Distribution Solutions Group, Inc.

Previous wording

Canada Branch Division combines the operations of our Bolt Supply House (“Bolt”) and Source Atlantic Limited 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 36 branch locations.

Current wording

Canada Branch Division is a distributor of 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

We intend to grow our businesses organically by exploring growth opportunities that provide different channels to reach customers, increase revenue and generate positive results. We plan to utilize our Company structure to grow organic revenue through collaborative selling across our diverse customer base and expanding the digital capabilities across our platform.

Current wording

We intend to grow our businesses organically by exploring growth opportunities that provide different channels to reach customers, increase revenue and generate positive results. We plan to utilize our Company structure to grow organic revenue through collaborative selling across our customer bases and expanding the digital capabilities across our platform.

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 49.1 in the nine months ended September 30, 2025, compared to 48.3 in thenine months ended September 30, 2024.

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 52.6 in the three months ended March 31, 2026, compared to 50.1 in thethree months ended March 31, 2025.

Previous wording

The North American market for test and measurement, industrial, and electronic production supplies is highly fragmented, with competition ranging from global to regional distributors. 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 wording

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.

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 36 branch locations. Source Atlantic was acquired to expand DSG’s operating footprint in the Canadian market.

Current wording

Canada Branch Division is a distributor of 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

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 2024 and 2025 in response to rising supplier costs including tariffs, as well as increased transportation and labor costs in order to attempt 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 2025 and 2026 in response to rising supplier costs and 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 prior acquisitions. 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 1. Financial Statements for a description of each acquisition completed in 2024 and the reportable segment in which each acquisition’s respective results of operations are included.

Current wording

Our results of operations are not directly comparable on a year-over-year basis due to acquisition activity. 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 Acquisitions within Item 1. Financial Statements for a description of the acquisition completed in 2026 and the reportable segment in which the acquisition’s results of operations are included.

Previous wording

Management believes Adjusted EBITDA is an important measure of the Company’s operating performanceand 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 the fair value step-up of inventory 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 1. Financial Statements 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 13 – Segment Information within Item 1. Financial Statements for additional information about our reportable segments.

Previous 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 thethree and nine months ended September 30, 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.

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 thethree months ended March 31, 2026 and 2025. 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$49.9 million in the third quarter of 2025 compared to thethird quarter of 2024 primarily driven by $23.3 million from acquisitions completed in 2024 and an increase in organic revenue of $26.6 million or 6.0%. Consolidated gross profit and Selling, general and administrative expenses also increased in thethird quarter of 2025 compared to theprior year quarter, primarily driven by the inclusion of the S&S Automotive, Source Atlantic, TCR and ConRes TE acquisitions completed in 2024.

Current wording

Our consolidated revenue increased$18.0 million in the first quarter of 2026 compared to thefirst quarter of 2025 primarily driven by an increase in organic revenue of $17.2 million or 3.6%. Consolidated gross profit decreased and Selling, general and administrative expenses increased in thefirst quarter of 2026 compared to theprior year quarter, primarilyto support the increase in revenue.

Previous wording

Revenue increased $3.6 million, or 3.0%, to $121.5 million in thethird quarter of 2025 compared to $118.0 million in thethird quarter of 2024. The increase was primarily driven by increased sales to Lawson’s strategic, government, and automotive customers.

Current wording

Revenue increased approximately $3.3 million, or 2.7%, to $123.7 million in thefirst quarter of 2026 compared to $120.5 million in thefirst quarter of 2025. The increase was primarily driven by increased sales to Lawson’s strategic and government customers, partially offset by a decline in sales to Lawson’s core customers.

Previous wording

Gross profit increased $1.0 million, or 1.5%, to $66.3 million in the third quarter of 2025 compared to gross profit of $65.3 million in the prior year quarter primarily as a result of the increase in revenue. Lawson gross profit as a percent of revenue was 54.6% in the third quarter of 2025 compared to 55.4% in the prior year quarter. The gross profit margin percentage decrease was primarily due to increased vendor costs and higher tariff rates on inbound freight partially offset by lower amortization of the fair value step-up of inventory of $0.4 million related to the S&S Automotive Transaction and customer price increases.

