Financial Data and Key Metrics Changes - Total sales for Q3 2020 were $220.2 million, down 12.4% from Q2 and down 32.7% compared to Q3 2019 [35][30] - Adjusted operating income for Q3 was $7.6 million, an increase of 74 basis points compared to Q2 2020 [44] - Adjusted EBITDA was $12.5 million in Q3, down from $28.2 million in Q3 2019, but improved 68 basis points sequentially [47] - Free cash flow generated during the quarter was $29.1 million, contributing to a total of $100 million expected for the year [50][26] Business Segment Data and Key Metrics Changes - Sales in the Innovative Pumping Solutions (IPS) segment were down 63.8% sequentially and 73.4% year-over-year, significantly impacted by capital budget cuts in the oil and gas industry [38][17] - Service Centers experienced a sequential sales growth of 7.2%, although down 14.9% from Q3 2019, driven by diverse end markets [37] - Supply Chain Services sales declined 9.9% sequentially and 34.8% year-over-year, reflecting reduced activity in oil and gas and transportation sectors [41] Market Data and Key Metrics Changes - Average daily sales for Q3 were $3.4 million, compared to $5.1 million in Q3 2019 and $4 million in Q2 2020 [36] - Key end markets driving performance included food and beverage, mining, municipal, and specialty chemicals [37] - The company aims to grow in markets such as food and beverage, sanitary, water and wastewater, chemicals, alternative energy, and military [16] Company Strategy and Development Direction - The company is focused on combining financial strength with local business agility to deliver superior value and growth opportunities [9] - DXP plans to continue its acquisition strategy, targeting non-oil and gas markets, specifically in water and wastewater and food and beverage sectors [27][54] - The company emphasizes a customer-focused approach, adapting to customer needs through digital transformation and an omni-channel strategy [20][19] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the team's ability to navigate challenges posed by COVID-19 and other external factors, while remaining focused on sales growth [7][28] - The company anticipates a gradual recovery in demand, particularly in the Supply Chain Services segment, with expectations for sequential growth in Q4 [23][41] - Management acknowledged the uncertainty in capital allocation decisions among customers due to the current environment, particularly in the IPS segment [40][63] Other Important Information - The company took a $48.4 million pretax charge related to impairment of goodwill and assets, which is a non-cash item [32] - Working capital was reduced to $161.7 million, reflecting improved collections and aligning with historical averages [48] - The company maintained a strong liquidity position with $228.6 million available, including cash and ABL availability [53] Q&A Session Summary - There were no questions during the Q&A session, indicating a lack of analyst participation [55]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [ ☒ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2020 or [ ☐ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission file number 0-21513 DXP Enterprises, Inc. (Exact name of registrant as specified in its charter) Texas 76-0509661 | --- | --- | |------ ...

Financial Data and Key Metrics Changes - For the six-month period ended June 30, 2020, total sales were $552.4 million and operating income was $17.7 million, with diluted earnings per share at $0.42 [25] - Total sales for Q2 were $251.4 million, a 16.5% decline sequentially and a 24.6% decline year-over-year [26] - Average daily sales for Q2 were $4.0 million per day, down from $5.3 million in Q2 2019 and $4.7 million in Q1 2020 [27] Business Line Data and Key Metrics Changes - Service Center sales were down 15.7% sequentially and 23.1% year-over-year [30] - Innovative Pumping Solutions (IPS) sales decreased 13.6% sequentially and 25.4% compared to Q2 of last year [30] - Supply Chain Services sales declined 23.3% sequentially and 29.1% year-over-year, reflecting significant pullback in oil and gas and transportation-related customers [31] Market Data and Key Metrics Changes - The U.S. and Canada average quarterly rig count is down 57% from Q1 to Q2, significantly affecting demand within the Safety Services division [14] - Downstream refinery business utilization rates dropped from an average of 88% in Q1 to 72% in Q2 [15] - Strength was noted in gold mining, specialty polymers, bottled water, and certain agricultural markets [16] Company Strategy and Development Direction - The company aims to drive sales growth and achieve excellence for stakeholders while navigating the challenges posed by COVID-19 [6][9] - DXP is focusing on maintaining a strong balance sheet to invest in capabilities through growth or acquisitions, with recent acquisitions in stable markets [19][20] - The company plans to continue pushing for resilience and adaptability in the second half of the year [22] Management's Comments on Operating Environment and Future Outlook - Management expressed that the recovery experienced in May and June was short-lived due to a resurgence in COVID-19 cases [11] - The company is adapting to operate safely in a COVID-19 environment while managing demand pressures [13] - Management remains optimistic about the long-term financial performance despite current challenges [6][21] Other Important Information - DXP achieved record cash flow in the quarter, driven by improved collections, resulting in a significant improvement in liquidity and a reduction in total debt [40][41] - The company has no near-term maturities, with a strong capital structure designed for flexibility [44] - The average backlog for Q2 is 6% below fiscal year 2015 but 60% above fiscal year 2016 [18] Q&A Session Summary Question: Can you provide insights on monthly sales per day? - Monthly sales per day decreased from $5.2 million in March to $3.2 million in July, indicating a year-over-year decline of 25% to 35% [48][49] Question: What are the trends in Service Center and IPS segments? - Service Center bookings have shown an uptick in July, while IPS backlog is trending down but remains profitable [51][52] Question: How much temporary cost reduction occurred in Q2? - The company has taken out over $28 million in costs from 2019 levels, with ongoing cost management strategies in place [63] Question: What is the outlook for the Supply Chain segment? - The Supply Chain segment faced significant declines due to customer facility closures, but profitability was maintained as expenses also decreased [68] Question: What are the plans for inventory management? - Adjustments to inventory levels were made in April, with expectations for inventory to decrease in the second half of the year [75] Question: What is the company's approach to M&A? - The company is looking to close 1 or 2 acquisitions by year-end, focusing on businesses that have shown growth during the pandemic [76][79]

