Distribution Solutions Group Reports 6.6% Revenue Growth, Net Income Turnaround in Q3 2024

Distribution Solutions Group, Inc. (DSG) reported significant financial developments in its latest 10-Q filing for the quarter ending September 30, 2024. The company achieved revenue of $468.0 million for Q3 2024, a 6.6% increase from $438.9 million in Q3 2023. For the nine months ended September 30, 2024, total revenue reached $1.32 billion, up from $1.17 billion in the same period last year, reflecting a growth of 13.6%. This increase was primarily driven by acquisitions, which contributed approximately $211.7 million, although organic revenue declined by $9.0 million.

Gross profit for Q3 2024 was $158.8 million, compared to $145.3 million in Q3 2023, while gross profit for the nine-month period increased to $453.8 million from $414.2 million. However, operating income for the nine months decreased to $35.9 million from $43.3 million in the prior year, indicating challenges in maintaining profitability amid rising costs.

DSG reported a net income of $21.9 million for Q3 2024, a significant turnaround from a net loss of $1.6 million in Q3 2023. For the nine-month period, net income was $18.6 million, compared to $7.4 million in the previous year. Basic income per share for Q3 2024 was $0.47, compared to a loss of $0.03 per share in Q3 2023.

Strategically, DSG has been active in expanding its market presence through acquisitions. Notably, the company acquired Source Atlantic Limited for $103.1 million on August 14, 2024, enhancing its footprint in the Canadian MRO market. This acquisition was funded through borrowings under an amended credit facility, which also included a $200 million incremental term loan. Additionally, DSG acquired S&S Automotive Inc. for approximately $80.1 million on May 1, 2024, and Emergent Safety Supply for $9.9 million on January 19, 2024.

The company also underwent a segment realignment, increasing its reportable segments from three to four, with the addition of the Canada Branch Division. This realignment is not expected to impact financial results significantly.

As of September 30, 2024, DSG's total assets were $1.78 billion, up from $1.55 billion at the end of 2023. Total liabilities increased to $1.10 billion, primarily due to higher long-term debt, which rose to $704.1 million from $535.9 million at the end of 2023. The company reported total stockholders' equity of $680.8 million, a slight increase from $661.6 million at the end of the previous fiscal year.

Overall, DSG's financial performance reflects a combination of strategic acquisitions and operational challenges, with a focus on expanding its market presence while managing costs and profitability.