Dxp Enterprises Inc Q3 FY2024 Earnings Call

Thank you for standing by. My name is Novi and I will be your conference operator today. At this time, I would like to welcome everyone to the DXP Enterprises, Inc. 3rd Quarter 2024 Earnings Release and Conference Call. All lines have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad if you would like to withdraw your question press star one again thank you i would now like to turn the call over to kent ye chief financial

officer please go ahead thank you novi and thank you everyone this is kent ye and welcome to dxp's q3 2024 conference call to discuss our results for the third quarter ending september 30th 2024. for joining me today is our chairman and ceo david little before we get started i want to remind you that today's call is being webcast and recorded and includes forward-looking statements actual results may differ materially from those contemplated by these forward-looking statements a detailed discussion of the many factors that we believe may have a material effect on our business on an ongoing basis are contained in our SEC filings. However, DXP assumes no obligation to update that information as a result of new information or future events. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our earnings press release. The press release and an accompanying investor presentation are now available on our website at ir.dxpe.com. I will now turn the call over to David Little, our Chairman and CEO, to provide his thoughts and a summary of our third quarter performance

and financial results. David? Thanks, Kent, and thanks to everyone on our 2024 third quarter conference call. Kent will take you through the key financial details after my remarks and after our prepared comments we will open for Q&A. It is my privilege to share DXP's third quarter results with you on behalf of over 2,989 DX people. Congratulations to all our stakeholders and a special thank to you and our DX people you can trust. We are pleased to see The in-market demand and DXP's performance continued through Q3. We remain at record levels as we move into the last quarter of 2024. This allows us to achieve another quarter of both solid sales growth and 10% plus EBITDA margins. We are pleased to announce strong third quarter results with sales, operating income, and earnings per share all up over the prior year. This is a great way to start the second half of physical 2024. We remain focused on serving our customers and providing products and services that help them save money, consolidate their MRO spend, manage inventory, and provide solutions to solve their revolving needs. Being customer driven and growing sales profitably is our goal. We continue to focus on driving organic and acquisition growth, increasing gross profit margins, and increasing productivity. Our execution has resulted in physical 2023 and 2024 top-line and bottom-line growth, both organically and through acquisitions. That said, our growth strategies are working and our acquisition pipeline should add to our results as we close out physical 2024 and going into physical 2025. 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 and our core capabilities and drive long-term growth. Here today through September 30th, total sales were up 4.7% and adjusted EBITDA is up 6.5%. Last 12 months sales in adjusted EBITDA were $1.74 billion and $183 million respectively with adjusted EBITDA margins of 10.5%. Moving to our third quarter, total DXP revenue of $47.9 million for the third quarter of 2024 was a 12.8% increase year-over-year with adjusted EBITDA of $52.4 million for the third quarter. In terms of Q3 financial results, innovative pumping solution led the way, growing sales 52.3% year-over-year to 89.8 million, following by service centers growing sales 7.6% year-over-year to 316.8 million, and supply chain services flatter growing 0.7% year-over-year to 66.2 million. In terms of IPS, our innovative pumping solutions, we have two broad markets tied to capital budgets and or project work. DXP's heritage energy related project work and DXP water. Year-to-date DXP's water is 45% of IPS sales versus last year at this time it was 31%. As we have grown our DXP water platform, we have increased both gross margins and operating income margins for the segment and for DXP. Our energy-related bookings and backlog continues to show resilience and perform above our long-term averages, albeit not at all-time highs. Additionally, our year-to-date average remains above our long-term average energy IPS backlog going back to 2015, which we mentioned first occurred in Q1 of this year. What this indicates is that we are continuing to get bookings and we feel good at this point in this cycle on the energy and water and wastewater related project work. We look forward to seeing how this impacts our results and project revenue in both both energy and water and wastewater as we move through 2024 and into 2025. We