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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2019
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to
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Texas
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76-0509661
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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5301 Hollister, Houston, Texas
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77040
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(713) 996-4700
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number, including area code)
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Title of Each Class
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Trading Symbol
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Name of Exchange on which Registered
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Common Stock par value $0.01
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DXPE
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NASDAQ Global Select Market
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Large accelerated filer ☐
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Accelerated filer ☒
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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Item
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Page
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PART I
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1.
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1A.
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1B.
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2.
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3.
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||
4.
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PART II
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5.
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||
6.
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||
7.
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||
7A.
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||
8.
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||
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||
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9.
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9A.
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9B.
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PART III
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10.
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||
11.
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||
12.
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||
13.
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14.
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PART IV
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15.
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16.
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||
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•
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Industry Consolidation. Industrial customers have reduced the number of supplier relationships they maintain to lower total purchasing costs, improve inventory management, assure consistently high levels of customer service and enhance purchasing power. This focus on fewer suppliers has led to consolidation within the fragmented industrial distribution industry.
|
•
|
Customized Integrated Service. As industrial customers focus on their core manufacturing or other production competencies, they increasingly demand customized integration services, consisting of value-added traditional distribution, supply chain services, modular equipment and repair and maintenance services.
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•
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Single Source, First-Tier Distribution. As industrial customers continue to address cost containment, there is a trend toward reducing the number of suppliers and eliminating multiple tiers of distribution. Therefore, to lower overall costs to the customer, some MRO product distributors are expanding their product coverage to eliminate second-tier distributors and become a “one stop source”.
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Segment
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2019 Sales (in millions)
|
|
% of Sales
|
|
End-Markets
|
|
Locations
|
|
Employees
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SC
|
|
762.3
|
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60.2%
|
|
Oil & Gas, Food & Beverage, General Industrial, Chemical & Petrochemical, Transportation, Aerospace
|
|
141 service centers, 4 distribution centers
|
|
1,586
|
|
|
|
|
|
|
|
|
|
|
|
IPS
|
|
303.7
|
|
24.0%
|
|
Oil & Gas
Food & Beverage,
Mining & Transportation
|
|
10 fabrication facilities
|
|
498
|
|
|
|
|
|
|
|
|
|
|
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SCS
|
|
201.3
|
|
15.9%
|
|
Oil & Gas Mining Utilities
|
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89 customers facilities'
|
|
406
|
•
|
Structural welding
|
•
|
Pipe welding
|
•
|
Custom skid assembly
|
•
|
Custom coatings
|
•
|
Hydrostatic pressure testing
|
•
|
Mechanical string testing
|
•
|
Diesel and electric driven firewater packages
|
•
|
Pipeline booster packages
|
•
|
Potable water packages
|
•
|
Pigging pump packages
|
•
|
Lease Automatic Custody Transfer (LACT) charge units
|
•
|
Chemical injection pump packages wash down units
|
•
|
Seawater lift pump packages
|
•
|
Jockey pump packages
|
•
|
Condensate pump packages
|
•
|
Cooling water packages
|
•
|
Seawater/produced water injection packages
|
•
|
Variety of packages to meet customer required industry specifications such as API, ANSI and NFPA
|
•
|
SmartAgreement, a planned, pro-active MRO products procurement solution for MRO categories leveraging DXP’s local Service Centers.
|
•
|
SmartBuy, DXP’s on-site or centralized MRO procurement solution.
|
•
|
SmartSource SM, DXP’s on-site procurement and storeroom management by DXP personnel.
|
•
|
SmartStore, DXP’s customized e-Catalog solution.
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•
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SmartVend, DXP’s industrial dispensing solution, which allows for inventory-level optimization, user accountability and item usage reduction by an initial 20-40%.
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•
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SmartServ, DXP’s integrated service pump solution. It provides a more efficient way to manage the entire life cycle of pumping systems and rotating equipment.
|
•
|
Rotating Equipment. Our rotating equipment products include a full line of centrifugal pumps for transfer and process service applications, such as petrochemicals, refining and crude oil production; rotary gear pumps for low- to- medium pressure service applications, such as pumping lubricating oils and other viscous liquids; plunger and piston pumps
|
•
|
Bearings & Power Transmission. Our bearing products include several types of mounted and un-mounted bearings for a variety of applications. The power transmission products we distribute include speed reducers, flexible-coupling drives, chain drives, sprockets, gears, conveyors, clutches, brakes and hoses.
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•
|
Industrial Supplies. We offer a broad range of industrial supplies, such as abrasives, tapes and adhesive products, coatings and lubricants, fasteners, hand tools, janitorial products, pneumatic tools, welding supplies and welding equipment.
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•
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Metal Working. Our metal working products include a broad range of cutting tools, abrasives, coolants, gauges, industrial tools and machine shop supplies.
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•
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Safety Products & Services. We sell a broad range of safety products including eye and face protection, first aid, hand protection, hazardous material handling, instrumentation and respiratory protection products. Additionally, we provide safety services including hydrogen sulfide (H2S) gas protection and safety, specialized and standby fire protection, safety supervision, training, monitoring, equipment rental and consulting. Our safety services include safety supervision, medic services, safety audits, instrument repair and calibration, training, monitoring, equipment rental and consulting.
|
NAME
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AGE
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TITLE
|
David R. Little
|
68
|
Chairman of the Board, President and Chief Executive Officer
|
Kent Yee
|
44
|
Senior Vice President/Chief Financial Officer
|
Gene Padgett
|
49
|
Senior Vice President/Chief Accounting Officer
|
David C. Vinson
|
69
|
Senior Vice President/Innovative Pumping Solutions
|
John J. Jeffery
|
52
|
Senior Vice President/Supply Chain Services
|
Todd Hamlin
|
48
|
Senior Vice President/Service Centers
|
Chris Gregory
|
45
|
Senior Vice President/Information Technology
|
•
|
DXP Code of Ethics for Senior Financial Officers;
|
•
|
DXP Code of Conduct;
|
•
|
Compensation Committee Charter;
|
•
|
Nominating and Governance Committee Charter; and
|
•
|
Audit Committee Charter
|
Plan category
|
|
Number of Securities to be issued upon exercise of outstanding options
|
|
Weighted average exercise price of outstanding options
|
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Non-vested restricted shares outstanding
|
|
Weighted average grant price
|
|
Number of securities remaining available for future issuance under equity compensation plans
|
|
|
||||
Equity compensation plans approved by shareholders
|
|
N/A
|
|
N/A
|
|
144,250
|
|
|
$
|
32.71
|
|
|
697,797
|
|
|
(1)
|
Equity compensation plans not approved by shareholders
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
Total
|
|
N/A
|
|
N/A
|
|
144,250
|
|
|
$
|
32.71
|
|
|
697,797
|
|
|
(1)
|
(1)Represents shares of common stock authorized for issuance under the 2016 Omnibus Incentive Plan.
