Latest news with #DSGR
San Francisco Chronicle
31-07-2025
- Business
- San Francisco Chronicle
Distribution Solutions: Q2 Earnings Snapshot
FORT WORTH, Texas (AP) — FORT WORTH, Texas (AP) — Distribution Solutions Group, Inc. (DSGR) on Thursday reported profit of $5 million in its second quarter. The Fort Worth, Texas-based company said it had net income of 11 cents per share. Earnings, adjusted for one-time gains and costs, were 35 cents per share. The industrial products and tools maker posted revenue of $502.4 million in the period. _____
Business Wire
31-07-2025
- Business
- Business Wire
Distribution Solutions Group Announces 2025 Second Quarter Results
FORT WORTH, Texas--(BUSINESS WIRE)-- Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or the "Company"), a premier specialty distribution company, today announced consolidated results for the second quarter ended June 30, 2025. This press release is supplemented by an earnings presentation at 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. Bryan King, CEO and Chairman, said, "We are pleased to deliver strong top and bottom-line results and cash flows for the quarter. Sales increased 14.3% to $502.4 million for the quarter, driven by acquisitions and a 3.3% average daily organic sales growth versus last year. Sequentially, seasonal daily sales grew by 2.4% over the first quarter. Adjusted EBITDA rose to $48.6 million, or 9.7% of sales, and grew year-over-year and sequentially by 7.5% and 13.5%, respectively. Compared to the same quarter last year, Adjusted EBITDA margins declined slightly pressured by approximately 60bps from our Source Atlantic acquisition. However, we saw a lift in margin sequentially as we vigorously work on improving margins in Canada. "In the second quarter, each of our operational teams delivered sequential expansion of adjusted margins driven partially by an expected seasonality benefit, but also evidencing progress on the execution of initiatives across our DSG platform. Sequentially, Lawson's net margins in the quarter expanded from 11.9% to 12.6%, Gexpro Services expanded from 12.6% to 13.4%, TestEquity expanded from 6.8% to 6.9% and Canada Branch Division expanded from 5.2% to 6.5%. Initiatives to improve margins in each of our five 2024 acquisitions are still in the early stages, and we remain confident in our plan to enhance margins further and achieve higher returns. During the quarter, the teams also improved working capital management, enabling us to generate $33.3 million from cash flows from operations while ending the quarter with no outstanding revolver debt. We are well positioned with liquidity and flexibility as we evaluate our acquisition pipeline. "DSG's core strengths include strong vendor relationships and robust source capabilities, which have become increasingly important amid ongoing trade policy changes. These shifts have driven greater customer engagement as DSG teams help guide customers through sourcing options and product alternatives to add value. We remain cautiously optimistic about the remainder of 2025 given this uncertainty. In the first half of 2025, our stock buyback program was active, and we repurchased $20.0 million of DSGR stock, with $8.8 million of the repurchases occurring in the second quarter. I am confident that we will continue to build strong businesses through a combination of organic growth and the acquisition of strategic bolt-on businesses. We are fully aligned with shareholders and expect that by generating significant free cash flow and building structurally higher margin businesses, that our shareholders will be rewarded with an expanded valuation," concluded Mr. King. 2025 Second Quarter Summary (1) Revenue increased $62.9 million, or 14.3%, to $502.4 million, driven by $48.8 million of incremental revenue from five acquisitions closed in 2024. Organic sales grew 3.3% over a year ago and 5.1% sequentially over the first quarter of 2025. Operating income was $26.8 million, net of $11.7 million of non-cash acquired intangible amortization and $1.4 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 $14.2 million in the prior year quarter, net of similar items as 2024. Adjusted operating income, excluding these non-cash and non-recurring items, was $39.9 million in the current quarter compared to $38.9 million in the year-ago quarter and $34.4 million in the first quarter of 2025. Diluted net income per share was $0.11 for the quarter compared to diluted net income per share of $0.04 in the year-ago quarter. Adjusted EBITDA grew $3.4 million to $48.6 million, or 9.7% of sales, compared to $45.2 