UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
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| Item 7.01 | Regulation FD Disclosure. |
On May 5, 2022, Distribution Solutions Group, Inc., a Delaware corporation formerly known as Lawson Products, Inc. (the “Company”), made available an investor presentation (the “Presentation”) relating to the Company. From time to time, the Company may use this presentation, or portions thereof, in meetings or conversations with investors, prospective investors, analysts and/or other interested parties.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Item 7.01, including Exhibit 99.1, shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing or document.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Exhibit Description | |
| 99.1 | Investor Presentation. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DISTRIBUTION SOLUTIONS GROUP, INC. | ||||||
| (Registrant) | ||||||
| Date: May 5, 2022 | By: | /s/ Ronald J. Knutson | ||||
| Name: | Ronald J. Knutson | |||||
| Title: | Executive Vice President, Chief Financial Officer and Treasurer | |||||
Exhibit 99.1 Investor Presentation | May 5, 2022 NASDAQ: DSGR* *The company will start trading under the new NASDAQ common stock trading symbol “DSGR” commencing Monday, May 9, 2022 DSG Investor Presentation
Forward Looking Statements Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. The terms “aim,” “anticipate,” “believe,” “contemplates,” “continues,” “could,” “ensure,” “estimate,” “expect,” “forecasts,” “if,” “intend,” “likely,” “may,” “might,” “objective,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “probable,” “project,” “shall,” “should,” “strategy,” “will,” “would,” and other words and terms of similar meaning and expression are intended to identify forward-looking statements. Forward-looking statements can also be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks, uncertainties and assumptions, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. Lawson can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and Lawson cautions readers not to place undue reliance on such statements, which speak only as of the date made. Lawson undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Certain risks associated with Lawson’s business are also discussed from time to time in the reports Lawson files with the SEC, including Lawson’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, Lawson’s Quarterly Reports on Form 10-Q and Lawson’s Current Reports on Form 8-K. In addition, the following factors, among others, could cause actual outcomes and results to differ materially from those discussed in the forward-looking statements: (i) whether or not the terms of the earnout provisions in either of the merger agreements (related to TestEquity and Gexpro Services mergers) will be satisfied such that Lawson would be required to issue additional shares of Lawson common stock in connection with the mergers; (ii) unanticipated difficulties or expenditures relating to the mergers; (iii) the risk that stockholder litigation in connection with the mergers results in significant costs of defense, indemnification and liability; and (iv) any problems arising in combining the businesses of Lawson, TestEquity and Gexpro Services, which may result in the combined company not operating as effectively and efficiently as expected. 2 DSG Investor Presentation
Distribution Solutions Group Powerful Solutions. Proven Results. DSG Investor Presentation
