Distribution Solutions Group (DSGR) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue rose 14.3% year-over-year to $502.4M, driven by five acquisitions and 3.3% organic growth; sequential revenue increased 5.1%.

• Adjusted EBITDA was $48.6M (9.7% margin), up from $45.2M last year and $5.8M higher than Q1; all business verticals showed sequential margin improvement.

• Diluted EPS was $0.11, up from $0.04 last year; adjusted EPS was $0.35, with net income at $5.0M.

• Strong cash flow from operations of $33.3M enabled continued share repurchases, with $20M returned to shareholders and no outstanding borrowings under the revolving credit facility.

• Strategic initiatives included salesforce transformation at Lawson, integration of Source Atlantic, leadership changes at TestEquity, and segment realignment.

Financial highlights

• Revenue: $502.4M, up from $439.5M year-over-year and $478.0M sequentially; organic sales grew 3.3% year-over-year and 2.4% sequentially.

• Adjusted EBITDA: $48.6M (9.7% margin), up from $45.2M (10.3%) last year; operating income was $26.8M, with adjusted operating income at $39.9M.

• Net income: $5.0M, up from $1.9M year-over-year; GAAP EPS $0.11, adjusted EPS $0.35.

• Cash and liquidity: $61.8M in cash, $314.4M total liquidity, net debt leverage at 3.5x.

• Free cash flow conversion at ~90% TTM; TTM ROIC at ~11%.

Outlook and guidance

• July sales trends consistent with Q2; management remains cautiously optimistic for the remainder of 2025 amid trade policy uncertainty.

• Margin improvement initiatives for recent acquisitions are ongoing, with confidence in further enhancement.

• Acquisition pipeline remains strong; ongoing integration and margin improvement initiatives in Canada.

• Gexpro faces tougher comps in H2, while Lawson is up against easier comps, likely resulting in netting effects.

• No formal margin guidance, but internal targets focus on continued margin expansion.