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DXP Enterprises (DXPE) Q1 Earnings Lags Estimates, Up Y/Y
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DXP Enterprises, Inc. (DXPE - Free Report) reported weaker-than-expected bottom-line results for the first quarter of 2018, delivering negative earnings surprise of 7.7%.
Earnings in the reported quarter were 24 cents per share, lagging the Zacks Consensus Estimate of 26 cents. However, the bottom line increased 41.2% from the year-ago tally of 17 cents.
Segmental Performance Drives Revenues
In the quarter under review, DXP Enterprises generated revenues of $285.9 million, increasing 19.9% year over year. The improvement was driven by organic sales growth of 15.4% and gains of $10.6 million from acquired assets.
The company reports its revenues under three heads/segments. The segmental results for first-quarter 2018 are briefly discussed below:
Revenues from Service Centers segment totaled $175.4 million, up 17.9% year over year. It represented 61.3% of the reported quarter’s revenues. Of the year-over-year improvement, roughly 10.8% came from organic sales growth.
Revenues from Innovative Pumping Solutions segment grew 37.9% year over year to $67.6 million. It represented 23.7% of revenues.
Revenues from Supply Chain Services segment were $42.9 million, up 5.3% year over year. It represented 15% of revenues.
Margin Profile Weak on Higher Costs & Expenses
In the quarter under review, DXP Enterprises’ cost of sales increased 20.4% year over year to $209.5 million. It represented 73.3% of revenues compared with 73% in the year-ago quarter. Gross margin decreased 30 basis points year over year to 26.7%. Selling, general and administrative expenses grew 16% year over year to $65.3 million, representing 22.8% of revenues versus 23.6% in the year-ago quarter.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $18.4 million, up 13.3% year over year. Adjusted EBITDA margin was 6.4% versus 6.8% in the first quarter of 2017.
Balance Sheet and Cash Flow
Exiting the first quarter, DXP Enterprises had a cash balance of $12.6 million, down 42.6% from $25.6 million in the previous quarter. Long-term debt was roughly flat sequentially at $238.2 million.
In the reported quarter, the company used $1.6 million cash for its operating activities, down from $2.2 million used in the year-ago quarter. Capital invested in purchasing equipment totaled $0.8 million, increasing 31.6% year over year. Adjusted free cash flow in the reported quarter was $14.7 million versus an outflow of $2.8 million in the year-ago quarter.
Outlook
For 2018, DXP Enterprises intends on strengthening its products and services, and enhancing operational efficiency. Acquired assets are expected to be a boon.
DXP Enterprises, Inc. Price, Consensus and EPS Surprise
In the last 60 days, earnings estimates for each of these stocks improved for the current year. Also, average positive earnings surprise for the last four quarters was 12.81% for Graco, 5.06% for Altra Industrial Motion and 3.12% for IEX Corporation.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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DXP Enterprises (DXPE) Q1 Earnings Lags Estimates, Up Y/Y
DXP Enterprises, Inc. (DXPE - Free Report) reported weaker-than-expected bottom-line results for the first quarter of 2018, delivering negative earnings surprise of 7.7%.
Earnings in the reported quarter were 24 cents per share, lagging the Zacks Consensus Estimate of 26 cents. However, the bottom line increased 41.2% from the year-ago tally of 17 cents.
Segmental Performance Drives Revenues
In the quarter under review, DXP Enterprises generated revenues of $285.9 million, increasing 19.9% year over year. The improvement was driven by organic sales growth of 15.4% and gains of $10.6 million from acquired assets.
The company reports its revenues under three heads/segments. The segmental results for first-quarter 2018 are briefly discussed below:
Revenues from Service Centers segment totaled $175.4 million, up 17.9% year over year. It represented 61.3% of the reported quarter’s revenues. Of the year-over-year improvement, roughly 10.8% came from organic sales growth.
Revenues from Innovative Pumping Solutions segment grew 37.9% year over year to $67.6 million. It represented 23.7% of revenues.
Revenues from Supply Chain Services segment were $42.9 million, up 5.3% year over year. It represented 15% of revenues.
Margin Profile Weak on Higher Costs & Expenses
In the quarter under review, DXP Enterprises’ cost of sales increased 20.4% year over year to $209.5 million. It represented 73.3% of revenues compared with 73% in the year-ago quarter. Gross margin decreased 30 basis points year over year to 26.7%. Selling, general and administrative expenses grew 16% year over year to $65.3 million, representing 22.8% of revenues versus 23.6% in the year-ago quarter.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $18.4 million, up 13.3% year over year. Adjusted EBITDA margin was 6.4% versus 6.8% in the first quarter of 2017.
Balance Sheet and Cash Flow
Exiting the first quarter, DXP Enterprises had a cash balance of $12.6 million, down 42.6% from $25.6 million in the previous quarter. Long-term debt was roughly flat sequentially at $238.2 million.
In the reported quarter, the company used $1.6 million cash for its operating activities, down from $2.2 million used in the year-ago quarter. Capital invested in purchasing equipment totaled $0.8 million, increasing 31.6% year over year. Adjusted free cash flow in the reported quarter was $14.7 million versus an outflow of $2.8 million in the year-ago quarter.
Outlook
For 2018, DXP Enterprises intends on strengthening its products and services, and enhancing operational efficiency. Acquired assets are expected to be a boon.
DXP Enterprises, Inc. Price, Consensus and EPS Surprise
DXP Enterprises, Inc. Price, Consensus and EPS Surprise | DXP Enterprises, Inc. Quote
Zacks Rank & Other Stocks to Consider
With a market capitalization of approximately $679 million, DXP Enterprises currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the industry are Graco Inc. (GGG - Free Report) , Altra Industrial Motion Corporation and IDEX Corporation (IEX - Free Report) . While Graco sports a Zacks Rank of 1, both Altra Industrial Motion and IDEX Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last 60 days, earnings estimates for each of these stocks improved for the current year. Also, average positive earnings surprise for the last four quarters was 12.81% for Graco, 5.06% for Altra Industrial Motion and 3.12% for IEX Corporation.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>