Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the DXP Enterprises First Quarter 2025 Earnings Release. 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] Thank you. I would now like to turn the conference over to Kent Yee, Chief Financial Officer. Kent, you may begin.

Thank you, Krista. This is Kent Yee and welcome to DXP's Q1 2025 conference call to discuss our results for the first quarter ending March 31, 2025. 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 and 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 our first quarter performance and financial results. David?

Good morning, and thank you, Kent. And thank you to everyone for joining us today on our fiscal 2025 first quarter conference call. Thank you for joining us this morning and thank you to all the DX people for your hard work. We are off to a great start in 2025. We remain highly focused on providing the expertise our customers have come to expect from DXP and finding ways to help them manage their supply channel, increase their uptime, increase productivity and successfully run their business. DXP remains committed to our overall focus on being customer driven experts that keep their operations running and their people safe. This consistent approach has fueled our financial results. First quarter adjusted EBITDA of $52.5 million and adjusted diluted earnings per share of $1.26 was supported by year-over-year sales growth of 15.5% and sequential sales growth of 1.2%. Thanks to the efforts of all our DX people across the company, we continue to build on the positive financial results of fiscal 2024, driving further operational improvements while performing for our customers. I personally want to thank all our DXP stakeholders, in particular all our DX people for their determination and hard work as we continue to grow and improve the business. We remain focused on building trust and making a difference with our customers and our communities with a customer-first approach. We are encouraged by our results and remain focused on growing our business organically and inorganically in fiscal year 2025. I will begin today with some perspective on our first quarter and thoughts on the remainder of 2025. Kent will then take you through the key financial details after my remarks. And after his prepared comments, we will open for Q&A. Overall, we are pleased with our fiscal quarter results. Our first…

Thank you, David. And thank you to everyone for joining us for our review of our first quarter 2025 financial results. Q1 financial performance reflects DXP’s ability to continually to successfully navigate through the market and execute and create value for all our stakeholders. We will also be successful in navigating the current market volatility surrounding tariffs and trade. As it pertains to our first quarter, DXP’s first quarter financial results reflect record service center sales performance, establishing a new high water mark at $327 million. Remarkable year-over-year sales growth within IPS growing 38.5% year-over-year driven by strength within DXP Water, continued gross margin strength and stability with a year-over-year improvement of 151 basis points to 31.5%. Continued execution of our acquisition strategy, completing the purchase of Arroyo Process Equipment and consistent operating leverage leading to sustained adjusted EBITDA margins north of our 10% plus goal. Total sales for the first quarter increased 15.5% year-over-year at 1.2% sequentially to $476.6 million. Acquisitions that have been with DXP for less than a year contributed $31.1 million in sales during the quarter. Average daily sales for the first quarter were $7.6 million per day versus $7.6 million per day in Q4 of 2024 and $6.6 million per day in Q1 of 2024. Adjusting for acquisitions, average daily sales were $7.1 million per day for the first quarter of 2025 versus $6.4 million per day during the first quarter of 2024. That said, the average daily sales trend during the quarter went from $6.8 million per day in January to $8.1 million per day in March, reflecting a typical quarter end push as we closed out the first quarter. In terms of our business segments and on a year-over-year basis, Innovative Pumping Solutions grew 38.5%. This was followed by Service Centers growing 13.4%…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Zach Marriott with Stephens. Please go ahead.

Good morning, and thank you for taking my questions.

Good morning, Zach.

Good morning, Zach.

Is there any color you can share on daily sales trends by month for both Q1 and Q2 thus far?

Yes, absolutely, Zach. And as I typically do, I'll back up to Q4 of last year and then I'll bring it forward through April is what we have at this point a flash of April. So in October, we were at 7.2 million per day, November 7.5 million per day, December 8.1 million per day, January 6.8 million per day, February 7.8 million per day, March 8.1 million per day, and then April 7.8 million per day.

Great. Much appreciated there. And then, is there anything that should drive a meaningful margin difference, whether up or down, when comparing Q1 with Q2?

No. No.

Okay, got it.

Once again our mix has shifted, Zach. Call it really over the last year or so. But as it pertains to Q1 versus Q2, there wouldn't be anything substantive that would cause a differ from where we're at today.

Makes sense. And then just one more quick one is, are you seeing any signs of things slowing down with all the tariff and macro uncertainty?

Well, that's the multimillion dollar question. The tariffs we're working really hard to take care of our customers and to minimize tariffs and minimize price increases as much as we can. And because we're a – in my opinion, a manufacturer of pumps and a distributor of major brand pumps, we have a lot of knowledge around that area. And so we – when we also understand where somebody might be wanting to charge a whole bunch on tariffs and so we can lead them to other alternate products, et cetera. And so we're always trying to take care of them. But at the end of the day, we're not in the business of eating tariffs. So we're passing them all on. That said, your question, it's a good one, is, well, do we have an effect on demand? And at this point, we would have to absolutely say, no, we're not seeing any effect on demand. Maybe a little more effect of stalling a little bit around the fact is, where's Washington going to end up? I think we're all expecting to have tariffs. 145% tariffs sounds a little excessive. So I think people are maybe stalling a bit. But we haven't seen any projects canceled or our activity is good, our backlog's good, our bookings are good. So at this point, we're not feeling much.

Great. Thanks for the color and I'll turn it back.

We have no further questions at this time. David Little?

Yes. Let me ask Zach if he wants to rethink and ask some more questions. We only have one person covering us, so, Zach, do you have anything else you want to fire away at it? We don't want to cut you short.

Zach, your line is now open.

I'm all good. Appreciate it.

Okay, well, I will close and thank you. I think it's – I think I'd like to make a few additional points. One is, DXP manufactures pumps, and we have parts made really all over the, all over the country. So we understand tariffs specifically because of that. And then we represent major brands of other additional pumps. And so we understand the complexity of their supply channel and where they might be able to just, say, move tariffs from China to India or Mexico or Korea, wherever they need to do. So we kind of understand what everybody's going through to minimize tariffs to the best of their abilities. And so I think we're really good at helping our customers to minimize the cost of all this. And we're also good at calling people out on the fact that maybe they're just using tariffs as an excuse to have a big price increase. So I want to make sure that you all understand that. And then I think that it's important that we sort of understand the fact that DXP is operating like a growth company. We don't do acquisitions just for the fun of it. We do acquisitions to diversify our markets, to grow our geography, to grow our capabilities, and we do acquisitions to grow. These acquisitions are not random. They go through a lot of scrutiny to make sure they're going to fit with what our customers base wants to have us participating in and value adds that we can bring to them, et cetera. And then around those also let me say that we're pleased as we diversified our markets by focusing acquisitions that are have just not been oil and gas as an example, but also that they're highly profitable. So our 10% organic…

This concludes today's conference call. Thank you for your participation. And you may now disconnect.