Thank you. This is Mac McConnell, CFO of DXP. Good evening and thank you for joining us. Welcome to DXP's third quarter conference call. David Little, our CEO, will also speak to you and answer your questions. Before I begin, I want to remind you that today's discussion will include forward-looking statements. We want to caution you that such statements are predictions and actual events or results could differ materially. A detailed discussion of the many factors that we believe might have a material effect on our business on an ongoing basis is contained in our SEC filings, but DXP assumes no obligation to update that information. I will begin with a summary of DXP's third quarter 2014 results. David Little will share his thoughts regarding the quarter's results, and we will be happy to answer questions. Sales for the third quarter increased $57.3 million or 17.4% to $387.1 million from the third quarter of 2013. After excluding third quarter 2014 sales of $46.4 million for businesses acquired, sales for the third quarter increased $11 million or a 3.3% on a same-store sales basis. This sales increase is primarily the result of increases in our service center and supply chain services segments of $5.8 million and $7.3 million, respectively, on a same-store sales basis. These increases were partially offset by a decrease within our IPS segment of $2.2 million on a same-store sales basis. Sales of Innovative Pumping Solution products increased $27.5 million or 45% to $88.6 million, compared to $61.1 million for the 2013 third quarter. After excluding 2014, IPS segment sales of $29.7 million for B27, which was acquired in January, IPS segment sales for the third quarter of 2014 decreased $2.2 million or 3.5% from the prior corresponding period on a same-store sales basis. We believe that…

Thanks, Mac, and thanks to all our assistants on our call today. Special thanks to our solid execution by our DX people. DXP posted strong results for the third quarter of 2014. The DXP team continues to improve throughout the year and executed well in an inconsistent market environment. We continue to see progress in Natpro and B27. We have improved operating income margins, delivered better-than-expected earnings, and generated strong cash flow for the third quarter. We experienced 17.4% year-over-year sales growth. With most of our markets flat and 0% inflation, I am pleased with our efforts to take market share away from our competitors. Our organic growth rate of 3.3% is okay, and we are challenging ourselves to improve existing sales strategies and use our expertise and technology to better serve our customers and to create new sales growth opportunities. Profitable growth remains a primary focus, including M&A opportunities and organic initiatives as we position DXP to deliver and drive increased shareholder value. DXP serves all industrial markets, but our largest market is oil and gas, and with prices declining, the question is: how will this affect DXP? So in my opinion, first, the decline in prices is all about supply and demand and the value of the dollar. The U.S. has plenty of demand, and it can be -- because it can replace imports. But the prices are set by global demand and the strength of the dollar. Second, the oil and gas industry has three parts: upstream, midstream and downstream. It is all about cash flow in my opinion. If an oil company's upstream business has less cash flow because of lower prices, then he cuts drilling and he does everything possible to increase production with less cash flow. The exception is long-term projects in companies with…

Thank you. [Operator Instructions] We'll hear first from Matt Duncan with Stephens. Matt Duncan – Stephens: Hey, guys.

Matt.

Hey, Matt. Matt Duncan – Stephens: David, let's start talking first about B27. Mac, I don't remember you giving us the revenue and accretion numbers for those guys in the quarter, but let's start there, and then maybe dive in a little bit on what you're seeing in terms of business trends there.

All right. The B27's revenues during the third quarter were $35.4 million, and the accretion was between $0.12 and $0.13 per share. Matt Duncan – Stephens: So that's a little less revenue, I think, than what you guys have thought it might do. I think it was $43 million last quarter, and the thought was that it would stay around there. But building on the plus side, I guess probably more importantly, the earnings accretion is up there. So what's happening that's driven the profitability up while the sales number is down a little bit? And what's the outlook like at this point for B27, David?

Well, we're -- I don't, first, ever remember us forecasting earnings sales too much on a call. But that said, the -- we're just really happy, I guess, that IFS has performed in an improving manner. It's not performing like it did the year before we bought them, but in an improving manner to that effect. I believe I'm right about this, that they had $10 million worth of orders they received in the first six months, and to date they've already received, in the second half of the year $20 million with several potential orders still to come. So we're pretty pleased with the progress that IFS has made. There's also in Central America, several very large projects and jobs that we've been successful with in the past, that are slated for the first of the year to receive orders on. So we're pleased with their operating results, too. They had some things that we cleaned up from an accounting point of view in the first quarter and continued in the second quarter. And so, on performance and the EBITDA, even IFS I believe with lower sales, is going to generate something like 14% EBITDA margins. So that's pretty outstanding considering how far off their sales are. And so, I'm pleased with the management of that group, I'm pleased with the improvement, and I'm certainly getting happier with the accretions over there. Matt Duncan – Stephens: Yeah. So, David, on the improvement in bookings there, is any of that coming from International markets? Or is that really at this point still pretty domestically focused? I know there were some larger international orders you guys have been hopeful about there. Just give an update on that.

