{"url_path":"/sec/dxpe/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial Statements and Supplementary Data","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-26","source_url":"https://www.sec.gov/Archives/edgar/data/1020710/0001628280-26-012382-index.html","accession_number":"0001628280-26-012382","cik":"0001020710","ticker":"DXPE","issuer_name":"DXP ENTERPRISES INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1020710/0001628280-26-012382-index.html","primary_entity_key":"0001020710","primary_entity_name":"DXP ENTERPRISES INC"},"word_count":14715,"has_tables":true,"body_markdown":"ITEM 8. Financial Statements and Supplementary Data\n\nTABLE OF CONTENTS\n\n Page\n\nReport of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP) PCAOB ID: 238\n\n[4](#i32cf9fb7e1ae41b68565f24f0e69f011_133)[8](#i32cf9fb7e1ae41b68565f24f0e69f011_133)\n\nConsolidated Statements of Operations and Comprehensive Income\n\n[51](#i32cf9fb7e1ae41b68565f24f0e69f011_142)\n\nConsolidated Balance Sheets\n[52](#i32cf9fb7e1ae41b68565f24f0e69f011_145)\n\nConsolidated Statements of Cash Flows\n[53](#i32cf9fb7e1ae41b68565f24f0e69f011_148)\n\nConsolidated Statements of Equity\n[54](#i32cf9fb7e1ae41b68565f24f0e69f011_151)\n\nNotes to Consolidated Financial Statements\n[55](#i32cf9fb7e1ae41b68565f24f0e69f011_157)\n\n47\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nReport of Independent Registered Public Accounting Firm\n\nTo the Board of Directors and Shareholders of DXP Enterprises, Inc.\n\nOpinions on the Financial Statements and Internal Control over Financial Reporting\n\nWe have audited the accompanying consolidated balance sheets of DXP Enterprises, Inc. and its subsidiaries (the \"Company\") as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the \"consolidated financial statements\"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).\n\nIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.\n\nBasis for Opinions\n\nThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.\n\nOur audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.\n\nAs described in Management’s Report on Internal Control over Financial Reporting, management has excluded seven entities from its assessment of internal control over financial reporting as of December 31, 2025 because they were acquired by the Company in purchase business combinations during 2025. We have also excluded these seven entities from our audit of internal control over financial reporting. These\n\n48\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nentities, each of which is wholly-owned, comprised, in the aggregate, total assets and total sales excluded from management’s assessment and our audit of internal control over financial reporting of approximately 2% of the related consolidated financial statement amounts as of and for the year ended December 31, 2025.\n\nDefinition and Limitations of Internal Control over Financial Reporting\n\nA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.\n\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\n\nCritical Audit Matters\n\nThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.\n\nRevenue Recognized Over Time - Estimated Costs to Complete Open Contracts\n\nAs described in Note 2 to the consolidated financial statements, revenue recognized under the percentage-of-completion method was $373.3 million for the year ended December 31, 2025. As disclosed by management, the Company has contracts to assemble, fabricate and or deliver tangible assets to customer specifications that can range from three to eighteen months or more. The Company accounts for these contracts under the percentage-of-completion method of accounting. Under this method, the Company recognizes sales and profit based upon the cost-to-cost method, in which sales and profit are recorded based upon the ratio of costs incurred to estimated total costs to complete the asset. The percentage-of-completion method of accounting requires management to estimate the project costs at completion. Revenues are estimated based upon the original contract price and change orders. Contract costs may be incurred over a period of several months, and the estimation of these costs requires judgment based upon the acquired knowledge and experience of program managers, engineers, and finance professionals. Estimated costs are based primarily on purchase contract terms and assumptions relating to items such as cost of materials, labor productivity and cost, and overhead.\n\nThe principal considerations for our determination that performing procedures relating to the estimated costs to complete open contracts associated with revenue recognized over time is a critical audit matter are (i) the significant judgment by management when developing the estimated costs to complete open contracts and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to estimated costs of materials.\n\n49\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nAddressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the estimated costs to complete open contracts. These procedures also included, among others, for a sample of open contracts (i) testing management’s process for developing the estimated costs to complete the open contracts as of year end and (ii) evaluating the reasonableness of the significant assumption used by management related to estimated costs of materials. Evaluating management’s assumption related to estimated costs of materials involved (i) obtaining and inspecting executed purchase orders and agreements; (ii) considering customer specifications and associated vendor quotes; and (iii) performing a comparison of the originally estimated and actual costs of materials incurred on similar completed contracts.\n\n/s/ PricewaterhouseCoopers LLP\n\nHouston, Texas\n\nFebruary 26, 2026\n\nWe have served as the Company’s auditor since 2022.\n\n50\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nDXP ENTERPRISES, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME\n\n(in thousands, except per share amounts)\n\n \nTwelve Months Ended December 31,\n\n 202520242023\n\nSales$2,016,365 $1,802,040 $1,678,600 \n\nCost of sales1,380,437 1,245,763 1,173,309 \n\nGross profit635,928 556,277 505,291 \n\nSelling, general and administrative expenses\n459,058 410,895 366,569 \n\nIncome from operations\n176,870 145,382 138,722 \n\nInterest expense60,530 63,927 53,146 \n\nOther income ([Note 18](#i32cf9fb7e1ae41b68565f24f0e69f011_220))\n(2,882)(3,517)(1,355)\n\nIncome before income taxes\n119,222 84,972 86,931 \n\nProvision for income taxes ([Note 10](#i32cf9fb7e1ae41b68565f24f0e69f011_193))\n30,545 14,483 18,119 \n\nNet income\n88,677 70,489 68,812 \n\nPreferred stock dividend90 90 90 \n\nNet income attributable to common shareholders\n$88,587 $70,399 $68,722 \n\nNet income\n$88,677 $70,489 $68,812 \n\nForeign currency translation adjustments\n3,003 (2,370)435 \n\nComprehensive income\n$91,680 $68,119 $69,247 \n\nEarnings per share [(Note 12)](#i32cf9fb7e1ae41b68565f24f0e69f011_199):\n\n    Basic$5.65 $4.44 $4.07 \n\n    Diluted $5.37 $4.22 $3.89 \n\nWeighted average common shares outstanding:\n\n    Basic15,667 15,861 16,870 \n\n    Diluted16,507 16,701 17,710 \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n51\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nDXP ENTERPRISES, INC. AND SUBSIDIARIES\n\nCONSOLIDATED BALANCE SHEETS\n\n(in thousands, except share amounts)\n\n December 31, 2025December 31, 2024\n\nASSETS  \n\nCurrent assets:  \n\nCash$303,783 $148,320 \n\nRestricted cash— 91 \n\nAccounts receivable, net of allowance of $3,995 and $5,172, respectively\n397,502 339,365 \n\nInventories108,144 103,113 \n\nCosts and estimated profits in excess of billings53,855 50,735 \n\nPrepaid expenses and other current assets47,033 20,250 \n\nTotal current assets910,317 661,874 \n\nProperty and equipment, net114,822 81,556 \n\nGoodwill494,561 452,343 \n\nOther intangible assets, net\n81,351 85,679 \n\nOperating lease right of use assets, net\n74,709 46,569 \n\nOther long-term assets9,395 21,473 \n\nTotal assets$1,685,155 $1,349,494 \n\nLIABILITIES AND EQUITY \n\nCurrent liabilities: \n\nCurrent maturities of debt\n$8,580 $6,595 \n\nTrade accounts payable116,765 103,728 \n\nAccrued wages and benefits51,180 41,650 \n\nCustomer advances15,460 13,655 \n\nBillings in excess of costs and estimated profits 15,689 12,662 \n\nShort-term operating lease liabilities19,038 14,921 \n\nOther current liabilities45,769 50,773 \n\nTotal current liabilities272,481 243,984 \n\nLong-term debt, net of unamortized debt issuance costs and discounts\n818,476 621,684 \n\nLong-term operating lease liabilities57,509 33,159 \n\nOther long-term liabilities38,250 27,879 \n\nTotal long-term liabilities914,235 682,722 \n\nTotal liabilities1,186,716 926,706 \n\nCommitments and Contingencies ([Note 17](#i32cf9fb7e1ae41b68565f24f0e69f011_217))\n\nShareholders' Equity: \n\nSeries A preferred stock, $1.00 par value; 1,000,000 shares authorized\n1 1 \n\nSeries B preferred stock, $1.00 par value; 1,000,000 shares authorized\n15 15 \n\nCommon stock, $0.01 par value, 100,000,000 shares authorized; 20,403,647 issued and 15,513,590 outstanding at December 31, 2025 and 20,402,861 issued and 15,695,088 outstanding at December 31, 2024\n204 204 \n\nAdditional paid-in capital220,681 219,511 \n\nRetained earnings478,257 389,670 \n\nAccumulated other comprehensive loss(30,607)(33,610)\n\nTreasury stock, at cost 4,890,057 and 4,707,773 shares, respectively\n(170,112)(153,003)\n\nTotal DXP Enterprises, Inc. equity498,439 422,788 \n\nTotal liabilities and equity$1,685,155 $1,349,494 \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n52\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nDXP ENTERPRISES, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(in thousands)\n\n \nTwelve Months Ended December 31,\n\n 202520242023\n\nCASH FLOWS FROM OPERATING ACTIVITIES:   \n\nNet income\n$88,677 $70,489 $68,812 \n\nReconciliation of net income to net cash provided by operating activities:\n  \n\nDepreciation10,372 9,019 8,423 \n\nAmortization of intangibles and finance lease assets\n28,478 24,386 21,682 \n\nAmortization of debt issuance costs4,041 3,646 2,991 \n\nGain on sale of property and equipment(491)— — \n\nProvision for (recovery of) credit losses\n220 (887)(885)\n\nPayment of contingent consideration liability in excess of acquisition-date fair value(1,228)(108)(160)\n\nFair value adjustment on contingent consideration1,406 745 1,738 \n\nLoss on debt extinguishment\n— 494 1,201 \n\nRestricted stock compensation expense\n5,708 4,714 3,072 \n\nDeferred income taxes27,358 (14,990)(9,059)\n\nOther non-cash items(11,390)3,877 2,342 \n\nChanges in operating assets and liabilities, net of effects of businesses acquired:\n\nAccounts receivable\n(41,502)(12,552)13,293 \n\nCost and estimated profits in excess of billings\n(3,064)(8,506)(18,720)\n\nInventories1,037 8,432 (2,026)\n\nPrepaid expenses and other assets\n(5,732)2,643 3,830 \n\nTrade accounts payable532 (3,473)2,144 \n\nAccrued expenses17,875 2,009 5,649 \n\nBillings in excess of costs and estimated profits\n2,951 3,263 (916)\n\nIncome taxes(30,984)9,010 2,811 \n\nNet cash provided by operating activities$94,264 $102,211 $106,222 \n\nCASH FLOWS FROM INVESTING ACTIVITIES:  \n\n  Purchase of property and equipment(40,286)(25,068)(12,263)\n\n  Proceeds from the sale of property and equipment2,715 — — \n\n  Acquisition of businesses, net of cash acquired(61,675)(156,624)(10,384)\n\nNet cash used in investing activities$(99,246)$(181,692)$(22,647)\n\nCASH FLOWS FROM FINANCING ACTIVITIES:  \n\nBorrowings on asset-backed credit facility\n— 6,000 7,870 \n\nRepayments on asset-backed credit facility\n— (6,000)(7,870)\n\nBorrowings on Senior Secured Term Loan B\n848,005 649,500 550,000 \n\nRepayments on Senior Secured Term Loan B\n(643,005)(544,500)(424,856)\n\nPrincipal payments on debt\n(7,091)(5,749)(4,652)\n\n  Debt issuance costs(3,173)(2,309)(12,061)\n\n  Shares repurchased held in treasury\n(17,109)(29,007)(56,215)\n\n  Payment for acquisition contingent consideration liability\n(7,538)(5,000)(5,673)\n\n  Preferred stock dividends paid(90)(90)(90)\n\n  Payment for employee taxes withheld from stock awards(4,539)(1,826)(527)\n\n  Principal payments on finance leases(6,592)(4,216)(2,347)\n\nNet cash provided by financing activities\n$158,868 $56,803 $43,579 \n\nEffect of foreign currency on cash1,486 (2,122)(60)\n\nNet change in cash and restricted cash\n155,372 (24,800)127,094 \n\nCash and restricted cash at beginning of year\n148,411 173,211 46,117 \n\nCash and restricted cash at end of year\n$303,783 $148,411 $173,211 \n\nSupplemental cash flow information ([Note 15](#i32cf9fb7e1ae41b68565f24f0e69f011_211))\n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n53\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nDXP ENTERPRISES, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF EQUITY\n\n(in thousands)\n\n Series A preferred StockSeries B preferred StockCommon StockPaid-in CapitalRetained earnings\nAccum Other Comp Loss\nTreasury stockTotal equity\n\nBalance at December 31, 2022$1 $15 $345 $213,937 $250,549 $(31,675)$(67,780)$365,392 \n\nPreferred dividends paid— — — — (90)— — (90)\n\nCompensation expense for restricted stock— — — 3,072 — — — 3,072 \n\nTax related items for share based awards— — — (527)— — — (527)\n\nIssuance of shares of common stock— — — — — — — — \n\nCurrency translation adjustment— — — — — 435 — 435 \n\nRepurchases of shares— — — — — — (55,696)(55,696)\n\nExcise tax on share repurchases\n— — — — — — (519)(519)\n\nNet income\n— — — — 68,812 — — 68,812 \n\nBalance at December 31, 2023$1 $15 $345 $216,482 $319,271 $(31,240)$(123,995)$380,879 \n\nPreferred dividends paid— — — — (90)— — (90)\n\nCompensation expense for restricted stock— — — 4,714 — — — 4,714 \n\nTax related items for share based awards— — — (1,826)— — — (1,826)\n\nOther\n— — (141)141 — — — — \n\nCurrency translation adjustment— — — — — (2,370)— (2,370)\n\nRepurchases of shares— — — — — — (28,783)(28,783)\n\nExcise tax on share repurchases\n— — — — — — (225)(225)\n\nNet income\n— — — — 70,489 — — 70,489 \n\nBalance at December 31, 2024$1 $15 $204 $219,511 $389,670 $(33,610)$(153,003)$422,788 \n\nPreferred dividends paid— — — — (90)— — (90)\n\nCompensation expense for restricted stock— — — 5,708 — — — 5,708 \n\nTax related items for share based awards— — — (4,538)— — — (4,538)\n\nCurrency translation adjustment — — — — — 3,003 — 3,003 \n\nRepurchases of shares— — — — — — (16,994)(16,994)\n\nExcise tax on share repurchases\n— — — — — — (115)(115)\n\nNet income— — — — 88,677 — — 88,677 \n\nBalance at December 31, 2025$1 $15 $204 $220,681 $478,257 $(30,607)$(170,112)$498,439 \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n54\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nDXP ENTERPRISES INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nNOTE 1 - THE COMPANY\n\nDXP Enterprises, Inc. together with its subsidiaries (collectively “DXP,” “Company,” “us,” “we,” or “our”) was incorporated in Texas on July 26, 1996. The Company and its subsidiaries are engaged in the business of distributing maintenance, repair and operating (MRO) products, and service to customers serving a variety of end markets. Additionally, the Company provides integrated, custom pump skid packages, pump remanufacturing and manufactures branded private label pumps to energy and industrial customers. The Company is organized into three business segments: Service Centers (“SC”), Innovative Pumping Solutions (“IPS”), and Supply Chain Services (“SCS”). See [Note 20 - Segment Reporting](#i32cf9fb7e1ae41b68565f24f0e69f011_229) for discussion of the business segments.\n\nNOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES\n\nBasis of Presentation\n\nThe Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries.\n\nAll intercompany accounts and transactions have been eliminated in consolidation.\n\nReclassifications\n\nCertain 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.\n\nBusiness Combinations\n\nWe allocate the total purchase price of a business combination to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date, with the excess purchase price recorded as goodwill. For material acquisitions, we engage third-party valuation specialists to assist us in determining the fair value of the assets acquired and liabilities assumed, including goodwill, based on recognized business valuation methodologies. If the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. Subsequent to the acquisition, and not later than one year from the acquisition date, we will record any material adjustments to the initial estimate in the reporting period in which the adjustment amounts are determined based on facts and circumstances that existed as of the acquisition date, as applicable. Generally, we use an income valuation method to estimate the fair value of the assets acquired or liabilities assumed in a business combination. However, a market or cost valuation method may be utilized.\n\nWe expense acquisition-related costs as incurred in connection with each business combination.\n\nForeign Currency\n\nThe financial statements of the Company’s foreign subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss). Gains and losses on transactions denominated in foreign currency are reported in the consolidated statements of operations and comprehensive income (loss).\n\nUse of Estimates\n\nThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.\n\n55\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nCash\n\nThe Company places its cash with institutions with high credit quality. However, at certain times, such cash may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not historically experienced any losses when in excess of these limits.\n\nReceivables and Credit Risk\n\nTrade receivables consist primarily of uncollateralized customer obligations due under normal trade terms, which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and customers may not pay within stated trade terms.\n\nThe Company has trade receivables from a diversified customer base located primarily in the Rocky Mountain, Northeastern, Midwestern, Southeastern and Southwestern regions of the U.S. and Canada. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers' financial positions and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically based upon management’s best estimate of the collectability of such accounts under the current expected credit losses model. The Company writes off uncollectible trade accounts receivable when the accounts are determined to be uncollectible. No customer represents more than 10% of consolidated sales.\n\nChanges in this allowance for 2025 and 2024 are as follows (in thousands):\n\n 20252024\n\nBeginning balance, January 1\n$5,172 $5,584 \n\nCharges to (recoveries of) expense\n220 (887)\n\nForeign currency translation\n(73)(42)\n\nWrite-offs and other\n(1,324)517 \n\nEnding balance, December 31\n$3,995  $5,172 \n\nInventories\n\nInventories are comprised 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 regularly 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.\n\nThe carrying values of inventories are as follows (in thousands):\n\nDecember 31,\n\n 20252024\n\nFinished goods$98,089 $89,780 \n\nWork in process10,055 13,333 \n\nInventories$108,144 $103,113 \n\nProperty and Equipment\n\nProperty and equipment are recorded on a historical cost basis. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives. Maintenance and repairs of depreciable assets are charged against earnings as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and gains or losses are credited or charged to earnings.\n\nThe principal estimated useful lives used in determining depreciation are as follows:\n\nBuildings\n20-39 years\n\nBuilding improvements\n10-20 years\n\nFurniture, fixtures and equipment\n3-20 years\n\nLeasehold improvementsShorter of estimated useful life or related lease term\n\n56\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nImpairment of Goodwill and Other Intangible Assets\n\nThe Company tests goodwill for impairment on an annual basis on October 1st and when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assigns the carrying value of goodwill 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.\n\nThe Company’s goodwill impairment assessment first permits evaluating qualitative factors to determine if a reporting unit's carrying value would more likely than not exceed its fair value. If the Company concludes, based on the qualitative assessment, that a reporting unit's carrying value would more likely than not exceed its fair value, the Company would perform a quantitative test for that reporting unit. Should the reporting unit's carrying amount exceed the fair value, then an impairment charge for the excess would be recognized. The impairment charge is limited to the amount of goodwill allocated to the reporting unit and goodwill will not be reduced below zero. The Company performed qualitative tests and determined no impairment of goodwill was required for the years ended December 31, 2025, 2024 and 2023.\n\nImpairment of Long-Lived Assets, Excluding Goodwill\n\nThe Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. No impairment of long-lived assets was required for the years ended December 31, 2025, 2024 and 2023.