Night Watch Investment Management, an investment management firm, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. Despite experiencing high volatility in individual stocks during Q4, the fund finished the quarter approximately flat. Overall, the firm is pleased with how 2025 unfolded. Like 2024, the results were broad-based and did not rely on any single security.  In addition, please check the fund’s top five holdings to know its best picks in 2025. In its ...

Ashi Sae Yang/iStock via Getty Images Performance During the fourth quarter of 2025, Night Watch Investment Management LP depreciated by -1.80% net of fees. 2025 performance ended at 23.61%. Despite high single stock volatility in Q4, we ended the quarter roughly flat. Overall, we are very happy with how 2025 transpired. Similar to 2024, our performance was broad-based and not dependent on one or two securities. Notable Positions Haypp (HAYPP) was our top performer of the year. Haypp is the largest e-co ...

Company Overview and Strategy - TopBuild has a market capitalization of approximately $12.5 billion and operates over 450 branches [21] - The company's sales breakdown is 56% from Installation Services and 44% from Specialty Distribution [21] - TopBuild's strategy focuses on operational excellence, talent development, technology leverage, and strategic M&A [24] - Since 2022, TopBuild has expanded its total addressable market by approximately 6x to over $90 billion [26] Financial Performance and Outlook - TopBuild's 2025 proforma TTM sales for Installation Services are $3.527 billion, with an adjusted EBITDA of $761.552 million [314] - Specialty Distribution's 2025 proforma TTM sales are $3.101 billion, with an adjusted EBITDA of $485.763 million [314] - The company is committed to delivering $35 million to $40 million in synergies from the SPI acquisition over the next two years [181] - TopBuild anticipates 2030 sales of $9 billion to $10 billion, with a cumulative free cash flow between 2026 and 2030 of $4.2 billion to $5.0 billion [302] M&A Activity - Since 2022, TopBuild has completed 24 acquisitions, contributing over $1.5 billion in revenue [33] - The company has deployed $2.2 billion in capital for M&A since 2022 [33] - M&A remains TopBuild's number one capital allocation priority [286]

Core Points - Core & Main, Inc. reported a net sales increase of $24 million, or 1.2%, to $2,062 million for the third quarter ended November 2, 2025, compared to $2,038 million for the same period in the previous year, primarily driven by acquisitions [7][9] - The company achieved a gross profit increase of $18 million, or 3.3%, to $561 million, with a gross profit margin of 27.2% compared to 26.6% in the prior year [8][9] - Net income rose by $3 million, or 2.1%, to $143 million, while diluted earnings per share increased by 4.3% to $0.72 [12][13] Financial Performance - Net sales for the nine months ended November 2, 2025, increased by $323 million, or 5.6%, to $6,066 million, attributed to higher volumes and acquisitions [16] - Gross profit for the nine months increased by $102 million, or 6.7%, to $1,631 million, with a gross profit margin of 26.9% [17] - Selling, general and administrative (SG&A) expenses for the nine months rose by $91 million, or 11.4%, to $890 million, with SG&A as a percentage of net sales at 14.7% [18] Operational Highlights - The company opened new locations in Houston, Texas, and Denver, Colorado, which are priority markets with attractive growth profiles [4][9] - Core & Main completed the acquisition of Canada Waterworks on September 30, 2025, enhancing its market position [9] - The company implemented $30 million of annualized cost savings while continuing to invest in growth initiatives [5] Cash Flow and Debt Management - Net cash provided by operating activities was $382 million for the nine months ended November 2, 2025, compared to $386 million for the same period in the previous year [24] - As of November 2, 2025, net debt decreased to $2,083 million from $2,420 million as of October 27, 2024, primarily due to lower borrowings on the senior asset-based revolving credit facility [25][49] - The company had no outstanding borrowings on its Senior ABL Credit Facility as of November 2, 2025, allowing for significant borrowing capacity [26] Future Outlook - Core & Main reaffirms its full-year fiscal 2025 outlook, projecting net sales of $7,600 to $7,700 million and adjusted EBITDA of $920 to $940 million [28]

