NEWS RELEASE CONTACT: Kent Yee Senior Vice President, CFO 713-996-4700 www.dxpe.com DXP ENTERPRISES, INC. REPORTS THIRD QUARTER 2024 RESULTS • $35.0 million in cash • $472.9 million in sales, a 6.1 percent sequential and 12.8 percent year-over-year increase • GAAP diluted EPS of $1.27 • $52.4 million in earnings before interest, taxes, depreciation & amortization and other non-cash charges ("Adjusted EBITDA") • Free Cash Flow of $24.4 million for the quarter, and $54.4 million for the nine months ended Sept ...

Financial Data and Key Metrics - Total sales for Q3 2024 increased by 12.8% year-over-year to $472.9 million, with adjusted EBITDA of $52.4 million, up 19.1% year-over-year [8][19] - Year-to-date sales through September 30 increased by 4.7%, with adjusted EBITDA up 6.5% [7] - Gross profit margins improved by 94 basis points to 30.9% in Q3 2024 compared to Q3 2023 [17] - Operating income margin was 8.4% in Q3 2024, a slight decline of 18 basis points compared to Q3 2023 [18] - Earnings per diluted share for Q3 2024 was $1.27, up from $0.93 in Q3 2023 [37] Business Segment Performance - **Innovative Pumping Solutions (IPS):** Sales grew 52.3% year-over-year to $89.8 million, driven by strong performance in energy and water-related projects [8][9] - **Service Centers:** Sales increased 7.6% year-over-year to $316.8 million, with operating income margins of 14.6% [8][19] - **Supply Chain Services (SCS):** Sales grew 0.7% year-over-year to $66.2 million, with operating income margins of 8.4% [8][19] - DXP Water now represents 45% of IPS sales, up from 31% in the previous year [9] Market Performance - Energy-related backlog grew 39.1% sequentially in Q3 2024, with significant project wins expected to impact revenue in Q1 or Q2 of 2025 [27] - Water and wastewater-related backlog also showed strong growth, driven by both organic and acquisition-related additions [28] - Regional growth was observed in North Central, North Texas, South Rockies, Southwest, and Canadian rotating equipment markets [13] Strategic Direction and Industry Competition - The company is focused on driving organic and acquisition growth, improving gross profit margins, and increasing productivity [6] - DXP is diversifying its business to reduce cyclicality, with a strong emphasis on water and wastewater projects, which now represent a significant portion of IPS sales [9][10] - The company has closed seven acquisitions year-to-date, with plans to close at least two more by the end of Q1 2025 [44] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about the future, citing strong demand in end markets and a robust acquisition pipeline [6][20] - The company expects to maintain double-digit EBITDA margins and continue growing sales above market rates [20][22] - DXP is investing in technology and processes to improve efficiency and support long-term growth [17] Other Important Information - The company has remediated all material weaknesses in its financial controls as of Q3 2024 [45] - DXP repurchased $5 million worth of shares in Q3 and has a new $85 million share repurchase program in place [44] - Free cash flow for Q3 was $24.4 million, down from $38.3 million in Q3 2023, primarily due to investments in project work [41] Q&A Session Summary Question: Acquisition Pipeline and Recent Deals - The company closed five acquisitions by the end of Q3 and two more in October, bringing the total to seven year-to-date [47] - Two additional acquisitions are expected to close by the end of Q1 2025 [47] - Recent acquisitions include a water wastewater business in Nebraska and a vacuum pump business in California [48] Question: Q4 Revenue Expectations - Management expects Q4 revenue to be softer historically, with fewer billing days due to holidays [51] - Sales per business day trend shows variability, with September reaching $8.77 million per day, but October dropping to $6.99 million per day [50] Question: EBITDA Margins and Operating Tailwinds - Adjusted EBITDA margins are expected to remain in the double digits, supported by growth in water and wastewater projects and accretive acquisitions [55] - SG&A expenses are expected to remain elevated as the company invests in growth initiatives [55] Question: Debt Refinancing and Interest Expense - The company reduced borrowing costs by 100 basis points in October, with run-rate interest expense expected to remain around $15.5 million to $16 million per quarter [57] Question: Portfolio Diversification and Potential Divestitures - Management is open to divesting parts of the portfolio that no longer align with the company's strategic direction, though no immediate plans are in place [60][62] Question: Capital Allocation and Seller Expectations - Seller valuations remain reasonable, and the company continues to focus on strategic acquisitions that align with its growth objectives [58]

