DXPE 10-K & 10-Q changes, risk factors and insider trading
Dxp Enterprises Inc. · Nasdaq · Wholesale-Industrial Machinery & Equipment · CIK 1020710 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Material changes in the costs of our products from manufacturers without the ability to pass price increases onto our customers could cause our gross and operating margins to decline.”
New heading “Our uncertain tax position and effective tax rate may vary from period to period.”
Largest changes
“Additionally, market variables, such as inflation of product costs, labor rates, fuel, freight and energy costs, as well as geopolitical events, could negatively impact our ability to effectively manage our operating and administrative expenses. For example, geopolitical conflicts and related international responses have and may continue to exacerbate inflationary pressures, including increases in fuel and other energy costs. …”see in full comparison
“Product manufacturers may adjust the prices of products we distribute for many reasons, including changes in their costs for raw materials, components, energy, labor, tariffs and taxes on imports. In addition, a portion of our own distribution costs is composed of fuel for our sales and delivery vehicles, freight, and utility expenses for our facilities. After the cost of the products we sell, labor costs are our largest expense. Our ability to pass along increases in our costs in a timely manner to our customers depends on execution, market conditions, and contractual limitations. …”see in full comparison
“Material changes in the costs of our products from manufacturers without the ability to pass price increases onto our customers could cause our gross and operating margins to decline.”see in full comparison
“Our uncertain tax position and effective tax rate may vary from period to period.”see in full comparison
“We believe we have established an adequate reserve for any adjustments resulting from tax examinations. However, the outcome of these examinations cannot be predicted with certainty. If issues addressed in our tax examinations are resolved differently than management expects, given current facts and circumstances, we may need to adjust our income tax reserves and effective tax rate accordingly. Although the timing of resolution, settlement, and closure of examinations remains uncertain, we do not believe it is reasonably possible that our unrecognized tax benefits from certain U.S. …”see in full comparison
“As of December 31, 2025, the Company recognized a total of $29.8 million in federal income tax credits for research activities from 2015 through 2025, of which $3.8 million is from an ongoing IRS audit of the 2018 tax year. In addition, the Company has also recorded a $5.1 million reserve for uncertain tax positions related to these credits, of which $993,000 is related to the ongoing IRS audit noted above.”see in full comparison
Full comparison: every changed paragraph (20)
•Demand for our products could decrease if manufacturers decide to sell them direct.directly to end users.
•Material changes in the costs of our products from manufacturers without the ability to pass price increases onto our customers could cause our gross and operating margins to decline.
•Our uncertain tax position and effective tax rate may vary from period to period.
Material changes in the costs of our products from manufacturers without the ability to pass price increases onto our customers could cause our gross and operating margins to decline.
Product manufacturers may adjust the prices of products we distribute for many reasons, including changes in their costs for raw materials, components, energy, labor, tariffs and taxes on imports. In addition, a portion of our own distribution costs is composed of fuel for our sales and delivery vehicles, freight, and utility expenses for our facilities. After the cost of the products we sell, labor costs are our largest expense. Our ability to pass along increases in our costs in a timely manner to our customers depends on execution, market conditions, and contractual limitations. Failing to pass along price increases timely in an inflationary environment, or not maintaining sales volume while increasing prices, could significantly reduce our profitability.
Additionally, market variables, such as inflation of product costs, labor rates, fuel, freight and energy costs, as well as geopolitical events, could negatively impact our ability to effectively manage our operating and administrative expenses. For example, geopolitical conflicts and related international responses have and may continue to exacerbate inflationary pressures, including increases in fuel and other energy costs. Additionally, climate-related policies, carbon pricing mechanisms, and regulations aimed at reducing emissions may increase energy and raw material costs, which could put additional pressure on our margins. Inflation may also reduce demand for products, resulting in lower sales volumes. In addition, our inability to pass on increases in costs to customers in a timely manner, or at all, could cause operating and administrative expenses to grow more rapidly than sales, which could result in lower gross margins and net earnings.
Our manufacturers may cancel our oral or written distribution authorizations upon little or no notice, which could adversely impact our revenues and profits from distributing certain manufacturer’smanufacturers’ products.
The value of our inventory could decline as a result of manufacturer price reductions with respect to products that we sell. Such a decline could have an adverse effect on our revenues. Also, decreases in the market prices of products that we sell could cause customers to demand lower sales prices from us. These price reductions could reduce our margins and profitability on sales with respect to the lower-priced products to the extent that we purchased our inventory of these products at the higher prices prior to the manufacturersmanufacturers’ price reductions. Reductions in our margins and profitability on sales could have a material adverse effect on our business.
If disruptions damage, breach or cause our systems or those of third parties on which we depend to cease to function properly or are otherwise disrupted, we may require a significant investment to repair or replace them and may suffer interim interruptions in itsour business operations. If critical information systems fail or otherwise become unavailable, our ability to operate our digital platforms, process orders, maintain proper levels of inventories, collect accounts receivable, disburse funds, manage our supply chain, monitor results of operations, and process and store team member or customer data, among other functions, could be adversely affected. Any such interruption of our information systems could have a material adverse effect on our business or results of operations. We have experienced these incidents in the past, which we deemed immaterial to our business and operations individually and in the aggregate, and may be subject to other incidents in the future. We cannot assure you that any future incidents will not be material to our business, operations or financial condition.
Through our sales channels and electronic communications with customers generally, we collect and maintain confidential information that customers provide to us in order to purchase products or services. We also acquire and retain information about suppliers and employees in the normal course of business. Computer hackers may attempt to penetrate our information systems or our vendors' information systems and, if successful, misappropriate confidential customer, supplier, employee or other business information. In addition, one of our employees, contractors or other third party may attempt to circumvent security measures in order to obtain such information or inadvertently cause a breach involving such information. Loss of information could expose us to claims from customers, suppliers, financial institutions, regulators, payment card associations, employees and other persons, any of which could have an adverse effect on our financial condition and results of operations. We may not be able to adequately insure against cyber risks.
Our backlog generally consists of projects for which we have an executed contract or commitment with a client and reflects our expected revenue from the contract or commitment, which is often subject to revision over time. We cannot guarantee that the revenue projected in our backlog will be realized or profitable or will not be subject to delay or suspension. Project cancellations, scope adjustmentsadjustments, or deferrals,deferrals may occur with respect to contracts reflected in our backlog and could reduce the dollar amount of our backlog and the revenue and profits that we actually earn; or may cause the rate at which we perform on our backlog to decrease. Our contracts typically provide for the payment of fees earned through the date of termination and the reimbursement of costs incurred including demobilization costs. In addition, projects may remain in our backlog for an extended period of time. During periods of economic slowdown, or decreases and/or instability in oil prices, the risk of projects being suspended, delayed or canceled generally increases. Finally, poor project or contract performance could also impact our backlog. Such developments could have a material adverse effect on our business and our profits.
