LAWS - Earnings call transcript Q2 2018 | Distribution Solutions Group, Inc.

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Operator

Good morning ladies and gentlemen and welcome to Lawson Products' Second Quarter 2018 Earnings Conference Call. This call will be hosted by Michael DeCata, Lawson Products' President and Chief Executive Officer; and Ron Knutson, Lawson Products' Chief Financial Officer. They will open the call with an overview of the first quarter results. There will be then time for questions-and-answers. This call is being audio simulcast on the Internet via the Lawson Products Investors Relations page on the company's website, lawsonproducts.com. webcast XXXX. available the through the of XX, August replay will on be website A

call, actual company relevant this out the business information. During the would that as on an I call well the statements materially contain release update on results, goals, and as and to covering underlying those that assumptions concerning that and to uncertainties like strategies, risks financial this operational differ expectations, press will beliefs, and point statements results could described. cause are from forward-looking be operating plans, in to providing subject future

In information may call to today. made so. this The presented in on Products' to to change. obligation cause based of forward-looking future addition, some anticipates update to statements disclaims may that but developments the company light. do call CEO, today, company's are DeCata. at elect company turn the those over as specifically the during now consider views point made views statements any the Mike Lawson I Please would The

Michael DeCata

of provide our more morning comment Ron This you will thank our for call. and financial our progress. we'll the Then take joining overall your CFO, quarter morning, on I review and Good detailed results. our Knutson, will a questions.

performance a quarter continuation of was represents second strong and quarter. Our a solid first

total we planned, sales. As organic sales and grew

of indicated I call, to as plan especially momentum our conference pertains on and quarter that to in first the XXXX, leverage. During build it was earnings XXXX

profitable increasing its value is second proposition, that strengthen penetration, evidence and more as deliver quarter productivity customer Lawson to continues we The growth.

details. Total some of grew sales let's the over discuss XX%. Now,

quarter makes growth. This X.X%. grew. market quarter-over-quarter grew of Every sales the seventh segment organic consecutive Our

the growth XXXX. second growth accounts XX% continued extremely we by in increased encouraged the XX% Our the quarter segment. this during XXXX, we're achieved strategic of versus Considering

We accounts signed existing conversion remain Canada are of excluding During new strategic it continue XX process locations confident nearly as quarter to agreements. Revenue drive also we Bolt. quarter, account XX our will strategic XXX% the in help we added the and within grew new and conversion and second committed us to growth. organically XXXX process part versus second XX% additional sales of our

improved both Our X% we the this a every cloud-based quarter and Kent customer partnership and with grew our quarter. Kent has a [Indiscernible]. but Over building. for largest recently also productivity this time by team. our Kent customers, segment second year-over-year this momentum In called month year at will in slower of Lawson pace, one government we is grew Procure-to-Pay implemented improve

for second these first $XX.X favorable. quarter stated our the previously and in This second in leverage the sales consolidated on sales XX% business. and solid the we're basis Based the of EBITDA EBITDA of We guidance organic million million. optimistic achieved will and the leverage With earnings MRO sales increases, quarter, that XX% leverage XX% we in leverage incremental on also XXXX. of half on XX% continuation our exceed to a a quarter and over represents adjusted EBITDA were $X.X

and EBITDA this detail cost in adjusted some our leverage operating X.X% first of regarding have provide Ron increases of achieved we X.X% earnings quarter, earned top moment. the greater in seen environment, compared from will the For quarter on a and year In also we ago. X.X% a to inflationary suppliers.

maintain MRO our profit reductions cost to gross realized managed pricing our However, other margin. we incremental and

who an to to is also have mentioned of operational their a ultimately standpoint, margin XX% six testament previously, Lawson total that have our center have reflects our years. This needs. quarter distribution our all this profit achieved lowest every our we represents in sourcing parts and our As value distribution critical consistency. team, chain solution sales for margins is supply almost approximately a From teams, fully MRO gross the teams, and operational. achieving It Alberta proposition cost understanding customers' consumable center play MRO

you customers warehouses recall, with anticipate a have from As distribution Western may Supply it's business to inventory from Bolt Kent Bolt. Western in of in and increased Lawson and this Kent Customers independent under a two Essentially, single Canada. room. center Lawson both growth addition growth rewarded in local result House our and organic is us strong as we serving Canada customers

strategy. growth our to Turning

work We growth continue our sales strategy. on to Growing our three-part team.