\n\nRevenue Recognition\n\nThe Company primarily provides purchased products distributed through its local Service Centers and provides services through its local branch network and recognizes revenue at a point in time when control of the product or service performed transfers to the customer, typically upon shipment or completion from a DXP facility or directly from a supplier or completion of the service. Revenue is measured at the amount of consideration expected to be received in exchange for the products and services provided, net of allowances for product returns, and any taxes collected from customers that will be remitted to governmental authorities. The Service Centers segment primarily provides a wide range of maintenance, repair and operating (MRO) products, equipment and integrated services, including logistics capabilities, to industrial customers. The Supply Chain Services segment also provides a wide range of MRO products as well as manages all or part of various customers' supply chain, including warehouse and inventory management services. Revenue is recognized upon the completion of our performance obligation(s) under the sales agreement. The majority of the Service Centers and Supply Chain Services segment revenues originate from the satisfaction of a single performance obligation--the delivery of products. Revenues are recognized when an agreement is in place, the performance obligations under the contract have been satisfied, and the price or consideration to be received is fixed and allocated to the performance obligation(s) in the contract. We believe our performance obligation has been satisfied when title passes to the customer or services have been rendered under the contract. Revenues are recorded net of sales taxes. The Company reserves for potential customer returns based upon historical levels.\n\n57\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nThe Company also assembles, kits, and fabricates custom-made pump packages, remanufactures pumps, and manufactures branded private label pumps substantially within our Innovative Pumping Solutions segment. For binding agreements to assemble, fabricate and direct tangible assets to customer specifications, the Company recognizes revenues over time when the customer is able to direct the use of and obtain substantially all of the benefits of the work performed. This occurs when the products have no alternative use for us and we have a right to payment for the work completed to date plus a reasonable profit margin. Contracts include cancellation provisions that require the customer to reimburse us for costs incurred through the date of cancellation. We recognize revenue for these contracts using the percentage of completion method, an “input method” as defined by ASC 606, “Revenue from Contracts with Customers”. Under this method, we recognize sales and profit based upon the cost-to-cost method, in which sales and profit are recorded based upon the ratio of costs incurred to estimated total costs to complete the asset. The percentage-of-completion method of accounting requires the Company to estimate the project costs at completion. Revenues are estimated based upon the original contract price and change orders. Contract costs may be incurred over a period of several months, and the estimation of these costs requires judgment based upon the acquired knowledge and experience of program managers, engineers, and finance professionals. Estimated costs are based primarily on purchase contract terms and estimated cost of materials, labor productivity and cost, and overhead. Percentage of completion revenues were $373.3 million, $293.3 million, and $311.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.\n\nShipping and Handling Costs\n\nThe Company classifies shipping and handling charges billed to customers as sales. Shipping and handling charges paid to others are classified as a component of cost of sales.\n\nCost of Sales and Selling, General and Administrative Expense\n\nCost of sales includes product and product-related costs, inbound freight charges, internal transfer costs, and depreciation. Selling, general and administrative expenses include purchasing and receiving costs, inspection costs, warehousing costs, depreciation, and amortization.\n\nIncome Taxes\n\nThe Company utilizes the asset and liability method of accounting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and income tax bases of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established to reduce deferred income tax assets to the amounts expected to be realized under a more likely than not criterion.\n\nAccounting for Uncertainty in Income Taxes\n\nA position taken or expected to be taken in a tax return is recognized in the financial statements when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. 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 believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.\n\nComprehensive Income\n\nComprehensive income includes net income and foreign currency translation adjustments. The Company’s other comprehensive income is from translating balances at foreign subsidiaries to the reporting currency. \n\n58\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS\n\nAll 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.\n\nRecently Adopted Accounting Pronouncements\n\nIn 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; however, a retrospective basis is permitted for annual periods beginning after December 15, 2024. Early adoption of this standard is permitted. The Company adopted this accounting standard update using a retrospective approach effective December 31, 2025, and included the required income tax disclosures in our notes to the financial statements. This ASU resulted in required additional disclosures with no impact to our consolidated financial statements. See further discussion at [Note 10 - Income Taxes](#i32cf9fb7e1ae41b68565f24f0e69f011_193).\n\nAccounting Pronouncements Not Yet Adopted\n\nIn 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 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.\n\nNOTE 4 - LEASES\n\nWe lease office space, warehouses, land, automobiles, buildings, and manufacturing equipment. Some of our leases include one or more renewal options to extend the lease term, which can be exercised at our sole discretion. Our lease agreements may include options to purchase the leased property. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements.\n\nThe following table presents components of lease cost (in thousands):\n\n \nTwelve Months Ended December 31,\n\n 202520242023\n\nOperating lease costs\n$23,059 $21,210 $21,575 \n\nFinance lease costs:\n\nAmortization of assets\n6,808 4,559 3,451 \n\nInterest on lease liabilities\n1,467 1,108 595 \n\nTotal finance lease costs\n8,275 5,667 4,046 \n\nTotal operating and finance lease costs$31,334 $26,877 $25,621 \n\n59\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nThe following table presents the consolidated balance sheet location of assets and liabilities related to operating and finance leases (in thousands):\n\nDecember 31,\n\nBalance Sheet Location\n20252024\n\nOperating\n\nOperating lease right of use assets, net\n$74,709 $46,569 \n\nFinance\n\nProperty and equipment, net\n20,106 15,829 \n\nTotal lease assets\n$94,815 $62,398 \n\nCurrent operating\nShort-term operating lease liabilities19,038 14,921 \n\nNon-current operating\nLong-term operating lease liabilities57,509 33,159 \n\nCurrent finance\n\nOther current liabilities\n7,660 5,321 \n\nNon-current finance\n\nOther long-term liabilities\n13,223 11,055 \n\nTotal lease liabilities$97,430 $64,456 \n\nAs most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.\n\nAs of December 31, 2025 maturities of lease liabilities are as follows (in thousands):\n\nFinance\n\nOperating\n\n2026$8,894 $24,481 \n\n20277,246 20,671 \n\n20284,839 15,565 \n\n20292,014 12,112 \n\n2030149 9,502 \n\nThereafter— 10,569 \n\nTotal future lease payments\n23,142 92,900 \n\nLess: imputed interest2,259 16,353 \n\nTotal lease liability balance\n$20,883 $76,547 \n\nThe following table presents cash paid for leases, assets exchanged for operating and finance leases, and weighted average remaining lease terms, and discount rates:\n\nDecember 31,\n\n20252024\n\nCash paid for operating leases\n$22,658 $20,886 \n\nCash paid for finance leases\n$6,592 $4,216 \n\nAssets obtained in exchange for operating lease obligations, initial recognition\n$23,499 $4,551 \n\nAssets obtained in exchange for finance lease obligations\n$10,965 $8,441 \n\nWeighted-average remaining lease term - operating leases\n4.8 years\n3.9 years\n\nWeighted-average remaining lease term - finance leases\n3.0 years3.2 years\n\nWeighted average discount rate - operating leases\n8.3%8.1%\n\nWeighted-average discount rate - finance leases\n7.5%8.5%\n\nThe Company incurred approximately $2.3 million, $1.9 million, and $1.8 million in lease expenses to entities controlled by the Company's Chief Executive Officer and family for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n60\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 5 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES\n\nAuthoritative guidance for financial assets and liabilities measured on a recurring basis applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis. Fair value, as defined in the authoritative guidance, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance affects the fair value measurement of an investment with quoted market prices in an active market for identical instruments, which must be classified in one of the following categories:\n\nLevel 1 Inputs\n\nLevel 1 inputs come from quoted prices (unadjusted) in active markets for identical assets or liabilities.\n\nLevel 2 Inputs\n\nLevel 2 inputs are other than quoted prices that are observable for an asset or liability. These inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.\n\nLevel 3 Inputs\n\nLevel 3 inputs are unobservable inputs for the asset or liability which require the Company's own assumptions. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.\n\nOur 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 and discount rates based on an internal rate of return analysis. The fair value measurement includes inputs that are Level 3 inputs as discussed above, 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 during each reporting period and reflected in our results of operations.\n\nDuring the twelve months ended December 31, 2025, we recorded $13.8 million in other current and other long-term liabilities for contingent consideration. See further discussion at [Note 16 - Business Acquisitions](#i32cf9fb7e1ae41b68565f24f0e69f011_214).