DXP Enterprises, Inc. (NASDAQ: DXPE) This fall 2021 earnings name dated Mar. 25, 2022
Company Contributors:
Kent Yee — Senior Vice President, Chief Monetary Officer
David R. Little — Chairman of the Board, President and Chief Government Officer
Analysts:
Tommy Moll — Stephens, Inc. — Analyst
Presentation:
Operator
Good morning. My title is David, and I’ll be your convention operator at this time. Right now, I’d prefer to welcome everybody to the DXP Enterprises 2021 Fourth Quarter and Fiscal 12 months 2021 Outcomes Convention Name. Right now’s convention is being recorded. [Operator Instructions] Thanks.
Kent Yee, CFO, you might start your convention.
Kent Yee — Senior Vice President, Chief Monetary Officer
Thanks, David, and thanks to everybody becoming a member of us at this time. That is Kent Yee and welcome to DXP’s This fall 2021 convention name to debate our outcomes for the fourth quarter and monetary yr ending December 31, 2021. Becoming a member of me at this time is our Chairman and CEO, David Little. Earlier than we get began, I need to remind you that at this time’s name is being webcast and recorded and consists of forward-looking statements. Precise outcomes might differ materially from these contemplated by these forward-looking statements.
An in depth dialogue of the numerous elements that we imagine might have a fabric impact on our enterprise on an ongoing foundation are contained in our SEC filings. Nonetheless, DXP assumes no obligation to replace that data on account of new data or future occasions. Throughout this name, we might current each GAAP and non-GAAP monetary measures. A reconciliation of GAAP to non-GAAP measures is included in our earnings press launch. The press launch and an accompanying investor presentation are actually accessible on our web site at ir.dxpe.com.
I’ll now flip the decision over to David to supply his ideas and a abstract of our fiscal 2021 and fourth quarter outcomes. David?
David R. Little — Chairman of the Board, President and Chief Government Officer
Good morning and thanks, Kent, and thanks everybody for becoming a member of us at this time on our 2021 fourth quarter and yr finish convention name. I’ll start at this time with some views on our fourth quarter and yr finish outcomes, present business circumstances and our place going ahead. Kent will then take you thru the important thing monetary particulars after my remarks. After his ready feedback we are going to open for Q&A. As everyone knows, everybody continues to navigate by way of COVID and COVID-related challenges for 2021, and I’m happy with the braveness, compassion and dedication demonstrated by our DXP folks all year long.
There isn’t any query 2021 was a unprecedented yr, it proceed to stay difficult for us, our prospects, our DXPeople, our suppliers and our communities. However even in an unbelievable dynamic market surroundings the DXPeople got here collectively, we stayed true to our technique, stay buyer pushed and although we nonetheless have a whole lot of work to do I’m happy with the truth that we delivered sturdy outcomes for our shareholders. DXP began fiscal 2021 believing monetary outcomes weren’t going to come back simple and we had been going to should take market share the place we may. The tempo and magnitude of restoration would fluctuate drastically from geography, buyer kind and finish markets.
This largely proved to be true because the economic system continued to get better from the brief however deep recession that marked the pandemic’s early months and days. The following sturdy development that adopted in sure markets started to place monumental stress on the availability chain, triggering ranges of inflation not seen in many years. By year-end rate of interest hikes had been broadly anticipated. Markets entered into a brand new uncertainty. Whereas we don’t count on fiscal 2022 to seem like 2021, DXP’s confidence is as sturdy because it ever has been.
Our technique is working. We proceed to be customer-driven specialists, sourcing, offering, servicing our prospects as they navigate regardless of the end result yr holds. In fiscal 2021, we soundly executed on diversifying our finish markets with a concentrate on water and wastewater and different industrial markets, persevering with to do acquisitions, including three nice firms in the course of the yr, together with Carter & Verplanck, Course of Equipment and Premier Water. We executed on share repurchase program and rising organically within the second half of 2021, delivering second half natural gross sales development of 13%.
Our technique has at all times been to mix monetary energy, expertise, assets, know-how and capabilities of a big firm with the quick, versatile and entrepreneurial capabilities of our native companies to ship superior worth to our prospects and our suppliers whereas offering higher development alternatives for our DXP folks. We proceed to imagine on this strategy and look to resume our dedication to folks, processes and assets and know-how as we scale DXP and stay targeted on doubling the dimensions of our enterprise over the subsequent three to 5 years.
