Distribution Solutions Group Inc (DSGR) Reports 14.3% Revenue Growth in Q2, Achieves 9.7% Adjusted EBITDA Margin

Distribution Solutions Group Inc (DSGR) reported a 14.3% increase in sales to $502 million in Q2 2025, with a consolidated adjusted EBITDA margin of 9.7%. The company successfully integrated several acquisitions and achieved strategic progress, including salesforce transformation and leadership changes. However, the Canadian division faced challenges due to economic anxiety and tariff disruptions, and the military market for Lawson products remains uncertain.

Distribution Solutions Group Inc. (DSGR), a premier specialty distribution company, has reported robust financial performance for the second quarter of 2025. The company's revenue increased by 14.3% to $502.4 million, driven by a combination of organic sales growth and acquisitions [1]. The adjusted EBITDA margin stood at 9.7% of sales, reflecting the company's strong operational efficiency.

Revenue and Organic Growth
The company's revenue growth was primarily driven by a 3.3% average daily organic sales growth compared to the same period last year. Additionally, the company's five acquisitions closed in 2024 contributed $48.8 million in incremental revenue. The sequential growth from the first quarter of 2025 was 5.1%, showcasing consistent quarterly performance [1].

Operational Efficiency
Operating income for the quarter was $26.8 million, with adjusted operating income reaching $39.9 million. Adjusted EBITDA grew by $3.4 million to $48.6 million, representing a 9.7% margin of sales. Despite the inclusion of the 2024 Source Atlantic acquisition, which compressed Adjusted EBITDA margins by approximately 60 basis points, the company demonstrated resilience in maintaining strong financial metrics [1].

Strategic Acquisitions and Integration
The company successfully integrated several acquisitions, contributing to the overall revenue growth. The integration process included salesforce transformation and leadership changes, which have positioned DSG for continued growth and operational efficiency [1].

Challenges and Opportunities
While the company reported strong performance, it also faced challenges, particularly in the Canadian division, which was impacted by economic anxiety and tariff disruptions. Additionally, the military market for Lawson products remains uncertain, presenting potential risks to the company's future performance [1].

Future Outlook
DSG's CEO and Chairman, Bryan King, expressed confidence in the company's ability to build strong businesses through organic growth and strategic acquisitions. The company is well-positioned with liquidity and flexibility, enabling it to evaluate its acquisition pipeline effectively. King also highlighted the company's commitment to shareholders, aiming to generate significant free cash flow and build structurally higher margin businesses [1].

Conclusion
Distribution Solutions Group Inc. demonstrated strong financial performance in Q2 2025, with significant revenue growth and operational efficiency. The company's strategic acquisitions and integration efforts have positioned it for continued growth, despite facing some challenges in specific markets. Investors and financial professionals should closely monitor DSG's progress as it navigates these challenges and continues to expand its operations.

References:
[1] https://www.businesswire.com/news/home/20250730530495/en/Distribution-Solutions-Group-Announces-2025-Second-Quarter-Results