DXP Enterprises(DXPE) - 2024 Q2 - Quarterly Results

DXP Enterprises, Inc. Second Quarter 2024 Results Financial & Operational Highlights The company reported strong Q2 sales growth, increased Adjusted EBITDA, and continued its strategic acquisition plan Q2 2024 Key Metrics | Metric | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | | Sales | $445.6 million | +4.1% | | GAAP Diluted EPS | $1.00 | -5.7% | | Adjusted EBITDA | $48.2 million | +6.4% | | Net Income | $16.7 million | -12.3% | | Free Cash Flow (YTD) | $30.0 million | +63.1% | - Completed four acquisitions through the second quarter of 2024, consisting of two water companies and two industrial rotating equipment companies[1] - Cash on hand at the end of the quarter was $49.9 million[1] Management Commentary Management attributes strong sequential sales growth to organic execution and acquisitions, planning further expansion - CEO David R. Little emphasized that strong sequential sales growth and gross profit margins produced a GAAP EPS of $1.00, with acquisitions adding $23.4 million in sales[2] - CFO Kent Yee noted the company's diversification efforts, reduced energy industry exposure, and strong balance sheet with a net debt to EBITDA ratio of 2.64:1.0[2] Consolidated Financial Statements The company's financial statements detail changes in operations, assets, liabilities, and equity for the period Unaudited Condensed Consolidated Statements of Operations Sales increased year-over-year, but higher expenses led to a decline in net income and diluted EPS Consolidated Statements of Operations Highlights ($ thousands, except EPS) | Account | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Sales | $445,556 | $428,040 | $858,191 | $852,307 | | Gross Profit | $137,793 | $131,852 | $261,675 | $256,893 | | Income from Operations | $37,352 | $37,480 | $66,483 | $72,879 | | Net Income | $16,693 | $19,054 | $28,025 | $36,634 | | Diluted EPS | $1.00 | $1.06 | $1.66 | $2.01 | Unaudited Condensed Consolidated Balance Sheets Total assets grew slightly, driven by an increase in goodwill from acquisitions offset by a decrease in cash Condensed Consolidated Balance Sheet Highlights ($ thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash | $49,936 | $173,120 | | Goodwill | $426,821 | $343,991 | | Total Assets | $1,189,146 | $1,177,436 | | Total Current Liabilities | $227,703 | $224,165 | | Long-term Debt, net | $519,735 | $520,697 | | Total Liabilities | $804,465 | $796,557 | | Total Equity | $384,681 | $380,879 | Business Segment Performance The Innovative Pumping Solutions segment drove performance with significant revenue and operating income growth Q2 2024 Segment Revenue & Operating Income ($ thousands) | Segment | Revenue (Q2 2024) | Revenue (Q2 2023) | % Change | Operating Income (Q2 2024) | Operating Income (Q2 2023) | | :--- | :--- | :--- | :--- | :--- | :--- | | Service Centers | $306,516 | $313,806 | -2.3% | $43,855 | $46,823 | | Innovative Pumping Solutions | $73,377 | $48,067 | +52.7% | $13,366 | $6,760 | | Supply Chain Services | $65,663 | $66,167 | -0.8% | $5,823 | $5,416 | Non-GAAP Financial Measures & Reconciliations Reconciliations show increased Adjusted EBITDA and a significant improvement in Free Cash Flow year-over-year Reconciliation of Adjusted EBITDA ($ thousands) | Account | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Income before income taxes | $23,003 | $25,859 | | Plus: Interest expense | $15,384 | $11,863 | | Plus: Depreciation & amortization | $8,127 | $6,703 | | EBITDA | $46,514 | $44,425 | | Plus: Adjustments | $1,712 | $871 | | Adjusted EBITDA | $48,226 | $45,296 | Reconciliation of Free Cash Flow ($ thousands) | Account | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $14,735 | $(2,430) | | Less: purchases of property and equipment | $(8,825) | $(1,813) | | Free Cash Flow | $5,910 | $(4,243) | Reconciliation of Adjusted Diluted EPS | Account | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Diluted Earnings per Share | $1.00 | $1.06 | | Adjusted Diluted Earnings per Share | $1.02 | $1.06 | Company Information The company operates as an industrial distributor and advises on forward-looking statement risks - DXP is a leading products and service distributor providing value-added solutions to industrial customers in North America and Dubai[4] - The company's business segments are Service Centers, Innovative Pumping Solutions, and Supply Chain Services[4] - The press release contains forward-looking statements protected under the Private Securities Litigation Reform Act of 1995, which involve significant risks and uncertainties[8]