Sign In  |  Register  |  About Walnut Creek Guide  |  Contact Us

Walnut Creek, CA
September 01, 2020 1:43pm
7-Day Forecast | Traffic
  • Search Hotels in Walnut Creek Guide

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Distribution Solutions Group Announces 2023 Full Year and Fourth Quarter Results

2023 Revenue Grew to $1.6 Billion, Generating $102 Million of Operating Cash

Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or the "Company"), a premier specialty distribution company, today announced consolidated results for the 2023 full year and fourth quarter ended December 31, 2023. This press release is supplemented by an earnings presentation at https://investor.distributionsolutionsgroup.com/news/events.

Bryan King, CEO and Chairman of the Board said, “By most any standard, 2023 was a very successful year for Distribution Solutions Group. The Company's profitability grew significantly while also generating over $102 million of cash from operations. We expanded topline revenue to $1.6 billion, up more than 36%. Comparable sales, including Lawson for all periods, increased almost 24% for the full year despite a choppy sales environment in a few end markets, resulting in 3% organic growth. On a two-year stacked basis, organic revenue grew by almost 17%. For the full year, we ended with $157 million in adjusted EBITDA, up nearly 28%, and our adjusted EBITDA margins were 10.0%, a testament to DSG's ability to create value by broadening our scale and footprint.

“2023 reflects an acceleration of growth through a disciplined execution of our strategic initiatives with accretive acquisitions, organic growth and the successful roll-out of key operational initiatives. We took deliberate actions in 2023 to improve the return profile of the Company and create long-term enterprise value through a disciplined capital allocation strategy. This strategy included the acquisition of Hisco and the related $100 million rights offering, the return of capital to shareholders through an expanded share repurchase plan and our continuous focus of managing working capital to generate significant operating cash flows. As evidenced in 2023, our asset-light model that generates meaningful cash flow allows us to re-invest into high ROI initiatives and accretive acquisitions as we further drive long-term shareholder value.

“Fourth quarter revenue grew by 23% primarily due to acquired revenue from Hisco. Although our organic revenue contracted by 6%, our two-year stacked organic revenue grew by 10%. The current quarter decline was primarily due to continued softness in the technology end-market, delayed maintenance spend most notable in the renewable end-market, and delayed capital spending in the current interest-rate sensitive environment. Excluding these end markets, organic revenue grew by approximately 1% in the fourth quarter. This gives us confidence that business headwinds are isolated to these categories, mostly within the OEM and Industrial Technology verticals. Macroeconomic impacts and seasonally fewer selling days negatively impacted the margin profile of certain verticals for the quarter," concluded Mr. King.

The following represents a summary of certain operating results (unaudited). See the reconciliations of GAAP to non-GAAP measures in Tables 2, 3 and 6.

 

Twelve Months Ended

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

December 31,

 

 

(Dollars in thousands)

2023

 

2022(2)

 

% Change

 

2023

 

2022

 

% Change

Revenue

$

1,570,402

 

 

$

1,151,422

 

 

36.4

%

 

$

405,239

 

 

$

328,850

 

 

23.2

%

Pro forma revenue(1)

$

1,570,402

 

 

$

1,269,299

 

 

23.7

%

 

$

405,239

 

 

$

328,850

 

 

23.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$

42,991

 

 

$

41,786

 

 

2.9

%

 

$

(289

)

 

$

12,658

 

 

N/M

 

Non-GAAP adjusted operating income(1)

$

93,448

 

 

$

73,577

 

 

27.0

%

 

$

17,608

 

 

$

20,131

 

 

(12.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted EBITDA(1)

$

157,036

 

 

$

123,028

 

 

27.6

%

 

$

33,880

 

 

$

34,003

 

 

(0.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) as a percent of revenue

 

2.7

%

 

 

3.6

%

 

 

 

 

(0.1

)%

 

 

3.8

%

 

 

Adjusted EBITDA as a percent of pro forma revenue

 

10.0

%

 

 

9.7

%

 

 

 

 

8.4

%

 

 

10.3

%

 

 

 

(1) Full year 2022 results includes Lawson Products pre-merger results, other pro forma adjustments and certain non-operational or non-cash items

(2) As a result of the April 1, 2022 strategic combination of Lawson Products, Gexpro Services and TestEquity, the Company's financial results are reported under reverse merger accounting treatment as required by generally accepted accounting principles ("GAAP"). Accordingly, Lawson Products results are included only for the periods following the April 1, 2022 merger closing date. GAAP results for the three and twelve months ended December 31, 2022 include the combined results of Gexpro Services and TestEquity, and the results of Lawson Products only subsequent to April 1, 2022.