Why Own DSG: Investment Thesis NASDAQ: DSGR* Aligned Best-in-Class Management Team • Deeply experienced and proven operating company leadership across each focus area • Management team owns ~10% of stock, with LKCM & affiliates owning ~65% Annual Revenues • Equity incentive structure fully aligns management with shareholders to drive long-term value creation (1) • Non-compensated support & leadership from LKCM Headwater team $1.2B Large Growth Opportunity with Significant Operating Leverage • Scalable platform of asset-light, high touch service models in fragmented end markets • Strong secular tailwinds within core end markets (5G/electrification, semiconductor, and renewables) • Supply chain cost leverage focusing on both direct and indirect spend categories Annual Adjusted EBITDA • Operating leverage synergies not currently represented in TTM financials (1) $103M Highly Accretive, Actionable M&A Pipeline with Dedicated In-House M&A Team • Demonstrated success executing eight highly accretive transactions since mid-2020 • Dedicated in-house experienced business development team • Buyer of choice with robust acquisition pipeline within highly fragmented $57B TAM Total Addressable Market Investor Mindset Around Capital Allocation • Capital redeployment flexibility to fuel further organic and inorganic growth $57B • Prioritization of highly accretive, synergistic opportunities • Oversight from LKCM with 42-year history of active engagement in public and private markets Attractive Financial Profile • High free cash flow generation • Strong balance sheet and prudent capital structure targeting 3x-4x leverage • Asset light model with capex at ~1.0% of sales *The company will start trading under the new NASDAQ common stock trading symbol “DSGR” commencing Monday, May 9, 2022 (1) Represents combined annual expected revenues and annual adjusted EBITDA for TTM period ended 3/31/22 and also includes acquisition of TEquipment that closed on 4/29/22 4 DSG Investor Presentation
What We Do (1) (1) (1) (37% of Sales) (29% of Sales) (34% of Sales) MRO Focus OEM Focus Industrial Technologies Focus Leading North American vendor managed Leading global supply chain services and Leading independent North American Test inventory provider of C-parts to the MRO market C-parts provider to OEM & aftermarket & Measurement provider • High margin, low price point products • Global industrial OEM distributor • Distributor of electronic test & • Service & solution industrial MRO specializing in VMI inventory solutions measurement solutions distributor specializing in vendor & kitting • Broadest T&M, electronic production managed inventory • Diversified product offering of over supplies with 180,000+ SKUs • Specialty knowledge with 230,000+ 70,000+ SKUs • Procurement alternatives of new, SKUs, including ~40% of sales private • Services 1,800 OEM customers in reconditioned & rental label multiple locations/countries imbedded • Capabilities including VMI, kitting, and • Services over 90,000 customers with into supply chain complimentary calibration capabilities VMI, engineering services, technical • Verticals Served: Transportation, information • 100+ technical, consultative sales Technology, Renewables, Power professionals across a fragmented • Customers serviced by 1,100+ sales Generation, C&I, Aerospace & Defense customer base representatives Leveraging Strengths Across Three High-Touch, Highly-Entrenched Industrial Verticals to Create a Diversified, Highly-Profitable Specialty Distribution Company Poised for Accelerated Growth (1) Represents combined annual expected revenues for TTM period ended 3/31/22 and also includes acquisition of TEquipment that closed on 4/29/22. 5 DSG Investor Presentation
Embedded Growth Opportunities UNIQUE ORGANIC GROWTH OPPORTUNITIES SELECTIVE, ACTIONABLE ACQUISITION PROGRAM + • In-house Corporate Development team with first-class experience LEVERAGE PLATFORM CAPABILITIES ACROSS CUSTOMER BASE • Well-respected brands viewed as credible acquirors with longstanding relationships in a $57B market • Large, highly fragmented markets with hundreds of small regional competitors Unique total customer value proposition across end markets with limited succession planning + Monetize distinct capabilities across the platform • Significant scale benefits including more advanced global sourcing, ability to leverage customer relationships and technology globally + Collaborative selling across customer bases • Meaningful revenue and cost synergies for most acquisitions + • Well capitalized balance sheet and cash flow to fund acquisitions Expand digital capabilities across the platform • Significant organizational track record of purchasing and integrating acquisitions EXPOSURE TO END MARKETS WITH STRONG SECULAR TAILWINDS ACCELERATING ACQUISITION ACTIVITY Technology IoT Renewables 2017 - 2020 2021 2022 6 DSG Investor Presentation
