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| Statement |
|---|
| DXP's overall gross profit margins for the year were 30.1%, a 160 basis point improvement over 2022 |
| These results demonstrate the power of our DX people, products, processes to serve the needs of our customer |
| They also highlight the benefit of our broad and diverse exposure to different end markets and regions and our disciplined capital allocation strategy |
| We're doing a lot of really good things for our customers and a lot of the growth initiatives that I think are helping |
| Fiscal 2023 was another successful year for DXP, growing sales 13.4% to $1.7 billion |
| These achievements contributed to our remarkable annual return on invested capital of 38%, demonstrating gains from our strategic initiatives as well as our disciplined approach to capital allocation and our acquisition strategy |
| One of our key long-term themes winning at max margins converted into improving gross profit margins by 160 basis points to 30.1% |
| We achieved record adjusted earnings performance at $4.9 per share and our cash flow from operations also accelerated with further rooms – with further room for improvement, higher earnings, improved working capital efficiency delivered a 54% free cash flow conversion to EBITDA on 13.5% sales growth |
| Fiscal year 2023 was a record year in terms of sales dollars, achieving a new high sales watermark for DXP while also achieving the fiscal year of 10% plus adjusted EBITDA margins we executed on our constant goal of 10% plus sales growth and 10% EBITDA margins |
| In summary, we are pleased with our fiscal 2023 performance |
| In terms of acquisitions, DXP's acquisition pipeline continues to grow and the market continues to present compelling opportunities |
| Return on invested capital or ROIC for fiscal 2023 was 38% and continues to be above our cost of capital and is reflecting our improved profitability levels, and efficient working capital management |
| Supply Chain Services operating income margins improved 14 basis points on a year-over-year comparative basis |
| Our future looks bright |
| Service center operating income margins improved 170 basis points on a comparative basis and year-over-year operating income margins |
| IPS operating income margins improved 324 basis points driven by the addition of water and wastewater acquisitions and overall improvement within the energy related IPS business |
| We continue to be excited about the future and delivering a differentiated customer experience, creating an engaging winning culture for DXP, and investing in our business to strengthen our core capabilities and drive long-term growth |
| This was driven by improvements in operating income margins across all three business segments |
| Our strategy has always been to combine the financial strength, talent, resources, technology and capabilities of a large company, with the fast, flexible, entrepreneurial capabilities of our local business to deliver superior value to our customers and our suppliers, while providing better growth opportunities for our DX people |
| This improvement was driven by strength in our IPS business segment showing the greatest improvement with margins improving 349 basis points on a year-over-year comparative basis |
| Our profits for the quarter were positively impacted by a sequential increase in gross profit margins, as well as an increase in SG&A expense associated with continued investment in our business |
| However, in the midst of contained change in growth our year-over-year earnings showed improvement and resiliency as we grew diluted earnings per share to $0.0389 |
| We have been experiencing strong organic sales growth within IPS |
| That said, this reflects improvement in sales per business day going from $6.655 million in Q3 with 63 business days to 61 days in Q4 or $6.673 million sales per business day |
| Overall, DXP's fiscal 2023 financial results were great to see and reflect the following, strong year-over-year sales growth driven by service centers and Innovative Pumping Solutions, lessening impacts from inflation and price increases compared to a year ago, continued gross margin strength and stability, continued year-over-year and sequential growth in IPS energy and water related backlog and activity, consistent operating leverage leading to sustained adjusted EBITDA margins, continued execution on our acquisition strategy completing three acquisitions and reaching the early stages of scale within water and wastewater and significant capital return to shareholders through our share repurchase program, a great high watermark year at one that will position us well for 2024 and beyond |
| As we have discussed, acquisitions have continued diversify our end market exposure and position us well through some through various economic cycles, and we are excited about 2024 and the growth we are pushing to see both organically and through organic acquisitions as we continue to have a strong pipeline of opportunities |
| Fiscal 2023 was a record year a new watermark in terms of sales and gross margins |
| I am pleased to report record full year results for our key financial metrics, sales, sales per day, gross profit margins and adjusted EBITDA margins |
| If organic growth slows, then free cash flow will grow and we will take advantage of the economy to grow profitably both organically and through acquisitions |
| This is evidenced by our sales growth, improved gross profit margins, acquisitions and the overall teamwork of the DX People |
| Statement |
|---|
| That said, while supply chain service experienced a decline year over year in Q3 and Q4 |
| This is primarily due to some facility closures with existing customers as well as the Streamline inefficiencies |
| As a percentage of sales, this amounted to 16.2%, which is below the 18.9% compared to this time last year |
| Compared to last year, SES's mix contribution was higher at 16.2%, which impacted gross margins slightly in fiscal 2022 |
| We are growing sales in excess of the market and expect that in the near future |
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