Document


	Three Months Ended
	September 30,						June 30,
(Dollars in thousands)	2025		2024		% Change		2025		% Change
Revenue	$	517,958	$	468,019	10.7	%	$	502,437	3.1	%



Operating income	$	23,619	$	18,947	24.7	%	$	26,826	(12.0)	%


Non-GAAP adjusted operating income	$	40,065	$	42,458	(5.6)	%	$	39,873	0.5	%

Non-GAAP adjusted EBITDA	$	48,457	$	49,110	(1.3)	%	$	48,561	(0.2)	%

Operating income (loss) as a percent of revenue	4.6%		4.0%		60bps		5.3%		-70bps

Adjusted EBITDA as a percent of revenue	9.4%		10.5%		-110bps		9.7%		-30bps

Bryan King, CEO and Chairman, said, "Our third-quarter results demonstrate the strength and resilience of our business model, even as inflation, tariffs, and higher interest rates continue to challenge parts of the U.S. economy. We delivered double-digit revenue growth of 10.7% in the quarter, supported by strong momentum in organic average daily sales which grew 6.0%, as well as revenue contributions from our recent acquisitions. Sales growth was realized across each of our segments, particularly strong at Gexpro Services and the Canada Branch Division. Supported by four quarters of organic top-line revenue growth quarter-over-quarter, we’re entering the final stretch of the year with solid momentum and confidence in our growth strategy.

"Once again, we delivered strong operating cash flow of $38.4 million in the quarter. We also enhanced shareholder returns with more than $20.0 million in common stock repurchases in the first nine months of 2025 reflecting our confidence in the Company's performance trajectory despite a challenging macro environment. Adjusted EBITDA totaled $48.5 million, or 9.4% of sales, a strong showing despite product and customer mix dynamics and the impact of increased employee-related costs, in particular, for healthcare. While industry-wide U.S. manufacturing softness and significant strategical investments in the business have pressured margins below 10% this year, we’re encouraged by the progress our teams are making. Gexpro Services delivered another quarter of sequential margin expansion, and our Canada Branch Division—primarily Source Atlantic—achieved significant improvement, to 9.6% compared to 6.5% in the second quarter. These results reflect disciplined execution of margin unlocking initiatives and continued focus on operational efficiencies across our portfolio.

"We ended the quarter with no outstanding revolver debt and total liquidity of over $335 million. This underscores our solid liquidity position and the financial flexibility to pursue future acquisitions and other strategic growth opportunities. As we look at the fourth quarter, we’re maintaining a cautious outlook given tougher year-over-year comparisons and ongoing economic uncertainty. That said, I remain confident in our leadership teams and their ability to continue building structurally higher-margin businesses that generate strong free cash flow and create long-term value for our shareholders," concluded Mr. King.

•Operating income was $23.6 million, net of $11.7 million of non-cash acquired intangible amortization and $4.8 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 $18.9 million in the prior year quarter, net of similar items as 2025. Adjusted operating income, excluding these non-cash and non-recurring items, was $40.1 million in the current quarter compared to $42.5 million in the year-ago quarter and $39.9 million in the second quarter of 2025.

Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss 2025 third quarter results at 9:00 a.m. Eastern Time on October 30, 2025. 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 667630. A replay of the conference call will be available by telephone approximately two hours after completion of the call through November 13, 2025. 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 52952. 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.

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 200,000 customers in several diverse end markets supported by approximately 4,400 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.

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.


	September 30, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	69,214	$	66,479
Restricted cash	13,486		15,247
Accounts receivable, less allowances	295,456		250,717
Inventories	345,206		348,226
Prepaid expenses and other current assets	43,030		31,505

Total current assets	766,392		712,174
Property, plant and equipment, net	126,544		125,524
Rental equipment, net	37,454		39,376
Goodwill	467,024		462,789
Deferred tax asset, net	372		136
Intangible assets, net	237,227		269,763
Cash value of life insurance	21,253		19,916
Right of use operating lease assets	105,312		91,962
Other assets	4,948		5,615
Total assets	$	1,766,526	$	1,727,255
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	155,036	$	125,575
Current portion of long-term debt	42,452		40,476
Current portion of lease liabilities	20,256		18,951


Accrued expenses and other current liabilities	88,219		81,259
Total current liabilities	305,963		266,261
Long-term debt, less current portion, net	665,539		693,903


Lease liabilities	92,993		77,758
Deferred tax liability, net	23,477		22,265
Other liabilities	24,680		26,525
Total liabilities	1,112,652		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 - 47,828,925 and 47,738,290 shares, respectively Outstanding - 46,286,285 and 46,856,757 shares, respectively	46,286		46,856
Capital in excess of par value	683,902		677,473
Retained deficit	(27,323)		(42,039)
Treasury stock – 1,542,640 and 881,533 shares, respectively	(40,135)		(19,631)
Accumulated other comprehensive income (loss)	(8,856)		(22,116)
Total stockholders' equity	653,874		640,543
Total liabilities and stockholders' equity	$	1,766,526	$	1,727,255


