What changed in this filing

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Item 1. Business

2025-03-06 compared with 2024-03-07 · 112 added, 96 removed, 158 unchanged (57% of the section changed)

Distribution Solutions Group, Inc., a Delaware corporation ("DSG"), is a global specialty distribution company providing value-added distribution solutions to the maintenance, repair and operations ("MRO"), original equipment manufacturer ("OEM") and industrial technology markets.

DSG has three principal operating companies:

Lawson Products, Inc., an Illinois corporation ("Lawson"), TestEquity Acquisition, LLC, a Delaware limited liability company ("TestEquity"), and 301 HW Opus Holdings, Inc., a Delaware corporation conducting business as Gexpro Services ("Gexpro Services").

The complementary distribution operations of Lawson, TestEquity and Gexpro Services were combined on April 1, 2022 to create a global specialty distribution company.

A summary of the Mergers (as defined below), including the legal entities party to the transactions and the stock consideration, is presented below.

Distribution Solutions Group, Inc.

(“DSG”), a Delaware corporation, is a global specialty distribution company providing value-added distribution solutions to the maintenance, repair and operations (“MRO”), original equipment manufacturer (“OEM”) and industrial technology markets.

DSG was formed in 2022 through the strategic mergers of Lawson Products, a leader in MRO distribution of C-parts, TestEquity, a leader in electronic test & measurement solutions and Gexpro Services, a leading global supply chain services provider to manufacturing customers.

A summary of the mergers is presented in Note 1 – Nature of Operations and Basis of Presentation, in Item 8.

Financial Statements and Supplementary Data.

Through its collective businesses, DSG is dedicated to helping customers lower their total cost of operation by increasing productivity and efficiency with the right products, expert technical support, and fast, reliable delivery to be a one-stop solution provider.

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Unless the context requires otherwise, references in this Annual Report on Form 10-K to “DSG”, the “Company”, “we”, “our” or “us” refer to Distribution Solutions Group, Inc., and all entities consolidated in the accompanying consolidated financial statements.

Combination with TestEquity and Gexpro Services

On December 29, 2021, DSG entered into:

• an Agreement and Plan of Merger (the “TestEquity Merger Agreement”) by and among (i) LKCM TE Investors, LLC, a Delaware limited liability company (the “TestEquity Equityholder”), (ii) TestEquity, which was a wholly-owned subsidiary of the TestEquity Equityholder, (iii) DSG and (iv) Tide Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of DSG (“Merger Sub 1”), pursuant to the terms and subject to the conditions of which the parties agreed, among other things, that Merger Sub 1 would merge with and into TestEquity, with TestEquity surviving the merger as a wholly-owned subsidiary of DSG (the “TestEquity Merger”);

• an Agreement and Plan of Merger (the “Gexpro Services Merger Agreement” and, together with the TestEquity Merger Agreement, the “Merger Agreements”) by and among (i) 301 HW Opus Investors, LLC, a Delaware limited liability company (the “Gexpro Services Stockholder”), (ii) Gexpro Services, which was a wholly-owned subsidiary of the Gexpro Services Stockholder, (iii) DSG and (iv) Gulf Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of DSG (“Merger Sub 2”), pursuant to the terms and subject to the conditions of which the parties agreed, among other things, that Merger Sub 2 would merge with and into Gexpro Services, with Gexpro Services surviving the merger as a wholly-owned subsidiary of DSG (the “Gexpro Services Merger” and, together with the TestEquity Merger, the “Mergers”).

Completion of the TestEquity Merger

On April 1, 2022 (the "Merger Date"), the TestEquity Merger was consummated pursuant to the TestEquity Merger Agreement.

In accordance with the TestEquity Merger Agreement, Merger Sub 1 merged with and into TestEquity, with TestEquity surviving as a wholly-owned subsidiary of DSG.

