Company Achieved 9.8% Full Year Revenue Growth and Generated $84 Million in Operating Cash Flow
FORT WORTH, Texas--(BUSINESS WIRE)--March 05, 2026--
Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or the "Company"), a premier specialty distribution company, today announced consolidated results for the fourth quarter ended December 31, 2025. This press release is supplemented by an earnings presentation at https://investor.distributionsolutionsgroup.com/news/events.
The following represents a summary of certain operating results (unaudited). See the reconciliations of GAAP to non-GAAP measures in Tables 2 and 5.
Three Months Ended Twelve Months Ended
-------------------------------------- ------------------------------------------
December 31, December 31,
-------------------------------------- ------------------------------------------
(Dollars in thousands) 2025 2024 % Change 2025 2024 % Change
------- ------- ---------- --------- --------- ----------
Revenue $481,599 $480,463 0.2% $1,980,023 $1,804,104 9.8%
Operating income $ 7,721 $ 20,067 (61.5)% $ 78,263 $ 55,955 39.9%
Non-GAAP adjusted
operating income $ 26,517 $ 37,293 (28.9)% $ 140,847 $ 148,364 (5.1)%
Net income (loss) $ (6,371) $(25,925) 75.4% $ 8,345 $ (7,332) 213.8%
Non-GAAP adjusted
EBITDA $ 35,437 $ 44,899 (21.1)% $ 175,241 $ 175,257 --%
Operating income (loss)
as a percent of
revenue 1.6% 4.2% -260bps 4.0% 3.1% 90bps
Adjusted EBITDA as a
percent of revenue 7.4% 9.3% -190bps 8.9% 9.7% -80bps
Bryan King, CEO and Chairman, said, "For the full year, we delivered sales growth of 9.8% despite one less selling day, supported by organic average daily sales growth of 3.6%. This performance reflects the strength of our operating model and execution amidst a challenging macroeconomic environment affecting most U.S. companies in 2025. We generated improved GAAP net income and strong operating cash flow for the year, demonstrating the resilience of our business while continuing to invest in growth initiatives. While margins were pressured by end-market softness, sales mix, timing of certain expenses and continued investments, we believe actions being taken within our verticals are positioning us better for long-term profitable growth.
"Cash flow generation continues to be very strong. We generated full year operating cash flow of $84 million on top of $56 million in the year-ago period. This allowed us to return more than $23 million to shareholders through stock repurchases in 2025, reflecting our confidence in the Company's strategic advancement. Margin pressure during the period was primarily driven by shifts in the product and solutions mix, including acquisition-related impacts, and timing of employee-related costs, particularly in healthcare benefits, and leadership talent investments. While the fourth quarter margin did not play out as anticipated given some of these dynamics, it is not indicative of our longer-term plans or our confidence in the future. Industry-wide softness and continued investments in the business have pressured margins in the short-term, however, we are encouraged by the disciplined execution of our strategy and the progress on our key operating initiatives.
"Total available liquidity was $469 million at year end, with a minimal outstanding revolver balance. During the fourth quarter, we extended our senior secured credit facility through 2030, providing $700 million of term debt and increasing our revolving credit capacity from $255 million to $400 million. This further strengthens our liquidity profile and enhances our financial flexibility to pursue acquisitions and other strategic growth initiatives. As we look ahead to 2026, we are beginning to see backlogs build and improved momentum in our weekly sales cadence. We remain focused on building structurally higher-margin businesses that generate strong free cash flow, creating long-term shareholder value," concluded Mr. King.
2025 Full Year Summary(1)
-- Revenue was $1.98 billion, an increase of $175.9 million or 9.8% on one
fewer selling day, of which $121.5 million resulted from five
acquisitions only partially included in 2024. Organic average daily sales
increased 3.6% for 2025 versus 2024.
-- Operating income increased $22.3 million from the prior year to $78.3
million, net of acquired intangible amortization of $46.5 million and
$16.1 million of non-recurring severance and acquisition-related
retention costs, stock-based compensation, acquisition-related costs and
other non-recurring items. Adjusted operating income, excluding these
non-cash and non-recurring items, decreased $7.5 million to $140.8
million compared to $148.4 million in 2024.
