DXP Enterprises, Inc. Reports Second Quarter 2025 Results

Business Wire

2 hours ago

HOUSTON--(BUSINESS WIRE)-- DXP Enterprises, Inc. ("DXP" or the "Company") (NASDAQ: DXPE) today announced financial results for the second quarter ended June 30, 2025. The following are results for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and March 31, 2025, where appropriate. A reconciliation of the non-GAAP financial measures can be found in the back of this press release.
Second quarter results reflect the execution of our growth strategy and the resilience and durability of DXP's business
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Second Quarter 2025 Financial Highlights:
Sales increased 11.9 percent to $498.7 million compared to $445.6 million for the second quarter of 2024 and increased 4.6 percent sequentially from $476.6 million for the first quarter of 2025.
Net income increased 41.3 percent for the second quarter to $23.6 million, compared to $16.7 million for the second quarter of 2024 and $20.6 million for the first quarter of 2025.
Earnings per diluted share for the second quarter was $1.43 based upon 16.5 million diluted shares, compared to $1.00 earnings per diluted share in the second quarter of 2024, based on 16.7 million diluted shares.
Adjusted EBITDA for the second quarter was $57.3 million compared to $48.2 million for the second quarter of 2024 and $52.5 million for the first quarter of 2025. Adjusted EBITDA as a percentage of sales, or Adjusted EBITDA margin, was 11.5 percent, 10.8 percent, and 11.0 percent, respectively.
Cash flow from operating activities increased 26.5 percent for the second quarter to $18.6 million, compared to $14.7 million for the second quarter of 2024.
Free Cash Flow (cash flow from operating activities less capital expenditures) for the second quarter was $8.3 million, compared to $5.9 million for second quarter of 2024.
Business segment financial highlights:
Service Centers' revenue for the second quarter was $339.7 million, an increase of 10.8 percent year-over-year, with a 14.8 percent operating income margin.
Innovative Pumping Solutions' revenue for the second quarter was $93.5 million, an increase of 27.5 percent year-over-year, with a 19.9 percent operating income margin.
Supply Chain Services' revenue for the second quarter was $65.4 million, a decrease of 0.4 percent year-over-year, with a 8.0 percent operating income margin.
David R. Little, Chairman and Chief Executive Officer commented, "Second quarter results reflect the execution of our growth strategy and the resilience and durability of DXP's business. We are pleased with our sequential and year-over-year sales growth and strength in our gross profit margins. This resulted in operating leverage that produced earnings per share of $1.43. DXP's second quarter 2025 sales were $498.7 million, or a 4.6 percent increase over the first quarter of 2025 and 11.9 percent increase over 2024. Sequential organic sales for the quarter increased 12.3 percent or $51.9 million and acquisitions added another $24.6 million in sales during Q2. Adjusted EBITDA grew $4.8 million, or 9.2 percent over the first quarter of 2025. During the second quarter of 2025, sales were $339.7 million for Service Center, $93.5 million for Innovative Pumping Solutions, and $65.4 million for Supply Chain Services. Overall, we are very pleased with our performance and the progress DXP continues to make as a growth company, and we are excited to enter the second half of 2025.'
Kent Yee, Chief Financial Officer and Senior Vice President, remarked, 'DXP achieved another high watermark quarter with a 4.6 percent sequential and 11.9 percent year-over-year sales increase to $498.7 million and 11.5 percent Adjusted EBITDA margins. We have closed two acquisitions through the second quarter, and one subsequent, and we anticipate closing at least three or four more acquisitions during the second half of 2025. This quarters financial results reflect continued execution of our strategic goals and the impact of our diversification efforts, an overall reduced energy industry exposure, and a strong balance sheet to support our key initiatives. Total debt outstanding as of June 30, 2025, was $626.8 million. DXP's secured leverage ratio or net debt to EBITDA ratio was 2.4:1.0 with a covenant EBITDA of $221.1 million for the last twelve months ending June 30, 2025.'
Conference Call Information
DXP Enterprises, Inc. management will host a conference call, August 7, 2025, at 10:30 a.m. Central Time, to discuss the Company's financial results. The conference call may be accessed by going to https://ir.dxpe.com.
Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://ir.dxpe.com. The online replay will be available on the same website immediately following the call. A slide presentation highlighting the Company's results and key performance indicators will also be available on the Investor Relations section of the Company's website.
