Reported Full Year Revenue of $1.2
Billion
Strong Q4 Results: Organic Sales Growth of
17%
Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or
the "Company"), a premier, multi-platform distribution company
providing high touch, value-added distribution solutions to the
maintenance, repair & operations (MRO), original equipment
manufacturer (OEM) and industrial technologies markets, today
announced consolidated results for the fourth quarter and full year
ended December 31, 2022. This press release is supplemented by an
earnings slide deck appearing on the Company’s investor relations
home page at www.distributionsolutionsgroup.com.
Note Regarding Reverse Merger
Accounting
As a result of the April 1, 2022 strategic combination of Lawson
Products, Gexpro Services and TestEquity, our 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 period following
the April 1, 2022 merger closing date. GAAP results for the three
and twelve months ended December 31, 2021 include the combined
results of Gexpro Services and TestEquity, GAAP results for the
three months ended December 31, 2022 include the results of Lawson
Products, Gexpro Services and TestEquity and GAAP results for the
year ended December 31, 2022 include the results of Lawson Products
for the nine months after the April 1, 2022 merger closing date as
well as the results of Gexpro Services and TestEquity for the full
twelve months.
The following represents a summary of certain operating results
(unaudited). See reconciliation of GAAP to non-GAAP measures in
tables 2 and 3.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(Dollars in thousands)
2022
2021
% Change
2022
2021
% Change
GAAP Revenue
$
328,850
$
129,221
154.5
%
$
1,151,422
$
520,290
121.3
%
Pre-Merger Revenue(1)
—
102,067
N/M
117,877
417,733
N/M
Adjusted Revenue
328,850
231,288
42.2
%
1,269,299
938,023
35.3
%
GAAP Operating Income
12,658
(1,791
)
N/M
41,786
11,421
265.9
%
Pre-Merger Operating Income(1)
—
(825
)
N/M
12,076
11,987
0.7
%
Adjusted Operating Income
12,658
(2,616
)
N/M
53,862
23,408
130.1
%
Adjusted EBITDA
$
34,003
$
17,657
92.6
%
$
123,028
$
75,219
63.6
%
GAAP Operating income as a percent of GAAP
Revenue
3.8
%
(1.4
)%
3.6
%
2.2
%
Adjusted EBITDA as a percent of Adjusted
Revenue
10.3
%
7.6
%
9.7
%
8.0
%
(1)
Represents Lawson Products pre-merger
revenue and operating income
Bryan King, CEO and Chairman of the Board, said, “We are pleased
with fourth quarter results that exceeded expectations. Our
continued topline growth and sequential improvement in margins
further supports our strategic decision to combine Lawson Products,
Gexpro Services and TestEquity. While macroeconomic uncertainties
remain, we are laser-focused on driving greater returns on cash
flow through a combination of organic growth, strategic
acquisitions and operational efficiencies. We believe that our
disciplined approach to capital allocation through our asset light
model coupled with our strengthening balance sheet positions us to
further generate meaningful returns and cash flow in 2023.
“Fourth quarter revenue grew to nearly $329 million, consisting
of organic growth of 16.7% as well as revenue from acquisitions.
Fourth quarter Adjusted EBITDA grew $16.3 million over a year ago
to $34.0 million or 10.3% of adjusted revenue, with an expansion in
margins over the third quarter on fewer selling days. On a full
year basis, we realized strong comparable adjusted revenue growth
of over 35% and adjusted margin expansion in terms of dollars and
percentage. I want to congratulate our leadership teams for
successfully completing five acquisitions in 2022, as well as
realizing sequential margin expansion as the year developed,"
concluded Mr. King.
Fourth Quarter Highlights (1)
- GAAP revenue was $328.9 million, an increase of $199.6 million
or 154.5%, which included $60.2 million of additional revenue from
companies acquired in 2021 and 2022 other than Lawson
Products.
- Non-GAAP adjusted revenue, which in the fourth quarter of 2021
includes the pre-merger revenue of Lawson Products, increased
approximately $97.6 million or 42.2% to $328.9 million. This
improvement was driven by organic growth of 16.7% and revenue from
companies acquired in 2021 and 2022 (other than Lawson
Products).
- Reported operating income increased by $14.4 million from the
prior year period to $12.7 million or 3.8% of GAAP revenue.