-- Net income increased by $15.7 million to $8.3 million in 2025 compared
to a net loss of $7.3 million in the prior year.
-- Adjusted EBITDA was $175.2 million in 2025, or 8.9% of revenue,
compared to $175.3 million or 9.7% of revenue in the prior year.
Excluding the impact of Source Atlantic, acquired in 2024, Adjusted
EBITDA as a percentage of revenue would have been 9.2%.
-- Diluted income per share was $0.18 for the year compared to diluted
loss per share of $0.16 in the year-ago period. Non-GAAP adjusted diluted
earnings per share was $1.24 compared to $1.44 in the prior year.
-- Cash generated from operations increased by $27.4 million to $83.8
million in 2025 compared to $56.5 million in the prior year. Cash uses
for 2025 included net capital expenditures of $26.8 million and share
repurchases of $23.5 million at an average price of $30.26.
-- Amended and expanded the credit facility through 2030. The new facility
includes $700 million in term debt and a $400 million revolving credit
facility, an increase over the previous revolver capacity of $255
million. The Company ended the quarter with total liquidity of $469.0
million, consisting of $75.3 million of cash (restricted and
unrestricted) and $393.7 million available under its credit facility,
with net debt leverage of 3.5x.
-- Net working capital ended at $473.5 million for the year, flat with the
year-ago period.
(1) See reconciliation of GAAP to non-GAAP measures in tables 2, 4 and 5.
2025 Fourth Quarter Summary(2)
-- Revenue increased $1.1 million to $481.6 million, driven by $1.7
million of incremental revenue from two acquisitions closed in the fourth
quarter of 2024, not included in the full fourth quarter of 2024. Organic
average daily sales were flat compared to the year ago quarter.
-- Operating income was $7.7 million, net of $11.6 million of non-cash
acquired intangible amortization and $7.2 million of non-recurring
severance and acquisition-related retention costs, stock-based
compensation, acquisition-related costs and other non-recurring items.
This compares to an operating income of $20.1 million in the prior year
quarter. Adjusted operating income, excluding these non-cash and
non-recurring items, was $26.5 million in the current quarter compared to
$37.3 million in the year-ago quarter.
-- Net loss was $6.4 million for the quarter compared to net loss of $25.9
million in the prior year quarter which was negatively impacted by higher
tax expense.
-- Adjusted EBITDA was $35.4 million, or 7.4% of sales, compared to $44.9
million, or 9.3% of sales in the prior year quarter.
-- Diluted net loss per share was $0.14 for the quarter compared to
diluted net loss per share of $0.55 in the year-ago quarter. Non-GAAP
adjusted diluted earnings per share was $0.18 compared to $0.42 for the
same period a year ago. 2024 included a $0.56 benefit from lower deferred
tax reserves.
-- Cash flow from operations was $16.9 million for the quarter. Uses of
cash for the quarter included net capital expenditures of $8.5 million
and share repurchases of $3.5 million.
(2) See reconciliation of GAAP to non-GAAP measures in tables 2, 3 and 5.
Conference Call
Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss 2025 fourth quarter results at 9:00 a.m. Eastern Time on March 5, 2026. 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 679700. A replay of the conference call will be available by telephone approximately two hours after completion of the call through March 19, 2026. 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 53443. 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 220,000 customers in several diverse end markets supported by approximately 4,300 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, Section 21E of the Securities Exchange Act of 1934, as amended, and the "safe-harbor" provisions under the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. The Terms "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. DSG undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Each forward-looking statement speaks only as of the date on which such statement is made, and DSG undertakes no obligation to update any such statement to reflect events or circumstances arising after such date. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Factors that could cause or contribute to such differences or that might otherwise impact DSG's business, financial condition and results of operations include the risks that DSG may encounter difficulties integrating the business of DSG with the business of other companies that DSG has combined with or may otherwise combine with and that certain assumptions with respect to such business or transactions could prove to be inaccurate. Certain risks associated with DSG's business are also discussed from time to time in the reports DSG files with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K or other reports the Company may file from time to time with the Securities and Exchange Commission, which should be reviewed carefully.
