Earnings Roundup: Distribution Solutions Group, DXP, Veritiv & More

Distribution Solutions Group had its inaugural earnings report following the April 1 merger of Lawson Products, TestEquity and Gexpro Services.
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We’re near the end of the latest quarterly earnings reporting period for publicly-traded companies, covering the April-June period. For most companies, that was their fiscal second quarter. Below, find the key sales and profit figures for top distributors and manufacturers in the markets MDM typically covers:

Distribution Solutions Group (formerly Lawson Products)

Distribution Solutions Group reported its 2022 second-quarter financial results on Aug. 9, marking the company’s first reporting since the April 1 merger closing between Lawson Products, TestEquity and Gexpro Services that resulted in the current firm.

The Chicago-based distributor of MRO products and industrial technologies reported 2Q total sales of $321 million, up 139.5% year-over-year — largely driven by the aforementioned merger. The company said non-GAAP organic sales increased 11.8% year-over-year.

By business segment in 2Q (in GAAP reporting):

  • Lawson Products sales were $107 million, with an operating loss of $2.6 million and adjusted EBITDA of $9.4 million
  • Gexpro Services sales were $100 million, with an operating profit of $5.4 million and adjusted EBITDA of $11.9 million
  • TestEquity sales were $98 million, with an operating profit of $0.5 million and adjusted EBITDA of $8.6 million
  • Other sales were $16 million, with an operating profit of $0.8 million and adjusted EBITDA of $1.7 million

The company had a total operating profit of $4.1 million on margin of 1.3% and adjusted EBITDA of $31.7 million (9.9% of sales), while it had a total net loss of $4.7 million.

“We continue to see solid product demand from our customers across many of our end markets,” said, Bryan King, DSG chairman and CEO, in the company’s earnings release. “Only 120 days into the merger we are realizing early wins regarding customer opportunities as well as overall cost synergies. The leadership of each operating company and their respective teams are working collaboratively to ensure they continue to deliver on our high-touch, value-added business models while we continue to focus on increasing DSG’s long-term enterprise value for our shareholders.”

King noted that during 2Q the company completed two accretive acquisitions with aggregate annual revenues of approximately $119 million, which are expected to generate annual adjusted EBITDA over more than $10 million.

DXP Enterprises

Pumping solutions and MROP supplies distributor DXP Enterprises reported its 2Q results on Aug. 8, showing major gains in year-over-year and sequential sales.

The Houston-based company posted total 2Q sales of $368 million, up 28.7% year-over-year and up 15.2% from 1Q. Gross margin of 28.4%trailed the 29.9% of a year earlier and 29.7% of 1Q. 2Q EBITDA of $33 million and EBITDA margin of 8.9% topped the $23 million and 7.9% of a year earlier, and topped/matched the $28 million and 8.9% in 1Q.

By business segment in 2Q:

  • Service Centers sales of $251 million increased 19.8% year-over-year and increased 14.8% sequentially), while operating profit of $32 million (12.9% margin) topped the $26 million of a year earlier.
  • Innovative Pumping Solutions sales of $58 million jumped 57.3% year-over-year and increased 8.9% sequentially, while operating profit of $8.7 million (15.1% margin) topped the $4.8 million of a year earlier.
  • Supply Chain Services sales of $59 million likewise jumped 49.8% year-over-year and increased 23.9% sequentially, while operating profit of $5.0 million (8.4% margin) topped the $3.5 million of a year earlier.

DXP’s total 2Q operating profit of $46 million topped the $35 million it had a year earlier, while total net profit of $14 million topped the $8 million it had a year earlier.

“We have underlying business momentum while our industry continues to effectively manage through inflationary pressures,” DXP chairman and CEO David Little said in the company’s earnings release. “While the macro-environment continues to remain dynamic, we still see a strong second half of 2022 with good demand trends, acquisitions and strategic initiatives that will allow us to finish 2022 strong and position us for a better 2023.”

Veritiv Corp.

Jan-San products distributor Veritiv Corp. reported its 2022 2Q results on Aug. 9, which were led by continued strong sales and profit growth.

The Atlanta-based company posted total 2Q sales of $1.8 billion, up 9.8% year-over-year, with organic sales up 18.2%. The company’s operating profit of $118 million dwarfed the $38 million it had a year earlier, while net profit of $91 million likewise soared over the $26 million of a year earlier.

“Double-digit organic sales growth and continued operational excellence contributed to the best performance for any quarter in company history for net income, EPS, adjusted EBITDA dollars and adjusted EBITDA margin,” said Sal Abbate, Veritiv CEO. “The combination of continued sales growth and our cost and price management discipline resulted in record net income of $91 million which was more than three times higher than the second quarter of 2021, while diluted earnings per share increased to a record $6.12.”

The company expects 2022 full year net profit to be between $285 million and $315 million.

ADI Global Distribution

Resideo Technologies reported its 2Q financials on Aug. 4, which included results for ADI Global Distribution — a distributor of security, audio-video and low-voltage products.

The figures showed that ADI had 2Q total revenue of $922 million — a quarterly record for ADI — up 5% year-over-year. Gross margin of 20.0% grew 260 basis points year-over-year, while operating profit of $86 million likewise jumped 30%.

Resideo said ADI’s eCommerce sales grew 29% and accounted for 18% of its total revenue. Overall touchless revenue comprised 36% of ADI’s total.

ADI’s 2Q sales growth was driven by a strong pricing environment and recent acquisitions, Resideo said. “Demand was again strong in categories that typically serve commercial end markets including fire and access control. Vendor supply issues remained a headwind to additional growth in the quarter,” the company stated.

At the start of 2Q, ADI acquired Electronic Custom Distributors (ECD), a regional distributor of residential audio, video, automation, security, wire and telecommunication products. It added four branch locations and a 30,000-square-foot distribution center to ADI, representing its fith acquisition since 2020.

Wajax Corp.

Toronto, Ontario-based Wajax Corp. reported its 2022 2Q results on Aug. 4, which included strong growth in its Industrial Parts segment.

The company posted total sales of $397 million USD, up 14.6% year-over-year as gross margin of 20.1% increased from 19.9% a year earlier. Wajax’s 2Q net profit of $17 million topped the $14 million of a year earlier.

In its Industrial Parts business segment, 2Q sales of $104 million increased 17.1% year-over-year.

Effective June 30, Wajax’s Tundra subsidiary acquired the Alberta division of Powell Canada (Powell Valve), which specializes in valve sales, service and support, for $4.2 million. Powell Valve’s trailing 12-month revenue at the time of the acquisition was approximately $6.8 million.

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