- Diluted loss per share was $0.10 for the quarter compared to a
diluted loss per share of $0.47 in the year ago quarter. Non-GAAP
diluted earnings per share was $0.25 in the fourth quarter 2022
compared to $0.15 for the same period a year ago.
- Non-GAAP adjusted EBITDA increased by $16.3 million from the
prior year period to $34.0 million or 10.3% of non-GAAP adjusted
revenue.
- In November, the Board authorized an increase of the existing
share buy-back program from $7.5 million to $12.5 million. During
2022, the Company repurchased approximately 54,000 shares of its
common stock for an aggregate price of $1.9 million on top of $3.0
million previously repurchased which leaves $7.6 million available
under its expanded authorized share repurchase plan.
(1) See reconciliation of GAAP to non-GAAP
measures in tables 2 and 4.
Full Year Highlights (2)
- GAAP revenue was $1.15 billion, an increase of $631.1 million
or 121.3%. The increase was driven by the inclusion of Lawson
Products revenue of $324.8 million following the April 1, 2022
merger closing date and $203.6 million of additional revenue from
companies acquired in 2021 and 2022 (other than Lawson
Products).
- Non-GAAP adjusted revenue was $1.27 billion, which in 2022 and
2021 includes the pre-merger revenue of Lawson Products, increased
approximately $331.3 million or 35.3%. This improvement was driven
by organic growth of 13.8% and revenue from companies acquired in
2021 and 2022 (other than Lawson Products).
- Reported operating income increased by $30.4 million from the
prior year period to $41.8 million or 3.6% of GAAP revenue.
- Diluted earnings per share was $0.42 for the year compared to a
loss per diluted share of $0.49 in the year ago period.
- Non-GAAP adjusted EBITDA increased by $47.8 million from the
prior year period to $123.0 million or 9.7% of non-GAAP adjusted
revenue.
- The Company ended the year with $24.6 million of cash on hand
and $77.0 million of availability under its credit facility with
net debt leverage of 3.1x. Net capital expenditures were $11.3
million during 2022.
(2) See reconciliation of GAAP to non-GAAP
measures in table 3.
The following represents a summary of certain operating results
for each reportable segment (unaudited). See reconciliation of GAAP
to non-GAAP measures in table 2.
Lawson Products
Gexpro Services
TestEquity
Other
Consolidated DSG
(Dollars in thousands)
Q4 2022
Q4 2021
Q4 2022
Q4 2021
Q4 2022
Q4 2021
Q4 2022
Q4 2021
Q4 2022
Q4 2021
GAAP Revenue
$
108,029
$
—
$
100,103
$
66,516
$
105,374
$
62,705
$
15,344
$
—
$
328,850
$
129,221
Pre-Merger Revenue(1)
—
89,791
—
—
—
—
—
12,276
—
102,067
Adjusted Revenue
$
108,029
$
89,791
$
100,103
$
66,516
$
105,374
$
62,705
$
15,344
$
12,276
$
328,850
$
231,288
GAAP Operating Income
$
3,746
$
—
$
4,317
$
(2,428
)
$
3,932
$
637
$
663
$
—
$
12,658
$
(1,791
)
Pre-Merger Operating Income(1)
—
(1,995
)
—
—
—
—
—
1,170
—
(825
)
Adjusted Operating Income
3,746
(1,995
)
4,317
(2,428
)
3,932
637
663
1,170
12,658
(2,616
)
Adjusted EBITDA
$
11,509
$
6,839
$
10,795
$
4,587
$
10,476
$
4,645
$
1,223
$
1,586
$
34,003
$
17,657
GAAP Operating income as a percent of GAAP
Revenue
3.5
%
—
%
4.3
%
(3.7
)%
3.7
%
1.0
%
4.3
%
—
%
3.8
%
(1.4
)%
Adjusted EBITDA as a percent of Adjusted
Revenue
10.7
%
7.6
%
10.8
%
6.9
%
9.9
%
7.4
%
8.0
%
12.9
%
10.3
%
7.6
%
(1)
Represents Lawson Products and The Bolt
Supply House pre-merger revenue and operating income
Conference Call
Distribution Solutions Group, Inc. will conduct a conference
call with investors to discuss fourth quarter 2022 results at 9:00
a.m. Eastern Time on March 9, 2023. 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 228752. A replay of the conference call will be available by
telephone approximately two hours after completion of the call
through March 23, 2023. 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
PIN access number for the replay is 47406. 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 www.distributionsolutionsgroup.com.
