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Kent Yee | SVP, Finance, CFO & Secretary |
David Little | Chairman, President & CEO |
Ladies and gentlemen, thank you for standing by, and welcome to the DXP Enterprise Inc. 2020 Third Quarter Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Kent Yee, Chief Executive Officer [ph]. ahead. go Please
third Chief This was QX But you. for thank conference XX, Christine, Kent Financial Yee, you. the results our is to DXP's ending and Thank September call XXXX. I discuss Officer. quarter welcome XXXX to
today and CEO, is David Chairman our me Little. Joining
that these materially and we statements. includes you to Actual get forward-looking from being is results want I call Before differ those forward-looking by contemplated webcast statements. started, may remind today's and recorded
that factors an many believe the contained of discussion detailed on on a a have business in effect ongoing we material filings. As may are our our SEC basis
no However, events. assumes result of that information obligation DXP information as a to update future or new
GAAP press call, in a present call During we website the to over to now The non-GAAP release. now and both measures to may I of financial his our on the is are release at investor quarter. our presentation and ir.dxpe.com. third thoughts accompanying summary included will provide and reconciliation available an earnings this GAAP non-GAAP press of measures. David A turn
you, thank conference Kent. call. to joining us everyone and today third on morning, Good quarter for our XXXX Thanks
communities. goes COVID-XX those with some the extraordinary in our is proud results would of the customer, discussing ways successfully DXPeople growth California financial virus move actions I collectively some and then hurricanes third for along results of all to have how challenges. and Obviously, multiple face and details there and our suppliers, continued find stakeholders beyond. of My to am to be. in open DXPeople will achieving a wildfires the on prepared DXPeople, year-to-date. rest sales our on and Louisiana all it like this second the ways I developments to updating call that forward. effects of to Kent managing of driving unprecedented our are We Coast. excellence the for of by After mimic, remain not quarter for our shareholders We continued of the pandemic pleased to areas and are and are you focused will for out additional taking start nature vision through remarks. the impact Q&A. find we we my our challenges have the you his the financial heart we the key take call we be deliver of comments, where quarter after progress the year where given will and navigate since But
to continue a As at operating and we industry. very navigate of to here fortunate the and COVID through the we feel challenges part essential be sales with associated XX, DXP
end strategy markets no capabilities with a superior our fast, while value always our fast, suppliers, capabilities for and growth providing the while has company the flexible, our we opportunities been better emphasize entrepreneurial serve. of been financial flexible and large to convenient, technology technical to to Our customers different of resources, qualities strength, to businesses these talent, our There combine local the time better to deliver has than DXPeople. being for now solutions providing and
DXP to help products our which ways of customer more in provide markets, to set us to very in gives all continue and services industry, our capabilities We complementary our makes our build win. unique
We to relentless improve allow opportunities and we a us operational strategy reviewing where complement at market drive with all includes can will looking constantly are share. initiatives, believe our steadily progress business that for performance we for our our grow which also stakeholders. We
potential to markets. opportunities DXP and grow out ahead has to and As we continue year, new excited within are the we finish and the scale the about existing
putting growth. while opportunistic strategic work also to and to leader, must a And forward and strong be successful financially position that tomorrow. us find believe move be in to and through we a we mine are safety ways are finding drive and and and ways we industrial to today We successful remain par with
fragmented build our and expanding to DXP enhancing industry, the the our continue our product best filling through local along of adding nature given way. talent the by to team adding and and in we regional Finally, reach our acquisitions, lines, companies terrific
us new while priorities on Our work normal. third our beginning these quarter results in ways to reflect deliver finding to
begin back that in businesses short-lived cases rebound orders we COVID of second home May call, troughed part return per was As stay and recovery and the discussed expected sales as and the June day increased the at in work. to dropped relaxed during subsequently begin but DXP quarter picked we and July, to was economy rebound to while million August $X.X September. or somewhat and at after July up get to work, August fighting September. to in in