have booked a few large projects in both energy and water that should start recognizing revenues starting in Q1 or Q2 of next year. That said, as we maintain growth, VXP's focus within IPS will be to continue to manage the demand levels we have, finding opportunities in all markets such as energy, biofuels, food and beverage, and water and wastewater, and manage pricing and delivery while improving and maintaining margins. In terms of service centers, the diversity of in-markets, multiple product division approach, and our MRO nature within service centers allows us to continue to remain resilient and continue to experience consistent top-line year-over-year growth. From a regional perspective, regions that experience year-over-year growth included North Central, North Texas, South Rockies, Southwest, and our Canadian rotating equipment business. We continue to expect our end markets will remain constructive over the near future. We have also seen strength in our U.S. Safety Services Division and Metalworking Products Division, which is great to see. Supply chain services sales have continued to align with performance trends observed in the second half of 2023. Historically, the later half of the year is impacted by holiday season and there being fewer billing days. However, Supply Chain Services is anticipating an increase in new accounts implemented in Q4 of 2024 and Q1 of 2025. SES has also invested in a customer care model allowing customers to utilize DXP's remote technology without the need of full-time on-site presence. This model enables DXP to extend supply chain services technology to accounts with smaller sites and expand the business relationship. SES remains committed to expanding our industrial customer base through enhanced marketing and lead generation tools. As we go into physical 2025, we will focus on extending DXP's service and repair offering for rotating equipment and safety services to our existing customers, leveraging the broader DXP capability. We anticipate this could happen in early 2025. Demand for supply chain services services is increasing because of proven technology and efficiency they perform for all of their industrial customers. VXP's overall gross profit margins for the third quarter were 30.9%, a 94 basis point improvement over 2023. Overall, I'm pleased with our gross margins and our steady improvement over the last seven quarters. SG&A for the third quarter increased 16.8 million versus Q3 of 2023. SG&A as a percent of sales increase going from 21.4% in Q3 of 23 to 22.5% in Q3 of 24. SG&A continues to reflect our investment in our people and our growth strategies along with improvements in technology and processes to gain future efficiencies. It is my privilege to share DXP's financial results on behalf of our DX people. DXP's overall operating income margin was 8.4% or 39.6 million which includes corporate expense and amortization. This reflects an 18 basis point decline in margin versus Q3 of 2023. We still feel there is opportunity in our operations to be more efficient, and we have chosen to invest in the business via people and our operations as we have been focused on growth. Service centers operating income margins were 14.6%. IPS's operating income margins were 20.3%. Supply chain services operating income margins were 8.4%. Overall, DXP produced adjusted EBITDA of $52.4 million in the third quarter of 2024 versus $44 million in the same period of 2023. This turned into a year-over-year increase of 8.4 million or 19.1%. Adjusted EBITDA as a percent of sales was 11.1% of 59 basis points versus Q3 of 23 and up 27 basis points versus Q2 of 2024. I am pleased by our performance in the third quarter. DXP continues to make great efforts and adapt as we grow and evolve DXP in a more diversified and less cyclical business, the next chapter. We still have substantial work to do to achieve our goals, but I am confident that the team will continue to execute and drive sales and profitability. We are growing sales more than the market and expect that into the near future. We continue to make progress on our growth strategies, and our commitment to our customers is strong. We are driving growth and improvements at DXT. We look forward to navigating and working through the remainder of physical 2024 and launch into physical 2025, further developing the next chapter. We continue to build our capabilities to provide a technical set of products and services in all our markets. We make DXP very unique in our industry and gives us more ways to help our customers win. Finally, I would like to thank our DX people for continuing to main 10% plus EBITDA margins and hitting a new quarter sales high in Q3. Let's do it again in Q4. Q3 was another great quarter as we continue to have success in 2024 and prepare to launch ourselves in the 2025. We remain excited for what is next. With that, I will now turn it back to Kent to review our financials in more detail.

