dxpe-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


			☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2025


			☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from __________ to __________

Commission file number 0-21513

DXP Enterprises, Inc.

(Exact name of registrant as specified in its charter)


Texas						76-0509661
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

5301 Hollister, Houston, Texas 77040

(Address of principal executive offices, including zip code)

(713) 996-4700


(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

Trading Symbol

Name of Exchange on which Registered

Common Stock par value $0.01

DXPE

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of registrant's Common Stock, par value $0.01 per share outstanding as of May 2, 2025: 15,694,290.

DXP ENTERPRISES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page
PART I: FINANCIAL INFORMATION
	ITEM 1. Financial Statements	3
	a) Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income	3
	b) Unaudited Condensed Consolidated Balance Sheets	4
	c) Unaudited Condensed Consolidated Statements of Cash Flows	5
	d) Unaudited Condensed Consolidated Statements of Equity	6
	e) Notes to Unaudited Condensed Consolidated Financial Statements	7
	ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	17
	ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	26
	ITEM 4. Controls and Procedures	27

PART II: OTHER INFORMATION		28
	ITEM 1. Legal Proceedings	28
	ITEM 1A. Risk Factors	28
	ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
	ITEM 3. Default upon Senior Securities	28
	ITEM 4. Mine Safety Disclosures	28
	ITEM 5. Other Information	28
	ITEM 6. Exhibits	29

SIGNATURES		30

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

DXP ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(in thousands, except per share amounts) (unaudited)


	Three Months Ended March 31,
	2025		2024

Sales	$	476,569	$	412,635
Cost of sales	326,304		288,753
Gross profit	150,265		123,882
Selling, general and administrative expenses	109,750		94,751
Income from operations	40,515		29,131
Interest expense	14,660		15,544
Other income, net (Note 15)	(1,318)		(1,968)
Income before income taxes	27,173		15,555
Provision for income taxes	6,584		4,223
Net income	20,589		11,332


Preferred stock dividend	23		23
Net income attributable to common shareholders	20,566		11,309

Net income	$	20,589	$	11,332
Foreign currency translation adjustments	86		(614)
Comprehensive income	$	20,675	$	10,718

Earnings per share (Note 9):
Basic	$	1.31	$	0.70
Diluted	$	1.25	$	0.67

Weighted average common shares outstanding:
Basic	15,698		16,128
Diluted	16,538		16,968

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DXP ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts) (unaudited)



	March 31, 2025		December 31, 2024
ASSETS
Current assets:
Cash	$	114,283	$	148,320
Restricted cash	—		91
Accounts receivable, net of allowance of $3,537 and $5,172, respectively	357,764		339,365
Inventories	109,876		103,113
Costs and estimated profits in excess of billings	47,844		50,735
Prepaid expenses and other current assets	31,989		20,250

Total current assets	661,756		661,874
Property and equipment, net	97,658		81,556
Goodwill	459,963		452,343
Other intangible assets, net	83,608		85,679
Operating lease right of use assets, net	59,597		46,569
Other long-term assets	19,930		21,473
Total assets	$	1,382,512	$	1,349,494

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of debt	$	6,595	$	6,595
Trade accounts payable	114,301		103,728
Accrued wages and benefits	39,334		41,650
Customer advances	13,477		13,655
Billings in excess of costs and estimated profits	19,779		12,662

Short-term operating lease liabilities	16,608		14,921
Other current liabilities	35,323		50,773
Total current liabilities	245,417		243,984

Long-term debt, net of unamortized debt issuance costs and discounts	620,901		621,684
Long-term operating lease liabilities	44,583		33,159
Other long-term liabilities	26,952		27,879

Total long-term liabilities	692,436		682,722
Total liabilities	937,853		926,706
Commitments and Contingencies (Note 10)
Shareholders' equity:
Series A preferred stock, $1.00 par value; 1,000,000 shares authorized	1		1
Series B preferred stock, $1.00 par value; 1,000,000 shares authorized	15		15
Common stock, $0.01 par value, 100,000,000 shares authorized; 20,402,063 issued and 15,694,290 outstanding at March 31, 2025 and 20,402,861 issued and 15,695,088 outstanding at December 31, 2024	204		204
Additional paid-in capital	220,702		219,511
Retained earnings	410,236		389,670
Accumulated other comprehensive loss	(33,524)		(33,610)
Treasury stock, at cost 4,707,773 and 4,707,773 shares, respectively	(152,975)		(153,003)
Total DXP Enterprises, Inc. equity	444,659		422,788