About Distribution Solutions Group,
Inc.
Distribution Solutions Group (“DSG”) is a leading,
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 110,000 customers in
several diverse end markets supported by approximately 3,100
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 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. 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 other words and
terms of similar meaning and expression 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. 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) whether or not the terms of the
earnout provisions in either of the merger agreements will be
satisfied such that DSG would be required to issue additional
shares of common stock in connection with the mergers; (ii)
unanticipated difficulties or expenditures relating to the mergers;
(iii) the risk that stockholder litigation in connection with the
mergers results in significant costs of defense, indemnification
and liability; and (iv) any problems arising in combining the
businesses of Lawson Products, TestEquity and Gexpro Services,
which may result in the combined company not operating as
effectively and efficiently as expected.
-TABLES FOLLOW-
Distribution Solutions Group,
Inc.
Consolidated Balance
Sheets
(Dollars in thousands, except
share data)
(Unaudited)
December 31,
2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
24,554
$
14,671
Restricted cash
186
—
Accounts receivable, less allowance for
doubtful accounts
166,301
80,574
Inventories, net
264,374
132,717
Prepaid expenses and other current
assets
22,773
8,098
Total current assets
478,188
236,060
Property, plant and equipment, net
64,395
9,079
Rental equipment, net
27,139
24,727
Goodwill
348,048
104,211
Deferred tax asset
189
266
Intangible assets, net
227,994
96,608
Cash value of life insurance
17,166
—
Right of use assets
46,755
19,662
Other assets
5,736
747
Total assets
$
1,215,610
$
491,360
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
80,486
$
47,958
Current portion of long-term debt
16,352
134,405
Current portion of lease obligation
9,964
4,641
Earnout derivative liability
—
—
Related party payables
—
4,813
Accrued expenses and other current
liabilities
62,677
23,126
Total current liabilities
169,479
214,943
Long-term debt, less current portion,
net
395,825
93,134
Security bonus plan
9,651
—
Deferred compensation
9,962
—
Lease obligation
39,828
16,132
Deferred tax liability
23,834
808
Other liabilities
4,036
574
Total liabilities
652,615
325,591
Stockholders’ equity:
Preferred stock, $1 par value:
Authorized - 500,000 shares, issued and
outstanding — None
—
—
Common stock, $1 par value:
Authorized - 35,000,000 shares Issued -
19,730,362 and 10,542,333 shares, respectively Outstanding -
19,416,784 and 10,294,824 shares, respectively
19,417
10,318
Capital in excess of par value
591,796
197,057
Retained deficit
(25,736
)
(33,142
)
Treasury stock – 313,578 and 247,509
shares, respectively
(12,526
)
(10,033
)
Accumulated other comprehensive (loss)
income
(9,956
)
1,569
Total stockholders’ equity
562,995
165,769
Total liabilities and stockholders’
equity
$
1,215,610
$
491,360
Distribution Solutions Group,
Inc.
Consolidated Statements of
Operations and Comprehensive Income (Loss)
(Dollars in thousands, except per
share data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
2022
2021
Revenue
$
328,850
$
129,221
$
1,151,422
$
520,290
Cost of goods sold
212,558
97,769
760,524
390,012
Gross profit
116,292
31,452
390,898
130,278
Selling, general and administrative
expenses
103,634
33,243
349,112
118,857
Operating income (loss)
12,658
(1,791
)
41,786
11,421
Interest expense
(7,597
)
(4,255
)
(24,301
)
(16,737
)
Loss on extinguishment of debt
—
—
(3,395
)
—
Change in fair value of earnout
liabilities
(4,431
)
—
(483
)
—
Other income (expense), net
(894
)
905
(670
)
577
Income (loss) before income taxes
(264
)
(5,141
)
12,937
(4,739
)
Income tax expense (benefit)
1,619
(293
)
5,531
313
Net income (loss)
$
(1,883
)
$
(4,848
)
$
7,406
$
(5,052
)
Basic income (loss) per share of common
stock
$
(0.10
)
$
(0.47
)
$
0.43
$
(0.49
)
Diluted income (loss) per share of
common stock
$
(0.10
)
$
(0.47
)
$
0.42
$
(0.49
)
Distribution Solutions Group,
Inc.
