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Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-03-10 · 276 added, 176 removed, 981 unchanged (32% of the section changed)

29 unchanged sentences

We have also excluded these seven entities from our audit of internal control over financial reporting.

These entities, 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 4% and 5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

entities, 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.

Definition and Limitations of Internal Control over Financial Reporting

18 unchanged sentences

The 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.

As previously disclosed by management, a material weakness existed during the year related to this matter.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

6 unchanged sentences

Houston, Texas

March 10, 2025

February 26, 2026

We have served as the Company’s auditor since 2022.

13 unchanged sentences

Interest expense 60,530 63,927 53,146

Other (income) expense, net ( Note 1 8 )

Other income ( Note 18 )

( 2,882 ) ( 3,517 ) ( 1,355 )

1 unchanged sentence

119,222 84,972 86,931

Provision for income taxes 14,483 18,119 17,799

Provision for income taxes ( Note 10 )

30,545 14,483 18,119

Net loss attributable to noncontrolling interest — — ( 53 )

Net income attributable to DXP Enterprises, Inc.

88,677 70,489 68,812

80 unchanged sentences

Depreciation 10,372 9,019 8,423

Amortization of intangibles and fixed assets 24,386 21,682 18,915

Amortization of intangibles and finance lease assets

28,478 24,386 21,682

Amortization of debt issuance costs 4,041 3,646 2,991

(Recovery of) provision for credit losses

Gain on sale of property and equipment ( 491 ) — —

Provision for (recovery of) credit losses

220 ( 887 ) ( 885 )

5 unchanged sentences

Deferred income taxes 27,358 ( 14,990 ) ( 9,059 )

Loss on sale of interest in VIE — — 1,193

Other non-cash items ( 11,390 ) 3,877 2,342

Changes in operating assets and liabilities, net of effects of businesses acquired:

6 unchanged sentences

( 5,732 ) 2,643 3,830

Accounts payable and accrued expenses 7,547 10,604 35,965

Trade accounts payable 532 ( 3,473 ) 2,144

Accrued expenses 17,875 2,009 5,649

Billings in excess of costs and estimated profits

2,951 3,263 ( 916 )

Other long-term liabilities

( 1,136 ) ( 3,494 ) ( 2,902 )

Income taxes ( 30,984 ) 9,010 2,811

Net cash provided by operating activities $ 94,264 $ 102,211 $ 106,222

1 unchanged sentence

Purchase of property and equipment ( 40,286 ) ( 25,068 ) ( 12,263 )

Proceeds from the sale of property and equipment 2,715 — —

Acquisition of businesses, net of cash acquired ( 61,675 ) ( 156,624 ) ( 10,384 )

2 unchanged sentences

Borrowings on asset-backed credit facility

— 6,000 7,870

Repayments on asset-backed credit facility

Proceeds from debt 649,500 550,000 105,000

Principal debt payments ( 550,249 ) ( 429,508 ) ( 3,567 )

— ( 6,000 ) ( 7,870 )

Borrowings on Senior Secured Term Loan B

848,005 649,500 550,000

Repayments on Senior Secured Term Loan B

( 643,005 ) ( 544,500 ) ( 424,856 )

Principal payments on debt

( 7,091 ) ( 5,749 ) ( 4,652 )

Debt issuance costs ( 3,173 ) ( 2,309 ) ( 12,061 )

22 unchanged sentences

Series A preferred Stock Series B preferred Stock Common Stock Paid-in Capital Retained earnings Accum Other Comp Loss

Treasury stock Non controlling interest Total equity

Treasury stock Total equity

Balance at December 31, 2022 $ 1 $ 15 $ 345 $ 213,937 $ 250,549 $ ( 31,675 ) $ ( 67,780 ) $ 365,392

5 unchanged sentences

Repurchases of shares — — — — — — ( 55,696 ) ( 55,696 )

Net income (loss) — — — — 48,155 — — ( 53 ) 48,102

Excise tax on share repurchases

— — — — — — ( 519 ) ( 519 )

