DXP Enterprises files 10K / A and issues press release

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HOUSTON – (COMMERCIAL THREAD) –DXP Enterprises, Inc. (NASDAQ: DXPE) today announced the company’s 10K / A filing and update comments on subsequent filings.

Kent Yee, CFO, said: “When I became CFO in mid-2017, our team set out to improve the processes, resources and talent of DXP’s finance and accounting function. So far we have been successful in these endeavors, but we still have room to grow and the best is yet to come. Change is not an event but a process. Early on, we made the transition from the Accounts Payable process from being primarily manual to being more automated based on our high billing activity. In the first quarter of 2019, we commissioned a comprehensive procurement-to-payment platform to help DXP manage sustained purchase orders, no-order orders, and employee spend. As part of this initiative, we had to process and validate all existing and known liabilities. We came to the end of this process and as a result we ended up with reprocessing and significant weaknesses. Over 77% of unsupported PO receipts that are written off are associated with Q1 2019 and prior balances. While we would have liked to be able to go through the process more quickly, DXP ​​follows the accounting and auditing procedures, in a situation like this.

Gene Padgett, CAO, commented: “Although reprocessing is never ideal, it is extremely important to measure both the quantitative and qualitative impacts over the respective time periods. Quantitatively, our restatement analysis shows ultimate impacts of 7.6%, 2.8% and 1.9% on net income for the 2018, 2019 and 2020 year-ends, respectively. For 2018 and 2019, these were positive impacts or increases in net income, while 2020 was a slight decrease based on the accounting treatment associated with the year and other past adjustments. Since joining Enbridge Inc. in 2018 it has been a great journey where we have seen continuous improvement and a raised bar and the team will continue to do so. Coming from a large-cap company, DXP ​​has many similarities to large-cap companies. Kent, Stephen Wick, DXP ​​Controller, and I have worked to find talent, vendors, and resources that match DXP.

Kent Yee, CFO, added, “As we move forward, file our restated first quarter and get up to date on the second quarter, we will continue to balance the interests of all stakeholders and work towards this. which is best for DXP and the continuous improvement path we’ve been on. DXP has always valued conservatism, accuracy and punctuality considering multiple stakeholders including customers, suppliers, debt and equity investors, rating agencies, etc. The business and financial health of DXP has never been stronger and, unfortunately, in a scenario like this, the business investment thesis, viability, stability and opportunities of DXP may be lost. We had 16 quarters of on-balance sheet cash on hand, a proven robust approach to managing capital structure, and solid execution from the COVID rebound, all while growing through acquisitions. One of my favorite quotes and take comfort in this exercise has been from Warren Buffett – – “To be successful you need to focus on the corporate world, not the obscure accounting mathematics”.

David R. Little, Chairman of the Board and Chief Executive Officer, said, “Kent, Gene and Stephen have done an excellent job developing and improving the finance and accounting function of DXP. They have built an iron triangle around a strategic, operational and technical / GAAP focus, without losing sight of our business goals and the fact that we run a business on a day-to-day basis. This exercise has more to do with the historical non-cash accounting impacts and the past versus the future of DXP, our current accounting and finance group, and the way forward. We look forward to closing the year and focusing on strategic priorities in 2022. ”

About DXP Enterprises, Inc.

DXP Enterprises, Inc. is a leading distributor of products and services that add value and total cost savings solutions to industrial customers in the United States, Canada and Dubai. DXP provides innovative pumping solutions, supply chain services, and maintenance, repair, operation and production (“MROP”) services that emphasize and utilize the extensive product knowledge and DXP’s technical expertise in rotating equipment, bearings, power transmission, metalworking, industrial supplies and safety. products and services. DXP’s portfolio of MROP products and service solutions enables DXP to be flexible and customer-focused, creating competitive advantages for our customers. DXP’s business lines include service centers, innovative pumping solutions and supply chain services. For more information, visit www.dxpe.com.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this press release (as well as information included in oral or other written statements made or to be made by the Company) contains forward-looking statements. These forward-looking statements include, without limitation, those regarding the Company’s expectations regarding the impact and resumption of the COVID-19 pandemic and the impact of low oil and gas commodity prices; the business of the Company, the future profitability of the Company, its cash flow, liquidity and growth. Such forward-looking information involves significant risks and uncertainties which could significantly affect the expected results in the future; and therefore, these results may differ from those expressed in any forward-looking statement made by or on behalf of the Company. These risks and uncertainties include, but are not limited to: declining prices for oil and natural gas; declines in spending levels in the oil and gas industry, which may result from lower oil and natural gas prices or other factors; ability to raise necessary capital, dependence on existing management, leverage and debt servicing, national or global economic conditions, economic risks associated with the impact of COVID-19, ability to manage change and the health or continued availability of management personnel and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by words such as, but not limited to, “may”, “will”, “should”, “intend”, “expect”, “Plan”, “anticipate”, “” believe ”,“ estimate ”,“ predict ”,“ potential ”,“ objective ”or“ continue ”or the negative of these terms or other comparable terminology. For more information, see the documents filed by the Company with the Securities and Exchange Commission. Further information on these risks and other potential factors that could affect the business and financial results of the Company is included in the documents filed by the Company with the SEC, including in the sections “Risk Factors” and “Management’s Discussion and Analysis of the Financial Position and Results of Operations” of the latest periodic reports filed by the Company on Forms 10-K and 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which relate to their respective dates.

The following table presents the impact of the restatement adjustments on the Company’s results previously published for 2020, 2019 and 2018 on a condensed basis:

For the year ended December 31

2020

2019

2018

As reported

As retired

As reported

As retired

As reported

As retired

INCOME STATEMENT (S)

Sales

$

1,005,266

$

1,005,266

$

1,267,189

$

1,264,851

$

1,216,197

$

1,218,709

Cost of sales

725,997

728,070

919 965

915,062

883 989

882 866

Gross profit

279,269

277,196

347,224

349 789

332,208

335,843

Selling, general and administrative expenses

246,256

244,981

281.102

282 377

263,757

263,757

Profit (loss) before taxes

(47 515

)

(48 313

)

46,669

47,959

48,706

52,341

Provision (benefit) for income taxes

(18,441

)

(18,696

)

10,894

11 194

13 185

14,107

Net income (loss) attributable to common shareholders

$

(28 816

)

$

(29,359

)

$

35 945

$

36 935

$

35,542

$

38 255

Basic earnings (loss) per share

$

(1.62

)

$

(1.65

)

$

2.04

$

2.10

$

2.02

$

2.18

Diluted earnings (loss) per share

$

(1.62

)

$

(1.65

)

$

1.96

$

2.01

$

1.94

$

2.08

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