LAWS - Earnings call transcript Q4 2021 | Distribution Solutions Group, Inc.

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Operator

Good morning, ladies and gentlemen. And welcome to the Lawson Products Fourth Quarter 2021 Earnings Call. This call will be hosted by Michael DeCata, Lawson Products President and Chief Executive Officer, and Ron Knutson, Lawson Products Chief Financial Officer.

During this call, they will be providing an update on the business, as well as covering relevant financial and operational information. There will then be time for question and answers. assumptions on statements and strategies, could concerning operating and statements release the plans, cause that to results, forward-looking subject differ contain goals, underlying those actual note results this uncertainties materially in call press future risks to Please and are from that described. that beliefs, expectations,

Investor those Please addition, made so. being but on during that the company's the call to is the of XXXX. Lawson as Products views do of company in the website, the statements audio The lawsonproducts.com. this anticipates to Mike now A on Internet through that over webcast website change. to made any This In company some I today. available developments the page Lawson future views be information Relations presented will cause will may today, also may company's turn DeCata. statements replay on disclaims on forward-looking obligation consider point XXst, call are to Products March update The the light. the specifically based simulcast elect via at CEO, the call

Michael DeCata

review Knutson, and thank CFO, will the on the questions. I'll joining you the our the our a and business results, year. of of detailed also state financial for full call. morning, Ron fourth will expectations This morning, Good share XXXX. for some on followed quarter the by I comment thoughts our more your and provide

combine this impacted been of this King is portfolio Lawson and be the solid merger to all discuss the fourth commenting quarter margin margin meeting to that more mailed some on performance, most have we continue beyond. that that for shareholder our see these overall report for the activity to Lawson average cost I price of several services X.X% pushed am beginning call, encouraging many effects markets, of for parts initial let growth the all initiatives. agreed investments of people and beginning market, announced our growing to educational, The good Jets roll-out have by myriad was of and month-to-month quarter fourth will believe for initiatives will basis. scheduled we the of comment has daily on On proxy of transactions. signs input XXXX, throughout EBITDA XXXX quarter and process inflation, XXXX. with will year quarter pleased fourth these the agreements 's Ron on XXth. we favorably for earnings new initiatives, we are XX.X% organic the these growth and and stock organic lingering Both of XXXX. to and related sales shareholders it developing global which and compared into our growth. say are increases seen except X.X%, that the I Adjusted entered our investments margins. shortages record, and We two labor companies, and including contribute of that in system. to through the over a operational channels fourth into as to supply XXth, full to disruption, that state, with SLED, further anticipate washing reported XXXX, Luther will agreements growth call we to a to not excellence merger March I customer Pro quarter. pandemic quarter, our XXXX X.X% commented in factors we me that XXXX, to by our cost and Management is in as product to labor disruptions, transportation associated sales TestEquity, in our growth Before included Throughout increases. impact local, and in two calls, protect say gross Lawson previous year. in XXXX Capital the that chain and organic December I've sequential associated on with This on availability, encouraging increases But the on

While progress through managing from disruptions made our have most companies, good times reducing backorders supply chain continued lead suppliers. and we've impact to longer-than-normal in customer

and across resulting teams to recognize done end-customer our for to Lawson pricing This MRO in a offering. combined segments. consumable acute new have more our Customers cost our Lawson realizing and option job increases for that Products labor sales increases inventory managing great in their the managing Our supplies. with prospects, service-intensive, Products vendor-managed lowest cost continue is price is shortages, turning

During revenue operational retention XX%. and integration into been is fully the Overall, distribution complete. with now fully reps, the quarter, Partsmaster Sales The have integrated throughout Partsmaster performed financial nearly well year. centers, reporting products, Lawson.

in the business. military in of overall House, have that be procurement acquisitions, XXXX pleased Supply and activity to Bolt very slowdown We're the impacted Military XXXX. appears early performed two largest in Partsmaster rebounding second half a the our However, well.

additional Supply Bolt acquisition is operated whereas in as is standalone a fully business integrated both our fact have into future well gives The Partsmaster performed discussed, we've businesses confidence that strategy. us Lawson. As

XXXX. by achieved in November an XX% all-time sales Supply capped Bolt quarter, record This sales month nearly increase,

X.X% turning the fourth was down Strategic the quarter XXXX. quarter from third up for accounts and to to X.X% sequentially Now, growth as the sales. quarter, fourth compared

Several are account basis strategic average daily and segments of customer account segment, and X.X%. up have sales are years oil integrated the supply integrated However, Non-oil several gas on an base. total XX% gas were customers is growth partnerships, XX grown customers, and represent strategic accounts excluding growing our growing supply strategic partnerships, our accelerating. past Industrial the XX Of through faster over nicely. than others.

strategic within growth market. account equipment is Another the construction rental segment

for this forward, growth opportunity significant a Looking is us.