In accordance with and under the terms of the TestEquity Merger Agreement, in connection with the closing of the TestEquity Merger on the Merger Date, DSG:

(i) issued to the TestEquity Equityholder 6,600,000 shares of DSG common stock, (ii) on behalf of TestEquity, paid certain indebtedness of TestEquity and (iii) on behalf of TestEquity, paid certain transaction expenses of TestEquity.

The TestEquity Merger Agreement provided that up to an additional 1,400,000 shares of DSG common stock would be potentially issuable to the TestEquity Equityholder in accordance with, and subject to the terms and conditions of, the earnout provisions of the TestEquity Merger Agreement.

On March 20, 2023, DSG issued 1,400,000 shares of DSG common stock to the TestEquity Equityholder (the "TestEquity Holdback Shares") pursuant to the terms of the earnout provisions of the TestEquity Merger Agreement.

The TestEquity Holdback Shares issued represented the maximum number of additional shares that could be issued under the TestEquity Merger Agreement, and no further shares are available for issuance, and no additional shares will be issued, in connection with the TestEquity Merger Agreement.

Refer to Note 8 – Earnout Liabilities for information about the earnout derivative liability related to the TestEquity Holdback Shares.

Completion of the Gexpro Services Merger

On the Merger Date, the Gexpro Services Merger was consummated pursuant to the Gexpro Services Merger Agreement.

In accordance with the Gexpro Services Merger Agreement, Merger Sub 2 merged with and into Gexpro Services, with Gexpro Services surviving as a wholly-owned subsidiary of DSG.

In accordance with and under the terms of the Gexpro Services Merger Agreement, in connection with the closing of the Gexpro Services Merger on the Merger Date, DSG:

(i) issued to the Gexpro Services Stockholder 14,000,000 shares of DSG common stock, (ii) on behalf of Gexpro Services, paid certain indebtedness of Gexpro Services and (iii) on behalf of Gexpro Services, paid certain specified transaction expenses of Gexpro Services.

The Gexpro Services Merger Agreement provided that up to an additional 2,000,000 shares of DSG common stock would be potentially issuable to the Gexpro Services Stockholder in accordance with, and subject to the terms and conditions of, the earnout provisions of the Gexpro Services Merger Agreement.

On March 20, 2023, DSG issued 2,000,000 shares of DSG common stock to the Gexpro Services Stockholder (the “Gexpro Services Holdback Shares”) pursuant to the terms of the earnout provisions of the Gexpro Services Merger Agreement.

The Gexpro Services Holdback Shares issued represented the maximum number of additional shares that could be issued under the Gexpro Services Merger Agreement, and no further shares are available for issuance, and no additional shares will be issued, in connection with the Gexpro Services Merger Agreement.

As of April 1, 2022, approximately 1,076,000 of the Gexpro Services Holdback Shares had been expected to be issued under the first earnout opportunity in the Gexpro Services Merger Agreement based on certain earnout metrics related to the consummation of certain additional acquisitions which were completed prior to the Merger Date.

Under the Gexpro Services Merger Agreement, if any Gexpro Services Holdback Shares remained after the calculation of the first earnout opportunity, there was a second earnout opportunity under the Gexpro Services Merger Agreement based on certain earnout performance metrics.

On March 20, 2023, all 2,000,000 Gexpro Services Holdback Shares were issued under the earnout opportunities.

The incremental 924,000 Gexpro Services Holdback Shares that were issued in excess of the 1,076,000 Gexpro Services Holdback Shares that were originally expected to be issued had been remeasured at fair value immediately prior to and reclassified to equity at December 31, 2022.

Refer to Note 8 – Earnout Liabilities for information about the earnout derivative liability related to the Gexpro Services Holdback Shares.

Accounting for the Mergers

TestEquity and Gexpro Services were treated as a combined entity as the accounting acquirer for financial reporting purposes, and DSG was identified as the accounting acquiree.

Accordingly, periods prior to the April 1, 2022 Merger Date reflect the results of operations of TestEquity and Gexpro Services on a consolidated basis, and the results of operations of DSG's legacy Lawson business are only included subsequent to the April 1, 2022 Merger Date.