PART I: FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements, including statements of operations, balance sheets, cash flows, and equity, along with detailed notes [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=a)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) The condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2020, show a decrease in sales and net income compared to the prior year, alongside a decline in earnings per share | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | Change (%) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------- | | Sales | $300,983 | $311,225 | -3.3% | | Gross Profit | $83,985 | $84,200 | -0.3% | | Income from Operations | $10,915 | $14,816 | -26.3% | | Net Income | $5,648 | $7,187 | -21.4% | | Net Income Attributable to DXP Enterprises, Inc. | $5,710 | $7,291 | -21.7% | | Basic EPS | $0.32 | $0.41 | -22.0% | | Diluted EPS | $0.31 | $0.40 | -22.5% | [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=b)%20Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets as of March 31, 2020, indicate a slight increase in total assets and equity compared to December 31, 2019, while total liabilities saw a minor decrease | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | Change (%) | | :----------------------------------- | :------------------------------ | :------------------------------- | :--------- | | Total Current Assets | $403,308 | $408,481 | -1.3% | | Total Assets | $791,691 | $788,220 | 0.4% | | Total Current Liabilities | $144,552 | $148,171 | -2.5% | | Total Liabilities | $439,471 | $443,272 | -0.9% | | Total Equity | $352,220 | $344,948 | 2.1% | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=c)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows for the three months ended March 31, 2020, show a significant increase in cash used for investing activities, primarily due to business acquisitions, while cash used in operating and financing activities decreased | Cash Flow Activity | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | Change (YoY) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Net cash used in operating activities | $(1,612) | $(5,310) | $(3,698) (69.6% decrease in usage) | | Net cash used in investing activities | $(17,388) | $(2,283) | $(15,105) (661.6% increase in usage) | | Net cash used in financing activities | $(742) | $(2,310) | $(1,568) (67.9% decrease in usage) | | Net change in cash and restricted cash | $(21,472) | $(9,791) | $(11,681) (119.3% increase in usage) | [Unaudited Condensed Consolidated Statements of Equity](index=7&type=section&id=d)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity) The condensed consolidated statements of equity detail changes in shareholders' equity for the three months ended March 31, 2020, reflecting net income, stock compensation, and the impact of currency translation adjustments | Equity Component | Balance at Dec 31, 2019 (in thousands) | Q1 2020 Activity (in thousands) | Balance at Mar 31, 2020 (in thousands) | | :----------------------------------- | :------------------------------------- | :------------------------------ | :------------------------------------- | | Common Stock | $174 | $1 | $175 | | Additional Paid-in Capital | $157,886 | $2,909 | $160,695 | | Retained Earnings | $205,680 | $5,687 | $211,367 | | Accumulated Other Comprehensive Loss | $(19,954) | $(1,163) | $(21,117) | | Total DXP Enterprises, Inc. Equity | $343,802 | $7,334 | $351,136 | | Noncontrolling Interest | $1,146 | $(62) | $1,084 | | Total Equity | $344,948 | $7,272 | $352,220 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=e)%20Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the accounting policies, recent pronouncements, and specific financial statement line items [NOTE 1 - THE COMPANY](index=8&type=section&id=NOTE%201%20-%20THE%20COMPANY) DXP Enterprises, Inc. distributes maintenance, repair, and operating (MRO) products and services to energy and industrial customers, also providing custom pump solutions and manufacturing - DXP's core business involves distributing **maintenance, repair, and operating (MRO) products and services** to energy and industrial customers[23](index=23&type=chunk) - The company also provides integrated, custom pump skid packages, pump remanufacturing, and manufactures branded private label pumps[23](index=23&type=chunk) - DXP is organized into **three business segments**: Service Centers (SC), Supply Chain Services (SCS), and Innovative Pumping Solutions (IPS)[23](index=23&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES](index=8&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20AND%20BUSINESS%20POLICIES) The financial statements are prepared in accordance with US GAAP, presenting condensed consolidated results that include the Company, its wholly-owned subsidiaries, and a variable interest entity, with all inter-company transactions eliminated - The Company's financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP")[24](index=24&type=chunk) - The condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its variable interest entity ("VIE")[24](index=24&type=chunk) - All inter-company accounts and transactions have been eliminated upon