DXP ENTERPRISES INC Q1 FY2025 earnings call

• First quarter adjusted EBITDA was $52.5 million and adjusted diluted earnings per share was $1.26, supported by 15.5% year-over-year sales growth and 1.2% sequential sales growth. - Experienced organic growth of 11.1% year-over-year and acquisitions contributed $31.1 million in sales. - Closed the acquisition of Arroyo Process Equipment in the first quarter. - Service Centers achieved a new sales watermark at $327 million. - Total gross margins were 31.5%, a 151 basis point improvement over Q1 2024. - All three business segments saw improvements in operating income margins.

Innovative Pumping Solutions (IPS) grew 38.5% year-over-year. Service Centers grew 13.4% year-over-year. Supply Chain Services grew 2.1% year-over-year. In terms of revenue contribution, Innovative Pumping Solutions was 18.1%, Service Centers contributed 68.6%, and Supply Chain Services was 13.3%. First quarter service center sales reached a new high water mark of $327 million.

• Anticipate closing 2 to 3 acquisitions before mid-year. - Focus on growing the business organically and inorganically in fiscal year 2025. - Expect sustained growth and market outperformance with continued investments and acquisitions to drive future sales and profitability.

• Uncertainty around tariffs and trade policies, with impact on demand being unpredictable. - Need to manage tariffs to help customers and minimize price increases, while navigating potential effects on market demand.

Q: Is there any color you can share on daily sales trends by month for both Q1 and Q2 thus far?

A: Yes, in October it was 7.2 million per day, November 7.5 million per day, December 8.1 million per day, January 6.8 million per day, February 7.8 million per day, March 8.1 million per day, and April 7.8 million per day.

Q: Is there anything that should drive a meaningful margin difference, whether up or down, when comparing Q1 with Q2?

A: No, there wouldn't be anything substantive causing a meaningful margin difference between Q1 and Q2.

Q: Are you seeing any signs of things slowing down with all the tariff and macro uncertainty?

A: The tariffs are being worked on to take care of customers and minimize impact. At this point, no significant effect on demand has been seen, though tariff uncertainty is a key concern. Backlog and bookings remain good.