Aligned and Tenured Leadership J. Bryan King Brad Wallace Jacob Smith Ron Knutson Chairman & CEO Partner Partner CFO DSG LKCM Headwater LKCM Headwater DSG With daily strategy and business execution led by best-in-class management teams across each business GEXPRO SERVICES TESTEQUITY LAWSON PRODUCTS • Joined Lawson Products in 2022 after serving as • Joined Gexpro Services in 2004 as General • Joined TestEquity in 2018 as COO before being CEO of Jon Don for Incline Equity Manager & named corporate officer in 2015 named CEO in 2022 • Previously President for NA and Asia Pacific at • Previously at General Electric as General • Previously COO/CIO at FCX Performance, VP of Optimas OE Solutions and VP at Grainger Manager of GE Supply Logistics Distribution Operations at CompuServe Cesar Lanuza Bob Connors Russ Frazee CEO CEO CEO • Joined Lawson Products in 2009 as CFO after • Re-joined Gexpro Services in 2020 as CFO• Joined TestEquity in 2020 as CFO serving as CFO of Frozen Food Express Industries • Previously CFO for Electrical Source Holdings • Previously CFO for Allied Electronics & • Previously spent 12 years at Ace Hardware as and Finance Manager for Gexpro Services Automation, Global VP of Finance for Allied sister Controller and VP Finance when it was owned by Rexel company (RS Components) Ron Knutson Craig Schilling Nick Hawtrey CFO CFO CFO Additional Dedicated LKCM Headwater Team: Andy Zacharias - Partner (TestEquity) | Joel Stewart - Principal (Gexpro Services and Lawson) | Rick Settle - Principal (TestEquity) | Jonathon Miller - Principal (Leads Headwater Operations team across the DSG platform) Garrett Spriggs - VP (Gexpro Services and Lawson) | Davis Miller - VP (TestEquity) | Brett Scarbrough - Portfolio Manager (Lawson) 7 DSG Investor Presentation
LKCM Headwater Introduction SIGNIFICANT PRIVATE COMPANY DISTRIBUTION EXPERIENCE • Portfolio of leading distribution businesses in the hose, gasket, belting, seals and flow control markets • Privately owned SEC-registered investment advisor • Founded in 1979 with over 60 investment and other • Value-added distributor specializing in designing and implementing professionals supply chain solutions / VMI for OEM customers • $25.7 billion of assets under management (3/31/22) • Leading provider of building automation, controls and gas detection • Primarily long-term, long-equity focused for taxable individuals solutions for the commercial buildings market and families • Value-added instrumentation, controls, and automation distributor with engineering and service capabilities • Largest North American specialty distributor of electronic T&M equipment and production supplies • Private investment arm of LKCM • Over 100 years of collective distribution investing experience • North America’s leading value-added distributor and service provider of mission-critical communication solutions • LKCM, investment team and affiliates are collectively the largest investor (~1/3 of capital) • High growth value-added distributor, packager and re-packager of • Flexible mandate with focus on U.S. lower mid-market buyouts generic pharmaceuticals • More than $2.0 billion of committed private capital • Provider of supply chain solutions and distributor of indirect • Stable of former operating executives that play active roles materials primarily to manufacturers within the portfolio • Leading value-added instrumentation and valve distributor based in the Gulf Coast 8 DSG Investor Presentation CURRENT FORMER
Operating Companies DSG Investor Presentation
DSG Investor Presentation
