Executive Summary

Q4 delivered 18.6% revenue growth to $480.5M on 3.5% organic growth; adjusted EBITDA was $44.9M (9.3% margin) and adjusted EPS was $0.42, while GAAP EPS was a loss of $0.55 driven by tax items .
Sequentially, sales rose 2.7% while margins compressed 120 bps as expected on fewer selling days and the full-quarter inclusion of Source Atlantic (~50 bps margin headwind) .
Cash flow from operations strengthened to ~$45.7M in Q4; year-end liquidity was ~$334.7M with net leverage of 3.5x, positioning DSG to continue executing its M&A and integration agenda into 2025 .
Estimates: Wall Street consensus from S&P Global could not be retrieved (service limit). Beat/miss vs. estimates cannot be assessed this quarter (S&P Global data unavailable).
Key near-term stock catalysts: synergy traction and margin re-expansion as Source Atlantic integration progresses, continued end‑market recovery at Gexpro Services and Test & Measurement, and visibility on deferred U.S. federal/military orders at Lawson .

What Went Well and What Went Wrong

What Went Well

Gexpro Services delivered strong organic growth (+26.8% YoY in Q4 to $118.8M) with adjusted EBITDA margin expanding to 13.3% (up 380 bps YoY), driven by rebounds in technology, aerospace & defense, and renewables and operating leverage .
TestEquity’s margin improved YoY (7.8% in Q4 vs. 6.2% a year ago) with strength in Test & Measurement, chambers, rental utilization (up double-digits), and bookings momentum into 2025 .
Cash generation accelerated: Q4 cash from operations of ~$45.7M (vs. ~$28M a year ago) and full-year adjusted EBITDA of $175.3M (9.7% margin), supporting capital deployment and integration workstreams .

What Went Wrong

Lawson organic sales were pressured by lower rep count and a significant decline in military sales (military down >50% for 2024; ~75% in Q4), weighing on Lawson’s organic performance despite rep rebuild efforts .
Consolidated margins compressed sequentially (Q4 adjusted EBITDA margin 9.3% vs. 10.5% in Q3) due to fewer selling days and the lower‑margin Source Atlantic inclusion; management expects improvement as 2025 progresses .
Canada Branch Division (Source Atlantic + Bolt) is early in integration and seasonally soft in Q4/Q1; EBITDA margin for the segment was 7.2% in Q4 with a plan to lift to double digits as synergies and branch consolidations complete .

Financial Results

Headline P&L vs prior periods and estimates

Metric	Q4 2023	Q3 2024	Q4 2024 (Actual)	Vs Est.
Revenue ($M)	$405.239	$468.019	$480.463	N/A (S&P unavailable)
GAAP Diluted EPS	$(0.35)	$0.46	$(0.55)	N/A (S&P unavailable)
Adjusted Diluted EPS	$0.22	$0.37	$0.42	N/A (S&P unavailable)
Adjusted EBITDA ($M)	$33.880	$49.110	$44.899	N/A (S&P unavailable)
Adjusted EBITDA Margin	8.4%	10.5%	9.3%	N/A (S&P unavailable)
Operating Income Margin	(0.1)%	4.0%	4.2%	N/A (S&P unavailable)

Notes: Revenue and EPS comparisons reflect GAAP and non‑GAAP as disclosed. Estimates vs. actuals unavailable this quarter due to S&P Global access limits.

Sequential and YoY growth detail

Metric	Q4 2023 → Q4 2024 YoY	Q3 2024 → Q4 2024 QoQ
Revenue Growth	+18.6%	+2.7%
Organic Sales Growth	+3.5% YoY; organic ADS +2.4% YoY	Organic sales −2.2% seasonally; organic ADS +0.4% seq.
Adjusted EBITDA Margin Δ	+90 bps YoY (9.3% vs. 8.4%)	−120 bps seq. (9.3% vs. 10.5%)

Segment breakdown (Q4 2024 vs Q4 2023)

Segment	Revenue Q4’23 ($M)	Revenue Q4’24 ($M)	Op Inc Q4’23 ($M)	Op Inc Q4’24 ($M)
Lawson Products	109.807	111.783	5.140	3.593
Canada Branch Division	13.236	59.041	1.186	1.178
Gexpro Services	93.211	118.797	3.516	11.437
TestEquity	190.685	191.306	(8.282)	5.029
Intersegment Elim.	(1.700)	(0.464)	—	—
Total	405.239	480.463	(0.289)	20.067

KPIs and balance sheet highlights

KPI	Q4 2024
Cash from Operations (quarter)	~$45.7M
Liquidity	$334.7M (Cash/restricted/unrestricted $81.7M; revolver availability $253.0M)
Net Debt Leverage	3.5x
Adjusted Operating Income (Q4)	$37.293M
Organic ADS growth	+2.4% YoY; +0.4% seq.
2025 CapEx Outlook	~$20–$25M (≈1% of revenue)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net CapEx	FY 2025	Not provided prior for 2025	$20–$25M (~1% of revenue)	—
Canada Branch (Source Atlantic) EBITDA Margin	Run-rate by late 2025	Double-digit by end‑2025 (discussed previously)	Target remains double‑digit; integration/branch consolidations through H1’25	Maintained
Leverage Target	Ongoing	3–4x	3–4x (Q4 exit at 3.5x)	Maintained
Lawson Field Sales Reps	H2 2025	~900 exiting 2024 (Q3), path to 1,000 in mid‑2025	Target ~1,000 by H2 2025; rebuild underway	Maintained/updated timing

