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What changed in DXP ENTERPRISES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of DXP ENTERPRISES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+223 added−204 removedSource: 10-K (2026-02-26) vs 10-K (2025-03-10)

Top changes in DXP ENTERPRISES INC's 2025 10-K

223 paragraphs added · 204 removed · 180 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

82 edited+22 added−11 removed52 unchanged
Biggest changeOur strategies to increase productivity include consolidated purchasing programs, centralizing product distribution, customer service and inside sales functions, and using information technology to increase employee productivity. 34 Table of Contents Consolidated Results of Operations Twelve Months Ended December 31, 2024 % 2023 % 2022 % ( in millions, except percentages and per share amounts ) Sales $ 1,802.0 100.0 $ 1,678.6 100.0 $ 1,480.8 100.0 Cost of sales 1,245.8 69.1 1,173.3 69.9 1,058.8 71.5 Gross profit 556.2 30.9 505.3 30.1 422.0 28.5 Selling, general and administrative expenses 410.9 22.8 366.6 21.8 324.3 21.9 Income from operations 145.3 8.1 138.7 8.3 97.7 6.6 Interest expense 63.9 3.5 53.1 3.2 29.1 2.0 Other (income) expense, net (3.5) (0.2) (1.4) (0.1) 2.7 0.2 Income before income taxes 84.9 4.7 87.0 5.2 65.9 4.5 Provision for income tax expense 14.5 0.8 18.1 1.1 17.8 1.2 Net income 70.4 3.9 68.9 4.1 48.1 3.2 Net loss attributable to noncontrolling interest — — — — (0.1) — Net income attributable to DXP Enterprises, Inc. $ 70.4 3.9 $ 68.9 4.1 $ 48.2 3.3 Earning per share: Basic $ 4.44 $ 4.07 $ 2.58 Diluted $ 4.22 $ 3.89 $ 2.47 Year Ended December 31, 2024 compared to Year Ended December 31, 2023 SALES.
Biggest changeOur strategies to increase productivity include consolidated purchasing programs, centralizing product distribution, customer service and inside sales functions, and using information technology to increase employee productivity. 35 Table of Contents Consolidated Results of Operations Twelve Months Ended December 31, 2025 % 2024 % 2023 % ( in millions, except percentages and per share amounts ) Sales $ 2,016.4 100.0 $ 1,802.0 100.0 $ 1,678.6 100.0 Cost of sales 1,380.5 68.5 1,245.8 69.1 1,173.3 69.9 Gross profit 635.9 31.5 556.2 30.9 505.3 30.1 Selling, general and administrative expenses 459.1 22.8 410.9 22.8 366.6 21.8 Income from operations 176.8 8.8 145.3 8.1 138.7 8.3 Interest expense 60.5 3.0 63.9 3.5 53.1 3.2 Other (income) expense, net (2.9) (0.1) (3.5) (0.2) (1.4) (0.1) Income before income taxes 119.2 5.9 84.9 4.7 87.0 5.2 Provision for income tax expense 30.5 1.5 14.5 0.8 18.1 1.1 Net income $ 88.7 4.4 $ 70.4 3.9 $ 68.9 4.1 Earning per share: Basic $ 5.65 $ 4.44 $ 4.07 Diluted $ 5.37 $ 4.22 $ 3.89 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) : Sales Acquisition Sales Organic Sales Twelve Months Ended December 31, 2025 Service Centers $ 1,373,140 $ 56,164 $ 1,316,976 Innovative Pumping Solutions 390,291 39,879 350,412 Supply Chain Services 252,934 — 252,934 Total Sales $ 2,016,365 $ 96,043 $ 1,920,322 Twelve Months Ended December 31, 2024 Service Centers (1) $ 1,236,775 $ 36,944 $ 1,199,831 Innovative Pumping Solutions (1) 308,850 61,556 247,294 Supply Chain Services 256,415 — 256,415 Total Sales $ 1,802,040 $ 98,500 $ 1,703,540 $ Change Service Centers $ 136,365 $ 19,220 $ 117,145 Innovative Pumping Solutions 81,441 (21,677) 103,118 Supply Chain Services (3,481) — (3,481) Total $ Change $ 214,325 $ (2,457) $ 216,782 % Change Service Centers 11.0 % 52.0 % 9.8 % Innovative Pumping Solutions 26.4 % (35.2) % 41.7 % Supply Chain Services (1.4) % N/A (1.4) % Total % Change 11.9 % (2.5) % 12.7 % (1) Prior period segment disclosures have been recast.
The following table summarizes the Company’s credit ratings as of December 31, 2024: Corporate Senior Secured Moody’s B1 B2 S&P B B Free Cash Flow We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase shares of the Company's common stock, and for other activities.
The following table summarizes the Company’s credit ratings as of December 31, 2025: Corporate Senior Secured Moody’s B1 B2 S&P B B Free Cash Flow We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase shares of the Company's common stock, and for other 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 manage our capital structure on a short-term and long-term basis.
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 managing 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.
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 receivable.
Year Ended December 31, 2023 compared to Year Ended December 31, 2022 For the full year 2023 to 2022 comparative discussion, see Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 incorporated by reference in this Annual Report on Form 10-K.
Year Ended December 31, 2024 compared to Year Ended December 31, 2023 For the full year 2024 to 2023 comparative discussion, see Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 incorporated by reference in this Annual Report on Form 10-K.
Our key non-U.S. GAAP business metrics may be calculated in a different manner than similarly titled metrics used by other companies. See “Non-U.S. GAAP Financial Measures and Reconciliations” for additional information on non-U.S. GAAP financial measures and a reconciliation to the most comparable U.S. GAAP measures.
GAAP business metrics may be calculated in a different manner than similarly titled metrics used by other companies. See “Non-U.S. GAAP Financial Measures and Reconciliations” for additional information on non-U.S. GAAP financial measures and a reconciliation to the most comparable U.S.
We do not expect that there will be material change in the future estimates or assumptions we use to complete the purchase price allocation and estimate the fair values of acquired assets and liabilities for the acquisitions completed in fiscal year 2024.
We do not expect that there will be material change in the future estimates or assumptions we use to complete the purchase price allocation and estimate the fair values of acquired assets and liabilities for the acquisitions completed in fiscal year 2025.
With few exceptions, the Company is no longer subject to U. S. federal, state and local tax examination by tax authorities for years prior to 2016. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses.
With few exceptions, the Company is no longer subject to U. S. federal, state and local tax examination by tax authorities for years prior to 2015. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses.
Our effective tax rate in a given period could be impacted if, upon final resolution with taxing authorities, we prevail on positions for which unrecognized tax benefits have been accrued, or are required to pay amounts in excess of accrued unrecognized tax benefits. 43 Table of Contents The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states.
Our effective tax rate in a given period could be impacted if, upon final resolution with taxing authorities, we prevail on positions for which unrecognized tax benefits have been accrued, or are required to pay amounts in excess of accrued unrecognized tax benefits. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states.
The following table sets forth the reconciliation of Acquisition Sales and Organic Sales to the most comparable U.S.
The following table sets forth the reconciliation of Acquisition Sales and Organic Sales to the most directly comparable U.S.
Our Free Cash Flow, which is calculated as cash provided by operations less net purchase of property and equipment, was $77.1 million, $94.0 million and $1.0 million for years 2024, 2023 and 2022, respectively. Free Cash Flow is not a measure of liquidity under U.S. GAAP, and may not be defined and calculated by other companies in the same manner.
Our Free Cash Flow, which is calculated as cash provided by operations less net purchase of property and equipment, was $54.0 million, $77.1 million and $94.0 million for years 2025, 2024 and 2023, respectively. Free Cash Flow is not a measure of liquidity under U.S. GAAP, and may not be defined and calculated by other companies in the same manner.
The Company's products are marketed in the U.S., Canada, Mexico, U.A.E., and India to customers that are engaged in a variety of industries, many of which may be counter cyclical to each other.
The Company's products are marketed in the U.S., Canada, Mexico, U.A.E., India, and Saudi Arabia to customers that are engaged in a variety of industries, many of which may be counter cyclical to each other.
Historically, payments made related to these indemnities have been immaterial. 40 Table of Contents DISCUSSION OF CRITICAL ACCOUNTING ESTIMATES The Consolidated Financial Statements of the Company are prepared in accordance with U.S.
Historically, payments made related to these indemnities have been immaterial. 42 Table of Contents DISCUSSION OF CRITICAL ACCOUNTING ESTIMATES The Consolidated Financial Statements of the Company are prepared in accordance with U.S.
Quantitative and Qualitative Disclosure about Market Risk Liquidity We believe our cash generated from operations will meet our normal working capital needs during the next twelve months. However, we may require additional debt outside of our credit facilities or equity financing to fund potential acquisitions.
Quantitative and Qualitative Disclosure about Market Risk 40 Table of Contents Liquidity We believe our cash generated from operations will meet our normal working capital needs during the next twelve months. However, we may require additional debt outside of our credit facilities or equity financing to fund potential acquisitions.
Item 1A. Risk Factors . General Overview The Company is a leading North American distributor of technical products and services. Our comprehensive knowledge, specialized services and leading brands serve MRO, OEM and capital equipment end users in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, expertise, timely response and an overall ease of doing business.
General Overview The Company is a leading North American distributor of technical products and services. Our comprehensive knowledge, specialized services and leading brands serve MRO, OEM and capital equipment end users in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, expertise, timely response and an overall ease of doing business.
The historical loss rates for each respective age bucket are then adjusted for current conditions using reasonable and supportable data points. The overall allowance is adjusted accordingly based upon historical experience and economic factors that impact our business and customers. At December 31, 2024, the allowance was approximately 1.5% of the gross accounts receivable.
The historical loss rates for each respective age bucket are then adjusted for current conditions using reasonable and supportable data points. The overall allowance is adjusted accordingly based upon historical experience and economic factors that impact our business and customers. At December 31, 2025, the allowance was approximately 1.0% of the gross accounts receivable.
Estimated costs are based primarily on purchase contract terms and assumptions relating to terms such as estimated cost of materials, labor productivity and cost, and overhead. The uncertainty as to the future availability of materials and labor resources could affect the Company's ability to accurately estimate future contract costs.
Estimated costs are based primarily on purchase contract terms and assumptions relating to terms such as 44 Table of Contents estimated cost of materials, labor productivity and cost, and overhead. The uncertainty as to the future availability of materials and labor resources could affect the Company's ability to accurately estimate future contract costs.
Organic Sales per Business Days We define and calculate Organic Sales per Business Day as Organic Sales divided by the number of Business Days in the relevant reporting period. 32 Table of Contents EBITDA and Adjusted EBITDA We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization, and non-controlling interest.
Organic Sales per Business Days We define and calculate Organic Sales per Business Day as Organic Sales divided by the number of Business Days in the relevant reporting period. 33 Table of Contents EBITDA and Adjusted EBITDA We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization.
Contractual and Other Obligations 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 2024 and 2023, the Company made cash principal payments of $5.7 million and $4.7 million, respectively.
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 2025 and 2024, the Company made cash principal payments of $7.1 million and $5.7 million, respectively.
As a result, we may experience changes in demand within particular markets, segments and product categories as changes occur in our customers' respective markets. 31 Table of Contents Key Business Metrics We regularly monitor several financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
As a result, we may experience changes in demand within particular markets, segments and product categories as changes occur in our customers' respective markets. Key Business Metrics We regularly monitor several financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Our key non-U.S.
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%, or base rate plus 2.75%. The interest rate for the Amended Senior Secured Term Loan B was 8.32% as of December 31, 2024.
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 3.25%, or base rate plus 2.25%. The interest rate for the Amended Senior Secured Term Loan B was 7.17% as of December 31, 2025.
Below are readings for the fourth quarter versus the full year average: Index Reading Period MCU PMI IP MBI Active Drilling Rigs (1) October 77.0 46.5 102.1 43.9 1,754 November 77.0 48.4 102.3 44.7 1,708 December 77.6 49.3 103.2 46.9 1,660 Fiscal 2024 Q4 average 77.2 48.1 102.5 45.2 1,707 Fiscal 2024 average 77.6 48.3 102.6 45.7 1,735 Fiscal 2023 average 79.3 47.1 102.8 46.5 1,814 Fiscal 2022 average 79.7 53.5 103.9 53.9 1,747 (1) From Baker Hughes’ Worldwide Rig Counts - Current Data 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.
