MRO, OEM and industrial technologies distributor Distribution Solutions Group reported a strong acceleration in 2Q26 sales growth as the company moves toward a pending take-private transaction with controlling shareholder LKCM Headwater Investments.

DSG is comprised of subsidiaries TestEquity (40% of revenue), Lawson Products (35%) and Gexpro Services (25%).

Fort Worth, TX-based DSG posted second-quarter sales of $558 million, up 11.0% year-over-year, with organic sales increasing 10.2%. Eastern Valve, acquired during 1Q, contributed $4.1 million. Sequentially, organic sales increased 12.4%, while organic average daily sales rose 8.1% from 1Q.

Gross margin fell 160 basis points year-over-year to 32.3%, which DSG attributed primarily to customer and vertical sales mix shifts and higher tariff rates on inbound shipments, partially offset by pricing. Operating profit increased 3.9% to $28 million, while net profit rose to $8.5 million from $5 million a year earlier. Adjusted EBITDA increased 11.1% to $54 million, with margin holding flat at 9.7%. That margin improved 210 basis points sequentially from 1Q.

TestEquity led DSG’s organic growth, with average daily sales up 17.4% year-over-year amid higher test and measurement and electronic production supplies demand. Its revenue reached $229 million, while adjusted EBITDA rose to $20 million on 8.7% margin. Gexpro Services’ organic daily sales increased 9.7%, while DSG’s Canada Branch business increased 6.7% and Lawson Products gained 1.0%.

DSG said the macro environment is improving, with momentum in technology, industrial power and consumer and industrial markets. Tariff uncertainty persists, while industrial printing remains under pressure.

The results arrive after DSG entered a definitive agreement July 15 for LKCM to acquire the roughly 21% of shares it doesn’t already own for $35 per share in cash. LKCM and its affiliates currently own about 79% of DSG. The approximately $2.4 billion deal would make DSG wholly owned by LKCM and end its Nasdaq listing.

Closing remains subject to customary conditions, including antitrust clearance and approval by shareholders, including a majority of votes cast by DSG shareholders unaffiliated with LKCM.