Q4 2024 DXP Enterprises Inc Earnings Call
Okay.
Operator: Thank you for standing by.
Eric: Thank you for standing by my name is Eric and I'll be a conference operator today.
Eric: My name is Eric, and I will be your conference operator today.
At this time I would like to welcome everyone to the DXP enterprises incorporated fourth quarter 2024.
Eric: At this time, I would like to welcome everyone to the DXP Enterprises, Incorporated, 4th quarter, 2024, earnings release conference call. All lines have been placed on mute to prevent any background noise.
Eric: Earnings release Conference call.
Eric: All lines have been placed on mute to prevent any background noise.
Eric: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.
Eric: After the Speakers' remarks, there'll be a question answer session and.
Eric: If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Eric: If you would like to withdraw your question Press Star one again.
Eric: Thank you.
Kent Yee: I would now like to turn the call over to Kent Yee, Chief Financial Officer. Please go ahead. Thank you, Eric. And thank you, everyone.
Speaker Change: I'd like to turn the call over to <unk>, Chief Finance and Chief Financial Officer. Please go ahead.
Eric: Eric.
Kate E: Thank you everyone. This is Kate E and welcome to Dxp's Q4, 2024 conference call to discuss our results for the fourth quarter and fiscal year ending December 31, 2020 for joining.
Kent Yee: This is Kent Yee, and welcome to DXP's Q4 2024 conference call to discuss our results for the fourth quarter and fiscal year ending December 31st, 2024. Joining me today is our Chairman and CEO, David Little.
Eric: Joining me today is our chairman and CEO David Little.
Kent Yee: Before we get started, I want to remind you that today's call is being webcast and recorded and includes forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. A detailed discussion of the many risk factors that we believe may have a material effect on our business on an ongoing basis are contained in our SEC filings. However, DXP assumes no obligation to update that information because of new information or future events.
Eric: Before we get started I want to remind you that today's call is being webcast and recorded and includes forward looking statements actual results may differ materially from those contemplated by these forward looking statements a detailed discussion of the many risk factors that we believe may have a material effect on our business on an ongoing basis.
Eric: Are contained in our SEC filings. However, DXP assumes no obligation to update that information because of new information or future events.
Kent Yee: During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our earnings press release.
Eric: This call we may present, both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in our earnings press release, the press release and an accompanying investor presentation are now available on our website at IR Dot Dx P E Dot com.
Kent Yee: The press release and an accompanying investor presentation are now available on our website at ir.dxpe.com.
David Little: I will now turn the call over to David Little, our Chairman and CEO, to provide his thoughts and a summary of our fourth quarter and fiscal 2024 performance and financial results. David? Thanks, Kent. And thanks to everyone on our 2024 fourth quarter and physical. I am pleased to report another record year for our key financial metrics, sales, sales for business day, gross profit margins, and adjusted dividends. These results demonstrate the power of our people, products, and processes to serve the needs of our people. I also highlight the benefits of our broad and diverse exposure to different end markets and regions and our disciplined capital allocation.
Speaker Change: I'll now turn the call over to David Little our chairman and CEO to provide his thoughts and a summary of our fourth quarter and fiscal 2020 for performance and financial results David.
Speaker Change: Thanks, Dan and thanks to everyone on our 2020 for fourth quarter and physical 'twenty 'twenty four conference call.
Speaker Change: I am pleased to report another record year for our key financial metric metrics.
Speaker Change: Sales per business day growth profit margins and adjusted EBITDA margins.
Speaker Change: These results demonstrate the power of our people products and processes to serve the needs of our customers.
Speaker Change: They also highlight the benefits of our broad and diverse exposure to different end markets and regions and our disciplined capital allocation strategy.
David Little: It is my privilege to share DXP's fourth quarter in physical... for results with you on behalf of over 3,028 DXPs. Congratulations to all our stakeholders. Special thanks to our DX people. Fiscal 2024 was another successful year for DXP, growing sales 7.4% to $1.8 billion. We are excited to move into physical 2025 with the momentum momentum and results of our 2024. DXP had another year of winning at max margins and gross profit margins increase by 77 based to 30.9% Physical 2024 was about winning at max margins while also operating efficiencies and invest. We accomplished this goal by either maintaining or increasing margins on our business segments and executing seven acquisitions in Physical 24.
Speaker Change: It is my privilege to share Dxp's fourth quarter, and physical 2024 results with you on behalf of over 3028 Dx people.
Speaker Change: Congratulations to all our stakeholders and a special thanks to our Dx people you can trust.
Speaker Change: Physical 2024 was another successful year for DXP growing sales seven 4% to $1 8 billion.
Speaker Change: We are excited to move into a physical 2025 with the Moe minimum well minimum and results of our 2020 for DXP had another year of winning at Max margins and gross profit margins increased by 77 basis points to 39%.
Speaker Change: Physical 2024 was about Winnie and Max margins, while also operating efficiencies and investments we accomplished this goal by either maintaining or increasing margins on our business segments and executing seven acquisitions and physical 24.
David Little: Physical 24 was a record year in terms of sales dollars, achieving new high sales watermark for DXP, while achieving the second physical year of 10% plus adjusted EBITDA. We continue to successfully execute on our end market goals of diversification and scale. And at the end of physical 24, oil and gas was 23% of our business followed by water and wastewater and chemical at 10% and food and beverage and manufacturing at 7% and general industry at 13%. in our Words DXP has continued to deliver on balancing our risks from an end market perspective. And we have experienced that in the last two years, and specifically in We look forward to the interplay of these markets in 2025.
Speaker Change: Physical 24 was a record year in terms of sales dollars, achieving new highs sales watermark for DXP, while achieving the second physical year of 10% plus adjusted EBITDA margins.
Speaker Change: <unk> continues to successfully execute on our end market goals of diversification and scale and at the end of physical 24 oil and gas was 23% of our business, followed by water and wastewater and chemical at 10% and food and beverage and manufacturing at seven.
Speaker Change: Person and general industry at 13%.
Speaker Change: Our words DXP has continued to deliver on balancing our risk from an end market perspective, and we have experienced that in the last two years and specifically in 2024, we look forward to the interplay of these markets in 2025.
David Little: Thank you, DXPeople sales and operational professionals for teaming up together and winning for our customers and stakeholders. Thank you to our corporate support team for their effort to support both internal and external customers. And thank you, DXPeople, for an awesome year. Our future looks bright. In fiscal 2024, I mentioned, we continue to soundly execute on diversifying our end markets with a focus on water and wastewater and other industrial markets continue to continuing to execute on acquisition. adding seven great companies during the year including Hennessey, Mechanical Seal, Cappy Associates, Pro Seal, Manufacturer's Edge, Hartwell, Max Pack, and BGA Gurney.
Speaker Change: Thank you Dx people sales and operational professionals for teaming up together and winning for our customers and stakeholders. Thank you to our corporate support team for their effort to support both internal and external customers and thank you Dx people for an awesome year our future.
Speaker Change: It looks bright.
