# Distribution Solutions Group, Inc. (DSGR)

Informational only - not investment advice.

CIK: 0000703604
SIC: 5080 Wholesale-Machinery, Equipment & Supplies
SIC breadcrumb: [Wholesale Trade](/division/F/) > [SIC Major Group 50](/major-group/50/) > [SIC 5080 Wholesale-Machinery, Equipment & Supplies](/industry/5080/)
Latest 10-K filed: 2026-03-05
SEC page: https://www.sec.gov/edgar/browse/?CIK=703604
Filing source: https://www.sec.gov/Archives/edgar/data/703604/000070360426000008/dsgr-20251231.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 1980023000 | USD | 2025 | 2026-03-05 |
| Net income | 8345000 | USD | 2025 | 2026-03-05 |
| Assets | 1748621000 | USD | 2025 | 2026-03-05 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000703604.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  |  |  |  |  | 1,570,402,000 | 1,804,104,000 | 1,980,023,000 |
| Net income | -1,629,000 | 29,688,000 | 6,214,000 | 7,221,000 | 15,113,000 | -5,052,000 | 7,406,000 | -8,967,000 | -7,332,000 | 8,345,000 |
| Operating income | -1,457,000 | 9,936,000 | 9,210,000 | 9,066,000 | 20,550,000 | 11,421,000 | 41,786,000 | 42,991,000 | 55,955,000 | 78,263,000 |
| Gross profit | 168,062,000 | 183,018,000 | 189,540,000 | 197,354,000 | 186,538,000 | 130,278,000 | 390,898,000 | 551,875,000 | 613,775,000 | 662,038,000 |
| Diluted EPS | -0.19 | 3.25 | 0.67 | 0.77 | 1.62 | -0.49 | 0.21 | -0.20 | -0.16 | 0.18 |
| Operating cash flow |  |  |  | 9,196,000 | 32,528,000 | 10,320,000 | -11,029,000 | 102,286,000 | 56,453,000 | 83,849,000 |
| Capital expenditures | 3,112,000 | 1,256,000 | 2,524,000 | 2,028,000 | 1,687,000 | 3,026,000 | 8,307,000 | 15,337,000 | 13,684,000 | 21,015,000 |
| Share buybacks | 176,000 | 20,000 | 523,000 | 4,527,000 | 3,254,000 | 0.00 | 1,940,000 | 3,619,000 | 2,580,000 | 23,753,000 |
| Assets | 135,307,000 | 191,111,000 | 197,142,000 | 204,429,000 | 256,304,000 | 491,360,000 | 1,215,610,000 | 1,550,331,000 | 1,727,255,000 | 1,748,621,000 |
| Liabilities | 74,174,000 | 97,621,000 | 97,969,000 | 96,428,000 | 133,882,000 | 325,591,000 | 652,615,000 | 888,730,000 | 1,086,712,000 | 1,099,274,000 |
| Stockholders' equity | 61,133,000 | 93,490,000 | 99,173,000 | 108,001,000 | 155,248,000 | 165,769,000 | 562,995,000 | 661,601,000 | 640,543,000 | 649,347,000 |
| Cash and cash equivalents | 10,421,000 | 4,416,000 | 11,883,000 | 5,495,000 | 28,393,000 | 14,671,000 | 24,554,000 | 83,931,000 | 66,479,000 | 61,753,000 |
| Free cash flow |  |  |  | 7,168,000 | 30,841,000 | 7,294,000 | -19,336,000 | 86,949,000 | 42,769,000 | 62,834,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  |  |  |  |  | -0.57% | -0.41% | 0.42% |
| Operating margin |  |  |  |  |  |  |  | 2.74% | 3.10% | 3.95% |
| Return on equity | -2.66% | 31.76% | 6.27% | 6.69% | 9.73% | -3.05% | 1.32% | -1.36% | -1.14% | 1.29% |
| Return on assets | -1.20% | 15.53% | 3.15% | 3.53% | 5.90% | -1.03% | 0.61% | -0.58% | -0.42% | 0.48% |
| Liabilities / equity | 1.21 | 1.04 | 0.99 | 0.89 | 0.86 | 1.96 | 1.16 | 1.34 | 1.70 | 1.69 |
| Current ratio | 2.23 | 1.64 | 1.61 | 1.87 | 1.46 | 1.10 | 2.82 | 2.72 | 2.67 | 2.56 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-30. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000703604.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2019-Q1 | 2019-03-31 | 91,343,000 |  |  | reported discrete quarter |
| 2019-Q2 | 2019-06-30 | 96,097,000 |  |  | reported discrete quarter |
| 2019-Q3 | 2019-09-30 | 94,779,000 |  |  | reported discrete quarter |
| 2020-Q1 | 2020-03-31 | 91,035,000 |  |  | reported discrete quarter |
| 2020-Q2 | 2020-06-30 | 72,146,000 |  |  | reported discrete quarter |
| 2020-Q3 | 2020-09-30 | 90,277,000 |  |  | reported discrete quarter |
| 2022-Q2 | 2022-06-30 |  |  | -0.23 | reported discrete quarter |
| 2022-Q3 | 2022-09-30 |  |  | 0.84 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.28 | reported discrete quarter |
| 2023-Q2 | 2023-03-31 |  | 5,907,000 |  | reported discrete quarter |
| 2023-Q2 | 2023-06-30 |  |  | 0.14 | reported discrete quarter |
| 2023-Q3 | 2023-06-30 |  | 3,024,000 |  | reported discrete quarter |
| 2023-Q3 | 2023-09-30 |  |  | -0.03 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 |  | -16,330,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 |  | -5,224,000 | -0.11 | reported discrete quarter |
| 2024-Q2 | 2024-03-31 |  | -5,224,000 |  | reported discrete quarter |
| 2024-Q2 | 2024-06-30 |  |  | 0.04 | reported discrete quarter |
| 2024-Q3 | 2024-06-30 |  | 1,896,000 |  | reported discrete quarter |
| 2024-Q3 | 2024-09-30 |  |  | 0.46 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 |  | -25,925,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 |  | 3,261,000 | 0.07 | reported discrete quarter |
| 2025-Q2 | 2025-03-31 |  | 3,261,000 |  | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 502,437,000 |  | 0.11 | reported discrete quarter |
| 2025-Q3 | 2025-06-30 |  | 5,003,000 |  | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 517,958,000 |  | 0.14 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 481,599,000 | -6,371,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 495,995,000 | 382,000 | 0.01 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
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- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/703604/000070360426000024/dsgr-20260331.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-04-30
Report date: 2026-03-31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of DSG’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements, accompanying notes and other information included in DSG’s Annual Report on Form 10-K filed for the year ended December 31, 2025.

