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Financial Data and Key Metrics Changes - Total sales for Q3 2025 increased by 8.6% year over year to a record $513.7 million, with adjusted EBITDA of $56.5 million, reflecting an adjusted EBITDA margin of 11% [5][15][23] - Year-to-date total sales are up 11.8%, and adjusted EBITDA is up 17.6% compared to the previous year [5][12] - Overall gross profit margins for Q3 were 31.4%, a 50-basis point improvement over Q3 2024 [10][20] Business Line Data and Key Metrics Changes - Innovative Pumping Solutions (IPS) sales grew by 11.9% year over year to $100.6 million, while Service Centers sales increased by 10.5% to $350.2 million [5][15] - Supply Chain Services experienced a decline of 5% year over year, with sales at $63 million [5][15][19] - IPS backlog remains strong, with energy-related bookings showing resilience, although the average backlog declined by 3.3% for the first time in 10 quarters [17][18] Market Data and Key Metrics Changes - Regions showing year-over-year growth include South Central, California, Southeast, South Rockies, Texas Gulf Coast, and Northern Rockies [9][18] - The service center segment achieved its strongest performance in the last 10 quarters, driven by diverse in-market dynamics [18] Company Strategy and Development Direction - The company remains focused on organic and acquisition growth, increasing gross profit margins, and enhancing productivity [4][5] - DXP is investing in its core capabilities to drive long-term growth and deliver a differentiated customer experience [5][12] - The acquisition pipeline remains active, with five acquisitions closed year-to-date and plans for more before the end of Q1 2026 [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining adjusted EBITDA margins above 11% and highlighted the importance of managing demand levels and pricing [12][36] - The company anticipates a mild Q4 due to seasonal factors but expects a stronger outlook for Q1 2026 [10][19] - Management noted that while expenses were higher than expected, they were necessary for growth and investment in the business [45] Other Important Information - SG&A expenses increased by $11 million year over year, reflecting investments in personnel, technology, and acquisitions [11][22] - Free cash flow for Q3 was $28.2 million, an increase from $24.4 million in Q3 2024, indicating improved profitability [26] Q&A Session Summary Question: Could you walk through Q3 sales numbers and provide insights on Q4? - Management provided daily sales figures for Q3, noting July at $7.26 million, August at $7.95 million, and September at $8.9 million, with October at $7.59 million [35] Question: Should we expect similar EBITDA margin compression from Q3 to Q4 as in previous years? - Management indicated confidence in sustaining 11% EBITDA margins, despite potential seasonal impacts in Q4 [36] Question: What should be expected for corporate expenses moving forward? - Management explained that Q3 expenses were elevated due to insurance renewals and unique claims, but they expect similar levels in Q4 [38][40] Question: Are there any opportunities in the data center market? - Management acknowledged the potential in the data center market but noted it has not been a significant area of success yet [41][42]

Financial Performance - For the nine months ended September 30, 2025, DXP Enterprises reported approximately $1.3 billion in sales for its Service Centers and Innovative Pumping Solutions segments, reflecting a 14.1% increase compared to the same period in 2024[100]. - The Supply Chain Services segment generated approximately $191.7 million in sales for the nine months ended September 30, 2025, a decrease of 1.1% compared to the same period in 2024[101]. - Acquisition sales for the nine months ended September 30, 2025, were $74.1 million, up from $63.7 million in the same period in 2024[102]. - Organic sales for the nine months ended September 30, 2025, totaled $1.414 billion, compared to $1.267 billion for the same period in 2024, indicating a significant growth[105]. - The net income for the nine months ended September 30, 2025, was $65.8 million, compared to $49.1 million for the same period in 2024, representing a 33.9% increase[105]. - EBITDA for the nine months ended September 30, 2025, was $161.1 million, an increase from $133.3 million in the same period in 2024, reflecting a growth of 20.8%[105]. - Sales for the three months ended September 30, 2025 increased by $40.8 million, or 8.6%, to approximately $513.7 million from $472.9 million for the prior year's corresponding period[115]. - Net income for the three months ended September 30, 2025 was $21.6 million, or 4.2% of sales, compared to $21.1 million, or 4.5% of sales, for the prior year's corresponding period[114]. - Sales for the nine months ended September 30, 2025 increased by $157.8 million, or 11.9%, to approximately $1.5 billion from $1.3 billion for the prior year's corresponding period[125]. Profitability Metrics - The gross profit margin for the nine months ended September 30, 2025, improved to 31.5%, compared to 30.6% for the same period in 2024[105]. - Gross profit margin for the three months ended September 30, 2025 was 31.4%, compared to 30.9% for the prior year's corresponding period, positively impacted by 50 basis points due to recent acquisitions[119]. - Gross profit margin for the nine months ended September 30, 2025 was 31.5%, compared to 30.6% for the prior year's corresponding period, positively impacted by 90 basis points due to recent acquisitions[129]. - Operating income for the three months ended September 30, 2025 increased by $4.1 million to $43.7 million, primarily driven by increases in the Service Centers segment[121]. - Operating income for the nine months ended September 30, 2025 increased by $24.1 million, or 22.7%, to $130.2 million from $106.1 million in the prior year's corresponding period[131]. Cash Flow and Capital Expenditures - Free cash flow for the nine months ended September 30, 2025, was $19.5 million, down from $54.4 million in the same period in 2024[105]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $56.5 million, down from $70.1 million in the prior year[145]. - Capital expenditures for the nine months ended September 30, 2025, were $37.0 million, compared to $15.7 million in 2024[159]. - Free Cash Flow for the nine months ended September 30, 2025, was $19.5 million, a significant decrease from $54.4 million in 2024[140]. Debt and Working Capital - Total outstanding debt as of September 30, 2025, was $644.0 million, accounting for 56.9% of total capitalization of $1.1 billion[149]. - Net working capital as of September 30, 2025, increased to $364.6 million, up $73.6 million from $291.0 million as of December 31, 2024[157]. - Interest expense for the nine months ended September 30, 2025 decreased by $2.3 million compared with the prior year's corresponding period, primarily due to refinancing of the Term Loan[132]. Strategic Focus - The company is actively monitoring economic conditions and adjusting strategies to mitigate adverse effects from inflation and supply chain challenges[97]. - DXP Enterprises continues to focus on maintaining strong margins despite vendor price increases, demonstrating resilience in its operations[100]. - The Company invested $24.4 million in acquisitions during the nine months ended September 30, 2025, a decrease from $149.4 million in the same period of 2024[158]. Tax and Expenses - The effective tax rate for the three months ended September 30, 2025 was 26.6%, compared to 11.1% for the prior year's corresponding period, primarily due to a lower tax benefit from research and development tax credits[122]. - Selling, general and administrative expenses (SG&A) for the three months ended September 30, 2025 increased by $11.1 million, or 10.4%, to $117.6 million from $106.5 million for the prior year's corresponding period[120]. - Adjusted EBITDA for the three months ended September 30, 2025, was $56.5 million, representing a 7.3% increase from $52.4 million in 2024[138].