Speaker Change: And physical 2024, I mentioned, we continue to soundly execute on diversifying our end markets with a focus on water and wastewater and other industrial markets continue to <unk>.
Speaker Change: Continuing to execute on.
Speaker Change: On acquisitions, adding seven great companies during the year, including Hennessy mechanical seal Cappy associates Crossville manufacturers eggs Hartwell Max back and be a journey.
David Little: We also continued executing on our share repurchase program and refinanced our debt in the second half of 2024 positioning DXP for organic and inorganic growth in 2025. We continue to be excited about the future and delivering a differentiated customer experience, creating an engaging, winning culture for DXP, and investing in the business to strengthen our core capabilities and drive long-term growth. For physical 2024, total DXP sales were up 7.4%, operating income was up 4.8% compared to 23. Physical year 2024 sales and adjusted EBITDA were $1.8 billion and $191 million respectively, and adjusted EBITDA margins of 10.62%.
Speaker Change: We also continued executing on our share repurchase program and refinanced our debt in the second half of 2020 for positioning DXP for organic and in organic growth in 2025.
Speaker Change: We continue to be excited about the future and delivering a differentiated customer experience, creating an engaging winning culture for DXP and in investing in the business to strengthen our core capabilities and drive long term growth.
Speaker Change: For physical 2024 total DXP sales were up seven 4% operating income was up four 8% compared to 23.
Speaker Change: Physical year 2020 for sales and adjusted EBITDAR were one 8 billion and $191 million, respectively, and adjusted EBITDA margins of 10.62%.
David Little: Our strategy has always been to combine physical strength, talent, resources, technology, and capabilities of a large... with the fast flexibility, entrepreneurial capabilities of local businesses to deliver superior value to our customers and our suppliers while providing better growth opportunities for our DXP. We continue to believe in this approach and look to renew our commitment to people, processes, resources and technology as we scale DXP and remain focused on doubling the size of our business over the next three to five years. While making strategic investments that match the evolution of the From a sales per business day standpoint, DXP experienced continued improvement throughout the year, with Q1 averaging 6.55 million sales per business day, ending the Q4 averaging 7.595 million sales per business day.
Speaker Change: Our strategy our strategy has always been to combine physical strength.
Speaker Change: <unk> resources technology and capabilities of a large company with the fast flexibility entrepreneurial capabilities of local businesses to deliver superior value to our customers and our suppliers while.
Speaker Change: Providing better growth opportunities for our Dx people, we continue to believe in this approach and look to renew or.
Speaker Change: Commitment to people processes resources and technology as we scale DXP and remain focus on doubling the size of our business over the next three to five years.
Speaker Change: While making strategic investments that match the evolution of DXP.
Speaker Change: From a sales per business day standpoint, DXP experienced continued improvement throughout the year with Q1, averaging $6 5 million sales per business day, ending the Q4, averaging 759 5 million sales per business day total.
David Little: Total DXP sales for Q4 were $470.9 million or $7.595 million per business day. Our profits for the quarter were positively impacted by a sequential increase in gross margins, as well as an increase in SG&A associated with continued investment in our business. However, in the midst of continued change and growth, our year-over-year earnings showed improvement, resilience, and we grew diluted earnings per share. Again, thank you to the 3,028 DX people for your hard work and dedication and finishing the year as strong as possible. It is always my pleasure to share our fourth quarter and year-end financial results on your behalf.
Speaker Change: Total DXP sales for Q4 were $478 9 million or 7.595 million per business day or.
Speaker Change: Our profits for the quarter were positively impacted by a sequential increase in gross margins as well as an increase in SG&A associated with continued investment in.
Speaker Change: And our business however, in the midst of continued change and growth.
Speaker Change: Year over year earnings showed improvement resilience and we grew diluted earnings per share.
Speaker Change: Again, thank you to the 3020, a dx people for your hard work and dedication and finishing the year as strong as possible. It is always my pleasure to share our fourth quarter and year end financial results on your behalf.
David Little: In terms of cash flow and liquidity, we generated $77 million of free cash flow in the fiscal 2024, which reflects DXP's focus on generating consistent cash flow while investing in related working capital as the business continues to grow. This, combined with a flexible capital structure, put us in a position where we could keep executing on our acquisition strategy, as well as return capital to our shareholders via opportunistic share repurchase. As we discussed, acquisitions have continued to diversify our in-market exposure and position us well through various economic cycles, and we are excited about 2025 and the growth we are pushing to see, both organically and through acquisitions, as we continue to have a strong pipeline of opportunities.
In terms of cash flow and liquidity.
Speaker Change: Generated $77 million of free cash flow in the physical 2024, which reflects DXP is focused on generating consistent cash flow, while investing and related working capital as the business continues to grow.
Speaker Change: This combined with our flexible capital structure put us in a position where we could keep executing on our acquisition strategy as well as return capital to our shareholders Vir via opportunistic share repurchase.
Speaker Change: As we discussed acquisitions have continued to do versus by our end market exposure and position us well through various economic cycles and we are excited about 2025 and the growth we are pushing to see both organically and through acquisitions as we continue to have a strong.
Speaker Change: Pipeline of opportunities.
David Little: We are excited to have seven new companies join us during the year of 2024. On top of the three, we completed during fiscal 2023. All of our acquisitions have been great additions to DXP family. To all of our recent acquisitions, welcome to DXP, and we are excited to support your future growth as a part of it. DX people have continued to find ways to deliver financial results and position us well for our stakeholders in the face of extraordinary challenges. This is evidenced by our sales growth, improved gross profit margins, acquisitions, and the overall teamwork of the DX people.
Speaker Change: We are excited to have seven new companies join us during the year of 2024 on top of the three we completed during physical 2023.
Speaker Change: All of our acquisitions have been great additions to DXP family to all of our recent acquisitions welcome to DXP and we are excited to support future growth as a part of DXP.
Speaker Change: <unk> people have continued to find ways to deliver financial results and position us well for our stakeholders in the face of extraordinary challenges. This is evidenced by our sales growth and improved gross profit margins acquisitions and the overall teamwork of the Dx people.
David Little: We continue to build our capabilities to provide complimentary sets of products and services in all our markets, which makes DXP very unique in our industry and gives us more ways to help our customers win. We also are constantly looking at reviewing opportunities where we can grow market share. We complement our strategy with relentless drive for progress that includes business and operational initiatives that we believe will allow us to steadily improve our performance for our stakeholders. As we go into 2025, we're excited about the opportunity ahead and the potential DXP has to continue to scale and grow within existing and new markets.
Speaker Change: We continue to build our capabilities to provide complementary sets of products and services in all our markets, which makes DXP very unique in our industry and gives us more ways to help our customers win.
Speaker Change: We also are constantly looking at reviewing opportunities, where we can grow market share we complement our strategy with a relentless drive for progress to that includes business and operational initiatives. We are that we believe will allow us to steadily improve our performance for our stakeholders.