Total liabilities and equity	$	1,382,512	$	1,349,494

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DXP ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)


	Three Months Ended March 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	20,589	$	11,332
Reconciliation of net income to net cash provided by operating activities:
Depreciation	2,316		2,208
Amortization of intangibles and fixed assets	6,818		5,330
Amortization of debt issuance costs	965		895
Gain on sale of property and equipment	(325)		—
Recovery of credit losses	(1,322)		(1,200)
Payment of contingent consideration liability in excess of acquisition-date fair value	—		(17)
Fair value adjustment on contingent consideration	183		(194)
Restricted stock compensation expense	1,317		864
Deferred income taxes	3,943		(3,056)
Other non-cash items	(6,100)		(1,246)
Changes in operating assets and liabilities, net of effects of businesses acquired:
Accounts receivable	(13,202)		8,993
Costs and estimated profits in excess of billings	2,893		7,052
Inventories	(3,525)		754
Prepaid expenses and other assets	(2,369)		(2,667)
Accounts payable	6,505		(6,811)
Accrued expenses	(3,569)		(892)
Billings in excess of costs and estimated profits	6,764		(1,301)
Income taxes	(18,908)		6,945

Net cash provided by operating activities	$	2,973	$	26,989

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(19,914)		(2,894)
Proceeds from the sale of property and equipment	2,699		—
Acquisition of businesses, net of cash acquired	(12,850)		(39,261)
Net cash used in investing activities	$	(30,065)	$	(42,155)

CASH FLOWS FROM FINANCING ACTIVITIES:



Principal debt payments	(1,624)		(1,375)
Debt issuance costs	(125)		—
Shares repurchased held in treasury	—		(14,815)
Payment for acquisition contingent consideration liability	(3,820)		(983)
Preferred stock dividends paid	(23)		(23)
Payment for employee taxes withheld from stock awards	(126)		(54)
Principal payments on finance leases	(1,365)		(896)
Net cash used in financing activities	$	(7,083)	$	(18,146)
Effect of foreign currency on cash	47		(111)
Net change in cash and restricted cash	(34,128)		(33,423)
Cash and restricted cash at beginning of period	148,411		173,211
Cash and restricted cash at end of period	$	114,283	$	139,788

Supplemental cash flow information (Note 14)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DXP ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands) (unaudited)


	Series A preferred stock		Series B preferred stock		Common stock		Paid-in capital		Retained earnings		Accum other comp loss		Treasury Stock		Total equity
Balance at December 31, 2024	$	1	$	15	$	204	$	219,511	$	389,670	$	(33,610)	$	(153,003)	$	422,788
Preferred dividends paid	—		—		—		—		(23)		—		—		(23)
Compensation expense for restricted stock	—		—		—		1,317		—		—		—		1,317

Tax related items for share based awards	—		—		—		(126)		—		—		—		(126)

Currency translation adjustment	—		—		—		—		—		86		—		86

Excise tax on share repurchases	—		—		—		—		—		—		28		28
Net income	—		—		—		—		20,589		—		—		20,589
Balance at March 31, 2025	$	1	$	15	$	204	$	220,702	$	410,236	$	(33,524)	$	(152,975)	$	444,659


	Series A preferred stock		Series B preferred stock		Common stock		Paid-in capital		Retained earnings		Accum other comp loss		Treasury Stock		Total equity
Balance at December 31, 2023	$	1	$	15	$	345	$	216,482	$	319,271	$	(31,240)	$	(123,995)	$	380,879
Preferred dividends paid	—		—		—		—		(23)		—		—		(23)
Compensation expense for restricted stock	—		—		—		864		—		—		—		864

Tax related items for share based awards	—		—		—		(54)		—		—		—		(54)


Currency translation adjustment	—		—		—		—		—		(614)		—		(614)
Repurchases of shares	—		—		—		—		—		—		(16,805)		(16,805)
Excise tax on share repurchases	—		—		—		—		—		—		(115)		(115)
Net income	—		—		—		—		11,332		—		—		11,332
Balance at March 31, 2024	$	1	$	15	$	345	$	217,292	$	330,580	$	(31,854)	$	(140,915)	$	375,464

