The following is a summary of the Distribution Solutions Group, Inc. (DSGR) Q4 2023 Earnings Call Transcript:

Financial Performance:

• DSG's annual revenue grew by 23.7% to $1.57 billion, due to the acquisition of four companies impacting $267.5 million.

• Adjusted EBITDA increased to $157 million in 2023 from $123 million in 2022.

• GAAP diluted loss per share of $0.20 for the full year and adjusted diluted EPS was $1.42.

• The company ended the year with nearly $300 million of liquidity, including $99.6 million of cash.

• Each of DSG's three segments, Lawson, Gexpro Services, and the TestEquity Group, contributed 30%, 23%, and 47% of revenue, respectively.

• The TestEquity group saw the highest increase in sales due to recent acquisitions, especially the Hisco acquisition in 2023.

Business Progress:

• Lawson's sales grew by 9.1%, driven by a significant improvement in its strategic business and increased sales rep productivity.

• Gexpro Services' sales growth was hindered in Q4 due to delays in project-related businesses, particularly in renewables and technology.

• DSG made strides in strengthening its balance sheet, ending 2023 at a leverage rate of 2.9 times.

• Management remains focused on robust working capital investment and careful inventory management.

• DSG intends to execute disciplined inorganic growth via an acquisition model and reduce capital intensity where possible.

• The company repurchased 139,000 shares at an average cost of $26.09 per share during Q4 2023.

• DSG foresees ongoing progress with cross-selling initiatives, increasing sales through long-term customer relationships, and making strategic, accretive acquisitions.

• DSG expects approximately $17 million in savings due to cost-cutting measures and anticipates an overall operating leverage expansion, provided certain market conditions are met.

• The company emphasized profitability expansion in Lawson and explored earnings opportunities in their outside sales team, resulting in improved long-term profitability despite an initial impact on organic revenue growth.

• DSG also focused on collaboration and cross-selling across all three business verticals and plans to enhance business liquidity, considering share buybacks if the stock price significantly discounts their estimated terminal business value.

More details: Distribution Solutions Group IR

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