Our uncertain tax position and effective tax rate may vary from period to period.
The Company's uncertain tax position and effective tax rate may vary from period to period. Currently, these uncertainties primarily relate to an ongoing Internal Revenue Service (“IRS”) examination regarding the realization of federal research and development tax credits.
As of December 31, 2025, the Company recognized a total of $29.8 million in federal income tax credits for research activities from 2015 through 2025, of which $3.8 million is from an ongoing IRS audit of the 2018 tax year. In addition, the Company has also recorded a $5.1 million reserve for uncertain tax positions related to these credits, of which $993,000 is related to the ongoing IRS audit noted above.
In addition to the position noted above, we regularly evaluate the likelihood of adverse outcomes from these examinations to assess whether our income tax reserves are sufficient. We continue to track the progress of ongoing discussions with tax authorities and the potential impact of the expected expiration of the statute of limitations in various taxing jurisdictions.
We believe we have established an adequate reserve for any adjustments resulting from tax examinations. However, the outcome of these examinations cannot be predicted with certainty. If issues addressed in our tax examinations are resolved differently than management expects, given current facts and circumstances, we may need to adjust our income tax reserves and effective tax rate accordingly. Although the timing of resolution, settlement, and closure of examinations remains uncertain, we do not believe it is reasonably possible that our unrecognized tax benefits from certain U.S. federal, state, and non-U.S. tax positions will materially change in the next 12 months.
Our credit facilities require the Company to comply with certain specified covenants, restrictions, financial ratios and other financial and operating tests. The Company’s ability to comply with any of the foregoing restrictions will depend on its future performance, which will be subject to prevailing economic conditions and other factors, including factors beyond the Company’s control. A failure to comply with any of these obligations could result in an event of default under the credit facilities, which could permit acceleration of the Company’s indebtedness under the credit facilities. The Company from time to time has been unable to comply with some of the financial covenants contained in previous credit facilities (relating to, among other things, the maintenance of prescribed financial ratios) and has, when necessary, obtained waivers or amendments to the covenants from its lenders. In the future the Company may not be able to comply with the covenants or,and, if it is not able to do so, that its lenders willmay not be willing to waive such non-compliance or amend such covenants.
Risks associated with substantial or material claimclaims or lawsuits that are not covered by insurance.
In the ordinary course of business we at times may become the subject of various claims, lawsuits or administrative proceedings seeking damages or other remedies concerning our commercial operations, the products we distribute, employees and other matters, including potential claims by individuals alleging exposure to hazardous materials as a result of the products we distribute or our operations. Some of these claims may relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to acquisition. The products we distribute,distribute and/or manufacture,manufacture are subject to inherent risks that could result in personal injury, property damage, pollution, death or loss of production.
We conduct a meaningful amount of business outside of the U.S. We could be adversely affected by economic, legal, political and regulatory developments in countries that we conduct business in. We have meaningful operations in Canada in which the functional currency is denominated in Canadian dollars. We also have operations in the U.A.E., India, and Saudi Arabia, where the functional currency is dirham.dirham, rupee, and riyal, respectively. As the value of currencies in foreign countries in which we have operations increases or decreases related to the U.S. dollar, the sales, expenses, profits, losseslosses, assets and liabilities of our foreign operations, as reported in our consolidated financial statements, increase or decrease, accordingly.
Management's Discussion & Analysis (MD&A)
New heading “NON-GAAP FINANCIAL MEASURES”
New heading “In an effort to provide investors with additional information regarding our results of operations as determined by U.S. GAAP, we disclose non-GAAP financial measures. The non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP.”
New heading “Our primary non-GAAP financial measures are organic sales ("Organic Sales"), sales per business day ("Sales per Business Day"), organic sales per business day ("Organic Sales per Business Day"), free cash flow ("Free Cash Flow"), earnings before interest, taxes, depreciation and amortization ("EBITDA") adjusted EBITDA ("Adjusted EBITDA"), EBITDA Margin, and Adjusted EBITDA Margin. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures.”
New heading “Refer to the Non-GAAP Financial Measures and Reconciliation section below for detailed reconciliations of our non-GAAP financial measures.”
New heading “Matters Affecting Comparability”
New heading “Year Ended December 31, 2025 compared to Year Ended December 31, 2024”
New heading “Valuation of Goodwill”
Removed heading “Year Ended December 31, 2023 compared to Year Ended December 31, 2022”
Removed heading “Impairment of Goodwill, Other Intangible Assets, and Long-Lived Assets”
Largest changes
“Impairment of Goodwill, Other Intangible Assets, and Long-Lived Assets”see in full comparison
“Our primary non-GAAP financial measures are organic sales ("Organic Sales"), sales per business day ("Sales per Business Day"), organic sales per business day ("Organic Sales per Business Day"), free cash flow ("Free Cash Flow"), earnings before interest, taxes, depreciation and amortization ("EBITDA") adjusted EBITDA ("Adjusted EBITDA"), EBITDA Margin, and Adjusted EBITDA Margin. …”see in full comparison
“In an effort to provide investors with additional information regarding our results of operations as determined by U.S. GAAP, we disclose non-GAAP financial measures. The non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP.”see in full comparison
“Refer to the Non-GAAP Financial Measures and Reconciliation section below for detailed reconciliations of our non-GAAP financial measures.”see in full comparison
“Year Ended December 31, 2025 compared to Year Ended December 31, 2024”see in full comparison
Full comparison: every changed paragraph (55)
NON-GAAP FINANCIAL MEASURES
In an effort to provide investors with additional information regarding our results of operations as determined by U.S. GAAP, we disclose non-GAAP financial measures. The non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP.
Our primary non-GAAP financial measures are organic sales ("Organic Sales"), sales per business day ("Sales per Business Day"), organic sales per business day ("Organic Sales per Business Day"), free cash flow ("Free Cash Flow"), earnings before interest, taxes, depreciation and amortization ("EBITDA") adjusted EBITDA ("Adjusted EBITDA"), EBITDA Margin, and Adjusted EBITDA Margin. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures.
Management uses these non-GAAP financial measures to assist in comparing our performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management believes that presenting our non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items, (ii) permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating our results. We believe that the presentation of these non-GAAP financial measures, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding of the factors and trends affecting our business than could be obtained absent these disclosures.
