PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) For Q1 2025, Distribution Solutions Group, Inc. reported total revenue of $478.0 million, a 14.9% increase, achieving a net income of $3.3 million from a prior-year loss, with total assets reaching $1.76 billion due to acquisitions and segment realignment [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $1.76 billion, total liabilities rose to $1.13 billion due to long-term debt, and total stockholders' equity slightly decreased to $636.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,762,912** | **$1,727,255** | | Total current assets | $744,802 | $712,174 | | Goodwill | $464,098 | $462,789 | | **Total Liabilities** | **$1,126,199** | **$1,086,712** | | Long-term debt, less current portion, net | $712,370 | $693,903 | | **Total Stockholders' Equity** | **$636,713** | **$640,543** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) In Q1 2025, the company achieved a significant turnaround, reporting a net income of $3.3 million ($0.07 per diluted share) compared to a $5.2 million net loss in Q1 2024, driven by a 14.9% revenue increase to $478.0 million and higher operating income Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $478,029 | $416,086 | | Gross Profit | $163,980 | $143,409 | | Operating Income (loss) | $20,097 | $2,783 | | Net Income (loss) | $3,261 | $(5,224) | | Diluted Income (loss) per share | $0.07 | $(0.11) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash used in operating activities was $4.8 million, a reversal from the prior year, while net cash used in investing activities decreased to $5.1 million, and financing activities provided $7.6 million from credit facility borrowings Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(4,762) | $6,615 | | Net cash provided by (used in) investing activities | $(5,053) | $(16,008) | | Net cash provided by (used in) financing activities | $7,633 | $(3,951) | | Increase (decrease) in cash, cash equivalents and restricted cash | $(1,689) | $(14,024) | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail a Q3 2024 segment realignment, the $50.8 million revenue contribution from 2024 acquisitions, total debt of $758.0 million with covenant compliance, $11.2 million in share repurchases, and the settlement of a 2022 cyber incident legal matter - The company realigned its reportable segments in Q3 2024 following the Source Atlantic acquisition, creating four segments: Lawson, TestEquity, Gexpro Services, and Canada Branch Division[28](index=28&type=chunk)[29](index=29&type=chunk)[95](index=95&type=chunk) - Acquisitions completed in 2024 contributed **$50.8 million** in revenue and **$2.1 million** in net income during the first quarter of 2025[60](index=60&type=chunk) - Total debt outstanding was **$758.0 million** as of March 31, 2025, with the company in compliance with all financial covenants[76](index=76&type=chunk)[87](index=87&type=chunk)[194](index=194&type=chunk) - In Q1 2025, the company repurchased **320,638 shares** of its common stock for **$11.2 million**, with **$15.2 million** remaining under the authorized program[90](index=90&type=chunk)[199](index=199&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 14.9% consolidated revenue growth in Q1 2025 to acquisitions and organic growth, with all segments contributing to improved performance, and the company maintains sufficient liquidity for future strategic initiatives - Consolidated revenue increased by **$61.9 million** in Q1 2025, driven by **$50.8 million** from acquisitions completed in 2024 and organic revenue growth of **$11.1 million** (**2.7%**)[154](index=154&type=chunk) Adjusted EBITDA by Segment (in thousands) | Segment | Q1 2025 Adjusted EBITDA | Q1 2024 Adjusted EBITDA | % Change | | :--- | :--- | :--- | :--- | | Lawson | $14,307 | $13,426 | 6.6% | | TestEquity | $12,811 | $11,611 | 10.3% | | Gexpro Services | $14,975 | $10,811 | 38.5% | | Canada Branch Division | $2,616 | $1,372 | 90.7% | | **Consolidated** | **$42,786** | **$36,067** | **18.6%** | - The company believes its liquidity, consisting of **$65.4 million** in cash and **$224.7 million** in borrowing availability, is sufficient to meet its needs for the next twelve months[185](index=185&type=chunk) - The company expects to spend approximately **$20.0 million** to **$25.0 million** for net capital expenditures during the full fiscal 2025 year[197](index=197&type=chunk) [Results by Reportable Segment](index=39&type=section&id=Results%20by%20Reportable%20Segment) In Q1 2025, Gexpro Services achieved strong organic revenue growth, the Canada Branch Division's revenue surged due to acquisition, Lawson's revenue grew with acquisitions offsetting legacy declines, and TestEquity's operating income significantly improved - Lawson: Revenue increased **1.9%** to **$120.5 million**, with acquisitions contributing **$10.4 million**, partially offset by an **$8.1 million** decline in legacy revenue; operating income grew **53.8%** to **$6.3 