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

DXP ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY

DXP Enterprises, Inc. together with its subsidiaries (collectively "DXP," the "Company," "us," "we," or "our") was incorporated in Texas on July 26, 1996. DXP Enterprises, Inc. and its subsidiaries are engaged in the business of distributing maintenance, repair and operating ("MRO") products and services to a variety of end markets and business-to-business customers. Additionally, DXP provides integrated, custom pump skid packages, pump remanufacturing and manufactures branded private label pumps to energy and broad industrial customers. The Company is currently organized into three business segments: Service Centers ("SC"), Innovative Pumping Solutions ("IPS"), and Supply Chain Services ("SCS"). See Note 11 - Segment Reporting for discussion of the business segments.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES

Basis of Presentation

The Company's financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission ("SEC") not all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP are required. The unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2024 that are included in our annual report on Form 10-K filed with the SEC on March 10, 2025 (“Annual Report”).

Certain reclassifications were made to the prior year’s consolidated financial statements to conform to the current year presentation. Such reclassifications did not have a material effect on our consolidated statements of operations and comprehensive income, balance sheets, cash flows or equity.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of results expected for the full fiscal year. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary for the fair statement of the Company's financial position, results of operations and cash flows for the interim periods presented.

All intercompany accounts and transactions have been eliminated in consolidation.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

All new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.

Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU would result in additional disclosures being included in our consolidated financial statements, once adopted. We are currently evaluating the provisions of this ASU.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. We are currently evaluating the provisions of this ASU.

NOTE 4 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Our acquisitions may include contingent consideration as part of the purchase price. The fair value of the contingent consideration is estimated as of the acquisition date based on the present value of the contingent payments to be made using a weighted probability of possible payments. The unobservable inputs used in the determination of the fair value of the contingent consideration include management's assumptions about the likelihood of payment based on the established benchmarks, discount rates, and an internal rate of return analysis. The fair value measurement includes inputs that are Level 3 inputs as they are not observable in the market. Should actual results increase or decrease as compared to the assumptions used in our analysis, the fair value of the contingent consideration obligations will increase or decrease, up to the contracted limit, as applicable. Changes in the fair value of the contingent consideration are measured each reporting period and reflected in our results of operations.

As of March 31, 2025, there was $12.7 million in other current and other long-term liabilities for contingent consideration associated with the recent acquisitions. See further discussion at Note 1 2 - Business Acq uisitions.

The following table provides a reconciliation of the beginning and ending balances and gains or losses recognized during the three months ended March 31, 2025 (in thousands):



	Contingent Consideration







*Beginning balance at December 31, 2024	$	16,322
Acquisitions and settlements:
Acquisitions (Note 12)	—
Settlements	(3,820)
Total remeasurement adjustments:
Changes in fair value recorded in other expense (income), net	183
*Ending Balance at March 31, 2025	$	12,685



*Amounts included in other current liabilities were $7.2 million and $8.0 million for the periods ending March 31, 2025 and December 31, 2024, respectively. Amounts included in other long-term liabilities were $5.5 million and $8.3 million for the periods ending March 31, 2025 and December 31, 2024, respectively.

Sensitivity to Changes in Significant Unobservable Inputs

The significant Level 3 unobservable inputs used in the fair value measurement of contingent consideration related to the acquisitions are annualized EBITDA forecasts developed by the Company's management and the probability of achievement of those EBITDA results. The discount rate used in the calculations was 9.5 percent. Changes in our unobservable inputs in isolation would result in a change to our fair value measurement. As of March 31, 2025, the maximum amount of contingent consideration payable under these arrangements is $14.5 million over three years.

Other financial instruments not measured at fair value on the Company's unaudited condensed consolidated balance sheets at March 31, 2025 and December 31, 2024, but which require disclosure of their fair values include: cash, restricted cash, accounts receivable, trade accounts payable and accrued expenses. The Company believes that the estimated fair value of such instruments at March 31, 2025 and December 31, 2024 approximates their carrying value as reported on the unaudited condensed consolidated balance sheets due to the relative short maturity of these instruments.

See Note 8 - Long-term Debt for fair value disclosures on our asset-backed line of credit and term loan debt under our syndicated credit agreement facilities.

