Financial Data and Key Metrics Changes - Lawson Products reported consolidated sales of $102.1 million for Q4 2021, an increase of $4 million compared to the previous year, despite having one less selling day [21] - Average daily sales grew by 5.7% year-over-year for Q4 and 19.7% for the full year 2021 compared to 2020 [6][21] - Adjusted EBITDA margin for Q4 was 8.3%, and for the full year, it was 8.6% [6][38] - Consolidated gross margin percentage was 52.9% for Q4, slightly down from 53.1% in the previous year [22][26] Business Line Data and Key Metrics Changes - MRO sales rep productivity improved by 8.6% year-over-year [22] - Historical loss in MRO business saw average daily sales increase by 9.6% over Q4 2020, while Bolt Supply increased nearly 27% [26] - Partsmaster sales were impacted by a slowdown in military procurement, but military activity is expected to rebound in early 2022 [11] Market Data and Key Metrics Changes - Strategic accounts growth was down 2.4% sequentially for Q4 but up 9.7% compared to Q4 2020 [13] - Non-oil and gas customers represent 93% of the total strategic account customer base, with significant growth in industrial customers [13] - Government civilian segment sales were down due to lower PPE sales compared to 2020, but growth is anticipated from new contracts [16] Company Strategy and Development Direction - The company is focusing on organic growth initiatives, including investments in people and processes, particularly in the SLED markets [8] - The integration of Partsmaster is complete, and both Partsmaster and Bolt Supply have performed well, reinforcing confidence in future acquisitions [12] - The company is adapting to supply chain challenges and inflation by implementing price increases and managing costs effectively [9][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory in 2022, citing improvements in customer backorders and operational efficiency [18][63] - The company is confident in its ability to manage through supply chain disruptions and inflation, with a focus on maintaining customer relationships [24][66] - Early signs of customer demand in 2022 are positive, with mid-to-high single-digit increases in average daily sales compared to the previous year [71] Other Important Information - The company plans to invest $10 million to $12 million in capital expenditures in 2022, focusing on expanding distribution capabilities [34] - The company ended Q4 with $91.3 million in liquidity, positioning it well for future investments and acquisitions [36] Q&A Session Summary Question: Insights on labor shortages impacting organic growth - Management noted an increase in new customer inquiries due to labor shortages, with revenue retention slightly improving to just under 91% [44][46] Question: Size of investments in growth initiatives - Investments in growth initiatives for Q4 were approximately $300,000 to $400,000, with expectations for continued investment in early 2022 [53][56] Question: Outlook for standalone business growth - Management refrained from providing formal guidance but indicated positive trends in early 2022 sales [76][79] Question: Inventory build outlook - Management is comfortable with current inventory levels and does not anticipate significant increases in 2022 [81][83] Question: Activity in oil and gas accounts - Management acknowledged some volatility in oil and gas accounts but emphasized strong relationships with loyal customers [90][92] Question: Gross margin outlook for 2022 - Management expects stable gross margins, with ongoing cost increases being offset by price increases [94][96]
DSG(DSGR) - 2021 Q4 - Earnings Call Transcript