Distribution Solutions Group, Inc.
For the period ended Dec 31, 2025. Filed Mar 5, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 5, 2026
DSGR$34.93-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-06.
0000703604-25-000012
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-05.
0000703604-26-000008
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 224 previous paragraphs and 129 current paragraphs.
74 unchanged; 34 reworded; 21 added; 105 removed; 11 previous and 0 current paragraphs rearranged.
Tables are not compared: 20 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
2025 Debt Amendment
Current report
In December 2025, the Company amended and expanded the senior secured facility through 2030. The new facility includes $700 million of term debt and a revolving credit arrangement of $400 million, an increase over the previous revolver capacity of $255 million. Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information about the Amended Credit Agreement.
Current report
Share Repurchase Increase
Current report
In November 2025, the Board authorized a$30.0 million increase to the Company’s existing stock repurchase program for shares of DSG common stock. As a result of the additional authorization, the aggregate repurchase authorization under the Company’s repurchase program for shares of DSG common stock increased from $37.5 million to $67.5 million. The remaining availability for stock repurchases under the stock repurchase program was $32.9 million at December 31, 2025.
Current report
The North American market for test and measurement, industrial, and electronic production supplies is highly fragmented, with competition ranging from global to regional distributors. We believe TestEquity stands out through its portfolio of specialized brands, technical knowledge, and digital platforms, each tailored to serve specific needs across the electronics lifecycle. These brands maintain unique identities and address every stage of the electronics process—from R&D to assembly and ongoing maintenance. This multi-brand approach enables TestEquity to offer an extensive product range, expert support, and tailored technical solutions, positioning it as a trusted partner across diverse customer requirements.
Current report
Revenue growth is fueled by TestEquity’s comprehensive catalog of test and measurement equipment, electronic production supplies, and industrial tools, supported by a high-touch, consultative sales model. Strategic acquisitions have expanded its customer base and strengthened recurring rental revenue. We believe that continued investments in e-commerce, rising demand from high-growth sectors like aerospace and telecommunications, and TestEquity’s strong positioning as a preferred vendor amid supplier consolidation will contribute to sustained momentum and long-term value creation.
Current report
Supply Chain Disruptions and Tariffs
Current report
Revenue increased $12.0 million, or 2.6%, to$481.1 million in 2025 compared to revenue of$469.0 million in 2024. The increase was primarily driven by $17.0 million of additional revenue generated from the acquisitions completed in 2024, partially offset by a decline in military customer sales of $5.2 million.
Current report
Gross profit increased $6.8 million, or 2.6%, to$264.0 million in 2025 compared to gross profit of$257.3 million in 2024 primarily as a result of the inclusion of $9.2 million of additional gross profit from the acquisitions completed in 2024 partially offset by lower revenue for legacy Lawson. Lawson gross profit as a percentage of revenue was 54.9% in 2025 compared to gross profit as a percentage of revenue of 54.8% in the prior year.
Current report
Selling, general and administrative expenses increased $2.6 million to $245.3 million in 2025 compared to $242.7 million in 2024. The increase was driven primarily by additional selling, general and administrative expenses of approximately $3.8 million due tothe acquisitions completed in 2024, higher employee related costs of $5.8 million and higher depreciation and amortization expense of $2.7 million partially offset by a decrease in severance expense, merger and acquisition expenses and stock based compensation of $2.3 million, $6.9 million and $1.2 million, respectively.
Current report
Revenue increased $12.1 million, or 1.6%, to$783.2 million in 2025 compared to $771.2 million in 2024. The increase was primarily driven by$7.2 million of revenue generated from the acquisition completed in 2024, and an increase of $19.0 million in the test and measurement, rentals, chambers, fabrication value added and calibration business, partially offset by a $14.1 million decrease in electronic production supplies and printing value added services.
Current report
Gross profit decreased $6.3 million to$169.5 million in 2025 compared to$175.8 million in 2024. The decrease was primarily driven by $3.4 million of higher depreciation expense due to the expansion of the rental equipment fleet from the 2024 acquisition of ConRes TE and a sales mix shift toward test and measurement which have lower margins. TestEquity gross profit as a percentage of revenue decreased to 21.6% in 2025 compared to 22.8% in the prior year primarily due to higher depreciation expense on the expanded rental equipment fleet, higher inventory write-offs of $1.2 million and a shift in sales mixtoward test and measurement which have lower margins partially offset by favorability in vendor rebates.
Current report
Selling, general and administrative expenses decreased $16.7 million to$155.1 million in 2025 compared to$171.8 million in 2024. The decrease was primarily drivenby a decrease in severance and acquisition related retention expense of $16.2 million andmerger and acquisition expenses of $2.4 million primarily related to the 2023 acquisition of Hisco, partially offset by an increase in stock based compensation of $1.4 million.
Current report
During 2025, TestEquity generated Adjusted EBITDA of$51.0 million, a decrease of$5.3 million, or 9.5%, from the same period a year ago primarily driven by lower gross margins and higher employee compensation expenses partially offset by additional net margins of$7.7 million generated from the 2024 acquisition of ConRes TE.
Current report
Gross profit increased $16.5 million to $155.0 million in 2025 compared to $138.5 million in 2024 primarily due to higher revenue. Gexpro Services’ gross profit as a percentage of revenue was 31.2% in 2025 compared to 31.4% in the prior year period. The gross profit margin percentage decrease for 2025 was primarily the result of a sales mix shift and tariff costs not recovered through price increases to customers.
Current report
Selling, general, and administrative expenses increased $4.2 million to$106.2 million in 2025 compared to$102.0 million in 2024. The increase was primarily due to $2.0 millionof additional expenses driven by the 2024 acquisition of TCR, investments of $2.0 million to support 2025 new commercial investments, an increase in stock-based compensation of $0.4 million and additional expenses to support the increase in revenue. These were partially offset by lower merger and acquisition expenses of$1.6 million and a reduction to non-recurring strategic project consulting costs of $1.8 million.