\n\n61\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nFor the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein and gains or losses recognized during the last three fiscal years (in thousands):\n\n Contingent Consideration\n\nBalance at December 31, 2022$10,166 \n\nAcquisitions and settlements:\n\n     Acquisitions2,682 \n\n     Settlements\n(5,833)\n\nTotal remeasurement adjustments:\n\n     Changes in fair value recorded in other (income) expense, net\n1,738 \n\nBalance at December 31, 20238,753 \n\nAcquisitions and settlements:\n\n     Acquisitions\n11,932 \n\n     Settlements\n(5,108)\n\nTotal remeasurement adjustments:\n\n     Changes in fair value recorded in other (income) expense, net\n745 \n\nBalance at December 31, 2024(1)\n16,322 \n\nAcquisitions and settlements:\n\n     Acquisitions ([Note 16](#i32cf9fb7e1ae41b68565f24f0e69f011_214))\n4,813 \n\n     Settlements(8,766)\n\nTotal remeasurement adjustments:\n\n     Changes in fair value recorded in other (income) expense, net1,406 \n\nBalance at December 31, 2025(1)\n$13,775 \n\n(1) Amounts included in other current liabilities were $9.4 million and $8.0 million for the periods ending December 31, 2025 and December 31, 2024, respectively. Amounts included in other long-term liabilities were $4.4 million and $8.3 million for the periods ending December 31, 2025 and December 31, 2024, respectively.\n\nQuantitative Information about Level 3 Fair Value Measurements\n\nThe significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:\n\nFair Value at December 31, 2025Valuation TechniqueSignificant Unobservable Inputs\n\n$13,775 Discounted cash flowAnnualized EBITDA and probability of achievement\n\nSensitivity to Changes in Significant Unobservable Inputs\n\nThe 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 calculation was 8.3%. A decrease in discount rates would increase the contingent consideration liability, whereas an increase or decrease in EBITDA forecasts would increase or decrease the contingent liability. Changes in our unobservable inputs in isolation would result in a change to our fair value measurement. As of December 31, 2025, the maximum amount of contingent consideration payable under these arrangements is $14.9 million over three years.\n\nOther financial instruments not measured at fair value on the Company's consolidated balance sheets at December 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 December 31, 2025 and December 31, 2024 approximates their carrying value as reported on the consolidated balance sheets due to the relative short maturity of these instruments.\n\n62\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nSee [Note 9 - Long-term Debt](#i32cf9fb7e1ae41b68565f24f0e69f011_190) for fair value disclosures on our asset-backed line of credit and term loan debt under our syndicated credit agreement facilities.\n\nNOTE 6 – CONTRACT ASSETS AND LIABILITIES\n\nUnder our customized pump production 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 “Cost and estimated profits in excess of billings” on our Consolidated Balance Sheets. 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 Consolidated Balance Sheets.\n\nCosts and estimated profits on uncompleted contracts and related amounts billed were as follows (in thousands):\n\n December 31,\n\n 202520242023\n\nCosts incurred on uncompleted contracts$147,866 $122,951 $92,363 \n\nEstimated profits, thereon71,260 58,373 37,379 \n\nTotal costs and estimated profits on uncompleted contracts\n219,126 181,324 129,742 \n\nLess: billings to date180,960 143,251 96,925 \n\nTotal\n$38,166 $38,073 $32,817 \n\nSuch amounts were included in the accompanying Consolidated Balance Sheets for 2025 and 2024 under the following captions (in thousands):\n\n December 31,\n\n 202520242023\n\nCosts and estimated profits in excess of billings $53,855 $50,735 $42,323 \n\nBillings in excess of costs and estimated profits(15,689)(12,662)(9,506)\n\nNet contract assets\n$38,166 $38,073 $32,817 \n\nDuring the twelve months ended December 31, 2025, 2024 and 2023, $10.4 million, $7.4 million, and $10.4 million of the balances that were previously classified as contract liabilities at the beginning of the period were recognized into revenues, respectively.\n\nNOTE 7 - PROPERTY AND EQUIPMENT, NET\n\nThe carrying values of property and equipment, net are as follows (in thousands):\n\nDecember 31,\n\n 20252024\n\nLand$1,704 $1,704 \n\nBuildings and leasehold improvements37,667 32,652 \n\nFurniture, fixtures and equipment177,046 137,058 \n\nFinance lease right of use assets\n34,577 23,612 \n\nLess – Accumulated depreciation and amortization\n(136,172)(113,470)\n\nProperty and equipment, net\n$114,822 $81,556 \n\nDepreciation expense was $10.4 million, $9.0 million, and $8.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. Capital expenditures by segment are included in [Note 20 - Segment Reporting](#i32cf9fb7e1ae41b68565f24f0e69f011_229).\n\n63\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS\n\nThe following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2025 (in thousands):\n\n Goodwill\nOther\n\nIntangible\n\nAssets, Net\nTotal\n\nBalances as of December 31, 2024$452,343 $85,679 $538,022 \n\nTranslation adjustment870 — 870 \n\nAcquisitions 41,348 17,342 58,690 \n\nAmortization— (21,670)(21,670)\n\nBalances as of December 31, 2025$494,561 $81,351 $575,912 \n\nThe following table presents the changes in the carrying amount of goodwill and other intangible assets during the year ended December 31, 2024 (in thousands):\n\n Goodwill\nOther\n\nIntangible\n\nAssets, Net\nTotal\n\nBalances as of December 31, 2023$343,991 $63,895 $407,886 \n\nTranslation adjustment(1,380)(10)(1,390)\n\nAcquisitions109,732 41,621 151,353 \n\nAmortization— (19,827)(19,827)\n\nBalances as of December 31, 2024$452,343 $85,679 $538,022 \n\nThe following table presents the goodwill balance by reportable segment as of December 31, 2025 and 2024 (in thousands):\n\nDecember 31,\n\n 20252024\n\nService Centers$349,860 $335,611 \n\nInnovative Pumping Solutions127,562 99,593 \n\nSupply Chain Services17,139 17,139 \n\nTotal$494,561 $452,343 \n\nGross carrying amounts as well as accumulated amortization are partially affected by the fluctuation of foreign currency rates.\n\nOther intangible assets are amortized according to estimated economic benefits over their estimated useful lives. Amortization expense was $21.7 million, $19.8 million, and $18.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. The estimated future annual amortization of intangible assets for each of the next five years and thereafter are as follows (in thousands):\n\nAmount\n\n2026$20,724 \n\n202718,708 \n\n202816,412 \n\n20299,107 \n\n20306,582 \n\nThereafter9,818 \n\nTotal$81,351 \n\nThe weighted average remaining estimated life for customer relationships, trade names, and non-compete agreements are 5.4, 8.4, and 3.2 years, respectively.\n\n64\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 9 – LONG-TERM DEBT\n\nLong-term debt consisted of the following (in thousands):\n\nDecember 31,\n\n 20252024\n\nABL Revolver$— $— \n\nSenior Secured Term Loan B due October 13, 2030(1)\n845,885 647,876 \n\nPromissory Note due November 1, 2029\n900 1,000 \n\nTotal debt\n846,785 648,876 \n\nLess: current maturities\n(8,580)(6,595)\n\nTotal long-term debt\n838,205 642,281 \n\nUnamortized discount and debt issuance costs\n19,729 20,597 \n\nLong-term debt, net of unamortized discount and debt issuance costs\n$818,476 $621,684 \n\n(1) The fair value of the Amended Term Loan B due October 13, 2030 using level 2 input values was $854.3 million and $657.6 million as of December 31, 2025 and December 31, 2024, respectively.\n\nSenior Secured Term Loan B:\n\nOn December 16, 2025, the Company entered into an amendment (the “Term Loan Amendment”), by and among the Company, certain of the Company’s subsidiaries, as guarantors (the “Guarantors”), the incremental lenders party thereto and Goldman Sachs Bank USA as agent (the “Agent”).\n\nThe Term Loan Amendment amends and supplements the Term Loan and Security Agreement, dated as of December 23, 2020, by and among the Company, the Guarantors, the lenders party thereto and the Agent (as amended by Amendment No. 1 and Joinder Agreement to Term Loan and Security Agreement, dated as of November 22, 2022, as further amended by Amendment No. 2 and Joinder Agreement to Term Loan and Security Agreement, dated as of October 13, 2023, and as further amended by Amendment No. 3 and Joinder Agreement to Term Loan and Security Agreement, dated as of October 3, 2024, the “Existing Term Loan Agreement”; the Existing Term Loan Agreement, as further amended by the Term Loan Amendment, the “Term Loan Agreement”).\n\nThe Term Loan Amendment provides for, among other things, (i) adjustments to certain financial ratio covenant compliance dates and (ii) $205.0 million in new incremental term loan commitments (the “2025 Incremental Term Loans”) under the Term Loan Agreement, such that after giving effect to the Term Loan Amendment, including the 2025 Incremental Term Loans, the Company has $848.0 million in outstanding borrowings under the Term Loan Agreement.\n\nAs of December 31, 2025 there was $845.9 million outstanding under the Senior Secured Term Loan B.\n\nIn connection with the Term Loan Amendment the Company expensed third-party fees of $1.2 million. Deferred financing costs associated with the Term Loan Amendment were $2.9 million which were amortized to interest expense using the effective interest method during 2025.\n\nInterest rate\n\nQuarterly interest payments 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 Amended Senior Secured Term Loan B is guaranteed by each of the Company’s direct and indirect material wholly owned subsidiaries, other than any of the Company’s Canadian subsidiaries and certain other excluded subsidiaries.\n\nThe interest rate for the Amended Senior Secured Term Loan B was 7.17% and 8.32% as of December 31, 2025 and December 31, 2024.\n\n65\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nFacility Size Increases\n\nThe Amended Senior Secured Term Loan B allows for incremental increases in facility size up to an aggregate amount of $100 million.\n\nPrepayments\n\nWe are required to repay the Amended 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 Amended 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.