2023 Revenue Grew to $1.6 Billion,
Generating $102 Million of Operating Cash
Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or
the "Company"), a premier specialty distribution company, today
announced consolidated results for the 2023 full year and fourth
quarter ended December 31, 2023. This press release is supplemented
by an earnings presentation at
https://investor.distributionsolutionsgroup.com/news/events.
Bryan King, CEO and Chairman of the Board said, “By most any
standard, 2023 was a very successful year for Distribution
Solutions Group. The Company's profitability grew significantly
while also generating over $102 million of cash from operations. We
expanded topline revenue to $1.6 billion, up more than 36%.
Comparable sales, including Lawson for all periods, increased
almost 24% for the full year despite a choppy sales environment in
a few end markets, resulting in 3% organic growth. On a two-year
stacked basis, organic revenue grew by almost 17%. For the full
year, we ended with $157 million in adjusted EBITDA, up nearly 28%,
and our adjusted EBITDA margins were 10.0%, a testament to DSG's
ability to create value by broadening our scale and footprint.
“2023 reflects an acceleration of growth through a disciplined
execution of our strategic initiatives with accretive acquisitions,
organic growth and the successful roll-out of key operational
initiatives. We took deliberate actions in 2023 to improve the
return profile of the Company and create long-term enterprise value
through a disciplined capital allocation strategy. This strategy
included the acquisition of Hisco and the related $100 million
rights offering, the return of capital to shareholders through an
expanded share repurchase plan and our continuous focus of managing
working capital to generate significant operating cash flows. As
evidenced in 2023, our asset-light model that generates meaningful
cash flow allows us to re-invest into high ROI initiatives and
accretive acquisitions as we further drive long-term shareholder
value.
“Fourth quarter revenue grew by 23% primarily due to acquired
revenue from Hisco. Although our organic revenue contracted by 6%,
our two-year stacked organic revenue grew by 10%. The current
quarter decline was primarily due to continued softness in the
technology end-market, delayed maintenance spend most notable in
the renewable end-market, and delayed capital spending in the
current interest-rate sensitive environment. Excluding these end
markets, organic revenue grew by approximately 1% in the fourth
quarter. This gives us confidence that business headwinds are
isolated to these categories, mostly within the OEM and Industrial
Technology verticals. Macroeconomic impacts and seasonally fewer
selling days negatively impacted the margin profile of certain
verticals for the quarter," concluded Mr. King.
The following represents a summary of certain operating results
(unaudited). See the reconciliations of GAAP to non-GAAP measures
in Tables 2, 3 and 6.
Twelve Months Ended
Three Months Ended
December 31,
December 31,
(Dollars in thousands)
2023
2022(2)
% Change
2023
2022
% Change
Revenue
$
1,570,402
$
1,151,422
36.4
%
$
405,239
$
328,850
23.2
%
Pro forma revenue(1)
$
1,570,402
$
1,269,299
23.7
%
$
405,239
$
328,850
23.2
%
Operating income (loss)
$
42,991
$
41,786
2.9
%
$
(289
)
$
12,658
N/M
Non-GAAP adjusted operating income(1)
$
93,448
$
73,577
27.0
%
$
17,608
$
20,131
(12.5
)%
Non-GAAP adjusted EBITDA(1)
$
157,036
$
123,028
27.6
%
$
33,880
$
34,003
(0.4
)%
Operating income (loss) as a percent of
revenue
2.7
%
3.6
%
(0.1
)%
3.8
%
Adjusted EBITDA as a percent of pro forma
revenue
10.0
%
9.7
%
8.4
%
10.3
%
(1) Full year 2022 results includes Lawson
Products pre-merger results, other pro forma adjustments and
certain non-operational or non-cash items
(2) As a result of the April 1, 2022
strategic combination of Lawson Products, Gexpro Services and
TestEquity, the Company's financial results are reported under
reverse merger accounting treatment as required by generally
accepted accounting principles ("GAAP"). Accordingly, Lawson
Products results are included only for the periods following the
April 1, 2022 merger closing date. GAAP results for the three and
twelve months ended December 31, 2022 include the combined results
of Gexpro Services and TestEquity, and the results of Lawson
Products only subsequent to April 1, 2022.
