|   | [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.  For the quarterly period ended September 30, 2010 |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | [   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | For the transition period from | to |
|--------|----------------------|-------------------------------------------------------------------------------------------|--------------------------------|----|

| Texas                                                          |   | 76-0509661                                                 |
|----------------------------------------------------------------|--------|------------------------------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification Number)                    |
|                                                           |   |                                                       |
| 7272 Pinemont, Houston, Texas 77040                            |   | (713) 996-4700                                             |
| (Address of principal executive offices)(Zip Code)             |   | (Registrant’s telephone number, including area code) |

----

| DXP ENTERPRISES, INC., AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands, Except Share and Per Share Amounts)                                                                                                                                                                                                          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                              | September 30, 2010 |   | December 31,2009 |
|      ASSETS                                                                                                                                                                                                                                                                                                              |   |   |   |
| Current assets:                                                                                                                                                                                                                                                                                                                                   |   |   |   |
|   Cash                                                                                                                                                                                                                                                                                                                                  | $                    1,208 |   | $                    2,344 |
|   Trade accounts receivable, net of allowances for doubtful accounts                                                                                                                                                                                                                                                                    |   |   |   |
|     of $3,535 in 2010 and $3,006 in 2009                                                                                                                                                                                                                                                                                      | 98,780 |   | 77,066 |
|   Inventories, net                                                                                                                                                                                                                                                                                                                      | 70,873 |   | 72,581 |
|   Prepaid expenses and other current assets                                                                                                                                                                                                                                                                                             | 3,159 |   | 3,533 |
|   Federal income tax recoverable                                                                                                                                                                                                                                                                                                        | - |   | 235 |
|   Deferred income taxes                                                                                                                                                                                                                                                                                                                 | 8,532 |   | 7,833 |
|      Total current assets                                                                                                                                                                                                                                                                                                | 182,552 |   | 163,592 |
| Property and equipment, net                                                                                                                                                                                                                                                                                                                       | 15,501 |   | 16,955 |
| Goodwill                                                                                                                                                                                                                                                                                                                                          | 79,488 |   | 60,542 |
| Other intangibles, net of accumulated amortization of $18,118 in 2010  and $13,779 in 2009                                                                                                                                                                                                                                              |  28,380 |   |  25,727 |
| Non-current deferred income taxes                                                                                                                                                                                                                                                                                                                 | 2,813 |   | 3,289 |
| Other assets                                                                                                                                                                                                                                                                                                                                      | 877 |   | 822 |
|      Total assets                                                                                                                                                                                                                                                                                                        | $                309,611 |   | $                270,927 |
|      LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                                                                                          |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                                                                              |   |   |   |
|   Current portion of long-term debt                                                                                                                                                                                                                                                                                                     | $                  10,924 |   | $                  12,595 |
|   Trade accounts payable                                                                                                                                                                                                                                                                                                                | 54,361 |   | 51,185 |
|   Accrued wages and benefits                                                                                                                                                                                                                                                                                                            | 10,880 |   | 6,633 |
|   Federal income taxes payable                                                                                                                                                                                                                                                                                                          | 6,221 |   | - |
|   Customer advances                                                                                                                                                                                                                                                                                                                     | 10,186 |   | 1,008 |
|   Other accrued liabilities                                                                                                                                                                                                                                                                                                             | 3,398 |   | 6,377 |
|      Total current liabilities                                                                                                                                                                                                                                                                                           | 95,970 |   | 77,798 |
| Long-term debt, less current portion                                                                                                                                                                                                                                                                                                              | 98,492 |   | 102,916 |
| Shareholders’ equity:                                                                                                                                                                                                                                                                                                                       |   |   |   |
|   Series A preferred stock, 1/10th vote per share; $1.00 par value;   liquidation preference of $100 per share ($112 at September 30,   2010); 1,000,000 shares authorized; 1,122 shares issued   and outstanding                                                                          |    1 |   |    1 |
|   Series B convertible preferred stock, 1/10th vote per share;  $1.00   par value; $100 stated value; liquidation preference of $100 per   share ($1,500 at September 30, 2010);   1,000,000 shares authorized;   15,000  shares issued and outstanding |    15 |   |    15 |
|   Common stock, $0.01 par value, 100,000,000 shares authorized;    13,893,956 in 2010 and 12,935,201 in 2009 shares    issued and outstanding                                                                                                                                                   |   139 |   |   129 |
| Paid-in capital                                                                                                                                                                                                                                                                                                                                   | 69,484 |   | 58,037 |
| Retained earnings                                                                                                                                                                                                                                                                                                                                 | 45,510 |   | 32,057 |
| Accumulated other comprehensive income (loss)                                                                                                                                                                                                                                                                                                     | - |   | (26) |
|      Total shareholders’ equity                                                                                                                                                                                                                                                                                    | 115,149 |   | 90,213 |
|      Total liabilities and shareholders’ equity                                                                                                                                                                                                                                                                    | $                306,611 |   | $                270,927 |
|  The accompanying notes are an integral part of these consolidated financial statements.                                                                                                                                                                                                                                                     |

