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DXP Enterprises, Inc. (NASDAQ: DXPE) This fall 2021 earnings name dated Mar. 25, 2022
Company Members:
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 immediately. Presently, I’d wish 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, it’s possible you’ll start your convention.
Kent Yee — Senior Vice President, Chief Monetary Officer
Thanks, David, and thanks to everybody becoming a member of us immediately. 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 immediately is our Chairman and CEO, David Little. Earlier than we get began, I need to remind you that immediately’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 consider might have a fabric impact on our enterprise on an ongoing foundation are contained in our SEC filings. Nevertheless, 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 at the moment are obtainable on our web site at ir.dxpe.com.
I’ll now flip the decision over to David to offer 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 immediately on our 2021 fourth quarter and yr finish convention name. I’ll start immediately with some views on our fourth quarter and yr finish outcomes, present trade situations 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 via 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 is no such thing as a query 2021 was a rare yr, it proceed to stay difficult for us, our prospects, our DXPeople, our suppliers and our communities. However even in an unimaginable dynamic market atmosphere the DXPeople got here collectively, we stayed true to our technique, stay buyer pushed and although we nonetheless have numerous work to do I’m happy with the truth that we delivered robust outcomes for our shareholders. DXP began fiscal 2021 believing monetary outcomes weren’t going to return straightforward and we had been going to need to take market share the place we may. The tempo and magnitude of restoration would range significantly from geography, buyer sort and finish markets.
This largely proved to be true because the financial system continued to recuperate from the brief however deep recession that marked the pandemic’s early months and days. The following strong progress that adopted in sure markets started to place monumental strain on the provision chain, triggering ranges of inflation not seen in a long time. By year-end rate of interest hikes had been broadly anticipated. Markets entered into a brand new uncertainty. Whereas we don’t anticipate fiscal 2022 to appear like 2021, DXP’s confidence is as robust because it ever has been.
Our technique is working. We proceed to be customer-driven consultants, sourcing, offering, servicing our prospects as they navigate regardless of the consequence yr holds. In fiscal 2021, we soundly executed on diversifying our finish markets with a give attention to water and wastewater and different industrial markets, persevering with to do acquisitions, including three nice corporations throughout 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 progress 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 progress alternatives for our DXP folks. We proceed to consider on this method and look to resume our dedication to folks, processes and assets and know-how as we scale DXP and stay centered on doubling the dimensions of our enterprise over the following 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 throughout the summer season months from August via the tip of December, we persistently 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 progress and enhancements in our finish markets and trade indicators together with our PMI and our metallic working indexes.
Oil and gasoline 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 progress via This fall. Whole DXP gross sales for This fall had been $293.1 million or $4.8 million per enterprise day. Our income 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 evaluate throughout his feedback. Nevertheless, within the midst of continued change and progress, 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 laborious work and dedication and ending the yr as strongly as attainable. 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 constructive throughout the second half of the yr. This mixed with versatile capital construction plus us ready the place we may preserve executing on our acquisition technique, in addition to return capital to our shareholders through opportunistic share repurchases.
As we mentioned on the again finish of 2020, acquisitions have continued to diversify our finish market publicity and place us effectively for a rebounding financial system as we’re enthusiastic about 2022 and the expansion we anticipate to see each organically and thru acquisitions as we proceed to have a robust pipeline of alternatives. We had been excited to have three new corporations be a part of us throughout 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 Gear Firm, Pumping Techniques, Inc. and Whole Gear Firm. To all of you, welcome to DXP and we’re excited to have you ever be part of our DXP household and we stay up for our successes collectively. DXP has continued to seek out methods to ship monetary outcomes and place us effectively for all our stakeholders within the face of extraordinary challenges. That is evidenced by our gross sales progress, improved gross margins and acquisitions and the general teamwork for the DXP folks.
