Distribution Solutions Group, Inc. Q4 FY2025 earnings call

2025 was a year of internal focus, reinvestment, etc. Navigated challenges like government shutdown, demand shifts. JEXPRO services had new business and wallet share wins. Lawson made progress in customer-facing capabilities. Canadian segment had operational and synergy progress. Test equity group invested in platform. Recruited Jim Slomka as Chief Revenue Officer and Hillary Bryant as Chief People Officer at Lawson

For the full year, total revenue grew 9.8% to $1.98 billion. Organic average daily sales grew 3.6%. Cash flows were strong with $84 million from operations. Adjusted EBITDA was $175 million. JEXPRO services: Full year revenue $496.7 million, organic average daily sales growth 12.3%, total ADS growth over 13%. Adjusted EBITDA $63.7 million, 12.8% of sales. Fourth quarter revenue $119.4 million, average daily sales down 1%. Lawson: Full year revenue up 12 million, average daily sales grew 2.6%, organic average daily sales declined 1.2%. Fourth quarter average daily sales up 2.7%, adjusted EBITDA $7.7 million, 6.7% of sales. Canadian segment: Full year sales $221.4 million (USD), up $96.3 million. Fourth quarter sales $55.1 million. Full year adjusted EBITDA $15.6 million, 7.1% of sales. Fourth quarter margins 6.6%. Test equity group: Full year sales $783.2 million, average daily sales growth 2%, organic average daily sales up 1%. Fourth quarter sales $192.9 million, average daily sales up 0.9%. Adjusted EBITDA $51 million, 6.5% of sales. Fourth quarter EBITDA margins 6.4% of sales

2026 focused on capturing market and wallet share, continuing investments. Anticipated first quarter under margin pressure, expected improved margin expansion in second and third quarters. Expect growth with enhanced profitability while balancing long-term investments

Potential implications of Middle East events on business, customers, supply chain. Tariff-related uncertainty impacting margins. Market demand volatility affecting segments

Q: Comment on sales pacing year-to-date and daily sales pacing data.

A: Ron Knutson said saw growth in low single digits, ADS flat vs Q4 but up vs year ago, first quarter 2026 has 63 selling days like first quarter 2025.

Q: Progress and ahead for test equity in 2026.

A: New leadership brought different cadence and insight, re-energizing sales force on time and messaging, shifting focus to higher contribution margin areas.

Q: Tariffs and material impacts.

A: Too early to tell, evaluating, team managed pricing and sourcing costs last year, now evaluating additional moves.

Q: Trends in segments.

A: Jexpro Services has key markets spooling up, test equity sees interest in test and measurement, Lawson continues work on small account side.

Q: Margin guidance.

A: First quarter under pressure, second and third quarters expected to have margins above full year 2025 average.

Q: Lawson small account challenges and approach.

A: Shift to small customers led to issues, now renewed focus with service reps and re-engagement sellers to support sales reps.

Q: M&A pipeline.

A: Sean Dwyer added, funnel increased, expect small tuck-in acquisitions to bolster areas, three prioritized adding margin constructive