2023 Full Year Summary(1)
- Revenue was $1.57 billion, an increase of $419.0 million or
36.4% compared to 2022. On a comparable basis (including 12 months
of Lawson in 2022), pro forma revenue grew 23.7%. Organic revenue
grew 2.9% for 2023 versus 2022 and the remaining increase driven by
acquisitions.
- Operating income increased $1.2 million from the prior year to
$43.0 million, after the effect of non-cash acquired intangible
amortization and $50.5 million of non-recurring acquisition related
severance and retention costs, stock-based compensation and other
non-recurring items. Adjusted operating income, excluding these
non-cash and non-recurring items, grew 27.0% to $93.4 million
compared to $73.6 million in 2022.
- Non-GAAP adjusted EBITDA grew to $157.0 million in 2023, or
10.0% of revenue, compared to $123.0 million or 9.7% of comparable
pro forma revenue in the prior year. As expected, Hisco's
operations pressured the 2023 adjusted EBITDA margins by
approximately 50bps.
- GAAP Diluted loss per share was $0.20 for the year compared to
earnings per diluted share of $0.21 in the year-ago period.
Non-GAAP adjusted diluted earnings per share was $1.42 compared to
$1.47 in the prior year on higher weighted average shares of 44.9
million in 2023 versus 35.1 million in 2022.
- The Company ended 2023 with total liquidity of $298 million,
consisting of $99.6 million of cash (restricted and unrestricted)
and $198.3 million of availability under its credit facility with
net debt leverage of 2.9x. Uses of cash for 2023 included net
capital expenditures of $18.7 million and share repurchases of $3.6
million at an average price of $26.09. (1) See reconciliation of
GAAP to non-GAAP measures in tables 3, 5 and 6. Share and per share
data for all periods presented reflect two-for-one stock
split.
2023 Fourth Quarter Summary(2)
- Revenue increased $76.4 million, or 23.2%, to $405.2 million
which includes $97.3 million of incremental revenue from 2022 and
2023 acquisitions. Two-year stacked organic revenue in the fourth
quarter for 2023 and 2022 increased 10% despite organic revenue
softness in the 2023 fourth quarter being down 6.4%. The revenue
headwinds were isolated to the technology end-market and
project-related verticals that are both more sensitive to high
interest rates connected to capital spending.
- Operating loss was $0.3 million, which included $10.4 million
of non-cash acquired intangible amortization and $17.9 million of
non-recurring severance (primarily acquisition related) and other
acquisition-related retention costs, stock-based compensation and
other non-recurring items as compared to operating income of $12.7
million in the prior year quarter. Adjusted operating income,
excluding these non-cash and non-recurring items, was $17.6 million
compared to $20.1 million in the year-ago quarter.
- GAAP Diluted loss per share was $0.35 for the quarter compared
to diluted loss per share of $0.05 in the year-ago quarter on
higher depreciation and amortization expenses and establishing a
valuation allowance on certain deferred tax assets in 2023.
Non-GAAP adjusted diluted earnings per share was $0.22 compared to
$0.32 for the same period a year ago.
- Adjusted EBITDA was $33.9 million compared to $34.0 million in
the prior year quarter. As expected, Hisco operations pressured
adjusted EBITDA margins in the 2023 quarter by approximately
35bps.
- The Board of Directors announced an increase of $25.0 million
to the existing share repurchase program, expanding the Company's
availability to $29.0 million at December 31, 2023. (2) See
reconciliation of GAAP to non-GAAP measures in tables 2, 4 and 6.
Share and per share data for all periods presented reflect
two-for-one stock split.
