Company: DXPE
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050322
Chunk: 80

Company: DXP ENTERPRISES INC
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 80
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 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 September 30, 2025, there was $10.6 million in other current and other long-term liabilities for contingent consideration.The following table provides a reconciliation of the beginning and ending balances and gains or losses recognized during the nine months ended September 30, 2025 (in thousands): Contingent Consideration*Beginning balance at December 31, 2024$16,322 Acquisitions and settlements:   Acquisitions (Note 12)683    Settlements(7,333)Total remeasurement adjustments:Changes in fair value recorded in other expense (income), net932 *Ending Balance at September 30, 2025$10,604 *Amounts included in other current liabilities were $7.7 million and $8.0 million for the periods ending September 30, 2025 and December 31, 2024, respectively. Amounts included in other long-term liabilities were $2.9 million and $8.3 million for the periods ending September 30, 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 annualized EBITDA forecasts developed by the Company's management and the probability of achievement of those EBITDA results. The discount rate used in the calculations was 9.3 percent. Changes in our unobservable inputs in isolation would result in a change to our fair value measurement. As of September 30, 2025, the maximum amount of contingent consideration payable under these arrangements is $11.8 million over three years.Other financial instruments not measured at fair value on the Company's unaudited condensed consolidated balance sheets at September 30, 2025 and December 31, 2024, but which require disclosure of their fair values include: cash, restricted cash, accounts receivable, trade accounts payable and accrued expenses. The Company believes that the estimated fair value of such instruments at September 30, 2025 and December 31, 2024 approximates their carrying value as reported