-TABLES FOLLOW-
Distribution Solutions Group, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
December 31, December 31,
2025 2024
--------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 61,753 $ 66,479
Restricted cash 13,573 15,247
Accounts receivable, less allowances 271,331 250,717
Inventories 353,374 348,226
Prepaid expenses and other current
assets 46,893 31,505
---------- ----------
Total current assets 746,924 712,174
Property, plant and equipment, net 126,605 125,524
Rental equipment, net 38,956 39,376
Goodwill 467,905 462,789
Deferred tax asset, net 1,196 136
Customer relationships intangibles,
net 143,503 171,184
Trade names and other intangibles, net 82,552 98,579
Cash value of life insurance 21,567 19,916
Right of use operating lease assets 111,117 91,962
Other assets 8,296 5,615
---------- ----------
Total assets $ 1,748,621 $ 1,727,255
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 151,234 $ 125,575
Current portion of long-term debt 35,470 40,476
Current portion of lease liabilities 20,624 18,951
Accrued expenses and other current
liabilities 84,137 81,259
---------- ----------
Total current liabilities 291,465 266,261
Long-term debt, less current portion,
net 664,196 693,903
Lease liabilities 98,821 77,758
Deferred tax liability, net 20,147 22,265
Other liabilities 24,645 26,525
---------- ----------
Total liabilities 1,099,274 1,086,712
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 - 47,860,312 and 47,738,290
shares, respectively Outstanding -
46,180,700 and 46,856,757 shares,
respectively 46,180 46,856
Capital in excess of par value 686,183 677,473
Retained deficit (33,694) (42,039)
Treasury stock -- 1,679,612 and
881,533 shares, respectively (43,998) (19,631)
Accumulated other comprehensive income
(loss) (5,324) (22,116)
---------- ----------
Total stockholders' equity 649,347 640,543
---------- ----------
Total liabilities and
stockholders' equity $ 1,748,621 $ 1,727,255
========== ==========
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,
-------------------------- ----------------------------
2025 2024 2025 2024
---------- ---------- ---------- ----------
Revenue $ 481,599 $ 480,463 $ 1,980,023 $ 1,804,104
Cost of goods
sold 323,951 320,472 1,317,985 1,190,329
---------- ---------- ---------- ----------
Gross profit 157,648 159,991 662,038 613,775
Selling,
general and
administrative
expenses 149,927 139,924 583,775 557,820
Operating
income (loss) 7,721 20,067 78,263 55,955
Interest
expense (12,944) (15,365) (55,352) (55,145)
Change in fair
value of
earnout
liabilities -- (127) (1,000) (988)
Other income
(expense),
net (1,123) (440) (2,500) (358)
---------- ---------- ---------- ----------
Income (loss)
before income
taxes (6,346) 4,135 19,411 (536)
Income tax
expense
(benefit) 25 30,060 11,066 6,796
---------- ---------- ---------- ----------
Net income
(loss) $ (6,371) $ (25,925) $ 8,345 $ (7,332)
========== ========== ========== ==========
Basic income
(loss) per
share of
common stock $ (0.14) $ (0.55) $ 0.18 $ (0.16)
========== ========== ========== ==========
Diluted income
(loss) per
share of
common stock $ (0.14) $ (0.55) $ 0.18 $ (0.16)
========== ========== ========== ==========
Basic weighted
average shares
outstanding 46,198,828 46,849,345 46,364,229 46,811,354
Diluted
weighted
average shares
outstanding 46,198,828 46,849,345 47,166,469 46,811,354
Distribution Solutions Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Twelve Months Ended December 31,
------------------------------------------
2025 2024
------------- ------------
Operating activities
Net income (loss) $ 8,345 $ (7,332)
Adjustments to reconcile to
net cash used in operating
activities:
Depreciation and
amortization 80,879 74,376
Amortization of debt
issuance costs 3,197 2,922
Stock-based compensation 6,672 5,233
Deferred income taxes (4,008) (6,649)
Change in fair value of
earnout liabilities 1,000 988
(Gain) loss on sale of
rental equipment (4,867) (2,813)
(Gain) loss on sale of
property, plant and
equipment (708) (61)
Charge for step-up of
acquired inventory -- 2,882
Net realizable value
adjustment and write-offs
for obsolete and excess
inventory 7,321 6,612
Bad debt expense 4,429 863
Changes in operating assets
and liabilities, net of
acquisitions:
Accounts receivable (21,437) (1,423)
Inventories (7,239) (9,227)
Prepaid expenses and other