Conference Call
Distribution Solutions Group, Inc. will conduct a conference
call with investors to discuss 2023 fiscal year and fourth quarter
results at 9:00 a.m. Eastern Time on March 7, 2024. 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 138589. A replay of the conference call will be available by
telephone approximately two hours after completion of the call
through March 21, 2024. 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 49593. 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 180,000 customers in
several diverse end markets supported by approximately 3,700
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, and Section 21E of the Securities Exchange Act of 1934, as
amended, that involve risks and uncertainties. Terms such as “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, which speak only as of the date
made. DSG undertakes no obligation to release publicly any
revisions to forward-looking statements as a result of new
information, future events or otherwise. Actual results may differ
materially from those projected as a result of certain risks and
uncertainties. Certain risks associated with DSG’s business are
also discussed from time to time in the reports DSG files with the
SEC, including DSG’s Annual Report on Form 10-K, DSG’s Quarterly
Reports on Form 10-Q and DSG’s Current Reports on Form 8-K, which
should be reviewed carefully. In addition, the following factors,
among others, could cause actual outcomes and results to differ
materially from those discussed in the forward-looking statements:
(i) unanticipated difficulties, expenditures or any problems
arising after combining the businesses of Lawson Products,
TestEquity and Gexpro Services (the "merger"), which may result in
DSG not operating as effectively and efficiently as expected; (ii)
the risk that stockholder litigation in connection with the merger
or any other acquisition or business combination completed by DSG
or any of its subsidiaries results in significant costs of defense,
indemnification and liability; and (iii) the risks that DSG may
encounter difficulties integrating the business of DSG with the
business of other companies that DSG has acquired or has otherwise
combined with, that DSG may not achieve the anticipated synergies
contemplated with respect to any such business or transactions and
that certain assumptions with respect to such business or
transactions could prove to be inaccurate.
-TABLES FOLLOW-
Distribution Solutions Group,
Inc.
Condensed Consolidated Balance
Sheets
(Dollars in thousands, except
share data)
(Unaudited)
December 31,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
83,931
$
24,554
Restricted cash
15,695
186
Accounts receivable, less allowances
213,448
166,301
Inventories
315,984
264,374
Prepaid expenses and other current
assets
28,272
22,773
Total current assets
657,330
478,188
Property, plant and equipment, net
113,811
64,395
Rental equipment, net
24,575
27,139
Goodwill
399,925
348,048
Deferred tax asset, net
95
189
Intangible assets, net
253,834
227,994
Cash value of life insurance
18,493
17,166
Right of use operating lease assets
76,340
46,755
Other assets
5,928
5,736
Total assets
$
1,550,331
$
1,215,610
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
98,674
$
80,486
Current portion of long-term debt
32,551
16,352
Current portion of lease liabilities
13,549
9,964
Accrued expenses and other current
liabilities
97,241
62,677
Total current liabilities
242,015
169,479
Long-term debt, less current portion,
net
535,881
395,825
Lease liabilities
67,065
39,828
Deferred tax liability, net
18,326
23,834
Other liabilities
25,443
23,649
Total liabilities
888,730
652,615
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 - 47,535,618 and 39,460,724 shares,
respectively
Outstanding - 46,758,359 and 38,833,568
shares, respectively
46,758
38,834
Capital in excess of par value
671,154
572,379
Retained deficit
(34,707
)
(25,736
)
Treasury stock – 777,259 and 627,156
shares, respectively
(16,434
)
(12,526
)
Accumulated other comprehensive income
(loss)
(5,170
)
(9,956
)
Total stockholders’ equity
661,601
562,995
Total liabilities and stockholders’
equity
$
1,550,331
$
1,215,610
Distribution Solutions Group,
Inc.