at including reps sales Supply. XXX with finished we Managers Bolt XX quarter This Territory

We an retention. improvement rep seen have in also sales

productivity. to We Increasing continue incrementally the on focus sales adding foreseeable future. will reps for

represents sales improvement per This in This sales consecutive productivity. rep achieved Growth Lawson through quarter improvement in day. rep sixth sales per reps the quarter, X.X% acquisition. quarterly --

range fill disciplined We a broad remain to opportunities, acquirers. of the pipeline but with acquisition continue

Speaking We're of Managers Supply from Bolt business acquisitions, And is the overtime. a the Territory to Supply sales team. planning plan EBITDA perspective. three Bolt team we've Bolt Supply and the sales on to added grow

to into a and a our by and as has Columbia a with adding in better investments. those an are and will operational Surrey, into previously From perspective, expand excellence a of operations new we and This return initiated plans in cabinets. Recently branch program supply This more closely We consolidate metrics. pleased Vancouver. to us enable location on serve which branch. to will a warehouse suburb also our Surrey in a bins we resulted British, recently manage chain larger our announced acquired both warehouse

also lower a terms both our percent continue maintaining side our to with while grow. associated in level and as business, We inventory service as sales of absolute sales, of organic

the existing existing customers. report that more a program enhance During more our win recently shared share gain to I are skews within positive. indications quarter call, addition I am designed very first we plan mentioned of through to pleased that within early is customers. This established to

hard Our large sales and share reps expand both existing of work within wallet small accounts. to

the already outstanding categories recently largest this strategic business one and product opportunity our we We this we hydraulics service accounts. were example, business For the win in won of earned that to through servicing.

be the will experienced growth for XXXX that XXXX. the we strong we've sales challenging half forward, Looking during second because of mentioned remainder of comps

will continue. and we're our sustain However, operating improvement we confident that overall will EBITDA momentum

more call to over insight the Ron results. for quarter financial the turn second I'll Now, into

Ron Knutson

Thank you, Mike, good morning everyone. and

resulted quarter strategy. in of successfully sales adjusted as and growth our continue second significant execute EBITDA our in a to growth The we strong continuation

reflect Our quarter second quarter whereas Bolt Bolt a of Supply the not results any full does include Supply XXXX House activity. QX

Supply. our the I As performance, as financial through include go as our well organic Lawson results the on business comments Bolt consolidated that both

let Now, share QX highlights. the financial of some me

million quarter the quarter. first sales were sales the daily the up versus quarter. up X.X% were First, and ago from $XX.X Average year for XX.X%

sales year ago. over acquisition, a organic daily increased X.X% Excluding the impact of the Bolt Supply average

EBITDA $X.X million compared of was XX%. adjusted quarter the to increase ago, our Second, an for $X.X million a year

$XXX,XXX, under While the $X.X our House EBITDA driven operating And of result quarter in into by a margin reported was consolidated in XX.X%. previous new amounts adjusted as percentage the associated business the leverage. Supply benefited certain and improvement our from allocating of was service-related costs million quarters gross a third, in sales of our increased primarily method the gross Bolt as MRO margin discussed

while Bolt days, year the quarter in on selling detail. the one XX.X% of day quarter days XX.X% discuss drivers further percentage reclassification, of of Excluding now million generated We was quarter. our QX. as same more in in the number the ago XX sales of ago margin the than $XX.X quarter; segment gross loss the year some service I'll for compared to expense and the

As of to Bolt from year quarter a sales quarter. second compared ago, first, benefited the million for Supply sales the our following; generated $X.X

of we all positive our segments Second, deliver quarter. actions sales grow the to we've in as taken to realized drive growth, continue for