References to “DSG”, the “Company”, “we”, “our” or “us” refer to Distribution Solutions Group, Inc. and all entities consolidated in the accompanying unaudited condensed consolidated financial statements.

Overview

Organization and Structure

DSG is a multi-platform specialty distribution company providing high touch, value-added distribution solutions to the maintenance, repair and operations (“MRO”), the original equipment manufacturer (“OEM”) and the industrial technologies markets.

We manage and report our operating results through four reportable segments: Lawson, TestEquity, Gexpro Services and Canada Branch Division. A summary of our reportable segments is presented below. For additional details about our segments see Note 1 – Nature of Operations and Basis of Presentation and Note 13 – Segment Information, within Item 1. Financial Statements.

Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and governmental MRO marketplace. Lawson primarily distributes MRO products to its customers through a network of sales representatives and an inside sales channel throughout the United States and Canada.

TestEquity is a distributor of test and measurement equipment and solutions, industrial and electronic production supplies, vendor managed inventory programs, and converting, fabrication and adhesive solutions from its leading manufacturer partners supporting the aerospace and defense, wireless and communication, semiconductors, industrial electronics and automotive, and electronics manufacturing industries.

Gexpro Services is a global supply chain solutions provider, specializing in the development of mission critical production line management, aftermarket and field installation programs.

Canada Branch Division is a distributor of industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 35 branch locations.

In addition to these four reportable segments, we have an “All Other” category which includes unallocated DSG holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments.

Recent Events

Eastern Valve Acquisition

On March 9, 2026, DSG completed the acquisition of Eastern Valve & Control Specialties Ltd. (“Eastern Valve” and the “Eastern Valve Transaction”). Eastern Valve is located in Paradise, Newfoundland, Canada, and supplies and services industrial valve products throughout Atlantic Canada. Eastern Valve was acquired to expand DSG’s operating footprint in the Canadian market.

Organic Growth Strategy

We intend to grow our businesses organically by exploring growth opportunities that provide different channels to reach customers, increase revenue and generate positive results. We plan to utilize our Company structure to grow organic revenue through collaborative selling across our customer bases and expanding the digital capabilities across our platform.

26

Table of Contents

Acquisition Strategy

In addition to organic growth, we plan to actively pursue acquisition opportunities complementary to our businesses and that we believe will be financially accretive to our organization.

Sales Drivers

DSG believes that the Purchasing Managers Index (“PMI”) published by the Institute for Supply Management is an indicative measure of the relative strength of the economic environment of the industry in which it operates. The PMI is a composite index of economic activity in the U.S. manufacturing sector. A measure of the PMI index above 50 is generally viewed as indicating an expansion of the manufacturing sector while a measure below 50 is generally viewed as representing a contraction. The average monthly PMI was 52.6 in the three months ended March 31, 2026, compared to 50.1 in the three months ended March 31, 2025.

Lawson Sales Drivers

The North American MRO market is highly fragmented. Lawson competes for business with several national distributors as well as a large number of regional and local distributors. The MRO business is impacted by the overall strength of the manufacturing sector of the U.S. economy.

Lawson’s revenue is also influenced by the number of sales representatives and their productivity. Lawson plans to continue concentrating its efforts on increasing the productivity and size of its sales team. Additionally, Lawson drives revenue through the expansion of products sold to existing customers as well as attracting new customers and additional ship-to locations. Lawson also utilizes an inside sales team to help drive field sales representative productivity and also utilizes an e-commerce site to generate sales.

TestEquity Sales Drivers

The North American market for test and measurement, industrial, and electronic production supplies is highly fragmented, with competition ranging from global to regional distributors. We believe TestEquity stands out through its portfolio of specialized brands, technical knowledge, and digital platforms, each tailored to serve specific needs across the electronics lifecycle. These brands maintain unique identities and address every stage of the electronics process—from R&D to assembly and ongoing maintenance. This multi-brand approach enables TestEquity to offer an extensive product range, expert support, and tailored technical solutions, positioning it as a trusted partner across diverse customer requirements.

Revenue growth is fueled by TestEquity’s comprehensive catalog of test and measurement equipment, electronic production supplies, and industrial tools, supported by a high-touch, consultative sales model. Strategic acquisitions have expanded its customer base and strengthened recurring rental revenue. We believe that continued investments in e-commerce, rising demand from high-growth sectors like aerospace and telecommunications, and TestEquity’s strong positioning as a preferred vendor amid supplier consolidation will contribute to sustained momentum and long-term value creation.

Gexpro Services Sales Drivers

The global supply chain solutions market is highly fragmented across Gexpro Services’ key vertical segments. Gexpro Services’ competitors range from large global distributors and manufacturers to small regional domestic distributors and manufacturers. Gexpro Services’ revenue is influenced by our OEMs’ production schedules, new product introduction launches, and service project needs.

Gexpro Services’ strategy is to increase revenue through increasing wallet share with existing customers, customer-led geographic expansion, new customer development in its six key vertical markets and leveraging its portfolio of recent acquisitions to expand its installation and aftermarket services.

Canada Branch Division Sales Drivers

Canada Branch Division is a distributor of industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 35 branch locations.

27

Table of Contents

Canada Branch Division’s strategy is to grow revenue through increasing wallet share with existing customers, via introduction of new product lines and services in geographic areas that were underserviced previously. Additionally, Canada Branch Division will engage new customers and additional ship-to locations with its national sales team.

Supply Chain Disruptions and Tariffs

We continue to be affected by rising supplier costs caused by inflation, and increased tariffs, transportation and labor costs. We have instituted various price increases during 2025 and 2026 in response to rising supplier costs and increased tariffs, transportation and labor costs in order to attempt to manage our gross profit margins.

Factors Affecting Comparability to Prior Periods

Our results of operations are not directly comparable on a year-over-year basis due to acquisition activity. We account for acquisitions under Accounting Standards Codification 805, Business Combinations (“ASC 805”). Accordingly, the results of acquisitions are only included subsequent to their respective acquisition dates. Refer to Note 3 – Business Acquisitions within Item 1. Financial Statements for a description of the acquisition completed in 2026 and the reportable segment in which the acquisition’s results of operations are included.