current assets (18,197) (869)
Accounts payable 23,602 11,338
Accrued expenses and other
current liabilities 3,989 (21,254)
Other changes in operating
assets and liabilities 871 867
------------- ------------
Net cash provided by
(used in) operating
activities 83,849 56,453
------------- ------------
Investing activities
Purchases of property, plant
and equipment (21,015) (13,684)
Proceeds from sale of
property, plant and
equipment 990 3,662
Business acquisitions, net of
cash acquired (2,176) (199,423)
Asset acquisitions -- (15,853)
Purchases of rental equipment (19,480) (9,509)
Proceeds from sale of rental
equipment 12,749 5,124
Other (560) --
------------- ------------
Net cash provided by (used
in) investing activities (29,492) (229,683)
------------- ------------
Financing activities
Proceeds from revolving lines
of credit 264,757 211,599
Payments on revolving lines
of credit (260,660) (213,634)
Proceeds from term loans 700,000 200,000
Payments on term loans (739,625) (32,750)
Deferred financing costs (4,648) (2,064)
Repurchase of common stock (23,753) (2,580)
Shares repurchased held in
treasury (614) (617)
Stock option exercises 877 --
Payment of financing lease
principal (600) (653)
------------- ------------
Net cash provided by (used
in) financing activities (64,266) 159,301
------------- ------------
Effect of exchange rate changes
on cash and cash equivalents 3,509 (3,971)
Increase (decrease) in cash,
cash equivalents and restricted
cash (6,400) (17,900)
Cash, cash equivalents and
restricted cash at beginning of
period 81,726 99,626
------------- ------------
Cash, cash equivalents and
restricted cash at end of
period $ 75,326 $ 81,726
============= ============
Cash and cash equivalents $ 61,753 $ 66,479
Restricted cash 13,573 15,247
------------- ------------
Total cash, cash equivalents
and restricted cash $ 75,326 $ 81,726
============= ============
Distribution Solutions Group, Inc.
Table 1 - Selected Segment Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------------
2025 2024 2025 2024
------- ------- --------- ---------
Revenue:
Lawson
Products $114,764 $111,783 $ 481,088 $ 469,044
Canada Branch
Division 55,054 59,041 221,426 125,099
Gexpro
Services 119,418 118,797 496,655 440,723
TestEquity 192,939 191,306 783,237 771,180
Intersegment
revenue
elimination (576) (464) (2,383) (1,942)
------- ------- --------- ---------
Total $481,599 $480,463 $1,980,023 $1,804,104
======= ======= ========= =========
Operating income
(loss):
Lawson
Products $ (913) $ 3,593 $ 18,763 $ 14,555
Canada Branch
Division 1,818 1,178 7,714 6,024
Gexpro
Services 9,788 11,437 48,811 36,533
TestEquity 2,827 5,029 14,405 3,967
All Other (5,799) (1,170) (11,430) (5,124)
------- ------- --------- ---------
Total $ 7,721 $ 20,067 $ 78,263 $ 55,955
======= ======= ========= =========
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 excludes 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, 2025 and 2024, and for the years ended
December 31, 2025 and 2024. 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 Net Income (Loss) and GAAP Operating
Income (Loss) to Non-GAAP Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------------- --------------------------
December 31, December 31,
------------------------- --------------------------
2025 2024 2025 2024
------ ------- ------- -------
Net income (loss) $(6,371) $(25,925) $ 8,345 $ (7,332)
Income tax
expense
(benefit) 25 30,060 11,066 6,796
Other income
(expense), net 1,123 440 2,500 358
Change in fair
value of earnout
liabilities -- 127 1,000 988
Interest expense 12,944 15,365 55,352 55,145
------ ------- ------- -------
Operating income
(loss) 7,721 20,067 78,263 55,955
Depreciation and
amortization 20,520 20,165 80,879 74,376
Stock-based
compensation(1) 2,048 910 6,672 5,233
Severance and
acquisition
related
retention
expenses(2) 1,403 639 5,480 23,236
Acquisition
related
costs(3) 178 1,689 165 10,142
Inventory
step-up(4) -- 1,122 -- 2,882
Other
non-recurring(5) 3,567 307 3,782 3,433
------ ------- ------- -------
Non-GAAP adjusted
EBITDA $35,437 $ 44,899 $175,241 $175,257
====== ======= ======= =======
Operating income
(loss) as a percent
of revenue 1.6% 4.2% 4.0% 3.1%
Adjusted EBITDA as a
percent of revenue 7.4% 9.3% 8.9% 9.7%
(1) Expense (benefit) primarily for stock-based compensation, of which a
portion varies with the Company's stock price.