Current wording

Gross profit decreased $3.2 million, or 4.8%, to $65.0 million in the first quarter of 2026 compared to gross profit of $68.2 million in the prior year quarter primarily as a result of a sales mix shift toward lower margin customers, increased vendor costs and higher tariff rates on inbound freight partially offset by customer price increases. Lawson gross profit as a percentage of revenue was 52.5% in the first quarter of 2026 compared to 56.6% in the prior year quarter. The gross profit margin percentage decrease was primarily due to a sales mix shift toward lower margin customers, increased vendor costs and higher tariff rates on inbound freight partially offset by customer price increases.

Previous wording

During the three months ended September 30, 2025, Lawson generated Adjusted EBITDA of$14.0 million, or 11.5%of sales. This isa decrease of$1.5 million from the same period a year agoprimarily driven by higher employee related costs and a lower gross profit margin percentage partially offset by increased revenue.

Current wording

During the three months ended March 31, 2026, Lawson generated Adjusted EBITDA of$11.6 million, or 9.3%of sales. This isa decrease of$2.7 million from the same period a year agoprimarily driven by the lower gross profit margin percentage partially offset by increased revenue.

Previous wording

During thenine months ended September 30, 2025, Gexpro Services generated Adjusted EBITDA of$49.8 million, an increase of $9.9 million, or 24.7% from the same period a year agoprimarily driven byhigher organic revenue, managing gross profit margins and leveraging Selling, general, and administrative expenses over a higher sales base.

Current wording

During the three months ended March 31, 2026, TestEquity generated Adjusted EBITDA of $13.2 million or 6.5% of sales. This is an increase of $0.4 million from the same period a year ago, which was primarily driven by the increase in revenue and gross profit margin while leveraging Selling, general, and administrative expenses over a higher sales base.

Previous wording

During the three months ended September 30, 2025, Gexpro Services generated Adjusted EBITDA of $17.8 million or 13.6% of sales. This isan increase of$1.4 million from the same period a year ago primarily driven by higher organic revenue, gross profit margin management and leveraging its Selling, general, and administrative expenses over a higher sales base.

Current wording

During the three months ended March 31, 2026, Gexpro Services generated Adjusted EBITDA of $12.0 million or 10.2% of sales. This isa decrease of$2.9 million from the same period a year ago primarily driven by lower revenue.

Previous wording

Gross profit increased $6.9 million to $19.5 million in the third quarter of 2025 compared to gross profit of $12.6 million in the prior year quarter primarily from the inclusion of additional gross profit of$6.9 million from the 2024 acquisition of Source Atlantic. Gross profit as a percent of revenue increased to 32.5% in thethird quarter of 2025 compared to 32.1% in the prior year quarter primarily due to an increase in the gross profit margin profile of Source Atlantic as a result of executing on acquisition related synergy plans and lower inventory step up amortization of $0.7 million from the Source Atlantic acquisition.

Current wording

Gross profit increased $0.3 million to $17.2 million in the first quarter of 2026 compared to gross profit of $16.9 million in the prior year quarter primarily from the inclusion of additional gross profit of$0.3 million from the acquisition of Eastern Valve. Gross profit as a percentage of revenue increased slightly to 33.7% in thefirst quarter of 2026 compared to 33.4% in the prior year quarter.

Previous wording

During the three months ended September 30, 2025, Canada Branch Division generated Adjusted EBITDA of$5.8 million, or 9.6%of sales. This isan increase of $1.8 million from the same period a year ago, primarily driven by approximately $1.8 million of adjusted EBITDA generated by the 2024 acquisition of Source Atlantic.

