Company: DXPE
Filing Date: 2025-03-10
Form Type: 10-K
Source: 0001020710-25-000036
Chunk: 55

Company: DXP ENTERPRISES INC
Filing Date: 2025-03-10
Form: 10-K
Item: Item 8
Chunk 55
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 determination that performing procedures relating to the estimated costs to complete open contracts associated with revenue recognized over time is a critical audit matter are (i) the significant judgment by management when developing the estimated costs to complete open contracts and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to estimated costs of materials. As previously disclosed by management, a material weakness existed during the year related to this matter.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the estimated costs to complete open contracts. These procedures also included, among others, for a sample of open contracts (i) testing management’s process for developing the estimated costs to complete the open contracts as of year end and (ii) evaluating the reasonableness of the significant assumption used by management related to estimated costs of materials. Evaluating management’s assumption related to estimated costs of materials involved (i) obtaining and inspecting executed purchase orders and agreements; (ii) considering customer specifications and associated vendor quotes; and (iii) performing a comparison of the originally estimated and actual costs of materials incurred on similar completed contracts.

47

/s/ PricewaterhouseCoopers LLP 

Houston, Texas

March 10, 2025

We have served as the Company’s auditor since 2022.

48

DXP ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

 Twelve Months Ended December 31, 202420232022Sales$1,802,040 $1,678,600 $1,480,832 Cost of sales1,245,763 1,173,309 1,058,794 Gross profit556,277 505,291 422,038 Selling, general and administrative expenses410,895 366,569 324,286 Income from operations145,382 138,722 97,752 Interest expense63,927 53,146 29,135 Other (income) expense, net (Note 18)(3,517)(1,355)2,716 Income before income taxes84,972 86,931 65,901 Provision for income taxes14,483 18,119 17,