DXP Enterprises(US:DXPE)2026-02-26 17:30Financial Data and Key Metrics Changes - DXP sales grew 11.9% to $2 billion in fiscal 2025, with gross profit margins expanding 67 basis points to 31.5% [5][12] - Adjusted EBITDA reached a record $225.3 million, with an 11.2% margin, marking the first year of sustained 11%+ adjusted EBITDA margins [16][27] - Operating income increased 21.7% year-over-year to $176.9 million, and diluted earnings per share improved to $5.37, up from $4.22 in fiscal 2024 [5][27] Business Line Data and Key Metrics Changes - Innovative Pumping Solutions (IPS) sales grew 26.4% year-over-year to $390.3 million, driven by strength in energy and water-related project activity [9][19] - Service Centers delivered 11% total sales growth, including 9.8% organic growth, supported by diverse end markets [11][19] - Supply Chain Services experienced a modest decline of 1.4% year-over-year due to reduced activity at certain energy-related sites [12][22] Market Data and Key Metrics Changes - Energy represented 22% of DXP sales, followed by water and wastewater at 15%, general industry at 15%, chemical at 10%, and food and beverage at 7% [6][12] - Geographic regions with notable sales growth included Ohio River Valley, Southeast, Texas Gulf Coast, and California [12][21] Company Strategy and Development Direction - The company focuses on diversification of end market exposure while building scale in markets with a strong competitive position [6][14] - DXP completed 6 acquisitions in 2025, strengthening capabilities and expanding reach, while also executing a share repurchase program returning $17 million to shareholders [9][35] - The company aims to maintain margin discipline while driving organic growth and executing strategic acquisitions [14][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand across energy, water, and industrial markets, while remaining mindful of inflation dynamics and supply chain variability [14][30] - The company anticipates continued growth in 2026, with a focus on maintaining operational efficiency and leveraging recent acquisitions [14][30] Other Important Information - DXP generated $94.3 million in cash from operating activities, translating into $54 million of free cash flow during fiscal 2025 [13][32] - The company successfully refinanced its debt, improving flexibility and positioning for growth and acquisitions [9][30] Q&A Session Summary Question: Can you share daily sales trends by month for Q4 and Q1 thus far? - In Q4, daily sales were $7.5 million in October, $8.2 million in November, and $9.8 million in December, averaging $8.5 million per day [37] - January's daily sales were $6.9 million, typically the slowest month of the year [38] Question: Will there be a meaningful margin difference comparing Q4 with Q1? - Management indicated that water continues to be accretive to margins, and recent acquisitions should positively impact Q1 margins [40] Question: What are the positive dynamics developing in energy for the second half of the year? - Management noted a decline in Q4 energy-related backlog but observed increased quoting activity, suggesting potential for back-end weighted growth in 2026 [46][47]