Core Insights - Distribution Solutions Group (DSGR) reported Q2 2025 earnings with GAAP revenue of $502.4 million, exceeding the consensus estimate of $484.4 million, reflecting a 14.3% year-over-year increase [1][2] - Adjusted EPS was $0.35, surpassing forecasts, while GAAP EPS was $0.11, missing expectations by $0.10 [1][2] - The company is focusing on integrating recent acquisitions to drive sales growth, but profit margins are under pressure due to these integrations, particularly in Canada [1][5] Financial Performance - GAAP revenue for Q2 2025 was $502.4 million, a 14.3% increase from $439.5 million in Q2 2024 [2] - Adjusted operating income rose to $39.9 million, a 2.6% increase year-over-year [2] - Adjusted EBITDA increased by 7.5% year-over-year to $48.6 million, although margins declined slightly due to acquisition integration [2][5] Business Strategy - DSG has executed an aggressive acquisition strategy, completing five acquisitions in 2024, including Source Atlantic Limited and ConRes Test Equipment [4] - The company aims to leverage operational synergies and improve efficiency through effective integration of these new businesses [4][5] - Management is focused on achieving a target 10% adjusted EBITDA margin in the Canada division, with significant progress expected by 2026 [7][11] Segment Performance - Lawson Products saw a 2.6% sales increase with improved margins, while TestEquity experienced a 1.2% revenue decline compared to Q2 2024 [8] - The Canada Branch segment, now including Source Atlantic, reported GAAP revenue of $55.9 million in Q2 2025, significantly up from $14.5 million in Q2 2024, but faced margin pressures with an adjusted EBITDA margin of 6.5% [8] Market Outlook - DSG management expressed cautious optimism for the remainder of the year, citing macroeconomic uncertainties, particularly regarding tariffs and the Canadian market [10] - The company maintains significant liquidity of $314.4 million and a net leverage ratio of 3.5x, indicating potential for further acquisitions [11]