Non-GAAP Financial Measures

The Company’s management believes that certain non-GAAP financial measures may provide users of this financial information with additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain infrequently occurring, seasonal or non-operational items that impact the overall comparability. These non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

Non-GAAP Adjusted EBITDA

Management believes Adjusted EBITDA is an important measure of the Company’s operating performance and may provide investors with additional meaningful comparisons between current results and results in prior operating periods because Adjusted EBITDA excludes certain non-operational or non-cash items whose fluctuations from period to period do not necessarily correspond to changes in the operating performance of our business and consequently may impact the overall comparability from period to period. We define Adjusted EBITDA as operating income plus depreciation and amortization, stock-based compensation, severance and acquisition related retention costs, costs related to the execution and integration of acquisitions, amortization of fair value step-up resulting from acquisitions and other non-recurring items. Management uses operating income and Adjusted EBITDA to evaluate the performance of its reportable segments. See Note 13 – Segment Information within Item 1. Financial Statements for additional information about our reportable segments.

The following table provides a reconciliation of Net income (loss) to Adjusted EBITDA on a consolidated basis and Operating income (loss) to Adjusted EBITDA by segment for the three months ended March 31, 2026 and 2025. A reconciliation of Net income (loss) to Adjusted EBITDA by segment is not provided because management does not determine or review net income at the segment level and does not allocate non-operating costs and expenses to its segments, such as income taxes, interest expense, and various other non-operating income and expense.

28

Table of Contents

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA (Unaudited)

Three Months Ended March 31, 2026

(in thousands)

Lawson

TestEquity

Gexpro Services

Canada Branch Division

All Other

Consolidated

Net income (loss)

$

382 

Income tax expense (benefit)

375 

Other income (expense), net

702 

Interest expense

12,171 

Operating income (loss)

$

3,056 

$

4,047 

$

8,401 

$

386 

$

(2,260)

$

13,630 

Depreciation and amortization

6,714 

8,280 

3,129 

1,601 

— 

19,724 

Stock-based compensation(

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of DSG’s financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related notes included in this Annual Report on Form 10-K.

This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2025 and 2024 and the year-over-year comparisons between the years ended December 31, 2025 and 2024. Discussions of items for the year ended December 31, 2023, and the year-over-year comparisons between the years ended December 31, 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in DSG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 6, 2025.

References to “DSG”, the “Company”, “we”, “our” or “us” refer to Distribution Solutions Group, Inc. and all entities consolidated in the accompanying consolidated financial statements.

Overview

Organization and Structure

DSG is a multi-platform specialty distribution company providing high touch, value-added distribution solutions to the maintenance, repair and operations (“MRO”), the original equipment manufacturer (“OEM”) and the industrial technologies markets.

We manage and report our operating results through four reportable segments: Lawson, TestEquity, Gexpro Services and Canada Branch Division. A summary of our segments is presented below. For additional details about our segments, see Item 1. Business and Note 14 – Segment Information in Item 8. Financial Statements and Supplementary Data.

Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and government MRO marketplace.

TestEquity is a distributor of test and measurement equipment and solutions, industrial and electronic production supplies, vendor managed inventory programs, and converting, fabrication and adhesive solutions from its leading manufacturer partners supporting the aerospace and defense, wireless and communication, semiconductors, industrial electronics and automotive, and electronics manufacturing industries.

Gexpro Services is a global supply chain solutions provider, specializing in the development of mission critical production line management, aftermarket and field installation programs.

Canada Branch Division combines the operations of our Bolt and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 35 branch locations.

In addition to these four reportable segments, we have an “All Other” category which includes unallocated DSG holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments.

Recent Events

2025 Debt Amendment

In December 2025, the Company amended and expanded the senior secured facility through 2030. The new facility includes $700 million of term debt and a revolving credit arrangement of $400 million, an increase over the previous revolver capacity of $255 million. Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information about the Amended Credit Agreement.

Share Repurchase Increase

27

In November 2025, the Board authorized a $30.0 million increase to the Company’s existing stock repurchase program for shares of DSG common stock. As a result of the additional authorization, the aggregate repurchase authorization under the Company’s repurchase program for shares of DSG common stock increased from $37.5 million to $67.5 million. The remaining availability for stock repurchases under the stock repurchase program was $32.9 million at December 31, 2025.

Sales Drivers

DSG believes that the Purchasing Managers Index (“PMI”) published by the Institute for Supply Management is an indicative measure of the relative strength of the economic environment of the industry in which it operates. The PMI is a composite index of economic activity in the U.S. manufacturing sector. A measure of the PMI index above 50 is generally viewed as indicating an expansion of the manufacturing sector while a measure below 50 is generally viewed as representing a contraction. The average monthly PMI was 48.9 in the year ended December 31, 2025, compared to 48.3 in the year ended December 31, 2024, and 47.1 in the year ended December 31, 2023.

Lawson Sales Drivers

The North American MRO market is highly fragmented. Lawson competes for business with several national distributors as well as a large number of regional and local distributors. The MRO business is impacted by the overall strength of the manufacturing sector of the U.S. economy.

Lawson’s revenue is also influenced by the number of sales representatives and their productivity. Lawson plans to continue concentrating its efforts on increasing the productivity and size of its sales team. Additionally, Lawson drives revenue through the expansion of products sold to existing customers as well as attracting new customers and additional ship-to locations. Lawson also utilizes an inside sales team to help drive field sales representative productivity and also utilizes an e-commerce site to generate sales.

TestEquity Sales Drivers

The North American market for test and measurement, industrial, and electronic production supplies is highly fragmented, with competition ranging from global to regional distributors. We believe TestEquity stands out through its portfolio of specialized brands, technical knowledge, and digital platforms, each tailored to serve specific needs across the electronics lifecycle. These brands maintain unique identities and address every stage of the electronics process—from R&D to assembly and ongoing maintenance. This multi-brand approach enables TestEquity to offer an extensive product range, expert support, and tailored technical solutions, positioning it as a trusted partner across diverse customer requirements.

