Distribution Solutions Group on Thursday reported nearly flat year-over-year sales growth in its latest quarter and narrowed its loss compared to the same window last year.
But the parent of Lawson Products and Gexpro also saw operating income plummet by more than 60% over that span, and company officials acknowledged that its Q4 margin “did not play out as expected.”
The company posted $481.6 million in revenue between October and December, which was up 0.2% from its previous fourth quarter.
DSG’s gross profit, however, slipped from nearly $160 million to $157.7 million, and operating income of $7.7 million was down from more than $20 million at the end of 2024, which officials said reflected “non-cash acquired intangible amortization” as well as non-recurring severance, compensation and acquisition-related costs. Its operating margin came in at 1.2%, down 260 basis points year-over-year.
DSG again reported a Q4 loss at $6.4 million, but that total was improved from a nearly $26 million loss in the previous fourth quarter tied to a higher tax expense.
DSG Chairman and CEO Bryan King said that the company’s margin was impacted by “shifts in the product and solutions mix, including acquisition-related impacts, and timing of employee-related costs, particularly in healthcare benefits, and leadership talent investments.”
“While the fourth quarter margin did not play out as anticipated given some of these dynamics, it is not indicative of our longer-term plans or our confidence in the future,” King said in the earnings release. “Industry-wide softness and continued investments in the business have pressured margins in the short-term, however, we are encouraged by the disciplined execution of our strategy and the progress on our key operating initiatives.”
The Lawson Products division posted $114.8 million in sales in the quarter, up from $111.8 million in the final quarter of 2024. Gexpro Services and TestEquity also edged up, while DSG’s Canadian operations were down year-over-year.
For the full year, DSG’s revenues were up 9.8% to $1.98 billion, and the company posted net income of $8.3 million after a $7.3 million loss in 2024.
The company ranked at no. 16 on ID’s most recent Big 50.
