Distribution Solutions Group, Inc. · NASDAQ:DSGR
Distribution Solutions — Lawson Products — Q1 2020 Earnings Presentation
19 slides from Distribution Solutions's earnings presentation, 2020
Slide 1: Investor Presentation First Quarter 2020
Investor Presentation First Quarter 2020 Presenters: Michael DeCata, President & CEO Ronald Knutson, EVP & CFO © 2020 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 MixAftermarket Automotive Supplies 8% Safety 6% Kent Electrical Welding and Automotive Bolt Supply 11% Metal Repair 15% 10% 1% Cutting Tools Strategic Government and Abrasives Other 14% 10% 13% 13% Other 3% Specialty Regional Chemicals Accounts 12% F
Slide 7: COVID-19 Impact
COVID-19 Impact Ever-Changing Environment Limited Bright-Lines Flexibility Coming Out: Current Nimble Decision-Making • Customer Environment: loyalty • Lawson • Strong deemed an financial essential position business • Engaged • Distribution team network members- operating company • Sales team trust
Slide 8: Financial Highlights for First Quarter 2020
Financial Highlights for First Quarter 2020 • Adjusted Reg G EBITDA margin improving; 10.2% in Q1 2020 v. 8.2% in • Significant Actions in Q1 2019 Response to COVID-19; Eliminated $4.0-$4.5M of • Sales decreased 0.3% compared to Q1 monthly expenses 2019; primarily driven by second half of ✓ Provided
Slide 9: 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 2015 2016 2017 2018 2019 TTM 2015 2016 2017 2018 2019 TTM 3/31/20 3/
Slide 10: Capital Allocation Priorities
Capital Allocation Priorities Maintain Strong • $4.1 million cash on hand outstanding borrowings of $10.5 million at the end of Balance Sheet Q1 • Increased our borrowing capacity to $100.0 million (additional $50.0 million Reinvest for Growth accordion) with our new borrowing agreement in 2019 • Ca
Slide 11: 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 11 © 2020 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction, In Whole or in Part, Pr
Slide 12: 2020 Focus: Actions Across the Value Chain Driving Growth
2020 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 13: Longer Sales Rep Tenure Drives Rep Productivity
Longer Sales Rep Tenure Drives Rep Productivity 350 $500,000 $450,000 300 $400,000 250 $350,000 Number Of Sales Reps Average Annual Sales $300,000 200 $250,000 150 $200,000 100 $150,000 $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 3/31/20)
Slide 14: Lawson Products: Poised for Growth
Lawson Products: Poised for Growth • Leverage Current Infrastructure • Continued Sales Growth • Foundational Investments Completed • Operational Excellence • Large Fragmented Market 14 © 2020 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction, In Whole or in Part, Prohibi
Slide 15: 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 15 © 2020 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction,
Slide 16: Appendices
Appendices 16 © 2020 Lawson Products, Inc. All rights reserved. Confidential Material, Reproduction, In Whole or in Part, Prohibited.
Slide 17: Significant Activities
Appendix P-1 Significant Activities 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 18: 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 19: Consolidated Balance Sheet
Appendix P-4 Consolidated Balance Sheet March 31, December 31, 2020 2019 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 4,095 $ 5,495 Restricted cash 802 802 Accounts receivable, less allowance for doubtful accounts of $793 41,406 38,843 and $593, respectively Inventories, net 56,182