XXXX. strategic quarter XX% of to achieved quarter Additionally, compared accounts Automotive the fourth sequentially third growth XX% Kent versus and the

recall, businesses. quarter We strategic Kent other locations than the new recovered impacted XXX Lawson during side XXXX. locations the pandemic the business and of on may Kent XXX added business the significantly at new fourth but more of account was faster you of the our As outset

also strategic large two seven a customers, account manufacturing and equipment integrated and We location company supply including companies, several customer. construction rental added

these While new expect to quarter as these are kinds we early us down development, the their XXXX. fourth to new quarter, is Sales Like this our government lower our of in attributed the plans. as PPE in help relationships segment XXXX. of sales relationships growth were to achieve compared compared third to XXXX civilian

to our to mentioned the recently about All of parts three government and we development a of SLED, were However, new We're Iowa are optimistic channels our our growth system Omnia awarded washing business previously still We initiatives, Torrent growth. the contract the of market, in early the through are trajectory automotive stage. do add contract. under State XXXX. in beginning investment continues awarded contract category recently in Omnia, to and growth

start as However, quarter. these of X.X% sales to and drive topic, initiatives compared by the sequentially rep other third increased in fourth sales 'XX will quarter to to X.X% compared as productivity One well. the sales-related XXXX as up

start. off XXXX Looking to a has gotten solid forward,

in discussed several for And be continue, While as supply builds, this and in a long is inflation that momentum it growth segments. to previously we poised chain we've sustained environment. learned new initiatives manage important period. to have likely The contribute challenges are to

of all resilient Sigma, Six are benefits and we've mentioned, next Bolt been And those core the state-of-the-art to XXth to the celebrate people their to culture employing initiatives are are our that We've seeing is and investments segments refining Lean market outsourcing and Lawson made embracing and Customers I businesses which growth change. we expanding. just while struggling the year, Lawson in will XXth the equipment. to anniversary. find are their the maintain as problem. us in years celebrates a our year, value years, Beyond market. More over our of kept solution processes. This turning excellence across run operational this best anniversary, differentiating its past Over and proposition Supply remaining that

financial to like Now, to turn more our for I'd over information it performance. on Ron

Ron Knutson

will share some highlights of Thank takeaways the with of start everyone. we'll I'll some good for some into full key the year you, And get XXXX. the details. and quarter, also Mike. I then for morning,

highlights for ago. one less million were quarter. day Average sales MRO $XXX.X selling this daily productivity on by a quarter year. $X improved rep by million Consolidated sales few the to a during quarter. a First, year improved sales year-ago versus up the X.X% versus X.X%

of proactively our operating Second, XX.X% third $XXX,XXX for marketplace quarter in gross quarter million of quarter and non-operating loss XX.X% despite this items, loss $X.X of Inclusive a the reported chain $XXX,XXX pressures. versus a margins and consolidated managed in quarter. compared issues margin year-ago the our a X. supply XX.X% We've year-ago to global quarter. the inflationary was percentage the was

the Our share was adjusted quarter. $X.XX diluted per earnings for X.

$X.X was or million, of EBITDA X.X% sales. adjusted Our

have XXXX, sequential our fourth Most as reflect on daily and QX. we As we in categories business, continue does Sales continued year, increases quarter to realized sales the the product rep over drive Lawson our business productivity. sequentially in the improve to Bolt forward. sales full

supporting make great this We ensure and focused teammates. environment this revenue our cash while margins, our in our safety controls, in environment We on flows. cost to continue on focus our progress continue to remain driving the in protecting of and sales, customers continuing generating

relationships We've critical and of is our downtime. efficient that company upon reduce rely that built operations. have celebrate year, manner Partnering us our In shortages, customers an our mentioned, we'll the products, to excited future with customer more XXXX, Mike are as anticipated we in services, than most we Lawson, to As and that operate strong this labor organization. light become anniversary ensure ' expertise. to this they for through XXth continue the current ever and their

$X.XXX unusual the quarter, trend aspect the fourth and of million of and down average sequentially reduced number see million days. daily seasonal It's in selling were to $X.XXX given October, November, the December. $X.XXX business not our During in in December sales million sales

sales entire Bolt operations. November Bolt team all-time month sales for Supply included branch Congratulations accomplishment. an the for their to customer improve they outreach this Additionally, their as and continue programs, record major

a QX. margin, standalone before the and to the in costs. of offset XX.X% improvement in increasing actions service-related On of ago and of labor third to is sequential quarter MRO basis, gross XXXX business X.X% daily transportation, was increased result and sales of as QX federal taken historical the year QX some in XXXX. certain quarter, direct This business compared costs loss of their XX.X% offset increases in a progressed a the XX.X% margin compared for Lawson while QX lower to Bolt spend. Supply within business this back sales, XX.X% the by on pulled were at XX.X%% MRO in gross These increased For over as in nearly Consolidated military XXXX, came primarily average quarter the the XX%. government of Partsmaster into at margins Lawson MRO classification vendor, in segment