For more information about the Mergers, refer to Note 3 – Business Acquisitions in Item 8.

Financial Statements and Supplementary Data.

Recent Events

On August 15, 2023, DSG announced that its Board of Directors approved and declared a two-for-one stock split (the “Stock Split”) which entitled each stockholder of record as of the close of business on August 25, 2023 to receive one additional share of DSG common stock for each share of DSG common stock then-held.

The additional shares were

distributed after the close of trading on August 31, 2023, and shares of DSG common stock began trading at the split-adjusted basis on September 1, 2023.

Accordingly, all share and per share amounts have been retroactively adjusted to reflect the impact of the Stock Split for all periods presented herein.

In order to implement the Stock Split, on August 31, 2023, DSG filed a Third Amended and Restated Certificate of Incorporation of DSG with the Secretary of State of the State of Delaware to increase the number of authorized shares of DSG common stock from 35,000,000 to 70,000,000, which became effective on that date.

HIS Company, Inc.

On March 30, 2023, DSG entered into a Stock Purchase Agreement (the “Purchase Agreement”), with various parties for the acquisition of all of the issued and outstanding capital stock of HIS Company, Inc., a Texas corporation (“Hisco,” and the "Hisco Transaction"), a distributor of specialty products serving industrial technology applications.

DSG completed the Hisco Transaction on June 8, 2023.

The total purchase consideration exchanged for the Hisco Transaction was $267.3 million, net of cash acquired of $12.2 million, at closing, with a potential additional earn-out payment subject to Hisco achieving certain performance targets.

DSG will also pay $37.5 million in cash or DSG common stock in retention bonuses to certain Hisco employees that remain employed with Hisco or its affiliates for at least twelve months after the closing of the Hisco Transaction.

In connection with the Hisco Transaction, DSG combined the operations of TestEquity and Hisco, creating one of the largest suppliers serving the electronics design, production, and repair industries.

DSG funded the Hisco Transaction with borrowings under its amended and restated credit facility and proceeds raised from the Rights Offering with existing stockholders, discussed below.

Refer to Note 3 – Business Acquisitions for further details about Hisco and the Hisco Transaction.

The Purchase Agreement allowed certain eligible Hisco employees to invest all or a portion of their respective closing payment in DSG common stock at $22.50 per share, up to an aggregate value of DSG common stock issued to such eligible Hisco employees of $25.0 million.

During 2023, the Company issued 144,608 shares of DSG common stock to the eligible Hisco employees and received approximately $3.3 million.

2024 Business Acquisitions

On November 18, 2024, DSG acquired the assets of ConRes Test Equipment, (“ConRes TE” and the “ConRes TE Transaction” ).

These assets were acquired to expand TestEquity’s test equipment offerings and value-add service capabilities in all of our end markets.

The total purchase consideration exchanged was approximately $17.0 million and was funded using DSG’s cash on hand and its revolving credit facility.

On October 30, 2024, DSG completed the acquisition of Tech-Component Resources Pte Ltd (“TCR” and the “TCR Transaction”).

TCR is a distributor of fasteners, mechanical components, and other industrial products in Southeast Asia.

TCR was acquired to provide us with a strategic foothold in this growing region.

The total purchase consideration exchanged was approximately $5.9 million , net of cash acquired of $1.9 million, and was funded using DSG’s cash on hand and its revolving credit facility .

On August 14, 2024, DSG acquired all of the issued and outstanding capital stock of Source Atlantic Limited (“Source Atlantic” and the “Source Atlantic Transaction”).

Source Atlantic, headquartered in Saint John, New Brunswick, Canada, is a wholesale distributor of industrial MRO supplies, safety products, fasteners, and related value-add services for the Canadian MRO market.

Source Atlantic was acquired to expand DSG’s operating footprint in the Canadian market.

