The following is a summary of the Distribution Solutions Group, Inc. (DSGR) Q1 2024 Earnings Call Transcript:
Financial Performance:
Distribution Solutions Group (DSG) experienced a growth in the Q1 2024 sales, totaling $416 million, a 19.5% increase due to strategic inorganic growth initiatives compared to Q1 of the previous year.
The consolidated EBITDA margins improved sequentially from 8.4% in Q4 2023 to an adjusted EBITDA margin of 8.7% in Q1 2024.
Q1 revenue of $416.1 million was primarily driven by acquisitions in 2023 and 2024.
Organic sales decreased by 8.6% on a comparable day basis, but grew 4.7% on a 2-year stacked basis.
Adjusted EBITDA for the quarter was $36.1 million or 8.7% of sales, reflecting an increment in net margin.
The adjusted operating income was $29.8 million compared to $32.8 million a year ago.
DSG reported a GAAP diluted loss per share of $0.11 for the quarter, compared to earnings per share of $0.14 in the year ago.
Business Progress:
DSG remains focused on organic and inorganic growth initiatives, with a 5-year goal to increase total sales to over $3.3 billion.
Significant acquisitions were completed, namely Emergent Safety Supply (ESS) and S&S Automotive, aiming to bolster offerings and expand capabilities.
Strong double-digit sequential and quarterly sales improvement was observed in Gexpro's aerospace and defense vertical.
The company's run rate adjusted revenue is now approximately $1.73 billion, serving over 180,000 customers across more than 500,000 SKUs.
2024 will focus on initiatives that improve sales representative productivity and drive sequential sales growth in future quarters.
DSG plans to grow cross-selling revenue and leverage value-added capabilities for future success.
Q2 organic sales are predicted to be flat to down low single digits compared to the previous year.
The company expects a gradual return of government orders through 2024 due to changes in the government order entry program.
The company reported some capital spending delays from customers in the test & measurement business sector.
The company sees potential for growth in target areas and plans on actively recruiting additional sales representatives and redefining territories for future sales growth.
More details: Distribution Solutions Group IR
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