Current report
Revenue increased $96.3 million, or 77.0%, to$221.4 million in 2025 compared to$125.1 million in 2024. The increase was primarily driven by$93.4 million of additional revenue generated from the acquisition of Source Atlantic completed in 2024.
Current report
Selling, general and administrative expenses for Canada Branch Division consist of compensation, expenses to operate its distribution network and branch locations and overhead expenses.
Current report
Selling, general and administrative expenses increased $29.6 million to$65.8 million in 2025 compared to $36.2 million in 2024. Approximately $29.6 millionof the increased expenses, including depreciation, was driven by the acquisition of Source Atlantic completed in 2024.
Current report
Interest expense was flat in 2025 compared to 2024 as higher average borrowings in 2025 were partially offset with lower interest rates in 2025.
Current report
Net cash used in financing activities for the year ended December 31, 2025 was $64.3 million primarily due to the repayment of previous indebtedness in conjunction with the December 2025 debt refinancing of the Original Credit Agreement with the Amended Credit Agreement, principal payments on the previous term loans and repurchases of DSG common stock under the repurchase program. This was partially offset by proceeds from the Amended Credit Agreement. During 2025, deferred financing costs of $4.6 million were incurred related to the Amended Credit Agreement.
Removed paragraphs (105)
Previous report
2024 Business and Asset Acquisitions
Previous report
On November 18, 2024, DSG acquired the assets of ConRes Test Equipment, (“ConRes TE” and the“ConRes TE Transaction”). These assets were acquired to expand TestEquity’s test equipment offerings and value-add service capabilities in all of our end markets. The results of operations from the additional assets acquired from ConRes TE have been included in the TestEquity reportable segment subsequent to its acquisition date.
Previous report
On October 30, 2024, DSG completed the acquisition of Tech-Component Resources Pte Ltd (“TCR” and the “TCR Transaction”). TCR is a distributor of fasteners, mechanical components, and other industrial products in Southeast Asia. TCR was acquired to provide us with a strategic foothold in this growing region. The results of operations of TCR have been included in the Gexpro Services reportable segment subsequent to its acquisition date.
Previous report
On August 14, 2024, DSGcompleted the acquisitionof Source Atlantic Limited (“Source Atlantic” and the “Source Atlantic Transaction”). Source Atlantic, headquartered in Saint John, New Brunswick, Canada, is a wholesale distributor of industrial MRO supplies, safety products, fasteners, and related value-add services for the Canadian MRO market. Source Atlantic was acquired to expand DSG’s operating footprint in the Canadian market. The results of operations of Source Atlantic have been included in the Canada Branch Division reportable segment subsequent to its acquisition date.
Previous report
On May 1, 2024, DSG completed the acquisition of S&S Automotive Inc. (“S&S Automotive” and the “S&S Automotive Transaction”). S&S Automotive is a distributor of automotive, industrial, and safety supplies primarily to the automotive dealership market based near Chicago in Woodridge, Illinois. S&S Automotive was acquired to expand Lawson’s services and products to the automotive end market. The results ofoperations of S&SAutomotive have been included in the Lawson reportable segment subsequent to its acquisition date.
Previous report
On January 19, 2024, DSG acquired the assets of Safety Supply Illinois LLC, conducting business as Emergent Safety Supply (“ESS” and the “ESS Transaction”). ESS is a national distributor of safety products based near Chicago in Batavia, Illinois. ESS was acquired to expand Lawson’s safety product category. The results ofoperations of ESS have been included in the Lawson reportable segment subsequent to its acquisition date.
Previous report
Debt Amendment
Previous report
Across the test and measurement, industrial and electronic production supplies businesses, the North American market is highly fragmented with competitors ranging from large global distributors to national and regional distributors.
Previous report
Through the Hisco Transaction, TestEquity expanded its product offerings, including adhesives, chemicals and tapes as well as specialty materials such as electrostatic discharge, thermal management materials and static shielding bags. Hisco operates in 32 locations across North America, including its Precision Converting facilities that provide value-added fabrication and its Adhesive Materials Group that provides an array of custom repackaging solutions. Hisco also offers vendor-managed inventory and Radio Frequency Identification (“RFID”) programs with specialized warehousing for chemical management, logistics services and cold storage.
Previous report
Supply Chain Disruptions
Previous report
Cyber Incident Litigation
Previous report
On February 10, 2022, DSG disclosed that Lawson Products’ computer network was the subject of a cyber incident potentially involving unauthorized access to certain confidential information(the “Cyber Incident”). DSG engaged a cybersecurity forensics firm to assist in the investigation of the incident and to assist in securing its computer network.
Previous report
Because of the nature of the information that may have been compromised, DSG was required to notify the parties whose information was potentially compromised of the incident as well as various governmental agencies and has taken other actions, such as offering credit monitoring services. On April 4, 2023, aputative class action lawsuit was filed against DSG related to the Cyber Incident (the “Cyber Incident Suit”). At December 31, 2024, DSG had not incurred material costs as a result of the Cyber Incident. For more information about the Cyber Incident Suit, refer to Note 15 – Commitments and Contingencies within Item 8. Financial Statements and Supplementary Data.
Previous report
2024 Comparability Factors
Previous report
2023 Comparability Factors
Previous report
On June 8, 2023, we completed the acquisition of HIS Company, Inc. The results ofoperations of HIS Company, Inc. have been included in the TestEquity reportable segment subsequent to the acquisition date.