consolidation[25](index=25&type=chunk) [NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS](index=8&type=section&id=NOTE%203%20-%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company adopted new accounting standards for internal-use software, fair value measurement, and credit losses effective January 1, 2020, with immaterial impacts on financial results, and is currently evaluating the potential impact of ASU 2020-04 on reference rate reform - Adopted ASU No. 2018-15 (Internal-Use Software) effective **January 1, 2020**, with **no impact** on results of operations[26](index=26&type=chunk) - Adopted ASU 2018-13 (Fair Value Measurement) effective **January 1, 2020**, with **no impact** on results of operations[27](index=27&type=chunk) - Adopted ASU 2016-13 (Measurement of Credit Losses) effective **January 1, 2020**, resulting in an **immaterial impact** to beginning retained earnings but requiring changes to the process of estimating expected credit losses[29](index=29&type=chunk) - Currently evaluating the potential impact of ASU 2020-04 (Reference Rate Reform) issued in March 2020[30](index=30&type=chunk) [NOTE 4 - LEASES](index=9&type=section&id=NOTE%204%20-%20LEASES) Supplemental information on leases shows cash payments for operating leases and the values of operating lease right-of-use assets and liabilities, indicating a slight decrease in total operating lease liabilities year-over-year | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Operating cash flows from operating leases | $4,672 | $4,513 | | Right-of-use assets obtained from operating leases | $4,326 | $2,935 | | Metric | March 31, 2020 (in thousands) | March 31, 2019 (in thousands) | | :----------------------------------- | :------------------------------ | :------------------------------ | | Operating lease right-of-use assets | $65,268 | $70,851 | | Short-term operating lease liabilities | $15,926 | $17,660 | | Long-term operating lease liabilities | $47,480 | $52,993 | | Total operating lease liabilities | $63,406 | $70,653 | - During the three months ended March 31, 2020, the Company paid **$2.4 million** in current and future lease obligations to entities invested in by the Company's Chief Executive Officer[35](index=35&type=chunk) [NOTE 5 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES](index=10&type=section&id=NOTE%205%20-%20FAIR%20VALUE%20OF%20FINANCIAL%20ASSETS%20AND%20LIABILITIES) This note outlines the fair value hierarchy (Level 1, 2, 3) for financial assets and liabilities, specifically detailing the Level 3 contingent consideration liability of $2.2 million related to the ASI acquisition, which is valued using discounted cash flow based on unobservable inputs - Contingent consideration liability associated with the acquisition of Application Specialties Inc. ("ASI") was recorded at **$2.2 million** as of March 31, 2020, classified as **Level 3 fair value measurement**[40](index=40&type=chunk)[43](index=43&type=chunk) - The fair value measurement for contingent consideration uses discounted cash flow, with significant unobservable inputs including annualized EBITDA forecasts and probability of achievement[43](index=43&type=chunk) | Metric | Amount (in thousands) | | :----------------------------------- | :-------------------- | | Beginning balance at December 31, 2019 | $2,705 | | Changes in fair value recorded in other (income) expense, net | $(496) | | Ending Balance at March 31, 2020 | $2,208 | [NOTE 6 – INVENTORIES](index=11&type=section&id=NOTE%206%20%E2%80%93%20INVENTORIES) The carrying values of inventories increased slightly from December 31, 2019, to March 31, 2020, primarily driven by an increase in finished goods, partially offset by a minor increase in the obsolescence reserve | Inventory Component | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :----------------------------------- | :------------------------------ | :------------------------------- | | Finished goods | $127,219 | $122,510 | | Work in process | $18,703 | $19,721 | | Obsolescence reserve | $(12,901) | $(12,867) | | Total Inventories | $133,021 | $129,364 | [NOTE 7 – COSTS AND ESTIMATED PROFITS ON UNCOMPLETED CONTRACTS](index=12&type=section&id=NOTE%207%20%E2%80%93%20COSTS%20AND%20ESTIMATED%20PROFITS%20ON%20UNCOMPLETED%20CONTRACTS) This note details the accounting for contract assets and liabilities related to customized pump production, showing an increase in net contract assets from December 31, 2019, to March 31, 2020, primarily due to timing differences between performance and customer payments | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :----------------------------------- | :------------------------------ | :------------------------------- | | Costs incurred on uncompleted contracts | $58,607 | $51,017 | | Estimated profits, thereon | $11,409 | $10,771 | | Total | $70,016 | $61,788 | | Less: billings to date | $38,753 | $41,223 | | Net | $31,263 | $20,565 | - Contract assets are presented as "Cost and estimated profits in excess of billings," while contract liabilities are "Billings in excess of costs and estimated profits"[47](index=47&type=chunk) - During Q1 2020, **$8.5 million** of contract liabilities from the beginning of the period shipped, with overall changes primarily due to normal activity and timing differences[48](index=48&type=chunk) [NOTE 8 – INCOME TAXES](index=12&type=section&id=NOTE%208%20%E2%80%93%20INCOME%20TAXES) The effective tax rate for the three months ended March 31, 2020, decreased to 23.3% from 26.7% in the prior year, influenced by state and foreign taxes, nondeductible expenses, and research and development tax credits | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Effective tax rate from continuing operations | 23.3% | 26.7% | - The effective tax rate was increased by state taxes, foreign taxes, and nondeductible expenses, and partially offset by research and development tax credits and other tax credits[49](index=49&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [NOTE 9 – LONG-TERM DEBT](index=13&type=section&id=NOTE%209%20%E2%80%93%20LONG-TERM%20DEBT) The company's