Below are readings for the fourth quarter versus the full year average: Index Reading Period MCU PMI IP MBI Active Drilling Rigs (1) October 75.8 48.7 101.5 49.2 1,800 November 76.1 48.2 102.0 48.1 1,813 December 76.3 47.9 102.3 48.5 1,783 Fiscal 2025 Q4 average 76.1 48.3 101.9 48.6 1,799 Fiscal 2025 average 76.4 48.9 102.0 48.6 1,819 Fiscal 2024 average 77.6 48.3 102.6 45.7 1,735 Fiscal 2023 average 79.3 47.1 102.8 46.5 1,814 (1) From Baker Hughes’ Worldwide Rig Counts - Current Data 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.
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.
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.
For additional information, please refer to Note 20 . Segment Reporting . 36 Table of Contents EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization, less non-controlling interest.
For additional information, please refer to Note 20. Segment Reporting . EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization.
GAAP financial measure (in thousands) : Twelve Months Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 102,211 $ 106,222 $ 5,894 Less: purchases of property and equipment, net (25,068) (12,263) (4,916) Free Cash Flow $ 77,143 $ 93,959 $ 978 37 Table of Contents Liquidity and Capital Resources General Overview We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.
GAAP financial measure (in thousands) : Twelve Months Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 94,264 $ 102,211 $ 106,222 Less: purchases of property and equipment, net (40,286) (25,068) (12,263) Free Cash Flow $ 53,978 $ 77,143 $ 93,959 Liquidity and Capital Resources General Overview We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.
Free Cash Flow should not be considered in isolation or as an alternative to net cash provided by operating activities. Free Cash Flow reconciles to the most directly comparable U.S.
Free Cash Flow should not be considered in isolation or as an alternative to net cash provided by operating activities. Free Cash Flow reconciles to the most directly comparable U.S. GAAP financial measure of cash flows from operations.
Financing Activities For the year ended December 31, 2024, net cash generated in financing activities was $56.8 million, compared to net cash generated in financing activities of $43.6 million for the corresponding period in 2023.
Financing Activities For the year ended December 31, 2025, net cash generated in financing activities was $158.9 million, compared to net cash generated in financing activities of $56.8 million for the corresponding period in 2024.
With our strong backlog and improved market environment, we expect to continue to see growth in 2025. Assuming a positive general macroeconomic environment and continued supportive environments in our end markets, we expect fiscal 2025 growth to be comparable to 2024 growth metrics with the continued execution of acquisition activity.
Assuming a positive general macroeconomic environment and continued supportive environments in our end markets, we expect fiscal 2026 growth to be comparable to 2025 growth metrics with the continued execution of acquisition activity.
Key elements of our sales strategy include leveraging existing customer relationships by cross-selling new products, expanding product offerings to new and existing customers, and increasing business-to-business solutions using system agreements and supply chain solutions for our integrated supply customers.
Our sales growth strategy in recent years has focused on internal growth and acquisitions. Key elements of our sales strategy include leveraging existing customer relationships by cross-selling new products, expanding product offerings to new and existing customers, and increasing business-to-business solutions using system agreements and supply chain solutions for our integrated supply customers.
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.
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.
GAAP financial measure of cash flows from operations. 39 Table of Contents The following table sets forth the reconciliation of net cash provided by operating activities to Free Cash Flow (in thousands): Twelve Months Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 102,211 $ 106,222 $ 5,894 Less: Purchase of property and equipment, net 25,068 12,263 4,916 Free Cash Flow $ 77,143 $ 93,959 $ 978 Uses of Liquidity Internally generated cash flows are the primary source of working capital and growth initiatives, including acquisitions and growth capital expenditures.
The following table sets forth the reconciliation of net cash provided by operating activities to Free Cash Flow (in thousands): Twelve Months Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 94,264 $ 102,211 $ 106,222 Less: Purchase of property and equipment, net 40,286 25,068 12,263 Free Cash Flow $ 53,978 $ 77,143 $ 93,959 41 Table of Contents Uses of Liquidity Internally generated cash flows are the primary source of working capital and growth initiatives, including acquisitions and growth capital expenditures.
The extent to which changing interest rates, inflation and other economic trends will continue to impact the Company’s business, financial condition and results of operations is uncertain. Therefore, we cannot reasonably estimate the full future impacts of these matters at this time.
The extent to which changing interest rates, inflation and other economic trends will continue to impact the Company’s business, financial condition and results of operations is uncertain. Therefore, we cannot reasonably estimate the full future impacts of these matters at this time. We have seen growth from our supportive served end-markets and our focus on organic and inorganic sales growth.
Share repurchases are executed at prices the Company determines appropriate subject to various factors, including market conditions and the Company's financial performance and may be affected through accelerated share repurchase programs, open market purchases, or privately negotiated transactions.
Share repurchases are executed at prices the Company determines appropriate subject to various factors, including market conditions and the Company's financial performance and may be affected through accelerated share repurchase programs, open market purchases, or privately negotiated transactions. Contractual and Other Obligations On December 16, 2025, the Company amended its Senior Secured Term Loan B.
The following table summarizes the amount of borrowing capacity under our ABL Revolver as follows (in thousands) : December 31, 2024 2023 Total borrowing capacity $ 135,000 $ 135,000 Less: Amount drawn — — Less: Outstanding letters of credit 9,354 2,945 Total amount available $ 125,646 $ 132,055 At December 31, 2024, the Company had $274.0 million of liquidity including $148.3 million in cash and $125.6 million in availability under the ABL Revolver.
The following table summarizes the amount of borrowing capacity under our ABL Revolver as follows (in thousands) : December 31, 2025 2024 Total borrowing capacity $ 185,000 $ 135,000 Less: Amount drawn — — Less: Outstanding letters of credit 31,472 9,354 Total amount available $ 153,528 $ 125,646 At December 31, 2025, the Company had $457.3 million of liquidity including $303.8 million in cash and $153.5 million in availability under the ABL Revolver.
These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macro economic 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.
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.
The interest rate for the Senior Secured Term Loan B was 10.44% 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.
The interest rate for the Senior Secured Term Loan B was 8.32% as of December 31, 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.
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. Cash As of December 31, 2024 and 2023, we had cash of $148.3 million and $173.1 million, respectively.
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. 39 Table of Contents Cash As of December 31, 2025, we had cash of $303.8 million and credit facility availability of $153.5 million.
GAAP financial measure (in thousands) : Twelve Months Ended December 31, 2024 2023 2022 Net income attributable to DXP Enterprises, Inc. $ 70,489 $ 68,812 $ 48,155 Less: Net loss attributable to non-controlling interest (NCI) — — (53) Plus: Interest expense 63,927 53,146 29,135 Plus: Provision for income tax expense 14,483 18,119 17,799 Plus: Depreciation and amortization 33,405 30,105 28,500 EBITDA $ 182,304 $ 170,182 $ 123,536 Plus: NCI income before tax — — 227 Plus: other non-recurring items (1) 4,292 1,051 1,193 Plus: stock compensation expense 4,714 3,072 1,850 Adjusted EBITDA $ 191,310 $ 174,305 $ 126,806 Operating Income Margin 8.1 % 8.3 % 6.6 % EBITDA Margin 10.1 % 10.1 % 8.3 % Adjusted EBITDA Margin 10.6 % 10.4 % 8.6 % (1) Other non-recurring items includes unique acquisition integration costs and other non-cash, non-recurring costs.
GAAP financial measure (in thousands) : Twelve Months Ended December 31, 2025 2024 2023 Net income attributable to DXP Enterprises, Inc. $ 88,677 $ 70,489 $ 68,812 Plus: Interest expense 60,530 63,927 53,146 Plus: Provision for income tax expense 30,545 14,483 18,119 Plus: Depreciation and amortization 38,850 33,405 30,105 EBITDA $ 218,602 $ 182,304 $ 170,182 Plus: stock compensation expense 5,708 4,714 3,072 Plus: other non-recurring items (1) 992 4,292 1,051 Adjusted EBITDA $ 225,302 $ 191,310 $ 174,305 Operating Income Margin 8.8 % 8.1 % 8.3 % Net Income Margin 4.4 % 3.9 % 4.1 % EBITDA Margin 10.8 % 10.1 % 10.1 % Adjusted EBITDA Margin 11.2 % 10.6 % 10.4 % (1) Other non-recurring items includes unique acquisition integration costs and other non-cash, non-recurring costs.
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.
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.
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 taxes and all other non-cash charges, adjustments, and non-recurring items.
We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization plus stock-based compensation expense 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 define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization minus stock-based compensation expense, non-controlling interest before taxes and all other non-cash charges, adjustments, and non-recurring items.
We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization plus stock-based compensation expense 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 following table sets forth the reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to the most comparable U.S.
We define and calculate EBITDA Margin as EBITDA divided by sales. We define and calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by sales. 38 Table of Contents The following table sets forth the reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to the most comparable U.S.
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.
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.
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.
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. 37 Table of Contents PROVISION FOR INCOME TAX EXPENSE.
These estimates are subject to change in the future, particularly if earnings of a particular subsidiary are significantly higher or lower than expected, or if management takes operational or tax planning actions that could impact the future taxable earnings of a subsidiary.
These estimates are subject to change in the future, particularly if earnings of a particular subsidiary are significantly higher or lower than expected, or if management takes operational or tax planning actions that could impact the future taxable earnings of a subsidiary. 45 Table of Contents In the normal course of business, we are audited by federal, state and foreign tax authorities, and are periodically challenged regarding the amount of taxes due.
However, the Company cannot reasonably estimate whether these strategies will help mitigate the impact of these economic disruptors in the future. 33 Table of Contents 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’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 34 Table of Contents statements. The Company considered the impact of economic trends on the assumptions and estimates used in preparing the consolidated financial statements.
For additional information, please refer to Note 20. Segment Reporting . 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.
For additional information, please refer to Note 20. Segment Reporting . 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.
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.
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.
The fair value estimates are developed using the best information available. Third party valuation specialists assist in valuing the Company’s significant acquisitions. Our purchase price allocation methodology contains uncertainties because it requires management to make assumptions and to apply judgment to estimate the fair value of acquired assets and liabilities.
Our purchase price allocation methodology contains uncertainties because it requires management to make assumptions and to apply judgment to estimate the fair value of acquired assets and liabilities.
Free Cash Flow We define and calculate free cash flow as net cash provided by operating activities less net purchases of property and equipment. CURRENT MARKET CONDITIONS AND OUTLOOK Economic Indices The Company monitors several economic indices that have been key indicators for industrial and oil & gas economic activity in the U.S.
CURRENT MARKET CONDITIONS AND OUTLOOK Economic Indices The Company monitors several economic indices that have been key indicators for industrial and oil & gas economic activity in the U.S.
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, 2024 increased $123.4 million, or 7.4%, to approximately $1.8 billion from $1.7 billion for the prior corresponding period.
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, 2025 increased $214.3 million, or 11.9%, to approximately $2.0 billion from $1.8 billion for the prior corresponding period. Customer demand was generally healthy throughout fiscal 2025, resulting in industry expected volume growth.
Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $181.7 million compared to $22.6 million used in the corresponding period in 2023. The increase of $159.0 million was primarily driven by an increase in acquisition activities during 2024 compared to 2023.
Investing Activities For the year ended December 31, 2025, net cash used in investing activities was $99.2 million compared to $181.7 million used in the corresponding period in 2024. The $82.4 million decrease was primarily driven by less significant acquisitions during the twelve months ended December 31, 2025.
Cash Flows The following table summarizes our net cash flows provided by (used in) operating activities, investing activities, financing activities for the periods presented ( in thousands, except percentages ): Twelve Months Ended December 31, 2024 2023 Change Change % Net cash provided by (used in): Operating activities $ 102,211 $ 106,222 $ (4,011) (4) % Investing activities (181,692) (22,647) (159,045) 702 % Financing activities 56,803 43,579 13,224 30 % Effect of foreign currency (2,122) (60) (2,062) 3,437 % Net change in cash and restricted cash $ (24,800) $ 127,094 $ (151,894) (120) % Operating Activities The Company generated $102.2 million of cash in operating activities during the year ended December 31, 2024 compared to generating $106.2 million of cash during the prior year's corresponding period.