Previous report
2022 Comparability Factors
Previous report
On April 1, 2022 (the “Merger Date”) we completed the Mergers whereby TestEquity and Gexpro Services became wholly-owned subsidiaries of DSG. The Mergers were accounted for as a reverse merger under the accounting guidance for reverse acquisitions as provided in ASC 805. Under this guidance, TestEquity and Gexpro Services were treated as a combined entity as the accounting acquirer for financial reporting purposes, and DSG was identified as the accounting acquiree. This determination was primarily made as TestEquity and Gexpro Services were under the common control of an entity that owned a majority of the voting rights of the combined entity, and therefore, only DSG experienced a change in control. Accordingly, the results of operations for the year ended December 31, 2022 include the results of operations of TestEquity and Gexpro Services on a consolidated basis for the full year, and the results of operations of DSG’s legacy Lawson, Canada Branch Division and All Other have only been included subsequent to the April 1, 2022 Merger Date.
Previous report
2022 Supplemental Information - Lawson and Canada Branch Division Pro Forma Operating Income and Non-GAAP Adjusted EBITDA
Previous report
For management to discuss Lawson’s and Canada Branch Division’s operating results on a comparable basis, Lawson’s and Canada Branch Division’s GAAP results of operations were adjusted to include Lawson’s and Canada Branch Division’s historical pre-merger components of operating income, prior to the April 1, 2022 Merger Date, along with pre-merger pro forma adjustments prepared under SEC Regulation S-X Article 11, in order to reflect the total operating activities attributable to Lawson and Canada Branch Division for each period presented. Management believes this supplemental information provides the most meaningful basis of comparison for Lawson’s and Canada Branch Division’s operations, is more useful in identifying current business trends, and is important for the users of our financial statements in understanding Lawson’s and Canada Branch Division’s businesses. Refer to Note 1 – Nature of Operations and Basis of Presentation and Note 3 – Business and Asset Acquisitions within Item 8. Financial Statements and Supplementary Data for information about the Mergers.
Previous report
This supplemental information may not reflect the actual results we would have achieved had the Mergers occurred at the beginning of 2022 and should not be viewed as a substitute for the results of operations presented in accordance with GAAP. Lawson’s and Canada Branch Division’s historical operating results prior to the Mergers were obtained from the unaudited condensed consolidated financial statements included in the Lawson Products, Inc. Quarterly Report on Form 10-Q filed for the quarterly period ended March 31, 2022. The pro forma adjustments were obtained from the unaudited pro forma condensed combined financial information included in DSG’s Current Report on Form 8-K/A filed on August 24, 2023.
Previous report
(4) Inventory net realizable value adjustment recordedto reduce inventory related to discontinued products where the anticipated net realizable value was lower than the cost reflected in our records.
Previous report
(7)Includes the operating results of Lawson, Canada Branch Division and All Other subsequent, but not prior, to the April 1, 2022 Merger Date in accordance with GAAP accounting guidance for reverse acquisitions.
Previous report
The following results of operations for the years ended December 31, 2024 and 2023 include the combined operations of DSG, while the following results of operations for the year ended December 31, 2022 include the accounts of the TestEquity and Gexpro Services combined entity, as the accounting acquirer, for the full year, and the results of DSG’s legacy Lawson, Canada Branch Division and All Other businesses have only been included for activity subsequent, and not prior, to the April 1, 2022 Merger Date.
Previous report
Revenue increased$0.3 million, or 0.1%, to$469.0 million in 2024 compared to revenue of$468.7 million in 2023. The increase was primarily driven by $39.8 million of revenue generated from the acquisitions completed in 2024 and strengthening sales within the automotive end market of $2.9 million, offset by adecline in sales to Lawson’s core, governmental and strategic customers of$42.4 million primarily as a result of fewer sales representatives.
Previous report
Gross profit decreased$8.2 million, or 3.1%, to$257.3 million in 2024 compared to gross profit of$265.5 million in 2023 primarily due to a shift in sales toward larger lower margin profile customers and the amortization of the fair value step-up of inventory of $1.1 million related to the S&S Automotive Transaction. Lawson gross profit as a percent of revenue was 54.8% in 2024 compared to gross profit as a percent of revenue of 56.6% in the prior year. The gross profit margin percentage decrease for 2024 was primarily the result of the amortization of the fair value step-up of inventory of $1.1 million related to the S&SAutomotive Transaction, a shift in sales toward larger lower margin profile customers and a lower margin profile from the 2024 acquisitions than its organic margin profile.
Previous report
Selling, general and administrative expenses increased $9.7 million to $242.7 million in 2024 compared to $233.0 million in 2023. Approximately $10.3 millionof the increased expenses was driven by the acquisitions completed in 2024 in addition to higher severance and merger and acquisition expenses of$4.5 million and$4.0 million, respectively. These costs were partially offset by a decrease in stock-based compensation expense of $3.8 million and a decrease in variable compensation as a result of lower sales.
Previous report
Revenue increased$129.4 million, or 20.2%, to$771.2 million in 2024 compared to $641.8 million in 2023. The increase was primarily driven by$157.4 million of revenue generated from acquisitions completed in 2024 and 2023, partially offset by a$28.0 million decline in legacy TestEquity revenue due to a slowdown in the electronics assembly market causing softening in the electronic production supplies end markets.
Previous report
Gross profit increased$34.0 million to$175.8 million in 2024 compared to$141.9 million in 2023 primarily as a result ofthe inclusion of the acquisitions completed in 2024 and 2023, which generated$39.5 million of additional gross profit during 2024, partially offset by a decrease in gross profit on the decline in legacy TestEquity revenue. TestEquity gross profit as a percent of revenue increased to 22.8% in 2024 compared to 22.1% in the prior year. 2023 included expense of $3.6 million for the amortization of the fair value step-up of inventory related to the acquisition completed in 2023.
Previous report
Selling, general and administrative expenses increased$13.5 million to$171.8 million in 2024 compared to$158.3 million in 2023. Approximately $17.3 million of the increased expenses, including depreciation, was driven by the acquisitions completed in 2024 and 2023. These costs were partially offset by lower merger and acquisition expenses of $4.0 million and lower personnel expenses in 2024 compared to 2023 inclusive of severance and acquisition related retention expenses.