million, or 10.3% 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 increased by $5.8 million from the first quarter of 2025 and increased as a percentage of sales by 70bps. Cash flow from operations was $33.3 million for the quarter. Uses of cash for the quarter included net capital expenditures of $5.5 million and share repurchases of $8.8 million. The Company ended the quarter with total liquidity of $314.4 million, consisting of $61.8 million of cash (restricted and unrestricted) and $252.7 million available under its credit facility with net debt leverage of 3.5x. Conference Call Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss 2025 second quarter results at 9:00 a.m. Eastern Time on July 31, 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 661521. A replay of the conference call will be available by telephone approximately two hours after completion of the call through August 14, 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 52605. 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 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 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. Forward-looking statements can also be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks, uncertainties and assumptions, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. DSG can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and DSG cautions readers not to place undue reliance on such statements. DSG undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Each forward-looking statement speaks only as of the date on which such statement is made, and DSG undertakes no obligation to update any such statement to reflect events or circumstances arising after such date. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Factors that could cause or contribute to such differences or that might otherwise impact DSG's business, financial condition and results of operations include the risks that DSG may encounter difficulties integrating the business of DSG with the business of other companies that DSG has combined with or may otherwise combine with and that certain assumptions with respect to such business or transactions could prove to be inaccurate. Certain risks associated with DSG's business are also discussed from time to time in the reports DSG files with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K or other reports the Company may file from time to time with the Securities and Exchange Commission, which should be reviewed carefully. Distribution Solutions Group, Inc. Condensed Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) Six Months Ended June 30, 2025 2024 Operating activities Net income (loss) $ 8,264 $ (3,328 ) Adjustments to reconcile to net cash used in operating activities: Depreciation and amortization 40,317 35,587 Amortization of debt issuance costs 1,752 1,320 Stock-based compensation 2,224 1,891 Deferred income taxes 1,793 (1,541 ) Change in fair value of earnout liabilities 1,000 3 (Gain) loss on sale of rental equipment (2,129 ) (900 ) (Gain) loss on sale of property, plant and equipment (543 ) (5 ) Charge for step-up of acquired inventory — 634 Net realizable value adjustment and write-offs for obsolete and excess inventory 4,907 3,110 Bad debt expense 2,119 106 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (31,048 ) (18,331 ) Inventories (1,470 ) (1,636 ) Prepaid expenses and other current assets (16,364 ) (15,345 ) Accounts payable 15,552 9,771 Accrued expenses and other current liabilities 1,216 15,636 Other changes in operating assets and liabilities 946 1,037 Net cash provided by (used in) operating activities 28,536 28,009 Investing activities Purchases of property, plant and equipment (10,289 ) (5,829 ) Proceeds from sale of property, plant and equipment 990 — Business acquisitions, net of cash acquired (1,426 ) (95,437 ) Purchases of rental equipment (7,177 ) (3,214 ) Proceeds from sale of rental equipment 5,913 2,110 Net cash provided by (used in) investing activities (11,989 ) (102,370 ) Financing activities Proceeds from revolving lines of credit 196,652 84,139 Payments on revolving lines of credit (195,865 ) (40,285 ) Payments on term loans (20,125 ) (8,188 ) Repurchase of common stock (20,256 ) (1,683 ) Shares repurchased held in treasury (45 ) (538 ) Stock option exercises 877 — Payment of financing lease principal (296 ) (237 ) Net cash provided by (used in) financing activities (39,058 ) 33,208 Effect of exchange rate changes on cash and cash equivalents 2,548 (1,562 ) Increase (decrease) in cash, cash equivalents and restricted cash (19,963 ) (42,715 ) Cash, cash equivalents and restricted cash at beginning of period 81,726 99,626 Cash, cash equivalents and restricted cash at end of period $ 61,763 $ 56,911 Cash and cash equivalents $ 47,430 $ 46,786 Restricted cash 14,333 10,125 Total cash, cash equivalents and restricted cash $ 61,763 $ 56,911 Expand Distribution Solutions Group, Inc. Segment Reporting Change in Reportable Segments: In the third quarter of 2024, as a result of the Source Atlantic Limited ("Source Atlantic") acquisition, we realigned our reportable segments by adding a new segment with a focus on the Canadian MRO market. The new Canada Branch Division segment includes the results of Source Atlantic and Bolt Supply House ("Bolt"). The results of Bolt had previously been included in our All Other non-reportable segment prior to Q3 2024. The results of the Lawson, TestEquity and Gexpro Services reportable segments did not change. The segment realignment had no impact on our financial condition or results of operations. Prior period segment results have been recast to reflect our new reportable segments. Expand Distribution Solutions Group, Inc. Table 1 - Selected Segment Financial Data (Dollars in thousands) (Unaudited) Three Months Ended June 30, 2025 2024 Revenue: Lawson Products $ 124,313 $ 121,118 Canada Branch Division 55,852 14,471 Gexpro Services 127,807 107,134 TestEquity 195,046 197,481 Intersegment revenue elimination (581 ) (668 ) Total $ 502,437 $ 439,536 Operating income (loss): Lawson Products $ 7,975 $ 6,129 Canada Branch Division 1,751 1,463 Gexpro Services 13,902 8,091 TestEquity 4,813 703 All Other (1,615 ) (2,228 ) Total $ 26,826 $ 14,158 Expand DISTRIBUTION SOLUTIONS GROUP, INC. SEC REGULATION G GAAP RECONCILIATIONS The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, the Company's management believes that certain non-GAAP financial measures may provide users of this financial information with additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflections of underlying trends of the business because they provide a comparison of historical information that excludes certain non-operational or non-cash items that impact the overall comparability. See Tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended June 30, 2025 and 2024 and the three months ended March 31, 2025. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. Expand Distribution Solutions Group, Inc. Table 2 - Reconciliation of GAAP Net Income (Loss) and GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA (Dollars in thousands) (Unaudited) Three Months Ended June 30, March 31, 2025 2024 2025 Net income (loss) $ 5,003 $ 1,896 $ 3,261 Income tax expense (benefit) 6,859 (180 ) 2,253 Other income (expense), net 726 (359 ) (632 ) Change in fair value of earnout liabilities — 8 1,000 Interest expense 14,238 12,793 14,215 Operating income (loss) 26,826 14,158 20,097 Depreciation and amortization 20,338 18,535 19,979 Stock-based compensation (1) 1,250 (307 ) 974 Severance and acquisition related retention expenses (2) 355 8,313 1,628 Acquisition related costs (3) (208 ) 3,598 108 Inventory step-up (4) — 634 — Other non-recurring (5) — 250 — Non-GAAP adjusted EBITDA $ 48,561 $ 45,181 $ 42,786 Operating income (loss) as a percent of revenue 5.3% 3.2% 4.2% Adjusted EBITDA as a percent of revenue 9.7% 10.3% 9.0% Expand (1) Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company's stock price. (2) Includes severance expense for actions taken not related to a formal restructuring plan and acquisition related retention expenses. (3) Transaction and integration costs related to acquisitions. (4) Inventory fair value step-up adjustment for acquisition accounting related to acquisitions completed. (5) Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items. Expand (1) The adjustment to the income tax expense (benefit) is determined by excluding the non-GAAP adjustments by jurisdiction. (2) Pretax adjustments to diluted EPS calculated on 46.563 million, 47.624 million and 47.400 million diluted shares for the second quarter of 2025 and 2024, and the first quarter of 2025, respectively. (3) The quarter-to-date amounts are derived from the current period year-to-date amount less the previous quarter year-to-date amount. (4) The estimated impact to the deferred tax asset valuation allowance from interest expense limitations under Section 163(j) determined by including the non-GAAP adjustments by jurisdiction. Expand Distribution Solutions Group, Inc. (Dollars in thousands) (Unaudited) Three Months Ended June 30, March 31, 2025 2024 2025 Operating income (loss) $ 26,826 $ 14,158 $ 20,097 