• Adjusted EBITDA of $16.7M or 14.6% of Revenue up from 8.8% of Revenue over year ago quarter on revenue growth and improved gross margins NASDAQ: DSGR November 2, 2023 Cautionary Note Regarding Forward-Looking Statements 2 Today's Conference Call Will Discuss Results Primarily on an Adjusted (Non-GAAP) and Comparable Operations Basis. • Q3 2023 Consolidated Highlights & Financial Results • Segment Highlights & Financial Results See appendix for GAAP to Non-GAAP reconciliations. • Q3 Revenue of $439M, Opera ...

Distribution Solutions Group, Inc. (NASDAQ:DSGR) Q3 2023 Earnings Conference Call November 2, 2023 9:00 AM ET Company Participants Sandy Martin - Three Part Advisors Bryan King - Chairman and Chief Executive Officer Ron Knutson - Executive Vice President and Chief Financial Officer Conference Call Participants Kevin Steinke - Barrington Research Tommy Moll - Stephens Inc. Brad Hathaway - Far View Operator Greetings, and welcome to the Distribution Solutions Group Third Quarter 2023 Earnings Conference Call. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file Number: 0-10546 DISTRIBUTION SOLUTIONS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 36-2229304 301 Comme ...

Distribution Solutions Group, Inc. (NASDAQ:DSGR) Q2 2023 Earnings Conference Call August 3, 2023 9:00 AM ET Company Participants Steven Hooser - Investor Relations Bryan King - Chairman & Chief Executive Officer Ron Knutson - Executive Vice President & Chief Financial Officer Conference Call Participants Kevin Steinke - Barrington Research Ken Newman - KeyBanc Capital Markets Operator Greetings and welcome to the Distribution Solutions Group Second Quarter 2023 Earnings Conference Call. [Operator Instructio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file Number: 0-10546 DISTRIBUTION SOLUTIONS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 36-2229304 (State or othe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from to Commission file Number: 0-10546 DISTRIBUTION SOLUTIONS GROUP, INC. Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) Delaware 36-2229304 (State or oth ...

Distribution Solutions Group, Inc. (NASDAQ:DSGR) Q1 2023 Earnings Conference Call May 4, 2023 9:00 AM ET Company Participants Steven Hooser - Investor Relations Bryan King - Chairman & CEO Ron Knutson - EVP and CFO Conference Call Participants Kevin Steinke - Barrington Research Brad Hathaway - Far View Capital Management Katie Fleischer - KeyBanc Capital Markets Operator Greetings, and welcome to the Distribution Solutions Group's First Quarter 2023 Earnings Conference Call. [Operator Instructions] Pleas ...