Current wording

During the three months ended March 31, 2026, Canada Branch Division generated Adjusted EBITDA of$2.8 million, or 5.5%of sales. This isan increase of $0.2 million from the same period a year ago, primarily driven byapproximately $0.1 million of adjusted EBITDA generated by the 2026 acquisition of Eastern Valve.

Previous wording

Interest expense decreased$1.2 million in thethird quarter of 2025 compared tothe prior year quarter primarily due to lower outstanding borrowings.

Current wording

Interest expense decreased$2.0 million in thefirst quarter of 2026 compared tothe prior year quarter primarily due to lower average outstanding borrowings and lower average interest rates in 2026.

Previous wording

The$0.9 million expense in the third quarter of 2024 related to the change in fair value of the earnout liabilities associated with the Frontier acquisition.

Current wording

The$1.0 million expense in the first quarter of 2025 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 $1.3 million change in the third quarter of 2025 compared to the same period of 2024 is primarily due to unfavorable 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 $1.3 million change in the first quarter of 2026 compared to the same period of 2025 is primarily due to a decrease in the gain on the sale of property, plant and equipment and unfavorable changes in foreign currency exchange rates.

Previous wording

Income tax expense was $1.9 million, a 23.0% effective tax rate for the three months ended September 30, 2025 compared to an income tax benefit of $19.0 million and a (652.3)% effective tax rate for the three months ended September 30, 2024. The change in the year-over-year effective tax rate was primarily due to a change in valuation allowances related to interest expense limitation on deferred tax assets, state taxes and foreign income. The income tax expense recorded in the third quarter of 2025 is based on the estimated year-end effective tax rate. Limitations on the deductibility of interest expense and other permanent items on a nominal pre-tax income amount drove the higher effective tax rate in 2024.

Current wording

Income tax expense was $0.4 million, a 49.5% effective tax rate for the three months ended March 31, 2026 compared to an income tax expense of $2.3 million and a 40.9% effective tax rate for the three months ended March 31, 2025. The change in the year-over-year effective tax rate was primarily due to a change in valuation allowances related to interest expense limitation on deferred tax assets, state taxes and foreign income. The income tax expense recorded in the first quarter of 2026 is based on the estimated year-end effective tax rate.

Previous wording

Cash and cash equivalents were $69.2 million on September 30, 2025 compared to $66.5 million on December 31, 2024.

Current wording

Cash and cash equivalents were $52.7 million on March 31, 2026 compared to $61.8 million on December 31, 2025.

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. As of September 30, 2025, the Company had $69.2 million of cash and cash equivalents and $252.7 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. As of March 31, 2026, the Company had $52.7 million of cash and cash equivalents and $350.2 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 1. Financial Statements 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 implementations 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.

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 8 – Debt within Item 1. Financial Statements 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 operating activities for the nine months ended September 30, 2025 was $66.9 million primarily due to net income including non-cash items, partially offset by investments in trade working capital and other net cash flow items.

Current wording

Net cash used in operating activities for the three months ended March 31, 2026 was $20.4 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 provided by operating activities for the nine months ended September 30, 2024 was $10.7 million, primarily due to net income including non-cash items, partially offset by payments of $34.6 million related to the Company’s commitment to pay retention bonuses to certain employees of HIS Company, Inc. (“Hisco”) in connection with the Company’s 2023 acquisition of Hisco and investments in trade working capital and other net cash flow items.

Current wording

Net cash used in operating activities for the three months ended March 31, 2025 was $4.8 million, primarily due to net income including non-cash items offset by investments in trade working capital and other net cash flow items.

Previous wording

Net cash used in investing activities for thenine months ended September 30, 2024 was $205.4 million, primarily due to the purchase of ESS, S&S Automotive and Source Atlantic, 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 used in investing activities for the three months ended March 31, 2026 was $21.8 million, primarily due to the purchase of Eastern Valve, as well as purchases 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 nine months ended September 30, 2025 was $20.5 million, primarily due to purchases of property, plant and equipment and rental equipment, partially offset by the sale of property, plant and equipment and rental equipment.

