DXP Enterprises(DXPE) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Earnings Release Overview 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 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 $112.9 million in cash[5] - Two acquisitions were completed this quarter, with another completed after the quarter ended[5] 2025 Second Quarter Sales and Operating Margins by Business Segment | Business Segment | Sales ($ 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 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] - 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] - The company plans to complete at least three to four acquisitions in the second half of 2025 to continue executing its growth strategy[4] - 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] Company Information 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. 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] - The company offers innovative pumping solutions, supply chain services, and maintenance, repair, operating, and production (MROP) services[9] - DXP's business segments include Service Centers, Innovative Pumping Solutions, and Supply Chain Services[9] Conference Call Information 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] - The conference call webcast can be accessed via https://ir.dxpe.com[7](index=7&type=chunk)[8] - 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] GAAP Financial Performance 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 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 | $1.66 | 60.8% | UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2025, DXP's total assets and stockholders' equity increased, reflecting business expansion and improved financial health, despite a decrease in cash balance Consolidated Balance Sheets Key Data ($ 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 $626.8 million[7] SEGMENT DATA In Q2 2025, DXP's Innovative Pumping Solutions and Service Center segments achieved strong sales and operating income growth, while Supply Chain Services experienced a slight sales decrease Sales by Business Segment ($ 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 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 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] - Adjusted EBITDA is defined as EBITDA less stock-based compensation expense and all other non-cash expenses, adjustments, and non-recurring items[22] - Free cash flow is defined as net cash provided by (used in) operating activities less purchases of property and equipment[27] - 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] RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (EBITDA) 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) 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 | $6,480 | 12.6% | - Organic sales include sales from locations owned by the company for at least twelve months and acquired businesses[24] RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Free Cash Flow) DXP generated positive free cash flow in Q2 2025, with a significant year-over-year increase, demonstrating improved cash generation capability after capital expenditures Free Cash Flow Reconciliation ($ 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 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] - 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] - The company undertakes no obligation to update any forward-looking statements or information[12]