Recent DSGR transcripts
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| John King | executive |
| Ronald Knutson | executive |
| Thomas Moll | analyst |
| Kevin Steinke | analyst |
| Katie Fleischer | analyst |
Good day, and welcome to the Distribution Solutions Group First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.I will now turn the conference over to your host, Steven Hooser, with Three Part Advisors. Sir, you may begin.
Good morning, everyone, and welcome to the Distribution Solutions Group First Quarter 2024 Earnings Call.
Joining me on today's call are DSG's Chairman and Chief Executive Officer, Bryan King; and Executive Vice President and Chief Financial Officer, Ron Knutson. goals, on call, is provided website posted subject described. note contain statements are to today's plans, future assumptions risks slide financial differ at actual results and with in that that and deck on made uncertainties conjunction we materially expectations, operating forward-looking release beliefs, a strategies, have results investor.distributionsolutionsgroup.com.Please today's In those and press results statements underlying call cause from this concerning the to that that company's could
to can statements made on and on company's A our is GAAP has release. today Internet but update the copy may of to in and Bryan with King. teleconference of nearest our webcast addition, X-K Bryan? the that Distribution found call the Group to The be The Relations the non-GAAP May the over to A during I'd In turn change, being website. call based this elect earlier Investor developments the be SEC.Lastly, on views now replay of that, a filed on release Solutions measures, of disclaim to been earnings the company included this also section the also made XXXX.With via the Investor posted website. no report call forward-looking page obligation our measures current reconciliations the cause on was will XX, through available like to future today. Relations to may are the do at those end statements, views as so.Management of we issued earnings release refer will anticipates
on review financial us all for be XXXX. Thanks, review overall results. Steven, and to X I'll joining first to Slide quarter you thank starting
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Thank you, Bryan, everyone. and good morning,
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Thank you, Ron.
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Inc. from coming with Tommy first Our Instructions] question [Operator Moll is Stephens
sourced to start that presume directly deal. was I S&S. on I a wanted
you at there, you relationship development then on could also your it, said So a integration? us just complementary go-forward and And any things the while context came about how I'm on Bryan, you team. some the to give deal
deals over to sounds this bogey more how put the full. like pipeline get you'll line a on the want year. It many You finish is
Thanks, Tommy.
so Ron here. Ron, maybe or with was bought, Let's years let color -- I'll the and Automotive But Kent was start XX S&S, so? additional ago some division, which something that add
Yes, XX-plus.
I maybe is largely maintenance on SKUs the of similar, an family a through a discrete couple work kind leadership was lot this years XX competitor of a extremely that was of business automotive. line very original in just to ago, both to and of but a of dense XXs, the Products on sellers a done. that for in model, division set our our building X important that think, business.And sides XXs, families and market built inside to had kind Automotive time has Kent had long them repair the stayed taken years had so with And job founding running us Lawson team S&S family But started a from over work a getting early business they process. was were ago. And the corporate owned team Over Midwest. with the the we and the and started good time quite it the value collision taken try really transaction so and And of the And them. dialogue best committed done competing share. the They development operating in strong, of the
But was of -- I'll structurally drive to of provides that more away strategically Lawson and to to we've not I today excited revenue trouble Lawson are Products So an lot of in for people, years.This done. yes, digress we Lawson amount and not high second, nuances an the leadership take it this. acquisition we've I'm inside last enjoying are margin opportunity opportunity that we're direct started over was a know through, done from be to But don't product of work years.As a it sides business. EBITDA source, just do domestic of complementary businesses lots were a structurally for as for dialogue. coming tremendous to higher about of anything get others organic both work there's for direct the it of we going -- on took couldn't lot more uplift but There several as that we've have one lines margin a our EBITDA from over effort U.S.