Speaker Change: As we go into 2025, we're excited about the opportunity ahead and the potential DXP has to continue to scale and grow within existing and new markets total DXP sales for physical 2024 were up seven 4% with innovative pumping.
David Little: Total DXP sales for physical 2024 were up 7.4% with innovative pumping solutions leading the way, growing 47.7% year over year to 323%. followed by service centers growth of 1.9% to $1.2 billion and then supply chain services at $256.4 million. In terms of IPS, Innovative Public Solutions, as we discussed in more detail in Q3, we have two broad businesses tied to capital budgets and project DXP's heritage energy-related project work, and DXP's water. For Physical 2024, DXP's water is 44% of IPS's sales last year. It was 32% last year. Yeah, DXPs 44% 44% of DXP sales. And then last year was 30%.
Speaker Change: Solutions, leading the way growing 47, 7% year over year to $323 million, followed by service centers growth of one 9% to $1 2 billion and then supply chain services that $256 4 million in terms of IP.
Speaker Change: Innovative pumping solutions as we discussed in more detail in Q3, we have two broad businesses tied to capital budgets and project work Dxp's Heritage Energy related project work and DXP is water.
Speaker Change: For physical 2020 for DXP as water is 44% of Ips as sales last year it was 32%.
Speaker Change: Last year I'm, sorry, Yeah, DXP is 44%, 44% of DXP sales and then last year was 32.
David Little: As we grow our DXP water platform, we have increased both margins and operating income margins for the segment and for DXP. DXP water backlog continues to grow both organically and through acquisition. In fiscal 2024, we added four acquisitions to the DXP water, including Hennessey, Cappy Associates, Hartwell Environmental, and BGA Gurney. Our energy-related bookings and backlog continue to show resilience and performance above our long-term averages set at all-time highs. Our Q4 average energy backlog continues to stay ahead of DXP's average going back to 2017. Additionally, our year-to-date average continues to exceed our long-term average IPS backlog going back to 2015.
Speaker Change: As we grow our DXP water platform, we have increased both margins and operating income margins for the segment and for DXP DXP water backlog continues to grow both organically and through acquisitions and physical 2024, we added four acquisitions through the DXP water, including <unk>.
Speaker Change: NSC Cappy associates Hartwell environmental N V G a gardening.
Speaker Change: Our energy related bookings and backlog continued to show resilience and performance above our long term averages sat at all time highs. Our Q4 average energy backlog continues to stay ahead of Dxp's average going back to 2017. Additionally, our year to date.
Speaker Change: <unk> averaged continues to exceed our long term average Ips backlog going back to 2015.
David Little: which we highlighted occurred for the first time in the second quarter of 2023 and continues as we move forward to fiscal year 2025. What this indicates is that we are continuing to get bookings, and we feel good at this point in the cycle on energy and waste and wastewater related projects. We look forward to seeing how this impacts our results and project revenue, both in energy and water and wastewater as we move through 2025. As we maintain growth, our main focus within IPS will be managing to the demand levels we have, finding opportunities in all markets such as energy, biofuels, food and beverage, water and wastewater, and pricing appropriately given the supply chain dynamics and ebbs and flows of inflation.
Speaker Change: Which we highlighted occurred for the first time in the second quarter of 2023 and continues as we move forward to physical year 2025.
Speaker Change: That what this indicates is that we are continuing to get bookings and we feel good at this point in the cycle on energy and waste Mye wastewater related project work.
Speaker Change: Look forward to seeing how this impacts our results in project revenue, both in energy and water and wastewater as we move through 2025.
Speaker Change: Yeah.
Speaker Change: We maintain growth.
Our main focus within Ips will be managing to the demand levels, we have finding opportunities in all markets, such as energy Biofuels food and beverage water and wastewater and pricing appropriately given the supply chain dynamics and ebbs and flows of inflation.
David Little: In terms of service centers, the diversity of in markets, multiple product division approach, and our MRO nature within service centers allows us to continue to remain resilient and continue to experience top line year-over-year growth in physical 2024. From a regional perspective, regions that experienced year over year growth included North Central, South Rockies, Southwest, our Canadian rotating equipment business. We continue to expect our end markets will remain constructive over the near term. We have also seen in our US Safety Services Division and Metal Working Product Divisions, which is great. Supply chain services experienced a slight decrease year-over-year primarily due to some facility foreclosures by our customers and small declines across our energy-related SES sites.
Speaker Change: In terms of service centers, the diversity of end markets.
Speaker Change: Multiple product division approach and our MRO nature with them service centers allows us to continue to remain resilient and continue to experience top line year over year growth in physical 2024.
Speaker Change: From a regional perspective regions that experienced the year over year growth included in North Central South Rockies southwest our Canadian rotating equipment business. We continue to expect our end markets will remain constructive over the near term we have also seen in our.
Speaker Change: U S safety services division and metal working product divisions, which is great to see.
Speaker Change: Yes.
Speaker Change: Supply chain services experienced a slight decrease year over year, primarily due to some facility closures by our customers and small declines across our energy related SCS sites that said Ses has also invested in customer care model, allowing customers to utilize DXP.
David Little: That said, SES has also invested in a customer care model, allowing customers to utilize DXP's remote technology within the need for a full-time on-site presence. This model enables DXP to extend SES's technology to accounts with smaller sites and expand the business relationship. SES remains committed to expanding our industrial customer base through enhanced marketing and lead generation tools. As we go into FY25, we believe demand for SES's services is increasing because of the proven technology and efficiency they perform for all of their industrial customers. DXP's overall gross profit margins for the year were 30.9%, a 77 basis point improvement over 2023.
Speaker Change: He's remote technology within the need for a full time onsite presence. This model enables DXP to extend Ses's technology, two accounts with smaller sites and expand the business relationship.
Speaker Change: <unk> remains committed to expanding our industrial customer base through enhanced marketing and lead generation tools and as we go into physical 25, we believe demand for Ses's services is increasing because of the proven technology and efficiency they perform for all of their industrial customer.
Speaker Change: Sure.
Speaker Change: Dxp's overall gross profit margins for the year were 39%, a 77 basis point improvement over 2023.
David Little: This is the plate displayed. constant gross margin performance within our different segments throughout the year and added accretive gross margin. through, we added the creative gross profit margins through our acquisition. That said, service centers had meaningful improved gross margins year-over-year, IPS sales contribution was 18% of total sales in 2024 and 13% total sales in 2023. Overall, DXP produced adjusted EBITDA of $191.3 million or an increase of 9.8% year over year. Adjusted EBITDA as a percent of sales was 10.62% or an increase of 24 basis points compared to 2023.
Speaker Change: Just to play displayed.
Speaker Change: Constant gross margin performance within our different segments throughout the year and added accretive gross margin gross margins.
Speaker Change: Through <unk>, we added accretive gross profit margins through our acquisitions.
Speaker Change: That said service centers had meaningful improved gross margins year over year Ips.
Speaker Change: Sales contribution was 18% of total sales in 2024 and 13% of total sales in 2023.
