Distribution Solutions Group Announces Third Quarter 2025 Results
FORT WORTH, Texas--( BUSINESS WIRE)--Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or the "Company"), a premier specialty distribution company, today announced consolidated results for the third quarter ended September 30, 2025. This press release is supplemented by an earnings presentation at https://investor.distributionsolutionsgroup.com/news/events.
The following represents a summary of certain operating results (unaudited). See the reconciliations of GAAP to non-GAAP measures in Tables 2, 3 and 4.
Three Months Ended
September 30,
June 30,
(Dollars in thousands)
2025
2024
% Change
2025
% Change
Revenue
$
517,958
$
468,019
10.7
%
$
502,437
3.1
%
Operating income
$
23,619
$
18,947
24.7
%
$
26,826
(12.0
)%
Non-GAAP adjusted operating income
$
40,065
$
42,458
(5.6
)%
$
39,873
0.5
%
Non-GAAP adjusted EBITDA
$
48,457
$
49,110
(1.3
)%
$
48,561
(0.2
)%
Operating income (loss) as a percent of revenue
4.6
%
4.0
%
60bps
5.3
%
-70bps
Adjusted EBITDA as a percent of revenue
9.4
%
10.5
%
-110bps
9.7
%
-30bps
Bryan King, CEO and Chairman, said, "Our third-quarter results demonstrate the strength and resilience of our business model, even as inflation, tariffs, and higher interest rates continue to challenge parts of the U.S. economy. We delivered double-digit revenue growth of 10.7% in the quarter, supported by strong momentum in organic average daily sales which grew 6.0%, as well as revenue contributions from our recent acquisitions. Sales growth was realized across each of our segments, particularly strong at Gexpro Services and the Canada Branch Division. Supported by four quarters of organic top-line revenue growth quarter-over-quarter, we’re entering the final stretch of the year with solid momentum and confidence in our growth strategy.
"Once again, we delivered strong operating cash flow of $38.4 million in the quarter. We also enhanced shareholder returns with more than $20.0 million in common stock repurchases in the first nine months of 2025 reflecting our confidence in the Company's performance trajectory despite a challenging macro environment. Adjusted EBITDA totaled $48.5 million, or 9.4% of sales, a strong showing despite product and customer mix dynamics and the impact of increased employee-related costs, in particular, for healthcare. While industry-wide U.S. manufacturing softness and significant strategical investments in the business have pressured margins below 10% this year, we’re encouraged by the progress our teams are making. Gexpro Services delivered another quarter of sequential margin expansion, and our Canada Branch Division—primarily Source Atlantic—achieved significant improvement, to 9.6% compared to 6.5% in the second quarter. These results reflect disciplined execution of margin unlocking initiatives and continued focus on operational efficiencies across our portfolio.
"We ended the quarter with no outstanding revolver debt and total liquidity of over $335 million. This underscores our solid liquidity position and the financial flexibility to pursue future acquisitions and other strategic growth opportunities. As we look at the fourth quarter, we’re maintaining a cautious outlook given tougher year-over-year comparisons and ongoing economic uncertainty. That said, I remain confident in our leadership teams and their ability to continue building structurally higher-margin businesses that generate strong free cash flow and create long-term value for our shareholders," concluded Mr. King.
2025 Third Quarter Summary (1)
(1) See reconciliation of GAAP to non-GAAP measures in tables 2, 3 and 4.
Conference Call
Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss 2025 third quarter results at 9:00 a.m. Eastern Time on October 30, 2025. The conference call is available by direct dial at 1-888-506-0062 in the U.S. or 1-973-528-0011 from outside of the U.S. The participant access code is 667630. A replay of the conference call will be available by telephone approximately two hours after completion of the call through November 13, 2025. Callers can access the replay by dialing 1-877-481-4010 in the U.S. or 1-919-882-2331 outside the U.S. The passcode for the replay is 52952. A streaming audio of the call and an archived replay will also be available on the investor relations page of Distribution Solutions Group's website. Presentations may be supplemented by a series of slides appearing on the company's investor relations home page at https://investor.distributionsolutionsgroup.com/news/events.