2023 Full Year Summary(1)

  • Revenue was $1.57 billion, an increase of $419.0 million or 36.4% compared to 2022. On a comparable basis (including 12 months of Lawson in 2022), pro forma revenue grew 23.7%. Organic revenue grew 2.9% for 2023 versus 2022 and the remaining increase driven by acquisitions.
  • Operating income increased $1.2 million from the prior year to $43.0 million, after the effect of non-cash acquired intangible amortization and $50.5 million of non-recurring acquisition related severance and retention costs, stock-based compensation and other non-recurring items. Adjusted operating income, excluding these non-cash and non-recurring items, grew 27.0% to $93.4 million compared to $73.6 million in 2022.
  • Non-GAAP adjusted EBITDA grew to $157.0 million in 2023, or 10.0% of revenue, compared to $123.0 million or 9.7% of comparable pro forma revenue in the prior year. As expected, Hisco's operations pressured the 2023 adjusted EBITDA margins by approximately 50bps.
  • GAAP Diluted loss per share was $0.20 for the year compared to earnings per diluted share of $0.21 in the year-ago period. Non-GAAP adjusted diluted earnings per share was $1.42 compared to $1.47 in the prior year on higher weighted average shares of 44.9 million in 2023 versus 35.1 million in 2022.
  • The Company ended 2023 with total liquidity of $298 million, consisting of $99.6 million of cash (restricted and unrestricted) and $198.3 million of availability under its credit facility with net debt leverage of 2.9x. Uses of cash for 2023 included net capital expenditures of $18.7 million and share repurchases of $3.6 million at an average price of $26.09.

    (1) See reconciliation of GAAP to non-GAAP measures in tables 3, 5 and 6.

    Share and per share data for all periods presented reflect two-for-one stock split.

2023 Fourth Quarter Summary(2)

  • Revenue increased $76.4 million, or 23.2%, to $405.2 million which includes $97.3 million of incremental revenue from 2022 and 2023 acquisitions. Two-year stacked organic revenue in the fourth quarter for 2023 and 2022 increased 10% despite organic revenue softness in the 2023 fourth quarter being down 6.4%. The revenue headwinds were isolated to the technology end-market and project-related verticals that are both more sensitive to high interest rates connected to capital spending.
  • Operating loss was $0.3 million, which included $10.4 million of non-cash acquired intangible amortization and $17.9 million of non-recurring severance (primarily acquisition related) and other acquisition-related retention costs, stock-based compensation and other non-recurring items as compared to operating income of $12.7 million in the prior year quarter. Adjusted operating income, excluding these non-cash and non-recurring items, was $17.6 million compared to $20.1 million in the year-ago quarter.
  • GAAP Diluted loss per share was $0.35 for the quarter compared to diluted loss per share of $0.05 in the year-ago quarter on higher depreciation and amortization expenses and establishing a valuation allowance on certain deferred tax assets in 2023. Non-GAAP adjusted diluted earnings per share was $0.22 compared to $0.32 for the same period a year ago.
  • Adjusted EBITDA was $33.9 million compared to $34.0 million in the prior year quarter. As expected, Hisco operations pressured adjusted EBITDA margins in the 2023 quarter by approximately 35bps.
  • The Board of Directors announced an increase of $25.0 million to the existing share repurchase program, expanding the Company's availability to $29.0 million at December 31, 2023.

    (2) See reconciliation of GAAP to non-GAAP measures in tables 2, 4 and 6.

    Share and per share data for all periods presented reflect two-for-one stock split.

Conference Call

Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss 2023 fiscal year and fourth quarter results at 9:00 a.m. Eastern Time on March 7, 2024. 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 138589. A replay of the conference call will be available by telephone approximately two hours after completion of the call through March 21, 2024. 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 49593. 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 https://investor.distributionsolutionsgroup.com/news/events.

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 180,000 customers in several diverse end markets supported by approximately 3,700 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 www.distributionsolutionsgroup.com.

This release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Terms such as “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, which speak only as of the date made. DSG undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Certain risks associated with DSG’s business are also discussed from time to time in the reports DSG files with the SEC, including DSG’s Annual Report on Form 10-K, DSG’s Quarterly Reports on Form 10-Q and DSG’s Current Reports on Form 8-K, which should be reviewed carefully. In addition, the following factors, among others, could cause actual outcomes and results to differ materially from those discussed in the forward-looking statements: (i) unanticipated difficulties, expenditures or any problems arising after combining the businesses of Lawson Products, TestEquity and Gexpro Services (the "merger"), which may result in DSG not operating as effectively and efficiently as expected; (ii) the risk that stockholder litigation in connection with the merger or any other acquisition or business combination completed by DSG or any of its subsidiaries results in significant costs of defense, indemnification and liability; and (iii) the risks that DSG may encounter difficulties integrating the business of DSG with the business of other companies that DSG has acquired or has otherwise combined with, that DSG may not achieve the anticipated synergies contemplated with respect to any such business or transactions and that certain assumptions with respect to such business or transactions could prove to be inaccurate.