million**[156](index=156&type=chunk)[157](index=157&type=chunk) - TestEquity: Operating income swung to a **$4.1 million** profit from a **$6.1 million** loss in the prior year, primarily due to a **$9.2 million** decrease in severance and acquisition-related retention expenses[162](index=162&type=chunk)[166](index=166&type=chunk) - Gexpro Services: Revenue grew **20.5%** to **$118.9 million**, driven by increased sales in renewable energy, technology, aerospace, and defense; operating income rose **105.8%** to **$11.2 million**[168](index=168&type=chunk)[169](index=169&type=chunk) - Canada Branch Division: Revenue increased **304.5%** to **$50.5 million**, primarily driven by **$37.4 million** from the Source Atlantic acquisition[174](index=174&type=chunk)[175](index=175&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company maintained $65.4 million in cash and $224.7 million in credit availability, with net cash used in operations at $4.8 million, and key uses including capital expenditures and share repurchases Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $(4,762) | $6,615 | | Net cash from investing activities | $(5,053) | $(16,008) | | Net cash from financing activities | $7,633 | $(3,951) | - The company had **$758.0 million** in outstanding borrowings as of March 31, 2025, and was in compliance with all financial covenants[194](index=194&type=chunk)[195](index=195&type=chunk) - Contractual purchase commitments for the next twelve months total approximately **$181.1 million**[196](index=196&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations, as 100% of its debt obligations are at floating rates, and it does not currently use derivative financial instruments to mitigate this risk - A hypothetical **100 basis point (1%)** increase or decrease in interest rates would change the company's annual interest expense by approximately **$7.6 million**[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Senior management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the evaluation date, March 31, 2025[204](index=204&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[205](index=205&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company settled a class action lawsuit related to a 2022 cyber incident on April 10, 2025, with the non-material settlement payment fully covered by insurance - A class action lawsuit (Cyber Incident Suit) filed in April 2023 regarding a 2022 cyber incident was settled in April 2025[108](index=108&type=chunk) - The settlement amount was not material and was entirely covered by insurance[108](index=108&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the risk factors disclosed in the 2024 Annual Report on Form 10-K, with the report reiterating the potential negative impact of tariffs and trade policies on global economic conditions and operating margins - The company highlights the risk that tariffs and trade disputes could negatively affect operating profit margins if increased costs cannot be passed to customers or if operations cannot be modified accordingly[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company conducted no unregistered equity sales in Q1 2025, but repurchased 320,638 shares for $11.2 million under its authorized program, with $15.2 million remaining for future repurchases Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 320,638 | $34.94 | | February 2025 | — | $— | | March 2025 | — | $— | | **Total** | **320,638** | | [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the first quarter of 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025[216](index=216&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) The report lists various exhibits filed with the Form 10-Q, including credit agreements, executive employment agreements, and CEO/CFO certifications

Revenue Growth - First quarter revenue increased by $61.9 million, or 14.9%, to $478.0 million, including $50.8 million from five acquisitions closed in 2024[6] - Revenue for the three months ended March 31, 2025, was $478.03 million, a 14.9% increase from $416.09 million in the same period of 2024[19] - Total revenue for Q1 2025 reached $478,029 thousand, up from $416,086 thousand in Q1 2024, indicating a growth of 14.9%[44] - The Canada Branch Division generated $50.54 million in revenue, a notable increase from $12.50 million in the prior year, indicating successful market expansion[26] Profitability - Adjusted EBITDA for the first quarter rose to $42.8 million, up 18.6%, representing 9.0% of sales compared to 8.7% in the prior year[11] - Adjusted EBITDA for Q1 2025 was $42,786 thousand, compared to $36,067 thousand in Q1 2024, representing an increase of 18.5%[44] - Gross profit increased to $163.98 million, up 14.4% from $143.41 million year-over-year[19] - Operating income was $20.1 million, significantly up from $2.8 million in the prior year, with adjusted operating income at $34.4 million[11] - Operating income rose significantly to $20.10 million compared to $2.78 million