DXP Enterprises, Inc.

Kate and I will be your conference operator today. At this time, I would like to welcome everyone to DXP Enterprises Inc. Second quarter, 2025 earnings release. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed with the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Kent Yee, CFO. Please go ahead.

Thank you, Kate. And thank you everyone for joining us today. This is Kent Yee and welcome to DXP's Q2 2025 Conference Call to discuss our results for the second quarter in the June 30th, 2025. Joining me today is our chairman and CEO, David Little. 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 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 as a result of new information or future events. 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. The press release and an accompanying investor presentation are now available on our website at .DXPE.com. I will now turn the call over to David Little, our chairman and CEO, to provide his thoughts in a separate summary, excuse me, of our second quarter performance and financial results.

David. Good morning, and thank you, Kent. Thanks to everyone for joining us today on our physical 2025 second quarter conference call. DXP delivered another quarter of strong results with sequential growth of .7% -over-year growth of 11.9%. I want to thank our DX people for their passion and dedication to support our customers in delivering these impressive results. We are pleased to see DXP's performance continue throughout Q2 and remain at record levels throughout the first half of 2025. This allows us to achieve another quarter of both sales growth and 11% plus adjusted dividend margins. Overall, we had a great second quarter and continue to have the momentum for the second half of 2025. We are establishing new highs for DXP. Look forward to the second half of 2025. The first half of 2025 highlights solid execution and our ability to grow organically through and through acquisitions. We continue to execute our acquisition strategy, adding two rotating equipment acquisitions during the first half and one after the quarter end. We continue to execute our goals to diversify the business with new products, new industries served and geographical expansions. Our consistent improvement and profitability speaks to our relentless drive to center our strategy around our customers and remain customer-driven experts while creating a win-win for all stakeholders. Thanks to our growth strategies and operational improvements, we continue to build on positive financial results in the second quarter. While performing for our customers, we remain highly focused on providing the expertise and service our customers have come to expect from DXP. DX people you can trust. We strive to be credible, reliable and customer-driven every day. I personally want to thank all our DXP stakeholders in particular, all our DX people for their determination and hard work as we continue to grow and improve the business and achieve new sales highs and profits for the business. We're building the next chapter to DXP, which will define us as the best in class industrial business by being technical experts, providing customer-driven solutions and being fast and convenient. As to our financial results, I will begin today with some perspective on our second quarter and thoughts on the remainder of 2025. Kent will then take you through the key financial details after my remark and after his prepared comments, we will open for Q&A. In terms of our financial results, the second quarter results resulted in an adjusted EBITDA of 57.3 million or .5% of sales and diluted earnings per share of $1.43. A strong quarter that we will look to build from and continue to increase sales, profitability and cash flow. As we move into the second half of the year, we remain confident that our well-balanced business, strong balance sheet, exceptional teams, improved capabilities and robust acquisition pipeline position us well to navigate the current environment and achieve continued success. Total DXP sales for Q2 increased .9% year over year and .7% sequentially or were 498.7 million or an average of 7.9 million per business day for the second quarter. On a year over year basis, gross profit margins increased 72 basis points and selling general and administrative expenses decreased 11 basis points as a percent of sales. Helping us increase profit margins and our EBITDA margins. Thank you to the 3193 DX people for your hard work and dedication. We welcome our new acquisitions, Arroyo Process Equipment, McBride and Morris Pump and DXP continues to hire additional DX people for growth. In terms of Q2 segment financial results, innovative pumping solutions led the way, growing sales .5% year over year, followed by service centers growing .8% year over year and supply chain services essentially flat year over year. In terms of IPS or innovative pumping solutions, both our energy and our DXP water continue to perform. During Q2, our energy business is up .3% year over year and anticipated to ramp as we approach Q3. Driven by some selected projects, our DXP water platform continues to grow sequentially with Q2 2025 coming in as the 11th consecutive quarter of sequential sales growth. Our Q2 average IPS energy backlog continues to stay ahead of all averages going back to 2015 and is at an all time high. In Q2, we have meaningful bookings in the month of April and May, similar to January and March during the first quarter. This continues to signal that we should have strong energy project revenues over the next nine to 12 months. We're continuing to get bookings for both our energy and water project work and we feel comfortable on delivering strong sales performance in 2025. Our highly engineered innovative pumping solutions, modular fabricated systems and manufacturing new pumps for our PumpWorks brand are forging a path forward with sales growth and elevated brand recognition. All be it without a few bumps as DXP wrote off $2 million and two unsuccessful new product developments in Q2. In terms of service centers, our performance reflects multiple product category approach and our ongoing investment and progress on internal growth initiatives against the mix and evolving in market dynamics. A few growth initiatives that are helping DXP grow percentage over the last several years are technical products like automation, new pump brands for water and industrial markets, process equipment and filtration. New markets like water, air compressors, data centers, need pumps, water, power, cooling, filtration, products we handle. We have added an e-commerce channel for the generation that wants to buy pumps and parts electronically. National accounts and preferred pricing agreements, increased reoccurring revenues with service and parts agreements. Service nature within service centers allows us to continue to remain resilient and continue to experience consistent sales performance. Adding geography like Florida and training and adding sales professionals has helped grow sales. From a regional perspective, regions that continue to experience year over year growth, including the North and South Rockies, Ohio River Valley, South Atlantic. We also seen strength in our air compressors and our US Safety Services Division, which is always great to see. My chain services sales increased .3% sequentially and year over year remained flat at 6.4 million. In the supply chain business, all pricing is electronic with slow approval processes, causes price adjustments for inflation or tariffs to take longer to get implemented. That said, SES added a large contract that lost money as sales ramped up in Q2 and is now above breakeven in July. The contract will be 20 plus million as sales ramp up over the next 12 months. Several other small wins are being implemented. So we look forward to SES having a much better second half of 2025. A special thanks to our DX people who have stayed on top of supplier product increases, labor costs and overall efficiencies. Overall, DXP produced adjusted EBITDA of 57.3 million, adjusted EBITDA margin of 11.5%, which reflects the operating leverage we expect to get with sales growth. Regarding capital allocation, we continue to make strategic investments to fuel and diversify DXP through acquisitions. During the quarter, we completed one acquisition, McBride Machinery, and completed another acquisition after the quarter, Moore's Pump and Service. Again, let me thank all our DXP stakeholders, particularly all our DX people for their continued efforts and adaptability as we grow and involve DXP into a more diversified and less cyclical business. Let me conclude my remarks by saying that I am encouraged with our continued sequential improvement in sales and profitability. We are driving growth and improvements at DXP. We look forward to navigating and working through the remainder of physical 2025. We continue to build our capabilities to provide technical set of products and services in all our markets, which makes DXP unique in our industry and gives us ways to help our customers win. Finally, I'd like to thank our DX people for continuing to maintain 11% plus adjusted EBITDA margins and move towards a goal of 12% plus while hitting a new quarter sales high in Q2. Q2 was another great quarter as we continue to have success in 2025. With that, I will now turn to Kent to review our financials in more detail. Kent.