-TABLES FOLLOW-

Distribution Solutions Group, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share data)

(Unaudited)

 

 

December 31,

2023

 

December 31,

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

83,931

 

 

$

24,554

 

Restricted cash

 

15,695

 

 

 

186

 

Accounts receivable, less allowances

 

213,448

 

 

 

166,301

 

Inventories

 

315,984

 

 

 

264,374

 

Prepaid expenses and other current assets

 

28,272

 

 

 

22,773

 

Total current assets

 

657,330

 

 

 

478,188

 

Property, plant and equipment, net

 

113,811

 

 

 

64,395

 

Rental equipment, net

 

24,575

 

 

 

27,139

 

Goodwill

 

399,925

 

 

 

348,048

 

Deferred tax asset, net

 

95

 

 

 

189

 

Intangible assets, net

 

253,834

 

 

 

227,994

 

Cash value of life insurance

 

18,493

 

 

 

17,166

 

Right of use operating lease assets

 

76,340

 

 

 

46,755

 

Other assets

 

5,928

 

 

 

5,736

 

Total assets

$

1,550,331

 

 

$

1,215,610

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

98,674

 

 

$

80,486

 

Current portion of long-term debt

 

32,551

 

 

 

16,352

 

Current portion of lease liabilities

 

13,549

 

 

 

9,964

 

Accrued expenses and other current liabilities

 

97,241

 

 

 

62,677

 

Total current liabilities

 

242,015

 

 

 

169,479

 

Long-term debt, less current portion, net

 

535,881

 

 

 

395,825

 

Lease liabilities

 

67,065

 

 

 

39,828

 

Deferred tax liability, net

 

18,326

 

 

 

23,834

 

Other liabilities

 

25,443

 

 

 

23,649

 

Total liabilities

 

888,730

 

 

 

652,615

 

Stockholders’ equity:

 

 

 

Preferred stock, $1 par value:

 

 

 

Authorized - 500,000 shares, issued and outstanding — None

 

 

 

 

 

Common stock, $1 par value:

 

 

 

Authorized - 70,000,000 shares

Issued - 47,535,618 and 39,460,724 shares, respectively

Outstanding - 46,758,359 and 38,833,568 shares, respectively

 

46,758

 

 

 

38,834

 

Capital in excess of par value

 

671,154

 

 

 

572,379

 

Retained deficit

 

(34,707

)

 

 

(25,736

)

Treasury stock – 777,259 and 627,156 shares, respectively

 

(16,434

)

 

 

(12,526

)

Accumulated other comprehensive income (loss)

 

(5,170

)

 

 

(9,956

)

Total stockholders’ equity

 

661,601

 

 

 

562,995

 

Total liabilities and stockholders’ equity

$

1,550,331

 

 

$

1,215,610

 

Distribution Solutions Group, Inc.

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Revenue

$

405,239

 

 

$

328,850

 

 

$

1,570,402

 

 

$

1,151,422

 

Cost of goods sold

 

267,555

 

 

 

212,558

 

 

 

1,018,527

 

 

 

760,524

 

Gross profit

 

137,684

 

 

 

116,292

 

 

 

551,875

 

 

 

390,898

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

137,973

 

 

 

103,634

 

 

 

508,884

 

 

 

349,112

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(289

)

 

 

12,658

 

 

 

42,991

 

 

 

41,786

 

 

 

 

 

 

 

 

 

Interest expense

 

(12,717

)

 

 

(7,597

)

 

 

(42,774

)

 

 

(24,301

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

(3,395

)

Change in fair value of earnout liabilities

 

112

 

 

 

(4,431

)

 

 

758

 

 

 

(483

)

Other income (expense), net

 

(113

)

 

 

(894

)

 

 

(2,982

)

 

 

(670

)

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(13,007

)

 

 

(264

)

 

 

(2,007

)

 

 

12,937

 

Income tax expense (benefit)

 

3,323

 

 

 

1,619

 

 

 

6,960

 

 

 

5,531

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(16,330

)

 

$

(1,883

)

 

$

(8,967

)

 

$

7,406

 

 

 

 

 

 

 

 

 

Basic income (loss) per share of common stock

$

(0.35

)

 

$

(0.05

)

 

$

(0.20

)

 

$

0.22

 

 

 

 

 

 

 

 

 

Diluted income (loss) per share of common stock

$

(0.35

)

 

$

(0.05

)

