DXP Enterprises (DXPE -7.16%), a leading industrial distributor specializing in maintenance, repair, operations, pumping systems, and supply chain services, released its second quarter fiscal 2025 results on August 7, 2025. The earnings report showed an 11.9% GAAP revenue increase compared to Q2 2024. While revenue (GAAP) reached $498.7 million, just missing estimates by $0.3 million, earnings per share (GAAP) rose to $1.43, beating analyst expectations by $0.04. This result reflected a notable expansion in profitability, supported by growth in core business segments and cost discipline. The quarter was marked by robust operational leverage, ongoing strategic acquisitions, and record segment results, though the company’s supply chain services segment saw stagnant performance.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $1.43 | $1.39 | $1.00 | 43.0% |
| Revenue (GAAP) | $498.7 million | $499.0 million | $445.6 million | 11.9% |
| Adjusted EBITDA | $57.3 million | $48.2 million | 18.9% | |
| Free Cash Flow | $8.3 million | $5.9 million | 40.7% | |
| Adjusted EBITDA Margin | 11.5% | 10.8% | 0.7 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Business Focus
DXP Enterprises is an industrial distributor known for delivering products and solutions to support maintenance, repair, operations, production, and pumping applications. The company divides its business into three key areas: Service Centers, which offer a wide range of maintenance and repair products; Innovative Pumping Solutions, focused on custom-engineered pump packages; and Supply Chain Services, which manages customers’ supply chains and inventory. Its portfolio covers 279 locations across North America and select international markets, helping industrial customers improve efficiency and reduce downtime.
In recent years, DXP has emphasized growth through acquisitions and the integration of customized solutions. Key success factors include the ability to efficiently integrate acquired businesses, expand its geographic footprint, and provide tailored supply chain solutions that lower client costs. The company’s broad product expertise, technical talent, and scale allow it to meet an array of customer needs across industrial, energy, water, and manufacturing markets.
Quarter Highlights and Financial Developments
The company posted $498.7 million in GAAP revenue, an increase of 11.9% from the same period last year. This growth was primarily organic, with sequential sales rising by 12.3% excluding acquisitions. Acquisitions contributed approximately $24.6 million in added sales, sustaining a pattern of expansion through strategic purchases. Gross profit (GAAP) climbed 14.5% to $157.8 million. Net income (GAAP) increased 41.3% to $23.6 million, outpacing sales growth and driving EPS higher.
Operational margins were a notable area of improvement. Adjusted EBITDA, which measures earnings before interest, tax, depreciation, and amortization, reached $57.3 million. The adjusted EBITDA margin was 11.5 %, up from 10.8 % in the prior year. These efficiency gains came despite a slight miss on GAAP revenue, showing the effectiveness of cost controls and improved pricing. Operating cash flow registered at $18.6 million, with free cash flow (non-GAAP) rising 40.7% to $8.3 million compared to Q2 2024. The company ended the quarter with $112.9 million in cash, although this was lower than year-end due to acquisition spending and capital investments.
By segment, Service Centers delivered revenue of $339.7 million, up 10.8 %, with an operating income margin of 14.8 %. Innovative Pumping Solutions led the way with 27.5% revenue growth to $93.5 million and a segment margin of 19.9%. This segment, specializing in custom pump packages for industrial, water, and energy projects, benefited from strong order backlogs and demand from diversified end-markets. In contrast, Supply Chain Services brought in $65.4 million in revenue, which was nearly flat compared to last year and delivered an 8.0% segment operating income margin. This service line, which includes inventory management and procurement tools like SmartAgreement and SmartBuy, continues to be a focus area for improvement as its revenue lagged behind other segments.
Management attributed earnings strength to both broad-based market demand and the successful integration of recent acquisitions. Two acquisitions closed during the quarter, with another completed after quarter end. The company expects to finalize three or four additional deals in the second half of fiscal 2025, underscoring its reliance on acquisition-driven growth. DXP Enterprises does not currently pay a dividend.
Product and Segment Developments
Within Service Centers, sales were driven by ongoing demand for maintenance, repair, and operations (MRO) products, including rotating equipment and industrial supplies essential for customer reliability.
The Innovative Pumping Solutions segment—covering turnkey pump systems and engineered solutions for energy, water, and industrial markets—set the pace with its year-on-year performance. Management cited strong backlogs, particularly in water infrastructure and energy projects, as the main growth drivers. Orders and bookings remained robust, and the margin profile improved both year over year and compared to the prior quarter. The company’s backlog for pump projects continues to exceed historical averages, supporting visibility for future sales.
Supply Chain Services, responsible for managing client supply chains and on-site procurement functions, posted nearly unchanged GAAP revenue year over year. Operating margin in this segment declined compared to last year, and management acknowledged the need for customer growth and innovation here. Despite this stagnation, SCS remains strategic as clients seek operational and cost efficiencies through managed inventory and tailored distribution programs.
The mix of organic and acquired growth remains a critical component. Management highlighted the importance of ongoing “diversification efforts, an overall reduced energy industry exposure, and a strong balance sheet,” positioning the business to weather sector volatility. Cash flow from operations strengthened, though the company continues to carry elevated net debt, with a leverage ratio of 2.4 times adjusted EBITDA for the last twelve months. Cash on hand declined in the first quarter as the company invested in acquisitions and equipment, part of its planned expansion strategy.
Outlook and What to Watch
However, its leadership reconfirmed plans to maintain operating margins and complete additional acquisitions in the back half of the year. Management commented that “we anticipate closing at least three or four more acquisitions during the second half of 2025.” highlighting acquisitive growth as a continuing priority.
Investors should monitor the performance of the Supply Chain Services segment, which has underperformed relative to the rest of the business. Other key watchpoints include integration of new acquisitions, margin maintenance, cash flow progression, and leverage levels. The company’s balance sheet shows positive momentum, but ongoing investments will likely require continued close attention to liquidity and debt metrics. DXP Enterprises does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