Yeah. It's more domestic, but it's not in the -- I wish I could, I'm drawing a blank right now, but it was in an unusual area that, it was in Utilities I believe, that they got the -- some really pretty nice orders from. And so, the International stuff is doing well as it relates to the API 610 product. But as we stated in our conference call, the modular systems have not done well, but there's some really nice stuff that's -- looks like is going to happen, and pretty sizable stuff that's going to happen, that we think we have a really good chance of getting. So, but the International market has continued to be soft. Matt Duncan – Stephens: Okay. Fair enough. So moving on then to your own Innovative Pumping Solutions business, I know you still see a pretty good outlook for that business. There's been a couple quarters in a row here where it's been down a little bit on an organic basis, and it sounds like that's probably more a function of timing. I know you guys don't typically report a backlog number for that business, but if you could just give us a general feel for what you're seeing in terms of bid activity, quote activity, and then actual orders into your backlog. What does the trend line look like for that segment?

Well, IPS is having a good year. They're not growing 20% or anything, but they're having a good year, they're having a really nice profitable year. They're -- they are going to have a better fourth quarter than the second and third, so they should end up the year with some -- with positive growth. They feel good about these orders that are starting to come out of the Gulf of Mexico, they feel good about the continuation of the business they've been getting on these shale plays out of the Bakken, Eagle Ford and the Permian Basin. So the expansion of IPS into some International markets has not happened. The expansion of IFS going forward looks like it is going to happen, so we -- again, I think we feel good about the fourth quarter, and we feel good about 2015. Matt Duncan – Stephens: Okay. Last thing for me just on M&A pipeline. What's that looking like at this point, and do you expect that we might see anything get closed by the end of the year here?

No -- well, yeah, there was just one small deal probably, but I would think we -- we're working on some mid-size, mid being $30 million, type deals that I think you'll see more like in the first quarter next year. Matt Duncan – Stephens: Okay.

We're getting awful close to Thanksgiving and Christmas. Matt Duncan – Stephens: Sure. Sure. Understood. Thanks for the update, David.

All right.

Thank you. Our next question comes from Ryan Merkel with William Blair. Ryan Merkel – William Blair: Hey. Good afternoon, everyone.

Hey, Ryan.

Ryan. Ryan Merkel – William Blair: So I want to start with IPS as well. Again, it sounds like you're attributing some of the sales softness to timing. I'm just wondering what causes or caused the timing delays, and then why are we confident that you're going to book some of these projects in the fourth quarter?

What causes timing is the manufacturers that are supplying us major components on the job, because that's what triggers -- that and labor triggers percentage completion. And so, we use percentage completion to try to smooth things out, but those two things can cause percentage completion not to be smooth, to be a little more lumpy. So it's always a little bit lumpy. It also typically has, if you go back and look at the historic numbers of DXP, there's an awful lot of IPS-type stuff that always gets shipped in the fourth quarter. And so, they work on -- they get ordered this time of year, and they take a year to build, and they get shipped by the end of the year, and it's just kind of how the cycle goes. But again, we use percentage completion to -- I mean, one year we missed sales by $14 million because two jobs didn't ship, and so that was, we were on a completed contract basis and said, well, that's a -- that wasn't pretty, so nobody liked that. That was back when we were much smaller. And then we have relationships with customers. We're noted as being a preferred vendor for Chevron and some major accounts. And so, we just typically feel really, really good about our chances on certain types of equipment and certain types of -- and certain customers, as far as why we feel good about getting orders. Ryan Merkel – William Blair: And so you have visibility then -- I know you've delayed manufacturing components -- you're going to be able to ship the projects in the fourth quarter?

Are we going to at least get -- we'll at least get the major components so that if something rolls over into 2015, it'll only be 5% or 10%, it won't be 85% or 95%. Ryan Merkel – William Blair: Got it. Okay. And then I was thinking the Service Center organic growth to be a little better than 2.5%. And I guess, does this just broadly speak to the mixed industrial end-markets, David, that you mentioned?

Well, I guess. I don't know what [indiscernible]. We're, you know, our markets to us have been pretty flat all year. And we've had flat markets and we've had flat inflation, and so to us, to garnish three month 3% organic growth, which would have been a little higher if IPS maybe shipped everything, or had everything shipped to them, is just a function of our ability to take market share away from other people. And so we try to do that responsibly where we're not trying to cut our price, and just sell things to be selling them. So it's been tough. Ryan Merkel – William Blair: Okay. Last one for me. Nice to see the EBIT margin recovering from the first quarter. I'm just wondering is this level sustainable in your view? And then second part of that question, should we expect the cost control to continue?