Speaker Change: Overall DXP produced adjusted EBITDA of $191 3 million or an increase of nine 8% year over year adjusted EBITDA as a percent of sales was 10, 62% or an increase of 24 basis points compared to 2023.
David Little: In summary, we are pleased with our overall performance in 2024. We look to continue to drive improvement in our organic sales and marketing strategies and drive further sales growth through acquisitions and anticipate physical 2025 to be a to be focused. on Maintaining Margins While Driving and Laying the Groundwork for Long-Term Operating Efficiency. Overall, through our strategic investments and initiatives, we will remain focused on providing world-class tools, processes, training, and technology to deliver value to our customers and suppliers and help our DX people be more productive so they can better help our customers. I would like to sincerely thank all our DX people who continue to show up to work with their passion, commitment, teamwork, and selfless service.
Speaker Change: In summary, we are pleased with our overall performance in 2024, we look to continue to drive improvement in our organic sales and marketing strategies and drive further sales growth through acquisitions and anticipate physical 2025 to be to be focus.
Speaker Change: On maintaining margins, while driving and laying the groundwork for long term operating efficiencies.
Speaker Change: Overall through our strategic investments and initiatives, we will remain focused on providing world class tools processes training and technology to deliver value to our customers and suppliers and help our dx people be more productive so they can better help our customers win.
Speaker Change: I would like to sincerely. Thank all our Dx people, who continue to show up to work with their passion commitment teamwork and selfless service. They have a tremendous team and it is an honor to deliver value for all our stakeholders I am pleased with our performance in physical 24, I'm proud of our efforts to continue.
David Little: We have a tremendous team and it is an honor to deliver value for all our stakeholders. I am pleased with our performance in Fiscal 24. I'm proud of our efforts to continue to improve. We are growing sales in excess of market and expect the same in the near future. We expect to drive SG&A leverage, manage working capital, generate free cash flow. And if organic sales slow, then free cash flow will grow, and we will take advantage of the economy to grow profitability both organically and through. If inflation rears its head, DXP is not concerned. As a distributor, we pass on increases to our customers.
Speaker Change: To improve we are growing sales in excess of market and expect into the and expect the same in the near future. We expect to drive SG&A leverage manage working capital generate free cash flow.
And if organic sales slow than free cash flow will grow and we will take advantage of the economy to grow profitability, both organically and through acquisitions if.
Speaker Change: If inflation rears its head DXP is not concerned as a distributor we pass on increases to our customer DXP has experienced in navigating inflationary environment.
David Little: DXP is experienced in navigating inflationary environments. We have grown sales on a compounded annual growth rate of over 15.7% since 2008. We have achieved new highs in both sales and profitability, and I would like to thank our stakeholders, and especially our DXP.
Speaker Change: We have grown sales on a compounded annual growth rate of over 15, 7% since 2020.
Speaker Change: We have achieved new highs in both sales and profitability and I would like to thank our stakeholders and especially our Dx people.
Kent Yee: With that, I'll now turn it back over.
Kenzie: With that I'll now turn it back over to Kenzie.
Speaker Change: Yeah.
Kent Yee: Thank you, David. And thank you to everyone for joining us for our review of our fourth quarter and fiscal year 2024 financial results. Fiscal 2024 was another record year, a new watermark in terms of sales and gross margins. Additionally, is our second fiscal year of 10% plus adjusted EBITDA margins. We are excited to report these results and we look forward to moving into fiscal 2025. Specifically, fiscal year 2024 financial performance reflects our ability to continue to execute on key themes that we have been focused on over the past three to five years. Overall, DXP's fiscal 2024 financial results reflect the following.
Speaker Change: Thank you David and thank you to everyone for joining us for a review of our fourth quarter and fiscal year 2024 financial results fiscal 2024 was another record year and new water Mark in terms of sales and gross margins. Additionally, as our second fiscal year of 10% plus adjusted.
Speaker Change: EBITDA margins were.
Speaker Change: To report these results and we look forward to moving into fiscal 2025.
Speaker Change: Specifically fiscal year 2024 financial performance reflects our ability to continue to execute on key themes that we have been focused on over the past three to five years overall dxp's fiscal 2024 financial results reflect the following.
Kent Yee: Strong year-over-year sales growth driven by innovative pumping solutions and acquisitions. Continued Gross Margin Strength and Stability, Consistent Operating Leverage Leading to Sustained Adjusted EBITDA Margins, more notably our second year of 10% plus adjusted EBITDA margins. Continued execution on our acquisition strategy, completing seven acquisitions, and DXP Water crossing the $100 million plus sales mark. Successfully refinancing and repricing our term loan B, including raising an incremental $105 million and reducing interest costs by 100 basis points, and continued capital return to shareholders through our share repurchase program. Total sales for the fourth quarter increased 15.7% year-over-year to $470.9 million.
Speaker Change: Strong year over year sales growth driven by innovative pumping solutions and acquisitions.
Speaker Change: <unk> gross margin strength and stability.
Speaker Change: Consistent operating leverage leading to sustained adjusted EBITDA margins more notably our second year of 10% plus adjusted EBITDA margins continued.
Speaker Change: Execution on our acquisition strategy, completing seven acquisitions and DXP water crossing the $100 million plus sales mark successfully refinancing and repricing our term loan b, including raising.
Speaker Change: Incremental $105 million and reducing interest costs by 100 basis points and continued capital return to shareholders through our share repurchase program.
Speaker Change: Total sales for the fourth quarter increased 15, 7% year over year to $479 million that said this reflects improvement in sales per business day going from 739 million in Q3 with 64 business days to 62 days in Q4 or 7.595 million sales per day in Q4.
Kent Yee: That said, this reflects improvement in sales per business day going from 7.39 million in Q3 to 64 business days to 62 days in Q4 or 7.595 million sales per day in Q4. Acquisitions that have been with DXP for less than a year contributed 34.8 million in sales during the quarter. Total sales for DXP for fiscal year 2024 were $1.8 billion, increasing 7.4% compared to fiscal 2023. For the full year, acquisitions contributed $98.5 million in sales. Average daily sales for the fourth quarter were $7.595 million per day, as previously mentioned, or up 2.8% compared to Q3 2024, and were up 13.8% versus Q4 of 2023, or a sales per business day of $6.67 million in Q4 of 2023.
Speaker Change: Sure.
Speaker Change: Acquisitions that have been with DXP for less than a year contributed $34 8 million in sales during the quarter total sales for DXP for fiscal year 2024 were $1 8 billion, increasing seven 4% compared to fiscal 2023 for the full year acquisitions contributed $98 5 million in sales.
Speaker Change: Average daily sales for the fourth quarter were $7 595 million per day, as previously mentioned or up two 8% compared to Q3 2024 and were up 13, 8% versus Q4 of 2023 or sales per business day of $6 $67 million in Q4 of 2023.
