Financial Data and Key Metrics Changes - The company reported consolidated sales of $321 million, representing a 139% increase on a GAAP basis due to the inclusion of Lawson Products [37] - Organic sales growth was nearly 12%, with a like-for-like increase of approximately 34% or $80.6 million over the second quarter of 2021 [38] - Adjusted EBITDA improved by $11.7 million to $31.7 million, translating to 9.9% of sales [40] Business Line Data and Key Metrics Changes - Lawson Products generated sales of $107.3 million, with organic sales growth of 13.1% compared to the second quarter of 2021 [43] - Gexpro Services reported total sales of $99.8 million, with organic sales growth of 6% [48] - TestEquity's sales grew by over 44%, with organic sales increasing by 10.6% in both the Test & Measurement and Electronic Production Supplies businesses [52] Market Data and Key Metrics Changes - The company experienced strong demand across all operating segments, with increasing customer backlog in TestEquity indicating robust market conditions [36][64] - Gexpro Services maintained gross margin percentage despite inflationary pressures, indicating effective management of supply chain costs [50] Company Strategy and Development Direction - The company continues to focus on an acquisition strategy, having closed four acquisitions in 2022 that are expected to generate annual revenues of over $180 million [15][16] - Management emphasized the importance of cross-selling opportunities among the operating companies to enhance service offerings and customer value [60][61] Management's Comments on Operating Environment and Future Outlook - Management noted no significant slowdown in unit volume shipped, indicating strong customer demand despite economic uncertainties [63][64] - The company remains confident in achieving adjusted EBITDA margins above 10% by the end of 2022, driven by revenue synergies and cost management [70][71] Other Important Information - The company ended the quarter with $17.9 million in cash and $406 million in outstanding debt, maintaining a net debt leverage ratio of 3.6 times [41] - Management highlighted the successful integration of acquisitions and the ongoing evaluation of new acquisition opportunities [17][18] Q&A Session Summary Question: What progress has been made on cross-selling among operating companies? - Management indicated that customers are receptive to expanded service capabilities, leading to quick conversions and enhanced value propositions [60][61] Question: Is there any indication of economic slowdown impacting the business? - Management reported no signs of slowdown in unit volume shipped and noted strong customer demand reflected in increasing backlogs [63][64] Question: How are price increases being managed across segments? - All three companies have successfully passed along price increases to offset supplier cost increases, with approximately 7% of the 12% organic growth attributed to price [65][66] Question: What factors are driving adjusted EBITDA margin expansion? - Management cited strong demand, effective cost management, and revenue synergies as key drivers of margin expansion [67][70] Question: What is the status of the acquisition pipeline? - The acquisition pipeline remains robust, with ongoing activity across all three platforms and targeted multiples of 7 to 8 times [73][75] Question: What are the order trends and seasonality expectations? - Management expects the second and third quarters to be stronger due to more selling days, with consistent trends observed early in the third quarter [85][86] Question: How is cash flow generation expected to normalize? - Management anticipates cash flow generation to return to normalized levels in the latter half of the year, following initial merger-related costs [95][96]
DSG(DSGR) - 2022 Q2 - Earnings Call Transcript