Refer to the Non-GAAP Financial Measures and Reconciliation section below for detailed reconciliations of our non-GAAP financial measures.
Matters Affecting Comparability
Our results of operations are not directly comparable on a year-over-year basis due to various prior acquisitions and the varying size and number of acquisitions in any comparable period. Accordingly, the results of acquisitions are included subsequent to their respective acquisition dates and the Company provides detail around Organic and Acquisition Sales as defined in our Key Business Metrics. During the twelve months ended December 31, 2025, acquisition sales were $96.0 million compared to $98.5 million for the twelve months ended December 31, 2024.
The Company's products are marketed in the U.S., Canada, Mexico, U.A.E., India, and IndiaSaudi Arabia to customers that are engaged in a variety of industries, many of which may be counter cyclical to each other. Demand for our products generally is subject to changes in the U.S. and Canada, and global and macro-economic trends affecting our customers and the industries in which they compete. Certain of these industries, such as the oil and gas industry, are subject to volatility driven by a variety of factors, while others, such as the petrochemical industry and the construction industry, are cyclical and materially affected by changes in the U.S. and global economy. As a result, we may experience changes in demand within particular markets, segments and product categories as changes occur in our customers' respective markets.
We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization, and non-controlling interest.amortization. We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization minusplus stock-based compensation expense, non-controlling interest before taxesexpense and all other non-cash charges, adjustments, and non-recurring items. We identify the impact of all other non-cash charges, adjustments and non-recurring items because we believe these items do not directly reflect our underlying operations.
The continued disruption in economic markets due to inflation, changing interest rates, tariffs, trade disputes, business interruptions due to natural disasters and changes in weather patterns, employee shortages, and supply chain issues, all pose challenges which may adversely affect our future performance. The Company continues to execute various strategies previously implemented to help mitigate the impact of these economic disruptors. Sales for the year ended December 31, 20242025 increased $123.4$214.3 million, or 7.4%,11.9%, to approximately $1.8$2.0 billion from $1.7$1.8 billion for the prior corresponding period. Customer demand was generally healthy throughout fiscal 2024,2025, resulting in industry expected volume growth,growth. complemented by additional pricing actions taken by the Company's vendors after strong pricing action in 2022 and 2023, which ultimately, gets passed on to customers. As such, someSome of the 20242025 sales increase iswas the result of increasesour inability priceto withmaintain increasesmargins inand volumefocus on profitability as well as the contribution from accretive acquisitions andover the related sales of rotating equipment and air compressors.time.
The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements. The Company considered the impact of economic trends on the assumptions and estimates used in preparing the consolidated financial statements. In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the year have been made. These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macro economicmacroeconomic trends. The severity, magnitude and duration of certain economic trends continue to be uncertain and are difficult to predict. Therefore, our accounting estimates and assumptions may change over time in response to economic trends and may change materially in future periods.
As our operations have generally stabilized from the COVID-19 pandemic and related inflationary pressures, weWe have seen growth from our supportive served end-markets and our focus on organic and inorganic sales growth. Our sales volume is expected to deliver sustainable and healthy growth, while our diversification efforts have unlocked gains in margins, cash flow and overall organizational efficiency. With our strong backlog and improved market environment, we expect to continue to see growth in 2025.2026.
Assuming a positive general macroeconomic environment and continued supportive environments in our end markets, we expect fiscal 20252026 growth to be comparable to 20242025 growth metrics with the continued execution of acquisition activity. We expect our interest expense in 20252026 willto be relatively higher than the amounts incurred in 20242025 due to ourincremental refinancingfinancing inactivities, thebut fourthmitigated quarterby ofproactively 2024.securing favorable terms to reduce overall borrowing costs .
We expect to generate sufficient cash from operations and have sufficient capacity under our ABL credit facility to fund any working capital, capital expenditures, share repurchases, and debt payments in 2025.2026. The amount of cash generated or consumed by working capital is dependent on our level of revenues, customer cash advances, backlog, customer-driven delays and other factors. We will seek to improve our working capital utilization, with a particular focus on improving the management of accounts receivable, inventory and cost in excess of billings. In 2025,2026, our cash flows for investing activities will be focused on strategic initiatives, information technology software and infrastructure, general upgrades and cost reduction opportunities and we currently estimate capital expenditures to be between $15.0 million and $25.0 million, before consideration of any acquisition activity.opportunities.
The following table sets forth the disaggregation of revenue from sales associated with recent acquisitions for the twelve months ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31, 2025 compared to Year Ended December 31, 2024
SALES. Sales for the year ended December 31, 2025 increased $214.3 million, or 11.9%, to approximately $2.0 billion from $1.8 billion for the year ended December 31, 2024. The sales increase was primarily due to increased sales within our SC and IPS segments during the year ended December 31, 2025. Sales in our SC and IPS segments increased $136.4 million and $81.4 million, respectively, offset by a decrease in sales in our SCS segment of $3.5 million. The fluctuations in sales are further explained in our business segment discussions below.
Service Centers Segment. Sales for the SC segment increased by $136.4 million, or 11.0% for the year ended December 31, 2025, compared to the year ended December 31, 2024. Sales from recent acquisitions contributed $56.2 million during the twelve months ended December 31, 2025 compared to $36.9 million in the corresponding period. Total sales excluding recent acquisitions increased $117.1 million from the prior year's corresponding period. This sales increase was primarily due to an increase in larger projects with our customers within our Ohio River Valley, Southwest, Texas Gulf Coast, and California regions as well as metal working and air compressors division.
Innovative Pumping Solutions Segment. Sales for the IPS segment increased by $81.4 million, or 26.4% for the year ended December 31, 2025, compared to the year ended December 31, 2024. Sales from recent acquisitions contributed $39.9 million during the twelve months ended December 31, 2025 compared to $61.6 million in the corresponding period. Total sales excluding recent acquisitions increased $103.1 million from the prior year's corresponding period. The sales increase was primarily due to larger projects with customers. Additionally, the sales increase was also due to continuing diversification efforts into the water and wastewater end markets.
Supply Chain Services Segment. Sales for the SCS segment decreased by $3.5 million, or 1.4%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease in sales was primarily due to a decrease in business activity amongst our oil and gas customers.