in the prior year, reflecting a substantial improvement in operational efficiency[19] - Non-GAAP adjusted operating income for Q1 2025 was $34,392 thousand, compared to $29,761 thousand in Q1 2024, reflecting a year-over-year growth of 8.2%[40] Net Income - Net income per diluted share was $0.07, compared to a net loss per diluted share of $0.11 in the year-ago quarter[11] - Net income for the quarter was $3.26 million, a turnaround from a net loss of $5.22 million in the same quarter of 2024[19] - The company reported a basic income per share of $0.07, compared to a loss of $0.11 per share in the same period last year[19] Liquidity and Assets - Total liquidity at the end of the quarter was $304.8 million, consisting of $80.0 million in cash and $224.7 million available under the credit facility[11] - Total assets increased to $1,762.9 million from $1,727.3 million at the end of the previous quarter[17] - Cash and cash equivalents at the end of the period were $65.44 million, down from $73.10 million at the end of Q1 2024[22] Expenses - The company incurred $19.98 million in depreciation and amortization expenses, up from $17.05 million in the prior year[22] - Interest expense increased to $14.22 million from $11.83 million year-over-year, reflecting higher borrowing costs[19] - The company incurred $14,295 thousand in total selling, general and administrative adjustments for Q1 2025, down from $26,978 thousand in Q4 2024[40] - Acquisition-related costs for Q1 2025 were $108 thousand, a decrease from $1,954 thousand in Q4 2024[40] - Stock-based compensation expenses for Q1 2025 were $974 thousand, down from $2,198 thousand in Q4 2024[40] Strategic Initiatives - The company aims to improve structural margins and achieve higher return goals through strategic scaling and M&A[5] - Capital allocation priorities included opportunistic share repurchases totaling $11.2 million during the quarter[5] Market Performance - Organic average daily sales grew 4.3% year-over-year, with a constant currency increase of 4.7%[3] - The company reported year-over-year net margin expansion in all three verticals, with Lawson's net margin increasing from 11.4% to 11.9%[4]

NASDAQ: DSGR Q1 2025 Financial Results May 1, 2025 Safe Harbor Statement Cautionary Note Regarding Forward-Looking Statements This presentation contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the "safe-harbor" provisions under the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. The terms "aim," "anticipate," "believe," "contemp ...

Financial Data and Key Metrics Changes - The company reported revenue of $1.8 billion for fiscal 2024, an increase of almost 15%, primarily driven by strategic acquisitions [8] - Adjusted free cash flow grew to $175 million, reflecting strong operational performance [8] - The trailing twelve-month total revenues were approximately $1.95 billion, indicating significant growth since the 2021 pre-merger results [10] Business Line Data and Key Metrics Changes - Lawson Products reported Q4 sales of $111.8 million, with organic sales down 10.9% due to lower rep counts and military sales decline [53] - Gexpro Services experienced a revenue increase of 27.4% year-over-year, reaching $118.8 million, driven by organic expansion [58] - Test Equity Group's sales were $191.3 million, with adjusted EBITDA of $14.8 million, reflecting a positive growth trajectory in test and measurement [60] Market Data and Key Metrics Changes - The aerospace and defense, technology, and renewables markets showed sequential growth, contributing to Gexpro Services' performance [34] - Military sales for Lawson were down over 50%, significantly impacting total sales [32] - The company noted improvements in market conditions, particularly in the OEM vertical, which is expected to enhance performance in 2025 [17] Company Strategy and Development Direction - The company is focused on strategic acquisitions to broaden scale and geographic footprint, with five acquisitions completed in 2024 [12] - Investments in sales force and technology are aimed at enhancing customer engagement and long-term profitability [19][24] - The company is prioritizing high-growth opportunities in Southeast Asia and integrating recent acquisitions to drive future growth [14][35] Management's Comments on Operating Environment and Future Outlook - Management acknowledged persistent macro headwinds but expressed confidence in the company's positioning for record performance in 2025 as market conditions improve [17] - The company is optimistic about the recovery in end markets and expects to see sales and margins build quickly as conditions normalize [46] - Management highlighted the importance of adapting to new regulatory environments and potential impacts from government spending [72] Other Important Information - The company ended Q4 with approximately $473 million in net working capital and $335 million in liquidity [61] - Debt leverage at the end of Q4 was 3.5 times, with a targeted range