Condensed Consolidated
Statements of Operations
(Dollars in thousands, except per
share data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Revenue
$
405,239
$
328,850
$
1,570,402
$
1,151,422
Cost of goods sold
267,555
212,558
1,018,527
760,524
Gross profit
137,684
116,292
551,875
390,898
Selling, general and administrative
expenses
137,973
103,634
508,884
349,112
Operating income (loss)
(289
)
12,658
42,991
41,786
Interest expense
(12,717
)
(7,597
)
(42,774
)
(24,301
)
Loss on extinguishment of debt
—
—
—
(3,395
)
Change in fair value of earnout
liabilities
112
(4,431
)
758
(483
)
Other income (expense), net
(113
)
(894
)
(2,982
)
(670
)
Income (loss) before income
taxes
(13,007
)
(264
)
(2,007
)
12,937
Income tax expense (benefit)
3,323
1,619
6,960
5,531
Net income (loss)
$
(16,330
)
$
(1,883
)
$
(8,967
)
$
7,406
Basic income (loss) per share of common
stock
$
(0.35
)
$
(0.05
)
$
(0.20
)
$
0.22
Diluted income (loss) per share of
common stock
$
(0.35
)
$
(0.05
)
$
(0.20
)
$
0.21
Basic weighted average shares
outstanding
46,804,556
38,816,834
44,868,862
34,291,870
Diluted weighted average shares
outstanding
46,804,556
38,816,834
44,868,862
35,086,592
Distribution Solutions Group,
Inc.
Condensed Consolidated
Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Twelve Months Ended December
31,
2023
2022
Operating activities
Net income (loss)
$
(8,967
)
$
7,406
Adjustments to reconcile to net cash used
in operating activities:
Depreciation and amortization
63,588
45,186
Amortization of debt issuance costs
2,420
1,888
Extinguishment of debt
—
3,395
Stock-based compensation
7,940
2,448
Compensation expense related to employee
share purchases
427
—
Deferred income taxes
(8,028
)
(2,406
)
Change in fair value of earnout
liabilities
(758
)
483
Gain on sale of rental equipment
(2,675
)
(3,632
)
Loss on sale of property, plant and
equipment
294
—
Charge for step-up of acquired
inventory
3,582
2,866
Net realizable value adjustment and
write-offs for obsolete and excess inventory
8,990
4,608
Bad debt expense
784
795
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
18,020
(21,771
)
Inventories
(1,236
)
(42,404
)
Prepaid expenses and other current
assets
931
(1,874
)
Accounts payable
3,048
(8,839
)
Accrued expenses and other current
liabilities
13,667
4,492
Other changes in operating assets and
liabilities
259
(3,670
)
Net cash provided by (used in) operating
activities
102,286
(11,029
)
Investing activities
Purchases of property, plant and
equipment
(15,337
)
(8,307
)
Business acquisitions, net of cash
acquired
(259,835
)
(115,343
)
Purchases of rental equipment
(9,341
)
(11,794
)
Proceeds from sale of rental equipment
5,990
8,756
Net cash provided by (used in) investing
activities
(278,523
)
(126,688
)
Financing activities
Proceeds from revolving lines of
credit
180,982
383,489
Payments on revolving lines of credit
(302,083
)
(320,751
)
Proceeds from term loans
305,000
445,630
Payments on term loans
(26,375
)
(335,305
)
Deferred financing costs
(3,419
)
(11,956
)
Proceeds from rights offering, net of
offering costs of $1,531
98,469
—
Repurchase of common stock
(3,619
)
(1,940
)
Shares repurchased held in treasury
(287
)
(520
)
Proceeds from employees for share
purchases
3,253
—
Payment of financing lease principal
(515
)
(429
)
Payment of earnout
(1,000
)
—
Payment on seller's note
—
(9,757
)
Net cash provided by (used in) financing
activities
250,406
148,461
Effect of exchange rate changes on cash
and cash equivalents
717
(675
)
Increase (decrease) in cash, cash
equivalents and restricted cash
74,886
10,069
Cash, cash equivalents and restricted cash
at beginning of period
24,740
14,671
Cash, cash equivalents and restricted
cash at end of period
$
99,626
$
24,740
Cash and cash equivalents
$
83,931
$
24,554
Restricted cash
15,695
186
Total cash, cash equivalents and
restricted cash
$
99,626
$
24,740
Distribution Solutions Group,
Inc.