Thank you, David, and thank you to everyone for joining us for our review of the third quarter 2024 financial results. Q3 financial performance reflects DXP's ability to continue to successfully navigate through the market and execute and create value for all our stakeholders our third quarter results also reflect another record sales water mark along with a new all time high and adjusted EBITDA margins as it pertains specifically to our third quarter DXP third quarter financial results reflect solid sales growth within IPS and continued strength with it within the energy and water bookings and backlog, along with an accelerating contribution from DXP Water. Year-to-date inline service center performance marked by gross margin strength and stability and a pickup in sales performance from Q2 to Q3, continued contribution from acquisitions along with closing an additional acquisition during the third quarter and closing two subsequent to the quarter for bringing the total completed year-to-date to seven acquisitions and consistent operating leverage leading to sustained adjusted EBITDA margins. Total sales for the third quarter increased 6% sequentially to a record 472.9 million. Acquisitions that had been with DXP for less than a year contributed 28.5 million in sales during the quarter. Average daily sales for the third quarter were 7.39 million per day versus 6.96 million per day in Q2 and 6.66 million per in Q3 2023. Adjusting for acquisitions, average daily organic sales were 6.94 million per day for the third quarter of 2024 versus 6.59 million per day during the third quarter of 2023. That said, the average daily sales trend during the quarter went from 6.62 million per day in July to 8.77 million per day in September, reflecting a quarter in push and benefit from acquisitions as we closed out the third quarter. In terms of our business segments, innovative pumping solutions grew 22.42% sequentially and 52.34% year-over-year. This was followed by service centers growing 3.36% sequentially and sales increasing 7.6% year-over-year. Supply chain services grew 0.94% sequentially and increased 0.69% year-over-year. In terms of innovative pumping solutions we continue to experience increases in the energy related bookings and backlog as well as the water and wastewater bookings and backlog our q3 energy related average backlog grew 39.1 percent over our q2 average backlog and continues to be ahead of all our averages it is worth noting that our q3 energy backlog includes a significant project win that is currently estimated to meaningfully impact our sales performance in q1 or q2 of next year Adjusting for this project, our Q3 energy backlog grew 8.9% sequentially. The conclusion continues to remain that we are trending meaningfully above all notable sales levels, and we're moving towards 2018 and 2019 levels based upon where our backlog stands today. On a nine-month comparative basis, our native energy IPS business is up 31.1% year-over-year. We expect this to continue for the remainder of 2024. We also see strength in our IPS water backlog as it continues to grow due to a combination of organic and acquisition additions. In terms of our service centers, our service center performance reflects our internal growth initiatives along with our diversified and evolving end market dynamics. On a comparative basis, our third quarter of 2024 is now our strongest quarter within service centers over the last seven quarters and sets a new sales high watermark. Regions within our service center business segment which experience year-over-year sales growth include the South Rockies, Southeast, Southwest, Alaska product perspective. We also experience strength in our U.S. safety services and metalworking product divisions and Canadian rotating equipment, which is all great to see in points to strengthen our energy markets and or exposure. As discussed in Q2, supply chain services sales continue to perform in line with the performance we experienced in the second half of 2023. Supply chain services sales grew 0.94% sequentially and increased 0.69% year over year. Our results have been impacted by facility closures with existing customers as well as the streamlining efficiency we bring to our customers that we mentioned back in Q4 of last year. As David mentioned in terms of our outlook, we are anticipating an increase in new accounts implemented in Q4 of this year and Q1 of next year. SES has also created a customer care model that focuses on remote technologies without the need for a full-time on-site presence. Additionally, as we go into fiscal 2025, SES will focus on extending DXP services and repair offerings for rotating equipment and safety services to our existing customers, leveraging the broader DXP capabilities. We anticipate this could happen in early 2025. Turning to our gross margins, DXP's total gross margins were 30.89%, a 94 basis point improvement over Q3 of 2023. This improvement is attributed to strength and gross profit margins within service centers or a 99 basis point improvement from Q3 of last year. Additionally, the creative contribution from acquisitions at a higher overall relative gross margin versus our base DXP business helped drive consistent IPS gross margins. acquisitions continue to be accretive to both our gross and operating margins that said from a segment mixed sales contribution service centers contributed 66.99 percent innovative pumping solutions 18.99 percent and supply chain services was 14.01 percent ips has notably contributed more to the overall mix of dxp going from 15 of sales in q1 to 19 in terms of operating income combined combined, all three business segments increased 64 basis points sequentially, and business segment operating income margins are 6.9 million versus the second quarter of this year. This primarily was driven by improvements in operating income margins across service centers and IPS, but more notably within IPS. The improvement in innovative pumping solution reflects the impact of our water and wastewater