of three to four times [62] - The company repurchased $2.6 million of stock during fiscal 2024 as part of its capital allocation strategy [64] Q&A Session Summary Question: Can you provide insights on quarter-to-date sales levels across DSG compared to Q4? - Management indicated that Lawson has started strong in Q1, with sales up compared to the previous year, while consolidated sales are relatively flat [84][86] Question: How have consolidated margins trended in Q1 versus Q4? - Margins are expected to improve as 2025 develops, particularly with the realization of synergies from recent acquisitions [88][89] Question: Was the fourth quarter organic revenue growth of 3.5% a positive surprise? - Management noted that the fourth quarter was firmer than expected, reflecting better performance in several verticals [98][100] Question: What is the outlook for Lawson's margins moving through 2025? - Management expects gradual improvement in margins as investments in the sales force begin to yield results, despite challenges from military sales [106][114]

Financial Data and Key Metrics Changes - The company reported revenue of $1.8 billion for fiscal year 2024, an increase of nearly 15% driven by strategic acquisitions [5][6] - Adjusted free cash flow grew to $175 million, reflecting strong operational performance [5] - Adjusted EBITDA for Q4 was $44.9 million, or 9.3% of sales, up 90 basis points year-over-year [27] Business Line Data and Key Metrics Changes - Lawson Products reported Q4 sales of $111.8 million, with organic sales down 10.9% due to lower military sales and rep counts [29] - Jexpro Services experienced a 27.4% revenue growth in Q4, primarily from organic expansion [32] - Test Equity Group's Q4 sales were $191.3 million, with adjusted EBITDA at 7.8% of sales, up from 6.2% a year ago [33] Market Data and Key Metrics Changes - The manufacturing PMI remained in contraction territory for most of 2024, impacting overall market conditions [7] - Military sales for Lawson were down over 50% in 2024, significantly affecting total sales [18] - Aerospace and defense markets showed sequential growth, contributing positively to Jexpro Services [20] Company Strategy and Development Direction - The company is focused on strategic acquisitions to broaden scale and geographic footprint, with five acquisitions completed in 2024 [7][8] - Investments in sales force and technology are aimed at enhancing customer engagement and long-term profitability [11][12] - The company aims to achieve double-digit EBITDA margins for the Canada branch through integration and synergy realization [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in record performance for 2025 as market conditions improve [10] - The company is navigating macroeconomic challenges while focusing on internal initiatives to enhance profitability [9] - There is cautious optimism regarding military orders, with expectations for gradual recovery [19][73] Other Important Information - The company ended Q4 with approximately $473 million in net working capital and $335 million in liquidity [34] - Debt leverage at the end of Q4 was 3.5 times, within the targeted range of three to four times [34] - The company repurchased $2.6 million of stock during fiscal 2024 as part of its capital allocation strategy [35] Q&A Session Summary Question: Can you share on quarter-to-date sales levels across DSG compared to the end of Q4? - Management indicated that Lawson has started strong in Q1, with sales up compared to the previous year and flattish on a consolidated basis [48][49] Question: How have consolidated margins trended in Q1 versus Q4? - Margins are expected to remain consistent with Q4, with expectations for improvement as synergies from acquisitions are realized [50][51] Question: Was the fourth quarter organic revenue growth of 3.5% a positive surprise? - Management noted that the fourth quarter was firmer than expected, particularly in Jexpro Services, which sustained momentum [58][59] Question: What is the margin trajectory for Lawson moving through 2025? - Management highlighted that while there will be some compression due to military sales and sales force ramp-up, they expect to see improved productivity and margin recovery over time [64][68]