To learn more about DXP Enterprises, Inc., please visit the Company's website at https://www.dxpe.com.
About DXP Enterprises, Inc.
DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout North America and Dubai. DXP provides innovative pumping solutions, supply chain services and maintenance, repair, operating and production ("MROP") services that emphasize and utilize DXP's vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services. DXP's breadth of MROP products and service solutions allows DXP to be flexible and customer-driven, creating competitive advantages for our customers. DXP's business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, go to www.dxpe.com.
Non-GAAP Financial Measures
DXP supplements reporting of net income with certain non-GAAP measurements, including EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, and Free Cash Flow. This supplemental information should not be considered in isolation or as a substitute for the unaudited GAAP measurements. Additional information regarding EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Free Cash Flow and net debt referred to in this press release are included below under "Unaudited Reconciliation of Non-GAAP Financial Information".
The Company believes EBITDA provides additional information about: (i) operating performance, because it assists in comparing the operating performance of the business, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii) the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a component of a measure of the Company's financial covenants under its credit facilities. Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors' understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation to its most directly comparable GAAP financial measure, the Company believes it is enhancing investors' understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives. Free Cash Flow reconciles to the most directly comparable GAAP financial measure of cash flows from operations as provided below. We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase shares of the Company's common stock, and for certain other activities.
Information Related to Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a 'safe-harbor' for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made by or to be made by the Company) contains statements that are forward-looking. These forward-looking statements include, without limitation, those about the Company's expectations regarding the Company's expectations regarding the filing of the Form 10-Q; the description of the anticipated changes in the Company's consolidated balance sheet and the results of operations and the Company's assessment of the impact of such anticipated changes; the Company's business, the Company's future profitability, cash flow, liquidity, and growth. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future; and accordingly, such results may differ from those expressed in any forward-looking statement made by or on behalf of the Company. These risks and uncertainties include, but are not limited to: the effectiveness of management's strategies and decisions; our ability to implement our internal growth and acquisition growth strategies; general economic and business conditions specific to our primary customers; changes in government regulations; our ability to effectively integrate businesses we may acquire; new or modified statutory or regulatory requirements; availability of materials and labor; inability to obtain or delay in obtaining government or third-party approvals and permits; non-performance by third parties of their contractual obligations; unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response thereto; cyber-attacks adversely affecting our operations; other geological, operating and economic considerations and declining prices and market conditions, including supply or demand for maintenance, repair and operating products, equipment and service; inability of the Company or its independent auditors to complete the work necessary in order to file the Form 10-Q in the expected time frame; unanticipated changes to the Company's operating results in the Form 10-Q as filed or in relation to prior periods, including as compared to the anticipated changes stated here; unanticipated impact of such changes and its materiality; ability to obtain needed capital, dependence on existing management, leverage and debt service, domestic or global economic conditions, ability to manage changes and the continued health or availability of management personnel and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, 'may,' 'will,' 'should,' 'intend,' 'expect,' 'plan,' 'anticipate,' 'believe,' 'estimate,' 'predict,' 'potential,' 'goal,' or 'continue' or the negative of such terms or other comparable terminology. More information on these risks and other potential factors that could affect the Company's business and financial results is included in the Company's filings with the Securities and Exchange Commission, including in the 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' sections of the Company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
DXP ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
($ thousands, except share amounts)
December 31, 2024
ASSETS
Current assets:
Cash
$
112,930
$
148,320
Restricted cash
—
91
