- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to DXP Enterprises' 2022 Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Financial Chief Officer. Yee, Kent

You may begin.

Kent Yee

XXXX. Chris. DXP's QX you, for third September This discuss is to welcome the XXth, in ending and Yee, quarter XXXX results Kent our Thank conference to call

Joining me today our Chairman David and CEO, is Little.

that want I statements. the and call those recorded on remind you forward-looking contemplated believe materially A from statements. of Actual we by started, is get contained that factors an a webcast forward-looking being in detailed have we discussion material many filings. business to SEC our Before differ ongoing these and includes are today's may basis results our may effect on

no assumes result information events. DHB of However, new future to as update that information or a obligation

website non-GAAP During is this release are financial non-GAAP GAAP in reconciliation included and David presentation call, results. summary release. measures the to of third I our an we and A may The a performance and will now earnings GAAP of measures. on Chairman ir.dxpe.com. provide press thoughts turn our to investor financial and press accompanying our CEO, Little, present quarter both now at his available to David? our over call and

David Little

third into stable you, full wastewater, company, on We, year our and today like and and that our quarter a DXP the Kent. future. sales well everyone markets. have morning, record Congratulations, for in customer-driven us perspectives into $XXX.X of serve us you're your to quarter base markets you the the on as our today of a a efforts food some to with sales thank Good call. I diversifying be Thanks joining and and existing and plus quarter will more our each about water thoughts for for to industrial part beverage, third XXXX growing during quarter. new million begin fiscal Thanks conference will our is DXPeople, third future.

to air the automation, our make will mix DXPeople outstanding help efficient, serve and customers capture into digital that service and will our also biofuels also well technical added by technologies us better. safe compressed that service filtration, essential and product and being us lives serve of more environment Every day, have We environmentally products help friendly. hydrogen and future the

be acquisitions is this goal Note how a the air lead and I with sustainability and that meaningful changing and help is fun. to efficient a making energy doing? and our helping we their Nine XX% Our good environment. wastewater business of and compressed DXPeople is would energy be grow. XX% not only last customer-driven two in their helping be environmentally stable make but years and hard environmentally lives also water XX%. Three in safe. are our efforts long-term, our compressed But for enthusiasm for over and to in It glad DXP exciting goals is very succeed. customers us example. friendly. customers world we saves our by industry. for see for the To XXXX, by o all focus market the to our and the is This XXXX, friendly, could and work, In this is air to thank and a important industry acquisitions, Energy was today,

reliability. initiatives efficiencies, and and to Accounts, carbon automation rotating biofuels, National emissions. and and customers we safety, waste, in equipment, and equipment reducing New the our mechanical air and needs markets, is growing, compressed hydrogen, of repair help products have pumps, all succeed carbon controls service expertise especially creates capture, automation in storage this in carbon controls,

capture, grow inorganic to sustainability the and and are plans renewable expertise are fund is to doing environment what help little safety. we reduce strategies, As and and we our a organic technical their will do better, These very consumption, customers growth the others with goals. distributor, DXP very both impact energy. include little by energy which But environmental their energy we carbon real have with helping our consume and helping

were good results price QX great, Our everyone and job passing of a increases. did supplier on

sold inflation, event. is Our pump DXP. gross ownership at ownership $X.X by are is costs million payroll being margins affected still expected. in inflation good is the And XX% to castings work loss, a for which and one-time be to which overall, XX% a We DXP's

few us the still last health quick will foundry this margins. is to that have over access deliveries. have and acquisitions of EBITDA for helped improve chain We supply noting all years the It worth

Our goal. adjusted our EBITDA dollars increased always sequentially, which is

In ISM year and as DXP's products will The have well-positioned is chemical, a and show upward to compression, next in and for indication as and gives such declining an serve but DXP These manufacturing, energy DXP's into renewable is positive how general DXP economy and even markets, utility to and wastewater, industrial, or signs and food still XX% markets index, terms That overall of we seen our be perform, largest in yet in which economy compressed June manufacturing of of including inflation energy, should look September markets, serving. activity air a a DXP's like good movement. said, rating our slow a any economy. the headed aerospace, even end of us through well. food XX.X%. industry beverage, broad environmental have water growth not we manageable, continues to average reading market, of markets is industrial PMI which seem slower markets air, decline us users industrial an beverage, aerospace, is hydrogen legs end have market, seem