\n\nRestrictive Covenants\n\nThe 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, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of unrestricted cash, not to exceed $330 million) as of such day to EBITDA, beginning with the fiscal quarter ending December 31, 2025, is either equal to or less than as indicated in the table below:\n\nFiscal QuarterSecured Leverage Ratio\n\nDecember 31, 2025\n5.75:1.00\n\nMarch 31, 2026\n5.75:1.00\n\nJune 30, 2026\n5.50:1.00\n\nSeptember 30, 2026\n5.50:1.00\n\nDecember 31, 2026\n5.50:1.00\n\nMarch 31, 2027\n5.25:1.00\n\nJune 30, 2027\n5.25:1.00\n\nSeptember 30, 2027\n5.25:1.00\n\nDecember 31, 2027\n5.00:1.00\n\nMarch 31, 2028\n5.00:1.00\n\nJune 30, 2028 and thereafter\n\n4.75:1.00\n\nAs of December 31, 2025, the Company’s Secured Leverage Ratio was 2.25 to 1.00.\n\nThe Term Loan contains restrictive covenants (in each case, subject to exclusions) that limit, among other things, the ability of the Company and its restricted subsidiaries to:\n\n•make investments, including acquisitions;\n\n•prepay certain indebtedness;\n\n•grant liens;\n\n•incur additional indebtedness;\n\n•sell assets;\n\n•make fundamental changes to our business;\n\n•enter into transactions with affiliates; and\n\n•pay dividends.\n\nThe Term Loan also contains other customary restrictive covenants. The covenants are subject to various baskets and materiality thresholds, with certain of the baskets permitted by the restrictions on the repayment of subordinated indebtedness, restricted payments and investments being available only when the Senior Secured Leverage Ratio of the Company is below certain levels.\n\n66\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nEBITDA as defined under the Term Loan B Agreement for financial covenant purposes means, without duplication, for any period of determination, the sum of, consolidated net income during such period; plus to the extent deducted from consolidated net income in such period: (i) income tax expense, (ii) franchise tax expense, (iii) interest expense, (iv) amortization and depreciation during such period, (v) all non-cash charges and adjustments, and (vi) non-recurring cash expenses related to the Term Loan, provided, that if the Company acquires or disposes of any property during such period (other than under certain exceptions specified in the Term Loan B Agreement, including the sale of inventory in the ordinary course of business, then EBITDA shall be calculated, after giving pro forma effect to such acquisition or disposition, as if such acquisition or disposition had occurred on the first day of such period.\n\nABL Revolver:\n\nOn July 1, 2025, the Company entered into an Increase Agreement (the “Increase Agreement”) to which the aggregate commitments under the Company's existing asset-based revolving credit facility (the \"ABL Facility\") were increased by $50 million. Following the effectiveness of the Increase Agreement, the total commitments under the ABL Facility increased from $135.0 million to $185.0 million. 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 Secured Overnight Financing Rate (“SOFR”) or Canadian Dollar Offered Rate (“CDOR”) 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 December 31, 2025 the unused line fee was 0.375% and there were no amounts outstanding under the ABL Revolver.\n\nGuarantees\n\nEach 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.\n\nSecurity\n\nObligations 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.\n\nInterest rate\n\nThe interest rate for the ABL Revolver was 7.00% and 7.75% as of December 31, 2025 and December 31, 2024, respectively.\n\nFacility Size Increases\n\nEffective July 1, 2025, the Company exercised its right to increase the ABL Credit Agreement by an aggregate amount of $50 million.\n\nExcess Availability\n\nAs of December 31, 2025, the borrowing availability under our credit facility was $153.5 million compared to $125.6 million at December 31, 2024. Letters of credit issued under the ABL Revolver in the aggregate face amount of $31.5 million and $9.3 million were outstanding on December 31, 2025 and December 31, 2024, respectively.\n\n \n\n67\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nFinancial Covenant\n\nThe Company's 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 to 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.\n\nAs of December 31, 2025, the Company's Fixed Charge Coverage Ratio was 2.12 to 1.00.\n\nPromissory Note:\n\nOn November 1, 2024, in connection with an acquisition, the Company signed a promissory note for the loan amount of $1.0 million. The promissory note has a maturity date of November 1, 2029. The promissory note shall be payable in four equal consecutive annual installments of $0.1 million on November 1 of each year commencing on November 1, 2025, provided that all amounts outstanding under this promissory note, including all accrued and unpaid interest and other amounts payable under the promissory note, shall be due and payable in full on November 1, 2029. The Company may prepay the promissory note in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid together with accrued interest thereon to the date of the prepayment. Interest is payable quarterly, starting with the quarter ending January 31, 2025 on outstanding borrowings at a rate of 5%.\n\nMaturities of Debt\n\nAs of December 31, 2025, the maturities of long-term debt for the next five years were as follows (in thousands):\n\nAmount\n\n2026$8,580 \n\n20278,580 \n\n20288,580 \n\n20299,080 \n\n2030811,965 \n\nTotal$846,785 \n\nNOTE 10 - INCOME TAXES\n\nThe components of income before income taxes are as follows (in thousands):\n\n Years Ended December 31,\n\n 202520242023\n\nDomestic$110,687 $77,309 $79,785 \n\nForeign8,535 7,663 7,146 \n\nTotal income before taxes$119,222 $84,972 $86,931 \n\n68\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nThe provision for income taxes consisted of the following (in thousands):\n\n Years Ended December 31,\n\n 202520242023\n\nCurrent -   \n\nFederal$(3,254)$22,066 $22,514 \n\nState4,783 5,217 2,620 \n\nForeign2,194 2,190 2,044 \n\nTotal current3,723 29,473 27,178 \n\nDeferred -   \n\nFederal26,306 (13,597)(7,679)\n\nState516 (1,347)(1,133)\n\nForeign— (46)(247)\n\nTotal deferred26,822 (14,990)(9,059)\n\nTotal current and deferred taxes$30,545 $14,483 $18,119 \n\nThe following table shows the principal reasons for the difference between the effective income tax rate and the statutory federal income tax rate:\n\nYears Ended December 31,\n\n202520242023\n\nAmount Percent Amount Percent Amount Percent\n\nU.S. Federal Statutory Tax Rates $25,034 21.0 %$17,844 21.0 %$18,392 21.2 %\n\nState and local income tax, net of federal (national) income tax effect(1)\n4,206 3.5 %3,057 3.6 %1,620 1.9 %\n\nForeign tax effects\n\nCanada330 0.3 %433 0.5 %280 0.3 %\n\nMexico 38 — %14 — %17 — %\n\nOther Foreign Jurisdictions 55 — %80 0.1 %— — %\n\nEffect of changes in tax laws or rates enacted in the current period— — %— — %— — %\n\nEffect of cross-border tax laws— — %— — %— — %\n\nTax credits\n\nResearch Tax Credit 1,339 1.1 %(7,333)(8.6)%(4,718)(5.4)%\n\nForeign Tax Credit — — %— — %— — %\n\nOther Tax Credits(62)(0.1)%(118)(0.1)%(19)— %\n\nChanges in valuation allowances— — %— — %— — %\n\nNontaxable or nondeductible items\n\n 162(m) compensation 2,583 2.2 %1,281 1.5 %513 0.6 %\n\nOther nondeductible items 1,992 1.7 %(460)(0.5)%847 1.0 %\n\nRestricted Stock (275)(0.2)%(2,056)(2.4)%(3)— %\n\nEarnout — — %— — %1,225 1.4 %\n\nChanges in unrecognized tax benefits.(1,336)(1.1)%1,732 2.0 %(33)(0.2)%\n\nOther Adjustments (3,359)(2.8)%9 (0.1)%(2)— %\n\nEffective Tax Rate $30,545 25.6 %$14,483 17.0 %$18,119 20.8 %\n\n(1). State taxes in California, Pennsylvania, and Tennessee made up the majority (greater than 50 percent) of the tax effects in this category.\n\n69\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nDeferred tax liabilities and assets were comprised of the following (in thousands):\n\nDecember 31,\n\n 20252024\n\nDeferred tax assets: \n\nAllowance for doubtful accounts$868 $954 \n\nInventory5,449 3,585 \n\nFederal R&D credit carryforward1,953 — \n\nTexas R&D credit carryforward2,283 2,232 \n\nLouisiana R&D credit carryforward10 10 \n\nForeign Tax Credit Carryforward203 64 \n\nCharitable Contribution Carryforward1,225 — \n\nNet operating loss carryforward15,224 1,258 \n\nCapital loss carryforward4 4 \n\nDeferred Compensation490 2,304 \n\nAccruals10,910 9,814 \n\nBusiness Interest Expense Carryforward962 — \n\nROU Lease Liability 17,389 304 \n\nSection 174 Addback— 40,650 \n\nTotal deferred tax assets59,672 63,483 \n\nLess valuation allowance(221)(221)\n\nTotal deferred tax asset, net of valuation allowance59,451 63,262 \n\nDeferred tax liabilities:\n\nGoodwill(26,252)(24,847)\n\nIntangibles(6,322)(7,902)\n\nProperty and equipment(17,933)(10,204)\n\nROU Asset(17,007)— \n\nUnremitted foreign earnings(421)(421)\n\nMethod changes(1,088)(393)\n\nOther(802)(243)\n\nTotal deferred tax liability$(69,825)$(44,010)\n\nNet deferred tax (liability) asset\n$(10,374)$19,252 \n\nThe Company records a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions. If the Company was to determine that it would be able to realize the deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. As of December 31, 2025, the valuation allowance primarily relates to state operating loss and foreign capital loss carryforwards.\n\nThe following summarizes changes in the balance of valuation allowances on deferred tax assets (in thousands):\n\nDecember 31,\n\n  202520242023\n\nBalance at January 1$(221)$(278)$(4)\n\nChanges due to state operating loss and foreign capital loss carryforwards\n— 57 (274)\n\nBalance at December 31$(221)$(221)$(278)\n\n70\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nExpected tax benefit on carryforwards available for use on future income tax returns, prior to valuation allowance, at December 31, 2025, are as follows (in thousands):\n\n  Domestic  ForeignExpiration\n\nNet operating loss - foreign$— $543 2034-2045\n\nNet operating loss - federal (80%)\n13,116 — Indefinite\n\nNet operating loss - state\n1,566 — 2035-Indefinite\n\nCapital loss carryforward - foreign— 4 Indefinite\n\nForeign tax credits203 — 2035\n\nTexas research and development tax credits2,283 — 2038-2045\n\nLouisiana research and development tax credits10 — 2026\n\nChanges in the balance of unrecognized tax benefits excluding interest and penalties on uncertain tax positions are as follows (in thousands):\n\nDecember 31,\n\n  202520242023\n\nBalance at January 1,$(8,702)$(5,755)$(5,918)\n\n   Decreases related to prior year tax positions2,088 142 1,475 \n\n   Increases related to current year tax positions(8)(3,089)(1,312)\n\nBalance at December 31,$(6,622)$(8,702)$(5,755)\n\nAs of December 31, 2025, the Company had recorded a total tax benefit of $34.9 million related to federal and state research and development tax credits. This benefit is partially offset by $6.1 million uncertain tax position due to the uncertainty related to the realizability of the federal research and development tax credits. The Company is also recording a $0.5 million uncertain tax position resulting from a method change for a historical acquisition and non-deductible auto expense compensation. The total amount of these unrecognized tax benefits, if recognized, would impact the effective tax rate.