COMPANY OVERVIEW GEOGRAPHIC COVERAGE • Leading service-focused industrial MRO distributor • Employs 1,100+ sales representatives providing providing product through a vendor managed the following: inventory approach • Help customers choose from a wide range of products • Embedded within customer operations via to meet needs and specifications HQ (Chicago, IL) unique high-touch VMI model Primary Warehouse • Support customer with product application advice and (McCook, IL) • Provides customers with optimized inventory on-site training 4 Regional DC’s management, engineering services, technical • Manage customer products and inventory at the information, eBusiness and scanning solutions 14 Bolt Branches customers’ facilities • 90,000+ customers with daily or weekly contact • Founded in 1952 and headquartered in Chicago, Illinois PRODUCT OFFERING OPTIMIZED INVENTORY MANAGEMENT SYSTEM A Disorganized Parts Room Creates Downtime and Low Labor Utilization Other • Time lost looking for the right product when needed Fasteners 18% 22% • Disorganized and inefficient bin and cabinet set-up • Disruptive, unplanned trips to off-site stores looking for parts Safety 5% 230,000+ Before Lawson 7% SKUs Auto Lawson Representatives Lower Total Cost of Ownership 15% Cutting & • Making sure customers have the right product in the right place at the right time 10% Abrasives Electrical • Designing and installing efficient custom systems of clearly labeled bins and cabinets for each facility 13% 10% • Continually managing product inventory Chemicals Fluid Power• Offering product application advice and on-site support After Lawson ~$432M ~$36M 230,000+ 1900+ 3 ~$20B 90,000+ (1) (1) Adj. Net Sales Adj. EBITDA Number of SKUs Employees No. of Countries Served Total Addressable Market Customers Served (1) Estimated TTM March 2022 adjusted for all closed acquisitions as of 3/31/22 (2) See appendix for reconciliation of GAAP net income to Non-GAAP adjusted EBITDA. 11 DSG Investor Presentation
DSG Investor Presentation
COMPANY OVERVIEW CUSTOMER / MARKET OVERVIEW • Leading global supply chain Services and C-Parts provider of highly engineered specified products for manufacturing end users • Specializes in Vendor Managed Inventory (“VMI”), Kitting and field installation Blue Chip service programs Renewables Semiconductor Power Customers • Built to be considered the best-in-class global sourcing and logistics provider for leading & Telecom Generation Original Equipment Manufacturers (“OEM”) in Diverse • Considered the “critical-link” between a fragmented supply chain and OEM customers focused on reducing manufacturing lead times, improving product quality & fulfillment End Markets rates, while reducing direct and indirect procurement costs • Led by a proven management team with decades of industry experience Transportation Consumer Aerospace & Industrial & Defense C-PART VALUE-PROPOSITION TYPICAL MANUFACTURER PARTS PROCUREMENT SCHEME FOR A GIVEN PRODUCT Typical # % Total Description Procurement✓ Drives down direct and indirect procurement cost of C-Parts Suppliers Material Cost ✓ Reduces the number of suppliers Large, high-value parts procured A Parts from a small number of suppliers requiring ~20 80% In-House ✓ Leverages scale to reduce direct cost significant OEM procurement attention ✓ Removes complexity of managing thousands of suppliers Medium-value parts requiring across a product portfolio B Parts ~20 15% In-House OEM procurement attention Low-cost, high volume, custom parts with C-Parts ~1,000 5% Outsourced significant hidden costs to procure ~$347M ~$37M 70,000+ 660+ 65+ ~$30B 75,000+ (1) (1) Adj. Net Sales Adj. EBITDA Number of SKUs Employees No. of Countries Served Total Addressable Market Bins Serviced (1) Estimated TTM March 2022 adjusted for all closed acquisitions as of 3/31/22. (2) See appendix for reconciliation of GAAP net income to Non-GAAP adjusted EBITDA. 13 DSG Investor Presentation
DSG Investor Presentation
