DXP Enterprises(DXPE) - 2024 Q3 - Quarterly Report

Sales Performance - For the nine months ended September 30, 2024, DXP reported total sales of approximately $1,331.1 million, an increase of 4.7$1,271.6 million for the same period in 2023[89]. - Organic sales for the three months ended September 30, 2024, were $444.4 million, up 7.0$415.4 million in the same period of 2023[89]. - The Service Centers segment generated sales of $911.8 million for the nine months ended September 30, 2024, compared to$914.1 million in 2023, reflecting a slight decrease[89]. - The Innovative Pumping Solutions segment saw sales increase to $225.4 million for the nine months ended September 30, 2024, up from$158.4 million in 2023, representing a growth of 42.2%[89]. - The Supply Chain Services segment reported sales of approximately $193.9 million for the nine months ended September 30, 2024, a decrease of 2.6$199.0 million in 2023[97]. - Sales for the three months ended September 30, 2024, increased by $53.7 million, or 12.8$472.9 million from $419.2 million for the prior year's corresponding period[100]. - The Service Centers segment saw sales increase by$22.4 million, or 7.6%, primarily due to job timing and a recent acquisition contributing $13.0 million[101]. - The Innovative Pumping Solutions segment experienced a sales increase of$30.9 million, or 52.3%, driven by project-related work and $15.6 million from recent acquisitions[102]. - For the nine months ended September 30, 2024, sales increased by$59.6 million, or 4.7%, to approximately $1,331.1 million, with the Innovative Pumping Solutions segment contributing$67.0 million to this growth[108]. Profitability and Expenses - Gross profit for the three months ended September 30, 2024, was $146.1 million, resulting in a gross profit margin of 30.9$125.6 million and 29.9% in the same period of 2023[89]. - Adjusted EBITDA for the three months ended September 30, 2024, was $52.4 million, with an adjusted EBITDA margin of 11.1$44.0 million and 10.5% in the same period of 2023[89]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $141.0 million, up from$132.4 million in the prior year, reflecting a growth of approximately 6.4%[121]. - Selling, general and administrative expenses (SG&A) for the three months ended September 30, 2024, increased by $16.8 million, or 18.7$106.5 million, mainly due to higher payroll and related expenses[104]. - SG&A for the nine months ended September 30, 2024, increased by approximately $28.0 million, or 10.2$301.7 million, reflecting increased business activity[113]. - Operating income for the third quarter of 2024 increased by $3.8 million to$39.6 million, attributed to the increase in sales during the period[105]. Cash Flow and Liquidity - Free cash flow for the three months ended September 30, 2024, was $24.4 million, down from$38.3 million in the same period of 2023[89]. - The Company generated $70.1 million in cash from operating activities during the nine months ended September 30, 2024, compared to$63.8 million in the prior year, marking an increase of 3.9%[128]. - Free Cash Flow for the three months ended September 30, 2024, was $24.4 million, compared to$38.3 million in the same period of 2023, indicating a decrease of 36.3%[123]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $165.1 million, significantly higher than$16.0 million in the same period of 2023, primarily due to acquisition activity[130]. - The Company had available cash of $35.0 million and credit facility availability of$131.6 million as of September 30, 2024[125]. - The Company expects to maintain adequate funding and liquidity to meet normal working capital needs over the next twelve months[139]. Debt and Financial Ratios - Interest expense for the third quarter of 2024 rose by $3.0 million, primarily due to an additional$125.0 million borrowed on the Term Loan[106]. - The Fixed Charge Coverage Ratio as of September 30, 2024, was 1.72 to 1.00, indicating compliance with financial covenants[133]. - The Secured Leverage Ratio as of September 30, 2024, was 2.54 to 1.00, below the required threshold of 5.50 to 1.00[135]. Future Outlook - DXP anticipates consistent demand across all end markets moving forward, supported by price increases from vendors and acquisition activities[96]. - Recent acquisitions contributed approximately $40.5 million in sales within the water and wastewater markets for the nine months ended September 30, 2024[96]. - The Company plans to pursue additional acquisition targets, primarily funded through cash flows from operations and borrowings[138]. - The effective tax rate for the three months ended September 30, 2024, was 11.1$21.1 million, compared to $16.2 million for the same period in 2023, representing a 30% increase[121].