DXP Enterprises Inc

NASDAQ:DXPE

Earnings Call Analysis

DXP Enterprises Reports Strong 2023 Performance

DXP Enterprises concluded fiscal 2023 with robust sales growth of 13.4%, amounting to $1.7 billion. This year marked a record in sales, paired with a new high in adjusted EBITDA margins over 10%. Additionally, DXP improved its gross profit margins significantly by 160 basis points, reaching 30.1%. Driving efficiencies while growing the business remains a priority, with an intent to maintain these solid margins into fiscal 2024.

A Record Year Focusing on Growth and Margin Enhancement

DXP Enterprises reported a landmark fiscal 2023 with a robust 13.4% increase in sales to $1.7 billion and a significant 41.9% surge in operating income. The company's strategy of diversified market exposure and disciplined capital allocation contributed to these achievements. The energy sector constituted a quarter of the business, followed by chemicals and manufacturing, among others, ensuring a balanced risk profile. A key long-term objective to maximize margins led to a 160 basis points improvement to 30.1% in gross profit margins, setting the stage for a promising fiscal 2024.

Investing in the Future - Strategic Acquisitions and Capital Improvements

DXP continues to expand through strategic acquisitions, integrating three companies in the year, on top of four in 2022, thus fortifying its market diversity and strength to withstand economic cycles. Fiscally, this translated into $94 million of free cash flow, propelling a commitment to double business size over the next 3 to 5 years while aligning strategic investments with the company's growth trajectory.

Solidifying Financial Position with Enhanced Liquidity and Free Cash Flow

In fiscal 2023, the company generated $94 million in free cash flow, evidencing efficient management of working capital and operating cash flow, which totaled $106.2 million. These efforts were further highlighted by a year-end cash balance of $173.1 million, following prudent refinancing initiatives that reduced borrowing costs and improved the capital structure.

Prudent Management and Commitment to Shareholder Value

DXP demonstrated effective cost management with a marginal drop in SG&A percent of sales to 21.84%, while yielding a notable adjusted EBITDA of $174.3 million. Robust returns on investment capital were showcased by an impressive 38% return on invested capital (ROIC). The company also displayed its commitment to shareholders by returning $54.7 million through a share repurchase program.

Sustainable Growth Through Strategic Shifts and Acquisition Targets

For the upcoming fiscal 2024, DXP aims to continue its momentum. There is an anticipation of completing a minimum of 1 to 3 acquisitions by mid-2024 as part of the ongoing growth and diversification strategy. Maintaining a strong leverage position and a newly refreshed balance sheet, including $305.3 million in liquidity and manageable debt, positions DXP favorably to pursue its aspirations for growth and innovation.

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, thank you for standing by. My name is [indiscernible] and I will be your conference operator today. At this time, I would like to welcome everyone to the DXP Enterprise 2023 Fourth Quarter and Fiscal Year 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions]

I would now like to turn the conference over to Kent Yee, Chief Financial Officer. Please go ahead.

[Kent Yee, executive]

Thank you, [indiscernible] 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.

[David Little, executive]

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 DXPeople, 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 DXPeople. Congratulations to all our stakeholders and a special thanks to our DXPeople 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 into 2024 from winning at MAX margins; two, 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 wastewater and food and beverage at 7% each and manufacturing and general industry at 8% and 12%, respectively. In other words, DXP has continued to deliver on balancing our risk from an end market perspective and we see that in our fiscal 2023 results, and we look forward to the interplay of these markets in 2024.

Thank you, DXP sales and operational professionals for teaming up together and winning for our customer and stakeholders. Thank you to our corporate support team for their efforts to support both internal and external customers and thank you DXP for an awesome year. Our future looks bright.

In fiscal 2023, I mentioned we've continued to soundly execute on diversifying end markets with a focus on water and wastewater and other industrial markets. We also continue to execute on acquisitions, adding 3 great companies during the year, including Florida Valve, Riordan and Alliance Pump & mechanical. Also executing on our share repurchase program and refinancing our debt in the second half of 2023, cleaning up our capital structure and positioning DXP for organic and inorganic growth in 2024. 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 our core capabilities and drive long-term growth.

