 31, 2017 2016 2015 Operating income for reportable segments, excluding impairment expense $ 90,124 $ 72,950 $ 113,967 Adjustments for: B27 settlement - - 7,348 Impairment expense - - 68,735 Amortization of intangibles 17,266 18,061 20,621 Corporate and other expense, net 39,368 35,557 45,179 Total operating income (loss) 33,490 19,332 (27,916 ) Interest expense 17,054 15,564 10,932 Other expenses (income), net (456 ) (5,906 ) 72 Income (loss) before income taxes $ 16,892 $ 9,674 $ (38,920 ) |
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, 2017 2016 2015 Revenues United States $ 902,636 $ 873,926 $ 1,119,210 Canada 104,146 88,166 127,833 Total $ 1,006,782 $ 962,092 $ 1,247,043 |
Schedule of Property and Equipment by Geographical Areas | As of December 31, 2017 2016 Property and Equipment, net United States $ 42,683 $ 48,635 Canada 10,654 12,172 Total $ 53,337 $ 60,807 |
QUARTERLY FINANCIAL INFORMATI44
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY FINANCIAL INFORMATION (Unaudited) [Abstract] | |
Summarized Quarterly Financial Information | Summarized quarterly financial information for the years ended December 31, 2017, 2016 and 2015 is as follows ( in millions, except per share data First Quarter Second Quarter Third Quarter Fourth Quarter 2017 Sales $ 238.5 $ 250.7 $ 251.9 $ 265.7 Gross profit 64.5 68.9 67.0 71.2 Net income (loss) 3.1 4.1 3.0 6.6 Net income (loss) attributable to DXP Enterprises, Inc. 3.0 4.0 2.9 6.6 Earnings (loss) per share - basic $ 0.18 $ 0.24 $ 0.17 $ 0.38 Earnings (loss) per share - diluted $ 0.17 $ 0.23 $ 0.16 $ 0.37 2016 Sales $ 253.6 $ 256.2 $ 230.0 $ 222.3 Gross profit 68.8 71.6 63.8 60.6 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 ) |
THE COMPANY (Details)
THE COMPANY (Details) | 12 Months Ended |
Dec. 31, 2017Segment | |
THE COMPANY [Abstract] | |
Number of segments | 3 |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Basis of Presentation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Risks and Uncertainties [Abstract] | ||
Ownership percentage in VIE | 47.50% | |
Assets of VIE | $ 5.2 | |
Increase cost of sales from consolidation of the VIE | 0.6 | $ 1.3 |
Income tax benefit of VIE | $ (0.2) | $ (0.3) |
Employees [Member] | ||
Risks and Uncertainties [Abstract] | ||
Ownership percentage in VIE | 52.50% | |
Fixed Assets [Member] | ||
Risks and Uncertainties [Abstract] | ||
Assets of VIE | $ 4.5 |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Receivables and Credit Risk (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |||||
Changes in allowance [Roll Forward] | |||||||
Balance at beginning of year | $ 8,160 | $ 9,364 | $ 8,713 | ||||
Charged to cost and expenses | 3,367 | 180 | 2,014 | ||||
Charged to other accounts | 22 | [1] | (17) | [2] | 1,255 | [2] | |
Deductions | [3] | (2,534) | (1,367) | (2,618) | |||
Balance at end of year | $ 9,015 | $ 8,160 | $ 9,364 | ||||
[1] | Primarily due to translation adjustments. | ||||||
[2] | Includes allowance for doubtful accounts from acquisitions and divestiture | ||||||
[3] | Uncollectible accounts written off, net of recoveries |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
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 ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Impairment of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | |||||||
Impairment of goodwill | $ 9.8 | $ 58.9 | $ 0 | $ 0 | |||
Goodwill [Member] | |||||||
Goodwill [Line Items] | |||||||
Impairment of goodwill | $ 9.8 | $ 57.8 | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN50
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue Recognition [Abstract] | |||
Revenues recognized on contracts in process | $ 40.6 | $ 31.5 | $ 47.5 |
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 ACCOUN51
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Self-insured Insurance and Medical Claims (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reinsurance Retention Policy [Line Items] | ||
Accrual for claims | $ 2,700,000 | $ 3,100,000 |
Self-insured Insurance [Member] | Maximum [Member] | ||
Reinsurance Retention Policy [Line Items] | ||
Amount retained, per claim | 100,000 | |
Medical Claims [Member] | Maximum [Member] | ||
Reinsurance Retention Policy [Line Items] | ||
Amount retained, per claim | $ 175,000 | |
Retention percentage of employee higher risk claims | 0.05% |
SUMMARY OF SIGNIFICANT ACCOUN52
SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES, Debt Issuance Cost Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Issuance Cost Amortization [Abstract] | |||||
Total unamortized debt issuance costs | $ 10,073 | $ 10,073 | $ 992 | ||
Write off of debt issuance costs | $ 600 | $ 600 | $ 578 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN53
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, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Deferred tax asset on unrealized foreign currency losses | $ 8.6 | |||
Restatement Adjustment [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Comprehensive income - deferred tax assets change in amount | $ (8.6) | $ 4.6 | $ 2.7 | $ 1.3 |
SUMMARY OF SIGNIFICANT ACCOUN54
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, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Out-of-Period Items [Abstract] | |||||||||||||||
Canadian acquisition deferred tax liability true up | $ (2,180) | $ (2,180) | $ 0 | $ 0 | |||||||||||
Selling, general and administrative expenses | 238,091 | 245,470 | 303,819 | ||||||||||||
Income tax (benefit) | 363 | 2,523 | 150 | ||||||||||||
Net income (loss) | $ 6,600 | $ 3,000 | $ 4,100 | $ 3,100 | $ 7,100 | $ 100 | $ 5,100 | $ (5,200) | $ (3,200) | $ (52,700) | $ 7,200 | $ 9,700 | $ 16,529 | $ 7,151 | $ (39,070) |
Basic earnings (loss) per share (in dollars per share) | $ 0.38 | $ 0.17 | $ 0.24 | $ 0.18 | $ 0.44 | $ 0.02 | $ 0.36 | $ (0.36) | $ (0.20) | $ (3.64) | $ 0.50 | $ 0.67 | $ 0.97 | $ 0.51 | $ (2.68) |
Diluted earnings (loss) per share (in dollars per share) | $ 0.37 | $ 0.16 | $ 0.23 | $ 0.17 | $ 0.42 | $ 0.02 | $ 0.34 | $ (0.36) | $ 0.93 | $ 0.49 | $ (2.68) | ||||
Overstatement of Accrual at December 31, 2014 [Member] | |||||||||||||||
Out-of-Period Items [Abstract] | |||||||||||||||
Selling, general and administrative expenses | $ 2,500 | ||||||||||||||
Out-of-period adjustment, net of tax | $ 1,600 | ||||||||||||||
Income tax (benefit) | $ (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) |
RECENT ACCOUNTING PRONOUNCEME55
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Income tax (benefit) | $ 363 | $ 2,523 | $ 150 |
Income tax benefit recognized as an operating activity | 0 | (619) | 0 |
Income tax expense recognized as a financing activity | 0 | (619) | 0 |
Non-current deferred income tax liabilities | 7,069 | 9,513 | |
Cash classified to restricted cash | 3,532 | 0 | |
ASU 2016-09 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Income tax (benefit) | (100) | 0 | |
Income tax benefit recognized as an operating activity | 100 | ||
Income tax expense recognized as a financing activity | 600 | 200 | $ 800 |
ASU 2015-17 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Non-current deferred income tax liabilities | $ 9,513 | ||
ASU 2016-18 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cash classified to restricted cash | $ 3,500 |
FAIR VALUE OF FINANCIAL ASSET56
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Impairment expense | $ 9.8 | $ 58.9 | $ 0 | $ 0 |
Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Impairment expense | $ 9.8 | $ 57.8 | ||
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% | |||
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% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
INVENTORIES [Abstract] | ||
Finished goods | $ 79,820 | $ 74,269 |
Work in process | 11,593 | 9,430 |
Inventories | $ 91,413 | $ 83,699 |
COSTS AND ESTIMATED PROFITS O58
COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of costs and estimated earnings on uncompleted contracts [Abstract] | ||
Costs incurred on uncompleted contracts | $ 37,899 | $ 25,214 |
Estimated earnings, thereon | 2,665 | 6,274 |
Total | 40,564 | 31,488 |
Less: billings to date | 17,881 | 15,864 |
Net | 22,683 | 15,624 |
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 | 26,915 | 18,421 |
Billings in excess of costs and estimated profits on uncompleted contracts | (4,249) | (2,813) |
Translation adjustment | 17 | 16 |
Net | $ 22,683 | $ 15,624 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Less - Accumulated depreciation | $ (60,208) | $ (52,582) | |
Total property and equipment | 53,337 | 60,807 | |
Depreciation expense | 10,520 | 11,933 | $ 12,622 |
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 2,346 | 2,346 | |
Buildings and Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 16,724 | 16,259 | |