Gross profit adjustments: Inventory step-up (1) — 634 — Total gross profit adjustments — 634 — Selling, general and administrative expenses adjustments: Acquisition related costs (2) (208 ) 3,598 108 Amortization of intangible assets 11,650 12,206 11,585 Stock-based compensation (3) 1,250 (307 ) 974 Severance and acquisition related retention expenses (4) 355 8,313 1,628 Other non-recurring (5) — 250 — Total selling, general and administrative adjustments 13,047 24,060 14,295 Total adjustments 13,047 24,694 14,295 Non-GAAP adjusted operating income $ 39,873 $ 38,852 $ 34,392 Expand (1) Inventory fair value step-up adjustment for acquisition accounting related to acquisitions completed. (2) Transaction and integration costs related to acquisitions. (3) Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company's stock price. (4) Includes severance expense for actions taken not related to a formal restructuring plan and acquisition related retention expenses. (5) Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items. Expand Distribution Solutions Group, Inc. Table 5 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA Q2 2025 and Q2 2024 (Dollars in thousands) (Unaudited) Depreciation and amortization 6,808 6,390 3,532 3,825 8,280 7,795 1,718 525 — — 20,338 18,535 Adjustments: Acquisition related costs(1) 12 2,400 (397 ) 382 29 282 148 — — 534 (208 ) 3,598 Stock-based compensation(2) 775 (633 ) 18 — 168 160 — — 289 166 1,250 (307 ) Severance and acquisition related retention expenses(3) 139 1,583 27 192 187 6,508 3 30 (1 ) — 355 8,313 Inventory step-up(4) — 634 — — — — — — — — — 634 Other non-recurring(5) — — — 250 — — — — — — — 250 Expand (1) Transaction and integration costs related to acquisitions. (2) Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company's stock price. (3) Includes severance expense from actions taken not related to a formal restructuring plan and acquisition related retention expenses. (4) Inventory fair value step-up adjustment for acquisition accounting related to acquisitions completed. (5) Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items. N/M - Not meaningful Expand
Yahoo
15-05-2025
- Business
- Yahoo
DSGR Q1 Earnings Call: Revenue Miss and Margin Expansion Amid Trade Policy Uncertainty
Industrial and safety product distributor Distribution Solutions (NASDAQ:DSGR) fell short of the market's revenue expectations in Q1 CY2025, but sales rose 14.9% year on year to $478 million. Its non-GAAP profit of $0.31 per share was 12.3% below analysts' consensus estimates. Is now the time to buy DSGR? Find out in our full research report (it's free). Revenue: $478 million vs analyst estimates of $497.2 million (14.9% year-on-year growth, 3.8% miss) Adjusted EPS: $0.31 vs analyst expectations of $0.35 (12.3% miss) Adjusted EBITDA: $42.79 million vs analyst estimates of $47.13 million (9% margin, 9.2% miss) Operating Margin: 4.2%, up from 1.1% in the same quarter last year Free Cash Flow was -$13.27 million, down from $2.94 million in the same quarter last year Market Capitalization: $1.27 billion Distribution Solutions' first-quarter results were shaped by ongoing trade policy shifts and internal execution on margin improvement initiatives. Management attributed top-line growth to contributions from recent acquisitions and steady organic sales, with CEO Bryan King emphasizing the company's ability to help customers navigate a complex sourcing landscape. King noted, 'Our sourcing capabilities, teamed with our on-the-ground capabilities alongside our customers... offers us an excellent position to improve our engagement and ability to earn, notwithstanding any near-term challenges.' Looking ahead, management's guidance reflects both caution and optimism amid continued marketplace turbulence. King highlighted that further pricing actions and sourcing flexibility are expected to offset most tariff impacts, while investments in salesforce expansion and integration of recent acquisitions are designed to drive improved profitability. He added that the company's diversified end markets and focus on operational discipline should position Distribution Solutions to capitalize on evolving customer needs as trade and manufacturing dynamics settle. Management's remarks focused on how Distribution Solutions is adapting to an environment of shifting global trade policies and ongoing integration of acquisitions. The company identified several operational and market-specific factors impacting Q1 results and its ability to protect margins going forward. Tariff and Trade Policy Effects: The team discussed how recent