long-term debt primarily consists of Term Loan B, with a carrying value of $243.8 million as of March 31, 2020. The ABL Revolver facility was increased to $135 million in March 2020, providing $131.6 million in borrowing capacity with no outstanding balance | Debt Component | Carrying Value (Mar 31, 2020, in thousands) | Fair Value (Mar 31, 2020, in thousands) | | :----------------------------------- | :------------------------------------------ | :-------------------------------------- | | Term Loan B | $243,750 | $209,625 | | Total long-term debt | $243,750 | $209,625 | | Less: current portion | $(2,500) | $(2,150) | | Long-term debt less current maturities | $241,250 | $207,475 | - On March 17, 2020, the ABL Revolver facility was increased by **$50.0 million** to **$135 million**[53](index=53&type=chunk) - As of March 31, 2020, the Company had **no amount outstanding** under the ABL Revolver and had **$131.6 million** of borrowing capacity[53](index=53&type=chunk) [NOTE 10 - EARNINGS PER SHARE DATA](index=14&type=section&id=NOTE%2010%20-%20EARNINGS%20PER%20SHARE%20DATA) Basic and diluted earnings per share both decreased for the three months ended March 31, 2020, compared to the prior year, reflecting lower net income attributable to common shareholders | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Basic Earnings Per Share | $0.32 | $0.41 | | Diluted Earnings Per Share | $0.31 | $0.40 | | Weighted Average Common Shares Outstanding (Basic) | 17,713 | 17,566 | | Weighted Average Common Shares Outstanding (Diluted) | 18,553 | 18,406 | [NOTE 11 - COMMITMENTS AND CONTINGENCIES](index=14&type=section&id=NOTE%2011%20-%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various legal proceedings in the ordinary course of business, but management believes their ultimate resolution will not have a material adverse effect on DXP's consolidated financial position, cash flows, or results of operations - DXP is a party to various legal proceedings arising in the ordinary course of business[57](index=57&type=chunk) - Management believes the ultimate resolution of these lawsuits will **not have a material adverse effect** on DXP's consolidated financial position, cash flows, or results of operations[57](index=57&type=chunk) [NOTE 12 - SEGMENT REPORTING](index=14&type=section&id=NOTE%2012%20-%20SEGMENT%20REPORTING) This note provides financial information for DXP's three reportable segments: Service Centers, Innovative Pumping Solutions, and Supply Chain Services, detailing revenue and operating income, and their reconciliation to consolidated income before taxes | Segment | Total Revenue (Q1 2020, in thousands) | Total Revenue (Q1 2019, in thousands) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | | Service Centers (SC) | $182,585 | $186,179 | -1.9% | | Innovative Pumping Solutions (IPS) | $70,021 | $74,723 | -6.3% | | Supply Chain Services (SCS) | $48,377 | $50,323 | -3.9% | | **Total Revenue** | **$300,983** | **$311,225** | **-3.3%** | | Segment | Income from Operations (Q1 2020, in thousands) | Income from Operations (Q1 2019, in thousands) | Change (%) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Service Centers (SC) | $16,926 | $18,980 | -10.8% | | Innovative Pumping Solutions (IPS) | $10,428 | $6,799 | 53.4% | | Supply Chain Services (SCS) | $3,755 | $4,086 | -8.1% | | **Operating income for reportable segments** | **$31,109** | **$29,865** | **4.2%** | - Reconciliation to consolidated income before taxes includes adjustments for amortization of intangible assets (**$3.2 million** in Q1 2020) and corporate expenses (**$17.0 million** in Q1 2020)[63](index=63&type=chunk) [NOTE 13 - BUSINESS ACQUISITIONS](index=16&type=section&id=NOTE%2013%20-%20BUSINESS%20ACQUISITIONS) In the first quarter of 2020, DXP completed two acquisitions: Turbo Machinery Repair for $3.2 million in cash and Pumping Systems, Inc. (PSI) for $13.0 million in cash and stock, contributing a combined $5.2 million in sales - Acquired Turbo Machinery Repair on February 1, 2020, for approximately **$3.2 million in cash**, contributing **$0.5 million in sales** for Q1 2020[65](index=65&type=chunk) - Acquired substantially all assets of Pumping Systems, Inc. (PSI) on January 1, 2020, for approximately **$13.0 million in cash and stock**, contributing **$4.7 million in sales** for Q1 2020[66](index=66&type=chunk) | Purchase Price Consideration | Amount (in millions) | | :----------------------------------- | :------------------- | | Cash payments | $14.2 | | Fair value of stock issued | $2.0 | | Total purchase price consideration | $16.2 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis provides insights into DXP's financial performance and condition for the three months ended March 31, 2020, highlighting the significant impact of the COVID-19 pandemic and low oil prices on market conditions, segment results, and liquidity, along with the company's mitigation strategies [DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS](index=17&type=section&id=DISCLOSURE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that the report contains forward-looking statements about DXP's future performance, profitability, cash flow, liquidity, and growth, which are subject to significant risks and uncertainties, including the impact of COVID-19 and low commodity prices - The report contains forward-looking statements regarding the Company's expectations for business, future profitability, cash flow, liquidity, and growth[70](index=70&type=chunk) - These statements are subject to **significant risks and uncertainties**, including the impact of the COVID-19 pandemic and low commodity prices of oil and gas[70](index=70&type=chunk) - The Company assumes **no obligation** and does not intend to update these forward-looking statements[70](index=70&type=chunk) [CURRENT MARKET CONDITIONS AND OUTLOOK](index=17&type=section&id=CURRENT%20MARKET%20CONDITIONS%20AND%20OUTLOOK) The first quarter of 2020 saw severe market disruption due to COVID-19 and low oil prices, leading to demand destruction and industry-wide spending cuts. DXP responded by