Financial Data and Key Metrics Changes - The company achieved consolidated sales of 8.8 million, representing 8.3% of sales [20][25] - The company ended the quarter with a net cash position of 33 million payment for the Partsmaster acquisition [20][27] Business Line Data and Key Metrics Changes - Partsmaster generated sales of $15.3 million in the quarter, although sales were slightly down from Q1 due to timing on military sales [7][11] - The Bolt Supply business achieved an 11.5% EBITDA for the quarter, with sales growing over 30% year-over-year and 12% over Q1 2021 [11] - Strategic accounts grew by 6.5% compared to Q1 and 50% compared to Q2 2020, while the Kent business grew by 4.7% versus Q1 and 53% year-over-year [12] Market Data and Key Metrics Changes - Sales in the government civilian segment were flat between Q1 and Q2 but up 6.6% compared to Q2 2020, with the SLED segment performing particularly well [13] - The company is focusing on underserved markets and has made progress in developing additional channels to market [14] Company Strategy and Development Direction - The company’s three-part growth strategy remains unchanged, focusing on sales rep productivity and the integration of Partsmaster [15] - Investments are being made in distribution capabilities and expanding the Calgary location to support future growth [11][26] - The company is optimistic about future growth driven by labor challenges faced by customers, which may lead to increased outsourcing of inventory management [39] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges from supply chain disruptions and labor shortages but expressed confidence in the company's ability to navigate these issues [6][16] - There is optimism regarding the future, with management highlighting the importance of operational excellence and customer relationships [17][39] Other Important Information - The integration of Partsmaster is progressing as planned, with all sales reps now utilizing Lawson's technology systems [28] - The company is actively managing supply chain challenges and has implemented price increases to offset inflationary pressures [9][31] Q&A Session Summary Question: About the price increases and their impact on margins - Management confirmed that price increases implemented late in Q2 are expected to benefit margins in Q3 and beyond, as customers recognize the necessity of these increases [31] Question: Clarification on the reduced cost structure - The CFO explained that the cost structure has improved due to actions taken in 2020, and the company is managing costs effectively while growing sales [32][33] Question: Monthly trend in average daily sales - Average daily sales showed a sequential increase from March to April, remained flat in May, and slightly decreased in June, with July sales expected to be similar to June [35] Question: Variations among suppliers - Management noted that some suppliers are performing better than others, particularly in the chemical supply sector, and the company is adapting by shifting to functional equivalent products when necessary [36] Question: Long-term growth outlook amid labor challenges - Management indicated that labor challenges faced by customers are creating opportunities for the company to provide more value through outsourcing inventory management [39] Question: Gross margin expectations - Management reiterated that they expect gross margins to return to the 59%-61% range over time, despite current headwinds from supply chain disruptions [41] Question: M&A strategy moving forward - The company remains committed to pursuing larger acquisitions and is confident in its ability to integrate them successfully, without being hindered by the potential Luther King transaction [52][53]
DSG(DSGR) - 2021 Q2 - Earnings Call Transcript