Kent Yee: Average daily sales for fiscal year 2024 were $7.123 million per day versus $6.661 million per day in fiscal 2023, a 7% increase. In terms of our business segments, innovative pumping solutions grew 47.7% year-over-year. This was followed by service centers growing 1.9% year-over-year and supply chain services slightly declining at 1.5% year-over-year. In terms of innovative pumping solutions, we continue to experience increases in the energy and water-related backlog. Our Q4 energy-related average backlog grew 17.5% over our Q3 average backlog, which continues to be a notable uptick compared to Q1 of this year and continues to be ahead of our 2015, 2016, and 2017 average backlog.
Speaker Change: Average daily sales for fiscal year 2024 were 712 3 million per day versus 666 1 million per day in fiscal 2023, 7% increase in terms of our business segments.
Speaker Change: Innovative pumping.
Speaker Change: Innovative pumping solutions grew 47, 7% year over year. This was followed by service centers growing one 9% year over year and supply chain services slightly declining at one 5% year over year in.
Speaker Change: In terms of innovative pumping solutions, we continue to experience increases in the energy and water related backlog. Our Q4 energy related average backlog grew 17, 5% over our Q3 average backlog, which continues to be a notable uptick compared to Q1 of this year and continues to be ahead of our 2015 2016.
Speaker Change: And 2017 average backlog it is worth noting that our energy backlog includes a significant project. When that is currently estimated to meaningfully impact our sales performance in Q1 or Q2 of 2025 adjusting for this project are energy backlog grew eight 7% sequentially that said the conclusions continue.
Kent Yee: It is worth noting that our energy backlog includes a significant project win that is currently estimated to meaningfully impact our sales performance in Q1 or Q2 of 2025. Adjusting for this project, our energy backlog grew 8.7% sequentially. That said, the conclusion continues to remain that we are trending meaningfully above all historical sales levels and we are moving towards 2014 sales levels based upon where our backlog stands today. We also see strength in our IPS water backlog as it continues to grow due to a combination of organic and acquisition addition. In terms of our DXP water backlog, as of Q4, we're up 108% compared to Q4 of last year.
Speaker Change: To remain that we're training minute meaningfully above also storage sales levels and we are moving towards 2014 sales levels based upon where our backlog stands today. We also see strengthen our Ips water backlog as it continues to grow due to a combination of organic and acquisition additions in terms of our DXP water backlog.
Speaker Change: As of Q4 were up 108% compared to Q4 of last year adjusting for recent acquisitions. The DXP. The water backlog is up 39, 5% organically, we have been experiencing strong organic sales growth within Ips inspect and expect that trend to continue in 2025.
Kent Yee: Adjusting for recent acquisitions, the DXP water backlog is up 39.5% organically. We have been experiencing strong organic sales growth within IPS and expect that trend to continue in 2025. In terms of our service centers, regions within our service center business segment, which experienced notable sales growth year over year, include the South Rockies, North Central, and the Southwest. Additionally, we saw notable strength year over year in our Canadian Rotating Equipment and U.S. Safety Services business. Key products and end markets continue to drive sales performance. Also include rotating equipment, water and waste water, food and beverage, and energy.
Speaker Change: In terms of our service centers regions within our service Center business segment, which experienced notable sales growth year over year include the south Rockies North central and the southwest. Additionally, we saw a notable strength year over year, and our Canadian rotating equipment and U S safety services businesses key products and end markets continue to do.
Speaker Change: <unk> sales performance also include rotating equipment water and wastewater food and beverage and energy.
Kent Yee: Supply chain services performance reflects the impact of some facility closures with our customers and declines across our energy-related SES customers, as well as the streamlining and efficiencies we brought to our new customers that we have added over the last couple of As we move into fiscal 2025, we will look for new customer additions and a return to sales growth. Turning to our gross margins, DXP's total gross margins were 30.87%, a 77 basis point improvement over fiscal year 2023. This improvement was driven by strength in our service center business segment, showing the greatest improvement margins, improving 83 basis points on a year-over-year comparative basis.
Speaker Change: Supply chain services performance reflects the impact of some facility closures with our customers and declines across our energy related SCS customers as well as the streamlining inefficiencies we brought to our new customers that we've added over the last couple of years as we move into fiscal 2025, we will look for new customer additions and a return to sales growth.
Speaker Change: Turning to our gross margins Dxp's total gross margins were 38, 7%.
Speaker Change: 77 basis point improvement over fiscal year 2023.
Speaker Change: This improvement was driven by strength in our service center business segments, showing the greatest improvement margins, improving 83 basis points on a year over year comparative basis. This was followed by 114 basis point improvement from supply chain services that said from a segment mixed sales contribution service centers contributed 67, 9% innovative pumping.
Kent Yee: This was followed by 114 basis point improvement from supply chain service. That said, from a segment mixed sales contribution, service centers contributed 67.9%, innovative pumping solutions 17.9%, and supply chain services was 14.2%. Compared to last year, IPS is mixed contribution was higher at 17.9% in 2024, which impacted margins positively. versus 2023. In terms of operating income combined, all three business segments increased 27 basis points in year-over-year business segment operating income margins, or $18.8 million versus fiscal 2023. This was primarily driven by improvements in operating income margins across innovative pumping solutions and supply chain services businesses.
Speaker Change: Solutions 17, 9% in supply chain services was 14, 2% compared to last year. Ips is mixed contribution was higher at 17, 9% in 2024, which impacted margins positively.
Speaker Change: Versus 2023 in terms of operating income combined all three business segments increased 27 basis points and year over year business segment operating income margins or $18 8 million versus fiscal 2023.
Speaker Change: This was primarily driven by improvements in operating income margins across innovative pumping solutions and supply chain services business segments. Ips operating income margins improved 57 basis points driven by the addition of water and wastewater acquisitions and overall improvement within the energy related Ips business supply chain services.
Kent Yee: IPS operating income margins improved 57 basis points driven by the addition of water and wastewater acquisitions and overall improvement within the energy related IPS business. Supply Chain Services Operating Income Margins improved 21 basis points on a year-over-year comparative basis. Total DXP operating income increased $6.7 million versus fiscal 2023 to $145.4 million. Our SG&A for the full year increased 44.3 million from fiscal 2023 to 410.9 The increase reflects the growth in the business, including acquisitions and associated incentive compensation, as well as DXP investing in its people through merit and pay raises, as well as the addition of new personnel.
Speaker Change: Operating income margins improved 21 basis points on a year over year comparative basis total DXP operating income increased $6 7 million versus fiscal 2023 to $145 4 million.
Speaker Change: Our SG&A for the full year increased $44 3 million from fiscal 2023 to $410 9 million.
Speaker Change: The increase reflects the growth in the business, including acquisitions and associated incentive compensation as well as DXP investing in its people through merit and pay raises as well as the addition of new personnel SG&A as a percentage of sales increased slightly to 22, 8% versus 21, 8% of sales in fiscal 2023, we still.