— — — — 68,812 — — 68,812

Balance at December 31, 2023 $ 1 $ 15 $ 345 $ 216,482 $ 319,271 $ ( 31,240 ) $ ( 123,995 ) $ 380,879

2 unchanged sentences

Tax related items for share based awards — — — ( 1,826 ) — — — ( 1,826 )

— — ( 141 ) 141 — — — —

Currency translation adjustment — — — — — ( 2,370 ) — ( 2,370 )

7 unchanged sentences

Tax related items for share based awards — — — ( 4,538 ) — — — ( 4,538 )

— — ( 141 ) 141 — — — — —

Currency translation adjustment — — — — — 3,003 — 3,003

21 unchanged sentences

The accompanying consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications were made to the prior year’s consolidated financial statements to conform to the current year presentation.

Such reclassifications did not have a material effect on our consolidated statements of operations and comprehensive income, balance sheets, cash flows or equity.

The Company was the primary beneficiary of a VIE in which it owned 47.5 % of the VIE's equity.

The Company consolidated the VIE within its financial statements.

In November 2022, the Company sold its interest in the VIE and ceased the consolidation of the VIE within the Company's financial statements.

The losses associated with the VIE that occurred prior to the deconsolidation are included in the consolidated statements of operations and comprehensive income.

These losses were $ 0.2 million for the year ended December 31, 2022.

All intercompany accounts and transactions have been eliminated in consolidation.

Business Combinations

7 unchanged sentences

Foreign Currency

The financial statements of the Company’s Canadian subsidiaries are measured using local currencies as their functional currencies.

The 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.

22 unchanged sentences

$ 5,172 $ 5,584

(Recoveries) Charges to expense

( 887 ) ( 885 )

Charges to (recoveries of) expense

Foreign currency translation

( 73 ) ( 42 )

Write-offs and other

( 1,324 ) 517

Ending balance, December 31

$ 3,995 $ 5,172

Inventories are made up of equipment purchased for resale, and materials utilized in the fabrication of industrial and wastewater equipment stated at lower of cost and net realizable value, primarily determined using the weighted average cost method.

Inventories 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.

15 unchanged sentences

The 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 these intangible assets to its reporting units and applies the test for goodwill at the reporting unit level.

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.

16 unchanged sentences

Revenue Recognition

The Company primarily provides purchased products distributed through its branch of 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.

The 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.

23 unchanged sentences

Cost of sales includes product and product-related costs, inbound freight charges, internal transfer costs, and depreciation.

Selling, general and administrative expense includes purchasing and receiving costs, inspection costs, warehousing costs, depreciation, and amortization.

Selling, general and administrative expenses include purchasing and receiving costs, inspection costs, warehousing costs, depreciation, and amortization.

The Company utilizes the asset and liability method of accounting for income taxes.

13 unchanged sentences

Comprehensive income includes net income and foreign currency translation adjustments.

The Company’s other comprehensive income is from translating foreign subsidiaries to the reporting currency.

The Company’s other comprehensive income is from translating balances at foreign subsidiaries to the reporting currency.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

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

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The ASU is effective on a prospective basis;

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 .

Accounting Pronouncements Not Yet Adopted

8 unchanged sentences

We are currently evaluating the provisions of this ASU.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance.

This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.

We are currently evaluating the provisions of this ASU.

NOTE 4 - LEASES

We lease office space, warehouses, land, automobiles, office, and manufacturing equipment.

We 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.

11 unchanged sentences

Interest on lease liabilities

1,467 1,108 595

Total finance lease costs

1 unchanged sentence

Total operating and finance lease costs $ 31,334 $ 26,877 $ 25,621

The following table presents supplemental cash flow information related to leases (in thousands) :

Twelve Months Ended December 31,

2024 2023 2022

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows - operating leases

$ 20,886 $ 21,823 $ 20,584

Operating cash flows - finance leases

Financing cash flows - finance leases

$ 4,216 $ 2,347 $ —

The following table presents the consolidated balance sheet location of assets and liabilities related to operating and finance leases (in thousands) :

14 unchanged sentences

Other long-term liabilities

13,223 11,055

Total lease liabilities $ 97,430 $ 64,456

22 unchanged sentences

Weighted-average remaining lease term - operating leases

4.8 years 3.9 years

Weighted-average remaining lease term - finance leases

125 unchanged sentences

ABL Revolver $ — $ —

Amended Senior Secured Term Loan B due October 13, 2030 (1)

Senior Secured Term Loan B due October 13, 2030 (1)

845,885 647,876

Promissory Note due November 1, 2029

8 unchanged sentences

$ 818,476 $ 621,684

(1) The fair value of the Amended Term Loan B due October 13, 2030 using level 2 input values was $ 657.6 million as of December 31, 2024.