GROSS PROFIT. Gross profit as a percentage of sales for the twelve months ended December 31, 2025 increased by approximately 67 basis points from the prior year's corresponding period. The increase during the period was primarily attributable to IPS sales, going from 17.1% of consolidated sales in 2024 to 19.4% of sales in 2025. Additionally, the increase in the gross profit percentage during the period was primarily attributable to IPS and SCS segments basis points increasing 166 basis points and 121 basis points, respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”). SG&A for the year ended December 31, 2025 increased by approximately $48.2 million, or 11.7%, to $459.1 million from $410.9 million for the prior year's corresponding period. SG&A attributable to acquisitions during the period increased by $4.6 million. Excluding acquisitions, the increase in SG&A is primarily the result of increased payroll, building expenses, depreciation, amortization, and IT expenses.
INCOME FROM OPERATIONS. Income from operations for the year ended December 31, 2025 increased by $31.5 million to $176.9 million from $145.4 million in the prior year's corresponding period. This increase in operating income is primarily related to the aforementioned increased business activity across all segments.
INTEREST EXPENSE. Interest expense for the year ended December 31, 2025 decreased $3.4 million compared to the prior year's corresponding period, primarily due to the Company refinancing its Senior Secured Term Loan B. Both of the Company's facilities are subject to a variable interest rate for the twelve months ended December 31, 2025.
PROVISION FOR INCOME TAX EXPENSE. Our effective tax rate from continuing operations was a tax expense of 25.6% for the twelve months ended December 31, 2025, compared to a tax expense of 17.0% for the twelve months ended December 31, 2024. Compared to the U.S. statutory rate for the twelve months ended December 31, 2025, the effective tax rate increased primarily due to return-to-provision adjustments related to the research and development credit, nondeductible expenses, limitations on executive compensation, and state income taxes, and was partially offset by discrete items, including the release of a reserve related to a historical acquisition method change and a tax-basis balance-sheet adjustment related to intangibles and goodwill.
SALES. Sales for the year ended December 31, 2024 increased $123.4 million, or 7.4%, to approximately $1.8 billion from $1.7 billion for the year ended December 31, 2023. The sales increase was primarily due to new acquisitions within our SC and IPS segments during the year ended December 31, 2024. Sales in our SC and IPS segments increased $23.1 million and $104.3 million, respectively, offset by a decrease in sales in our SCS segment of $4.0 million. The fluctuations in sales are further explained in our business segment discussions below.
Service Centers Segment. Sales for the Service Centers segment increased by $23.1 million, or 1.9% for the year ended December 31, 2024, compared to the year ended December 31, 2023. Sales from acquisitions for the SC segment increased by $17.7 million during the twelve months ended December 31, 2024. Total sales for the SC segment excluding acquisitions increased $5.4 million from the prior year's corresponding period. This sales increase was primarily due to increase in sales within our Ohio River Valley, Southwest, South Rockies, and Canada regions; partially offset by decreases in our North Rockies and Texas Gulf Coast regions.
Innovative Pumping Solutions Segment. Sales for the IPS segment increased by $104.3 million, or 47.7% for the year ended December 31, 2024, compared to the year ended December 31, 2023. Sales from acquisitions for the IPS segment increased $47.8 million during the twelve months ended December 31, 2024. Total sales for the IPS segment excluding acquisitions increased $56.5 million from the prior year's corresponding period. This sales increase was primarily due to increase in sales within our water and wastewater division, our international division, and overall increases in project related jobs due to increased capital spending by oil and gas producers and the renewables sector.
Supply Chain Services Segment. Sales for the SCS segment decreased by $4.0 million, or 1.5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The decrease in sales was primarily the result of decreases in sales in our oil & gas, resin, and power end-markets.
GROSS PROFIT. Gross profit as a percentage of sales for the twelve months ended December 31, 2024 increased by approximately 77 basis points from the prior year's corresponding period. The primary driver was an increase in contribution from IPS sales, going from 13.0% of consolidated sales in 2023 to 17.9% of sales in 2024. While IPS overall gross profit percentage decreased 148 basis points from 2023 to 2024, the decrease did not impact consolidated gross profit percentage due to IPS’ overall relative higher gross margins. Additionally, the increase in the gross profit percentage is primarily the result of an approximate 83 basis points and 114 basis points increase in the gross profit percentage in our SC and SCS segments, respectively, partially offset by an approximate 148 basis points decrease in our IPS segment.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”). SG&A for the year ended December 31, 2024 increased by approximately $44.3 million, or 12.1%, to $410.9 million from $366.6 million for the prior year's corresponding period. SG&A attributable to acquisitions during the period increased by $6.4 million. Excluding acquisitions, the increase in SG&A is primarily the result of increased professional fees, payroll expenses, incentive compensation and 401(k) expenses as a result of an increase in headcount during the period.
INCOME FROM OPERATIONS. Income from operations for the year ended December 31, 2024 increased by $6.7 million to $145.4 million from $138.7 million in the prior year's corresponding period. This increase in operating income is primarily related to the aforementioned increased business activity across all segments.
INTEREST EXPENSE. Interest expense for the year ended December 31, 2024 increased $10.8 million compared to the prior year's corresponding period, primarily due to an increase outstanding borrowings on the Term Loan B. Both of the Company's facilities are subject to a variable interest rate for the twelve months ended December 31, 2024.
PROVISION FOR INCOME TAX EXPENSE. Our effective tax rate from continuing operations was a tax expense of 17.0 percent for the twelve months ended December 31, 2024, compared to a tax expense of 20.8 percent for the twelve months ended December 31, 2023. Compared to the U.S. statutory rate for the twelve months ended December 31, 2024, the effective tax rate was increased by state taxes, foreign taxes, nondeductible expenses, and uncertain tax positions recorded for research and development tax credits and was partially offset by research and development tax credits and other tax credits.
Year Ended December 31, 2023 compared to Year Ended December 31, 2022
The following table sets forth the reconciliation of Acquisition Sales and Organic Sales to the most directly comparable U.S. GAAP financial measure (in thousands):
We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization,and less non-controlling interest.amortization. We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization plus stock-based compensation expense, non-controlling interest before taxesexpense and all other non-cash charges, adjustments, and non-recurring items. We identify the impact of all other non-cash charges, adjustments and non-recurring items because we believe these items do not directly reflect our underlying operations.
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. We continue to generate adequate cash from operating activities. We believe that our operating cash flow, cash on hand, and other sources of liquidity will be sufficient to allow us to continue investing in the business including capital expenditures, strategic acquisitions and investments, paying interest and servicing debt, repurchasing common stock when deemed appropriate, and managemanaging our capital structure on a short-term and long-term basis.