No formal revenue/EPS guidance was issued.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current (Q4 2024)	Trend
Macro/PMI	Headwinds; ISM <50; sequential end‑market recovery pockets	PMI ~47; awaiting expansion; some end‑market resurgence	PMI >50 early 2025; improving backdrop; aiming for record 2025	Improving
Tariffs/Policy	Not a major focus	Cautious post‑election, rate cuts could help	Monitoring tariff directives; low direct/indirect exposure; plan to offset with customers	Manageable risk
Lawson sales force transformation	CRM go‑live; territory optimization; rep rebuild starting	Identified ~134 new territories; hiring cadence up; rep count 860	~900+ reps by YE; targeting ~1,000 by H2’25; January/Feb ADS up	Execution progressing
Military/government	Ordering process changes; softness signaled	Federal orders delayed; drag on Lawson	Military down >50% FY; ~75% in Q4; timing of releases uncertain	Persistent headwind
Gexpro end‑markets	Tech/renewables recovery starting; A&D strong	Double‑digit growth; sequential momentum; strong book‑to‑bill	Continued strength across tech, A&D, renewables; Southeast Asia expansion (TCR)	Positive
Test & Measurement	Channel inventory overhang clearing; sequential lift	Record bookings; sequential ADS improvement	Core T&M, chambers, rentals growing; rental utilization up double‑digits	Recovering
Canada Branch (Source Atlantic + Bolt)	Acquisition announced; lower initial margin with synergy plan	New reportable segment; initial ~7.6% margin for Source; 10.3% segment	Target double‑digit; consolidation of 4 locations by summer; seasonal softness in Q4/Q1	On plan

Management Commentary

“Our fourth quarter top-line performance was in line with expectations… organic sales growth up 3.5%… Adjusted EBITDA… $44.9 million or 9.3% of sales… inclusion of the 2024 Source Atlantic acquisition compressed our net margins by approximately 50bps” – Bryan King, CEO .
“We remain confident that DSG is very well positioned for record performance in 2025 as some of the most recent headwinds subside” – John/Bryan King .
“Excluding the impact of Source Atlantic in the fourth quarter, net margins were 9.9%” – Ronald Knutson, CFO .
“Q4 adjusted EBITDA for the Canada Branch segment… 7.2% of sales. Excluding Source Atlantic… would have been 14.8% (Bolt)” – Ronald Knutson .
“We expect our 2025 net CapEx to be in the range of $20 million to $25 million or approximately 1% of our revenues” – Ronald Knutson .

Q&A Highlights

Organic outperformed flattish expectations: Q4 organic +3.5% was firmer than feared, led by Gexpro and Test & Measurement; management sees continued momentum into early 2025 (with March still key for margins) .
Sequential margin cadence: Overall margins in January were similar to Q4; management expects profile to lift through 2025 as 2024 acquisitions (Source Atlantic, S&S) synergize .
Lawson margin path: Investment in reps/tools created near-term compression; lower turnover and rep rebuild (~920 by Q4 end) should drive progression through 2025; high‑teens longer‑term target reiterated (multi‑year) .
Military timing: Orders remain “stuck” due to federal process; visibility limited; models assume no bold recovery in 2025, limiting downside risk if delays persist .
Source Atlantic to double‑digit EBITDA: Facility consolidations and cost actions underway (four consolidations by summer); seasonal softness in Q4/Q1 tempers early run‑rate; margin ramp more 2H’25‑weighted .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue could not be retrieved due to a service limit; as a result, we cannot quantify beat/miss this quarter. We attempted to fetch: Primary EPS Consensus Mean, Revenue Consensus Mean, and estimate counts for Q4 2024 (S&P Global data unavailable).
Implication: Focus shifts to intra-company trends and disclosed drivers until estimates are accessible again.

Key Takeaways for Investors

Margin trough passed; sequential compression in Q4 was expected (selling days + Source Atlantic mix) and management targets re‑expansion through 2025 as integration synergies materialize and Lawson rep rebuilds to ~1,000 by H2’25 .
Gexpro Services is a cyclical bright spot with broad end‑market strength and expanding margins (13.3% in Q4), providing near-term earnings ballast and optionality from Southeast Asia expansion (TCR) .
Test & Measurement recovery is taking hold (bookings, utilization, sequential growth), positioning TestEquity for continued margin improvement as channel normalization sticks into 2025 .
Lawson’s military headwind remains the key overhang; base‑case modeling should not rely on a quick federal order release; upside exists if/when orders flow .
Canada Branch (Source Atlantic + Bolt) offers material synergy runway; seasonal softness and integration costs near-term, but double‑digit EBITDA target by end‑2025 is intact, a catalyst for consolidated margin uplift .
Balance sheet/liquidity supports continued M&A/integration while staying within 3–4x leverage; cash generation improved sharply in Q4 .
Trading lens: Watch for 1) synergy updates (Canada consolidation milestones), 2) Lawson ADS and rep count progression monthly, 3) Gexpro/TestEquity order/booking momentum, and 4) any visibility on U.S. federal/military order release cadence .

Other Relevant Q4 Press Releases:

Closed acquisitions of Tech-Component Resources (Oct 30, 2024) and ConRes Test Equipment (Nov 18, 2024), which fed Q4 revenue and broadened DSG’s Southeast Asia and Northeast U.S. positioning .
Announced timing for Q4/FY24 results and call logistics (Feb 6, 2025) .

Distribution Solutions Group, Inc. (DSGR)·Q4 2024 Earnings Summary