DXP Enterprises Q2 Earnings Call Highlights DXP Enterprises logo MarketBeat Thu, August 6, 2026 at 7:04 PM GMT+2 6 min read DXPE Key Points Interested in DXP Enterprises, Inc.? Here are five stocks we like better. DXP Enterprises delivered strong Q2 growth: Sales rose 15.6% year over year to $576.5 million, while net income, diluted EPS and adjusted EBITDA increased; the EBITDA margin reached a company-record 12.2%. Water and wastewater drove segment performance: Innovative Pumping Solutions sales jumped 52.6% to $142.7 million, with organic growth of 13.3%, and DXP Water sales rose 85.6% year over year amid sustained municipal infrastructure demand. Cash generation and strategic expansion improved: Second-quarter free cash flow increased to $29.8 million, while DXP completed four acquisitions and acquired Canadian company Mequipco to expand its water platform; management is targeting a sustainable long-term adjusted EBITDA margin of 12%. 3 Best Industrials Sector Picks for Long-Term Investors in 2025 DXP Enterprises (NASDAQ:DXPE) reported higher second-quarter sales, earnings and cash flow, supported by organic growth, acquisitions and continued expansion in water and wastewater markets. Total sales for the quarter ended June 30 rose 15.6% year over year to $576.5 million. Acquisitions completed within the past year contributed $49.8 million of revenue, while organic sales increased 11.1% to $526.6 million, according to Chief Financial Officer Kent Yee. → 3 Drone Stocks That Should Soar After the Summer Slump Net income increased to $28.7 million, and diluted earnings per share rose to $1.76 from $1.43 in the second quarter of 2025. Operating income climbed 20.7% to $55.5 million. Adjusted EBITDA increased to $70.4 million from $57.3 million a year earlier, with the adjusted EBITDA margin reaching 12.2% of sales, compared with 11.5% in the prior-year period. Yee described the margin level as a new high watermark for the company. Segment Growth Led by Innovative Pumping Solutions → Meta's Earnings Drop Shows Wall Street Wants More Than Ad Growth Innovative Pumping Solutions, or IPS, was DXP's fastest-growing segment during the quarter. Sales increased 52.6% year over year to $142.7 million, driven by water and wastewater activity, production contracts and acquisitions. Recent acquisitions contributed $47 million of IPS sales in the quarter, compared with $9.1 million in the prior-year period. Excluding acquisitions, IPS organic sales rose 13.3%, or $11.3 million. Segment operating income increased to $26.7 million from $18.6 million a year earlier. → Jersey Mike's Serves Fresh Gains After IPO Stumble Story Continues Chief Operating Officer Nick Little said water and wastewater demand, municipal infrastructure investment and regulatory requirements continue to create long-cycle opportunities for the business. DXP Water generated approximately $97 million in second-quarter sales and $175.5 million for the first half, up 85.6% year over year. Yee said DXP Water recorded its 15th consecutive quarter of sequential sales growth. Water and wastewater now accounts for nearly 70% of IPS sales, he said during the question-and-answer session. IPS backlog increased in both energy and water and wastewater markets. Energy-related average backlog rose 7.3% sequentially, while backlog excluding certain large engineered projects increased 10% from the first quarter, Yee said. Service Centers and Supply Chain Businesses Service Center sales rose 8.3% year over year and 8.9% sequentially to $367.9 million. The segment's growth was supported by activity in California, the Gulf Coast, the Southeast, North Texas, South Central and the South Rockies, according to Yee. Service Centers produced $54.2 million in segment operating income during the quarter. Little characterized the business as central to DXP's local customer-driven model, with branches providing products, technical expertise and rapid response for industrial customers. Supply Chain Services sales increased 0.6% to $65.8 million. The company said new customer and facility onboarding partly offset lower activity among certain existing customers. Despite relatively flat revenue, segment operating income improved to $6.5 million from $5.2 million in the prior-year quarter. Total gross margin was 31.8%, up from 31.6% a year earlier. SG&A expenses rose $15.7 million to $127.6 million, though SG&A as a percentage of sales improved to 22.1% from 22.4%. Average daily sales were $9.15 million during the quarter, compared with $7.92 million a year earlier. Monthly average daily sales were $9.1 million in April, $9 million in May and $9.4 million in June. Cash Flow, Liquidity and Acquisitions DXP generated $29.8 million in free cash flow during the second quarter, compared with $8.3 million in the prior-year quarter. First-half free cash flow totaled $56 million, compared with negative $8.6 million in the first half of 2025. Over the past four quarters, the company generated $118.7 million of free cash flow, which Yee said represented a new pattern of more consistent cash generation while the business continues to grow. Capital expenditures were $2.6 million in the second quarter and $5.9 million in the first half, down from $10.3 million and $30.3 million, respectively, in the comparable 2025 periods. Yee said the prior year included investments in software, facilities, equipment and rotating-equipment capabilities, including patterns used for DXP's private-label pumps. As of June 30, DXP held $226.6 million in cash and had $147.9 million available under its asset-based lending facility, for total liquidity of $374.5 million. Total debt outstanding was $842.5 million. The company acquired four businesses during the first half of 2026 for total consideration of $135.6 million. Management said the acquisitions are intended to expand the company's water and wastewater platform, technical capabilities and geographic reach. After the quarter ended, DXP acquired M