Previous report
During 2024, TestEquity generated Adjusted EBITDA of$56.3 million, an increase of$13.0 million from the same period a year ago with an increase of approximately$16.2 million driven by the acquisitions completed in 2024 and 2023, partially offset by a reduction of$3.2 million in legacy TestEquity primarily due to a decline in organic revenue.
Previous report
Gross profit increased $17.4 million to $138.5 million in 2024 compared to $121.1 million in 2023. Gexpro Services’ gross profit as a percent of revenue was 31.4% in 2024 compared to 29.8% in the prior year period. The gross profit margin percentage improvement for 2024 was primarily the result of strategic sourcing initiatives, supply chain improvements and end market sales mix.
Previous report
Selling, general, and administrative expenses increased$7.9 million to$102.0 million in 2024 compared to$94.1 million in 2023. The increase was primarily driven by additional consulting costs of $1.8 million to support non-recurring strategic projects, non-recurring legal fees of $1.0 million and investments to support future growth andadditional compensation.
Previous report
Revenue increased$69.2 million, or 123.8%, to$125.1 million in 2024 compared to$55.9 million in 2023. The increase was primarily driven by$70.3 million of revenue generated from the acquisition of Source Atlantic completed in 2024, partially offset by a decline in organic Canada Branch Division revenue of$1.1 million.
Previous report
Selling, general and administrative expenses increased$18.4 million to$36.2 million in 2024 compared to $17.8 million in 2023. Approximately$18.1 million of the increased expenses, including depreciation, was driven by the acquisition of Source Atlantic completed in 2024.
Previous report
Interest expense increased $12.4 million in 2024 compared to 2023 primarily due to an increase in interest rates and higher outstanding borrowings related to the acquisitions of Hisco, S&S Automotive, Source Atlantic, TCR and ConRes TE.
Previous report
Consolidated Results of Operations
Previous report
(1) Includes the operating results of Lawson, Canada Branch Division and All Other subsequent, but not prior, to the April 1, 2022 Merger Date.
Previous report
Our consolidated results of operations include the financial impact of the Mergers that were completed on April 1, 2022 and the other acquisitions completed in 2023 and 2022. The increase in gross profit for 2023 compared to 2022 was primarily due to the inclusion of Lawson and Canada Branch Division operations only subsequent, and not prior, to the Merger Date and to the Hisco and other acquisitions completed in 2023 and 2022. Expenses for 2023 were impacted by the other acquisitions completed in 2023 and 2022.
Previous report
Results by Reportable Segment
Showing the first 40 of 105 passages. Open the source sections for the rest.
Reworded paragraphs (34)
Previous wording
The following discussion and analysis of DSG’s financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related notes included in this Annual Report on Form 10-K, the audited consolidated financial statements and accompanying notes included in DSG’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 7, 2024, the audited consolidated financial statements and accompanying notes included in DSG’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 14, 2023 and the Lawson Products, Inc. unaudited condensed consolidated financial statements and accompanying notes included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, filed on April 28, 2022.
Current wording
The following discussion and analysis of DSG’s financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related notes included in this Annual Report on Form 10-K.
Previous wording
This section of the Annual Report on Form 10-K generally discusses the years ended December 31, 2024 and 2023 and the year-over-year comparisons between the years ended December 31, 2024 and 2023. As a result of the change in our operating and reportable segments during the third quarter of 2024, this section also presents year-over-year comparisons between the years ended December 31, 2023, and 2022 on a recasted basis to reflect the change. For additional details about our segment realignment in the third quarter of 2024, see Note 1 – Nature of Operations and Basis of Presentation in Item 8. Financial Statements and Supplementary Data.
Current wording
This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2025 and 2024 and the year-over-year comparisons between the years ended December 31, 2025 and 2024. Discussions of items for the year ended December 31, 2023, and the year-over-year comparisons between the years ended December 31, 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in DSG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 6, 2025.
Previous wording
Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and government MRO market.
Current wording
Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and government MRO marketplace.
Previous wording
Canada Branch Division combines the operations of our Bolt and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 38 branch locations.
Current wording
Canada Branch Division combines the operations of our Bolt and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 35 branch locations.
Previous wording
DSG believes that the Purchasing Managers Index (“PMI”) published by the Institute for Supply Management is an indicative measure of the relative strength of the economic environment of the industry in which it operates. The PMI is a composite index of economic activity in the U.S. manufacturing sector. A measure of the PMI index above 50 is generally viewed as indicating an expansion of the manufacturing sector while a measure below 50 is generally viewed as representing a contraction. The average monthly PMI was 48.3 in the year ended December 31, 2024, compared to 47.1 in theyear ended December 31, 2023, and 53.5 in the year ended December 31, 2022.
Current wording
DSG believes that the Purchasing Managers Index (“PMI”) published by the Institute for Supply Management is an indicative measure of the relative strength of the economic environment of the industry in which it operates. The PMI is a composite index of economic activity in the U.S. manufacturing sector. A measure of the PMI index above 50 is generally viewed as indicating an expansion of the manufacturing sector while a measure below 50 is generally viewed as representing a contraction. The average monthly PMI was 48.9 in the year ended December 31, 2025, compared to 48.3 in theyear ended December 31, 2024, and 47.1 in the year ended December 31, 2023.
Previous wording
Lawson’s revenue is also influenced by the number of sales representatives and their productivity. Lawson plans to continue concentrating its efforts on increasing the productivity and size of its sales team. Additionally, Lawson drives revenue through the expansion of products sold to existing customers as well as attracting new customers and additional ship- to locations. Lawson also is expanding its inside sales team to help drive field sales representative productivity and also utilizes an e-commerce site to generate sales.
