Distribution Solutions Group, Inc.
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 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-Q
Period ended 2026-03-31; filed 2026-04-30.
0000703604-26-000024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0000703604-26-000041
Item 2. 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 129 previous paragraphs and 174 current paragraphs.
84 unchanged; 43 reworded; 33 added; 2 removed; 0 previous and 14 current paragraphs rearranged.
Tables are not compared: 9 previous and 17 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 (33)
Current report
Pending Merger
Current report
On July 15, 2026, we entered into the Merger Agreement with Parent, Intermediate and Merger Sub, each of which is affiliated with LKCM Headwater, J. Bryan King and their respective affiliates. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into DSG, with DSG continuing as the surviving corporation and becoming an indirect wholly owned subsidiary of Parent. At the effective time of the Merger, each outstanding share of DSG common stock, other than specified excluded shares and shares subject to validly exercised appraisal rights, will be converted into the right to receive $35.00 in cash, without interest.
Current report
Completion of the Merger is subject to specified closing conditions, including receipt of specified stockholder approvals and expiration or termination of the applicable waiting period under the HSR Act, and is not subject to a financing condition. If ther Merger is completed, DSG will become privately held and DSG common stock will be delisted from Nasdaq. In connection with the execution of the Merger Agreement, we amended our existing credit agreement to permit, subject to its terms and conditions, revolving loans to be used to finance the Merger and related transactions. For additional information, see
Current report
Note 16 – Subsequent Events in Part I, Item 1, Financial Statements and our Current Report on Form 8-K filed with the SEC on July 16, 2026.
Current report
Selling, general and administrative expenses increased $1.3 million to $61.9 million in the second quarter of 2026 compared to $60.6 million in the prior year quarter. The increase was primarily driven by higher severance expense of $1.3 million and higher medical claims costs.
Current report
Gross profit increased $8.4 million to $50.9 million in the second quarter of 2026 compared to gross profit of $42.6 million in the prior year quarter. The increase was primarily driven by the increase in revenue. TestEquity gross profit as a percentage of revenue increased to 22.2% in thesecond quarter of 2026 compared to 21.8% in the prior year quarter primarily due to higher supplier rebates.
Current report
Revenue increased $7.9 million to$63.7 millionin thesecond quarter of 2026 compared to $55.9 million in the second quarter of 2025 driven by $4.1 million of additional revenue generated by the 2026 acquisition of Eastern Valve and an increase in organic revenue of $3.8 million primarily from increased sales volume in Eastern and Western Canada.
Current report
Selling, general and administrative expenses were flat at $17.2 million inthe second quarter of 2026 compared to $17.2 million in the prior year quarter. There were approximately$0.5 millionof additional expenses driven by the 2026 acquisition of Eastern Valve which were offset by lower facility costs of $0.4 million.
Current report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Current report
Consolidated Results of Operations
Current report
Our consolidated revenue increased $73.3 million inthe firstsix months of 2026 compared to the firstsix months of 2025 primarily driven by an increase in organic revenue of 7.0% and $4.9 million of additional revenue generated by the 2026 acquisition of Eastern Valve. Consolidated Gross profit and Selling, general and administrative expenses also increased over the prior year primarily to support the increase in revenue.
Current report
Results by Reportable Segment
Current report
Lawson Segment
Current report
Selling, general and administrative expenses increased $1.3 million to $123.8 million in the first six months of 2026 compared to $122.5 million in the same period of 2025. The increase was primarily driven by higher severance expense of $1.2 million and higher medical claims costs.
Current report
TestEquity Segment
Current report
Revenue increased $49.4 million, or 12.9%, to$433.2 million in the firstsix months of 2026 compared to $383.8 million in the same period in 2025. The increase was primarily driven bya $24.7 million increase in revenue from test and measurement, a $25.0 million increase in revenue from electronic production supplies and a $4.4 million increase in revenue from rental and refurbished, partially offset by a $4.7 million decrease in revenue from value added services.
Current report
Selling, general and administrative expenses increased $6.3 million to$81.7 million in the first six months of 2026 compared to$75.4 million in the same period of 2025. The increase was primarily drivenby anincrease in stock-based compensation of $0.9 million, an increase inmerger and acquisition expenses of$0.4 million, and higher salaries, commissions and bonuses as part of strategic leadership investments in 2026. These were partially offset by a higher gain on the sale of rental assets and lower bad debt expense.