 

$

(0.20

)

 

$

0.21

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

46,804,556

 

 

 

38,816,834

 

 

 

44,868,862

 

 

 

34,291,870

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

46,804,556

 

 

 

38,816,834

 

 

 

44,868,862

 

 

 

35,086,592

 

Distribution Solutions Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

 

 

Twelve Months Ended December 31,

 

2023

 

2022

Operating activities

 

 

 

Net income (loss)

$

(8,967

)

 

$

7,406

 

Adjustments to reconcile to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

63,588

 

 

 

45,186

 

Amortization of debt issuance costs

 

2,420

 

 

 

1,888

 

Extinguishment of debt

 

 

 

 

3,395

 

Stock-based compensation

 

7,940

 

 

 

2,448

 

Compensation expense related to employee share purchases

 

427

 

 

 

 

Deferred income taxes

 

(8,028

)

 

 

(2,406

)

Change in fair value of earnout liabilities

 

(758

)

 

 

483

 

Gain on sale of rental equipment

 

(2,675

)

 

 

(3,632

)

Loss on sale of property, plant and equipment

 

294

 

 

 

 

Charge for step-up of acquired inventory

 

3,582

 

 

 

2,866

 

Net realizable value adjustment and write-offs for obsolete and excess inventory

 

8,990

 

 

 

4,608

 

Bad debt expense

 

784

 

 

 

795

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

 

18,020

 

 

 

(21,771

)

Inventories

 

(1,236

)

 

 

(42,404

)

Prepaid expenses and other current assets

 

931

 

 

 

(1,874

)

Accounts payable

 

3,048

 

 

 

(8,839

)

Accrued expenses and other current liabilities

 

13,667

 

 

 

4,492

 

Other changes in operating assets and liabilities

 

259

 

 

 

(3,670

)

Net cash provided by (used in) operating activities

 

102,286

 

 

 

(11,029

)

Investing activities

 

 

 

Purchases of property, plant and equipment

 

(15,337

)

 

 

(8,307

)

Business acquisitions, net of cash acquired

 

(259,835

)

 

 

(115,343

)

Purchases of rental equipment

 

(9,341

)

 

 

(11,794

)

Proceeds from sale of rental equipment

 

5,990

 

 

 

8,756

 

Net cash provided by (used in) investing activities

 

(278,523

)

 

 

(126,688

)

Financing activities

 

 

 

Proceeds from revolving lines of credit

 

180,982

 

 

 

383,489

 

Payments on revolving lines of credit

 

(302,083

)

 

 

(320,751

)

Proceeds from term loans

 

305,000

 

 

 

445,630

 

Payments on term loans

 

(26,375

)

 

 

(335,305

)

Deferred financing costs

 

(3,419

)

 

 

(11,956

)

Proceeds from rights offering, net of offering costs of $1,531

 

98,469

 

 

 

 

Repurchase of common stock

 

(3,619

)

 

 

(1,940

)

Shares repurchased held in treasury

 

(287

)

 

 

(520

)

Proceeds from employees for share purchases

 

3,253

 

 

 

 

Payment of financing lease principal

 

(515

)

 

 

(429

)

Payment of earnout

 

(1,000

)

 

 

 

Payment on seller's note

 

 

 

 

(9,757

)

Net cash provided by (used in) financing activities

 

250,406

 

 

 

148,461

 

Effect of exchange rate changes on cash and cash equivalents

 

717

 

 

 

(675

)

Increase (decrease) in cash, cash equivalents and restricted cash

 

74,886

 

 

 

10,069

 

Cash, cash equivalents and restricted cash at beginning of period

 

24,740

 

 

 

14,671

 

Cash, cash equivalents and restricted cash at end of period

$

99,626

 

 

$

24,740

 

Cash and cash equivalents

$

83,931

 

 

$

24,554

 

Restricted cash

 

15,695

 

 

 

186

 

Total cash, cash equivalents and restricted cash

$

99,626

 

 

$

24,740

 

Distribution Solutions Group, Inc.

Table 1 - Selected Segment Financial Data

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

Three Months Ended

 

December 31,

 

2023

 

2022

Revenue:

 

 

 

Lawson Products

$

109,807

 

 

$

108,029

Gexpro Services

 

93,211

 

 

 

100,103

TestEquity

 

190,685

 

 

 

105,374

Other

 

13,236

 

 

 

15,344

Intersegment revenue elimination

 

(1,700

)

 

 

Total

$

405,239

 

 

$

328,850

 

 

 

 

Operating income (loss):

 

 

 

Lawson Products

$

5,140

 

 

$

3,746

Gexpro Services

 

3,516

 

 

 

4,317

TestEquity

 

(8,282

)

 

 

3,932

Other

 

(663

)

 

 

663

Total

$

(289

)

 

$

12,658

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 includes for the year ended December 31, 2022 certain results of pre-merger Lawson Products and excludes for all periods 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 December 31, 2023 and 2022 and the years ended December 31, 2023 and 2022. 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.