Summary of Distribution Solutions Group (DSGR) FY Conference Call Company Overview - **Company**: Distribution Solutions Group (NasdaqGS: DSGR) - **Date**: November 18, 2025 - **Key Management**: CFO Ron Knutson, VP of Strategy and Investor Relations Brett Scarbrough Industry and Business Segments - **Industry**: Specialty distribution - **Business Segments**: 1. **Lawson Products**: - 73-year-old vendor-managed inventory provider for Class C MRO market - Average piece price of $1.20, with gross margins exceeding 60% [6][7] - Serves approximately 80,000 customers, primarily in maintenance, repair, and operations [26] 2. **Gexpro Services**: - OEM provider of Class C parts, contributing about 25% of DSGR's revenue (~$500 million) [10] - Focuses on supply chain solutions for production environments, handling items like rivets and screws [8][9] 3. **TestEquity Group**: - Comprises electronic production supplies and test and measurement equipment, making up about 40% of DSGR's revenue [11] - Recently doubled in size due to the acquisition of Hisco [11] Financial Performance - **Revenue Growth**: - Consolidated revenues increased from approximately $900 million to a TTM of about $2 billion [22] - EBITDA improved from about $90 million (8% margin) to a run rate of close to $200 million (9-10% margin) [22] - **Organic Growth**: - Recent quarters showed organic growth rates ranging from 2.5% to 6% despite a sluggish industrial backdrop [24][26] Ownership Structure - **Majority Owner**: Luther King Capital Management (LKCM) owns about 78% of DSGR [14] - **Investment Strategy**: Focus on specialty distribution businesses that provide services and technical sales, avoiding commoditized markets [15][16] M&A Strategy - **Acquisitions**: - Nine acquisitions made, deploying about $550 million in capital [56] - Comfortable leverage ratio of approximately 3.5 times, with a $1.1 billion credit facility available [56][57] - **Future Plans**: M&A remains a key growth strategy, with a dedicated team for sourcing acquisitions [18] Market Conditions and Outlook - **Demand Environment**: - Characterized as sluggish, with some positive trends in unit volumes for Lawson and Gexpro Services [26][27] - Cautious outlook for 2026, with ongoing initiatives across all verticals [28] - **Tariffs**: - DSGR has managed tariff impacts effectively, with 6% of products directly imported [30][32] Technology and Innovation - **Artificial Intelligence**: - Early stages of AI deployment, with initiatives in accounts receivable collection and sales processes [34] Segment-Specific Insights - **Lawson Products**: - Focus on increasing sales rep productivity and optimizing sales processes [36][37] - **Gexpro Services**: - Strong performance in industrial power and aerospace markets, with ongoing investments in Southeast Asia [52][53] - **TestEquity Group**: - New leadership focused on enhancing go-to-market strategies and improving e-commerce conversion rates [49][50] Capital Allocation - **Share Repurchase Program**: - Recently authorized an additional $30 million for share repurchases, viewed as a return to shareholders [58][59] Key Market Segments - **Revenue Distribution**: - Industrial (15%), Auto and Transportation (13%), Aerospace and Defense (10%), Renewable Energy (8%), Government and Military (4%), Electronic Assembly (20%) [60] This summary encapsulates the key points discussed during the conference call, providing insights into the company's structure, performance, market conditions, and strategic initiatives.

Summary of Distribution Solutions Group (DSG) FY Conference Call Company Overview - **Company Name**: Distribution Solutions Group (DSGR) - **Industry**: Specialty Distribution - **Market Capitalization**: Approximately $2 billion, up from less than $1 billion three years ago [3][2] - **EBITDA**: Currently around $190 million, increased from approximately $90 million at the time of the merger [3][2] Core Business Segments 1. **Lawson Products** - Established 73 years ago with about 1,000 sales representatives [4][2] - Focuses on Class C and MRO (Maintenance, Repair, and Operations) products, managing vendor inventory for over 80,000 customers [4][2] - Gross margins near 70% before sales costs [7][2] 2. **Gexpro Services** - A leading OEM provider, with 70% of products customized to client specifications [4][2] - Manages the supply chain for Class C items, which are low-cost but high-volume components [5][2] - Operates with margins of 13%-14% [22][2] 3. **TestEquity Group** - Comprises about 40% of DSG's revenue, focusing on electronic production supplies and test measurement equipment [5][2][23][2] - Recently appointed a new CEO to revamp the go-to-market strategy [23][2] Financial Performance - **Organic Growth**: Achieved 6% organic growth year-over-year [28][2] - **Recent Acquisitions**: Made five acquisitions in 2024, three of which were on the Lawson side [21][2] - **Cash Flow**: Generated cash flow from operating activities of $38 million in Q3 and $33 million in Q2 [27][2] - **Capital Allocation**: Deployed approximately $550 million in capital for acquisitions since the formation of DSG [26][2] Strategic Initiatives - **M&A Strategy**: DSG has a dedicated M&A team supported by Luther King Capital Management (LKCM), which owns 78% of DSG shares [10][2][25][2] - **Customer Retention**: High revenue retention rates, particularly in Gexpro Services, with minimal customer churn [11][2][17][2] - **Diversification**: Serves over 200,000 customers across various end markets, with no single market exceeding 20% of total sales [12][2][17][2] Competitive Advantages - **Asset-Light Model**: CapEx is about 1% of sales, allowing for significant free cash flow generation [12][2] - **Strong Supplier Relationships**: Maintains a diverse supplier base with minimal concentration risk [13][2] - **Integrated Sales Approach**: Sales teams incentivized to cross-sell services among the three verticals, enhancing customer relationships [31][2][32][2] Challenges and Considerations - **Internal Competition**: There exists a competitive nature among the three verticals for capital allocation, but this is viewed positively as it drives performance [36][2][37][2] - **Market Adaptability**: The company has shown resilience through various business cycles, adjusting resources as needed across different end markets [22][2][12][2] Conclusion Distribution Solutions Group is positioned strongly within the specialty distribution industry, demonstrating significant growth, a robust M&A strategy, and a commitment to customer service and operational efficiency. The company’s diversified approach across its three verticals provides a solid foundation for continued success and resilience in fluctuating market conditions.