Current wording
Lawson’s revenue is also influenced by the number of sales representatives and their productivity. Lawson plans to continue concentrating its efforts on increasing the productivity and size of its sales team. Additionally, Lawson drives revenue through the expansion of products sold to existing customers as well as attracting new customers and additional ship-to locations. Lawson also utilizes an inside sales team to help drive field sales representative productivity and also utilizes an e-commerce site to generate sales.
Previous wording
Canada Branch Division combines the operations of our Bolt and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 38 branch locations. Source Atlantic was acquired to expand DSG’s operating footprint in the Canadian market.
Current wording
Canada Branch Division combines the operations of our Bolt and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 35 branch locations. Source Atlantic was acquired in 2024 to expand DSG’s operating footprint in the Canadian market.
Previous wording
We continue to be affected byrising supplier costs caused by inflation and increased transportation and labor costs. We have instituted various price increases during 2023 and 2024 in response to rising supplier costs, as well as increased transportation and labor costs in order to manage our gross profit margins.
Current wording
We continue to be affected byrising supplier costs caused by inflation, and increased tariffs, transportation and labor costs. We have instituted various price increases during 2023, 2024 and 2025 in response to rising supplier costs, increased tariffs, transportation and labor costs in order to attempt to manage our gross profit margins.
Previous wording
Our results of operations are not directly comparable on a year-over-year basis due to various business combinations. We account for acquisitions under Accounting Standards Codification 805, Business Combinations (“ASC 805”). Accordingly, the results of acquisitions are only included subsequent to their respective acquisition dates. Business combinations that affected the year-over-year comparability of our financial results were as follows:
Current wording
Our results of operations are not directly comparable on a year-over-year basis due to various business combinations. We account for acquisitions under Accounting Standards Codification 805, Business Combinations (“ASC 805”). Accordingly, the results of acquisitions are only included subsequent to their respective acquisition dates. Refer to Note 3 – Business and Asset Acquisitions within Item 8. Financial Statements and Supplementary Data for a description of each acquisition completed in 2024 and the reportable segment that each acquisition’s respective results of operations is included in.
Previous wording
Management believes Adjusted EBITDA is an important measure of the Company’s operating performance and may provide investors with additional meaningful comparisons between current results and results in prior operating periods because Adjusted EBITDA excludes certain non-operational or non-cash items whose fluctuations from period to period do not necessarily correspond to changes in the operating performance of our business and consequently may impact the overall comparability from period to period. We define Adjusted EBITDA as operating income plus depreciation and amortization, stock-based compensation, severance and acquisition related retention costs, costs related to the execution and integration of acquisitions, inventory net realizable value adjustments, amortization of fair value step-up resulting from acquisitions and other non-recurring items. Management uses operating income and Adjusted EBITDA to evaluate the performance of its reportable segments. See Note 14 – Segment Information of our consolidated financial statements within Item 8. Financial Statements and Supplementary Data for additional information about our reportable segments.
Current wording
Management believes Adjusted EBITDA is an important measure of the Company’s operating performance and may provide investors with additional meaningful comparisons between current results and results in prior operating periods because Adjusted EBITDA excludes certain non-operational or non-cash items whose fluctuations from period to period do not necessarily correspond to changes in the operating performance of our business and consequently may impact the overall comparability from period to period. We define Adjusted EBITDA as operating income plus depreciation and amortization, stock-based compensation, severance and acquisition related retention costs, costs related to the execution and integration of acquisitions, amortization of fair value step-up resulting from acquisitions and other non-recurring items. Management uses operating income and Adjusted EBITDA to evaluate the performance of its reportable segments. See Note 14 – Segment Information within Item 8. Financial Statements and Supplementary Data for additional information about our reportable segments.
Previous wording
The following table provides a reconciliation of Net income to Adjusted EBITDA on a consolidated basis and Operating income to Adjusted EBITDA by segment for theyears ended December 31, 2024, 2023 and 2022. A reconciliation of Net income to Adjusted EBITDA by segment is not provided because management does not determine or review net income at the segment level and does not allocate non-operating costs and expenses to its segments, such as income taxes, interest expense, and various other non-operating income and expense.
Current wording
The following table provides a reconciliation of Net income (loss) to Adjusted EBITDA on a consolidated basis and Operating income (loss) to Adjusted EBITDA by segment for theyears ended December 31, 2025 and 2024. A reconciliation of Net income (loss) to Adjusted EBITDA by segment is not provided because management does not determine or review net income at the segment level and does not allocate non-operating costs and expenses to its segments, such as income taxes, interest expense, and various other non-operating income and expense.
Previous wording
Our consolidated revenue increased$233.7 million for 2024 compared to 2023 primarily driven by$268.2 million of revenue from acquisitions completed in 2023 and 2024 offset by a decline in organic revenue of $34.5 million. Consolidated Gross profit and Selling, general and administrative expenses also increased over the prior year primarily driven by the inclusion of the Hisco, ESS, S&S, Source Atlantic, TCR and ConRes TE acquisitions completed in 2023 and 2024.
Current wording
Our consolidated revenue increased $175.9 million for 2025 compared to 2024 primarily driven by $121.5 million of revenue from acquisitions completed in 2024 and an increase in organic revenue of $54.4 million. Consolidated Gross profit and Selling, general and administrative expenses also increased over the prior year primarily driven by the 2024 acquisitions of ESS, S&S Automotive, Source Atlantic, TCR and ConRes TE (each as defined in Note 3 – Business and Asset Acquisitions in Item 8. Financial Statements and Supplementary Data).
Previous wording
Selling, general and administrative expenses consist of compensation and support for TestEquity’s sales representatives and expenses to operate TestEquity’s distribution network and overhead expenses.
Current wording
Selling, general and administrative expenses consist of compensation and support for Lawson sales representatives as well as expenses to operate Lawson’s distribution network and overhead expenses.