Core Viewpoint - The focus on cash flow rather than just profits is essential for assessing a company's financial health and potential for growth in the current economic environment [1][2][3]. Group 1: Importance of Cash Flow - Cash is crucial for a company's existence, development, and success, serving as a measure of resiliency [2]. - Positive cash flow indicates an increase in liquid assets, enabling a company to meet obligations, reinvest, and endure downturns [4]. - A company must not only have positive cash flow but also increasing cash flow to ensure future growth and reduce dependency on external financing [5]. Group 2: Screening Parameters for Stocks - Stocks were screened for those whose cash flow in the latest quarter was at least equal to or greater than the 5-year average cash flow per common share, indicating a positive trend [6]. - Additional criteria included a Zacks Rank of 1 (Strong Buy), an average broker rating of 1, a current price of at least $5, and a VGM Score of B or better [7]. Group 3: Selected Stocks - Limbach Holdings, Inc. (LMB) provides building systems and has seen a 2.5% upward revision in the 2024 earnings estimate [8]. - DXP Enterprises, Inc. (DXPE) offers innovative pumping solutions and has had a 12.7% upward revision in current-year earnings [9]. - Lands' End, Inc. (LE) operates as a multi-channel retailer with a 23.3% increase in fiscal 2025 earnings estimates [10]. - Euroseas Ltd. (ESEA) operates in the shipping market and has experienced a 13.7% upward revision in current-year earnings [11].

In the latest market close, DXP Enterprises (DXPE) reached $49.40, with a +0.06% movement compared to the previous day. The stock's performance was behind the S&P 500's daily gain of 0.16%. Meanwhile, the Dow experienced a drop of 0.37%, and the technology-dominated Nasdaq saw an increase of 0.78%. Shares of the industrial products supplier witnessed a loss of 7.48% over the previous month, trailing the performance of the Industrial Products sector with its loss of 0.89% and the S&P 500's gain of 1.67%. The ...

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks in various market conditions, utilizing valuation metrics to uncover potential opportunities [1][2]. Company Summary: DXP Enterprises (DXPE) - DXP Enterprises currently holds a Zacks Rank of 1 (Strong Buy) and an A grade for Value, indicating strong potential for value investors [3]. - The stock has a Forward P/E ratio of 14.45, significantly lower than the industry average of 22.24, with a historical range between 7.02 and 17.28 over the past 52 weeks [3]. - The P/B ratio for DXPE is 2.25, which is attractive compared to the industry average of 5.50, with a historical range of 1.32 to 2.40 [4]. - DXPE's P/CF ratio stands at 9.56, also favorable against the industry average of 21.95, with a historical range of 5.18 to 9.92 [5]. - Overall, the metrics suggest that DXP Enterprises is likely undervalued, making it one of the strongest value stocks in the market [6].

In the latest trading session, DXP Enterprises (DXPE) closed at $54.86, marking a +0.31% move from the previous day. This move lagged the S&P 500's daily gain of 0.77%. Elsewhere, the Dow saw an upswing of 0.47%, while the tech-heavy Nasdaq appreciated by 0.87%. The industrial products supplier's shares have seen an increase of 9.62% over the last month, surpassing the Industrial Products sector's gain of 8.52% and the S&P 500's gain of 4.87%. Investors will be eagerly watching for the performance of DXP En ...

When it comes to short-term investing or trading, they say "the trend is your friend." And there's no denying that this is the most profitable strategy. But making sure of the sustainability of a trend to profit from it is easier said than done. Often, the direction of a stock's price movement reverses quickly after taking a position in it, making investors incur a short-term capital loss. So, it's important to ensure that there are enough factors -- such as sound fundamentals, positive earnings estimate re ...

Company Performance - DXP Enterprises (DXPE) closed at $53.36, reflecting a +0.87% change from the previous trading day's closing, outperforming the S&P 500 which gained 0.42% [1] - Over the past month, DXP Enterprises' shares have depreciated by 3.82%, underperforming the Industrial Products sector's gain of 6.17% and the S&P 500's gain of 2.06% [1] Earnings and Analyst Estimates - Investors are keenly awaiting DXP Enterprises' upcoming earnings disclosure, with a focus on any recent adjustments to analyst estimates, which indicate changing business trends [2] - Positive revisions in estimates suggest analyst optimism regarding the company's business and profitability [2] Zacks Rank and Valuation - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently ranks DXP Enterprises at 1 (Strong Buy), with a Zacks Consensus EPS estimate that has increased by 12.66% in the past month [4] - DXP Enterprises has a Forward P/E ratio of 14.86, which is lower than the industry average Forward P/E of 22.97, indicating that DXP Enterprises is trading at a discount compared to its peers [5] Industry Context - The Manufacturing - General Industrial industry, to which DXP Enterprises belongs, has a Zacks Industry Rank of 160, placing it in the bottom 37% of over 250 industries [5] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [6]

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, September 26th: DXP Enterprises, Inc. (DXPE) : This company that engages in distributing maintenance, repair, and operating products, equipment, and services to industrial customers has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 12.7% over the last 60 days. DXP's shares gained 14.5% over the last three months compared with the S&P 500's advance of ...

When it comes to short-term investing or trading, they say "the trend is your friend." And there's no denying that this is the most profitable strategy. But making sure of the sustainability of a trend to profit from it is easier said than done. Often, the direction of a stock's price movement reverses quickly after taking a position in it, making investors incur a short-term capital loss. So, it's important to ensure that there are enough factors -- such as sound fundamentals, positive earnings estimate re ...