NOTE 5 – INVENTORIES

Inventories are made up of equipment purchased for resale, and materials utilized in the fabrication of industrial and wastewater equipment stated at lower of cost and net realizable value, primarily determined using the weighted average cost method. The Company reviews inventory and records provisions for the difference between cost and net realizable value arising from excess and obsolete items on hand based upon the aging of the inventories, market trends, and continued demand.

The carrying values of inventories are as follows (in thousands):


	March 31, 2025		December 31, 2024
Finished goods	$	93,859	$	89,780
Work in process	16,017		13,333
Inventories	$	109,876	$	103,113

NOTE 6 – CONTRACT ASSETS AND LIABILITIES

Under our customized pump production and water and wastewater project contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets presented as "Costs and estimated profits in excess of billings". However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities that are presented as "Billings in excess of costs and estimated profits" on our unaudited condensed consolidated balance sheets.

Costs and estimated profits on uncompleted contracts and related amounts billed were as follows (in thousands):


	March 31, 2025		December 31, 2024
Costs incurred on uncompleted contracts	$	132,231	$	122,951
Estimated profits, thereon	63,609		58,373
Total costs and estimated profits on uncompleted contracts	195,840		181,324
Less: billings to date	167,775		143,251
Net	$	28,065	$	38,073

Such amounts were included in the accompanying unaudited condensed consolidated balance sheets for March 31, 2025 and December 31, 2024 under the following captions (in thousands):


	March 31, 2025		December 31, 2024
Costs and estimated profits in excess of billings	$	47,844	$	50,735
Billings in excess of costs and estimated profits	(19,779)		(12,662)

Net	$	28,065	$	38,073

During the three months ended March 31, 2025 and 2024, $5.1 million and $1.4 million of the balances that were previously classified as contract liabilities at the beginning of the period were recognized in revenues, respectively. Contract asset and liability changes were primarily due to normal activity and timing differences between our performance and customer payments.

NOTE 7 – INCOME TAXES

Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items, which are recorded in the period in which they occur.

Our effective tax rate from continuing operations was a tax expense of 24.2 percent for the three months ended March 31, 2025 compared to a tax expense of 27.2 percent for the three months ended March 31, 2024. Compared to the U.S. statutory rate for the three months ended March 31, 2025, 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 partially offset by research and development tax credits and other tax credits.

To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts would be classified as a component of income tax provision (benefit) in the financial statements consistent with the Company’s policy.

The Organization of Economic Cooperation and Development (OECD) continues to release additional guidance, including administrative guidance on how Pillar Two rules should be interpreted and applied by jurisdictions as they adopt Pillar Two. A number of countries have utilized the administrative guidance as a starting point for legislation that went into effect January 1, 2024. As of March 31, 2025, DXP anticipates the impact of Pillar Two to be immaterial to the Company based on current legislation that has been enacted to date.

NOTE 8 – LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):


	March 31, 2025		December 31, 2024

ABL Revolver	$	—		$	—
Amended Senior Secured Term Loan B due October 13, 2030(1)	646,253			647,876

Promissory Note due November 1, 2029	1,000			1,000
Total debt	647,253			648,876
Less: current maturities	(6,595)			(6,595)
Total long-term debt	$	640,658		$	642,281
Unamortized discount and debt issuance costs	19,757			20,597
Long-term debt, net of unamortized discount and debt issuance costs	$	620,901		$	621,684
(1) The fair value of the Amended Term Loan B due October 13, 2030 using level 2 input values was $645.4 million and $657.6 million as of March 31, 2025 and December 31, 2024, respectively.

Senior Secured Term Loan B:

On October 3, 2024, the Company entered into an amendment on its existing Senior Secured Term Loan B (the “Term Loan Amendment”), which provides for, among other things, an additional $105.0 million in new incremental commitments. The Term Loan Amendment refinanced the existing Senior Term Loan B and replaced it with an Amended Senior Secured Term Loan B with total borrowings of $649.5 million. The Senior Secured Term Loan B amortizes in equal quarterly installments of 0.25%, with the remaining balance being payable on October 13, 2030, when the facility matures.

As of March 31, 2025 there was $646.3 million outstanding under the Amended Senior Secured Term Loan B.

Interest rate

The interest rate for the Amended Senior Secured Term Loan B was 8.07% and 8.32% as of March 31, 2025 and December 31, 2024, respectively.