While to growing dollars versus in inflationary fell margin focused year Specific throughout $X.X labor to DC's identifying our our from reallocating million XXXX day. consolidated gain actions gross this forward of gross focus and our when of times, secondary our our one we as as generated include impacts. on In we through on products suppliers environment, dollars selling products, on fast-moving percentage possible. cross-stocking sources chain ago, a appropriate, taken the and place ago supply, to challenging compared with less quarter McCook delivery fourth-quarter putting the needs margin slightly increases closely our ensure a customers on gross price resources managing we supply margin remain in ' fill year facility to related to insight including working national-branded additional

While XXXX, negatively percentages has our products for to margin sales. impacted the ability our quarter of we're access with our pleased overall fourth

QX. have to Our QX customer improved back sequentially service-level metrics orders in from

activities However, period continue back adjusting to types are this our XXXX. our these and We're throughout expect of we'll not through with have of levels. most unusual actions that to normalized manage to

related $X.X quarter. For operating acquisition related year of million and XXXX stock-based The Services. $XX.X quarter to Gexpro costs and execution business costs, compared accounting were review, the non-recurring TestEquity of goodwill fourth severance, includes million to and merger negotiation, million for million expenses ago of in related combination with compensation, $X.X mark-to-market to severance, expenses non-operating the quarter, million the a costs to and approximately also $XX.X XXXX impairment. a the Lawson's compensation, and agreements proposed stock-based included of for The $XX.X third of quarter fourth

driven Excluding to up were to $X.X the planned sales, compared the customer-facing million, primarily sales selling to year-ago our X.X% or nonrecurring activities, upfront items, adjusted higher expenses and investments of market. more by quarter, operating to expanding support grow channels return

to less non-operating the Adjusted for the our $X.X In increased of for fourth were was excluding was build-out allow our fourth new quarter Capital leased including to and non-operating Dallas Suwanee new and washing sales percent $X.XX X.X% and day. in relocating basis, non-GAAP location with $X.X the to $X.X diluted million, of XXXX, items, Canadian Western million planned the share purchase compared capabilities, adjusted in $XXX,XXX future, quarter. Calgary XXXX XXXX. selling Bolt to an million in capex was for approximately $X.XX square the loss facility, being a stock-based footage QX the an QX, of machines. infrastructure quarter. year-ago to with compared will other including quarter we to to Torrent's $X.X our of compensation operating EBITDA expand as million, reported versus On distribution earnings in for our operating Our On in the work the distribution including better having purchase one was upgrades performed expanded the our the for to customers. our Suwanee items, Total a of was income parts quarter volume quarter washing that expenditures per we adjusted basis, for XXXX, service X.X% MRO be the parts center the customers. machines XXXX

to our $XX in $XX million range million Capex in to be XXXX. expect We of the

we in make that particular, in a sales. As continue on organization, an the impact direct to have areas business, investments

million, quarter in generate were and We quarter trends. acquisition in in supply the sales. capital payment uncertainties of ongoing able and to $X.X our ended while net unevenness million on our the the final increasing position the related we the continued, making from the structure a recovery challenges $XX borrowing higher sales While inclusive working Partsmaster of improvement second balancing for our still the business cost and pandemic the against chain

support equivalents, reflecting particular programs. During XXXX, marketing the future vendor of great of of million invest categories in quarter business certain We acquisitions. ended $X.X million cash and inventory, carrying we increases, in availability upcoming increased in of and inventory the liquidity, This our consisting items, to $XX.X investments working PPE in us capital, cost and and $XX.X facility. with places cash credit a $XXX position support the million of under to our planned million

over at a XXXX driven sales as only an growth over and in and compared few all This MRO being product, various XX% increase over pandemic, XXXX as This and XXXX rising XXXX and XXXX, post-acquisition year we Partsmaster in progressed, but turns the XXXX recovering our slowly levels. four-month increase was organic in sales to period accessing way including increase XXXX were an not As without managed XX.X% increase X.X% a vendor disruptions; levels, related through chain a the Consolidated to labor daily environment by by X.X% costs as $XXX.X sales for supply twists Bolt of represents driven full million. Supply. well Lawson shortages. included average a for nearly organic of the

part, items, some grew sales category progressed every one-off For XXXX in segments. sequentially putting and aside as nearly all the most