Cash Flows The following table summarizes our net cash flows provided by (used in) operating activities, investing activities, financing activities for the periods presented ( in thousands, except percentages ): Twelve Months Ended December 31, 2025 2024 Change Change % Net cash provided by (used in): Operating activities $ 94,264 $ 102,211 $ (7,947) (8) % Investing activities (99,246) (181,692) 82,446 (45) % Financing activities 158,868 56,803 102,065 180 % Effect of foreign currency 1,486 (2,122) 3,608 (170) % Net change in cash and restricted cash $ 155,372 $ (24,800) $ 180,172 (727) % Operating Activities We generated $94.3 million of cash in operating activities during the year ended December 31, 2025 compared to generating $102.2 million of cash during the prior year's corresponding period.
Additionally, as part of the market multiples approach, the Company utilizes market data from publicly traded entities whose businesses operate in industries comparable to the Company’s reporting units, adjusted for certain factors that increase comparability. The Company cannot predict the occurrence of events or circumstances that could adversely affect the fair value of goodwill.
Management uses industry considerations and Company-specific historical and projected results to develop cash flow projections for each reporting unit. Additionally, as part of the market multiples approach, the Company utilizes market data from publicly traded entities whose businesses operate in industries comparable to the Company’s reporting units, adjusted for certain factors that increase comparability.
GAAP financial measure (in thousands) : Twelve Months Ended December 31, 2024 2023 (1) 2022 (1) Service Centers $ 1,222,599 $ 1,199,501 $ 1,041,462 Innovative Pumping Solutions 323,026 218,731 198,895 Supply Chain Services 256,415 260,368 240,475 Total DXP Sales $ 1,802,040 $ 1,678,600 $ 1,480,832 Acquisition Sales $ 98,500 $ 33,078 $ 41,527 Organic Sales $ 1,703,540 $ 1,645,522 $ 1,439,305 (1) Prior period segment disclosures have been recast.
GAAP financial measure (in thousands) : Twelve Months Ended December 31, 2025 2024 (1) 2023 (1) Service Centers $ 1,373,140 $ 1,236,775 $ 1,214,602 Innovative Pumping Solutions 390,291 308,850 203,630 Supply Chain Services 252,934 256,415 260,368 Total DXP Sales $ 2,016,365 $ 1,802,040 $ 1,678,600 Acquisition Sales $ 96,043 $ 98,500 $ 33,078 Organic Sales $ 1,920,322 $ 1,703,540 $ 1,645,522 (1) Prior period segment disclosures have been recast.
The discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in a similar business. Management uses industry considerations and Company-specific historical and projected results to develop cash flow projections for each reporting unit.
The WACC considers market an industry data, as well as Company-specific risk factors for each reporting unit in determining the appropriate discount rate to be used. The discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in a similar business.
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.
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.
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.
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.
We believe the Company has adequate funding to support its working capital needs within the business. Debt At December 31, 2024, our total outstanding debt was $648.9 million, or 60.5% of total capitalization (total debt plus shareholders’ equity) of $1.1 billion. $647.9 million of this outstanding debt bears interest at various floating rates. See Item 7A.
Debt At December 31, 2025, our total outstanding debt was $846.8 million, or 62.9% of total capitalization (total debt plus shareholders’ equity) of $1.3 billion. $845.9 million of this outstanding debt bears interest at various floating rates. See Item 7A.
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. The net inflow of cash from financing activities in 2024 was a benefit driven by the refinancing of our existing Senior Secured Term Loan B.
The net inflow of cash from financing activities in 2025 was primarily driven by the refinancing of our existing Senior Secured Term Loan B and raising an incremental $205.0 million. Deferred financing costs associated with refinancing activity was $3.2 million for the year ended December 31, 2025.
Discount rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. Discount rates are determined using a weighted average cost of capital (“WACC”). The WACC considers market an industry data, as well as Company-specific risk factors for each reporting unit in determining the appropriate discount rate to be used.
Key assumptions used in the discounted cash flow valuation model include, among others, discount rates, growth rates, cash flow projections and terminal value rates. Discount rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. Discount rates are determined using a weighted average cost of capital (“WACC”).
In the normal course of business, we are audited by federal, state and foreign tax authorities, and are periodically challenged regarding the amount of taxes due. These challenges relate primarily to the timing and amount of deductions and the allocation of income among various tax jurisdictions.
These challenges relate primarily to the timing and amount of deductions and the allocation of income among various tax jurisdictions.
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. Share Repurchases For the years ended December 31, 2024 and 2023, we repurchased shares of our common stock for $28.8 million and $54.7 million, respectively.
Share Repurchases For the years ended December 31, 2025 and 2024, we repurchased shares of our common stock for $17.0 million and $28.8 million, respectively.
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”).
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”).
A significant change in an estimate on several projects could have a material effect on our financial position and results of operations. 42 Table of Contents Purchase Accounting The Company estimates the fair value of assets, including property, machinery and equipment and their related useful lives and salvage values, intangibles and liabilities when allocating the purchase price of an acquisition.
Purchase Accounting The Company estimates the fair value of assets, including property, machinery and equipment and their related useful lives and salvage values, intangibles and liabilities when allocating the purchase price of an acquisition. The fair value estimates are developed using the best information available. Third party valuation specialists assist in valuing the Company’s significant acquisitions.
Years Ended December 31 (in thousands, except percentages) 2024 % Total 2023 (1) % Total Change Change % Sales by Business Segment Service Centers $ 1,222,599 67.9 $ 1,199,501 71.5 $ 23,098 1.9 % Innovative Pumping Solutions 323,026 17.9 218,731 13.0 104,295 47.7 % Supply Chain Services 256,415 14.2 260,368 15.5 (3,953) (1.5) % Total Sales $ 1,802,040 100.0 $ 1,678,600 100.0 $ 123,440 7.4 % (1) Prior period segment disclosures have been recast.
Years Ended December 31 (in thousands, except percentages) 2025 % Total 2024 (1) % Total Change Change % Sales by Business Segment Service Centers $ 1,373,140 68.1 $ 1,236,775 68.7 $ 136,365 11.0 % Innovative Pumping Solutions 390,291 19.4 308,850 17.1 81,441 26.4 % Supply Chain Services 252,934 12.5 256,415 14.2 (3,481) (1.4) % Total Sales $ 2,016,365 100.0 $ 1,802,040 100.0 $ 214,325 11.9 % (1) Prior period segment disclosures have been recast.
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.
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 macroeconomic trends.
Twelve Months Ended December 31, 2024 2023 2022 Sales by Business Segment ( in thousands, except percentages and days) Service Centers $ 1,222,599 $ 1,199,501 $ 1,041,462 Innovative Pumping Solutions 323,026 218,731 198,895 Supply Chain Services 256,415 260,368 240,475 Total DXP Sales $ 1,802,040 $ 1,678,600 $ 1,480,832 Acquisition Sales $ 98,500 $ 33,078 $ 41,527 Organic Sales $ 1,703,540 $ 1,645,522 $ 1,439,305 Business Days 253 252 253 Sales per Business Day $ 7,123 $ 6,661 $ 5,853 Organic Sales per Business Day $ 6,733 $ 6,530 $ 5,689 Gross Profit $ 556,277 $ 505,291 $ 422,038 Gross Profit Margin 30.9 % 30.1 % 28.5 % EBITDA $ 182,304 $ 170,182 $ 123,536 EBITDA Margin 10.1 % 10.1 % 8.3 % Adjusted EBITDA $ 191,310 $ 174,305 $ 126,806 Adjusted EBITDA Margin 10.6 % 10.4 % 8.6 % Free Cash Flow $ 77,143 $ 93,959 $ 978 Organic Sales and Acquisition Sales We define and calculate organic sales to include locations and acquisitions under our ownership for at least twelve months.
GAAP measures. 32 Table of Contents Twelve Months Ended December 31, 2025 2024 (1) 2023 (1) Sales by Business Segment ( in thousands, except percentages and days) Service Centers $ 1,373,140 $ 1,236,775 $ 1,214,602 Innovative Pumping Solutions 390,291 308,850 203,630 Supply Chain Services 252,934 256,415 260,368 Total DXP Sales $ 2,016,365 $ 1,802,040 $ 1,678,600 Acquisition Sales $ 96,043 $ 98,500 $ 33,078 Organic Sales $ 1,920,322 $ 1,703,540 $ 1,645,522 Business Days 252 253 252 Sales per Business Day $ 8,001 $ 7,123 $ 6,661 Organic Sales per Business Day $ 7,620 $ 6,733 $ 6,530 Gross Profit $ 635,928 $ 556,277 $ 505,291 Gross Profit Margin 31.5 % 30.9 % 30.1 % Income from Operations $ 176,870 $ 145,382 $ 138,722 Income from Operations Margin 8.8 % 8.1 % 8.3 % Net Income $ 88,677 $ 70,489 $ 68,812 Net Income Margin 4.4 % 3.9 % 4.1 % EBITDA $ 218,602 $ 182,304 $ 170,182 EBITDA Margin 10.8 % 10.1 % 10.1 % Adjusted EBITDA $ 225,302 $ 191,310 $ 174,305 Adjusted EBITDA Margin 11.2 % 10.6 % 10.4 % Net cash provided by operating activities $ 94,264 $ 102,211 $ 106,222 Free Cash Flow $ 53,978 $ 77,143 $ 93,959 (1) Prior period segment disclosures have been recast.
We expect our interest expense in 2025 will be relatively higher than the amounts incurred in 2024 due to our refinancing in the fourth quarter of 2024. 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.
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 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.
The Company determines fair value using widely accepted valuation techniques, including discounted cash flows and market multiples analyses. These types of analyses contain uncertainties as they require management to make assumptions and to apply judgments regarding industry economic factors and the profitability of future business strategies.
These types of analyses contain uncertainties as they require management to make assumptions and to apply judgments regarding industry economic factors and the profitability of future business strategies. The Company’s policy is to conduct impairment testing based on current business strategies, taking into consideration current industry and economic conditions, as well as the Company’s future expectations.
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.
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 2026, our cash flows for investing activities will be focused on strategic initiatives, information technology software and infrastructure, general upgrades and cost reduction opportunities.
As our operations have generally stabilized from the COVID-19 pandemic and related inflationary pressures, we 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.
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 2026.
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.
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.
Acquisitions For a discussion of the Company’s acquisitions refer to Note 16 to the Consolidated Financial Statements. In 2024 and 2023, the Company invested $156.6 million and $10.4 million, respectively, in acquisitions. Capital Expenditures In fiscal 2024, the Company's capital expenditures were $25.1 million and $12.3 million for the years ended December 31, 2024 and 2023, respectively.
In 2025 and 2024, the Company invested $61.7 million and $156.6 million, respectively, in acquisitions, net of cash acquired. Capital Expenditures The Company's capital expenditures were $40.3 million and $25.1 million for the years ended December 31, 2025 and 2024, respectively. This includes continued facility enhancements, tools and equipment, software and technology enhancements across the Company.
While credit losses have historically been within expectations and the provisions established, should actual write-offs differ from estimates, revisions to the allowance would be required. 41 Table of Contents Impairment of Goodwill, Other Intangible Assets, and Long-Lived Assets The Company tests goodwill and other intangible assets for impairment annually on October 1 st and when events or changes in circumstances indicate that the carrying amount may not be recoverable.
The Company tests goodwill for impairment annually on October 1 st 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.
Management continues to monitor and update project cost estimates quarterly for all open contracts.
Management continues to monitor and update project cost estimates quarterly for all open contracts. A significant change in an estimate on several projects could have a material effect on our financial position and results of operations.
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.
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.
Debt issuance costs associated with the amendment of our new Term Loan B was $1.8 million for the year ended December 31, 2024. 38 Table of Contents During the twelve months ended December 31, 2024 we repurchased 0.6 million shares of the Company's common stock for approximately $28.8 million compared to 1.7 million shares of the Company's stock for approximately $54.7 million for the twelve months ended December 31, 2023.
