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Sep 30, 2023
DSG Q3 2023 Earnings Report
DSG reported strong cash flows as growth continued, driven by recent acquisitions, while organic revenue declined slightly due to softness in the Industrial Technologies vertical.
Key Takeaways
Distribution Solutions Group (DSG) announced its Q3 2023 results, with total revenue increasing by 26.4% to $438.9 million, including $106.3 million from recent acquisitions. Adjusted EBITDA grew by 26% to $43.7 million. The company generated $47 million in cash flows from operations and ended the quarter with $80.5 million in unrestricted cash. Diluted loss per share was $0.03, while non-GAAP adjusted diluted earnings per share was $0.17.
Total revenue increased by 26.4% to $438.9 million, including $106.3 million from acquisitions.
Consolidated organic revenue declined 4.2%, primarily due to softness in the Industrial Technologies (TestEquity) vertical.
Adjusted EBITDA grew by 26% to $43.7 million, with an Adjusted EBITDA margin of 10.0%.
The Company generated $47 million of cash flows from operations and ended the quarter with $80.5 million of unrestricted cash.
DSG
DSG
DSG Revenue by Segment
Revenue by Segment
Lawson Products Revenue
CapyFin.comGexpro Services Revenue
CapyFin.comTestEquity Revenue
CapyFin.com Forward Guidance
The company is closely monitoring the demand environment and proactively identifying margin improvement and cost savings opportunities to mitigate sales and margin risks for the remainder of 2023 and into 2024.
Positive Outlook
- Strategically invest in initiatives which generate long-term profitable growth and cash flow across the DSG platform.
- Proactively identifying margin improvement and cost savings opportunities.
- Taking steps to sustainably improve business to mitigate sales and margin risks for the remainder of 2023 and into 2024.
- Asset-light business model.
- Focus on growing operating cash flows and accelerating returns on invested capital.
Challenges Ahead
- Closely monitoring the demand environment in light of the continued tightening monetary policy.
- Fluctuations in customer ordering patterns.
- Some markets inevitably fluctuate.
- Organic revenue declined 4.2% for the quarter, primarily driven by softness in the Industrial Technologies (TestEquity) vertical.
- Hisco decreased Adjusted EBITDA margins by approximately 70bps for the third quarter.
Revenue & Expenses
Visualization of income flow from segment revenue to net income