Current report
Gexpro Services Segment
Current report
Revenue increased $11.1 million, or 4.5%, to$257.8 million in the firstsix months of 2026 compared to$246.7 million in the same period of 2025. The increase in revenue was primarily driven by increased sales in the industrial power, technology, and consumer and industrial vertical markets of $11.6 million, $4.0 million, and $3.0 million, respectively, partially offset by decreased sales within the renewables and aerospace and defense vertical markets of $4.2 million and $3.6 million, respectively.
Current report
Gross profit increased $2.2 million to$79.3 million in the firstsix months of 2026 compared to$77.1 million inthe same period of 2025 primarily due to the increase in revenue. Gexpro Services’ gross profit as a percentage of revenue decreased to 30.8% in the firstsix months of 2026 compared to 31.2% in the prior year period primarily as a result of additional tariff charges passed through to customers of approximately $4.6 million which negatively impacted the gross margin percentage.
Current report
Selling, general, and administrative expenses increased $4.4 million to$56.4 million in the firstsix months of 2026 compared to$51.9 million in the same period of 2025. The increase was primarily driven by investments to support sales growth, higher stock-based compensation expense of$0.8 million and higher severance expense of $0.4 million.
Current report
During thesix months ended June 30, 2026, Gexpro Services generated Adjusted EBITDA of$30.3 million, a decrease of $1.7 million, or 5.4% from the same period a year agoprimarily driven by a lower gross margin percentage and an increase in selling, general, and administrative expenses.
Current report
Canada Branch Division Segment
Current report
Revenue increased $8.3 million, or 7.8%, to$114.7 millionin the firstsix months of 2026 compared to $106.4 million in the same period of 2025 driven by$4.9 million of additional revenue generated by the 2026 acquisition of Eastern Valveand an increase in organic revenue of $3.4 million. Favorable foreign currency exchange rate changes positively impacted sales by $2.7 million.
Current report
Gross profit increased $2.4 million to $38.3 million in thefirstsix months of 2026 compared to gross profit of $35.9 million in the same period of 2025 primarily from the inclusion of additional gross profitof$1.6 million generated by the 2026 acquisitionof Eastern Valve. Gross profit as a percentage of revenue decreased to 33.3% in the firstsix months of 2026 compared to 33.7% in the prior year primarily due to a sales mix shift toward lower margin customers.
Current report
During the firstsix months of 2026, Canada Branch Division generated Adjusted EBITDA of$8.5 million, an increase of $2.3 million from the same period a year ago with an increase of approximately $1.1 million driven by the acquisition of Eastern Valve.
Current report
Interest Expense
Current report
Other Income (Expense), Net
Current report
Income Tax Expense (Benefit)
Current report
Credit Agreement Amendment and Merger Financing
Current report
On July 15, 2026, in connection with the Merger Agreement, the Company entered into the Credit Agreement Amendment. The Credit Agreement Amendment permits, subject to its terms and conditions, revolving loans under the credit facility to be used to finance the Merger and related transactions and establishes a “certain funds” framework applicable to such borrowings. The Merger Agreement requires the Company to provide customary financing cooperation, including using commercially reasonable efforts to maintain the credit agreement financing or pursue specified alternative debt financing. The availability of financing is not a condition to the obligations of Parent, Intermediate and Merger Sub to complete the Merger.
Current report
The Credit Agreement Amendment was entered into after June 30, 2026 and therefore did not affect the Company’s outstanding borrowings or borrowing availability as of that date. Under the terms of the Merger agreement, during the period between execution of the Merger Agreement and completion of the Merger, revolving loans under the credit facility, other than borrowings to finance certain contemplated acquisitions, may not exceed $100.0 million outstanding at any time. Accordingly, although the credit facility provided $344.7 million of unused additional borrowing capacity at June 30, 2026, the Merger Agreement now caps at $100.0 million the amount of revolving borrowings that may be outstanding under the credit facility while the Merger is pending, subject to limited exceptions for certain contemplated acquisitions. For additional information, see Note 16 – Subsequent Events in Part I, Item 1, Financial Statements and our Current Report on Form 8-K filed with the SEC on July 16, 2026.
