Question · Q1 2025
Brad Hathaway of Fairview Capital requested details on the company's path to achieving its 20% return on invested capital (ROIC) target, focusing on both numerator (NOPAT) and denominator (invested capital) drivers.
Answer
Executive Ronald Knutson identified improving the numerator (NOPAT) as the primary driver, focusing on realizing synergies from recent acquisitions like Source Atlantic. Executive John King elaborated on four key levers: cost synergies, sourcing and pricing initiatives, normalization in lagging end markets, and organic growth from the 'network effect' of sales initiatives. While working capital investment may rise with inflation, King expects pricing actions to generate higher returns on that capital.
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