resulting our of This to cost XXXX an started full margins which put continued the mind We're the million. place to $XX.X year, very performance XXXX, through early XXXX many improvement EBITDA We with pandemic pandemic, were now finished For temporary in as that progressed. uncertain and the have million, X.X% manage global adjusted significant back overall well $X.X also cash levels, inflation. in protect including for in exceeded XXXX, XXXX chain put disruptions at as over sales. in effects a reductions our in pleased million our flows very represents levels of of environment, during supply that Keep place. the $X.X were the as by been able or and

entered are Mike of how XXXX, completed position organization time managing in and into integration it. of we the come have expectation with we this a I As we than both and environment we will was that The one now stronger organization. stated, previously challenging out this are through the Partsmaster in

to supply other with disruptions. inflationary global experienced we companies, chain due As costs the have many

proactively price margins. necessary monitoring protect We situation, have increases to taken the this our managing are including and actions, through and

the I Operator, thank let Before me to turn the entire it over team.

had inflation of customers, mention this all the Operator not your us Thank through our through it effects activities shareholders. fronts, our many work ever employees, for for make over you more have stronger team period on challenges to and The unusual seen. for now managing our I to commitment supply We most significant the extensive than questions. of the to and place to will the company. turn taking and pandemic to chain have us of continues

Operator

now Steinke will time, question-and-answer And At to we will Kevin roster. [Operator coming live. is first session. Research in the your assemble from begin is Associates. Instructions]. Barrington question momentarily from Kevin, our this We the pause line

Kevin Steinke

Good morning, Mike and Ron.

Michael DeCata

Morning, Kevin.

Ron Knutson

Morning, Kevin.

Kevin Steinke

etc., upfront really about, help seeing talking there to you? in to that you that's situation in wanted Shortages then been mechanics, are labor you to obviously just anything shortages to a ask your or starting growth, about in I is Any the that anecdotes field starting theme you're mentioned more comments while. organic help customers that you labor like hearing are the think from a there, really your of for even for but growth drive now? maintenance, market, the pointing you've

Michael DeCata

that's really statistically when is statistically accounts. encouraging examples what customer from That's anecdotal customers to would about. good out of Kevin. are a we're I beginning lot you, that engaging valid who coming in us. Thank excited to and forward us. looking reporting really who not significant prospects, are were anecdotal, I'm reaching it new still People a moves say, see Yes, what we to customers examples, to and little

really anecdotes, many personally and in them, sales are communicate, and there a us good sales accounts that with of there's it calls up it anecdotal a a will as soon will lot up be in It of in in retention. customer and a show in not of made really as So speaking seen lot that which increase we can reps. have revenue slow we've continued increase, show evidence. will albeit

I talked, just hair hair time the our revenue XX%. over and was last under now retention think we'll XX%, we a a

go about of hard, out There metrics to retention the So we're from when very revenue two valid are feeling them. X. That very customer But that are that and report gets go and XX that. to X, of against able the counts combination you account business companies statistically are us. more X, to that we good to are key

Kevin Steinke

right, to quarter. you to that's the And All the to during initiatives helpful. you're that three growth metrics up it will those some to start interesting fourth And those following It mentioned early you XXXX. to the track early been seeing be able then size investments talking in time. over about be Any mentioned, signs in on contribute growth that, very that investments? way -- will you've

So seeing maybe what's from investments? your those

Michael DeCata

Absolutely. Yes.

and with So it sort punctuate bit can data. maybe start, little of of Ron I'll

general of account backroom help So large And density area, government this those win a number managers addition and and general year, do at and reps. population that first generally field, both And strategic investment opportunities. a educational quarter us are of and this in bulk placing account That's to large have government.The as They're well quotes, of talking even we also government I'm we're come the population bids and government half field field-based more office account of managers. real the government make folks large sales a there, and where of productive, cities, larger there to activity of is in in near the sales reps this selling, strategic strategic populated where more about, SLED folks. the strategic lot number addition counties, account the of more of win the the and the -- the managers contracts. of

and combination market. again, outbound revenue reps marketing. retention the proactive helping being reps, second of the sales that's the There to sales It's inside to on Moving reps retention hiring combination initiative sales we've with of resources, and channel-to-market. also, more an outside balls firm we have. And sort that for of of addition that outreach. external the The engaged is that resources, inside building channels retention customer

again, a had products with about ones our alluded Torrent the washing to system. our and new a that carried. but not Ron It's them is ago more reps Lastly, opening training us, that -- Capex, are, they to center minute some unique we previously existing for of are parts system. sales

washing the the sales familiar it all focused Now, have as just system. on legacy well. reps Lawson reps intimately Partsmaster to were with of parts Torrent the the rest have sales We

on of the will early really optimistic in of So on return impact early but investments -- stage this they investments that real stage at growth. in a have the those moment, accelerating

Ron Knutson

Yes, Kevin, is this Ron.