Current report
On July 15, 2026, the Company entered into the Merger Agreement, which generally prohibits the Company from repurchasing shares of DSG common stock during the pendency of the Merger, subject to specified exceptions. See Note 16 – Subsequent Events in Part I, Item 1 for additional information.
Removed paragraphs (2)
Previous report
Selling, general and administrative expenses remained flat at $61.9 million in the first quarter of 2026 compared to the prior year quarter.
Previous report
Revenue increased $0.5 million to$51.0 millionin thefirst quarter of 2026 compared to $50.5 million in the first quarter of 2025 primarily driven by $0.8 million of additional revenue generated by the 2026 acquisition of Eastern Valve.
Reworded paragraphs (43)
Previous wording
We manage and report our operating results through four reportable segments: Lawson, TestEquity, Gexpro Services and Canada Branch Division. A summary of our reportable segments is presented below. For additional details about our segments see Note 1 – Nature of Operations and Basis of Presentation and Note 13 – Segment Information, within Item 1. Financial Statements.
Current wording
We manage and report our operating results through four reportable segments: Lawson, TestEquity, Gexpro Services and Canada Branch Division. A summary of our reportable segments is presented below. For additional details about our segments see Note 1 – Nature of Operations and Basis of Presentation and Note 13 – Segment Information, in Part I, Item 1. Financial Statements.
Previous 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.
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 38 branch locations.
Previous wording
In addition to organic growth, we plan to actively pursue acquisition opportunities complementary to our businesses and that we believe will be financially accretive to our organization.
Current wording
In addition to organic growth, we plan to actively pursue acquisition opportunities complementary to our businesses and that we believe will be financially accretive to our organization. During the pendency of the Merger, our ability to pursue acquisitions and other strategic transactions is subject to the interim operating covenants contained in the Merger Agreement.
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 52.6 in the three months ended March 31, 2026, compared to 50.1 in thethree months ended March 31, 2025.
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 53.0 in the six months ended June 30, 2026, compared to 49.4 in thesix months ended June 30, 2025.
Previous 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.
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 38 branch locations.
Previous 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.
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 in Part I, 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 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.
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 in Part I, 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 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.
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 and six months ended June 30, 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
(5)Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items.
Current wording
(5)Other non-recurring costs consist of certain non-recurring strategic projects, costs related to the proposed Merger (as described in Note 16 – Subsequent Events in Part I, Item 1. Financial Statements) and other non-recurring items.
Previous wording
Segment revenue and Operating income (loss) by reportable segment includes sales to external customers and sales transactions between our segments, referred to as intersegment revenue, and the impact of those intersegment revenue transactions on operating activities. Reconciliations of segment revenue and Operating income (loss) to our consolidated results of operations in the unaudited condensed consolidated financial statements are provided in Note 13 – Segment Information within Item 1. Financial Statements.
Current wording
Segment revenue and Operating income (loss) by reportable segment includes sales to external customers and sales transactions between our segments, referred to as intersegment revenue, and the impact of those intersegment revenue transactions on operating activities. Reconciliations of segment revenue and Operating income (loss) to our consolidated results of operations in the unaudited condensed consolidated financial statements are provided in Note 13 – Segment Information in Part I, Item 1. Financial Statements.
Previous 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.
Current wording
Consolidated revenue increased$55.3 million in the second quarter of 2026 compared to thesecond quarter of 2025 primarily driven by an increase in organic revenue of $51.2 million or 10.2% and $4.1 million of additional revenue generated by the 2026 acquisition of Eastern Valve. Consolidated gross profit increased and Selling, general and administrative expenses increased in thesecond quarter of 2026 compared to theprior year quarter, primarilyto support the increase in revenue.
Previous 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.
Current wording
Revenue increased approximately $1.2 million, or 1.0%, to $125.5 million in thesecond quarter of 2026 compared to $124.3 million in thesecond 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 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.
Current wording
Gross profit decreased $4.2 million, or 6.1%, to $64.4 million in the second quarter of 2026 compared to gross profit of $68.6 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 51.3% in the second quarter of 2026 compared to 55.2% 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 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.