Revenue growth is fueled by TestEquity’s comprehensive catalog of test and measurement equipment, electronic production supplies, and industrial tools, supported by a high-touch, consultative sales model. Strategic acquisitions have expanded its customer base and strengthened recurring rental revenue. We believe that continued investments in e-commerce, rising demand from high-growth sectors like aerospace and telecommunications, and TestEquity’s strong positioning as a preferred vendor amid supplier consolidation will contribute to sustained momentum and long-term value creation.

Gexpro Services Sales Drivers

The global supply chain solutions market is highly fragmented across Gexpro Services’ key vertical segments. Gexpro Services’ competitors range from large global distributors and manufacturers to small regional domestic distributors and manufacturers. Gexpro Services’ revenue is influenced by our OEMs’ production schedules, new product introduction launches, and service project needs.

Gexpro Services’ strategy is to increase revenue through increasing wallet share with existing customers, customer-led geographic expansion, new customer development in its six key vertical markets and leveraging its portfolio of recent acquisitions to expand its installation and aftermarket services.

Canada Branch Division Sales Drivers

28

Canada Branch Division combines the operations of our Bolt and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 35 branch locations. Source Atlantic was acquired in 2024 to expand DSG’s operating footprint in the Canadian market.

Canada Branch Division’s strategy is to grow revenue through increasing wallet share with existing customers, via introduction of new product lines and services in geographic areas that were underserviced previously. Additionally, Canada Branch Division will engage new customers and additional ship-to locations with its national sales team.

Supply Chain Disruptions and Tariffs

We continue to be affected by rising supplier costs caused by inflation, and increased tariffs, transportation and labor costs. We have instituted various price increases during 2023, 2024 and 2025 in response to rising supplier costs, increased tariffs, transportation and labor costs in order to attempt to manage our gross profit margins.

Factors Affecting Comparability to Prior Periods

Our results of operations are not directly comparable on a year-over-year basis due to various business combinations. We account for acquisitions under Accounting Standards Codification 805, Business Combinations (“ASC 805”). Accordingly, the results of acquisitions are only included subsequent to their respective acquisition dates. Refer to Note 3 – Business and Asset Acquisitions within Item 8. Financial Statements and Supplementary Data for a description of each acquisition completed in 2024 and the reportable segment that each acquisition’s respective results of operations is included in.

Non-GAAP Financial Measures

The Company’s management believes that certain non-GAAP financial measures may provide users of this financial information with additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain infrequently occurring, seasonal or non-operational items that impact the overall comparability. These non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

Non-GAAP Adjusted EBITDA

Management believes Adjusted EBITDA is an important measure of the Company’s operating performance and may provide investors with additional meaningful comparisons between current results and results in prior operating periods because Adjusted EBITDA excludes certain non-operational or non-cash items whose fluctuations from period to period do not necessarily correspond to changes in the operating performance of our business and consequently may impact the overall comparability from period to period. We define Adjusted EBITDA as operating income plus depreciation and amortization, stock-based compensation, severance and acquisition related retention costs, costs related to the execution and integration of acquisitions, amortization of fair value step-up resulting from acquisitions and other non-recurring items. Management uses operating income and Adjusted EBITDA to evaluate the performance of its reportable segments. See Note 14 – Segment Information within Item 8. Financial Statements and Supplementary Data for additional information about our reportable segments.

The following table provides a reconciliation of Net income (loss) to Adjusted EBITDA on a consolidated basis and Operating income (loss) to Adjusted EBITDA by segment for the years ended December 31, 2025 and 2024. A reconciliation of Net income (loss) to Adjusted EBITDA by segment is not provided because management does not determine or review net income at the segment level and does not allocate non-operating costs and expenses to its segments, such as income taxes, interest expense, and various other non-operating income and expense.

29

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA (Unaudited)

Year Ended December 31, 2025

(in thousands)

Lawson

TestEquity

Gexpro Services

Canada Branch Division

All Other

Consolidated

Net income (loss)

$

8,345 

Income tax expense (benefit)

11,066 

Other income (expense), net

2,500 

Change in fair value of earnout liabilities

1,000 

Interest expense

55,352 

Operating income (loss)

$

18,763 

$

14,405 

$

48,811 

$

7,714 

$

(11,430)

$

78,263 

Depreciation and amortization

27,074 

33,032 

14,128 

6,645 

— 

80,879 

Stock-based compensation(1)

2,926 

1,787 

413 

— 

1,546 

6,672 

Severance and acquisition related retention expenses(2)

2,620 

1,579 

511 

770 

— 

5,480 

Acquisition related costs(3)

109 

(178)

(129)

329 

34 

165 

Inventory step-up(4)

— 

— 

— 

— 

— 

— 

Other non-recurring(5)

150 

326 

— 

172 

3,134 

3,782 

Adjusted EBITDA

$

51,642 

$

50,951 

$

63,734 

$

15,630 

$

(6,716)

$

175,241 

Year Ended December 31, 2024

(in thousands)

Lawson

TestEquity

Gexpro Services

Canada Branch Division

All Other

Consolidated

Net income (loss)

$

(7,332)

Income tax expense (benefit)

6,796 

Other income (expense), net

358 

Change in fair value of earnout liabilities

988 

Interest expense

55,145 

Operating income (loss)

$

14,555 

$

3,967 

$

36,533 

$

6,024 

$

(5,124)

$

55,955 

Depreciation and amortization

24,349 

30,799 

15,489 

3,739 

— 

74,376 

Stock-based compensation(1)

4,132 

433 

— 

— 

668 

5,233 

Severance and acquisition related retention expenses(2)

4,937 

17,791 

460 

49 

(1)

23,236 

Acquisition related costs(3)

7,023 

2,251 

1,501 

23 

(656)

10,142 

Inventory step-up(4)

1,066 

— 

— 

1,816 

— 

2,882 

Other non-recurring(5)

337 

1,047 

1,792 

— 

257 

3,433 

Adjusted EBITDA

$

56,399 

$

56,288 

$

55,775 

$

11,651 

$

(4,856)

$

175,257 

(1)    Expense (benefit) primarily for stock-based compensation, of which a portion varies with the Company’s stock price.

(2)    Includes severance expense from actions taken not related to a formal restructuring plan and acquisition related retention expenses.

(3)    Transaction and integration costs related to acquisitions.

(4)    Inventory fair value step-up adjustment for acquisition accounting related to acquisitions completed.