(2) The fair value of the Term Loan B due October 13, 2030 using level 2 input values was $ 554.1 million as of December 31, 2023.

(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.

Senior Secured Term Loan B:

On October 3, 2024, the Company entered into an amendment on its existing Senior Secured Term Loan B (the “Term Loan Amendment”), which provides for, among other things, an additional $ 105.0 million in new incremental commitments.

The Term Loan Amendment refinanced the existing Senior Term Loan B and replaced it with an Amended Senior Secured Term Loan B with total borrowings of $ 649.5 million.

The Amended Senior Secured Term Loan B amortizes in equal quarterly installments of 0.25 %, with the remaining balance being payable on October 13, 2030, when the facility matures.

As of December 31, 2024 there was $ 647.9 million outstanding under the Amended Senior Secured Term Loan B.

On 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”).

The 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”).

The 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.

As of December 31, 2025 there was $ 845.9 million outstanding under the Senior Secured Term Loan B.

In 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.

Interest rate

1 unchanged sentence

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.

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

The interest rate for the Senior Secured Term Loan B was 10.44 % as of December 31, 2023

The 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.

Facility Size Increases

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

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

We 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.

1 unchanged sentence

No payment of excess cash flow is required if the Total Leverage Ratio is less than or equal to 2.50 to 1.00.

In connection with the Term Loan Amendment the Company expensed third-party fees of $ 1.1 million and recognized a $ 0.5 million loss on debt extinguishment, which were included in Interest expense during 2024.

Deferred financing costs associated with the Term Loan Amendment were $ 2.3 million which were amortized to interest expense using the interest method during 2024.

Restrictive Covenants

28 unchanged sentences

ABL Revolver:

On July 19, 2022, the Company entered into an Amended and Restated Loan and Security Agreement (the “ABL Credit Agreement”) that provided for a $ 135.0 million asset-backed revolving line of credit (the “ABL Revolver”).

On July 1, 2025, the Company entered into an Increase Agreement (the “Increase Agreement”) to which the aggregate commitments under the Company's existing asset-based revolving credit facility (the "ABL Facility") were increased by $ 50 million.

Following the effectiveness of the Increase Agreement, the total commitments under the ABL Facility increased from $ 135.0 million to $ 185.0 million.

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.

17 unchanged sentences

Facility Size Increases

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

Effective July 1, 2025, the Company exercised its right to increase the ABL Credit Agreement by an aggregate amount of $ 50 million.

Excess Availability

As of December 31, 2024, the borrowing availability under our credit facility was $ 125.6 million compared to $ 132.1 million at December 31, 2023, primarily as a result of outstanding letters of credit.

As 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.

Financial Covenant

The Company's principal financial covenant under the ABL Credit Agreement include a Fixed Charge Coverage Ratio.

The 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 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.

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.

As of December 31, 2025, the Company's Fixed Charge Coverage Ratio was 2.12 to 1.00.

Promissory Note:

On 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 %.

