DXP Enterprises (DXPE) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 sales reached $1.8 billion, up 7.4% year-over-year, with net income of $70.5 million and adjusted EBITDA of $191.3 million at a 10.6% margin; organic sales grew 3.5% and $98.5 million came from acquisitions.

• Achieved record gross profit margins and adjusted EBITDA margins, with a five-year EBITDA CAGR of 34.2%.

• Completed seven acquisitions, including four water & wastewater and three industrial rotating companies, further diversifying end markets and strengthening the water and wastewater segment.

• Maintained a disciplined capital allocation strategy, including $28.8 million in share repurchases and refinancing Senior Secured Term Loan B, raising $649.5 million and reducing borrowing costs by 100 basis points.

• Positioned for continued organic and inorganic growth in 2025, with a strong acquisition pipeline and remediated all previously existing material weaknesses.

Financial highlights

• Q4 2024 sales were $470.9 million, up 15.7% year-over-year; average daily sales for Q4 were $7.595 million, up 13.8% from Q4 2023.

• Fiscal 2024 net income was $70.5 million; diluted EPS was $4.22, or $4.51 adjusted for one-time items.

• Free cash flow for 2024 was $77.1 million, with a free cash flow conversion of 40.3% and return on invested capital reaching 39%.

• Gross profit for 2024 was $556.3 million (30.9% margin); adjusted EBITDA margin improved to 10.6%.

• Operating income for 2024 was $145.4 million (8.1% margin), up from $138.7 million.

Outlook and guidance

• Management expects continued sales and margin growth in 2025, supported by strong backlogs and positive end-market dynamics in oil & gas and water & wastewater.

• Plan to close at least one to three additional acquisitions by mid-2025, with a disciplined M&A strategy and flexible capital deployment.

• Targeting 11% EBITDA margins in the near term, with incentive compensation aligned to this goal.

• Focus remains on organic and acquisition-driven growth, margin improvement, and operational discipline.