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,
2025

December 31,
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

Amount

Diluted EPS(2)

Amount

Diluted 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

Amount

Diluted EPS(2)

Amount

Diluted 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

Quarter Ended

Q4 2025

Q4 2024

Q4 2025

Q4 2024

Q4 2025

Q4 2024

Q4 2025

Q4 2024

Q4 2025

Q4 2024

Q4 2025

Q4 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 percent of revenue

10.7

%

12.0

%

12.8

%

12.7

%

6.5

%

7.3

%

7.1

%

9.3

%

N/M

N/M

8.9

%

9.7

%

(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

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