Company Performance - DXP Enterprises (DXPE) experienced a decline of 2.22% in its stock price, closing at $119.94, while the S&P 500 gained 0.27% [1] - Prior to the recent trading session, DXP's shares had increased by 6.26%, outperforming the Industrial Products sector's gain of 1.35% and the S&P 500's gain of 1.85% [1] Earnings Forecast - The Zacks Consensus Estimates project DXP Enterprises to report earnings of $5.3 per share and revenue of $0 million for the year, reflecting a year-over-year earnings increase of 17.52% and no change in revenue [2] Analyst Estimates - Recent adjustments to analyst estimates for DXP Enterprises are crucial as they indicate the evolving short-term business trends, with positive revisions suggesting analysts' confidence in the company's performance and profit potential [3] Valuation Metrics - DXP Enterprises is currently trading at a Forward P/E ratio of 23.14, which aligns with the industry average Forward P/E of 23.14 [6] - The Manufacturing - General Industrial industry, to which DXP belongs, holds a Zacks Industry Rank of 48, placing it in the top 20% of over 250 industries [6] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), indicates that DXP Enterprises currently holds a Zacks Rank of 3 (Hold) [5] - The Zacks Rank has a proven track record, with 1 stocks averaging an annual return of +25% since 1988 [5]

Company Performance - DXP Enterprises, Inc. (NASDAQ: DXPE) reported double-digit growth in its second quarter, with the IPS segment expanding by an impressive 27.5% [1] Industry Insights - The company is positioned well within the technology, industrial, and conglomerate sectors, indicating strong foundational support for long-term success [1]

PART I: FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) DXP's unaudited condensed consolidated financial statements show strong sales and net income growth, increased assets, and decreased operating cash flow [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=a)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Three Months Ended June 30, 2025 vs 2024 (in thousands, except per share amounts) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Sales | $498,682 | $445,556 | $53,126 | 11.9% | | Gross profit | $157,813 | $137,793 | $20,020 | 14.5% | | Income from operations | $45,986 | $37,352 | $8,634 | 23.1% | | Net income | $23,612 | $16,693 | $6,919 | 41.5% | | Basic EPS | $1.50 | $1.05 | $0.45 | 42.9% | | Diluted EPS | $1.43 | $1.00 | $0.43 | 43.0% | Six Months Ended June 30, 2025 vs 2024 (in thousands, except per share amounts) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Sales | $975,251 | $858,191 | $117,060 | 13.6% | | Gross profit | $308,078 | $261,675 | $46,403 | 17.7% | | Income from operations | $86,501 | $66,483 | $20,018 | 30.1% | | Net income | $44,201 | $28,025 | $16,176 | 57.7% | | Basic EPS | $2.81 | $1.75 | $1.06 | 60.6% | | Diluted EPS | $2.67 | $1.66 | $1.01 | 60.8% | [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=b)%20Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--------------------------------- | :------------ | :---------------- | :--------- | :--------- | | Total current assets | $683,661 | $661,874 | $21,787 | 3.3% | | Total assets | $1,412,394 | $1,349,494 | $62,900 | 4.7% | | Total current liabilities | $245,449 | $243,984 | $1,465 | 0.6% | | Total liabilities | $944,302 | $926,706 | $17,596 | 1.9% | | Total DXP Enterprises, Inc. equity | $468,092 | $422,788 | $45,304 | 10.7% | [Unaudited Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=c)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Six Months Ended June 30, 2025 vs 2024 (in thousands) | Cash Flow Activity | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Net cash provided by operating activities | $21,619 | $41,724 | $(20,105) | (48.2%) | | Net cash used in investing activities | $(41,405) | $(130,736) | $89,331 | (68.3%) | | Net cash used in financing activities | $(16,594) | $(35,003) | $18,409 | (52.6%) | | Net change in cash and restricted cash | $(35,481) | $(123,185) | $87,704 | (71.2%) | | Cash and restricted cash at end of period | $112,930 | $50,026 | $62,904 | 125.7% | [Unaudited Condensed Consolidated Statements of Equity](index=6&type=section&id=d)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity) Changes in Total Equity (in thousands) | Period | Balance at Beginning | Net Income | Preferred Dividends Paid | Compensation Expense | Tax Related Items | Currency Adjustment | Excise Tax | Repurchases | Balance at End | | :-------------------- | :------------------- | :--------- | :--------------------- | :------------------- | :---------------- | :------------------ | :--------- | :---------- | :------------- | | Dec 31, 2024 - Jun 30, 2025 | $422,788 | $44,201 | $(45) | $2,800 | $(4,329) | $2,649 | $28 | $0 | $468,092 | | Dec 31, 2023 - Jun 30, 2024 | $380,879 | $28,025 | $(45) | $2,076 | $(1,755) | $(521) | $(181) | $(23,797) | $384,681 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=e)%20Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 - THE COMPANY](index=7&type=section&id=NOTE%201%20-%20THE%20COMPANY) - DXP Enterprises, Inc. distributes maintenance, repair, and operating (MRO) products and services, and provides integrated pump skid packages, pump remanufacturing, and manufactures private label pumps. The Company operates through three segments: **Service Centers (SC)**, **Innovative Pumping Solutions (IPS)**, and **Supply Chain Services (SCS)**[16](index=16&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES](index=7&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20AND%20BUSINESS%20POLICIES) - The financial statements are prepared in accordance with **U.S. GAAP** for interim periods, with certain disclosures omitted as permitted by SEC regulations. Prior year reclassifications had no material effect, and interim results are not necessarily indicative of the full fiscal year. All intercompany accounts and transactions are eliminated in consolidation[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) [NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS](index=7&type=section&id=NOTE%203%20-%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - The Company is evaluating new accounting pronouncements, including **ASU No. 2024-03** (Disaggregation of Income Statement Expenses) and **ASU No. 2023-09** (Improvements to Income Tax Disclosures). Neither is expected to have a material impact on financial position or results of operations, but will result in additional disclosures[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [NOTE 4 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES](index=8&type=section&id=NOTE%204%20-%20FAIR%20VALUE%20OF%20FINANCIAL%20ASSETS%20AND%20LIABILITIES) - Contingent consideration from acquisitions is measured at fair value using **Level 3 unobservable inputs**, including management's EBITDA forecasts and a **9.8% discount rate**. As of June 30, 2025, contingent consideration liabilities totaled **$11.9 million**, with a maximum payable of **$13.2 million** over three years[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) Contingent Consideration Reconciliation (in thousands) | Item | Amount | | :------------------------------------------ | :------- | | Beginning balance at December 31, 2024 | $16,322 | | Settlements | $(5,145) | | Changes in fair value recorded in other expense (income), net | $728 | | Ending Balance at June 30, 2025 | $11,905 | [NOTE 5 – INVENTORIES](index=9&type=section&id=NOTE%205%20%E2%80%93%20INVENTORIES) - Inventories are valued at the **lower of cost or net realizable value**, primarily using the **weighted average cost method**. Provisions are recorded for excess and obsolete items based