LAWS - Earnings call transcript Q1 2019 | Distribution Solutions Group, Inc.

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Operator

Good morning ladies and gentlemen and welcome to the Lawson Products first quarter 2019 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 time for questions and answers at the end. This call is being audio simulcast on the internet via the Lawson Products Investor Relations page on the company’s website, wwww.lawsonproducts.com. webcast XXXX. available the through the of XX, May replay will on be website A

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

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

Michael DeCata

joining detailed and financial followed our call. Ron you by our overall. questions. continued for provide results comment the first our morning Good will progress This morning and will CFO Knutson, review on the of thank more I quarter your results

Lawson of markets. of against through Lawson that and results. Just that lean great the end report growth to backdrop had The has earnings six in reengineering. of the XX management the and exceeded reinforce growth initiatives healthy quarter ago, effective solid excited success I those this morning XXXX results process report advantage years. the first cost share taken weeks to reported best I’m also our XXXX. strong of results in XXXX continued quarter gain first and of sales

This of increase of we standard EBITDA during incorporates achieved compared basis, versus the first to quarter a this margin Ron an profitability. quarter lease a a adjusted adjusted leverage As and accounting X.X% took the in of quarter to which represents operating this deliver on we first EBITDA X.X% quarter. XXXX. This further new comment On moment. strong continued XXXX. effect EBITDA in result, XX% the will consolidated this

the standard EBITDA adjusted not would reported classified While an been the for of and our at XXXX, impact being of X.X% primarily less quarter did to new XX% the EPS, due first as higher have increase quarter expense depreciation. versus

We organic during also XX% achieved on leverage MRO nearly top our XXXX. within XX% of leverage business

reps, sales are pursuing our increasing We executing successfully strategy and acquisitions. rep a disciplined productivity, three-part approach adding sales to of growth

the result, As with we and a value company continues resonate proposition to is performing as our expect to well trend this continue customers.

sequential on let’s Areas growth of quarter, an of quarter. broad grew XX% as each with We quarter compared the Defense nearly the to accounts, our X% strength government of details. of Now as Department including some business, quarter versus improvement as XXXX federal a currency achieved well benefited discuss non-military of which as the XX% from and of basis increased the first sales segments. consolidated XXXX. In basis on equivalent strategic base by municipal, during the month included well state, and X.X% government we first which the accounts,

our this IPA which reps located segment Our progress us a national several agreement, the forcefully sales in combination at through and local business. the been sales of military to government enables win and dedicated quarter has embracing municipal achieved bases

growth we also of While experienced Kent growth the this is the the segment and in the expect year, second quarter. business our segment half up through comps for against XXXX. this balance nice continued in challenging of core

and area the Canada structure, in managing transportation. quarter achieved our western Bolt Operationally, the achieved grew. categories this our business product cost overall progress XX.X% local In of and segments all business particularly Canadian growth quarter, all overall achieved of XX good in Importantly, solid we currency, this XX% growth. our made growth

For expenses Canadian the example, has positioning the opening to of transportation by impact Alberta western customers. our closer inventory favorable distribution had center a on

in installed recently in measured in McCook distribution hour per also items improvement new our We engineered center resulted worked. standards by productivity, which picked labor

incremental Our commitment to our a lean of continuous the improvement defining is across company. characteristic culture

reach customers. and over district quarter to the a specialists full continued our through sales sales we focus addition actions trend addition, located we quarters, balance reps at-risk out and percentage on sharp as in approximately managers been retention well at retention one to point. that we’ve through the increased XXXX. few retention first This anticipate In implemented continued by combination have improvement as of That the customer our has of headquarters of with past customer directly for several the the accomplished

welders, want increase year, greatly the shortages demonstrated mechanics, of have of and our day especially serve personnel market. Customers downed that Over don’t service-intensive and Considering to to shortages, past the there repair industrial considerable costs, drivers, wait labor even the been one opportunity VMI associated with discussion to has maintenance labor in labor customers model. equipment. value truck us productivity to

to increases from suppliers, and see cost we XXXX of continue anticipate lower increases overall the cost balance we than moderation Although for XXXX.

