0001020710false00010207102024-05-092024-05-09

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported):  May 8, 2024
Commission file number 0-21513
DXP Enterprises, Inc.
(Exact name of registrant as specified in its charter)

Texas76-0509661
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
5301 Hollister(713)996-4700
Houston, Texas77040
(Address of principal executive offices)(Registrant’s telephone number, including area code)
_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading SymbolName of Exchange on which Registered
Common Stock par value $0.01DXPENASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company    ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following information is furnished pursuant to Regulation FD.
On May 8, 2024, DXP Enterprises, Inc., issued a press release announcing financial results for the first quarter ended March 31, 2024. A copy of the release is furnished herewith as Exhibit 99.1, and incorporated herein by reference. Such exhibit (i) is furnished pursuant to Item 2.02 of Form 8-K, (ii) is not to be considered "filed" under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (iii) shall not be incorporated by reference into any previous or future filings made by or to be made by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act.




ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
99.1     Press Release dated May 8, 2024 announcing the earnings results for the first quarter ended March 31, 2024.


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DXP ENTERPRISES, INC.
(Registrant)
 
By:/s/ Kent Yee
Kent Yee
Senior Vice President/Finance and Chief Financial Officer
By:/s/ David Molero Santos
David Molero Santos
Vice President/Finance and Chief Accounting Officer
 
Dated:May 9, 2024



INDEX TO EXHIBITS
Introductory Note: The following exhibit is furnished pursuant to Item 2.02 of Form 8-K and is not to be considered “filed” under the Exchange Act and shall not be incorporated by reference into any of the Company’s previous or future filings under the Securities Act or the Exchange Act.
Exhibit No.Description
99.1


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NEWS RELEASE
CONTACT: Kent Yee
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www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS

DXP ENTERPRISES, INC. REPORTS FIRST QUARTER 2024 RESULTS

•$139.7 million in cash
•$412.6 million in sales
•GAAP diluted EPS of $0.67
•Non-GAAP diluted EPS of $0.74
•$40.3 million in earnings before interest, taxes, depreciation & amortization and other non-cash charges ("Adjusted EBITDA")
•Free Cash Flow of $24.1 million, a 6.4 percent year-over-year increase
•Completed the acquisitions of Hennesy Mechanical Sales, Kappe Associates, and Pro-Seal, Inc.

Houston, TX – May 8, 2024 – DXP Enterprises, Inc. ("DXP" or the "Company") (NASDAQ: DXPE) today announced financial results for the first quarter ended March 31, 2024. The following are results for the three months ended March 31, 2024, compared to the three months ended March 31, 2023 and December 31, 2023, where appropriate. A reconciliation of the non-GAAP financial measures can be found in the back of this press release.

First Quarter 2024 Financial Highlights:

•Sales increased 1.4 percent sequentially to $412.6 million, compared to $407.0 million for the fourth quarter of 2023 and decreased 2.7 percent compared to $424.3 million for the first quarter of 2023.
•Net income for the first quarter of 2024 was $11.3 million, compared to $17.6 million for the first quarter of 2023.
•Earnings per diluted share for the first quarter of 2024 was $0.67 based upon 17.0 million diluted shares, compared to $0.95 earnings per diluted share in the first quarter of 2023, based on 18.4 million diluted shares. Adjusted diluted earnings per share was $0.74 compared to $0.95 in the first quarter of 2023.
•Adjusted EBITDA for the first quarter of 2024 was $40.3 million compared to $43.1 million for the first quarter of 2023. Adjusted EBITDA as a percentage of sales, or Adjusted EBITDA margin, was 9.8 percent and 10.2 percent, respectively.
•Free Cash Flow (cash flow from operating activities less capital expenditures) for the first quarter of 2024 was $24.1 million, compared to $22.6 million for the first quarter of 2023.