Financial Performance - DSG reported a consolidated Adjusted EBITDA of $113.858 million for the year ended December 31, 2022, compared to $39.417 million in 2021, reflecting significant growth post-merger[165][168]. - Lawson's revenue for the year was $324.783 million, with a gross profit of $170.753 million, resulting in an operating income of $6.536 million[171]. - TestEquity achieved an Adjusted EBITDA of $34.736 million in 2022, up from $16.107 million in 2021, indicating strong operational performance[168]. - Gexpro Services generated an Adjusted EBITDA of $43.206 million for 2022, compared to $23.310 million in the previous year, showcasing effective market strategies[168]. - Total revenue for 2022 reached $1,151.4 million, a significant increase from $520.3 million in 2021, reflecting a growth of 121.5%[174]. - Adjusted revenue for Lawson increased by 15.6% to $429.7 million in 2022 compared to $371.7 million in 2021, driven by price increases and higher sales volumes[179][180]. - Adjusted gross profit for Lawson rose by $25.8 million to $226.3 million in 2022, with a gross profit margin of 52.7% compared to 53.9% in the prior year[181][182]. - Adjusted EBITDA for Lawson was $38.6 million in 2022, reflecting a 27.1% increase from the previous year[184]. - TestEquity segment revenue increased by 48.5% to $392.4 million in 2022, driven by acquisitions and organic growth of 12.1%[186]. - Gexpro Services segment revenue grew by 50.4% to $385.3 million in 2022, with an operating income of $21.3 million, up 91.9% from 2021[190]. - The overall gross profit margin for the company improved to 33.9% in 2022 from 25.0% in 2021, indicating better cost management and pricing strategies[174]. - Net income for the company was $7.4 million in 2022, a turnaround from a net loss of $5.1 million in 2021[174]. - Net income for 2022 was $20.9 million, a significant increase from $0.4 million in 2021[330]. Mergers and Acquisitions - The Mergers completed on April 1, 2022, have significantly impacted the comparability of financial results, with Lawson's results included only post-merger[162]. - The mergers with TestEquity and Gexpro Services were completed on April 1, 2022, with Lawson Products, Inc. as the legal acquirer, and the combined entity is treated as the accounting acquirer for financial reporting purposes[228]. - The consolidated financial statements reflect the results of operations and financial position of TestEquity and Gexpro Services for all periods presented, while the legacy Lawson business results are included only after the merger date[228]. - The Company acquired $43.0 million of intangible assets related to trade names during the mergers, valued using the relief from royalty method[242]. - The Company completed mergers on April 1, 2022, issuing a total of 10.3 million shares of common stock valued at approximately $351.5 million[321][324]. - The total consideration exchanged for the mergers amounted to $353.4 million, with transaction costs of $12.7 million recorded for 2022[324][328]. - The company acquired several businesses in 2022, with total purchase consideration for these acquisitions amounting to $122.2 million[332]. - The Frontier acquisition includes a potential earn-out payment of up to $3.0 million based on performance milestones, with a fair value of $1.7 million recorded as of December 31, 2022[334]. - The company recognized a gain on bargain purchase of $1.4 million related to the acquisition of NEF, reflecting the excess of net assets over the consideration transferred[336]. Financial Position and Assets - Total assets increased to $1,215,610 in 2022, up from $491,360 in 2021, reflecting a growth of 147%[253]. - Total stockholders' equity increased to $562,995 in 2022 from $165,769 in 2021, reflecting a growth of 239%[253]. - The Company had $348.0 million of goodwill as of December 31, 2022, up from $104.2 million in 2021, indicating significant business acquisitions[290]. - The allocation of consideration for the mergers included $148.3 million in current assets and $119.1 million in other intangible assets[328]. Cash Flow and Expenses - The company incurred interest expenses of $24.3 million in 2022, compared to $16.7 million in 2021, reflecting increased debt levels[174]. - Selling, general and administrative expenses for Lawson increased to $208.7 million in 2022, up from $192.3 million in 2021, primarily due to higher compensation and severance costs[183]. - Net cash used in operating activities was $11.0 million for the year ended December 31, 2022, primarily due to increased accounts receivables and inventories[207]. - Net cash used in investing activities was $126.7 million, mainly due to acquisitions completed during the year[209]. - The company incurred interest expenses of $24,301 in 2022, up from $16,737 in 2021, indicating increased borrowing costs[255]. - Net cash paid for income taxes increased to $13,813 from $2,998, reflecting a significant rise in tax obligations[261]. - Net cash paid for interest rose to $22,153 compared to $15,395, indicating higher financing costs[261]. Operational Challenges and Strategies - Supply chain disruptions have led to increased supplier costs and lower gross profit margins, prompting DSG to implement price increases in 2021 and 2022[161]. - TestEquity is currently facing challenges due to a semiconductor chip shortage, which is expected to recover in 2023[158]. - Lawson plans to enhance sales team productivity and expand product offerings to existing customers while attracting new clients[154]. - Gexpro Services aims to increase wallet share with existing customers and expand geographically in its six key vertical markets[160]. Audit and Compliance - BDO USA, LLP was engaged to audit the 2022 consolidated financial statements, ratified by stockholders at the 2022 Annual Meeting[229]. - The Company’s internal control over financial reporting received an adverse opinion as of December 31, 2022, indicating significant deficiencies[235]. - The financial statements for the year ended December 31, 2022, present fairly the financial position of the Company in conformity with generally accepted accounting principles[234]. - The historical consolidated financial statements of TestEquity and Gexpro Services had not been audited prior to their inclusion in the Form 10-K[229]. - The Company’s management is responsible for the financial statements, while the auditors express an opinion based on their audit[248]. Inventory and Revenue Recognition - The majority of the company's revenue is generated through the sale of specialized products, with less than 5.0% coming from Vendor Managed Inventory services[280]. - The company evaluates the collectability of accounts receivable based on historical experience, with reserves for bad debts recorded as necessary[282]. - The company’s inventory is primarily valued using the first-in-first-out method for the Lawson segment and the weighted average method for TestEquity and Gexpro Services segments[283]. - The Lawson segment generated revenue primarily from MRO product sales, with revenue recognized upon transfer of control to the customer[345]. - Revenue from customers is recognized when obligations under the contract are satisfied, generally upon delivery of products or services[341].