Table 1 - Selected Segment
Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended
December 31,
2023
2022
Revenue:
Lawson Products
$
109,807
$
108,029
Gexpro Services
93,211
100,103
TestEquity
190,685
105,374
Other
13,236
15,344
Intersegment revenue elimination
(1,700
)
—
Total
$
405,239
$
328,850
Operating income (loss):
Lawson Products
$
5,140
$
3,746
Gexpro Services
3,516
4,317
TestEquity
(8,282
)
3,932
Other
(663
)
663
Total
$
(289
)
$
12,658
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 includes for
the year ended December 31, 2022 certain results of pre-merger
Lawson Products and excludes for all periods 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 December 31, 2023 and 2022 and the years ended
December 31, 2023 and 2022. 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 Operating Income (Loss) to Non-GAAP Adjusted EBITDA
Q4 2023 and Q4 2022
(Dollars in thousands)
(Unaudited)
Lawson Products
Gexpro Services
TestEquity
All Other
Eliminations
Consolidated DSG
Quarter Ended
Q4 2023
Q4 2022
Q4 2023
Q4 2022
Q4 2023
Q4 2022
Q4 2023
Q4 2022
Q4 2023
Q4 2022
Q4 2023
Q4 2022
Revenue from external customers
$
109,475
$
108,029
$
91,968
$
100,103
$
190,560
$
105,374
$
13,236
$
15,344
$
—
$
—
$
405,239
$
328,850
Intersegment revenue
332
—
1,243
—
125
—
—
—
(1,700
)
—
—
—
Revenue
$
109,807
$
108,029
$
93,211
$
100,103
$
190,685
$
105,374
$
13,236
$
15,344
$
(1,700
)
$
—
$
405,239
$
328,850
Operating income (loss)
$
5,140
$
3,746
$
3,516
$
4,317
$
(8,282
)
$
3,932
$
(663
)
$
663
$
(289
)
$
12,658
Depreciation and amortization
4,407
4,063
4,026
4,196
7,315
5,055
524
558
16,272
13,872
Adjustments:
Merger and acquisition related
costs(1)
360
1,324
268
1,823
931
1,486
939
—
2,498
4,633
Stock-based compensation(2)
2,499
2,003
—
—
—
—
—
—
2,499
2,003
Severance and acquisition related
retention expenses(3)
46
217
199
221
11,153
3
2
2
11,400
443
Inventory step-up(4)
—
—
—
—
716
—
—
—
716
—
Other non-recurring(5)
(30
)
156
814
238
—
—
—
—
784
394
Non-GAAP adjusted EBITDA
$
12,422
$
11,509
$
8,823
$
10,795
$
11,833
$
10,476
$
802
$
1,223
$
33,880
$
34,003
Operating income (loss) as a percent of
revenue
4.7
%
3.5
%
3.8
%
4.3
%
(4.3
)%
3.7
%
(5.0
)%
4.3
%
(0.1
)%
3.8
%
Adjusted EBITDA as a percent of
revenue
11.3
%
10.7
%
9.5
%
10.8
%
6.2
%
9.9
%
6.1
%
8.0
%
8.4
%
10.3
%
(1)
Transaction and integration costs related
to the mergers and other acquisitions
(2)
Expense (benefit) primarily for
stock-based compensation, of which a portion varies with the
Company’s stock price
(3)
Includes severance expense for actions
taken in 2023 and 2022 not related to a formal restructuring plan
and acquisition related retention expenses for the Hisco
acquisition
(4)
Inventory fair value step-up adjustment
for Lawson resulting from the reverse merger acquisition accounting
and acquisition accounting for additional acquisitions completed by
Gexpro Services or TestEquity
(5)
Other non-recurring costs consist of
non-capitalized deferred financing costs incurred in conjunction
with the 2023 credit agreement amendment, certain non-recurring
strategic projects and other non-recurring items
Distribution Solutions Group,
Inc.