|
|
Years Ended December 31
|
|||||||||||||||||
|
2019
|
2018
|
|
2017
|
|
2016
|
|
2015(1)
|
||||||||||
|
|
(in thousands, except per share amounts)
|
||||||||||||||||
Consolidated Statements of Earnings Data:
|
|
|
|
|
|
|
|
|
||||||||||
Sales
|
$
|
1,267,189
|
|
$
|
1,216,197
|
|
|
$
|
1,006,782
|
|
|
$
|
962,092
|
|
|
$
|
1,247,043
|
|
Gross Profit
|
347,224
|
|
332,208
|
|
|
271,581
|
|
|
264,802
|
|
|
351,986
|
|
|||||
Operating income (loss)
|
66,122
|
|
68,451
|
|
|
33,490
|
|
|
19,332
|
|
|
(27,916
|
)
|
|||||
Net income (loss)
|
35,775
|
|
35,521
|
|
|
16,529
|
|
|
7,151
|
|
|
(39,070
|
)
|
|||||
Net loss attributable to non-controlling interest
|
(260
|
)
|
(111
|
)
|
|
(359
|
)
|
|
(551
|
)
|
|
(534
|
)
|
|||||
Net income (loss) attributable to DXP
|
$
|
36,035
|
|
$
|
35,632
|
|
|
$
|
16,888
|
|
|
$
|
7,702
|
|
|
$
|
(38,536
|
)
|
Earnings per share:
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss)(2)
|
$
|
2.04
|
|
$
|
2.02
|
|
|
$
|
0.97
|
|
|
$
|
0.51
|
|
|
$
|
(2.68
|
)
|
Diluted earnings (loss)(2)
|
$
|
1.96
|
|
$
|
1.94
|
|
|
$
|
0.93
|
|
|
$
|
0.49
|
|
|
$
|
(2.68
|
)
|
|
Years Ended December 31
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash(1)
|
$
|
54,327
|
|
|
$
|
40,519
|
|
|
$
|
25,579
|
|
|
$
|
1,590
|
|
|
$
|
1,693
|
|
Net Working Capital (2)
|
208,483
|
|
|
205,201
|
|
|
170,892
|
|
|
140,430
|
|
|
166,667
|
|
|||||
Total Assets
|
788,220
|
|
|
699,962
|
|
|
639,083
|
|
|
602,052
|
|
|
674,984
|
|
|||||
Long-term Debt Obligations
|
241,875
|
|
|
245,309
|
|
|
248,716
|
|
|
174,323
|
|
|
300,726
|
|
|||||
Total Shareholders’ Equity
|
$
|
344,948
|
|
|
$
|
308,254
|
|
|
$
|
268,546
|
|
|
$
|
252,549
|
|
|
$
|
198,870
|
|
Operating Environment Overview*
|
|
|
|
|
|
|
||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Active Drilling Rigs**
|
|
|
|
|
|
|
||||||
U.S
|
|
944
|
|
|
1,032
|
|
|
875
|
|
|||
Canada
|
|
135
|
|
|
191
|
|
|
207
|
|
|||
International
|
|
1,098
|
|
|
988
|
|
|
948
|
|
|||
Worldwide
|
|
2,177
|
|
|
2,211
|
|
|
2,030
|
|
|||
|
|
|
|
|
|
|
||||||
Gross Domestic Product (in billions)
|
|
$
|
21,429.0
|
|
|
$
|
20,500.6
|
|
|
$
|
19,485.4
|
|
West Texas Intermediate ** (per barrel)
|
|
$
|
56.98
|
|
|
$
|
65.23
|
|
|
$
|
50.80
|
|
Purchasing Managers Index
|
|
47.2
|
|
|
54.3
|
|
|
59.3
|
|
|
Years Ended December 31,
|
||||||||||||||||
|
2019
|
|
%
|
|
2018
|
|
%
|
|
2017
|
|
%
|
||||||
|
( in millions, except percentages and per share amounts)
|
||||||||||||||||
Sales
|
$
|
1,267.2
|
|
|
100.0
|
|
$
|
1,216.2
|
|
|
100.0
|
|
$
|
1,006.8
|
|
|
100.0
|
Cost of sales
|
920.0
|
|
|
72.6
|
|
884.0
|
|
|
72.7
|
|
735.2
|
|
|
73.0
|
|||
Gross profit
|
$
|
347.2
|
|
|
27.4
|
|
$
|
332.2
|
|
|
27.3
|
|
$
|
271.6
|
|
|
27.0
|
Selling, general & administrative expense
|
281.1
|
|
|
22.2
|
|
263.8
|
|
|
21.7
|
|
238.1
|
|
|
23.6
|
|||
Operating income
|
$
|
66.1
|
|
|
5.2
|
|
$
|
68.4
|
|
|
5.6
|
|
$
|
33.5
|
|
|
3.3
|
Other income
|
—
|
|
|
—
|
|
(1.2
|
)
|
|
(0.1)
|
|
(0.5
|
)
|
|
—
|
|||
Interest expense
|
19.5
|
|
|
1.5
|
|
20.9
|
|
|
1.7
|
|
17.1
|
|
|
1.7
|
|||
Income before income taxes
|
$
|
46.6
|
|
|
3.7
|
|
$
|
48.7
|
|
|
4.0
|
|
$
|
16.9
|
|
|
1.7
|
Provision for income taxes
|
10.9
|
|
|
0.9
|
|
13.2
|
|
|
1.1
|
|
0.4
|
|
|
—
|
|||
Net income
|
$
|
35.7
|
|
|
2.8
|
|
$
|
35.5
|
|
|
2.9
|
|
$
|
16.5
|
|
|
1.6
|
Net loss attributable to noncontrolling interest
|
(0.3
|
)
|
|
—
|
|
(0.1
|
)
|
|
—
|
|
(0.4
|
)
|
|
—
|
|||
Net income attributable to DXP Enterprises, Inc.
|
$
|
36.0
|
|
|
2.8
|
|
$
|
35.6
|
|
|
2.9
|
|
$
|
16.9
|
|
|
1.7
|
Per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic earnings per share
|
$
|
2.04
|
|
|
|
|
$
|
2.02
|
|
|
|
|
$
|
0.97
|
|
|
|
Diluted earnings per share
|
$
|
1.96
|
|
|
|
|
$
|
1.94
|
|
|
|
|
$
|
0.93
|
|
|
|
|
Years Ended December 31
|
|||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
Change%
|
|||||||
Sales by Business Segment
|
(in thousands, except change%)
|
|||||||||||||
Service Centers
|
$
|
762,256
|
|
|
$
|
750,044
|
|
|
$
|
12,212
|
|
|
1.6
|
%
|
Innovative Pumping Solutions
|
303,655
|
|
|
291,697
|
|
|
11,958
|
|
|
4.1
|
%
|
|||
Supply Chain Services
|
201,278
|
|
|
174,456
|
|
|
26,822
|
|
|
15.4
|
%
|
|||
Total DXP Sales
|
$
|
1,267,189
|
|
|
$
|
1,216,197
|
|
|
$
|
50,992
|
|
|
4.2
|
%
|
|
Years Ended December 31
|
|||||||||||||
|
2018
|
|
2017
|
|
Change
|
|
Change%
|
|||||||
Sales by Business Segment
|
(in thousands, except change%)
|
|||||||||||||
Service Centers
|
$
|
750,044
|
|
|
$
|
641,275
|
|
|
$
|
108,769
|
|
|
17.0
|
%
|
Innovative Pumping Solutions
|
291,697
|
|
|
204,030
|
|
|
87,667
|
|
|
43.0
|
%
|
|||
Supply Chain Services
|
174,456
|
|
|
161,477
|
|
|
12,979
|
|
|
8.0
|
%
|
|||
Total DXP Sales
|
$
|
1,216,197
|
|
|
$
|
1,006,782
|
|
|
$
|
209,415
|
|
|
20.8
|
%
|
Fiscal 2018
|
|
Net Sales
|
|
Acquisition Sales
|
|
Divestiture Sales
|
|
Organic Sales
|
||||||||
Service Centers
|
|
$
|
750,044
|
|
|
$
|
47,486
|
|
|
$
|
—
|
|
|
$
|
702,558
|
|
Innovative Pumping Solutions
|
|
291,697
|
|
|
—
|
|
|
—
|
|
|
291,697
|
|
||||
Supply Chain Services
|
|
174,456
|
|
|
—
|
|
|
—
|
|
|
174,456
|
|
||||
Total Sales
|
|
$
|
1,216,197
|
|
|
$
|
47,486
|
|
|
$
|
—
|
|
|
$
|
1,168,711
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fiscal 2017
|
|
|
|
|
|
|
|
|
||||||||
Service Centers
|
|
$
|
641,275
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
641,275
|
|
Innovative Pumping Solutions
|
|
204,030
|
|
|
—
|
|
|
—
|
|
|
204,030
|
|
||||
Supply Chain Services
|
|
161,477
|
|
|
—
|
|
|
—
|
|
|
161,477
|
|
||||
Total Sales
|
|
$
|
1,006,782
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,006,782
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year-over-year growth rates
|
|
|
|
|
|
|
|
|
||||||||
Service Centers
|
|
17.0
|
%
|
|
—
|
|
|
—
|
|
|
9.6
|
%
|
||||
Innovative Pumping Solutions
|
|
43.0
|
%
|
|
—
|
|
|
—
|
|
|
43.0
|
%
|
||||
Supply Chain Services
|
|
8.0
|
%
|
|
—
|
|
|
—
|
|
|
8.0
|
%
|
||||
Total Sales
|
|
20.8
|
%
|
|
—
|
|
|
—
|
|
|
16.1
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
GAAP net income attributable to DXP Enterprises, Inc.