(5)    Other non-recurring costs consist of certain non-recurring strategic projects and other non-recurring items.

30

Composition of Results of Operations

Segment revenue and Operating income (loss) by reportable segment includes sales to external customers and sales transactions between our segments, referred to as intersegment revenue, and the impact of those intersegment revenue transactions on operating activities. Reconciliations of segment revenue and Operating income (loss) to our consolidated results of operations in the consolidated financial statements are provided in Note 14 – Segment Information within Item 8. Financial Statements and Supplementary Data.

RESULTS OF OPERATIONS FOR 2025 AS COMPARED TO 2024

Consolidated Results of Operations

Year Ended December 31,

2025

2024

(Dollars in thousands)

Amount

% of Revenue

Amount

% of Revenue

Revenue

Lawson

$

481,088 

24.3 

%

$

469,044 

26.0 

%

TestEquity

783,237 

39.6 

%

771,180 

42.7 

%

Gexpro Services

496,655 

25.1 

%

440,723 

24.4 

%

Canada Branch Division

221,426 

11.2 

%

125,099 

6.9 

%

Intersegment revenue elimination

(2,383)

(0.1)

%

(1,942)

(0.1)

%

Total Revenue

1,980,023 

100.0 

%

1,804,104 

100.0 

%

Cost of goods sold

Lawson

217,058 

11.0 

%

211,784 

11.7 

%

TestEquity

613,707 

31.0 

%

595,368 

33.0 

%

Gexpro Services

341,685 

17.3 

%

302,228 

16.8 

%

Canada Branch Division

147,910 

7.5 

%

82,897 

4.6 

%

Intersegment cost of goods sold elimination

(2,375)

(0.1)

%

(1,948)

(0.1)

%

Total Cost of goods sold

1,317,985 

66.6 

%

1,190,329 

66.0 

%

Gross profit

662,038 

33.4 

%

613,775 

34.0 

%

Selling, general and administrative expenses

Lawson

245,267 

12.4 

%

242,705 

13.5 

%

TestEquity

155,125 

7.8 

%

171,845 

9.5 

%

Gexpro Services

106,159 

5.4 

%

101,962 

5.7 

%

Canada Branch Division

65,802 

3.3 

%

36,178 

2.0 

%

All Other

11,422 

0.6 

%

5,130 

0.3 

%

Total Selling, general and administrative expenses

583,775 

29.5 

%

557,820 

30.9 

%

Operating income (loss)

78,263 

4.0 

%

55,955 

3.1 

%

Interest expense

(55,352)

(2.8)

%

(55,145)

(3.1)

%

Change in fair value of earnout liabilities

(1,000)

(0.1)

%

(988)

(0.1)

%

Other income (expense), net

(2,500)

(0.1)

%

(358)

— 

%

Income (loss) before income taxes

19,411 

1.0 

%

(536)

— 

%

Income tax expense (benefit)

11,066 

0.6 

%

6,796 

0.4 

%

Net income (loss)

$

8,345 

0.4 

%

$

(7,332)

(0.4)

%

31

Overview of Consolidated Results of Operations

Our consolidated revenue increased $175.9 million for 2025 compared to 2024 primarily driven by $121.5 million of revenue from acquisitions completed in 2024 and an increase in organic revenue of $54.4 million. Consolidated Gross profit and Selling, general and administrative expenses also increased over the prior year primarily driven by the 2024 acquisitions of ESS, S&S Automotive, Source Atlantic, TCR and ConRes TE (each as defined in Note 3 – Business and Asset Acquisitions in Item 8. Financial Statements and Supplementary Data).

Refer to Results by Reportable Segment below for a complete discussion of our results of operations.

Results by Reportable Segment

Lawson Segment

Year Ended December 31,

Change

(Dollars in thousands)

2025

2024

Amount

%

Revenue from external customers

$

480,768 

$

468,976 

$

11,792 

2.5 

%

Intersegment revenue

320 

68 

252 

370.6 

%

Revenue

481,088 

469,044 

12,044 

2.6 

%

Cost of goods sold

217,058 

211,784 

5,274 

2.5 

%

Gross profit

264,030 

257,260 

6,770 

2.6 

%

Selling, general and administrative expenses

245,267 

242,705 

2,562 

1.1 

%

Operating income (loss)

$

18,763 

$

14,555 

$

4,208 

28.9 

%

Gross profit margin

54.9 

%

54.8 

%

Adjusted EBITDA(1)

$

51,642 

$

56,399 

$

(4,757)

(8.4)

%

(1)Refer to the Non-GAAP Adjusted EBITDA section in Overview for a reconciliation of operating income to Adjusted EBITDA.

Revenue and Gross Profit

Revenue increased $12.0 million, or 2.6%, to $481.1 million in 2025 compared to revenue of $469.0 million in 2024. The increase was primarily driven by $17.0 million of additional revenue generated from the acquisitions completed in 2024, partially offset by a decline in military customer sales of $5.2 million.

Gross profit increased $6.8 million, or 2.6%, to $264.0 million in 2025 compared to gross profit of $257.3 million in 2024 primarily as a result of the inclusion of $9.2 million of additional gross profit from the acquisitions completed in 2024 partially offset by lower revenue for legacy Lawson. Lawson gross profit as a percentage of revenue was 54.9% in 2025 compared to gross profit as a percentage of revenue of 54.8% in the prior year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of compensation and support for Lawson sales representatives as well as expenses to operate Lawson’s distribution network and overhead expenses.

Selling, general and administrative expenses increased $2.6 million to $245.3 million in 2025 compared to $242.7 million in 2024. The increase was driven primarily by additional selling, general and administrative expenses of approximately $3.8 million due to the acquisitions completed in 2024, higher employee related costs of $5.8 million and higher depreciation and amortization expense of $2.7 million partially offset by a decrease in severance expense, merger and acquisition expenses and stock based compensation of $2.3 million, $6.9 million and $1.2 million, respectively.

Adjusted EBITDA

During 2025, Lawson generated Adjusted EBITDA of $51.6 million, a decrease of 8.4% or $4.8 million from the prior year primarily driven by lower organic revenue and higher selling, general and administrative expenses primarily from higher

32

employee related costs, partially offset by additional contributions of approximately $4.4 million generated by the acquisitions completed in 2024.