Current wording

Net cash used in investing activities for thethree months ended March 31, 2025 was $5.1 million, primarily due to purchases of property, plant and equipment and rental equipment which was partially offset by the sale of property, plant and equipment and rental equipment.

Previous wording

Net cash provided by financing activities for the nine months ended September 30, 2024 was $171.9 million primarily due to borrowings under the Company’s credit facility partially offset by principal payments on the term loan. In conjunction with the Source Atlantic Transaction on August 14, 2024, the Company borrowed $200 million under an incremental term loan facility under the Amended Credit Agreement. During the first nine months of 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 three months ended March 31, 2026 was $32.0 million primarily due to net borrowings on the revolving credit facility partially offset by principal payments on the term loans.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2025 was $48.4 million primarily due to principal payments on the term loans and repurchases of DSG common stock under the repurchase program.

Current wording

Net cash provided by financing activities for the three months ended March 31, 2025 was $7.6 million primarily due to net borrowings on the revolving credit facility partially offset by principal payments on the term loans and share repurchases.

Previous wording

As amended, the Amended Credit Agreement includes a $255 million senior secured revolving credit facility, a $250 million senior secured initial term loan facility, $505 million of incremental term loans, and a $50 million senior secured delayed draw term loan 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. Refer to Note 9 – Debt within Item 1. Financial Statements for a description of the Amended Credit Agreement.

Current wording

The Amended Credit Agreement includes $700 million of term debt and a revolving credit arrangement of $400 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. Refer to Note 8 – Debt within Item 1. Financial Statements for a description of the Amended Credit Agreement.

Previous wording

On September 30, 2025, we had $711.6 million in outstanding borrowings under the Amended Credit Agreement and $252.7 million of borrowing availability remaining, net of outstanding letters of credit, under the senior secured revolving credit facility component.

Current wording

On March 31, 2026, we had $736.6 million in outstanding borrowings under the Amended Credit Agreement and $350.2 million of borrowing availability remaining, net of outstanding letters of credit, under the senior secured revolving credit facility component.

Previous wording

As of September 30, 2025, we had contractual commitments to purchase approximately $199.3 million of products from our suppliers and contractors over the next twelve months.

Current wording

As of March 31, 2026, we had contractual commitments to purchase approximately $277.8 million of products from our suppliers and contractors over the next twelve months.

Previous wording

During thenine months ended September 30, 2025, total net capital expenditures for property, plant and equipment and rental equipment were$18.3 million including proceeds from the sale of property, plant and equipment and rental equipment. The Company expects to spend appro ximately $22.0 million to $25.0 million for net capital expenditures during the full fiscal 2025 year to support ongoing operations.

Current wording

During thethree months ended March 31, 2026, total net capital expenditures for property, plant and equipment and rental equipment were$5.6 million including proceeds from the sale of property, plant and equipment and rental equipment. The Company expects to spend appro ximately $25.0 million to $30.0 million for net capital expenditures during the full fiscal 2026 year 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.

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.

Previous wording

During thenine months ended September 30, 2025, the Company repurchased 653,213 shares of DSG common stock under the repurchase program at an average cost of $30.69 per share for a total cost of $20.0 million. During thenine months ended September 30, 2024, the Company repurchased 85,644 shares of DSG common stock under the repurchase program 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$6.3 million as of September 30, 2025. See Note 11 – Stockholders’ Equity within Item 1. Financial Statements for further information.

Current wording

During thethree months ended March 31, 2026, no repurchases were made. During thethree months ended March 31, 2025, the Company repurchased 320,638 shares of DSG common stock under the repurchase program at an average cost of $34.94 per share for a total cost of$11.2 million. The remaining availability for stock repurchases under the program was$32.9 million as of March 31, 2026. See Note 10 – Stockholders’ Equity within Item 1. Financial Statements for further information.