On August 1, 2024, Distribution Solutions Group Inc (DSGR, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Distribution Solutions Group Inc is an industrial distributor of maintenance and repair supplies, operating through three segments: Lawson, TestEquity, and Gexpro Services. The TestEquity segment, which is a key revenue driver, distributes test and measurement equipment and solutions, electronic production supplies, and tool kits across various industries including technology, aerospace, defense, automotive, electronics, education, and medical.
Performance Overview
Distribution Solutions Group Inc (DSGR, Financial) reported a revenue of $439.5 million for Q2 2024, surpassing the analyst estimate of $438.37 million. This represents a 16.3% increase compared to the same period last year. The company also reported a sequential revenue growth of 5.6% from Q1 2024.
Operating income for the quarter was $14.2 million, a slight increase from $13.8 million in Q2 2023. However, the diluted income per share was $0.04, falling short of the estimated $0.20 per share. The non-GAAP adjusted diluted earnings per share was $0.40, compared to $0.42 in the same period last year.
Financial Achievements and Challenges
The company achieved a non-GAAP adjusted EBITDA of $45.2 million, reflecting a 12.7% increase from $40.1 million in Q2 2023. The adjusted EBITDA margin was 10.3%, slightly down from 10.6% in the prior year quarter. Sequentially, adjusted EBITDA grew by 25.3% from Q1 2024.
Bryan King, CEO and Chairman of the Board, commented, "Our strategic initiatives are on track, and I am pleased with DSG's quarterly results, marked by 16.3% revenue growth compared to last year and double-digit EBITDA margins of 10.3%."
Despite the positive revenue growth, the company faced challenges with organic sales, which declined by 5.7% on comparable days. However, organic sales grew by 3.8% over Q1 2024, driven by improving sales in several end markets including Test & Measurement, Renewables, Technology, and project-related business.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Revenue | $439.5 million | $378.0 million | 16.3% |
| Operating Income | $14.2 million | $13.8 million | 2.8% |
| Non-GAAP Adjusted EBITDA | $45.2 million | $40.1 million | 12.7% |
| Diluted Income Per Share | $0.04 | $0.07 | -42.9% |
Balance Sheet and Cash Flow
As of June 30, 2024, Distribution Solutions Group Inc (DSGR, Financial) had total liquidity of $209.9 million, including $56.9 million in cash and $153.0 million in availability under its credit facility. The company generated $21.4 million in cash from operations during the quarter. Uses of cash included net capital expenditures of $4.0 million and share repurchases of $1.7 million.
Strategic Initiatives and Future Outlook
The company completed the acquisition of S&S Automotive in May 2024 and announced plans to acquire Source Atlantic, expected to close in Q3 2024. These acquisitions are anticipated to drive further growth by expanding the company's scale, customer base, and geographic reach.
Bryan King added, "We remain focused on actively working our pipeline of acquisition targets, incremental margin enhancement initiatives, and cost savings. These efforts, along with some end market recovery, drove DSG’s strong second quarter results."
Distribution Solutions Group Inc (DSGR, Financial) continues to focus on growing operating cash flows and accelerating returns on invested capital, positioning the company well to maximize long-term shareholder value.
Explore the complete 8-K earnings release (here) from Distribution Solutions Group Inc for further details.