TestEquity Segment

Year Ended December 31,

Change

(Dollars in thousands)

2025

2024

Amount

%

Revenue from external customers

$

782,367 

$

770,866 

$

11,501 

1.5 

%

Intersegment revenue

870 

314 

556 

177.1 

%

Revenue

783,237 

771,180 

12,057 

1.6 

%

Cost of goods sold

613,707 

595,368 

18,339 

3.1 

%

Gross profit

169,530 

175,812 

(6,282)

(3.6)

%

Selling, general and administrative expenses

155,125 

171,845 

(16,720)

(9.7)

%

Operating income (loss)

$

14,405 

$

3,967 

$

10,438 

263.1 

%

Gross profit margin

21.6 

%

22.8 

%

Adjusted EBITDA(1)

$

50,951 

$

56,288 

$

(5,337)

(9.5)

%

(1)Refer to the Non-GAAP Adjusted EBITDA section in Overview for a reconciliation of operating income (loss) to Adjusted EBITDA.

Revenue and Gross Profit

Revenue increased $12.1 million, or 1.6%, to $783.2 million in 2025 compared to $771.2 million in 2024. The increase was primarily driven by $7.2 million of revenue generated from the acquisition completed in 2024, and an increase of $19.0 million in the test and measurement, rentals, chambers, fabrication value added and calibration business, partially offset by a $14.1 million decrease in electronic production supplies and printing value added services.

Gross profit decreased $6.3 million to $169.5 million in 2025 compared to $175.8 million in 2024. The decrease was primarily driven by $3.4 million of higher depreciation expense due to the expansion of the rental equipment fleet from the 2024 acquisition of ConRes TE and a sales mix shift toward test and measurement which have lower margins. TestEquity gross profit as a percentage of revenue decreased to 21.6% in 2025 compared to 22.8% in the prior year primarily due to higher depreciation expense on the expanded rental equipment fleet, higher inventory write-offs of $1.2 million and a shift in sales mix toward test and measurement which have lower margins partially offset by favorability in vendor rebates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of compensation and support for TestEquity’s sales representatives and expenses to operate TestEquity’s distribution network and overhead expenses.

Selling, general and administrative expenses decreased $16.7 million to $155.1 million in 2025 compared to $171.8 million in 2024. The decrease was primarily driven by a decrease in severance and acquisition related retention expense of $16.2 million and merger and acquisition expenses of $2.4 million primarily related to the 2023 acquisition of Hisco, partially offset by an increase in stock based compensation of $1.4 million.

Adjusted EBITDA

During 2025, TestEquity generated Adjusted EBITDA of $51.0 million, a decrease of $5.3 million, or 9.5%, from the same period a year ago primarily driven by lower gross margins and higher employee compensation expenses partially offset by additional net margins of $7.7 million generated from the 2024 acquisition of ConRes TE.

33

Gexpro Services Segment

Year Ended December 31,

Change

(Dollars in thousands)

2025

2024

Amount

%

Revenue from external customers

$

495,495 

$

439,163 

$

56,332 

12.8 

%

Intersegment revenue

1,160 

1,560 

(400)

(25.6)

%

Revenue

496,655 

440,723 

55,932 

12.7 

%

Cost of goods sold

341,685 

302,228 

39,457 

13.1 

%

Gross profit

154,970 

138,495 

16,475 

11.9 

%

Selling, general and administrative expenses

106,159 

101,962 

4,197 

4.1 

%

Operating income (loss)

$

48,811 

$

36,533 

$

12,278 

33.6 

%

Gross profit margin

31.2 

%

31.4 

%

Adjusted EBITDA(1)

$

63,734 

$

55,775 

$

7,959 

14.3 

%

(1)Refer to the Non-GAAP Adjusted EBITDA section in Overview for a reconciliation of operating income to Adjusted EBITDA.

Revenue and Gross Profit

Revenue increased $55.9 million, or 12.7%, to $496.7 million in 2025 compared to $440.7 million in 2024. There was one less selling day in the year ended December 31, 2025, compared to the same period a year ago. A selling day generally represents a business day in which Gexpro Services ships products to its customers. Average daily sales increased 13.1% over the same period a year ago. The increase in revenue was primarily driven by increased sales in the renewable energy, aerospace and defense and technology vertical markets of $25.3 million, $15.8 million, and $8.0 million, respectively, and additional revenue generated from the 2024 acquisition of TCR of $3.9 million. This was partially offset by softness within the consumer and industrial vertical market. Tariff costs passed through in the form of product price increases accounted for approximately 1.6% or $7.1 million of the 2025 revenue growth.

Gross profit increased $16.5 million to $155.0 million in 2025 compared to $138.5 million in 2024 primarily due to higher revenue. Gexpro Services’ gross profit as a percentage of revenue was 31.2% in 2025 compared to 31.4% in the prior year period. The gross profit margin percentage decrease for 2025 was primarily the result of a sales mix shift and tariff costs not recovered through price increases to customers.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of sales and marketing expenses primarily relating to compensation, costs associated with supporting Gexpro Services’ service facilities, overhead expenses within finance, legal, human resources and information technology, and other costs required to operate Gexpro Services’ business.

Selling, general, and administrative expenses increased $4.2 million to $106.2 million in 2025 compared to $102.0 million in 2024. The increase was primarily due to $2.0 million of additional expenses driven by the 2024 acquisition of TCR, investments of $2.0 million to support 2025 new commercial investments, an increase in stock-based compensation of $0.4 million and additional expenses to support the increase in revenue. These were partially offset by lower merger and acquisition expenses of $1.6 million and a reduction to non-recurring strategic project consulting costs of $1.8 million.

Adjusted EBITDA

During 2025, Gexpro Services generated Adjusted EBITDA of $63.7 million, an increase of $8.0 million, or 14.3% from 2024 primarily driven by higher organic revenue, managing gross profit margins and leveraging Selling, general, and administrative expenses over a higher sales base.

