Fort Worth, TX-based Distribution Solutions Group reported its 2024 second-quarter financial results, which showed margin expansion in its three verticals — MRO, original equipment manufacturers and industrial technologies.

The industrial distributor posted 2Q total sales of $439.5 million, including $81.4 million of incremental revenue from 2023 and 2024 acquisitions. The sales were up 16% year-over-year and up 5.6% compared to the first quarter.  As expected by the company, organic sales declined 5.7% compared to a year ago but improved sequentially by nearly 4% from the 1Q.

That sequential increase was driven by improved sales in many of DSG’s end markets, including test and measurement, renewables, technology and project-related business, according to the company’s earnings report posted Aug. 1

DSG’s 2Q adjusted EBITDA was $45.2 million, a 10.3% margin compared to $40.1 million in the prior year’s second quarter. Sequentially, adjusted EBITDA grew $9.1 million or 25.3% from the first quarter of 2024; and increased as a percent of sales by 160 bps.

Looking forward, the company expects to close a deal to acquire Canadian MRO distributor Source Atlantic in the third quarter, which will “meaningfully drive DSG’s growth” by expanding the company’s scale, customer base and geographic reach. The

“We remain focused on actively working our pipeline of acquisition targets, incremental margin enhancement initiatives and cost savings,” DSG CEO and Board Chair Bryan King said. “These efforts, along with some end market recovery, drove DSG’s strong second-quarter results.”

By DSG business unit in 2Q:

• Lawson Products logged sales of $121 million, up from $119 million year-over-year. The increases was attributed to the MRO vertical’s acquisitions of S&S Automotive to further expand its presence in the automotive dealership and collision repair end markets, and safety and JanSan products distributor Emergent Safety Supply. Adjusted EBITDA margin of 13.6% was up from 1Q’s 11.4%.
• Gexpro Services sales of $107.1 million was down compared to $107.3 in the 2Q 2023, but up 8.6% from 1Q thanks to strong growth in the aerospace and defense and renewables end markets. Adjusted EBITDA margin of 11.9% rose from last quarters 11%.
• TestEquity sales jumped 45% or $61.4 million year-over-year, driven by the acquisition of Hisco and offset by an organic revenue decline of 9.2% or $9.9 million. Adjusted EBITDA margin of 7.8% rose from 6.2% in the earlier quarter.

“The Lawson MRO vertical had strong performance while continuing to make investments in its sales organization, the Gexpro Services OEM vertical realized continued margin expansion as expected and the TestEquity industrial technology vertical saw margins improve on some end market recovery and the continued integration of Hisco,” King said.