Latest news with #DistributionSolutions
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
01-05-2025
- Business
- Yahoo
Distribution Solutions (NASDAQ:DSGR) Reports Sales Below Analyst Estimates In Q1 Earnings, Stock Drops
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 Distribution Solutions? Find out in our full research report. 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%, in line with the same quarter last year Free Cash Flow was -$10.41 million, down from $2.94 million in the same quarter last year Market Capitalization: $1.21 billion 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. Founded in 1952, Distribution Solutions (NASDAQ:DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries. A company's long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Distribution Solutions grew its sales at an incredible 50.3% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers. We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Distribution Solutions's annualized revenue growth of 17.8% over the last two years is below its three-year trend, but we still think the results suggest healthy demand. This quarter, Distribution Solutions's revenue grew by 14.9% year on year to $478 million but fell short of Wall Street's estimates. Looking ahead, sell-side analysts expect revenue to grow 10.2% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is healthy and indicates the market is baking in success for its products and services. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Distribution Solutions was profitable over the last four years but held back by its large cost base. Its average operating margin of 5.2% was weak for an industrials business. This result is surprising given its high gross margin as a starting point. On the plus side, Distribution Solutions's operating margin rose by 3.2 percentage points over the last four years, as its sales growth gave it operating leverage. In Q1, Distribution Solutions generated an operating profit margin of 4.2%, in line with the same quarter last year. This indicates the company's cost structure has recently been stable. Revenue trends explain a company's historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Distribution Solutions's EPS grew at an astounding 24.9% compounded annual growth rate over the last two years, higher than its 17.8% annualized revenue growth. However, this alone doesn't tell us much about its business quality because its operating margin didn't expand during this time. In Q1, Distribution Solutions reported EPS at $0.31, up from $0.25 in the same quarter last year. Despite growing year on year, this print missed analysts' estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Distribution Solutions's full-year EPS of $1.50 to grow 15.3%. We struggled to find many positives in these results. Its revenue missed significantly and its EBITDA fell short of Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 8.7% to $23.81 immediately following the results. Distribution Solutions's earnings report left more to be desired. Let's look forward to see if this quarter has created an opportunity to buy the stock. If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
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