on aging, market trends, and demand[29](index=29&type=chunk) Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Finished goods | $96,290 | $89,780 | | Work in process | $14,468 | $13,333 | | Total Inventories | $110,758 | $103,113 | [NOTE 6 – CONTRACT ASSETS AND LIABILITIES](index=9&type=section&id=NOTE%206%20%E2%80%93%20CONTRACT%20ASSETS%20AND%20LIABILITIES) - **Contract assets** ('Costs and estimated profits in excess of billings') arise when billing occurs after revenue recognition, while **contract liabilities** ('Billings in excess of costs and estimated profits') result from customer advances before revenue recognition. Changes are primarily due to normal activity and timing differences[31](index=31&type=chunk)[32](index=32&type=chunk) Contract Assets and Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Costs and estimated profits in excess of billings | $57,260 | $50,735 | | Billings in excess of costs and estimated profits | $(22,906) | $(12,662) | | Net | $34,354 | $38,073 | [NOTE 7 – INCOME TAXES](index=10&type=section&id=NOTE%207%20%E2%80%93%20INCOME%20TAXES) Effective Tax Rate | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | 25.3% | 27.4% | | Six Months Ended June 30, | 24.8% | 27.3% | - The effective tax rate decreased primarily due to **higher tax benefits** from stock compensation, state income taxes, and R&D tax credits, partially offset by uncertain tax positions related to R&D credits. The recently enacted **One Big Beautiful Bill Act (OBBB)** is expected to reduce cash taxes but not materially impact income tax expense[33](index=33&type=chunk)[35](index=35&type=chunk) - The Company anticipates the impact of **OECD Pillar Two rules** to be immaterial based on current legislation[36](index=36&type=chunk) [NOTE 8 – LONG-TERM DEBT](index=10&type=section&id=NOTE%208%20%E2%80%93%20LONG-TERM%20DEBT) Long-Term Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Amended Senior Secured Term Loan B | $644,629 | $647,876 | | Promissory Note | $1,000 | $1,000 | | Total debt | $645,629 | $648,876 | | Less: current maturities | $(6,595) | $(6,595) | | Total long-term debt | $639,034 | $642,281 | | Unamortized discount and debt issuance costs | $18,795 | $20,597 | | Long-term debt, net | $620,239 | $621,684 | - The Company's Senior Secured Term Loan B was amended in October 2024, increasing total borrowings to **$649.5 million**, maturing October 13, 2030. The interest rate for the Term Loan B was **8.08%** as of June 30, 2025. The Secured Leverage Ratio was **2.41 to 1.00**, well below the covenant of **5.50 to 1.00**[38](index=38&type=chunk)[40](index=40&type=chunk)[44](index=44&type=chunk) - The ABL Revolver, with a **$135.0 million** facility, had no outstanding borrowings at June 30, 2025, and an interest rate of **7.75%**. Borrowing availability was **$106.3 million**. The Fixed Charge Coverage Ratio was **2.02 to 1.00**, exceeding the **1.00 to 1.00** covenant[45](index=45&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) [NOTE 9 - EARNINGS PER SHARE](index=13&type=section&id=NOTE%209%20-%20EARNINGS%20PER%20SHARE) Earnings Per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic EPS | $1.50 | $1.05 | $2.81 | $1.75 | | Diluted EPS | $1.43 | $1.00 | $2.67 | $1.66 | | Weighted average common shares outstanding (Basic) | 15,694 | 15,868 | 15,696 | 15,998 | | Weighted average common shares outstanding (Diluted) | 16,534 | 16,708 | 16,536 | 16,838 | - Basic EPS is calculated based on weighted average shares outstanding, while diluted EPS includes the impact of potentially dilutive securities, such as convertible preferred stock (**840,000 shares**) and unvested restricted stock awards[54](index=54&type=chunk) [NOTE 10 - COMMITMENTS AND CONTINGENCIES](index=13&type=section&id=NOTE%2010%20-%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company is involved in various legal proceedings in the ordinary course of business, but believes their ultimate resolution will not have a material adverse effect on its financial position, cash flows, or results of operations[55](index=55&type=chunk) [NOTE 11 - SEGMENT REPORTING](index=13&type=section&id=NOTE%2011%20-%20SEGMENT%20REPORTING) - DXP operates in three reportable segments: **Service Centers** (MRO products, equipment, logistics), **Innovative Pumping Solutions** (custom pump packages, remanufacturing, water/wastewater products), and **Supply Chain Services** (MRO products, supply chain/inventory management)[16](index=16&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) Segment Sales (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Service Centers | $339,731 | $306,516 | $666,806 | $594,952 | | Innovative Pumping Solutions | $93,540 | $73,377 | $179,722 | $135,592 | | Supply Chain Services | $65,411 | $65,663 | $128,723 | $127,647 | | Total Reportable Segments | $498,682 | $445,556 | $975,251 | $858,191 | Segment Operating Income (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Service Centers | $50,171 | $43,855 | $97,215 | $84,175 | | Innovative Pumping Solutions | $18,642 | $13,366 | $32,049 | $20,336 | | Supply Chain Services | $5,229 | $5,823 | $10,792 | $11,085 | | Total Reportable Segments | $74,042 | $63,044 | $140,056 | $115,596 | [NOTE 12 - BUSINESS ACQUISITIONS](index=16&type=section&id=NOTE%2012%20-%20BUSINESS%20ACQUISITIONS) - During the first six months of 2025, DXP acquired two businesses for a total of **$13.9 million** to expand platforms, geographic coverage, and maintain its position as a leading distributor of rotating equipment in North America[68](index=68&type=chunk)[69](index=69&type=chunk) Acquisition Summary (Six Months Ended June 30, 2025, in thousands) | Item | Q1 2025 | Q2 2025 | Total | | :--------------------------------- | :------ | :------ | :---- | | Cash payments | $12,851 | $1,009 | $13,860 | | Tangible assets acquired | $8,030 | $909 | $8,939 | | Intangible assets acquired | $3,284 | $203 | $3,487 | | Total assets acquired | $11,314 | $1,112 | $12,426 | | Total liabilities assumed | $(4,983) | $(508) | $(5,491) | | Net assets acquired | $6,331 | $604 | $6,935 | | Goodwill | $6,520 | $405 | $6,925 | - Goodwill of approximately **$6.9 million** was assigned to the **SC segment**, primarily due to expected synergies and the assembled workforce. Acquired intangible assets include non-compete agreements (**$0.2 million**, 5-year amortization) and customer relationships (**$3.3 million**, 8-year amortization)[70](index=70&type=chunk)[72](index=72&type=chunk) [NOTE 13 - SHARE REPURCHASES](index=16&type=section&id=NOTE%2013%20-%20SHARE%20REPURCHASES) - The Company completed an **$85.0 million** share repurchase program in August 2024 and announced a new **$85.0 million** program on August 28, 2024, authorizing the repurchase of up to **2.5 million shares** over 24 months. No shares were repurchased under this program during the six months ended June 30, 2025[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) Share Repurchase Activity (in thousands, except per share data) | Period | Total Number of Shares Purchased | Amount Paid | Average Price Paid per Share | | :-------------------------- | :------------------------------- | :---------- | :--------------------------- | | Three Months Ended June 30, 2025 | — | $— | $— | | Three Months Ended June 30, 2024 | 139.4 | $6,992 | $50.15 | | Six Months Ended June 30, 2025 | — | $— | $— | | Six Months Ended June 30, 2024 | 465.8 | $23,798 | $51.09 | [NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION](index=17&type=section&id=NOTE%2014%20-%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) Supplemental Cash Flow Information (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :--------------------------------- | :------- | :------- | | Cash