Distribution Solutions Group, Inc. · NASDAQ:DSGR
Distribution Solutions — KeyBanc Investor Conference 2023
24 slides from Distribution Solutions's conference presentation, Jun 1, 2023
Slide 1: KeyBanc Investor Conference Presentation
NASDAQ: DSGR KeyBanc Investor Conference Presentation June 1, 2023 DSG Investor Presentation
Slide 2: Forward Looking Statements
Forward Looking Statements 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 an
Slide 3: About Distribution Solutions Group
About Distribution Solutions Group Multi-platform specialty distribution company providing high touch, value-added distribution solutions to the MRO, the OEM and the industrial technologies markets 5% 5% 33% 27% 35% 32% TTM Adj TTM Revenue Adj EBITDA $1.4B (1) $140M (1) ( ( 30% 33% Other Q1 ‘23 Reve
Slide 4: Why Own DSG: Investment Thesis
Why Own DSG: Investment Thesis NASDAQ: DSGR Proven, Best-in-Class Management Team with Clear Vision of Value Creation Large Addressable Markets Aggregating $57 billion with Multi-Channel, Diverse Distribution Multi-platform with Scale for Attractive Returns, Acceleration of Growth with Successful Re
Slide 5: Embedded Growth Opportunities
Embedded Growth Opportunities LEVERAGE PLATFORM ACROSS CUSTOMER BASE END MARKETS HAVE STRONG SECULAR TAIL WINDS Unique total customer value proposition + Monetize distinct capabilities across the platform + Collaborative selling across customer bases Onshoring + IoT Renewables Manufacturing Expand d
Slide 6: Disciplined Capital Allocation Framework
Disciplined Capital Allocation Framework Q1 ‘23 trade working capital $352M and to-date incremental Q1 ‘23 2.7x Net Debt to investment in working capital of Adjusted EBITDA Leverage $24M Invest in Core Pay Down Debt Businesses Balance Sheet focused on Highest ROIC Opportunities Bolt-on Acquisitions
Slide 7: Lawson: service-focused industrial MRO distributor with vendor managed inventory
Leading service-focused industrial MRO distributor providing product through a vendor managed inventory approach OPTIMIZED INVENTORY MANAGEMENT SYSTEM DIVERSE END MARKETS(1) Other 21% Before Disorganized Parts Room Increased Downtime & Lower Labor Utilization Manufacturing Construction 22% 8% Vendor
Slide 8: Gexpro Services: global supply chain services and C-Parts provider
Leading global supply chain Services and C-Parts provider of highly engineered specified products for manufacturing end users BLUE CHIP CUSTOMERS IN DIVERSE MARKETS GLOBAL LOCATIONS Renewables Semiconductor Power & Telecom Generation • USA - Global HQ • Denmark – Resolux HQ • Turkey • Canada – NEF H
Slide 9: TestEquity: electronics production supplies and Test & Measurement distributor
Leading authorized distributors of electronics production supplies and Test & Measurement solutions, with over 250,000 products PRODUCTS OVERVIEW DIVERSE END MARKETS(1) Electronic Production Test & Measurement Supplies (“EPS”) with Instrumentation (“T&M”) advanced digital capabilities Other, 25% Aer
Slide 10: Hisco Accelerates DSG's Vision for Growth
Hisco Accelerates DSG’s Vision for Growth ‘22 Revenue:1 ~$1.3B ‘22 Revenue:2 ~$404M ‘22 EBITDA:1 ~$123M ‘22 EBITDA:2 ~$29M Diversified distribution company with high-touch, Mission-critical distribution company value-added solutions catering to MRO, OEM and serving electronic assembly, aerospace & I
Slide 11: Transaction Summary
Transaction Summary ▪ Upfront purchase price of $269.1M (9.4x 2022 Adjusted EBITDA1) • Mid-7x inclusive of anticipated synergies realized within 12 months post-close Value ▪ Approximately $35M of anticipated future tax benefit value2 ▪ Expected to be accretive on an adjusted basis3 in 2023 ▪ Transac
Slide 12: Hisco At a Glance
Hisco At a Glance Business Overview Select Product Offering Mix1 Largest Suppliers ▪ Leading broadline industrial supplies distribution business with integrated footprint 4% 3% Adhesives, Sealants & Tapes 4% across the United States, Canada, and Mexico 4% Soldering & Rework 4% Chemical & Cleaning Su
Slide 13: Q1 2023 Consolidated Financial Highlights
Q1 2023 Consolidated Financial Highlights Results Adjusted to Reflect Comparable Results Including Pre-Merger Lawson Products • Adjusted Revenue of $348.3M, an increase of $76.3M or +28.1% over year ago quarter; organic growth of +13.7% • Adjusted EBITDA of $39.4M with 11.3% margin; up 73.6% from $2
Slide 14: Q1 2023 Consolidated Financial Highlights
Q1 2023 Consolidated Financial Highlights Results Inclusive of Lawson Products and Other Acquisitions Pre-Merger Results • Adjusted Revenue and Adjusted EBITDA below include the reported GAAP results and (1) pre-Merger results of the Lawson and Other segment and (2) the pre-acquisition results of ot
Slide 15: Progress Since April 2022 Merger
Progress Since April 2022 Merger At March 30, performing at or above all underwriting objectives established prior to consolidation Superior Leadership Fully Executed Cost Enhanced Go-to- Expanded Channels- Incentives for Cross- Synergies for IT, Market Strategy to-Market Selling Insurance Sensitive
Slide 16: 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 17: Investor Contacts
Investor Contacts Three Part Advisors, LLC (214) 872-2710 Steven Hooser shooser@threepa.com Sandy Martin smartin@threepa.com 17 DSG Investor Presentation
Slide 18: Appendix
Appendix DSG Investor Presentation
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Q1 Adjusted Revenue and EBITDA Reconciliation ($000s) Results Inclusive of Lawson Products Pre-Merger Results 1. Represents Lawson Products pre-merger revenue and operating income 2. Merger transaction costs related to the negotiation, review and execution of the mer
Slide 20: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted Revenue and Adjusted EBITDA Reconciliation ($000s) Results Inclusive of Lawson Products Pre-Merger Results and Other Acquisitions – Pre-Acquisition Date References to table footnotes on slide 18 Results are presented on an Adjusted (Non-GAAP) and continuing
Slide 21: 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 Lawson pre-Merger and Other Acquisitions prior to their acquisition dates not in reported GAAP results 2. Merger transaction costs related to the neg
Slide 22: Aligned and Tenured Leadership
Aligned and Tenured Leadership BOARD Governance & Strategy J. Bryan King Andrew Albert Steven Edelson Lee Hillman Mark Moon Bianca Rhodes Robert Zamarripa DSG LEADERSHIP Capital Allocation & Operational Accountability J. Bryan King Brad Wallace Kim Carter Jacob Smith Ron Knutson Chairman & CEO Partn
Slide 23: Historical Acquisitions
Historical Acquisitions COMPANY FOCUS STRATEGIC RATIONALE CLOSING DATE REVENUE (1) PURCHASE PRICE ▪ Expanded geographic coverage and expanded customer base with an additional Industrial ~22,000 customer locations January 2017 $45.1 $25.0 Technologies ▪ Complementary value-added products / services (
Slide 24: 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
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