acquisitions at a higher relative operating income margin and a growing percentage of revenue or sales mix along with improvements of this quarter within our pump manufacturing operations. DXP water has gone from 28% of sales in Q1 of 2023 to over 43% of sales of IPS in the third quarter of 2024. Total DXP operating income was $39.6 million in the third quarter, or 8.4% of sales versus $35.9 million, or 8.6% of sales in the third quarter of 2023. Our SG&A for the quarter increased 16.8 million from Q3 of 2023 and 6.1 million from Q2 of this year to 106.5 million. The increase reflects the growth in the business and associated incentive compensation and DXP investing in its people through merit and pay raises. Additionally, this also reflects some unique one-time costs and expense associated with our horizontal pump offering. SG&A as a percentage of sales increased 112 basis points year over year to 22.52 percent of sales and was essentially flat sequentially for Q2 this year. Turning to EBITDA, Q3 2024 adjusted EBITDA was 52.4 million. Adjusted EBITDA margins were 11.1 percent. As discussed in Q1, we expect this to pick up and margins have improved as we've moved through the first path and into the second half of 2024. We continue to benefit from the fixed cost SG&A leverage we experience as we grow sales as well as the margin accretion and growing scale of the DXP water acquisitions. In terms of EPS, our net income for Q3 was $21.1 million. Our earnings per diluted share for Q3 was $1.27 per share versus $0.93 per share last year. Conservatively adjusting for one-time items. Adjusted earnings per diluted share for Q3 2024 was $1.43 per share. Turning to the balance sheet and cash flow, in terms of working capital, our working capital increased to $11.6 million from June and $26.5 million from December to $298.6 million. As a percentage of the last 12-month sales, this amounted to 17.2%. This is an uptick from where we have been and reflects the impact of acquisitions and an increase in DXP's capital project work. As we move into fiscal 2025, we will grow into the working capital as a percentage sales and particularly the impact from recent acquisitions. In terms of cash, we have $35 million in cash on the balance sheet as of September 30th. This is a decrease of $104.7 million compared to the end of Q1 and reflects our acquisition activity as well as an additional $5 million in share repurchases in Q3. In terms of CapEx, CapEx in the third quarter was $4 million, or a decrease of $4.9 million compared to Q2, and a $2.5 million increase versus Q3 of 2023. We continue to expect CapEx to pick up in 2024 versus 2023. We are continuing to make investments in our business, software, our facilities, and operations for our employees. As we move forward, we will continue to invest in the business as we focus on growth and the next evolution or phase of DXP. turning to free cash flow free cash flow for the third quarter was 24.4 million versus 38.3 million in q3 of 2023 this primarily reflects the impacts from our project work work which we have highlighted in the past was requiring investments in inventory product and cost and excess of buildings that said we continue to focus on tightening managing this aspect of our business from a cash flow perspective and look to align billings with the investments which slid backwards on us during the third quarter are increasing or impacting us by 13 13.1 million during q3 return on invested capital or roic at the end of the third quarter was 36 and reflects the improvements in ebitda and operating leverage inherent within the business additionally it also points to our recent acquisitions performance and their positive contribution and the creative impact of both gross profit and ebitda as of september 30th our fixed charge coverage ratio was 1.7 to 1 and our secured leverage ratio was 2.5 to 1 with a covenant EBITDA for the last 12 months of 200.7 million total debt outstanding on September 30th was 544.5 million in terms of liquidity as of the third quarter we were undrawn on our ABL with 3.4 million in letters of credit with 131.6 million of availability and liquidity of 166.6 million including 35 million in cash subsequent to the quarter end we successfully reduced borrowing costs by 100 basis points and raised an incremental $105 million. DXP is positioned itself to continue to execute on our acquisition strategy. In terms of acquisitions, we have closed seven acquisitions year-to-date, including two subsequent to the quarter end, and we will look to close at minimum another two before the end of the first quarter. DXP's acquisition pipeline continues to remain active, and the market continues to present compelling opportunities. That said, we remain comfortable with our ability to execute on our pipeline and valuations continue to remain reasonable. Regarding capital allocation, we repurchased or returned $5 million to shareholders via share repurchases in Q3. We finished our previous program and we have put in place a new $85 million or $2.5 million share repurchase program. As previously mentioned, we will continue to be opportunistic and support our shareholders as we move through the cycles. In summary, we are excited about the future and building the next chapter. We will keep our eyes focused on those things we can control and what is ahead of us. We are excited because there is substantial value embedded in DXP and we continue to believe that what is next is greater than what we have already achieved. Lastly, it is worth mentioning that as of Q3 2024, we have remediated and cured all our existing material weaknesses noted in our controls opinion under item four controls and procedures as of september 30th 2024 thank you to our dxp team for all their effort and commitment to remediate and enhance the financial controls and procedures at dxp we look forward to great with great confidence to a future of sustained growth and market outperformance we will now turn the call over for questions at this time i would