About Distribution Solutions Group, Inc.
Distribution Solutions Group ("DSG") is a premier multi-platform specialty distribution company providing high touch, value-added distribution solutions to the maintenance, repair & operations (MRO), the original equipment manufacturer (OEM) and the industrial technologies markets. DSG was formed through the strategic combination of Lawson Products, a leader in MRO distribution of C-parts, Gexpro Services, a leading global supply chain services provider to manufacturing customers, and TestEquity, a leader in electronic test & measurement solutions.
Through its collective businesses, DSG is dedicated to helping customers lower their total cost of operation by increasing productivity and efficiency with the right products, expert technical support and fast, reliable delivery to be a one-stop solution provider. DSG serves approximately 200,000 customers in several diverse end markets supported by approximately 4,400 dedicated employees and strong vendor partnerships. DSG ships from strategically located distribution and service centers to customers in North America, Europe, Asia, South America and the Middle East.
For more information on Distribution Solutions Group, please visit www.distributionsolutionsgroup.com.
This release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the “safe-harbor” provisions under the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. The Terms "aim," "anticipate," "believe," "contemplates," "continues," "could," "ensure," "estimate," "expect," "forecasts," "if," "intend," "likely," "may," "might," "objective," "outlook," "plan," "positioned," "potential," "predict," "probable," "project," "shall," "should," "strategy," "will," "would," and variations of them and other words and terms of similar meaning and expression (and the negatives of such words and terms) are intended to identify forward-looking statements.
Forward-looking statements can also be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks, uncertainties and assumptions, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. DSG can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and DSG cautions readers not to place undue reliance on such statements. DSG undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Each forward-looking statement speaks only as of the date on which such statement is made, and DSG undertakes no obligation to update any such statement to reflect events or circumstances arising after such date. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Factors that could cause or contribute to such differences or that might otherwise impact DSG’s business, financial condition and results of operations include the risks that DSG may encounter difficulties integrating the business of DSG with the business of other companies that DSG has combined with or may otherwise combine with and that certain assumptions with respect to such business or transactions could prove to be inaccurate. Certain risks associated with DSG’s business are also discussed from time to time in the reports DSG files with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K or other reports the Company may file from time to time with the Securities and Exchange Commission, which should be reviewed carefully.
Distribution Solutions Group, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
September 30,
2025
December 31,
2024
ASSETS
Current assets:
Cash and cash equivalents
$
69,214
$
66,479
Restricted cash
13,486
15,247
Accounts receivable, less allowances
295,456
250,717
Inventories
345,206
348,226
Prepaid expenses and other current assets
43,030
31,505
Total current assets
766,392
712,174
Property, plant and equipment, net
126,544
125,524
Rental equipment, net
37,454
39,376
Goodwill
467,024
462,789
Deferred tax asset, net
372
136
Intangible assets, net
237,227
269,763
Cash value of life insurance
21,253
19,916
Right of use operating lease assets
105,312
91,962
Other assets
4,948
5,615
Total assets
$
1,766,526
$
1,727,255
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
155,036
$
125,575
Current portion of long-term debt
42,452
40,476
Current portion of lease liabilities
20,256
18,951
Accrued expenses and other current liabilities
88,219
81,259
Total current liabilities
305,963
266,261