Furniture, Fixtures and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 94,475 | $ 94,784 |
GOODWILL AND OTHER INTANGIBLE60
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | 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 | |||||||
Remaining intangible asset value of vendor distribution agreements | 0 | 0 | ||||||
Goodwill impairment loss | 9,800 | 58,900 | $ 0 | $ 0 | ||||
Goodwill [Roll Forward] | ||||||||
Balance at beginning of period | $ 187,591 | $ 197,362 | ||||||
Sale of subsidiary | (9,620) | |||||||
Purchase accounting adjustment | (151) | |||||||
Translation adjustment | 0 | 0 | ||||||
Balance at end of period | 197,362 | 187,591 | 187,591 | 197,362 | ||||
Other Intangibles Assets [Roll Forward] | ||||||||
Balance at beginning of period | 94,831 | 112,297 | ||||||
Sale of subsidiary | 0 | |||||||
Purchase price adjustment | 0 | |||||||
Translation adjustment | 960 | 595 | ||||||
Amortization | (17,266) | (18,061) | (20,621) | |||||
Balance at end of period | 112,297 | 78,525 | 94,831 | 112,297 | ||||
Total Goodwill and Intangible Assets [Roll Forward] | ||||||||
Balance at beginning of period | 282,422 | 309,659 | ||||||
Sale of subsidiary | (9,620) | |||||||
Purchase price adjustment | (151) | |||||||
Translation adjustment | 960 | 595 | ||||||
Amortization | (17,266) | (18,061) | (20,621) | |||||
Balance at end of period | 309,659 | 266,116 | 282,422 | $ 309,659 | ||||
B27, LLC [Member] | ||||||||
Goodwill and Intangible Asset Impairment [Abstract] | ||||||||
Percentage of goodwill not deductible for tax purpose | 60.00% | |||||||
Percentage Goodwill impairment | 40.00% | |||||||
Service Centers [Member] | ||||||||
Goodwill [Roll Forward] | ||||||||
Balance at beginning of period | 154,473 | |||||||
Balance at end of period | 154,473 | 154,473 | ||||||
Service Centers [Member] | B27, LLC [Member] | ||||||||
Goodwill and Intangible Asset Impairment [Abstract] | ||||||||
Accumulated impairment of goodwill | 25,000 | 20,000 | $ 25,000 | $ 10,200 | ||||
Goodwill impairment loss | 5,000 | 9,800 | ||||||
Goodwill [Roll Forward] | ||||||||
Balance at beginning of period | 10,300 | 5,300 | ||||||
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 | |||||||
Balance at end of period | $ 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 | 148,000 | $ 95,100 | ||||
Goodwill impairment loss | 4,900 | 48,000 | ||||||
Goodwill [Roll Forward] | ||||||||
Balance at beginning of period | 4,900 | $ 0 | ||||||
Balance at end of period | $ 0 | $ 4,900 | $ 0 |
GOODWILL AND OTHER INTANGIBLE61
GOODWILL AND OTHER INTANGIBLE ASSETS, Goodwill Balance by Reportable Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill [Line Items] | |||
Goodwill | $ 187,591 | $ 187,591 | $ 197,362 |
Service Centers [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 154,473 | 154,473 | |
Innovative Pumping Solutions [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 15,980 | 15,980 | |
Supply Chain Services [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 17,138 | $ 17,138 |
GOODWILL AND OTHER INTANGIBLE62
GOODWILL AND OTHER INTANGIBLE ASSETS, Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 163,149 | $ 164,858 | |
Accumulated amortization | (84,624) | (70,027) | |
Carrying amount, net | 78,525 | 94,831 | $ 112,297 |
Amortization expense | 17,266 | 18,061 | $ 20,621 |
Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 162,200 | 163,022 | |
Accumulated amortization | (83,806) | (68,446) | |
Carrying amount, net | 78,394 | 94,576 | |
Non-Compete Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 949 | 1,836 | |
Accumulated amortization | (818) | (1,581) | |
Carrying amount, net | $ 131 | $ 255 |
GOODWILL AND OTHER INTANGIBLE63
GOODWILL AND OTHER INTANGIBLE ASSETS, Estimated Future Annual Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
The estimated future annual amortization of intangible assets for each of the next five years and thereafter [Abstract] | |||
2,018 | $ 15,615 | ||
2,019 | 14,170 | ||
2,020 | 10,292 | ||
2,021 | 8,911 | ||
2,022 | 7,264 | ||
Thereafter | 22,273 | ||
Carrying amount, net | 78,525 | $ 94,831 | $ 112,297 |
Customer Relationships [Member] | |||
The estimated future annual amortization of intangible assets for each of the next five years and thereafter [Abstract] | |||
Carrying amount, net | $ 78,394 | 94,576 | |
Finite-Lived Intangible Assets [Line Items] | |||