|
|
$
|
36,035
|
|
|
$
|
35,632
|
|
|
$
|
16,888
|
|
Loss attributable to non-controlling interest
|
|
(260
|
)
|
|
(111
|
)
|
|
(359
|
)
|
|||
Provision for income taxes
|
|
10,894
|
|
|
13,185
|
|
|
363
|
|
|||
Depreciation and amortization
|
|
25,174
|
|
|
26,164
|
|
|
27,786
|
|
|||
Interest expense
|
|
19,498
|
|
|
20,937
|
|
|
17,054
|
|
|||
EBITDA
|
|
$
|
91,341
|
|
|
$
|
95,807
|
|
|
$
|
61,732
|
|
EBITDA margin as % of sales
|
|
7.2
|
%
|
|
7.9
|
%
|
|
6.1
|
%
|
|
Years Ended December 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
Change(%)
|
|||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|||||||
Operating activities
|
$
|
41,307
|
|
|
$
|
35,840
|
|
|
$
|
5,467
|
|
|
15
|
%
|
Investing activities
|
(22,085
|
)
|
|
(17,576
|
)
|
|
(4,509
|
)
|
|
26
|
%
|
|||
Financing activities
|
(6,092
|
)
|
|
(2,921
|
)
|
|
(3,171
|
)
|
|
109
|
%
|
|||
Effect of foreign currency
|
676
|
|
|
(403
|
)
|
|
1,079
|
|
|
(268
|
)%
|
|||
Net change in cash
|
$
|
13,806
|
|
|
$
|
14,940
|
|
|
$
|
(1,134
|
)
|
|
(8
|
)%
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
|
$
|
41,307
|
|
|
$
|
35,840
|
|
|
$
|
12,544
|
|
Less: Purchase of property and equipment
|
|
22,120
|
|
|
9,323
|
|
|
2,811
|
|
|||
Add: Proceeds from the disposition of property and equipment
|
|
35
|
|
|
2,558
|
|
|
—
|
|
|||
Free cash flow
|
|
$
|
19,222
|
|
|
$
|
29,075
|
|
|
$
|
9,733
|
|
Fiscal Quarter
|
Secured Leverage Ratio
|
December 31, 2019
|
4.75:1.00
|
March 31, 2020
|
4.75:1.00
|
June 30, 2020 and each Fiscal Quarter thereafter
|
4.50:1.00
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Increase
(Decrease)
|
||||||
Current portion of long-term debt
|
$
|
2,500
|
|
|
$
|
3,407
|
|
|
$
|
(907
|
)
|
Long-term debt, less debt issuance costs
|
235,419
|
|
|
236,979
|
|
|
(1,560
|
)
|
|||
Total long-term debt
|
237,919
|
|
|
240,386
|
|
|
(2,467
|
)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Increase
(Decrease)
|
||||||
Total borrowing capacity
|
$
|
85,000
|
|
|
$
|
85,000
|
|
|
$
|
—
|
|
Less : ABL
|
—
|
|
|
—
|
|
|
—
|
|
|||
Less : Outstanding letters of credit
|
3,442
|
|
|
5,679
|
|
|
(2,237
|
)
|
|||
Total amount available
|
$
|
81,558
|
|
|
$
|
79,321
|
|
|
$
|
2,237
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Less than 1 Year
|
|
1–3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
|
Total
|
||||||||||
Long-term debt, including current portion (1)
|
$
|
2,500
|
|
|
$
|
5,000
|
|
|
$
|
236,875
|
|
|
$
|
—
|
|
|
$
|
244,375
|
|
Operating lease obligations
|
21,641
|
|
|
32,653
|
|
|
13,499
|
|
|
10,301
|
|
|
78,094
|
|
|||||
Estimated interest payments (2)
|
15,923
|
|
|
31,355
|
|
|
7,757
|
|
|
—
|
|
|
55,035
|
|
|||||
Total
|
$
|
40,064
|
|
|
$
|
69,008
|
|
|
$
|
258,131
|
|
|
$
|
10,301
|
|
|
$
|
377,504
|
|
TABLE OF CONTENTS
|
|
|
Page
|
|
|
Reports of Independent Registered Public Accounting Firm
|
|
|
|
Consolidated Statements of Operations and Comprehensive Income
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
Consolidated Statements of Equity
|
|
|
|
Notes to Consolidated Financial Statements
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Sales
|
$
|
1,267,189
|
|
|
$
|
1,216,197
|
|
|
$
|
1,006,782
|
|
Cost of sales
|
919,965
|
|
|
883,989
|
|
|
735,201
|
|
|||
Gross profit
|
347,224
|
|
|
$
|
332,208
|
|
|
$
|
271,581
|
|
|
Selling, general and administrative expense
|
281,102
|
|
|
263,757
|
|
|
238,091
|
|
|||
Income from operating
|
66,122
|
|
|
$
|
68,451
|
|
|
$
|
33,490
|
|
|
Other income, net
|
(45
|
)
|
|
(1,192
|
)
|
|
(456
|
)
|
|||
Interest expense
|
19,498
|
|
|
20,937
|
|
|
17,054
|
|
|||
Income before income taxes
|
46,669
|
|
|
$
|
48,706
|
|
|
$
|
16,892
|
|
|
Provision for income taxes
|
10,894
|
|
|
13,185
|
|
|
363
|
|
|||
Net income
|
35,775
|
|
|
$
|
35,521
|
|
|
$
|
16,529
|
|
|
Net loss attributable to noncontrolling interest
|
(260
|
)
|
|
(111
|
)
|
|
(359
|
)
|
|||
Net income attributable to DXP Enterprises, Inc.