During the twelve months ended December 31, 2025 we repurchased 0.2 million shares of the Company's common stock for approximately $17.0 million compared to 0.6 million shares of the Company's stock for approximately $28.8 million for the twelve months ended December 31, 2024. We believe the Company has adequate funding to support its working capital needs within the business.
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.
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.
The Company expects to continue to return excess capital to shareholders through share repurchases, when appropriate. Working Capital Working capital as of December 31, 2024 was $296.3 million, an increase of $20.9 million compared to $275.4 million as of December 31, 2023. The increase was primarily due to sustained sales growth and acquisitions.
Net working capital as of December 31, 2025 was $361.7 million, an increase of $70.7 million compared to $291.0 million as of December 31, 2024. The increase was primarily due to sustained sales growth and acquisitions. Acquisitions For a discussion of the Company’s acquisitions refer to Note 16 - Business Acquisitions .

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also engage external firms to measure our NIST CSF maturity level. 26 Table of Contents Governance Our board of directors established a standing Cybersecurity Committee, which is tasked with oversight of the Cybersecurity Program, including: (i) strategy and governance; (ii) operations; and (iii) risk management and regulatory compliance.
Biggest changeGovernance Our board of directors established a standing Cybersecurity Committee, which is tasked with oversight of the Cybersecurity Program, including: (i) strategy and governance; (ii) operations; and (iii) risk management and regulatory compliance.
The Cybersecurity Committee responsibilities include: • reviewing our enterprise cybersecurity strategy and framework, including our assessment of cybersecurity threats and risk, data security programs, and our management and mitigation of cybersecurity and information technology risks and potential breach incidents; • reviewing any significant cybersecurity incident that has occurred, reports to or from regulators with respect thereto, and steps that have been taken to mitigate against reoccurrence; • evaluating the effectiveness of our cyber risk management and data security programs measured against our cybersecurity threat landscape; • assessing the effectiveness of our data breach incident response plan; • reviewing and assessing our information technology disaster recovery capabilities; and • reviewing our assessment of cybersecurity threats and risk associated with our supply chain and actions we are taking to address such threats and risks.
The Cybersecurity Committee responsibilities include: • reviewing our enterprise cybersecurity strategy and framework, including our assessment of cybersecurity threats and risk, data security programs, and our management and mitigation of cybersecurity and information technology risks and potential breach incidents; • reviewing any significant cybersecurity incident that has occurred, reports to or from regulators with respect thereto, and steps that have been taken to mitigate against reoccurrence; • evaluating the effectiveness of our cyber risk management and data security programs measured against our cybersecurity threat landscape; • assessing the effectiveness of our data breach incident response plan; • reviewing and assessing our information technology disaster recovery capabilities; and • reviewing our assessment of cybersecurity threats and risks associated with our supply chain and actions we are taking to address such threats and risks.
Management’s Role and Expertise in Assessing and Managing Cybersecurity Our Cybersecurity and Information Technology organization is led by our CIO, who is responsible for cybersecurity risk management. Our CIO has more than 27 years of experience in the IT industry. Since 2006, he has held multiple roles at the Company and most recently as Vice President of IT Strategic Solutions.
Management’s Role and Expertise in Assessing and Managing Cybersecurity Our Cybersecurity and Information Technology organization is led by our CIO, who is responsible for cybersecurity risk management. Our CIO has more than 28 years of experience in the IT industry. Since 2006, he has held multiple roles at the Company and most recently as Vice President of IT Strategic Solutions.
Risk Factors,” specifically the risks titled “Cybersecurity breaches and other disruptions or misuse of our network and information systems could affect our ability to conduct our business effectively.”, the sophistication of cyber threats continues to increase, and the preventative actions we take to reduce the risk of cyber incidents and protect our systems and information may be insufficient.
Risk Factors,” specifically the risks titled “Cybersecurity breaches and other disruptions or misuse of our 27 Table of Contents network and information systems could affect our ability to conduct our business effectively.”, the sophistication of cyber threats continues to increase, and the preventative actions we take to reduce the risk of cyber incidents and protect our systems and information may be insufficient.
Training is supplemented through regular company-wide communications with frequent updates to educate on the latest adversary trends and social engineering techniques. Additionally, we engage in cyber crisis response simulations to assess our ability to adapt to information and operational technology threats.
Training is supplemented through regular company-wide communications with frequent updates to educate on the latest adversary trends and social engineering techniques. 26 Table of Contents Additionally, we engage in cyber crisis response simulations to assess our ability to adapt to information and operational technology threats.
Accordingly, no matter how well our controls are designed or implemented, we will not be able to anticipate all security breaches, and we may not be able to implement effective preventive measures against such security breaches in a timely manner. 27 Table of Contents
Accordingly, no matter how well our controls are designed or implemented, we will not be able to anticipate all security breaches, and we may not be able to implement effective preventive measures against such security breaches in a timely manner.
We also utilize internal and external audits and assessments, vulnerability testing, governance processes over outsourced service providers, active risk management and benchmarking against peers in the industry to validate our security posture.
We also utilize internal and external audits and assessments, vulnerability testing, governance processes over outsourced service providers, active risk management and benchmarking against peers in the industry to validate our security posture. We also engage external firms to measure our NIST CSF maturity level.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe location of our Service Centers and Innovative Pumping Solutions segment facilities at the end of December 31, 2024 were as follows: State/City/Province Locations State/City/Province Locations Alaska 1 North Dakota 3 Alabama 6 Ohio 5 Arkansas 1 Oklahoma 3 Arizona 3 Oregon 1 California 11 Pennsylvania 4 Colorado 5 South Dakota 1 Florida 3 Tennessee 1 Georgia 4 Texas 48 Iowa 4 Utah 1 Illinois 2 Washington 4 Indiana 2 West Virginia 1 Kansas 2 Wisconsin 2 Kentucky 1 Wyoming 2 Louisiana 14 Alberta 10 Massachusetts 1 British Columbia 1 Maryland 2 Manitoba 2 Michigan 2 New Brunswick 1 Minnesota 1 Newfoundland 1 Missouri 1 Nova Scotia 2 Montana 2 Ontario 5 Nebraska 10 Quebec 1 New Jersey 2 Saskatchewan 3 New Mexico 2 U.A.E. 1 New York 3 India 1 North Carolina 3 Saudi Arabia 1 Total Locations 193 At December 31, 2024, the Supply Chain Services segment operated supply chain installations in 86 of our customers’ sites in 31 U.S. states and two Canadian provinces. 28 Table of Contents At December 31, 2024, our owned facilities ranged from 5,000 square feet to 45,000 square feet in size.
Biggest changeThe location of our Service Centers and Innovative Pumping Solutions segment facilities at the end of December 31, 2025 were as follows: State/City/Province Location(s) State/City/Province Location(s) Alaska 1 North Dakota 3 Alabama 5 Ohio 4 Arkansas 1 Oklahoma 3 Arizona 3 Oregon 1 California 11 Pennsylvania 4 Colorado 5 South Dakota 1 Florida 7 Tennessee 1 Georgia 4 Texas 50 Iowa 4 Utah 1 Illinois 2 Washington 6 Indiana 2 West Virginia 1 Kansas 2 Wisconsin 2 Kentucky 1 Wyoming 2 Louisiana 13 Alberta 11 Massachusetts 1 British Columbia 1 Maryland 2 Manitoba 2 Michigan 2 New Brunswick 1 Minnesota 1 Newfoundland 1 Missouri 1 Nova Scotia 3 Montana 2 Ontario 6 Nebraska 10 Quebec 1 Nevada 2 Saskatchewan 3 New Jersey 2 U.A.E. 1 New Mexico 3 India 1 New York 3 Saudi Arabia 1 North Carolina 3 Total Locations 204 At December 31, 2025, the Supply Chain Services segment operated supply chain installations in 89 of our customers’ sites in 31 U.S. states and two Canadian provinces. 28 Table of Contents At December 31, 2025, our owned facilities ranged from 5,000 square feet to 45,000 square feet in size.
We lease facilities for terms generally ranging from one to fifteen years. The leased facilities range from approximately 570 square feet to 105,000 square feet in size. The leases provide for periodic specified rental payments and certain leases are renewable at our option. We believe that our facilities are suitable and adequate for the needs of our existing business.
We lease facilities for terms generally ranging from one to fifteen years. The leased facilities range from approximately 570 square feet to 225,000 square feet in size. The leases provide for periodic specified rental payments and certain leases are renewable at our option. We believe that our facilities are suitable and adequate for the needs of our existing business.
At December 31, 2024, the Innovative Pumping Solutions segment operated out of 21 fabrication facilities located in 12 states in the U.S., two provinces in Canada, one in India and one in Saudi Arabia. Additionally, we had 11 wastewater locations in the U.S.
At December 31, 2025, the Innovative Pumping Solutions segment operated out of 19 fabrication facilities located in 13 states in the U.S., two provinces in Canada, one in India and one in Saudi Arabia. Additionally, we had 17 wastewater locations in the U.S.
At December 31, 2024, the Service Centers segment operated out of 157 service center facilities. Of these facilities, 132 were located in the U.S. in 38 states, 24 were located in nine Canadian provinces and one was located in the U.A.E. The four distribution centers were located in the U.S., specifically in Texas, Montana and Nebraska.
At December 31, 2025, the Service Centers segment operated out of 164 service center facilities. Of these facilities, 137 were located in the U.S. in 39 states, 27 were located in nine Canadian provinces and one was located in the U.A.E. The four distribution centers were located in the U.S., specifically in Texas, Montana and Nebraska.
ITEM 2. Properties At December 31, 2024, our Service Centers and Innovative Pumping Solutions segments had 193 facilities which comprised of 157 service center facilities, four distribution centers, 21 fabrication facilities and 11 wastewater locations. We own 11 of our facilities while the remainder of our facilities are leased.
ITEM 2. Properties At December 31, 2025, our Service Centers and Innovative Pumping Solutions segments had 204 facilities which comprised of 164 service center facilities, four distribution centers, 19 fabrication facilities and 17 wastewater locations. We own 17 of our facilities while the remainder of our facilities are leased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeInvestors are cautioned against drawing conclusions from the data contained in the graph below as past results are not necessarily indicative of future performance. Recent Sales of Unregistered Securities The Company did not issue any unregistered shares of common stock during the years ended December 31, 2024 and 2023.
Biggest changeDecember 31, 2020 2021 2022 2023 2024 2025 DXP Enterprises $ 100.00 $ 113.81 $ 122.15 $ 149.41 $ 366.30 $ 486.77 S & P 400 $ 100.00 $ 123.46 $ 105.58 $ 120.83 $ 135.58 $ 143.58 Nasdaq Industrial $ 100.00 $ 109.03 $ 70.81 $ 91.30 $ 114.74 $ 120.56 Dow Jones U.S Industrial Suppliers Index $ 100.00 $ 127.16 $ 115.27 $ 157.73 $ 185.43 $ 206.25 Investors are cautioned against drawing conclusions from the data contained in the graph below as past results are not necessarily indicative of future performance. 30 Table of Contents Recent Sales of Unregistered Securities The Company did not issue any unregistered shares of common stock during the years ended December 31, 2025, 2024, and 2023.
Stock Performance The following performance graph compares the performance of the Company's common stock to the NASDAQ Industrial Index, S&P 400 Index and Dow Jones U.S. Industrial Suppliers Index. The graph assumes that the value of the investment in the Company's common stock and in each index was $100 at December 31, 2019.
Stock Performance The following performance graph compares the performance of the Company's common stock to the NASDAQ Industrial Index, S&P 400 Index and Dow Jones U.S. Industrial Suppliers Index. The graph assumes that the value of the investment in the Company's common stock and in each index was $100 at December 31, 2020.
ITEM 5. Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Our common stock trades on The NASDAQ Global Select Market under the stock ticker symbol “DXPE”. On February 28, 2025, we had approximately 293 holders of record for outstanding shares of our common stock.
ITEM 5. Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Our common stock trades on The NASDAQ Global Select Market under the stock ticker symbol “DXPE”. On February 20, 2026, we had approximately 262 holders of record for outstanding shares of our common stock.