Consolidated Statements of
Cash Flows
(Dollars in thousands)
(Unaudited)
Twelve Months Ended December
31,
2022
2021
Operating activities
Net income (loss)
$
7,406
$
(5,052
)
Adjustments to reconcile to net cash used
in operating activities:
Depreciation and amortization
45,186
18,683
Amortization of debt issue costs
1,888
1,297
Extinguishment of debt
3,395
—
Stock-based compensation
2,448
—
Deferred income taxes
(2,406
)
(3,999
)
Change in fair value of earnout
liability
483
—
Gain on sale of rental equipment
(3,632
)
(2,055
)
Bargain purchase option
—
(1,363
)
Charge for step-up of acquired
inventory
2,866
—
Net realizable value and reserve
adjustment for obsolete and excess inventory
4,608
1,104
Bad debt expense
795
939
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(21,771
)
6,936
Inventories
(42,404
)
(5,059
)
Prepaid expenses and other current
assets
(1,874
)
1,732
Accounts payable
(8,839
)
(2,241
)
Accrued expenses and other current
liabilities
4,492
2,894
Other changes in operating assets and
liabilities
(3,670
)
(3,496
)
Net cash provided by (used in) operating
activities
(11,029
)
10,320
Investing activities
Purchases of property, plant and
equipment
(8,307
)
(3,026
)
Business acquisitions, net of cash
acquired
(115,343
)
(33,936
)
Purchases of rental equipment
(11,794
)
(10,755
)
Proceeds from sale of rental equipment
8,756
6,341
Net cash provided by (used in) investing
activities
(126,688
)
(41,376
)
Financing activities
Proceeds from revolving lines of
credit
383,489
38,121
Payments on revolving lines of credit
(320,751
)
(11,200
)
Proceeds from term loans
445,630
6,000
Payments on term loans
(335,305
)
(7,486
)
Deferred financing costs
(11,956
)
—
Capital contribution
—
9,233
Repurchase of common stock
(1,940
)
—
Shares repurchased held in treasury
(520
)
—
Payment of financing lease principal
(429
)
—
Payment on seller's note
(9,757
)
—
Net cash provided by (used in) financing
activities
148,461
34,668
Effect of exchange rate changes on cash
and cash equivalents
(675
)
660
Increase (decrease) in cash, cash
equivalents and restricted cash
10,069
4,272
Cash, cash equivalents and restricted cash
at beginning of period
14,671
10,399
Cash, cash equivalents and restricted
cash at end of period
$
24,740
$
14,671
Cash and cash equivalents
$
24,554
$
14,671
Restricted cash
186
—
Total cash, cash equivalents and
restricted cash
$
24,740
$
14,671
Distribution Solutions Group,
Inc.
Table 1 - Selected Segment
Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended
December 31,
2022
2021
Revenue:
Lawson
$
108,029
$
—
Gexpro Services
100,103
66,516
TestEquity
105,374
62,705
Other
15,344
—
Total
$
328,850
$
129,221
Operating Income:
Lawson
$
3,746
$
—
Gexpro Services
4,317
(2,428
)
TestEquity
3,932
637
Other
663
—
Total
$
12,658
$
(1,791
)
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 reflection of underlying trends of the business because
they provide a comparison of historical information that includes
for the three months ended December 31, 2021 and the years ended
December 31, 2022 and 2021 certain results of pre-merger Lawson
Products and excludes for all periods certain non-operational 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,
2022 and 2021 and the years ended December 31, 2022 and 2021.
