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].
DSG(DSGR) - 2024 Q4 - Annual Report