COMPANY OVERVIEW PRODUCTS OVERVIEW • One of the largest authorized distributors of Test & Measurement solutions and electronics production supplies with over 180K products. • Premier value-added distributor of electronic test and measurement solutions and eMRO tools and supplies Test & Measurement Instrumentation (“T&M”) Electronic Production Supplies (“EPS”) • “One-stop-shop” offering with multiple procurement alternatives including new, reconditioned and rental options supported by complementary calibration capabilities and expansive value-added Broadest offering of T&M and EPS supplies in the industry services such as VMI and kitting (1) • We operate from five primary warehouses, four in the U.S. and BLUE CHIP CUSTOMERS DIVERSE END MARKETS one in the UK to grow European presence • 490+ non-union employees, including team of 100+ technical, Energy/Power, All Other, 6% Medical, 2% consultative sales professionals 3% • Retooled management team with proven experience leading Semiconductor, larger organizations Aerospace & 6% Defense, Government, 30% STRONG VALUE PROPOSITION 7% • Fills a strong customer need, providing the technical consultation and full product and services range that broad line distributors lack while stocking inventory to eliminate long lead times from OEMs Contract Mfg, 12% • Provides high service levels to a fragmented customer base that would be expensive and inefficient for OEMs to serve • Robust digital capabilities (~14% of sales and growing) to meet Reseller, Technology, 20% customers through their preferred channel 13% ~$396M ~$30M 180,000+ 490+ 30+ ~$7.5B 1,000+ (2) (2) Adj. Net Sales Adj. EBITDA Number of Products Employees No. of Countries Served Total Addressable Market Manufacturer Brands (1) 2021 data, excluding 2022 acquisition of TEquipment. (2) Estimated TTM March 2022 adjusted for all closed acquisitions as of 3/31/22, including TEquipment closed 4/29/22. (3) See appendix for reconciliation of GAAP net income to Non-GAAP adjusted EBITDA. 15 DSG Investor Presentation
Financials Powerful Solutions. Proven Results. DSG Investor Presentation
Combined Adjusted Financial Profile UNAUDITED ACCELERATING GROWTH INCREASING PROFITABILITY Combined Revenue ($mm) (1) Combined Adjusted EBITDA ($mm) (2) $103 $103 $1,175 $1,175 19% 15 166 $88 $987 30 9% $902 396 10 55 7.6% MRO $69 67 OEM 6 256 Industrial Technologies 11 37 347 10.7% 88 1,009 20 931 250 78 432 36 32 329 8.3% 2020 2021 TTM TTM by Business 2020 2021 TTM TTM by Business 7.7% 8.9% 8.8% (1) Represents combined expected revenue of all companies inclusive of revenues generated pre and post of acquisition dates through 3/31/22 and TEquipment that closed on April 29, 2022. (2) See appendix for reconciliation of GAAP net income to Non-GAAP combined adjusted EBITDA. 17 DSG Investor Presentation Acquisitions % Margins
Combined Adjusted Balance Sheet (1) (2) UNAUDITED COMBINED ADJUSTED BALANCE SHEET ($000s) 3/31/2022 Cash and cash equivalents $21,774 • Credit facility led by J.P. Morgan includes a $200M Revolving Accounts receivable, net 158,000 Credit Facility, $250M TLA amortizing 5% per year, and a Inventory, net 237,806 Other current assets 17,561 $50M delay draw term loan Total current assets $435,141 o Plus $200M uncommitted accordion feature for growth Property, plant and equipment, net $69,745 Rental equipment, net 21,091 • Net debt of $365.8M implies < 3.6x net leverage multiple Other long term assets 644,637 Total long term assets $735,473 • Anticipate leverage to be in the 3x-4x level to fund acquisitive Total assets $1,170,614 growth Accounts payable $95,974 Accrued expenses and other liabilities 49,423 Current portion of long term debt 15,250 • Capital allocation will be managed by LKCM Headwater in Lease obligation 9,825 concert with the broader holding company management Total current liabilities $170,472 team and DSG Board of Directors Long-term debt $372,365 Lease obligation 27,769 (2) • $250.4M of net working capital Other long term liabilities 76,371 Total long term liabilities $476,505 Total liabilities $646,977 Stockholders' equity $523,637 Total liabilities and stockholders' equity $1,170,614 (1) Represents combined balance sheet of Lawson, Gexpro Services and TestEquity and acquisition of TEquipment that closed April 29, 2022, inclusive of merger consideration and debt refinance. See appendix for reconciliation of GAAP to Non-GAAP. (2) Net working capital defined as accounts receivable plus inventory less accounts payable and accrued expenses. 18 DSG Investor Presentation
