Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the DXP Enterprises 2023 Fourth Quarter and Fiscal Year 2023 Results 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. [Operator Instructions] I would now like to turn the conference over to Kent Yee, Chief Financial Officer. Please go ahead.

Thank you, Desiree, and thank you everyone for joining us today. This is Kent Yee and welcome to DXP's Q4 2023 conference call to discuss our results for the fourth quarter and fiscal year ending December 31, 2023. 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 because 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 the fourth quarter and fiscal 2023 performance and financial results.

Thanks Kent, and thanks to everyone on our 2023 fourth quarter and fiscal 2023 conference call. 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. 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. It is my privilege to share DXP's fourth quarter and fiscal 2023 results with you on behalf of over 2,837 DX people. Congratulations to all our stakeholders and special thanks to our DX people you can trust. Fiscal 2023 was another successful year for DXP, growing sales 13.4% to $1.7 billion. We are excited to move into fiscal 2024 with the momentum and results of 2023. 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 are transitioning our theme to 2024 from winning at max margins to winning at max margins, while maximizing operating efficiencies and investments. 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. And we will look to maintain that as we enter into fiscal 2024; and thus focusing on driving operating efficiencies while still growing the business. We continue to successfully execute on our end market goals of diversification and scale. At the end of fiscal 2023, energy was 25% of our business followed by chemical at 10% and with water and…

Thank you, David, and thank you to everyone for joining us for our fourth quarter and fiscal year 2023 financial results. Fiscal 2023 was a record year a new watermark in terms of sales and gross margins. Additionally, it is our first fiscal year of 10% plus adjusted EBITDA margins. We are excited to report these results and we look forward to moving into fiscal year 2024. Specifically, fiscal year 2023 financial performance reflects our ability to continue to execute on key themes that we have been focused on over the past three to five years. 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. Total sales for the fourth quarter increased 0.2% year-over-year to $407 million. 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. Acquisitions that had been with DXP for less than a year contributed $2.8 million in sales during the quarter. Total sales for DXP for fiscal 2023 were $1.7 billion increasing 13.4% compared to fiscal 2022. For the full year acquisitions contributed $33.1 million in sales. Average…

The floor is now open for your questions. [Operator Instructions] Your first question comes from the line of Max Kane with Stephens Inc. Your line is open.

Good afternoon. Thank you for taking my questions.

Good afternoon, Max. how are you?

I'm doing fine. What about yourself?

Good. Doing good.

Good. Yes, the first question I have is on can you provide any color on quarter-to-date trends for daily sales including recent acquisitions if that's possible?

Yes, no, absolutely. What I'll do is I'll walk back through Q4 and then bring you through February, which we have a flash just in terms of through February. So in terms of our sales per business day in October, that was 6.392 million and November, 6.553 million and then in December, 7.125 million. In January for severance of 5.9 million to 5 million and then in February 6.37 million. What I'd note there matches off our January [indiscernible] is up 4.5% year-over-year. And then our February flash is up 2.5% year-over-year on a comparative basis.

Got you. Thank you for the color on that. And what are the number of selling days you're assuming for 1Q?

We will have 63 actually business days in the Q1, which is one day less than what we had in 2023. And probably, of note is in March of last year we had 23 business days. And this year we'll have 20 business days. So three less business days.

Got you. And then just last question from me. How you're thinking about 1Q adjusted EBITDA margins progressing versus 4Q 2023?

Our EBITDA margins today partially are a reflection of mix meaning at a very high level service centers versus IPS versus supply chain. And then as you kind of narrow down from there some of our more recent themes of water/wastewater and air compressors dependent upon that mix contribution kind of impacts our EBITDA margins today. So all that to say is that our goal is always 10% plus. And we feel like we've got the appropriate mix today assuming all businesses are performing to kind of achieve that. But it is influenced a little bit by the mix and the different contributions.

Got it. Thanks for the color and I'll go ahead and turn it back.

There are no further questions at this time. Mr. David Little I turn the call back over to you.

Yes, thanks. I would I'd like to conclude by thanking our sales team, thanking our inside sales team and thanking operations, thanking accounting, thanking everybody, everybody contributed to a what I consider a really solid great year and as it's really appreciated. We're doing a lot of really good things for our customers and a lot of the growth initiatives that I think are helping. We look forward to 2024 and onward and upward. So thank you, everybody and thanks all are DX people and thank all our stakeholders out there. And we'll see you guys next time.

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.