Financial Data and Key Metrics Changes - Consolidated sales for Q4 were $328.9 million, representing a 155% increase on a GAAP basis, driven by the inclusion of Lawson Products and organic growth of 16.7% [37][47] - Adjusted EBITDA margin for Q4 was 10.3%, exceeding the previously stated goal of 10% [73][81] - Full year GAAP revenue totaled $1.15 billion, with adjusted EBITDA of $123 million, reflecting a 64% increase year-over-year [47][57] Business Line Data and Key Metrics Changes - Lawson Products achieved a 20.3% organic growth in average daily sales over Q4 2021, with significant contributions from strategic business and Kent Automotive [59] - Gexpro Services reported total sales of $100.1 million for Q4, an increase of $33.6 million year-over-year, with $26.3 million from acquisitions and $7.3 million from organic growth [40] - TestEquity's sales grew by $42.7 million, or over 68%, to $105.4 million, with approximately $33.9 million from acquisitions and organic sales increasing by 14.5% [41] Market Data and Key Metrics Changes - The renewables vertical is expected to see a reacceleration as customers await government tax credit guidance, while demand in the technology vertical remains soft until inventories stabilize [31][32] - Customer orders remain strong across all three businesses, with no destocking observed, indicating a healthy demand environment [69][70] Company Strategy and Development Direction - The company aims to build profitable scale as a specialty distribution network, focusing on significant free cash flow and above-market returns for shareholders [27][65] - Strategic investments in technology and lead generation capabilities are planned to enhance sales productivity and customer service [30][50] - The company is actively pursuing acquisitions that enhance organic growth rates and returns on working capital investment [49][113] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the 2023 outlook, with strong momentum continuing from 2022 [26][46] - The company is closely monitoring macroeconomic conditions and customer demand while maintaining a focus on operational efficiency and margin expansion [80][81] Other Important Information - The company successfully completed five acquisitions in 2022, producing annualized revenues of about $204 million and adjusted EBITDA of $21 million [48][72] - The net debt leverage ratio improved from 3.6 times at the time of the merger to 3.1 times by the end of 2022 [62] Q&A Session Summary Question: How has demand trended in January and February? - Management indicated that there has not been a destocking trend and overall customer conversations remain positive, with a focus on inventory replenishment [69][70] Question: What are customer conversations like regarding inventory needs? - Customers are not destocking but are looking to fill inventories, indicating a stable demand environment [70][90] Question: What is the company's approach to capital allocation and M&A? - The company prioritizes organic growth opportunities but remains selective in pursuing M&A that significantly enhances organic growth rates and shareholder value [93][113] Question: What enabled the sequential margin expansion in Q4? - The margin expansion was attributed to continued growth throughout 2022, effective management of operating expenses, and contributions from acquisitions [117][119]

Distribution Solutions Group (NASDAQ:DSGR) Q3 2022 Earnings Conference Call November 3, 2022 9:00 AM ET Company Participants Steven Hooser - Investor Relations Bryan King - Chairman & CEO Ron Knutson - EVP and CFO Cesar Lanuza - President and CEO, Lawson Products Bob Connors - President and CEO, Gexpro Services Russ Frazee - CEO, TestEquity LLC Conference Call Participants Ken Newman - KeyBanc Capital Markets Kevin Steinke - Barrington Research Brad Hathaway - Far View Capital Operator Good morning, ladies ...