Distribution Solutions Group, Inc. · NASDAQ:DSGR
Distribution Solutions — Q3 2023 Earnings Presentation
19 slides from Distribution Solutions's earnings presentation, Nov 2, 2023
Slide 1: Q3 2023 Financial Results
NASDAQ: DSGR Q3 2023 Financial Results November 2, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 unc
Slide 3: Earnings Call Agenda
Earnings Call Agenda Today’s Conference Call Will Discuss Results Primarily on an Adjusted (Non-GAAP) and Comparable Operations Basis. Agenda • Q3 2023 Consolidated Highlights & Financial Results • Segment Highlights & Financial Results • Q&A DSG's Board of Directors approved and declared a two-for-
Slide 4: Q3 Commentary
Q3 Commentary • Q3 Revenue of $439M, Operating Income of $13M and Adjusted EBITDA of $44M up from $35M over the prior year. • Q3 Revenue growth of 26.4%, primarily from acquisitions. Organic sales down 4.2% driven by softness in Industrial Technologies (TestEquity) vertical. On a two- year comparati
Slide 5: 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 and production supplies and T&M equipment to t
Slide 6: Operating Companies Update and Value Drivers
Operating Companies Update and Value Drivers 6
Slide 7: Q3 2023 Consolidated Financial Highlights
Q3 2023 Consolidated Financial Highlights 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
Slide 8: Lawson Products – MRO Focus
Lawson Products – MRO Focus Q3 2023 Highlights: Revenue (in millions) • Revenue +4.6%; (+6.3% on same day basis) all $114.5 organic growth-driven by expanding and new $109.4 customer relationships • Price increases throughout 2022 and 2023 continue to be realized • Ended September 30, 2023 with ~900
Slide 9: Gexpro Services – OEM Focus
Gexpro Services – OEM Focus Q3 2023 Highlights: Revenue (in millions) • Revenue of $103.2M; flat with year ago quarter primarily due to softness in technology vertical market $103.7 $103.2 • Integrations of prior acquisitions continuing strong • Value creation initiatives including DSG cross sell, a
Slide 10: TestEquity – Industrial Technologies Focus
TestEquity – Industrial Technologies Focus Q3 2023 Highlights: Revenue (in millions) • Revenue of $207.7M; up $91M or 77.9%; primarily driven by acquisitions; organic sales down 13.2% $207.7 • Revenue from 2022 and 2023 acquisitions (Hisco $116.7 and Instrumex) up $106.3M from a year ago. Integratio
Slide 11: Other Financial Highlights
Other Financial Highlights Robust Net Working Capital Rapid Deleveraging via Earnings Amended Credit Agreement: Investment Growth and Free Cash Flow $805mm Total Facility Generation $445 3.6x ~$279mm Leverage(1) at April 1, 2022 Merger Close Accounts $239 Receivable $313 Inventory ò 2.9x ~$100mm $(1
Slide 12: Disciplined Capital Allocation Framework
Disciplined Capital Allocation Framework Q3 '23 trade working capital Q3 '23 2.9x(2) Net Debt to $445M Adjusted EBITDA Leverage Cash flows from operating Free Cash Flow(1) Conversion activities of $47M in Q3 '23 of 149% realized in Q3 10 highly strategic & accretive tuck-in distribution $7.6M availa
Slide 13: Summary
Summary • Strong Q3 results despite tougher sales comps; softening of certain end markets experienced. • Proactively re-baselining cost structure where appropriate. • Q3 results driven primarily by acquired revenue – aligns with growth strategy; combined 26.4% revenue growth and two-year organic gro
Slide 14: Appendix
JSG visiRieurion » SOLUTIONS GROUP_“ Appendix 14
Slide 15: 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 peri
Slide 16: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Q3 Revenue and Adjusted EBITDA Reconciliation ($000s) (Unaudited) Lawson Products Gexpro Services TestEquity All Other Consolidated DSG Quarter Ended Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 GAAP Revenue $ 114,477 $ 109,418 $ 10
Slide 17: 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) Consolidated DSG Quarter Ended Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 GAAP Revenue $ 347,151 $ 328,850 $ 348,270 $ 377,984 $ 438,90
Slide 18: 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 ot
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations GAAP Net Income (Loss) and GAAP Diluted EPS to Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted EPS Reconciliation ($000s, except per share data) (Unaudited) Consolidated DSG Quarter Ended Q3 2023 Q3 2022 Amount Diluted EPS(2) Amount Diluted EPS(2) Net inco
Distribution Solutions Group — Q3 2023 Earnings Presentation on 6ix