|
36,035
|
|
|
$
|
35,632
|
|
|
$
|
16,888
|
|
|
Preferred stock dividend
|
90
|
|
|
90
|
|
|
90
|
|
|||
Net income attributable to common shareholders
|
$
|
35,945
|
|
|
$
|
35,542
|
|
|
$
|
16,798
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
35,775
|
|
|
$
|
35,521
|
|
|
$
|
16,529
|
|
Cumulative translation adjustment, net of income taxes
|
(687
|
)
|
|
224
|
|
|
(1,217
|
)
|
|||
Comprehensive income
|
$
|
35,088
|
|
|
$
|
35,745
|
|
|
$
|
15,312
|
|
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
2.04
|
|
|
$
|
2.02
|
|
|
$
|
0.97
|
|
|
Diluted
|
1.96
|
|
|
$
|
1.94
|
|
|
$
|
0.93
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
17,592
|
|
|
17,553
|
|
|
17,400
|
|
|||
Diluted
|
18,432
|
|
|
18,393
|
|
|
18,240
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
54,203
|
|
|
$
|
40,304
|
|
Restricted cash
|
124
|
|
|
215
|
|
||
Accounts receivable, net of allowances for doubtful accounts of $8,929 and $10,126
|
187,116
|
|
|
191,829
|
|
||
Inventories
|
129,364
|
|
|
114,830
|
|
||
Costs and estimated profits in excess of billings
|
32,455
|
|
|
32,514
|
|
||
Prepaid expenses and other current assets
|
4,223
|
|
|
4,938
|
|
||
Federal income taxes receivable
|
996
|
|
|
960
|
|
||
Total current assets
|
$
|
408,481
|
|
|
$
|
385,590
|
|
Property and equipment, net
|
63,703
|
|
|
51,330
|
|
||
Goodwill
|
194,052
|
|
|
194,052
|
|
||
Other intangible assets, net
|
52,582
|
|
|
67,207
|
|
||
Operating lease ROU assets
|
66,191
|
|
|
—
|
|
||
Other long-term assets
|
3,211
|
|
|
1,783
|
|
||
Total assets
|
$
|
788,220
|
|
|
$
|
699,962
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Current maturities of long-term debt
|
$
|
2,500
|
|
|
$
|
3,407
|
|
Trade accounts payable
|
76,438
|
|
|
87,407
|
|
||
Accrued wages and benefits
|
23,412
|
|
|
21,275
|
|
||
Customer advances
|
3,408
|
|
|
3,223
|
|
||
Billings in excess of costs and estimated profits
|
11,871
|
|
|
10,696
|
|
||
Short-term operating lease liabilities
|
17,603
|
|
|
—
|
|
||
Other current liabilities
|
12,939
|
|
|
17,269
|
|
||
Total current liabilities
|
$
|
148,171
|
|
|
$
|
143,277
|
|
Long-term debt, net of current maturities and unamortized debt issuance costs
|
235,419
|
|
|
236,979
|
|
||
Long-term operating lease liabilities
|
48,605
|
|
|
—
|
|
||
Other long-term liabilities
|
1,205
|
|
|
2,819
|
|
||
Deferred income taxes
|
9,872
|
|
|
8,633
|
|
||
Total long-term liabilities
|
$
|
295,101
|
|
|
$
|
248,431
|
|
Total liabilities
|
$
|
443,272
|
|
|
$
|
391,708
|
|
Commitments and Contingencies (Note 16)
|
|
|
|
|
|
||
Shareholders' Equity:
|
|
|
|
|
|||
Series A preferred stock, $1.00 par value; 1,000,000 shares authorized
|
1
|
|
|
1
|
|
||
Series B convertible preferred stock, $1.00 par value; 1,000,000 shares authorized
|
15
|
|
|
15
|
|
||
Common stock, $0.01 par value, 100,000,000 shares authorized; 17,604,092 and 17,570,590 outstanding
|
174
|
|
|
174
|
|
||
Additional paid-in capital
|
157,886
|
|
|
156,190
|
|
||
Retained earnings
|
205,680
|
|
|
169,735
|
|
||
Accumulated other comprehensive loss
|
(19,954
|
)
|
|
(19,267
|
)
|
||
Total DXP Enterprises, Inc. equity
|
$
|
343,802
|
|
|
$
|
306,848
|
|
Noncontrolling interest
|
1,146
|
|
|
1,406
|
|
||
Total equity
|
$
|
344,948
|
|
|
$
|
308,254
|
|
Total liabilities and equity
|
$
|
788,220
|
|
|
$
|
699,962
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income attributable to DXP Enterprises, Inc.
|
$
|
36,035
|
|
|
$
|
35,632
|
|
|
$
|
16,888
|
|
Less: net loss attributable to non-controlling interest
|
(260
|
)
|
|
(111
|
)
|
|
(359
|
)
|
|||
Net income
|
$
|
35,775
|
|
|
$
|
35,521
|
|
|
$
|
16,529
|
|
Reconciliation of net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Depreciation
|
10,100
|
|
|
9,578
|
|
|
10,520
|
|
|||
Amortization of intangible assets
|
15,074
|
|
|
16,586
|
|
|
17,266
|
|
|||
Bad debt expense
|
139
|
|
|
2,368
|
|
|
3,416
|
|
|||
Payment of contingent consideration liability in excess of acquisition-date fair value
|
(106
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
1,875
|
|
|
1,743
|
|
|
1,548
|
|
|||
Fair value adjustment on contingent consideration
|
54
|
|
|
313
|
|
|
—
|
|
|||
Write off of debt issuance costs
|
—
|
|
|
60
|
|
|
578
|
|
|||
Gain on sale of property and equipment
|
(9
|
)
|
|
(1,330
|
)
|
|
—
|
|
|||
Stock compensation expense
|
1,963
|
|
|
2,549
|
|
|
1,708
|
|
|||
Deferred income taxes
|
1,110
|
|
|
1,004
|
|
|
(3,827
|
)
|
|||
Other long-term liabilities
|
(6,718
|
)
|
|
2,610
|
|
|
—
|
|
|||
Changes in operating assets and liabilities
|
|
|
|
|
|
||||||
Trade accounts receivable
|
5,560
|
|
|
(22,487
|
)
|
|
(20,539
|
)
|
|||
Costs and estimated profits in excess of billings
|
92
|
|
|
(5,640
|
)
|
|
(8,419
|
)
|
|||
Inventories
|
(14,447
|
)
|
|
(20,838
|
)
|
|
(7,544
|
)
|
|||
Prepaid expenses and other assets
|
5,110
|
|
|
188
|
|
|
(3,287
|
)
|
|||
Accounts payable and accrued expenses
|
(15,407
|
)
|
|
7,093
|
|
|
3,189
|
|
|||
Billings in excess of costs & estimated profits
|
1,142
|
|
|
6,522
|
|
|
1,406
|
|
|||
Net cash provided by operating activities
|
$
|
41,307
|
|
|
$
|
35,840
|
|
|
$
|
12,544
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Purchase of property and equipment
|
(22,120
|
)
|
|
(9,323
|
)
|
|
(2,811
|
)
|
|||
Proceeds from the sale of property and equipment
|
35
|
|
|
2,558
|
|
|
—
|
|
|||
Acquisition of business
|
—
|
|
|
(10,811
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
$
|
(22,085
|
)
|
|
$
|
(17,576
|
)
|
|
$
|
(2,811
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Proceeds from debt
|
—
|
|
|
—
|
|
|
728,822
|
|
|||
Principal debt payments
|
(4,341
|
)
|
|
(3,381
|
)
|
|
(702,402
|
)
|
|||
Debt issuance costs
|
—
|
|
|
(60
|
)
|
|
(11,208
|
)
|
|||
Payment for contingent consideration liability
|
(1,394
|
)
|
|
—
|
|
|
—
|
|
|||
Non-controlling interest holder contributions (distributions), net of tax benefits
|
—
|
|
|
950
|
|
|
—
|
|
|||
Preferred dividends paid
|
(90
|
)
|
|
(90
|
)
|
|
(90
|
)
|
|||
Payment for employee taxes withheld from stock awards
|
(267
|
)
|
|
(340
|
)
|
|
(934
|
)
|
|||
Net cash provided by (used in) financing activities
|
$
|
(6,092
|
)
|
|
$
|
(2,921
|
)
|
|
$
|
14,188
|
|
Effect of foreign currency on cash
|
676
|
|
|
(403
|
)
|
|
68
|
|
|||
Net Change In Cash
|
$
|
13,806
|
|
|
$
|
14,940
|
|
|
$
|
23,989
|
|
Cash at Beginning of Year
|
40,519
|
|
|
25,579
|
|
|
1,590
|
|
|||
Cash at End of Year
|
$
|
54,325
|
|
|
$
|
40,519
|
|
|
$
|
25,579
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|||
Cash paid for interest
|
$
|
17,623
|
|
|
$
|
19,134
|
|
|
$
|
15,205
|
|
Cash paid for income taxes
|
$
|
13,318
|
|
|