Appendix Powerful Solutions. Proven Results. DSG Investor Presentation
GAAP to Non-GAAP Reconciliation-Combined Adjusted EBITDA $ in 000,000's Unaudited (a) Represents non-recuring transaction costs related to mergers of 2020 2021 TTM 3/31/22 Lawson, TestEquity and Gexpro Services Net Income $ 0 $ 4 $ 13 (b) Represents management fees paid to LKCM which were Interest 16 18 20 discontinued after the mergers Tax 1 3 3 Depreciation 25 26 26 (c) Represents non-cash stock compensation expense related to award issuances and mark-to-market account on stock performance rights EBITDA $ 43 $ 52 $ 62 (d) Represents mark-to-market adjustments for currency fluctuations Management Adjustments (e) Represents non-cash goodwill impairment Acquisition/Transaction Cost (a) 7 17 22 (f) Represents non-recurring inventory adjustments for PPE items and Management Fee (b) 3 4 4 acquisition integration Stock Comp (c) 2 5 (5) FX gains Losses (d) (1) (1) (1) (g) Represents severance expenses primarily related to acquisition Goodwill Impairment (e) 2 - - integrations Inventory Adjustment (f) - 1 1 (h) Represents non-recurring items primarily related to system Severence (g) 4 0 1 implementations, distribution center consolidations, shift to Other Non-recurring (h) 5 4 3 manufacturing outsourcing and other non-recurring items Total Add-Backs $ 22 $ 30 $ 25 (i) Represents post acquisition adjusted EBITDA included in reported EBITDA Adjusted EBITDA (as reported) $ 64 $ 82 $ 86 (j) Represents adjusted EBITDA from prior year acquisitions Less Post-Acquisition Adjusted EBITDA (i) (2) (7) (11) EBITDA from Prior Year Acquisitions (j) - 5 13 (k) Represent acquired adjusted EBITDA in each respective year Acquired EBITDA in Current Year (k) 6 10 15 Combined Adjusted EBITDA $ 69 $ 88 $ 103 Amounts may not total due to rounding 20 DSG Investor Presentation
GAAP to Non-GAAP Reconciliation-Balance Sheet UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (in thousands) Actual Actual Actual Pro forma Gexpro Pro forma Combined TestEquity Services Lawson Combined w/Tequipment As of March 31, As of March 31, As of March 31, Merger As of March 31, Merger As of March 31, 2022 2022 2022 Consideration Debt Refinance 2022 Tequipment Consideration Debt Draw 2022 Assets Current Assets: Cash and cash equivalents $ 3,164 $ 9,041 $ 5,534 $ - $ 2,147 (a) $ 19,886 $ 1,688 $ (55,000) $ 55,000 $ 21,574 Restricted cash - - 200 - - 200 - - - 200 Accounts receivable, less allowance for doubtful accounts 46,525 52,895 54,940 - - 154,360 3,640 - - 158,000 Inventories, net 43,877 105,369 77,297 - - 226,543 11,263 - - 237,806 Miscellaneous receivables and prepaid expenses 3,799 5,029 7,954 - - 16,782 570 - - 17,352 - - - 209 - 209 - - - 209 Income tax receivable $ 97,365 $ 172,334 $ 145,925 $ 209 $ 2,147 $ 417,980 $ 17,161 $ (55,000) $ 55,000 $ 435,141 Total current assets Property, plant and equipment, less accumulated depreciation and amortization $ 5,507 $ 5,093 $ 19,165 $ 19,816 $ - (b) $ 49,581 $ 348 $ 19,816 $ - $ 69,745 Rental equipment, net 21,091 - - - - 21,091 - - - 21,091 Deferred income taxes - - 18,556 - - 18,556 - - - 18,556 Goodwill 64,298 94,731 35,510 87,260 - (c) 281,799 - 12,202 - 294,001 Cash value of life insurance - - 18,025 - - 18,025 - - - 18,025 Intangible assets, net 48,949 34,372 15,613 147,387 - (c) 246,321 569 12,202 - 259,092 Right of use assets - - 17,571 18,831 - (e) 36,402 - - - 36,402 267 16,266 348 - 1,670 (d) 18,551 10 - - 18,561 Other assets $ 237,477 $ 322,796 $ 270,713 $ 273,503 $ 3,817 $ 1,108,306 $ 18,088 $ (10,780) $ 55,000 $ 1,170,614 Total assets Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 24,402 $ 33,691 $ 31,726 $ - $ - $ 89,819 $ 6,155 $ - $ - $ 95,974 Current portion of long term debt 1,583 1,370 - - 9,547 12,500 - - 2,750 15,250 Income tax payable (50) (159) - 209 - - - - - - Revolving loan facility 1,000 - - - (1,000) - - - - - Lease obligation - - 4,855 4,970 - (e) 9,825 - - - 9,825 Accrued expenses and other liabilities 15,945 145 