From a gross sales enterprise day standpoint, DXP skilled continued enchancment all year long with Q1 averaging $3.9 million gross sales per day and ending This fall averaging $4.8 million gross sales per enterprise day or an enchancment of 23.1% from Q1 to This fall. Whereas we did expertise some softness in the course of the summer season months from August by way of the top of December, we constantly carried out above our 2021 gross sales per day common of $4.5 million gross sales per day. Our fourth quarter outcomes replicate sequential gross sales development and enhancements in our finish markets and business indicators together with our PMI and our metallic working indexes.
Oil and fuel additionally began to see indicators of firming, and DXP skilled sequential will increase in our associated backlog, and IPS anticipated — skilled two sequential quarters of natural development by way of This fall. Whole DXP gross sales for This fall had been $293.1 million or $4.8 million per enterprise day. Our earnings for the quarter had been impacted by a sequential decline in gross margins in addition to a rise in SG&A related — bills related to auditor transition and associated gadgets, which Kent will evaluation throughout his feedback. Nonetheless, within the midst of continued change and development, our year-over-year earnings confirmed enchancment and resilience as we grew diluted earnings per share 13.9% to $0.83 per share on a year-over-year foundation.
Thanks to our 2,841 DXPeople on your arduous work and dedication and ending the yr as strongly as doable. It’s at all times my pleasure to share our fourth quarter and year-end outcomes in your behalf. When it comes to money circulate and liquidity, we generated $32.7 million of free money circulate versus a document of $101 million of free money circulate in 2020, which displays the turning of the enterprise and investing in associated working capital because the enterprise begins to show optimistic in the course of the second half of the yr. This mixed with versatile capital construction plus us ready the place we may maintain executing on our acquisition technique, in addition to return capital to our shareholders by way of opportunistic share repurchases.
As we mentioned on the again finish of 2020, acquisitions have continued to diversify our finish market publicity and place us nicely for a rebounding economic system as we’re enthusiastic about 2022 and the expansion we count on to see each organically and thru acquisitions as we proceed to have a powerful pipeline of alternatives. We had been excited to have three new firms be a part of us in the course of the yr 2021 on high of the 4 we accomplished on the finish of 2020, or basically the start of 2021. Carter & Verplanck, Course of Equipment, Premier Water have been nice additions to the DXP household.
That’s seven acquisitions over the past 12 months together with APO Pumps & Compressors, Company Tools Firm, Pumping Methods, Inc. and Whole Tools Firm. To all of you, welcome to DXP and we’re excited to have you ever be part of our DXP household and we sit up for our successes collectively. DXP has continued to seek out methods to ship monetary outcomes and place us nicely for all our stakeholders within the face of extraordinary challenges. That is evidenced by our gross sales development, improved gross margins and acquisitions and the general teamwork for the DXP folks.
We proceed to construct our capabilities to supply complementary set of services to all of our markets, which makes DXP very distinctive in our business and provides us extra methods to assist our buyer win. We are also always taking a look at reviewing alternatives the place we will develop market share. We complement our technique with a relentless drive for progress that features enterprise and operational initiatives, which we imagine will permit us to steadily enhance our efficiency for all our stakeholders. As we go into 2022, we’re excited concerning the alternatives forward and the potential DXP has to proceed to scale and develop inside current and new markets.
Whole DXP gross sales in fiscal 2021 had been up 10.8% to $1.1 billion. Service facilities led the way in which at $816 million adopted by provide chain providers of $158 million after which Progressive Pumping Options of $140 million. The purpose right here is acquisitions, the variety of finish markets [Indecipherable] nature of service Facilities allowed us to stay resilient. Provide chain providers will stay impacted by oil and fuel and transportation-related finish markets in the course of the first half of the yr. And as we moved into the second half a few of these associated COVID impacts started to subside. Moreover, we began extra proactive gross sales growth that translated into additional development and provide chain providers together with [Indecipherable].
