[Management View]
Distribution Solutions Group (DSG) reported strong operational results for Q2 2025, driven by acquisitions and organic growth. Key metrics include consolidated revenue of $502 million, up 14.3%, and adjusted EBITDA of $48.6 million, or 9.7% of sales. Strategic priorities focus on salesforce transformation, digital initiatives, and enhancing profitability across business segments.

[Outlook]
Management anticipates continued margin expansion and robust cash flows. Future plans include further investments in salesforce transformation, digital initiatives, and strategic acquisitions. The new CEO at Test Equity Group is expected to drive profitability and growth.

[Financial Performance]
YoY trends show a 14.3% increase in consolidated revenue, with adjusted EBITDA up from 9% in Q1 2025 to 9.7% in Q2 2025. Sequential sales growth was 2.4%. GAAP EPS increased to $0.11 from $0.04, while adjusted EPS was $0.35 compared to $0.40.

[Q&A Highlights]
Question 1: Can you frame third-quarter expectations for us? Any insight into July pacing or margin differences?
Answer: July trends are consistent with Q2, with no major movements. Jexpro Services faces tougher comps, while Lawson Products has easier comps. No significant margin changes expected, though Q4 typically sees compression due to fewer selling days.

Question 2: Any updates on the Canada branch consolidation?
Answer: Two locations have been consolidated, with two more planned by year-end. Margin expansion and synergy progress are on target, with Bolt Supply achieving nearly 16% EBITDA margins.

Question 3: What are the longer-term margin goals for Lawson and TestEquity?
Answer: TestEquity aims for double-digit EBITDA margins, leveraging specialty offerings. Lawson's Salesforce transformation targets mid to high teens EBITDA margins, with potential to exceed 20% over time.

Question 4: Any updates on the military market for Lawson?
Answer: Military sales showed slight improvement in June but remain sporadic. Excluding military impact, Lawson's organic growth was modestly positive.

Question 5: Any pricing contribution around tariffs and price-cost dynamics?
Answer: No net margin compression expected from tariffs. DSG manages procurement and pricing dynamically, with approximately 6% of product purchases from China.

Question 6: Expectations for JexPro Services in the back half of the year?
Answer: Despite tougher comps, JexPro Services' end markets are trending upward, with strong backlog visibility. Investments in commercial capabilities continue to drive growth.

[Sentiment Analysis]
Analysts and management displayed a cautiously optimistic tone, emphasizing strategic investments and operational improvements. Management's confidence in achieving long-term margin goals and growth was evident.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | Q2 2024 |
|---------------------------|---------------|---------------|---------------|
| Consolidated Revenue | $502 million | N/A | N/A |
| Adjusted EBITDA | $48.6 million | $N/A | N/A |
| GAAP EPS | $0.11 | $0.04 | N/A |
| Adjusted EPS | $0.35 | $0.40 | N/A |
| Cash Flow from Operations | $33 million | $N/A | $21 million |
| Debt Leverage | 3.5x | N/A | N/A |

[Risks and Concerns]
Risks include softness in electronic production and measurement markets, Canadian industrial demand, and tariff disruptions. The Canadian segment faces declines in top customers due to cautious business behavior and uncertain tariffs.

[Final Takeaway]
DSG's Q2 2025 results reflect strong revenue growth and margin expansion driven by strategic acquisitions and organic growth. Management's focus on salesforce transformation, digital initiatives, and strategic investments positions the company for continued growth and profitability. Despite challenges in certain markets, DSG remains optimistic about its long-term prospects and ability to compound shareholder value.