Financial Data and Key Metrics Changes - The company reported first quarter revenue of $478 million, an increase of 14.9% compared to the same quarter last year, with $51 million attributed to acquisitions and organic average daily sales growth of 4.3% [10][31] - Adjusted EBITDA for the first quarter grew to nearly $43 million, an increase of 18.6% year-over-year, with an EBITDA margin of 9%, up 30 basis points from the previous year [12][31] - GAAP net income per diluted share was $0.07 for the quarter, compared to a net loss of $0.11 a year ago, while adjusted EPS was $0.31, up from $0.25 in the prior year [33] Business Line Data and Key Metrics Changes - Lawson Products reported Q1 sales of $120.5 million, with organic average daily sales down 6.8% primarily due to military sales and sales force transformation efforts [33] - Gexpro Services achieved first quarter revenue of $118.9 million, up over 20% year-over-year, with adjusted EBITDA of $15 million or 12.6% of sales [36] - Test Equity Group's first quarter sales were $188.8 million, with adjusted EBITDA of $12.8 million or 6.8% of sales, reflecting a slight increase from the previous year [38] Market Data and Key Metrics Changes - The Canadian segment reported first quarter sales of $50.5 million, with organic sales increasing 5.3%, but overall performance was impacted by market disruptions and seasonality [35][20] - The aerospace and defense, renewables, and technology sectors showed strong growth, contributing to the momentum in JetPro Services, while the industrial power and consumer segments experienced softer sales [23] Company Strategy and Development Direction - The company is focused on enhancing its sourcing capabilities and expanding its value-added services to navigate the current trade policy environment and improve customer engagement [5][8] - The management team is committed to maximizing long-term value through disciplined capital allocation, including share repurchases and strategic acquisitions [39][44] - The company aims to double EBITDA over the next three years while improving current EBITDA margins through operational efficiencies and integration of recent acquisitions [15][41] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the long-term positioning of the company amidst current trade policy uncertainties, emphasizing the importance of flexibility in sourcing and customer relationships [5][9] - The company anticipates that the current market noise will stabilize, allowing for better sourcing strategies and improved profitability [6][10] - Management highlighted the importance of ongoing investments in sales force transformation and customer-centric initiatives to drive future growth [18][62] Other Important Information - The company repurchased $11.2 million of stock in the first quarter, with over $15 million remaining under prior authorization [9][40] - The company expects net capital expenditures for the full year 2025 to be in the range of $20 million to $25 million, approximately 1% of revenues [40] Q&A Session Summary Question: Daily sales trends and April pacing - Management noted that April sales trends are relatively flat compared to Q1, with no major movements observed [52][54] Question: Military sales and sales force rebuild - Military sales remain flat, and the sales force transformation is ongoing, with a focus on increasing productivity and expanding the number of sales reps [60][62] Question: M&A pipeline and market opportunities - The current environment is expected to create more M&A opportunities, with a robust pipeline but a measured approach to new acquisitions [71][75] Question: Potential reshoring and onshoring of manufacturing - Management believes there are long-term opportunities arising from current market conditions, with a focus on enhancing sourcing capabilities [77][79] Question: Path to achieving 20% returns on invested capital - The company aims to improve the numerator through better margins from acquisitions while managing working capital effectively [88]
DSG(DSGR) - 2025 Q1 - Earnings Call Transcript