Economic Indicators - DSG reported an average monthly Purchasing Managers Index (PMI) of 48.3 for the year ended December 31, 2024, compared to 47.1 in 2023 and 53.5 in 2022, indicating a slight contraction in the manufacturing sector[172]. - The average monthly PMI for 2024 indicates a slight improvement in economic conditions compared to 2023, which may influence future sales performance[172]. Revenue and Growth - Consolidated revenue for 2024 increased by $233.7 million to $1,804.1 million, primarily driven by $268.2 million from acquisitions, despite a decline in organic revenue of $34.5 million[202]. - Revenue for the year ended December 31, 2024, was $1,804,104, an increase of 14.8% from $1,570,402 in 2023[340]. - Lawson's revenue growth strategy focuses on increasing sales team productivity and expanding product offerings to existing customers while attracting new clients[174]. - The Canada Branch Division plans to grow revenue by increasing wallet share with existing customers and introducing new product lines in previously underserved geographic areas[181]. - Gexpro Services aims to increase revenue by expanding its customer base and leveraging recent acquisitions to enhance installation and aftermarket services[179]. Acquisitions - The company completed several acquisitions in 2024, including ConRes Test Equipment, Tech-Component Resources Pte Ltd, Source Atlantic Limited, S&S Automotive Inc., and Safety Supply Illinois LLC, to enhance its service offerings and market presence[164][166][167][168][169]. - TestEquity expanded its product offerings through the acquisition of HIS Company, Inc., which included adhesives, chemicals, and specialty materials, enhancing its competitive position in the market[177][187]. - The company acquired S&S Automotive Inc. and Source Atlantic Limited for a combined purchase price of approximately $183.2 million, net of cash acquired[325]. - The Canada Branch Division's revenue surged by $69.2 million, or 123.8%, to $125.1 million in 2024, primarily due to $70.3 million from the acquisition of Source Atlantic[223]. Financial Performance - Adjusted EBITDA for 2024 was $175.3 million, compared to $157.0 million in 2023, reflecting an increase of approximately 11.6%[195]. - Net income for 2024 was a loss of $7.3 million, an improvement from a loss of $8.97 million in 2023[201]. - Operating income for 2024 was $55.96 million, up from $42.99 million in 2023, indicating a growth of approximately 30%[201]. - The gross profit margin for 2024 was 34.0%, slightly down from 35.1% in 2023[201]. - Total cost of goods sold for 2024 was $1,190.3 million, representing 66.0% of total revenue, compared to 64.9% in 2023[201]. - Interest expense increased to $55.1 million in 2024 from $42.8 million in 2023, reflecting higher borrowing costs[201]. - Selling, general and administrative expenses were $557,820 in 2024, up from $508,884 in 2023, an increase of 9.6%[340]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $56.5 million for the year ended December 31, 2024, a decrease of $45.8 million from $102.3 million in 2023[294]. - Net cash used in investing activities was $229.7 million in 2024, primarily due to acquisitions and capital expenditures[295]. - The Company expects to spend approximately $20 million to $25 million for capital expenditures during 2025 to support ongoing operations[304]. Debt and Financing - DSG's debt amendment in August 2024 included a $200 million incremental term loan and a $55 million increase in the senior secured revolving credit facility, raising the total to $255 million[171]. - As of December 31, 2024, the Company had $739.9 million in outstanding borrowings under the Amended Credit Agreement and $253.0 million of borrowing availability remaining[301]. - A hypothetical increase/decrease in interest rates of 100 basis points would increase/decrease the Company's annual interest expense by approximately $7.4 million[315]. Segment Performance - Lawson segment revenue increased by $0.3 million, or 0.1%, to $469.0 million in 2024, driven by $39.8 million from acquisitions and $2.9 million from automotive sales, offset by a $42.4 million decline in core customer sales[205]. - TestEquity segment revenue increased by $129.4 million, or 20.2%, to $771.2 million in 2024, primarily due to $157.4 million from acquisitions, despite a $28.0 million decline in legacy revenue[211]. - Gexpro Services segment revenue increased by $35.0 million, or 8.6%, to $440.7 million in 2024, driven by increased sales in renewable energy, aerospace, and technology markets[217]. - Canada Branch Division revenue grew significantly to $125.1 million in 2024, up from $55.9 million in 2023[201]. Stock and Shareholder Actions - The Board of Directors increased the stock repurchase program by $25.0 million in December 2023, bringing the total authorized to $37.5 million[305]. - During 2024, the Company repurchased 85,644 shares of common stock at an average cost of $30.13 per share for a total cost of $2.6 million[306]. - The company completed a two-for-one stock split in August 2023, impacting the share data presented[338]. Tax and Other Income - Income tax expense for 2024 was $6.8 million, with an effective tax rate of (1,267.9)%, compared to $7.0 million and (346.8)% in 2023[231]. - Other income (expense), net changed by $2.6 million in 2024 compared to 2023, influenced by favorable interest income and foreign currency exchange rate changes[230]. Segment Realignment - The company realigned its reportable segments to four: Lawson, TestEquity, Gexpro Services, and Canada Branch Division, effective from Q3 2024[353]. - The Canada Branch Division now includes results from Bolt and Source Atlantic, acquired in Q3 2024[354].

