Slide 1: KeyBanc Capital Markets Industrials & Basic Materials Conference
NASDAQ: DSGR KeyBanc Capital Markets Industrials & Basic Materials Conference May 30, 2024
Slide 2: Disclaimers
Disclaimers Cautionary Note Regarding Forward-Looking Statements This presentation contains certain "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: Presenters
Presenters Ron Knutson Brett Scarbrough EVP & CFO for Portfolio Manager for LKCM DSG and Lawson Headwater 3
Slide 4: Leading Specialty Industrial Distribution Platform
Leading Specialty 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 equipmen
Slide 5: Cross-Company Collaboration
Cross-Company Collaboration The Power of Three Main Assembly Comprehensive product solutions supported by robust suite of value-added services Fasteners VMI Management Manufacturing & Assembly Labeling & Printing Slitting & Die Cutting Hydraulics Packaging & Kitting Value Engineering Che
Slide 6: 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 7: DSG Serves a Broad & Diverse Set of End Markets
DSG Serves a Broad & Diverse Set of End Markets Spotlight: Revenue and End Market Diversification A&D Industry – example of how DSG serves >180,000 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/H
Slide 8: Value Creation Themes
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 9: MRO Focus: Overview
MRO Focus: Overview Business Unit Snapshot Products Fasteners Hydraulics MRO Focus 31% of Total Revenue Chemicals Other broad offerings and C-Parts Cutting tools Safety OEM Focus Services Managed inventory Product recommendations Industrial vending Industrial Technologies Focus A
Slide 10: OEM Focus: Overview
OEM Focus: Overview Business Unit Snapshot Comprehensive Supply Chain Solutions MRO Focus OEM Focus 23% of Total Revenue Vendor Managed Kitting & Inventory (VMI) Aftermarket / Technology Industrial Technologies Focus Assembly Installation Diverse End Markets Renewables Technology Aerospace & Defense
Slide 11: 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 12: 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 13: M&A Strategy: Acquisition Criteria
M&A Strategy Acquisition Criteria Strong organic Synergistic across the A clear integration Prioritizing Unique customer growth and potential platform while thesis to unlock North American value proposition for scale in attractive driving higher targeted value- footprint end markets structural margi
Slide 14: M&A Focus Areas
M&A Focus Areas Fasteners, Fabrication, Electricals, Electronic Production Supplies Safety, Cutting Tools, Automotive, Product Offering Mechanicals, Gaskets/Seals/O- Test & Measurement Fluid Power, Fasteners, Welding Rings, Hose Assemblies Calibration United States North America United States Expand
Slide 15: Q1 2024 Consolidated Financial Highlights
Q1 2024 Consolidated Financial Highlights Reported Revenue and Adjusted EBITDA Q1 revenue of $416.1M; up $67.8M or 19.5% due to 2023 and 2024 acquisitions. Q1 two-year stacked organic growth up 4.7% while Q1 organic down 8.6% on comparable days primarily from continued softness in technology end-m
Slide 16: Other Financial Highlights
Other Financial Highlights Robust Net Working Capital Investment Focus on Deleveraging via Earnings Total Liquidity Growth and Free Cash Flow Generation $433.4M $221.3 Accounts Receivable 3.6x ~$298 Leverage (1) at April 1, 2022 Merger Close $313.8 Inventory ~$284 $(101.7) Accounts Payable 3.0x Leve
Slide 17: 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 18: Investor Contacts
Investor Contacts Three Part Advisors, LLC (214) 872-2710 Steven Hooser shooser@threepa.com Sandy Martin smartin@threepa.com 18 DSG Investor Presentation
Slide 19: Appendix
Appendix DSG Investor Presentation
Slide 20: Q1 2024 Consolidated Financial Highlights
Q1 2024 Consolidated Financial Highlights Results Inclusive of 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 Q1 2023-Q1 2024 period. Adj EBITDA Margi
Slide 21: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Q1 Revenue and Adjusted EBITDA Reconciliation ($000s) (Unaudited) Lawson Products Gexpro Services TestEquity All Other Eliminations Consolidated DSG Quarter Ended Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Revenue
Slide 22: 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 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Revenue $ 348,270 $ 377,984 $ 438,909 $ 405,239 $ 416,086 Pre
Slide 23: 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 acquisitions prior to their acquisition dates not in reported GAAP results 2. Transaction and integration costs related to acquisitions 3. Expense (b
Slide 24: Acquisition History
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 (kitting, VMI) Industrial
Slide 25: 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 26: 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 27: 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