We proceed to construct our capabilities to offer complementary set of services to all of our markets, which makes DXP very distinctive in our trade and provides us extra methods to assist our buyer win. We are also always taking a look at reviewing alternatives the place we are able to develop market share. We complement our technique with a relentless drive for progress that features enterprise and operational initiatives, which we consider will enable us to steadily enhance our efficiency for all our stakeholders. As we go into 2022, we’re excited in regards to 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 Modern Pumping Options of $140 million. The purpose right here is acquisitions, the range of finish markets [Indecipherable] nature of service Facilities allowed us to stay resilient. Provide chain providers will stay impacted by oil and gasoline and transportation-related finish markets throughout 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 progress and provide chain providers together with [Indecipherable].
As we mentioned throughout Q1 via Q3, we skilled the most important natural gross sales decline inside our Modern Pumping Resolution enterprise section. IPS is tied to capital budgets and predominantly within the oil and gasoline trade, however we’ve added via acquisitions, water and wastewater remedy undertaking work this yr, which has positively impacted the outcomes of IPS together with enhancements in value administration on our conventional enterprise. When it comes to the energy within the IPS backlog, we now have now had two consecutive quarters of sequential double-digit will increase and the development appears 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 via the yr, and added accretive gross margin acquisitions. That stated IPS improved gross margins 463 foundation factors year-over-year within the midst of a major decline in demand. Total, 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 in addition highlighted or accentuated sure enterprise fails that supplied us with areas to reinforce 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 progress via acquisitions and anticipate fiscal 2022 to be a robust restoration yr. Our acquisitions carried out very effectively throughout 2021, contributing considerably to progress in gross sales and adjusted EBITDA. We proceed to anticipate a busy acquisition yr in 2022. In 2021, we made nice progress with an funding in a buyer relations administration system or CRM software for our gross sales power, which can assist our over 400 exterior gross sales leaders, deliver elevated worth to our present prospects and drive progress via new prospects and enhance share of pockets.
We’re very optimistic that our funding in digital instruments and advertising to create important aggressive benefit for DXP total via our strategic investments and initiatives. We’ll stay centered 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’ll proceed to make use of no matter medium the shopper prefers and tailor our method to their wants. DXP is at all times customer-focused, particularly in an atmosphere we now have immediately. We’re listening to the shopper issues.
I’m very happy with how our staff continues to carry out on this extraordinary instances as a number one distributor of extremely engineered services. We consider DXP stays well-positioned to assist our prospects and navigate these difficult durations for the advantage of all our stakeholders. I wish to sincerely thank all of our DXP individuals who proceed to point out as much as work with their ardour, dedication, teamwork and selfless service. We now have an amazing staff. It’s an honor to beat the collective [Phonetic] range all of us skilled and ship worth for all our stakeholders.
With that, I’ll now flip it again to Ken to evaluate 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 immediately. I’ll evaluate the fourth quarter fiscal 2021 monetary outcomes. 2021 turned out to be one other distinctive yr as we transfer via the COVID-19 and skilled new and associated challenges. Regardless of these challenges, DXP efficiently navigated via the yr and was in a position to execute and create worth for all our stakeholders. Total, DXP’s fiscal 2021 monetary outcomes had been good to see and replicate the next: diversifying our finish markets with robust acquisition exercise finishing three acquisitions in 2021 after finishing the 4 initially of the yr or on December 31 of final yr.
Gross sales bettering 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 section energy with year-over-year progress in service facilities and provide chain providers regardless of the primary half of 2021 presenting [Indecipherable]. Two quarters of sequential progress within the IPS backlog throughout 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. Primarily an awesome transition yr and one that can place us effectively 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 throughout 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 day by 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 day by 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 day by 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 Modern Pumping Options declining 25.8%.
Excluding acquisitions, Modern Pumping Options declined 35.5% year-over-year. When it comes to our service facilities, areas inside our Service Middle enterprise section, which skilled gross sales progress 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 embrace meals and beverage, mining, municipal water, wastewater, specialty chemical substances, in addition to some COVID-related exercise in Canada throughout the first half of the yr. Provide Chain Companies efficiency displays the pullback in exercise at oil and gasoline and transportation associated buyer websites.