Distribution Solutions Group, Inc.

Table 2 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA

Q4 2023 and Q4 2022

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lawson Products

 

Gexpro Services

 

TestEquity

 

All Other

 

Eliminations

 

Consolidated DSG

Quarter Ended

Q4 2023

Q4 2022

 

Q4 2023

Q4 2022

 

Q4 2023

Q4 2022

 

Q4 2023

Q4 2022

 

Q4 2023

Q4 2022

 

Q4 2023

Q4 2022

Revenue from external customers

$

109,475

 

$

108,029

 

��

$

91,968

 

$

100,103

 

 

$

190,560

 

$

105,374

 

 

$

13,236

 

$

15,344

 

 

$

 

$

 

$

405,239

 

$

328,850

 

Intersegment revenue

 

332

 

 

 

 

 

1,243

 

 

 

 

 

125

 

 

 

 

 

 

 

 

 

 

(1,700

)

 

 

 

 

 

 

Revenue

$

109,807

 

$

108,029

 

 

$

93,211

 

$

100,103

 

 

$

190,685

 

$

105,374

 

 

$

13,236

 

$

15,344

 

 

$

(1,700

)

$

 

$

405,239

 

$

328,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$

5,140

 

$

3,746

 

 

$

3,516

 

$

4,317

 

 

$

(8,282

)

$

3,932

 

 

$

(663

)

$

663

 

 

 

 

 

$

(289

)

$

12,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

4,407

 

 

4,063

 

 

 

4,026

 

 

4,196

 

 

 

7,315

 

 

5,055

 

 

 

524

 

 

558

 

 

 

 

 

 

16,272

 

 

13,872

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger and acquisition related costs(1)

 

360

 

 

1,324

 

 

 

268

 

 

1,823

 

 

 

931

 

 

1,486

 

 

 

939

 

 

 

 

 

 

 

 

2,498

 

 

4,633

 

Stock-based compensation(2)

 

2,499

 

 

2,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,499

 

 

2,003

 

Severance and acquisition related retention expenses(3)

 

46

 

 

217

 

 

 

199

 

 

221

 

 

 

11,153

 

 

3

 

 

 

2

 

 

2

 

 

 

 

 

 

11,400

 

 

443

 

Inventory step-up(4)

 

 

 

 

 

 

 

 

 

 

 

716

 

 

 

 

 

 

 

 

 

 

 

 

 

716

 

 

 

Other non-recurring(5)

 

(30

)

 

156

 

 

 

814

 

 

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

784

 

 

394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted EBITDA

$

12,422

 

$

11,509

 

 

$

8,823

 

$

10,795

 

 

$

11,833

 

$

10,476

 

 

$

802

 

$

1,223

 

 

 

 

 

$

33,880

 

$

34,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) as a percent of revenue

 

4.7

%

 

3.5

%

 

 

3.8

%

 

4.3

%

 

 

(4.3

)%

 

3.7

%

 

 

(5.0

)%

 

4.3

%

 

 

 

 

 

(0.1

)%

 

3.8

%

Adjusted EBITDA as a percent of revenue

 

11.3

%

 

10.7

%

 

 

9.5

%

 

10.8

%

 

 

6.2

%

 

9.9

%

 

 

6.1

%

 

8.0

%

 

 

 

 

 

8.4

%

 

10.3

%

(1)

Transaction and integration costs related to the mergers and other acquisitions

(2)

Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company’s stock price

(3)

Includes severance expense for actions taken in 2023 and 2022 not related to a formal restructuring plan and acquisition related retention expenses for the Hisco acquisition

(4)

Inventory fair value step-up adjustment for Lawson resulting from the reverse merger acquisition accounting and acquisition accounting for additional acquisitions completed by Gexpro Services or TestEquity

(5)

Other non-recurring costs consist of non-capitalized deferred financing costs incurred in conjunction with the 2023 credit agreement amendment, certain non-recurring strategic projects and other non-recurring items

Distribution Solutions Group, Inc.