Just my opinion. I'm happy with 10% EBITDA margins. And I'm not quite happy with where we are expense wise. I believe we're kind of, it's kind of like when you're at an awkward size and that happens whether you're $50 million or $100 million or $200 million. And we have a lot of division people, we have a lot of in-house counsel, we have a huge IT staff. I think we're designed to be a little bigger than we are. And so our expenses as a percent of sales is about 1% higher than I would personally think that if we were running at optimum levels where we would be that. Ryan Merkel – William Blair: Okay. Thank you.

Does that make sense? Ryan Merkel – William Blair: Yes, it makes sense. Thank you.

Thank you. Our next question comes from Joe Mondillo with Sidoti & Company. Joe Mondillo – Sidoti & Co.: Hi, guys.

Hi, Joe.

Hi, Joe. Joe Mondillo – Sidoti & Co.: My first question, IPS as well, and I guess one of the questions that I have just have is that, your organic growth has been trending, the trend of growth has been trending, organically anyway, downward for several quarters now, over a course of six, seven quarters. And now we've seen negative for the last two quarters. Can you talk about the competitive environment, and pricing as well?

You know, we do have competitors, so I think that's a fair question. I don't think though that we're pricing ourselves out of the market. I don't feel like we're not getting our fair share. We track quotes. You know, we have $100 million $200 million quotes out there all the time. We track hit rate. And I don't -- I just don't believe that - I'd have to really double check I haven't really looked at that number in a while but I believe David Vinson said that our hit rate was pretty strong. So I don't think we're having a competitive issue. I think what we're having is we have a little bit of oil prices going down and people looking over their shoulder. Again, I don't think that affects long term projects and I don't think it affects mid-market and certainly, it benefits downstream petrochemical plants, but upstream I have to believe that things are just really, really flat whereas a number of years ago when we first discovered fracking, and everything went crazy, it was nothing for us not to have 16% organic growth. So we're just at a point where we're reaching a peak of activity but we are certainly going to reach a peak of activity with oil prices going down. And so I don't know, I'm thinking that our growth rate -- Joe Mondillo – Sidoti & Co.: So the market maybe a bit saturated after the huge increase that we have had over the last three, four years and then potentially with oil prices there is potential risk of more of a plateauing effect?

And I like your term plateauing, because I don't really -- we don't really see it declining. We don't see it declining. We just don't see it increasing in any great extent either, and certainly if Saudi Arabia wants to take out all of the non-profitable producers, they can do so. So I think we're kind of at a place where we are kind of holding our own. I don't know how to describe it any better than that really. Joe Mondillo – Sidoti & Co.: Compared to the revenue growth organically that you've seen, how has the order trend growth-wise, aare you seeing a contraction in orders as well like you've seen in organic revenue at IPS?

No. We're -- both on the MRO side and the capital side, including our service centers and our IPS, we're seeing -- frankly we're seeing order sizes get bigger. But we are also not seeing our backlog really substantially increase. It's going up that one or two or three percent. And so there is nothing really driving growth based on what we are doing today, except to take market share away from the little small ma and pops, so that's exactly what we are doing. We are trying to build supercenters, we are out there with more sales men, more professionally trained salesmen. And with expertise and et cetera. And so we're picking on -- well we are just taking market share, and of course, we are not trying to target W.W. Granger or MSC or somebody like that. We are trying to -- we're just picking on the thousands and thousands of little distributors that we should be able to beat in the game. Joe Mondillo – Sidoti & Co.: Okay. And then moving to my second question which is related to the Service Center segment. Just wondering with sales -- you're organic sales have been trending not too bad compared to some of your competitors, it's been sort of flat to up. I'm just wondering in terms of the margins, year-over-year the last few quarters, including the one that you just recorded, you've been seeing some margin contraction pressures. I'm just wondering what's going on there?

Well, the Service Center margins -- gross margin as well -- and bottom line margins, both grew sequentially. So maybe year-over-year we had a different product mix or different makeup of our company, but as far as Q2, Q3 we made improvement. Joe Mondillo – Sidoti & Co.: Okay. And then it looks like you have a pretty tough comp on the fourth quarter. There is nothing seasonally that's going to drive a pretty big sequential increase in the fourth quarter that you expect. Is there?