Facility Size Increases

The Senior Secured Term Loan B allows for incremental increases in facility size up to an aggregate of $100 million.

Prepayments

We are required to repay the Senior Secured Term Loan B with the proceeds from certain asset sales, certain debt issuances, and certain insurance proceeds. In addition, on an annual basis, we are required to repay an amount equal to 50% of excess cash flow, as defined in the Senior Secured Term Loan B, reducing to 25% if our Total Leverage Ratio is less than or equal to 3.00 to 1.00. No payment of excess cash flow is required if the Total Leverage Ratio is less than or equal to 2.50 to 1.00.

Restrictive Covenants

The Company’s primary financial covenant under the Term Loan B is a Secured Leverage Ratio, The Term Loan B Agreement requires that the Company’s Secured Leverage Ratio as of March 31, 2025 to be less than 5.75 to 1.00.

As of March 31, 2025, the Company’s Secured Leverage Ratio was 2.50 to 1.00.

ABL Revolver:

On July 19, 2022, the Company entered into an Amended and Restated Loan and Security Agreement (the “ABL Credit Agreement”) that provided for a $135.0 million asset-backed revolving line of credit (the "ABL Revolver"). Subject to the conditions set forth in the ABL Credit Agreement, the ABL Revolver may be increased in increments of $10.0 million up to an aggregate of $50.0 million. The ABL Revolver matures on July 19, 2027. Interest accrues on outstanding borrowings at a rate equal to SOFR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average daily excess availability under the ABL Revolver for the most recently completed calendar quarter. Fees payable on the unused portion of the facility range from 0.25% to 0.375% per annum. At March 31, 2025 the unused line fee was 0.375% and there were no amounts outstanding under the ABL Revolver.

Guarantees

Each of our current and future wholly owned material U.S. subsidiaries and DXP Enterprises, Inc. guarantees the obligations of our borrower under the ABL Revolver. Additionally, each of our Canadian subsidiaries guarantees the obligations of our Canadian borrower subsidiaries under the ABL Revolver.

Security

Obligations under the U.S. Borrowing Base are primarily secured, subject to certain exceptions, by a first-priority secure interest in the accounts receivable, inventory and related assets of our wholly owned, material U.S. subsidiaries. The security interest in accounts receivable, inventory, and related assets of the U.S. borrower subsidiaries ranks prior to the security interest in this collateral which secures the Term Loan B. The obligations under the Canadian Borrowing Base are primarily secured, subject to certain exceptions, by a first-priority secure interest in the accounts receivable, inventory and related assets of our wholly owned, material Canadian subsidiaries and our wholly owned material U.S. subsidiaries.

Excess Availability

The borrowing availability under our credit facility was $108.9 million and $125.6 million at March 31, 2025 and December 31, 2024, respectively.

Interest rate

The interest rate for the ABL Revolver was 7.75% and 7.75% as of March 31, 2025 and December 31, 2024, respectively.

Facility Size Increases

The ABL Credit Agreement allows for incremental increases in facility size up to an aggregate of $50 million.

Financial Covenant

The Company's principal financial covenant under the ABL Credit Agreement include a Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio under the ABL Credit Agreement is defined as the ratio for the most recently completed four-fiscal quarter period, of (a) EBITDA minus capital expenditures (excluding those financed or funded with debt (other than the ABL Loans), (ii) the portion thereof funded with the net proceeds from asset dispositions of equipment or real property which the Company is permitted to reinvest pursuant to the Term Loan and the portion thereof funded with the net proceeds of casualty insurance or condemnation awards in respect of any equipment and real estate which DXP is not required to use to prepay the ABL Loans pursuant to the Term Loan B Agreement or with the proceeds of casualty insurance or condemnation awards in respect of any other property) minus cash taxes paid (net of cash tax refunds received during such period), to (b) fixed charges. The Company is restricted from allowing its fixed charge coverage ratio be less than 1.00 to 1.00 during a compliance period, which is triggered when the availability under the ABL Revolver falls below a threshold set forth in the ABL Credit Agreement. As of March 31, 2025, the Company's Fixed Charge Coverage Ratio was 1.88 to 1.00.

The Company was in compliance with all financial covenants as of March 31, 2025.

