Distribution Solutions Group Announces Third Quarter 2025 Results

The following represents a summary of certain operating results (unaudited). See the reconciliations of GAAP to non-GAAP measures in Tables 2, 3 and 4.

Bryan King, CEO and Chairman, said, "Our third-quarter results demonstrate the strength and resilience of our business model, even as inflation, tariffs, and higher interest rates continue to challenge parts of the U.S. economy. We delivered double-digit revenue growth of 10.7% in the quarter, supported by strong momentum in organic average daily sales which grew 6.0%, as well as revenue contributions from our recent acquisitions. Sales growth was realized across each of our segments, particularly strong at Gexpro Services and the Canada Branch Division. Supported by four quarters of organic top-line revenue growth quarter-over-quarter, we’re entering the final stretch of the year with solid momentum and confidence in our growth strategy.

"Once again, we delivered strong operating cash flow of $38.4 million in the quarter. We also enhanced shareholder returns with more than $20.0 million in common stock repurchases in the first nine months of 2025 reflecting our confidence in the Company's performance trajectory despite a challenging macro environment. Adjusted EBITDA totaled $48.5 million, or 9.4% of sales, a strong showing despite product and customer mix dynamics and the impact of increased employee-related costs, in particular, for healthcare. While industry-wide U.S. manufacturing softness and significant strategical investments in the business have pressured margins below 10% this year, we’re encouraged by the progress our teams are making. Gexpro Services delivered another quarter of sequential margin expansion, and our Canada Branch Division—primarily Source Atlantic—achieved significant improvement, to 9.6% compared to 6.5% in the second quarter. These results reflect disciplined execution of margin unlocking initiatives and continued focus on operational efficiencies across our portfolio.

"We ended the quarter with no outstanding revolver debt and total liquidity of over $335 million. This underscores our solid liquidity position and the financial flexibility to pursue future acquisitions and other strategic growth opportunities. As we look at the fourth quarter, we’re maintaining a cautious outlook given tougher year-over-year comparisons and ongoing economic uncertainty. That said, I remain confident in our leadership teams and their ability to continue building structurally higher-margin businesses that generate strong free cash flow and create long-term value for our shareholders," concluded Mr. King.

2025 Third Quarter Summary⁽¹⁾

• Revenue increased $49.9 million, or 10.7%, to $518.0 million, driven by $23.3 million of incremental revenue from three acquisitions closed in the second half of 2024. Organic sales grew 6.0% over a year ago and 3.1% sequentially over the second quarter of 2025.

• Operating income was $23.6 million, net of $11.7 million of non-cash acquired intangible amortization and $4.8 million of non-recurring severance and acquisition-related retention costs, stock-based compensation, acquisition-related costs and other non-recurring items. This compares to an operating income of $18.9 million in the prior year quarter, net of similar items as 2025. Adjusted operating income, excluding these non-cash and non-recurring items, was $40.1 million in the current quarter compared to $42.5 million in the year-ago quarter and $39.9 million in the second quarter of 2025.

• Diluted net income per share was $0.14 for the quarter compared to diluted net income per share of $0.46 in the year-ago quarter which benefitted from a substantial non-recurring tax benefit. Non-GAAP adjusted diluted earnings per share was $0.40 compared to $0.37 for the same period a year ago and $0.35 for the second quarter of 2025.

• Adjusted EBITDA was $48.5 million, or 9.4% of sales, compared to $49.1 million, or 10.5% of sales in the prior year quarter. Inclusion of the 2024 Source Atlantic acquisition compressed Adjusted EBITDA as a percentage of sales by approximately 11bps over the year ago quarter.

• Cash flow from operations was $38.4 million for the quarter. Uses of cash for the quarter included net capital expenditures of $7.7 million.

• The Company ended the quarter with total liquidity of $335.4 million, consisting of $82.7 million of cash (restricted and unrestricted) and $252.7 million available under its credit facility with no outstanding borrowings under its revolver. Net debt leverage was 3.5x.

• Net working capital ended at $485.7 million for the quarter.

Conference Call

Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss 2025 third quarter results at 9:00 a.m. Eastern Time on October 30, 2025. The conference call is available by direct dial at 1-888-506-0062 in the U.S. or 1-973-528-0011 from outside of the U.S. The participant access code is 667630. A replay of the conference call will be available by telephone approximately two hours after completion of the call through November 13, 2025. Callers can access the replay by dialing 1-877-481-4010 in the U.S. or 1-919-882-2331 outside the U.S. The passcode for the replay is 52952. A streaming audio of the call and an archived replay will also be available on the investor relations page of Distribution Solutions Group's website. Presentations may be supplemented by a series of slides appearing on the company's investor relations home page at https://investor.distributionsolutionsgroup.com/news/events.

About Distribution Solutions Group, Inc.

Distribution Solutions Group ("DSG") is a premier multi-platform specialty distribution company providing high touch, value-added distribution solutions to the maintenance, repair & operations (MRO), the original equipment manufacturer (OEM) and the industrial technologies markets. DSG was formed through the strategic combination of Lawson Products, a leader in MRO distribution of C-parts, Gexpro Services, a leading global supply chain services provider to manufacturing customers, and TestEquity, a leader in electronic test & measurement solutions.

Through its collective businesses, DSG is dedicated to helping customers lower their total cost of operation by increasing productivity and efficiency with the right products, expert technical support and fast, reliable delivery to be a one-stop solution provider. DSG serves approximately 200,000 customers in several diverse end markets supported by approximately 4,400 dedicated employees and strong vendor partnerships. DSG ships from strategically located distribution and service centers to customers in North America, Europe, Asia, South America and the Middle East.

For more information on Distribution Solutions Group, please visit www.distributionsolutionsgroup.com.

This release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the “safe-harbor” provisions under the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. The Terms "aim," "anticipate," "believe," "contemplates," "continues," "could," "ensure," "estimate," "expect," "forecasts," "if," "intend," "likely," "may," "might," "objective," "outlook," "plan," "positioned," "potential," "predict," "probable," "project," "shall," "should," "strategy," "will," "would," and variations of them and other words and terms of similar meaning and expression (and the negatives of such words and terms) are intended to identify forward-looking statements.

Forward-looking statements can also be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks, uncertainties and assumptions, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. DSG can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and DSG cautions readers not to place undue reliance on such statements. DSG undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Each forward-looking statement speaks only as of the date on which such statement is made, and DSG undertakes no obligation to update any such statement to reflect events or circumstances arising after such date. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Factors that could cause or contribute to such differences or that might otherwise impact DSG’s business, financial condition and results of operations include the risks that DSG may encounter difficulties integrating the business of DSG with the business of other companies that DSG has combined with or may otherwise combine with and that certain assumptions with respect to such business or transactions could prove to be inaccurate. Certain risks associated with DSG’s business are also discussed from time to time in the reports DSG files with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K or other reports the Company may file from time to time with the Securities and Exchange Commission, which should be reviewed carefully.