increasing its ABL revolver, reducing discretionary spending, and maintaining operations as an essential business, while anticipating continued declines in activity - The COVID-19 pandemic and failure of OPEC+ to agree on production cuts led to sharp demand destruction for crude oil and **decimated oil prices** in Q1 2020[71](index=71&type=chunk) - North American rig count declined from over **1,200 in March 2019** to **435 as of May 1, 2020**[71](index=71&type=chunk) - DXP's mitigation efforts include increasing its ABL revolver facility to **$135 million**, reducing discretionary expenditures, suspending retirement plan matching contributions, and operating as an "essential" business with employee safety measures[72](index=72&type=chunk)[73](index=73&type=chunk) - Management expects industry activity and customer spending to **decrease throughout the remainder of 2020**, potentially impacting results and asset carrying values[76](index=76&type=chunk) [RESULTS OF OPERATIONS](index=19&type=section&id=RESULTS%20OF%20OPERATIONS) DXP's Q1 2020 results show a 3.3% decrease in total sales to $301.0 million, primarily driven by declines across all segments due to reduced capital spending and COVID-19 impacts. Gross profit percentage improved, but increased SG&A expenses led to a 26.3% decrease in operating income [Sales Analysis](index=19&type=section&id=Sales%20Analysis) Total sales for Q1 2020 decreased by 3.3% to $301.0 million, with $5.2 million contributed by acquisitions. All three business segments experienced sales declines, primarily due to decreased capital spending in oil and gas and the economic impacts of COVID-19 | Segment | Sales (Q1 2020, in thousands) | Sales (Q1 2019, in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :---------------------------- | :---------------------------- | :-------------------- | :--------- | | Service Centers | $182,585 | $186,179 | $(3,594) | -1.9% | | Innovative Pumping Solutions | $70,021 | $74,723 | $(4,702) | -6.3% | | Supply Chain Services | $48,377 | $50,323 | $(1,946) | -3.9% | | **Total DXP Sales** | **$300,983** | **$311,225** | **$(10,242)** | **-3.3%** | - Sales from businesses acquired during Q1 2020 accounted for **$5.2 million** of total sales[79](index=79&type=chunk) [Gross Profit Analysis](index=20&type=section&id=Gross%20Profit%20Analysis) Gross profit as a percentage of sales increased by 85 basis points to 27.9% in Q1 2020, primarily driven by a significant increase in the IPS segment's gross profit percentage due to improved utilization and pricing, partially offset by a decrease in the SC segment | Metric | Q1 2020 | Q1 2019 | Change (basis points) | | :----------------------------------- | :------ | :------ | :-------------------- | | Gross profit as a percentage of sales | 27.9% | 27.1% | 85 bps | | IPS segment gross profit percentage change | +435 bps | N/A | N/A | | SC segment gross profit percentage change (adjusted) | -27 bps | N/A | N/A | | SCS segment gross profit percentage change | +15 bps | N/A | N/A | - The increase in IPS gross profit percentage was primarily due to increased utilization and capacity within its engineered-to-order business and an overall improvement in the pricing environment[86](index=86&type=chunk) [Selling, General and Administrative Expenses](index=20&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) Selling, general and administrative (SG&A) expenses increased by $3.7 million (5.3%) to $73.1 million in Q1 2020, with $1.5 million attributed to acquired businesses. The increase was driven by higher payroll, incentive compensation, and 401(k) expenses, leading to a 192 basis point increase as a percentage of sales (adjusted for acquisitions) | Metric | Q1 2020 (in thousands) | Q1 2019 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | SG&A Expense | $73,070 | $69,384 | $3,686 | 5.3% | | SG&A as % of Sales | 24.3% | 22.3% | 200 bps | | SG&A as % of Sales (adjusted for acquisitions) | 24.2% | 22.3% | 192 bps | - The increase in SG&A was primarily due to increased payroll, incentive compensation, and related taxes and 401(k) expenses[89](index=89&type=chunk) [Operating Income](index=20&type=section&id=Operating%20Income) Operating income for Q1 2020 decreased by $3.9 million (26.3%) to $10.9 million, primarily due to the increase in selling, general, and administrative expenses | Metric | Q1 2020 (in thousands) | Q1 2019 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Operating Income | $10,915 | $14,816 | $(3,901) | -26.3% | [INTEREST EXPENSE](index=21&type=section&id=INTEREST%20EXPENSE) Interest expense for the first quarter of 2020 decreased by $0.7 million compared to the prior year, primarily due to lower LIBOR rates | Metric | Q1 2020 (in thousands) | Q1 2019 (in thousands) | Change (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Interest Expense | $4,377 | $5,040 | $(663) | - The decrease in interest expense was primarily due to **lower LIBOR rates**[92](index=92&type=chunk) [INCOME TAXES](index=21&type=section&id=INCOME%20TAXES) The effective tax rate from continuing operations decreased to 23.3% in Q1 2020 from 26.7% in Q1 2019, influenced by state and foreign taxes, nondeductible expenses, and various tax credits | Metric | Q1 2020 | Q1 2019 | | :----------------------------------- | :------ | :------ | | Effective tax rate from continuing operations | 23.3% | 26.7% | - The effective tax rate was increased by state taxes, foreign taxes, and nondeductible expenses, and decreased by research and development tax credits and other tax credits[93](index=93&type=chunk)[94](index=94&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=21&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of March 31, 2020, DXP had $32.9 million in cash and $237.8 million in borrowings. The ABL Revolver facility was increased to $135 million, providing $131.6 million in available borrowing capacity. The company believes its cash flow from operations and credit facilities are adequate for working capital needs, but may seek additional financing for future acquisitions - As of March 31, 2020, DXP had cash and cash