like to remind everyone in order to ask a question press star then the number one on your telephone keypad your first question comes from the line of tommy mall with stevens please go ahead morning

and good morning and thanks for taking my question good morning on the acquisition front i want to make sure i heard you correctly kent so there were five year to date through when you close the books third quarter then i guess there were two more for a total of seven in october and then i think i I heard you say another two more, either by year end or by first quarter end.

Yeah, Tommy, I'll walk you through that, and thank you for joining us today. We closed three, and then subsequent to the quarter end, just this past Friday, we closed an additional two acquisitions, so that brings us to seven-year today. And we'll be putting out a press release in the next 24 to 36 hours regarding those. And then my comments in the script also pointed to that, obviously, we still got a strong pipeline, and we anticipate closing another two, if you will, before the end of Q1 of next year.

Got it. And anything you can share at this point on the two that you closed first of the month, even just in terms of end markets or any of the contours that you can share now?

Yeah, what I would share today on the call is they were both more typical in the smaller size of our acquisition program. One was another water wastewater acquisition in the Nebraska market, so we're excited to get a little bit of a foothold in Nebraska. And then the other one was a vacuum pump acquisition in California, so continuing to grow our California region, but it's on the vacuum pump side, which means there's more in-market diversification, so everything from semiconductors, food and beverage, pharmaceuticals, et cetera.

If you roll it all together, I'm going to pivot just to the fourth quarter here, which is always tricky from a revenue standpoint to try to have a view on, but if you include some of the benefits of the acquisitions that you announced, and you look at the $473 million you did in the third quarter, does it feel like maybe flat up or down quarter over quarter into Q4, inclusive of the acquisitions that you've announced? But obviously, we haven't seen how big they are yet, but just trying to roll all that together to set an expectation.

Yeah, yeah, no, no, and I get it. you know we don't formally provide guidance but but but but you know we have our kpis including sales per business day i i think you know tommy the way to think about it as we go is yes there's there's fewer days as we head into um you know into i i think um you know i think everybody's got to factor that in that said let me walk you through the sales per business day trend um and and then you know if you have a follow-up we can go from there uh but i always think that as a broad kpi kind of directionally kind of uh can can point people in a certain direction and then david may have some comments but um if you start off and just let's just go back to may and then i'll pull it forward may we were at 6.43 million per day june 7.63 million per day 0.62 million per August six point eight nine million per day September eight point seven seven million per day and in October we've got six point nine nine million per day so so that's kind of the sales per business day trend but once again we will have fewer days and you know you get stuck between the days after those holidays as

Wow. And then I would just add that historically the fourth quarter is a little sauntered and I'm not sure that, I guess from our perspective, bookings are still really strong, our backlog is strong. but I'm not necessarily thinking what will ship or recognize as revenue in the fourth quarter will, I think it'll be a little soft.