Weighted average remaining estimated life | 8 years 3 months 18 days | ||
Non-Compete Agreements [Member] | |||
The estimated future annual amortization of intangible assets for each of the next five years and thereafter [Abstract] | |||
Carrying amount, net | $ 131 | $ 255 | |
Finite-Lived Intangible Assets [Line Items] | |||
Weighted average remaining estimated life | 1 year 9 months 18 days |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | Aug. 29, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Borrowings [Abstract] | ||||||
Less unamortized debt issuance costs | $ (10,073) | $ (10,073) | $ (992) | |||
Total Debt | 242,024 | 242,024 | 224,685 | |||
Less: Current maturities | (3,381) | (3,381) | (51,354) | |||
Total Long-term Debt | 238,643 | 238,643 | 173,331 | |||
Secured Leverage Ratio [Abstract] | ||||||
Write off of debt issuance costs | 600 | $ 600 | 578 | 0 | $ 0 | |
Maturities of Long-term Debt [Abstract] | ||||||
2,018 | 3,381 | 3,381 | ||||
2,019 | 3,405 | 3,405 | ||||
2,020 | 3,436 | 3,436 | ||||
2,021 | 2,500 | 2,500 | ||||
2,022 | 2,500 | 2,500 | ||||
Thereafter | 236,875 | 236,875 | ||||
Total | 252,097 | 252,097 | ||||
ABL Revolver [Member] | ||||||
Borrowings [Abstract] | ||||||
Total Debt | $ 0 | $ 0 | 0 | |||
Debt instrument term | 5 years | |||||
Debt instrument face amount | $ 85,000 | |||||
Maturity date | Aug. 29, 2022 | |||||
Incremental increase in term loan | 50,000 | |||||
Interest rate | 2.90% | 2.90% | ||||
Fixed charge coverage ratio | 3.67 | 3.67 | ||||
ABL Revolver [Member] | Minimum [Member] | ||||||
Borrowings [Abstract] | ||||||
Incremental increase in term loan | $ 10,000 | |||||
Commitment fee | 0.25% | |||||
ABL Revolver [Member] | Maximum [Member] | ||||||
Borrowings [Abstract] | ||||||
Commitment fee | 0.375% | |||||
ABL Revolver [Member] | LIBOR [Member] | Minimum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 1.25% | |||||
ABL Revolver [Member] | LIBOR [Member] | Maximum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 1.75% | |||||
ABL Revolver [Member] | CDOR [Member] | Minimum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 1.25% | |||||
ABL Revolver [Member] | CDOR [Member] | Maximum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 1.75% | |||||
ABL Revolver [Member] | Prime rate [Member] | Minimum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 0.25% | |||||
ABL Revolver [Member] | Prime rate [Member] | Maximum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 0.75% | |||||
ABL Revolver [Member] | Base Rate [Member] | CANADA | Minimum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 0.25% | |||||
ABL Revolver [Member] | Base Rate [Member] | CANADA | Maximum [Member] | ||||||
Borrowings [Abstract] | ||||||
Basis spread on base rate | 0.75% | |||||
Term Loan B [Member] | ||||||
Borrowings [Abstract] | ||||||
Total Debt | $ 249,375 | $ 249,375 | 0 | |||
Debt instrument term | 6 years | |||||
Debt instrument face amount | $ 250,000 | |||||
Amortization in quarterly installments | 0.25% | |||||
Maturity date | Aug. 31, 2023 | |||||
Incremental increase in term loan | $ 30,000 | |||||
Percentage of excess cash flow | 50.00% | |||||
Reduction in percentage of excess cash flow, condition one | 25.00% | |||||
Debt instrument leverage ratio, condition one | 3 | |||||
Reduction in percentage of excess cash flow, condition two | 0.00% | |||||
Debt instrument leverage ratio, condition two | 2.50 | |||||
Interest rate | 7.10% | 7.10% | ||||
Secured Leverage Ratio [Abstract] | ||||||
December 31, 2017 | 5.75% | 5.75% | ||||
March 31, 2018 | 5.75% | 5.75% | ||||
June 30, 2018 | 5.50% | 5.50% | ||||
September 30, 2018 | 5.50% | 5.50% | ||||
December 31, 2018 | 5.25% | 5.25% | ||||
March 31, 2019 | 5.25% | 5.25% | ||||
June 30, 2019 | 5.00% | 5.00% | ||||
September 30, 2019 | 5.00% | 5.00% | ||||
December 31, 2019 | 4.75% | 4.75% | ||||
March 31, 2020 | 4.75% | 4.75% | ||||
June 30, 2020 and each Fiscal Quarter thereafter | 4.50% | 4.50% | ||||
Secured Leverage Ratio | 3.59% | |||||
Term Loan B [Member] | Minimum [Member] | ||||||
Borrowings [Abstract] | ||||||
Incremental increase in term loan | $ 10,000 | |||||
Term Loan B [Member] | Maximum [Member] | ||||||
Borrowings [Abstract] | ||||||
Debt instrument secured leverage ratio | 3.60 | |||||
Fixed charge coverage ratio | 1 | |||||
Secured debt covenant amount net of restricted cash | $ 30,000 | $ 30,000 | ||||
Line of Credit [Member] | ||||||
