Distribution Solutions Group, Inc. · NASDAQ:DSGR
Distribution Solutions — Lawson Products — Q2 2019 Earnings Presentation
18 slides from Distribution Solutions's earnings presentation, 2019
Slide 1: Investor Presentation Second Quarter 2019
Investor Presentation Second Quarter 2019 Presenters: Michael DeCata, President & CEO Ronald Knutson, EVP & CFO © 2019 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction, In Whole or in Part, Prohibited.
Slide 2: Safe Harbor Statement
Lawson Products, Inc. "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,”
Slide 3: Lawson Products: At a Glance
Lawson Products: At a Glance • Leading service based provider of consumables in MRO market • Serves industrial, commercial, institutional and government markets in all 50 states, Canada, Mexico, Puerto Rico and the Caribbean • Headquartered in Chicago, IL – Strategically located distribution centers
Slide 4: Competitive Advantages and Differentiators
Competitive Advantages and Differentiators What differentiates Lawson: • Service intensive “high touch” value proposition • Vendor managed inventory or “keep fill” • Deep product knowledge • Broad geographic sales and service coverage throughout the US and Canada • Leverage investments in sales team
Slide 5: Our Commitment to our 70,000+ Customers
Our Commitment to our 70,000+ Customers High touch service and technical expertise drives customer relationships Before After One Company, Zero Headaches Inventory Management Options Access to Industry Knowledge & Expertise • Comprehensive line of products • Lawson Managed Inventory • Product recomm
Slide 6: Customer and Product Profile
Customer and Product Profile Customer Mix Product Mix Aftermarket Automotive Supplies 8% Safety Kent Electrical 5% Automotive Bolt Supply 11% 16% 11% Welding and Cutting Tools Metal Repair and Abrasives 2% Strategic Government 13% 14% Other 10% Specialty 10% Other Chemicals 2% 12% Regional Accounts
Slide 7: Lawson Growth Strategy
Lawson Growth Strategy Sales Growth Driven By New Sales Sales Rep Acquisitions Reps Productivity Foundational Support ERP Network Sales Lean Six Website Optimization Transformation Sigma 7 © 2019 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction, In Whole or in Part, Pro
Slide 8: 2019 Focus: Actions Across the Value Chain Driving Growth
2019 Focus: Actions Across the Value Chain Driving Growth Add New Sales Reps and Drive Rep Productivity Customer Product Sales Process / Sourcing / Service / Order Management / DC Operations Sales Reps Purchasing Entry Pricing • Increase sales rep • Reduction of • Leverage vendor • Reduce cycle time
Slide 9: Longer Sales Rep Tenure Drives Rep Productivity
Longer Sales Rep Tenure Drives Rep Productivity 400 $500,000 $450,000 350 $400,000 300 $350,000 Number Of Sales Reps 250 Average Annual Sales $300,000 200 $250,000 $200,000 150 $150,000 100 $100,000 50 $50,000 0 $0 < 12 Mos. 1 - 2 Yrs. 3 - 5 Yrs. 5 - 10 Yrs. > 10 Yrs. Tenure With Lawson (as of 6/30/
Slide 10: Historical Financial Performance
Historical Financial Performance Recent sales growth and earnings expansion providing financial flexibility Consolidated Revenues Adjusted Reg G EBITDA $400,000 $40,000 $350,000 $30,000 $300,000 $20,000 $250,000 $10,000 $200,000 $0 2014 2015 2016 2017 2018 TTM 2014 2015 2016 2017 2018 TTM 6/30/19 6/
Slide 11: Financial Highlights for Second Quarter 2019
Financial Highlights for Second Quarter 2019 • Sales increased 6.3% YOY (7.1% excluding currency fluctuation) • Adjusted Reg G EBITDA margin improving 9.8% in Q2 2019 (10.1%(1) before lease accounting rule changes) v. 8.6% in Q2 2018 Continued investment in new sales reps and rep productivity •
Slide 12: Capital Allocation Priorities
Capital Allocation Priorities Maintain Strong • Net debt to TTM Adjusted EBITDA 0.1x at 6/30/19; target < 3.0x Balance Sheet • Consistent free cash flow generation • $40 million credit facility in place • Capital expenditures expected to be $2.0 - $3.0 million in 2019 Reinvest for Growth • Growth in
Slide 13: Lawson Products: Poised for Growth
Lawson Products: Poised for Growth • Leverage Current Infrastructure • Continued Sales Growth • Foundational Investments Completed • Operational Excellence • Large Fragmented Market 13 © 2019 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction, In Whole or in Part, Prohibi
Slide 14: For More Information
For More Information Contact: Ronald J. Knutson EVP, CFO Investor Relations (773) 304-5665 ron.knutson@lawsonproducts.com And see our Website at http://www.lawsonproducts.com/company-info/investor-relations.jsp 14 © 2019 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction,
Slide 15: Appendices
Appendices 15 © 2019 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction, In Whole or in Part, Prohibited.
Slide 16: Significant Activities
Significant Activities Appendix P-1 August 2011 Implemented SAP October 2011 Commenced construction of new McCook, Ill distribution center May 2012 Relocated corporate headquarters June 2012 Restructured senior team. Announced $20M cost savings plan Transitioned packaging facility to McCook, Il
Slide 17: Regulation G – GAAP Reconciliation
Appendix P-2 Regulation G – GAAP Reconciliation Non GAAP Reconciliation of Adjusted EBITDA to Sales Percentage 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
Slide 18: Consolidated Balance Sheet
Appendix P-4 Consolidated Balance Sheet June 30, December 31, 2019 2018 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 6,915 $ 11,883 Restricted cash 800 800 Accounts receivable, less allowance for doubtful accounts of $596 and $549, respectively 45,570 37,682 Inventories, net 55,360