when growth our our fulfillment is margins suppliers. with three-part managing successful our and be strategy to continue closely improving working. through process, actions gross necessary, also working summary, In We pricing

hire including sales Bolt First, foreseeable future. X,XXX our and Supply, incrementally to team: reps we sales finished the first for with the plan growing quarter

quarters, and past process This rep of in this process productivity: first improvement being this specialists per initiatives is put Second, the sharing to existing solid the the sales of MS measure such sales market. additional X.X% the with strategic a few quarter productivity Lawson called reps knowledge in rep day. use Teams, along conversion within by over sales hiring as retention XXXX. We of the versus customer many achieved productivity place quarter, increasing locations of win MRO driven as per a accounts

government against an our add including systematic our color execution strategy, accounts as years, we resilient To and acquirer. helps overall a that pipeline geographic XXXX feel our this range diverse highlight new will sales label have acquisitions: base. comps. our operating achieved MRO results while strategy. and opening through active past previously such XX% XX% broad small concurrently western private remain have more compare opportunity in many to The business, diversity the for a diverse we to our to diverse focusing are on on commitment Canadian and customer solid growth This disciplined markets a build as existing with the but to to of consciously focus working our acquisition Third, remain strategy, our methodical expansion, approach includes expansion of confident within XX,XXX communicated accounts. customers leverage end resilient. the range we servicing over two We quarter, We strategic challenging believe across us we of

achieving XX% making EBITDA milestone. and good toward then are progress exceeding our We

over to for Now into our it first turn results. I’ll Ron insight quarter financial more

Ron Knutson

you Thank Mike, and good everyone. morning

Mike XXXX of of results a mentioned, XXXX leverage As a strong quarter with adjusted and operating reflects first the significant favorable our EBITDA. in continuation improvement

organic include on well consolidated highlight Screw business performance, impact As also as Supply the I’ll I that Products both discuss our comment on of the Lawson and results, as the both quarter. financial the

Mike accounting that the me new Before referenced. were in on lease required I we our discuss comment standard results, quarter implement the to let that first

right-of-use operating of As standard, liabilities required to we all associated financing sheet. the for assets balance leases include are now and on and this a result our

result, a approximately As million of added liabilities. lease we $XX

sheet, our Additionally, McCook already balance and lease under been the our as on had previously standard new recorded capitalized an which lease. as was was facility, distribution operating a financing re-characterized

thereby earnings share, $XXX,XXX. historically our net the adjusted this did While EBITDA and it recorded by had per expense classify not rent or reported for us as quarter our impact to as expense, require does income reported depreciation approximately been decreasing what

Now let of some me financial the QX highlights. share

First, year for quarter. were Consolidated up sales ago were X.X% the $XX.X million quarter. average sales daily the versus

primarily a quarter our that million by XXXX is improvement compared EBITDA $X.X organic realized was quarter the MRO driven for million all an for improvement we in The XX% ago, the to $X.X Second, year top a XX%. our this This $X.X over increase million of adjusted of of on business. in XXXX. was

$XXX,XXX Additionally, the contributed Products organization Screw in recently EBITDA. acquired

organic of of QX some quarter with days. we first costs but compared commentary. into The XX.X% same business XXXX. to ago of discussed per gross discuss quarter QX percentage now XX.X% to quarter in allocating the consolidated as margin and This MRO was additional the sales over selling earnings Third, I’ll as some in segment days compared number prior XX service-related expectations. gross XX.X% the year the additional and gross the line $X.XX margin we’ve of was quarter drivers for was of million Fourth, share two for and of loss $X.XX method of on quarters. to our $XX.X margin, provide previous We of reported new of days the in in in generated quarter selling was the XXXX. the XXXX diluted

increase first primarily in demand million for benefited and a U.S. Bolt quarter, compared dollars ago, to its As $X.X in across sales categories from XX.X% newly stocked generated the driven product of following: broad-based Supply items. quarter USD of sales year first, the by our an favorable

Mike mentioned, the for X.X% MRO segments as our of quarter. Second, grew sales all across

ago a day sales increase rep quarter. an As with year of result, per X.X% the rep improve productivity to continued sales MRO per over

