DXP Enterprises(US:DXPE)2020-11-08 11:50Financial Data and Key Metrics Changes - Total sales for Q3 2020 were $220.2 million, down 12.4% from Q2 and down 32.7% compared to Q3 2019 [35][30] - Adjusted operating income for Q3 was $7.6 million, an increase of 74 basis points compared to Q2 2020 [44] - Adjusted EBITDA was $12.5 million in Q3, down from $28.2 million in Q3 2019, but improved 68 basis points sequentially [47] - Free cash flow generated during the quarter was $29.1 million, contributing to a total of $100 million expected for the year [50][26] Business Segment Data and Key Metrics Changes - Sales in the Innovative Pumping Solutions (IPS) segment were down 63.8% sequentially and 73.4% year-over-year, significantly impacted by capital budget cuts in the oil and gas industry [38][17] - Service Centers experienced a sequential sales growth of 7.2%, although down 14.9% from Q3 2019, driven by diverse end markets [37] - Supply Chain Services sales declined 9.9% sequentially and 34.8% year-over-year, reflecting reduced activity in oil and gas and transportation sectors [41] Market Data and Key Metrics Changes - Average daily sales for Q3 were $3.4 million, compared to $5.1 million in Q3 2019 and $4 million in Q2 2020 [36] - Key end markets driving performance included food and beverage, mining, municipal, and specialty chemicals [37] - The company aims to grow in markets such as food and beverage, sanitary, water and wastewater, chemicals, alternative energy, and military [16] Company Strategy and Development Direction - The company is focused on combining financial strength with local business agility to deliver superior value and growth opportunities [9] - DXP plans to continue its acquisition strategy, targeting non-oil and gas markets, specifically in water and wastewater and food and beverage sectors [27][54] - The company emphasizes a customer-focused approach, adapting to customer needs through digital transformation and an omni-channel strategy [20][19] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the team's ability to navigate challenges posed by COVID-19 and other external factors, while remaining focused on sales growth [7][28] - The company anticipates a gradual recovery in demand, particularly in the Supply Chain Services segment, with expectations for sequential growth in Q4 [23][41] - Management acknowledged the uncertainty in capital allocation decisions among customers due to the current environment, particularly in the IPS segment [40][63] Other Important Information - The company took a $48.4 million pretax charge related to impairment of goodwill and assets, which is a non-cash item [32] - Working capital was reduced to $161.7 million, reflecting improved collections and aligning with historical averages [48] - The company maintained a strong liquidity position with $228.6 million available, including cash and ABL availability [53] Q&A Session Summary - There were no questions during the Q&A session, indicating a lack of analyst participation [55]