Previous wording
During 2024, Lawson generated Adjusted EBITDA of$56.4 million, a decrease of 11.4% or$7.3 million from the prior year primarily driven by lower organic revenue and gross profit margin partially offset by contributions of approximately $6.2 million generated by the acquisitions completed in 2024.
Current wording
During 2025, Lawson generated Adjusted EBITDA of$51.6 million, a decrease of 8.4% or$4.8 million from the prior year primarily driven by lower organic revenue and higher selling, general and administrative expenses primarily from higher employee related costs, partially offset by additional contributions of approximately $4.4 million generated by the acquisitions completed in 2024.
Previous wording
Revenue increased $35.0 million, or 8.6%, to $440.7 million in 2024 compared to $405.7 million in 2023. There were two more selling days in the year ended December 31,2024, compared to the same period a year ago. A selling day generally represents a business day in which Gexpro Services ships products to its customers. Average daily sales increased 7.8% over the same period a year ago. The increase in revenue was primarily driven by increased sales in the renewable energy vertical market of $21.8 million, increased sales in the aerospace and defense vertical market of $6.4 million, strengthening sales within the technology vertical market of $6.7 million and $0.6 million of revenue generated from the acquisition completed in 2024, partially offset by softness within the consumer and industrial vertical market.
Current wording
Revenue increased $55.9 million, or 12.7%, to $496.7 million in 2025 compared to $440.7 million in 2024. There was one less selling day in the year ended December 31,2025, compared to the same period a year ago. A selling day generally represents a business day in which Gexpro Services ships products to its customers. Average daily sales increased 13.1% over the same period a year ago. The increase in revenue was primarily driven by increased sales in the renewable energy, aerospace and defense and technology vertical markets of $25.3 million, $15.8 million, and $8.0 million, respectively, and additional revenue generated from the 2024 acquisition of TCR of $3.9 million. This was partially offset by softness within the consumer and industrial vertical market. Tariff costs passed through in the form of product price increases accounted for approximately 1.6% or $7.1 million of the 2025 revenue growth.
Previous wording
During 2024, Gexpro Services generated Adjusted EBITDA of$55.8 million, an increase of $10.6 million, or 23.4% from 2023 primarily driven by higher organic revenue and managing gross profit margins, partially offset by an increase in Selling, general, and administrative expenses.
Current wording
During 2025, Gexpro Services generated Adjusted EBITDA of$63.7 million, an increase of $8.0 million, or 14.3% from 2024 primarily driven byhigher organic revenue, managing gross profit margins and leveraging Selling, general, and administrative expenses over a higher sales base.
Previous wording
Gross profit increased$18.7 million to $42.2 million in 2024 compared to gross profit of $23.5 million in 2023 primarily as a result of the inclusion of the acquisition of Source Atlantic completed in 2024, which generated $18.7 million of additional gross profit during 2024. Gross profit as a percent of revenue decreased to 33.7% in 2024 compared to 42.0% in the prior year primarily due to the lower gross profit margin profile of Source Atlantic as compared to Bolt.
Current wording
Gross profit increased $31.3 million to $73.5 million in 2025 compared to gross profit of $42.2 million in 2024 primarily as a result of the inclusion of $30.7 million of additional gross profit from the acquisition of Source Atlantic completed in 2024. Gross profit as a percentage of revenue decreased to 33.2% in 2025 compared to 33.7% in the prior year primarily due to the lower gross profit margin profile of Source Atlantic as compared to Bolt.
Previous wording
During 2024, Canada Branch Division generated Adjusted EBITDA of$11.7 million, an increase of$3.8 million from the same period a year ago with an increase of approximately $4.1 million driven by the acquisition of Source Atlantic completed in 2024.
Current wording
During 2025, Canada Branch Division generated Adjusted EBITDA of$15.6 million, an increase of$4.0 million, or 34.2% from the same period a year ago with an increase of approximately $3.4 million driven by the acquisition of Source Atlantic completed in 2024.
Previous wording
The $1.0 million expense in 2024 and the$0.8 million benefit in 2023 related to the change in fair value of the earnout liabilities associated with the Frontier acquisition.
Current wording
The $1.0 million expense in 2025 and the$1.0 million expense in 2024 related to the change in fair value of the earnout liabilities associated with the Frontier acquisition.
Previous wording
Other income (expense), net consists of effects of changes in foreign currency exchange rates, interest income, net and other non-operating income and expenditures. The $2.6 million change in 2024 compared to 2023 was partly due to favorable increases in interest income and favorable changes in foreign currency exchange rates.
Current wording
Other income (expense), net consists of effects of changes in foreign currency exchange rates, interest income, net and other non-operating income and expenditures. The $2.1 million change in 2025 compared to 2024 was primarily due to unfavorable changes in foreign currency exchange rates and an unfavorable decrease in interest income.
Previous wording
Income tax expense was $6.8 million, a (1,267.9)% effective tax rate for the year ended December 31, 2024 compared to income tax expense of $7.0 million and a (346.8)% effective tax rate for the prior year. The change in the year-over-year effective tax rate was primarily due to a change in valuation allowances related to interest expense limitation deferred tax assets. The disproportionate effective tax rates were caused by limitations on the deductibility of interest expense and other permanent items on a small pre-tax loss amount.
Current wording
Income tax expense was $11.1 million, a 57.0% effective tax rate for the year ended December 31, 2025 compared to income tax expense of $6.8 million and a (1,267.9)% effective tax rate for the prior year. The change in the year-over-year effective tax rate was primarily due to a change in valuation allowances related to interest expense limitation deferred tax assets. The disproportionate effective tax rates were caused by limitations on the deductibility of interest expense and other permanent items on pre-tax income for the year ended December 31, 2025, compared to a small pre-tax loss in the prior year.