delivery in We backlog activity and related pickup production and reflects supply to gas, to of market, increasing the continue see increase companies, in carbon hydrogen, oil, sales we which budgets we significant That began that issues our energy in terms deliveries. exploration chain pickup year. to growth in last small QX, In is a sequestration. are commentary The see U.S. with of around in XXXX. organic we QX biofuels, is capture, experienced consistent cap during slowing impacts seeing majors said,

projects is activity growing projects. albeit on technical to gas and biofuel carbon many direction. projects also for to momentum. not grey, solutions us in to an efforts excited expertise solutions. renewable, green, other capabilities to forefront fabrication, with DXP's participate positioned Hydrogen as and projects and environment, well-positioned help engineering excited and oil around to within environmental XXXX technology, come. DXP's sequestration gain of cash projects back to has effort and levels, is in mini years emerging our the fabricated and engineering, be participating transition energy customer packaging, that leveraging, and and many DXP to has to blue, base. capitalize on Specific capture energy our Our is is and design, legacy DXP on is designed in continue hydrogen customers the hydrogen with DXP to DXP

seeing budgets, as We in accelerate XXXX. which we and into cap are increase gradual energy move have been should

evidence water projects inflation, their and building beyond. Our is seeing diversified existing and so DXP are plus wastewater XXXX performance demand of nine we believe a that see utility categories Several the of these we is more have gaining budgets can many increased we uncertain business The for three solid XXXX acquisitions we with With in and resilient, traction service XXXX. because are markets, efforts. exceeded organic great outlook in markets, in of and market centers. should generate market more growth within

quarter, Regarding we Sullivan the acquisitions, we during closed Technologies, as Inc., Environmental the earlier. mentioned

to part our excited division. DXP Water of them have as are We

for our our across are groups. the inflation see product our have to continuing through price are business, We increases over discussed as is we inflation passed good to But customers. years,

high, have throughout to year. chains increases of received getting are more beginning and year. normal moderated amounts chain down problems, vendors our have multiple our the that at global this from to backlog We it does next With not notices price continue supply appear The worse. increase for supply the all-time expect

into we flatten close areas in XXXX. we holiday are As to as season, head some out the bookings starting

supply are equipment of reached is with us IPS that contracts well demand, doing professionals, two segments new very levels have next services sales sales centers increasing activity positive companies chain for budgets remanufacturing energy to and professionals national XXXX. problems, in are SCS capital which busy renewables, and for and can help All projects, have hiring with rotating plus year. is Service additional environmental puts our hire outlooks require their

During results, sales improvements DXP quarter growth financial and for QX sequential and $XX.X our third sequentially markets. our end XX.X% reflects in year-over-year. Total X.X% million or increased our

dedication. family DXPeople As your always, and to for our work you hard thank

We are our in DXP forward in to division. excited QX to look continued and Water growth add Sullivan

are excited financial is XXXX. of All and forward and results a to have continue to up as full always everyone the look we my work, everyone's family. share QX, during and of pleasure It our everyone's our for results performance having our good to DXP in on perform Again, keep behalf. acquisitions year part to we

We provide which to ways more capabilities services help build in customers our of DXP continue products win. our markets and gives makes us set all industry technical our to in and to unique our

customer chemical base well by $XX financial of With we markets Pumping maintenance the quarter, through overall chain, production grow Supply service million sales continue to as repair, customer and $XXX.X in year. Services existing significant sales. the Service resilient the expect growth and MRO of sales to diversity to in million. allows qualified uniquely $XX.X with experienced diversified move our of In as the followed to Innovative SCS global of and within remain Service of supply million, DXP's results, the operating their improvement terms segment Center Solutions supplies. by centers sales end Chain and us is customers sales activity Supply help The nature of in and increase as driven Chain addition disruptions

a chain facility in production, the all is saving line. up We meeting to are reliable companies our while a because can well of qualified to inventory in are excited downtime, forecasting someone ultimately problem. customers increased for customers well and that MROP, the forward levels, in action supply running. about Results by efficiencies, services. supply increasing their The manage Chain chain, bottom demand monitor business the of taking and detecting and issues chain eliminating customers Supply while Services transportation, planning looking customers' goods moving and DXP supply and improving for are resulting keeping advance the logistics digitize supply money complete the

segment backlog grow, as is bookings to slowed by to business supply IPS chain growing but it and our is energy continues increase Our continues constraints.

