Distribution Solutions Group Announces 2025 First Quarter Results

First Quarter Revenues Up 14.9%, Consolidated Organic Average Daily Sales Up 4.3%

FORT WORTH, Texas--(BUSINESS WIRE)--May 01, 2025-- 

Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or the "Company"), a premier specialty distribution company, today announced consolidated results for the first quarter ended March 31, 2025. This press release is supplemented by an earnings presentation at https://investor.distributionsolutionsgroup.com/news/events.

The following represents a summary of certain operating results (unaudited). See the reconciliations of GAAP to non-GAAP measures in Tables 2, 3 and 4.

 
                                                Three Months Ended 
                         ---------------------------------------------------------------- 
                                       March 31,                       December 31, 
                         --------------------------------------  ------------------------ 
(Dollars in thousands)     2025          2024         % Change     2024         % Change 
                          -------       -------      ----------   -------      ---------- 
Revenue                  $478,029      $416,086       14.9%      $480,463       (0.5)% 
 
Operating income         $ 20,097      $  2,783        N/M       $ 20,067        0.1% 
Non-GAAP adjusted 
 operating income        $ 34,392      $ 29,761       15.6%      $ 37,293       (7.8)% 
 
Non-GAAP adjusted 
 EBITDA                  $ 42,786      $ 36,067       18.6%      $ 44,899       (4.7)% 
 
Operating income (loss) 
 as a percent of 
 revenue                      4.2%          0.7%         350bps       4.2%           0bps 
Adjusted EBITDA as a 
 percent of revenue           9.0%          8.7%          30bps       9.3%         -30bps 
(N/M) - Not meaningful 
 

Bryan King, CEO and Chairman, said, "Our financial results met expectations for the quarter, despite macro uncertainties that affected all U.S. companies. We are pleased with first quarter sales of $478 million, up 14.9%, comprising inorganic revenue of $51 million and an increase in organic average daily sales of 4.3%. On a constant currency basis our organic ADS was up 4.7%, which includes a full quarter of contribution from Source Atlantic. First quarter's Adjusted EBITDA grew to $42.8 million, up 18.6% and expanded to 9.0% as a percent of sales compared to 8.7% in the year-ago period.

"We are pleased to report year-over-year net margin expansion in each of our three verticals on a comparable basis. Lawson's net margins in the quarter expanded from 11.4% a year ago to 11.9%, Gexpro Services expanded from 11.0% a year ago to 12.6% and TestEquity expanded from 6.2% a year ago to 6.8%. As expected, Source Atlantic's results compressed the Canada Branch Division and DSG's net margins. Excluding the Source Atlantic impact from the consolidated results, Adjusted EBITDA margin for the first quarter would have been 9.6%. Initiatives to improve margins in each of our five 2024 acquisitions are in the early innings. We remain confident in our plan to improve DSG's structural margins and achieve our higher return goals.

"We are cautiously optimistic about 2025 and are well-positioned to help our customers navigate alternative sourcing and services as trade policies develop. In the first quarter, our capital allocation priorities allowed us to take advantage of opportunistic share repurchases totaling $11.2 million. We continue to focus on long-term value creation through the growth of our industrial distribution platform. We are building higher-margin businesses by strategically scaling our platform through a combination of organic growth and highly strategic M&A. Our focus on managing our capital structure and generating high cash flow conversion rates positions us well to generate sustaining, long-term value for our shareholders," concluded Mr. King.

2025 First Quarter Summary(1)

   -- Revenue increased $61.9 million, or 14.9%, to $478.0 million, including 
      $50.8 million of revenue from five acquisitions closed in 2024. Organic 
      average daily sales grew 4.3% over a year ago but decreased 1.4% 
      sequentially over the fourth quarter of 2024. On a constant currency 
      basis, organic average daily sales grew 4.7% over a year ago quarter. 
 