We for continue our to new convert strategic locations relationships. existing

are as technical and onboarding reps, questions, management, product initiatives reps our we and of in process accountability the sales robust forums sales to with addition, the field investment talent and development drive new more improve growth. reps sales support for technology, rewarding In to provide

nearly local rep X.X%, the at average sales Bolt million, organic sales of ago U.S. was approximately As a X,XXX Also rep From respectively. segment with X%, reps, a sales remaining continue were Managers the based On $X.XXX rep XX quarter finished our an standpoint, than Lawson account were ADS sales ended XX% a Year-to-date, within line hiring. less up organic X.X%, for in represent while with our quarter consolidated loss Supply the per and in for plus million, XX% improve quarter. up quarter. all and and over broad are April increase X.X% sales of daily sales with of in year-over-year the strategic increase increase X.X% XX.X% sales and productivity were volume. Territory day our quarter growing sequentially MRO over average X.X% a the to currency. $X.XXX basis, million June May Kent in XX.X% first slightly $X.XXX We on the sales per productivity result, sales an sales Canada was business focus Lawson an segments and year up and up or expectations. XX% sequential basis, up From were Lawson segment excluding daily our nearly Bolt with the

business. solid in with gross margin in core our growth performance realized From line Lawson our a also expectations. was We standpoint, X.X% our

in gross quarter. strategic by in our gross customer lower weighted for the and who lower was margins. in to costs, around efficiencies Our XX% anticipated, our gross expenses the Bolt the continued setup and compared a segment Bolt margin and marketplace pricing was significant customers margin And margin margin remains XX.X% percentage. reported gross average Prior was percentage. The the driven the the lower percentage with Supply XX.X% business improved reflects There typically margin Bolt towards as product focus in to Supply, margin offset ago to partially a fulfillment pressures. margin Supply process primarily reclassifying reclassification quarter expense Lawson in a lowered margins estimated service-related have shift year by which increase Lawson's against gross closer gross the XX.X%,

was Bolt that $XXX,XXX operation leverage We as sales as our percent primarily million. inclusion compensation remain required by increase site $XX.X own. total of driven expense in the a the our been total look to reducing higher the for quarter. to further not the related from continue same expenses been a vendor year $XX.X million stay same we've general, from seeing While compressed. are perspective. selling with at cost ago and increases, a margin Selling, Consistent administrative million ahead year quarters, quarter previous an we the it margin gross to under to to of $X.X portion compared sales business. of the million, gross to were we standard, on expenses discontinued of have the customers overall to accrual ago, of operating to $XX.X Supply moving product The new when amount a and recognition revenue increase, Prior margins were for building a expenses expenses a support for we focused pricing able second the to

Our consolidated results, in adjusted XX% by the EBITDA leverage approximately of [QX XXXX not The base]. Bolt inclusion the percentage in the quarter. diluted second Supply gets the for XXXX was at of quarter but

sale income basis, MRO discontinued an our sales organic and our the taking Bolt range the year operating remaining the Adjusted was of to on and share. previously $X.XX million in Lawson which contributed an a was $X.XX ago $X.X benefited the or million growth, to EBITDA due million $X.X distribution Net from adjusted for quarter. This $XXX,XXX stock-based or million in diluted Operating was into the increase XXXX adjusted year a non-recurring gain EBITDA, the from costs. net expenses, center EBITDA This a However, per with the $X.X was $X.X the additional X.X% ago. quarter exceeding of severance, income approximately segment adjusted of EBITDA million leverage $X.X income quarter non-GAAP coming operations on managing for compared quarter was account to of accrual non-recurring for some primarily $X.XX $X.X share. per share $X.X XXXX our the stated XX% second Of the million compensation, Supply. of compares to XX%. diluted million XX% per

ended last from Bolt gain, the balance quarter created Supply to year improved the million this in with from a second $XX.X perspective, year. XXXX borrowings, primarily XX% From we of quarter acquisition. sheet Excluding $X.XX EPS $X.XX diluted the

quarter, decreased by the borrowing of During $X.X position million. our net cash

year. the expect We quarter half for $XXX,XXX. was trend decreasing to during the of this continue the second CapEx

in million $X expect our of guidance for previous We range down CapEx $X.X from be million, of million full to million. our $X.X to of XXXX $X.X year to slightly the the

