Distribution Solutions Group on Thursday reported a slight loss in its latest fiscal quarter, but its recent acquisitions more than offset a decline in the company’s organic sales.
The company, formed in 2022 by the combination of Lawson Products, Gexpro Services and TestEquity, posted revenue of $438.9 million, an increase of more than 26% compared to the same period last year. DSG’s acquisitions in the past two years — headlined by its June purchase of fellow ID Big 50 distributor Hisco — contributed $106.3 million to that total; without those added companies, sales fell by 4.2%, which officials attributed to “softness” in TestEquity’s industrial technologies market.
The company reported a net loss of about $1.6 million in the quarter, compared to $16.5 million in net income in the third quarter of 2022. Those numbers translated to a diluted loss of $0.03 per share — down from $0.42 in net income per diluted share year-over-year — which officials blamed on “higher depreciation and amortization expenses,” along with a higher number of shares last year.
DSG’s operating income fell from $22 million in the previous third quarter to $12.8 million, although officials said that adjusted operating income actually increased year-over-year. Adjusted EBITDA also grew — by 26% — while adjusted EBITDA margin remained flat. The company said that the Hisco acquisition, as expected, affected the latter number.
“We are well underway integrating Hisco's business into TestEquity and continue to recognize the benefits of building a broader customer base and reach, a larger geographic footprint and an enhanced product offering,” DSG Chairman and CEO Bryan King said in a statement. “While it's still in the early days of integration with the rest of DSG, we are discovering additional opportunities Hisco offers to achieve revenue and cost synergies across the entire group.”