Kent Yee: SG&A as a percentage of sales increased slightly to 22.8% versus 21.8% of sales in fiscal 2023. We still anticipate that DXP will benefit from the leverage inherent in the business, despite increased operating dollars supporting our growth and the impacts of acquisition. Turning to EBITDA, fiscal 2024 adjusted EBITDA was $191.3 million. Adjusted EBITDA margins were 10.6%. This is our second fiscal year with adjusted EBITDA margins in excess of 10% and we will look for this to continue in fiscal 2025. Year-over-year adjusted EBITDA margins increased 24 basis points or $17 million. This reflects the fixed-cost SG&A leverage we experience as we grow sales.
Speaker Change: Anticipate that DXP will benefit from the leverage inherent in the business. Despite increased operating dollars supporting our growth and the impacts of acquisitions.
Speaker Change: Turning to EBITA fiscal 2024, adjusted EBITDA was $191 3 million adjusted EBITDA margins were 10, 6%. This is our second fiscal year with adjusted EBITDA margins in excess of 10% and we will look for this to continue in fiscal 2025 year over year adjusted EBITDA.
Speaker Change: Margins increased 24 basis points or 17 million. This reflects the fixed costs SG&A leverage we experience as we grow sales. This translated into one three times operating leverage in terms of EPS. Our net income for fiscal 2024 was $75 million or earnings per diluted.
Kent Yee: This translated into 1.3 times operating leverage. In terms of EPS, our net income for fiscal 2024 was $70.5 million. Our earnings per diluted share for fiscal 2024 was $4.22 per share versus $3.89 per share last year. Adjusting for one-time or non-cash items associated with our $650 million refinancing during Q4 and other items, our earnings per diluted share for fiscal 2024 was $4.51 per share. Our adjusted diluted EPS in Q4 was $1.38 per share.
Speaker Change: Sure for fiscal 2024 was $4 22 per share versus $3 89 per share last year <unk>.
Speaker Change: Adjusting for one time or noncash items associated with our $650 million refinancing during Q4 and other items our earnings per diluted share for fiscal 2024 was $4 51 per share our adjusted diluted EPS in Q4 was $1 38 per share.
Kent Yee: turning to the balance sheet and calf. In terms of working capital, our working capital increased $20.9 million from December of 2023 to $296.3 million. As a percentage of sales, this amounted to 16.4 percent, which is in the lower half of our targeted range of 15 to 20 percent of sales. At this point, we have moved in line with our historical averages or ranges in terms of investing in working capital, and we have moved off our Q3 2022 high point of 19.9 percent of LTM sales. We do anticipate further acquisitions as we move into fiscal 2025.
Speaker Change: Turning to the balance sheet and cash flow.
Speaker Change: In terms of working capital our working capital increased $20 9 million from December of 2023 to $296 3 million as a percentage of sales. This amounted to 16, 4%, which is in the lower half of our targeted range of 15% to 20% of sales at this point, we have moved in line with our historical averages are ranges in terms of the <unk>.
Speaker Change: Testing and working capital and we have moved off our Q3 2022 high point of 19, 9% of LTM sales. We do anticipate further acquisitions as we move into fiscal 2025. This could cause us to move upwards, albeit we are focused on focused on managing working capital as efficiently as possible as we scale and grow.
Kent Yee: This could cause us to move upwards, albeit we are focused on managing working capital as efficiently as possible as we scale and grow. In terms of cash, we had $148.3 million in cash on the balance sheet as of December 31. This is a decrease of $24.8 million compared to the end of Q4 2023 and an increase of $113.3 million since September. This reflects the refinancing of our existing term loan B in the fourth quarter and the strong cash flow generation we experienced during the fourth quarter, which we will touch upon later in my comments. As it pertains to our Term Loan B, as a reminder, during the fourth quarter, we announced that we refinanced and repriced our Term Loan B, which maintains our maturity at October 2030.
Speaker Change: In terms of cash we had $148 3 million in cash on the balance sheet as of December 31.
Speaker Change: This is a decrease of $24 8 million compared to the end of Q4, 2023, and an increase of $113 3 million citizens. Since September. This reflects the refinancing of our existing term loan b in the fourth quarter and a strong cash flow generation, we experienced during the fourth quarter, which we will touch upon later in my comments.
Speaker Change: Yes.
Speaker Change: As it pertains to our term loan B as a reminder, during the fourth quarter, we announced that we refinanced and repriced our term loan B, which maintains our maturity at October 2013, we successfully repriced the new term loan term loan b, reducing our borrowing costs by 100 basis points to sofa, plus $3 75 versus sofa.
Kent Yee: We successfully repriced the new Term Loan B, reducing our borrowing costs by 100 basis points to SOFR Plus 375 versus SOFR Plus 475, while also raising an incremental $105 million in capital to support our Acquisition and Investments program over the next 9 to 12 months. In terms of CapEx, CapEx for fiscal 2024 was $25.1 million versus $12.3 million in fiscal 2023. This increase reflects reinvestment in some of our facilities and equipment, software, and related investments to drive improvement in efficiencies on behalf of our employees. As we move forward, we will continue to invest in the business as we focus on growth.
Speaker Change: Plus 475, while also raising an incremental $105 million in capital to support our acquisition and investment program over the next nine to 12 months.
Speaker Change: In terms of Capex Capex for fiscal 2024 was $25 1 million versus $12 3 million in fiscal 2023. This increase reflects reinvestment in some of our facilities and equipment software and related investments to drive improvement in efficiencies on behalf of our employees as we move forward, we will continue to invest in the business as we.
Speaker Change: On growth.
Kent Yee: Turning to free cash flow, we generated solid operating cash flow during the fourth quarter as we did during the first and third quarter. During Q4 and for fiscal 2024, we had cash flow from operations of $32.1 million and $106.2 million respectively. For fiscal 2024, this translated into $77.1 million in free cash flow. While we continue to make improvements in our free cash flow when we are growing, DXP tends to make significant investments in inventory and project work in our facilities, equipment, and software, similar to what we did in 2023. That said, a majority of our capex is growth-oriented and controllable, and we have the ability to pivot if necessary.
Speaker Change: Turning to free cash flow, we generated solid operating cash flow during the fourth quarter as we did during the first and third quarter during Q4 and for fiscal 2000, and 2024, we had cash flow from operations of $32 1 million and $106 2 million respectively for fiscal 2024 this translated into 7%.
Speaker Change: $7 1 million in free cash flow, while we continue to make improvements in our free cash flow. When we are growing DXP tends to make significant investments in inventory and project work in our facilities equipment and software similar to what we did in 2023 that said a majority of our Capex is growth oriented and controllable and we have the ability to pivot if necessary.
Speaker Change: Sorry.
Kent Yee: Return on Invested Capital, or ROC, for fiscal 2024 was 39% and continues to be above our cost of capital and is reflecting our improved profitability levels and efficient working capital management. As of December 31st, our fixed charge coverage ratio was 1.7 to 1, and our secured leverage ratio was 2.4, 3 to 1, with a covenant EBITDA for fiscal 2024 of $206.2 million. Total debt outstanding on December 31st was $648.9 million. In terms of liquidity, as of December 31st, we were undrawn our ABL with $9.4 million in letters of credit, with $125.6 million of availability, and liquidity of $273.9 million, including $148.3 million in cash, which some of it has already been used to finance the purchase of Arroyo process equipment, which we closed subsequent to the fourth quarter.