X,XXX We Lawson ended for the Third, sales reps Kent territory Screw in plus Products than quarter added with managers Supply sales the $XXX,XXX less quarter. XX slightly business. in Bolt the

a or Products, productivity, of profitably approximately Lawson up Canadian Our X.X% MRO sales $X.XXX sales an with basis, our million, local Lawson X.X% basis, at the was currency an improving excluding organic efficiency margin process, in and quarter Bolt strong we sales From account sales initiatives Prior Through organic talent. the in sales The broad gross were continue pricing in From effective Screw addition $X.XXX margin XX%. profiles re-classification, February expense Supply, XX% million, Screw quarter. our Supply prior Lawson dollars. approximately of growing of segment. and and in Lawson Supply and excess quarters, March to Lawson XX.X%. focus while to the with government XXXX. expenses fulfillment service-related X.X% of increase rep than margins March segment remains We the in operational XX.X%. X.X% was drive segment was and that product On the represent force, and by was strategic our Similar U.S. January over up our standpoint, quarter were our re-classified sold segment, for line our business. increase sales X% Bolt was Kent In average based in ago cost Lawson in goods to X.X% impacted our XX% core were million, Automotive. expectations, over all up were gross were of segments growth sales $X.X reported growing million margin growth gross the growth for in XX% a into realized X.X% Bolt on finished business, margin retaining Products the and sequential gross ADS, our ADS lower year $X.XXX daily our U.S. MRO to MRO

expenses sales year existing manage a administrative as expenses percent $XX.X a general operating quarter Selling, continue to We total for of and first leverage infrastructure. the further million our ago million quarter. to and compared $XX.X were

items Excluding operating sales our severance stock-based the total increase. service and such up cost X.X% non-recurring were to expenses as and support re-classification, compensation X.X%

operating leverage infrastructure. and expenses sales further total percent as control to continue of a existing our We

XX% sales for leverage, MRO EBITDA adjusted operating expense With the the for the nearly leverage increase operating quarter Lawson quarter. strong was and

was income income a adjusted to quarter taking for to share to the year quarter $X.XX we $X.X compared severance, EBITDA, compensation Net the share, or for year million million earnings $X.X $X.X Our was $X.XX. was operating the from per account for diluted quarter. and ago, improvement ago and reported an Adjusted year of million the stock-based increased adjusted diluted EBITDA non-GAAP an a $X.XX into on ago. $X.X quarter million $X.XX million per compared in $X.X of first basis from

XXXX accruals net we on Capital and Our that incentives typical $XXX,XXX. for end working fund on and by made the the quarter at as the capital XXXX. borrowings increased in approximately of first higher is sales other quarter $XX.X million, which additional quarter were in expenditures the existed payments

million $X.X expect We range $X in capex XXXX be million. of our to in the to

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

and First, our growth economic quarters trends sector remains are our initiatives past drive regarding our internal demand few sales the indicators we given over to Current in and earnings. optimistic strong.

remain disciplined to addition, we expect In activity. our acquisition in

operating will remains range our Second, in the XX%. be XX% expectation that of our leverage to MRO

will continue Third, to trends. we monitor inflationary

it to ahead We will actions now product take that over questions. any margins. ensure turn costs I’ll increasing necessary we the to the maintain for to stay our of Operator

Operator

here go ahead. Steinke instructions] Barrington question [Operator Please Kevin Research. first Our is from from

Kevin Steinke

and Good Ron. morning Mike

Michael DeCata

Morning Kevin.

Ron Knutson

Kevin. Morning

Kevin Steinke

end by is gain the highlight evidence growth off confidence start to gains, that within guess of anything to putting marketplace? share that taking else would markets. there you’re comments you’re your point share could about you wanted obviously you is healthy nice I about the talking up I but in or share give

Michael DeCata

or to our you Thank new proxy accounts would accounts of way so nut share fastener MRO quarters, gain. find strategic an quarter, of an customer consumable we always customer Yes, electrical based strategic and because our but all of, so doesn’t connector accounts, very that the a very, top proxy on XX market, and very you, promising This locations, Mike of conversion quarter, gain. but great in – that what bolt XX of in a account a a brought proxy that fragmented it existing believe for little we broad at market, it’s all are DeCata. Rarely that obvious its is conversion conversion Kevin down that We’ve place. up a we’ve talked we one business, good at up amorphous new promising gain. it’s be look again, brought nail highly about strategic comments, is our all an a last or In know picked for fourth look process, growth proxy. share new Again, through a up, so growth so are as are conversion hard some actually a they before gain, doing nature on would interestingly specific that anecdotally, is another within start do. One share initial the at of Because us, getting for us in picking any that’s didn’t and as new just small, in conversion. all is those the In our you’re incremental - a it mention you’re at stuff a customer and existing process. conversions share get level, locations, the detail large account business, ramp with previous growth but those prepared the within we we question. we and order beyond an operate channel to business your local