For fiscal 2023, DXP's sales were 13.4% and operating income was up 41.9% compared to 2022. We fiscal year 2023 and adjusted EBITDA were $1.6 billion and $174 million, respectively. With adjusted EBITDA margins of 10.38%. Our strategy has always been to combine the financial strength, talent, resources, technology and capabilities of a large company with the fast, flexible entrepreneurial capabilities of our local business to deliver superior value to our customers and our suppliers, while providing better growth opportunities for our DX people. We continue to believe in this approach and look to renew our commitment to people, processes and resources and technology as we scale DXP and remain focused on doubling the size of our business over the next 3 to 5 years while making strategic investments that match the evolution of DXP. From a sales per day standpoint, DXP experienced continued improvement throughout the year with Q1 averaging $6.629 [indiscernible]

[Operator]

Ladies and gentlemen, I would now like to turn the conference over to Ken Yee, Chief Financial Officer. Please go ahead.

[Kent Yee, executive]

Thank you, Desiree. David, we'll just hand it back to you to pick up where you left off.

[David Little, executive]

Okay. Total DXP sales for Q4 were $407 million or $6.673 million per business day. Our profits for the quarter were positively impacted by a sequential increase in gross profit margins as well as an increase in SG&A expense associated with continued investment in our business. However, in the midst of contained change in growth, our year-over-year earnings showed improvement and resiliency as we grew diluted earnings per share to $3.89.

Again, thank you to the 2,837 DXPeople for your hard work and dedication and finishing the year as strong as possible. It is always my pleasure to share our fourth quarter and end year financial results on their behalf. In terms of cash flow and liquidity, we generated $94 million of free cash flow in fiscal 2023, which reflects DXP's focus on generating consistent cash flow on investing and the related working capital as the business continues to grow. This, combined with the flexible capital structure put us in a position where we could keep executing on our acquisition strategy as well as return capital to our shareholders, [indiscernible] via opportunistic share repurchase.

As we have discussed, acquisitions have continued to diversify our end market exposure and position us well through some -- through various economic cycles and we are excited about 2024 and the growth we are pushing to see both organically and through acquisitions as we continue to have a strong pipeline of opportunities. We're excited to have 3 new companies join us during the year of 2023 on top of the 4 we completed during 2022. Florida Valve and Equipment, Riordan and Alliance Pump and Mechanical have been great additions to the DXP family.

To all of our recent acquisitions, welcome to DXP. We are excited to have you, and it is great having you as a part of DXP. DXPeople have continued to find ways to deliver financial results and position us well for all our stakeholders in the face of extraordinary challenges. This is evidenced by our sales growth and improved gross profit margins, acquisitions and the overall teamwork of the DXPeople. We continue to build our capabilities to provide complementary set of products and services in all our markets, which makes DXP very unique in our industry and gives us more ways to help our customers win. We also are consistently looking at reviewing opportunities where we can grow market share.

We continue our strategy with a relentless drive for progress that includes business and operational initiatives, which we believe will allow us to steadily improve our performance for all of our stakeholders. As we go into 2024, we are excited about the opportunity ahead and the potential DXP has to continue to scale and grow within existing and new markets.

Total DXP sales in fiscal 2023 were up 13.4% with service centers leading the way at $1.1 billion, followed by Innovative Pumping Solutions at $273 million and then Supply Chain Services at $260 million. In terms of service centers, the diversity of end markets 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, a majority of our regions continue to experience year-over-year growth including the North Rockies, Alaska, Texas, Gulf Coast and South Central. Additionally, we continue to see strength in our air compressor product division and we continue to expect that our end markets will remain constructive over the near future. It is pertinent to [indiscernible] energy as it pertains to energy, we believe that we could be in the early stages of an up cycle, supported by energy transition, which has been consistent with our recent commentary over the last 3 quarters.

In terms of IPS, our Innovative Pumping Solutions, our Q4 average IPS backlog continues to stay ahead of the physical 2022 average. Additionally, our year-to-date average continues to exceed our long-term averages IPS backlog going back to 2015, which we highlighted occurred for the first time in the second quarter and continue as we move into 2024. What this indicates is that we are continuing to increase our bookings. And we mentioned -- as we mentioned earlier, we're likely in the front end of a good cycle on the energy-related project work that we look forward to as we move into 2024.