Table 3 - Reconciliation of GAAP Revenue to Pro Forma Revenue and

GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA

YTD 2023 and YTD 2022

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lawson Products

 

Gexpro Services

 

TestEquity

 

Other

 

Eliminations

 

Consolidated DSG

Year Ended

2023

2022

 

2023

2022

 

2023

2022

 

2023

2022

 

2023

2022

 

2023

2022

Revenue from external customers

$

468,379

 

$

324,783

 

 

$

404,490

 

$

385,326

 

 

$

641,643

 

$

392,358

 

 

$

55,890

 

$

48,955

 

 

$

 

$

 

$

1,570,402

 

$

1,151,422

 

Intersegment revenue

 

332

 

 

 

 

 

1,243

 

 

 

 

 

125

 

 

 

 

 

 

 

 

 

 

(1,700

)

 

 

 

 

 

 

Revenue

 

468,711

 

 

324,783

 

 

 

405,733

 

 

385,326

 

 

 

641,768

 

 

392,358

 

 

 

55,890

 

 

48,955

 

 

 

(1,700

)

 

 

 

1,570,402

 

 

1,151,422

 

Pre-merger revenue(1)

 

 

 

104,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,975

 

 

 

 

 

 

 

 

 

117,877

 

Pro forma revenue

$

468,711

 

$

429,685

 

 

$

405,733

 

$

385,326

 

 

$

641,768

 

$

392,358

 

 

$

55,890

 

$

61,930

 

 

$

(1,700

)

$

 

$

1,570,402

 

$

1,269,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$

32,498

 

$

6,536

 

 

$

27,000

 

$

21,291

 

 

$

(16,465

)

$

11,375

 

 

$

(42

)

$

2,584

 

 

 

 

 

$

42,991

 

$

41,786

 

Pre-merger operating income(1)

 

 

 

11,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

980

 

 

 

 

 

 

 

 

12,076

 

Pro forma merger adjustments(2)

 

 

 

(4,086

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,086

)

Pro forma operating income (loss)

 

32,498

 

 

13,546

 

 

 

27,000

 

 

21,291

 

 

 

(16,465

)

 

11,375

 

 

 

(42

)

 

3,564

 

 

 

 

 

 

42,991

 

 

49,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

19,532

 

 

14,716

 

 

 

15,986

 

 

15,175

 

 

 

26,002

 

 

17,480

 

 

 

2,068

 

 

2,080

 

 

 

 

 

 

63,588

 

 

49,451

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger and acquisition related costs(3)

 

3,015

 

 

7,672

 

 

 

1,081

 

 

5,957

 

 

 

6,215

 

 

4,786

 

 

 

1,250

 

 

 

 

 

 

 

 

11,561

 

 

18,415

 

Stock-based compensation(4)

 

7,940

 

 

(4,237

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,940

 

 

(4,237

)

Severance and acquisition related retention expenses(5)

 

476

 

 

2,050

 

 

 

238

 

 

266

 

 

 

23,949

 

 

1,095

 

 

 

3

 

 

11

 

 

 

 

 

 

24,666

 

 

3,422

 

Inventory net realizable value adjustment(6)

 

 

 

1,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,737

 

Inventory step-up(7)

 

 

 

1,943

 

 

 

 

 

163

 

 

 

3,582

 

 

 

 

 

 

 

761

 

 

 

 

 

 

3,582

 

 

2,867

 

Other non-recurring(8)

 

202

 

 

1,199

 

 

 

886

 

 

354

 

 

 

 

 

 

 

 

1,620

 

 

44

 

 

 

 

 

 

2,708

 

 

1,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted EBITDA

$

63,663

 

$

38,626

 

 

$

45,191

 

$

43,206

 

 

$

43,283

 

$

34,736

 

 

$

4,899

 

$

6,460

 

 

 

 

 

$

157,036

 

$

123,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) as a percent of revenue

 

6.9

%

 

2.0

%

 

 

6.7

%

 

5.5

%

 

 

(2.6

)%

 

2.9

%

 

 

(0.1

)%

 

5.3

%

 

 

 

 

 

2.7

%

 

3.6

%

Adjusted EBITDA as a percent of revenue

 

13.6

%

 

11.9

%

 

 

11.1

%

 

11.2

%

 

 

6.7

%

 

8.9

%

 

 

8.8

%

 

13.2

%

 

 

 

 

 

10.0

%

 

10.7

%

Adjusted EBITDA as a percent of pro forma revenue

 

13.6

%

 

9.0

%

 

 

11.1

%

 

11.2

%

 

 

6.7

%

 

8.9

%

 

 

8.8

%

 

10.4

%

 

 

 

 

 

10.0

%

 

9.7

%

(1)

Represents Lawson Products pre-merger revenue and operating income

(2)

Represents Lawson Products pro forma adjustments related to the merger consisting primarily of amortization of intangibles and stock based compensation

(3)

Transaction and integration costs related to the mergers and other acquisitions

(4)

Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company’s stock price

(5)

Includes severance expense for actions taken in 2023 and 2022, not related to a formal restructuring plan and acquisition related retention expenses for the Hisco acquisition

(6)

Inventory net realizable value adjustment recorded to reduce inventory related to discontinued products where the anticipated net realizable value was lower than the cost reflected in our records

(7)

Inventory fair value step-up adjustment for Lawson resulting from the reverse merger acquisition accounting and acquisition accounting for additional acquisitions completed by Gexpro Services or TestEquity

(8)

Other non-recurring costs consist of non-capitalized deferred financing costs incurred in conjunction with the 2023 credit agreement amendment, certain non-recurring strategic projects and other non-recurring items

Distribution Solutions Group, Inc.