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024

Revenue	$	517,958	$	468,019	$	1,498,424	$	1,323,641
Cost of goods sold	347,632		309,171		994,034		869,857
Gross profit	170,326		158,848		504,390		453,784

Selling, general and administrative expenses	146,707		139,901		433,848		417,896

Operating income (loss)	23,619		18,947		70,542		35,888

Interest expense	(13,955)		(15,160)		(42,408)		(39,780)

Change in fair value of earnout liabilities	—		(858)		(1,000)		(861)
Other income (expense), net	(1,283)		(15)		(1,377)		82

Income (loss) before income taxes	8,381		2,914		25,757		(4,671)
Income tax expense (benefit)	1,929		(19,007)		11,041		(23,264)

Net income (loss)	$	6,452	$	21,921	$	14,716	$	18,593

Basic income (loss) per share of common stock	$	0.14	$	0.47	$	0.32	$	0.40

Diluted income (loss) per share of common stock	$	0.14	$	0.46	$	0.31	$	0.39

Basic weighted average shares outstanding	46,280,811		46,799,672		46,419,969		46,798,598

Diluted weighted average shares outstanding	47,060,025		47,560,478		47,212,912		47,603,808


	Nine Months Ended September 30,
	2025		2024
Operating activities
Net income (loss)	$	14,716	$	18,593
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization	60,359		54,211
Amortization of debt issuance costs	2,581		2,093

Stock-based compensation	4,624		4,323

Deferred income taxes	975		(2,814)
Change in fair value of earnout liabilities	1,000		861
(Gain) loss on sale of rental equipment	(3,454)		(1,586)
(Gain) loss on sale of property, plant and equipment	(716)		190

Charge for step-up of acquired inventory	—		1,760
Net realizable value adjustment and write-offs for obsolete and excess inventory	5,694		4,311

Bad debt expense	3,480		537
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(44,940)		(30,423)
Inventories	1,470		(981)
Prepaid expenses and other current assets	3,743		(33,335)
Accounts payable	27,556		14,091
Accrued expenses and other current liabilities	(10,334)		(20,183)
Other changes in operating assets and liabilities	152		(912)
Net cash provided by (used in) operating activities	66,906		10,736
Investing activities
Purchases of property, plant and equipment	(15,796)		(9,091)
Proceeds from sale of property, plant and equipment	990		—
Business acquisitions, net of cash acquired	(2,176)		(194,393)

Purchases of rental equipment	(12,849)		(5,703)
Proceeds from sale of rental equipment	9,367		3,795

Net cash provided by (used in) investing activities	(20,464)		(205,392)
Financing activities
Proceeds from revolving lines of credit	205,943		166,777
Payments on revolving lines of credit	(204,128)		(166,496)
Proceeds from term loans	—		200,000
Payments on term loans	(30,188)		(22,688)
Deferred financing costs	—		(2,064)


Repurchase of common stock	(20,252)		(2,580)
Shares repurchased held in treasury	(252)		(538)
Stock option exercises	877		—

Payment of financing lease principal	(445)		(462)


Net cash provided by (used in) financing activities	(48,445)		171,949
Effect of exchange rate changes on cash and cash equivalents	2,977		(1,151)
Increase (decrease) in cash, cash equivalents and restricted cash	974		(23,858)
Cash, cash equivalents and restricted cash at beginning of period	81,726		99,625
Cash, cash equivalents and restricted cash at end of period	$	82,700	$	75,767
Cash and cash equivalents	$	69,214	$	61,344
Restricted cash	13,486		14,423
Total cash, cash equivalents and restricted cash	$	82,700	$	75,767


Distribution Solutions Group, Inc.
Table 1 - Selected Segment Financial Data
(Dollars in thousands)
(Unaudited)

	Three Months Ended
	September 30,
	2025		2024
Revenue:
Lawson Products	$	121,549	$	117,957
Canada Branch Division	59,977		39,092
Gexpro Services	130,525		116,141
TestEquity	206,479		195,244
Intersegment revenue elimination	(572)		(415)
Total	$	517,958	$	468,019

Operating income (loss):
Lawson Products	$	5,385	$	726
Canada Branch Division	3,494		2,523
Gexpro Services	13,880		11,543
TestEquity	2,635		4,329
All Other	(1,775)		(174)
Total	$	23,619	$	18,947

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 September 30, 2025 and 2024 and the three months ended June 30, 2025. 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
	September 30,				June 30,
	2025		2024		2025
Net income (loss)	$	6,452	$	21,921	$	5,003
Income tax expense (benefit)	1,929		(19,007)		6,859
Other income (expense), net	1,283		15		726
Change in fair value of earnout liabilities	—		858		—

Interest expense	13,955		15,160		14,238
Operating income (loss)	23,619		18,947		26,826
Depreciation and amortization	20,042		18,624		20,338
Stock-based compensation(1)	2,400		2,432		1,250
Severance and acquisition related retention expenses(2)	2,094		3,568		355
Acquisition related costs(3)	87		2,901		(208)

Inventory step-up(4)	—		1,126		—

Other non-recurring(5)	215		1,512		—
Non-GAAP adjusted EBITDA	$	48,457	$	49,110	$	48,561