As we maintain growth, our main focus within IPS will be managing to the demand level we have, finding opportunities in all markets such as energy, biofuels, food and beverage and water and wastewater and pricing appropriately given the supply chain dynamics and the ebbs and flow of inflation. Supply Chain Services experienced an increase year-over-year, primarily due to new customers that we added this year. Our customer end markets contributing to SCS in 2023 included energy, medical, technology and food and beverage. That said, demand for SCS services is increasing because of proven technology and efficiencies that they perform for all their customers, but the sales cycle can be protracted and we look to our SCS leaders to add new customers as we move into 2024. The DXP's overall gross profit margins for the year were 30.1%, a 160 basis point improvement over 2022.

We displayed consistent gross margin performance within our different segments throughout the year and added accretive gross profit margins through acquisitions. That said, Service Centers and IPS had meaningful improved gross profit margins year-over-year. Overall, DXP produced adjusted EBITDA of $174.3 million or an increase of 32.4% year-over-year. Adjusted EBITDA as a percent of sales was 10.38% or an increase of 182 basis points compared to 2022.

In summary, we are pleased with our overall performance in 2023. We look to continue to drive improvement in our organic sales and marketing strategies drive further sales growth through acquisitions and anticipate fiscal 2024 to be a year focused on maintaining margins while driving and laying the groundwork for long-term operating efficiencies. Overall, through our strategic investments and initiatives, we will remain focused on providing world-class tools, processes, training, technology to deliver value to our customers and suppliers and to help our DXPeople be more productive so that they can better help our customers win.

I would like to sincerely thank all of our DXP people who continue to show up to work with their passion, commitment, teamwork and selfless service. We have a tremendous team, and it is an honor to deliver value for all our stakeholders. I am pleased by our performance in fiscal 2023. I am proud of our efforts to continue to improve. We are working. We are growing sales in excess of the market and expect that in the near future. We expect to drive strong SG&A leverage, manage working capital and generate free cash flow.

If organic growth slows, then free cash flow will grow, and we will take advantage of the economy to grow profitably both organically and through acquisitions. We have grown sales on a compounded annual growth rate of over 7% since 2019 and we have achieved new highs in both sales and profitability, and I would like to thank all our stakeholders and especially our DXPeople.

And with that, I will now turn it back to Kent to review the financials in more detail.

[Kent Yee, executive]

Thank you, David, and thank you to everyone for joining us for a review of our fourth quarter and fiscal year 2023 financial results. Fiscal 2023 was a record year at 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 3 to 5 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 3 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 and 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 have 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 daily sales for the fourth quarter were $6.67 million per day, as previously mentioned, are close to flat to Q3 2023 and were up 1.8% versus Q4 2022 [indiscernible] sales per business stay of $6.5 million in Q4 2022.

Average daily sales for the fiscal year 2023 were $6.6 million per day versus $5.85 million per day in fiscal 2022. In terms of our business segments, Innovative Pumping Solutions grew 18.2% year-over-year. This was followed by service centers growing 13.5% year-over-year and Supply Chain Services growing 8.3% year-over-year. In terms of our service centers, regions within our Service Center business segment, which experienced notable sales growth year-over-year include the North Rockies, Alaska, Texas Gulf Coast and South Central.

Key products and end markets continue to drive sales performance include air compressors, rotating equipment, water and wastewater, chemical, general industrial, food and beverage, transportation and energy. Supply Chain Services performance continues to reflect the impact of the addition of new customers and specifically a large diversified chemical customer that we added in Q2 of last year and has fully ramped as of Q2 of 2023. That said, while supply chain service experienced a decline year-over-year in Q3 and Q4, this is primarily due to some facility closures with existing customers as well as the streamlining efficiencies we brought to new customers that we added this year.

For fiscal 2023, Supply Chain Services grew 8.3% and as we move into fiscal 2024, we will look for new customer additions. In terms of Innovative Pumping Solutions, we continue to experience increases in the energy and water-related backlog. Our Q4 energy-related average backlog grew 5.2% over our Q3 average backlog, which continues to be a notable uptick compared to Q1 of this year and continues to be ahead of our 2015, 2016 and 2017 average backlog.