paid for interest | $26,698 | $29,140 | | Cash paid for income taxes | $33,948 | $15,456 | | Treasury shares repurchase accruals | $(28) | $— | [NOTE 15 - OTHER INCOME AND EXPENSES](index=17&type=section&id=NOTE%2015%20-%20OTHER%20INCOME%20AND%20EXPENSES) Other (Income) Expense (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Interest income | $(765) | $(1,192) | $(1,797) | $(3,065) | | Change in fair value of contingent consideration | $545 | $(111) | $728 | $(305) | | Other, net | $(134) | $268 | $(603) | $366 | | Total | $(354) | $(1,035) | $(1,672) | $(3,004) | [NOTE 16 - REVENUE](index=18&type=section&id=NOTE%2016%20-%20REVENUE) - Revenue is disaggregated by geography (**United States, Canada, Other**) and reportable segments (**Service Centers, Innovative Pumping Solutions, Supply Chain Services**), reflecting varying macroeconomic and market influences[79](index=79&type=chunk)[80](index=80&type=chunk) Revenues by Geographical Location (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | United States | $478,864 | $423,621 | $936,104 | $818,500 | | Canada | $19,369 | $21,144 | $38,357 | $38,219 | | Other | $449 | $791 | $790 | $1,472 | | Total | $498,682 | $445,556 | $975,251 | $858,191 | Sales Disaggregation by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 Sales | Three Months Ended June 30, 2025 Acquisition Sales | Three Months Ended June 30, 2025 Organic Sales | Six Months Ended June 30, 2025 Sales | Six Months Ended June 30, 2025 Acquisition Sales | Six Months Ended June 30, 2025 Organic Sales | | :-------------------------- | :------------------------------------ | :------------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------------- | :----------------------------------- | | Service Centers | $339,731 | $15,555 | $324,176 | $666,806 | $33,496 | $633,310 | | Innovative Pumping Solutions | $93,540 | $9,050 | $84,490 | $179,722 | $22,221 | $157,501 | | Supply Chain Services | $65,411 | $— | $65,411 | $128,723 | $— | $128,723 | | Total Sales | $498,682 | $24,605 | $474,077 | $975,251 | $55,717 | $919,534 | [NOTE 17 - SUBSEQUENT EVENT](index=20&type=section&id=NOTE%2017%20-%20SUBSEQUENT%20EVENT) - On July 1, 2025, the Company increased its ABL Revolver commitments by **$50 million**, raising the total facility to **$185.0 million**. Also, on July 1, 2025, DXP completed the acquisition of Moore's Pump & Services, funded with cash on hand[84](index=84&type=chunk)[85](index=85&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis covers DXP's financial performance, condition, and operational results, highlighting sales growth, improved margins, and liquidity [DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS](index=21&type=section&id=DISCLOSURE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) - This report contains **forward-looking statements** regarding the Company's business, profitability, cash flow, liquidity, and growth, which are subject to **significant risks and uncertainties**, and actual results may vary materially from expectations[87](index=87&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=21&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) - The Company discloses **non-GAAP financial measures**, including **organic sales, sales per business day, free cash flow, EBITDA, and Adjusted EBITDA**, to provide additional insights into operational performance, assist in business decision-making, and offer a consistent basis for comparison[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) [GENERAL BUSINESS OVERVIEW](index=22&type=section&id=GENERAL%20BUSINESS%20OVERVIEW) - DXP Enterprises, Inc. is a business-to-business distributor of **MRO products and services** across **North America and Dubai**, also specializing in fabricating, remanufacturing, and assembling custom pump packages and manufacturing branded private label pumps[92](index=92&type=chunk) [CURRENT MARKET CONDITIONS AND OUTLOOK](index=22&type=section&id=CURRENT%20MARKET%20CONDITIONS%20AND%20OUTLOOK) - The global economy faces **volatility and uncertainty** from **geopolitical developments, macroeconomic factors, and new tariffs**, which may impact DXP's operations. The Company is monitoring conditions and implementing strategies to mitigate adverse effects of **inflation** and **supply chain challenges**[93](index=93&type=chunk)[94](index=94&type=chunk) - Sales in **Service Centers** and **Innovative Pumping Solutions** segments increased by **15.9%** for the six months ended June 30, 2025, driven by price increases and acquisitions. **Supply Chain Services** segment sales increased by **0.8%**, primarily due to new customer facilities[97](index=97&type=chunk)[98](index=98&type=chunk) [Matters Affecting Comparability](index=23&type=section&id=Matters%20Affecting%20Comparability) - Year-over-year results are not directly comparable due to varying acquisition activity; acquisition sales were **$55.7 million** for the six months ended June 30, 2025, compared to **$35.2 million** in the prior year. There was one less business day in the second quarter of 2025 compared to 2024[99](index=99&type=chunk)[100](index=100&type=chunk) [Key Business Metrics](index=23&type=section&id=Key%20Business%20Metrics) Key Business Metrics (in thousands, except percentages and per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total DXP Sales | $498,682 | $445,556 | $975,251 | $858,191 | | Acquisition Sales | $24,605 | $23,403 | $55,717 | $35,178 | | Organic Sales | $474,077 | $422,153 | $919,534 | $823,013 | | Business Days | 63 | 64 | 126 | 127 | | Sales per Business Day | $7,916 | $6,962 | $7,740 | $6,757 | | Organic Sales per Business Day | $7,525 | $6,596 | $7,298 | $6,480 | | Gross Profit Margin | 31.6% | 30.9% | 31.6% | 30.5% | | Income from Operations Margin | 9.2% | 8.4% | 8.9% | 7.7% | | Net Income Margin | 4.7% | 3.7% | 4.5% | 3.3% | | EBITDA | $55,830 | $46,514 | $106,797 | $85,152 | | EBITDA Margin | 11.2% | 10.4% | 11.0% | 9.9% | | Adjusted EBITDA | $57,313 | $48,226 | $109,832 | $88,570 | | Adjusted EBITDA Margin | 11.5% | 10.8% | 11.3% | 10.3% | | Net cash provided by operating activities | $18,646 | $14,735 | $21,619 | $41,724 | | Free Cash Flow | $8,300 | $5,910 | $(8,641) | $30,005 | [Organic Sales and Acquisition Sales](index=24&type=section&id=Organic%20Sales%20and%20Acquisition%20Sales) - **Organic sales** include locations and acquisitions owned for at least twelve months, while **acquisition sales** are from acquisitions owned for less than twelve months[103](index=103&type=chunk) [Business Days](index=24&type=section&id=Business%20Days) - **Business Days** are defined as weekdays excluding Saturdays, Sundays, and holidays, even if some branches are open on weekends for consistency[104](index=104&type=chunk) [Sales per Business Day](index=24&type=section&id=Sales%20per%20Business%20Day) - **Sales per Business Day** is calculated by dividing total sales by the number of business days in the reporting period[105](index=105&type=chunk) [Organic Sales per Business Days](index=24&type=section&id=Organic%20Sales%20per%20Business%20Days) - **Organic Sales per Business Day** is calculated by dividing organic sales by the number of business days in the reporting period[106](index=106&type=chunk) [EBITDA and Adjusted EBITDA](index=24&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) - **EBITDA** is defined as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization. **Adjusted EBITDA** further excludes stock-based compensation expense and other non-cash, non-recurring items[107](index=107&type=chunk) [EBITDA Margin and Adjusted EBITDA Margin](index=24&type=section&id=EBITDA%20Margin%20and%20Adjusted%20EBITDA%20Margin) - **EBITDA Margin** is EBITDA divided by sales, and **Adjusted