Table 4 - Reconciliation of GAAP Net Income (Loss) and GAAP Diluted EPS to

Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted EPS

(Dollars in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

December 31, 2023

 

December 31, 2022(3)(4)

 

Amount

 

Diluted EPS(2)

 

Amount

 

Diluted EPS(2)

Net income (loss)

$

(16,330

)

 

$

(0.35

)

 

$

(1,883

)

 

$

(0.05

)

 

 

 

 

 

 

 

 

Pretax adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

2,499

 

 

 

0.05

 

 

 

2,003

 

 

 

0.05

 

Merger and acquisition related costs

 

2,498

 

 

 

0.05

 

 

 

4,633

 

 

 

0.12

 

Amortization of intangible assets

 

10,398

 

 

 

0.22

 

 

 

8,186

 

 

 

0.21

 

Severance and acquisition related retention expenses

 

11,400

 

 

 

0.24

 

 

 

443

 

 

 

0.01

 

Change in fair value of earnout liabilities

 

(112

)

 

 

 

 

 

4,431

 

 

 

0.11

 

Inventory step-up

 

716

 

 

 

0.02

 

 

 

 

 

 

 

Other non-recurring

 

784

 

 

 

0.02

 

 

 

394

 

 

 

0.01

 

Total pretax adjustments

 

28,183

 

 

 

0.60

 

 

 

20,090

 

 

 

0.51

 

Tax effect on adjustments(1)

 

(7,412

)

 

 

(0.16

)

 

 

(5,264

)

 

 

(0.14

)

Deferred tax asset valuation allowance(5)

 

6,144

 

 

 

0.13

 

 

 

124

 

 

 

 

Non-GAAP adjusted net income

$

10,585

 

 

$

0.22

 

 

$

13,067

 

 

$

0.32

 

(1)

The estimated tax effect on the adjustments is determined by applying the jurisdictional rate of the originating territory of the non-GAAP adjustments.

(2)

Pretax adjustments to diluted EPS calculated on 46.805 million and 38.817 million diluted shares for the fourth quarter of 2023 and 2022, respectively.

(3)

In 2023, the Company changed the treatment of amortization of intangible assets and the deferred tax asset valuation allowance to be included in the calculation of Non-GAAP adjusted net income and Non-GAAP adjusted diluted EPS. The calculation of the tax effect on adjustments was revised to consider the jurisdictional rate of the originating territory of the non-GAAP adjustments. Prior periods have been adjusted to conform to current period presentation.

(4)

Share and per share data for all periods presented reflect two-for-one stock split.

(5)

Represents expense related to the deferred tax asset valuation allowance from interest expense limitations under Section 163(j).

Distribution Solutions Group, Inc.

Table 5 - Reconciliation of GAAP Net Income (Loss) and GAAP Diluted EPS to

Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted EPS

(Dollars in thousands, except per share data)

(Unaudited)

 

 

 

Twelve Months Ended

 

December 31, 2023

 

December 31, 2022(3)(4)

 

Amount

 

Diluted EPS(2)

 

Amount

 

Diluted EPS(2)

Net income (loss)

$

(8,967

)

 

$

(0.20

)

 

$

7,406

 

 

$

0.21

 

 

 

 

 

 

 

 

 

Pretax adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

7,940

 

 

 

0.18

 

 

 

2,448

 

 

 

0.07

 

Merger and acquisition related costs

 

11,561

 

 

 

0.26

 

 

 

15,441

 

 

 

0.44

 

Amortization of intangible assets

 

40,263

 

 

 

0.90

 

 

 

29,097

 

 

 

0.83

 

Severance and acquisition related retention expenses

 

24,666

 

 

 

0.55

 

 

 

2,796

 

 

 

0.08

 

Change in fair value of earnout liabilities

 

(758

)

 

 

(0.02

)

 

 

483

 

 

 

0.01

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

3,395

 

 

 

0.10

 

Inventory net realizable value adjustment

 

 

 

 

 

 

 

1,737

 

 

 

0.05

 

Inventory step-up

 

3,582

 

 

 

0.08

 