Long-term debt, less current portion, net
665,539
693,903
Lease liabilities
92,993
77,758
Deferred tax liability, net
23,477
22,265
Other liabilities
24,680
26,525
Total liabilities
1,112,652
1,086,712
Stockholders' equity:
Preferred stock, $1 par value:
Authorized - 500,000 shares, issued and outstanding — None
—
—
Common stock, $1 par value:
Authorized - 70,000,000 shares
Issued - 47,828,925 and 47,738,290 shares, respectively
Outstanding - 46,286,285 and 46,856,757 shares, respectively
46,286
46,856
Capital in excess of par value
683,902
677,473
Retained deficit
(27,323
)
(42,039
)
Treasury stock – 1,542,640 and 881,533 shares, respectively
(40,135
)
(19,631
)
Accumulated other comprehensive income (loss)
(8,856
)
(22,116
)
Total stockholders' equity
653,874
640,543
Total liabilities and stockholders' equity
$
1,766,526
$
1,727,255
Distribution Solutions Group, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
Revenue
$
517,958
$
468,019
$
1,498,424
$
1,323,641
Cost of goods sold
347,632
309,171
994,034
869,857
Gross profit
170,326
158,848
504,390
453,784
Selling, general and administrative expenses
146,707
139,901
433,848
417,896
Operating income (loss)
23,619
18,947
70,542
35,888
Interest expense
(13,955
)
(15,160
)
(42,408
)
(39,780
)
Change in fair value of earnout liabilities
—
(858
)
(1,000
)
(861
)
Other income (expense), net
(1,283
)
(15
)
(1,377
)
82
Income (loss) before income taxes
8,381
2,914
25,757
(4,671
)
Income tax expense (benefit)
1,929
(19,007
)
11,041
(23,264
)
Net income (loss)
$
6,452
$
21,921
$
14,716
$
18,593
Basic income (loss) per share of common stock
$
0.14
$
0.47
$
0.32
$
0.40
Diluted income (loss) per share of common stock
$
0.14
$
0.46
$
0.31
$
0.39
Basic weighted average shares outstanding
46,280,811
46,799,672
46,419,969
46,798,598
Diluted weighted average shares outstanding
47,060,025
47,560,478
47,212,912
47,603,808
Distribution Solutions Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Nine Months Ended September 30,
2025
2024
Operating activities
Net income (loss)
$
14,716
$
18,593
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
60,359
54,211
Amortization of debt issuance costs
2,581
2,093
Stock-based compensation
4,624
4,323
Deferred income taxes
975
(2,814
)
Change in fair value of earnout liabilities
1,000
861
(Gain) loss on sale of rental equipment
(3,454
)
(1,586
)
(Gain) loss on sale of property, plant and equipment
(716
)
190
Charge for step-up of acquired inventory
—
1,760
Net realizable value adjustment and write-offs for obsolete and excess inventory
5,694
4,311
Bad debt expense
3,480
537
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(44,940
)
(30,423
)
Inventories
1,470
(981
)
Prepaid expenses and other current assets
3,743
(33,335
)
Accounts payable
27,556
14,091
Accrued expenses and other current liabilities
(10,334
)
(20,183
)
Other changes in operating assets and liabilities
152
(912
)
Net cash provided by (used in) operating activities
66,906
10,736
Investing activities
Purchases of property, plant and equipment
(15,796
)
(9,091
)
Proceeds from sale of property, plant and equipment
990
—
Business acquisitions, net of cash acquired
(2,176
)
(194,393
)
Purchases of rental equipment
(12,849
)
(5,703
)
Proceeds from sale of rental equipment
9,367
3,795
Net cash provided by (used in) investing activities
(20,464
)
(205,392
)
Financing activities
Proceeds from revolving lines of credit
205,943
166,777
Payments on revolving lines of credit
(204,128
)
(166,496
)
Proceeds from term loans
—
200,000
Payments on term loans
(30,188
)
(22,688
)
Deferred financing costs
—
(2,064
)
Repurchase of common stock
(20,252
)
(2,580
)
Shares repurchased held in treasury
(252
)
(538
)
Stock option exercises
877
—
Payment of financing lease principal
(445
)
(462
)
Net cash provided by (used in) financing activities
(48,445
)
171,949
Effect of exchange rate changes on cash and cash equivalents
2,977
(1,151
)
Increase (decrease) in cash, cash equivalents and restricted cash
974
(23,858
)
Cash, cash equivalents and restricted cash at beginning of period
81,726
99,625
Cash, cash equivalents and restricted cash at end of period
$
82,700
$
75,767
Cash and cash equivalents
$
69,214
$
61,344
Restricted cash
13,486
14,423
Total cash, cash equivalents and restricted cash
$
82,700
$
75,767
Distribution Solutions Group, Inc.