Maturities of Debt

As of December 31, 2024, the maturities of long-term debt for the next five years and thereafter were as follows ( in thousands ):

Thereafter 615,401

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

Total $ 846,785

18 unchanged sentences

Total current and deferred taxes $ 30,545 $ 14,483 $ 18,119

The difference between income taxes computed at the statutory income tax rate and the provision for income taxes is as follows ( in thousands ):

The following table shows the principal reasons for the difference between the effective income tax rate and the statutory federal income tax rate:

Years Ended December 31,

2025 2024 2023

Income taxes computed at federal statutory rate $ 17,844 $ 18,255 $ 13,839

State income taxes, net of federal benefit 1,935 1,669 2,701

Foreign taxes 352 144 122

Nondeductible expenses 1,048 2,670 1,158

Return to Provision Adjustment

( 1,105 ) — —

Blended state rate change

1,122 ( 58 ) 240

General business credit

Amount Percent Amount Percent Amount Percent

Federal Statutory Tax Rates $ 25,034 21.0 % $ 17,844 21.0 % $ 18,392 21.2 %

State and local income tax, net of federal (national) income tax effect (1)

4,206 3.5 % 3,057 3.6 % 1,620 1.9 %

Valuation allowance ( 57 ) 274 ( 1 )

Foreign tax effects

Canada 330 0.3 % 433 0.5 % 280 0.3 %

Mexico 38 — % 14 — % 17 — %

Other Foreign Jurisdictions 55 — % 80 0.1 % — — %

Effect of changes in tax laws or rates enacted in the current period — — % — — % — — %

Effect of cross-border tax laws — — % — — % — — %

Research Tax Credit 1,339 1.1 % ( 7,333 ) ( 8.6 ) % ( 4,718 ) ( 5.4 ) %

Foreign Tax Credit — — % — — % — — %

Other Tax Credits ( 62 ) ( 0.1 ) % ( 118 ) ( 0.1 ) % ( 19 ) — %

Changes in valuation allowances — — % — — % — — %

Nontaxable or nondeductible items

162(m) compensation 2,583 2.2 % 1,281 1.5 % 513 0.6 %

Other nondeductible items 1,992 1.7 % ( 460 ) ( 0.5 ) % 847 1.0 %

Restricted Stock ( 275 ) ( 0.2 ) % ( 2,056 ) ( 2.4 ) % ( 3 ) — %

( 2,056 ) — —

Uncertain tax positions 1,732 ( 33 ) 271

Other 67 9 ( 281 )

Total income tax expense

Earnout — — % — — % 1,225 1.4 %

Changes in unrecognized tax benefits.

( 1,336 ) ( 1.1 ) % 1,732 2.0 % ( 33 ) ( 0.2 ) %

Other Adjustments ( 3,359 ) ( 2.8 ) % 9 ( 0.1 ) % ( 2 ) — %

Effective Tax Rate $ 30,545 25.6 % $ 14,483 17.0 % $ 18,119 20.8 %

State taxes in California, Pennsylvania, and Tennessee made up the majority (greater than 50 percent) of the tax effects in this category.

Deferred tax liabilities and assets were comprised of the following (in thousands) :

2 unchanged sentences

Inventory 5,449 3,585

Texas research and development tax credit carryforward 2,232 2,239

Louisiana research and development tax credit carryforward 10 10

Federal R&D credit carryforward 1,953 —

Texas R&D credit carryforward 2,283 2,232

Louisiana R&D credit carryforward 10 10

Foreign Tax Credit Carryforward 203 64

Charitable Contribution Carryforward 1,225 —

Net operating loss carryforward 15,224 1,258

Capital loss carryforward 4 4

Deferred Compensation 490 2,304

Accruals 10,910 9,814

ROU asset 304 220

Research expenses 40,650 23,822

Business Interest Expense Carryforward 962 —

ROU Lease Liability 17,389 304

Section 174 Addback — 40,650

Total deferred tax assets 59,672 63,483

5 unchanged sentences

Property and equipment ( 17,933 ) ( 10,204 )

Deferred compensation 2,304 ( 215 )

ROU Asset ( 17,007 ) —

Unremitted foreign earnings ( 421 ) ( 421 )

2 unchanged sentences

Total deferred tax liability $ ( 69,825 ) $ ( 44,010 )

$ ( 41,706 ) $ ( 36,345 )

Net deferred tax asset

Net deferred tax (liability) asset

$ ( 10,374 ) $ 19,252

12 unchanged sentences

Net operating loss - federal (80%)

13,116 — Indefinite

6 unchanged sentences

Changes in the balance of unrecognized tax benefits excluding interest and penalties on uncertain tax positions are as follows (in thousands) :

Assets (Liabilities)

2025 2024 2023

5 unchanged sentences

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 $ 0.2 million uncertain tax position related to non-deductible auto expense compensation.