grow XXX EBITDA -- saw drive wastewater sales reflects X.X%. this improvement as should and in positive and would of summary, financial margins was water years we forward. overall increases. of through as certain and sales. DXP's which and included which of markets runway a positive for of over industries. acquisitions gross This profit in through capital quarter a the improved to because continued XX.X. and with the performance several utility million to This strategies and IPS business DXP for which, see and looking sequential DXP's our growth, growing a In a we is of and sales albeit mix percent geographies QX basis has organic nature QX Our expect marketing as from Services our shift labor ago improvement from profit point to produced is We to as in and because X.X% and Overall, increased lower know, inflation a DXP's look contributions of of inorganic you gaining organic growth a a year of in leverage, acquisitions which continued great margins. gross continue sign continued $XX.X increased decrease QX well Supply operating in and getting improvement, EBITDA cost, we Chain have is

quarter, price While a supplier third next our coming. is economy the in encouraged are supply we for and year, increases, we by to chain of are when thoughtfully constraints given plan labor continuing concerns shortages, slower performance

as our turn achieve detail. bookings to I We expect tools now goals, drive to industry working give free pleased us as and service continue and deserve all we am strategies and our we to to cash in are With DXPeople are flow. with capital, and and easy create review move digital will continue we our financials given grow and manage consumers grow sales, the Kent more continue in to to working face. perform. our continue to QX headwinds they to not back it the customers the we hard productivity, the that, expect, serve which to performance forward see helping backlog our is I

Kent Yee

inflation, and you thank challenges us report value sales third financial performing quarter and the history. our our a to and Thank for execute navigate create cycle challenges, able you, of performance supply performance interrelated chain David successfully excited to subsequent QX reflects for for during been continues QX DXP joining our results. in XXXX to increases quarter our COVID stakeholders. everyone financial market of to these including quarter review I'm this all financial sales and eighth our has the sequential war. is highest Despite through XXXX and the DXP's constraints that

a milestone, sales strive While to to forward notable continuing meet we and build thresholds DXP to look and through acquisitions. organically new

growing successful and We diversifying transforming in have been DXP.

third it adjusted center IPS and quarter to strong financial $XXX.X contributed Total business sales organic contribution consistent stability, have the consistent margin ability been further DXP's in service sustained inflation EBITDA backlog DXP $XX.X As that quarter, continued of manage for QX with undertaken. actions acquisitions, million. increases, results marked increases are to gross third a increased a another third year, price Acquisitions to continued XX.X% sequentially leverage follows; within to sales we SES, along margins. from the takeaways increase our by in specifically, during pertains for leading have and and strong as reflect than quarter More sales year-over-year sales quarter. growth less million the performance X.X% operating combination with quarter and

a our push. in you average have typical We day July for provide market the $X.X per the million Technologies wastewater daily recent per Average per will and day product within in and to Sullivan Environmental excited family. Environmental from end and excited were during in the sales diversification. for million $X.X have reflecting $X.X of $X.X trends sales quarter platform the million as Sullivan average That sales quarter to said, we're and to and DXP. enhancement sales third acquisitions, Sullivan, million part day day daily of you QX. water third are the per acquisition, quarter most We million daily margin welcome went the provide Adjusting were as additional part a versus per for end day X.X quarter. September, the DXP

this In year-over-year. Services year-over-year terms segments, me, by business Supply year Chain Innovative of was growing Solutions -- XX.X% Pumping This XX% year-over-year. excuse our sales followed grew XX.X%

