Financial Data and Key Metrics Changes - Total sales grew 46% to $347.2 million, with organic growth of 15% and acquired revenue contributing 31% [10][34] - Adjusted EBITDA for the quarter was nearly $35 million, achieving a 10% margin [10][37] - Diluted earnings per share increased to $0.84, with adjusted diluted EPS at $0.64 compared to $0.25 a year ago [37] Business Line Data and Key Metrics Changes - Lawson Products reported sales of $109.4 million, with organic growth of 16.8% driven by strong performance in strategic accounts [41] - Gexpro Services achieved total sales of $103.7 million, with organic growth of nearly 14% [44] - TestEquity's sales grew by $48.9 million, representing a 72% increase, with organic growth of 16.9% [47] Market Data and Key Metrics Changes - Demand remained strong across most verticals, with the exception of renewables, which faced headwinds [60][61] - Five of the six vertical markets experienced double-digit growth, particularly in aerospace, defense, and consumer industrial sectors [61] - The company noted a steady demand environment, with no significant signs of softness in customer orders [64] Company Strategy and Development Direction - The company is focused on enhancing its specialty distribution network and driving significant free cash flow [23] - A robust acquisition pipeline is in place, with ongoing evaluations of tuck-in acquisitions to support growth [25][79] - The management team emphasizes disciplined capital allocation and prioritizes internal growth initiatives alongside potential acquisitions [76][81] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic outlook for 2023 but noted strong current demand [14][60] - The company is prepared to manage through economic cycles, leveraging past experiences during downturns [15][93] - There is confidence in the ability to generate cash flow and manage working capital effectively, even in softer economic conditions [20][93] Other Important Information - The share repurchase program has been expanded to return capital to shareholders when appropriate [22] - The company has invested significantly in working capital to support growth and align its business operations [17][50] Q&A Session Summary Question: Demand side observations and backlog visibility for 2023 - Management noted consistent activity levels and no significant delays in customer orders, with a focus on MRO and OEM markets [60][64] Question: Pricing actions and their impact on organic growth - Price increases contributed significantly to organic growth across all segments, with specific percentages provided for each business line [70][71] Question: M&A strategy in light of macroeconomic uncertainty - The company remains cautious about aggressive acquisitions but is actively pursuing attractive tuck-in opportunities that align with long-term goals [75][79] Question: New channels to market for Lawson Products - Lawson is exploring diverse channels to better serve its customer base and enhance sales team efficiency [83][85] Question: Impact of higher compensation and healthcare costs - Increased compensation was aligned with organic growth, while healthcare costs had a notable impact on margins [87]
DSG(DSGR) - 2022 Q3 - Earnings Call Transcript