----

|                                                                                   | Three Months EndedSeptember 30,                                                                 |   | Nine Months EndedSeptember 30,                                                                  |
|----------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|
|                                                                                   | 2010                                                                                            |   | 2009                                                                                            |   | 2010 |   | 2009 |
| Sales                                                                                  | $         172,249                                  |   | $         143,422                                  |   | $         486,533 |   | $         445,400 |
| Cost of sales                                                                          | 123,360                                                                                         |   | 102,644                                                                                         |   | 347,786 |   | 317,164 |
| Gross profit                                                                           | 48,889                                                                                          |   | 40,778                                                                                          |   | 138,747 |   | 128,236 |
| Selling, general and  administrative expense                                 |  38,731                                                                                    |   |  35,145                                                                                    |   |  112,713 |   |  110,790 |
| Operating income                                                                       | 10,158                                                                                          |   | 5,633                                                                                           |   | 26,034 |   | 17,446 |
| Other income                                                                           | 29                                                                                              |   | 9                                                                                               |   | 243 |   | 71 |
| Interest expense                                                                       | (1,425)                                                                                         |   | (1,232)                                                                                         |   | (4,023) |   | (4,020) |
| Income before income taxes                                                             | 8,762                                                                                           |   | 4,410                                                                                           |   | 22,254 |   | 13,497 |
| Provision for income taxes                                                             | 3,417                                                                                           |   | 1,726                                                                                           |   | 8,733 |   | 5,475 |
| Net income                                                                             | 5,345                                                                                           |   | 2,684                                                                                           |   | 13,521 |   | 8,022 |
| Preferred stock dividend                                                               | (23)                                                                                            |   | (22)                                                                                            |   | (68) |   | (60) |
| Net income attributable to  common shareholders                              |  $             5,322      |   |  $             2,662      |   |  $            13,453 |   |  $             7,962 |
|                                                                                   |                                                                                            |   |                                                                                            |   |   |   |   |
| Basic income per share                                                                 | $               0.38 |   | $               0.20 |   | $               0.98 |   | $              0.61 |
| Weighted average common  shares outstanding                                  |  14,023                                                                                    |   |  13,132                                                                                    |   |  13,710 |   |  13,105 |
| Diluted income per share                                                               | $               0.36 |   | $               0.19 |   | $               0.93 |   | $              0.57 |
| Weighted average common  and common equivalent  shares outstanding |   15,056                                                                              |   |   14,004                                                                              |   |   14,764 |   |   13,978 |
|  See notes to condensed consolidated financial statements.                        |