Excluding by growing sales XX.X% was centers This grew acquisitions, million. increased or followed $XX.X service year-over-year. IPS XX.X%

grew Centers or million, acquisition Excluding $XX.X to sales, me. sales Service within XX% excuse $XX.X

chemicals. in Supply that and a air, Services addition we terms performance customer year-over-year, South end centers, and sales within our North million products and Gulf the experienced include Ohio beverage, Texas Service This business that performance specialty chemical customer include River and Coast, and Key Valley, began an sales contributed water In large and in growth food diversified transportation the mentioned reflects sales markets our energy contracts compressors, $XX.X quarter. in as municipal of as well and rotating Center Atlantic, service food air Regions the Central, QX. segment, which driving existing South Chain equipment key Texas. to increase and wastewater, beverage of QX in ramp during and mining,

continue of in experience backlog. Innovative the to terms In increases Pumping Solutions, we

Our XXXX XXXX now and that X% our and levels The of to today. we average our is towards XXXX and down average average here upon backlog we from XXXX move continuing based backlog backlog backlog conclusion stands QX and our meaningfully the are ahead grew backlog. is QX trending over XXXX above X% where are levels, average

opportunities find including our in organic we versus but hydrogen, We and to to meaningfully. look capture growth oil energy biofuels, and carbon sequestration and contribute do other strong IPS are to expect continue a transitioning gas, within to markets, traditional

segment contribution, been contribution a gross that Turning QX results, XXX to This contributing the attributed margins mix is our mentioned we to basis XXXX. IPS' business over overall more DXP's were by decline SCS in total as DXP historically to offset our quarterly mix. the has gross point XX.X%, or decline margins. higher

XX% QX quarter, XX% has Service closer of IPS was XX.X% third at and sales contribution of SCS Chain to less or for the been was XX% Historically, QX. QX Services total For to XX% versus DXP. Centers was XX.X%. in and Supply

of primarily three XXXX improvements increased within was or This segment income, million. $XX.X to all million margins points income points basis operating versus basis combined, by $XX.X business XXXX. driven operating IPS. increased In operating organic in DXP operating Total year-over-year in segments income margins versus income terms business XXX XXX

million leverage growth, as reflects cost sales, Our points raises. The of of acquisitions. inherent the the the $X.X of XXXX. dollars the compensation decreased increased growth a associated well as -- SG&A year-over-year as business our the and basis increase quarter supporting that its percent in business reflecting through, in investing merit impact from excuse increased me, inflation earlier, XXX sales we for XX% incentive despite and in the SG&A and DXP pay mentioned people operating throughout to

to were X.X or $XX.X XXX grow QX experienced million. Adjusted million. $XX.X XXXX X.X%, basis reflects the margins leverage. year-over-year operating SG&A into EBITDA, sales. This Turning we times fixed adjusted EBITDA increased was cost we margins translated points This EBITDA EBITDA leverage as

In terms net QX was income was EPS, for million. $XX.X -- of our

QX was share year. per earnings $X.XX non-cash share. share last or earnings for Our item versus per QX per for one-time for per share share diluted $X.XX a $X.XX diluted was Adjusting per

to cash flow. the sheet balance Turning and

capital, increased capital June from of In million million. terms to working $XXX.X our $XX.X working

continued of percentage and increase investments million to primarily in a project increase accounts XX-month in our this This reflects $XX a activity. receivable last in $XX amounted XX.X%. million work sales, inventory As and

acquisitions Additionally, $X.X in Sullivan Environmental contributed increase receivable. accounts million of and the other

some for of capital, to QX, are would in months. a our full of or as As where with XX percentage last still acquisitions this discussed in we at we averages range onboard sales of expect we historical XX a during off investing working as terms but level are line a our point we recent months' in

September is million have purchase a $XX.X to reduction working and $X.X million XXth. of uses. of In of compared the environmental, This the terms share end decrease capital balance The cash a the in we sheet of QX. of on as was result of cash, repurchases sell-in

terms have experienced project increased $XX.X activity and in of a of work estimated and cost million In QX billings within excess of in profits and we has IPS since year. million $X.X increased increase QX last over

in CapEx, QX. an terms was $X.X In million increase $XXX,XXX third of compared CapEx of to quarter the or

and increases year-to-date While ability up QX pick we capital minimal million strategic is our into expenditures investments. and reflect in control to with XXXX, do expect to our continues and by XXXX CapEx maintenance of $X.X CapEx primarily driven to

move invest business continue focus and we to in on forward, will As growth. the we

flow cash is $X.X million. to free Turning and as work, investments This flow. Free cash inventory in year the earlier, for the reflects minus year. primarily throughout project significant mentioned