The conclusion continues to remain that we are trending meaningfully above 2016 and 2017 sales levels, and we are moving towards 2015 levels based upon where our backlog stands today. We have been experiencing strong organic sales growth within IPS. We experienced that in Q4 of 2023 and expect that trend to continue into 2024. In terms of our DXP water backlog as of Q4, we are up 37-plus percent compared to the end [indiscernible]

Turning to our gross margins. DXP's total gross margins were 30.1%, a 160 basis point improvement over fiscal 2022. This improvement was driven by strength in our IPS business segment, showing the greatest improvement with margins improving 349 basis points on a year-over-year comparative basis. This was followed by 146 basis point improvement from service centers. That said, from a segment mix sales contribution, Service Centers contributed 68.2%, Innovative Pumping Solutions 16.3% and Supply Chain Services contributing 15.5%. Compared to last year, SCS's mix contribution was higher at 16.2%, which impacted gross margins slightly in fiscal 2022.

In terms of operating income, combined, all 3 business segments increased 174 basis points in year-over-year business segment operating income margins were $16.3 million versus fiscal 2022. This was driven by improvements in operating income margins across all 3 business segments. IPS operating income margins improved 324 basis points, driven by the addition of water and wastewater acquisitions and overall improvement within the energy-related IPS business. Service Center operating income margins improved to 170 basis points on a comparative basis and year-over-year operating income margins.

Supply Chain Services operating income margins improved 14 basis points on a year-over-year comparative basis. The improvement in service center reflects the impact of acquisitions at a higher relative operating income margin. Total DXP operating income increased 166 basis points versus fiscal 2022 to $138.7 million. Our SG&A for the full year increased $42.3 million to $366.6 million. The increase reflects the growth in the business and associated incentive compensation as well as DXP investing in its people through Merit and Pay raises as well as the addition of new personnel. SG&A percent of sales decreased slightly to 21.84% versus 21.9% of sales in fiscal 2022.

We still anticipate that DXP will benefit from the leverage inherent in the business despite increased operating dollars supporting our growth and the impact of acquisitions.

Turning to EBITDA. Fiscal 2023 adjusted EBITDA was $174.3 million. Adjusted EBITDA margins were 10.4%. This is our first fiscal year with adjusted EBITDA margins in excess of 10%, and we will look for this to continue. Year-over-year adjusted EBITDA margins increased 182 basis points or $47.5 million. This reflects the fixed cost SG&A leverage we experienced as we grow sales. This translated into 2.8x operating leverage.

In terms of our EPS, our net income for fiscal 2023 was $68.8 million. Our earnings per diluted share for fiscal 2023 was $3.89 per share versus $2.47 per share last year. Adjusting for onetime or noncash items associated with our $550 million refinancing during Q4 and other items, our earnings per diluted share for fiscal 2023 was $4.09 per share. Our adjusted diluted EPS in Q4 was $1.12 per share. Normalizing our effective tax rate for the Q4 pickup throughout 2023, diluted EPS would have been $0.69 per share for the fourth quarter.

Turning to the balance sheet and cash flow in terms of working capital, our working capital decreased $7.4 million from December of 2022 to $272.1 million. As a percentage of sales, this amounted to 16.2%, which is below the 18.9% compared to this time last year. At this point, we have moved in line with our historical averages or ranges in terms of investing in working capital, and we have moved off our Q3 2022 high of 19.9% of LTM sales.

We do anticipate further acquisitions. So as we move into fiscal 2024, this could move upwards, albeit we are focused on managing working capital as efficiently as possible as we scale and grow. In terms of cash, we had $173.1 million in cash on the balance sheet as of December 31. This is an increase of $127.1 million compared to the end of Q4 2022 and an increase of $149.9 million since September. This reflects the refinancing of our existing term loan B in the fourth quarter and the strong cash flow generation we experienced during the fourth quarter, which we will touch upon later in my comments.

As it pertains to our Term Loan B, as a reminder, during the fourth quarter, we announced that we refinanced and repriced our Term Loan B, which now has a maturity of October 2030. We successfully repriced the new Term Loan B, reducing our borrowing costs by 50 basis points to SOFR plus 475 versus SOFR plus 525, while also raising an incremental $125 million in capital to support acquisition and investments program over the next 9 to 12 months.

In terms of CapEx, CapEx for fiscal 2023 was $12.3 million versus $4.9 million in fiscal 2022. This increase reflects reinvestment in some of our facilities and equipment on behalf of our employees. As we move forward, we continue to invest in the business as we focus on growth.