Accounts receivable, net of allowance of $3,665 and $5,172, respectively
361,393
339,365
Inventories
110,758
103,113
Costs and estimated profits in excess of billings
57,260
50,735
Prepaid expenses and other current assets
41,320
20,250
Total current assets
683,661
661,874
Property and equipment, net
107,207
81,556
Goodwill
461,298
452,343
Other intangible assets, net
78,485
85,679
Operating lease right of use assets, net
60,835
46,569
Other long-term assets
20,908
21,473
Total assets
$
1,412,394
$
1,349,494
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of debt
$
6,595
$
6,595
Trade accounts payable
104,764
103,728
Accrued wages and benefits
37,449
41,650
Customer advances
16,018
13,655
Billings in excess of costs and estimated profits
22,906
12,662
Short-term operating lease liabilities
17,071
14,921
Other current liabilities
40,646
50,773
Total current liabilities
245,449
243,984
Long-term debt, net of unamortized debt issuance costs and discounts
620,239
621,684
Long-term operating lease liabilities
45,402
33,159
Other long-term liabilities
33,212
27,879
Total long-term liabilities
698,853
682,722
Total liabilities
944,302
926,706
Commitments and Contingencies
Shareholders' equity:
Series A preferred stock, $1.00 par value; 1,000,000 shares authorized
1
1
Series B preferred stock, $1.00 par value; 1,000,000 shares authorized
15
15
Common stock, $0.01 par value, 100,000,000 shares authorized; 20,401,857 issued and 15,694,084 outstanding at June 30, 2025 and 20,402,861 issued and 15,695,088 outstanding at December 31, 2024
204
204
Additional paid-in capital
217,982
219,511
Retained earnings
433,826
389,670
Accumulated other comprehensive loss
(30,961
)
(33,610
)
Treasury stock, at cost 4,707,773 and 4,707,773 shares, respectively
(152,975
)
(153,003
)
Total DXP Enterprises, Inc. equity
468,092
422,788
Total liabilities and equity
$
1,412,394
$
1,349,494
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Three Months Ended June 30,
Six Months Ended June 30,
Income from operations for reportable segments
$
74,042
$
63,044
$
140,056
$
115,596
Adjustment for:
Amortization of intangibles
5,327
4,719
10,684
9,088
Corporate expenses
22,729
20,973
42,871
40,025
Income from operations
$
45,986
$
37,352
$
86,501
$
66,483
Interest expense
14,744
15,384
29,404
30,928
Other income, net
(354
)
(1,035
)
(1,672
)
(3,004
)
Income before income taxes
$
31,596
$
23,003
$
58,769
$
38,559
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RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
($ thousands, unaudited)
We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization. We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization minus stock-based compensation expense and all other non-cash charges, adjustments, and non-recurring items. We identify the impact of all other non-cash charges, adjustments and non-recurring items because we believe these items do not directly reflect our underlying operations.
We define and calculate EBITDA Margin as EBITDA divided by sales. We define and calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by sales.
The following table sets forth the reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin to the most comparable U.S. GAAP financial measure (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Income before income taxes
$
31,596
$
23,003
$
58,769
$
38,559
Plus: Interest expense
14,744
15,384
29,404
30,928
Plus: Depreciation and amortization
9,490
8,127
18,624
15,665
EBITDA
$
55,830
$
46,514
$
106,797
$
85,152
Plus: other non-recurring items (1)
—
500
235
1,342
Plus: stock compensation expense
1,483
1,212
2,800
2,076
Adjusted EBITDA
$
57,313
$
48,226
$
109,832
$
88,570
Operating Income Margin
9.2
%
8.4
%
8.9
%
7.7
%
Net Income Margin
4.7
%
3.7
%
4.5
%
3.3
%
EBITDA Margin
11.2
%
10.4
%
11.0
%
9.9
%
Adjusted EBITDA Margin
11.5
%
10.8
%
11.3
%
10.3
%
(1) Other non-recurring items includes unique acquisition integration costs and other non-cash, non-recurring costs not related to continuing business operations.
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We define and calculate organic sales to include locations and acquisitions under our ownership for at least twelve months. "Acquisition Sales" are sales from acquisitions that have been under our ownership for less than twelve months and are excluded in our calculation of Organic Sales.
"Business Days" are days of the week, excluding Saturdays, Sundays, and holidays, that our locations are open during the year. Depending on the location and the season, our branches may be open on Saturdays and Sundays; however, for consistency, those days have been excluded from the calculation of Business Days.
We define and calculate Sales per Business Day as sales divided by the number of Business Days in the relevant reporting period.
We define and calculate Organic Sales per Business Day as Organic Sales divided by the number of Business Days in the relevant reporting period.
The following table sets forth the reconciliation of Acquisition Sales, Organic Sales and Organic Sales per Business Day to the most comparable U.S. GAAP financial measure (in thousands):
We define and calculate free cash flow as net cash (used in) provided by operating activities less purchases of property and equipment.
The following table sets forth the reconciliation of Free Cash Flow to the most comparable GAAP financial measure (in thousands):