has increased $XX.X our since inventory while last $XX.X project year, million increased December have million. investments of Specifically,

invested ROIC should end on our As and we be uses business, margins activities little project supply the run which rate we at seeing, and we we bit as of a increase the IPS sporadic capital likely in leverage to continue to through EBITDA. chain operating continue third are experience higher improve and Return but this manage delays. will will quarter XX% improve was cash, drive our of we more as

debt XX As leverage covenant XXth, our EBITDA of Total was a XX of last the September secured fixed $XXX charge million. million X.XXX $XXX.X and our outstanding with on ratio months September X.X:X, was was ratio for coverage

liquidity, of drawn million as terms at million In we with of on availability. quarter, $XX.X ABL the of were $XX.X

mentioned industrial continues to team, during and as I we Environmental continues opportunities. with the Welcome of the the a on us with and and to excited pipeline the market full look and Sullivan. forward we're the platform of with have DXP in Canada. to earlier, acquisition them DXP the water of Kentucky closed provides quarter Technologies Sullivan and we acquisitions, of DXP's Sullivan DXP industries terms states within compelling In wastewater to quarter, acquisition for Ohio, to reporting present QX. grow the and municipal leading in Sullivan

to the no it are backdrop there challenging, and valuation. we may sellers when are While opportunities finding seem reasonable are of comes that shortage

for has flow DXP, end profile. our enhancing markets, strategy significant value DXP's margins, created acquisition and Our cash

this expect into to we forward, Looking continue XXXX.

our Regarding goal the strategy. including invest our acquisition primary is our to execution capital of allocation, in business,

our as are X.X ratio leverage provide or of we demonstrated excess program less. committed by the extent also repurchase after To share target to maintaining balance have objectives, these to a us return we a achieving the We shareholders. sheet capital mechanism to will the conservative times capital

During we And nine the shares. for quarter, in $X.X million year-to-date repurchased the months.

summary, or is $XX.X a priority In from including market financial to opportunities. perspective purchased growth strength million, market open transactions. and balance We negotiated purchases private sacrificing without have our and maintain sheet our long-term

we the growth while outperformed balance outlined all deleveraging As have sheet. we results, sales strength record this have delivering while achieving the and sales impressive margin market, morning,

supply Our the markets and to capabilities resilient and including and will wastewater profitability. sustainable exposure sustainable MRO sales and various our trends, chain solutions, project and critical water with combined our drive secular and future energy

outperformance. because are excited forward still look confidence to DXP. are sustained future and in embedded with of a growth substantial great We there We market value

Now, for over the questions. I'll call turn

Operator

Thank you. with Stephens. [Operator Instructions] The first question is from Tommy Moll

is line Your open.

Tommy Moll

morning Good questions. taking for thanks and my

David Little

morning. Good

Kent Yee

morning Tommy. Good

Tommy Moll

to your on and of to oil commentary, in higher, market. that give then like typical the gas, start context you've we and the at might November oil the but gas any and trend December, continue sounds on got look towards seasonality then it your us top wanted the looks as revenue or like? And I based Can that ex seasonality daily October sales. on what P&L you

that on progressing So, you consolidated through this a daily see basis, do wonder sales quarter? I how

Kent Yee

Yes.

and So, just market was can trend, it into really million little then David then in Tommy, from But there October, million, a jump September October, I'll I'll day, quarter $X.X $X.X perspective. give and million. and per the go the million maybe another in $X.X a color through just $X.X and

Our is on basis. per October day sales comparative up year-over-year XX.X% a business

there continuing other here jump to oil early David comments. in if some around had and know trends some quarter. don't gas in other the But the she I on fourth and So, if things. we're seeing wanted

David Little

run had And holidays. out the they spend Well, to Oil either of then and they end you want you people it. and have budget or and of gas, sure. to the have haven't the money year

piece, that's holidays, lot the oil And earn gas cetera. general et piece of a week, shut will so down how industrial and The the manufacturers mean, works. a of I kind

So, you have some softness there.