equivalents of **$32.9 million** and bank and other borrowings of **$237.8 million**[95](index=95&type=chunk) - The ABL Revolver facility was increased to **$135 million** on March 17, 2020, with **$131.6 million** of borrowing capacity available as of March 31, 2020 (no outstanding balance)[103](index=103&type=chunk) | Cash Flow Activity | Q1 2020 (in thousands) | Q1 2019 (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | | Net Cash Used in Operating Activities | $(1,612) | $(5,310) | | Net Cash Used in Investing Activities | $(17,388) | $(2,283) | | Net Cash Used in Financing Activities | $(742) | $(2,310) | - Net cash used in investing activities increased by **$15.2 million** in Q1 2020, primarily driven by the acquisitions of PSI and Turbo[100](index=100&type=chunk) - The Company believes its cash generated from operations will meet normal working capital needs for the next twelve months, but may require additional debt or equity financing for potential acquisitions[106](index=106&type=chunk) [DISCUSSION OF SIGNIFICANT ACCOUNTING AND BUSINESS POLICIES](index=22&type=section&id=DISCUSSION%20OF%20SIGNIFICANT%20ACCOUNTING%20AND%20BUSINESS%20POLICIES) This section reiterates that the condensed financial statements are prepared in accordance with US GAAP and should be read in conjunction with the annual report on Form 10-K for a comprehensive understanding of significant accounting policies and business practices - The Company's condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP")[108](index=108&type=chunk) - These statements should be read in conjunction with the annual report on Form 10-K for a more complete discussion of significant accounting policies and business practices[108](index=108&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=22&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This section refers readers to Note 3 of the Condensed Consolidated Financial Statements for detailed information regarding recent accounting pronouncements - Refer to Note 3 - Recent Accounting Pronouncements to the Condensed Consolidated Financial Statements for information regarding recent accounting pronouncements[109](index=109&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=22&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that its exposures to market risk have not materially changed since December 31, 2019, and directs readers to its Annual Report on Form 10-K for comprehensive disclosures on this topic - The Company's exposures to market risk have **not changed materially** since December 31, 2019[110](index=110&type=chunk) - For detailed quantitative and qualitative disclosures about market risk, refer to Item 7A of the Annual Report on Form 10-K for the year ended December 31, 2019[110](index=110&type=chunk) [ITEM 4. Controls and Procedures](index=23&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, concluded that DXP's disclosure controls and procedures were effective as of March 31, 2020. No material changes in internal control over financial reporting occurred during the quarter, though inherent limitations of internal controls are acknowledged - Disclosure controls and procedures were evaluated and deemed **effective** as of March 31, 2020[112](index=112&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended March 31, 2020[113](index=113&type=chunk) - Internal control over financial reporting has inherent limitations and cannot provide absolute assurance of achieving financial reporting objectives[114](index=114&type=chunk) PART II: OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other disclosures not included in the financial statements [ITEM 1. Legal Proceedings](index=24&type=section&id=ITEM%201.%20Legal%20Proceedings) DXP is routinely involved in various legal proceedings arising in the ordinary course of business, but the company believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position, cash flows, or results of operations - The Company is a party to various legal proceedings arising in the ordinary course of business[117](index=117&type=chunk) - DXP believes the ultimate resolution of these lawsuits will **not have a material adverse effect** on its consolidated financial position, cash flows, or results of operations[117](index=117&type=chunk) [ITEM 1A. Risk Factors](index=24&type=section&id=ITEM%201A.%20Risk%20Factors) Key risk factors include the widespread disruptions caused by the COVID-19 pandemic, which could lead to supply chain issues, decreased customer demand, and lower oil prices. Additionally, the unexpected loss of key management or widespread employee illness, and sustained low oil prices, pose significant threats to DXP's business and financial performance - The COVID-19 pandemic could result in disruptions in the supply chain, decreased customer demand, lower oil prices, and volatility in the stock market and global economy, **negatively impacting DXP's business**[118](index=118&type=chunk)[119](index=119&type=chunk) - The unexpected loss of services from the executive management team or other key employees, particularly due to COVID-19, could **adversely impact business and operations**[121](index=121&type=chunk)[122](index=122&type=chunk) - Sustained low oil prices or a continued decline could lead to decreased capital and operating expenditures in the oil and natural gas industry, **adversely affecting DXP's revenues**[123](index=123&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2020, DXP issued 49,468 shares of common stock for $2.0 million in a private placement to certain employees of Pumping Systems, Inc. (PSI), as part of the PSI acquisition - Issued an aggregate of **49,468 shares of common stock** to certain employees of PSI in a private placement[125](index=125&type=chunk) - The total consideration for these shares was **$2.0 million**[125](index=125&type=chunk) - This issuance was part of the acquisition of Pumping Systems, Inc. (PSI)[125](index=125&type=chunk) [ITEM 3. Default upon Senior Securities](index=25&type=section&id=ITEM%203.