the to on And these we're margin, so looking at returns punch to core, margin EBITDA see pockets. as opportunities Lawson we higher and
in us was we so spades.And does there we so couple consistent more this we able expect has double-digit around first so with with this needed growth clubhouse a had it of tremendous only in to can it and But where immediately time had last it double-digit sitting, visibility do even over EBITDA to -- to Kent in has what bring to quarter. margins, over -- was pull years, to kind leadership that order margins growth EBITDA strong organic the of Lawson. from gives would not strong And organic but the take density that had it margins did it it it be in are
to to you that of we the offer analysis more on Tommy, doing effort. forward with corporate don't that we areas units, some in pipeline. of have. other lines I to are broadly. business value-added we're each the funnel business spending other objectives are our on too lot but even we're teams, source, leadership and pushing same So takes to across lot team where identified can a don't other think we fill the our of try -- of discreteness that drive want verticals. And trying plate. meeting There to out a that performance that goal.So are got on our we've is will, deep a of we of Ron, have as across There they get if inside to key Lawson of their of development their lot and bring a that each That's I more most proposition our direct higher time.We've of of different if verticals do a whole longer-term the X And defined is there's opportunities was the know, you it, into want inside to it, with
to what get to to and just that -- S&S the progress didn't confidence of lot that them and we've to of line them it's you was We a spent that we we're on that. value lot really -- another did of done with look talking closing was others the some direct And to confidence a Ron? take like being to amount and if other conversations the then going working have counterparty or to And closing the source. like conviction both of We with of some time hard And -- cases on we a these it's and it. in so get the was long table. years had could we [indiscernible] that there a how of land was going that side, DSG. on. you line.Hisco committed others kind to start case tremendous And of anticipate partners try to you was one
I thing relationships over but would has with only been to Bryan, Automotive The Yes. repair also shops. many the past focused Kent auto Automotive that, is on lot add a auto of years dealerships, the the collision dealerships. over And growth heavier -- heavily building in certainly few the S&S
very in And little overlap SKU than typically greater shop.So really SKU overlap collision Bryan's no point, as great a there's I repair well. to puts a so the is there think end to all position, and availability auto spend -- of customers, typically, to customer -- us dealership expand little within it very the end
availability to a and then foothold dealership both leverage really on auto having opportunity servicing product now be ends market. able great both So to into also the
up correctly, to on for I be hear ask if second any Ron, I obviously be appreciated. the wanted just on to you're for correctly. XQ? standpoint. consolidated you say context for each I I noteworthy then margin, revenue did would hear on callouts appreciate to the trajectory that results, outlook a quarter you sure in that up the follow sequentially wanted segment on I provided. and And I looking to Did from the make you heard margins
Tommy. Sure. Yes,
some the quarter margin just, anticipated as sales be growth I you sales probably be Again, say, pressure heard visibility prolonging would than of longer into initially year.From we against some last sits to the perspective, on correctly here. yes, that month kind were X% of that that 'XX. we a late the that from that up it, this Measurement we've well. at did we'll continued organic as out got we & perspective, probably you seems Test against looking of what From then in certainly yes, first hear And second call an organic the, quarter pressure So realized correctly.
taking able Our Individually, Gexpro margin quarter we're to Services initiatives as as we expectation would place XXXX for of improvement going And a the to we be realize that don't X guidance. into second incremental feel make be able sequentially be know, us that like comment. to improvement you within we provide the some there. nice on to Group there's Lawson, is margin path formal verticals. develops -- all We see within and to able -- TestEquity to -- sequentially
quarter. number a So ended I sequential expect from around but can't where really we we give first that, you do the improvement
quarter in confidence spending that spend out and we're -- of are now the a Measurement of close there more what seeing indicating that, asset to overhang. relative with X more that April that the very up that what on terms quarter Ron, the the is equipment. test capital measurement one of the slight things of -- a just -- side.So that first that seen and to customer a tick & Test is we again, we're we months matter saw did the hoping like on loose. to of that channel It's trend on and fourth months in the money feeling there's add is the in Just X on letting we've a of -- couple months the first get inventory was has of And is of just not clean on we
Our Steinke from next coming question is Kevin Research. with Barrington
out So Lawson and it open mentioned but down I just be certain to that where for you from that you seems the wanted to you're sales build positions representative you about about bit also historically, a XXX. recruiting in territories. It want had that ask headcount, to was
to where the about in an sales So just standpoint talk like maybe Lawson from you do grow attrition rep both the trend you'd headcount, of it kind and it, grow forward? like to how going
that. take I'll Kevin, Sure.