(2) Includes severance expense for actions taken not related to a formal
restructuring plan and acquisition related retention expenses.
(3) Transaction and integration costs related to acquisitions.
(4) Inventory fair value step-up adjustment for acquisition accounting
related to acquisitions completed.
(5) Other non-recurring costs consist of certain non-recurring strategic
projects and other non-recurring items.
Distribution Solutions Group, Inc.
Table 3 - 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, 2025 December 31, 2024
-------------------- ---------------------
Diluted Diluted
Amount EPS(2) Amount EPS(2)
-------- ---------- --------- ----------
Net income (loss) $(6,371) $(0.14) $(25,925) $(0.55)
Pretax adjustments:
Stock-based
compensation 2,048 0.04 910 0.02
Acquisition related
costs 178 -- 1,689 0.04
Amortization of
intangible assets 11,600 0.25 12,559 0.27
Severance and
acquisition
related retention
expenses 1,403 0.03 639 0.01
Change in fair
value of earnout
liabilities -- -- 127 --
Inventory step-up -- -- 1,122 0.02
Other non-recurring 3,567 0.08 307 0.01
------ ----- ------- -----
Total pretax
adjustments 18,796 0.40 17,353 0.37
Tax effect on
adjustments(1)/(3) (5,020) (0.10) 2,054 0.04
Deferred tax asset
valuation
allowance(3)/(4) 1,085 0.02 26,205 0.56
------ ----- ------- -----
Non-GAAP adjusted net
income $ 8,490 $ 0.18 $ 19,687 $ 0.42
====== ===== ======= =====
(1) The adjustment to the income tax expense (benefit) is determined by
excluding the non-GAAP adjustments by jurisdiction.
(2) Pretax adjustments to diluted EPS calculated on 46.199 million and
46.849 million diluted shares for the fourth quarter of 2025 and 2024,
respectively.
(3) The quarter-to-date amounts are derived from the current period
year-to-date amount less the previous quarter year-to-date amount.
(4) The estimated impact to the deferred tax asset valuation allowance from
interest expense limitations under Section 163(j) determined by
including the non-GAAP adjustments by jurisdiction.
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)
Twelve Months Ended
--------------------------------------------
December 31, 2025 December 31, 2024
--------------------- ---------------------
Diluted Diluted
Amount EPS(2) Amount EPS(2)
--------- ---------- --------- ----------
Net income (loss) $ 8,345 $ 0.18 $ (7,332) $(0.16)
Pretax
adjustments:
Stock-based
compensation 6,672 0.14 5,233 0.11
Acquisition
related costs 165 -- 10,142 0.22
Amortization of
intangible
assets 46,485 0.99 47,483 1.01
Severance and
acquisition
related
retention
expenses 5,480 0.12 23,236 0.50
Change in fair
value of
earnout
liabilities 1,000 0.02 988 0.02
Inventory
step-up -- -- 2,882 0.06
Other
non-recurring 3,782 0.08 3,433 0.07
------- ----- ------- -----
Total pretax
adjustments 63,584 1.35 93,397 1.99
Tax effect on
adjustments(1) (16,506) (0.35) (23,735) (0.51)
Deferred tax
asset
valuation
allowance(3) 2,990 0.06 5,674 0.12
------- ----- ------- -----
Non-GAAP adjusted
net income $ 58,413 $ 1.24 $ 68,004 $ 1.44
======= ===== ======= =====
(1) The adjustment to the income tax expense (benefit) is determined by
excluding the non-GAAP adjustments by jurisdiction.