As of December 31, 2024, approximately $85.0 million worth of, or approximately 2.5 million, shares remained available under the $85.0 million Share Repurchase Program.
As of December 31, 2025, approximately $68.0 million worth of, or approximately 2.3 million, shares remained available under the $85.0 million Share Repurchase Program.
Repurchases of Common Stock A summary of our repurchases of DXP Enterprises, Inc. common stock under our current share repurchase program and employee stock awards withheld for certain tax obligations during the quarter ended December 31, 2024 is as follows: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ( in thousands ) (2) October 1 - October 31 — $ — — $ 85,000 November 1 – November 30 — — — 85,000 December 1 – December 31 79 74.24 — 85,000 Total 79 $ 74.24 — $ 85,000 (1) There were 79 shares transferred from employees in satisfaction of minimum statutory tax withholding obligations upon the vesting of restricted stock during the three months ended December 31, 2024.
Repurchases of Common Stock A summary of our repurchases of DXP Enterprises, Inc. common stock under our current share repurchase program and employee stock awards withheld for certain tax obligations during the quarter ended December 31, 2025 is as follows: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ( in thousands ) (2) October 1 - October 31 — — — 83,001 November 1 – November 30 163,629 92.02 163,096 68,006 December 1 – December 31 79 98.15 — 68,006 Total 163,708 92.03 163,096 $ 68,006 (1) There were 612 shares transferred from employees in satisfaction of minimum statutory tax withholding obligations upon the vesting of restricted stock during the three months ended December 31, 2025.
All issuances were as a result of private negotiation, and not pursuant to public solicitation. In addition, we believe the shares were issued to “accredited investors” as defined by Rule 501 of the Securities Act.
We relied on Section 4(a)(2) of the Securities Exchange Act as a basis for exemption from registration. All issuances were as a result of private negotiation, and not pursuant to public solicitation. In addition, we believe the shares were issued to “accredited investors” as defined by Rule 501 of the Securities Act.
Removed
The Company issued 36,549 unregistered shares of common stock as part of the consideration for the September 1, 2022 acquisition of Sullivan. The unregistered shares were issued to the sellers of Sullivan. The Company issued 208,855 unregistered shares of common stock as part of the consideration for the May 2, 2022 acquisition of Cisco.
Removed
The unregistered shares were issued to the sellers of Cisco. 30 Table of Contents The Company issued 18,263 unregistered shares of common stock as part of the consideration for the March 1, 2022 acquisition of Drydon. The unregistered shares were issued to the sellers of Drydon.
Removed
The Company issued 3,581 unregistered shares of common stock as part of the consideration for the March 1, 2022 acquisition of Burlingame. The unregistered shares were issued to the sole seller of Burlingame. We relied on Section 4(a)(2) of the Securities Exchange Act as a basis for exemption from registration.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCredit and Access to Debt Capital • We may not be able to refinance on favorable terms, extend, or repay our debt, which could adversely affect our results of operations or may result in default of our debt. • Our failure to comply with financial covenants of our credit facilities may adversely affect our results of operations and our financial conditions. • We may not be able to access acquisition financing, including debt capital. • A deterioration in the oil and gas sector or other circumstances may negatively impact our business and results of operations and thus hinder our ability to comply with financial covenants under our credit facilities, including the Secured Leverage Ratio and Fixed Charge Coverage Ratio financial covenants. • Changes in our credit profile may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity. 17 Table of Contents Legal and Regulatory • Risks associated with substantial or material claim or lawsuits that are not covered by insurance. • The nature of our manufactured products carries the possibility of significant product liability and warranty claims, which could harm our business and future results. • We are subject to potential shareholder litigation associated with potential volatile trading of our common stock. • We are subject to personal injury, product liability and environmental claims involving allegedly defective products. • We are subject to risks associated with conducting business in foreign countries. • We are subject to environmental, health and safety laws and regulations that may lead to liabilities and negatively impact our business. • We are subject to various government regulations, the cost of compliance of such regulations could increase our cost of conducting business and any violations of such regulations could materially adversely affect our financial condition or results of operations.
Biggest changeLegal and Regulatory • Risks associated with substantial or material claim or lawsuits that are not covered by insurance. • The nature of our manufactured products carries the possibility of significant product liability and warranty claims, which could harm our business and future results. • We are subject to potential shareholder litigation associated with potential volatile trading of our common stock. • We are subject to personal injury, product liability and environmental claims involving allegedly defective products. • We are subject to risks associated with conducting business in foreign countries. • We are subject to environmental, health and safety laws and regulations that may lead to liabilities and negatively impact our business. • We are subject to various government regulations, the cost of compliance of such regulations could increase our cost of conducting business and any violations of such regulations could materially adversely affect our financial condition or results of operations.
Many of our projects may directly and/or indirectly involve challenging design, engineering, financing, permitting, procurement and construction phases that occur over extended time periods, sometimes several years, and we have encountered and may in the future encounter project delays, additional costs or project performance issues as a result of, among other things: • inability to meet project schedule requirements or achieve guaranteed performance or quality standards for a project, which can result in increased costs, through rework, replacement or otherwise, or the payment of liquidated damages to the customer or contract termination; • failure to accurately estimate project costs or accurately establish the scope of our services; • failure to make judgments in accordance with applicable professional standards (e.g., engineering standards); • unforeseen circumstances or project modifications not included in our cost estimates or covered by our contract for which we cannot obtain adequate compensation, including concealed or unknown environmental, geological or geographical site conditions or technical problems such as design or engineering issues; • changes in laws or permitting and regulatory requirements during the course of our work; 18 Table of Contents • delays in the delivery or management of design or engineering information, equipment or materials; • our or a customer’s failure to manage a project, including the inability to timely obtain land, permits or rights of way or meet other permitting, regulatory or environmental requirements or conditions; • changes to project or customer schedules; • natural disasters or emergencies, including wildfires and earthquakes, as well as significant weather events (e.g., hurricanes, tropical storms, tornadoes, floods, droughts, blizzards and extreme temperatures) and adverse or unseasonable weather conditions (e.g., prolonged rainfall or snowfall, early thaw in Canada and the northern United States); Many of these difficulties and delays are beyond our control and can negatively impact our ability to complete the project in accordance with the required delivery schedule or achieve our anticipated margin on the project.
Many of our projects may directly and/or indirectly involve challenging design, engineering, financing, permitting, procurement and construction phases that occur over extended time periods, sometimes several years, and we have encountered and may in the future encounter project delays, additional costs or project performance issues as a result of, among other things: • inability to meet project schedule requirements or achieve guaranteed performance or quality standards for a project, which can result in increased costs, through rework, replacement or otherwise, or the payment of liquidated damages to the customer or contract termination; • failure to accurately estimate project costs or accurately establish the scope of our services; • failure to make judgments in accordance with applicable professional standards (e.g., engineering standards); • unforeseen circumstances or project modifications not included in our cost estimates or covered by our contract for which we cannot obtain adequate compensation, including concealed or unknown environmental, geological or geographical site conditions or technical problems such as design or engineering issues; • changes in laws or permitting and regulatory requirements during the course of our work; • delays in the delivery or management of design or engineering information, equipment or materials; 18 Table of Contents • our or a customer’s failure to manage a project, including the inability to timely obtain land, permits or rights of way or meet other permitting, regulatory or environmental requirements or conditions; • changes to project or customer schedules; • natural disasters or emergencies, including wildfires and earthquakes, as well as significant weather events (e.g., hurricanes, tropical storms, tornadoes, floods, droughts, blizzards and extreme temperatures) and adverse or unseasonable weather conditions (e.g., prolonged rainfall or snowfall, early thaw in Canada and the northern United States); Many of these difficulties and delays are beyond our control and can negatively impact our ability to complete the project in accordance with the required delivery schedule or achieve our anticipated margin on the project.
Additionally, we make the following available free of charge through our internet website ir.dxpe.com : • DXP Code of Ethics for Senior Financial Officers; • DXP Code of Conduct; • DXP Conflict Minerals Policy; • DXP Anti-Corruption Policy; • Compensation Committee Charter; • Nominating and Governance Committee Charter; and • Audit Committee Charter • Corporate Sustainability Report ITEM 1A.
Additionally, we make the following available free of charge through our internet website ir.dxpe.com : • DXP Code of Ethics for Senior Financial Officers; • DXP Code of Conduct; • DXP Conflict Minerals Policy; • DXP Anti-Corruption Policy; • Compensation Committee Charter; • Nominating and Governance Committee Charter • Audit Committee Charter • Cybersecurity Committee Charter; and • Corporate Sustainability Report ITEM 1A.
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 its business operations.
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 our business operations.
The SCS segment provides fully outsourced MRO solutions for sourcing MRO products including, but not limited to, the following: inventory optimization and management; store-room management; transaction consolidation and control; vendor oversight and procurement cost optimization; productivity improvement services; and customized reporting.
Our SCS segment provides fully outsourced MRO solutions for sourcing MRO products including, but not limited to, the following: inventory optimization and management; store-room management; transaction consolidation and control; vendor oversight and procurement cost optimization; productivity improvement services; and customized reporting.
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 manufacturers price reductions.
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 manufacturers’ price reductions.
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.
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, 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.
The Company's leaders are expected to make great strategic choices, deliver great results, be great talent managers and provide strong leadership. The Company's leaders who have expertise in the Company's business model are the critical factor in translating the potential of the Company's business model into full performance.
Our leaders are expected to make great strategic choices, deliver great results, be great talent managers and provide strong leadership. Leaders who have expertise in our business model are the critical factor in translating the potential of our business model into full performance.
Molero is a certified public accountant and has over 20 years of experience in accounting within a public company environment and most recently as a Chief Accounting Officer of another publicly traded company. Prior to DXP, Mr.
Molero is a certified public accountant and has over 25 years of experience in accounting within a public company environment and most recently as a Chief Accounting Officer of another publicly traded company. Prior to DXP, Mr.
In cases where we maintain insurance coverage, our insurers may raise various objections and exceptions to coverage which could make uncertain the timing and amount of any possible insurance recovery. 24 Table of Contents The nature of our manufactured products carries the possibility of significant product liability and warranty claims, which could harm our business and future results.
In cases where we maintain insurance coverage, our insurers may raise various objections and exceptions to coverage which could make uncertain the timing and amount of any possible insurance recovery. The nature of our manufactured products carries the possibility of significant product liability and warranty claims, which could harm our business and future results.
Government Regulation and Environmental Matters We are subject to various laws and regulations relating to our business and operations and various health and safety regulations including those established by the Occupational Safety and Health Administration and Canadian Occupational Health and Safety.
Government Regulation and Environmental Matters We are subject to various laws and regulations relating to our business and operations and various health and safety regulations including those established by the Occupational Safety and Health Administration and Canadian Centre for Occupational Health and Safety.
The following is a summary of some of the more important factors that could affect our businesses: Business and Operations • Demand for our products could decrease if manufacturers decide to sell them direct. • Changes in our customer or product mix, could cause our gross margins to fluctuate. • Material changes in the costs of our products from manufacturers without the ability to pass price increases onto our customers could cause our gross margins to decline. • A variety of issues could affect the timing or profitability of our projects, and could result in, among other things, project termination or payment of liquidated damages. • Changes in estimates related to revenues and costs under customer contracts could result in a reduction or elimination of revenues or profits and the recognition of losses. • 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’s products. • We may experience unexpected supply shortages, which could adversely affect our product and service offerings and our business. • Price reductions by our manufacturers of products that we sell could cause the value of our inventory to decline. • We are subject to increased shipping costs as well as the potential inability of our third-party transportation providers to deliver products on a timely basis. • Our business has substantial competition that could adversely affect our results. • The loss of or the failure to attract and retain key personnel could adversely impact our results of operations. • The loss of any key supplier could adversely affect the Company’s sales and profitability. • Our future results will be impacted by our ability to implement our internal growth strategy. • Our future results will be impacted by the effective execution of our acquisition strategy. • Goodwill and intangible assets recorded as a result of our acquisitions could become impaired. • Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs and/or decreases in revenues. • Cybersecurity breaches and other disruptions or misuse of our network and information systems could affect our ability to conduct our business effectively. • Our backlog is subject to unexpected adjustments and potential cancellations. • Our actual results could differ from the assumptions and estimates used to prepare our financial statements.