as investments, our sales, So in And some areas about invest previously primarily we we can continuing I XX%. and from to the leverage to are to that that drive XX% perspective, top-line the people significant fourth-quarter sales. create in drive between Mike specifically being and mentioned mentioned talked operating as pretty an organization we've then

hit that about $XXX,XXX dollars, quarter. fourth quarter it's for of related these the $XXX,XXX to to investments, terms In the

So we're some or I fourth investments. either -- in of mean, particular, thinking versus QX, And even $XXX,XXX in of the Mike the upfront early early in comparison said, if the this as use about these you're I'd quarter of number about process. QX

investments the -- XXXX. move about confident So we we on return as throughout are but those

Kevin Steinke

off helpful. right, does even of taper couple should for All begin the that's accelerate. we a similar or next that size or to here, investment expect And quarters of

should Just of that how kind think we about -- $XXX,XXX

Michael DeCata

Yeah.

Kevin Steinke

-- baseline kind being of is or a

Michael DeCata

Yeah, I baseline. think it's a pretty good

early part say to Mike some get off. will that kicked market investments the segmentation had mentioned attracting in make that, particular, in of -- some acquisition. in the customer of outsourcing segment and area channel-to-market, here really those other XXXX more new we'll I in customers probably of However, the

very to segment; come generate revenue little as time, but that a just same may -- because early that it pretty fourth are within where at the -- starting segment, go the a up on the well, that four much up there so necessarily may those So that for we're that rich share market optimistic far us, we record, very and they're but fragmented opportunity very have opportunities, track identified initial have want we that where of large accounts. in directed credibility sub-segments customer good little we it. channels marquee that we to dollars really at but wasn't Part and start tremendous matter was have should bit, generating in greater is marketing quarter those marketing be already we case market middle a where communication, a And programs, the opportunity. subject it's rich areas, that experts,

Kevin Steinke

Great. initiatives. a All construction And mentioned I called account adding area construction for strength out strategic accounts right. you there. growth potential significant Mike, rental source two been equipment your equipment always anyway, for you know is but as you've more And a strategic of rental

is on little a gives that there changing optimism more even there? bit that up something or picking market you So

Michael DeCata

market fact earns unlike understanding or -- $XX with is doing I billion sales business that some there revenue, teammates, may account are our that opportunity. which Rental thing leaders, on marquee in would most customers important our not industry, But a we're is and who our have Rental the to, segment fragmented, the largest the American two but it's credibility. is that rental again, or extremely and us talking rental think in-depth have about things, reps strategic fragmented the most one about Association, rental real of of players two have largest branches, we space, developed to a belong that, thousand most work industry, The companies the that $XX the as shops a continued say revenue billion the branches. highly I'm needs.

them needs rate. our are an there intensive reputation knowledge lifeblood And inventory, what manager, the look two customers rental customer time the company, specifically little, service utilization, the a and keep quality that getting very the intensity two do. rental. space. is those to [Indiscernible] industry, -- we rental help Again, asset real time offer time Rental you rate we and More importantly, at. which really equipment utilization high vendor-managed value by of utilization. tremendous helps the the variables in it earns as their can service of with us for so rental And are you little out work of if We you're in

positioned. we're So uniquely

than are same sales for to you other asked Our there difference similar reps markets way, that characteristics. that are there really other a one, way those positioned the are marketplace. about make more that have And XXXX by but marketplaces,

Kevin Steinke

in right. orders. couple least come through fashion? how not, Great. of I believe I for much you you planning that's to to wanted managing XXXX, Have put improved like All continue you've here. for chain a job It disruptions you a ask of sounds just more and supply good done you're of back we mentioned don't around that it that. seen numbers meaningful or down any at I trending. if know qualitatively, but

Michael DeCata

Yes.

of purchasing that our backorders, have part to and team. team supply is work outstanding chain an in the large improvement seen We in

very the of quarterly learning time doing cycle business cross-docking We've manage hard working the are with we order, to reviews well and we're far and it will I new fourth used We disruptive environment. to disruptive, think disruption compared managing in but suppliers. the time. word further 'XX, almost have develop it's We're the this ever chain mentioned this our out getting continuing. than new really transitioning, seen through and improvement to don't customer during yes, us, more you staked with quarter suppliers. true already in that's did. delivery We're environment. confident, frequently as to to Again, be on to we supply We're

number increases very And we that through with high inflation have this So price not to there course. realization. in high a realization. the certainly new one with taken are year, pushed has yet we've last actions again, even as fully that manage would run anticipate price of environment. well, And year, We, several very its price

changing, team incredibly but is has lot nimble. our a So been

Lean more rich We to company. Our helped better the thorough talked and has Six in data, do them people Sigma, access analysis. about

with ever you So I'm data. some coming jump to more topics these quickly than and there better answers all Ron, sure want before. are on more people to