34

Canada Branch Division Segment

Year Ended December 31,

Change

(Dollars in thousands)

2025

2024

Amount

%

Revenue from external customers

$

221,393 

$

125,099 

$

96,294 

77.0 

%

Intersegment revenue

33 

— 

33 

— 

%

Revenue

221,426 

125,099 

96,327 

77.0 

%

Cost of goods sold

147,910 

82,897 

65,013 

78.4 

%

Gross profit

73,516 

42,202 

31,314 

74.2 

%

Selling, general and administrative expenses

65,802 

36,178 

29,624 

81.9 

%

Operating income (loss)

$

7,714 

$

6,024 

$

1,690 

28.1 

%

Gross profit margin

33.2 

%

33.7 

%

Adjusted EBITDA(1)

$

15,630 

$

11,651 

$

3,979 

34.2 

%

(1)Refer to the Non-GAAP Adjusted EBITDA section in Overview for a reconciliation of operating income to Adjusted EBITDA.

Revenue and Gross Profit

Revenue increased $96.3 million, or 77.0%, to $221.4 million in 2025 compared to $125.1 million in 2024. The increase was primarily driven by $93.4 million of additional revenue generated from the acquisition of Source Atlantic completed in 2024.

Gross profit increased $31.3 million to $73.5 million in 2025 compared to gross profit of $42.2 million in 2024 primarily as a result of the inclusion of $30.7 million of additional gross profit from the acquisition of Source Atlantic completed in 2024. Gross profit as a percentage of revenue decreased to 33.2% in 2025 compared to 33.7% in the prior year primarily due to the lower gross profit margin profile of Source Atlantic as compared to Bolt.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for Canada Branch Division consist of compensation, expenses to operate its distribution network and branch locations and overhead expenses.

Selling, general and administrative expenses increased $29.6 million to $65.8 million in 2025 compared to $36.2 million in 2024. Approximately $29.6 million of the increased expenses, including depreciation, was driven by the acquisition of Source Atlantic completed in 2024.

Adjusted EBITDA

During 2025, Canada Branch Division generated Adjusted EBITDA of $15.6 million, an increase of $4.0 million, or 34.2% from the same period a year ago with an increase of approximately $3.4 million driven by the acquisition of Source Atlantic completed in 2024.

Consolidated Non-operating Income and Expense

Year Ended December 31,

Change

(Dollars in thousands)

2025

2024

Amount

%

Interest expense

$

(55,352)

$

(55,145)

$

(207)

0.4 

%

Change in fair value of earnout liabilities

$

(1,000)

$

(988)

$

(12)

1.2 

%

Other income (expense), net

$

(2,500)

$

(358)

$

(2,142)

N/M

Income tax expense (benefit)

$

11,066 

$

6,796 

$

4,270 

62.8 

%

N/M Not meaningful

35

Interest Expense

Interest expense was flat in 2025 compared to 2024 as higher average borrowings in 2025 were partially offset with lower interest rates in 2025.

Change in Fair Value of Earnout Liabilities

The $1.0 million expense in 2025 and the $1.0 million expense in 2024 related to the change in fair value of the earnout liabilities associated with the Frontier acquisition.

Other Income (Expense), Net

Other income (expense), net consists of effects of changes in foreign currency exchange rates, interest income, net and other non-operating income and expenditures. The $2.1 million change in 2025 compared to 2024 was primarily due to unfavorable changes in foreign currency exchange rates and an unfavorable decrease in interest income.

Income Tax Expense (Benefit)

Income tax expense was $11.1 million, a 57.0% effective tax rate for the year ended December 31, 2025 compared to income tax expense of $6.8 million and a (1,267.9)% effective tax rate for the prior year. The change in the year-over-year effective tax rate was primarily due to a change in valuation allowances related to interest expense limitation deferred tax assets. The disproportionate effective tax rates were caused by limitations on the deductibility of interest expense and other permanent items on pre-tax income for the year ended December 31, 2025, compared to a small pre-tax loss in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $61.8 million on December 31, 2025, compared to $66.5 million on December 31, 2024.

The Company believes its current balances of cash and cash equivalents, availability under its Amended Credit Agreement and cash flows from operations will be sufficient to meet its liquidity needs for the next twelve months. In December 2025, the Company amended and expanded the senior secured facility through 2030. The new facility includes $700 million of term debt and a revolving credit arrangement of $400 million, an increase over the previous revolver capacity of $255 million. The Company used the proceeds from the initial term loan to repay the existing $709 million outstanding under the Original Credit Agreement (as defined in Note 9 – Debt within Item 8. Financial Statements and Supplementary Data). Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information about the Amended Credit Agreement. As of December 31, 2025, the Company had $61.8 million of cash and cash equivalents and $393.7 million of borrowing availability remaining, net of outstanding letters of credit, under the Amended Credit Agreement.

Our primary short-term and long-term liquidity and capital resource needs are to finance operating expenses, working capital, capital expenditures, potential business acquisitions, strategic initiatives and general corporate purposes. Our current debt obligations under the Amended Credit Agreement mature in December 2030. Required principal payments on the Amended Credit Agreement for the next twelve months are $35.0 million. Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information related to our debt obligations. Access to debt capital markets has historically provided the Company with sources of liquidity, beyond normal operating cash flows. We do not currently anticipate having difficulty in obtaining financing from those markets in the future, however, we cannot provide assurance that unforeseen events or events beyond our control (such as a potential tightening of debt capital markets, including in response to the implementation of new tariffs as part of the U.S. trade policy and any reciprocal or retaliatory tariffs thereto) will not have a material adverse impact on our liquidity.

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Sources and Uses of Cash

The following table presents a summary of our cash flows:

(in thousands)

December 31, 2025

December 31, 2024

Change

Net cash provided by (used in) operating activities

$

83,849 

$

56,453 

$

27,396 

Net cash provided by (used in) investing activities

$

(29,492)

$

(229,683)

$

200,191 

Net cash provided by (used in) financing activities

$

(64,266)

$

159,301 

$

(223,567)

Cash Provided by (Used in) Operating Activities

Net cash provided by operations for the year ended December 31, 2025 was $83.8 million primarily due to net income including non-cash items, partially offset by investments in trade working capital and other net cash flow items.

Net cash provided by operations for the year ended December 31, 2024 was $56.5 million, primarily due to non-cash items, partially offset by a net loss, payments of $34.6 million related to the Hisco retention bonuses and other net cash flow items.

Cash Provided by (Used in) Investing Activities

Net cash used in investing activities for the year ended December 31, 2025 was $29.5 million, primarily due to the purchase of property, plant and equipment and rental equipment, partially offset by the sale of property, plant and equipment and rental equipment.