   -- Operating income was $20.1 million, net of $11.6 million of non-cash 
      acquired intangible amortization and $2.7 million of non-recurring 
      severance and acquisition-related retention costs, stock-based 
      compensation, acquisition-related costs and other non-recurring items. 
      This compares to an operating income of $2.8 million in the prior year 
      quarter, net of similar items as 2024. Adjusted operating income, 
      excluding these non-cash and non-recurring items, was $34.4 million in 
      the current quarter compared to $29.8 million in the year-ago quarter and 
      $37.3 million in the fourth quarter of 2024. 
 
   -- Diluted net income per share was $0.07 for the quarter compared to 
      diluted net loss per share of $0.11 in the year-ago quarter. Non-GAAP 
      adjusted diluted earnings per share was $0.31 compared to $0.25 for the 
      same period a year ago and $0.42 for the fourth quarter of 2024. 
 
   -- Adjusted EBITDA grew $6.7 million to $42.8 million, or 9.0% of sales, 
      compared to $36.1 million, or 8.7% of sales in the prior year quarter. 
      Inclusion of the 2024 Source Atlantic acquisition compressed Adjusted 
      EBITDA as a percentage of sales by approximately 60bps over the year ago 
      quarter. Sequentially, Adjusted EBITDA decreased by $2.1 million from the 
      fourth quarter of 2024 and decreased as a percentage of sales by 30bps. 
 
   -- Uses of cash for the quarter included net capital expenditures of $5.1 
      million and share repurchases of $11.2 million. 
 
   -- The Company ended the quarter with total liquidity of $304.8 million, 
      consisting of $80.0 million of cash (restricted and unrestricted) and 
      $224.7 million of availability under its credit facility with net debt 
      leverage of 3.6x. (1) See reconciliation of GAAP to non-GAAP measures in 
      tables 2, 3 and 4. 

Conference Call

Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss 2025 first quarter results at 9:00 a.m. Eastern Time on May 1, 2025. The conference call is available by direct dial at 1-888-506-0062 in the U.S. or 1-973-528-0011 from outside of the U.S. The participant access code is 958334. A replay of the conference call will be available by telephone approximately two hours after completion of the call through May 15, 2025. Callers can access the replay by dialing 1-877-481-4010 in the U.S. or 1-919-882-2331 outside the U.S. The passcode for the replay is 52327. A streaming audio of the call and an archived replay will also be available on the investor relations page of Distribution Solutions Group's website. Presentations may be supplemented by a series of slides appearing on the company's investor relations home page at https://investor.distributionsolutionsgroup.com/news/events.

About Distribution Solutions Group, Inc.

Distribution Solutions Group ("DSG") is a premier multi-platform specialty distribution company providing high touch, value-added distribution solutions to the maintenance, repair & operations $(MRO)$, the original equipment manufacturer (OEM) and the industrial technologies markets. DSG was formed through the strategic combination of Lawson Products, a leader in MRO distribution of C-parts, Gexpro Services, a leading global supply chain services provider to manufacturing customers, and TestEquity, a leader in electronic test & measurement solutions.

Through its collective businesses, DSG is dedicated to helping customers lower their total cost of operation by increasing productivity and efficiency with the right products, expert technical support and fast, reliable delivery to be a one-stop solution provider. DSG serves approximately 200,000 customers in several diverse end markets supported by approximately 4,400 dedicated employees and strong vendor partnerships. DSG ships from strategically located distribution and service centers to customers in North America, Europe, Asia, South America and the Middle East.

For more information on Distribution Solutions Group please visit www.distributionsolutionsgroup.com.

This release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the "safe-harbor" provisions under the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. The terms "aim," "anticipate," "believe," "contemplates," "continues," "could," "ensure," "estimate," "expect," "forecasts," "if," "intend," "likely," "may," "might," "objective," "outlook," "plan," "positioned," "potential," "predict," "probable," "project," "shall," "should," "strategy," "will," "would," and variations of them and other words and terms of similar meaning and expression (and the negatives of such words and terms) are intended to identify forward-looking statements.

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