Previous wording
Cash and cash equivalents were $66.5 million on December 31, 2024 compared to $83.9 million on December 31, 2023.
Current wording
Cash and cash equivalents were $61.8 million on December 31, 2025, compared to $66.5 million on December 31, 2024.
Previous wording
The Company believes its current balances of cash and cash equivalents, availability under its Amended Credit Agreement and cash flows from operations will be sufficient to meet its liquidity needs for the next twelve months. On August 14, 2024, the Company borrowed $200 million under the incremental term loan of the Amended Credit Agreement. The Company used a portion of these proceeds to fund the Source Atlantic Transaction. As of December 31, 2024, the Company had $66.5 million of cash and cash equivalents and $253.0 million of borrowing availability remaining, net of outstanding letters of credit, under the Amended Credit Agreement.
Current wording
The Company believes its current balances of cash and cash equivalents, availability under its Amended Credit Agreement and cash flows from operations will be sufficient to meet its liquidity needs for the next twelve months. In December 2025, the Company amended and expanded the senior secured facility through 2030. The new facility includes $700 million of term debt and a revolving credit arrangement of $400 million, an increase over the previous revolver capacity of $255 million. The Company used the proceeds from the initial term loan to repay the existing $709 million outstanding under the Original Credit Agreement (as defined in Note 9 – Debt within Item 8. Financial Statements and Supplementary Data). Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information about the Amended Credit Agreement. As of December 31, 2025, the Company had $61.8 million of cash and cash equivalents and $393.7 million of borrowing availability remaining, net of outstanding letters of credit, under the Amended Credit Agreement.
Previous wording
Our primary short-term and long-term liquidity and capital resource needs are to finance operating expenses, working capital, capital expenditures, potential business acquisitions, strategic initiatives and general corporate purposes. Our current debt obligations under the Amended Credit Agreement mature in April 2027. Required principal payments on the Amended Credit Agreement for the next twelve months are$40.3 million. Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information related to our debt obligations. Access to debt capital markets has historically provided the Company with sources of liquidity, beyond normal operating cash flows. We do not anticipate having difficulty in obtaining financing from those markets in the future, however, we cannot provide assurance that unforeseen events or events beyond our control (such as a potential tightening of debt capital markets) will not have a material adverse impact on our liquidity.
Current wording
Our primary short-term and long-term liquidity and capital resource needs are to finance operating expenses, working capital, capital expenditures, potential business acquisitions, strategic initiatives and general corporate purposes. Our current debt obligations under the Amended Credit Agreement mature in December 2030. Required principal payments on the Amended Credit Agreement for the next twelve months are$35.0 million. Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information related to our debt obligations. Access to debt capital markets has historically provided the Company with sources of liquidity, beyond normal operating cash flows. We do not currently anticipate having difficulty in obtaining financing from those markets in the future, however, we cannot provide assurance that unforeseen events or events beyond our control (such as a potential tightening of debt capital markets, including in response to the implementation of new tariffs as part of the U.S. trade policy and any reciprocal or retaliatory tariffs thereto) will not have a material adverse impact on our liquidity.
Previous wording
Net cash provided by operations for the year ended December 31, 2023 was $102.3 million, primarily due to non-cash items, partially offset by a net loss and improvements in working capital.
Current wording
Net cash provided by operations for the year ended December 31, 2025 was $83.8 million primarily due to net income including non-cash items, partially offset by investments in trade working capital and other net cash flow items.
Previous wording
Net cash used in investing activities for theyear ended December 31, 2023 was $278.5 million, primarily due to the Hisco Transaction, as well as purchases of property, plant and equipment and rental equipment which was partially offset by the sale of rental equipment.
Current wording
Net cash used in investing activities for the year ended December 31, 2025 was $29.5 million, primarily due to the purchase of property, plant and equipment and rental equipment, partially offset by the sale of property, plant and equipment and rental equipment.
Previous wording
Net cash used in investing activities for the year ended December 31, 2024 was $229.7 million, primarily due to the purchase of ESS, S&SAutomotive, Source Atlantic, TCR and certain assets of ConRes TE as well as purchases of property, plant and equipment and rental equipment. This was partially offset by the sale of property, plant and equipment and rental equipment.
Current wording
Net cash used in investing activities for theyear ended December 31, 2024 was $229.7 million, primarily due to the purchase of ESS, S&SAutomotive, Source Atlantic, TCR and ConRes TE as well as purchases of property, plant and equipment and rental equipment. This was partially offset by the sale of property, plant and equipment and rental equipment.
Previous wording
Net cash provided by financing activities for the year ended December 31, 2024 was $159.3 million primarily due to borrowings under the Company’s credit facility partially offset by principal payments on the term loans. In conjunction with the Source Atlantic Transaction, the Company borrowed $200 million under the incremental term loan facility on August 14, 2024. During 2024, deferred financing costs of $2.1 million were incurred related to the Amended Credit Agreement.
Current wording
Net cash provided by financing activities for the year ended December 31, 2024 was $159.3 million primarily due to borrowings under the Company’s credit facility partially offset by principal payments on the term loans. In conjunction with the Source Atlantic Transaction, the Company borrowed $200 million under the incremental term loan facility on August 14, 2024. During 2024, deferred financing costs of $2.1 million were incurred related to the Original Credit Agreement.
Previous wording
On August 14, 2024, the Company entered into the Third Amendment to Amended and Restated Credit Agreement (the “Third Amendment”). The Third Amendment provided for an additional $200 million incremental term loan and a $55 million increase in the senior secured revolving credit facility to $255 million, and permits the Company to increase the commitments under the agreement from time to time by up to $300 million in the aggregate, subject to, among other things, receipt of additional commitments from existing and/or new lenders and pro forma compliance with certain financial covenants. Refer to Note 9 – Debt in Item 8. Financial Statements and Supplementary Data for additional information about DSG’s credit agreement.
