Last week DXP Enterprises filed notice of a late report for the fourth quarter and year ending December 2022. The Company did offer an estimated range for revenue from a low of $1.40 billion to a high of $1.46 billion, providing operating income in a range of $80 million to $90 million and net earnings in a range of $1.92 per share to $2.07 per share. All three metrics represent significant increases over sales activity and profitability in the previous year. As manufacturing has picked up with the recent economic recovery, the Company has gained traction in the U.S. industrial market for its maintenance, repair and operating equipment products. DXP is differentiated through its technical expertise and logistics services for customers operating in the oil and gas, mining and construction markets.
Assuming the Company eventually reports financial results within the guided ranges, the numbers should support continued generation of returns in excess of capital costs. Indeed in the twelve months ending September 2022, return on invested capital was 8.8% compared to weighted average cost of capital of 7.4%. The Company’s product line may be dull in comparison with flashy new technology such as artificial intelligence or a new drug. However, the Company’s strong returns are impressive and perhaps more importantly predictable. DXP has a strong track record of delivering profits even in a period of economic retreat.
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