Kevin Steinke

good That’s Okay, that makes sense. hear. to

to more a I to so off customer if reduce quarters about retention. quite service, all, to last be wondering to what of here, and make that might of were your would so at your be just what that the initiative greater initiative, business, therefore efforts seem in talked efforts me You’ve launch couple that your I’m at would just in customer proposition strong, churn, itself, you you value retention. you driver Thanks. maybe on have drop the that led retention and is any comment mean, helpful. it increase seeing why, and customers would

Michael DeCata

our talked you we’ve to your are the if that, important the their certainly provide piece a retention. profits at our ago company, so or a the some construction drives we analysis discovered, do the a doing we once. question, that in maintain said and own going its while of all of because it a but why processes which not Sigma, retired every at call or rep business examining one which of unique, you’re systematically business, the business customer answering is we that. an churn, product out label if lose sales of thing Six like started to customers of they service ago rep almost time retention having was a But that about operating and things proposition enables seen didn’t service for Kevin. wanted that and Lean core their and a But and of us correct buy there so our do value through operate, are product machine, started is most customers, customer ever and that was the some small a so drive and needed in they they Thank but customers company, they our your renting it’s Well, number not customer, that that go private equipment customers doesn’t normal producing the reasons didn’t because injection any we sometimes anymore, you’re we operations, you, one-off machines molding get hardly some number, our hadn’t maybe didn’t sometimes sales or left do underlying of just segment, service with we -

their them last every all continuation systematic having but sharpening still them know, on has to we of So with XXX% of want business, got business It’s candidly want customers, when progress core and us this at cycle, positive a look and that of it’s analytical customer sales its both number, is focus way speaks do our neglected. our accounts, week. and a process it’s customers and year. alert This single XX,XXX reps, and retain this at on to district neglecting with the some with any sharper great never a small us, to--you buying just managers process a a corporate effect running of one and this single the in process an year we us to every a automated of it’s sales because the very deliberate of effect focus of a if misses

dividends. and is Lean processes of and long just paying analytical short Six this the Sigma is, it So, underneath the our

Kevin Steinke

Okay, that’s good color.

a also necessary, but Are end price in I monitor to expect supplier increases I more mentioned--Ron, any suppliers and you’ll guess on the think implement from at environment to that things bit, you where mentioned costs prepared inflationary the on? the XXXX. been remarks. or inflationary higher there, color Just mostly you there’s mentioned you kind in of not Mike, continue mentioned the you cool more moderate You increases on as much those the off and therefore have seeing pass passed environment

Ron Knutson

is I’ll Knutson, this on Ron so Kevin, this. Sure comment

XX.X%. to we were really able versus margins were ago of you keep As our XX.X% a saw, quarter XX%, margins, our at excess year we this MRO XX--in at

We effectively would actions have XXXX, really to to What necessary able as that continue our some vendors way from network. sense say well some XXXX; seen--we of will efficiencies our not in first pass pricing which would saw we bigger leads throughout costs through it some and a maybe piece here I already think feel the our to come through bit within I however, were is XXXX. that we our see distribution or it’s quarter comment as majority, manage any increases through remaining about a that quarters of it few the over I and my Mike’s through, fact we like say inflation the the has but probably moderate

as environment, and in we our Although we when are can and inflationary actions the maintain so necessary actively sure margins. an you again to where are we that know, we that taking make monitoring necessary

you six a being and been our if proves environment. gross pricing back seven in in tough to percentage to call I last what over able the that’s look fairly that and that think band, narrow value of margin inflationary that I to has years, maintain we’re customers would kind out I something providing the margin our a think within MRO

Michael DeCata

earn through for seen leverage customers’ where that, operated is sound value Ron we down the customer. eyes Just to and to through proposition which as and its as our up profits seven it sideways in mentioned, our just at value narrower of our core the companies, call cycles over to the and our their range of is years to cycles ability important add proposition cycles, the

Kevin Steinke

about great. found. with dedicated continue to how the much sounds sense on military more dedicated is reps initiative. like wanted I’m to Okay, ask I a color specific to you how - you’ve to adding can now large that how have initiative just to bases. to expand It you that military growth know, get maybe niche continue too that to reps of room initiative, you opportunity that have in specific you any trying