As we mentioned throughout Q1 by way of Q3, we skilled the most important natural gross sales decline inside our Progressive Pumping Resolution enterprise phase. IPS is tied to capital budgets and predominantly within the oil and fuel business, however we’ve added by way of acquisitions, water and wastewater remedy mission work this yr, which has positively impacted the outcomes of IPS together with enhancements in price administration on our conventional enterprise. When it comes to the energy within the IPS backlog, now we have now had two consecutive quarters of sequential double-digit will increase and the pattern seems to proceed in Q1.
DXP total gross revenue margins for the yr had been 29.5%, a 192 foundation level enchancment over 2020. We displayed constant gross margin efficiency inside IPS by way of the yr, and added accretive gross margin acquisitions. That mentioned IPS improved gross margins 463 foundation factors year-over-year within the midst of a big decline in demand. General, DXP produced EBITDA of $70.2 million or a rise of 19.1% year-over-year. EBITDA as a % of gross sales was 6.3% or a rise of 43 foundation factors in comparison with 2020. In abstract, we had been happy with our total efficiency in 2021. Clearly, one other extraordinary yr that presumed societal modifications but additionally highlighted or accentuated sure enterprise fails that offered us with areas to boost and focus upon as we go into 2022.
We glance to proceed to drive enchancment in our natural gross sales and advertising methods, drive future gross sales development by way of acquisitions and anticipate fiscal 2022 to be a powerful restoration yr. Our acquisitions carried out very nicely throughout 2021, contributing considerably to development in gross sales and adjusted EBITDA. We proceed to count on a busy acquisition yr in 2022. In 2021, we made nice progress with an funding in a buyer relations administration system or CRM instrument for our gross sales power, which is able to assist our over 400 outdoors gross sales leaders, carry elevated worth to our present prospects and drive development by way of new prospects and improve share of pockets.
We’re very optimistic that our funding in digital instruments and advertising to create important aggressive benefit for DXP total by way of our strategic investments and initiatives. We are going to stay targeted on offering world class instruments, processes, trainings and know-how to ship worth to our prospects and suppliers and to assist our DXP folks be extra productive to allow them to higher assist our prospects win. We are going to proceed to make use of no matter medium the client prefers and tailor our strategy to their wants. DXP is at all times customer-focused, particularly in an surroundings now we have at this time. We’re listening to the client issues.
I’m very happy with how our group continues to carry out on this extraordinary occasions as a number one distributor of extremely engineered services. We imagine DXP stays well-positioned to assist our prospects and navigate these difficult durations for the good thing about all our stakeholders. I wish to sincerely thank all of our DXP individuals who proceed to indicate as much as work with their ardour, dedication, teamwork and selfless service. We have now an amazing group. It’s an honor to beat the collective [Phonetic] variety all of us skilled and ship worth for all our stakeholders.
With that, I’ll now flip it again to Ken to evaluation our financials in additional element.
Kent Yee — Senior Vice President, Chief Monetary Officer
Thanks, David, and thanks to everybody for becoming a member of us at this time. I’ll evaluation the fourth quarter fiscal 2021 monetary outcomes. 2021 turned out to be one other distinctive yr as we transfer by way of the COVID-19 and skilled new and associated challenges. Regardless of these challenges, DXP efficiently navigated by way of the yr and was in a position to execute and create worth for all our stakeholders. General, DXP’s fiscal 2021 monetary outcomes had been good to see and replicate the next: diversifying our finish markets with sturdy acquisition exercise finishing three acquisitions in 2021 after finishing the 4 initially of the yr or on December 31 of final yr.
Gross sales enhancing farther from the continued pressures of COVID-19 with gross sales per enterprise day averaging $4.5 million gross sales per enterprise day in 2021. Improved enterprise phase energy with year-over-year development in service facilities and provide chain providers regardless of the primary half of 2021 presenting [Indecipherable]. Two quarters of sequential development within the IPS backlog in the course of the again finish of the yr. Gross margin enchancment year-over-year and opportunistic share repurchases returning $33.5 million in capital again to shareholders. Basically a fantastic transition yr and one that may place us nicely for 2022 and past.
Whole gross sales for the fourth quarter elevated sequentially 1.3% to $293.1 million, reflecting important enchancment in gross sales per enterprise day going from $4.5 million per day in gross sales in Q3, with 64 enterprise days to $4.8 million gross sales per enterprise day with 61 days in This fall. Moreover, this displays impacts from provide chain shortages and gross sales getting pushed into 2022. Acquisitions contributed $43.5 million in gross sales in the course of the quarter. Whole gross sales for DXP for fiscal 2021 had been $1.1 billion, growing 10.8% in comparison with fiscal 2020. For the complete yr, acquisitions contributed $147.5 million in gross sales.