David R. Little, Chairman and Chief Executive Officer commented, “Our first quarter results reflect sequential sales growth driven by acquisitions, strong free cash flow, and continued efforts to expand and grow our business. We are encouraged by the sequential increases and the start to the year. As we look ahead to the rest of 2024, we remain optimistic around market conditions, our ability to execute our growth initiatives and the diversity of our end markets to deliver growth in 2024. DXP’s first quarter 2024 sales were $412.6 million. In terms of our business segments for the first quarter of 2024, sales were $288.4 million for Service Centers, $62.2 million for Innovative Pumping Solutions, and $62.0 million for Supply Chain Services. We believe we are well positioned to outgrow the market and to generate improved operating margins and returns for the benefit of our shareholders as we move further into 2024.”
Kent Yee, Chief Financial Officer and Senior Vice President, remarked, “Our first quarter sequential increase of 1.4 percent was great to see in addition to the $24.1 million of free cash flow along with the closing of three acquisitions. We continue to see bright spots in the market and we currently anticipate the second half of the year to drive growth as we benefit from increases in our project backlog and the diversification of our end markets. We had a strong quarter of free cash flow generation, producing $24.1 million in free cash flow during the first quarter in the midst of closing three acquisitions. DXP ended the quarter with $139.7 million in cash on the balance sheet and net debt of $407.6 million. DXP’s secured leverage ratio or net debt to EBITDA ratio was 2.3:1.0 with a covenant EBITDA of $179.3 million for the last twelve-months ending March 31, 2024. We expect to drive organic and acquisition driven growth as we move through fiscal 2024.”
Page 1
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NEWS RELEASE
CONTACT: Kent Yee
Senior Vice President, CFO
www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS
Conference Call Information
DXP Enterprises, Inc. management will host a conference call, May 9, 2024, at 10:30 a.m. Central Time, to discuss the Company’s financial results. The conference call may be accessed by going to https://ir.dxpe.com.
Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://ir.dxpe.com. The online replay will be available on the same website immediately following the call. A slide presentation highlighting the Company’s results and key performance indicators will also be available on the Investor Relations section of the Company’s website.

To learn more about DXP Enterprises, Inc., please visit the Company's website at https://www.dxpe.com

About DXP Enterprises, Inc.

DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout North America and Dubai. DXP provides innovative pumping solutions, supply chain services and maintenance, repair, operating and production ("MROP") services that emphasize and utilize DXP’s vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services. DXP's breadth of MROP products and service solutions allows DXP to be flexible and customer-driven, creating competitive advantages for our customers. DXP’s business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, go to www.dxpe.com.

Non-GAAP Financial Measures

DXP supplements reporting of net income with certain non-GAAP measurements, including EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, and Free Cash Flow. This supplemental information should not be considered in isolation or as a substitute for the unaudited GAAP measurements. Additional information regarding EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Free Cash Flow and net debt referred to in this press release are included below under "Unaudited Reconciliation of Non-GAAP Financial Information".

The Company believes EBITDA provides additional information about: (i) operating performance, because it assists in comparing the operating performance of the business, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii) the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a component of a measure of the Company’s financial covenants under its credit facilities. Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors’ understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation to its most directly comparable GAAP financial measure, the Company believes it is enhancing investors’ understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives. Free Cash Flow reconciles to the most directly comparable GAAP financial measure of cash flows from operations as provided below. We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase shares of the Company's common stock, and for certain other activities.

Page 2
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CONTACT: Kent Yee
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www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS
Information Related to Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe-harbor” for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made by or to be made by the Company) contains statements that are forward-looking. These forward-looking statements include, without limitation, those about the Company’s expectations regarding the Company's expectations regarding the filing of the Form 10-Q; the description of the anticipated changes in the Company's consolidated balance sheet and the results of operations and the Company's assessment of the impact of such anticipated changes; the Company’s business, the Company’s future profitability, cash flow, liquidity, and growth. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future; and accordingly, such results may differ from those expressed in any forward-looking statement made by or on behalf of the Company. These risks and uncertainties include, but are not limited to: the effectiveness of management’s strategies and decisions; our ability to implement our internal growth and acquisition growth strategies; general economic and business conditions specific to our primary customers; changes in government regulations; our ability to effectively integrate businesses we may acquire; new or modified statutory or regulatory requirements; availability of materials and labor; inability to obtain or delay in obtaining government or third-party approvals and permits; non-performance by third parties of their contractual obligations; unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response thereto; cyber-attacks adversely affecting our operations; other geological, operating and economic considerations and declining prices and market conditions, including supply or demand for maintenance, repair and operating products, equipment and service; inability of the Company or its independent auditors to complete the work necessary in order to file the Form 10-Q in the expected time frame; unanticipated changes to the Company's operating results in the Form 10-Q as filed or in relation to prior periods, including as compared to the anticipated changes stated here; unanticipated impact of such changes and its materiality; ability to obtain needed capital, dependence on existing management, leverage and debt service, domestic or global economic conditions, ability to manage changes and the continued health or availability of management personnel and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or the negative of such terms or other comparable terminology. More information on these risks and other potential factors that could affect the Company’s business and financial results is included in the Company’s filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Page 3
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CONTACT: Kent Yee
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www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS

DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ thousands)

Three Months Ended March 31,
20242023
Sales$412,635 $424,267 
Cost of sales288,753 299,226 
Gross profit123,882 125,041 
Selling, general and administrative expenses94,751 89,642 
Income from operations29,131 35,399 
Other income, net
(1,968)(469)
Interest expense15,544 11,521 
Income before income taxes15,555 24,347 
Provision for income taxes 4,223 6,767 
Net income 11,332 17,580 
Preferred stock dividend23 23 
Net income attributable to common shareholders$11,309 $17,557 
Diluted earnings per share attributable to DXP Enterprises, Inc.$0.67 $0.95 
Weighted average common shares and common equivalent shares outstanding16,968 18,436 

Page 4
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NEWS RELEASE
CONTACT: Kent Yee
Senior Vice President, CFO
www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS
DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
($ thousands, except share amounts)

March 31, 2024December 31, 2023
ASSETS
Current assets:
Cash$139,697 $173,120 
Restricted cash91 91 
Accounts receivable, net of allowance of $4,946 and $5,584, respectively313,791 311,171 
Inventories108,186 103,805 
Costs and estimated profits in excess of billings35,259 42,323 
Prepaid expenses and other current assets19,808 18,044 
Total current assets616,832 648,554 
Property and equipment, net64,039 61,618 
Goodwill370,949 343,991 
Other intangible assets, net67,675 63,895 
Operating lease right of use assets, net53,443 48,729 
Other long-term assets11,217 10,649 
Total assets$1,184,155 $1,177,436 
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of debt$5,500 $5,500 
Trade accounts payable97,324 96,469 
Accrued wages and benefits31,655 36,238 
Customer advances12,619 12,160 
Billings in excess of costs and estimated profits8,195 9,506 
Short-term operating lease liabilities15,796 15,438 
Other current liabilities58,313 48,854 
Total current liabilities229,402 224,165 
Long-term debt, net of unamortized debt issuance costs and discounts520,217 520,697 
Long-term operating lease liabilities38,914 34,336 
Other long-term liabilities20,158 17,359 
Total long-term liabilities579,289 572,392 
Total liabilities808,691 796,557 
Commitments and Contingencies
Shareholders' equity:
Series A preferred stock, $1.00 par value; 1,000,000 shares authorized11
Series B preferred stock, $1.00 par value; 1,000,000 shares authorized15 15 
Common stock, $0.01 par value, 100,000,000 shares authorized; 15,928,305 and 16,177,237 outstanding, respectively345 345 
Additional paid-in capital217,292 216,482 
Retained earnings330,580 319,271 
Accumulated other comprehensive loss(31,854)(31,240)
Treasury stock, at cost 4,468,354 and 4,141,989 shares, respectively
(140,915)(123,995)
Total DXP Enterprises, Inc. equity375,464 380,879 
Total liabilities and equity$1,184,155 $1,177,436 
Page 5
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CONTACT: Kent Yee
Senior Vice President, CFO
www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS
Business segment financial highlights:

•Service Centers’ revenue for the first quarter was $288.4 million, a decrease of 5.7 percent year-over-year with a 14.0 percent operating income margin.
•Innovative Pumping Solutions’ revenue for the first quarter was $62.2 million, an increase of 21.0 percent year-over-year with a 11.2 percent operating income margin.
•Supply Chain Services’ revenue for the first quarter was $62.0 million, a decrease of 7.5 percent year-over-year with a 8.5 percent operating income margin.