Current wording
In December 2025, the Company amended and expanded the senior secured facility through 2030. The new facility includes $700 million of term debt and a revolving credit arrangement of $400 million, an increase over the previous revolver capacity of $255 million and permits the Company to increase the commitments under the credit facility from time to time by up to $500 million in the aggregate, subject to, among other things, receipt of additional commitments from existing and/or new lenders and pro forma compliance with certain financial covenants. The Company used the proceeds from the initial term loan to repay the existing $709 million outstanding under the Original Credit Agreement. Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information about the Amended Credit Agreement.
Previous wording
On December 31, 2024, we had $739.9 million in outstanding borrowings under the Amended Credit Agreement and $253.0 million of borrowing availability remaining, net of outstanding letters of credit, under the senior secured revolving credit facility component.
Current wording
On December 31, 2025, we had $704.4 million in outstanding borrowings under the Amended Credit Agreement and $393.7 million of borrowing availability remaining, net of outstanding letters of credit, under the senior secured revolving credit facility component.
Previous wording
As of December 31, 2024, we had contractual commitments to purchase approximately $173 million of products from our suppliers and contractors over the next twelve months.
Current wording
As of December 31, 2025, we had contractual commitments to purchase approximately $240 million of products from our suppliers and contractors over the next twelve months.
Previous wording
During theyear ended December 31, 2024, total capital expenditures for property, plant and equipment and rental equipment were$23.2 million excluding proceeds from the sale of rental equipment. The Company expects to spend appro ximately $20 million to $25 million for capital expenditures during 2025 to support ongoing operations.
Current wording
During theyear ended December 31, 2025, total net capital expenditures for property, plant and equipment and rental equipment were $26.8 million including proceeds from the sale ofproperty, plant and equipment and rental equipment. The Company expects to spend approximately $25 million to $30 million for net capital expenditures during 2026 to support ongoing operations.
Previous wording
The Company’s Board of Directors previously authorized a stock repurchase program that permits the Company to repurchase its common stock. The timing and the amount of any repurchases will be determined by management under parameters established by the Board of Directors and depend on various factors including an evaluation of our stock price, corporate and regulatory requirements, capital availability and other market conditions. In December 2023, the Board of Directors increased the existing repurchase program by $25.0 million bringing the total authorized to $37.5 million.
Current wording
The Company’s Board of Directors previously authorized a stock repurchase program that permits the Company to repurchase DSG common stock. The timing and the amount of any repurchases will be determined by management under parameters established by the Board of Directors and depend on various factors including an evaluation of our stock price, corporate and regulatory requirements, capital availability and other market conditions. In November 2025, the Board of Directors increased the existing stock repurchase program by $30.0 million bringing the total authorized stock repurchase program to $67.5 million.
Previous wording
During 2024, the Company repurchased 85,644 shares of DSG common stock at an average cost of $30.13 per share for a total cost of $2.6 million. During 2023, the Company repurchased 138,725 shares of DSG common stock at an average cost of $26.09 per share for a total cost of $3.6 million. The remaining availability for stock repurchases under the program was $26.4 million at December 31, 2024. See Note 11 – Stockholders’ Equity within Item 8. Financial Statements and Supplementary Data for further information.
Current wording
During 2025, the Company repurchased 776,924 shares of DSG common stock at an average cost of $30.26 per share for a total cost of $23.5 million. During 2024, the Company repurchased 85,644 shares of DSG common stock at an average cost of $30.13 per share for a total cost of $2.6 million. The remaining availability for stock repurchases under the program was $32.9 million at December 31, 2025. See Note 11 – Stockholders’ Equity within Item 8. Financial Statements and Supplementary Data for further information.
Rearranged previous paragraphs (11)
Previous report — wording carried elsewhere
Refer to Note 3 – Business and Asset Acquisitions in Item 8. Financial Statements and Supplementary Data for additional information about these acquisitions.
Previous report — wording carried elsewhere
Refer to the 2024 Business Acquisitions section above for a description of each acquisition completed in 2024 and the reportable segment that each acquisition’s respective results of operations is included in.
Previous report — wording carried elsewhere
RESULTS OF OPERATIONS FOR 2023 AS COMPARED TO 2022
Previous report — wording carried elsewhere
Overview of Consolidated Results of Operations
Previous report — wording carried elsewhere
Refer to Results by Reportable Segment below for a complete discussion of our results of operations.
Previous report — wording carried elsewhere
(1)Refer to the Non-GAAP Adjusted EBITDA section in Overview for a reconciliation of operating income (loss) to Adjusted EBITDA.
Previous report — wording carried elsewhere
Selling, general and administrative expenses consist of sales and marketing expenses primarily relating to compensation, costs associated with supporting Gexpro Services’ service facilities, overhead expenses within finance, legal, human resources and information technology, and other costs required to operate Gexpro Services’ business and service customers.
Previous report — wording carried elsewhere
Consolidated Non-operating Income and Expense
Previous report — wording carried elsewhere
Change in Fair Value of Earnout Liabilities
Previous report — wording carried elsewhere
Other income (expense), net consists of effects of changes in foreign currency exchange rates, interest income, net and other non-operating income and expenditures. The $2.3 million change in 2023 compared to the same period of 2022 was partly due to unfavorable changes in foreign currency exchange rates and other insignificant changes in other non-operating income and expenditures.
Previous report — wording carried elsewhere
On August 14, 2024, in connection with the Source Atlantic Transaction, DSG entered into the Third Amendment, which provided for an additional $200 million incremental term loan and a $55 million increase in the Company’s senior secured revolving credit facility, and permits the Company to increase the commitments under the credit facility from time to time by up to $300 million in the aggregate, subject to, among other things, receipt of additional commitments from existing and/or new lenders and pro forma compliance with certain financial covenants.