XXXX. Let commentary me now some of provide remainder the regarding

Supply sector, we comparisons the acquisition, growth. given the and half sales the Although optimistic second year, our half are challenging drive of Bolt in impact current quarters, economic to of are about trends the the more the organic in past second our over few indicators XXXX of initiatives

improving additions to salesforce. Second, we remain focused accretive pursuing our and on productivity rep

to XX% will business for of potential we of exceeding the longer continue it XX% and costs pipeline and existing the questions. now previously expect active sales half second guidance will anticipated the an second tariff I'll is range drive we over to impact turn take and our XX%, Fourth, finally, operator our XXXX, on MRO inflation term stay infrastructure some XX%. Due half the strategically ensure adjusted to focused. growth our actions in have the And continue to in to to of acquisitions stated that EBITDA. costs. we for our to to monitor necessary ahead that we Third, of increasing product of non-recurring the incurred XXXX in we leverage leverage

Operator

Research. Please with your question Our Barrington Instructions] proceed [Operator comes question. Steinke, Kevin from first

Kevin Steinke

and morning Ron. Good Mike

Michael DeCata

Kevin. Good morning

Ron Knutson

Kevin. Hi

Kevin Steinke

obviously, expected maybe EBITDA that leverage that second half. And leverage items of also that the half? results to better contributing outlook here. is non-recurring had you the nice And don't to to in out also recall -- expected adjusted So, sales mentioned kind you the second Can talked about very in one. that XX% I the leverage? you then That's might XX% that contribute call

Ron Knutson

Sure. Kevin this is Ron.

initiatives, I'll really modest growth. -- non-recurring We today half I call that going so second Mike some -- the comps also year. of And would the both excuse last did we a have the of some special and this your of the think given bit I consulting you second sales as and first. our expenses we maybe of in reoccurring XXXX. with And throughout as did growth we're Then continued first sales incur a do we of mentioned, even sales So, the that tougher and the move a going take question, as rest year. that leverage get growth. of the have leverage incentive we infrastructure we've from answer half from me maybe we to that's perspective, see our the But And comfortable ability to to we -- some know feel seen given the little what perspective accruals incentive kind second dollars not higher had year. in the half half

guidance, that of the comfortable seeing forward, on expenses, trend and XX% we're some XX% we second up half XXXX. non-recurring that at looking -- the against being sales pretty knowing with least just So, these of for feel to

Kevin Steinke

average great. do. month numbers sounds and by that sales Okay, daily And you went through you usually the for as loss loss

out You by showed an in which those also called throughout you month the year-over-year as move growth acceleration growth for month. the ADS numbers

far monthly what And it in acceleration? reason so out wondering about just called of if you're seeing what for show that growth? does So, you the how -- to in say the July terms ADS

Ron Knutson

Sure.

saw we nice throughout the So, Ron, June. really again, this and May, -- April, is a trend

from would it July made percentage year in June bit in far, up surprises there's to say no lighter ago, a been were easier. really a so little the bit in look little Relative July. I we Although a that against so

to get As we're from demand I our but trends customers. tougher, do mentioned see demand positive the comparisons continuing from

real So, XXXX as all-in. again, the know pretty surprises in we good second no of half feel July about

Kevin Steinke

bit account forward? strategic penetration strategic could XX good. with new about for relationships, conversely as called you how room Okay the also more of how Or a they new the at you about locations talk those accounts new relationships. accounts existing new And move accounts. out you if much outset? Mike large signing have adding additional are talked those would Wondering little

Michael DeCata

This Thank is great Yes, Kevin. Mike. you.