Current wording
During the three months ended June 30, 2026, Lawson generated Adjusted EBITDA of$11.9 million, or 9.5%of sales. This isa decrease of$3.8 million from the same period a year agoprimarily driven by the lower gross profit margin percentage partially offset by increased revenue.
Previous wording
Revenue increased $15.4 million, or 8.2%, to$204.2 million in thefirst quarter of 2026 compared to$188.8 million in thefirst quarter of 2025. The increase was primarily driven by a $19.0 million increase in revenue from test and measurement, rentals, chambers, refurbished, direct and indirect electronics production supplies partially offset by a $3.6 million decrease in revenue from fabrication and value added services along with a decrease in revenue from the Europe region.
Current wording
Revenue increased $33.9 million, or 17.4%, to$229.0 million in thesecond quarter of 2026 compared to $195.0 million in the second quarter of 2025. The increase was primarily driven by a $15.0 million increase in revenue from test and measurement, a $16.8 million increase in revenue from direct and indirect electronics production supplies, and a $3.8 million increase in revenue from rentals, chambers and refurbished, along with an increase in revenue from the European region, partially offset by a $1.7 million decrease in revenue from fabrication and value added services.
Previous wording
Selling, general and administrative expenses increased $3.9 million to$41.5 million inthe first quarter of 2026 compared to $37.6 million in the prior year quarter. The increase was primarily driven by an increase in stock-based compensation of $0.5 million, higher acquisition expenses of $0.3 million, higher salaries, commissions and bonuses as part of strategic leadership investments in 2026 and higher incentive compensation with the increase in revenue. These were partially offset by lower severance and acquisition related retention expenses of $0.5 million.
Current wording
Selling, general and administrative expenses increased $2.4 million to$40.2 million inthe second quarter of 2026 compared to $37.8 million in the prior year quarter. The increase was primarily driven by an increase in stock-based compensation of $0.3 million, higher salaries, commissions and bonuses as part of strategic leadership investments in 2026 and higher incentive compensation driven by the increase in revenue. These were partially offset by a higher gain on the sale of rental assets of $0.5 million and lower bad debt expense of $1.0 million.
Previous 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.
Current wording
During the three months ended June 30, 2026, TestEquity generated Adjusted EBITDA of $20.0 million or 8.7% of sales. This is an increase of $6.5 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
Revenue decreased $1.3 million, or 1.1%, to$117.6 millionin thefirst quarter of 2026 compared to $118.9 million in the first quarter of 2025. The decrease in revenue was primarily driven by a decline of $4.3 million and $1.5 million in the renewables and aerospace and defense vertical markets, respectively, partially offset by increases of $3.5 million in the industrial power vertical market and $1.5 million in the consumer and industrial vertical market. The changes in these vertical markets are inclusive of the pass through of tariff charges of approximately $2.8 million.
Current wording
Revenue increased $12.3 million, or 9.7%, to$140.1 millionin thesecond quarter of 2026 compared to $127.8 million in the second quarter of 2025. The increase in revenue was primarily driven by increases in the industrial power, technology, transportation, and consumer industrial vertical markets of $8.0 million, $3.2 million, $1.6 million and $1.5 million, respectively, partially offset by a decline of $2.2 million in the aerospace and defense vertical market.
Previous wording
Gross profit decreased $1.3 million to $35.8 millionin thefirst quarter of 2026 compared to gross profit of$37.1 million in the prior year quarter, primarily due to lower revenue. Gexpro Services gross profit as a percentage of revenue decreased to 30.4% in thefirst quarter of 2026 compared to 31.2% in the prior year quarter primarily as a result of the pass through of tariff charges of approximately $2.8 million which negatively impacted the gross margin percentage by approximately 70 basis points.
Current wording
Gross profit increased $3.6 million to $43.5 millionin thesecond quarter of 2026 compared to gross profit of$40.0 million in the prior year quarter, primarily due to the increase in revenue. Gexpro Services gross profit as a percentage of revenue decreased to 31.1% in thesecond quarter of 2026 compared to 31.3% in the prior year quarter primarily as a result ofadditional tariff charges passed through to customers of approximately $1.7 million which negatively impacted the gross margin percentage.