EBITDA Margin** is Adjusted EBITDA divided by sales[108](index=108&type=chunk) [Free Cash Flow](index=25&type=section&id=Free%20Cash%20Flow) - **Free Cash Flow** is defined as net cash provided by operating activities less purchases of property and equipment[109](index=109&type=chunk) [RESULTS OF OPERATIONS](index=25&type=section&id=RESULTS%20OF%20OPERATIONS) [Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024](index=25&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20compared%20to%20Three%20Months%20Ended%20June%2030,%202024) Financial Performance (Three Months Ended June 30, in thousands, except percentages) | Metric | 2025 | % of Sales | 2024 | % of Sales | Change ($) | Change (%) | | :--------------------------------- | :------- | :--------- | :------- | :--------- | :--------- | :--------- | | Sales | $498,682 | 100.0% | $445,556 | 100.0% | $53,126 | 11.9% | | Gross profit | $157,813 | 31.6% | $137,793 | 30.9% | $20,020 | 14.5% | | Selling, general and administrative expenses | $111,827 | 22.4% | $100,441 | 22.5% | $11,386 | 11.3% | | Income from operations | $45,986 | 9.2% | $37,352 | 8.4% | $8,634 | 23.1% | | Interest expense | $14,744 | 3.0% | $15,384 | 3.5% | $(640) | (4.2%) | | Income before income taxes | $31,596 | 6.3% | $23,003 | 5.2% | $8,593 | 37.4% | | Net income | $23,612 | 4.7% | $16,693 | 3.7% | $6,919 | 41.5% | - Sales increased by **11.9%** to **$498.7 million**, with acquisitions contributing **$24.6 million**. **Service Centers** sales grew **10.8%** (**$33.2 million**), **Innovative Pumping Solutions** sales grew **27.5%** (**$20.2 million**), while **Supply Chain Services** sales slightly decreased by **0.4%** (**$0.3 million**)[112](index=112&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - Gross profit margin improved to **31.6%** (up **70 basis points**) due to recent acquisitions and margin expansion. Operating income increased by **$8.6 million**, driven by SC and IPS segments. SG&A expenses rose by **$11.4 million** (**11.3%**) due to increased payroll, depreciation, amortization, rent, and IT expenses[113](index=113&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Interest expense decreased by **$0.6 million** due to Term Loan refinancing. The effective tax rate decreased to **25.3%** from **27.4%**, primarily due to **higher tax benefits** from stock compensation, state income taxes, and R&D tax credits[119](index=119&type=chunk)[120](index=120&type=chunk) [Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024](index=28&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20compared%20to%20Six%20Months%20Ended%20June%2030,%202024) Financial Performance (Six Months Ended June 30, in thousands, except percentages) | Metric | 2025 | % of Sales | 2024 | % of Sales | Change ($) | Change (%) | | :--------------------------------- | :------- | :--------- | :------- | :--------- | :--------- | :--------- | | Sales | $975,251 | 100.0% | $858,191 | 100.0% | $117,060 | 13.6% | | Gross profit | $308,078 | 31.6% | $261,675 | 30.5% | $46,403 | 17.7% | | Selling, general and administrative expenses | $221,577 | 22.7% | $195,192 | 22.7% | $26,385 | 13.5% | | Income from operations | $86,501 | 8.9% | $66,483 | 7.7% | $20,018 | 30.1% | | Interest expense | $29,404 | 3.0% | $30,928 | 3.6% | $(1,524) | (4.9%) | | Income before income taxes | $58,769 | 6.0% | $38,559 | 4.5% | $20,210 | 52.4% | | Net income | $44,201 | 4.5% | $28,025 | 3.3% | $16,176 | 57.7% | - Sales increased by **13.6%** to **$975.3 million**, with acquisitions contributing **$55.7 million**. **Service Centers** sales grew **12.1%** (**$71.9 million**), **Innovative Pumping Solutions** sales grew **32.5%** (**$44.1 million**), and **Supply Chain Services** sales increased by **0.8%** (**$1.1 million**)[123](index=123&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - Gross profit margin improved to **31.6%** (up **110 basis points**) due to recent acquisitions and margin expansion. Operating income increased by **$20.0 million** (**30.1%**), driven by all segments. SG&A expenses rose by **$26.4 million** (**13.5%**) due to increased payroll, depreciation, amortization, rent, and IT expenses[124](index=124&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Interest expense decreased by **$1.5 million** due to Term Loan refinancing. The effective tax rate decreased to **24.8%** from **27.3%**, primarily due to changes in income by jurisdiction, **higher tax benefits** from stock compensation, state income taxes, and R&D tax credits[130](index=130&type=chunk)[131](index=131&type=chunk) [NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS](index=30&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES%20AND%20RECONCILIATIONS) Organic Sales and Acquisition Sales Reconciliation (in thousands) | Segment | Three Months Ended June 30, 2025 Acquisition Sales | Three Months Ended June 30, 2025 Organic Sales | Six Months Ended June 30, 2025 Acquisition Sales | Six Months Ended June 30, 2025 Organic Sales | | :-------------------------- | :------------------------------------------ | :------------------------------------ | :----------------------------------------- | :----------------------------------- | | Service Centers | $15,555 | $324,176 | $33,496 | $633,310 | | Innovative Pumping Solutions | $9,050 | $84,490 | $22,221 | $157,501 | | Supply Chain Services | $— | $65,411 | $— | $128,723 | | Total DXP Sales | $24,605 | $474,077 | $55,717 | $919,534 | EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to DXP Enterprises, Inc. | $23,612 | $16,693 | $44,201 | $28,025 | | Plus: Interest expense | $14,744 | $15,384 | $29,404 | $30,928 | | Plus: Provision for income tax expense | $7,984 | $6,310 | $14,568 | $10,534 | | Plus: Depreciation and amortization | $9,490 | $8,127 | $18,624 | $15,665 | | EBITDA | $55,830 | $46,514 | $106,797 | $85,152 | | Plus: other non-recurring items | $— | $500 | $235 | $1,342 | | Plus: stock compensation expense | $1,483 | $1,212 | $2,800 | $2,076 | | Adjusted EBITDA | $57,313 | $48,226 | $109,832 | $88,570 | [LIQUIDITY AND CAPITAL RESOURCES](index=31&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) [General Overview](index=31&type=section&id=General%20Overview) - DXP assesses liquidity based on its ability to generate cash for operating, investing, and financing activities. The Company believes its **operating cash flow**, **cash on hand**, and **credit facilities (ABL and Term Loan B)** are sufficient to fund ongoing business needs, including capital expenditures, acquisitions, debt servicing, and share repurchases[138](index=138&type=chunk)[139](index=139&type=chunk) [Cash](index=31&type=section&id=Cash) - As of June 30, 2025, DXP had **$112.9 million** in cash and **$106.3 million** in credit facility availability under its **$135.0 million ABL Revolver**, with no outstanding borrowings[140](index=140&type=chunk) [Cash Flows](index=31&type=section&id=Cash%20Flows) Net Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Operating Activities | $21,619 | $41,724 | | Investing Activities | $(41,405) | $(130,736) | | Financing Activities | $(16,594) | $(35,003) | | Effect of Foreign Currency | $899 | $830 | | Net Change in Cash | $(35,481) | $(123,185) | [Operating Activities](index=31&type=section&id=Operating%20Activities) - Cash generated from operating activities decreased by **$20.1 million** to **$21.6 million** for the six months ended June 30, 2025, primarily due to higher income tax payments compared to the prior year[142](index=142&type=chunk) [Investing Activities](index=32&type=section&id=Investing%20Activities) - Net cash used in investing activities decreased by **$89.3 million** to **$41.4 million** for the six months ended June 30, 2025, mainly due to