Net cash used in investing activities for the year ended December 31, 2024 was $229.7 million, primarily due to the purchase of ESS, S&S Automotive, Source Atlantic, TCR and ConRes TE as well as purchases of property, plant and equipment and rental equipment. This was partially offset by the sale of property, plant and equipment and rental equipment.

Cash Provided by (Used in) Financing Activities

Net cash used in financing activities for the year ended December 31, 2025 was $64.3 million primarily due to the repayment of previous indebtedness in conjunction with the December 2025 debt refinancing of the Original Credit Agreement with the Amended Credit Agreement, principal payments on the previous term loans and repurchases of DSG common stock under the repurchase program. This was partially offset by proceeds from the Amended Credit Agreement. During 2025, deferred financing costs of $4.6 million were incurred related to the Amended Credit Agreement.

Net cash provided by financing activities for the year ended December 31, 2024 was $159.3 million primarily due to borrowings under the Company’s credit facility partially offset by principal payments on the term loans. In conjunction with the Source Atlantic Transaction, the Company borrowed $200 million under the incremental term loan facility on August 14, 2024. During 2024, deferred financing costs of $2.1 million were incurred related to the Original Credit Agreement.

Financing and Capital Requirements

Credit Facility

In December 2025, the Company amended and expanded the senior secured facility through 2030. The new facility includes $700 million of term debt and a revolving credit arrangement of $400 million, an increase over the previous revolver capacity of $255 million and permits the Company to increase the commitments under the credit facility from time to time by up to $500 million in the aggregate, subject to, among other things, receipt of additional commitments from existing and/or new lenders and pro forma compliance with certain financial covenants. The Company used the proceeds from the initial term loan to repay the existing $709 million outstanding under the Original Credit Agreement. Refer to Note 9 – Debt within Item 8. Financial Statements and Supplementary Data for additional information about the Amended Credit Agreement.

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On December 31, 2025, we had $704.4 million in outstanding borrowings under the Amended Credit Agreement and $393.7 million of borrowing availability remaining, net of outstanding letters of credit, under the senior secured revolving credit facility component.

As of December 31, 2025, we were in compliance with all financial covenants under our Amended Credit Agreement. While we were in compliance with our financial covenants as of December 31, 2025, failure to meet the covenant requirements of the Amended Credit Agreement in future quarters could lead to higher financing costs and increased restrictions, reduce or eliminate our ability to borrow funds, or accelerate the payment of our indebtedness and could have a material adverse effect on our business, financial condition and results of operations.

Purchase Commitments

As of December 31, 2025, we had contractual commitments to purchase approximately $240 million of products from our suppliers and contractors over the next twelve months.

Capital Expenditures

During the year ended December 31, 2025, total net capital expenditures for property, plant and equipment and rental equipment were $26.8 million including proceeds from the sale of property, plant and equipment and rental equipment. The Company expects to spend approximately $25 million to $30 million for net capital expenditures during 2026 to support ongoing operations.

Stock Repurchase Program

The Company’s Board of Directors previously authorized a stock repurchase program that permits the Company to repurchase DSG common stock. The timing and the amount of any repurchases will be determined by management under parameters established by the Board of Directors and depend on various factors including an evaluation of our stock price, corporate and regulatory requirements, capital availability and other market conditions. In November 2025, the Board of Directors increased the existing stock repurchase program by $30.0 million bringing the total authorized stock repurchase program to $67.5 million.

During 2025, the Company repurchased 776,924 shares of DSG common stock at an average cost of $30.26 per share for a total cost of $23.5 million. During 2024, the Company repurchased 85,644 shares of DSG common stock at an average cost of $30.13 per share for a total cost of $2.6 million. The remaining availability for stock repurchases under the program was $32.9 million at December 31, 2025. See Note 11 – Stockholders’ Equity within Item 8. Financial Statements and Supplementary Data for further information.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

We have disclosed our significant accounting policies in Note 2 – Summary of Significant Accounting Policies within Item 8. Financial Statements and Supplementary Data. The following provides information on the accounts requiring more significant estimates.

Income Taxes - Deferred tax assets or liabilities reflect temporary differences between amounts of assets and liabilities for financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse. Significant judgment is required in determining income tax provisions as well as deferred tax asset and liability balances, including the estimation of valuation allowances and the evaluation of uncertain tax positions.

Goodwill Impairment - Goodwill represents the cost of business acquisitions in excess of the fair value of identifiable net tangible and intangible assets acquired. The Company reviews goodwill for potential impairment annually on October 1st, or when an event or other circumstances change that would more likely than not reduce the fair value of the asset below its carrying value.

The first step in the multi-step process to determine if goodwill has been impaired and to what degree is to review the relevant qualitative factors that could cause the fair value of the reporting unit to decrease below the carrying value of the reporting unit. The Company considers factors such as macroeconomic, industry and market conditions, cost factors, overall

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Table of Contents

financial performance and other relevant factors that would affect the individual reporting units. If the Company determines that it is more likely than not that the fair value of the reporting unit is greater than the carrying value of the reporting unit, then no further impairment testing is needed. If the Company determines that it is more likely than not that the carrying value of the reporting unit is greater than the fair value of the reporting unit, the Company will move to the next step in the process. The Company will estimate the fair value of the reporting unit and compare it to the reporting unit’s carrying value. If the carrying value of the reporting unit exceeds its fair value, the Company will record an impairment of goodwill equal to the amount the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill previously recognized.

Business Combinations - We allocate the purchase price paid for assets acquired and liabilities assumed in connection with our acquisitions based on their estimated fair values at the time of acquisition. This allocation involves a number of assumptions, estimates, and judgments in determining the fair value, as of the acquisition date, of the following:

•intangible assets, including the valuation methodology (the relief of royalty method for trade names and multi-period excess earnings method for customer relationships), estimations of future cash flows, discount rates, royalty rates, recurring revenue attributed to customer relationships, and our assumed market segment share, as well as the estimated useful life of intangible assets;

•deferred tax assets and liabilities, uncertain tax positions, and tax-related valuation allowances;

•inventory;

•property, plant and equipment;

•pre-existing liabilities or legal claims;

•contingent consideration, including estimating the likelihood and timing of achieving the relevant thresholds; and

•goodwill as measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.

Our assumptions and estimates are based upon comparable market data and information obtained from our management and the management of the acquired companies. We allocate goodwill to the reporting units of the business that are expected to benefit from the business combination.