Operating income (loss) as a percent of revenue	4.6%		4.0%		5.3%

Adjusted EBITDA as a percent of revenue	9.4%		10.5%		9.7%


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
	September 30, 2025				September 30, 2024				June 30, 2025
	Amount		Diluted EPS(2)		Amount		Diluted EPS(2)		Amount		Diluted EPS(2)
Net income (loss)	$	6,452	$	0.14	$	21,921	$	0.46	$	5,003	$	0.11

Pretax adjustments:

Stock-based compensation	2,400		0.05		2,432		0.05		1,250		0.03
Acquisition related costs	87		—		2,901		0.06		(208)		—
Amortization of intangible assets	11,650		0.25		11,972		0.25		11,650		0.25
Severance and acquisition related retention expenses	2,094		0.04		3,568		0.08		355		0.01
Change in fair value of earnout liabilities	—		—		858		0.02		—		—


Inventory step-up	—		—		1,126		0.02		—		—
Other non-recurring	215		—		1,512		0.03		—		—
Total pretax adjustments	16,446		0.34		24,369		0.51		13,047		0.29
Tax effect on adjustments(1)/(3)	(4,307)		(0.08)		(11,210)		(0.23)		(3,135)		(0.08)
Deferred tax asset valuation allowance(3)/(4)	179		—		(17,425)		(0.37)		1,536		0.03

Non-GAAP adjusted net income	$	18,770	$	0.40	$	17,655	$	0.37	$	16,451	$	0.35


Distribution Solutions Group, Inc.
Table 4 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted Operating Income
(Dollars in thousands)
(Unaudited)

	Three Months Ended
	September 30,				June 30,
	2025		2024		2025
Operating income (loss)	$	23,619	$	18,947	$	26,826




Gross profit adjustments:
Inventory step-up(1)	—		1,126		—

Total gross profit adjustments	—		1,126		—

Selling, general and administrative expenses adjustments:
Acquisition related costs(2)	87		2,901		(208)
Amortization of intangible assets	11,650		11,972		11,650
Stock-based compensation(3)	2,400		2,432		1,250
Severance and acquisition related retention expenses(4)	2,094		3,568		355
Other non-recurring(5)	215		1,512		—
Total selling, general and administrative adjustments	16,446		22,385		13,047

Total adjustments	16,446		23,511		13,047
Non-GAAP adjusted operating income	$	40,065	$	42,458	$	39,873


Distribution Solutions Group, Inc.
Table 5 - Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA
Q3 2025 and Q3 2024
(Dollars in thousands)
(Unaudited)

	Lawson Products				Gexpro Services				TestEquity				Canada Branch Division				All Other				Eliminations				Consolidated DSG
Quarter Ended	Q3 2025		Q3 2024		Q3 2025		Q3 2024		Q3 2025		Q3 2024		Q3 2025		Q3 2024		Q3 2025		Q3 2024		Q3 2025		Q3 2024		Q3 2025		Q3 2024
Revenue from external customers	$	121,541	$	117,953	$	130,192	$	115,764	$	206,310	$	195,210	$	59,915	$	39,092	$	—	$	—	$	—	$	—	$	517,958	$	468,019
Intersegment revenue	8		4		333		377		169		34		62		—		—		—		(572)		(415)		—		—
Revenue	$	121,549	$	117,957	$	130,525	$	116,141	$	206,479	$	195,244	$	59,977	$	39,092	$	—	$	—	$	(572)	$	(415)	$	517,958	$	468,019




Operating income (loss)	$	5,385	$	726	$	13,880	$	11,543	$	2,635	$	4,329	$	3,494	$	2,523	$	(1,775)	$	(174)					$	23,619	$	18,947



Depreciation and amortization	6,666		6,533		3,541		3,840		8,220		7,460		1,615		791		—		—						20,042		18,624
Adjustments:
Acquisition related costs(1)	(17)		2,967		(2)		462		58		875		48		—		—		(1,403)						87		2,901
Stock-based compensation(2)	1,025		2,209		60		—		925		65		—		—		390		158						2,400		2,432
Severance and acquisition related retention expenses(3)	840		2,269		276		13		486		1,275		492		11		—		—						2,094		3,568


Inventory step-up(4)	—		432		—		—		—		—		—		694		—		—						—		1,126
Other non-recurring(5)	60		337		—		538		27		380		128		—		—		257						215		1,512

Non-GAAP adjusted EBITDA	$	13,959	$	15,473	$	17,755	$	16,396	$	12,351	$	14,384	$	5,777	$	4,019	$	(1,385)	$	(1,162)					$	48,457	$	49,110

Operating income (loss) as a percent of revenue	4.4%		0.6%		10.6%		9.9%		1.3%		2.2%		5.8%		6.5%		N/M		N/M						4.6%		4.0%

Adjusted EBITDA as a percent of revenue	11.5%		13.1%		13.6%		14.1%		6.0%		7.4%		9.6%		10.3%		N/M		N/M						9.4%		10.5%


DISTRIBUTION SOLUTIONS GROUP, INC.
SEC REGULATION G GAAP RECONCILIATIONS