DXP Enterprises (DXPE) Sidoti Small-Cap Virtual Investor Conference summary

Business overview and segment performance

• Operates through three segments: service centers (68% of sales), innovative pumping solutions (16%), and supply chain services.

• LTM sales reached $1.7 billion with adjusted EBITDA of $183 million and over 185 locations.

• Service centers generated $1.2 billion in sales and $168 million in operating income; IPS and supply chain services contributed $286 million and $255 million in sales, respectively.

• Largest product category is rotating equipment/pumps, accounting for over 60% of sales.

• Leading North American distributor of pumps, with strong market positions in metalworking, bearings, and industrial supplies.

Strategic transformation and diversification

• Oil and gas exposure reduced from 66% in 2014 to 22% in 2023, with growth in water, wastewater, chemical, food and beverage, and sanitary markets.

• Diversification has made the business less cyclical and increased profitability.

• Focus on expanding into new end markets and scaling profitable segments like water and wastewater.

• Transformation has shifted perception from an oil and gas-focused distributor to a diversified industrial player.

Growth strategy and acquisitions

• Annual financial goals target 10% organic growth and 10% growth through acquisitions.

• Completed seven to eight acquisitions in the past year, mainly in water and wastewater.

• Average acquisition size is $25–$35 million in revenue, focusing on geographic expansion and capability enhancement.

• Current environment favors strategic buyers due to higher interest rates impacting private equity competitors.

• Robust acquisition pipeline expected to continue into 2025.