year chemical, general the steal million mining, and diversity the X%, paper, is pulp share to third and and military, hour, agriculture, closing beverage/sanitary, aerospace, X%, transportation the X%. end to midstream alternative oil day. surges end goal would related sales XX%, refining, day average in upstream X%, and markets X%, do X.X% balanced XX%, calls X%, day, is manufacturing, water X%, We oil X%, there aggregates $X.X markets. fabrication and $X.X and assuming For X% resellers, construction, DXP's exposure. X%, with X%, of have energy, a average quarter, anticipate COVID. and to sales all we year-to-date We averaged X%, wastewater-municipal, no our our setbacks gas, I X%, gas, X%, grow to some per of million or you food and market industry, and including future in X%, lockdowns versus fourth our closer per our like quarter, of per the
and military. alternative biggest chemicals, and water sanitary, refineries beverage, Our and food wastewater, and opportunities are: energy, targets municipal,
customers challenges, pace company. vary execute we We these value our and continue recovering Despite on and the geography to will our magnitude continue type. and to believe our by forward of going for proposition greatly customer
performance quarter, income operating of financial sales compared reflects quarter. from of $XXX the the an results $X.X Total company million, quarter were XX% adjusted third the results million, and to executions. - improvement second XX% of down these Our second
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on have fabrication We demand, money lower shuttering including our one to expenses facilities. cutting sales of been make
contact demand as going they are they suggested, as prior to customer relationship sales an with Customers traditional facilities. back a tools methods as have professionals comments However, DXP COVID-XX. of use that had continue of virtual customers we to well do on started to those my partners the previous slow a existing to start recovery. of focused see entering variety
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new enhancements. Our is every omni-channel year not does with improve approach but new technology
reporting, orders challenges. to driven unique a that can or SmartAgreements, ordering including software, provide are that MRO of our including Store the pick suite solutions the following. cycle solutions, customers chain programs digital vendor-managed to suppliers the of requirements, Solutions has is, SmartVend, includes with ready of e products our products digital to adapt ready SmartSource, health to processing support, suite become they DXP, equipment, warranty customer want SmartServ, procurement management proactive the monitoring DXP SmartReliability, programs transformation, MRO a a life and outsourcing commodity of capital web-based functionality systems services repair Our equipment, catalog XX% store that Smart is SmartVMI, customized Smart and by of all with the need. service of digital. that of suite unmanned if Smart choose, is room. digital. customer's management solutions each question of inventory the supply electronic, the suite industrial but flexible transactions are and touchless. is are are is XX% SmartStore, of not industrial and for management, DXP can SmartBuy, and DXPs agreements, suite Today, our of Solutions purchase EDI purchase XX% of variety and The training, setup, question AP and technology storeroom manages which Virtual customer include order all vending, most
Service slow a Centers The this grew terms growth our included $XX turned regions Supply going Centers demand Chain from growth and anticipating QX. In it believes Service business perspective decline the regions. in Alaska, in in customer experienced sequential Sequentially, that X%. the has from sales that in Service Service sales year-over-year, in Chain million QX. QX, California, $XX million corner. experienced is North to Rocky QX And Supply of
now with strength are see In XXXX consistent capital numbers terms we average to of continue IPS are declines approaching the the backlog, backlog the in cutting budgets. and our that customers
and demand find the water have such and beverage we Our other and as is today biofuels, wastewater. food IPS focus within opportunities where level in main maintaining and markets
second EBITDA points From are to free demand. year. to margins on standard company continue we to basis basis flow. generation We XX that cash perspective, our results Regarding of million from a positive on the an we free were by the million flow drive cash have in produced business performance and $XXX improve to quarter led are This sales lower quarter, $XX as managing able gross we profitability. cost, we our increased overall points flow XX tightly during and free EBITDA cash us produce efficiencies to margins way