Michael DeCata

Yes, there. a it continuous is evolution

bigger some a added of last of our about is to addition our We’ve IPA This talked represent with the have previous grow. all But of bases. local dedicated dedicated of reps so this resilience. and municipal Department GSA some that in bases, dedicated at reps, We a sort to We picture them government. handful national opportunity. the diversity idea there not continues military couple state, military with which builds both reps, calls they levels of of in military quarter, sort were Defense, of about federal agreement, like agreement, and to the a

normal are up, be associated is Sometimes the more like down, to segment is military different military a customer disciplined requirements personality, dedicated down, call also base approach a At adding processes maybe because it’s rather different, the in are way, military even another when it than up--the and a is the the We military diversity. the different customer. up. of segment reps but one on with sales being by the moment, is nature would non-government is are on others

the on do snow more board in military, All candidly across in of to which and IPA to not focus, lot area. it’s your door opens your really in government, of national of from and the people potential areas the particular purchasing thousands agreement, a fire our of of dependent little of all the and entities, local process customer. thousands plow potential national customers eases Department see doors on opens those aspects the military but in local Transportation, the government, municipal that to finding departments libraries these town, to all a is IPA caliber We high are and in

we diversity, diversity strategic to the of accounts, significant our another government opportunity, government, label. across in and is private geographic board our balance itself see So area

market Our and in our and whole resilience effort diversity here customers. is

Kevin Steinke

etc. I manufacturing a heard some your anything, to Okay, demand the case, like health From you seeing maybe overall talk your off reporting, great. little Last numbers mean, maybe tensions, just environment? about the markets you’re cooling the from it seem there. be doesn’t have about end but that’s an one assessment from anything bit, of the and continues seen here, there customers trade you’re me that

Michael DeCata

continue in is In seeing strength, an single board see of the market at participating in real any we’re which literally the environment, elevated our haven’t so to XXXX which we strength answer seen we any really every from short we’re evidence level. Yes, markets. that a is across that in, yet continuation was change

seeing We state aren’t every state evidence, across as we’ve the no ’XX, acceleration the a seen seeing by at results from steady strength we’re from - ’XX, board very product described but steady our board. that was market, level, so categories, across geography, every high

it’s hard a We we’ve We worked yet but on about our haven’t as we that relative do most to that, to good operational any our ability for seen say important well evidence of down excellence. competition compared and feel competition through the any of doing environment. well XX-year-old lot same in to do years cycles. as XX up to thing a we’ve Again, been we’re company,

the that have we difference I been ever we than in are market. the think is stronger today

Kevin Steinke

Okay, great. Thank you.

Michael DeCata

Kevin. Thanks

Operator

Mills Keybanc Markets. ahead. Our go next Please from Ryan Capital is question from

Ryan Mills

and Good morning the quarter. congrats Mike on and Ron,

Michael DeCata

Thanks Ryan.

Ryan Mills

performance SG&A solid managing Real expenses. on

a rate a last DC the the think sales percent is believe the we that Should there year? sales execution? compared some SG&A of us of Alberta as but anything give on you gave for probably to XX.X% you year. Can was assume said run were else? that low new I color about XX% benefit, XX% they I

Ron Knutson

increase in all-in I this my operating is that prepared Sure. had our X.X%. X.X% expenses comments we had, on that about Ron. were up Ryan, sales the

to growing of that costs the continuation course, time on over flat, what working maintain we’ve our that on few they of the at in the years be piece trying expenses to fixed sales that. our team a to while really is fixed off the other getting variable, to those of been operating pay our items a the non-variable of know, leverage relatively in and, effective you the As really towards volume we are Relative last same sales sell. this commissions particular side, the

in So into had as large that blended the there lower quarter and We stuck that’s comp, the were stock-based percentage think real I no X.X benefits about--you severance know, one-time lower out. but points. first

As holding flat change we over the think quarters continue. next the year, dramatically. those not will forward costs next and would anything relatively on strategy around seeing few our the that horizon over I’m that

bit little indicate and more controllable a again, costs move health example certain not costs anything things to control that harder those it’s would we’re than others, so for Now, there’s the seeing a are dramatically. would insurance like forth, G&A items sometimes that on that But that. horizon

Ryan Mills

about Ron your up March from the sales have and strong, you Okay, daily your I so or talk the do was thought, Mike, XX%, a average the believe. trends sales I any reps comments to that and customers that and April surprise either far? you? in you Pretty anecdotal drove performance March? Could

