Lawson Products — the MRO and automotive parts unit of Distribution Solutions Group — acquired S&S Automotive Inc., which is an automotive and industrial parts supplier based in Woodridge, IL about 30 miles south of Lawson’s Chicago headquarters.

The deal will boost Lawson’s Kent Automotive division, which provides automotive and industrial C-class parts to auto dealerships and collision repair centers throughout North America.

Terms of the deal weren’t disclosed, though DSG noted that S&S has annual revenues of about $40 million.

“Similar to Lawson’s Kent Automotive business, S&S Automotive is an industry-leading distributor in the automotive dealership market,” Lawson Products President and CEO Cesar Lanuza said in a May 1 news release. “We’re very excited to announce this acquisition that leverages the best of both companies. On a combined basis, S&S and Kent Automotive will enhance our ability to serve customers with auto-related supplies and tools, as well as vendor-managed inventory services to dealerships and collision repair customers in this growing market.”

It’s the second deal for Lawson since it was merged with TestEquity and Gexpro Solutions in early 2022 to form DSG. This past January, Lawson announced the acquisition of safety and JanSan products distributor Emergent Safety Supply — also based outside of Chicago in Batavia, IL.

DSG 1Q Results

A day after releasing Lawson’s acquisition news, DSG reported its 2024 first quarter financial results. They were led by continued considerable year-over-year sales gains that were acquisition-driven, while organic sales saw declines. The largest acquisition driver was DSG’s $269 acquisition of Hisco, which had an additional $50 million in potential purchase costs. That deal closed in June 2023.

The company posted 1Q total sales of $416 million, up 19.5% year-over-year, including $99 million of incremental sales from acquisitions. Organic sales were down 8.6% on a comparable basis. It followed 4Q23’s sales of $405 million that were up 23.2% year-over-year.

1Q gross margin of 34.4% fell 370 basis points year-over-year, while operating profit of $2.8 million was dwarfed by the $16.7 million of a year earlier, but up from a $289 million operating loss in 4Q23.

DSG’s 1Q adjusted EBITDA margin of 8.7% was down 160 basis points year-over-year, but improved 30 bps from 4Q23.

DSG took a 1Q net loss of $5.2 million, following a $5.9 million net profit a year earlier and a $9 million loss in 4Q23.

By DSG business unit in 1Q:

• Lawson Products sales of $118 million (31% of total) were down 5.7% year-over-year, which included 1 fewer selling day than a year earlier. DSG noted Lawson’s sales per rep per day productivity continued its improved trend, up about 8% year-over-year. Adjusted EBITDA margin of 11.4% was down from the 14.7% of a year earlier, but up 10 bps from 4Q23.
• Gexpro Services sales of $99 million (23% of total) were down 2.3% year-over-year. Adjusted EBITDA margin of 11.0% trailed the 11.6% of a year earlier but improved 150 bps from 4Q23.
• TestEquity sales of $187 million (46% of total) jumped 74.3% year-over-year, driven by the Hisco acquisition, while organic sales were down 15.9%. DSG noted sales softness TestEquity’s core legacy business as test and measurement-type project headwinds continue. Adjusted EBITDA margin of 6.2% trailed the 7.1% of a year earlier and matched 4Q23.

DSG had 2023 total sales of $1.57 billion, up 36.4% from 2022.