Table 3 - Reconciliation of
GAAP Revenue to Pro Forma Revenue and
GAAP Operating Income (Loss)
to Non-GAAP Adjusted EBITDA
YTD 2023 and YTD 2022
(Dollars in thousands)
(Unaudited)
Lawson Products
Gexpro Services
TestEquity
Other
Eliminations
Consolidated DSG
Year Ended
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Revenue from external customers
$
468,379
$
324,783
$
404,490
$
385,326
$
641,643
$
392,358
$
55,890
$
48,955
$
—
$
—
$
1,570,402
$
1,151,422
Intersegment revenue
332
—
1,243
—
125
—
—
—
(1,700
)
—
—
—
Revenue
468,711
324,783
405,733
385,326
641,768
392,358
55,890
48,955
(1,700
)
—
1,570,402
1,151,422
Pre-merger revenue(1)
—
104,902
—
—
—
—
—
12,975
—
—
—
117,877
Pro forma revenue
$
468,711
$
429,685
$
405,733
$
385,326
$
641,768
$
392,358
$
55,890
$
61,930
$
(1,700
)
$
—
$
1,570,402
$
1,269,299
Operating income (loss)
$
32,498
$
6,536
$
27,000
$
21,291
$
(16,465
)
$
11,375
$
(42
)
$
2,584
$
42,991
$
41,786
Pre-merger operating income(1)
—
11,096
—
—
—
—
—
980
—
12,076
Pro forma merger adjustments(2)
—
(4,086
)
—
—
—
—
—
—
—
(4,086
)
Pro forma operating income (loss)
32,498
13,546
27,000
21,291
(16,465
)
11,375
(42
)
3,564
42,991
49,776
Depreciation and amortization
19,532
14,716
15,986
15,175
26,002
17,480
2,068
2,080
63,588
49,451
Adjustments:
Merger and acquisition related
costs(3)
3,015
7,672
1,081
5,957
6,215
4,786
1,250
—
11,561
18,415
Stock-based compensation(4)
7,940
(4,237
)
—
—
—
—
—
—
7,940
(4,237
)
Severance and acquisition related
retention expenses(5)
476
2,050
238
266
23,949
1,095
3
11
24,666
3,422
Inventory net realizable value
adjustment(6)
—
1,737
—
—
—
—
—
—
—
1,737
Inventory step-up(7)
—
1,943
—
163
3,582
—
—
761
3,582
2,867
Other non-recurring(8)
202
1,199
886
354
—
—
1,620
44
2,708
1,597
Non-GAAP adjusted EBITDA
$
63,663
$
38,626
$
45,191
$
43,206
$
43,283
$
34,736
$
4,899
$
6,460
$
157,036
$
123,028
Operating income (loss) as a percent of
revenue
6.9
%
2.0
%
6.7
%
5.5
%
(2.6
)%
2.9
%
(0.1
)%
5.3
%
2.7
%
3.6
%
Adjusted EBITDA as a percent of
revenue
13.6
%
11.9
%
11.1
%
11.2
%
6.7
%
8.9
%
8.8
%
13.2
%
10.0
%
10.7
%
Adjusted EBITDA as a percent of pro forma
revenue
13.6
%
9.0
%
11.1
%
11.2
%
6.7
%
8.9
%
8.8
%
10.4
%
10.0
%
9.7
%
(1)
Represents Lawson Products pre-merger
revenue and operating income
(2)
Represents Lawson Products pro forma
adjustments related to the merger consisting primarily of
amortization of intangibles and stock based compensation
(3)
Transaction and integration costs related
to the mergers and other acquisitions
(4)
Expense (benefit) primarily for
stock-based compensation, of which a portion varies with the
Company’s stock price
(5)
Includes severance expense for actions
taken in 2023 and 2022, not related to a formal restructuring plan
and acquisition related retention expenses for the Hisco
acquisition
(6)
Inventory net realizable value adjustment
recorded to reduce inventory related to discontinued products where
the anticipated net realizable value was lower than the cost
reflected in our records
(7)
Inventory fair value step-up adjustment
for Lawson resulting from the reverse merger acquisition accounting
and acquisition accounting for additional acquisitions completed by
Gexpro Services or TestEquity
(8)
Other non-recurring costs consist of
non-capitalized deferred financing costs incurred in conjunction
with the 2023 credit agreement amendment, certain non-recurring
strategic projects and other non-recurring items
Distribution Solutions Group,
Inc.