Common every day gross sales for the fourth quarter as I discussed had been $4.8 million per day versus $3.8 million per day in This fall 2020. Common every day gross sales for fiscal 2021 had been $4.5 million per day versus $4 million per day for fiscal 2020. Adjusting for acquisitions for the complete yr, common every day gross sales had been $3.9 million per day. When it comes to our enterprise segments, service facilities grew 23.2% year-over-year. Excluding acquisitions, service facilities grew 6.9% year-over-year, adopted by provide chain providers 6.9% year-over-year adopted by year-over-year, adopted by provide chain providers rising 2.1% and Progressive Pumping Options declining 25.8%.
Excluding acquisitions, Progressive Pumping Options declined 35.5% year-over-year. When it comes to our service facilities, areas inside our Service Heart enterprise phase, which skilled gross sales development year-over-year together with California, Ohio River Valley, North Texas and our Canadian Security Companies enterprise. Key finish markets driving the gross sales efficiency embody meals and beverage, mining, municipal water, wastewater, specialty chemical compounds, in addition to some COVID-related exercise in Canada in the course of the first half of the yr. Provide Chain Companies efficiency displays the pullback in exercise at oil and fuel and transportation associated buyer websites.
This subsided as we moved to the second half of the yr after which the SCS group turned their focus to new buyer wins, which we anticipate, as David mentioned, including important development in 2022. When it comes to Progressive Pumping Options, now we have now skilled two consecutive quarters of improve within the backlog. As I at all times say, we evaluation month-to-month bookings and backlog and examine these information factors to fiscal 2015, 2016 averages, in addition to fiscal 2017 averages. Our This fall common backlog was down 12% from the 2017 common backlog and down 28% from the 2015 common backlog, however is up 22% in comparison with the 2016 month-to-month common backlog.
The conclusion right here is that we are actually trending barely above 2016 gross sales ranges primarily based upon the place our backlog stands at this time over the subsequent 12 months. Turning to our gross margins, DXP’s whole gross margins had been 29.5%, a 192 foundation level enchancment over 2020. Drivers of the development embody acquisitions, which had been at a mean gross margin of 30.2% and continued enchancment in IPS on a year-over-year foundation. Natural gross margins improved 136 foundation factors year-over-year inside IPS, adopted by 154 foundation factors enchancment inside service facilities. Provide chain providers was basically flat year-over-year.
When it comes to working earnings mixed all three enterprise segments elevated 94 foundation factors in year-over-year enterprise phase working earnings margins versus 2020. This was pushed by enchancment in natural working earnings margins from service facilities. Whole DXP working earnings elevated 38 foundation factors versus 2020 to $39.9 million. Service facilities improved working earnings margins 128 foundation factors to $98.9 million. Provide chain providers working earnings margins declined 70 foundation factors to $12 million.
Progressive Pumping Options working earnings margins declined 33 foundation factors in comparison with 2020, which is notable as soon as once more given the contracting market surroundings. Our SG&A for the complete yr elevated $43.7 million from 2020. This improve displays larger than regular audit and legal-related bills related to our auditor noise this previous yr improve healthcare prices versus 2020 as a result of abnormally low prices incurred in 2020, when keep at residence orders had been in place and elevated insurance coverage price.
Moreover, DXP incurred development associated will increase in SG&A together with over 775,000 related to investing in a brand new CRM bundle as David talked about. Turning to EBITDA, fiscal 2021 adjusted EBITDA was $70.2 million. Adjusted EBITDA margins had been 6.3%. 12 months-over-year EBITDA margins elevated 43 foundation factors. We usually count on to obtain better mounted prices, SG&A leverage as we develop however given our development was pushed from acquisitions and our enterprise declined organically 2% year-over-year, we didn’t expertise leverage that we are going to expertise as we transfer by way of the cycle.