Our primary source of capital is cash flow from operations, supplemented as necessary by bank borrowings or other sources of debt and existing cash balances. As a distributor of MRO products and services, we require certain amounts of working capital to primarily fund inventories and accounts receivables.receivable. Additional cash is required for capital items for information technology, warehouse equipment, leasehold improvements, pump manufacturing and safety services equipment. We also require cash to pay our lease obligations, fund project work-in-process and to service our debt.
As of December 31, 2025, we had cash of $303.8 million and credit facility availability of $153.5 million. We have a $185.0 million asset-backed line of credit (the "ABL Revolver"), partially offset by letters of credit of $31.5 million. We had no borrowings outstanding on our ABL Revolver as of December 31, 2025.
As of December 31, 2024 and 2023, we had cash of $148.3 million and $173.1 million, respectively. The decrease in cash was primarily due to less cash flow from operating activities and an increase in acquisitions and capital expenditures from 2023 to 2024, partially offset by increased borrowings under the Company’s Amended Senior Secured Term Loan B and lower volume of share repurchases compared to 2023.
The CompanyWe generated $102.2$94.3 million of cash in operating activities during the year ended December 31, 20242025 compared to generating $106.2$102.2 million of cash during the prior year's corresponding period. The $4.0 million decrease in the amount of cash generated between the two periods was primarily driven by an increase in operating assets including trade accounts receivable partially offset by decreased inventory purchases and accrued expenses as compared to the prior period.
For the year ended December 31, 2024,2025, net cash used in investing activities was $181.7$99.2 million compared to $22.6$181.7 million used in the corresponding period in 2023.2024. The increase of $159.0$82.4 million decrease was primarily driven by anless increasesignificant in acquisition activitiesacquisitions during 2024the twelve months ended December 31, 2025. Total cash paid for acquisitions, net of cash acquired, was $61.7 million compared to 2023.$156.6 million for the twelve months ended December 31, 2024. Additionally, purchases of property and equipment was $15.2 million higher compared to the prior corresponding period.
For the year ended December 31, 2024,2025, net cash generated in financing activities was $56.8$158.9 million, compared to net cash generated in financing activities of $43.6$56.8 million for the corresponding period in 2023. For the year ended December 31, 2024, the Company repurchased approximately $29.0 million worth of outstanding shares compared to $56.2 million worth of outstanding shares for the year ended December 31, 2023.2024. The net inflow of cash from financing activities in 20242025 was a benefitprimarily driven by the refinancing of our existing Senior Secured Term Loan B.B Debtand issuanceraising an incremental $205.0 million. Deferred financing costs associated with therefinancing amendment of our new Term Loan Bactivity was $1.8$3.2 million for the year ended December 31, 2024.2025.
WorkingWe monitor net working capital, which excludes cash and restricted cash, short-term debt obligations, and short-term operating leases. Net working capital as of December 31, 20242025 was $296.3$361.7 million, an increase of $20.9$70.7 million compared to $275.4$291.0 million as of December 31, 2023.2024. The increase was primarily due to sustained sales growth and acquisitions.
For a discussion of the Company’s acquisitions refer to Note 16 to- theBusiness Consolidated Financial Statements.Acquisitions. In 20242025 and 2023,2024, the Company invested $156.6$61.7 million and $10.4$156.6 million, respectively, in acquisitions.acquisitions, net of cash acquired.
In fiscal 2024, theThe Company's capital expenditures were $25.1$40.3 million and $12.3$25.1 million for the years ended December 31, 20242025 and 2023,2024, respectively. Capital expenditures for 2025 is expected to be in the range of $15.0 and $25.0 million. This includes continued facility enhancements, tools and equipment, software and technology enhancements across the Company.
On December 16, 2025, the Company amended its Senior Secured Term Loan B.
The Company under our Amended Senior Secured Term Loan B is required to make equal quarterly principal payments of 0.25%, with the remaining balance being payable on October 13, 2030. For Fiscal Year 20242025 and 2023,2024, the Company made cash principal payments of $5.7$7.1 million and $4.7$5.7 million, respectively. Additionally, the Company makes quarterly interest payments that accrue on outstanding borrowings under the Amended Senior Secured Term Loan B at a rate equal to Term SOFR (with a floor of 1.00%) plus 3.75%,3.25%, or base rate plus 2.75%.2.25%. The interest rate for the Amended Senior Secured Term Loan B was 8.32%7.17% as of December 31, 2024.2025. The interest rate for the Senior Secured Term Loan B was 10.44%8.32% as of December 31, 2023. For Fiscal Year 2024 and 2023, the Company made cash interest payments of $59.8 million and $49.0 million, respectively. See Note 9 to the Consolidated Financial Statements.2024.
For Fiscal Year 2025 and 2024, the Company made cash interest payments of $53.7 million and $67.0 million on its outstanding debt, respectively. See Note 9 - Long-Term Debt to the Consolidated Financial Statements.
The Company has trade receivables from a diversified customer base located primarily in the Rocky Mountain, Northeastern, Midwestern, Southeastern and Southwestern regions of the U.S., and Canada. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers' financial positions and monitors accounts on a regular basis, but generally does not require collateral. Provisions to the allowance for doubtful accounts (or allowance for credit losses) are made monthly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of the collectability of such accounts under the current expected credit losses model. The Company writes-offwrites off uncollectible trade accounts receivable when the accounts are determined to be uncollectible. No customer represents more than 10% of consolidated sales.
Valuation of Goodwill
Impairment of Goodwill, Other Intangible Assets, and Long-Lived Assets
Our methodology for allocating the purchase price relating to business acquisitions is determined through established valuation techniques. Goodwill represents a residual value as of the acquisition date, which in most cases results in measuring goodwill as an excess of the purchase consideration transferred over the fair value of net assets acquired, including contingent consideration. The Company tests goodwill and other intangible assets for impairment annually on October 1st and when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assigns the carrying value of these intangible assets to its “reporting units” and applies the test for goodwill at the reporting unit level. A reporting unit is defined as an operating segment or one level below a segment (a “component”) if the component is a business and discrete information is prepared and reviewed regularly by segment management.
For the periods presented herein, a quantitative assessment was not required based on the qualitative assessment.
What changed in the latest 10-Q
Risk Factors
There have been no other changes to the risk factors as previously disclosed in “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year end December 31, 2025.