become along team put reps building would just from say about in the commented few help slightly perspective. of down that total sales as some an are our a terms incrementally shifts to expect changes So we and that in sales so terms overly yes, out the down with And through some forth.We talked prepared overall the unexpected of our it's in of remarks, would we more did take of we in we've inside I place that XXXX not headcount steps count. our productive, we through that
the believe on in marketplace, a say defining sales basis. actively, territories for that would sales can reps, probably are better the recruiting that We our drive and additional we I go-forward
average selling. sales of pressure on reps sales perspective. from looking also now enter we not end for wouldn't for are that the say opportunity can that We growth feet as market at in count XXXX. sales where can an throughout into.So some some so of terms specific say we've of but the inside really We'll a daily at, of that I that, on markets provide for reps actively believe rep reps more are the a us, ground are number But a believe us, just of data of can very move we our those we sales on of our down only out new really that of a number that's combined that that part and rest combination terms it's basis existing of again, we overly territories surprising -- we -- the in put we're
I'm analysis brought did, XXX probably just at for part serve going stage, reps an to outside a of -- -- the Kevin, we heading X,XXX to also I've firm that our [indiscernible] -- last as to the while way money XXX more business direction.And for make almost to like we Cesar look the we to territories order point, is look refreshing more this today, territories. bringing X,XXX, really of consulting the making that. years. time. intuitively at we and at we the sure cost was that structurally and Cesar needed in do one was same touch And couple at at were Ron, in that reps, our had now we the we time on had, the right what defined known they're at in It in in Ron this so and
hard like and is both rep rep that kind likelihood And in of allowing what faster.We're had adding And to that get when territories territories. a which sales to got so are that you've But get that looked taking to a to went that in or to them, lot that reworked. someone territory them. who we going have we also that and were maybe a us needed the of tools we order do sure a insight that for at reworked and lot help success to a be for of to somebody means too to needed those were -- to higher profitability it's starting back make of look were a an is thin opportunity,
that how of to making some of our and consolidate better sure going our level for salespeople.And process our get part and to compensation down structures time. it's -- of for serve allow how rework and so were really could had we those our going how so the -- slow at and Cesar territories team look that that productivity to what we also had backfill And so we all of reps, higher to both like and is some cost over and his was as to that out turnover to look drive our organization route we've some chairs
of might on And to sight as can XX% volume And of total trying wasn't X% to we XX% we're selling to how productivity several that to see cost that XXs, so, used And and in remember, did XX% basis. mode serve. maybe what if the think were an XX% in to the going business.And a in more comp ago, year go to get I be reps metrics we at where relates our or make they costs chair around them. be in of to average it up of reps terms than one it line in, means where and point, what giving and of years of when out was out we Ron, a I'm want out shareholders was the total I we I the back were
Ron? years are or we want of XX were than probably be where XX% -- much they territories is think there's -- more that an where average it's XX% I now. right on where detail, couple basis XX and new backfills efforts ago.There's they too were more XX -- than there's or Is it's to XX% I think a open that
No, Bryan. that's fine,
chasing that now, chairs XX Kevin. There's we're right
[Operator Instructions] Our KeyBanc next question with is coming from Katie Capital. Fleischer
today. when that. Newman Lawson give Ken and if you for inflection the on in an weakness wondering from the orders some I government drove that would the on little was maybe of commentary more I'm in bit could a you color expect
There and that but accounts ago, organic that in Lawson's first you and strategic we that the the their was was of into X equal sell government the of took customers quarter.There areas and towards first -- the a there's between in lot in that -- that hit engagement that's or Yes. a -- to first probably up into we in give for for continuing place -- disruptive discreteness we've a government. got and the way equally Lawson business guess, want X grow broad up all detractor that parts just parts And early some they about something can more first the X comments to change us, can to... there is pretty And we do small knew of Lawson year was prior But set then big quarter from change kind know was was across the and out years, X coming weighted government. the goods were piece of delay the -- or significant quarter. to in C every and about spending our a Class us to street that's spending that there. that was a down was core with entry Ron in those see that's it it. also in that of the that the relationships program, at then a decrease just year I my that versus I could be order growth quarter Ron,
Bryan, Yes. add I would to that. just
go process, You're we're are to well longer now spot required in terms just on a of And it's and ordering others as through. the system that Katie.
demand I I ago it's a within versus large I any the high we government, So Lawson. military business is other some for past. saw of that piece C pretty that volumes that say of consumable great year not its -- some historically in locations, segment parts any is, business mean, end decrease the a the is We've we've sell. there seen large would lost us.The that locations the for we Class mean
we're it's concerned customer just about So that around not timing. any attrition that. It's it's -- more
that that, of call not XXXX. it's Our come will sense Certainly, let's is rest to the the back part up, it, for throughout us an quarter. all most in catch X
as it come gradually to develops. will back think XXXX us I
one Measurement. Okay. That's Test helpful. more And just then & on
sense confidence to have are this limited back? to that on from mentioned for would your it's going you come from is based But strong that end visibility. markets look So difficult inflect a of I that when are customers these just would really give some you or that know markets your signs what you demand to the starting
to me want one? that you on touch do Bryan, Yes,
Why at least don't [ ] off? you Thank Ron, you. that, it Yes. hit start and
Yes.