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.

9 unchanged sentences

Tax assessments are typically received within weeks of filing date.

Income taxes paid net of refunds are as follows ( in thousands ):

Years Ended December 31,

2025 2024 2023

Federal $ 29,620 $ 11,958 $ 15,289

California (1)

Other States 3,784 3,838 3,379

Canada 2,174 1,318 1,617

Other Foreign Jurisdictions 254 258 257

Total Income Taxes Paid (net of refunds) $ 36,399 $ 18,681 $ 20,563

'(1) For 2025 and 2023, California did not exceed the 5% threshold;

however, the total has been separately stated for comparability.

NOTE 11 - SHARE-BASED COMPENSATION

35 unchanged sentences

Non-vested at December 31, 2023 304,437 $ 27.60

Compensation expense, associated with RSAs, recognized in the years ended December 31, 2024, December 31, 2023 and December 31, 2022 was $ 4.7 million, $ 3.1 million and $ 1.9 million, respectively.

Related income tax benefits recognized in earnings in the years ended December 31, 2024, December 31, 2023 and December 31, 2022 were approximately $ 0.8 million, $ 0.8 million and $ 0.5 million, respectively.

The aggregate grant-date fair value of vested shares for the years ended December 31, 2024, December 31, 2023 and December 31, 2022 was $ 3.4 million, $ 2.0 million and $ 1.9 million, respectively.

The following table sets forth information regarding the vesting and distribution of RSAs for the periods indicated (in thousands):

2025 2024 2023

Aggregate grant-date fair value of vested shares

$ 5,412 $ 3,382 $ 2,013

Tax benefits realized for tax deductions related to vestings

1,462 803 756

Compensation expense associated with RSAs recognized during the period

5,708 4,714 3,072

Unrecognized 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.

27 unchanged sentences

Restricted stock is considered a participating security and is included in the computation of basic earnings per share as if vested.

For the year ended December 31, 2024, 2023, and 2022, the weighted average of the unvested RSAs were 302.8 thousand, 270.2 thousand, and 144.3 thousand shares respectively.

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.

13 unchanged sentences

Restricted shares

Issuance of common stock related to purchase of businesses — — 267

( 97 ) ( 2 ) 147

Purchase of shares held in treasury ( 182 ) ( 566 ) ( 1,707 )

20 unchanged sentences

$ 36,399 $ 20,433 $ 21,839

Shares repurchased held in treasury

Proceeds from issuance of Senior Secured Term Loan B, net of deferred financing costs

$ 202,077 $ 102,716 $ 113,108

Non-cash investing and financing activities:

Treasury shares excise tax accruals

Issuance of Promissory Note ( Note 9 )

$ — $ 1,000 $ —

Shares issued for acquisition

Treasury shares excise tax accruals

$ ( 115 ) $ ( 225 ) $ ( 519 )

14 unchanged sentences

2025 Acquisitions

During 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.

During 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.

During 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.

During 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.

The results for the seven businesses acquired during the year have been included in our Consolidated Financial Statements beginning on the respective dates of acquisition.

During 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.

During 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.

During 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.

During 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.

The results for the six businesses acquired during the year have been included in our Consolidated Financial Statements beginning on the respective dates of acquisition.

Purchase Price Allocation and Consideration

In 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.

In 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:

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$ 12,981 $ 1,027 $ 10,916 $ 49,459 $ 74,383

Promissory Note due 11/1/ 2029

— — — 1,000 1,000

Contingent consideration

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Goodwill $ 6,520 $ 405 $ 5,254 $ 27,575 $ 39,754

The total cash and cash equivalents acquired for these seven acquisitions was $ 5.5 million.

The 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.

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Goodwill assigned to our SC and IPS segments as a result of these transactions was $ 12.2 million and $ 27.6 million, respectively.

Of the $ 41.6 million of acquired intangible assets, $ 2.3 million was provisionally assigned to non-compete agreements that are subject to amortization over 5 years and $ 3.7 million was assigned to trade names and will be amortized over a period of 10 years.