No. No. Joe Mondillo – Sidoti & Co.: Okay. And then just lastly, I know one of the past callers asked about M&A. I'm just wondering your viewpoint given the volatility in the markets right now and how fast and hard oil prices have come down and being below $80 now, how does that affect your outlook in terms of M&A? And in terms of pricing, how is that affecting pricing out there? Are acquisitions maybe a bit pricey at this point in time? And do you want to take a step back and maybe see how things play out? Or how do you look at the M&A just given the volatility that we've seen here?

Well, it's always -- it's our goal to cover more geography and hopefully in doing so have the oil and gas segment decrease. And actually I believe we were doing that until we jumped off and bought B27 which was strictly an oil and gas play, and a sizeable one. I truly believe that if you get anything out of this conference call, there is the perfect price of oil and that price is enough for the oil companies to make money and for the rest of the world to do good at the same time. And we're always trying to seek that equilibrium. I went on Fox Business and oil was at $140 and this guy was trying to set me up because he thought I was an oilfield supply company only and so he asked me about oil. And I said, well, to start off with, I think it's too high. And he's like, I can't believe you said that. But anyway, there's a point where it's too high, there's a point where it's too low, and there's a point where everybody can be happy at the same time. It never gets there but it gets close to there. And so -- Joe Mondillo – Sidoti & Co.: Do you have a sense of where that, you know, where oil...

No. I really don't. I really don't. Joe Mondillo – Sidoti & Co.: I only asked because I hear it all the time and I'm just wondering if you have a better sense of it.

I think we'd all be happy at $85 probably. It's just my own opinion of it. Joe Mondillo – Sidoti & Co.: Right. Okay. Well, that does it for me. Thanks a lot.

All right. Thanks, Joe.

[Operator Instructions] We'll take a follow-up from Matt Duncan. Matt Duncan – Stephens: Hey guys. Just back on the service centers and supply chain services for a minute. We've seen some of your peers who have seen an increasing growth rate I think really in the month of October and it sounds like things have picked up a little bit potentially on the industrial side. I'm curious, as you look at that slice of your customer base just what you guys are seeing out in the market, what you're hearing from your customers? David, you characterized it as mix. Are there any signs that, that's perhaps improving?

Well, let me refer to when spots and services has grown with existing customers that means that the marketplace and our customers are doing better. And they don't typically have -- well they might have an oilfield service company but they don't really have oil companies that they're doing integrated supply with. I think we've -- I personally think 2015 is going to be really a strong catalyst for other industrial people from automotive to plastics to petrochemical, chemical to the consumer. If oil prices stay at $80 I think we'll still have plenty of oilfield shale plays type of stuff going on and plenty of mid-stream and I think people will be wanting to generate cash flow. I look at it all as cash flow and so on the production. And at the same time people will be paying less at the pump et cetera. But I think 40% of our business isn't going at all suddenly increase 10% next year because there's not going to be a huge incentive. But on the other hand if oil went to $140 well that business might increase 20% but then the rest of the world does bad. So we're in a good spot where we can grow our business unless something catastrophic happens. Now, if oil goes to 60 and it stays there for two years then DXP is probably not going to do that well. But as long as it's a decent price where they can still make money and still produce, then, and the rest of the world does better because oil prices and products and all of that are less, and you kind of have a win-win. Matt Duncan – Stephens: Sure. Last thing, just going back to the Supply Chain business for a minute, that -- as a business, you've seen a very nice improving growth trend in -- I don't know if there's any way to look at that and sort of break it out between improvement in the market versus DXP serving its customers better, adding new locations. I know that's a segment you guys have put a lot of blood, sweat and tears into improving, and it looks like it's starting to pay off. And so, I'm trying to understand how much of that is improving market versus you guys' actions to improve that business.

And we're talking about Supply Chain? I'm sorry. Matt Duncan – Stephens: Correct. Yeah.

Yes. Well, we've improved the business a lot, but we've also had -- there was a time when we were getting some new accounts and growing the business, but our customers were just simply buying less. And by design, Supply Chain is supposed to take and reduce the customer spend. So you're only fighting against yourself. But we had -- we're having an increased spend, and we're landing new deals. And the increased spend has been modest, and the new deals have been most of the growth. Matt Duncan – Stephens: Okay. So a lot of this is competitive wins, you guys doing a good job targeting growth, and winning?

Right. Matt Duncan – Stephens: Okay. All right. Very helpful. Thanks.

And a lot of the growth is coming from existing customers giving -- we're winning more of their locations. So it gets a little confusing, because most of the revenue growth is coming from existing customers, but those existing customers have added -- we've accomplished getting more of their customers' locations. So, confuse you?

Are we done?

Thank you. Yes, sir. That does conclude our question-and-answer session and as well as the conference. Thank you all again for your participation.

All right. Thank you.

Thank you.