existing new walk that, locations within They're or As start In always never they a usually explain does. accounts, you somewhere. small. accounts actually conversion most have which to into and Bolt accounts customer them what is strategic a getting

the common almost just of of kind will tell moderate XX company. before whether So, Time the that's through like spectrum share just customer's existing a account; The their a or and have keep spectrum. enabling is Yet really One One rest in we become a gain. our Having to them recycle ramp denominator through that, one single are a we the of and is location to they at the strategic they they accounts across the cost win lowest the up can company. oil we of burn everything very product machines that recognize transportation accounts. running. company. is see mining the begin business. value an pretty said generally supply of is broad multi-site be provider kind inventory company. stage of where accounts, source and we these to the is Of their that gas our One is large

the the sort take part of question. me other Let implication your second -- of

existing we our add I tremendous We have. locations us runway that hunting go strategic accounts We strategic have in continue within conversion our within but even Generally, new new corporate mandate. usually There's XX to help, think way to earn side-by-side not mentioned existing to licenses customers we where locations converting but our these a within tend mostly, are already accounts. locations ahead always, and of not accounts. organizations

initiatives potential potential a our runway So, very strategic eye We significant the more but accounts. about ball very initiatives, locations. relative regional growth associated to accounts with and local strategic is feel accounts of taking great there the converting just long existing also off our our with not government

Kevin Steinke

Okay, that's good to hear.

improvement maybe the retention. sales a bit in quarters. I last rep You been challenging that's called over out know also few

point here? little you the that bit What might at What's more? to retention? do be with you if going retention of on turning talk just a you bit can think that led So, a a about

Michael DeCata

a reps to ability managers more training, benefit many spending reps. rep that our sharing -- as knowledge on this, and network. with one customer their of past, a the very and would we've improving of the teams lot sales question in response. small the that more a it's benefit connecting get of all front reps retention in way intense process that the I sales reps a I all quick about, from yesterday most the but even on reps district that we way discipline, time to is call certainly from other about so by new very, ask Microsoft spoken argue Yes, The seasoned actions, almost commented sales

I minutes. training, it's question process. knowledge of technical think combination the Pretty sharing was and turnaround so a six like

in I nature focus the power we attribute that people sharpening them our but will work to think we here, it plan and we're once onboard. is on hard we Can't people everything thing, so there to to work the the of to every get right bring five, they hire continue one day. with our years. XX us to they're That do successful make XX, are and hard

Kevin Steinke

per continues your to nicely. there? in what's rep a of rep per grow little internally addition bit to drive to good going productivity, being that that one you're And we three-pronged What growth more Okay. so of talk now? can sales day the on doing legs strategy key the sales market That's improving right obviously

Michael DeCata

to The that training and or every It's that in jump-in unique that let locations that very marketplace customers. again question solve of ability eyes and with as connected proposition. together. we're reps' the of see customer problems and existing of significant differentiates month. small Same in or day this shipped come every to and fact customer. sharing other those similar week, Programs every things reps. answer a a in customers, these items the -- maybe part is share our to unique whether sales us so moment. hundreds which wallet closely XX,XXX applications week them or of coming all to of to to knowledge large all with the excellence thousands the start a together. value visiting things every of Operational more the XX,XXX the is customers It's of single month. We problems single And within and per of Yes, lot win a answer me active wants retention Ron

a rental state, road Now, utilization oil over miles. Broad-based is is I backdrop; steady will the equipment state. there construction time economy again, good, say good, the steady is industry and for gas trucking

demonstrate economic steady to we it our share backdrop, our As a at to place gives value ability but a customers. see state, go the us good win and

deck of nicely at a of together of bit sort think a seeing years all moment working what the I little coming quite actions seems now. in now all be to and you're we've it investments and is of time the over a underneath the quite taken few