In addition, $ 35.6 million was assigned to customer relationships and will be amortized over a period of 8 years.

Of 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.

Contingent Consideration

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2024 Acquisitions

During 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.

During 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.

In 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 summarize the total consideration, the estimated fair values of the assets acquired and liabilities assumed at the acquisition date for the 2023 acquisitions:

During 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.

During 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.

During 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.

During 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.

In 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:

Q1 2024 Q2 2024 Q3 2024 Q4 2024 Total

Total Acquisitions

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$ 40,661 $ 81,538 $ 31,564 $ 8,201 $ 161,964

Promissory Note due 11/1/2029 — — — 1,000 1,000

Contingent consideration

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2023 Acquisitions

During the first quarter of 2022 the Company acquired two businesses for $ 9.0 million.

We acquired these two businesses to diversify our end-markets and expand into new geographic territories.

During the second quarter of 2022 the Company acquired a leading distributor of air compressors and related products and services for $ 52.3 million.

We acquired this business to diversify our end-markets, enhance our product and service offerings, and attract and retain talent.

During the third quarter of 2022, the Company acquired a leading distributor and manufacturers’ representative of pumps, valves, controls, and process equipment for $ 6.5 million.

We acquired this company to expand our water and wastewater end-market, expand our geographic territories, expand our product offerings, and attract and retain talent.

In aggregate, the acquisition-date fair value of the consideration transferred for the four businesses acquired in 2022 totaled $ 67.9 million.

The four acquisitions contributed $ 41.5 million in Sales and $ 8.4 million in Net income attributable to common shareholders for the year ended December 31, 2022.

The following table summarize the total consideration, the estimated fair values of the assets acquired and liabilities assumed at the acquisition date for the 2022 acquisitions:

During 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.

During 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.

In 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:

Total Acquisitions

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$ — $ 9,235 $ — $ 1,502 $ 10,737

Common stock consideration

527 4,365 865 — 5,757

Contingent consideration

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NOTE 18 - OTHER INCOME AND EXPENSE, NET

The components of other (income) expense, net were as followed:

The components of other (income) expense, net were as follows:

Years Ended December 31,

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( 709 ) 504 ( 413 )

Other (income) expense, net

$ ( 2,882 ) $ ( 3,517 ) $ ( 1,355 )

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Total $ 2,016 $ 1,802 $ 1,679

Recent Acquisitions

We 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.

The 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) :

Sales Acquisition Sales Organic Sales

Twelve Months Ended December 31, 2025

Service Centers $ 1,373,140 $ 56,164 $ 1,316,976

Innovative Pumping Solutions 390,291 39,879 350,412

Supply Chain Services 252,934 — 252,934

Total Sales $ 2,016,365 $ 96,043 $ 1,920,322

Twelve Months Ended December 31, 2024

Service Centers (1)

$ 1,236,775 $ 36,944 $ 1,199,831

Innovative Pumping Solutions (1)

308,850 61,556 247,294

Supply Chain Services 256,415 — 256,415

Total Sales $ 1,802,040 $ 98,500 $ 1,703,540

Service Centers $ 136,365 $ 19,220 $ 117,145

Innovative Pumping Solutions 81,441 ( 21,677 ) 103,118

Supply Chain Services ( 3,481 ) — ( 3,481 )

Total $ Change $ 214,325 $ ( 2,457 ) $ 216,782

Service Centers 11.0 % 52.0 % 9.8 %

Innovative Pumping Solutions 26.4 % ( 35.2 ) % 41.7 %

Supply Chain Services ( 1.4 ) % N/A ( 1.4 ) %

Total % Change 11.9 % ( 2.5 ) % 12.7 %

(1) Prior period segment disclosures have been recast.

For additional information, please refer to Note 20.

Segment Reporting .