And Kent, I appreciate the monthly cadence progression you provided there. Just to confirm, those are all on an as-reported basis, so that would be inclusive of whatever acquisitions had closed during those months?

yes yes yes and the two more two two more recent ones are once again on the smaller end we'll we'll have more detail when we put the press releases out but call it combined together you know less than 10 million in sales for those two on an annual basis okay that's very helpful

um and just in terms of the days for q4 do you know what you're dialing in this year or should it be a fairly similar number of selling days as in the past yeah i think we're coming in at around

once again just in mind like 61 to 62 just you know practically i think have 62 but you know

how the holidays fall on oh yeah oh yeah okay um thank you for unpacking that that's helpful So, David, you commented on the margins, which were, again, in the double-digit range in Q3, and I think I heard you say, let's do it again here in Q4. So, I just want to make sure I heard that correctly, that there isn't any kind of reason that should not be the case again in Q4, and also just get your latest and greatest on that performance. you've been solidly in the double digits for a number of quarters now there's some acquisition benefits in there but if there's any kind of uh operating uh tailwind otherwise you want to call

out please do thank you uh sure um and i assume you're talking about EBITDA margins um yes you've adjusted EBITDA yeah adjusted EBITDA um yeah i i um you know we're not uh if you noticed SG&A was was probably as a percent of sales was a little high and so we're I think it's important to note that we're not trying to manage the business to maximize profits at the expense of sales and that that in quite the opposite we have a lot of bets on the table to to grow sales and some of those are working out really nicely, as you can see, and then some of them are a little slower and taking bigger investments. So I think that that's good news. The good news is that we're managing the business for growth and not trying to cut every little nickel and dime of the expense out. So I don't think there's any real headwind that will make expenses go down and I don't think there's any reason to think that EBITDA margins are going to are going to go down either. Some of the EBITDA margin growth has been in the water and wastewater area which is a real focal point of what we're trying to do and and our traditional pump business so you know we continue to want to grow those two things so the acquisitions we're doing are are very uh accretive on ebitda margins and so we're excited about that and um i'm like okay guys let's keep up the good work and let's do it again

thank you david this one's probably for kent um just to unpack some of the refinancing you did there in october kent um your your gross debt will be up or is up i guess now um but then the cost of that debt was reduced i think by 100 basis points yep so are you able to help us dial in what you're thinking just for interest expense here in fourth quarter and then to the extent there's a lot of noise in that number with one-time fees that are going to fall away can you just calibrate us on what a what a run what run rate would look like in the current uh

so for environment yeah no absolutely tommy i i think you know the absolutics run rate interest will be roughly the same we're running around i'll call it 15 and a half to 16 million a quarter and the benefit we got obviously was the 100 basis points reduction as well as the dry powder right and that's really to fuel our acquisition activity and so think about if you're thinking about just in terms of how it impacts the the p and l yeah there'll be the one time we have we have to go through the analysis we haven't completed it yet where you look at the existing issuance cost and some of it you'll write through and obviously we'll be clear about that in q4 um sure but we haven't necessarily gone through that 100%, but I think the point you're getting at is you want to know kind of the run rate interest costs, and I think, you know, the 15 and a half to 16 million is fair. Keep in mind the facility still amortizes 1% per year, so as time goes on, we'll be paying down the facility at 1% per year, and so if that answers your question, Tommy, that's I think how we think about it. You know, it was favorable market conditions, and with our pipeline, and then And kind of with one of the acquisitions we did earlier this year being pretty significant and a contributor in this quarter, it felt right to just reprime, if you will, the balance sheet and go into 2025, putting us in a position to do something similar.