Turning to free cash flow. We generated solid operating cash flow during the fourth quarter as we did during the first and third quarter. During Q4 and for fiscal 2023, we had cash flow from operations of $42.4 million and $106.2 million, respectively. For fiscal 2023, this translated into $94 million in free cash flow. While we continue to make improvements in our free cash flow when we are growing, DXP tends to make significant investments in inventory and project work throughout the year, and we continue to experience these investments as we did in 2023. But we have put a closer eye on managing this as we move through the cycles.

Return on invested capital, ROIC, for fiscal 2023 was 38% and continues to be above our cost of capital and is reflecting our improved profitability levels and efficient working capital management. As of December 31, our fixed charge coverage ratio was 2.69:1 and our secured leverage ratio was 2.1:1, with a covenant EBITDA for fiscal 2023 of $178.4 million.

Total debt outstanding on December 31 was $548.6 million. In terms of liquidity, as of December 31, we are undrawn on our ABL with $2.9 million in letters of credit outstanding with $132.1 million of availability and liquidity of $305.3 million including $173.1 million in cash, which some of it has already been used to finance the purchases of Hennessy, Cathy [indiscernible] sale which we closed subsequent to the fourth quarter. We are excited to have them, and they will start reporting with us during the first quarter of 2024.

In terms of acquisitions, DXP's acquisition pipeline continues to grow and the market continues to present compelling opportunities.

Looking forward, we expect this to continue through fiscal 2024, and we look forward to closing a minimum of 1 to 3 additional acquisitions by the middle of 2024. In terms of capital allocation, we repurchased or returned $54.7 million to shareholders via our share repurchase program in fiscal 2023 or a total of 1.7 million shares of DXP stock.

The last item I briefly want to touch upon is the outstanding progress we have made with our accounting and finance team. During this year, we invested heavily in growing our finance and accounting department by hiring a new CEO, a new Director of Technical Accounting and additional assistant controllers. This has allowed us to continue on the path of continuous improvement, which this year is expressing itself in the remediation of 2 material weaknesses positioning us to remediate the rest of fiscal year 2024.

As I mentioned back in 2021, when we started the transition to PWC, progress is never a straight line, and we are staying nimble as we continue to grow. We are at an inflection point and I'm excited to work with PWC, our enhanced team and the entirety of DXP as we are scaling them real time organically and through acquisitions.

In summary, we are pleased with our fiscal 2023 performance. We achieved record adjusted earnings performance at $4.09 per share, and our cash flow from operations also accelerated with further rooms -- with further room for improvement. Higher earnings, improved working capital efficiency, delivered a 54% free cash flow conversion to EBITDA on 13.5% sales growth. These achievements contributed to our remarkable annual return on invested capital of 38%, demonstrating gains from our strategic initiatives as well as our disciplined approach to capital allocation and our acquisition strategy.

Heading into 2024, we refreshed our balance sheet, which allowed us to continue to invest in the business, both organically and through acquisitions through the cycle while also returning capital to our shareholders. An exciting time to be a part of DXP. We are excited about the future, and we will keep our eyes focused on those things we can control and what is ahead of us. What is in front of us is always bigger than what is behind us and the best is always ahead. We look forward to a successful 2024.

I will now turn the call over for your questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Max Kane with Stephens Inc.

[Unknown Analyst]

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

[Kent Yee, executive]

absolutely. What I'll do is I'll walk you actually 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 6.39%; In November, $6.553 million and then in December, $7.125 million. In January, that was $5.925 million. And then in February, $6.37 million.

What I'd note there, Max, is our January [indiscernible] 4.5% year-over-year. And then our February flat is up 2.4% year-over-year on a comparative basis.

[Unknown Analyst]

And what are the number of selling days you're assuming for 1Q?

[Kent Yee, executive]

We will have 63 actually business days in Q1, which is 1 day [indiscernible] 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, 3 less business days.

[Unknown Analyst]

And then just last question for me. How are you all thinking about 1Q adjusted EBITDA margins progressing versus 4Q '23?

[Kent Yee, executive]

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 depending upon that mix contribution kind of impacts our EBITDA margins today. So all that to say is 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. So.

[Operator]

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

[David Little, executive]

Yes. Thanks. 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 what I consider a really solid, great year and it's really appreciated. We're doing a lot of really good things for our customers and a lot of growth initiatives that I think are helping. We look forward to 2024. And [indiscernible] and upward. So thank you, everybody, and thanks all our DXPeople and thank all our stakeholders out there, and we'll see you guys next time.

[Operator]

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