The total purchase consideration exchanged was $103.1 million, net of cash acquired of $4.4 million .

DSG funded the Source Atlantic Transaction with borrowings under its amended and restated credit facility (discussed below).

On May 1, 2024 , DSG completed the acquisition of S&S Automotive Inc.

(“S&S Automotive” and the “S&S Automotive Transaction”).

S&S Automotive is a distributor of automotive, industrial, and safety supplies primarily to the automotive dealership market based near Chicago in Woodridge, Illinois.

S&S Automotive was acquired to expand Lawson’s services and products to the automotive end market.

The total purchase consideration exchanged was approximately $80.1 million, net of cash acquired of $0.7 million, and was funded using DSG’s cash on hand and its revolving credit facility.

On January 19, 2024, DSG acquired the assets of Safety Supply Illinois LLC, conducting business as Emergent Safety Supply (“ESS” and the “ESS Transaction”) .

ESS is a national distributor of safety products based near Chicago in Batavia,

ESS was acquired to expand Lawson’s safety product category.

The total purchase consideration exchanged was $9.9 million and was funded using DSG’s cash on hand.

Refer to Note 3 – Business and Asset Acquisitions in Item 8.

Financial Statements and Supplementary Data for additional information about these acquisitions.

Debt Amendment

On June 8, 2023, the Company and certain of its subsidiaries entered into the First Amendment to Amended and Restated Credit Agreement (the “First Amendment”), which amended the Amended and Restated Credit Agreement, dated as of April 1, 2022 (as amended by the First Amendment, the “2023 Amended Credit Agreement”), by and among the Company, certain subsidiaries of the Company as borrowers or guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

The First Amendment provides for a $305 million incremental term loan and for the Company to increase the commitments from time to time by up to $200 million in the aggregate, subject to, among other things, receipt of additional commitments from existing and/or new lenders and pro forma compliance with certain financial covenants.

Refer to Note 9 – Debt for additional information about the 2023 Amended Credit Agreement.

Rights Offering

On May 30, 2023, the Company issued 4,444,444 shares of DSG common stock for net proceeds of approximately $98.5 million pursuant to a subscription rights offering (the "Rights Offering").

The Rights Offering provided one transferable subscription right for each share of DSG common stock held by holders of DSG common stock on record as of the close of business on May 1, 2023.

Each subscription right entitled the holder to purchase 0.0525 shares of DSG common stock at a subscription price of $22.50 per share.

The subscription rights were transferable but were not listed for trading on any stock exchange or market.

In addition, holders of subscription rights who fully exercised their subscription rights were entitled to oversubscribe for additional shares of DSG common stock, subject to proration.

Refer to Note 11 – Stockholders' Equity for additional information about the Rights Offering.

On August 14, 2024, the Company entered into the Third Amendment to Amended and Restated Credit Agreement (the “Third Amendment”).

The Third Amendment provided for an additional $200 million incremental term loan and a $55 million increase in the Company’s senior secured revolving credit facility and permits the Company to increase the commitments under the agreement from time to time by up to $300 million in the aggregate, subject to, among other things, receipt of additional commitments from existing and/or new lenders and pro forma compliance with certain financial covenants.

Refer to Note 9 – Debt included in Item 8.

Financial Statements and Supplementary Data for additional information about DSG’s credit agreement.

DSG Vision and Strategic Focus

The complementary distribution operations of Lawson, TestEquity and Gexpro Services were combined in 2022 for the purpose of creating a global specialty distribution company enabling each of Lawson, TestEquity and Gexpro Services to maintain their respective high-touch, value-added service delivery models and customer relationships in their specialty

distribution businesses under the leadership of their separate business unit management teams.

The DSG leadership team provides oversight to these separate leadership teams.

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As of December 31, 2024 , our combined workforce included approximately 4,400 individuals, comprised of approximately 1,610 in sales and marketing, approximately 1,880 in operation and distribution and approximately 860 in management and administration.