lower acquisition activity, with cash paid for acquisitions (net of cash acquired) totaling **$13.9 million** compared to **$119.0 million** in the prior year[143](index=143&type=chunk) [Financing Activities](index=32&type=section&id=Financing%20Activities) - Net cash used in financing activities decreased by **$18.4 million** to **$16.6 million** for the six months ended June 30, 2025, primarily due to the absence of share repurchase activity, which was significant in the prior year[144](index=144&type=chunk) [Debt](index=32&type=section&id=Debt) - As of June 30, 2025, total outstanding debt was **$645.6 million**, representing **58.0%** of total capitalization. The majority of this debt (**$644.6 million**) bears interest at floating rates[146](index=146&type=chunk) [Liquidity](index=32&type=section&id=Liquidity) - The Company expects internally generated cash flows to meet normal working capital needs for the next twelve months. Additional debt or equity financing may be sought for potential acquisitions, which could dilute shareholder interests[147](index=147&type=chunk) [Borrowing Capacity](index=32&type=section&id=Borrowing%20Capacity) ABL Revolver Borrowing Capacity (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total borrowing capacity | $135,000 | $135,000 | | Less: Amount drawn | $— | $— | | Less: Outstanding letters of credit | $28,692 | $9,354 | | Total amount available | $106,308 | $125,646 | - As of June 30, 2025, total liquidity was **$219.2 million**, comprising **$112.9 million** in cash and **$106.3 million** in ABL Revolver availability. Post-period, the ABL facility increased to **$185.0 million**[148](index=148&type=chunk)[149](index=149&type=chunk) [Free Cash Flow](index=33&type=section&id=Free%20Cash%20Flow) - **Free Cash Flow** is a key liquidity metric measuring cash available for acquisitions, investments, debt repayment, and share repurchases. It is not a **U.S. GAAP** measure and reconciles to cash flows from operations[150](index=150&type=chunk)[151](index=151&type=chunk) Free Cash Flow Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $18,646 | $14,735 | $21,619 | $41,724 | | Less: purchases of property and equipment | $(10,346) | $(8,825) | $(30,260) | $(11,719) | | Free Cash Flow | $8,300 | $5,910 | $(8,641) | $30,005 | [Uses of Liquidity](index=33&type=section&id=Uses%20of%20Liquidity) - Internally generated cash flows are primarily used for working capital, growth initiatives (including acquisitions and capital expenditures), and returning excess capital to shareholders through share repurchases[153](index=153&type=chunk) [Working Capital](index=33&type=section&id=Working%20Capital) - Working capital increased by **$58.0 million** to **$348.9 million** as of June 30, 2025, from **$291.0 million** at December 31, 2024, driven by sustained sales growth and acquisitions[154](index=154&type=chunk) [Acquisitions](index=33&type=section&id=Acquisitions) - The Company invested **$13.9 million** in acquisitions during the six months ended June 30, 2025, a significant decrease from **$119.0 million** in the prior year[155](index=155&type=chunk) [Capital Expenditures](index=33&type=section&id=Capital%20Expenditures) - Capital expenditures for the six months ended June 30, 2025, were **$30.3 million**, up from **$11.7 million** in the prior year, including investments in a new facility, upgrades, tools, equipment, and technology[156](index=156&type=chunk) [DISCUSSION OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES](index=33&type=section&id=DISCUSSION%20OF%20SIGNIFICANT%20ACCOUNTING%20AND%20BUSINESS%20POLICIES) - The unaudited condensed financial statements are prepared in accordance with **U.S. GAAP** and should be read with the Annual Report on Form 10-K for a complete discussion of significant accounting policies. Interim results are not necessarily indicative of full fiscal year results[158](index=158&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=33&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - Information regarding recent accounting pronouncements is provided in Note 3 to the Condensed Consolidated Financial Statements[159](index=159&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Company's market risk exposures remain consistent with prior disclosures, with no material changes since December 31, 2024 - The Company's market risk exposures have not materially changed since December 31, 2024, and are detailed in Item 7A of the Annual Report on Form 10-K[160](index=160&type=chunk) [ITEM 4. Controls and Procedures](index=34&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[161](index=161&type=chunk) - The condensed consolidated financial statements are fairly stated in all material respects in accordance with **GAAP**[162](index=162&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[163](index=163&type=chunk) PART II: OTHER INFORMATION [ITEM 1. Legal Proceedings](index=35&type=section&id=ITEM%201.%20Legal%20Proceedings) DXP is involved in ordinary course legal proceedings, with management expecting no material impact on financial position or operations - DXP is a party to various legal proceedings in the ordinary course of business, but expects no material adverse effect on its financial position, cash flows, or results of operations[165](index=165&type=chunk) [ITEM 1A. Risk Factors](index=35&type=section&id=ITEM%201A.%20Risk%20Factors) A potential reduction in federal income tax research credits is a new risk factor, with no other material changes to prior disclosures - A potential reduction or disallowance of **federal income tax credits for research activities**, currently under **IRS examination** for the 2018 tax year, could have a **material adverse effect** on DXP's business and financial condition[166](index=166&type=chunk) - No other material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, were identified[167](index=167&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered securities were sold, and no shares were repurchased under the $85.0 million program during the quarter - No unregistered securities were sold during the three months ended June 30, 2025[168](index=168&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (2) | | :----------------------- | :----------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :-------------------------------------------------------------------------------------------------- | | April 1 - April 30, 2025 | 75 | $82.90 | — | $85,000 | | May 1 – May 31, 2025 | 265 | $83.60 | — | $85,000 | | June 1 – June 30, 2025 | — | $— | — | $85,000 | | Total | 340 | $83.45 | — | $85,000 | - As of June 30, 2025, approximately **$85.0 million** worth of shares remained available under the **$85.0 million** Share Repurchase Program announced on August 28, 2024[170](index=170&type=chunk) [ITEM 3. Default upon Senior Securities](index=35&type=section&id=ITEM%203.%20Default%20upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[171](index=171&type=chunk) [ITEM 4. Mine Safety Disclosures](index=36&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The Company reported no mine safety disclosures - There were no mine safety disclosures[172](index=172&type=chunk) [ITEM 5. Other Information](index=36&type=section&id=ITEM%205.%20Other%20Information) The Company reported no other information - There was no other information to report[173](index=173&type=chunk) [ITEM 6. Exhibits](index=37&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, debt agreements, and certifications - The report includes various exhibits, such as Restated Articles of Incorporation, Bylaws, an Increase Amendment to the ABL Credit Agreement, Subsidiary Guarantors, and certifications from the CEO and CFO[175](index=175&type=chunk)[176](index=176&type=chunk) SIGNATURES - The report is duly signed on behalf of DXP Enterprises, Inc. by Kent Yee, Senior Vice President and Chief Financial Officer, on August 7, 2025[178](index=178&type=chunk)