Ron Knutson

but Good It then and the great a percentage XX%, certainly month comparable a up basis, still nice jump just necessarily really a month. this given Friday, XX% We versus mean, of us. maybe piece Mike first surprise. in. was more point the picked wasn’t can I a take on I’ll it of so about a Sure, for timing

As Mike standalone what commented on segments, look a for that on a quarter, as continuation. we so basis, at we month continuation a well all increases really and of the categories saw really in as really all full end sales

on tougher weeks, of the with first note would in have say overall consistent relatively get couple weeks April, trends in first April what started the is consistent important saw year, coming that with comps the quarter. first know we do government see in I we business in the for and I be here what and been But few move do talked throughout of first throughout a we bit we move Mike the what to we it’s I quarter. saw out the kind as about to get in As that has strong, think as sales government the the here the April tougher really year. little particular comps

Michael DeCata

a ability Underneath the factory time our two customers to we’ve orders, to would company. necessary we hard service that costs thing so waiting opportunity of or recognize along I their customers. feel or replacement up a when conversion, is to is the about service that rental work operationally, or construction add like--again, only part, customers they as that day it’s about critical our and talked to costs whether talked their it, The success an over-the-road to equipment industry pass trucking we’ve there’s customers for real a machine

mechanics we enables shop their So to more consumable that to customers. their service to product, be productive, people immediate more enables of product primarily them service service, enables availability especially their the be productive, which

So about of market, underneath the feel processes. it, the sales team of the feel also state our great alignment our employing, we the we about we’re technology but with great

across to the it our feels on hitting good to market. our just very like we’re all execute it in and in ability the of feels addition stride board, cylinders, Just the state

Ryan Mills

color. the for Thanks

you Products, EBITDA it For quarter? to $XXX,XXX Screw contributed did for say the

Ron Knutson

expectations. on was It coming with $XXX,XXX north little of did, line correct, XX% in Ryan, EBITDA, of yes. our sales, about which bit in That’s so really really a

Ryan Mills

more Could that you the bit pretty on a EBITDA for is give percent Thirty business? color little profile impressive. margin margins

Ron Knutson

run end. the do complement felt nice we took let’s our less it we When that bit than little to margins, Their was reps other a like much processes MRO, our of a through really so business. fit their overall--their they XX%, the they the customers organization, look our pieces on They gross forth services say, do VMI but yes. is, into to on value a It at so run closer sales organic that business do add necessarily some Lawson margins. MRO types the and of provide and those side do, not our kitting front of so

gross organization, closer margins us lean achieve cost a to that pretty XX%. a pretty XX, to lean it’s again know, structure and allowing You

to a not again, us. surprise So

was that expectation be Our going was that case, the we expectation grow pretty know, fairly--you the as and early into XXXX. of that throughout to Lawson, we’re still business able in that that of our the organization piece integration be to will so move we’re is

Ryan Mills

acquisition Nice there.

a more Working of and million, stepped couple receivable. up that a $X was capital Just for driven accounts me. about lot by questions

trend, that as payables. talked XXXX? and peers should then how extending Some Are about about go seeing customers throughout we of your think you working we larger capital

Ron Knutson

heavier the is is a is just piece looking the first that again. of at sales. certainly us, use does--for Ron quarter typically cash, This and It of a

you on the there. MRO up million, say we’re March just If that. days we that our side we’re would seeing so to business not funding our December compare which of sales, of were real $X.X DSOs, expansion versus I to a sales, about fewer the Relative piece were had a

in which has consistent. still XX-day range, pretty to XX We’re been that

experiencing Our happen and are movement past no, from anything--any cash were where what we will a and its little for in there Typically quarters major third that second wouldn’t in bit year of we’ll I of down way us say ago, standpoint. a a the versus as a quarter will flow borrowings see the that spike year. and move we’re into end move then the dues down first so here is we throughout the

Ryan Mills

market? on color can been end the provide question for you and like oil sounds based, Last but me, any it broad generally demand’s gas

Ron Knutson

Yes, would relatively is versus Ron say this I ago. quarter a flat again.

down bit no have so larger would we I purchase oil point movement. two, think have of as see great gas fluctuation SIC of industry, nothing we Certainly an and X it bit that’s a code or nothing defined their little Certainly I about customers a and within a defined down our in, major say little so that industry actually but we dramatic. some unusual. customers in to some volume but well, but was business maybe X% what’s

Michael DeCata

so related, like market than like customer timing feels broad it’s And on customer-specific it doesn’t It specific projects more some and down. based - and specific of seem up, it’s some so it’s forth. and actions

Ryan Mills

and my quarter. on congrats taking for the questions, again, Thanks

Michael DeCata

Ryan. Thanks

Operator

ask if to you’d star, is like reminder, it a question, one. a As

Hathaway Our here go Please Brad from View is next Far question from Capital Management. ahead.