U.S. administration trade initiatives create short-term uncertainty but may benefit Distribution Solutions in the medium term due to its flexible sourcing model and customer support capabilities. Acquisition Integration Progress: Five acquisitions in the past year contributed to top-line growth but also added integration complexity. Management reported ongoing progress, particularly in Canada with the merger of Source Atlantic and Bolt Supply, and expects structural profitability improvements as synergy efforts continue. Salesforce Transformation at Lawson: Investments in expanding and supporting the salesforce at Lawson Products were highlighted, including new CRM tools and increased headcount. Management noted improvements in sales rep productivity but acknowledged that new hire ramp-up is slower than hoped. Segment Margin Expansion: Each core vertical—Lawson Products, Gexpro Services, and TestEquity—delivered year-over-year EBITDA margin gains. Gexpro Services and TestEquity benefited from strong aerospace, defense, and technology market exposure, while Lawson's sequential revenue growth was attributed to unit volume gains and salesforce investments. Canadian Market and Leadership Changes: The acquisition of Source Atlantic led to an expanded Canadian footprint but brought margin compression. New Canadian leadership was installed, with a focus on accelerating integration and facility consolidation to drive future profitability. Management's outlook for the rest of the year is shaped by the company's ability to adapt to trade policy changes, execute on integration plans, and enhance salesforce productivity. The primary themes for future performance include managing tariff impacts, realizing acquisition synergies, and improving working capital efficiency. Tariff Mitigation and Sourcing Flexibility: The company's ability to shift sourcing and pass through price increases is expected to limit negative tariff effects, while customer relationships are expected to deepen as clients seek supply chain stability. Acquisition Synergy Realization: Management is focused on integrating recent acquisitions, particularly in Canada and at Gexpro Services, to achieve targeted profitability and operational efficiencies. Salesforce Productivity and Expansion: Ongoing investments in salesforce expansion and CRM tools aim to increase unit volumes and drive organic growth, though new hire ramp-up remains a risk to near-term margin improvement. Tommy Moll (Stephens): Asked about daily sales trends for April and changes in customer order patterns. CFO Ron Knutson responded that sales trends were relatively flat from Q1 into April, with no major shifts reported. Tommy Moll (Stephens): Requested more detail on Lawson's salesforce rebuild and military sales visibility. Management noted sequential improvement in core accounts and ongoing investments in salesforce productivity, but military sales remained flat. Kevin Steinke (Barrington Research): Inquired about the M&A pipeline and whether current market conditions are creating more acquisition opportunities. CEO Bryan King explained that the environment is increasing opportunities but that the company is taking a measured approach to integration before pursuing new deals. Brad Hathaway (Far View Capital): Sought clarity on the path to achieving the 20% return on invested capital target. Management outlined four levers: acquisition synergy capture, sourcing efficiencies, market normalization, and organic revenue growth. Katie Fleischer (KeyBanc): Asked for more detail on Source Atlantic's margin trajectory. Management expects margin improvement through facility consolidation and cost actions but noted that timeline for reaching double-digit margins is likely extended due to current sales softness. In the coming quarters, the StockStory team will be watching (1) the pace and effectiveness of acquisition integration, especially in Canada and Gexpro Services, (2) whether margin gains in Lawson Products and TestEquity are sustained amid ongoing salesforce investments, and (3) the impact of further trade policy shifts and tariff mitigation efforts on both customer demand and sourcing costs. The execution of these initiatives will be central to Distribution Solutions' ability to meet its profitability and growth targets. Distribution Solutions currently trades at a forward P/E ratio of 15.8×. Should you double down or take your chips? See for yourself in our free research report. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-04-2025
- Business
- Yahoo
Distribution Solutions (DSGR): Buy, Sell, or Hold Post Q4 Earnings?