Largest changes
“The Company regularly claims federal income tax credits for the research activities it conducts related to its manufacturing activities. The Company has recognized a total of $37.0 million as of the third quarter of 2025 in federal income tax credits for the research activities from 2015 thru 2025. The Internal Revenue Service (“IRS”) is conducting an examination of the Company’s U.S. federal income tax returns for its 2018 tax year. …”see in full comparison
Full comparison: every changed paragraph (2)
The Company regularly claims federal income tax credits for the research activities it conducts related to its manufacturing activities. The Company has recognized a total of $37.0 million as of the third quarter of 2025 in federal income tax credits for the research activities from 2015 thru 2025. The Internal Revenue Service (“IRS”) is conducting an examination of the Company’s U.S. federal income tax returns for its 2018 tax year. The Company received Notices of Proposed Adjustment in October 2024, which if sustained, would result in a loss of federal income tax credits for research activities claimed by the Company during that tax year. The Company intends to vigorously defend its reported positions. The Company has currently accrued a reserve relating to the potential tax adjustments. However, the outcome of this dispute involves a number of uncertainties, including those relating to the application of the Internal Revenue Code and other federal income tax authorities and judicial precedent. Accordingly, there can be no assurance that the dispute with the IRS will be resolved favorably. If the IRS materially reduces or disallows our federal income tax credits for research activities, it may have a material adverse effect on our business and financial condition.
Other than the risk factors noted above, thereThere have been no other changes to the risk factors as previously disclosed in “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year end December 31, 2025.
Management's Discussion & Analysis (MD&A)
New heading “Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025”
Largest changes
“Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025”see in full comparison
“On July 20, 2026, we received an updated credit rating from Standard and Poor's ("S&P"), upgrading our issuer credit and issue-level rating from B to B+. This upgrade provides the capital markets with an updated view on our comparative credit risk which can impact future borrowing costs, and our ability to access funding efficiently.”see in full comparison
“Supply Chain Services segment. Sales for the SCS segment increased by $2.1 million, or 1.6 percent, for the six months ended June 30, 2026, compared to the prior year's corresponding period.”see in full comparison
“INCOME TAXES. Our effective tax rate from continuing operations was a tax expense of 26.6 percent for the six months ended June 30, 2026, compared to a tax expense of 24.8 percent for the six months ended June 30, 2025. …”see in full comparison
“Service Centers segment. Sales for the SC segment increased by $39.1 million, or 5.9 percent for the six months ended June 30, 2026, compared to the prior year's corresponding period. Sales from recent acquisitions for the SC segment contributed $8.6 million during the period as compared to $33.5 million during the six months ended June 30, 2025. Total sales for the SC segment excluding acquisitions increased $64.0 million from the prior year's corresponding period. …”see in full comparison
“On July 2, 2026, the Company entered into a Second Amended and Restated Loan and Security Agreement (the “Second A&R Credit Agreement”). The ABL Credit Agreement provides for asset-based revolving loans (the “ABL Loans”) in an aggregate principal amount of up to $225.0 million. The ABL Facility may be increased by up to an aggregate of $50.0 million, in minimum increments of $10.0 million. The ABL Credit Agreement amends and restates the Amended and Restated Loan and Security Agreement dated as of July 19, 2022. The ABL Facility will mature on July 2, 2031. …”see in full comparison
Full comparison: every changed paragraph (45)
The following management discussion and analysis ("MD&A") of the financial condition and results of operations of DXP Enterprises, Inc. together with its subsidiaries (collectively "DXP," "Company," "us," "we," or "our") for the threesix months ended MarchJune 31,30, 2026 should be read in conjunction with our previous Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, and the consolidated financial statements and notes thereto included in such reports. The Company's consolidated financial statements are prepared in accordance with U.S. GAAP.
Overview
General
DXP Enterprises, Inc. is a business-to-business distributor of MRO products and services to a variety of customers in different end markets acrosswith operations primarily in North America and Dubai.America. Additionally, we fabricate,provide remanufacture,engineered solutions including, fabrication, remanufacturing, and assembleassembling of custom pump packages along with manufacturing branded private label pumps.
The replacement and mission-critical nature of our products and services within the Company's Service Centers and Innovative Pumping Solutions business segments and industrial and manufacturing environments and processes drives a demand and outlook that are correlated with global, national and regional industrial production, capacity utilization and long-term GDP growth. For the threesix months ended MarchJune 31,30, 2026, we had approximately $456.6$967.3 million in sales in our Service Centers and Innovative Pumping Solutions segments, an increase of approximately 10.514.3 percent compared to the threesix months ended MarchJune 31,30, 2025. Our performance has been strengthened by our ability to maintain strong margins despite price increases from vendors and suppliers. During the threesix months ended MarchJune 31,30, 2026, $5.7$8.6 million in sales in our Service Centers (SC) segment and $35.0$82.0 million in sales in our Innovative Pumping Solutions (IPS) segment were associated with acquisitionrecent sales.acquisition.
For the threesix months ended MarchJune 31,30, 2026, we had approximately $65.0$130.8 million in sales in our Supply Chain Services (SCS) segment, an increase of approximately 2.71.6 percent compared to the threesix months ended MarchJune 31,30, 2025.
Our results of operations are not directly comparable on a year-over-year basis due to various prior acquisitions and the varying size and number of acquisitions in any comparable period. Accordingly, the results of acquisitions are included subsequent to their respective acquisition dates and the Company provides detail around Organic and Acquisition Sales as defined in our Key Business Metrics. During the threesix months ended MarchJune 31,30, 2026, acquisition sales were $40.7$90.6 million compared to $31.1$55.7 million for the threesix months ended MarchJune 31,30, 2025.
Three Months Ended MarchJune 31,30, 2026 compared to Three Months Ended MarchJune 31,30, 2025
The following tables sets forth the disaggregation of revenue from sales associated with acquisitions for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands) :
SALES. Sales for the three months ended MarchJune 31,30, 2026 increased $45.1$77.8 million, or 9.515.6 percent, to approximately $521.7$576.5 million from $476.6$498.7 million for the prior year's corresponding period, of which recent acquisitions contributed $40.7$49.8 million. Additionally, the overall increase in sales was the result of an increase in sales in our SC, IPS, and SCS segments of $10.9$28.2 million, $32.5$49.2 million, and $1.7$0.4 million, respectively. The fluctuations in sales are further explained in our business segment discussions below.
Service Centers segment. Sales for the SC segment increased $10.9$28.2 million, or 3.38.3 percent, for the three months ended MarchJune 31,30, 2026, compared to the prior year's corresponding period. Excluding the impact of recent acquisitions, sales grew $23.1$40.9 million, this sales increase was the result of increases within our OhioCalifornia, RiverGulf Valley,Coast, California,Southeast, North Texas, South East,Central and South Rockies regions as well as our metal working division totaling $24.7$31.9 million due to an increase in shipped product revenue during the period,million, offset by decreases in sales withinin our SouthSouthwest West region of $4.1 million.region. Sales from recent acquisitions contributed $5.7$2.9 million during the periodperiod, compared to $17.9$15.6 million for the three months ended MarchJune 31,30, 2025.