\n\nTo the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts are classified as a component of income tax provision (benefit) in the consolidated financial statements consistent with the Company's policy. For the year ended December 31, 2025, the Company recorded $0.3 million tax expense for interest and penalties related to uncertain tax positions.\n\nThe Company is subject to taxation in the U.S., various states, and foreign jurisdictions. The Company has significant operations in the U.S. and Canada and to a lesser extent in various other international jurisdictions. Tax years that remain subject to examination vary by legal entity but are generally closed in the U.S. for the tax years prior to 2015 and outside the U.S. for the tax years ended prior to 2019. There is a 4-year statute of limitations for Canadian returns based on the date tax assessment is received, not filing date. Tax assessments are typically received within weeks of filing date.\n\nIncome taxes paid net of refunds are as follows (in thousands):\n\nYears Ended December 31,\n\n202520242023\n\nFederal$29,620 $11,958 $15,289 \n\nState\n\n     California (1)\n567 1,309 21 \n\n     Other States3,784 3,838 3,379 \n\nForeign\n\n     Canada2,174 1,318 1,617 \n\n     Other Foreign Jurisdictions254 258 257 \n\nTotal Income Taxes Paid (net of refunds)$36,399 $18,681 $20,563 \n\n'(1) For 2025 and 2023, California did not exceed the 5% threshold; however, the total has been separately stated for comparability.\n\n71\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 11 - SHARE-BASED COMPENSATION\n\n2016 Omnibus Incentive Plan\n\nOn June 16, 2023, our shareholders approved an amendment to the DXP Enterprises, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”) to increase the number of shares that can be issued under the 2016 Plan from 1,000,000 shares to a total of 1,250,000 shares, which represents an increase of 250,000 shares (the “Amendment”), which authorized grants of restricted stock awards, restricted stock units, performance awards, options, investment rights, and cash-based awards.\n\nRestricted Stock Awards\n\nThe Company grants restricted stock awards (“RSAs”) to employees and non-employee directors. RSAs qualify as participating securities as each award contains non-forfeitable rights to dividends. RSAs are considered outstanding at the date of grant. Refer to [Note. 12 Earnings Per Share](#i32cf9fb7e1ae41b68565f24f0e69f011_199)for further detail.\n\nRSAs are subject to vesting periods between one to ten years. Compensation expense for RSAs is calculated based on the closing price of the Company’s common stock at the date of grant and recognized over the requisite vesting period on a straight-line basis. Unvested RSAs may be forfeited if employees or non-employee directors cease employment or services during the requisite vesting period. Forfeitures reduce expense at the time employment or service cease at the original grant date value. The Company issues new shares of common stock, if available, to settle vested RSAs. At December 31, 2025, 316,163 shares were available for grant.\n\nChanges in RSAs for the twelve months ended December 31, 2025 are as follows:\n\n Number of\nSharesWeighted Average\nGrant Price\n\nNon-vested at December 31, 2024302,400 $38.11 \n\nGranted57,275 $89.87 \n\nForfeited(2,478)$40.34 \n\nVested(151,486)$35.73 \n\nNon-vested at December 31, 2025205,711 $54.25 \n\nChanges in RSAs for the twelve months ended December 31, 2024 are as follows:\n\n Number of\nSharesWeighted Average\nGrant Price\n\nNon-vested at December 31, 2023304,437 $27.60 \n\nGranted127,860 $52.89 \n\nForfeited(9,644)$26.96 \n\nVested(120,253)$28.13 \n\nNon-vested at December 31, 2024302,400 $38.11 \n\nChanges in RSAs for the twelve months ended December 31, 2023 are as follows:\n\n Number of\nSharesWeighted Average\nGrant Price\n\nNon-vested at December 31, 2022157,767 $28.64 \n\nGranted215,554 $27.36 \n\nForfeited— $— \n\nVested(68,884)$29.23 \n\nNon-vested at December 31, 2023304,437 $27.60 \n\n72\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nThe following table sets forth information regarding the vesting and distribution of RSAs for the periods indicated (in thousands):\n\n  December 31,\n\n  20252024\n2023\n\nAggregate grant-date fair value of vested shares\n$5,412 $3,382 $2,013 \n\nTax benefits realized for tax deductions related to vestings\n1,462 803 756 \n\nCompensation expense associated with RSAs recognized during the period\n5,708 4,714 3,072 \n\nUnrecognized compensation expense under the 2016 Plan at December 31, 2025, December 31, 2024 and December 31, 2023 was $6.9 million, $7.7 million and $5.9 million, respectively. As of December 31, 2025, the weighted average period over which the unrecognized compensation expense is expected to be recognized is 1.2 years.\n\nNOTE 12 - EARNINGS PER SHARE DATA\n\nBasic 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.\n\nThe following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):\n\n  December 31,\n\n 202520242023\n\nBasic earnings per share:   \n\nWeighted average shares outstanding15,667 15,861 16,870 \n\n \n\nNet income attributable to DXP Enterprises, Inc.\n$88,677 $70,489 $68,812 \n\nSeries B convertible preferred stock dividend\n(90)(90)(90)\n\nNet income attributable to common shareholders\n88,587 70,399 68,722 \n\nPer share amount$5.65 $4.44 $4.07 \n\n \n\nDiluted earnings per share:\n\nWeighted average shares outstanding15,667 15,861 16,870 \n\nAssumed conversion of convertible preferred stock840 840 840 \n\nTotal dilutive shares16,507 16,701 17,710 \n\nNet income attributable to common shareholders\n$88,587 $70,399 $68,722 \n\nSeries B convertible preferred stock dividend\n90 90 90 \n\nNet income attributable to DXP Enterprises, Inc.\n88,677 70,489 68,812 \n\nPer share amount$5.37 $4.22 $3.89 \n\nBasic earnings per share have been computed by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period and excludes dilutive securities. Diluted earnings per share reflects the potential dilution that could occur if the preferred stock was converted into common stock.\n\nRestricted stock is considered a participating security and is included in the computation of basic earnings per share as if vested. For the years ended December 31, 2025, 2024, and 2023, the weighted average of the unvested RSAs were 232.1 thousand, 302.8 thousand, and 270.2 thousand shares, respectively. The preferred stock is convertible into 840,000 shares of common stock.\n\n73\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 13 – CAPITAL STOCK\n\nThe Company has Series A and Series B preferred stock of 1,222 shares and 15,000 shares issued and outstanding as of December 31, 2025, 2024 and 2023, respectively. The preferred stock did not have any activity during 2025, 2024 and 2023.\n\nSeries A Preferred Stock\n\nThe holders of Series A preferred stock are entitled to one-tenth of a vote per share on all matters presented to a vote of shareholders generally, voting as a class with the holders of common stock, and are not entitled to any dividends or distributions other than in the event of a liquidation of the Company, in which case the holders of the Series A preferred stock are entitled to $100 liquidation preference per share.\n\nSeries B Convertible Preferred Stock\n\nEach share of the Series B convertible preferred stock is convertible into 56 shares of common stock and a monthly dividend per share of $0.50. The holders of the Series B convertible stock are entitled to a $100 liquidation preference per share after payment of the distributions to the holders of the Series A preferred stock and to one-tenth of a vote per share on all matters presented to a vote of shareholders generally, voting as a class with the holders of the common stock.\n\nCommon Stock\n\nThe activity related to outstanding common stock was as follows (in thousands):\n\n December 31,\n\n 202520242023\n\nCommon Stock:\n\nBalance, beginning of period15,695 16,177 17,690 \n\nIssuance of shares for compensation net of withholding98 86 47 \n\nRestricted shares\n(97)(2)147 \n\nPurchase of shares held in treasury(182)(566)(1,707)\n\nBalance, end of period15,514 15,695 16,177 \n\nNOTE 14 - SHARE REPURCHASE\n\nOn December 15, 2022, the Company announced a new Share Repurchase Program pursuant to which we may repurchase up to $85.0 million worth, or 2.8 million shares of the Company's outstanding common stock over the next 24 months. The Company completed the program in August 2024.\n\nOn August 28, 2024, the Company announced a new Share Repurchase Program pursuant to which we may repurchase up to\n\n$85.0 million worth, or 2.5 million shares of the Company's outstanding common stock over the next 24 months.\n\nThe following table represents total number of shares purchased, the amount paid, and the average price paid per share under share repurchase programs authorized by our Board of Directors:\n\n Twelve Months Ended December 31,\n\n 202520242023\n\n(in millions, except per share data)\n\nTotal number of shares purchased0.2 0.6 1.7 \n\nAmount paid$17.0 $28.8 $54.7 \n\nAverage price paid per share$93.23 $50.87 $32.06 \n\n74\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION\n\n Twelve Months Ended December 31,\n\n 202520242023\n\nSupplemental disclosures of cash flow information:\n\nCash paid for interest(1)\n$53,698 $67,005 $48,954 \n\nCash paid for income taxes\n$36,399 $20,433 $21,839 \n\nProceeds from issuance of Senior Secured Term Loan B, net of deferred financing costs\n$202,077 $102,716 $113,108 \n\nNon-cash investing and financing activities:\n\nIssuance of Promissory Note ([Note 9](#i32cf9fb7e1ae41b68565f24f0e69f011_190))\n$— $1,000 $— \n\nTreasury shares excise tax accruals\n$(115)$(225)$(519)\n\n(1) FY 2024 includes $9.3 million of interest associated with 2023 paid in 2024.\n\nNOTE 16 - BUSINESS ACQUISITIONS\n\nThe Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into new and attractive markets. The Company has completed a number of acquisitions and the purchases of the acquired businesses have resulted in the recognition of goodwill and other intangible assets in the Company’s Consolidated Financial Statements.