a days. So, you little have less

know these advantage You or the do chain Schlumberger are that's that to of two as workovers -- or sure deliveries that off. the a supply and don't on not problems usual their trying oil going how to probably I can. far behind much they're so et they have taking may gas holes play DUCs doing not. doesn't mean cetera. at take because they and as and prices, I'm mean -- week It of be around drilling manufacturing maybe I they're out. a billion people oil they produce gas work and of are or lot and Halliburton on

mean, normal opinion, of kind and going this to be of next oil is and through all year. gas the general, for that's of really, quarter, rest a So, market good my stuff. in I in

So, answered I but don't know not, your my if attempt. I that's or question

Tommy Moll

But there. as a or tailwinds we any on and quarter or to start third uncertainty into fourth get gross or just which would gross the I for you the And percent or context. it. I P&L, quarter although down move No, there may to we if worse in outlook margin it's revenue little understanding headwinds revenue, G&A with for improve of a could would quarter? ask margin extent those you fourth the on go some hard down be it's appreciate maybe pin qualitative your helpful just as SG&A

Kent Yee

kind line downside to one. we've Chain really been of it's chemical they're I'll margin But gross the significant QX segment, the gross if we've obviously a communicating are customer, that our typically. of volume but significant where customer diversified overall a cost know Tommy, on profitability, including necessarily I a little headwinds, don't Well, our on that is bit put we're mean in jump it SG&A a perspective, with I There Services from got too. Supply within weight margins. Yes. since sales is

we're looking combination So shifting led it's And us. here always our both of business the is QX on of for that's the mix customers. more a opportunities and And unless existing there contribution what's customers to both. new with

is That segment. kind But just gross So, continue margins. too don't extremely said, in little I up much to it a margin we'll sales gross the on drag a weight net profitability the overall ramped for puts further line of perspective, our see in unless QX. from think

David Little

to we're at close full this ramp point. So,

-- We normal fine. pump. use replacement We our somebody try when job. So us markup. with do and need We But a transaction calls increase passed market and There's fixed costs the lag And just some to up gives those fixed price bit that little today; they a cost. get us and on the margin. we happens good a a go a when increase supplier avoid there're price the between still to customer. of

take order, really lag the that stuff it's still quote goes up. obviously, got then if pricing pricing the order gone we up, the to lot takes then we So, normal, if -- that everything pretty go exactly out right and longer six a there. But astray. day the projects And has million on order, not months a we things it the little order, get maybe is to things quote, labor the the build we we order a $X didn't project have we costs and of

it. there's always the reasons the listed XX.X% did today those So, we targeted lag. the think profit last of just margins, and time or margin be difference some what wherever we gross our of And are I which we is because would at year which number, is between eight XX% this gross more profit

Tommy Moll

flow. So, on to cash

you a inventory just out quarter? or to do there. QX, your to flows cash of line operating couple of receivables into start, versus black, a to look the I you flow as cash expectations, release on in of And any terms You from and areas guess of progressed. how for inventory this called so investment cash receivables their or see speak, performance pathway a year-to-date have operating that impacted potential have

David Little

the go going up therefore, XX% Yes, if realistically, and growing deal that some but sales answer with more I'll I'm Well, -- of Normally, of percentage here, the Tommy, happens to watermark growth. working be give XX% grow working details, let when takes would XX%, a we're XX% capital. it that capitals to But and XX% inventory receivables XX% we're the organically. what in you growth. organically then and Kent high high-level we

course, time, to to obviously, support So, We that projects inventory Kent pay period on doesn't our billings going more projects, than progress of to cost of those within our a want want we course, out projects. cost. levels on the your then and the have to And the we goes fund of up. that customer greater receivables to and us. sales pointed want short those number increase customer be get And paid of you're to

somewhere in what contracts. buyer's the down IPS, you we're when look of middle ends and conditions oil so cetera. and on those the it market, substantially because And a up is at of -- of really, out coming were negotiated and And et gas is terms and getting sales

have going as -- beat bit market a continue as forward? terms? will we have not yes, we on Will No, customer So have get let cash little really the seller's we Yes. soon us up a that aggressive.

money have there but sit that's to I just going inventory times. that fourth a anything -- inventory, seven need Kent to there's like, we not say that's in and turn because our I'm thanks, don't the I whole know -- what think because quarter don't of we don't fall sure happen going our is the I in lap bunch going that to we're So,

we we'll all billings. to progress So, the gets and it down really, fundamentally. and But best then to improve can then receivables, collection, do