Ron Knutson

that have conversion [MS] our fact reps. compensation Sales go reps retention required the the message that hit it's our grow. only It's add but really -- now It's sales would It's rolling about plan. we're the to we sales all thing our Kevin, And a lot a the sending the mind. that it's a the reps utilize It's to and help to that in individual our our Yes it's change. the that through It’s of And to scorecards mindset -- I about we've team only are out. sales that is really on changed Mike onboard. culture Managers sales brought my District training accountability, these, is quota-based specialists process. we're teams, must that can its

So, are been that it's after. rep driving believe we a all that really many culmination that productivity of many, we've factors

Kevin Steinke

quarter. helpful $X that's strengthen that here normal first seeing picture just guess overall sequentially? in for in color. trend expect you in in general? up the sales just second are kind sales Okay, the Is million I $X.X the Bolt on million Bolt, of from you'd Or lastly the seasonal quarter,

Ron Knutson

Yes. Yes, so is Kevin, this Ron.

a their So, their stronger second than quarter. is yes, typically quarter bit first

see second would bump we that up that here a quarter. the in anticipate did we So,

Western almost of -- ago on sales in add are quarter. the market up the strong year has has would our the I been relatively business, side that MRO fact, been were Canada over Although XX% and Canada a

even but they first the versus up the they've nice over second sorry increase second They not some they seeing nice versus are only XXXX. over quarter, -- seen were first I'm increases. of where is quarter Bolt half -- half So, a are

well they both So, in really at to of on-plan sales in and are point performing clearly as as Mike's earlier, EBITDA. our terms expectations

Kevin Steinke

great. Okay, now. questions. turn taking over for I'll it Thanks the for

Michael DeCata

Okay. Kevin. Thanks

Operator

with next comes Far Please Hathaway, Our View the your Management. Brad question. question Capital from proceed

Brad Hathaway

margins Hey that really the to congrats incremental strong on a guidance the are and exciting guys, on see. quarter and

So, that. congrats on

Michael DeCata

Thanks Brad.

Brad Hathaway

One question that continue is right didn't players? view the you roll-up mention on you environment Are acquisition now. still opportunities call the how to you seeing smaller do

Michael DeCata

-- are Yes, we now we some filling our are We've at looking for the ability larger smaller more We end a integrate feel nice denominator ability confident all sort is opportunistically lot continues of them But intensive, Mike. opportunistic. the feel We and Brad, much acquisitions They as I has acquisitions make learned pipeline internally say of -- type very been. sense. done and Yes, acquisitions. integration the are well always We're the of three differentiate umbrella. share in perfect products, still this us pipeline the from be MRO it feel so has service our range The we common as ourselves about upper done have. very in our through is It's Consumable now we the same and knowledge those to great five to from about size. perspective. at range. and five very there the our Though every we to more of that them. very, will one ability good seamlessly bandwidth. an that the

say that docket. companies under have fair to and successful references of owners one next there's said the lastly that we've management it's we more teams the acquired amount we the having that, the that the the in been use for as are and like that I Now that a umbrella will

communicate the process we use two surprises for thing. process of happens year we're are live everything there at the very actually the very integration no discussion same proud and so long what owners both and we what we we're versus that and do the up the So, in we a consistent to integration first way going into or completely that we're are to a say the

about So, the we're great feeling pipeline.

Brad Hathaway

you any Okay, Class on competition your seeing acquire space. more call, an obviously appetite quarter in great. from who [MSC] mentioned one are second players. had competitors, of mean the their [Indiscernible], other they I to that And owns C more

you seeing comes more to kind So, are of potential acquisitions. intensity competitive it when

Michael DeCata

We really aren't.

Let's and or acquisitions, we is there changing say there earn competition. smaller Whether larger there of go have not the seller. interest out we're are competition, to the but acquisitions

values, culture, our go our does think we I things how about us. differentiate

we fair course like decisions price, have acquired. purchase ourselves happen to based else record of on track acquisition. in on have people clearly based made Of our would going plus after what's price potential that the I everybody we a But but are eyes differentiate to pay often very the do. solely we've to the And sellers of think actually already

So, seems like it's a steady state from environment. a competitive

Brad Hathaway

you on good the thank congrats very Excellent. Well, and Great. results. Okay. much

Michael DeCata

Thank you, Brad.