SEGMENT DATA
($ thousands, unaudited)
Three Months Ended March 31,
Sales20242023
Service Centers$288,435 $305,813 
Innovative Pumping Solutions62,216 51,411 
Supply Chain Services61,984 67,043 
Total Sales$412,635 $424,267 
Three Months Ended March 31,
Operating Income20242023
Service Centers$40,320 $45,820 
Innovative Pumping Solutions6,970 9,190 
Supply Chain Services5,262 5,514 
Total Segments Operating Income
$52,552 $60,524 

RECONCILIATION OF OPERATING INCOME FOR REPORTABLE SEGMENTS
($ thousands, unaudited)
Three Months Ended March 31,
20242023
Income from operations for reportable segments$52,552 $60,524 
Adjustment for:
Amortization of intangibles
4,369 4,758 
Corporate expenses19,052 20,367 
Income from operations$29,131 $35,399 
Interest expense15,544 11,521 
Other income, net
(1,968)(469)
Income before income taxes$15,555 $24,347 
Page 6
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CONTACT: Kent Yee
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www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS

UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
($ thousands)

The following table sets forth the reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin to the most comparable U.S. GAAP financial measure (in thousands):
Three Months Ended March 31,
20242023
Income before income taxes
$15,555 $24,347 
Plus: Interest expense
15,544 11,521 
Plus: Depreciation and amortization
7,538 6,782 
EBITDA$38,637 $42,650 
Plus: other non-recurring items(1)
842 — 
Plus: stock compensation expense864 476 
Adjusted EBITDA$40,343 $43,126 
Operating Income Margin7.1 %8.3 %
EBITDA Margin9.4 %10.1 %
Adjusted EBITDA Margin9.8 %10.2 %
(1) Other non-recurring items includes unique acquisition integration costs and other non-cash, non-recurring costs not related to continuing business operations.

The following table sets forth the reconciliation of Organic Sales and Organic Sales per Business Day to the most comparable U.S. GAAP financial measure (in thousands):

Three Months Ended March 31,
20242023
Sales by Business Segment
Service Centers$288,435 $305,813 
Innovative Pumping Solutions62,216 51,411 
Supply Chain Services61,984 67,043 
Total DXP Sales$412,635 $424,267 
Acquisition Sales11,775 19,133 
Organic Sales$400,860 $405,134 
Business Days6364
Sales per Business Day$6,550 $6,629 
Organic Sales per Business Day$6,363 $6,330 
Page 7
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NEWS RELEASE
CONTACT: Kent Yee
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www.dxpe.com
THE INDUSTRIAL DISTRIBUTION EXPERTS

The following table sets forth the reconciliation of Free Cash Flow to the most comparable GAAP financial measure (in thousands):

Three Months Ended March 31,
20242023
Net cash from operating activities$26,989 $26,449 
Less: purchases of property and equipment(2,894)(3,804)
Free Cash Flow$24,095 $22,645 

The following table is a reconciliation of adjusted net income attributable to DXP Enterprises, Inc., a non-GAAP financial measure, to net income, calculated and reported in accordance with U.S. GAAP.


Three Months Ended March 31,
20242023
Net Income
$11,332 $17,580 
One-time non-cash items
942 — 
Adjustment for taxes
256 — 
Adjusted Net Income
$12,530 $17,580 
Weighted average common shares and common equivalent shares outstanding
Diluted16,968 18,436 
Diluted Earnings per Share $0.67 $0.95 
Adjusted Diluted Earnings per Share$0.74 $0.95 
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v3.24.1.u1
Cover Page
May 09, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 08, 2024
Entity File Number 0-21513
Entity Registrant Name DXP Enterprises, Inc.
Entity Incorporation, State or Country Code TX
Entity Tax Identification Number 76-0509661
Entity Address, City or Town Houston,
Entity Address, State or Province TX
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock par value $0.01
Trading Symbol DXPE
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001020710
Amendment Flag false
Entity Address, Address Line One 5301 Hollister
Local Phone Number 996-4700
City Area Code (713)
Entity Address, Postal Zip Code 77040
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