Borrowings [Abstract] | ||||||
Total Debt | 0 | 0 | 147,600 | |||
Term Loan [Member] | ||||||
Borrowings [Abstract] | ||||||
Total Debt | 0 | 0 | 74,500 | |||
Promissory Note Payable [Member] | ||||||
Borrowings [Abstract] | ||||||
Total Debt | $ 2,722 | $ 2,722 | $ 3,577 | |||
Interest rate | 2.90% | 2.90% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components of income before income taxes [Abstract] | ||||||||
Domestic | $ 13,183 | $ 11,079 | $ (42,179) | |||||
Foreign | 3,709 | (1,405) | 3,259 | |||||
Income (loss) before income taxes | 16,892 | 9,674 | (38,920) | |||||
Current [Abstract] | ||||||||
Federal | 1,400 | (902) | 5,182 | |||||
State | 698 | 136 | 1,499 | |||||
Foreign | 2,092 | 602 | 2,493 | |||||
Total current | 4,190 | (164) | 9,174 | |||||
Deferred [Abstract] | ||||||||
Federal | 686 | 4,174 | (7,090) | |||||
State | (464) | 120 | 0 | |||||
Foreign | (4,049) | (1,607) | (1,934) | |||||
Total Deferred | (3,827) | 2,687 | (9,024) | |||||
Total | $ 363 | 2,523 | 150 | |||||
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 | $ 5,912 | 3,386 | (13,622) | |||||
State income taxes, net of federal benefit | 152 | 166 | 974 | |||||
Non-tax deductible impairment expense computed at federal statutory rate | 0 | 0 | 15,765 | |||||
Foreign adjustment | 255 | 140 | 689 | |||||
Meals and entertainment | 422 | 361 | 620 | |||||
Gain on sale of Vertex | 0 | (1,971) | 0 | |||||
Domestic production activity deduction | (98) | 0 | (1,143) | |||||
Research and development tax credit | (641) | (886) | (1,730) | |||||
Foreign tax credit | 0 | (383) | (921) | |||||
Valuation allowance | (791) | 0 | 0 | |||||
Tax reform deferred tax remeasurement | (1,294) | 0 | 0 | |||||
Canadian acquisition deferred tax liability true up | $ (2,180) | (2,180) | 0 | 0 | ||||
Foreign rate difference | (297) | 112 | (261) | |||||
Other | (1,077) | 1,598 | (221) | |||||
Total | 363 | 2,523 | 150 | |||||
Deferred tax assets [Abstract] | ||||||||
Goodwill | 2,668 | $ 4,029 | 2,668 | 4,029 | ||||
Allowance for doubtful accounts | 1,707 | 2,469 | 1,707 | 2,469 | ||||
Inventories | 2,365 | 3,944 | 2,365 | 3,944 | ||||
Accruals | (61) | 97 | (61) | 97 | ||||
Research and development credit carryforward | 1,115 | 886 | 1,115 | 886 | ||||
Foreign Tax Credit Carryforward | 64 | 64 | 64 | 64 | ||||
Charitable Contribution Carryforward | 559 | 138 | 559 | 138 | ||||
Net operating loss carryforward | 136 | 760 | 136 | 760 | ||||
Capital loss carryforward | 12,225 | 18,903 | 12,225 | 18,903 | ||||
Deferred Compensation | 475 | 1,881 | 475 | 1,881 | ||||
Other Accruals | 266 | 0 | 266 | 0 | ||||
Other | 65 | 107 | 65 | 107 | ||||
Total deferred tax assets | 21,584 | 33,278 | 21,584 | 33,278 | ||||
Less valuation allowance | (12,220) | (19,633) | (12,220) | (19,633) | ||||
Total deferred tax asset, net of valuation Deferred tax liabilities | 9,364 | 13,645 | 9,364 | 13,645 | ||||
Intangibles | (8,695) | (10,042) | (8,695) | (10,042) | ||||
Property and equipment | (6,860) | (12,762) | (6,860) | (12,762) | ||||
Unremitted foreign earnings | (354) | (354) | (354) | (354) | ||||
Cumulative translation adjustment | (67) | 0 | (67) | 0 | ||||
Other | (457) | 0 | (457) | 0 | ||||
Net deferred tax liability | (7,069) | (9,513) | (7,069) | $ (9,513) | ||||
Capital Loss Carryforward [Member] | ||||||||
Tax Credit Carryforward [Line Items] | ||||||||
Capital loss carryforward | $ 51,400 | $ 51,400 | ||||||
Plan [Member] | ||||||||
Deferred [Abstract] | ||||||||
Federal statutory income tax rate | 21.00% | |||||||
Restatement Adjustment [Member] | ||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||
Comprehensive income - deferred tax assets change in amount | $ (8,600) | $ 4,600 | $ 2,700 | $ 1,300 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restricted Stock [Member] | |||
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) | 401,223 | ||
Restricted Stock [Roll Forward] | |||
Non-vested, beginning balance (in shares) | 143,380 | 137,507 | 179,942 |
Granted (in shares) | 18,672 | 108,553 | 35,821 |
Forfeited (in shares) | (298) | (39,000) | (20,855) |
Vested (in shares) | (83,853) | (63,680) | (57,401) |
Nonvested, ending balance (in shares) | 77,901 | 143,380 | 137,507 |
Weighted Average Grant Price [Roll Forward] | |||
Non vested, beginning balance (in dollars per share) | $ 26.76 | $ 54.58 | $ 52.71 |
Granted (in dollars per share) | 34.07 | 17.07 | 40.95 |