This factors to the accretive nature of the margins with the acquisitions and the chance to considerably enhance EBITDA margins as we transfer to natural development in 2022. When it comes to our EPS, our web earnings for 2021 was $16.4 million. Our earnings per diluted share for fiscal ’21 was $0.83 per share versus an adjusted $0.73 per share final yr. Turning to the steadiness sheet and money circulate; by way of our working capital, our working capital elevated $27.1 million from the prior yr to $186.2 million. As a proportion of gross sales, this amounted to 16.7%.
This primarily displays an 11 day improve in day gross sales excellent or what they consult with as DSO days and investments in stock. We’re nonetheless at a degree the place we’re in keeping with our historic averages or ranges by way of investing in working capital. When it comes to money, now we have $49.1 million in money on the steadiness sheet at December 31. It is a lower of $70.3 million in comparison with December 31, 2020. This discount was the results of our acquisition exercise and our share repurchase program that we introduced in Could of 2021.
When it comes to capex, capex within the fourth quarter was $3 million. Capex within the fiscal yr was $6 million or 0.5% of whole gross sales. In comparison with fiscal 2020, we’re down $673,000. As a reminder, capex displays our means to manage capital funding and the minimal upkeep wants of our enterprise. Throughout fiscal 2020, we’re targeted on liquidity as we set up our bearings round COVID. In 2021, we maintained that self-discipline, but additionally started to opportunistically spend money on the enterprise with 75% of our capex exercise occurring in Q3 and This fall. Transferring into 2022, we are going to proceed to spend money on the enterprise as we transfer in direction of development.
Turning to free money circulate, we generated stable working money circulate in the course of the fourth quarter, as we did in the course of the second and third quarter. Throughout This fall and for fiscal 2021, we had money circulate from operations of $14.3 million and $37.1 million, respectively. For fiscal 2021, this translated into $32.8 million in free money circulate. Return on invested capital, or ROIC for 2021, was 41%. At December 31, our mounted cost protection ratio was 2.7:1 and our secured leverage ratio was 3.7:1. Whole debt excellent at December 31 was $326.7 million.
When it comes to liquidity, we stay undrawn on our ABL and have over $180.7 million in liquidity, consisting of $49 million in money and $131.7 million below the ABL. When it comes to acquisitions, we anticipate closing on one other acquisition by the top of Q2. This transaction will proceed to diversify DXP from the top market perspective, in addition to additional strengthen our capabilities in key geographic areas and improve product capabilities. Our acquisition technique continues to create worth for DXP and our pipeline is robust and is increasing in numerous finish markets.
Extra importantly, the expertise as an organization [Indecipherable] very excessive, brings experience and invaluable expertise to our rising firm. The final merchandise I need to contact briefly upon is our auditor transition plan. I’m positive many noticed the announcement this morning that now we have appointed PricewaterhouseCoopers as our auditor for fiscal 2022. I need to first begin off by publicly thanking McConnell & Jones for working with us to get our third quarter and monetary 2021 carried out in a well timed method, given the weird circumstances. The group from McConnell & Jones dealt with the whole lot with the utmost professionalism, diligence and candor.
Frankly, it was extraordinarily refreshing. As mentioned again in November, DXP’s auditor transition or bridge plan has been about the way forward for DXP and to align with our imaginative and prescient and targets for the finance and accounting perform. Since 2017, now we have been targeted on making certain we had been constructing a finance and accounting group capabilities and performance that might assist and propel DXP into changing into a multi-billion greenback firm. Progress not at all is a straight line and we’re enhancing year-over-year. We’re additionally staying nimble as we proceed to develop and work with a wide range of market challenges that you just face.
We’re at that inflection level and I’m excited to work with PWC and have one other recent view as we scale DXP in real-time organically and thru acquisitions. In abstract, our priorities this yr had been to drive shareholder worth by way of diversifying our finish markets, persevering with to execute on our acquisition program and opportunistic share repurchases. We had been profitable and sit up for a stronger 2022 and past.
I’ll now flip the decision over for questions.
Questions and Solutions:
Operator
Thanks. [Operator Instructions] We’ll take our first query from Tommy Moll with Stephens. Your line is open.
Tommy Moll — Stephens, Inc. — Analyst
Good morning and thanks for taking my questions.
David R. Little — Chairman of the Board, President and Chief Government Officer
Hey Tommy, how are you?
Kent Yee — Senior Vice President, Chief Monetary Officer
Hey Tommy.
