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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