\n\nThe Company makes an initial allocation of the purchase price at the date of acquisition based upon its estimate of the fair value of the acquired assets and assumed liabilities. The Company obtains the information used for the purchase price allocation during due diligence and through other sources. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized. Final determination of the fair values may result in further adjustments.\n\nThe fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. The Company from time-to-time engages third-party valuation specialists who review the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with certain of its 2025 acquisitions. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.\n\nEach acquisition has been accounted for as a business combination under ASC 805, “Business Combinations”.\n\n2025 Acquisitions\n\nDuring the first quarter of 2025, the Company acquired one business for a total of $13.0 million. We acquired this business to expand our platforms and to maintain our leading position as the largest distributor of rotating equipment in North America.\n\nDuring the second quarter of 2025, the Company acquired one business for a total of $1.0 million. We acquired this business to expand our geographic coverage and to maintain our leading position as the largest distributor of rotating equipment in North America.\n\nDuring the third quarter of 2025, the Company acquired one business for a total of $11.6 million. We acquired this business to expand our end markets and enhance a geographic region in order to maintain our leading position as the largest distributor of rotating equipment in North America.\n\nDuring the fourth quarter of 2025, the Company acquired three businesses for a total of $53.6 million. We acquired these three businesses to expand our water & wastewater end-market and our product categories.\n\nThe results for the six businesses acquired during the year have been included in our Consolidated Financial Statements beginning on the respective dates of acquisition.\n\n75\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nPurchase Price Allocation and Consideration\n\nIn aggregate, the acquisition-date fair value of the consideration transferred for the six businesses acquired in 2025 totaled $79.2 million. The six acquisitions contributed $42.7 million in Sales and $4.4 million in Net income attributable to common shareholders for the year ended December 31, 2025. The following table summarizes the total consideration, the estimated fair values of the assets acquired and liabilities assumed at the acquisition date for the 2025 acquisitions:\n\nQ1 2025Q2 2025Q3 2025Q4 2025Total\n\nTotal Acquisitions\n11136\n\nCash payments\n$12,981 $1,027 $10,916 $49,459 $74,383 \n\nContingent consideration\n— — 683 4,130 4,813 \n\nTotal purchase price consideration\n12,981 1,027 11,599 53,589 79,196 \n\nTangible assets acquired\n8,160 927 5,219 26,949 41,255 \n\nIntangible assets acquired\n3,284 203 2,305 11,550 17,342 \n\nTotal assets acquired\n11,444 1,130 7,524 38,499 58,597 \n\nTotal liabilities assumed(4,983)(508)(1,179)(12,485)(19,155)\n\nNet assets acquired6,461 622 6,345 26,014 39,442 \n\nGoodwill$6,520 $405 $5,254 $27,575 $39,754 \n\nThe total cash and cash equivalents acquired for these six acquisitions was $12.7 million. Transaction-related costs included within selling, general, and administrative expenses in the consolidated statements of operations was $1.8 million for the twelve months ended December 31, 2025.\n\nThe goodwill total of approximately $39.8 million is attributable primarily to expected synergies and the assembled workforce of each entity of which $33.1 million is deductible for tax purposes and $6.7 million is not deductible for tax purposes. Goodwill assigned to our SC and IPS segments as a result of these transactions was $12.2 million and $27.6 million, respectively.\n\nOf the $17.3 million of acquired intangible assets, $0.9 million was provisionally assigned to non-compete agreements that are subject to amortization over 5 years and $16.4 million was assigned to customer relationships and will be amortized over a period of 8 years.\n\nContingent Consideration\n\nThe acquisitions included contingent consideration arrangements that requires additional consideration to be paid based on the achievement of annual EBITDA targets over a one-to-three year period. The range of undiscounted amounts the Company may be required to pay under the contingent consideration agreement is between zero and $5.6 million. The combined fair value of the contingent consideration recognized on each acquisition date of $4.8 million was estimated by using a weighted probability of possible payments. That measure is based on significant Level 3 inputs not observable in the market. The significant assumption includes a discount rate of 8.3%. Changes in the fair value measurement each period reflect the passage of time as well as the impact of adjustments, if any, to the likelihood of achieving the specified targets. The changes in the fair value of the contingent consideration are measured during each reporting period and reflected in our results of operations. The fair value measurement includes earnings forecasts, which are a Level 3 measurement as discussed in [Note 5 - Fair Value of Financial Assets and Liabilities](#i32cf9fb7e1ae41b68565f24f0e69f011_175). The fair value of the contingent consideration is reviewed quarterly over the earn-out period to compare actual earnings before interest, taxes, depreciation and amortization (“EBITDA”) achieved to the estimated EBITDA used in our forecasts.\n\n76\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nPro Forma Results of Operations (unaudited)\n\nThe following unaudited supplemental pro forma results of operations for the Company which incorporate the acquisitions completed in 2025, 2024 and 2023, have been provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future (in thousands).\n\n  Years Ended December 31,\n\n(in thousands)\n202520242023\n\nSales$2,092,146 $1,961,097 $1,794,749 \n\nNet income attributable to common shareholders$98,094 $93,786 $82,738 \n\nThe pro forma combined results of operations for the years ended December 31, 2025, 2024, and 2023 were prepared by adjusting the historical results of the Company to include the historical results of the businesses acquired in each year as if the business combinations that occurred during each year had occurred as of the beginning of the comparable prior annual reporting period.\n\n2024 Acquisitions\n\nDuring the first quarter of 2024, the Company acquired three businesses for a total of $46.8 million. We acquired these three businesses to expand our water & wastewater end-market, enhance our aftermarket and service capabilities, as well as expand into new geographic territories.\n\nDuring the second quarter of 2024, the Company acquired a pump and rotating equipment distribution company for $81.5 million. We acquired this business as part of our growth strategy and to maintain our leading position as the largest distributor of rotating equipment in North America.\n\nDuring the third quarter of 2024, the Company acquired a rotating equipment distribution company for $36.8 million. We acquired this business to expand our water & wastewater end market.\n\nDuring the fourth quarter of 2024, the Company acquired two businesses for a total of $9.8 million. We acquired these two businesses to expand our water & wastewater end-market and our product categories.\n\nIn aggregate, the acquisition-date fair value of the consideration transferred for the seven businesses acquired in 2024 totaled $174.9 million. The seven acquisitions contributed $91.3 million in Sales and $19.1 million in Net income attributable to common shareholders for the year ended December 31, 2024. The following table summarizes the total consideration, the estimated fair values of the assets acquired and liabilities assumed at the acquisition date for the 2024 acquisitions:\n\nQ1 2024Q2 2024Q3 2024Q4 2024Total\n\nTotal Acquisitions\n31127\n\nCash payments\n$40,661 $81,538 $31,564 $8,201 $161,964 \n\nPromissory Note due 11/1/2029— — — 1,000 1,000 \n\nContingent consideration\n6,132 — 5,197 626 11,955 \n\nTotal purchase price consideration\n46,793 81,538 36,761 9,827 174,919 \n\nTangible assets acquired\n18,632 4,485 9,026 4,630 36,773 \n\nIntangible assets acquired\n8,155 23,400 8,246 1,820 41,621 \n\nTotal assets acquired\n26,787 27,885 17,272 6,450 78,394 \n\nTotal liabilities assumed(8,605)(2,652)(1,205)(745)(13,207)\n\nNet assets acquired18,182 25,233 16,067 5,705 65,187 \n\nGoodwill$28,611 $56,305 $20,694 $4,122 $109,732 \n\n77\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\n2023 Acquisitions\n\nDuring the second quarter of 2023, the Company acquired two businesses for a total of $11.7 million. We acquired these two businesses to expand our water & wastewater end-market by expanding into new geographic territories, enhance our product capabilities, and attract and retain talent.\n\nDuring the fourth quarter of 2023, the Company acquired a leading municipal and industrial pump sales, service, and repair business for $1.7 million. We acquired this company to enhance our end-markets as well as expand into additional geographic territories.\n\nIn aggregate, the acquisition-date fair value of the consideration transferred for the three businesses acquired in 2023 totaled $13.4 million. The three acquisitions contributed $7.6 million in Sales and $0.8 million in Net income attributable to common shareholders for the year ended December 31, 2023. The following table summarizes the total consideration, the estimated fair values of the assets acquired and liabilities assumed at the acquisition date for the 2023 acquisitions:\n\nQ1 2023\n\nQ2 2023\n\nQ3 2023\n\nQ4 2023\nTotal\n\nTotal Acquisitions\n— 2— 13\n\nCash payments\n$— $9,235 $— $1,502 $10,737 \n\nContingent consideration\n— 2,498 — 184 2,682 \n\nTotal purchase price consideration\n— 11,733 — 1,686 13,419 \n\nTangible assets acquired\n— 3,379 — 146 3,525 \n\nIntangible assets acquired\n— 2,142 — 385 2,527 \n\nTotal assets acquired\n— 5,521 — 531 6,052 \n\nTotal liabilities assumed— (2,260)— (141)(2,401)\n\nNet assets acquired— 3,261 — 390 3,651 \n\nGoodwill$— $8,472 $— $1,296 $9,768 \n\nNOTE 17 - COMMITMENTS AND CONTINGENCIES\n\nFrom time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. While the Company is unable to predict the outcome or estimate the financial impact of these disputes, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on its consolidated financial position, cash flows, or results of operations.