Distribution Solutions Group Inc
For the period ended Apr 10, 2025. Filed Apr 10, 2025.
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Apr 10, 2025 · Filed Apr 10, 2025
Contents
Appendix A
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 years ended December 31, 2024 and 2023. 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.
| Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted EBITDA | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| YTD 2024 and YTD 2023 | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Lawson Products · Gexpro Services · TestEquity · Canada Branch Division · Other · Eliminations · Consolidated DSG | |||||||||||||||||||||||
| Year Ended · 2024 · 2023 · 2024 · 2023 · 2024 · 2023 · 2024 · 2023 · 2024 · 2023 · 2024 · 2023 · 2024 · 2023 | |||||||||||||||||||||||
| Revenue from external customers | $468,976 | $468,379 | $439,163 | $404,490 | $770,866 | $641,643 | $125,099 | $55,890 | $— | $— | $— | $— | $1,804,104 | $1,570,402 | |||||||||
| Intersegment revenue | 68 | 332 | 1,560 | 1,243 | 314 | 125 | — | — | — | — | (1,942) | (1,700) | — | — | |||||||||
| Revenue | 469,044 | 468,711 | 440,723 | 405,733 | 771,180 | 641,768 | 125,099 | 55,890 | — | — | (1,942) | (1,700) | 1,804,104 | 1,570,402 | |||||||||
| Operating income (loss) | $14,555 | $32,498 | $36,533 | $27,000 | $3,967 | $(16,465) | $6,024 | $5,731 | $(5,124) | $(5,773) | $55,955 | $42,991 | |||||||||||
| Depreciation and amortization | 24,349 | 19,532 | 15,489 | 15,986 | 30,799 | 26,002 | 3,739 | 2,068 | — | — | 74,376 | 63,588 | |||||||||||
| Adjustments: | |||||||||||||||||||||||
| Acquisition related costs(1) | 7,023 | 3,015 | 1,501 | 1,081 | 2,251 | 6,215 | 23 | — | (656) | 1,250 | 10,142 | 11,561 | |||||||||||
| Stock-based compensation(2) | 4,132 | 7,940 | — | — | 433 | — | — | — | 668 | — | 5,233 | 7,940 | |||||||||||
| Severance and acquisition related retention expenses (3) | 4,937 | 476 | 460 | 238 | 17,791 | 23,949 | 49 | 3 | (1) | — | 23,236 | 24,666 | |||||||||||
| Inventory step-up(4) | 1,066 | — | — | — | — | 3,582 | 1,816 | — | — | — | 2,882 | 3,582 | |||||||||||
| Other non-recurring(5) | 337 | 202 | 1,792 | 886 | 1,047 | — | — | — | 257 | 1,620 | 3,433 | 2,708 | |||||||||||
| Non-GAAP adjusted EBITDA | $56,399 | $63,663 | $55,775 | $45,191 | $56,288 | $43,283 | $11,651 | $7,802 | $(4,856) | $(2,903) | $175,257 | $157,036 | |||||||||||
| Operating income (loss) as a percent of revenue | 3.1% | 6.9% | 8.3% | 6.7% | 0.5% | (2.6)% | 4.8% | 10.3% | N/M | N/M | 3.1% | 2.7% | |||||||||||
| Adjusted EBITDA as a percent of revenue | 12.0% | 13.6% | 12.7% | 11.1% | 7.3% | 6.7% | 9.3% | 14.0% | N/M | N/M | 9.7% | 10.0% | |||||||||||
(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. | ||||
|---|---|---|---|---|
| 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, 2024 | December 31, 2023(3) | |||
| Amount | Diluted EPS(2) | Amount | Diluted EPS(2) | |
| Net income (loss) | $(7,332) | $(0.16) | $(8,967) | $(0.20) |
| Pretax adjustments: | ||||
| Stock-based compensation | 5,233 | 0.11 | 7,940 | 0.18 |
| Acquisition related costs | 10,142 | 0.22 | 11,561 | 0.26 |
| Amortization of intangible assets | 47,483 | 1.01 | 40,263 | 0.90 |
| Severance and acquisition related retention expenses | 23,236 | 0.50 | 24,666 | 0.55 |
| Change in fair value of earnout liabilities | 988 | 0.02 | (758) | (0.02) |
| Inventory step-up | 2,882 | 0.06 | 3,582 | 0.08 |
| Other non-recurring | 3,433 | 0.07 | 2,708 | 0.06 |
| Total pretax adjustments | 93,397 | 1.99 | 89,962 | 2.01 |
| Tax effect on adjustments(1) | (23,735) | (0.51) | (23,660) | (0.53) |
| Deferred tax asset valuation allowance(4) | 5,674 | 0.12 | 6,144 | 0.14 |
| Non-GAAP adjusted net income | $68,004 | $1.44 | $63,479 | $1.42 |
(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 46.811 million and 44.869 million diluted shares for the twelve months ended December 31, 2024 and 2023, respectively.
(3) Share and per share data for all periods presented reflect two-for-one stock split.
(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. | ||
|---|---|---|
| Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Adjusted Operating Income | ||
| (Dollars in thousands) | ||
| (Unaudited) | ||
| Twelve Months Ended | ||
| December 31, | ||
| 2024 | 2023 | |
| Operating income (loss) | $55,955 | $42,991 |
| Gross profit adjustments: | ||
| Inventory step-up(1) | 2,882 | 3,582 |
| Total gross profit adjustments | 2,882 | 3,582 |
| Selling, general and administrative expenses adjustments: | ||
| Acquisition related costs(2) | 10,142 | 11,561 |
| Amortization of intangible assets | 47,483 | 40,263 |
| Stock-based compensation(3) | 5,233 | 7,940 |
| Severance and acquisition related retention expenses(4) | 23,236 | 24,666 |
| Other non-recurring(5) | 3,433 | 2,708 |
| Total selling, general and administrative adjustments | 89,527 | 87,138 |
| Total adjustments | 92,409 | 90,720 |
| Non-GAAP adjusted operating income | $148,364 | $133,711 |
(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 for the Hisco and S&S Automotive acquisitions.
(5)Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.