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 Revenue to Non-GAAP Adjusted Revenue and
GAAP Operating Income to
Non-GAAP Adjusted EBITDA
Q4 2022 and Q4 2021
(Dollars in thousands)
(Unaudited)
Lawson Products
Gexpro Services
TestEquity
Other
Consolidated DSG
Quarter Ended
Q4 2022
Q4 2021
Q4 2022
Q4 2021
Q4 2022
Q4 2021
Q4 2022
Q4 2021
Q4 2022
Q4 2021
GAAP Revenue
$
108,029
$
—
$
100,103
$
66,516
$
105,374
$
62,705
$
15,344
$
—
$
328,850
$
129,221
Pre-Merger Revenue(1)
—
89,791
—
—
—
—
—
12,276
—
102,067
Adjusted Revenue
$
108,029
$
89,791
$
100,103
$
66,516
$
105,374
$
62,705
$
15,344
$
12,276
$
328,850
$
231,288
GAAP Operating Income
$
3,746
$
—
$
4,317
$
(2,428
)
$
3,932
$
637
$
663
$
—
$
12,658
$
(1,791
)
Pre-Merger Operating Income(1)
—
(1,995
)
—
—
—
—
—
1,170
—
(825
)
Adjusted Operating Income
3,746
(1,995
)
4,317
(2,428
)
3,932
637
663
1,170
12,658
(2,616
)
Depreciation and amortization
4,063
1,942
4,196
1,486
5,055
3,548
558
409
13,872
7,385
Adjustments:
Merger/integration costs(2)
1,324
3,741
1,274
1,264
465
13
—
—
3,063
5,018
Stock-based compensation(3)
2,003
3,435
—
—
—
—
—
—
2,003
3,435
Severance costs(4)
217
98
221
—
3
16
2
7
443
121
Acquisition related costs(5)
—
(382
)
549
4,145
1,021
431
—
—
1,570
4,194
Inventory net realizable value
adjustment(6)
—
—
—
—
—
—
—
—
—
—
Inventory step-up(7)
—
—
—
94
—
—
—
—
—
94
Other non-recurring(8)
156
—
238
26
—
—
—
—
394
26
Adjusted EBITDA
$
11,509
$
6,839
$
10,795
$
4,587
$
10,476
$
4,645
$
1,223
$
1,586
$
34,003
$
17,657
GAAP Operating income as a percent of GAAP
Revenue
3.5
%
—
%
4.3
%
(3.7
)%
3.7
%
1.0
%
4.3
%
—
%
3.8
%
(1.4
)%
Adjusted EBITDA as a percent of GAAP
Revenue
10.7
%
—
%
10.8
%
6.9
%
9.9
%
7.4
%
8.0
%
—
%
10.3
%
13.7
%
Adjusted EBITDA as a percent of Adjusted
Revenue
10.7
%
7.6
%
10.8
%
6.9
%
9.9
%
7.4
%
8.0
%
12.9
%
10.3
%
7.6
%
(1)
Represents Lawson Products pre-merger
revenue and operating income
(2)
Merger transaction costs related to the
negotiation, review and execution of the merger agreements relating
to the business combination of Lawson Products, TestEquity and
Gexpro Services and subsequent integration costs
(3)
Expense primarily for stock-based
compensation (benefit), of which a portion varies with the
Company’s stock price
(4)
Includes severance expense for actions
taken in 2022 and 2021, not related to a formal restructuring
plan
(5)
Expense for acquisition related costs,
unrelated to the business combination of Lawson Products,
TestEquity and Gexpro Services
(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 the Company's records
(7)
Inventory fair value step-up adjustments
resulting from the reverse merger acquisition accounting for Lawson
Products and acquisition accounting for additional acquisitions
completed by Gexpro Services
(8)
Other non-recurring costs consists of
sales force optimization and other non-recurring items
Distribution Solutions Group,
Inc.
Table 3 - Reconciliation of
GAAP Revenue to Non-GAAP Adjusted Revenue and
GAAP Operating Income to
Non-GAAP Adjusted EBITDA
YTD 2022 and YTD 2021
(Dollars in thousands)
(Unaudited)
Lawson Products
Gexpro Services
TestEquity
Other
Consolidated DSG
Year Ended
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
GAAP Revenue
$
324,783
$
—
$
385,326
$
256,129
$
392,358
$
264,161
$
48,955
$
—
$
1,151,422
$
520,290
Pre-Merger Revenue(1)
104,902
371,668
—
—
—
—
12,975
46,065
117,877
417,733
Adjusted Revenue
$
429,685
$
371,668
$
385,326
$
256,129
$
392,358
$
264,161
$
61,930
$
46,065
$
1,269,299
$
938,023
GAAP Operating Income
$
6,536
$
—
$
21,291
$
11,092
$
11,375
$
329
$
2,584
$
—
$
41,786
$
11,421
Pre-Merger Operating Income(1)
11,096
8,192
—
—
—
—
980
3,795
12,076
11,987
Adjusted Operating Income
17,632