Innovative Pumping Solutions segment. Sales for the IPS segment increased $32.5$49.2 million, or 37.752.6 percent, for the three months ended MarchJune 31,30, 2026, compared to the prior year's corresponding period. This sales increase was the result of increases within our water and wastewater division and increased production contracts totaling $10.6$11.3 million.million, as well as strategic acquisitions within the IPS segment. Sales from recent acquisitions contributed $35.0$47.0 million during the period asperiod, compared to $13.2$9.0 millionmillion, for the three months ended MarchJune 31,30, 2025.
Supply Chain Services segment. Sales for the SCS segment increased by $1.7$0.4 million, or 2.70.6 percent, for the three months ended MarchJune 31,30, 2026, compared to the prior year's corresponding period. This was primarily due to the onboarding of new customers and their related facilities, partially offset by decreased activity with existing customers.
GROSS PROFIT. Gross profit margin for the three months ended MarchJune 31,30, 2026 was 32.331.8 percent compared to 31.531.6 percent for the prior year's corresponding period. The gross profit margin for the three months ended MarchJune 31,30, 2026 was positively impacted by 7911 basis points due to recent acquisitions and continuing margin expansion efforts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"). SG&A for the three months ended MarchJune 31,30, 2026 increased by $16.4$15.7 million, or 14.914.1 percent, to $126.1$127.6 million from $109.8$111.8 million for the prior year's corresponding period. The increase in SG&A is primarily the result of increased payroll related costs, depreciation and amortization, rentrent, insurance, and professional fees.
OPERATING INCOME. Operating income for the firstsecond quarter of 2026 increased by $2.0$9.5 million to $42.5$55.5 million, from $40.5$46.0 million in the prior year's corresponding period. This increase in operating income was primarily driven by increases in our SCSC, segment.IPS, and SCS segments.
INTEREST EXPENSE. Interest expense for the firstsecond quarter of 2026 increased $1.8$2.1 million compared to the prior year's corresponding period. This increase was primarily due to the Company refinancing its Term Loan B during the fourth quarter of 2025.
INCOME TAXES. Our effective tax rate for continuing operations was 25.027.7 percent for the three months ended MarchJune 31,30, 2026, compared to 24.225.3 percent for the three months ended MarchJune 31,30, 2025. Compared to the U.S. statutory rate for the three months ended MarchJune 31,30, 2025, the effective tax rate increased slightly, primarily due to discrete items, including updates to the tax reserves, which reflect our ongoing assessment of uncertain tax positions, including research and development tax credits for which we believe our position is supportable and intend to dispute any proposed IRS adjustments, a decrease in tax benefits related to stock-based compensation vested during the period, net of amounts limited by Section 162(m), a lower benefit from research and development tax credits, and an increase in non-deductible expenses.
Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025
The following tables sets forth the disaggregation of revenue from sales associated with acquisitions for the six months ended June 30, 2026 and 2025 (in thousands) :
SALES. Sales for the six months ended June 30, 2026 increased $122.9 million, or 12.6 percent, to approximately $1.1 billion from $1.0 billion for the prior year's corresponding period, of which recent acquisitions contributed $90.6 million during the year. Additionally, the overall increase in sales was the result of an overall increase in sales within our SC, IPS, and SCS segments of $39.1 million, $81.7 million, and $2.1 million. The fluctuations in sales are further explained in our business segment discussions below.
Service Centers segment. Sales for the SC segment increased by $39.1 million, or 5.9 percent for the six months ended June 30, 2026, compared to the prior year's corresponding period. Sales from recent acquisitions for the SC segment contributed $8.6 million during the period as compared to $33.5 million during the six months ended June 30, 2025. Total sales for the SC segment excluding acquisitions increased $64.0 million from the prior year's corresponding period. This sales increase was primarily the result of increased business activity within the majority of our regions, offset by a decrease in project-related work compared to the prior year's corresponding period.
Innovative Pumping Solutions segment. Sales for the IPS segment increased by $81.7 million, or 45.4 percent for the six months ended June 30, 2026 compared to the prior year's corresponding period. Sales from acquisitions for the IPS segment contributed $82.0 million during the period compared to $22.2 million during the six months ended June 30, 2025. Excluding the impact of recent acquisitions, sales increased within our water and wastewater end market, due to the increased projects compared to the prior year's corresponding period.
Supply Chain Services segment. Sales for the SCS segment increased by $2.1 million, or 1.6 percent, for the six months ended June 30, 2026, compared to the prior year's corresponding period.
GROSS PROFIT. Gross profit margin for the six months ended June 30, 2026 was 32.0 percent compared to 31.6 percent for the prior year's corresponding period. The gross profit margin for the six months ended June 30, 2026 was positively impacted by 44 basis points due to recent acquisitions and continuing margin expansion efforts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"). SG&A for the six months ended June 30, 2026 increased by approximately $32.1 million, or 14.5 percent, to $253.7 million from $221.6 million for the prior year's corresponding period. The increase in SG&A is primarily the result of increased payroll related costs, depreciation and amortization, rent, insurance, and professional fees.
OPERATING INCOME. Operating income for the six months ended June 30, 2026 increased by $11.5 million or 13.3 percent to $98.0 million from $86.5 million in the prior year's corresponding period. This increase in operating income was primarily driven by increases in our SC, IPS, and SCS segments.
INTEREST EXPENSE. Interest expense for the six months ended June 30, 2026 increased $3.9 million compared with the prior year's corresponding period. This increase was primarily due to the Company refinancing its Term Loan B during the fourth quarter of 2025.
INCOME TAXES. Our effective tax rate from continuing operations was a tax expense of 26.6 percent for the six months ended June 30, 2026, compared to a tax expense of 24.8 percent for the six months ended June 30, 2025. The effective tax rate increased primarily due to discrete items, including updates to the tax reserves, which reflect our ongoing assessment of uncertain tax positions, including research and development tax credits for which we believe our position is supportable and intend to dispute any proposed IRS adjustments, a decrease in tax benefits related to stock-based compensation vested during the period, net of amounts limited by Section 162(m), and an increase in non-deductible expenses.
We assess our liquidity in terms of our ability to generate cash to fund our operating, investinginvesting, and financing activities. We continue to generate adequate cash from operating activities. We believe that our operating cash flow, cash on hand, and other sources of liquidity including our ABL and Term Loan B, will be sufficient to allow us to continue investing in the business including capital expenditures, strategic acquisitions and investments, paying interest and servicing debt, and repurchasing common stock when deemed appropriate.