----

|                                                                                                                                                                                                                                                                                                    | NINE MONTHS ENDED                                                                                                                    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                    | SEPTEMBER 30                                                                                                                         |
|                                                                                                                                                                                                                                                                                                    | 2010                                                                                                                                 |   | 2009 |
| OPERATING ACTIVITIES:                                                                                                                                                                                                                                                                                   |                                                                                                                                 |   |   |
| Net income                                                                                                                                                                                                                                                                                              | $                   13,521            |   | $                     8,022 |
|   Adjustments to reconcile net income to net cash provided                                                                                                                                                                                                                                    |                                                                                                                                 |   |   |
|    by operating activities – net of acquisitions and divestitures                                                                                                                                                                                                                  |                                                                                                                                 |   |   |
|     Depreciation                                                                                                                                                                                                                                                                    | 2,782                                                                                                                                |   | 3,354 |
|     Amortization of intangibles                                                                                                                                                                                                                                                     | 4,339                                                                                                                                |   | 5,420 |
|     Compensation expense for restricted stock                                                                                                                                                                                                                                       | 716                                                                                                                                  |   | 1,243 |
|     Tax benefit related to exercise of stock options and      vesting of restricted stock                                                                                                                                                             |  (408)                                                                                                                          |   |  (6) |
|     Deferred income taxes                                                                                                                                                                                                                                                           | (223)                                                                                                                                |   | (1,233) |
|     Gain on sale of property and equipment                                                                                                                                                                                                                                          | (188)                                                                                                                                |   | - |
|     Changes in operating assets and liabilities, net of     assets and liabilities acquired in business combinations:                                                                                                                                      |                                                                                                                                 |   |   |
|       Trade accounts receivable                                                                                                                                                                                                                                           | (16,124)                                                                                                                             |   | 22,855 |
|       Inventories                                                                                                                                                                                                                                                         | 6,496                                                                                                                                |   | 28,009 |
|       Prepaid expenses and other current assets                                                                                                                                                                                                                           | 891                                                                                                                                  |   | (2,251) |
|       Accounts payable and accrued expenses                                                                                                                                                                                                                               | 6,852                                                                                                                                |   | (27,264) |
|       Net cash provided by operating activities                                                                                                                                                                                                                           | 18,654                                                                                                                               |   | 38,149 |
|                                                                                                                                                                                                                                                                                                    |                                                                                                                                 |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                                                                                                                   |                                                                                                                                 |   |   |
| Purchase of property and equipment                                                                                                                                                                                                                                                                      | (901)                                                                                                                                |   | (1,482) |
| Purchase of businesses, net of cash acquired                                                                                                                                                                                                                                                            | (10,965)                                                                                                                             |   | 16 |
| Proceeds from the sale of business                                                                                                                                                                                                                                                                      | 1,428                                                                                                                                |   | (491) |
|   Net cash used in investing activities                                                                                                                                                                                                                                                       | (10,438)                                                                                                                             |   | (1,957) |
|                                                                                                                                                                                                                                                                                                    |                                                                                                                                 |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                                                                                                   |                                                                                                                                 |   |   |
| Proceeds from debt                                                                                                                                                                                                                                                                                      | 96,723                                                                                                                               |   | 97,387 |
| Principal payments on revolving line of credit and other long-term  debt                                                                                                                                                                                                                      |  (106,540)                                                                                                                      |   |  (137,070) |
| Dividends paid in cash                                                                                                                                                                                                                                                                                  | (68)                                                                                                                                 |   | (60) |
| Proceeds from exercise of stock options                                                                                                                                                                                                                                                                 | 125                                                                                                                                  |   | 10 |
| Tax benefit related to exercise of stock options and vesting of  restricted stock                                                                                                                                                                                                             |  408                                                                                                                            |   |  6 |
|   Net cash used in financing activities                                                                                                                                                                                                                                                       | (9,352)                                                                                                                              |   | (39,727) |
| DECREASE IN CASH                                                                                                                                                                                                                                                                                        | (1,136)                                                                                                                              |   | (3,535) |
| CASH AT BEGINNING OF PERIOD                                                                                                                                                                                                                                                                             | 2,344                                                                                                                                |   | 5,698 |
| CASH AT END OF PERIOD                                                                                                                                                                                                                                                                                   | $                     1,208 |   | $                     2,163 |
|                                                                                                                                                                                                                                                                                                    |                                                                                                                                 |   |   |
| Purchase of businesses excludes $14 million of common stock and convertible notes issued in connection with an acquisition during 2010.  Proceeds from debt exclude $6.3 million of convertible notes issued in connection with an acquisition in 2010 and converted to common stock in 2010. |
|  See notes to condensed consolidated financial statements.                                                                                                                                                                                                                                    |

----

|                                                               | Three Months EndedSeptember 30, 2010                   |   | Nine Months EndedSeptember 30, 2010                          |
|--------------------------------------------------------------------|--------------------------------------------------------|--------|--------------------------------------------------------------|
|                                                               | 2010                                                   |   | 2009                                                         |   | 2010 |   | 2009 |
|                                                               |                                                   |   |                                                         |   |   |   |   |
| Net income                                                         | $        5,345 |   | $         2,684 |   | $        13,521 |   | $         8,022 |
| Gain from interest rate swap,   net of income taxes |   -                                          |   |  181                                                    |   |  26 |   |  441 |
| Comprehensive income                                               | $        5,345 |   | $         2,865 |   | $        13,547 |   | $         8,463 |
|                                                               |                                                   |   |                                                         |   |   |   |   |
| See notes to consolidated condensed financial statements.          |