Financial Performance - Sales increased by 8.6% to $513.7 million in Q3 2025, compared to $472.9 million in Q3 2024[7] - Organic sales grew 11.5% year-over-year[7] - Acquisition sales contributed $18.4 million to total sales[7] - Net income increased 2.5% to $21.6 million for the third quarter, compared to $21.1 million for the third quarter of 2024[7] - Earnings per diluted share increased to $1.31, based on 16.5 million diluted shares, compared to $1.27 in Q3 2024, based on 16.6 million diluted shares[7] - Cash flow from operating activities increased 23.1% to $34.9 million, compared to $28.3 million in Q3 2024[7] - Free Cash Flow increased 15.4% to $28.1 million, compared to $24.4 million in Q3 2024[7] - Adjusted EBITDA was $56.5 million, compared to $52.4 million for the third quarter of 2024[7] - Adjusted EBITDA margin was 11.0%, compared to 11.1% respectively[7] Strategic Actions - The company closed one acquisition during the third quarter and two subsequent to quarter end[7]

Financial Performance - DXP reported third quarter 2025 sales of $513.7 million, an 8.6% increase compared to $472.9 million in Q3 2024[6] - Adjusted EBITDA for the third quarter was $56.5 million, up from $52.4 million in the same quarter last year, representing an Adjusted EBITDA margin of 11.0%[6] - Net income for the third quarter increased 2.5% to $21.6 million, compared to $21.1 million in Q3 2024[6] - Diluted earnings per share for the third quarter was $1.31, based on 16.5 million diluted shares, compared to $1.27 in Q3 2024[6] - Operating income for Q3 2025 was $75.0 million, up 7.3% from $69.9 million in Q3 2024[19] - Adjusted net income for Q3 2025 was $22.2 million, slightly down from $23.7 million in Q3 2024[28] - EBITDA for Q3 2025 was $54.3 million, compared to $48.2 million in Q3 2024, marking a 12.5% increase[23] - The company reported an EBITDA margin of 10.6% for Q3 2025, compared to 10.2% in Q3 2024[23] Cash Flow and Liquidity - Cash flow from operating activities rose 23.1% to $34.9 million, compared to $28.3 million in Q3 2024[6] - Free Cash Flow increased 15.4% to $28.1 million for the third quarter, compared to $24.4 million in Q3 2024[6] - Free cash flow for Q3 2025 was $28.1 million, an increase from $24.4 million in Q3 2024[27] Revenue Breakdown - Revenue from Service Centers was $350.2 million, a 10.5% year-over-year increase, with a 14.7% operating income margin[6] - Revenue from Innovative Pumping Solutions was $100.6 million, an 11.9% year-over-year increase, with an 18.3% operating income margin[6] - Organic sales for Q3 2025 totaled $495.3 million, a 11.5% increase from $444.4 million in Q3 2024[26] Balance Sheet - Total debt outstanding as of September 30, 2025, was $644.0 million, with a secured leverage ratio of 2.31:1.0[4] - Total assets as of September 30, 2025, were $1.444 billion, up from $1.349 billion at the end of 2024[17] - Total liabilities increased to $956.1 million from $926.7 million at the end of 2024[17] Acquisitions - DXP completed three acquisitions through Q3 2025 and two additional acquisitions in Q4 2025[5]