\n\nNOTE 18 - OTHER INCOME AND EXPENSE, NET\n\nThe components of other (income) expense, net were as follows:\n\n  Years Ended December 31,\n\n(in thousands)\n202520242023\n\nInterest income\n$(3,579)$(4,766)$(2,680)\n\nChange in fair value of contingent consideration\n1,406 745 1,738 \n\nOther, net\n(709)504 (413)\n\nOther income\n$(2,882)$(3,517)$(1,355)\n\n78\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nNOTE 19 - REVENUE\n\nThe Company disaggregates revenue based upon our geography and our reportable segments - Service Centers, Innovative Pumping Solutions and Supply Chain Services. Each of our geographic and reportable business segments are impacted and influenced by varying factors, including the macroeconomic environment, maintenance and capital spending and commodity prices and exploration and production activity. As such, we believe this information is important in depicting the nature, timing and uncertainty of our contracts with customers. The following Geographical Information and [Note 20 - Segment Reporting](#i32cf9fb7e1ae41b68565f24f0e69f011_229) present our revenue disaggregated by source.\n\nGeographical Information\n\nRevenues are presented in geographic area based on location of the facility shipping products or providing services.\n\nThe Company’s revenues by geographical location are as follows (in millions):\n\n  Years Ended December 31,\n\n 202520242023\n\nUnited States$1,939 $1,721 $1,602 \n\nCanada75 79 75 \n\nOther\n2 2 2 \n\nTotal$2,016 $1,802 $1,679 \n\nRecent Acquisitions\n\nWe define and calculate organic sales to include locations and acquisitions under our ownership for at least twelve months. \"Acquisition Sales\" are sales from acquisitions that have been under our ownership for less than twelve months and are excluded in our calculation of Organic Sales.\n\n79\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nThe following tables sets forth the disaggregation of revenue from sales associated with recent acquisitions for the twelve months ended December 31, 2025 and 2024 (in thousands):\n\nSalesAcquisition SalesOrganic Sales\n\nTwelve Months Ended December 31, 2025\n\nService Centers$1,373,140 $56,164 $1,316,976 \n\nInnovative Pumping Solutions390,291 39,879 350,412 \n\nSupply Chain Services252,934 — 252,934 \n\nTotal Sales$2,016,365 $96,043 $1,920,322 \n\nTwelve Months Ended December 31, 2024\n\nService Centers (1)\n$1,236,775 $36,944 $1,199,831 \n\nInnovative Pumping Solutions (1)\n308,850 61,556 247,294 \n\nSupply Chain Services256,415 — 256,415 \n\nTotal Sales$1,802,040 $98,500 $1,703,540 \n\n$ Change\n\nService Centers$136,365 $19,220 $117,145 \n\nInnovative Pumping Solutions81,441 (21,677)103,118 \n\nSupply Chain Services(3,481)— (3,481)\n\nTotal $ Change$214,325 $(2,457)$216,782 \n\n% Change\n\nService Centers11.0 %52.0 %9.8 %\n\nInnovative Pumping Solutions26.4 %(35.2)%41.7 %\n\nSupply Chain Services(1.4)%N/A(1.4)%\n\nTotal % Change11.9 %(2.5)%12.7 %\n\n(1) Prior period segment disclosures have been recast. For additional information, please refer to [Note 20. Segment Reporting](#i32cf9fb7e1ae41b68565f24f0e69f011_229).\n\n80\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nThe following tables sets forth the disaggregation of revenue from sales associated with recent acquisitions for the twelve months ended December 31, 2024 and 2023 (in thousands):\n\nSalesAcquisition SalesOrganic Sales\n\nTwelve Months Ended December 31, 2024\n\nService Centers (1)\n$1,236,775 $36,944 $1,199,831 \n\nInnovative Pumping Solutions (1)\n308,850 61,556 247,294 \n\nSupply Chain Services256,415 — 256,415 \n\nTotal Sales$1,802,040 $98,500 $1,703,540 \n\nTwelve Months Ended December 31, 2023\n\nService Centers (1)\n$1,214,602 $19,275 $1,195,327 \n\nInnovative Pumping Solutions (1)\n203,630 13,803 189,827 \n\nSupply Chain Services260,368 — 260,368 \n\nTotal Sales$1,678,600 $33,078 $1,645,522 \n\n$ Change\n\nService Centers$22,173 $17,669 $4,504 \n\nInnovative Pumping Solutions105,220 47,753 57,467 \n\nSupply Chain Services(3,953)— (3,953)\n\nTotal $ Change$123,440 $65,422 $58,018 \n\n% Change\n\nService Centers1.8 %91.7 %0.4 %\n\nInnovative Pumping Solutions51.7 %346.0 %30.3 %\n\nSupply Chain Services(1.5)%N/A(1.5)%\n\nTotal % Change7.4 %197.8 %3.5 %\n\n(1) Prior period segment disclosures have been recast. For additional information, please refer to [Note 20. Segment Reporting](#i32cf9fb7e1ae41b68565f24f0e69f011_229).\n\nNOTE 20 – SEGMENT REPORTING\n\nWe have three reportable and operating segments: Service Centers, Innovative Pumping Solutions and Supply Chain Services.\n\nThe Service Centers segment is engaged in providing 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.\n\nThe Innovative Pumping Solutions segment fabricates and assembles custom-made pump packages, re-manufactures pumps, manufactures branded private label pumps, and provides products and services for the water and wastewater treatment industries.\n\nThe 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.\n\nNo customer accounts for 10% or more of our revenues. Sales are shown net of intersegment eliminations.\n\nCorporate primarily includes unallocated overhead costs that are not directly associated with our reportable segments.\n\n81\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nSegment 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.\n\nThese segments were determined primarily by the distribution channels of the products and services offered and the nature of the customer markets and the primary driver of the customers’ spending. 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.\n\nAs 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. Historical financial information by segment has been retroactively recast to reflect the results of this review.\n\nThe following table sets out financial information related to the Company’s segments (in thousands):\n\nYears Ended December 31,Service CentersInnovative Pumping SolutionsSupply Chain ServicesTotalCorporateTotal\n\n2025    \n\nSales$1,373,140 $390,291 $252,934 $2,016,365 $— $2,016,365 \n\nOperating expenses1,165,844 316,119 230,796 1,712,759 — 1,712,759 \n\nOther expenses\n\nDepreciation3,865 3,019 32 6,916 3,456 10,372 \n\nAmortization of finance lease assets\n5,265 930 187 6,382 426 6,808 \n\nOther(1)\n— — — — 109,556 109,556 \n\nIncome (loss) from operations\n$198,166 $70,223 $21,919 $290,308 $(113,438)$176,870 \n\nInterest expense— — — — 60,530 60,530 \n\nOther income, net— — — — (2,882)(2,882)\n\nIncome (loss) before income taxes$198,166 $70,223 $21,919 $290,308 $(171,086)$119,222 \n\nCapital expenditures$4,509 $3,580 $— $8,089 $32,197 $40,286 \n\n(1). Other primarily includes selling, general and administrative expenses of $87.9 million and amortization of intangible assets of $21.7 million.\n\n \n\nYears Ended December 31,Service CentersInnovative Pumping SolutionsSupply Chain ServicesTotalCorporateTotal\n\n2024    \n\nSales$1,236,775 $308,850 $256,415 $1,802,040 $— $1,802,040 \n\nOperating expenses1,051,316 253,927 234,508 1,539,751 — 1,539,751 \n\nOther expenses\n\nDepreciation3,125 3,352 32 6,509 2,510 9,019 \n\nAmortization of finance lease assets\n2,812 508 133 3,453 1,106 4,559 \n\nOther(1)\n— — — — 103,329 103,329 \n\nIncome (loss) from operations\n$179,522 $51,063 $21,742 $252,327 $(106,945)$145,382 \n\nInterest expense— — — — 63,927 63,927 \n\nOther income, net— — — — (3,517)(3,517)\n\nIncome (loss) before income taxes$179,522 $51,063 $21,742 $252,327 $(167,355)$84,972 \n\nCapital expenditures$4,144 $2,593 $13 $6,750 $18,318 $25,068 \n\n(1). Other primarily includes selling, general and administrative expenses of $83.5 million and amortization of intangible assets of $19.8 million.\n\n82\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)\n\nYears Ended December 31,Service CentersInnovative Pumping SolutionsSupply Chain ServicesTotalCorporateTotal\n\n2023    \n\nSales$1,214,602 $203,630 $260,368 $1,678,600 $— $1,678,600 \n\nOperating expenses1,032,264 167,333 238,774 1,438,371 — 1,438,371 \n\nOther expenses\n\nDepreciation2,729 3,687 27 6,443 1,980 8,423 \n\nAmortization of finance lease assets\n3,026 214 45 3,285 166 3,451 \n\nOther(1)\n— — — — 89,633 89,633 \n\nIncome (loss) from operations\n$176,583 $32,396 $21,522 $230,501 $(91,779)$138,722 \n\nInterest expense— — — — 53,146 53,146 \n\nOther income, net— — — $— (1,355)$(1,355)\n\nIncome (loss) before income taxes$176,583 $32,396 $21,522 $230,501 $(143,570)$86,931 \n\nCapital expenditures$6,277 $1,965 $— $8,242 $4,021 $12,263 \n\n(1). Other primarily includes selling, general and administrative expenses of $71.4 million and amortization of intangible assets of $18.2 million.\n\nYears Ended December 31,\n\n 20252024\n\nService Centers$820,289 $744,966 \n\nInnovative Pumping Solutions383,201 307,818 \n\nSupply Chain Services\n95,045 85,823 \n\nTotal Reportable Segments Assets\n$1,298,535 $1,138,607 \n\nCorporate 386,620 210,887 \n\nTotal Assets$1,685,155 $1,349,494 \n\nNOTE 21 – RELATED PARTIES DISCLOSURES\n\nThe Board uses policies and procedures, to be applied by the Audit Committee of the Board, for review, approval or ratification of any transactions with related persons. Those policies and procedures will apply to any proposed transactions in which the Company is a participant, the amount involved exceeds $120,000 and any director, executive officer or significant shareholder or any immediate family member of such a person has a direct or material indirect interest. Any related party transaction will be reviewed by the Audit Committee of the Board of Directors to determine, among other things, the benefits of any transaction to the Company, the availability of other sources of comparable products or services and whether the terms of the proposed transaction are comparable to those provided to unrelated third parties.\n\nThe Company incurred approximately $2.3 million, $1.9 million, and $1.8 million in lease expenses to entities controlled by the Company’s Chief Executive Officer and family for the years ended December 31, 2025, 2024 and 2023, respectively.\n\nNOTE 22 - SUBSEQUENT EVENTS\n\nOn January 1, 2026, the Company completed the acquisition of PREMIERflow, LLC. The acquisition was funded with cash on the balance sheet.\n\nOn January 1, 2026, the Company completed the acquisition of Mid Atlantic Storage Systems Inc. The acquisition was funded with cash on the balance sheet.\n\nOn February 1, 2026, the Company completed the acquisition of Ambiente H2O Inc. The acquisition was funded with cash on the balance sheet.\n\n83\n\n[Table of Contents](#i32cf9fb7e1ae41b68565f24f0e69f011_10)"}