Core Insights - DXP Enterprises reported an 11.9% increase in GAAP revenue for Q2 2025, reaching $498.7 million, slightly missing estimates by $0.3 million, while GAAP EPS rose to $1.43, exceeding expectations by $0.04, indicating strong profitability growth driven by core business segments and cost discipline [1][5][6] Financial Performance - GAAP revenue for Q2 2025 was $498.7 million, up from $445.6 million in Q2 2024, reflecting an 11.9% year-over-year increase [2][5] - GAAP EPS increased by 43.0% from $1.00 in Q2 2024 to $1.43 in Q2 2025 [2] - Adjusted EBITDA reached $57.3 million, an 18.9% increase from $48.2 million in the previous year, with an adjusted EBITDA margin of 11.5%, up from 10.8% [2][6] - Free cash flow rose by 40.7% to $8.3 million compared to $5.9 million in Q2 2024 [2][6] Segment Performance - Service Centers generated $339.7 million in revenue, a 10.8% increase, with an operating income margin of 14.8% [7] - Innovative Pumping Solutions saw a significant 27.5% revenue growth to $93.5 million, with a segment margin of 19.9%, benefiting from strong order backlogs [7][10] - Supply Chain Services reported nearly flat revenue at $65.4 million, with an 8.0% operating income margin, indicating a need for improvement in this segment [7][11] Strategic Focus - The company is focusing on growth through acquisitions, having completed two during the quarter and planning to finalize three or four more in the second half of fiscal 2025 [8][13] - DXP Enterprises emphasizes the integration of customized solutions and efficient business practices to enhance customer value and reduce costs [4][12] Operational Highlights - Gross profit increased by 14.5% to $157.8 million, with net income rising 41.3% to $23.6 million, outpacing sales growth [5][6] - Operating cash flow was reported at $18.6 million, with cash on hand at $112.9 million, reflecting a decrease due to acquisition spending and capital investments [6][12] Market Position - DXP Enterprises operates across 279 locations in North America and select international markets, providing a diverse range of products and solutions for industrial customers [3] - The company maintains a strong balance sheet, although it carries elevated net debt with a leverage ratio of 2.4 times adjusted EBITDA [12]

[Second Quarter 2025 Earnings Release Overview](index=1&type=section&id=Second%20Quarter%202025%20Earnings%20Release%20Overview) DXP Enterprises reported strong financial results for Q2 2025, with significant sales growth, a record adjusted EBITDA margin, and strategic acquisitions [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) DXP Enterprises achieved strong financial performance in Q2 2025, with significant sequential and year-over-year sales growth, an adjusted EBITDA margin of 11.5%, and multiple strategic acquisitions 2025 Second Quarter Key Financial Data | Metric | Amount/Ratio | QoQ Growth | YoY Growth | | :--------------------- | :---------- | :------------- | :------------- | | Sales | $498.7 million | 4.6% | 11.9% | | GAAP Diluted EPS | $1.43 | - | 43.0% | | Adjusted EBITDA | $57.3 million | 9.2% | 18.9% | | Adjusted EBITDA Margin | 11.5% | +0.5 pp | +0.7 pp | | Net Income | $23.6 million | 14.6% | 41.3% | | Operating Cash Flow | $18.6 million | - | 26.5% | | Free Cash Flow | $8.3 million | - | 40.6% | - As of June 30, 2025, the company held **$112.9 million** in cash[5](index=5&type=chunk) - Two acquisitions were completed this quarter, with another completed after the quarter ended[5](index=5&type=chunk) 2025 Second Quarter Sales and Operating Margins by Business Segment | Business Segment | Sales ($ million) | YoY Growth | Operating Margin | | :----------------------- | :------------- | :------------- | :--------- | | Service Center | $339.7 | 10.8% | 14.8% | | Innovative Pumping Solutions | $93.5 | 27.5% | 19.9% | | Supply Chain Services | $65.4 | -0.4% | 8.0% | [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO David R. Little highlighted the effective execution of the company's growth strategy and business resilience, while CFO Kent Yee noted record sales and adjusted EBITDA margins, with plans for continued acquisitions in H2 2025 - CEO David R. Little stated that Q2 results reflect the execution of the company's growth strategy and the resilience and durability of DXP's business, expressing satisfaction with sequential and year-over-year sales growth and strong gross margins[4](index=4&type=chunk) - CFO Kent Yee noted that DXP achieved a 4.6% sequential and 11.9% year-over-year sales increase, reaching **$498.7 million**, with an adjusted EBITDA margin of **11.5%**, setting a new record[4](index=4&type=chunk) - The company plans to complete at least three to four acquisitions in the second half of 2025 to continue executing its growth strategy[4](index=4&type=chunk) - As of June 30, 2025, total debt was **$626.8 million**, with a secured leverage ratio (net debt to EBITDA) of **2.4:1.0**[7](index=7&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of DXP Enterprises, Inc., including its business model and details regarding the upcoming conference call for investors [About DXP Enterprises, Inc.](index=3&type=section&id=About%20DXP%20Enterprises%2C%20Inc.) DXP Enterprises, Inc. is a leading distributor of products and services, offering value-added and total cost savings solutions to industrial customers in North America and Dubai, focusing on innovative pumping solutions, supply chain services, and MROP services - DXP Enterprises, Inc. is a leading distributor of products and services, providing value-added and total cost savings solutions to industrial customers in North America and Dubai[9](index=9&type=chunk) - The company offers innovative pumping solutions, supply chain services, and maintenance, repair, operating, and production (MROP) services[9](index=9&type=chunk) - DXP's business segments include Service Centers, Innovative Pumping Solutions, and Supply Chain Services[9](index=9&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) DXP management will host a conference call on August 7, 2025, to discuss financial results, with investors able to access the webcast and presentation via the company's investor relations website - DXP Enterprises, Inc. management will host a conference call on August 7, 2025, at 10:30 AM Central Time to discuss the company's financial results[7](index=7&type=chunk) - The conference call webcast can be accessed via https://ir.dxpe.com[7](index=7&type=chunk)[8](index=8&type=chunk) - An online replay and a slide presentation highlighting the company's performance and key performance indicators will be available on the website after the call[8](index=8&type=chunk) [GAAP Financial Performance](index=5&type=section&id=GAAP%20Financial%20Performance) This section presents DXP's unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and segment data, prepared in accordance with GAAP [UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS](index=5&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) DXP achieved significant revenue and profit growth in Q2 and H1 2025, with substantial year-over-year increases in sales, gross profit, operating income, net income, and diluted earnings per share Consolidated Statements of Operations Key Data ($ thousand) | Metric | 2025 Q2 | 2024 Q2 | YoY Change (%) | 2025 H1 | 2024 H1 | YoY Change (%) | | :----------------------- | :------------- | :------------- | :----------- | :----------- | :----------- | :----------- | | Sales | 498,682 | 445,556 | 11.9% | 