The following is a summary of some of the more important factors that could affect our businesses: Business and Operations • Demand for our products could decrease if manufacturers decide to sell them directly to end users. • Changes in our customer or product mix, could cause our gross margins to fluctuate. • 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. • A variety of issues could affect the timing or profitability of our projects, and could result in, among other things, project termination or payment of liquidated damages. • Changes in estimates related to revenues and costs under customer contracts could result in a reduction or elimination of revenues or profits and the recognition of losses. • 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’s products. • We may experience unexpected supply shortages, which could adversely affect our product and service offerings and our business. • Price reductions by our manufacturers of products that we sell could cause the value of our inventory to decline. 16 Table of Contents • We are subject to increased shipping costs as well as the potential inability of our third-party transportation providers to deliver products on a timely basis. • Our business has substantial competition that could adversely affect our results. • The loss of or the failure to attract and retain key personnel could adversely impact our results of operations. • The loss of any key supplier could adversely affect the Company’s sales and profitability. • Our future results will be impacted by our ability to implement our internal growth strategy. • Our future results will be impacted by the effective execution of our acquisition strategy. • Goodwill and intangible assets recorded as a result of our acquisitions could become impaired. • Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs and/or decreases in revenues. • Cybersecurity breaches and other disruptions or misuse of our network and information systems could affect our ability to conduct our business effectively. • Our backlog is subject to unexpected adjustments and potential cancellations. • Our actual results could differ from the assumptions and estimates used to prepare our financial statements. • Our uncertain tax position and effective tax rate may vary from period to period.
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’s products .
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 manufacturers’ products .
However, there is no assurance that these claims could fully protect us or that the manufacturer would be able financially to provide protection. There is no assurance that our insurance coverage will cover or be adequate to cover the underlying claims. We are subject to risks associated with conducting business in foreign countries.
However, there is no assurance that these claims could fully protect us or that the manufacturer would be able financially to provide protection. There is no assurance that our insurance coverage will cover or be adequate to cover the underlying claims. 25 Table of Contents We are subject to risks associated with conducting business in foreign countries.
Such a combination could materially increase the severity of the impact of these risks on our results of operations, liquidity and financial condition. 16 Table of Contents We face a variety of risks that are substantial and inherent in our businesses.
Such a combination could materially increase the severity of the impact of these risks on our results of operations, liquidity and financial condition. We face a variety of risks that are substantial and inherent in our businesses.
It provides a more efficient way to manage the entire life cycle of pumping systems and rotating equipment. The Company's SmartSolutions programs listed above help customers to cut product costs, improve supply chain efficiencies and obtain expert technical support. The Company represents manufacturers of up to 90% of all the maintenance, repair and operating products of our customers.
It provides a more efficient way to manage the entire life cycle of pumping systems and rotating equipment. Our SmartSolutions programs listed above help customers to cut product costs, improve supply chain efficiencies and obtain expert technical support. We represent manufacturers of up to 90% of all the maintenance, repair and operating products of our customers.
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., where the functional currency is dirham.
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.
All officers of DXP hold office until the regular meeting of the board of directors following the 2025 Annual Meeting of Shareholders or until their respective successors are duly elected and qualified or their earlier resignation or removal. Available Information Our internet address is www.dxpe.com and the investor relations section of our website is located at ir.dxpe.com.
All officers of DXP hold office until the regular meeting of the board of directors following the 2026 Annual Meeting of Shareholders or until their respective successors are duly elected and qualified or their earlier resignation or removal. 15 Table of Contents Available Information Our internet address is www.dxpe.com and the investor relations section of our website is located at ir.dxpe.com.
He has executed over 60 transactions including more than $1.8 billion in M&A and $4.5 billion in financing transactions primarily for change of control deals and numerous industrial and distribution acquisition and sale assignments. He holds a Bachelors of Arts in Urban Planning from Morehouse College and an MBA from Harvard University Graduate School of Business. Nick Little . Mr.
He has executed over 66 transactions including more than $1.9 billion in M&A and $4.6 billion in financing transactions primarily for change of control deals and numerous industrial and distribution acquisition and sale assignments. He holds a Bachelors of Arts in Urban Planning from Morehouse College and an MBA from Harvard University Graduate School of Business. Nick Little . Mr.
We generally compete on expertise, responsiveness, and price in all of our segments. 12 Table of Contents Insurance We maintain liability and other insurance that we believe to be customary and generally consistent with industry practice. We retain a portion of the risk for medical claims, general liability, worker’s compensation and property losses.
We generally compete on expertise, responsiveness, and pricing in all of our segments. Insurance We maintain liability and other insurance that we believe to be customary and generally consistent with industry practice. We retain a portion of the risk for medical claims, general liability, worker’s compensation and property losses.
None of the Company's U.S. employees are represented by a labor union, while outside the U.S., employees in certain countries are represented by an employee representative organization, such as a union, works council or employee association. We believe our employees are key to achieving our business objectives. The Company considers its employee relations to be excellent.
None of our U.S. employees are represented by a labor union, while outside the U.S., employees in certain countries are represented by an employee representative organization, such as a union, works council or employee association. We believe our employees are key to achieving our business objectives. We consider our employee relations to be excellent.
At December 31, 2024, our combined goodwill and intangible assets amounted to $538.0 million, net of accumulated amortization. To the extent we do not generate sufficient cash flows to recover the net amount of any investments in goodwill and other intangible assets recorded, the investment could be considered impaired and subject to write-off which would directly impact earnings.
At December 31, 2025, our combined goodwill and intangible assets amounted to $575.9 million, net of accumulated amortization. To the extent we do not generate sufficient cash flows to recover the net amount of any investments in goodwill and other intangible assets recorded, the investment could be considered impaired and subject to write-off which would directly impact earnings.
We also provide a large variety of pump accessories. Bearings & Power Transmission . Our bearing products include several types of mounted and unmounted bearings for a variety of applications. The power transmission products we distribute include speed reducers, flexible-coupling drives, chain drives, sprockets, gears, conveyors, clutches, brakes and hoses. Industrial Supplies .
Our bearing products include several types of mounted and unmounted bearings for a variety of applications. The power transmission products we distribute include speed reducers, flexible-coupling drives, chain drives, sprockets, gears, conveyors, clutches, brakes and hoses. Industrial Supplies .
We are not currently aware of any environmental situation or violations of government regulations that we believe are likely to have a material adverse effect on our results of operations or financial condition. Human Capital The Company employed 3,028 people as of December 31, 2024.
We are not currently aware of any environmental situation or violations of government regulations that we believe are likely to have a material adverse effect on our results of operations or financial condition. Human Capital We employed 3,286 people as of December 31, 2025.
Maestas has been with DXP since 2002 and leads the Company's e-Commerce and Omni-Channel initiatives. In his 20 years with DXP, he has served in various roles and most recently as Vice President of Marketing and Operations. He holds a Bachelor of Science from the University of Texas at Austin. David C. Vinson. Mr.
Maestas has been with DXP since 2002 and leads the Company's e-Commerce and Omni-Channel initiatives. In his over 20 years with DXP, he has served in various roles and most recently as Vice President of Marketing and Operations. He holds a Bachelor of Science from the University of Texas at Austin. John J. Jeffery . Mr.
We are subject to a variety of U.S. and foreign laws and regulations, including without limitation import and export requirements, the Foreign Corrupt Practices Act (the “FCPA”), U.S. and foreign tax laws (including U.S. taxes on our foreign subsidiaries), data privacy requirements, labor laws and anti-competition regulations.
Compliance with laws and regulations increases our cost of doing business. We are subject to a variety of U.S. and foreign laws and regulations, including without limitation import and export requirements, the Foreign Corrupt Practices Act (the “FCPA”), U.S. and foreign tax laws (including U.S. taxes on our foreign subsidiaries), data privacy requirements, labor laws and anti-competition regulations.
Because this expertise develops over time and through specific experiences, the Company focuses on developing and promoting its own talent to ensure the Company's sustained business success over the long term. Employee Safety . The safety and well-being of the Company's colleagues around the world has been, and always will be, its top priority.
Because this expertise develops over time and through specific experiences, we focus on developing and promoting our own talent to ensure our sustained business success over the long term. Employee Safety . The safety and well-being of our colleagues around the world has been, and always will be, our top priority.
At December 31, 2024, the Service Centers segment had 1,843 employees, all of whom were full-time. 8 Table of Contents Innovative Pumping Solutions The Company's Innovative Pumping Solutions (“IPS”) segment provides integrated, custom pump skid packages, pump remanufacturing and manufactures branded private label pumps to meet the capital equipment needs of our global customer base.
At December 31, 2025, our SC segment had 1,945 employees, all of whom were full-time. 8 Table of Contents Innovative Pumping Solutions Our Innovative Pumping Solutions (“IPS”) segment provides integrated custom pump skid packages, pump remanufacturing, and manufactures branded private label pumps to meet the capital equipment needs of our global customer base.
Pump packages require MRO products and original equipment manufacturers’ (OEM) equipment such as pumps, motors, valves, and consumable products such as welding supplies. The Company leverages its MRO product inventories and breadth of authorized products to lower the total cost and maintain the quality of our pump packages.
Pump packages require MRO products and original equipment manufacturers’ (OEM) equipment such as pumps, motors, valves, and consumable products such as welding supplies. We also leverage our MRO product inventories and breadth of authorized products to lower the total cost and maintain the quality of our pump packages.
Since 2004, we have completed 58 acquisitions. We continue to evaluate opportunities to acquire businesses and companies that complement and enable further investment in our key priority areas. The risks associated with acquisitions are more fully discussed in “Item 1A. Risk Factors.” including the risk factory entitled “Risks associated with executing our acquisition strategy.”.
Since 2004, we have completed 64 acquisitions. We continue to evaluate opportunities to acquire businesses and companies that complement and enable further investment in our key priority areas. The risks associated with acquisitions are more fully discussed in “ Item 1A. Risk Factors .” including the risk factor entitled “Risks associated with executing our acquisition strategy”.
For the last three fiscal years, no customer accounted for 10% or more of our revenues. Over 90% of our business relates to sales of products. Service revenues are less than 10% of sales. The Company has operations in the U.S., Canada, Mexico, and the U.A.E.
For the last three fiscal years, no customer accounted for 10% or more of our revenues. Over 90% of our business relates to sales of products. Service revenues are less than 10% of sales. We have operations in the U.S., Canada, Mexico, U.A.E., India, and Saudi Arabia.
Jeffery 57 Senior Vice President/Supply Chain Services David Molero Santos 43 Vice President/Chief Accounting Officer 14 Table of Contents David R. Little . Mr.
Jeffery 58 Senior Vice President/Supply Chain Services David Molero Santos 44 Vice President/Chief Accounting Officer 14 Table of Contents David R. Little . Mr.
At December 31, 2024, the IPS segment had 462 employees, all of whom were full-time. 9 Table of Contents Total backlog, representing firm orders for the IPS segment products that have been received and entered into our production systems, was $292.2 million and $138.4 million at December 31, 2024 and 2023, respectively.
At December 31, 2025, our IPS segment had 541 employees, all of whom were full-time. 9 Table of Contents Total backlog, representing firm orders for our IPS segment products that have been received and entered into our production systems, was $325.0 million and $292.2 million at December 31, 2025 and 2024, respectively.
Consolidated Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2024 2023 2022 Sales $ 1,802 $ 1,679 $ 1,481 Operating Income $ 145 $ 139 $ 98 % Margin 8.1 % 8.3 % 6.6 % EBITDA $ 182 $ 170 $ 124 % Margin 10.1 % 10.1 % 8.3 % DXPeople 3,028 2,837 2,675 ______________________________________________________________________________________________________ 7 Table of Contents Service Centers The Service Centers (“SC”) are engaged in providing MRO products, equipment and services, including technical expertise and logistics capabilities, to a variety of customers serving varied end markets with the ability to provide same day delivery.