Ron Knutson

service on has a side quarter. go look Yeah. here experience, And before to reclassifications our comments Kevin, a we and so this, focus in that, management some and And been you back the was loss as supply chain for of you about -- of companies I historical would and Mike's as margin at side when talk this a XXXX about second did at you those saw forth. and think margins developed. the I what dip the and and add real going margins, I'm clearly just to the our in us costs product look lot margins

order we've And fact we improved QX. customers strategic work as headwind percentage really that. really quarter in say, in QX I the our where levers to customer. mix ended relative that service accordingly making continue customers. our that of against in I pull in well, the that And in Kent mentioned, about we very sales However, extent line end active from up seen though pressures as have backorders even our in to the a continue some protect those I customer gross on reduction so QX. would expand end those our -- in to QX backorders, at in Mike we those and particular, order know a our customer -- moves to to our our to understand are see to as Automotive levels to what QX. our of nice XXXX, the in do actions say of some seen our we've mentioned, growth, margins. mentioned, that And the that, need from improved QX on strategic well were Mike even sequentially from I to that's we XXXX, first trying think same XXXX some going It's also into XX% reduction margin taken as necessary have to probably Mike we've versus would to We

the actions. that something managing and and clearly So we're monitoring taking appropriate

Michael DeCata

out on ship appropriate, process, same-day. context, in were now day and this put One about last XX a question. important as thing, back 'XX, shipping it we're we It's Kevin, where of to XX,XXX about XX% of we in -- to them lines

to want has context. be improvement, it we be challenging job doing We this of more where to Now, little put very We're relates north a to situation, to course, into be. of XX%. to as a that's want not of good bit But come. and exactly it

Kevin Steinke

the third in the press demand that you sales pointing helpful. -- gains and you the customer continued gain that's has And just obviously, saw over daily are the sequential early XXXX. of evidence strong lastly, into -- Okay, to release that mentioned quarter

thus what color around first from give in here, can So far daily what maybe sales quarter you're numbers us average maybe an basis. seeing the you

Ron Knutson

-- me we versus -- I say I'll nice both start January to It let a January also QX a year that. then Yes. XXXX, and and seen would so going into take February, ago. January have Kevin, into and from sequentially

a And so January January combined versus and versus -- January, February year I'm ago. sorry,

the versus If are you combine what's first ago. increase an year say called in would we of seven mid-to-high a I weeks, single-digits

and we in -- So February. experienced that and January both

seeing some we're that demand additional out of about also account Mike think growth. customer some it's So the increases points earlier strategic to the to relative points an pointed from that overall just of and standpoint, Mike's I

part you seen most the we've growth the was back as product most -- categories, for our even and in for customer we're here really across XXXX. segments. same And really part thing go into Although XXXX, most early seeing across all the

Kevin Steinke

All right. Great.

you question total quarter? the and days have the Just one then for here. XXXX, last by Do selling numbers

Ron Knutson

I do. Yes.

and So in XX QX then is XXXX, is XX days, XX. QX days, is QX is QX XX,

selling were XXX pick So day the total here we in and in there XXXX, quarter. in days XXX up days we have first extra that XXXX,

Kevin Steinke

all for questions. great, the Alright taking thanks

Michael DeCata

Thanks, Kevin.

Ron Knutson

Thanks, Kevin.

Operator

[Operator question coming your from KeyBanc Ken Markets. from And next is Ken, live. the line Newman Capital is Instructions]

Ken Newman

morning, good guys. Hey,

Michael DeCata

Ken. Morning,

Ron Knutson

Ken. Hey,

Ken Newman

merger. want mean, this I that published the you've but sense, month. appreciate about think talk proxy makes I do some I you standalone And don't for the that business to in earlier forecast Morning. longer-term the

about I the business think think ballpark for standalone EBITDA X.X% outlook XXXX. I the at I want what's thinking and still if for in year, X.X% of if the growth, margin just changed? clarify adjusted that higher and highlighted around not, that to is

Michael DeCata

going that stands. the to merger, we're Thank comment you're document right, Ken. you, And not on

And at just the we'll is as so leave proxy stands the I that. and it think let -- documents it

Kevin Steinke

Understood.

is rather the standalone I you than forecast had so just Lawson for on think that the two the more business mergers. other the question

of to going the the expectations loss, so back with I standalone outlook again, kind your providing that forecast just just with just -- in-line that And still today? for you're is

Ron Knutson

Yeah, Kevin.