Powerful Solutions. Proven Results. NASDAQ: DSGR Baird Global Industrial Conference November 13, 2025 Disclaimers 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 ...

Company Overview - Ferguson is the largest scaled specialty distributor for North American plumbing, HVAC, and waterworks [2] - The company's revenue is approximately split 51% residential and 49% non-residential [2] Revenue Breakdown - About 60% of Ferguson's revenue comes from repair and replace (R&R) activities, while 40% is generated from new housing builds [2] - The distribution of revenue indicates a balanced approach between residential and non-residential sectors, highlighting the company's diverse market presence [2]

Summary of Distribution Solutions Group (DSGR) Conference Call Company Overview - **Company**: Distribution Solutions Group (DSGR) - **Industry**: Specialty distribution for maintenance, repair, operating (MRO), OEM, and industrial technologies - **Revenue**: Approximately $2 billion - **Free Cash Flow**: About $175 million - **Adjusted EBITDA Margin**: Ranges from 9% to 10% [4][41] Core Business Verticals 1. **Lawson Products**: Focused on MRO, servicing around 80,000 customers with class C fasteners and consumable items [4][25] 2. **Jexpro Services**: OEM-focused distributor serving about 2,000 customers, providing high-value services [4][27] 3. **Test Equity Group**: Accounts for about 40% of DSG's revenue, servicing the industrial technology space with test and measurement equipment [4][24] Key Points and Arguments - **High Touch Distribution**: DSG emphasizes its role as a high-touch, value-added distributor, providing not just products but also expert technical support and just-in-time delivery [5][6] - **Market Diversification**: DSG services over 200,000 customers and works with more than 10,000 suppliers, ensuring no single customer accounts for more than 3% of sales [20][19] - **Acquisition Strategy**: DSG has completed nine acquisitions in the last three and a half years, deploying about $550 million in capital [8][33] - **Revenue Growth**: Total revenues increased by over 14% year-over-year, with 3.3% attributed to organic growth, particularly from Jexpro Services [35] - **Customer Retention**: DSG boasts a revenue retention rate of approximately 92%, indicating strong customer loyalty [19] Financial Performance - **EBITDA Growth**: The company has seen EBITDA margins improve from less than 8% pre-DSG to around 10% currently, with a target of reaching 13.5% [20][41] - **Cash Flow Generation**: DSG operates with an asset-light model, with only about 1% of revenues allocated to capital expenditures, allowing for significant free cash flow generation [13][31] - **Share Buybacks**: DSG has repurchased approximately $20 million in shares in the first half of the year, indicating a commitment to returning capital to shareholders [31][38] Market Position and Future Outlook - **Onshoring Trend**: DSG is well-positioned to benefit from the trend of onshoring and near-shoring manufacturing back to the U.S. [22] - **Labor Challenges**: The company provides skilled sales support to help customers address labor shortages, enhancing its value proposition [22][23] - **Technological Advancements**: The Test Equity Group is positioned to capitalize on advancements in technology, particularly in IoT and electronic production [24] Additional Insights - **Vendor Managed Inventory (VMI)**: DSG employs VMI strategies, placing bins and cabinets at customer locations to streamline inventory management [14][15] - **Competitive Moat**: The extensive service offerings and technical expertise create a competitive advantage, making DSG a preferred partner for many customers [12][10] - **Vertical-Specific Strategies**: Each vertical operates with distinct sales strategies and customer bases, ensuring tailored approaches to market demands [18][19] This summary encapsulates the key points discussed during the conference call, highlighting the strengths, strategies, and financial performance of Distribution Solutions Group.

Company Overview - DSG is a leading specialty industrial distribution platform with a focus on MRO, OEM, and Industrial Technologies [12] - The company's TTM Adjusted Revenue as of June 30, 2025, was $1.96 billion [13] - Adjusted EBITDA margin was approximately 9.6% [13] - The company has over 200,000 customers and offers over 740,000 unique SKUs [13] Financial Performance - Q2 2025 revenue reached $502 million, a $63 million or 14.3% increase year-over-year, with organic average sales growing 3.3% [51] - Q2 2025 adjusted EBITDA was $48.6 million, representing 9.7% of sales [51] - The company has authorized a $37.5 million share repurchase program, with $20 million repurchased YTD 2025 and $6.3 million still available under prior authorizations [53] Strategic Focus - The company has a dual-pronged growth strategy, focusing on end markets with long-term strong tailwinds and strategic acquisitions [23] - Since 2022, DSG has completed 11 strategic acquisitions with purchase price range from 4.6x – 9.4x (weighted 8.3x) [23] - The company serves a broad and diverse set of end markets, catering to over 200,000 customers [24]