Financial Data and Key Metrics Changes - Consolidated sales grew by 7.1% for the quarter, with average daily sales increasing by 5.4% [7][27] - Adjusted EBITDA was $10.3 million for the quarter, representing a 40.9% increase year-over-year [26][37] - Diluted earnings per share were $0.51, compared to a loss of $0.09 in the same quarter of 2018 [28][37] - Cash flows from operations were $10.3 million, resulting in a net cash position of $6.4 million [29][38] Business Line Data and Key Metrics Changes - MRO segment sales increased by 3.7%, while Bolt Supply saw a 15% increase in sales [7][30] - Government business sales rose by 27% compared to Q3 2018, following a 38% increase in Q2 [12] - Strategic accounts sales grew by 7.6% for the quarter [32] Market Data and Key Metrics Changes - Average daily sales for Lawson's organic segment in the U.S. were up 5.7%, while Canadian average daily sales (excluding Bolt Supply) increased by 5.4% in local currency [31] - The overall gross margin for the quarter was reported at 53.4%, with the organic Lawson MRO gross margin at 60.9% [27][33] Company Strategy and Development Direction - The company continues to focus on a three-part growth strategy: expanding the sales team, increasing productivity, and pursuing acquisitions [19][20] - A new $100 million multibank credit facility was announced to support acquisition opportunities and organic growth initiatives [24][20] - The company is well-positioned to drive growth through its value proposition and commitment to continuous improvement [21][22] Management's Comments on Operating Environment and Future Outlook - The management noted a slowing industrial economy but remains confident in the company's ability to drive growth through internal initiatives [22][62] - The company expects to maintain its previously communicated range of 25% to 30% MRO operating leverage for 2019 [21][40] - Management emphasized the increasing value of their services to customers, particularly in light of labor shortages [65][66] Other Important Information - The company integrated Screw Products into its McCook distribution center, enhancing its service offerings [18][52] - Selling, general, and administrative expenses decreased to $44.1 million, primarily due to lower stock-based compensation [35] Q&A Session Summary Question: Why has the company been able to outperform the 25% to 30% operating leverage target? - Management attributed the performance to a combination of sales growth, margin management, and prudent cost management [44] Question: When might the company consider raising its margin goals? - Management indicated that the 10% EBITDA margin is a milestone, not a destination, and they aim to drive it higher [46][47] Question: What are the growth prospects for the Screw Products business? - Management sees potential for growth through value-added services and integration into existing operations [49][52] Question: What does the acquisition pipeline look like? - The company is looking at larger acquisitions and feels confident in its ability to integrate them successfully [55][56] Question: How is the company responding to the slowing industrial economy? - Management believes internal initiatives will help mitigate the impact of economic slowdowns [62][63]
DSG(DSGR) - 2019 Q3 - Earnings Call Transcript