This subsided as we moved to the second half of the yr after which the SCS staff turned their focus to new buyer wins, which we anticipate, as David stated, including important progress in 2022. When it comes to Modern Pumping Options, we now have now skilled two consecutive quarters of enhance within the backlog. As I at all times say, we evaluate 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 at the moment are trending barely above 2016 gross sales ranges primarily based upon the place our backlog stands immediately over the following 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 embrace 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 section 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.
Modern 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 atmosphere. Our SG&A for the complete yr elevated $43.7 million from 2020. This enhance displays larger than regular audit and legal-related bills related to our auditor noise this previous yr enhance healthcare prices versus 2020 on account of abnormally low prices incurred in 2020, when keep at residence orders had been in place and elevated insurance coverage value.
Moreover, DXP incurred progress associated will increase in SG&A together with over 775,000 related to investing in a brand new CRM package deal 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 sometimes anticipate to obtain better mounted prices, SG&A leverage as we develop however given our progress was pushed from acquisitions and our enterprise declined organically 2% year-over-year, we didn’t expertise leverage that we’ll expertise as we transfer via 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 progress in 2022. When it comes to our EPS, our internet 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 stability sheet and money circulate; when it comes to 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 enhance in day gross sales excellent or what they seek advice from 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 when it comes to investing in working capital. When it comes to money, we now have $49.1 million in money on the stability 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 capacity to manage capital funding and the minimal upkeep wants of our enterprise. Throughout fiscal 2020, we’re centered on liquidity as we set up our bearings round COVID. In 2021, we maintained that self-discipline, but in addition started to opportunistically put money into the enterprise with 75% of our capex exercise occurring in Q3 and This fall. Transferring into 2022, we are going to proceed to put money into the enterprise as we transfer in the direction of progress.
Turning to free money circulate, we generated strong working money circulate throughout the fourth quarter, as we did throughout 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 underneath the ABL. When it comes to acquisitions, we anticipate closing on one other acquisition by the tip of Q2. This transaction will proceed to diversify DXP from the tip 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 we now 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 achieved in a well timed method, given the bizarre circumstances. The staff from McConnell & Jones dealt with all the pieces 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 objectives for the finance and accounting perform. Since 2017, we now have been centered on making certain we had been constructing a finance and accounting staff capabilities and performance that will assist and propel DXP into turning into a multi-billion greenback firm. Progress under no circumstances is a straight line and we’re bettering year-over-year. We’re additionally staying nimble as we proceed to develop and work with quite a lot of market challenges that you simply face.
We’re at that inflection level and I’m excited to work with PWC and have one other contemporary view as we scale DXP in real-time organically and thru acquisitions. In abstract, our priorities this yr had been to drive shareholder worth via diversifying our finish markets, persevering with to execute on our acquisition program and opportunistic share repurchases. We had been profitable and stay 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 effectively, thanks. I wished to start out on your oil and gasoline prospects with crude right here above $100. What if any type of change in urge for food for spend are you seeing there? And particularly on the pricing aspect I’d assume you’ve most likely seen some enter inflation and clearly these prospects are realizing a lot larger costs on their aspect. So do you’ve gotten any type of incremental pricing energy on this atmosphere that could be a tailwind to margins?
David R. Little — Chairman of the Board, President and Chief Government Officer
Sure. To begin with, let me say that that we’re type of transferring ourselves away from oil and gasoline and but we promote numerous product into that market and we’ll proceed to take action. One of many larger alternatives for IPS although is to promote numerous different gasoline sort tasks and likewise carbon seize stuff and issues to enhance our surroundings, which is fairly thrilling for us and fairly thrilling for DXP is type of creating an entire new market. And we’re type of increasing there.
However again to your query, definitely persons are spending cash to provide as a lot as they will. Drilling goes again up however these budgets aren’t — they’re nowhere close to as massive as they was once however they’re nonetheless growing. So we’re seeing exercise at our IPA section each for different fuels, environmental and gathering techniques 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 definitely 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 the direction of most likely the correct amount however the good worth 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 apprehensive about the way it impacts the remainder of our enterprise, however again to the oil and gasoline 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 go that on and I believe the oil and gasoline corporations anticipate us to go that on, whether or not or not we go on just a little bit for our gross sales, that’s type 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 type of level to the truth that actually our service facilities did nice provide chain providers. I believe it’s going to have a superb yr. It retains trying prefer it’s going to have a superb 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 a superb yr.