8,192
21,291
11,092
11,375
329
3,564
3,795
53,862
23,408
Depreciation and amortization
12,540
6,736
15,175
4,899
17,480
13,784
2,080
1,605
47,275
27,024
Adjustments:
Merger/integration costs(2)
7,672
8,317
4,940
2,177
3,021
258
—
—
15,633
10,752
Stock-based compensation(3)
(6,147
)
4,838
—
—
—
—
—
—
(6,147
)
4,838
Severance costs(4)
2,050
939
266
18
1,095
32
11
12
3,422
1,001
Acquisition related costs(5)
—
—
1,017
4,669
1,765
1,704
—
—
2,782
6,373
Inventory net realizable value
adjustment(6)
1,737
1,368
—
—
—
—
—
—
1,737
1,368
Inventory step-up(7)
1,943
—
163
212
—
—
761
—
2,867
212
Other non-recurring(8)
1,199
—
354
243
—
—
44
—
1,597
243
Adjusted EBITDA
$
38,626
$
30,390
$
43,206
$
23,310
$
34,736
$
16,107
$
6,460
$
5,412
$
123,028
$
75,219
GAAP Operating income as a percent of GAAP
Revenue
2.0
%
—
%
5.5
%
4.3
%
2.9
%
0.1
%
5.3
%
—
%
3.6
%
2.2
%
Adjusted EBITDA as a percent of GAAP
Revenue
11.9
%
—
%
11.2
%
9.1
%
8.9
%
6.1
%
13.2
%
—
%
10.7
%
14.5
%
Adjusted EBITDA as a percent of Adjusted
Revenue
9.0
%
8.2
%
11.2
%
9.1
%
8.9
%
6.1
%
10.4
%
11.7
%
9.7
%
8.0
%
(1)
Represents Lawson Products pre-merger
revenue and operating income
(2)
Merger transaction costs related to the
negotiation, review and execution of the merger agreements relating
to the business combination of Lawson Products, TestEquity and
Gexpro Services and subsequent integration costs
(3)
Expense primarily for stock-based
compensation (benefit), of which a portion varies with the
Company’s stock price
(4)
Includes severance expense for actions
taken in 2022 and 2021, not related to a formal restructuring
plan
(5)
Expense for acquisition related costs,
unrelated to the business combination of Lawson Products,
TestEquity and Gexpro Services
(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 the Company's records
(7)
Inventory fair value step-up adjustments
resulting from the reverse merger acquisition accounting for Lawson
Products and acquisition accounting for additional acquisitions
completed by Gexpro Services
(8)
Other non-recurring costs consists of
sales force optimization and other non-recurring items
Distribution Solutions Group,
Inc.
Table 4 - Reconciliation of
GAAP Net Income (Loss) and Diluted EPS to
Non-GAAP Net Income and
Adjusted Diluted EPS
(Dollars in thousands)
(Unaudited)
Three Months Ended
December 31, 2022
December 31, 2021
Amount
Diluted EPS(2)
Amount
Diluted EPS(2)
Net income (loss) as reported per GAAP
$
(1,883
)
$
(0.10
)
$
(4,848
)
$
(0.47
)
Pretax adjustments:
Change in fair value of earnout
liability
4,431
0.23
—
—
Loss on extinguishment of debt
—
—
—
—
Merger/integration costs
3,063
0.16
1,277
0.12
Stock-based compensation
2,003
0.10
—
—
Severance costs
443
0.02
16
—
Acquisition related costs
1,570
0.08
4,576
0.45
Inventory net realizable value
adjustment
—
—
—
—
Inventory step-up
—
—
94
0.01
Other non-recurring
394
0.02
26
—
Total pretax adjustments
11,904
0.61
5,989
0.58
Tax effect on adjustments(1)
(5,095
)
(0.26
)
395
0.04
Total adjustments, net of tax
6,809
0.35
6,384
0.62
Non-GAAP adjusted net income
$
4,926
$
0.25
$
1,536
$
0.15
(1)
Tax effected at full year tax rate of
42.8% and (6.6)% for the twelve months ended December 31, 2022 and
2021, respectively.
(2)
Pretax adjustments to diluted EPS
calculated on 19.408 million and 10.253 million diluted shares for
the fourth quarter of 2022 and 2021, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230308005896/en/
Investor Relations: Distribution Solutions Group, Inc.
Ronald J. Knutson Executive Vice President and Chief Financial
Officer 773-304-5665
Investor Relations Contacts: Three Part Advisors, LLC
Steven Hooser or Sandy Martin 214-872-2710
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