$
|
8,301
|
|
|
$
|
714
|
|
|
Series A preferred Stock
|
|
Series B preferred Stock
|
|
Common Stock
|
|
Paid-in Capital
|
|
Retained earnings
|
|
Treasury stock
|
|
Non controlling interest
|
|
Accum Other Comp (Loss)
|
|
Total equity
|
||||||||||||||||||
Balances at December 31, 2016
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
173
|
|
|
$
|
152,313
|
|
|
$
|
117,395
|
|
|
$
|
—
|
|
|
$
|
926
|
|
|
$
|
(18,274
|
)
|
|
$
|
252,549
|
|
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|||||||||
Compensation expense for restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
1,708
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,708
|
|
|||||||||
Tax related items for share based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(934
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(934
|
)
|
|||||||||
Issuance of shares of common stock
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||||
Cumulative translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,217
|
)
|
|
(1,217
|
)
|
|||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,888
|
|
|
—
|
|
|
(359
|
)
|
|
—
|
|
|
16,529
|
|
|||||||||
Balances at December 31, 2017
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
174
|
|
|
$
|
153,087
|
|
|
$
|
134,193
|
|
|
$
|
—
|
|
|
$
|
567
|
|
|
$
|
(19,491
|
)
|
|
$
|
268,546
|
|
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|||||||||
Compensation expense for restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
2,549
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,549
|
|
|||||||||
Tax related items for share based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(340
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(340
|
)
|
|||||||||
Non-controlling interest holder contributions, net of tax benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
950
|
|
|
—
|
|
|
|
||||||||||
Issuance of shares of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
894
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
894
|
|
|||||||||
Cumulative translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
224
|
|
|
224
|
|
|||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,632
|
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
35,521
|
|
|||||||||
Balances at December 31, 2018
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
174
|
|
|
$
|
156,190
|
|
|
$
|
169,735
|
|
|
$
|
—
|
|
|
$
|
1,406
|
|
|
$
|
(19,267
|
)
|
|
$
|
308,254
|
|
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|||||||||
Compensation expense for restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
1,963
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,963
|
|
|||||||||
Tax related items for share based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(267
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(267
|
)
|
|||||||||
Non-controlling interest holder contributions, net of tax benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Issuance of shares of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Cumulative translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(687
|
)
|
|
(687
|
)
|
|||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,035
|
|
|
—
|
|
|
(260
|
)
|
|
—
|
|
|
35,775
|
|
|||||||||
Balances at December 31, 2019
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
174
|
|
|
$
|
157,886
|
|
|
$
|
205,680
|
|
|
$
|
—
|
|
|
$
|
1,146
|
|
|
$
|
(19,954
|
)
|
|
$
|
344,948
|
|
|
Years Ended December 31,
|
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Balance at beginning of year
|
$
|
10,126
|
|
|
$
|
9,015
|
|
|
$
|
8,160
|
|
|
Charged to costs and expenses
|
139
|
|
|
2,368
|
|
|
3,367
|
|
|
|||
Charged to other accounts
|
79
|
|
(3)
|
(86
|
)
|
(2)
|
22
|
|
(3)
|
|||
Deductions
|
(1,415
|
)
|
(1)
|
(1,171
|
)
|
(1)
|
(2,534
|
)
|
(1)
|
|||
Balance at end of year
|
$
|
8,929
|
|
|
$
|
10,126
|
|
|
$
|
9,015
|
|
|
Buildings
|
20-39 years
|
Building improvements
|
10-20 years
|
Furniture, fixtures and equipment
|
3-20 years
|
Leasehold improvements
|
Shorter of estimated useful life or related lease term
|
Lease
|
|
Classification
|
|
December 31, 2019
|
|
Impact of ASC 842 Transition
|
||||
Assets
|
|
|
|
|
|
|
||||
Operating
|
|
Operating lease right-of-use assets
|
|
$
|
66,191
|
|
|
$
|
72,679
|
|
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
|
||||
Current operating
|
|
Short-term operating lease liabilities
|
|
17,603
|
|
|
18,762
|
|
||
Non-current operating
|
|
Long-term operating lease liabilities
|
|
48,605
|
|
|
53,654
|
|
||
Total operating lease liabilities
|
|
|
|
$
|
66,208
|
|
|
$
|
72,416
|
|
Year Ending December 31,
|
|
Operating leases (*)
|
||
2020
|
|
$
|
21,641
|
|
2021
|
|
18,455
|
|
|
2022
|
|
14,198
|
|
|
2023
|
|
8,926
|
|
|
2024
|
|
4,573
|
|
|
Thereafter
|
|
10,301
|
|
|
Total lease payments
|
|
$
|
78,094
|
|
Less: imputed interest
|
|
11,886
|
|
|
Present value of lease liabilities
|
|
$
|
66,208
|
|
|
|
Payments due by period (in thousands)
|
||||||||||||||||||
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
|
Total
|
||||||||||
Operating lease obligations
|
|
$
|
22,096
|
|
|
$
|
33,825
|
|
|
$
|
18,379
|
|
|
$
|
11,022
|
|
|
$
|
85,322
|
|
Lease term and discount rate
|
|
Twelve Months Ended December 31, 2019
|
Weighted average remaining lease term (years)
|
|
|
Operating lease
|
|
4.74
|
Weighted average discount rate
|
|
|
Operating lease
|
|
7.3%
|
(in thousands, unaudited)
|
Fair Value at
December 31, 2019 |
Valuation Technique
|
Significant Unobservable Inputs
|
||
Contingent consideration: (ASI acquisition)
|
$
|
2,705
|
|
Discounted cash flow
|
Annualized EBITDA and probability of achievement
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Finished goods
|
$
|
122,510
|
|
|
$
|
110,182
|
|
Work in process
|
19,721
|
|
|
17,344
|
|
||
Obsolescence reserve
|
(12,867
|
)
|
|
(12,696
|
)
|
||
Inventories
|
$
|
129,364
|
|
|
$
|
114,830
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Costs incurred on uncompleted contracts
|
$
|
51,017
|
|
|
$
|
53,595
|
|
Estimated profits, thereon
|
10,771
|
|
|
6,847
|
|
||
Total
|
$
|
61,788
|
|
|
$
|
60,442
|
|
Less: billings to date
|
41,223
|
|
|
38,662
|
|
||
Net
|
$
|
20,565
|
|
|
$
|
21,780
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Costs and estimated profits in excess of billings
|
$
|
32,455
|
|
|
$
|
32,514
|
|
Billings in excess of costs and estimated profits
|
(11,871
|
)
|
|
(10,696
|
)
|
||
Translation Adjustment
|
(19
|
)
|
|
(38
|
)
|
||
Net
|
$
|
20,565
|
|
|
$
|
21,780
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Land
|
$
|
1,960
|
|
|
$
|
1,960
|
|
Buildings and leasehold improvements
|
15,445
|
|
|
15,051
|
|