975,251 | 858,191 | 13.6% | | Cost of Sales | 340,869 | 307,763 | 10.7% | 667,173 | 596,516 | 11.8% | | Gross Profit | 157,813 | 137,793 | 14.5% | 308,078 | 261,675 | 17.7% | | Operating Income | 45,986 | 37,352 | 23.1% | 86,501 | 66,483 | 30.1% | | Net Income | 23,612 | 16,693 | 41.3% | 44,201 | 28,025 | 57.7% | | Diluted Earnings Per Share | $1.43 | $1.00 | 43.0% | $2.67 | $1.66 | 60.8% | [UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, DXP's total assets and stockholders' equity increased, reflecting business expansion and improved financial health, despite a decrease in cash balance Consolidated Balance Sheets Key Data ($ thousand) | Metric | June 30, 2025 | Dec 31, 2024 | Change ($ thousand) | Change (%) | | :----------------------- | :------------- | :------------- | :-------- | :------- | | Cash | 112,930 | 148,320 | (35,390) | -23.9% | | Total Current Assets | 683,661 | 661,874 | 21,787 | 3.3% | | Total Assets | 1,412,394 | 1,349,494 | 62,900 | 4.7% | | Total Current Liabilities | 245,449 | 243,984 | 1,465 | 0.6% | | Total Liabilities | 944,302 | 926,706 | 17,596 | 1.9% | | Total DXP Enterprises, Inc. Stockholders' Equity | 468,092 | 422,788 | 45,304 | 10.7% | - As of June 30, 2025, total debt was **$626.8 million**[7](index=7&type=chunk) [SEGMENT DATA](index=7&type=section&id=SEGMENT%20DATA) In Q2 2025, DXP's Innovative Pumping Solutions and Service Center segments achieved strong sales and operating income growth, while Supply Chain Services experienced a slight sales decrease Sales by Business Segment ($ thousand) | Business Segment | 2025 Q2 | 2024 Q2 | YoY Change (%) | 2025 H1 | 2024 H1 | YoY Change (%) | | :----------------------- | :------------- | :------------- | :----------- | :----------- | :----------- | :----------- | | Service Center | 339,731 | 306,516 | 10.8% | 666,806 | 594,952 | 12.1% | | Innovative Pumping Solutions | 93,540 | 73,377 | 27.5% | 179,722 | 135,592 | 32.5% | | Supply Chain Services | 65,411 | 65,663 | -0.4% | 128,723 | 127,647 | 0.8% | | **Total Sales** | **498,682** | **445,556** | **11.9%** | **975,251** | **858,191** | **13.6%** | Operating Income by Business Segment ($ thousand) | Business Segment | 2025 Q2 | 2024 Q2 | YoY Change (%) | 2025 H1 | 2024 H1 | YoY Change (%) | | :----------------------- | :------------- | :------------- | :----------- | :----------- | :----------- | :----------- | | Service Center | 50,171 | 43,855 | 14.4% | 97,215 | 84,175 | 15.5% | | Innovative Pumping Solutions | 18,642 | 13,366 | 39.5% | 32,049 | 20,336 | 57.6% | | Supply Chain Services | 5,229 | 5,823 | -10.2% | 10,792 | 11,085 | -2.7% | | **Total Segment Operating Income** | **74,042** | **63,044** | **17.4%** | **140,056** | **115,596** | **21.1%** | [Non-GAAP Financial Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines and reconciles non-GAAP financial measures such as EBITDA, Adjusted EBITDA, organic sales, and free cash flow, providing additional insights into DXP's performance [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) DXP uses non-GAAP metrics like EBITDA, Adjusted EBITDA, and free cash flow to supplement GAAP reporting, offering additional insights into operational performance, liquidity, and strategic execution by excluding non-cash and non-recurring items - EBITDA is defined as net income attributable to DXP Enterprises, Inc. plus interest, taxes, depreciation, and amortization[22](index=22&type=chunk) - Adjusted EBITDA is defined as EBITDA less stock-based compensation expense and all other non-cash expenses, adjustments, and non-recurring items[22](index=22&type=chunk) - Free cash flow is defined as net cash provided by (used in) operating activities less purchases of property and equipment[27](index=27&type=chunk) - The company believes these non-GAAP measures provide additional information regarding operating performance, effectiveness of operating strategies, and liquidity, helping investors understand the business and evaluate strategic execution[11](index=11&type=chunk) [RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (EBITDA)](index=8&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20INFORMATION%20%28EBITDA%29) DXP's EBITDA and Adjusted EBITDA showed significant year-over-year and year-to-date growth in Q2 and H1 2025, reflecting improved operating performance and profitability EBITDA and Adjusted EBITDA Reconciliation ($ thousand) | Metric | 2025 Q2 | 2024 Q2 | YoY Change (%) | 2025 H1 | 2024 H1 | YoY Change (%) | | :--------------------- | :------------- | :------------- | :----------- | :----------- | :----------- | :----------- | | EBIT | 31,596 | 23,003 | 37.4% | 58,769 | 38,559 | 52.4% | | EBITDA | 55,830 | 46,514 | 20.0% | 106,797 | 85,152 | 25.4% | | Adjusted EBITDA | 57,313 | 48,226 | 18.8% | 109,832 | 88,570 | 24.0% | | Operating Margin | 9.2% | 8.4% | +0.8 pp | 8.9% | 7.7% | +1.2 pp | | Net Income Margin | 4.7% | 3.7% | +1.0 pp | 4.5% | 3.3% | +1.2 pp | | EBITDA Margin | 11.2% | 10.4% | +0.8 pp | 11.0% | 9.9% | +1.1 pp | | Adjusted EBITDA Margin | 11.5% | 10.8% | +0.7 pp | 11.3% | 10.3% | +1.0 pp | [RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Organic Sales)](index=9&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20INFORMATION%20%28Organic%20Sales%29) DXP achieved strong organic sales growth in Q2 and H1 2025, indicating healthy core business expansion even after excluding acquisition contributions Organic Sales and Sales Per Business Day Reconciliation ($ thousand) | Metric | 2025 Q2 | 2024 Q2 | YoY Change (%) | 2025 H1 | 2024 H1 | YoY Change (%) | | :----------------------- | :------------- | :------------- | :----------- | :----------- | :----------- | :----------- | | DXP Total Sales | 498,682 | 445,556 | 11.9% | 975,251 | 858,191 | 13.6% | | Acquisition Sales | 24,605 | 23,403 | 5.1% | 55,717 | 35,178 | 58.4% | | Organic Sales | 474,077 | 422,153 | 12.3% | 919,534 | 823,013 | 11.7% | | Business Days | 63 | 64 | -1.6% | 126 | 127 | -0.8% | | Sales Per Business Day | $7,916 | $6,962 | 13.7% | $7,740 | $6,757 | 14.5% | | Organic Sales Per Business Day | $7,525 | $6,596 | 14.1% | $7,298 | $6,480 | 12.6% | - Organic sales include sales from locations owned by the company for at least twelve months and acquired businesses[24](index=24&type=chunk) [RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Free Cash Flow)](index=9&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20INFORMATION%20%28Free%20Cash%20Flow%29) DXP generated positive free cash flow in Q2 2025, with a significant year-over-year increase, demonstrating improved cash generation capability after capital expenditures Free Cash Flow Reconciliation ($ thousand) | Metric | 2025 Q2 | 2024 Q2 | YoY Change ($ thousand) | 2025 H1 | 2024 H1 | YoY Change ($ thousand) | | :----------------------- | :------------- | :------------- | :------------ | :----------- | :----------- | :------------ | | Net Cash from Operating Activities | 18,646 | 14,735 | 3,911 | 21,619 | 41,724 | (20,105) | | Less: Purchases of Property and Equipment | (10,346) | (8,825) | (1,521) | (30,260) | (11,719) | (18,541) | | Free Cash Flow | 8,300 | 5,910 | 2,390 | (8,641) | 30,005 | (38,646) | [Information Related to Forward-Looking Statements](index=4&type=section&id=Information%20Related%20to%20Forward-Looking%20Statements) This section outlines the nature of forward-looking statements within the report, emphasizing inherent risks and uncertainties, and disclaims any obligation to update such information - Certain information in this press release (and in the company's oral or written statements) constitutes forward-looking statements, protected by the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995[12](index=12&type=chunk) - Forward-looking statements involve significant risks and uncertainties that could cause actual future results to differ materially from expectations, including but not limited to the effectiveness of management strategies, ability to integrate acquisitions, economic and business conditions, changes in government regulations, availability of materials and labor, and cyberattacks[12](index=12&type=chunk) - The company undertakes no obligation to update any forward-looking statements or information[12](index=12&type=chunk)

