DXP ENTERPRISES INC Q4 FY2024 earnings call

• Fiscal 2024 was a record year with sales up 7.4% to $1.8 billion, gross profit margins increased by 77 basis points to 30.9%, and adjusted EBITDA rose 9.8% to $191.3 million.
• Executed 7 acquisitions in fiscal 2024, including those within DXP Water, which saw backlog growth both organically and through acquisitions.
• Refinanced debt in the second half of 2024, positioning DXP for organic and inorganic growth in 2025.
• Sales per business day improved throughout 2024, with Q4 averaging $7.595 million compared to Q3's $7.39 million.

Fiscal 2024 saw DXP's segments perform as follows: Innovative Pumping Solutions (IPS) grew 47.7% year-over-year to $323 million, contributing 17.9% of total sales. Service Centers experienced 1.9% year-over-year growth to $1.2 billion, making up 67.9% of total sales. Supply Chain Services saw a slight decline of 1.5% year-over-year to $256.4 million, accounting for 14.2% of total sales. IPS had strong energy and water-related backlog growth, Service Centers had regional growth in certain areas, and Supply Chain Services was impacted by customer facility closures but invested in remote technology.

• Fiscal 2025 is expected to focus on maintaining margins while laying the groundwork for long-term operating efficiencies.
• Anticipate continuing with acquisitions, targeting 1 to 3 additional acquisitions by the middle of 2025.
• Aim for adjusted EBITDA margins above 10%, with a goal of reaching 11% EBITDA margins.

• Potential impact of tariffs and economic slowdown on sales performance.
• Inflationary pressures, though DXP can pass on cost increases to customers, with careful management to mitigate effects.

Q: Is there any color you can share on daily sales trends by month for both Q4 and so far into Q1?

A: David Little stated that in Q4, sales per business day were $7.2 million in October, $7.5 million in November, and $8.1 million in December. For 2025, January had sales per business day of $6.8 million and February had $7.8 million.

Q: And then also for margins quarter-over-quarter. How are those trending? And are there any noteworthy factors in March that may change that trajectory?

A: Kent Yee mentioned that full visibility into Q1 margins isn't available yet, but Q3 to Q4 gross margins increased significantly due to mix, particularly from water and wastewater acquisitions. He noted that while Q1 margins are expected to continue, sales mix from base businesses can impact margins.