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    Brad Hathaway • Fair View

    Brad Hathaway's questions to Distribution Solutions Group Inc (DSGR) leadership

    Brad Hathaway's questions to Distribution Solutions Group Inc (DSGR) leadership • Q1 2025

    Question

    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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    Brad Hathaway's questions to Distribution Solutions Group Inc (DSGR) leadership • Q3 2024

    Question

    Brad Hathaway questioned the company's strategy for increasing its Return on Invested Capital (ROIC) from current levels to the 20%+ benchmark for mature distributors.

    Answer

    Executive John King stated that the primary path to higher ROIC involves realizing synergies and driving earnings growth from recent acquisitions, which temporarily depress the metric. He emphasized that the biggest driver will be growing the earnings of acquired companies, supplemented by working capital efficiency and organic growth from the expanded platform.

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