||
Furniture, fixtures and equipment
|
119,865
|
|
|
100,449
|
|
||
Less – Accumulated depreciation
|
(73,567
|
)
|
|
(66,130
|
)
|
||
Total Property and Equipment
|
$
|
63,703
|
|
|
$
|
51,330
|
|
|
Goodwill
|
|
Other
Intangible
Assets
|
|
Total
|
||||||
Balances as of December 31, 2018
|
$
|
194,052
|
|
|
$
|
67,207
|
|
|
$
|
261,259
|
|
Translation adjustment
|
—
|
|
|
449
|
|
|
449
|
|
|||
Amortization
|
—
|
|
|
(15,074
|
)
|
|
(15,074
|
)
|
|||
Balances as of December 31, 2019
|
$
|
194,052
|
|
|
$
|
52,582
|
|
|
$
|
246,634
|
|
|
Goodwill
|
|
Other
Intangible
Assets
|
|
Total
|
||||||
Balances as of December 31, 2017
|
$
|
187,591
|
|
|
$
|
78,525
|
|
|
$
|
266,116
|
|
Translation adjustment
|
—
|
|
|
(917
|
)
|
|
(917
|
)
|
|||
Acquisition of ASI
|
6,461
|
|
|
6,185
|
|
|
12,646
|
|
|||
Amortization
|
—
|
|
|
(16,586
|
)
|
|
(16,586
|
)
|
|||
Balances as of December 31, 2018
|
$
|
194,052
|
|
|
$
|
67,207
|
|
|
$
|
261,259
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Service Centers
|
$
|
160,934
|
|
|
$
|
160,934
|
|
Innovative Pumping Solutions
|
15,980
|
|
|
15,980
|
|
||
Supply Chain Services
|
17,138
|
|
|
17,138
|
|
||
Total
|
$
|
194,052
|
|
|
$
|
194,052
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Amount,
net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Amount,
net
|
||||||||||||
Customer relationships
|
$
|
156,282
|
|
|
$
|
(103,796
|
)
|
|
$
|
52,486
|
|
|
$
|
168,255
|
|
|
$
|
(101,200
|
)
|
|
$
|
67,055
|
|
Non-compete agreements
|
285
|
|
|
(189
|
)
|
|
96
|
|
|
784
|
|
|
(632
|
)
|
|
152
|
|
||||||
Total
|
$
|
156,567
|
|
|
$
|
(103,985
|
)
|
|
$
|
52,582
|
|
|
$
|
169,039
|
|
|
$
|
(101,832
|
)
|
|
$
|
67,207
|
|
2020
|
$
|
11,611
|
|
2021
|
9,287
|
|
|
2022
|
7,974
|
|
|
2023
|
6,508
|
|
|
2024
|
4,886
|
|
|
Thereafter
|
12,316
|
|
|
Total
|
$
|
52,582
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying Value(1)
|
|
Fair Value
|
|
Carrying Value(1)
|
|
Fair Value
|
||||||||
ABL Revolver
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
||
Term Loan B
|
244,375
|
|
|
244,375
|
|
|
246,875
|
|
|
245,949
|
|
||||
Promissory note payable(2)
|
—
|
|
|
—
|
|
|
1,841
|
|
|
1,841
|
|
||||
Total Debt
|
244,375
|
|
|
244,375
|
|
|
248,716
|
|
|
247,790
|
|
||||
Less: Current maturities
|
(2,500
|
)
|
|
(2,500
|
)
|
|
(3,407
|
)
|
|
(3,398
|
)
|
||||
Total Long-term Debt
|
$
|
241,875
|
|
|
$
|
241,875
|
|
|
$
|
245,309
|
|
|
$
|
244,392
|
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||
ABL Revolver
|
3.5
|
%
|
|
4.0
|
%
|
Term Loan B
|
6.5
|
%
|
|
7.3
|
%
|
Promissory Note
|
—
|
%
|
|
2.9
|
%
|
Weighted average interest rate
|
6.5
|
%
|
|
7.2
|
%
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic
|
$
|
41,184
|
|
|
$
|
46,270
|
|
|
$
|
13,183
|
|
Foreign
|
5,485
|
|
|
2,436
|
|
|
3,709
|
|
|||
Total income before taxes
|
$
|
46,669
|
|
|
$
|
48,706
|
|
|
$
|
16,892
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current -
|
|
|
|
|
|
||||||
Federal
|
$
|
4,940
|
|
|
$
|
7,295
|
|
|
$
|
1,400
|
|
State
|
1,862
|
|
|
2,257
|
|
|
698
|
|
|||
Foreign
|
2,982
|
|
|
2,629
|
|
|
2,092
|
|
|||
Total current
|
$
|
9,784
|
|
|
$
|
12,181
|
|
|
$
|
4,190
|
|
Deferred -
|
|
|
|
|
|
|
|
|
|||
Federal
|
2,618
|
|
|
2,389
|
|
|
686
|
|
|||
State
|
(224
|
)
|
|
123
|
|
|
(464
|
)
|
|||
Foreign
|
(1,284
|
)
|
|
(1,508
|
)
|
|
(4,049
|
)
|
|||
Total deferred
|
$
|
1,110
|
|
|
$
|
1,004
|
|
|
$
|
(3,827
|
)
|
Total current and deferred taxes
|
$
|
10,894
|
|
|
$
|
13,185
|
|
|
$
|
363
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Income taxes computed at federal statutory rate
|
$
|
9,801
|
|
|
$
|
10,228
|
|
|
$
|
5,912
|
|
State income taxes, net of federal benefit
|
1,294
|
|
|
1,880
|
|
|
152
|
|
|||
Foreign taxes
|
311
|
|
|
150
|
|
|
(1,077
|
)
|
|||
Nondeductible expenses
|
1,108
|
|
|
954
|
|
|
642
|
|
|||
Domestic production activity deduction
|
—
|
|
|
—
|
|
|
(98
|
)
|
|||
Research and development tax credit
|
(2,324
|
)
|
|
(480
|
)
|
|
(641
|
)
|
|||
Foreign tax credit
|
(57
|
)
|
|
(346
|
)
|
|
—
|
|
|||
Valuation allowance
|
(5
|
)
|
|
—
|
|
|
(791
|
)
|
|||
Tax reform deferred tax remeasurement
|
—
|
|
|
81
|
|
|
(1,294
|
)
|
|||
Deferred tax liability true up
|
1,065
|
|
|
—
|
|
|
(2,180
|
)
|
|||
Uncertain tax positions
|
665
|
|
|
172
|
|
|
—
|
|
|||
Other
|
(964
|
)
|
|
546
|
|
|
(262
|
)
|
|||
Total current and deferred taxes
|
$
|
10,894
|
|
|
$
|
13,185
|
|
|
$
|
363
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
1,657
|
|
|
$
|
1,948
|
|
Inventories
|
3,254
|
|
|
2,944
|
|
||
Research and development credit carryforward
|
1,361
|
|
|
775
|
|
||
Foreign tax credit carryforward
|
64
|
|
|
64
|
|
||
Net operating loss carryforward
|
812
|
|
|
610
|
|
||
Capital loss carryforward
|
12,363
|
|
|
12,564
|
|
||
Deferred compensation
|
—
|
|
|
538
|
|
||
Accruals
|
4,077
|
|
|
576
|
|
||
Investment in partnerships
|
500
|
|
|
—
|
|
||
Other
|
—
|
|
|
137
|
|
||
Total deferred tax assets
|
$
|
24,088
|
|
|
$
|
20,156
|
|
Less valuation allowance
|
(12,363
|
)
|
|
(12,564
|
)
|
||
Total deferred tax asset, net of valuation deferred tax liabilities :
|
$
|
11,725
|
|
|
$
|
7,592
|
|
Goodwill
|
(8,459
|
)
|
|
(1,053
|
)
|
||
Intangibles
|
(2,051
|
)
|
|
(7,820
|
)
|
||
Property and equipment
|
(8,319
|
)
|
|
(6,807
|
)
|
||
Unremitted foreign earnings
|
(421
|
)
|
|
(421
|
)
|
||
Deferred compensation
|
(317
|
)
|
|
—
|
|
||
Method changes
|
(1,961
|
)
|
|
—
|
|
||
Other
|
(69
|
)
|
|
(124
|
)
|
||
Net deferred tax liability
|
$
|
(9,872
|
)
|
|
$
|
(8,633
|
)
|
|
Number of
Shares
|
|
Weighted Average
Grant Price
|
|||
Non-vested at December 31, 2018
|
169,293
|
|
|
$
|
31.05
|
|
Granted
|
46,885
|
|
|
$
|
35.60
|
|
Forfeited
|
(5,720
|
)
|
|
$
|
32.35
|
|
Vested
|
(66,208
|
)
|
|
$
|
27.75
|
|
Non-vested at December 31, 2019
|
144,250
|
|
|
$
|
32.71
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Price
|
|||
Non-vested at December 31, 2017
|
77,901
|
|
|
$
|
30.36
|
|
Granted
|
131,413
|
|
|
$
|
31.92
|
|
Forfeited
|
(2,400
|
)
|
|
$
|
46.68
|
|
Vested
|
(37,621
|
)
|
|
$
|
31.68
|
|
Non-vested at December 31, 2018
|
169,293
|
|
|
$
|
31.05
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Price
|
|||
Non-vested at December 31, 2016
|
143,380
|
|
|
$
|
26.76
|
|
Granted
|
18,672
|
|
|
$
|
34.07
|
|
Forfeited
|
(298
|
)
|
|
$
|
59.60
|
|
Vested
|
(83,853
|
)
|
|
$
|
24.92
|
|
Non-vested at December 31, 2017
|
77,901
|
|
|
$
|
30.36
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Basic:
|
|
|
|
|
|
||||||
Weighted average shares outstanding
|
17,592
|
|
|
17,553
|
|
|
17,400
|
|
|||
|
|
|
|
|
|
||||||
Net income attributable to DXP Enterprises, Inc.