Consolidated Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2025 2024 2023 Sales $ 2,016 $ 1,802 $ 1,679 Income from operations $ 177 $ 145 $ 139 % Margin 8.8 % 8.1 % 8.3 % EBITDA $ 219 $ 182 $ 170 % Margin 10.8 % 10.1 % 10.1 % DXPeople 3,286 3,028 2,837 ______________________________________________________________________________________________________ 7 Table of Contents Service Centers Our Service Centers (“SC”) are engaged in providing MRO products, equipment and services, including technical expertise and logistics capabilities, to a variety of customers serving varied end markets with the ability to provide same day delivery.
Unlike many other distributors who buy products from second-tier sources, the Company takes customers to the source of the products they need. At December 31, 2024, the SCS segment operated supply chain installations in 86 of our customers’ sites. All of the SCS segment’s long-lived assets are in the U.S. and Mexico.
Unlike many other distributors who buy products from second-tier sources, we take customers to the source of the products they need. At December 31, 2025, our SCS segment operated supply chain installations in 89 of our customers’ sites. All of our SCS segment’s long-lived assets are in the U.S. and Canada.
In the future the Company may not be able to comply with the covenants or, if is not able to do so, that its lenders will be willing to waive such non-compliance or amend such covenants. 23 Table of Contents We may not be able to access acquisition financing, including debt capital.
In the future the Company may not be able to comply with the covenants and, if it is not able to do so, its lenders may not be willing to waive such non-compliance or amend such covenants. We may not be able to access acquisition financing, including debt capital.
The Company is continually investing in its workforce to further talent development, increase employee safety, drive a strong workplace culture, improve compensation and benefits and diversity and inclusion to support our employees’ well-being, and foster their growth and development. Talent Development .
We are continually investing in our workforce to further talent development, increase employee safety, drive a strong workplace culture, improve compensation and benefits, support our diversity and inclusion efforts to improve our employees’ well-being, and foster our employees’ growth and development. Talent Development .
The Company operates under a balanced centralized and decentralized entrepreneurial culture that is crucial to the Company's performance and is one of the three unique elements of the Company's business model.
We operate under a balanced centralized and decentralized entrepreneurial culture that is crucial to our performance and is one of the three unique elements of our business model.
Guided by the Company's Safety Service offering, business and the philosophy that every accident is preventable, the Company strives every day to foster a proactive safety culture.
Guided by our Safety Service offering, business and the philosophy that every accident is preventable, we strive every day to foster a proactive safety culture.
The majority of the SCS segment’s 2024 revenues were recognized in the U.S. At December 31, 2024, the SCS segment had 397 employees, all of whom were full-time. Products Most industrial customers currently purchase their MRO products through local or national distribution companies that are focused on single or unique product categories.
Approximately 7.1% of SCS segment’s revenues were in Canada and the remainder was primarily all in the U.S. At December 31, 2025, our SCS segment had 465 employees, all of whom were full-time. Products Most industrial customers currently purchase their MRO products through local or national distribution companies that are focused on single or unique product categories.
Risks Related to Credit or Access to Debt Capital We may not be able to refinance on favorable terms or may not refinance, extend or repay our debt, which could adversely affect our results of operations or may result in default of our debt.
Our business or results of operations may be adversely affected by these and other negative effects of these events. 23 Table of Contents Risks Related to Credit or Access to Debt Capital We may not be able to refinance on favorable terms or may not refinance, extend or repay our debt, which could adversely affect our results of operations or may result in default of our debt.
The Company's safety strategy is based on the following core principles: (i) a goal of zero accidents, (ii) shared ownership for safety (business and individual); (iii) proactive approach focused on accident prevention; and (iv) continuous improvement philosophy. Workplace Culture.
Our safety strategy is based on the following core principles: 1.) a goal of zero accidents, 2.) shared ownership for safety (business and individual); 3.) proactive approach focused on accident prevention; and 4.) continuous improvement philosophy. 13 Table of Contents Workplace Culture.
Little 73 Chairman of the Board, President and Chief Executive Officer Kent Yee 49 Senior Vice President/Chief Financial Officer/Secretary Nick Little 43 Senior Vice President/Chief Operating Officer Chris Gregory 50 Senior Vice President/Chief Information Technology Officer Paz Maestas 45 Senior Vice President/Chief Marketing & Technology Officer David C. Vinson 74 Senior Vice President/Innovative Pumping Solutions John J.
Little 74 Chairman of the Board, President and Chief Executive Officer Kent Yee 50 Senior Vice President/Chief Financial Officer/Secretary Nick Little 44 Senior Vice President/Chief Operating Officer Chris Gregory 51 Senior Vice President/Chief Information Technology Officer Paz Maestas 46 Senior Vice President/Chief Marketing & Technology Officer John J.
The failure by us to comply with applicable environmental, health and safety requirements could result in significant liabilities including fines, penalties, enforcement actions, third party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup, or regulatory or judicial orders requiring corrective measures, which could negatively impact our business. 25 Table of Contents We are subject to various government regulations, the cost of compliance of such regulations could increase our cost of conducting business and any violations of such regulations could materially adversely affect our financial condition or results of operations.
The failure by us to comply with applicable environmental, health and safety requirements could result in significant liabilities including fines, penalties, enforcement actions, third party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup, or regulatory or judicial orders requiring corrective measures, which could negatively impact our business.
Our IPS segment provides a single source for design, engineering, project management and systems design and fabrication for unique customer specifications. Our sales of integrated pump packages, remanufactured pumps or branded private label pumps are generally derived from customer purchase orders containing the customers’ unique specifications. Sales are directly solicited from customers by our dedicated sales force.
Our sales of integrated custom pump packages, remanufactured pumps, and branded private label pumps are generally derived from customer purchase orders containing the customers’ unique specifications. Sales are directly solicited from customers by our dedicated sales force. Our engineering staff can design a complete custom pump package to meet our customers’ project specifications.
We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment. Our employees have multiple avenues available through which inappropriate behavior can be reported, including a confidential hotline. All reports of inappropriate behavior are promptly investigated with appropriate action taken aimed at stopping such behavior. Labor Relations.
Our employees have multiple avenues available through which inappropriate behavior can be reported, including a confidential hotline. All reports of inappropriate behavior are promptly investigated with appropriate action taken aimed at stopping such behavior. Labor Relations.
As a first-tier distributor, our network of service and distribution centers stock more than 60,000 SKUs and provide customers with access to more than 1,000,000 items. The Company tailors its inventory and leverages product experts to meet the needs of its local customers.
As a first-tier distributor, our network of SC facilities and distribution centers stock more than 60,000 SKUs and provide over 1,000,000 items to our customers. We tailor our assortment of inventory and leverage product experts to meet the needs of our customers.
With over 100 years of fabrication experience, the Company has acquired the technical expertise to ensure that our pumps and pump packages are built to meet the highest standards. The Company utilizes manufacturer authorized equipment and manufacturer certified personnel.
This process helps maximize the pump packages’ life and minimizes any impact to the environment. With over 100 years of fabrication experience, we have acquired the technical expertise to ensure that our pumps and pump packages are built to meet the highest standards. We utilize manufacturer authorized equipment and manufacturer certified personnel.
A majority of our Service Center segment sales are derived from customer purchase orders for products. Sales are directly solicited from customers by our sales force. The Company's Service Centers facilities are stocked and staffed with knowledgeable sales associates and backed by a centralized customer service team of experienced industry professionals.
Sales are directly solicited from customers by our sales force. Our SC facilities are stocked and staffed with knowledgeable sales associates and backed by a centralized customer service team of experienced industry professionals. At December 31, 2025, our SC products and services were distributed from 164 service center facilities and 4 distribution centers.
Given the large dollar amounts and volume of our purchases from suppliers, a change in payment terms may have a material adverse effect on our liquidity and our ability to make payments to our suppliers and, consequently, may have a material adverse effect on us.
Given the large dollar amounts and volume of our purchases from suppliers, a change in payment terms may have a material adverse effect on our liquidity and our ability to make payments to our suppliers and, consequently, may have a material adverse effect on us. 24 Table of Contents Risks Related to Legal and Regulatory Matters Risks associated with substantial or material claims or lawsuits that are not covered by insurance.
The Company believes its colleagues around the world thrive in this culture, as it allows them to experience significant autonomy, a sense of shared ownership with their colleagues, and a work atmosphere deeply rooted in the Company's core values. 13 Table of Contents Compensation and Benefits.
We believe our colleagues around the world thrive in this culture, as it allows them to experience significant autonomy, a sense of shared ownership with their colleagues, and a work atmosphere deeply rooted in our core values. Compensation and Benefits. We are committed to providing market-competitive compensation and benefits to attract and retain great talent across our business segments.
At December 31, 2024, our Service Centers’ products and services were distributed from 157 service center facilities and 4 distribution centers. The Company's Service Centers provide a wide range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, industrial supply and safety product and service categories.
Our SC segment provide a wide range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, industrial supply and safety product, and service categories.
Changes in our customer and product mix, or adverse changes to the cost of goods we sell, could cause our gross margin percentage to fluctuate or decrease, and we may not be able to maintain historical margins.
If customers were to purchase our products directly from manufacturers, or if manufacturers sought to increase their efforts to sell directly to end users, we could experience a significant decrease in sales and earnings. 17 Table of Contents Changes in our customer and product mix, or adverse changes to the cost of goods we sell, could cause our gross margin percentage to fluctuate or decrease, and we may not be able to maintain historical margins.
As a first-tier distributor, we are able to reduce our customers' costs and improve efficiencies in the supply chain. We offer a wide range of industrial MRO products, equipment and services through a continuum of customized and efficient MRO solutions. We also provide services such as field safety supervision, in-house and field repair and predictive maintenance.
We offer a wide range of industrial MRO products, equipment, and services through a continuum of customized and efficient MRO solutions. We also provide services such as field safety supervision, in-house and field repair, and predictive maintenance. A majority of our SC segment sales are derived from customer purchase orders for products.
In the Supply Chain Services segment, we compete with larger distributors that provide integrated supply programs and outsourcing services, some of which might be able to supply their products in a more efficient and cost-effective manner than we can provide.
Our IPS segment competes against a variety of manufacturers, distributors, and fabricators, many of which may have greater financial and other resources than we do. 12 Table of Contents Our SCS segment competes with larger distributors that provide integrated supply programs and outsourcing services, some of which may be able to supply their products in a more efficient and cost-effective manner than we can provide.
We are subject to laws and regulations in every jurisdiction where we operate including the U.S. and certain foreign countries. Compliance with laws and regulations increases our cost of doing business.
We are subject to various government regulations, the cost of compliance of such regulations could increase our cost of conducting business and any violations of such regulations could materially adversely affect our financial condition or results of operations. We are subject to laws and regulations in every jurisdiction where we operate including the U.S. and certain foreign countries.
At December 31, 2024, the Innovative Pumping Solutions segment operated out of 32 facilities, 28 of which are located in the U.S. and two in Canada. All of the IPS segment’s long-lived assets are located in the U.S.
At December 31, 2025, our IPS segment operated out of 36 facilities, 31 of which are located in the U.S., two in Canada, one in the United Arab Emirates (“U.A.E”), one in India, and one in Saudi Arabia. Primarily all of our IPS segment’s long-lived assets are located in the U.S.
This multi-faceted approach allows us to manage the entire MRO products channel for maximum efficiency and optimal control, which ultimately provides our customers with a low-cost solution. The Company takes a consultative approach to determine the strengths and opportunities for improvement within a customer’s MRO products supply chain.
We have developed assessment tools and master plan templates aimed at taking cost out of supply chain processes, streamlining operations and boosting productivity. This multi-faceted approach allows us to manage the entire MRO products channel for maximum efficiency and optimal control, which ultimately provides our customers with a low-cost solution.
The Company is committed to providing market-competitive compensation and benefits to attract and retain great talent across its business segments. Specific compensation and benefits vary and are based on regional practices. In the U.S., the Company focuses on providing a comprehensive, competitive benefits package that supports the health and wellness, educational endeavors, community involvement and financial stability of its colleagues.
Specific compensation and benefits vary and are based on regional practices. In the U.S., we focus on providing a comprehensive, competitive benefits package that supports the health and wellness, educational endeavors, community involvement and financial stability of our colleagues. Our key human capital measures include employee safety, turnover, absenteeism and production.
The Company's engineering staff can design a complete custom pump package to meet our customers’ project specifications. Drafting programs such as SolidWorks and AutoCAD® allow our engineering team to verify the design and layout of packages with our customers prior to the start of fabrication.
