Thank you for standing by. My name is John, and I'll be your conference operator today. At this time, I would like to welcome everyone to the DXP Enterprise's Second Quarter 2024 Earnings Release and Conference Call. All lines have been placed in mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kent Yee, Chief Financial Officer. Please go ahead.

Thank you, John. And thank you to everyone joining us this morning. This is Kent Yee, and welcome to DXP's Q2 2024 conference call to discuss our results for the second quarter ending June 30th, 2024. 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 second quarter performance and financial results. David?

Good morning. And thank you, Kent. Thanks to everyone for joining us today on our fiscal 2024 second quarter conference call. We delivered another quarter of strong results with sequential and year-over-year improvements by solid execution. We are pleased to see in-market demand and DXP's performance continue through Q2 and remain at record levels through the first half of 2024. This allows us to achieve another quarter of both solid sales growth and 10% plus EBITDA margins. I want to thank our DX people for their passion and dedication to support our customers in delivering these impressive results. Overall, we had a great second quarter. We are establishing new highs for DXP and look forward to the second half of 2024. The first half of 2024 highlighted solid execution and our ability to grow organically and through acquisitions. We continue to execute our acquisition strategy to continue to grow DXP water and wastewater platform as well as to add two industrial rotating equipment acquisitions. We continue to execute on our goal to diversify the business while maintaining our commitment to foundationally end markets like energy, which have been and will be a part of DXP. This is the DXP's fifth quarter out of the last six of adjusted EBITDA margins, more than 10%, which is great to see. And we look forward to maintaining the profitability momentum. This speaks to our relentless drive to center our strategy around our customers and remain customer-driven experts while creating a win-win for all stakeholders. We remain highly focused on providing the expertise our customers have come to expect from DXP. This consistent approach has fueled our financial results. I personally want to thank all our DXP stakeholders in particular, all our DX people for their determination of hard work as we continue to…

Thank you, David. And thank you to everyone for joining us for our review of our second quarter, 2024 financial results. Q2 financial performance reflects DXP's ability to continue to successfully navigate through the end market -- through the market, excuse me, execute and create value for all our stakeholders. Our second quarter results also reflect a new record high sales watermark, along with a new all-time high in adjusted EBITDA margins. As it pertains specifically to our second quarter, DXP's second quarter financial results reflect solid sales growth within IPS and continued strength within the IPS energy and water backlog, continued contribution from acquisitions, along with closing an additional acquisition during the second quarter or completing four-year-to-date through Q2, inline service center performance marked by gross margin strength and stability and consistent operating leverage leading to sustained adjusted EBITDA margins. Total sales for the second quarter increased 8% sequentially to $445.6 million. Acquisitions that have been with DXP for less than a year contributed $23.4 million in sales during the quarter. Average daily sales for the second quarter were $6.96 million per day versus $6.55 million per day in Q1 and $6.69 million per day in Q2 2023. Adjusting for acquisitions, average daily sales were $6.6 million per day for the second quarter of 2024 versus $6.58 million per day during the second quarter of 2023. That said, the average daily sales trend during the quarter went from $6.88 million per day in April to $7.63 million per day in June, reflecting a typical quarter end push as we closed out the second quarter. In terms of our business segments, innovative pumping solutions grew 17.9% sequentially and 52.65% year-over-year. This was followed by service centers growing 6.27% sequentially and sales declining 2.3% year-over-year. Supply chain services grew 5.9% sequentially…

Thank you. We will now begin our question-and-answer session. [Operator Instructions]. Your first question comes from the line of Max Kane from Stephens. Please go ahead.

Hey guys, thanks for taking my questions. So you mentioned, hey, how's it going? So you mentioned in your prepared remarks that revenue grew 4% year-over-year and 8% on a sequential basis. Can you provide some color on which underlying end markets or product categories grew during the quarter? And just to clarify, did you say acquisitions contributed $23.4 million of revenue during the quarter?

That's correct, that's correct.

Got you.

And Max, let me do this, give a fulsome answer starting with sales per business day and then address your question regarding end markets that were the positive during the quarter. Taking our sales per business day from March, which was, we ended Q1 at a high water market $7.46 million per day. April was $6.88 million per day. May was $6.44 million per day. And then June was $7.63 million per day. Q2 average was $6.96, which is coincidentally up 4% year-over-year. Last year for Q2, we averaged $6.69 million per day. So you can see that year-over-year we're still trending up from a sales per business day perspective. In terms of markets that drove that or your question around water and some of the other ones, water was definitely up. Part of that's both organic as well as acquisitions. During the first half, obviously we closed Hennessey and Kappe, which were two water acquisitions. And then I'm not sure if you picked up on it, but I call it our native energy IPS business. But if you look on that on a comparative basis year-over-year within IPS, that was up 6.9%. And so that would be worthy of pointing out. Obviously, we've had puts and takes with all our end markets. Food and beverage continues to perform. And so those are some of the markets I'd point to.

Got you. Thanks for the color there. And just sticking on revenue. Regarding ADS trends, can you maybe walk through what you've seen quarter to-date so far in July and early August, just both on an organic and inorganic basis?

Yes, July, we've got a flash. It's still open. We're looking at it. Call it $6.4 million per day, $6.4, $6.5 million per day.

Got you. And then just looking out for the rest of the year, how many selling days are y'all assuming here in the third and fourth quarter?

Third quarter will be another 64. And then Q4 is always light from actual business days, just due to the holidays, both Thanksgiving, Christmas and New Year's. And so just depending upon how you view those, one of those technically could still be a business day, but some people just kind of get quiet, in particular our supply chain services business, but call it roughly around 61 to 62 days in Q4.

Perfect. My last question here is on adjusted EBITDA margins. First off, congrats on exceeding your 10% target. But when we look at last year, during the second quarter, it looked like 2Q showed the highest EBITDA margin before slightly compressing in the third and fourth quarter on a sequential basis. Should we expect a similar trend of play out this year?

The way I'd answer that is, you know, I mentioned in our S&A, our S&A is growing because we're making investments in the business, both customer facing as well as supporting the back office, meaning pay raises and merit increases. And so, there could be some light compression. That said, what offsets that, Max, is a lot of the acquisitions we've been doing have been accretive to our overall margins once again. And so it becomes a mix of kind of our base business, our existing portfolio and the pay raises and support and additions we're doing. We're making growth investments and salespeople to be a little bit more specific. And then that counterbalancing with acquisitions and then being at a higher relative operating income margin. And a lot of the water, wastewater, I think we said it, but it bears mentioning they're typically north of I'll call it 11%, 12% EBITDA margins.

Okay, great. Thanks for the color there. And yes, that's all I had. So thanks again for taking my questions and I'll turn it back.

Ladies and gentlemen, that concludes our Q&A session as well as the DXP Enterprise's second quarter, 2024 earnings conference call. Thank you all for joining us. You may now disconnect.