Previous wording
Selling, general, and administrative expenses increased $1.5 million to $27.4 million inthe first quarter of 2026 compared to $25.9 million in the prior year quarter primarily driven by higher medical claim costs and stock-based compensation of$0.4 million.
Current wording
Selling, general, and administrative expenses increased $2.9 million to $29.0 million inthe second quarter of 2026 compared to $26.1 million in the prior year quarter primarily driven by higher medical claim costs and stock-based compensation of$0.4 million.
Previous 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.
Current wording
During the three months ended June 30, 2026, Gexpro Services generated Adjusted EBITDA of $18.3 million or 13.1% of sales, an increase of$1.2 million from the same period a year ago primarily driven by the increase in revenue.
Previous 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.
Current wording
Gross profit increased $2.1 million to $21.0 million in the second quarter of 2026 compared to gross profit of $19.0 million in the prior year quarter primarily from the inclusion of additional gross profit of$1.3 million from the acquisition of Eastern Valve. Gross profit as a percentage of revenue decreased to 33.0% in thesecond quarter of 2026 compared to 33.9% in the prior year quarter primarily due to a sales mix shift toward lower margin customers.
Previous 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.
Current wording
During the three months ended June 30, 2026, Canada Branch Division generated Adjusted EBITDA of$5.7 million, or 9.0%of sales. This isan increase of $2.1 million from the same period a year ago, primarily driven byapproximately $0.9 million of adjusted EBITDA generated by the 2026 acquisition of Eastern Valve.
Previous 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.
Current wording
Interest expense decreased $1.2 million in the second quarter of 2026 compared tothe prior year quarter primarily due to lower average interest rates in 2026.
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 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.
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 $0.2 million change in the second quarter of 2026 compared to the same period of 2025 is primarily due to an increase in the gain on the sale of property, plant and equipment.
Previous 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.
Current wording
Income tax expense was $5.9 million, a 41.0% effective tax rate for the three months ended June 30, 2026 compared to an income tax expense of $6.9 million and a 57.8% effective tax rate for the three months ended June 30, 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 change in the valuation allowances includes updated U.S. deferred tax projections, particularly related to future taxable income generated by the Company’s deferred tax liabilities. The income tax expense recorded in the second quarter of 2026 is based on the estimated year-end effective tax rate.
Previous wording
Gross profit increased $3.8 million to $45.6 million in the first quarter of 2026 compared to gross profit of $41.8 million in the prior year quarter. The increase was primarily driven by higher sales. TestEquity gross profit as a percentage of revenue increased to 22.3% in thefirst quarter of 2026 compared to 22.1% in the prior year quarter primarily due to lower inventory write-offs.
Current wording
Gross profit increased $12.2 million to$96.5 million in the firstsix months of 2026 compared to$84.3 million in the same period of 2025. The increase was primarily driven by the increase in revenue. TestEquity gross profit as a percentage of revenue increased to 22.3% in the firstsix months of 2026 compared to 22.0% in the prior year primarily due tohigher supplier rebates.
Previous wording
Selling, general and administrative expenses increased $0.6 million to$16.8 million inthe first quarter of 2026 compared to $16.2 million in the prior year quarter. The increase was primarily driven by approximately $0.1 millionof additional expenses from Eastern Valve after its acquisition and higher acquisition related expenses of$0.6 million.
Current wording
Selling, general and administrative expenses increased $0.6 million to$34.0 million inthe first six months of 2026 compared to $33.5 million in the prior year quarter. The increase was primarily due to approximately$0.7 millionof additional expenses driven by the 2026 acquisition of Eastern Valve.
Previous 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.
Current wording
The$1.0 million in expense in the first six months of 2025 related to the change in fair value of the earnout liabilities associated with the Frontier acquisition.
Previous wording
Cash and cash equivalents were $52.7 million on March 31, 2026 compared to $61.8 million on December 31, 2025.
Current wording
Cash and cash equivalents were $66.9 million on June 30, 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 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.