Financial Data and Key Metrics Changes - DXP Enterprises reported total sales for Q2 2025 of $498.7 million, reflecting an 11.9% year-over-year growth and a 4.7% sequential increase [9][19] - Adjusted EBITDA for Q2 was $57.3 million, representing an adjusted EBITDA margin of 11.5% [9][25] - Diluted earnings per share for Q2 was $1.43, up from $1.00 in the same quarter last year [25] Business Line Data and Key Metrics Changes - Innovative Pumping Solutions (IPS) led sales growth with a 27.5% year-over-year increase, while Service Centers grew by 10.8% year-over-year [10][20] - Supply Chain Services remained flat year-over-year, with a slight sequential growth of 3.3% [14][21] - The energy segment within IPS saw a significant year-over-year increase of 37.3% [10] Market Data and Key Metrics Changes - The DXP water platform achieved its eleventh consecutive quarter of sequential sales growth, reaching $48.7 million in Q2 [22] - Regions such as North and South Rockies, Ohio River Valley, and South Atlantic experienced year-over-year sales growth [22][23] Company Strategy and Development Direction - The company is focused on diversifying its business through new products, industries, and geographical expansions [6][16] - DXP continues to execute its acquisition strategy, having completed multiple acquisitions in the first half of 2025 [5][19] - The company aims to maintain adjusted EBITDA margins above 11% and is targeting 12% in the future [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment, citing a strong balance sheet and robust acquisition pipeline [9][30] - The backlog for energy-related projects is at an all-time high, indicating strong future revenue potential [11][21] - Management noted that while there are macroeconomic uncertainties, they are not seeing significant hesitance from customers regarding spending [38][39] Other Important Information - The company reported a working capital increase to $349 million, reflecting a 23.8 million increase from March [26] - Free cash flow for Q2 was $8.3 million, an increase from $5.9 million in the previous year [28] - DXP's acquisition pipeline remains active, with expectations to close three to four additional acquisitions in the second half of the year [29][30] Q&A Session Summary Question: Can you share daily sales trends by month for Q2 and Q3 thus far? - April sales were $7.81 million, May was $7.55 million, June was $8.37 million, and July is estimated at $7.25 million [35] Question: Will there be any significant margin differences between Q2 and Q3? - The company expects to continue benefiting from acquisitions that are accretive to margins, particularly in water and wastewater sectors [36] Question: Are customers hesitant to spend due to macro uncertainties? - Management indicated that they are not seeing significant hesitance in spending, with a strong backlog and bookings exceeding billings [39]

Financial Performance - Sales increased to $4987 million, a 119% year-over-year increase compared to Q2 2024, and a 46% sequential increase from Q1 2025[7] - Organic sales grew 123% year-over-year and 64% sequentially[7] - Net income for Q2 2025 was $236 million, compared to $167 million for Q2 2024 and $206 million for Q1 2025[7] - Adjusted EBITDA for Q2 2025 was $573 million compared to $482 million for Q2 2024 and $525 million for Q1 2025[7] - Adjusted EBITDA margin was 115%, 108%, and 110%, respectively[7] Cash Flow - Net cash provided by operating activities was $186 million for Q2 2025[19] - Free cash flow was $83 million for Q2 2025[19] Strategic Initiatives - The company closed one acquisition during Q2 2025 and one subsequent to quarter end[7] - The company has a flexible share repurchase program for opportunistic buybacks[24]

Core Insights - The article emphasizes the importance of saving and investing wisely, advocating for a disciplined approach to personal finance and investment strategies [1] Group 1: Investment Philosophy - The company suggests saving 10% of income consistently, regardless of the amount, as a fundamental principle of financial health [1] - It recommends investing in sectors where one has expertise, rather than diversifying into unfamiliar areas without proper guidance [1] - The focus is on long-term investing rather than trading, with a strategy to hold investments until the original thesis is invalidated [1] Group 2: Personal Approach to Investing - The company highlights the importance of pursuing passions over purely financial gains, suggesting that long-term happiness can outweigh short-term financial benefits [1] - It mentions the experience of working in various sectors, including natural resources, TMT, consumers, industrials, and transportation, to inform investment decisions [1]

Company Performance - DXP Enterprises (DXPE) closed at $111.84, reflecting a +1.19% change from the previous day's closing price, outperforming the S&P 500's 0.13% loss [1] - Over the past month, DXP Enterprises shares have increased by 22.76%, while the Industrial Products sector and the S&P 500 gained 5.75% and 3.39%, respectively [1] Financial Estimates - The Zacks Consensus Estimates predict DXP Enterprises will report earnings of $5.3 per share and revenue of $0 million for the fiscal year, indicating a +17.52% change in earnings and no change in revenue from the previous year [2] Analyst Estimates - Recent changes to analyst estimates for DXP Enterprises are important as they reflect near-term business trends, with positive revisions indicating a favorable business outlook [3] Valuation Metrics - DXP Enterprises has a Forward P/E ratio of 20.85, which is lower than the industry average Forward P/E of 22.02, suggesting a valuation discount [6] Industry Ranking - The Manufacturing - General Industrial industry, part of the Industrial Products sector, holds a Zacks Industry Rank of 23, placing it in the top 10% of over 250 industries [6]

Group 1 - DXP Enterprises (DXPE) closed at $99.71, marking a +1.38% move from the prior day, outperforming the S&P 500 which gained 0.06% [1] - Over the past month, shares of DXP Enterprises have appreciated by 17.36%, significantly exceeding the Industrial Products sector's gain of 6.94% and the S&P 500's gain of 5.88% [1] - The Zacks Consensus Estimates forecast earnings of $5.3 per share and revenue of $0 million for the entire year, indicating changes of +17.52% and 0%, respectively, compared to the previous year [2] Group 2 - Recent adjustments to analyst estimates for DXP Enterprises indicate a positive outlook, with positive revisions seen as a sign of optimism about the business [3] - The Zacks Rank system, which incorporates estimate changes, currently rates DXP Enterprises as 2 (Buy), reflecting a strong potential for stock performance [5] - DXP Enterprises has a Forward P/E ratio of 18.56, which is a discount compared to the industry average Forward P/E of 22.2, indicating potential value [6] Group 3 - The Manufacturing - General Industrial industry, part of the Industrial Products sector, has a Zacks Industry Rank of 32, placing it in the top 13% of over 250 industries [6] - The strength of individual industry groups is measured by the Zacks Industry Rank, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [7]