DXP Enterprises (DXPE) Reports Q3 Earnings, Sales Fall Y/Y

DXP Enterprises, Inc. (NASDAQ:DXPE) reported mixed third-quarter 2016 results with earnings beating expectations and revenues missing estimates. The company's earnings of 2 cents per share compared favorably with the year-ago loss of $3.64. The Zacks Consensus Estimate was of a loss of 2 cents.

Operational Update

The company’s third-quarter 2016 sales came in at $230 million, down 24.1% year over year. The top line also missed the Zacks Consensus Estimate of $243 million. The downside stemmed from weak sales from all the three segments of the company.

Cost of goods sold plunged 23.5% year over year to $166.2 million. Gross margin also contracted 60 basis points (bps) to 27.7%. Selling, general and administrative (SG&A) expenses were down 21.6% year over year to $58.9 million. Operating margin was down 100 bps year over year to 8.2%.

Segment Performance

Revenues at the Service Centers segment declined 23.7% year over year to $152 million.

Revenues at the Innovative Pumping Solutions segment plummeted 35.2% year over year to $39.8 million.

The Supply Chain Services segment’s revenues dipped 9.8% year over year to $38.2 million.

Financial Position

Exiting third-quarter 2016, DXP Enterprises had cash worth $3.4 million compared with $1.7 million at the end of 2015. Long-term debt came in at $203 million as against $298.7 million as of Dec 31, 2015.

In the first nine months of 2016, the company generated $35.5 million cash from operating activities as against $74.8 million accrued in the year-ago comparable period.

Outlook

DXP Enterprises aims to boost its business on the back of lower costs, productive labor force, reduced debt and greater innovation.

Zacks Rank and Stocks to Consider

DXP Enterprises currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the industry are

ACCO Brands Corporation (NYSE:ACCO) has an average positive earnings surprise of 23.93% over the four trailing quarters. The company has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies, Inc. (NYSE:AIT) currently carries a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 4.93% over the last four quarters.

AO Smith Corp. (NYSE:AOS) currently carries a Zacks Rank #2 and has an average positive earnings surprise of 6.45% over the trailing four quarters.

Zacks’ Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>