----

----

|                                                                      | Options Outstanding and Exercisable |
|---------------------------------------------------------------------------|-------------------------------------|
|                                                                      | Number of Shares                    |   | WeightedAverageExercisePrice |   | Weighted Average Remaining Contractual Term(in years) |   | Aggregate Intrinsic Value |
| Options outstanding  at December 31, 2009                       | 50,000                              |   | $   2.50 |   | 3.2 |   | $    529,000 |
| Granted                                                                   | -                                   |   |   |   |   |   |   |
| Exercised                                                                 | 50,000                              |   | $   2.50 |   |   |   |   |
| Options outstanding and  exercisable at September 30, 2010 | -                                   |   | - |   | - |   | - |

| Number of shares authorized for grants         | 600,000 |
|------------------------------------------------|---------|
| Number of shares granted                       | 474,662 |
| Number of shares forfeited                     | 59,649  |
| Number of shares available for future grants   | 184,987 |
| Weighted-average grant price of granted shares | $15.24  |

|                           | Number ofShares |   | Weighted AverageGrant Price |
|--------------------------------|-----------------|--------|-----------------------------|
| Unvested at December 31, 2009  | 223,448         |   | $ 15.29                     |
| Granted                        | 73,781          |   | $ 15.10                     |
| Forfeited                      | (36,885)        |   | $ 17.07                     |
| Vested                         | (69,627)        |   | $ 13.01                     |
| Unvested at September 30, 2010 | 190,717         |   | $ 15.55                     |

----

|            | September 30, 2010 |   | December 31, 2009 |
|-----------------|-------------------------|--------|------------------------|
|            |                    |   |                   |
| Finished goods  | $ 68,542                |   | $ 72,270               |
| Work in process |  2,331             |   |   311        |
| Inventories     | $  70,873     |   | $  72,581    |

|                             |  Total                     |   |  Goodwill                  |   | OtherIntangibles          |
|----------------------------------|---------------------------------|--------|---------------------------------|--------|---------------------------|
| Balance as of December 31, 2009  | $    86,269 |   | $    60,542 |   | $   25,727 |
| Acquired during the period       | 25,838                          |   | 18,846                          |   | 6,992                     |
| Payment of earn out              | 100                             |   | 100                             |   | -                         |
| Amortization                     | (4,339)                         |   | -                               |   | (4,339)                   |
| Balance as of September 30, 2010 | $  107,868            |   | $  79,488             |   | $   28,380 |

|                   | As of September 30, 2010                                     |   | As of December 31, 2009                                            |
|------------------------|--------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                   | GrossCarryingAmount                                          |   |  AccumulatedAmortization                                      |   | GrossCarryingAmount |   |  AccumulatedAmortization |
| Vendor agreements      | $         2,496 |   | $          (800) |   | $          2,496 |   | $          (706) |
| Customer relationships | 42,240                                                       |   | (15,811)                                                           |   | 35,390 |   | (11,908) |
| Non-compete agreements | 1,762                                                        |   | (1,507)                                                            |   | 1,620 |   | (1,165) |
| Total                  | $       46,498            |   | $     (18,118)                            |   | $        39,506 |   | $     (13,779) |

