Financial Data and Key Metrics Changes - The company reported revenue of $1.8 billion for fiscal year 2024, an increase of nearly 15% driven by strategic acquisitions [5][6] - Adjusted free cash flow grew to $175 million, reflecting strong operational performance [5] - Adjusted EBITDA for Q4 was $44.9 million, or 9.3% of sales, up 90 basis points year-over-year [27] Business Line Data and Key Metrics Changes - Lawson Products reported Q4 sales of $111.8 million, with organic sales down 10.9% due to lower military sales and rep counts [29] - Jexpro Services experienced a 27.4% revenue growth in Q4, primarily from organic expansion [32] - Test Equity Group's Q4 sales were $191.3 million, with adjusted EBITDA at 7.8% of sales, up from 6.2% a year ago [33] Market Data and Key Metrics Changes - The manufacturing PMI remained in contraction territory for most of 2024, impacting overall market conditions [7] - Military sales for Lawson were down over 50% in 2024, significantly affecting total sales [18] - Aerospace and defense markets showed sequential growth, contributing positively to Jexpro Services [20] Company Strategy and Development Direction - The company is focused on strategic acquisitions to broaden scale and geographic footprint, with five acquisitions completed in 2024 [7][8] - Investments in sales force and technology are aimed at enhancing customer engagement and long-term profitability [11][12] - The company aims to achieve double-digit EBITDA margins for the Canada branch through integration and synergy realization [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in record performance for 2025 as market conditions improve [10] - The company is navigating macroeconomic challenges while focusing on internal initiatives to enhance profitability [9] - There is cautious optimism regarding military orders, with expectations for gradual recovery [19][73] Other Important Information - The company ended Q4 with approximately $473 million in net working capital and $335 million in liquidity [34] - Debt leverage at the end of Q4 was 3.5 times, within the targeted range of three to four times [34] - The company repurchased $2.6 million of stock during fiscal 2024 as part of its capital allocation strategy [35] Q&A Session Summary Question: Can you share on quarter-to-date sales levels across DSG compared to the end of Q4? - Management indicated that Lawson has started strong in Q1, with sales up compared to the previous year and flattish on a consolidated basis [48][49] Question: How have consolidated margins trended in Q1 versus Q4? - Margins are expected to remain consistent with Q4, with expectations for improvement as synergies from acquisitions are realized [50][51] Question: Was the fourth quarter organic revenue growth of 3.5% a positive surprise? - Management noted that the fourth quarter was firmer than expected, particularly in Jexpro Services, which sustained momentum [58][59] Question: What is the margin trajectory for Lawson moving through 2025? - Management highlighted that while there will be some compression due to military sales and sales force ramp-up, they expect to see improved productivity and margin recovery over time [64][68]
DSG(DSGR) - 2024 Q4 - Earnings Call Transcript