%20Default%20upon%20Senior%20Securities) The company reported no defaults upon senior securities during the fiscal quarter ended March 31, 2020 - There were **no defaults** upon senior securities during the fiscal quarter ended March 31, 2020[127](index=127&type=chunk) [ITEM 4. Mine Safety Disclosures](index=25&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures for the period - **No mine safety disclosures** were reported[128](index=128&type=chunk) [ITEM 5. Other Information](index=25&type=section&id=ITEM%205.%20Other%20Information) The company reported no other information for the period - **No other information** was reported[130](index=130&type=chunk) [ITEM 6. Exhibits](index=26&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate organizational documents, the Increase Agreement for the ABL Revolver, and certifications from the Chief Executive Officer and Chief Financial Officer - Exhibits include Restated Articles of Incorporation, Bylaws, and the Increase Agreement dated March 17, 2020, related to the ABL Revolver[132](index=132&type=chunk)[133](index=133&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are included pursuant to Rule 13a-14(a) and 18 U.S.C. 1350[134](index=134&type=chunk)[135](index=135&type=chunk) - Interactive Data Files (101) are also filed as exhibits[136](index=136&type=chunk) [Signatures](index=27&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its due authorization and filing by DXP Enterprises, Inc. on May 8, 2020 - The report was signed on behalf of DXP ENTERPRISES, INC. by **Kent Yee, Senior Vice President and Chief Financial Officer**[139](index=139&type=chunk) - The report was dated **May 8, 2020**[139](index=139&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission file number 0-21513 DXP Enterprises, Inc. (Exact name of registrant as specified in its charter) Texas 76-0509661 | --- | --- | --- | |------------ ...

DXP Enterprises, Inc. (NASDAQ:DXPE) Q4 2019 Earnings Conference Call March 6, 2020 11:00 AM ET Company Participants Kent Yee - Chief Financial Officer David Little - Chief Executive Officer Conference Call Participants Blake Hirschman - Stephens Joe Mondillo - Sidoti & Company Carl Schemm - KeyBanc Capital Markets Operator Ladies and gentlemen, thank you for standing by, and welcome to the DXP Enterprises Fourth Quarter and Fiscal 2019 Conference Call. At this time, all participants are in a listen-only mod ...

DXP Enterprises, Inc. (NASDAQ:DXPE) Q3 2019 Earnings Conference Call November 7, 2019 11:00 AM ET Company Participants Kent Yee - SVP, Finance, CFO & Secretary David Little - Chairman, President & CEO Conference Call Participants Blake Hirschman - Stephens Ken Newman - KeyBanc Capital Joe Mondillo - Sidoti & Company Operator Ladies and gentlemen, thank you for standing by, and welcome to the DXP Enterprises third-quarter fiscal 2019 conference call. [Operator Instructions] I would now like to hand your conf ...

[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for DXP Enterprises, Inc [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements show revenue and net income growth, increased total assets due to lease accounting, and slightly decreased operating cash flow [Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=a)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This statement details the company's sales, gross profit, operating income, and net income for the three and nine months ended September 30, 2019 and 2018 Q3 & Nine Months 2019 Financial Performance (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Sales** | $327,178 | $308,028 | $971,721 | $905,191 | | **Gross Profit** | $92,704 | $84,070 | $268,891 | $245,631 | | **Income from Operations** | $21,717 | $16,813 | $59,380 | $48,022 | | **Net Income Attributable to DXP** | $13,109 | $8,397 | $33,859 | $24,510 | | **Diluted EPS** | $0.71 | $0.46 | $1.84 | $1.33 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=b)%20Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity as of September 30, 2019, and December 31, 2018 Balance Sheet Summary (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash | $28,436 | $40,304 | | Inventories | $131,916 | $114,830 | | Operating lease ROU assets | $67,296 | $— | | **Total Assets** | **$791,554** | **$699,962** | | Long-term debt, net | $235,576 | $236,979 | | Long-term operating lease liabilities | $49,602 | $— | | **Total Liabilities** | **$449,163** | **$391,708** | | **Total Equity** | **$342,391** | **$308,254** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=c)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2019 and 2018 Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,485 | $9,842 | | Net cash used in investing activities | ($14,212) | ($15,971) | | Net cash used in financing activities | ($5,444) | ($2,994) | | **Net change in cash and restricted cash** | **($11,958)** | **($9,189)** | [Condensed Consolidated Statements of Equity](index=6&type=section&id=d)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity) This statement details changes in the company's total equity, primarily driven by net income, for the period - Total equity increased from **$308.3 million** at December 31, 2018, to **$342.4 million** at September 30, 2019. The increase was primarily driven by net income of **$33.7 million** for the nine-month period[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=e)%20Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional information and explanations regarding the company's business segments, accounting policies, and significant transactions - DXP Enterprises is a distributor of MRO products and services, organized into three business segments: Service Centers (SC), Supply Chain Services (SCS), and Innovative Pumping Solutions (IPS)[21](index=21&type=chunk) - Effective January 1, 2019, the company adopted the new lease accounting standard (ASC 842), resulting in the recognition of right-of-use (ROU) assets and lease liabilities of approximately **$72 million** each on the balance sheet[32](index=32&type=chunk)[39](index=39&type=chunk) - As of September 30, 2019, the company had a contingent consideration liability of **$2.9 million** related to