With in structure able the quarter, our were the we manage generation third strong flow appropriately. capital to cash
capabilities discussions organic of and growth second Our quarter second our and I'm our we in strong able sheet total Maintaining were the to the invest quarter. of our liquidity third in strong and reignite acquisitions. quickly is acquisition during to a the pleased critical a that in to our balance cash start at reduction meaningful through flow part strategy in very resulted debt. improvement
we made last discussions, moving call, already we the forward. during mentioned acquisition resume we to our are and As decision our
of one of year. due deals two at the actively and place, diligence We intent end in have are we closing the two letters and anticipate or conducting
are how other and To industrial We on markets. proud have to of water summarize, focus other and a wastewater, non-oil gas markets, very I beverage and food am companies and our adding end general customers, specifically team this has business to our and way. take healthy serve to safe, extraordinary support care the our term each of and manage lower demand, near environment along performed in everyone keep
the benefit well and distributor up passion, who products we are day all to teamwork. customers changing remotely DXP As believe to of commitment with our show all engineered their these and to work services, DXPeople for I of highly and support or of a navigate our thank leading to remains whom every sincerely stakeholders. period to like working would positioned continue
We With all our financials in we for to experiencing more now have a is overcome detail. it the to an and honor tremendous team I over and are to the all back review collective value adversities deliver turn it stakeholders. that, will Kent
budgets, us Thank to to within oil demand by and joining cash flow reflect results. our ties quarterly following: IPS, results pressures for the then you, David, from given lightly good COVID-XX, and quarter which gross Supply quarter of see free and and were impacted the financial greatest, third of DXP's strength SG&A sales CapEx was thank segment Centers, Service Chain followed review margin Overall, our generation. you bottoming strength, everyone third gas reductions to strong and the Services the consistent business for
we still call, show impact full the for During conference our our were second to in of looking results. COVID quarter financial
July full third sales impact per million. pressures likely quarter related business hit sales we COVID-XX reflects sales day in the a related with The the as COVID demand at $X.X of bottom
and took comments, the such, will As the impacts my goodwill I noncash as Throughout to related third to we remainder during are these related million charge the guidance. accounting for they an adjust appropriate $XX.X and relate a assets. quarter, following of of pretax impairment
in operating associated deterioration and customer decline demand business evident to The count was reduction segment, rig IPS results. our our the spending which most in completions. back our Turning with followed
as over acquisition Center to However, and market to look diversity we our to XX and other Service factor adding initiatives. with which a we markets David segment, end end forward XX on our to within proved mitigating months, next strategically business the press alluded be organic
was $XXX.X per For the share ending $XX.X XX, XXXX, period $X.XX operating sales diluted earnings X-month income adjusted September million. total Adjusted million share. were per was and
quarter, third and charges to DXP earlier, goodwill million certain mentioned other a I $XX.X assets. incurred pretax noncash and the onetime As during noncash related impairment of
Regions were with XXXX. of driving of flat the the sales a XX.X% experienced July markets sales the year. versus to September end within sales beverage, the of were reflects business and quarterly diversity XXXX. sequentially Acquisitions day. the XXXX. of hitting decline $X.X Rockies. a is QX, Year-to-date, Adjusting from and acquisitions, compared municipal day in declined fiscal up Sequentially, versus our third Service highlights. include specialty subsequent per million X.X% $XXX.X daily Service was Centers and end sequential me third markets the reflects at in in as QX QX the for which increase million third and second well was $X.X for decline October. Total in August million The quarter, XX.X% were $X.X period this growth last sales include XX.X% this XX.X% daily which essentially a for In and and mentioned. for average quarter $X.X and performance excuse quarter of million, the income in contributed Alaska, rebounds day Service growth and to statement same trough million per in Key sales in previously $X as per XXXX, sequential QX. markets within year-over-year, sales million quarter the $XXX.X versus sales day strength - California Average of terms during - a Center compared million segment, DXP quarter sales mining, the food per North the Centers chemicals.