Brad Hathaway

share guys, and I’d big a understand you an little deeper how the congrats opportunity exciting quarter. seems opportunity why like be. share for to taking you. Hi a dig you qualitatively I that think a on just on the more really gain. you’re see wanted It to great to love little

Michael DeCata

broadly, Thank ways. I the would in Share you it question. Mike. Brad, is guess this characterize I gain Appreciate two

it underneath gain, I’m a really anecdotally and again First, costs here. little opportunity share drive speaking

us, your up equipment trucking whether it’s time of or or over-the-road rental customers business the machine up time, time availability--you - factory running the the providing in machine utilization, your prosper or We’re military, it time, to construction It’s industry mechanics know, time able and people, time their underneath tank. in maintenance and we’re all productivity improve Abrams for so companies service as back an to of about the of welders machines putting by operation sooner.

So the that in. underneath it we’re business that’s all,

order do do this much hey, to complete, solving before, never I’ve product reps problems a sales our Lean knowledge customer got gain availability, when says, Six backorders, problem it. Sigma, how of in as to and operational Now, solve I’ve with ability comes unique seen realize our excellence, I share has

it’ don’t price is expensive kind, a any day branch whether one large still any on a a of serious failures spoken tools you’re electrical company, knowledge now with culture machinery part or bear the you’re and that anything waiting we heat where a to availability, of as maps and customer have fitting servicing of so or things your the running factory, construction like that along today. lighting rental all servicing brought shop we connectors, want of mind that equipment for down issue of it’s these Transportation very in combination products one and you $X.XX, we’ve reporting comprehensively about $X.XX applicable that as trucking being even have, customers. bear at hydraulic a average customer So Department $X be sharing looks on for and , sees should that on tools knowledge software that, over-the-road example, of our roads an kind we’re - or to similar are Again, piece America and lighting, the if more broadly an the if

enable operationally customers are So we’re comprehensively their profitability. of customers all that and in needs to the profitability, of I know we things like customers, done than drive servicing feel and our that far these that ever our have improves job better our a doing

from adding process, we’re operational and and it, is excellence coming where share that’s So - underneath gain sales reps, course. of

Brad Hathaway

up, big you for now, how Just then, yours? have you to that share do you an should opportunity that think be see follow don’t

Michael DeCata

It’s fragment huge, huge a market.

It’s broad which many is never some a based for by going itself ever. $XX MRO, of to billion $XX as consumable out a sub-segment of We report MRO market are billion, measures customers, a billion-plus what $XXX market. run

the the so we of don’t we provide never total highly broad are share. which XX% it the maintenance participate us win and to again, that our is mechanic, are addition based because of in out $XX large more we sub-segment I’ll part we customers cost will in more run lowest for in enables still MRO products, but of private to needs take fragmented, billion customers the Now, and unique and as share, small service our designed label market, provider billion the it’s continue to to $XX to combination that more say recognize and

Brad Hathaway

so Congrats operational Impressive been few great, the it. It’s Okay thanks. work again. over last quarters, appreciate

Michael DeCata

Brad. you, Thank

Ron Knutson

Thanks Brad.

Operator

This concludes our answer closing comments. to session. conference turn and the DeCata Mike to I’d question any back like for

Michael DeCata

very to leverage a Sales, Thank Thank trend than late gross in XXXX. margin time. you, us EBITDA, Lawson performing for long you company that has had in Matt, better continued it appreciate Products much quarter. The all is began joining very we today. great another that.

three-part to within continue a equipment on I continued continued cost operational and operate customers center enable excellence is all strategy, thank our and would of pointing our distribution XX,XXX of to their capacity growth culture network, focus prosper. to our to like improvement. strong the management, way Our They teammates.

day. culture the success. we Have our value to with again differentiated look call in our forward today Thank you for Beyond the again and component strong most their speaking great joining important July. and a you is of proposition,

Operator

This concludes today’s teleconference.

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

Distribution Solutions (DSGR) 18 Apr 192019 Q1 Earnings call transcript