Approximately 1,685 individuals are within Lawson, 1,160 are within TestEquity, 712 are within Gexpro Services, with the remaining in corporate or other non-reportable segments.

The Company’s three reportable segments are (i) Lawson, (ii) Gexpro Services and (iii) TestEquity, which align with our principal operating businesses.

The following is a discussion of these reportable segments.

Approximately 1,740 individuals are within Lawson, 1,160 are within TestEquity, 740 are within Gexpro Services, and 710 are within Canada Branch Division.

In connection with the Source Atlantic Transaction in the third quarter of 2024, the Company realigned its reportable segments to align with our business strategy and the manner in which our chief operating decision maker (“CODM”) assesses performance and strategic execution and makes decisions regarding the allocation of resources.

The Company now has four reporting segments:

Lawson, TestEquity, Gexpro Services and Canada Branch Division.

For additional details about our segment realignment, see Note 1 – Nature of Operations and Basis of Presentation in Item 8.

Financial Statements and Supplementary Data.

The following is a discussion of our reportable segments.

For more information about our segments, refer to Note 14 – Segment Information in Item 8.

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We encounter competition from several national distributors and manufacturers and a large number of regional and local distributors.

competitors have greater financial and personnel resources, handle more extensive lines of merchandise, operate larger facilities and price some merchandise more competitively than we do.

Some competitors have greater financial and personnel resources, handle more extensive lines of merchandise, operate larger facilities and price some merchandise more competitively than we do.

Customers — During 2024, the Lawson segment sold products to over 53,000 distinct customers.

Lawson's largest customer accounted for approximately 3% of consolidated revenue.

Lawson’s largest customer accounted for approximately 4% of Lawson’s revenue.

In 2024 , approximately 92% of Lawson’s revenue was generated in the United States and approximately 8% in Canada.

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Percentage of Lawson Revenue

Manufacturing 22%

Automotive 27%

Government and Military 12%

Manufacturing 14%

Trade wholesale and retail 12%

Construction 8%

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Transportation 5%

Government and military 5%

Agriculture 3%

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Product Category Percentage of Lawson Revenue

Aftermarket automotive supplies 18%

Fastening systems 17%

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Electrical 11%

Aftermarket automotive supplies 12%

Specialty chemicals 10%

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Lawson recommends solutions to help customers maximize product performance and avoid costly product failures.

engineering department provides technical support for products and offers on-site problem solutions.

Lawson’s engineering department provides technical support for products and offers on-site problem solutions.

It also develops and presents product safety and technical training seminars tailored to meet customers’ needs.

Human Capital Resources — As of December 31, 2024 , Lawson’s workforce had 1,740 individuals:

approximately 1,153 in sales and marketing of whom 870 are field sales representatives, 406 in operation and distribution and 126 in management and administration.

Approximately 12% of the Lawson workforce is covered by two collective bargaining agreements.

approximately 1,030 in sales and marketing of whom approximately 900 are field sales representatives, 420 in operation and distribution and 290 in management and administration.

Approximately 13% of the Lawson workforce is covered by three collective bargaining agreements.

We believe that our relationships with our employees and their collective bargaining organizations are satisfactory.

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Lawson’s product training educates its sales team on the optimal uses of products, enabling them to provide the proper products and customized solutions to address customers’ needs, including technical expertise and on-site problem resolution.

During 2023 Lawson expanded its team of inside sales representatives to support customer demand.

Lawson’s leadership team is also focused on reducing sales force turn-over and on offering growth opportunities for its sales representatives.

TestEquity is a leading distributor of test and measurement equipment and solutions, industrial and electronic production supplies, vendor managed inventory programs, and converting, fabrication and adhesive solutions from its leading manufacturing partners.

TestEquity operates primarily through its six distribution brands, namely TestEquity, Hisco, TEquipment, Techni-Tool, Jensen Tools and Instrumex, and is focused primarily in North America with a network of sales representatives throughout the United States, Canada, Mexico, Germany and the United Kingdom.