Tommy Moll — Stephens, Inc. — Analyst
Doing nicely, thanks. I needed to begin on your oil and fuel prospects with crude right here above $100. What if any form of change in urge for food for spend are you seeing there? And particularly on the pricing aspect I’d assume you’ve in all probability seen some enter inflation and clearly these prospects are realizing a lot larger costs on their aspect. So do you have got any form of incremental pricing energy on this surroundings that could be a tailwind to margins?
David R. Little — Chairman of the Board, President and Chief Government Officer
Sure. Initially, let me say that that you recognize we’re form of shifting ourselves away from oil and fuel and but we promote a whole lot of product into that market and we’ll proceed to take action. One of many greater alternatives for IPS although is to promote a whole lot of various gasoline kind tasks and likewise carbon seize stuff and issues to enhance the environment, which is fairly thrilling for us and fairly thrilling for DXP is form of creating an entire new market. And we’re form of increasing there.
However again to your query, actually individuals are spending cash to supply as a lot as they’ll. Drilling goes again up however these budgets aren’t — they’re nowhere close to as large as they was however they’re nonetheless growing. So we’re seeing exercise at our IPA phase each for various fuels, environmental and gathering programs and issues that that assist produce extra; so all that appears actually, actually good for IPS. Our prices you say, they’re getting extra on the wellhead for his or her product and so they actually are.
I’m an enormous fan that that’s too excessive. It is going to in the end someplace alongside the road even out in direction of in all probability the correct quantity however the excellent value for oil we at all times speak about that. However and it’s not at $100 plus, I’ll simply let you know that. So I’m anxious about the way it impacts the remainder of our enterprise, however again to the oil and fuel half, folks, folks prices are going up, our suppliers are elevating their costs as a result of their folks prices are going up, metal goes up, all of the commodities have gone up, so.
After which we cross that on and I feel the oil and fuel firms count on us to cross that on, whether or not or not we cross on a bit bit for our gross sales, that’s form of as much as the person gross sales particular person and the folks doing the quoting and stuff, however we attempt to. However we’re simply going to have a merely — that was all said to form of level to the truth that actually our service facilities did nice provide chain providers. I feel it’s going to have an excellent yr. It retains trying prefer it’s going to have an excellent yr, however the actual enchancment and the actual detriment in 2021 was IPS and capital tasks. After which — however that’s coming again and we’re anticipating them to have an excellent yr.
Tommy Moll — Stephens, Inc. — Analyst
Thanks, David. Transferring as much as the overall firm stage and simply taking a look at your every day gross sales, it appears like a lot of the second half of final yr was fairly sturdy. And I’m curious, you recognize, now we’re a lot of the means by way of the primary quarter right here, simply what sort of commentary may you provide on? I don’t know if you wish to go month-by-month or quarter-to-date, year-to-date. Simply any context you might give us on how every day gross sales have progressed?
Kent Yee — Senior Vice President, Chief Monetary Officer
Yeah. Hey, Tommy. That is Kent. What I’ll do is, I’ll bounce in right here and simply provide the developments as I usually do. Generally I caveat the gross sales, however enterprise day however I’ll simply pull it ahead from the Q3 common after which form of the final 5 months, if you’ll. So for Q3, we averaged $4.5 million per day. In October, it was $4.7 million per day. In November, it was $4.6 million per day. In December, it was $5.1 million per day. January was $4.1 million per day. January is often at all times a gentle month, form of popping out [Indecipherable] and the start of the yr and in February, we kicked as much as $4.9 million per day.
So, trending in the suitable trend and growing month-over-month, so we like what we see. Now a few of that does embody acquisitions, to be truthful. However with out stepping into the element, we’re seeing the incremental improve of each gross sales per enterprise day and one all emphasizes our backlog as nicely. We’re seeing outstanding will increase of our backlog. Now, a few of that’s pushed by the truth that there are the availability chain points and a few gross sales are getting pushed out. However the web developments result in a positive 2022 as soon as once more.
Tommy Moll — Stephens, Inc. — Analyst
Yeah. Transferring to expense this yr on working expense, I feel you known as out within the ready remarks a few of the drivers in fourth quarter shifting larger, one in every of which was auditor associated. However as we transfer into this yr 2022, are there any elements you’d level as to simply if we take into consideration the place that expense line was in This fall, any elements that might drive that larger or decrease as we transfer by way of this yr?