In of of down Solutions, to Pumping XX.X% XX.X% last QX Innovative terms were sales sequentially and year. compared
are reviewed, declines we As backlog experienced the as Solutions. David monitoring within Pumping we Innovative
we our monthly XXXX As year a to this backlog, contraction comparing bookings FY experienced and averages, data to are XXXX fiscal the business we as XXXX. and points we time review as in these last well
is backlog ahead average average of and upon toward XXXX monthly the monthly XXXX but Our X%. based conclusion XX%, QX above remains average backlog are we The XXXX here stands where that by XX% trending XXXX XX-month is below sales the today. fiscal year our our FY by average
new However, each and quarter, bookings we of the reset based backlog. corresponding upon level ending
based and producer cuts around customers have IPS election a weighing direction, can for reset cut upon around majority budgets political vaccine Our CapEx U.S. they and clarity timing settles a are till OPEC budgets the COVID. the
volatility capital uncertainty becomes today. our activity decisions, for As sales not is for sequentially and oil transportation-related and reflects Chain XXXX. we that related quarter in CapEx ourselves Services pullback Supply third say, to Services in X.X% third always allocation we sales good customers, difficult it them declined Supply environment and performance Chain make find to sites. of compared the at gas customer significant quarter and XX.X% and
period dealing an with to closing extended facilities Supply altogether. Services due for Additionally, or Chain been has customers' COVID rationalizing some facilities temporary
the for chain closed a customers holidays. subset supply our During July, of
our anticipating growth. is QX, Supply into Going sales Chain segment Services
XX with basis to Chain improvement a XX of were The Supply margins, improvement Canada a business QX within XXX Service an XXXX improvement Services Services is improvement point Center mix. a XX result sales gross improvement a gross gross DXP higher-margin gross better The an in Chain sequentially. basis to result customers. QX and decline our of basis within within Safety point XX.X%, was basis Services. of Service and margins product a point QX Centers within Supply in in from more improvement the was our This of margins from Turning point margins from total result
million. versus in increased declined QX In to XX compared basis XXX points segment operating points basis versus income XXXX XXXX business of income DXP basis business terms of operating and X segments $X.X QX. QX combined, year-over-year adjusted operating income, of Total margins all points XX to
from Our Since SG&A quickly which various in million from business level we anticipated QX, spending. with adjust the reductions segments. have our discretionary for SG&A and million, levels the aggressively to reflects needs coronavirus ability SG&A declined to demand believe to as associated who tomorrow share. We respond quarter gain reduced will are those position reduce market a contraction pass. current the attack we capability our most further we in the $XX.X that with to today resource to a we as sales position of mindful in and to want will remain respond QX, be perspective, the customer And a $X.X and our
grow We positioning and selectively where market segment, ourselves take our to share and are see this Centers appropriate the starting reinvest are Service and to in within business. we
million were QX and points. in basis adjusted margins EBITDA, QX. XX in XXXX of margins improved Adjusted to we $XX.X in Turning in versus QX of was million $XX.X QX adjusted versus X.X% Sequentially, million XXXX. $XX.X EBITDA X.X% EBITDA EBITDA
In $X.X million. terms EPS, of our of net income XXXX was QX adjusted our
XXXX share per $X.XX share earnings XXXX. per share QX adjusted versus in $X.XX Our for and per was diluted per QX $X.XX share of QX in
the QX X an almost still our X-day reduction up days recent and where the this collections, working improved second driven and during working end flow, $XX.X in working quarter which does we to XX-month since QX balance amounted and with capital decline from it million our are from from XX.X% averages. quarter, reduction by comes working uses, quarter. days but of drive business, This and in $XXX.X reflects we is double-edged our to reduction capital million capital Turning days, within but by to been point X million when to in an capital, a averages. our down project-related sort the experienced average the $XX.X a QX our have was us with terms at to QX. of which accounts sheet the sales cash last slightly historical receivable Improvements line This moving of the mentioned
cash since at payments $XX.X in we million reflects Cash Term terms This compared the million by our million. and an and is was QX of the provided on cash, $XX.X balance In September on million operations had to of XX. increase QX sheet $XX.X B. loan $XX.X
have We flow the paired the with model structure will we cash highlight strong capital benefits appropriate the when continue to and working capital management.