Drafting programs such as SolidWorks and AutoCAD® allow our engineering team to verify the design and layout of packages with our customers prior to the start of fabrication. Finite Elemental Analysis programs such as Cosmos Professional are used to design the package to meet all normal and future loads and forces.
Executive Officers The following is a list of the Company's executive officers, their age, positions, and a description of each officer’s business experience as of March 10, 2025. All of our executive officers hold office at the pleasure of the Company's Board of Directors. NAME AGE TITLE David R.
All of our executive officers hold office at the pleasure of the Company's Board of Directors. NAME AGE TITLE David R.
Demand for our products is subject to economic trends affecting our customers and the industries in which they compete in particular.
Risks Related to the Market and Economy A general slowdown in the economy could negatively impact the Company's sales growth and profitability. Economic and industry trends affect the Company's business. Demand for our products is subject to economic trends affecting our customers and the industries in which they compete in particular.
Our foreign operations are subject to certain unique risks, which are more fully disclosed in Item 1A “ Risk Factors, ” “ Risks Associated with Legal and Regulatory Matters ”.
SC segment’s long-lived assets are primarily located in the U.S. and Canada. Approximately 5.2% of the SC segment’s revenues were in Canada and the remainder was primarily all in the U.S. Our foreign operations are subject to certain unique risks, which are more fully disclosed in Item 1A “Risk Factors, ” “ Risks Associated with Legal and Regulatory Matters ”.
Our key human capital measures include employee safety, turnover, absenteeism and production. We frequently benchmark our compensation practices and benefits programs against those of comparable companies and industries and in the geographic areas where our facilities are located.
We frequently benchmark our compensation practices and benefits programs against those of comparable companies and industries and in the geographic areas where our facilities are located. We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
Some of our competitors are small enterprises selling to customers in a limited geographic area. We also compete with catalog distributors, large warehouse stores and, to a lesser extent, manufacturers. While certain catalog distributors provide product offerings as broad as ours, these competitors do not offer the product application, technical expertise and after-the-sale services that we provide.
While certain catalog distributors provide product offerings as broad as ours, these competitors do not offer the product application, technical expertise and after-the-sale services that we provide.
We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization. Our notable health, welfare and retirement benefits include: ● Company subsidized health insurance ● 401(k) Plan with Company matching contributions ● Paid time off Diversity and Inclusion.
Our notable health, welfare and retirement benefits include: ● Company subsidized health insurance ● 401(k) Plan with Company matching contributions ● Paid time off Diversity and Inclusion. We believe we are at our best when we bring together unique perspectives, experiences and ideas.
He holds a Bachelor of Science in Industrial Distribution from Texas A&M University and is also a graduate of the Executive Business Program at Rice University. 15 Table of Contents David Molero Santos. Mr.
Jeffery has served in various significant capacities including branch, area, regional and national sales management as well as sales, marketing, information technology and Service Center vice president roles. He holds a Bachelor of Science in Industrial Distribution from Texas A&M University and is also a graduate of the Executive Business Program at Rice University. David Molero Santos. Mr.
The following chart represents financial information for the last three years and the key end markets our SCS segment currently serves: Supply Chain Services’ Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2024 2023 2022 Sales $ 256 $ 260 $ 240 Operating Income $ 22 $ 22 $ 20 % Margin 8.5 % 8.3 % 8.1 % EBITDA $ 22 $ 22 $ 20 % Margin 8.6 % 8.5 % 8.3 % SCS Employees 397 419 409 ______________________________________________________________________________________________________ The SCS segment enters into long-term contracts with its customers that can be canceled on little or no notice under certain circumstances.
The following chart and table represent financial information for the last three years and the key end markets our SCS segment currently serves: Supply Chain Services’ Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2025 2024 (1) 2023 (1) Sales $ 253 $ 256 $ 260 Income from operations $ 22 $ 22 $ 22 % Margin 8.5 % 8.5 % 8.3 % EBITDA $ 22 $ 22 $ 22 % Margin 8.7 % 8.6 % 8.5 % SCS Employees 465 397 419 (1) Prior period segment disclosures have been recast.
Adjustments are reflected in contract revenue in the period when such estimates are revised. Such adjustments could be material and could result in reduced profitability. 22 Table of Contents Risks Related to the Market and Economy A general slowdown in the economy could negatively impact the Company's sales growth and profitability. Economic and industry trends affect the Company's business.
Adjustments are reflected in contract revenue in the period when such estimates are revised. Such adjustments could be material and could result in reduced profitability. 22 Table of Contents 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.
Headcount by segment and country are as follows: Business Segment Employees Country Employees Service Centers 1,843 United States 2,796 Innovative Pumping Solutions 462 Canada 221 Supply Chain Services 397 Other (1) 11 Corporate 326 Total Employees 3,028 Total Employees 3,028 (1) Includes employees located in Mexico and the U.A.E.
Headcount by segment and country are as follows: Business Segment Employees Country Employees Service Centers 1,945 United States 3,038 Innovative Pumping Solutions 541 Canada 224 Supply Chain Services 465 Other (1) 24 Corporate 335 Total Employees 3,286 Total Employees 3,286 (1) Includes employees located in Mexico, U.A.E., India, & Saudi Arabia Executive Officers The following is a list of the Company's executive officers, their age, positions, and a description of each officer’s business experience as of February 26, 2026.
Our mission is to help our customers become more competitive by reducing their indirect material costs and order cycle time by increasing productivity and by creating enterprise-wide inventory and procurement visibility and control. The Company has developed assessment tools and master plan templates aimed at taking cost out of supply chain processes, streamlining operations and boosting productivity.
Supply Chain Services Our Supply Chain Services (“SCS”) segment manages all or part of our customers’ supply chains including procurement and inventory management. Our mission is to help our customers become more competitive by reducing their indirect material costs and order cycle time through increased productivity and enterprise-wide inventory and procurement visibility and control.
The following chart represents financial information for the last three years and the key end markets our IPS segment currently serves: Innovative Pumping Solutions’ Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2024 2023 2022 Sales $ 323 $ 219 $ 199 Operating Income $ 54 $ 35 $ 25 % Margin 16.6 % 16.1 % 12.5 % EBITDA $ 58 $ 39 $ 36 % Margin 18.0 % 17.8 % 18.1 % IPS Employees 462 383 337 ______________________________________________________________________________________________________ Additionally, our IPS segment provides project solutions and capital equipment to the water and wastewater treatment markets including potable water, bio-solid and residual management and wastewater treatment.
The following chart and table represent financial information for the last three years and the key end markets our IPS segment currently serves: Innovative Pumping Solutions’ Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2025 2024 (1) 2023 (1) Sales $ 390 $ 309 $ 204 Income from operations $ 70 $ 51 $ 32 % Margin 16.6 % 16.6 % 16.1 % EBITDA $ 74 $ 55 $ 36 % Margin 19.0 % 17.8 % 17.6 % IPS Employees 541 462 383 (1) Prior period segment disclosures have been recast.
In the Innovative Pumping Solutions segment we compete against a variety of manufacturers, distributors and fabricators, many of which may have greater financial and other resources than we do.
Our SC segment competes with a variety of industrial supply distributors, some of which may have greater financial and other resources than we do. Some of our competitors are small enterprises selling to customers in a limited geographic area. We also compete with catalog distributors, large warehouse stores and, to a lesser extent, manufacturers.
In 2024 we completed seven acquisitions for a combined total of $174.9 million. See Note 16 - Business Acquisition s for additional information. Competition Our business is highly competitive. In the Service Centers segment we compete with a variety of industrial supply distributors, some of which may have greater financial and other resources than we do.
In 2025, we completed six acquisitions for a combined total consideration of $79.2 million. See Note 16 - Business Acquisitions for additional information. In early 2026, we have completed 3 acquisitions. See Note 22 - Subsequent Events for additional information. Competition Our business is highly competitive.
The following chart represents financial information for the last three years and the key end markets our SC segment currently serves: Service Centers’ Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2024 2023 2022 Sales $ 1,223 $ 1,200 $ 1,041 Operating Income $ 175 $ 172 $ 132 % Margin 14.3 % 14.3 % 12.7 % EBITDA $ 182 $ 178 $ 135 % Margin 14.9 % 14.8 % 13.0 % SC Employees 1,843 1,723 1,651 ______________________________________________________________________________________________________ We offer our customers a single source of supply on an efficient and competitive basis by being a first-tier distributor that can purchase products directly from manufacturers.
The following chart and table represent financial information for the last three years and the key end markets our SC segment currently serves: Service Centers’ Financial Summary and End Markets ______________________________________________________________________________________________________ ($ in millions) 2025 2024 (1) 2023 (1) Sales $ 1,373 $ 1,237 $ 1,215 Income from operations $ 198 $ 180 $ 177 % Margin 14.4 % 14.6 % 14.6 % EBITDA $ 207 $ 185 $ 182 % Margin 15.1 % 15.0 % 15.0 % SC Employees 1,945 1,843 1,723 (1) Prior period segment disclosures have been recast.
The Company believes it is at its best when it brings together unique perspectives, experiences and ideas. The Company is committed to equal employment opportunity, fair treatment and creating diverse and inclusive workplaces where all the Company's colleagues can perform to their full potential.
We are committed to equal employment opportunity, fair treatment and creating diverse and inclusive workplaces where all of our colleagues can perform to their full potential. We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment.
Removed
The Service Centers segment’s long-lived assets are located in the U.S., Canada and the U.A.E. Approximately 6.1% of the Service Centers segment’s revenues were in Canada and the remainder was virtually all in the U.S.
Added
For additional information, please refer to Note 20. Segment Reporting . ______________________________________________________________________________________________________ We offer our customers a single source of supply on an efficient and competitive basis by being a first-tier distributor that can purchase products directly from manufacturers. As a first-tier distributor, we are able to reduce our customers' costs and improve efficiencies in the supply chain.
Removed
Finite Elemental Analysis programs such as Cosmos Professional are used to design the package to meet all normal and future loads and forces. This process helps maximize the pump packages’ life and minimizes any impact to the environment.
Added
Our IPS segment also provides a comprehensive suite of products and services to the water and wastewater treatment market in the United States to meet the capital equipment needs of municipalities, and general contractors.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeComparatively, based on a sensitivity analysis as of December 31, 2023, had short-term interest rates averaged 100 basis points higher (lower) in 2023 than in 2022, it was estimated that interest expense would have fluctuated by approximately $5.5 million. These amounts were estimated by considering the effect of the hypothetical interest rates on variable-rate debt outstanding each year.
Biggest changeComparatively, based on a sensitivity analysis as of December 31, 2024, had short-term interest rates averaged 100 basis points higher (lower) in 2024 than in 2023, it was estimated that interest expense would have fluctuated by approximately $6.5 million. These amounts were estimated by considering the effect of the hypothetical interest rates on variable-rate debt outstanding each year.
To monitor our currency exchange rate risks, we use sensitivity analysis, which measures the effect of devaluation of the Canadian dollar. Also see “Risk Factors,” included in Item 1A of this Report for additional risk factors associated with our business. 44 Table of Contents
To monitor our currency exchange rate risks, we use sensitivity analysis, which measures the effect of devaluation of the Canadian dollar. Also see “Risk Factors,” included in Item 1A of this Report for additional risk factors associated with our business. 46 Table of Contents
To reduce our interest rate risk we may enter into financial derivative instruments, including, but not limited to, interest rate swaps and rate lock agreements to manage and mitigate our exposure. As of December 31, 2024, we had no interest rate hedges in place.
To reduce our interest rate risk, we may enter into financial derivative instruments, including, but not limited to, interest rate swaps and rate lock agreements to manage and mitigate our exposure. As of December 31, 2025, we had no interest rate hedges in place.
Based on a sensitivity analysis as of December 31, 2024, it was estimated that if short-term interest rates average 100 basis points higher (lower) in 2024 than in 2023, interest expense, would fluctuate by $6.5 million before tax.
Based on a sensitivity analysis as of December 31, 2025, it was estimated that if short-term interest rates average 100 basis points higher (lower) in 2025 than in 2024, interest expense, would fluctuate by $8.5 million before tax.

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