Speaker Change: Turn on invested capital our RFC for fiscal 2024 was 39% and continues to be above our cost of capital editors, reflecting our improved profitability levels and efficient working capital management.
Speaker Change: As of December 31, our fixed charge coverage ratio was one seven to one and our secured leverage ratio was 243 to one with a covenant EBITDA for fiscal 2024 of $206 2 million.
Speaker Change: Total debt outstanding at December 31 was $648 9 million in terms of liquidity as of December 31, we were undrawn on our ABL with $9 4 million in letters of credit with $125 $6 million of availability and liquidity of $273 9 million, including $148 $3 million in cash.
Speaker Change: With some of it has already been used to finance the purchase of a royal process equipment, which we closed subsequent to the fourth quarter. We are excited to have them and they will start reporting with us for the first quarter of 2025 welcome to DXP.
Kent Yee: We're excited to have them, and they will start reporting with us for the first quarter of 2025.
Kent Yee: Welcome to DXP. DXP's acquisition pipeline continues to grow, and the market continues to present compelling opportunities. Looking forward, we expect this to continue through fiscal 2025, and we look forward to closing a minimum of one to three additional acquisitions by the middle of 2025. In terms of capital allocation, we repurchase or return $28.8 million to shareholders via our share repurchase program in fiscal 2024, or a total of 566,000 shares of DXP.
Speaker Change: Dxp's acquisition pipeline continues to grow and the market continues to present compelling opportunities looking forward. We expect this to continue through fiscal 2025, and we look forward to closing a minimum of one to three additional acquisitions by the middle of 2025 in terms of capital allocation, we repurchased returned two.
Speaker Change: $8 $8 million to shareholders via our share repurchase program in fiscal 2024, or a total of 566000 shares of DXP stock. The last item that I want to briefly touch upon is the outstanding progress we have made with our accounting and finance team as I mentioned last year, we have invested heavily in growing our finance and accounting Department.
Kent Yee: The last item that I want to briefly touch upon is the outstanding progress we have made with our Accounting and Finance team. As I mentioned last year, we have invested heavily in growing our Finance and Accounting department. This has allowed us to continue the path of continuous improvement, which this year is expressing itself in full remediation of all material needs. Progress is never a straight line, and we are staying nimble as we continue to grow. We are at an inflection point, and I'm excited to work with PWC, our enhanced team, and the entirety of DXP as we are scaling in real time, organically, and through acquisition.
Speaker Change: Has allowed us to continue the path of continuous improvement, which this year is expressing itself in full remediation of all material weaknesses progress is never a straight line and we are staying nimble as we continue to grow we are at an inflection point and I'm excited to work with Pwc, our enhanced team and they are tired of DXP as we're scaling in real time organically and <unk>.
Speaker Change: Through acquisitions.
Kent Yee: In summary, we are pleased with our fiscal 2024 performance. We achieved record adjusted earnings performance at $4.51 per share. Higher earnings and improved working capital efficiency delivered a 40% free cash flow conversion to EBITDA on 7.4% sales. These achievements contributed to a remarkable annual ROIC of 39%, demonstrating gains from our strategic initiatives as well as our disciplined approach to capital allocation and our acquisition strategy. Heading into 2025, we refreshed our balance sheet, which allows us to continue to invest in the business, both organically and through acquisitions, while also returning capital to our shareholders.
Speaker Change: In summary, we are pleased with our fiscal 2020 for performance.
Speaker Change: We achieved record adjusted earnings performance at $4 51 per share higher earnings and improved working capital efficiency delivered a 40% free cash flow conversion to EBITDA on seven 4% sales growth.
Speaker Change: These achievements contributed to a remarkable annual ROIC of 39% demonstrating gains from our strategic initiatives as well as our disciplined approach to capital allocation and our acquisition strategy.
Speaker Change: Heading into 2025, we refreshed our balance sheet, which allows us to continue to invest in the business both organically and through acquisitions. While also returning capital to our shareholders and exciting time to be a part of DXP. We are excited about the future we will keep our eyes on.
Kent Yee: An exciting time to be a part of DXP. We are excited about the future. We will keep our eyes focused on those things we can control and what is ahead of us. What is in front of us is always bigger than what is behind us, and the best is always ahead.
Speaker Change: Focus on those things, we can control and what is ahead of US what is in front of US is always bigger than what is behind us and the best is always ahead.
Kent Yee: We look forward to a successful fiscal 2025.
Speaker Change: Look forward to a fifth to a successful fiscal 2025, I will now turn the call over for questions.
Eric: I will now turn the call over for questions. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad.
Speaker Change: Okay.
Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Zach Marriott: Your first question comes from the line of Zach Marriott with Stevens. Please go ahead. Good morning, and thank you for taking my question. Good morning, Zach.
Speaker Change: Your first question comes from the line.
Jack Marriott: Jack Marriott with Stephens.
Speaker Change: Please go ahead.
Speaker Change: Good morning, and thank you for taking my questions.
Speaker Change: Good morning, Zach anymore.
Zach Marriott: Is there any color you can share on daily sales trends by month for both Q4 and so far into Q1? Yeah, no, absolutely, Zach. Starting back in Q4, our, in October, if you will, sales per business day was $7.2 million, $7.5 million, and then $8.1 million for December. And then starting off here in 2025 sales per business day for for January and February were 7, 6.8 million per day in January and then 7.8 million per day in February. Great. Thanks for that color.
Is there any color you can share on daily sales trends by month for both Q4, and so far into Q1, yes.
Speaker Change: Yeah, no absolutely Zack.
Speaker Change: Starting back in Q4 or.
Speaker Change: In October if you will sales per business day.
Speaker Change: Was seven 2 million seven.
Speaker Change: Seven 5 million.
Speaker Change: Then $8 1 million for December.
Speaker Change: And then starting off here in 2025.
Speaker Change: Sales per business day for <unk>.
Speaker Change: For January and February were $76 8 million per day in January and then $7 8 million per day in February.
Speaker Change: Great. Thanks for that color and then also from margins quarter over quarter, how are those trending and are there any noteworthy factors in March that may change that trajectory.
Zach Marriott: And then also for margins quarter over quarter, how are those trending? And are there any noteworthy factors in March that may change that trajectory? Um, you know, I don't think we have a full visibility into our margins, you know, at this point in time for Q1 necessarily, but I think what you're getting at, Zach, is, you know, from Q3 to Q4, our gross margins went up pretty significantly. And I think that's just a continued function of mix overall. All once again, our water waste, water acquisitions tend to be at an overall higher gross as well as EBITDA margins, and with us at the end of the year closing out some of the acquisitions and them performing with us longer, you know, they started to contribute in a higher fashion.
Speaker Change: You know I don't think we have a full visibility into our margins.
Speaker Change: At this point in time for our Q1 necessarily but.