The 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) :

Sales Acquisition Sales Organic Sales

Twelve Months Ended December 31, 2024

Service Centers (1)

$ 1,236,775 $ 36,944 $ 1,199,831

Innovative Pumping Solutions (1)

308,850 61,556 247,294

Supply Chain Services 256,415 — 256,415

Total Sales $ 1,802,040 $ 98,500 $ 1,703,540

Twelve Months Ended December 31, 2023

Service Centers (1)

$ 1,214,602 $ 19,275 $ 1,195,327

Innovative Pumping Solutions (1)

203,630 13,803 189,827

Supply Chain Services 260,368 — 260,368

Total Sales $ 1,678,600 $ 33,078 $ 1,645,522

Service Centers $ 22,173 $ 17,669 $ 4,504

Innovative Pumping Solutions 105,220 47,753 57,467

Supply Chain Services ( 3,953 ) — ( 3,953 )

Total $ Change $ 123,440 $ 65,422 $ 58,018

Service Centers 1.8 % 91.7 % 0.4 %

Innovative Pumping Solutions 51.7 % 346.0 % 30.3 %

Supply Chain Services ( 1.5 ) % N/A ( 1.5 ) %

Total % Change 7.4 % 197.8 % 3.5 %

(1) Prior period segment disclosures have been recast.

For additional information, please refer to Note 20.

Segment Reporting .

NOTE 20 – SEGMENT REPORTING

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Service Centers, Innovative Pumping Solutions and Supply Chain Services.

The Service Centers segment is engaged in providing maintenance, MRO products and equipment, including logistics capabilities, to industrial customers.

The Service Centers segment 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.

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

The 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.

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

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Sales are shown net of intersegment eliminations.

Corporate primarily includes unallocated overhead costs that are not directly associated with our reportable segments.

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

These segments were determined primarily on the distribution channels of the products and services offered and the nature of the customer markets and the primary driver of the customers spend.

These 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.

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As a result of this review, on January 1st, 2025, we moved certain branch locations previously reported under our IPS segment to our SC segment.

Prior period segment disclosures have been recast.

Historical financial information by segment has been retroactively recast to reflect the results of this review.

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

Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total

Total Revenue $ 1,222,599 $ 323,026 $ 256,415 $ 1,802,040

Operating income for reportable segments

$ 174,995 $ 53,736 $ 21,742 $ 250,473

Identifiable assets at year end $ 764,533 $ 311,429 $ 62,760 $ 1,138,722

Capital expenditures $ 4,423 $ 2,586 $ 13 $ 7,022

Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total Corporate Total

Sales $ 1,373,140 $ 390,291 $ 252,934 $ 2,016,365 $ — $ 2,016,365

Operating expenses 1,165,844 316,119 230,796 1,712,759 — 1,712,759

Other expenses

Depreciation 3,865 3,019 32 6,916 3,456 10,372

Amortization of finance leases

Amortization of finance lease assets

5,265 930 187 6,382 426 6,808

Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total

Total Revenue $ 1,199,501 $ 218,731 $ 260,368 $ 1,678,600

Operating income for reportable segments

— — — — 109,556 109,556

Identifiable assets at year end $ 660,209 $ 233,552 $ 62,610 $ 956,371

Income (loss) from operations

$ 198,166 $ 70,223 $ 21,919 $ 290,308 $ ( 113,438 ) $ 176,870

Interest expense — — — — 60,530 60,530

Other income, net — — — — ( 2,882 ) ( 2,882 )

Income (loss) before income taxes $ 198,166 $ 70,223 $ 21,919 $ 290,308 $ ( 171,086 ) $ 119,222

Capital expenditures $ 4,509 $ 3,580 $ — $ 8,089 $ 32,197 $ 40,286

Other primarily includes selling, general and administrative expenses of $ 87.9 million and amortization of intangible assets of $ 21.7 million.

Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total Corporate Total

Sales $ 1,236,775 $ 308,850 $ 256,415 $ 1,802,040 $ — $ 1,802,040

Operating expenses 1,051,316 253,927 234,508 1,539,751 — 1,539,751

Other expenses

Depreciation 3,125 3,352 32 6,509 2,510 9,019

Amortization of finance leases

Amortization of finance lease assets

2,812 508 133 3,453 1,106 4,559

Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total

Total Revenue $ 1,041,462 $ 198,895 $ 240,475 $ 1,480,832

Operating income for reportable segments

— — — — 103,329 103,329

Identifiable assets at year end $ 668,029 $ 223,369 $ 90,771 $ 982,169

Income (loss) from operations

$ 179,522 $ 51,063 $ 21,742 $ 252,327 $ ( 106,945 ) $ 145,382

Interest expense — — — — 63,927 63,927

Other income, net — — — — ( 3,517 ) ( 3,517 )

Income (loss) before income taxes $ 179,522 $ 51,063 $ 21,742 $ 252,327 $ ( 167,355 ) $ 84,972

Capital expenditures $ 4,144 $ 2,593 $ 13 $ 6,750 $ 18,318 $ 25,068

Other primarily includes selling, general and administrative expenses of $ 83.5 million and amortization of intangible assets of $ 19.8 million.

Years Ended December 31, Service Centers Innovative Pumping Solutions Supply Chain Services Total Corporate Total

Sales $ 1,214,602 $ 203,630 $ 260,368 $ 1,678,600 $ — $ 1,678,600

Operating expenses 1,032,264 167,333 238,774 1,438,371 — 1,438,371

Other expenses

Depreciation 2,729 3,687 27 6,443 1,980 8,423

Years Ended December 31,

2024 2023 2022

Income from operations for reportable segments

$ 250,473 $ 228,764 $ 176,741

Adjustments for:

Amortization of intangible assets (1)

Amortization of finance lease assets

3,026 214 45 3,285 166 3,451

Corporate expenses

— — — — 89,633 89,633

Income from operations

Income (loss) from operations

$ 176,583 $ 32,396 $ 21,522 $ 230,501 $ ( 91,779 ) $ 138,722

Interest expense — — — — 53,146 53,146

Other expense (income), net

Other income, net — — — $ — ( 1,355 ) $ ( 1,355 )

Income (loss) before income taxes $ 176,583 $ 32,396 $ 21,522 $ 230,501 $ ( 143,570 ) $ 86,931

Capital expenditures $ 6,277 $ 1,965 $ — $ 8,242 $ 4,021 $ 12,263

Other primarily includes selling, general and administrative expenses of $ 71.4 million and amortization of intangible assets of $ 18.2 million.

Years Ended December 31,

Service Centers $ 820,289 $ 744,966

Innovative Pumping Solutions 383,201 307,818

Supply Chain Services

95,045 85,823

Income before income taxes $ 84,972 $ 86,931 $ 65,901

(1) Amortization of intangible assets is recorded at the corporate level.

Corporate expenses includes selling, general, and administrative expenses, amortization of finance leases, and other expenses that are not directly attributable to a reportable segment.

The Company had capital expenditures at corporate of $ 18.0 million, $ 4.2 million, and $ 0.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The Company had identifiable assets at corporate of $ 210.8 million, $ 221.1 million, and $ 55.1 million as of December 31, 2024, 2023, and 2022, respectively.

Corporate depreciation was $ 2.5 million, $ 1.9 million, and $ 1.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Amortization of finance leases for Corporate was $ 0.3 million and $ 0.2 million for the years ended December 31, 2024 and December 31, 2023.

Total Reportable Segments Assets

$ 1,298,535 $ 1,138,607

Corporate 386,620 210,887

Total Assets $ 1,685,155 $ 1,349,494

NOTE 21 – RELATED PARTIES DISCLOSURES

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NOTE 22 - SUBSEQUENT EVENTS

On February 1, 2025 the Company completed the acquisition of a leading distributor of pumps, process equipment, and related service and repairs.

We acquired this company in order to expand our end-markets and expand our geographic territories.

The acquisition was not material to our consolidated financial statements.

On January 1, 2026, the Company completed the acquisition of PREMIERflow, LLC.

The acquisition was funded with cash on the balance sheet.

On January 1, 2026, the Company completed the acquisition of Mid Atlantic Storage Systems Inc.

The acquisition was funded with cash on the balance sheet.

On February 1, 2026, the Company completed the acquisition of Ambiente H2O Inc.

The acquisition was funded with cash on the balance sheet.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data