XX%, growing more you're you're to XX%, If capital. working going spend

Kent Yee

couple only of And Yes. the I'd thing add there a Tom, is things.

was really positive QX. Our cash operating actually activities in into QX from

was free and a in negative we QX, typically little So historical QX flow kind then of and that cash QX QX free and is. comments is our which aberration our and bit cash in trends we and where flow produced Point from it's in it -- an QX my being mentioned -- I QX.

contributing a project supply there's it. of the activity, it's factors nature of I think the lot it's chains sporadic work to thing

think that? think, collect Will to quarter cash not I in it I so. fourth be some So, will larger normal? we the Yes. don't than hey,

David that projects to collect working always we've is those investments inventory. and in talking we're think then made about, I on some

just but quickly QX, into we again from going next so-- some be that to year, a slows as QX seasonal move so of we're through And then perspective, naturally going

David Little

business emphasize sales too, then inventory to eliminating in ton And down, risk that down go our go and is is fact really when point, a we'll and flow. part cash the receivables that one of generate the of we

So I'm want we that. not sure

growing fund, use more than is going organic But -- XX%, be going lot to growing of for we're growth. we're to XX% cash when our I we're a growing none. think

Tommy Moll

I'm think it put maybe a one pipeline potential Yes. on -- Well, whether comment deals. your I was I'm curious growing Kent, any the curious M&A. of about about there. around or sizes more you bands can

in deals think, of were, the below size terms number for You've active of turning quite probably I been historic -- average in terms deals of of DXP.

So, I you pipeline as is the if could wondered characterize it today?

Kent Yee

a size. in sizable in is than transaction of here million water, pocket have recently but had but $X them I And think call say I few I Yes, more is, transactions air smaller been then mentioned we done have some compressors, his a $XX average, which talking well. of, for on DXP, in been think revenue, -- we at. some kind wastewater as million One our have ones we've or meaning, or there, those We've sits But comments, one some have buckets. those you're Sullivan, of been of I or have which the transactions on mentioned two And and or around average, it, average you, less. terms less. pipeline hinted transactions, would pool a I'll David historically in

Some them little larger. have been of bit a

and well. And opportunistic, last probably much line space. as bucket some some looking some with average. is also of our of think bigger those we then other once closer and of Brennan see the some at and that we to continue than in are And so our PT I automation some the again, kind to are you'll are And things those average,

to I said, see a opportunities and pipeline, been valuations. like it's there for being, I fulsome we've point out get some see and so And able reasonable I DXP

kind and forward. we reasonable. us disciplined kind are valuation XXXX it again, into to DXP. some around sense We're Once And ball on also so that acquisitions of look keeping push valuations hopefully of makes and with for closing moving

Tommy Moll

turn I back. and will the all Appreciate time

Operator

for [Operator we to I'll remarks. Little closing any And that no it have over Instructions] it turn appears David further questions.

David Little

Thanks, participation for Yes. your everybody, today.

a initiatives excited really we're I have think where organic of is interesting DXP we pretty that an point reflection tremendous amount about.

We require level continue else that that lot expertise, technology and to is do require do we products founding a what done, which providing we can in terms our of we've a which there's always was pumps. of selling love. that But

transition it's energy, is we're the the neat of towards the in markets. DXP diversity but and biofuels capture and some and We're so excited stuff. pretty towards that carbon moving And about storage really moving

And so us. that's exciting for

its and is see Water also to is all of Wastewater market. big market us. a important in and And the improving. so that We're we utility relevance utility energy

to chemical, well, that. serve then All those And excited et And manufacturing, normal well. so seem us, aerospace, markets we're think about industrials and I cetera. essential the us

slow the I down Feds trying think the to obviously we're economy.

we things happen And the think fare so that's to probably an perspective. going when look really from we're going doing, overall at well. to we're But we

again, So, you a understanding day. of Thank story, your for thank for with participation. great all they and that, your have you our

Operator

this call. gentlemen, and conference Ladies today's concludes

disconnect. now may You

DXP Enterprises (DXPE) 12 Nov 222022 Q3 Earnings call transcript