Current wording
The Company believes its current balances of cash and cash equivalents, availability under its revolving credit facility and cash flows from operations will be sufficient to meet its liquidity needs for the next twelve months. As of June 30, 2026, the Company had $66.9 million of cash and cash equivalents and $344.7 million of borrowing availability remaining, net of outstanding letters of credit, under its revolving credit facility. However, as discussed in more detail below under “—Financing and Capital Requirements—Credit Agreement Amendment and Merger Financing,” the Merger Agreement now caps at $100.0 million the amount of revolving borrowings that may be outstanding under its revolving credit facility while the Merger is pending, subject to limited exceptions for certain contemplated acquisitions.
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 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.
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 (as amended by the Credit Agreement Amendment executed on July 15, 2026) mature in December 2030. Required principal payments on the Amended Credit Agreement (as amended by the Credit Agreement Amendment executed on July 15, 2026) for the next twelve months are$35.0 million. Refer to Note 8 – Debt in Part I, 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 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.
Current wording
Net cash provided by operating activities for the six months ended June 30, 2026 was $1.6 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 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.
Current wording
Net cash provided by operating activities for the six months ended June 30, 2025 was $28.5 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 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.
Current wording
Net used in investing activities for the six months ended June 30, 2026 was $29.8 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 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.
Current wording
Net cash used in investing activities for thesix months ended June 30, 2025 was $12.0 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 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.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2026 was $28.9 million primarily due to net borrowings on the revolving credit facility partially offset by principal payments on the term loans.
Previous 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.
Current wording
Net cash used in financing activities for the six months ended June 30, 2025 was $39.1 million primarily due to principal payments on the term loans and repurchases of DSG common stock under the repurchase program, partially offset by net borrowings on the revolving credit facility.
Previous 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.
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 in Part I, Item 1. Financial Statements for a description of the Amended Credit Agreement.
Previous 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.
Current wording
On June 30, 2026, we had $733.8 million in outstanding borrowings under the Amended Credit Agreement and $344.7 million of borrowing availability remaining, net of outstanding letters of credit, under the senior secured revolving credit facility component.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (14)
Current report — wording carried from elsewhere
Overview of Consolidated Results of Operations
Current report — wording carried from elsewhere
Refer to Results by Reportable Segment below for a complete discussion of our results of operations.
Current report — wording carried from elsewhere
Revenue increased $4.5 million, or 1.8%, to$249.2 million in the firstsix months of 2026 compared to revenue of$244.8 million in the same period 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.
Current report — wording carried from elsewhere
Gross profit decreased $7.4 million to $129.4 million in the first six months of 2026 compared to gross profit of $136.8 million in the same period of 2025 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 51.9% in the first six months of 2026 compared to 55.9% in the prior year period. 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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
During thesix months ended June 30, 2026, Lawson generated Adjusted EBITDA of $23.5 million, a decrease of $6.5 million, or 21.8% from the same period a year ago primarily driven by the lower gross profit margin percentage partially offset by increased revenue.
Current report — wording carried from elsewhere
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 report — wording carried from elsewhere
During thesix months ended June 30, 2026, TestEquity generated Adjusted EBITDA of$33.2 million, an increase of$6.9 million, or 26.4%, from the same period a year agowhich was primarily driven by the increase in revenue and gross profit margin while leveraging Selling, general, and administrative expenses over a higher sales base.
Current report — wording carried from 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.
Current report — wording carried from elsewhere
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 — wording carried from elsewhere
Consolidated Non-operating Income and Expense
Current report — wording carried from elsewhere
Interest expense decreased $3.3 million in the first six months of 2026 compared to the same period of 2025 primarily due to lower average interest rates in 2026.
Current report — wording carried from 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 $1.1 million change in the first six months of 2026 compared to the same period of 2025 is primarily due to unfavorable changes in foreign currency exchange rates and lower interest income.
Current report — wording carried from elsewhere
Income tax expense was $6.3 million, a 41.4% effective tax rate for the first six months of 2026 compared to an income tax expense of $9.1 million and a 52.4% effective tax rate for the first six months of 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 change in the valuation allowances includes updated U.S. deferred tax projections, particularly related to future taxable income generated by the Company’s deferred tax liabilities. The income tax expense recorded in the second quarter of 2026 is based on the estimated year-end effective tax rate.