The following is a summary of the Distribution Solutions Group, Inc. (DSGR) Q3 2024 Earnings Call Transcript:

Financial Performance:

• DSG recorded Q3 revenue of $468 million, up 6.6% from last year, driven by the acquisition contributions amounting to $38.1 million.

• Adjusted EBITDA for the quarter amounted to $49.1 million, an increase of 12.4% year-over-year, with EBITDA margin improving to 10.5%.

• Organic sales saw a slight decline of 2.1%, mainly due to a tough industrial backdrop.

Business Progress:

• DSG strengthened its presence in Canada with the acquisition of Source Atlantic, enhancing its North American footprint and transitioning from a regional to a national MRO player in Canada.

• Reported significant progress in integrating acquisitions such as Hisco and TestEquity, capturing more cost savings than initially planned.

• Engaged in acquiring ConRes Test Equipment to enhance Test and Measurement capabilities, particularly in the Northeast, USA.

Opportunities:

• The combination of new acquisitions with existing business lines is expected to offer enhanced services and drive DSG's revenue growth and profitability, with a focused effort on improving strategic and revenue growth in Canada.

• New end markets recovering, such as technology and renewables, and strategic acquisitions in key regions like Canada and Southeast Asia represent significant growth opportunities.

Risks:

• Organic sales declined 2.1%, signaling potential vulnerabilities in some markets and challenges with current industrial market conditions.

• Integration risks associated with new acquisitions and managing increased costs that could impact profitability.

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