Distribution Solutions Group, Inc. · NASDAQ:DSGR
Distribution Solutions — Baird Investor Conference 2023
24 slides from Distribution Solutions's conference presentation, Nov 7, 2023
Slide 1: Baird Investor Conference
NASDAQ: DSGR Baird Investor Conference November 7, 2023
Slide 2: Disclaimers
Disclaimers Cautionary Note Regarding Forward-Looking Statements This presentation contains 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
Slide 3: Leading Industrial Distribution Platform
Leading Industrial Distribution Platform MRO Focus OEM Focus Industrial Technologies Focus Leading vendor managed Leading global supply chain services and Leading supplier of electronic and specialty inventory provider of C-parts C-parts provider to OEM production supplies and T&M equipment to the M
Slide 4: The Power of Three
The Power of Three Main Assembly Production Plant Maintenance Shop Valued Added Services Hardware Electrical Fabrications Fluid Fasteners Chemicals Cutting & Power Abrasives Electronics Assembly Research and Development Lab Solder Cases & Benches & Paint & Wire Tools Workstations Environmental Abras
Slide 5: DSG Delivers a Unique & Attractive Specialty Distribution Platform
DSG Delivers a Unique & Attractive Specialty Distribution Platform ✓ ✓ ✓ ✓ Significant Customer, Attractive, Accretive Strong, Sticky Role Dual Pronged Supplier & End Market Returns on in the Value Chain Growth Strategy Diversity Incremental Capital Customer-Embedded Serve 10+ Industries 200+ bps Ad
Slide 6: Value Creation Themes: Revenue and End Market Diversification
Value Creation Themes Spotlight: Revenue and End Market Diversification A&D Industry – example of how DSG serves >170,000 customers customers up and down the value chain within various end markets: in a robust set of end markets R&D - TE | OEM - GS/TE/Hisco | MRO - Lawson/Hisco ✓ Sticky customer rel
Slide 7: Value Creation Themes: Embedded Growth Opportunities
Value Creation Themes Spotlight: Embedded Growth Opportunities Leverage Platform Across Customer Base Strong Secular Tailwinds Unique total customer value proposition + Onshoring / Infrastructure Monetize distinct capabilities across the platform Nearshoring (CHIPS Act) + Collaborative selling acros
Slide 8: MRO Focus: Overview
MRO Focus: Overview Business Unit Snapshot Products ▪ Fasteners ▪ Hydraulics MRO Focus 30% of Total Revenue ▪ Chemicals ▪ Other broad offerings and C-Parts ▪ Cutting tools OEM Focus Services ▪ Managed inventory ▪ Product recommendations ▪ Industrial vending ▪ Application advice Industrial Technologi
Slide 9: OEM Focus: Overview
OEM Focus: Overview Business Unit Snapshot Comprehensive Supply Chain Solutions MRO Focus OEM Focus 23% of Total Revenue Vendor Managed Kitting & Aftermarket / Technology Industrial Technologies Focus Inventory (VMI) Assembly Installation Diverse End Markets Renewables Technology Aerospace & Defense
Slide 10: Industrial Technologies Focus: Overview
Industrial Technologies Focus: Overview Business Unit Snapshot Products ▪ Electronic Production ▪ Environmental Test MRO Focus Supplies Chambers ▪ Test & Measurement ▪ Chemicals & Adhesives OEM Focus Instrumentation ▪ Labels and Printing Services ▪ VMI ▪ Asset Management Industrial Technologies Focu
Slide 11: Compounding Effect of Cash Flow Reinvestment
Compounding Effect of Cash Flow Reinvestment Goal of >100% conversion1 Free Cash Flow Reinvesting in the Strategic M&A and bolt- business, balance sheet, on acquisitions and working capital Opportunistic buybacks Debt reduction and potential dividends Disciplined Capital Allocation Framework with a
Slide 12: Recent Financial Highlights – Q3 2023
Recent Financial Highlights – Q3 2023 Reported Revenue and Adjusted EBITDA ✓ Revenue of $438.9M, an increase of $91.8M or +26.4% over year ago quarter, primarily from acquisitions. Organic revenue down 4.2% from prior year quarter. On a two-year basis, organic growth up 11%. ✓ Adjusted EBITDA of $43
Slide 13: Other Financial Highlights
Other Financial Highlights Robust Net Working Capital Investment Rapid Deleveraging via Earnings Amended Credit Agreement: Growth and Free Cash Flow Generation $805mm Total Facility $445mm 3.6x ~$279 1 $313 Inventory Leverage at April 1, 2022 Merger Close $239 Accounts Receivable ~$100 2.9x 1 $(107)
Slide 14: Questions?
Questions? Visit our websites for more information www.lawsonproducts.com www.testequity.com www.gexproservices.com www.lkcmheadwater.com www.distributionsolutionsgroup.com DSG Investor Presentation
Slide 15: Investor Contacts
Investor Contacts Three Part Advisors, LLC (214) 872-2710 Steven Hooser shooser@threepa.com Sandy Martin smartin@threepa.com 15 DSG Investor Presentation
Slide 16: Appendix
Appendix DSG Investor Presentation
Slide 17: Q3 2023 Consolidated Financial Highlights
Q3 2023 Consolidated Financial Highlights Results Inclusive of Other Acquisitions Pre-Acquisition Results ✓ Adjusted Revenue and Adjusted EBITDA below include the reported GAAP results and the pre-acquisition results of other businesses that were acquired at any time during the Q3 2022-Q3 2023 perio
Slide 18: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Q3 Revenue and Adjusted EBITDA Reconciliation ($000s) (Unaudited) 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
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted Revenue and Adjusted EBITDA Reconciliation ($000s) Results Inclusive of Other Acquisitions – Pre-Acquisition Date (Unaudited) References to table footnotes on slide 20 Results are presented on an Adjusted (Non-GAAP) and continuing operations basis 19
Slide 20: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted Revenue and EBITDA Reconciliation – Table Footnotes 1. Represents additional revenue and operating income of other acquisitions prior to their acquisition dates not in reported GAAP results 2. Transaction and integration costs related to the mergers and othe
Slide 21: Historical Acquisitions
Historical Acquisitions COMPANY FOCUS STRATEGIC RATIONALE CLOSING DATE REVENUE (1) PURCHASE PRICE Industrial ▪ Expanded geographic coverage and expanded customer base with an additional ~22,000 customer locations January 2017 $45.1 $25.0 Technologies ▪ Complementary value-added products / services (
Slide 22: LKCM Headwater Introduction
LKCM Headwater Introduction SIGNIFICANT PRIVATE COMPANY DISTRIBUTION EXPERIENCE • LG - Leading distributor of fabricated hose, gaskets and belting for specialized and mission-critical applications • Private, employee-owned SEC-registered investment advisor • ESP - Value-added provider of mission-cri
Slide 23: Who We Are
Who We Are DSG is a best-in-class specialty distribution company providing high-touch, value-added distribution solutions to the MRO, OEM, and Industrial Technologies verticals in a diversified set of end markets. We take a solutions-based approach to serving our customers the way they want to be se
Slide 24: Highly Aligned Leadership / Governance
Highly Aligned Leadership / Governance J. Bryan King Ron Knutson DSG Chairman & CEO EVP and CFO Dedicated LKCM Headwater team LKCM HW Managing Partner Lawson and DSG investing significant time, resources and well aligned capital LAWSON PRODUCTS GEXPRO SERVICES TESTEQUITY GROUP Cesar Lanuza Bob Conno
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