Company: DXPE
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001020710-25-000092
Chunk: 33

Company: DXP ENTERPRISES INC
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 33
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 financial statements that have not yet been issued or made available for issuance. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.  We are currently evaluating the provisions of this ASU.

NOTE 4 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Our acquisitions may include contingent consideration as part of the purchase price. The fair value of the contingent consideration is estimated as of the acquisition date based on the present value of the contingent payments to be made using a weighted probability of possible payments. The unobservable inputs used in the determination of the fair value of the contingent consideration include management's assumptions about the likelihood of payment based on the established benchmarks, discount rates, and an internal rate of return analysis. The fair value measurement includes inputs that are Level 3 inputs as they are not observable in the market. Should actual results increase or decrease as compared to the assumptions used in our analysis, the fair value of the contingent consideration obligations will increase or decrease, up to the contracted limit, as applicable. Changes in the fair value of the contingent consideration are measured each reporting period and reflected in our results of operations.As of March 31, 2025, there was $12.7 million in other current and other long-term liabilities for contingent consideration associated with the recent acquisitions. See further discussion at Note 12 - Business Acquisitions. The following table provides a reconciliation of the beginning and ending balances and gains or losses recognized during the three months ended March 31, 2025 (in thousands): Contingent Consideration*Beginning balance at December 31, 2024$16,322 Acquisitions and settlements:   Acquisitions (Note 12)—    Settlements(3,820)Total remeasurement adjustments:Changes in fair value recorded in other expense (income), net183 *Ending Balance at March 31, 2025$12,685 *Amounts included in other current liabilities were $7.2 million and $8.0 million for the periods ending March 31, 2025 and December 31, 2024, respectively. Amounts included in other long-term liabilities were $5.5 million and $8.3 million for the periods ending March 31, 2025 and December 31, 2024, respectively.Sensitivity to Changes in Significant Unobservable InputsThe significant Level 3 unobservable inputs used in the fair value measurement of contingent consideration related to the acquisitions are