Table 1 - Selected Segment Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30,
2025
2024
Revenue:
Lawson Products
$
121,549
$
117,957
Canada Branch Division
59,977
39,092
Gexpro Services
130,525
116,141
TestEquity
206,479
195,244
Intersegment revenue elimination
(572
)
(415
)
Total
$
517,958
$
468,019
Operating income (loss):
Lawson Products
$
5,385
$
726
Canada Branch Division
3,494
2,523
Gexpro Services
13,880
11,543
TestEquity
2,635
4,329
All Other
(1,775
)
(174
)
Total
$
23,619
$
18,947
DISTRIBUTION SOLUTIONS GROUP, INC.
SEC REGULATION G GAAP RECONCILIATIONS
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 measures may provide users of this financial information with additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflections of underlying trends of the business because they provide a comparison of historical information that excludes certain non-operational or non-cash items that impact the overall comparability. See Tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended September 30, 2025 and 2024 and the three months ended June 30, 2025. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
Distribution Solutions Group, Inc.
Table 2 - Reconciliation of GAAP Net Income (Loss) and GAAP Operating Income (Loss) to
Non-GAAP Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30,
June 30,
2025
2024
2025
Net income (loss)
$
6,452
$
21,921
$
5,003
Income tax expense (benefit)
1,929
(19,007
)
6,859
Other income (expense), net
1,283
15
726
Change in fair value of earnout liabilities
—
858
—
Interest expense
13,955
15,160
14,238
Operating income (loss)
23,619
18,947
26,826
Depreciation and amortization
20,042
18,624
20,338
Stock-based compensation (1)
2,400
2,432
1,250
Severance and acquisition related retention expenses (2)
2,094
3,568
355
Acquisition related costs (3)
87
2,901
(208
)
Inventory step-up (4)
—
1,126
—
Other non-recurring (5)
215
1,512
—
Non-GAAP adjusted EBITDA
$
48,457
$
49,110
$
48,561
Operating income (loss) as a percent of revenue
4.6
%
4.0
%
5.3
%
Adjusted EBITDA as a percent of revenue
9.4
%
10.5
%
9.7
%
Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company's stock price.
Includes severance expense for actions taken not related to a formal restructuring plan and acquisition related retention expenses.
Transaction and integration costs related to acquisitions.
Inventory fair value step-up adjustment for acquisition accounting related to acquisitions completed.
Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items.
Distribution Solutions Group, Inc.
Table 3 - Reconciliation of GAAP Net Income (Loss) and GAAP Diluted EPS to
Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Diluted EPS
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
September 30, 2025
September 30, 2024
June 30, 2025
Amount
Diluted
EPS (2)
Amount
Diluted
EPS (2)
Amount
Diluted
EPS (2)
Net income (loss)
$
6,452
$
0.14
$
21,921
$
0.46
$
5,003
$
0.11
Pretax adjustments:
Stock-based compensation
2,400
0.05
2,432
0.05
1,250
0.03
Acquisition related costs
87
—
2,901
0.06
(208
)
—
Amortization of intangible assets
11,650
0.25
11,972
0.25
11,650
0.25
Severance and acquisition related retention expenses
2,094
0.04
3,568
0.08
355
0.01
Change in fair value of earnout liabilities
—
—
858
0.02
—
—
Inventory step-up
—
—
1,126
0.02
—
—
Other non-recurring
215
—
1,512
0.03
—
—
Total pretax adjustments
16,446
0.34
24,369
0.51
13,047
0.29
Tax effect on adjustments (1)/(3)
(4,307
)
(0.08
)
(11,210
)
(0.23
)
(3,135
)
(0.08
)
Deferred tax asset valuation allowance (3)/(4)
179
—
(17,425
)
(0.37
)
1,536
0.03
Non-GAAP adjusted net income
$
18,770
$
0.40
$
17,655
$
0.37
$
16,451
$
0.35
(1)
The adjustment to the income tax expense (benefit) is determined by excluding the non-GAAP adjustments by jurisdiction.
Pretax adjustments to diluted EPS calculated on 47.060 million, 47.560 million and 46.563 million diluted shares for the third quarter of 2025 and 2024, and the second quarter of 2025, respectively.
The quarter-to-date amounts are derived from the current period year-to-date amount less the previous quarter year-to-date amount.