Forfeited (in dollars per share) | 59.60 | 65.41 | 41.34 |
Vested (in dollars per share) | 24.92 | 46.65 | 44.99 |
Nonvested, ending balance (in dollars per share) | $ 30.36 | $ 26.76 | $ 54.58 |
Stock compensation expense | $ 1.7 | $ 2 | $ 3 |
Related income tax benefit recognized | 0.7 | 0.8 | 1.2 |
2016 Omnibus Incentive Plan [Member] | |||
Weighted Average Grant Price [Roll Forward] | |||
Unrecognized compensation expense | $ 1.6 | $ 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, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic [Abstract] | |||||||||||||||
Weighted average shares outstanding (in shares) | 17,400 | 15,042 | 14,423 | ||||||||||||
Net income (loss) attributable to DXP Enterprises, Inc. | $ 6,600 | $ 2,900 | $ 4,000 | $ 3,000 | $ 7,400 | $ 200 | $ 5,100 | $ (5,100) | $ (3,000) | $ (52,400) | $ 7,200 | $ 9,700 | $ 16,888 | $ 7,702 | $ (38,536) |
Convertible preferred stock dividend | (90) | (90) | (90) | ||||||||||||
Net income (loss) attributable to common shareholders | $ 16,798 | $ 7,612 | $ (38,626) | ||||||||||||
Per share amount (in dollars per share) | $ 0.38 | $ 0.17 | $ 0.24 | $ 0.18 | $ 0.44 | $ 0.02 | $ 0.36 | $ (0.36) | $ (0.20) | $ (3.64) | $ 0.50 | $ 0.67 | $ 0.97 | $ 0.51 | $ (2.68) |
Diluted [Abstract] | |||||||||||||||
Weighted average shares outstanding (in shares) | 17,400 | 15,042 | 14,423 | ||||||||||||
Assumed conversion of convertible preferred stock (in shares) | 840 | 840 | 0 | ||||||||||||
Total dilutive shares (in shares) | 18,240 | 15,882 | 14,423 | ||||||||||||
Net income (loss) attributable to common shareholders | $ 16,798 | $ 7,612 | $ (38,626) | ||||||||||||
Convertible preferred stock dividend | 90 | 90 | 0 | ||||||||||||
Net income (loss) attributable to DXP Enterprises, Inc. for diluted earnings per share | $ 16,888 | $ 7,702 | $ (38,626) | ||||||||||||
Per share amount (in dollars per share) | $ 0.37 | $ 0.16 | $ 0.23 | $ 0.17 | $ 0.42 | $ 0.02 | $ 0.34 | $ (0.36) | $ 0.93 | $ 0.49 | $ (2.68) | ||||
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 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Common Stock [Roll Forward] | |||
Balance, beginning of period (in shares) | 17,197,380 | ||
Balance, end of period (in shares) | 17,315,573 | 17,197,380 | |
Treasury Shares [Roll Forward] | |||
Issuance of treasury shares for acquisition (in shares) | 148,769 | ||
Purchase of treasury shares (in shares) | 191,420 | ||
Issuance of treasury shares upon vesting of restricted shares net of withholding (in shares) | 264,297 | 57,401 | |
Common Stock [Member] | |||
Common Stock [Roll Forward] | |||
Balance, beginning of period (in shares) | 17,197,000 | 14,390,000 | 14,375,000 |
Issuance of shares for compensation net of withholding (in shares) | 119,000 | 84,000 | 15,000 |
Issuance of common stock related to equity distribution agreements (in shares) | 0 | 2,723,000 | 0 |
Balance, end of period (in shares) | 17,316,000 | 17,197,000 | 14,390,000 |
Treasury Stock [Member] | |||
Treasury Shares [Roll Forward] | |||
Balance, beginning of period (in shares) | 0 | 264,000 | 280,000 |
Issuance of treasury shares for acquisition (in shares) | 0 | 0 | (149,000) |
Purchase of treasury shares (in shares) | 0 | 0 | 191,000 |
Issuance of treasury shares upon vesting of restricted shares net of withholding (in shares) | 0 | (264,000) | (58,000) |
Balance, end of period (in shares) | 0 | 0 | 264,000 |
Series A Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, outstanding (in shares) | 1,122 | 1,122 | |
Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, outstanding (in shares) | 15,000 | 15,000 |
BUSINESS ACQUISITIONS (Details)
BUSINESS ACQUISITIONS (Details) - USD ($) $ in Thousands | Sep. 01, 2015 | Apr. 01, 2015 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2015 | Apr. 02, 2015 |
Business Acquisition [Line Items] | |||||||
Goodwill acquired | $ 187,591 | $ 187,591 | $ 197,362 | ||||
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, Pro Form
BUSINESS ACQUISITIONS, Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pro Forma Information [Abstract] | |||
Net sales | $ 1,006.8 | $ 939.4 | |
Net income (loss) attributable to DXP Enterprises, Inc. | $ 16.9 | $ 5.5 | |
Per share data [Abstract] | |||
Basic earnings (loss) (in dollars per share) | $ 0.97 | $ 0.36 | |
Diluted earnings (loss) (in dollars per share) | $ 0.93 | $ 0.35 | |
