Contradictions Unveiled: Distribution Solutions' Q1 2025 Earnings Call Highlights Military Sales, Sales Force Dynamics, and Margin Expectations

Military sales trends, sales force productivity and rebuild, sales force strategy and impact on sales, Source Atlantic margins and contributions are the key contradictions discussed in Distribution Solutions' latest 2025Q1 earnings call.



Sales Revenue and Acquisitions Impact:
- DSG reported a revenue of $478 million for the first quarter of 2025, up 14.9% compared to the year-ago quarter, with $51 million from acquisitions in 2024.
- The growth was driven by five acquisitions completed in 2024 and organic average daily sales growth of 4.3%.

Profitability Improvement and Margin Expansion:
- Adjusted EBITDA for the first quarter grew to nearly $43 million, an increase of 18.6% over the prior year.
- This was attributed to disciplined execution of planned initiatives and modest tariff pressures impacting only about 5% of direct purchases and 6% of aggregate product spend.

Lawson Products' Sales Force Transformation:
- Lawson's sales force increased by approximately 80 individuals to around 910 in March 2025, compared to 860 in early 2024.
- The growth in sales reps was driven by the addition of new territories and enhancements in customer-centric sales platforms.

Canadian Division Challenges and Synergies:
- Canadian division sales were below internal plans, affected by seasonality, tariff changes, and currency exchange headwinds.
- DSG is implementing synergies by combining two businesses, Source Atlantic and Bolt Supply, to reduce expenses and improve gross margins.