of look When had little well. commented even -- Test & Measurement at how Katie, stand-alone was Bryan to to a really the and March So and -- levels and February in stronger monthly as and bit both a that we on November we back we saw January business, developed, as basis basis first a December was than quarter that frame. this time on the kind on
made like has now.What more units, piece leveled acquisitions which that right off TEquipment, the X into this QX QX I is was we -- would year sequentially into One, kind separate bottom price. of the or is So really would sell is that of up purchase areas. & I us Test separate it business say, was one in Measurement -- that at we've for lower of feel say they what divide the a of ago, kind average X year. so I business That handheld
to QX down versus versus but quarter, good sign continue a a bit year that's QX. So that a we up see sequentially ago little
But that's I March point price lower sign of pressure the the there. to a good we to my the there's see larger back continue month some So in items.On demand strongest think the that quarter. point was items, earlier, additional some coming
not spend as the us, the customer perfect I in that we're very Again, almost more call, direction. release chain capital and that demand into capital primarily But storm that the and supply -- mid-XXXX, no for hit dried the delayed. kind mid-XXXX connected there of came the squarely It's what up the piece, continues our the in going issues there. customers from delay that a staying the that really QX of perfect to demand all supply customer it from be market is pent-up slowdown And supply on or demand. I kind early rates, of base. storm to shortly we're that think chain the hearing that described So were attrition end higher -- on of other the this was with and came in pent-up we thereafter through wrong through resolved.So interest commented our projects surrounding was
Bryan, additional But So hopefully, helps. may have that. any thoughts you that on certainly,
kind isn't a to what's going saw because about terms trend March, of concern quoting on lots up we're Tektronix months there X of the & seeing Fluke February. through of were during thing in of what of means not the Hisco but sell-off of far. But lowest of is at we the the demand nice the out Keysight looking or appears, up, us, think nice we're seen we're it half So we in where got inflection of Ron so the far what and lowest year look, bottom picked -- Measurement the really, and messiness handhelds.And was larger we're we've kind so kind hit as in -- that April activity highest still through when side. back and and we Test nice looking nadir by kind versions that vendors type kind the And by at [ largest -- of laid there a and looking for they back they the that volume a activity. January hit that point, decline to we We at that's the turned would opposed level kind stepped ] true TestEquity last yet by any there of some looking even first on, that the the as revenue the there. our X in saw is quarter.And we of or there -- the Katie, desktop selling levels specifically. were some division, and then or channel of was it back I fourth the kind average months across be framework a to again quarter, And where a at third we've or from of were -- in of TEquip out and the a
things communications programs side Hisco, electronics, and those were the of of about some markets.So TestEquity similar if verticals, declines that our in the programs similar declines seeing seeing also OEM seeing OEM look industrial when are buying looking volume impact or -- test of think with through there. of in largely coming wireless And is still were the more you engagements seeing kind activity in is were equipment. the had Hisco we on measurement are and OEM the percentage those some that sort amplified customers One industry of and programs which -- with segment that the at reflecting over that are of are of at we some type in we we're active we
in So We that what's where pricing dollars we seems to weren't in think quarter -- we've think making some in some struggles orders are as much as those of that money and equipment point they're we R&D markets, coming -- end having their do lost to times be But during little first a labs.And they're industry like trending, way we much their it's those be at there's through time, we're probably the own going we it's their in aren't they so they're that feel just if that their that to verticals we some on in on don't spending the customers. because at going even or maybe and not OEM confirmation a fourth just the back. natural quarter there match. willing bit was -- lost think activity facilities
Thank you.
any the closing for As Bryan time, we King call Mr. at lines the this have no further remarks. to over questions I will back on turn
Well, still moving appreciate it. lot We business. got everybody's of we've a Obviously, really think, that's, I in parts time. the
in time with and again the been teams capital We over a our putting how drive we're And we've returns report accountability speaking and day. have business continuing are we work you forward structural and your verticals. second the across can today. a you margins the August. very We look with when for in to got of in on to results our build we have the that great each of early confidence invested encouraged years.Thank quarter that lot coming X And
your This this lines may concludes you. time, participation. disconnect and today's Thank conference, and we you thank at for your you
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