----

|                                                                                       | Three Months EndedSeptember 30                                                |   | Nine months EndedSeptember 30                                                 |
|--------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|
|                                                                                       | 2010                                                                          |   | 2009                                                                          |   | 2010 |   | 2009 |
| Basic:                                                                                     |                                                                          |   |                                                                          |   |   |   |   |
| Weighted average shares outstanding                                                        | 14,022,657                                                                    |   | 13,131,547                                                                    |   | 13,709,961 |   | 13,104,622 |
| Net income                                                                                 | $  5,345,000                                                        |   | $   2,684,000                                                  |   | $13,521,000 |   | $  8,022,000 |
| Convertible preferred stock dividend                                                       | (23,000)                                                                      |   | (22,000)                                                                      |   | (68,000) |   | (60,000) |
| Net income attributable to common shareholders                                             |  $  5,322,000                                                  |   |  $   2,662,000                                            |   |  $ 13,453,000 |   |  $  7,962,000 |
| Per share amount                                                                           | $            0.38 |   | $            0.20 |   | $            0.98 |   | $           0.61 |
|                                                                                       |                                                                          |   |                                                                          |   |   |   |   |
| Diluted:                                                                                   |                                                                          |   |                                                                          |   |   |   |   |
| Weighted average shares outstanding                                                        | 14,022,657                                                                    |   | 13,131,547                                                                    |   | 13,709,961 |   | 13,104,622 |
| Net effect of dilutive stock options –  based on the treasury stock method | -                                                                             |   |   32,784                                                            |   |  9,625 |   |  33,522 |
| Assumed conversion of  convertible notes                                         | 193,420                                                                       |   |                                                                          |   | 204,341 |   | - |
| Assumed conversion of convertible  preferred stock                               | 840,000                                                                       |   |  840,000                                                                 |   | 840,000 |   |  840,000 |
| Total                                                                                      | 15,056,077                                                                    |   | 14,004,331                                                                    |   | 14,763,927 |   | 13,978,144 |
| Net income                                                                                 | $  5,345,000                                                        |   | $   2,662,000                                                  |   | $ 13,521,000 |   | $  7,962,000 |
| Interest on convertible notes,  after income taxes                               | 47,000                                                                        |   |                                                                          |   | 142,000 |   |   |
| Convertible preferred stock dividend                                                       | 23,000                                                                        |   | 22,000                                                                        |   | 68,000 |   | 60,000 |
| Net income for diluted  earnings per share                                       | $  5,415,000                                                        |   |  $   2,684,000                                            |   | $ 13,731,000 |   |  $  8,022,000 |
| Per share amount                                                                           | $            0.36 |   | $            0.19 |   | $            0.93 |   | $           0.57 |

----

|                                                | Three Months Ended September 30, | Nine Months Ended September 30, |
|-----------------------------------------------------|----------------------------------|---------------------------------|
|                                                | MRO                              | InnovativePumpingSolutions      | SupplyChain Services |  Total | MRO | InnovativePumpingSolutions | SupplyChain Services |  Total |
| 2010                                                |                             |                            |   |   |   |   |   |   |
| Sales                                               | $  117,739             | $    22,574 | $31,936 | $ 172,249 | $338,124 | $   53,596 | $ 94,813 | $ 486,533 |
| Operating income for  reportable segments | 13,538                           | 2,368                           | 1,828 | 17,734 | 37,078 | 7,147 | 5,370 | 49,595 |
| 2009                                                |                             |                            |   |   |   |   |   |   |
| Sales                                               | $    95,606  | $    14,125 | $33,691 | $ 143,422 | $ 298,467 | $   43,975 | $ 102,958 | $ 445,400 |
| Operating income for  reportable segments | 8,786                            | 2,022                           | 1,657 | 12,465 | 32,794 | 6,267 | 5,347 | 44,408 |

|                                         | Three Months EndedSeptember 30 |   | Nine months EndedSeptember 30 |
|----------------------------------------------|--------------------------------|--------|-------------------------------|
|                                         | 2010                           |   | 2009                          |   |  2010 |   |  2009 |
| Operating income for reportable segments     | $ 17,734                       |   | $  12,465           |   | $  49,595 |   | $  44,408 |
| Adjustment for:                              |                           |   |                          |   |   |   |   |
|   Amortization of intangibles      | 1,520                          |   | 1,807                         |   | 4,339 |   | 5,420 |
|   Corporate and other expense, net | 6,056                          |   | 5,025                         |   | 19,222 |   | 21,542 |
| Total operating income                       | 10,158                         |   | 5,633                         |   | 26,034 |   | 17,446 |
| Interest expense, net                        | 1,425                          |   | 1,232                         |   | 4,023 |   | 4,020 |
| Other expense (income), net                  | (29)                           |   | (9)                           |   | (243) |   | (71) |
| Income before income taxes                   | $  8,762             |   | $   4,410      |   | $  22,254 |   | $  13,497 |

