Company: DXPE
Filing Date: 2025-04-30
Form Type: ARS
Source: 0001020710-25-000081
Chunk: 89

Company: DXP ENTERPRISES INC
Filing Date: 2025-04-30
Form: ARS
Chunk 89
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18,119 $ 17,799 Deferred tax liabilities and assets were comprised of the following (in thousands): December 31, 2024 2023 Deferred tax assets: Allowance for doubtful accounts $ 954 $ 879 Inventory 3,585 3,371 Texas research and development tax credit carryforward 2,232 2,239 Louisiana research and development tax credit carryforward 10 10 Foreign tax credit carryforward 64 64 Net operating loss carryforward 1,258 1,328 Capital loss carryforward 4 4 Accruals 9,814 8,190 ROU asset 304 220 Research expenses 40,650 23,822 Total deferred tax assets 58,875 40,127 Less valuation allowance (221) (278) Total deferred tax asset, net of valuation allowance 58,654 39,849 Deferred tax liabilities: Goodwill (24,847) (18,476) Intangibles (7,902) (8,363) Property and equipment (10,204) (7,885) Deferred compensation 2,304 (215) Unremitted foreign earnings (421) (421) Method changes (393) (342) Other (243) (643) Total deferred tax liability $ (41,706) $ (36,345) Net deferred tax asset $ 16,948 $ 3,504 Table of Contents 67

The Company records a valuation allowance when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions. If the Company was to determine that it would be able to realize the deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. As of December 31, 2024, the valuation allowance primarily relates to state operating loss and foreign capital loss carryforwards. The following summarizes changes in the balance of valuation allowances on deferred tax assets (in thousands): 2024 2023 2022 Balance at January 1 $ (278) $ (4) $ (4) Changes due to state operating loss and foreign capital loss carryforwards 57 (274) — Balance at December 31 $ (221) $ (278) $ (4) Expected tax benefit