Units Acquired In 2015 and 2016 [Member] | |||
Pro Forma Information [Abstract] | |||
Net sales | $ 939.4 | $ 1,228.9 | |
Net income (loss) attributable to DXP Enterprises, Inc. | $ 5.5 | $ (40.7) | |
Per share data [Abstract] | |||
Basic earnings (loss) (in dollars per share) | $ 0.36 | $ (2.83) | |
Diluted earnings (loss) (in dollars per share) | $ 0.35 | $ (2.83) |
COMMITMENTS AND CONTINGENCIES71
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Future minimum rental commitments for non-cancelable leases [Abstract] | |||
2,018 | $ 19,419 | ||
2,019 | 15,002 | ||
2,020 | 11,492 | ||
2,021 | 9,435 | ||
2,022 | 6,637 | ||
Thereafter | 3,441 | ||
Rental expense for operating leases | $ 27,700 | $ 27,600 | $ 32,700 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
EMPLOYEE BENEFIT PLANS [Abstract] | |||||
Company match to employee contributions | 50.00% | 50.00% | |||
Percentage of deferred salary which is matched | 4.00% | 4.00% | |||
Company contribution to the 401(K) plan | $ 0.2 | $ 0.4 | $ 0.2 | $ 0.4 | $ 2.6 |
OTHER COMPREHENSIVE INCOME (Det
OTHER COMPREHENSIVE INCOME (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($)Company | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
OTHER COMPREHENSIVE INCOME [Abstract] | ||||||
Number of companies acquired | Company | 4 | |||||
Cumulative translation adjustment | $ (1,217) | $ (7,658) | $ (4,916) | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Deferred tax asset on unrealized foreign currency losses | 8,600 | |||||
Restatement Adjustment [Member] | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Comprehensive income - deferred tax assets change in amount | $ (8,600) | $ 4,600 | $ 2,700 | $ 1,300 |
SEGMENT AND GEOGRAPHICAL REPO74
SEGMENT AND GEOGRAPHICAL REPORTING, Business Segmented Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||||||||||||
Sales | $ 265,700 | $ 251,900 | $ 250,700 | $ 238,500 | $ 222,300 | $ 230,000 | $ 256,200 | $ 253,600 | $ 278,600 | $ 303,100 | $ 323,700 | $ 341,600 | $ 1,006,782 | $ 962,092 | $ 1,247,043 |
Operating income for reportable segments, excluding amortization | 90,124 | 72,950 | 113,967 | ||||||||||||
Identifiable assets at year end | 618,224 | 590,255 | 660,710 | 618,224 | 590,255 | 660,710 | |||||||||
Capital expenditures | 2,646 | 4,403 | 12,172 | ||||||||||||
Proceeds from sale of fixed assets | 0 | (1,206) | 0 | ||||||||||||
Depreciation | 9,463 | 10,480 | 10,891 | ||||||||||||
Amortization | 17,266 | 18,061 | 20,621 | ||||||||||||
Interest expense | 17,054 | 15,564 | 10,932 | ||||||||||||
Impairment of goodwill and other intangible assets | 0 | 0 | 68,735 | ||||||||||||
Reportable Segment [Member] | Service Centers [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Sales | 641,275 | 621,007 | 826,588 | ||||||||||||
Operating income for reportable segments, excluding amortization | 63,250 | 47,634 | 78,170 | ||||||||||||
Identifiable assets at year end | 385,744 | 370,261 | 451,333 | 385,744 | 370,261 | 451,333 | |||||||||
Capital expenditures | 1,076 | 447 | 3,185 | ||||||||||||
Proceeds from sale of fixed assets | (1,038) | ||||||||||||||
Depreciation | 5,162 | 6,520 | 7,734 | ||||||||||||
Amortization | 8,989 | 9,152 | 10,334 | ||||||||||||
Interest expense | 9,712 | 9,290 | 2,967 | ||||||||||||
Impairment of goodwill and other intangible assets | 15,842 | ||||||||||||||
Reportable Segment [Member] | Innovative Pumping Solutions [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Sales | 204,030 | 187,124 | 254,829 | ||||||||||||
Operating income for reportable segments, excluding amortization | 11,423 | 9,867 | 21,584 | ||||||||||||
Identifiable assets at year end | 172,538 | 175,198 | 159,365 | 172,538 | 175,198 | 159,365 | |||||||||
Capital expenditures | 1,488 | 3,827 | 8,383 | ||||||||||||
Proceeds from sale of fixed assets | (168) | ||||||||||||||
Depreciation | 4,198 | 3,834 | 2,930 | ||||||||||||
Amortization | 7,194 | 7,826 | 8,406 | ||||||||||||
Interest expense | 5,352 | 4,422 | 6,881 | ||||||||||||
Impairment of goodwill and other intangible assets | 52,893 | ||||||||||||||
Reportable Segment [Member] | Supply Chain Services [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Sales | 161,477 | 153,961 | 165,626 | ||||||||||||
Operating income for reportable segments, excluding amortization | 15,451 | 15,449 | 14,213 | ||||||||||||
Identifiable assets at year end | $ 59,942 | $ 44,796 | $ 50,012 | 59,942 | 44,796 | 50,012 | |||||||||