Shareholders of Distribution Solutions would probably like to forget the past six months even happened. The stock dropped 34.1% and now trades at $26.44. This might have investors contemplating their next move. Is there a buying opportunity in Distribution Solutions, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it's free. Even with the cheaper entry price, we don't have much confidence in Distribution Solutions. Here are three reasons why there are better opportunities than DSGR and a stock we'd rather own. Founded in 1952, Distribution Solutions (NASDAQ:DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries. Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals. Distribution Solutions was profitable over the last four years but held back by its large cost base. Its average operating margin of 5.3% was weak for an industrials business. This result is surprising given its high gross margin as a starting point. If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Distribution Solutions has shown poor cash profitability over the last four years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.2%, lousy for an industrials business. As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by. Distribution Solutions's $831.1 million of debt exceeds the $66.48 million of cash on its balance sheet. Furthermore, its 6× net-debt-to-EBITDA ratio (based on its EBITDA of $136.6 million over the last 12 months) shows the company is overleveraged. At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company's rating if profitability falls. Distribution Solutions could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies. We hope Distribution Solutions can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt. Distribution Solutions isn't a terrible business, but it doesn't pass our bar. After the recent drawdown, the stock trades at 15.7× forward price-to-earnings (or $26.44 per share). This valuation multiple is fair, but we don't have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment. We'd suggest looking at one of our top digital advertising picks. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
Yahoo
08-04-2025
- Business
- Yahoo
Distribution Solutions (NASDAQ:DSGR) Q4 Earnings: Leading The Maintenance and Repair Distributors Pack
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let's take a look at how maintenance and repair distributors stocks fared in Q4, starting with Distribution Solutions (NASDAQ:DSGR). Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Maintenance and repair distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn't disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to serve customers everywhere. Additionally, maintenance and repair distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand. The 9 maintenance and repair distributors stocks we track reported a mixed Q4. As a group, revenues were in line with analysts' consensus estimates. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 9% since the latest earnings results. Founded in 1952, Distribution Solutions (NASDAQ:DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries. Distribution Solutions reported revenues of $480.5 million, up 18.6% year on year. This print exceeded analysts' expectations by 3.6%. Overall, it was a strong quarter for the company with an impressive beat of analysts' EPS estimates. The stock is down 4.2% since reporting and currently trades at $26.62. Read why we think that Distribution Solutions is one of the best maintenance and repair distributors stocks, our full report is free. Founded in NYC's Little Italy, MSC Industrial Direct (NYSE:MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors MSC Industrial reported revenues of $891.7 million, down 4.7% year on year, falling short of analysts' expectations by 0.8%. The business performed better than its peers, but it was unfortunately a mixed quarter with a solid beat of analysts' EBITDA estimates but a slight miss of analysts' organic revenue estimates. The stock is down 6.7% since reporting. It currently trades at $74. Is now the time to buy MSC Industrial? Access our full analysis of the earnings results here, it's free. Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ:TRNS) provides measurement instruments and supplies. Transcat reported revenues of $66.75 million, up 2.4% year on year, falling short of analysts' expectations by 5%. It was a disappointing quarter as it posted a significant miss of analysts' EBITDA and EPS estimates. Transcat delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 19.6% since the results and currently trades at $80. Read our full analysis of Transcat's results here. With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ:VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets. VSE Corporation reported revenues of $299 million, up 27.1% year on year. This result beat analysts' expectations by 1.8%. Overall, it was a stunning quarter as it also put up a solid beat of analysts' EPS estimates and an impressive beat of analysts' EBITDA estimates. VSE Corporation scored the fastest revenue growth among its peers. The stock is up 10.3% since reporting and currently trades at $111.37. Read our full, actionable report on VSE Corporation here, it's free. Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally. Fastenal reported revenues of $1.82 billion, up 3.7% year on year. This number lagged analysts' expectations by 1%. It was a slower quarter as it also produced a significant miss of analysts' adjusted operating income estimates. The stock is down 2.1% since reporting and currently trades at $73.20. Read our full, actionable report on Fastenal here, it's free. In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump's presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. Join Paid Stock Investor Research Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here. Sign in to access your portfolio