(2) Pretax adjustments to diluted EPS calculated on 47.166 million and
46.811 million diluted shares for the twelve months ended December 31,
2025 and 2024, respectively.
(3) The estimated impact to the deferred tax asset valuation allowance from
interest expense limitations under Section 163(j) determined by
including the non-GAAP adjustments by jurisdiction.
Distribution Solutions Group, Inc.
Table 5 - 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,
--------------------- -----------------------
2025 2024 2025 2024
------- ------- -------- --------
Operating income
(loss) $ 7,721 $ 20,067 $ 78,263 $ 55,955
Gross profit
adjustments:
Inventory
step-up(1) -- 1,122 -- 2,882
------- ------- -------- --------
Total gross profit
adjustments -- 1,122 -- 2,882
Selling, general and
administrative
expenses
adjustments:
Acquisition
related
costs(2) 178 1,689 165 10,142
Amortization of
intangible
assets 11,600 12,559 46,485 47,483
Stock-based
compensation(3) 2,048 910 6,672 5,233
Severance and
acquisition
related
retention
expenses(4) 1,403 639 5,480 23,236
Other
non-recurring(5) 3,567 307 3,782 3,433
------- ------- -------- --------
Total selling,
general and
administrative
adjustments 18,796 16,104 62,584 89,527
Total adjustments 18,796 17,226 62,584 92,409
------- ------- -------- --------
Non-GAAP adjusted
operating income $ 26,517 $ 37,293 $ 140,847 $ 148,364
======= ======= ======== ========
(1) Inventory fair value step-up adjustment for acquisition accounting
related to acquisitions completed.
(2) Transaction and integration costs related to acquisitions.
(3) Expense (benefit) primarily for stock-based compensation, of which a
portion varies with the Company's stock price.
(4) Includes severance expense for actions taken not related to a formal
restructuring plan and acquisition related retention expenses.
(5) Other non-recurring costs consist of certain non-recurring strategic
projects and other non-recurring items.
Distribution Solutions Group, Inc.
Table 6 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA
Q4 2025 and Q4 2024
(Dollars in thousands)
(Unaudited)
Lawson Products Gexpro Services TestEquity Canada Branch Division All Other Eliminations Consolidated DSG
-------------------------- -------------------------- -------------------------- ------------------------ ------------------ -------------- --------------------------
Q4 Q4
Quarter Ended Q4 2025 Q4 2024 Q4 2025 Q4 2024 Q4 2025 Q4 2024 Q4 2025 Q4 2024 Q4 2025 Q4 2024 2025 2024 Q4 2025 Q4 2024
------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- -------- -------- ------ ------ ------------ ------------
Revenue from
external customers $114,500 $111,772 $119,236 $118,505 $192,771 $191,145 $55,092 $59,041 $ -- $ -- $ -- $ -- $481,599 $480,463
Intersegment revenue 264 11 182 292 168 161 (38) -- -- -- (576) (464) -- --
------- ------- ------- ------- ------- ------- ------ ------ ------ ------ ---- ---- ------- -------
Revenue $114,764 $111,783 $119,418 $118,797 $192,939 $191,306 $55,054 $59,041 $ -- $ -- $(576) $(464) $481,599 $480,463
======= ======= ======= ======= ======= ======= ====== ====== ====== ====== ==== ==== ======= =======
Operating income
(loss) $ (913) $ 3,593 $ 9,788 $ 11,437 $ 2,827 $ 5,029 $ 1,818 $ 1,178 $(5,799) $(1,170) $ 7,721 $ 20,067
Depreciation and
amortization 7,048 6,218 3,602 3,984 8,404 8,048 1,466 1,915 -- -- 20,520 20,165
Adjustments:
Acquisition
related
costs(1) 12 369 5 584 28 713 133 23 -- -- 178 1,689
Stock-based
compensation(2) 603 544 335 -- 526 208 -- -- 584 158 2,048 910
Severance and
acquisition
related
retention
expenses(3) 827 273 192 183 228 180 156 4 -- (1) 1,403 639
Inventory
step-up(4) -- -- -- -- -- -- -- 1,122 -- -- -- 1,122
Other
non-recurring(5) 90 -- -- (360) 299 667 44 -- 3,134 -- 3,567 307
Non-GAAP adjusted
EBITDA $ 7,667 $ 10,997 $ 13,922 $ 15,828 $ 12,312 $ 14,845 $ 3,617 $ 4,242 $(2,081) $(1,013) $ 35,437 $ 44,899
======= ======= ======= ======= ======= ======= ====== ====== ====== ====== ======= =======
Operating income
(loss) as a percent
of revenue (0.8)% 3.2% 8.2% 9.6% 1.5% 2.6% 3.3% 2.0% N/M N/M 1.6% 4.2%
Adjusted EBITDA as a
percent of revenue 6.7% 9.8% 11.7% 13.3% 6.4% 7.8% 6.6% 7.2% N/M N/M 7.4% 9.3%
(1) Transaction and integration costs related to acquisitions.