So what is Ron. this so I -- yeah,

the well formal typically on of don't weeks basis terms around we routine sales So two the to what leverage comes operating it, developed have provide here really top-line the update an incremental know on comments go year, And almost any call basis. around What a and you the so our seen through first, the and seven back pretty guidance out how business or in growth. months of that we've guys first really you numbers. far that on I would in point is our

As around we then positive couple kind trending but or formal months we year today, moving over of started And just Yes. And you terms Maybe how really update inventories enough. on to speak percentage the about inventory a can't gotten just are XXXX. any for to your customer bit sales in fair color first the I our Maybe to as any you've Yeah. in I of of talk capital XXXX. little you how XXXX. built sit build. know flow. through expect guidance the commentary to a here of needs. your view in that, is outlook relative how any just we've trend far cash That's to where think working inventories the so

from increase we're know. mean, overall our sit built have today, our you're of that some the just we So of we as coming I Ken, through inventories direct pretty inventory XXXX vendor base. Where throughout right, levels. with is cost comfortable you reflection a

we inventory been we're But have programs we loss some Partsmaster to invested product move vast sales on as programs base. that going our some historical throughout think XXXX that of I majority on carrying in made. -- accelerate the already investments those relative have upcoming to into from

XXXX, that of here that now again be at. increase the in won't that there we inventory we in In of existing Partsmaster within we're all inventory, all where that consolidated comfortable also we 'XX, we increase distribution so of with the really have most certainly saw that network. So think in XXXX, pretty we're

feel be build necessary a on that. there to will don't need we like here in So XXXX

a than are AR, forward -- to percent of historically, inventory, about working sales, capital number XX as that, we've So in inventory, an -- we really kind you back low you we to was and the -- - comfortable of of of between pretty if ran build the AP, just overall as percent look ish from sales. 'XX us relative a going still but higher for XX% still be think in that's because sales. percent

Michael DeCata

acquired X,XXX [Indiscernible] the more than sales Partsmaster, are to They we make need population. to when We them skews about available added we -- now -- also to available. want total and nine

there's of that. It also challenge, this for interesting bit see whole customers, much supply-driven. I'm will economic little is so ours, So a not our really talking be to about

shift, time number So of and challenged There a with a labor shift. because availability. operating on if they're our they customers a a operating availability, would a third having material labor, raw of third be, could on be raw and second are that or are material second hard a yet they them or

bit, forces time we to you these sort more acceleration you little run machine your maintain a -- the an more abate except And of expect would machine. your have utilization. machine, of the As

I think we on into will inventory settle have inventory everybody's and to reality, in tailwinds general. the Because new that going the have point, So future. for an turns at impact and some

Ken Newman

run -- try up be as expecting these operating a and of rate then, Would decent the cycle? increase cash a flow I as know you you're question conversion expect cash mean, in I in Capex think thinking how percentage net that do investments. free moving I about just new throughout And you positive free to the XXXX, income for some pieces flow -- flow? can wrap Yeah, and of cash about the

Ron Knutson

Yes.

with So Capex, definitely this XX positive throwing of making I expand of And and investments off that those as relative distribution Mike that XX an range expand be a say as were really XXXX, the to in I call about a volume -- XXXX our And center to EBITDA, as throughput some positive -- the their kicking well. investments cash. of would case on that XXXX, finish it for we'll be we investments from putting But capabilities. similar then we kind some or though be as mentioned, the also line off, three to throwing in And to even those McCook perspective, well, investments initiatives. But are that into to cash flow organization is Suwanee aside throughput in we cash their expect off are in we I certainly some flow. process we're will overall made also, there. terms in of through we talked to yes, of drop off then the an XX% incremental going year,

Ken Newman

Understood.

few more here a me. Just from

of about XXXX. what I activity or idea prices the accounts it's color small you for and oil I where think But part those with have mix. bit customers. you you think about account And know talked strategic a on a any kind oil gas little with they the had do into are,

Michael DeCata

one of is couple first, construction in to step The a I customers. companies, was segment me referring very relationships, road, pipelines. loyal lost very happens back haven't In -- they're XXX-mile let and yet, we customers, pipelines, miles, close pipeline particular, little what the this spread gas where have we that say large long XX and they up periodically XX-mile another building from very move and

this big fourth-quarter, was a because see little segments. bit pipeline. slowed because of to enough past this winter, individual one so that's moving what of we a other And they they segment, finishing specific bit were And

stuff. Ohio. had that -- you like to the volatility we've through fracking, would think I going time a seen West things through come with But neat or think impact. cycle don't the event, any it's And Canada now think from in may mean, oil yet is that Virginia prices things of exploration, little I project I may projects. where are hard like not there think long the have about companies are exploration whether Those really back.