Core Insights - DXP Enterprises reported third-quarter results with sales growth of 8.6% year-over-year to $513.7 million, exceeding analyst estimates, but adjusted earnings fell short, posting $1.34 per share, which was 14.4% below the consensus estimate of $1.57 per share [1] - The market reacted negatively to the earnings miss, leading to a 17.8% drop in shares, indicating a focus on profitability over revenue growth [1] - DXP's stock has shown significant volatility, with 23 moves greater than 5% in the past year, highlighting the impact of recent news on market perception [3] Market Context - The broader market has experienced fluctuations due to negative economic news and rising consumer inflation expectations, which have contributed to investor fatigue and a pullback from recent rallies [4] - DXP's stock is currently trading 19.8% below its 52-week high of $127.63, despite being up 21.4% since the beginning of the year [5] - The market sentiment is mixed, with positive factors like anticipated monetary easing countered by concerns over slowing consumption and inflation [4]

Investment Philosophy - The importance of saving a portion of income, recommending a minimum of 10% regardless of the amount earned [1] - Emphasis on investing in sectors aligned with one's expertise, suggesting that individuals should focus on their competitive advantages [1] - Advocating for a long-term investment strategy rather than trading, with a focus on maintaining investment validity [1] - Encouragement to pursue passions over purely financial gains, highlighting the long-term happiness that can come from such choices [1] Personal Background - The individual has a diverse background in engineering, finance, and asset management, with experience in various sectors including natural resources, TMT, consumers, industrials, and transportation [1] - Transitioned from hedge fund management to establishing an asset management firm for family, friends, and high-net-worth individuals [1]

Core Viewpoint - DXP Enterprises, Inc. has completed the acquisition of Triangle Pump & Equipment, Inc., enhancing its capabilities in the water and wastewater industry and expanding its geographic reach [1][2][3]. Company Overview - DXP Enterprises, Inc. is a leading distributor of products and services, providing solutions to industrial customers across the United States, Canada, Mexico, and Dubai [5]. - The company specializes in innovative pumping solutions, supply chain services, and maintenance, repair, operating, and production (MROP) services [5]. Acquisition Details - Triangle Pump & Equipment, Inc. is a manufacturer’s representative and distributor focused on the water and wastewater industry, with sales of approximately $15.1 million and adjusted EBITDA of about $2.4 million for the twelve months ending June 30, 2025 [3][4]. - The acquisition was funded with cash from DXP's balance sheet, and the definitive agreement was signed on November 1, 2025 [2][3]. Strategic Implications - The acquisition is expected to enhance DXP's Water division by providing new geographic territories and capabilities, furthering its mission to build a comprehensive platform for municipal and industrial water and wastewater treatment markets [4][7]. - DXP aims to continue scaling its operations with more acquisitions planned for 2026, indicating a strategic focus on growth in the water and wastewater sector [4][7].

Core Insights - DXP Enterprises is set to release its Q3 2025 earnings results on November 3, 2025, with expected earnings of $1.45 per share and revenue of $499 million [2] - The company reported Q2 2025 earnings of $1.43 per share, exceeding analysts' expectations of $1.39, with revenue of $498.68 million, slightly below the forecast [3] Financial Performance - DXP Enterprises has a market capitalization of $1.88 billion, a price-to-earnings ratio of 22.83, and a beta of 1.16 [4] - The company has a return on equity of 20.94% and a net margin of 4.52% [3] - The stock's 52-week range is between $49.08 and $130.97, with a 50-day simple moving average of $120.49 and a 200-day simple moving average of $102.58 [4] Insider Transactions - Senior Vice President John Jay Jeffery sold 2,000 shares at an average price of $125.43, totaling $250,860, reducing his ownership by 9.09% [5] - Chief Marketing Officer Paz Maestas sold 5,000 shares at an average price of $120.11, totaling $600,550, representing a 0.83% decrease in ownership [5] - Insiders sold a total of 41,316 shares worth $4,960,704 in the last quarter, with company insiders owning 22.70% of the stock [5] Institutional Holdings - Osaic Holdings Inc. increased its stake by 6.7%, now owning 11,644 shares valued at $1.02 million [6] - Public Sector Pension Investment Board raised its holdings by 7.4%, owning 43,343 shares valued at $3.799 million [6] - Institutional investors collectively own 74.82% of DXP Enterprises' stock [6] Analyst Ratings - Singular Research upgraded DXP Enterprises to a "moderate buy" rating, while Wall Street Zen downgraded it from "strong-buy" to "buy" [7] - Weiss Ratings maintained a "buy (b)" rating, with a consensus rating of "Buy" and a price target of $95.00 [7] Company Overview - DXP Enterprises, Inc. distributes maintenance, repair, and operating (MRO) products and services in the U.S. and Canada, operating through three segments: Service Centers, Supply Chain Services, and Innovative Pumping Solutions [8]