Tommy Moll — Stephens, Inc. — Analyst
Thanks, David. Transferring as much as the whole firm stage and simply taking a look at your day by day gross sales, it appears like many of the second half of final yr was fairly robust. And I’m curious, , now we’re many of the method via the primary quarter right here, simply what sort of commentary may you supply on? I don’t know if you wish to go month-by-month or quarter-to-date, year-to-date. Simply any context you possibly can give us on how day by 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 leap 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 type 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 normally at all times a gentle month, type 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 vogue and growing month-over-month, so we like what we see. Now a few of that does embrace acquisitions, to be honest. However with out moving into the element, we’re seeing the incremental enhance of each gross sales per enterprise day and one all emphasizes our backlog as effectively. We’re seeing exceptional will increase of our backlog. Now, a few of that’s pushed by the truth that there are the provision chain points and a few gross sales are getting pushed out. However the internet developments result in a good 2022 as soon as once more.
Tommy Moll — Stephens, Inc. — Analyst
Yeah. Transferring to expense this yr on working expense, I believe you known as out within the ready remarks among the drivers in fourth quarter transferring larger, certainly one of which was auditor associated. However as we transfer into this yr 2022, are there any elements you’d level as to only if we take into consideration the place that expense line was in This fall, any elements that will drive that larger or decrease as we transfer via this yr?
Kent Yee — Senior Vice President, Chief Monetary Officer
Yeah. Let me, Tommy, when it comes to answering the query, let me simply retrace just a little bit a few of these buckets and put some numbers round it after which type of then particularly reply your query, if you’ll, type of going into 2022. When it comes to our auditor noise, as soon as once more nothing [Indecipherable] we wished to occur publicly however as soon as once more, I’ll simply sofa it with it was refreshing to type of be capable to transfer ahead and discover a agency that we may come alongside for our progress 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 when it comes to elevated insurance coverage prices one other $1.1 million. And numerous that, as soon as once more, to your level, was again finish weighted in the direction of the again finish of the yr simply given numerous 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 loads 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-Okay after which we are going to on board if you’ll with Pricewaterhouse.
And so 2022 will most likely nonetheless be elevated, most likely greater than doubtless not on the identical ranges as 2021, however we can have some elevated prices there. After which simply when it comes to SG&A going ahead, I assume I’d sofa you when it comes to massive image — I believe each firm in immediately’s atmosphere is receiving pressures round folks. Generally it will get tagline with an awesome resignation or simply folks transferring from firm to firm. I don’t suppose DXP is any totally different. And so for the worth staff members, we’re making an attempt to do all the suitable issues in retaining these and taking a look at compensation. After which basically, you’ve gotten inflationary pressures too basically to type of meet these calls for. So I believe you’ll see a few of that as we type of transfer via 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 anticipate to shut someday in Q2. I suppose you’ve given us all of the context you possibly can there, given it’s not over the road but, however no matter you possibly can share simply in regards to the pipeline basically, variety of alternatives you’re taking a look at versus development — any informative alternatives within the pipeline or extra alongside the tuck-in route that we’ve seen these days?
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 received misplaced, and a kind of, clearly, , 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 numerous gross sales, roughly round $9 million of gross sales added to DXP.
After which when it comes to type of one upcoming — I’ll name it nearer to our common acquisition dimension, which common acquisition dimension is often $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 strain however we’re nonetheless capable of finding these which might be accretive to DXP and are a superb 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 type of have that pipeline nonetheless develop and see the place we find yourself by the tip of 2022 when it comes to 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 corporations 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 sort 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 so forth. So corporations which might be within the service enterprise after which particularly it could appear attractive to type of leap again on oil and gasoline, however we’re actually — we now 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
Respect it, David. That’s all for me. I’ll flip it again.
Operator
[Operator Closing Remarks]
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