----

|                                                                                     | Interest Rate Swap                                                   |
|------------------------------------------------------------------------------------------|----------------------------------------------------------------------|
|                                                                                     | 2010                                                                 |   | 2009 |
| Three Months Ended September 30                                                          |                                                                 |   |   |
| Fair value at Julyl 1                                                                    | $        -                   |   | $  (  768) |
| Realized and unrealized gains (losses)  included in other comprehensive income |            -  |   |  302 |
| Fair value at September 30                                                               | $        -                   |   | $     (466) |
|                                                                                     |                                                                 |   |   |
| Nine months Ended September 30                                                           |                                                                 |   |   |
| Fair value at January 1                                                                  | $       (42)                      |   | $  (1,202) |
| Realized and unrealized gains (losses)  Included in other comprehensive income |            42 |   |  736 |
| Fair value at September 30                                                               | $         -             |   | $     (466) |

|   | NOTE 10:  OTHER COMPREHENSIVE INCOME |
|--------|------------------------------------------------|

|                                              | Three Months EndedSeptember 30 |         | Nine months EndedSeptember 30 |
|---------------------------------------------------|--------------------------------|--------------|-------------------------------|
|                                              | 2010                           |         | 2009                          |   | 2010 |   | 2009 |
| Net income                                        | $  5,345             |    | $2,684                        |   | $ 13,521 |   | $8,022 |
| Gain from interest rate swap, net of income taxes | -                              |         | 181                           |   | 26 |   | 441 |
| Other comprehensive income                        | $  5,345             |    | $2,865                        |   | $  13,547 |   | $8,463 |

----

|             | Three Months EndedSeptember 30 |   | Nine months EndedSeptember 30 |
|------------------|--------------------------------|--------|-------------------------------|
|             | 2010                           |   | 2009                          |   | 2010 |   | 2009 |
| Net sales        | $172,249                       |   | $155,275                      |   | $499,346 |   | $480,959 |
| Net income       | 5,345                          |   | 3,002                         |   | 13,911 |   | 8,901 |
| Per share data   |                           |   |                          |   |   |   |   |
| Basic earnings   | $0.38                          |   | $0.22                         |   | $1.00 |   | $0.66 |
| Diluted earnings | $0.36                          |   | $0.21                         |   | $0.94 |   | $0.62 |

| Cash                            | $3,035   |
|---------------------------------|----------|
| Accounts Receivable             | 5,824    |
| Inventory                       | 5,774    |
| Property and equipment          | 737      |
| Goodwill and intangibles        | 25,838   |
| Other assets                    | 189      |
| Assets acquired                 | 41,397   |
| Current liabilities assumed     | (13,397) |
|   Net assets acquired | $28,000  |

----

|   | ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|--------|---------------------------------------------------------------------------------------------------------|

|   | Impact of Current Economic Conditions |
|--------|---------------------------------------|

|                                                   | Three Months Ended September 30, |   | Nine months Ended September 30, |
|--------------------------------------------------------|----------------------------------|--------|---------------------------------|
|                                                   | 2010                             | %      | 2009                            | % |   | 2010 | % | 2009 | % |
| Sales                                                  | $172,249                         | 100.0  | $143,422                        | 100.0 |   | $486,533 | 100.0 | $445,400 | 100.0 |
| Cost of sales                                          | 123,360                          | 71.6   | 102,644                         | 71.6 |   | 347,786 | 71.5 | 317,164 | 71.2 |
| Gross profit                                           | 48,889                           | 28.4   | 40,778                          | 28.4 |   | 138,747 | 28.5 | 128,236 | 28.8 |
| Selling, general and  administrative expense | 38,731                           | 22.5   |  35,145                    |  24.5 |   | 112,713 | 23.2 |  110,790 |  24.9 |
| Operating income                                       | 10,158                           | 5.9    | 5,633                           | 3.9 |   | 26,034 | 5.3 | 17,446 | 3.9 |
| Interest expense                                       | (1,425)                          | (0.8)  | (1,232)                         | (0.8) |   | (4,023) | (0.8) | (4,020) | (0.9) |
| Other income                                           | 29                               | -      |  9                         | - |   | 243 | 0.1 | 71 | - |
| Income before  income taxes                  | 8,762                            | 5.1    |  4,410                     |  3.1 |   | 22,254 | 4.6 |  13,497 |  3.0 |
| Provision for  income taxes                  | 3,417                            | 2.0    |  1,726                     |  1.2 |   | 8,733 | 1.8 |  5,475 |  1.2 |
| Net income                                             | $5,345                           | 3.1    | $    2,684  | 1.9 |   | $  13,521 | 2.8 | $  8,022 | 1.8 |
| Per share amounts                                      |                             |   |                            |   |   |   |   |   |   |
|   Basic earnings per share                   | $0.38                            |   | $0.20                           |   |   | $0.98 |   | $0.61 |   |
|   Diluted earnings per share                 | $0.36                            |   | $0.19                           |   |   | $0.93 |   | $0.57 |   |

