• Total Sales: $1.8 billion, up 7.4% year over year.
• Q4 Sales: $470.9 million, a 15.7% increase year over year.
• Gross Profit Margin: 30.9%, a 77 basis point improvement over 2023.
• Adjusted EBITDA: $191.3 million, with a margin of 10.62%.
• Net Income: $70.5 million for fiscal 2024.
• Earnings Per Diluted Share (EPS): $4.22, adjusted EPS $4.51.
• Free Cash Flow: $77 million for fiscal 2024.
• Innovative Pumping Solutions Sales Growth: 47.7% year over year to $323 million.
• Service Centers Sales Growth: 1.9% year over year to $1.2 billion.
• Supply Chain Services Sales: $256.4 million, slight decline of 1.5% year over year.
• Acquisitions: Seven acquisitions completed in fiscal 2024, contributing $98.5 million in sales.
• Cash on Balance Sheet: $148.3 million as of December 31, 2024.
• Return on Invested Capital (ROIC): 39% for fiscal 2024.
• SG&A Expenses: $410.9 million, an increase from fiscal 2023.
• Debt Refinancing: Term Loan B repriced, reducing borrowing cost by 100 basis points.

• Warning! GuruFocus has detected 1 Warning Sign with DXPE.

Release Date: March 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DXP Enterprises Inc (NASDAQ:DXPE) reported a record year for key financial metrics, including sales per business day, gross profit margins, and adjusted EBITDA margin.
• Sales grew by 7.4% to $1.8 billion in fiscal 2024, demonstrating strong performance across various business segments.
• The company successfully executed seven acquisitions in fiscal 2024, contributing to diversification and growth.
• DXP Enterprises Inc (NASDAQ:DXPE) achieved a 77 basis point increase in gross profit margins to 30.9%, reflecting improved operational efficiencies.
• The company generated $77 million in free cash flow for fiscal 2024, highlighting its focus on consistent cash flow generation and capital allocation strategy.

Negative Points

• Supply Chain Services experienced a slight decline of 1.5% year over year, primarily due to facility closures by customers and small declines across energy-related sites.
• SG&A expenses increased by $44.3 million from fiscal 2023, reflecting growth in the business and associated incentive compensation.
• The company's cash balance decreased by $24.8 million compared to the end of Q4 2023, despite an increase in cash flow generation during the fourth quarter.
• Working capital increased by $20.9 million, which could impact liquidity if not managed efficiently.
• There is uncertainty regarding potential economic impacts from tariffs and inflation, which could pose challenges to maintaining sales growth and margins.

Q & A Highlights

Q: Can you provide insights on daily sales trends by month for both Q4 and so far into Q1? A: Yes, in Q4, sales per business day were $7.2 million in October, $7.5 million in November, and $8.1 million in December. For 2025, January sales per business day were $6.8 million, and February was $7.8 million. - David Little, Chairman and CEO

Q: How are margins trending quarter over quarter, and are there any factors in March that might change this trajectory? A: We don't have full visibility into Q1 margins yet, but from Q3 to Q4, gross margins increased significantly due to mix changes, particularly from higher-margin water and wastewater acquisitions. We aim to continue this trend into Q1. - Kent Yee, CFO

Q: What are your goals regarding EBITDA margins, and how do you plan to achieve them? A: Our goal was to reach 10% EBITDA margins, which we achieved. Now, we've set a new target of 11%. Employee compensation is aligned with these goals, and we're pleased with the progress. - David Little, Chairman and CEO

Q: How is DXP Enterprises managing its exposure to the oil and gas sector? A: We are working to diversify our market base away from oil and gas while still maximizing sales in that sector. This strategy has been successful, and we're being rewarded for our diversification efforts. - David Little, Chairman and CEO

Q: How does inflation impact DXP Enterprises, and how are you managing it? A: Inflation, within reason, is beneficial as it increases sales and inventory value without pressuring margins. We manage inflation impacts through appropriate pricing and cost management, including employee pay raises. - David Little, Chairman and CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.