Kent Yee — Senior Vice President, Chief Monetary Officer
Yeah. Let me, Tommy, by way of answering the query, let me simply retrace a bit bit a few of these buckets and put some numbers round it after which form of then particularly reply your query, if you’ll, form of going into 2022. When it comes to our auditor noise, as soon as once more nothing [Indecipherable] we needed to occur publicly however as soon as once more, I’ll simply sofa it with it was refreshing to form of be capable to transfer ahead and discover a agency that we may come alongside for our development and growth.
However that created an extra of $1 million to $1.5 million in 2021 that we wouldn’t have usually skilled. Elevated well being care prices, that was one other further $2.2 million. After which by way of elevated insurance coverage prices one other $1.1 million. And a whole lot of that, as soon as once more, to your level, was again finish weighted in direction of the again finish of the yr simply given a whole lot of issues. When it comes to pulling ahead as we go into 2022, we’re nonetheless within the midst of the transition, as soon as once more, it feels quite a bit higher. However as we transition from McConnell & Jones as a result of we needed to have them choose up in Q3 and for the complete yr audit, there’ll nonetheless be some bills as we shut out the 10-Ok after which we are going to on board if you’ll with Pricewaterhouse.
And so 2022 will in all probability nonetheless be elevated, in all probability greater than probably not on the similar ranges as 2021, however we may have some elevated prices there. After which simply by way of SG&A going ahead, I assume I’d sofa you by way of large image — I feel each firm in at this time’s surroundings is receiving pressures round folks. Generally it will get tagline with a fantastic resignation or simply folks shifting from firm to firm. I don’t assume DXP is any totally different. And so for the worth group members, we’re making an attempt to do all the suitable issues in retaining these and taking a look at compensation. After which typically, you have got inflationary pressures too typically to form of meet these calls for. So I feel you’ll see a few of that as we form of transfer by way of 2022.
Tommy Moll — Stephens, Inc. — Analyst
Thanks once more. Final one from me, simply on M&A. It appears like there could also be one other deal you count on to shut someday in Q2. I suppose you’ve given us all of the context you’ll be able to there, given it’s not over the road but, however no matter you might share simply concerning the pipeline typically, variety of alternatives you’re taking a look at versus pattern — any informative alternatives within the pipeline or extra alongside the tuck-in route that we’ve seen currently?
Kent Yee — Senior Vice President, Chief Monetary Officer
And the large image, a few of these themes which might be very related that DXP XP obtained misplaced, and a type of, clearly, you recognize, with all of the auditor noise was acquisitions, proper. We remained acquisitive seven months over the past 12 months. The pipeline continues to develop. It’s rising within the midst of all that. We clearly only recently closed two right here already initially of 2022. So, Drydon and Burlingame — not a whole lot of gross sales, roughly round $9 million of gross sales added to DXP.
After which by way of form of one upcoming — I’ll name it nearer to our common acquisition dimension, which common acquisition dimension is usually $25 million to $35 million plus in income. And so we’re excited with the place our pipeline stands. Among the dynamics within the pipeline, what you see — the market’s very aggressive nonetheless. And so that you do see a number of stress however we’re nonetheless capable of finding these which might be accretive to DXP and are an excellent match. And so they have the themes of specializing in water, wastewater and variety of finish markets. And so, we’re excited to be in 2022, and we’re excited to form of have that pipeline nonetheless develop and see the place we find yourself by the top of 2022 by way of the variety of offers, however a full pipeline.
David R. Little — Chairman of the Board, President and Chief Government Officer
Tommy I’d add only one thought is that we’re additionally in pursuit of firms which might be within the service enterprise. We’re making an attempt to steer clear of them. We at all times consider ourselves as an engineering, buyer skilled kind enterprise. And so we see that — we don’t need to compete with Amazon. We don’t need to compete with the Grainger’s and and many others. So firms which might be within the service enterprise after which particularly it could appear attractive to form of bounce again on oil and fuel, however we’re actually — now we have sufficient publicity in that market. And so, we’re taking a look at different industries which have a excessive service content material.
Tommy Moll — Stephens, Inc. — Analyst
Admire it, David. That’s all for me. I’ll flip it again.
Operator
[Operator Closing Remarks]
