Company: DXPE
Filing Date: 2025-04-30
Form Type: ARS
Source: 0001020710-25-000081
Chunk: 29

Company: DXP ENTERPRISES INC
Filing Date: 2025-04-30
Form: ARS
Chunk 29
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, revenue and expenses, and the disclosure of contingent assets and liabilities. Areas requiring significant estimates by our management include: • recognition of revenue, costs, profits or losses; • recognition of recoveries under contract change orders or claims; • estimated amounts for project losses, warranty costs, contract close-out or other costs; • income tax provisions and related valuation allowances; and • accruals for other estimated liabilities, including litigation and insurance reserves and receivables. Estimates are based on management's reasonable assumptions and experience, but are only estimates. Our actual business and financial results could differ from our estimates of such results due to changes in facts and circumstances, which could have a material negative impact on our financial condition and reported results of operations. Further, we recognize contract revenue as work on a contract progresses. The cumulative amount of revenue recorded on a contract at any point in time is the costs incurred to date versus the estimated total costs. Accordingly, contract revenue and total cost estimates are reviewed and revised as the work progresses. Adjustments are reflected in contract revenue in the period when such estimates are revised. Such adjustments could be material and could result in reduced profitability. Table of Contents 22

Risks Related to the Market and Economy A general slowdown in the economy could negatively impact the Company's sales growth and profitability. Economic and industry trends affect the Company's business. Demand for our products is subject to economic trends affecting our customers and the industries in which they compete in particular. General economic factors beyond our control that affect our business and our customers include (among others) interest rates, recession, inflation, deflation, customer credit availability, consumer credit availability, consumer debt levels, performance of housing markets, energy costs, tax rates and policy, unemployment rates, and other economic matters that influence our customers' spending. Many of our customers' industries, such as the manufacturing, food & beverage and oil and gas industry, are subject to volatility while others, such as the petrochemical industry, are cyclical and are materially affected by changes in the economy. As a result, demand for our products could be adversely impacted by changes in the markets of our customers. We traditionally do not enter into long-term contracts with our customers which increases the likelihood that economic downturns would affect our business. We could be adversely impacted by low oil prices, volatility in oil prices and downturns in the energy industry, including decreased capital expenditures, impacting our customers’ demand for our products and services. A portion of our revenue depends upon the level of capital and operating expenditures in the oil and