|
$
|
36,035
|
|
|
$
|
35,632
|
|
|
$
|
16,888
|
|
Convertible preferred stock dividend
|
(90
|
)
|
|
(90
|
)
|
|
(90
|
)
|
|||
Net income attributable to common shareholders
|
$
|
35,945
|
|
|
$
|
35,542
|
|
|
$
|
16,798
|
|
Per share amount
|
$
|
2.04
|
|
|
$
|
2.02
|
|
|
$
|
0.97
|
|
|
|
|
|
|
|
||||||
Diluted:
|
|
|
|
|
|
||||||
Weighted average shares outstanding
|
17,592
|
|
|
17,553
|
|
|
17,400
|
|
|||
Assumed conversion of convertible preferred stock
|
840
|
|
|
840
|
|
|
840
|
|
|||
Total dilutive shares
|
18,432
|
|
|
18,393
|
|
|
18,240
|
|
|||
Net income attributable to common shareholders
|
$
|
35,945
|
|
|
$
|
35,542
|
|
|
$
|
16,798
|
|
Convertible preferred stock dividend
|
90
|
|
|
90
|
|
|
90
|
|
|||
Net income attributable to DXP Enterprises, Inc.
|
$
|
36,035
|
|
|
$
|
35,632
|
|
|
$
|
16,888
|
|
Per share amount
|
$
|
1.96
|
|
|
$
|
1.94
|
|
|
$
|
0.93
|
|
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Common Stock:
|
Quantity (in thousands)
|
|||||||
Balance, beginning of period
|
17,401
|
|
|
17,316
|
|
|
17,197
|
|
Issuance of shares for compensation net of withholding
|
59
|
|
|
85
|
|
|
119
|
|
Issuance of common stock related to equity distribution agreements
|
—
|
|
|
—
|
|
|
—
|
|
Balance, end of period
|
17,460
|
|
|
17,401
|
|
|
17,316
|
|
Purchase Price Consideration
|
Total Consideration
|
||
Cash payments
|
$
|
10,811
|
|
Fair value of stock issued
|
894
|
|
|
Present value of estimated fair value of contingent earn-out consideration
|
4,006
|
|
|
Total purchase price consideration
|
$
|
15,711
|
|
|
Total
|
||
Cash
|
$
|
—
|
|
Accounts Receivable,net
|
6,142
|
|
|
Inventory
|
2,729
|
|
|
Other Current Assets
|
18
|
|
|
Property and equipment
|
216
|
|
|
Goodwill and intangibles
|
$
|
11,856
|
|
Assets acquired
|
$
|
20,961
|
|
Current liabilities assumed
|
$
|
(5,175
|
)
|
Non-current liabilities assumed
|
(75
|
)
|
|
Net assets acquired
|
$
|
15,711
|
|
2020
|
$
|
21,641
|
|
2021
|
18,455
|
|
|
2022
|
14,198
|
|
|
2023
|
8,926
|
|
|
2024
|
4,573
|
|
|
Thereafter
|
10,301
|
|
|
Total
|
$
|
78,094
|
|
Years Ended December 31,
|
Service Centers
|
|
Innovative Pumping Solutions
|
|
Supply Chain Services
|
|
Total
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Product sales (recognized at a point in time)
|
$
|
703,742
|
|
|
$
|
—
|
|
|
$
|
184,767
|
|
|
$
|
888,509
|
|
Inventory management services (recognized over contract life)
|
—
|
|
|
—
|
|
|
16,511
|
|
|
16,511
|
|
||||
Staffing services (day-rate basis)
|
58,514
|
|
|
—
|
|
|
—
|
|
|
58,514
|
|
||||
Customized pump production (recognized over time)
|
—
|
|
|
$
|
303,655
|
|
|
—
|
|
|
303,655
|
|
|||
Total Revenue
|
$
|
762,256
|
|
|
$
|
303,655
|
|
|
$
|
201,278
|
|
|
$
|
1,267,189
|
|
Operating income for reportable segments, excluding amortization
|
86,778
|
|
|
28,895
|
|
|
14,445
|
|
|
130,118
|
|
||||
Identifiable assets at year end
|
462,663
|
|
|
212,015
|
|
|
56,714
|
|
|
731,392
|
|
||||
Capital expenditures
|
2,333
|
|
|
9,347
|
|
|
922
|
|
|
12,602
|
|
||||
Proceeds from sale of fixed assets
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Depreciation
|
3,517
|
|
|
4,602
|
|
|
285
|
|
|
8,404
|
|
||||
Amortization
|
8,230
|
|
|
5,855
|
|
|
989
|
|
|
15,074
|
|
||||
Interest expense
|
$
|
10,786
|
|
|
$
|
6,747
|
|
|
$
|
1,965
|
|
|
$
|
19,498
|
|
Years Ended December 31,
|
Service Centers
|
|
Innovative Pumping Solutions
|
|
Supply Chain Services
|
|
Total
|
||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales (recognized at a point in time)
|
$
|
685,309
|
|
|
$
|
—
|
|
|
$
|
160,770
|
|
|
$
|
846,079
|
|
Inventory management services (recognized over contract life)
|
—
|
|
|
—
|
|
|
13,686
|
|
|
13,686
|
|
||||
Staffing services (day-rate basis)
|
64,735
|
|
|
—
|
|
|
—
|
|
|
64,735
|
|
||||
Customized pump production (recognized over time)
|
—
|
|
|
291,697
|
|
|
—
|
|
|
291,697
|
|
||||
Total Revenue
|
$
|
750,044
|
|
|
$
|
291,697
|
|
|
$
|
174,456
|
|
|
$
|
1,216,197
|
|
Operating income for reportable segments, excluding amortization
|
80,718
|
|
|
33,943
|
|
|
16,204
|
|
|
130,865
|
|
||||
Identifiable assets at year end
|
402,944
|
|
|
188,765
|
|
|
53,517
|
|
|
645,226
|
|
||||
Capital expenditures
|
1,655
|
|
|
6,800
|
|
|
296
|
|
|
8,751
|
|
||||
Proceeds from sale of fixed assets
|
3
|
|
|
9
|
|
|
—
|
|
|
12
|
|
||||
Depreciation
|
3,974
|
|
|
4,064
|
|
|
49
|
|
|
8,087
|
|
||||
Amortization
|
9,272
|
|
|
6,237
|
|
|
1,077
|
|
|
16,586
|
|
||||
Interest expense
|
$
|
11,178
|
|
|
$
|
7,351
|
|
|
$
|
2,408
|
|
|
$
|
20,937
|
|
Years Ended December 31,
|
Service Centers
|
|
Innovative Pumping Solutions
|
|
Supply Chain Services
|
|
Total
|
||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales (recognized at a point in time)
|
$
|
575,328
|
|
|
$
|
—
|
|
|
$
|
147,927
|
|
|
$
|
723,255
|
|
Inventory management services (recognized over contract life)
|
—
|
|
|
—
|
|
|
13,550
|
|
|
13,550
|
|
||||
Staffing services (day-rate basis)
|
65,947
|
|
|
—
|
|
|
—
|
|
|
65,947
|
|
||||
Customized pump production (recognized over time)
|
—
|
|
|
204,030
|
|
|
—
|
|
|
204,030
|
|
||||
Total Revenue
|
$
|
641,275
|
|
|
$
|
204,030
|
|
|
$
|
161,477
|
|
|
$
|
1,006,782
|
|
Operating income for reportable segments, excluding amortization
|
63,250
|
|
|
11,423
|
|
|
15,451
|
|
|
90,124
|
|
||||
Identifiable assets at year end
|
385,744
|
|
|
172,538
|
|
|
59,942
|
|
|
618,224
|
|
||||
Capital expenditures
|
1,076
|
|
|
1,488
|
|
|
82
|
|
|
2,646
|
|
||||
Depreciation
|
5,162
|
|
|
4,198
|
|
|
103
|
|
|
9,463
|
|
||||
Amortization
