Distribution Solutions Group (DSGR) 15th Annual Midwest IDEAS Investor Conference summary

Company overview and structure

• Operates as a specialty distribution group with three main businesses: Lawson Products, Gexpro Services, and TestEquity Group.

• Serves over 180,000 customers across diverse end markets, including government, industrial, aerospace, and technology.

• Emphasizes high-touch, high-service models with embedded customer relationships and vendor-managed inventory.

• Maintains high revenue retention rates, exceeding 92%.

• End markets are well diversified, reducing risk from sector-specific downturns.

Financial performance and targets

• Achieved $1.8 billion in revenues and a trailing twelve-month EBITDA margin slightly above 9%.

• Q2 EBITDA margin reached 10.3%, with sequential margin expansion driven mainly by organic growth.

• Five-year targets include growing revenue from $2 billion to $3.3 billion and increasing EBITDA to $450 million.

• Free cash flow conversion rate has reached 100% over the trailing twelve months.

• CapEx remains low, typically under 1% of sales, supporting strong cash generation.

Growth strategy and M&A

• Growth strategy is dual-pronged: organic initiatives and acquisitions, with nine acquisitions and $400 million deployed since formation.

• Recent credit facility increased to $1.05 billion, supporting ongoing M&A activity.

• Recent acquisition of Source Atlantic and ongoing integration of Hisco into TestEquity Group.

• M&A team actively seeks opportunities that strengthen the overall platform and expand geographic reach, especially in North America.

• Leverage reduced from 3.6x to 3.2x despite acquisition activity.