34,516 - (2,336) 48,270 1,153 - - 49,423 Total current liabilities $ 42,880 $ 35,047 $ 71,097 $ 5,179 $ 6,211 $ 160,414 $ 7,308 $ - $ 2,750 $ 170,472 Long-term debt $ 120,932 $ 171,456 $ - $ - $ 27,727 $ 320,115 $ - $ - $ 52,250 $ 372,365 Revolving line of credit - - 15,566 - (15,566) - - - - - Security bonus plan - - 10,353 - - 10,353 - - - 10,353 Lease obligation - - 13,908 13,861 - (e) 27,769 - - - 27,769 Deferred compensation - - 11,321 - - 11,321 - - - 11,321 Deferred tax liability 2,951 306 1,689 45,704 - (g) 50,650 - - - 50,650 Other liabilities - - 4,047 - - 4,047 - - - 4,047 Total liabilities $ 166,763 $ 206,809 $ 127,981 $ 64,744 $ 18,372 $ 584,669 $ 7,308 $ - $ 55,000 $ 646,977 Stockholders' Equity Common stock $ - $ - $ 9,368 $ 10,300 $ - (h) $ 19,668 $ - $ - $ - $ 19,668 Capital in excess of par value 102,201 95,639 22,424 319,465 - (h) 539,729 - - - 539,729 Members equity - - - - - - 10,780 (10,780) - - Retained earnings (31,288) 19,125 120,001 (120,001) (14,555) (h) (26,718) - - - (26,718) Treasury stock - - (10,066) - - (h) (10,066) - - - (10,066) Stockholders' distribution - (319) - - - (319) - - - (319) Accumulated other comprehensive income (loss) (199) 1,542 1,005 (1,005) - (h) 1,343 - - - 1,343 Total stockholders' equity $ 70,714 $ 115,987 $ 142,732 $ 208,759 $ (14,555) $ 523,637 $ 10,780 $ (10,780) $ - $ 523,637 $ 237,477 $ 322,796 $ 270,713 $ 273,503 $ 3,817 $ 1,108,306 $ 18,088 $ (10,780) $ 55,000 $ 1,170,614 Total liabilities and stockholders' equity 21 DSG Investor Presentation
Historical Acquisitions (1) COMPANY FOCUS STRATEGIC RATIONALE CLOSING DATE REVENUE PURCHASE PRICE ▪ Expanded geographic coverage and expanded customer base with an additional Industrial ~22,000 customer locations January 2017 $45.1 $25.0 Technologies ▪ Complementary value-added products / services (kitting, VMI) Industrial ▪ Adds scale to highly complementary Lab & Production supplies offering July 2017 $77.8 $35.0 Technologies▪ Bolsters stocked inventory and value-add capabilities (VMI, vending, etc.) ▪ Complementary products in fasteners, power tools and MRO supplies MRO October 2017 $34.4 $32.0 ▪ Provides sales/regional fulfillment expansion opportunity in W Canada ▪ Sizeable “DNA match” acquisition for MRO segment MRO August 2020 $64.2 $35.3 ▪ Highly accretive with significant cost synergies ▪ Complementary value-added fabrication capabilities OEM June 2021 $5.3 $6.5 ▪ Highly accretive with significant synergies Industrial ▪ European beachhead for Industrial Technologies segment July 2021 $9.7 $14.4 Technologies▪ Supplier expansion and further penetration into Telecom/5G market ▪ Strategic expansion into Canada & Mexico for OEM segment OEM November 2021 $28.3 $18.9 ▪ Loyal customer base with high service levels in new and existing markets ▪ Highly accretive “DNA match” with diversified end markets OEM December 2021 $9.6 $11.8 ▪ Natural tuck-in with value-add product offering and strong management ▪ Leading global renewables supplier within the OEM segment OEM January 2022 $31.9 $38.0 ▪ Opened new strategic markets in Europe, the Middle East, and Asia ▪ Enhances B & C-class product and service offering to Renewables market OEM March 2022 $21.9 $30.0 ▪ Significant commercial synergies and delivers manufacturing capabilities Industrial ▪ Adds complementary product lines (handhelds), brands and customers April 2022 $113.0 $55.0 Technologies▪ Digital go-to-market supplements Industrial Technology’s sales model HIGHLIGHTED TOTAL $441.2 $301.9 Note: $ figures in millions. List includes highlighted acquisitions executed under LKCM Headwater stewardship. (1) Represents trailing twelve-month measurement period at close. 22 DSG Investor Presentation 2022 2021 2020 2017
Questions? Visit our websites for more information www.lawsonproducts.com www.testequity.com www.gexproservices.com www.lkcmheadwater.com www.distributionsolutionsgroup.com DSG Investor Presentation
Investor Contacts Three Part Advisors, LLC (214) 872-2710 Steven Hooser shooser@threepa.com Sandy Martin smartin@threepa.com 24 DSG Investor Presentation