DXP Enterprises, Inc. Q2 FY2025 earnings call

• DXP delivered strong results with 4.7% sequential growth and 11.9% year-over-year growth in Q2 2025, achieving record sales and 11% plus adjusted EBITDA margins. • Continued execution of acquisition strategy, adding 2 rotating equipment acquisitions in the first half and one after the quarter end. • Innovative Pumping Solutions saw growth in energy-related bookings and backlog, with DXP Water having 11 consecutive quarters of sequential sales growth. • Service Centers benefited from multiple product categories, internal growth initiatives, and regional expansions. • Supply Chain Services added a large contract that is ramping up and expected to improve in the second half.

Innovative Pumping Solutions (IPS) led sales growth, increasing 27.5% year-over-year. Energy business within IPS was up 37.3% year-over-year, and DXP Water had the 11th consecutive quarter of sequential sales growth. Service Centers grew 10.8% year-over-year. Supply Chain Services were essentially flat year-over-year, with a 3.3% sequential increase. IPS contributed a significant portion of revenue growth, with its energy and water segments performing well. Service Centers benefited from multiple product categories and growth initiatives, while Supply Chain Services faced challenges with pricing adjustments but had a large contract ramping up.

• Anticipates closing another 3 to 4 acquisitions during the second half of 2025. • Confident in continued sales growth and profitability due to well-balanced business, strong balance sheet, exceptional teams, improved capabilities, and robust acquisition pipeline. • Sees potential for adjusted EBITDA margins to improve further as they benefit from operating leverage with sales growth.

• Mentioned potential impacts from macro uncertainty and tariff uncertainties, but no detailed in-depth discussion of specific risks in the transcript.

Q: Is there any color you can share on daily sales trends by month for both Q2 and Q3 thus far?

A: Sure, Zack. And I'll back up and once again, just walk through Q2 and then we have essentially a sales flash for July, so an estimate for July. But April, as I mentioned in my comments, were $7.81 million, May was $7.5 million, June was $8.37 million and in July, we had at $7.25 million per day.

Q: Is there anything that should drive a meaningful margin difference whether up or down when comparing 2Q and 3Q?

A: I mean we still -- we continue to benefit from our acquisitions and then being accretive from a margin perspective, meaning obviously, the profitability, specifically within water, wastewater and some of our industrial rotating equipment acquisitions is at a higher gross and thus EBITDA margin basis. So to the degree and extent we're rolling those ones in as well as rolling new ones in, we've benefited from a margin perspective.

Q: Are you seeing much hesitation to spend from customers due to macro uncertainty or still tariff uncertainty or anything?

A: I'm not necessarily sure how that's tied to acquisitions. But I'll let David address kind of the macro environment. I think he probably still have some thoughts as he did in Q1, surrounding tariffs and the impact to our environment and our customers and suppliers. David? David R. Little: So maybe I'll tie acquisitions in there in a sense that we typically like to do acquisitions of companies that are well run and they're growing their business. So we're not seeing anything fall off a cliff or anything as far as acquisitions or we wouldn't do them. So -- and then you now know, I really don't think so. When we look at our billings, our backlogs as high as it's ever been. Our bookings to billings is in excess of one. It's always billing -- bookings are greater. So we're not seeing anything. We read a little bit of about things continuing to grow but maybe at a slower pace, but we're really not seeing that.