 

 

2,867

 

 

 

0.08

 

Other non-recurring

 

2,708

 

 

 

0.06

 

 

 

1,597

 

 

 

0.05

 

Total pretax adjustments

 

89,962

 

 

 

2.01

 

 

 

59,861

 

 

 

1.71

 

Tax effect on adjustments(1)

 

(23,660

)

 

 

(0.53

)

 

 

(15,684

)

 

 

(0.45

)

Deferred tax asset valuation allowance

 

6,144

 

 

 

0.14

 

 

 

124

 

 

 

 

Non-GAAP adjusted net income

$

63,479

 

 

$

1.42

 

 

$

51,707

 

 

$

1.47

 

(1)

The estimated tax effect on the adjustments is determined by applying the jurisdictional rate of the originating territory of the non-GAAP adjustments.

(2)

Pretax adjustments to diluted EPS calculated on 44.869 million and 35.087 million diluted shares for the twelve months ended December 31, 2023 and 2022, respectively.

(3)

In 2023, the Company changed the treatment of amortization of intangible assets and the deferred tax asset valuation allowance to be included in the calculation of Non-GAAP adjusted net income and Non-GAAP adjusted diluted EPS. The calculation of the tax effect on adjustments was revised to consider the jurisdictional rate of the originating territory of the non-GAAP adjustments. Prior periods have been adjusted to conform to current period presentation.

(4)

Share and per share data for all periods presented reflect two-for-one stock split.

(5)

Represents expense related to the deferred tax asset valuation allowance from interest expense limitations under Section 163(j).

Distribution Solutions Group, Inc.

Table 6 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted Operating Income

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

Operating income (loss)

$

(289

)

 

$

12,658

 

$

42,991

 

$

41,786

 

Pre-merger operating income(1)

 

 

 

 

 

 

 

 

12,076

 

Pro forma merger adjustments(2)

 

 

 

 

 

 

 

 

(4,086

)

Pro forma operating income (loss)

 

(289

)

 

 

12,658

 

 

42,991

 

 

49,776

 

 

 

 

 

 

 

 

 

Gross profit adjustments:

 

 

 

 

 

 

 

Inventory step-up(3)

 

716

 

 

 

 

 

3,582

 

 

2,867

 

Inventory net realizable value adjustment(4)

 

 

 

 

 

��

 

 

1,737

 

Total gross profit adjustments

 

716

 

 

 

 

 

3,582

 

 

4,604

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses adjustments:

 

 

 

 

 

 

 

Merger and acquisition related costs(5)

 

2,498

 

 

 

4,633

 

 

11,561

 

 

18,415

 

Stock-based compensation(6)

 

2,499

 

 

 

2,003

 

 

7,940

 

 

(4,237

)

Severance and acquisition related retention expenses(7)

 

11,400

 

 

 

443

 

 

24,666

 

 

3,422

 

Other non-recurring(8)

 

784

 

 

 

394

 

 

2,708

 

 

1,597

 

Total selling, general and administrative adjustments

 

17,181

 

 

 

7,473

 

 

46,875

 

 

19,197

 

 

 

 

 

 

 

 

 

Total adjustments

 

17,897

 

 

 

7,473

 

 

50,457

 

 

23,801

 

Non-GAAP adjusted operating income

$

17,608

 

 

$

20,131

 

$

93,448

 

$

73,577

 

(1)

Represents Lawson Products pre-merger operating income

(2)

Represents Lawson Products pro forma adjustments related to the merger consisting primarily of amortization of intangibles and stock based compensation

(3)

Inventory fair value step-up adjustment for Lawson resulting from the reverse merger acquisition accounting and acquisition accounting for additional acquisitions completed by Gexpro Services or TestEquity

(4)

Inventory net realizable value adjustment recorded to reduce inventory related to discontinued products where the anticipated net realizable value was lower than the cost reflected in our records

(5)

Transaction and integration costs related to the mergers and other acquisitions

(6)

Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company’s stock price

(7)

Includes severance expense for actions taken in 2023 and 2022 not related to a formal restructuring plan and acquisition related retention expenses for the Hisco acquisition

(8)

Other non-recurring costs consist of non-capitalized deferred financing costs incurred in conjunction with the 2023 credit agreement amendment, certain non-recurring strategic projects and other non-recurring items

 

Contacts

Company:

Distribution Solutions Group, Inc.

Ronald J. Knutson

Executive Vice President, Chief Financial Officer and Treasurer

1-888-611-9888

Investor Relations:

Three Part Advisors, LLC

Steven Hooser / Sandy Martin

214-872-2710 / 214-616-2207

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 WalnutCreekGuide.com & California Media Partners, LLC. All rights reserved.