Table 4 - 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
December 31, 2023
December 31,
2022(3)(4)
Amount
Diluted EPS(2)
Amount
Diluted EPS(2)
Net income (loss)
$
(16,330
)
$
(0.35
)
$
(1,883
)
$
(0.05
)
Pretax adjustments:
Stock-based compensation
2,499
0.05
2,003
0.05
Merger and acquisition related costs
2,498
0.05
4,633
0.12
Amortization of intangible assets
10,398
0.22
8,186
0.21
Severance and acquisition related
retention expenses
11,400
0.24
443
0.01
Change in fair value of earnout
liabilities
(112
)
—
4,431
0.11
Inventory step-up
716
0.02
—
—
Other non-recurring
784
0.02
394
0.01
Total pretax adjustments
28,183
0.60
20,090
0.51
Tax effect on adjustments(1)
(7,412
)
(0.16
)
(5,264
)
(0.14
)
Deferred tax asset valuation
allowance(5)
6,144
0.13
124
—
Non-GAAP adjusted net income
$
10,585
$
0.22
$
13,067
$
0.32
(1)
The estimated tax effect on the
adjustments is determined by applying the jurisdictional rate of
the originating territory of the non-GAAP adjustments.
(2)
Pretax adjustments to diluted EPS
calculated on 46.805 million and 38.817 million diluted shares for
the fourth quarter of 2023 and 2022, respectively.
(3)
In 2023, the Company changed the treatment
of amortization of intangible assets and the deferred tax asset
valuation allowance to be included in the calculation of Non-GAAP
adjusted net income and Non-GAAP adjusted diluted EPS. The
calculation of the tax effect on adjustments was revised to
consider the jurisdictional rate of the originating territory of
the non-GAAP adjustments. Prior periods have been adjusted to
conform to current period presentation.
(4)
Share and per share data for all periods
presented reflect two-for-one stock split.
(5)
Represents expense related to the deferred
tax asset valuation allowance from interest expense limitations
under Section 163(j).
Distribution Solutions Group,
Inc.
Table 5 - 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)
Twelve Months Ended
December 31, 2023
December 31,
2022(3)(4)
Amount
Diluted EPS(2)
Amount
Diluted EPS(2)
Net income (loss)
$
(8,967
)
$
(0.20
)
$
7,406
$
0.21
Pretax adjustments:
Stock-based compensation
7,940
0.18
2,448
0.07
Merger and acquisition related costs
11,561
0.26
15,441
0.44
Amortization of intangible assets
40,263
0.90
29,097
0.83
Severance and acquisition related
retention expenses
24,666
0.55
2,796
0.08
Change in fair value of earnout
liabilities
(758
)
(0.02
)
483
0.01
Loss on extinguishment of debt
—
—
3,395
0.10
Inventory net realizable value
adjustment
—
—
1,737
0.05
Inventory step-up
3,582
0.08
2,867
0.08
Other non-recurring
2,708
0.06
1,597
0.05
Total pretax adjustments
89,962
2.01
59,861
1.71
Tax effect on adjustments(1)
(23,660
)
(0.53
)
(15,684
)
(0.45
)
Deferred tax asset valuation allowance
6,144
0.14
124
—
Non-GAAP adjusted net income
$
63,479
$
1.42
$
51,707
$
1.47
(1)
The estimated tax effect on the
adjustments is determined by applying the jurisdictional rate of
the originating territory of the non-GAAP adjustments.