Revenue Performance - Full year revenue increased by 14.9% to $1.80 billion, with organic revenue decreasing by 2.6% compared to 2023[7] - Fourth quarter revenue was $480.5 million, an increase of 18.6% year-over-year, including $61.0 million from acquisitions[7] - Revenue for Q4 2024 reached $480.5 million, a 18.6% increase from $405.2 million in Q4 2023[44] - For the year ended 2024, total revenue was $1.8 billion, a 14.8% increase from $1.57 billion in 2023[48] Profitability Metrics - Adjusted EBITDA for the full year grew to $175.3 million, or 9.7% of revenue, compared to $157.0 million, or 10.0% of revenue in the prior year[7] - Fourth quarter adjusted operating income was $37.3 million, compared to $28.0 million in the year-ago quarter[7] - Non-GAAP adjusted EBITDA for Q4 2024 was $44.9 million, up from $33.9 million in Q4 2023, representing a 32.5% increase[44] - Adjusted EBITDA for the year 2024 was $175.3 million, up from $157.0 million in 2023, reflecting an increase of 11.6%[48] Operating Income - Operating income for the full year increased by 30.2% to $56.0 million, net of $47.5 million in acquired intangible amortization[7] - Operating income for Q4 2024 was $20,067 thousand, compared to a loss of $289 thousand in Q4 2023[20] - The company reported an operating income of $56.0 million for the year 2024, compared to $43.0 million in 2023[48] - The operating income as a percentage of revenue for 2024 was 3.1%, compared to 2.7% in 2023[48] Net Income and Loss - Diluted loss per share for the year was $0.16, compared to $0.20 in the previous year, while non-GAAP adjusted diluted earnings per share was $1.44[7] - Net loss for the twelve months ended December 31, 2024, was $7,332 thousand, an improvement from a loss of $8,967 thousand in 2023[23] - The company reported a basic loss per share of $0.55 for Q4 2024, compared to a loss of $0.35 in Q4 2023[20] - For the three months ended December 31, 2024, the net loss was $25,925,000 compared to a net loss of $16,330,000 for the same period in 2023[31] Cash Flow and Liquidity - Cash generated from operations for the full year was $56.5 million, with $101.2 million excluding non-recurring acquisition-related costs[7] - The company expanded its credit facility by $255 million, ending the year with total liquidity of $334.7 million[7] - Cash and cash equivalents decreased to $66,479 thousand in 2024 from $83,931 thousand in 2023, a decline of 20.9%[18] Acquisitions and Strategic Initiatives - The company completed five strategic acquisitions in 2024, deploying approximately $216.0 million in capital[4] - Business acquisitions in 2024 totaled $199,423 thousand, compared to $259,835 thousand in 2023, indicating a decrease of 23.2%[23] - The company remains focused on long-term value creation through organic growth and strategic M&A in the industrial distribution sector[5] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[44] Balance Sheet Highlights - Total assets increased to $1,727,255 thousand in 2024 from $1,550,331 thousand in 2023, representing an increase of 11.4%[18] - Total liabilities rose to $1,086,712 thousand in 2024, up from $888,730 thousand in 2023, marking an increase of 22.3%[18] Other Financial Metrics - Interest expense for the twelve months ended December 31, 2024, was $55,145,000, compared to $42,774,000 in 2023, reflecting an increase of approximately 28.8%[31] - The company incurred $10,142,000 in acquisition-related costs for the twelve months ended December 31, 2024, down from $11,561,000 in 2023[37] - The company reported a total of $93,397,000 in pretax adjustments for the twelve months ended December 31, 2024, compared to $89,962,000 in 2023[37] - Stock-based compensation expenses for 2024 totaled $5.2 million, a decrease from $7.9 million in 2023[48]

Financial Data and Key Metrics Changes - The company reported record quarterly sales of $468 million, an increase of 6.6% compared to the previous year's third quarter, driven by $38.1 million from acquisitions [53][7] - Organic sales declined by 2.1% year-over-year but improved by 0.2% sequentially from the second to the third quarter [54][12] - Adjusted EBITDA for the quarter was $49.1 million, representing a 12.4% increase over the prior year and an adjusted EBITDA margin of 10.5%, up 50 basis points year-over-year [55][13] - GAAP diluted income per share was $0.46, compared to a loss per share of $0.30 in the year-ago quarter [57] Business Line Data and Key Metrics Changes - Lawson's sales were $118 million, with organic average daily sales down 10% due to lower sales rep