Speaker Change: I think what Youre getting that Zack is from Q3 to Q4, our gross margins went up.
Speaker Change: Pretty significantly and I think that's just a continued function of mix.
Speaker Change: Overall once again, our water wastewater acquisitions tend to be at a overall higher gross.
Speaker Change: Well as EBITDA margins and with US at the end of the year closing out some of the acquisitions and then performing with us longer.
Speaker Change: You know they started to contribute in a higher fashion. So I think that's what you saw.
Zach Marriott: So I think that's what you saw going from Q3 to Q4 and obviously going into Q1, we would like for that to continue. But we also have some, once again, always some strong initiatives in driving sales dollars, if you will, that impact mix on our base business.
Speaker Change: Going from Q3 to Q4, and obviously going into Q1, we would like for that to continue but but we also have some once again always some strong initiatives in driving sales dollars. If you will that impact mix on our base businesses.
Speaker Change: Got it yep I'm going to jump in and add just a little bit.
Zach Marriott: I'm going to jump in and add just a little bit. Our goals have been to get to 10% dividend margins. We were told that would make a big difference in the valuation. And so we hit that, and so now we We've changed our goal to 11. People are in a lot, their pay is in alignment with those goals, and so they obviously make more. If they hit them, then if they don't. So we're really pleased with the progress we made throughout the year. We look forward to continuing to work with you. Great, thank you both for the color and I'll turn it back.
Speaker Change: Our.
Speaker Change: Our goals.
Speaker Change: I have been to get the 10% EBITDA margins.
Speaker Change:
Speaker Change: We were told that would make a big difference in the valuation of our company.
Speaker Change: And so we hit that and so now we.
Changed our go to 11.
Speaker Change:
Speaker Change: People are.
Speaker Change: And a lot of their pay is in alignment with those and so they obviously make more.
Speaker Change: If they hit them and if they don't.
Speaker Change: And so.
Speaker Change: Really.
Speaker Change: Pleased with the progress we made throughout the year and.
Speaker Change: And we look.
Speaker Change: We look forward to.
Speaker Change: Continue to improve.
Speaker Change: Great. Thank you both for the color and I'll turn it back.
David Little: I will now turn the call back over to David Little, Chairman and CEO, for closing remarks. Please go ahead. Thanks, Eric. You know, it was a, our peer group. You know, didn't have really any growth this year, and most of them had some negative growth. Of course, I'm trying to change our peer group from being. Oil and Gas People. And so we've done a really, really good job of continuing to sell as many pumps and equipment as we can into the oil and gas deal, but at the same time, reduce it as a percent of our overall So.
Speaker Change: I will now turn the call back over to David Little Chairman and CEO for closing remarks.
Speaker Change: Please go ahead.
David Little: Thanks, Eric.
Speaker Change: Yeah.
Speaker Change: We.
Speaker Change: It was.
Speaker Change: Our peer group.
Speaker Change: Didn't didn't have really any growth this year.
Speaker Change: And most of them had some negative growth.
Speaker Change: And of course, I'm trying to change our peer group from BN.
Speaker Change: Oil and gas people. So we've done a really really good job of continuing to sell as many pumps and equipment as we can into the oil and gas deal, but at the same time reduce that as a percent of our overall business.
Speaker Change: And so.
David Little: We're kind of doing everything that's really possible in terms of taking the company into a more diversified market. We're being rewarded for that. We're also doing everything we can to increase gross profit margins and yet be fair to our customers. And we also are looking at. you know, a lot of things where we're kind of... heavy on the investment side on trying to drive scale and efficiencies, but coming as we, as we continue. So I think our goal of 11% dividend margins is very obtainable. Pretty much obtainable. for a very short period of time. The What goes against that, a possible headwind, is if...
Speaker Change: We're kind of doing everything that's really possible in terms of.
Speaker Change: Taking the company into a more diversified market basis, and and we're being rewarded for that.
Speaker Change: We're also doing everything we can to increase gross profit margins.
Speaker Change: And yet be fair to our customers and.
Speaker Change: And we also are looking at.
Speaker Change: A lot of a lot of things, where we're kind of.
Speaker Change: Heavy on the investment side on trying to drive.
Speaker Change: Scale and efficiencies, but but we see some improvements.
Speaker Change: Coming as we as we continue to move forward.
Speaker Change: So I think our goal of 11% EBITDA margins is very obtainable and pretty much obtainable.
Speaker Change: And.
Speaker Change: A short period of time.
Speaker Change: We would.
Speaker Change: It goes against that a possible headwind as if.
David Little: All these tariffs and things like that slow the economy down. and then it's obviously hard to get scale when your sales are declining. We don't see any of that yet. We see the uncertainty of comments that are being made around tariffs and inflation. I will reiterate that inflation is within reason, is good for us, it raises our sales, it raises our value of inventory. So in general, that's good. Of course, we to follow that up with pay raises for people and things like that, things cost a little managed all properly. That's doesn't affect this and we're pretty good at that.
Speaker Change: All of these tariffs and things like that slow the economy down.
Speaker Change: And then it's obviously hard to get.
Speaker Change: Scale.
Speaker Change: Sales are are declining we don't we don't see any of that yet.
Speaker Change: The uncertainty of comments that are being made around tariffs and inflation.
Speaker Change: I will reiterate that inflation is within reason.
Speaker Change: Is good for us it raises our sales that raises our value of inventory.
Speaker Change: And we don't.
Speaker Change: Good.
Speaker Change: Don't really get pressures to lower our margins.
Speaker Change: So in general that's that's good.
Speaker Change: Of course, we.
Speaker Change: To follow that up with pay raises for our people and things like that things are a little more but managed all properly that doesn't it doesn't affect us and we're we're pretty good at that because we've got a lot of them.
David Little: For More Information Visit www.FEMA.gov So I think we feel good. Again, I want to thank our DX people. We're working hard on a lot of different projects in addition to their normal daily routine. So I appreciate all those efforts. Performing well. So, from a stakeholder point of view, and I'm a large... I appreciate those efforts. And so, I think with that, I'd just like to thank everybody and, of course, Buy Back!
Speaker Change: Inflation over the years that I've been at the helm.
Speaker Change: So.
Speaker Change: I think we feel good again I want to thank our Dx people were working hard on a lot of different projects.
Speaker Change: In addition to their normal daily routine.
Speaker Change: I appreciate all of those efforts.
Speaker Change: Sure.
Speaker Change: Reforming.
Speaker Change: Pretty well.
Speaker Change:
Speaker Change: So from a stakeholder earlier point of view and I'm a large one I appreciate those efforts.
Speaker Change: And and.
Speaker Change: So I think with that I'd, just like to thank everybody in and of course.
The stock too low well, then I'm going to.
Speaker Change: Buyback.
David Little: Too high, I'm going to settle.
Speaker Change: Hi, I'm gonna celebrate so thank you very much.
Speaker Change: Have a great day.
Speaker Change: Okay.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining and you may now disconnect.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Operator: Thanks for watching!
Speaker Change: Yeah.