Ron Knutson

Brad. Thanks

Operator

Barger, Steve your Markets. from with Please KeyBanc comes question next proceed Our question. Instructions] Capital [Operator

Ryan Cieslak

the congrats Good Steve. is morning and for quarter. Ryan Mike and Ron on on This

Michael DeCata

Ryan. Hey

Ron Knutson

Ryan. Hey

Ryan Cieslak

rapid Yes, just update come pace? on see inflation starting so, wondering what if pricing through you're you to can to that? the at manage more an environment. Are steps give you if taking And a

Michael DeCata

Yes.

Mike. of is it and a first more This this. fill out the part can details. into Ron into I'll jump me Let jump few

driving from cost rational just We suppliers. suppliers. talked also We've bit been We're and to It's environment, that's certainly We well. see increases price able from inflation. labor suppliers; capacity increases. our being a are shortages seeing general from little price some manage seeing about a then some constraints that dynamic moderate and

inflationary a all environment. underneath like general seems it's it just So, it

or six to this customers in top narrow mechanics two gross ability let basis happened has variation been price downed makes are able valuable recognize keep a again to have our added including the in profit this on that produce in six that. day us world their years been me significant growth than our our increases with at percent. appropriate. machines argue on because in their improve environment a cost in and more and have us Now, is A a lot And we've would number part we waiting more to Underneath lowest a help a say and all very margins. of to and through to we've large willing basis. maintain that for customers enable them yet in it we interruption the rather our very this has and machine. quarter, A we of work an with lot strategic in on the accounts. able consistent We've I broader and been where years with of that, look gone that productivity almost happened us quarterly even to solution

Ryan Cieslak

Good. And performance are business. to my the that's legacy gross at I Okay. leads taking that nice Real due of initiatives know question. to there. you next up lot guys And a the margin

more growing curious I'm levers those how for to the to benefits opportunity So, you mix to continue pull headwinds outweigh strategic or from do just have much accounts?

Michael DeCata

What again, years, previous in Mike, are a lot there we play. this of -- as we is in forces have

work continue sourcing. global on We to

Our suppliers have us. our customers worked with very well with worked us. have well

part, where Six raise manner of But shouldn’t the and we're is have combination opportunistically or is what not small is. We ways, say to. keep working the for necessity I doing to more it most trying to we're out in hard are operational Sigma, prices. we all excellence Lean That initiatives, that broadly not of of it occasionally,

increase are do We it. not hard to trying

Ron Knutson

able the What we've keep the we been that I dollars dollars, really for the which we're profitability manage XX%. threw that of quarter, and versus after additional gross profit margin as to this But it's that north is helped that, And would going number gross really mean been out significant exhibited that quarter. add percentage. percentage great I Ryan, overall to

that range. with forward say would agree we percentile comments Mike's to I and going main is expectation that additional be remain the in dollars is next But would ish getting XX I of our really able So, our all focus.

Michael DeCata

Absolutely.

Ryan Cieslak

Okay. it's the How And rate? see quarter per good going kind we should an rep sales then increase headcount this to nice single in a range of think digit run about forward, quarter.

Michael DeCata

Yes.

and upward. at some territories is they for or trajectory and said the see last, work you've are you'll consistent, grow. we rep very a up divide per but as we've half moderate year see appropriate. point; to As a There as got more a kind There untapped territories of, so,

sharp then for rep hard But enable be our the career forward. sales with us. their a sales new of can a it not it's very and prosperous every well, moderate of sales gratification day. our and ones is long in going accountability. But get We a be of they and reps, see course, short successful work, if of the focus reps have customers increase seasoned So, our long to you'll that hard more everybody. by from very work of headcount on positives, It's they offset continuous as our lot a same to lot

So, increase in numbers.