counts and federal government ordering process changes [58][60] - The new Canada Branch segment, which includes Source Atlantic, generated $39.1 million in sales, with $24.7 million from the Source Atlantic acquisition [62] - Gexpro Services saw a 12.5% increase in average daily organic sales, driven by recovery in key end markets such as technology and renewables [64][44] - TestEquity Group reported sales of $195.2 million, with a decline in daily sales of 7.4% due to headwinds in the electronics assembly market [66] Market Data and Key Metrics Changes - The company noted a continued lackluster industrial backdrop but highlighted strong performance in renewables, technology, and aerospace and defense markets [7][44] - The aerospace and defense market has shown strong performance, with technology sales nearly doubling compared to the same quarter last year [88][87] - The company is optimistic about recovery in key OEM end markets and improving demand in Test & Measurement categories [77][78] Company Strategy and Development Direction - The company is focused on integrating acquisitions and enhancing customer intimacy while managing costs to improve operating leverage [17][19] - A disciplined capital allocation strategy is in place, with a robust pipeline of acquisition opportunities to drive long-term growth [82][19] - The company aims to expand its market potential through strategic acquisitions and by enhancing its sales force capabilities [80][81] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in certain end markets and the potential for improved sales and margins as macroeconomic pressures ease [78][79] - The company is preparing for potential choppiness in demand but is encouraged by early signs of recovery in key markets [77][78] - Management emphasized the importance of maintaining a disciplined approach to cost management and capital allocation to drive shareholder value [81][82] Other Important Information - The company ended the quarter with approximately $498 million in net working capital and $328 million in liquidity, including $76 million in cash [68] - The leverage ratio at the end of Q3 was 3.7 times, within the target range of 3 to 4 times [70] - The company has a trailing 12-month free cash flow conversion of approximately 90%, resulting in a return on invested capital (ROIC) of approximately 10% [71] Q&A Session Summary Question: Insights on Gexpro's revenue recovery - Management noted that end markets such as renewables and semiconductors are showing improvement, contributing to Gexpro's revenue growth [85][88] Question: Fourth quarter pacing and margin expectations - Sales levels are consistent with Q3, and management expects to maintain double-digit EBITDA margins despite fewer selling days [90][91] Question: New sales territories in Lawson - The majority of the 130 new sales territories are new markets where the company anticipates success, with a goal of increasing the sales rep count to 1,000 by mid-next year [92][96] Question: Path to improving return on invested capital - Management discussed the impact of acquisitions on ROIC and the expectation of improved returns as the company integrates these acquisitions and realizes synergies [104][106]

| --- | --- | --- | --- | |------------------|-------|-------|-------| | | | | | | | | | | | | | | | | NASDAQ: DSGR | | | | | Q3 2024 Financial Results | | | | | October 31, 2024 | | | | Safe Harbor Statement Cautionary Note Regarding Forward-Looking Statements This presentation contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the "safe-harbor" provisions under the Pr ...

分组1 - Distribution Solutions Group (DSGR) reported quarterly earnings of $0.37 per share, missing the Zacks Consensus Estimate of $0.40 per share, but showing an increase from $0.17 per share a year ago, resulting in an earnings surprise of -7.50% [1] - The company posted revenues of $468.02 million for the quarter ended September 2024, which was 0.38% below the Zacks Consensus Estimate and an increase from $438.91 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped revenue estimates just once [2] 分组2 - Distribution Solutions shares have increased approximately 27.5% since the beginning of the year, outperforming the S&P 500's gain of 21.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.33 on revenues of $465.2 million, and for the current fiscal year, it is $1.43 on revenues of $1.79 billion [7] - The Zacks Industry Rank indicates that the Technology Services sector is in the top 23% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this industry [8]