And on that front, Kent, with regard to capital deployment, did I hear you correctly say that seller expectations currently appear reasonable? I realize that's not specific to any particular deal, but just in general, did I hear you provide that characterization?

Yeah, I think that's fair, right? I think, you know, sellers in general understood where we were and still are, relatively speaking, in a higher interest rate environment. And so, from what we see, have been fair and reasonable. And our pipeline continues to reflect that. We don't feel like we're having to be too aggressive. Obviously, the businesses that are growing and are highly strategic in many ways to DXP, we're willing to push the valuation pendulum a little bit more. But all in all, on a blended average across, we've always restored.

Last one from me, David, if you look back over the last handful of years, you've been at this capital deployment program for some time where you're diversifying your end markets, signing pockets of faster growth, higher margin, et cetera, et cetera, closed a number of deals this year, more in the pipeline. One topic that doesn't often get discussed is whether there may ever be a point in the future where you'd be a seller of any part of your portfolio. So if you just play it forward and you keep shaping the portfolio as you have been now for some time, do you ever look up and there's a situation where a piece, it would make sense to pry out of the portfolio? Or if the answer is too early to tell, that's fine too. I was reflecting on the execution here over multiple years, and the business today looks a lot different than it has in prior cycles, so I figured it's worth an ask.

Well, I appreciate you making that comment, and I appreciate you recognizing the diversification that we've been doing, and so I feel really good about that, and I feel really good about the fact that we're not going to have any big downturns or anything like that that are hard on us so I feel really strong about DXP and where it is today that said I think you asked a very good question one that we consider at most board meetings and that is that you know are there some pieces that the new direction or maybe they don't fit the right financial matrix either that we're trying to accomplish and so the answer to your question is yes and again I think where we land these everything we're doing makes pretty decent money and so it's not like we're trying to sell something that's just a dog over here and so we don't have any dogs if we do they're all really nice dogs but uh anyway uh the boy the point besides my joke is that um um it's a consideration and then and then because they're all performing the to what they feel like they could do and it's and it's going well it's just a timing issue it's it's when do we think is the appropriate time to maximize selling something and and i'll be the first to admit that selling something has not been in my portfolio it's not not what david little is all about of i don't i can't remember selling something uh so i'm i'm gonna acquire and and then i try to make it as pretty as i can uh but but there's some as we've gotten much, much bigger for thoughts around that.

Thank you both. Yeah, but Tommy, the only thing I'd add there is, yeah, obviously from a fiduciary perspective, we look at it, but we're known in the marketplace as a buy and hold guy. And so we look at things from a fiduciary perspective, but we take it seriously because when sellers sell to us, that's part of the attraction to DXP, right? We're not like our competitors out there and we're not flipping every day. And so, you know, I just round out David's comments with that. We appreciate the question, but it's a delicate walk because one of the big differences for DXP in the marketplace is we're not private equity. We're not a lot of things. And so we take pride in that. So I just kind of add that ending touch there a little bit.

Yep, noted. and I appreciate the insight from you both, and I'll turn it back.

I will now turn the call back over to David Little, Chairman and CEO, for closing remarks.

And first, Tommy, I would just ask if there's anything else you would like to ask. We appreciate you and the things you do to cover us. If there's not, then thanks for everybody for joining us today. Thanks to all our DXP people out there. thanks to all the acquisitions that we've done and those people that are joining our DXP team. I think they learn to appreciate DXP and how we operate and we're all about growth. We're not about trying to whack expenses and take everybody, you know, just trying to maximize the last penny that's not our style I do appreciate Kent making a point that we're not a portfolio company buying and selling things typically I think I was thinking of a longer term answer to what I was asking answering and that was that you know as as we get bigger and bigger and bigger and and and move forward in you know in a direction that's very positive then as there are some things that may may need to be looked at so but that said again thank you all the DXP people for all you do and let's let's finish the year strong and off in the

2025 here we go thanks ladies and gentlemen that concludes today's call Thank you all for joining. You may now disconnect.