As of March 31, 2025, the maturities of long-term debt for the next five years and thereafter were as follows (in thousands):


	Amount
2025	$	4,971
2026	6,595
2027	6,595
2028	6,595
2029	7,095
Thereafter	615,402
Total	$	647,253

NOTE 9 - EARNINGS PER SHARE

Basic earnings per share is computed based on weighted average shares outstanding and excludes dilutive securities. Diluted earnings per share is computed including the impacts of all potentially dilutive securities.

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):


	Three Months Ended March 31,
	2025		2024
Basic earnings per share:
Weighted average shares outstanding	15,698		16,128
Net income attributable to DXP Enterprises, Inc.	$	20,589	$	11,332
Convertible preferred stock dividend	23		23
Net income attributable to common shareholders	$	20,566	$	11,309
Per share amount	$	1.31	$	0.70

Diluted earnings per share:
Weighted average shares outstanding	15,698		16,128
Assumed conversion of convertible preferred stock	840		840
Total dilutive shares	16,538		16,968
Net income attributable to common shareholders	$	20,566	$	11,309
Convertible preferred stock dividend	23		23
Net income attributable to DXP Enterprises, Inc.	$	20,589	$	11,332
Per share amount	$	1.25	$	0.67

As of March 31, 2025 and 2024, the weighted average of the unvested restricted stock awards ("RSAs") were 302,647 and 296,425 shares, respectively. The preferred stock is convertible into 840,000 shares of common stock.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. While DXP is unable to predict the outcome or estimate the financial impact of these disputes, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on DXP's consolidated financial position, cash flows, or results of operations.

NOTE 11 - SEGMENT REPORTING

We have three reportable and operating segments: Service Centers, Innovative Pumping Solutions and Supply Chain Services.

The Service Centers segment is engaged in providing maintenance, MRO products and equipment, including logistics capabilities, to industrial customers. The Service Centers segment provides a wide range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, fastener, industrial supply, safety products and safety services categories.

The Innovative Pumping Solutions segment fabricates and assembles custom-made pump packages, re-manufactures pumps, manufactures branded private label pumps, and provides products and process lines for the water and wastewater treatment industries.

The Supply Chain Services segment provides a wide range of MRO products and manages all or part of a customer's supply chain, including warehouse and inventory management.

Sales are shown net of intersegment eliminations.

Segment information is prepared on the same basis that our Chief Executive Officer, who is our chief operating decision maker (“CODM”), manages the segments, evaluates financial results, and makes key operating decisions.

These segments were determined primarily on the distribution channels of the products and services offered and the nature of the customer markets and the primary driver of the customers spend. The Company's CODM directs the allocation of resources to these segments based upon historical and current revenue, direct operating expenses, operating income, and capital expenditures of each respective segment. The allocation of resources across these segments is dependent upon, among other factors, the segments' historical or future expected operating margins; the segments' historical or future expected returns on capital; outlook within a specific market; opportunities to grow profitability; new products, services or new customer accounts; confidence in management; and competitive landscape and intensity.

As a part of the Company's annual business planning, the CODM reviews our reportable segment composition and financial performance. As a result of this review, on January 1st, 2025, we moved certain branch locations previously reported under our IPS segment to our SC segment. Prior period segment information has not been recast, as the changes to our segment composition did not have a material impact on the operating results of our reportable segments.

The following table sets out financial information related to the Company's segments excluding amortization (in thousands):


Three Months Ended March 31,	Service Centers		Innovative Pumping Solutions		Supply Chain Services		Total
2025
Total Revenue	$	327,075	$	86,182	$	63,312	$	476,569
Operating income for reportable segments	47,045		13,406		5,564		66,015
Identifiable assets at year end	782,602		319,897		88,481		1,190,980
Capital expenditures	2,037		574		—		2,611
Depreciation	937		795		8		1,740
Amortization of finance leases	$	1,137	$	192	$	41	$	1,370


Three Months Ended March 31,	Service Centers		Innovative Pumping Solutions		Supply Chain Services		Total
2024
Total Revenue	$	288,435	$	62,216	$	61,984	$	412,635
Operating income for reportable segments	40,320		6,970		5,262		52,552
Identifiable assets at year end	666,756		261,967		86,850		1,015,573
Capital expenditures	906		640		13		1,559

SEC Form 10-Q filed by DXP Enterprises Inc.