Distribution Solutions Group, Inc. · NASDAQ:DSGR
Distribution Solutions — Lawson Products Inc/New — William Blair 3rd Annual Emerging Growth Stock Conference 2009
22 slides from Distribution Solutions's conference presentation, Oct 6, 2009
Slide 1: William Blair 3rd Annual Emerging Growth Stock Conference October 2009
William Blair 3rd Annual Emerging Growth Stock Conference October 2009
Slide 2: Forward-Looking Statements
"Safe Harbor" Statement under the Securities Litigation Reform Act of 1995: This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. The terms "may," "should," "could," "anticipate,"
Slide 3: Agenda
Agenda Industry Overview Company Overview Business Strategy Financial Summary Appendix 1 Page 2
Slide 4: Industrial distribution industry: large scale, extreme fragmentation
The industrial distribution industry is characterized by its large scale, extreme fragmentation and many channels of distribution The North American industrial distribution market was estimated at $340 billion for 2007 made up of ~38,400 companies with an average revenue of ~$8.5 million (1) Of thes
Slide 5: Lawson Provides "Just in Case" Supplies for the "Do it for Me" customer
Lawson Provides "Just in Case" Supplies for the "Do it for Me" customer Lawson's place in distribution Lawson's place in distribution Lawson's place in distribution Planned Purchases Emergency Purchases Customer can shop around. Suppliers needs a low cost delivery model Customers need it now. Suppli
Slide 6: Founded in 1952, Lawson is an international MRO distributor
Founded in 1952, Lawson is an international distributor of maintenance, repair and operations ("MRO") products and specialty components to the industrial, commercial, institutional and government markets Supplies over 180,000 consumable products in a vast number of categories including fasteners, cu
Slide 7: Lawson Overview - Business Segments
Lawson Overview - Business Segments Lawson Products 2008 sales $353.2 million 976 Employees Lawson's largest division Markets a broad range of MRO products including fasteners, cutting tools, chemicals and abrasives, hydraulics and automotive products Selling Agents ~1500 2008 sales $50.4 million 11
Slide 8: Historical Challenges
Historical Challenges Multiple independent business units w/ separate supply chains, selling organizations & management teams Disparate operating & selling practices Business model costs (2007) 51.8% SG&A at enterprise level 60.1% SG&A for Lawson Products * 38.0% Lawson Products cost of sales Few in
Slide 9: Implemented Cost Savings Initiatives
Implemented Cost Savings Initiatives $'s in millions Total FTE's have decreased by approximately 250 (or 18%) from December 2007 to August 2009 Approximately $3.0 million of additional savings will be realized in 2010 from the annualization of the reduction in force and distribution center closings
Slide 10: Implemented Working Capital Management
Implemented Working Capital Management Targeted a $22.6 million inventory reduction from April 2008 to December 2009 Currently ahead of plan $1.7 million Achieved $20.8 million reduction by August 2009 Inventory Management Working Capital In addition to a $20.8 million inventory reduction, significa
Slide 11: Accomplishments
Accomplishments Integrate MRO businesses - completed 2008 Exploit inter-business synergies - completed 2008 Unify selling organization - completed 2008 Single high quality management organization - over 50 new hires at manager level and above Outsource computer operations - complete 2009 In Process
Slide 12: MRO Group Value Proposition "Smarter Maintenance"
Inventory Management Onsite management of MRO inventory to keep customers operations running Regular inventory analysis and replenishment to prevent unnecessary purchases or unplanned downtime Customized storage systems for improved inventory organization and more efficient workflow Technical Expert
Slide 13: Sales Transformation
Phase 1: Transition Front Line Management role from Player Manager to Manager Coach Implement new compensation programs to drive revenues Phase 2: Develop "Key Account" selling capability Implement segment specific strategies Develop greater tactical finesse around pricing management Phase 3: Develo
Slide 14: Network Optimization
Scenarios have been developed creating an incremental progression to move from the current distribution network to a more optimal design balancing cost and service. Network Optimization Deliverables: ~$10 million inventory reduction opportunity ~ $5 million operating cost reduction Maintain or impro
Slide 15: Enterprise Resource Planning System
50% Productivity Improvement Q 3 2009 Complete High Level Business Case 20% Sales Increase Q 4 2009 Complete ERP selection 20% Margin Improvement Q1 2010 Planning / Analysis / Design 10% One time Gain & Other Q 1 2011 Start Go-Live Current IT costs $16 million annually for Lawson Products compared t
Slide 16: Why Buy Lawson now
Resilient business model well positioned to navigate through the current economic conditions and produce operational leverage from any future market uptick Experienced management team with the capability in managing our business through significant adversity . Diversified customer base and a broad r
Slide 17: Agenda
Agenda Company Overview Industry Overview Business Strategy Financial Performance Appendix 1 Page 16
Slide 18: Lawson Financial Summary - Gross Margin
Lawson Financial Summary Gross Margin(1) (1) Period ending December 31, 2008. (2) Period ended August 31, 2008. Lawson possesses strong gross margins compared to its competitors... Page 17 (2) (1) (1) (1) (1)
Slide 19: Lawson Financial Summary - SG&A as a % of Sales
Lawson Financial Summary SG&A as a % of Sales(1) ....but notably high SG&A costs leave substantial opportunity for cost improvements which could translate into higher EBITDA margins Page 18 (1) Period ending December 31, 2008. (2) Period ended August 31, 2008. (2) (1) (1) (1) (1)
Slide 20: Condensed Consolidated Statements of Operations (Unaudited)
Condensed Consolidated Statements of Operations (Unaudited) Page 20
Slide 21: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets Page 20
Slide 22: Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited) Page 21
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