Ron Knutson

them and dormant that be are responsiveness can and predict someone start investments when but hard sustained tracks. to projects us bearing to cycle to restart capital time, cycle if them to calls A it enough and explore at their responsiveness, -- be product opportunity new on make our can afford to setups. our so and Monday, will Tuesday this the fast we in little that having quick on to mind the prices time

a saw of with reputation So specific is these what companies. see as idea And project-related really the you extremely volatility. respond huge a number in a time great number concept. again, opportunities. us not we have couple quickly that a for lead But of We we can was of

Ken Newman

Understood. pretty offset sounds realizing MRO margins, side, from on been have in execute of to gross historical prices able you me. I higher inflation. well color like appreciate it guys one on terms the Last all to

spread, on leverage As where color just I 'XX, think operating with gross how chain, the margins for and about 'XX you about the incremental progress supply on out whether of think as you into maybe margin expansion that's help the in see the or widening any the cadence can higher color price-cost flow-through, maybe us some sales normalizing. gross

as I widening of that mentioned this tight of whether environment getting shows think price-cost and here. of spreads a type out kind had used through to in operating you

Michael DeCata

You know, it I about we'd widening think see I out. it but think to don't have

we I think come likely cost increases see relatively continue it's stable, will to through.

price high put very realization. with We have in increase place already a price

it answer rental that are one I they rent that also the cost is or that large ago by are option do is this lowest Of a $XXX,XXX $X.XX very A maintaining course, down going far day no. our a mind of excavator They equipment think day about $X.XX, Kevin extra $X market. is the have thing, Opportunity average while their $X,XXX construction we in or though, asked Bearing for our part? or necessity. market, up, a day. $X,XXX moment you a customers real for recognize your recognize will the price the you when a a cost piece prices $X,XXX in excavator rent want is for part a $X,XXX for our equipment.

saying the for what are trying more of We're rock increases. to. who to I've manage becoming internally, choosing profit referred is to our percent this more trying the proposition value the valuable price are through fact, outsource we in And not companies So gross expansion years. not they I solid, to to -- expand used been market

we like offer the and want to it But cost step. is customers. value paid don't a we we're in feel which we're Now, by customers, to increases, we because of fairly tremendous our contract our

nor long-term we so expansion percents. of those long-term contraction expect neither margin And

Ken Newman

of of this just is to I half rental be those clarify. pretty it. lot the help are the because tight know imagine yield just one I back here. just fleets of since in Got on larger production my to that And rental that working these right utilization time of now a improve up for wanted of do lot year. the availability a equipment. open suppliers expecting fleets I you last -- time there. mentioned know the I this companies, will I to you're

as maybe think bit, we you're So strategize fleet high availability off time saw little us comes in to help maybe up peaks about around that 'XX. a just market opens yield that with how pretty planning

Michael DeCata

at and how equipment manufacturers. labor the materials available. production manufacturers production the expansion, contingent and talking large about right, becomes see it's That's are Yes, on raw we'll major

than engaging aerially So new they're I use could equipment. because the equipment like fresher hope expectancy the [Indiscernible] age ground much a industry right, life lives equipment, and in have an associated a with bulldozers There's shorter and equipment.

is lot of the this a tooth. And really so getting long equipment in

Ron Knutson

used consumable becomes of to people need. for now, rent well, me bulldozer, about fleet larger their trend MRO, where equipment the just they're let happening in industry talk it and their or outsourcing the backhaul construction same saying, the we So own the more is and I the days the

that think all as expanding is that for us. I market opportunity well, of and represents So

with large senior have We with close to very the the CEOs very, management, close very these down mean, companies. also I departments largest relationships companies. purchasing the in relationships from

lock-step in them we're with quarterly. So

Ken Newman

the color. helpful for Very guys. time, Thanks

Ron Knutson

Thank you.

Michael DeCata

Ken. Thanks,

Operator

DeCata conference for back our remarks. you. Mike like turn This I concludes any closing would question-and-answer the to Thank over to session.

Michael DeCata

the reflect value of us plant operating to ability acute shortages. prospects critical maintenance to Thank and turning the highlighted quarter keep in to environment. More Lawson's Thank The the our also you nature and increasingly inventory equipment year vendor-managed and full-year today. customers adapt to their service-intensive labor changing you, of enable and for joining Lawson nimble face fourth are -- The Paul. to be them proposition. labor

challenges the investors interest speaking for forward to best with and years you you Lawson our keep culture a so chain for ago Investments at on programs commitment, started our culture into our we'll environment. Thank of the commitment the and supply a has integrity, in look and serving on managing investing years next work in outstanding to in to the and your an on stakeholders. future. an new us history to that job our These do success day. Products. While data strong. Throughout great done across of are forward Thank Bolt our Supply, XX-year and we've well, a extraordinary you to to our your commitment strived for team investments customer and growth. and ensuring look has and to and come. XXXX us, our enabling We're Have based persist, made XXXX continued in the all are Thank XXXX, to based rich you. make wonderful company decisions we've XX-year customers, continue team. to accelerate history We we call. hard

Operator

for attending presentation. you concluded. This Thank today's conference now has

You may now disconnect.

Distribution Solutions (DSGR) 24 Feb 222021 Q4 Earnings call transcript