(2)
Pretax adjustments to diluted EPS
calculated on 44.869 million and 35.087 million diluted shares for
the twelve months ended December 31, 2023 and 2022,
respectively.
(3)
In 2023, the Company changed the treatment
of amortization of intangible assets and the deferred tax asset
valuation allowance to be included in the calculation of Non-GAAP
adjusted net income and Non-GAAP adjusted diluted EPS. The
calculation of the tax effect on adjustments was revised to
consider the jurisdictional rate of the originating territory of
the non-GAAP adjustments. Prior periods have been adjusted to
conform to current period presentation.
(4)
Share and per share data for all periods
presented reflect two-for-one stock split.
(5)
Represents expense related to the deferred
tax asset valuation allowance from interest expense limitations
under Section 163(j).
Distribution Solutions Group,
Inc.
Table 6 - Reconciliation of
GAAP Operating Income (Loss) to Non-GAAP Adjusted Operating
Income
(Dollars in thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Operating income (loss)
$
(289
)
$
12,658
$
42,991
$
41,786
Pre-merger operating income(1)
—
—
—
12,076
Pro forma merger adjustments(2)
—
—
—
(4,086
)
Pro forma operating income (loss)
(289
)
12,658
42,991
49,776
Gross profit adjustments:
Inventory step-up(3)
716
—
3,582
2,867
Inventory net realizable value
adjustment(4)
—
—
—
1,737
Total gross profit adjustments
716
—
3,582
4,604
Selling, general and administrative
expenses adjustments:
Merger and acquisition related
costs(5)
2,498
4,633
11,561
18,415
Stock-based compensation(6)
2,499
2,003
7,940
(4,237
)
Severance and acquisition related
retention expenses(7)
11,400
443
24,666
3,422
Other non-recurring(8)
784
394
2,708
1,597
Total selling, general and administrative
adjustments
17,181
7,473
46,875
19,197
Total adjustments
17,897
7,473
50,457
23,801
Non-GAAP adjusted operating income
$
17,608
$
20,131
$
93,448
$
73,577
(1)
Represents Lawson Products pre-merger
operating income
(2)
Represents Lawson Products pro forma
adjustments related to the merger consisting primarily of
amortization of intangibles and stock based compensation
(3)
Inventory fair value step-up adjustment
for Lawson resulting from the reverse merger acquisition accounting
and acquisition accounting for additional acquisitions completed by
Gexpro Services or TestEquity
(4)
Inventory net realizable value adjustment
recorded to reduce inventory related to discontinued products where
the anticipated net realizable value was lower than the cost
reflected in our records
(5)
Transaction and integration costs related
to the mergers and other acquisitions
(6)
Expense (benefit) primarily for
stock-based compensation, of which a portion varies with the
Company’s stock price
(7)
Includes severance expense for actions
taken in 2023 and 2022 not related to a formal restructuring plan
and acquisition related retention expenses for the Hisco
acquisition
(8)
Other non-recurring costs consist of
non-capitalized deferred financing costs incurred in conjunction
with the 2023 credit agreement amendment, certain non-recurring
strategic projects and other non-recurring items
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240306370463/en/
Company: Distribution Solutions Group, Inc. Ronald J.
Knutson Executive Vice President, Chief Financial Officer and
Treasurer 1-888-611-9888
Investor Relations: Three Part Advisors, LLC Steven
Hooser / Sandy Martin 214-872-2710 / 214-616-2207
Distribution Solutions (NASDAQ:DSGR)
過去 株価チャート
から 5 2024 まで 6 2024
Distribution Solutions (NASDAQ:DSGR)
過去 株価チャート
から 6 2023 まで 6 2024