As of MarchJune 31,30, 2026, we had available cash of $213.4$226.6 million and credit facility availability of $153.3$147.9 million. We have a $185.0 million asset-backed line of credit (the "ABL Revolver"), partially offset by letters of credit of $31.7$37.1 million. We had no borrowings outstanding on our ABL Revolver as of MarchJune 31,30, 2026.
The following table summarizes our net cash flows provided by and used in operating activities, investing activitiesactivities, and financing activities for the periods presented (in thousands):
The Company generated $29.6$62.0 million of cash from operating activities during the threesix months ended MarchJune 31,30, 2026 compared to $3.0$21.6 million of cash generated during the prior year's corresponding period. The increase of $26.6$40.3 million was primarily due to higher net income during the period and a reduction in tax payments in 2025 compared to 2026.the prior corresponding period.
For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $106.0$118.3 million compared to a $30.1$41.4 million use of cash during the prior year’s corresponding period. This $75.9$76.9 million increase was primarily driven by increased acquisition activity during the threesix months ended MarchJune 31,30, 2026. Total consideration, net of cash acquired, was $102.7$112.9 millionmillion, compared to $12.9$13.9 million for the threesix months ended MarchJune 31,30, 2025.
For the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities was $13.1$19.0 million, compared to net cash used in financing activities of $7.1$16.6 million during the prior year’s corresponding period. The decreaseincrease was primarily due to theincreases timing ofin shares withheld for taxes relating to shares vesting compared to prior corresponding period.period and increased principal debt repayments.
At MarchJune 31,30, 2026, our total outstanding debt was $844.7$842.5 million, or 62.360.9 percent of total capitalization (total debt plus shareholders' equity) of $1.4 billion. $843.8$841.6 million of this outstanding debt bears interest at various floating rates. For a further discussion of the Company's debt refer to Note 8. Long-Term Debt.
At MarchJune 31,30, 2026, the Company had $366.7$374.5 million of liquidity including $213.4$226.6 million in cash and $153.3$147.9 million in availability under the ABL Revolver.
On July 2, 2026, the Company entered into a Second Amended and Restated Loan and Security Agreement (the “Second A&R Credit Agreement”). The ABL Credit Agreement provides for asset-based revolving loans (the “ABL Loans”) in an aggregate principal amount of up to $225.0 million. The ABL Facility may be increased by up to an aggregate of $50.0 million, in minimum increments of $10.0 million. The ABL Credit Agreement amends and restates the Amended and Restated Loan and Security Agreement dated as of July 19, 2022. The ABL Facility will mature on July 2, 2031. For further discussion refer to Note 17. Subsequent Events.
Credit Ratings
On July 20, 2026, we received an updated credit rating from Standard and Poor's ("S&P"), upgrading our issuer credit and issue-level rating from B to B+. This upgrade provides the capital markets with an updated view on our comparative credit risk which can impact future borrowing costs, and our ability to access funding efficiently.
On July 1, 2025, the Company entered into an Increase Agreement (the “Increase Agreement”) to which the aggregate commitments under the Company's existing asset-based revolving credit facility (the "ABL Facility") were increased by $50 million. Following the effectiveness of the Increase Agreement, the total commitments under the ABL Facility increased from $135.0 million to $185.0 million.
We monitor net working capital, which excludes cash and restricted cash, short-term debt obligations, and short-term operating leases. Net working capital as of MarchJune 31,30, 2026 was $379.6$393.3 million, an increase of $17.9$31.7 millionmillion, compared to $361.7 million as of December 31, 2025. The increase was primarily due to sustained sales growth and acquisitions.
For a discussion of the Company’s acquisitions refer to Note 12. Business Acquisitions. During MarchJune 31,30, 2026 and 2025, the Company invested $102.7$112.9 million and $12.9$13.9 million, respectively, in acquisitions.
The Company's capital expenditures was $3.3$5.9 million and $19.9$30.3 million for the threesix months ended MarchJune 31,30, 2026 and 2025 respectively. This includes continued facility upgrades and enhancements, tools and equipment, and enhancements across the Company.
The Company's unaudited condensed financial statements are prepared in accordance with U.S. GAAP. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared on substantially the same basis as our annual Consolidated Financial Statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025. For a more complete discussion of our significant accounting policies and business practices, refer to the consolidated Annual Report on Form 10-K filed with the SEC on February 26, 2026. The results of operations for the threesix months ended MarchJune 31,30, 2026 are not necessarily indicative of results expected for the full fiscal year.
DXPE insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 3 filings (3 insiders, 3 trade dates, 17,942 shares, about $2.8M). Net open-market shares: -17,942 (purchases minus sales); net value about -$2.8M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-29 | Little David R |
Gift | 50,000 | — | — |
| 2026-07-08 | Mannes Joseph R |
Grant/award | 648 | $165.90 | $107.5K |
| 2026-07-07 | Hoffman Karen |
Grant/award | 648 | $165.90 | $107.5K |
| 2026-07-07 | Patton David |
Grant/award | 648 | $165.90 | $107.5K |
| 2026-07-07 | Halter Timothy P |
Grant/award | 648 | $165.90 | $107.5K |
| 2026-06-15 | Santos David Molero |
Open-market sale | 1,100 | $171.50 | $188.7K |
| 2026-06-11 | Maestas Paz |
Open-market sale | 10,000 | $164.37 | $1.6M |
| 2026-05-29 | Santos David Molero |
Shares withheld for tax | 194 | $144.20 | $28.0K |
| 2026-05-21 | Halter Timothy P |
Open-market sale | 6,842 | $141.59 | $968.8K |
| 2026-05-15 | Little David R |
Gift | 90,000 | — | — |
| 2026-05-07 | Little David R |
Gift | 1,000 | — | — |
| 2026-04-16 | Little Nicholas |
Shares withheld for tax | 5,821 | $138.82 | $808.1K |
Well-known investors holding DXPE (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 69,209 | $11.7M | 0.02% | Added 53% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 25,344 | $4.3M | 0.0% | Added 15% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 11,893 | $2.0M | 0.0% | Added 213% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 5,711 | $963.7K | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 2,627 | $443.3K | 0.0% | Reduced 87% |
| Millennium Management (Israel Englander) | 2026-06-30 | 2,559 | $431.8K | 0.0% | Reduced 82% |
| D. E. Shaw & Co. | 2026-06-30 | 2,494 | $420.8K | 0.0% | No change |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 1,255 | $211.8K | 0.0% | New position |