the acquisition of Application Specialties Inc. (ASI), which is measured at fair value using Level 3 inputs[54](index=54&type=chunk) Segment Revenue and Operating Income (in thousands) | Segment | Q3 2019 Revenue | Q3 2018 Revenue | 9M 2019 Op. Income | 9M 2018 Op. Income | | :--- | :--- | :--- | :--- | :--- | | Service Centers (SC) | $193,727 | $187,763 | $67,281 | $58,353 | | Innovative Pumping Solutions (IPS) | $82,169 | $76,662 | $28,924 | $24,109 | | Supply Chain Services (SCS) | $51,282 | $43,603 | $10,980 | $12,196 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, liquidity, and capital resources, highlighting sales growth and improved gross profit margins [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section analyzes the company's sales, gross profit, and operating income performance for the three and nine months ended September 30, 2019 Q3 2019 vs Q3 2018 Performance | Metric | Q3 2019 | Q3 2018 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Sales | $327.2M | $308.0M | +$19.2M | +6.2% | | Gross Profit % | 28.3% | 27.3% | +104 bps | - | | Operating Income | $21.7M | $16.8M | +$4.9M | +29.2% | - Q3 2019 sales growth was driven by all segments: Supply Chain Services (**+17.6%**), Innovative Pumping Solutions (**+7.2%**), and Service Centers (**+3.2%**), largely due to increased capital spending by oil and gas producers[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) Nine Months 2019 vs Nine Months 2018 Performance | Metric | 9M 2019 | 9M 2018 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Sales | $971.7M | $905.2M | +$66.5M | +7.3% | | Gross Profit % | 27.7% | 27.1% | +54 bps | - | | Operating Income | $59.4M | $48.0M | +$11.4M | +23.7% | - For the first nine months of 2019, sales increased across all segments: Supply Chain Services (**+18.5%**), Innovative Pumping Solutions (**+8.9%**), and Service Centers (**+4.2%**)[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's cash position, borrowings, and cash flow activities, emphasizing operating cash flow as the primary capital source - As of September 30, 2019, the company had **$28.6 million** in cash and cash equivalents and **$238.1 million** in bank and other borrowings. The primary source of capital is cash flow from operations[113](index=113&type=chunk)[114](index=114&type=chunk) Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Operating | $7,485 | $9,842 | | Investing | ($14,212) | ($15,971) | | Financing | ($5,444) | ($2,994) | - The decrease in cash from operations was primarily due to the timing of payments for trade accounts payable and inventory purchases. Cash used in investing was mainly for property and equipment purchases of **$14.2 million**[116](index=116&type=chunk)[117](index=117&type=chunk) - The amount available for borrowing under the credit facility increased to **$81.0 million** as of September 30, 2019, from **$79.3 million** at year-end 2018[119](index=119&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no material changes in its market risk exposures since the end of the prior fiscal year - There have been no material changes to the company's market risk exposures since the year ended December 31, 2018[127](index=127&type=chunk) [Controls and Procedures](index=25&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were **not effective** as of September 30, 2019[128](index=128&type=chunk) - The ineffectiveness is due to a **material weakness** in internal control over financial reporting previously identified in the 2018 Form 10-K, specifically related to the control environment and monitoring of certain accounts[129](index=129&type=chunk)[131](index=131&type=chunk) - The company is committed to and continues to implement remediation plans to address the underlying causes of the material weaknesses[132](index=132&type=chunk) [PART II: OTHER INFORMATION](index=27&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, other miscellaneous items, and a list of exhibits filed with the report [Legal Proceedings](index=27&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, none of which are expected to have a material adverse effect on its financial condition - DXP is party to various legal proceedings arising in the ordinary course of business, which are not expected to have a material adverse effect on the company's financial condition[137](index=137&type=chunk) [Risk Factors](index=27&type=section&id=ITEM%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes have occurred from the risk factors disclosed in the company's 2018 Form 10-K[138](index=138&type=chunk) [Other Items (2-5)](index=27&type=section&id=Other%20Items%20(2-5)) The company reported no unregistered sales of equity securities, defaults, mine safety disclosures, or other information for the period - The company reported "None" for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[140](index=140&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk) [Exhibits](index=28&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with or incorporated by reference into the Form 10-Q, including corporate governance documents and certifications - The report lists exhibits filed, including CEO and CFO certifications (**31.1, 31.2, 32.1, 32.2**) and Interactive Data Files (**101**)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)

DXP Enterprises, Inc. (NASDAQ:DXPE) Q2 2019 Earnings Conference Call August 6, 2019 5:00 PM ET Company Participants Kent Yee - SVP, Finance, CFO & Secretary David Little - Chairman, President & CEO Conference Call Participants Joseph Mondillo - Sidoti & Company Blake Hirschman - Stephens Inc. Ryan Mills - KeyBanc Capital Markets Operator Good afternoon. My name is Roche, and I will be your conference operator today. At this time, I would like to welcome everyone to the DXP Enterprises, Inc. 2019 Second Quar ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2019 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the transition period from to Commission file number 0-21513 DXP Enterprises, Inc. (Exact name of registrant as specified in its charter) Texas 76-0509661 (State or other jurisdicti ...