DXP Enterprises ((DXPE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for DXP Enterprises showcased a generally positive sentiment, emphasizing strong sales growth and consistent EBITDA margins. The company highlighted impressive performances in its Innovative Pumping Solutions and Service Centers segments. However, it also acknowledged challenges like a decline in Supply Chain Services and increased SG&A expenses. Despite these hurdles, the overall tone remained optimistic, buoyed by record sales and robust performance in key areas.
Record Sales Achieved
Total sales for the third quarter of 2025 reached a record $513.7 million, marking an 8.6% increase year-over-year. Year-to-date sales also saw a significant rise of 11.8%, underscoring the company’s strong market position and strategic growth initiatives.
Strong Performance in Innovative Pumping Solutions
The Innovative Pumping Solutions segment experienced a notable 11.9% growth year-over-year and a 7.5% sequential increase. DXP Water now constitutes 54% of IPS sales, highlighting the segment’s expanding influence and contribution to the company’s overall success.
Consistent EBITDA Margins
Adjusted EBITDA margins remained solid at 11%, with a year-to-date increase of 17.6%. This consistency in margins reflects the company’s effective cost management and operational efficiency.
Service Centers Growth
Service Centers sales grew by 10.5% year-over-year, with particularly strong performances in regions such as South Central, California, and Texas Gulf Coast. This growth underscores the company’s successful regional strategies and customer engagement.
Improvement in Gross Margins
Overall gross profit margins improved by 50 basis points to 31.4% compared to the third quarter of 2024. This improvement indicates enhanced profitability and effective pricing strategies.
Decline in Supply Chain Services
Supply Chain Services sales declined by 5% year-over-year and 3.7% sequentially. The challenges in implementing price increases and inflation adjustments were noted as contributing factors to this decline.
Higher SG&A Expenses
SG&A expenses rose by $11 million compared to the third quarter of 2024, increasing the percentage of sales from 22.5% to 22.9%. This rise was attributed to investments in personnel, insurance, and acquisitions, reflecting the company’s commitment to growth and development.
Small Decline in Energy-Related Backlog
The energy-related average backlog experienced a slight decline of 3.3%, marking the first decrease in 10 quarters. This decline was minor but notable in the context of the company’s otherwise strong performance.
Forward-Looking Guidance
Looking ahead, DXP Enterprises anticipates a strong outlook for 2026, driven by demand for its proven technology and efficiency solutions. Despite a slight decrease in Supply Chain Services sales due to seasonal factors, the company remains confident in its strategic growth initiatives and market position.
In conclusion, DXP Enterprises’ earnings call conveyed a positive sentiment, with record sales and strong performances in key segments. While challenges such as increased SG&A expenses and a decline in Supply Chain Services were noted, the company’s overall outlook remains optimistic, supported by strategic growth initiatives and a solid market position.