Distribution Solutions Group reported its 2023 fourth quarter and full-year financial results on March 7, showing the continued gains seen from its major acquisition of Hisco during the year — the first full calendar year since the company was formed through a merger of three distributors during 2022.

Lawson Products, Gexpro Services and TestEquity combined on April 1, 2022 to form DSG, and the company gained a major boost in June 2023 when it acquired industrial supplies distributor Hisco for a purchase price of up to $319 million.

DSG ranked No. 27 on MDM’s 2023 Top Industrial Distributors List, while Hisco ranked 39th.

Full-Year

For the full-year 2023, DSG posted total sales of $1.57 billion, up 36.4% from 2022’s $1.15 billion on a reported basis, and up 23.7% on a pro forma basis post-April 2022. Organic sales grew 2.9% overall vs. 2022, with the rest of the growth driven by acquisitions.

DSG’s 2023 operating profit of $43 million on margin of increased 2.9% vs. 2022, while operating margin of 2.7% fell 90 basis points. Adjusted EBITDA of $157 million jumped 27.6%, with adjusted EBITDA margin of 10.0% up 30 bps.

DSG took a 2023 net loss of $16 million, following a $2 million loss in 2022.

By business unit during 2023:

• TestEquity revenue of $642 million (47% of DSG total) jumped 63.6%, with nearly all of it driven by acquisitions (Hisco and Instrumex). Full-year adjusted EBITDA was $43 million on margin of 6.7%.
• Lawson Products pro forma revenue of $469 million (30% of DSG total) grew 9.1% vs. 2022, with all organic growth driven by pricing and expanding/new customer relationships. Full-year adjusted EBITDA was $64 million on 13.6% margin. Lawson ended the year with approximately 900 sales reps.
• Gexpro Services revenue of $406 million (23% of DSG total) grew 5.3% vs. 2022, despite what DSG noted was a ~50% decline in the technology/semiconductor market. Full-year adjusted EBITDA was $45 million on margin of 11.1%.

Fourth Quarter

DSG posted total 4Q sales of $405 million, up 23.2% year-over-year, primarily driven by Hisco acquisition, while organic revenue fell 6%. DSG said the 4Q organic decline was largely driven by continued softness in the technology end-market, delayed maintenance spend — particularly in the renewable end-market — and delayed capital spending.

DSG had a 4Q operating loss of $289 million, compared to a $13 million operation profit a year earlier, while adjusted operating profit of $18 million fell 12.5% year-over-year. Adjusted EBITDA of $34 million dipped 0.4% year-over-year on margin of 8.4% (10.3% in 4Q22).

DSG took a 4Q net loss of $9 million, compared to a $7 million profit a year earlier.

By business unit during 4Q23:

• TestEquity revenue of $642 million jumped 44.7%, driven nearly entirely by acquisitions. Operating loss was $8 million, compared to a $4 million profit a year earlier.
• Lawson Products revenue of $110 million increased 1.6%. Operating profit of $5 million topped the $4 million of a year earlier.
• Gexpro Services revenue of $93 million fell 6.9% year-over-year. Operating profit of $3.5 million trailed the $4 million of year earlier.

Other Notes

On Jan. 22, DSG announced that Lawson Products had acquired Safety Supply Illinois, which does business as Emergent Safety Supply and is a national distributor of safety and JanSan products based in the Chicago suburb of Batavia, IL. Terms were not disclosed.