For produced free $XX.X the flow. million we in cash quarter,
the CapEx or or CapEx, third quarter $X.X sales. quarter X.X% million $X.X XXXX, to third was the of of down of terms Compared million CapEx In dollars XX.X%. are in quarter third
needs ROIC, and fixed and investment At X.X:X, ratio our control the to As CapEx XX, X.X:X our on $XX total charge again, reflects XX was was of ability invested end the coverage debt at million during outstanding a our which Return quarter. third at was maintenance reminder, made quarter capital, during $XXX.X quarter the our was reflects, capital minimal secured in optional the business. to prepayments September our ratio third of the the million, leverage September XX%.
in our of million to liquidity, Term as as terms prepayment remain $XXX.X geographic transactions $X over $XXX.X strengthen continue from and sheet. In and perspective to capabilities of of DXP our strengthen million cash at that optional to an will as in key our fact we regions this in ABL market comments million acquisitions after end the one covered the product balance on to consisting loan David's These further B liquidity, year-end. two ABL on QX, well an offerings. closing anticipate diversify $XX further and making million anticipated we Similar availability. we call, undrawn million have our $XX.X in to
our the team on forward our remains market performance financial expand DXP bringing opportunistic growth. now a priority and mix DXPeople sacrificing tomorrow. we long-term will for focused looking support will In balance win be who strength to forward opportunities over maximizing the to DXP growth safely and stronger, I further market us our positioning Collectively, from when on flexibility are end any and call are our today and to turn We make perspective and sheet eventually summary, moving without opportunities and growth, questions. arise. new positions
Kent the no call there I'll this And Instructions] back at over [Operator Yee. to are time. turn questions
of to a years. had and you of equity haul our our in the possibility best your on questions. job Christine. call analysts To another coverage job, that Recently, you, over the having on opportunity the we and ask understood his could Thank wish today, analysts support one response. equity be took new listeners not and congratulations we of luck, appreciate to we Joe, the firm there all
think telling decided discontinue variety firm a Another and end evolving to market forward miscalculated, for growth DXP of story to is we this perspective. from on And coverage reasons. look our we an while
but are to not We notified Stephens Moll could from be have the and this us on up, excited Tommy unfortunately, in call. to of he advance us today call pick
we now during acquisition-driven to we forward there's here, on continue we our better execute and DXP think move no call. reset and cover that mentioned As organic opportunity as from growth we than to this
a concluding and of while is have process, are Additionally, oil change employees to markets that said, the end continuing some discussed, process we and markets. event the committed With and our David externally, and shareholders, different both an never I'll equally growing to to but for over internally we the thoughts. gas turn as the call serve to
Kent. to that Thanks, DXPeople. thank would tough Nobody catch thoughts a are My It's environment. like I to COVID. our wants Yes. the really really just
work care we to so - best And all we take can. to and customers of the try to go but the need
so. traveling are know salesman be I'm everybody need appreciate their cetera. bit. to they do really to doing, efforts out I I et a in so And what doing
and X at can, great is paramount the same the have X and probably that's think to safe, number fortunate At to those and to which time, that we're is all everybody I number I home electronic keep think probably, our concern our I is think for So devices - to safe. work be trying we're fantastic. not and capabilities
and some neat a shareholders been in we're of pretty lot fortunate for we a good and central the to progress. ways do us, not It's really lot here. best can our I in things we've of trying and business - I were doing that forward for so making supporting everybody And that. thank really, thank the of and we're that kind moving
the the is and thing first culprit cut As going strictly to is their capital everybody budget. biggest see is that knows, going be somebody that's can IPS, to and
And wins size. And still not of so wins. just small They're normally there. having they're And there's wins. we're some the profitable same
So we're we're pretty significantly. area there. is it in is, just okay down it what It's - and that
that, our call with think appreciate I'll thank again, today, I and efforts. for everybody we everybody's
great day. a have So
this for conference gentlemen, participating. Thank and call. today's you concludes Ladies
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