|
8,989
|
|
|
7,194
|
|
|
1,083
|
|
|
17,266
|
|
||||
Interest expense
|
9,712
|
|
|
5,352
|
|
|
1,990
|
|
|
17,054
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating income for reportable segments, excluding amortization
|
$
|
130,118
|
|
|
$
|
130,865
|
|
|
$
|
90,124
|
|
Adjustments for:
|
|
|
|
|
|
||||||
Amortization of intangibles
|
15,074
|
|
|
16,586
|
|
|
17,266
|
|
|||
Corporate and other expense, net
|
48,922
|
|
|
45,828
|
|
|
39,368
|
|
|||
Total operating income
|
$
|
66,122
|
|
|
$
|
68,451
|
|
|
$
|
33,490
|
|
Interest expense
|
19,498
|
|
|
20,937
|
|
|
17,054
|
|
|||
Other expenses (income), net
|
(45
|
)
|
|
(1,192
|
)
|
|
(456
|
)
|
|||
Income before income taxes
|
$
|
46,669
|
|
|
$
|
48,706
|
|
|
$
|
16,892
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Property and Equipment, net
|
|
|
|
||||
United States
|
$
|
56
|
|
|
$
|
41
|
|
Canada
|
8
|
|
|
10
|
|
||
Other(1)
|
—
|
|
|
—
|
|
||
Total
|
$
|
64
|
|
|
$
|
51
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
311.2
|
|
|
$
|
333.3
|
|
|
$
|
327.2
|
|
|
$
|
295.5
|
|
Gross profit
|
84.2
|
|
|
92.0
|
|
|
92.7
|
|
|
78.3
|
|
||||
Net income
|
7.3
|
|
|
13.4
|
|
|
13.2
|
|
|
2.1
|
|
||||
Net income attributable to DXP Enterprises, Inc.
|
7.3
|
|
|
13.4
|
|
|
13.1
|
|
|
2.2
|
|
||||
Earnings per share - basic
|
0.41
|
|
|
0.76
|
|
|
0.74
|
|
|
0.12
|
|
||||
Earnings per share - diluted
|
$
|
0.40
|
|
|
$
|
0.73
|
|
|
$
|
0.71
|
|
|
$
|
0.12
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales
|
$
|
285.9
|
|
|
$
|
311.2
|
|
|
$
|
308.0
|
|
|
$
|
311.0
|
|
Gross profit
|
76.4
|
|
|
85.1
|
|
|
84.1
|
|
|
86.6
|
|
||||
Net income
|
4.5
|
|
|
11.6
|
|
|
8.4
|
|
|
11.1
|
|
||||
Net income attributable to DXP Enterprises, Inc.
|
4.6
|
|
|
11.6
|
|
|
8.4
|
|
|
11.1
|
|
||||
Earnings per share - basic
|
0.26
|
|
|
0.66
|
|
|
0.48
|
|
|
0.63
|
|
||||
Earnings per share - diluted
|
$
|
0.25
|
|
|
$
|
0.63
|
|
|
$
|
0.46
|
|
|
$
|
0.60
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales
|
$
|
238.5
|
|
|
$
|
250.7
|
|
|
$
|
251.9
|
|
|
$
|
265.7
|
|
Gross profit
|
64.5
|
|
|
68.9
|
|
|
67.0
|
|
|
71.2
|
|
||||
Net income
|
3.1
|
|
|
4.1
|
|
|
3.0
|
|
|
6.6
|
|
||||
Net income attributable to DXP Enterprises, Inc.
|
3.0
|
|
|
4.0
|
|
|
2.9
|
|
|
6.6
|
|
||||
Earnings per share - basic
|
0.18
|
|
|
0.24
|
|
|
0.17
|
|
|
0.38
|
|
||||
Earnings per share - diluted
|
$
|
0.17
|
|
|
$
|
0.23
|
|
|
$
|
0.16
|
|
|
$
|
0.37
|
|
•
|
Engaged a third party consulting firm to lead our remediation efforts.
|
•
|
Conducted a review of our organization structure, reporting relationships and adequacy of staffing levels and made specific staffing changes as a result of our review.
|
•
|
Completed training for all appropriate personnel regarding the applicable accounting guidance and requirements.
|
•
|
Training was conducted by both an outside expert and through internal training meetings and provided to accounting personnel, remote location personnel, and management positions.
|
•
|
Strengthened our risk assessment, materiality and scoping, and fraud risk assessment.
|
•
|
Significantly improved our COSO mapping of entity level controls.
|
•
|
Developed or revised process maps for all key business processes.
|
•
|
Identified and documented key controls and control gaps in a comprehensive consolidated risk control matrix
|
•
|
Developed controls to address gaps and enhanced management review controls.
|
•
|
Educated process owners as to the expectations for documentation to evidence key controls.
|
•
|
The procedures described above have been implemented and controls have been successfully tested by our third party consultants and external auditors.
|
/s/ David R. Little
|
|
/s/ Kent Yee
|
|
David R. Little
|
|
Kent Yee
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
1.
|
Financial Statements – See Part II, Item 8 of this Report.
|
|
|
2.
|
Financial Statement Schedules - All other schedules have been omitted since the required information is not applicable or significant or is included in the Consolidated Financial Statements or notes thereto.
|
|
|
3.
|
Exhibits:
|
10.3+
|
|
|
|
10.4+
|
|
|
|
|
DXP ENTERPRISES, INC. (Registrant)
|
|
||
|
|
|
|
|
|
By:
|
/s/
|
DAVID R. LITTLE
|
|
|
|
|
David R. Little
|
|
|
|
|
Chairman of the Board,
|
|
|
|
|
President and Chief Executive Officer
|
|
|
NAME
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
|
|
/s/David R. Little
|
|
Chairman of the Board, President
|
|
|
|
David R. Little
|
|
Chief Executive Officer and Director
|
|
March 13, 2020
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/Kent Yee
|
|
Senior Vice President/Finance and
|
|
March 13, 2020
|
|
Kent Yee
|
|
Chief Financial Officer and Secretary
|
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/Gene Padgett
|
|
Senior Vice President/Finance,
|
|
March 13, 2020
|
|
Gene Padgett
|
|
Chief Accounting Officer
|
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
/s/Cletus Davis
|
|
Director
|
|
March 13, 2020
|
|
Cletus Davis
|
|
|
|
|
|
|
|
|
|
|
|
/s/Timothy P. Halter
|
|
Director
|
|
March 13, 2020
|
|
Timothy P. Halter
|
|
|
|
|
|
|
|
|
|
|
|
/s/David Patton
|
|
Director
|
|
March 13, 2020
|
|
David Patton
|
|
|
|
|
|
|
|
|
|
|
|
/s/Joseph Mannes
|
|
Director
|
|
March 13, 2020
|
|
Joseph Mannes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this annual report on Form 10-K of DXP Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
1.
|
I have reviewed this annual report on Form 10-K of DXP Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
|
|
|
|
|