The estimated impact to the deferred tax asset valuation allowance from interest expense limitations under Section 163(j) determined by including the non-GAAP adjustments by jurisdiction.
Distribution Solutions Group, Inc.
Table 4 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted Operating Income
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30,
June 30,
2025
2024
2025
Operating income (loss)
$
23,619
$
18,947
$
26,826
Gross profit adjustments:
Inventory step-up (1)
—
1,126
—
Total gross profit adjustments
—
1,126
—
Selling, general and administrative expenses adjustments:
Acquisition related costs (2)
87
2,901
(208
)
Amortization of intangible assets
11,650
11,972
11,650
Stock-based compensation (3)
2,400
2,432
1,250
Severance and acquisition related retention expenses (4)
2,094
3,568
355
Other non-recurring (5)
215
1,512
—
Total selling, general and administrative adjustments
16,446
22,385
13,047
Total adjustments
16,446
23,511
13,047
Non-GAAP adjusted operating income
$
40,065
$
42,458
$
39,873
Inventory fair value step-up adjustment for acquisition accounting related to acquisitions completed.
Transaction and integration costs related to acquisitions.
Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company's stock price.
Includes severance expense for actions taken not related to a formal restructuring plan and acquisition related retention expenses.
Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items.
Distribution Solutions Group, Inc.
Table 5 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA
Q3 2025 and Q3 2024
(Dollars in thousands)
(Unaudited)
Lawson Products
Gexpro Services
TestEquity
Canada Branch
Division
All Other
Eliminations
Consolidated
DSG
Quarter Ended
Q3 2025
Q3 2024
Q3 2025
Q3 2024
Q3 2025
Q3 2024
Q3 2025
Q3 2024
Q3 2025
Q3 2024
Q3 2025
Q3 2024
Q3 2025
Q3 2024
Revenue from external customers
$
121,541
$
117,953
$
130,192
$
115,764
$
206,310
$
195,210
$
59,915
$
39,092
$
—
$
—
$
—
$
—
$
517,958
$
468,019
Intersegment revenue
8
4
333
377
169
34
62
—
—
—
(572
)
(415
)
—
—
Revenue
$
121,549
$
117,957
$
130,525
$
116,141
$
206,479
$
195,244
$
59,977
$
39,092
$
—
$
—
$
(572
)
$
(415
)
$
517,958
$
468,019
Operating income (loss)
$
5,385
$
726
$
13,880
$
11,543
$
2,635
$
4,329
$
3,494
$
2,523
$
(1,775
)
$
(174
)
$
23,619
$
18,947
Depreciation and amortization
6,666
6,533
3,541
3,840
8,220
7,460
1,615
791
—
—
20,042
18,624
Adjustments:
Acquisition related costs(1)
(17
)
2,967
(2
)
462
58
875
48
—
—
(1,403
)
87
2,901
Stock-based compensation(2)
1,025
2,209
60
—
925
65
—
—
390
158
2,400
2,432
Severance and acquisition related retention expenses(3)
840
2,269
276
13
486
1,275
492
11
—
—
2,094
3,568
Inventory step-up(4)
—
432
—
—
—
—
—
694
—
—
—
1,126
Other non-recurring(5)
60
337
—
538
27
380
128
—
—
257
215
1,512
Non-GAAP adjusted EBITDA
$
13,959
$
15,473
$
17,755
$
16,396
$
12,351
$
14,384
$
5,777
$
4,019
$
(1,385
)
$
(1,162
)
$
48,457
$
49,110
Operating income (loss) as a percent of revenue
4.4
%
0.6
%
10.6
%
9.9
%
1.3
%
2.2
%
5.8
%
6.5
%
N/M
N/M
4.6
%
4.0
%
Adjusted EBITDA as a percent of revenue
11.5
%
13.1
%
13.6
%
14.1
%
6.0
%
7.4
%
9.6
%
10.3
%
N/M
N/M
9.4
%
10.5
%
Transaction and integration costs related to acquisitions.
Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company's stock price.
Includes severance expense from actions taken not related to a formal restructuring plan and acquisition related retention expenses.
Inventory fair value step-up adjustment for acquisition accounting related to acquisitions completed.
Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items.