Capital expenditures | 82 | 129 | 604 | ||||||||||||
Proceeds from sale of fixed assets | 0 | ||||||||||||||
Depreciation | 103 | 126 | 227 | ||||||||||||
Amortization | 1,083 | 1,083 | 1,881 | ||||||||||||
Interest expense | $ 1,990 | $ 1,852 | 1,084 | ||||||||||||
Impairment of goodwill and other intangible assets | $ 0 |
SEGMENT AND GEOGRAPHICAL REPO75
SEGMENT AND GEOGRAPHICAL REPORTING, Adjustments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Adjustment for [Abstract] | |||
B27 settlement | $ 0 | $ 0 | $ 7,348 |
Impairment expense | 0 | 0 | 68,735 |
Amortization of intangibles | 17,266 | 18,061 | 20,621 |
Total operating income (loss) | 33,490 | 19,332 | (27,916) |
Interest expense | 17,054 | 15,564 | 10,932 |
Other income, net | (456) | (5,906) | 72 |
Income (loss) before income taxes | 16,892 | 9,674 | (38,920) |
Identifiable assets at year end | 639,083 | 602,052 | |
Depreciation | 10,520 | 11,933 | 12,622 |
Corporate [Member] | |||
Adjustment for [Abstract] | |||
Capital expenditures | 200 | 500 | 1,800 |
Identifiable assets at year end | 19,400 | 18,300 | 23,300 |
Depreciation | 1,800 | 1,400 | 1,700 |
Reportable Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Operating income for reportable segments, excluding impairment expense | 90,124 | 72,950 | 113,967 |
Segment Reconciling Items [Member] | |||
Adjustment for [Abstract] | |||
B27 settlement | 0 | 0 | 7,348 |
Impairment expense | 0 | 0 | 68,735 |
Amortization of intangibles | 17,266 | 18,061 | 20,621 |
Corporate and other expense, net | $ 39,368 | $ 35,557 | $ 45,179 |
SEGMENT AND GEOGRAPHICAL REPO76
SEGMENT AND GEOGRAPHICAL REPORTING, Geographical Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||||||||||||
Revenues | $ 265,700 | $ 251,900 | $ 250,700 | $ 238,500 | $ 222,300 | $ 230,000 | $ 256,200 | $ 253,600 | $ 278,600 | $ 303,100 | $ 323,700 | $ 341,600 | $ 1,006,782 | $ 962,092 | $ 1,247,043 |
Property and equipment, net | 53,337 | 60,807 | 53,337 | 60,807 | |||||||||||
Reportable Geographical Components [Member] | United States [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Revenues | 902,636 | 873,926 | 1,119,210 | ||||||||||||
Property and equipment, net | 42,683 | 48,635 | 42,683 | 48,635 | |||||||||||
Reportable Geographical Components [Member] | Canada [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Revenues | 104,146 | 88,166 | $ 127,833 | ||||||||||||
Property and equipment, net | $ 10,654 | $ 12,172 | $ 10,654 | $ 12,172 |
QUARTERLY FINANCIAL INFORMATI77
QUARTERLY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information [Line Items] | |||||||||||||||
Sales | $ 265,700 | $ 251,900 | $ 250,700 | $ 238,500 | $ 222,300 | $ 230,000 | $ 256,200 | $ 253,600 | $ 278,600 | $ 303,100 | $ 323,700 | $ 341,600 | $ 1,006,782 | $ 962,092 | $ 1,247,043 |
Gross profit | 71,200 | 67,000 | 68,900 | 64,500 | 60,600 | 63,800 | 71,600 | 68,800 | 76,900 | 85,700 | 91,300 | 98,100 | 271,581 | 264,802 | 351,986 |
Impairment expense | 9,800 | 58,900 | 0 | 0 | |||||||||||
Net income (loss) | 6,600 | 3,000 | 4,100 | 3,100 | 7,100 | 100 | 5,100 | (5,200) | (3,200) | (52,700) | 7,200 | 9,700 | 16,529 | 7,151 | (39,070) |
Net income (loss) attributable to DXP Enterprises, Inc. | $ 6,600 | $ 2,900 | $ 4,000 | $ 3,000 | $ 7,400 | $ 200 | $ 5,100 | $ (5,100) | $ (3,000) | $ (52,400) | $ 7,200 | $ 9,700 | $ 16,888 | $ 7,702 | $ (38,536) |
Earnings (loss) per share - basic (in dollars per share) | $ 0.38 | $ 0.17 | $ 0.24 | $ 0.18 | $ 0.44 | $ 0.02 | $ 0.36 | $ (0.36) | $ (0.20) | $ (3.64) | $ 0.50 | $ 0.67 | $ 0.97 | $ 0.51 | $ (2.68) |
Earnings (loss) per share - diluted (in dollars per share) | $ 0.37 | $ 0.16 | $ 0.23 | $ 0.17 | $ 0.42 | $ 0.02 | $ 0.34 | $ (0.36) | $ 0.93 | $ 0.49 | $ (2.68) |
RELATED PARTIES (Details)
RELATED PARTIES (Details) | 12 Months Ended |
Dec. 31, 2017USD ($)Employee | |
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 | $ 1,400,000 |
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 | 1,200,000 |
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 |
Wages and other compensation | $ 1,300,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - Application Specialties, Inc. [Member] $ in Thousands | Jan. 01, 2018USD ($) |
Subsequent Event [Line Items] | |
Purchase price | $ 11,500 |
Purchase price financed in cash | 10,600 |
Purchase price financed under common stock issued | $ 900 |