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|             | Three Months EndedSeptember 30 |   | Nine months EndedSeptember 30 |
|------------------|--------------------------------|--------|-------------------------------|
|             | 2010                           |   | 2009                          |   | 2010 |   | 2009 |
| Net sales        | $  172,249           |   | $  155,275          |   | $  499,346 |   | $  480,959 |
| Net income       | 5,345                          |   | 3,002                         |   | 13,911 |   | 8,901 |
| Per share data   |                           |   |                          |   |   |   |   |
| Basic earnings   | $0.38                          |   | $0.22                         |   | $1.00 |   | $0.66 |
| Diluted earnings | $0.36                          |   | $0.21                         |   | $0.94 |   | $0.62 |

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|                                                                                                                                                                                                                                               | September 30, 2010              |   | December 31,2009          |   | Increase(Decrease)      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|--------|---------------------------|--------|-------------------------|
|                                                                                                                                                                                                                                               | (in Thousands)                  |   |                      |
| Current portion of long-term debt                                                                                                                                                                                                                  | $    10,924 |   | $   12,595 |   | $  (1,671)    |
| Long-term debt, less current portion                                                                                                                                                                                                               | 98,492                          |   | 102,916                   |   | (4,424)                 |
| Total long-term debt                                                                                                                                                                                                                               | $  109,416            |   | $ 115,511                 |   | $  (6,095)(2) |
| Amount available                                                                                                                                                                                                                                   | $ 51,461(1)                     |   | $ 37,276(1)               |   | $  14,185(3)  |
|  (1) Represents amount available to be borrowed at the indicated date under the Facility.                                                                                                                                                     |
| (2) The funds obtained from operations were used to reduce debt.                                                                                                                                                                                   |
| (3) The $14.2 million increase in the amount available is primarily a result of the $21.7 million increase in trade receivables, partially offset by the $3.7 increase in the amount outstanding under the line of credit portion of the Facility. |

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|                      | September 30, |   | Increase |
|---------------------------|---------------|--------|----------|
|                      | 2010          |   | 2009     |   | (Decrease) |
|                      | (in Days)     |
| Days of sales outstanding | 57.4          |   | 50.4     |   | 7.0 |
| Inventory turns           | 6.6           |   | 4.7      |   | 1.9 |

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| 3.1 | Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the SEC on August 20, 1998). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-4 (Reg. No. 333-10021), filed with the SEC on August 12, 1996). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Form of Common Stock certificate (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the SEC on August 20, 1998). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | See Exhibit 3.1 for provisions of the Registrant’s Restated Articles of Incorporation, as amended, defining the rights of security holders. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | See Exhibit 3.2 for provisions of the Registrant’s Bylaws defining the rights of security holders. |
|-----|----------------------------------------------------------------------------------------------------------|

| 4.4 | Form of Senior Debt Indenture of DXP Enterprises, Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-3 (Reg. No. 333-166582), filed with the SEC on May 6, 2010). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5 | Form of Subordinated Debt Indenture of DXP Enterprises, Inc. (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3 (Reg. No. 333-166582), filed with the SEC on May 6, 2010). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Asset Purchase Agreement, dated as of April 1, 2010, whereby DXP Enterprises, Inc. acquired the assets of Quadna (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 5, 2010). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Convertible Promissory Note dated April 1, 2010 in the amount of $3,400,000.00 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 8, 2010). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Convertible Promissory Note dated April 1, 2010 in the amount of $2,100,000.00 (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 8, 2010). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Convertible Promissory Note dated April 1, 2010 in the amount of $4,500,000.00 (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 8, 2010). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended.  (Filed herewith). |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended.  (Filed herewith). |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  (Filed herewith). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  (Filed herewith). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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