Ryan Cieslak

in now? going be then and lines. prepared saw customers customers growth Would new your within is stocking Alberta, to now early you And I out able that growth you to Okay. Kent remarks Lawson break that region tell just or said think your from product those you the to products, right D.C. in existing to too some

Ryan Cieslak

tell. to little a too early it's think I

the had had we a Canada. along reps have -- we seeing Western the cycle. was lot are customers in in delivery they The in challenge and sales had Western past We Canada

little customers D.C., the to it's are they being and with Alberta, the and giving We're have existing a we're a pick-up pleased cycle very at existing that an increase lot see And dollars very, very early from a in material short Now, us customers new also quite delivery we more confident order a increasing customers. customers. rewarded from we will new business. at pace

Canada in the needs the mix than inventory Of Eastern needs Canada is inventory, little different the Canada. a course, products and the we're Western dialing -- in of in Western

of that sort of all lined speak. is So, we as out being

Ryan Cieslak

quarter well. then you're like just what's comps? for quarter gas this was you. just oil it end give more market? driving couple and sounds on believe that it flat was And hearing customers I for It little me. the tougher as Can in color flat, Last bit a Okay. what more more from just maybe And you a so is

Michael DeCata

win energy for yes, because doubt within more more share I'm of fairly is sure. gas But operational excellence, the this customers customers comps, to in and Again sector. there. oil is It beginning No confident of that and and we are Mike. wallet existing tough

marketplace we the comps, and yes, So, wallet about but longer not customers very we market steady differentiating much and good much very so and optimistic very speaking I'm ourselves we feel in existing longer tough are that underneath term, That speaking and the I'm share pretty so with a more more I'm seems And will over market. oil term and of not customers. pick-up again gas to that state.

Ron Knutson

it and versus pretty as versus we down first flattish in that in overall represents year three about by second and Yes, quarter But defined Ryan, point, saw business quarter increase our XXXX. a of QX ago. a kind and Mike's code, of the little a bit to half sector nice and still SIC QX of a

we throughout the numbers we are up move the So, of year. as rest against tougher

Ryan Cieslak

was for Okay. rate about about And and this Tax XX% quarter XQ. XX% in last one then me.

should Looking forward tax think we about how the rate?

Ron Knutson

for XX% rate. think I pretty like and a the Overall, that's sitting Yes. year, we good at feel about we're

have items the percentage slightly. quarter the so it first little income was within a -- drove up The rate was just we fixed some effective rate our higher pretax because and there lower,

So, think basis XX%, rate use. I is a a to go-forward good on

Ryan Cieslak

and guys the again again quarter. Thanks on congrats

Ron Knutson

Thanks Ryan.

Michael DeCata

Ryan. Thanks

Operator

next question Barrington Our Research. question. Kevin from is with proceed Please your Steinke,

Kevin Steinke

just here. follow-up one I had

timeline open you wanting the outside have set mentioned had You to area. Do branch? branch Vancouver for Bolt that launch you new might a when new a

Michael DeCata

Kevin, quarter. Yes, It's probably Mike. is fourth early this

Kevin Steinke

Thanks. Perfect. Okay.

Michael DeCata

you. Thank

Operator

remarks. like Ladies call and end Michael reached of closing DeCata question-and-answer the the gentlemen, to we and for have pass to I the session back would

Michael DeCata

And great of EBITDA doing acquisitions. on and Bolt our quarter business. we do prior XX% added in Sales Lawson MRO the the organic you excluding $XXX,XXX is X.X% acquisition for leverage productivity. consecutive quarter. $X.XX a is why was you. in The per of this is Thank EPS today. which building quarterly the had over a Thank call and Lawson our up Products the quarter. We year's productivity was the sale Great. XXXX, second rep over increase joining we up great XX% achieved share sixth in

optimistic thank our Lastly, XXXX the you. Products. of a suppliers. I'd We're thank and that for customers, our Lawson great day and to remainder teammates, Have our like will strong be very

Operator

This concludes today's conference.

this time. your may lines your You you Thank participation. for disconnect at

Distribution Solutions (DSGR) 26 Jul 182018 Q2 Earnings call transcript