(2) Expense (benefit) primarily for stock-based compensation, of which a
portion varies with the Company's stock price.
(3) Includes severance expense from actions taken not related to a
formal restructuring plan and acquisition related retention
expenses.
(4) Inventory fair value step-up adjustment for acquisition accounting
related to acquisitions completed.
(5) Other non-recurring costs consist of certain non-recurring strategic
projects and other non-recurring items.
(N/M) - Not meaningful
Distribution Solutions Group, Inc.
Table 7 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA
YTD 2025 and 2024
(Dollars in thousands)
(Unaudited)
Lawson Products Gexpro Services TestEquity Canada Branch Division Other Eliminations Consolidated DSG
-------------------------- -------------------------- -------------------------- -------------------------- ------------------- ------------------ ------------------------------
Year Ended 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------ --------- ---------
Revenue from
external customers $480,768 $468,976 $495,495 $439,163 $782,367 $770,866 $221,393 $125,099 $ -- $ -- $ -- $ -- $1,980,023 $1,804,104
Intersegment revenue 320 68 1,160 1,560 870 314 33 -- -- -- (2,383) (1,942) -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------ --------- ---------
Revenue $481,088 $469,044 $496,655 $440,723 $783,237 $771,180 $221,426 $125,099 $ -- $ -- $(2,383) $(1,942) $1,980,023 $1,804,104
======= ======= ======= ======= ======= ======= ======= ======= ======= ====== ====== ====== ========= =========
Operating income
(loss) $ 18,763 $ 14,555 $ 48,811 $ 36,533 $ 14,405 $ 3,967 $ 7,714 $ 6,024 $(11,430) $(5,124) $ 78,263 $ 55,955
Depreciation and
amortization 27,074 24,349 14,128 15,489 33,032 30,799 6,645 3,739 -- -- 80,879 74,376
Adjustments:
Acquisition
related
costs(1) 109 7,023 (129) 1,501 (178) 2,251 329 23 34 (656) 165 10,142
Stock-based
compensation(2) 2,926 4,132 413 -- 1,787 433 -- -- 1,546 668 6,672 5,233
Severance and
acquisition
related
retention
expenses (3) 2,620 4,937 511 460 1,579 17,791 770 49 -- (1) 5,480 23,236
Inventory
step-up(4) -- 1,066 -- -- -- -- -- 1,816 -- -- -- 2,882
Other
non-recurring(5) 150 337 -- 1,792 326 1,047 172 -- 3,134 257 3,782 3,433
Non-GAAP adjusted
EBITDA $ 51,642 $ 56,399 $ 63,734 $ 55,775 $ 50,951 $ 56,288 $ 15,630 $ 11,651 $ (6,716) $(4,856) $ 175,241 $ 175,257
======= ======= ======= ======= ======= ======= ======= ======= ======= ====== ========= =========
Operating income
(loss) as a percent
of revenue 3.9% 3.1% 9.8% 8.3% 1.8% 0.5% 3.5% 4.8% N/M N/M 4.0% 3.1%
Adjusted EBITDA as a
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