Background and Operations — Based out of Moorpark, California, TestEquity is a large, comprehensive provider of electronic test solutions in the United States supporting the aerospace and defense, wireless and communication, semiconductors, industrial electronics and automotive, and electronics manufacturing industries.

TestEquity operates primarily through its five distribution brands, namely TestEquity, Hisco, TEquipment, Techni-Tool and Jensen Tools, and is focused primarily in North America with a network of sales representatives throughout the United States, Canada, Mexico, Germany and the United Kingdom.

Background and Operations — Based out of North Richland Hills, Texas, TestEquity is a large, comprehensive provider of electronic test solutions in the United States supporting the aerospace and defense, wireless and communication, semiconductors, industrial electronics and automotive, and electronics manufacturing industries.

TestEquity designs, rents and sells a full line of high-quality environmental test chambers.

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Jensen Tools employs a dedicated team of engineering, operational and sales professionals who focus on designing and building quality tool kits for its customers.

Instrumex is a small refurbished test and measurement distributor, based in Munich Germany, with a global reach.

Strategic Focus — TestEquity intends to grow revenue both organically and through acquisitions and continuing to expand and improve its service offerings to its customers.

In particular, TestEquity strives to improve its digital experience,

with a consistent approach for all of its brands.

TestEquity intends to seek to increase its market share through continued expansion of product lines and greater penetration of the e-commerce market, enabled through investment in key digital talent and leverage of the existing TestEquity and TEquipment platforms.

In particular, TestEquity strives to improve its digital experience, with a consistent approach for all of its brands.

TestEquity intends to increase its market share through continued expansion of product lines and greater penetration of the e-commerce market, enabled through investment in key digital talent and leverage of the existing TestEquity and TEquipment platforms.

Industry and Competition — Across both the test and measurement and electronic production supplies businesses, the North American market is fragmented with competitors ranging from large global distributors to national and regional distributors.

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Customers — TestEquity serves over 107,000 customers at 128,000 locations across the United States and abroad, primarily in Canada, Europe and Mexico with approximately 81% of TestEquity’s revenue in 2024 derived from customers in the United States.

There is not significant seasonality in TestEquity’s business across its fiscal quarters.

There is no significant seasonality in TestEquity’s business across its fiscal quarters.

However, the number of business days in a quarter has an impact on TestEquity’s revenue and profitability.

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Percentage of TestEquity Revenue

Industrial electronics and electronics manufacturing 46%

Electronics manufacturing 33%

Aerospace and defense 17%

Automotive 6%

General industrial 5%

Wireless and communications technology 4%

Semi-conductor production 2%

Products — Approximately 30,000 fast-moving products are typically held in inventory across forty-eight distribution centers available for next day delivery.

Products — Approximately 19,000 fast-moving products are typically held in inventory across 40 distribution centers available for next day delivery.

TestEquity’s revenue percentages by product categories in 2024 were as follows:

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Test & measurement 35%

Proprietary products 3%

Rental and refurbished 3%

TestEquity has 28 key suppliers that made up approximately 35% of TestEquity’s purchases in 2024.

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Gexpro Services provides comprehensive supply chain management solutions, including a full technology suite offering of VMI, kitting, global logistics management, manufacturing localization and import expertise, value engineering and quality assurance.

Gexpro Services' end-to-end project management is designed to support manufacturing OEMs with their engineered material specifications, fulfillment, and quality requirements to improve their total cost of ownership.

Gexpro Services has manufacturing and supply chain operations in over 31 service center sites across ten countries including key geographies in North America, South America, Asia, Europe, and the Middle East.

Gexpro Services’ end-to-end project management is designed to support OEMs with their engineered material specifications, fulfillment, and quality requirements to improve their total cost of ownership.

Gexpro Services has manufacturing and supply chain operations in over 34 service center sites across twelve countries including key geographies in North America, South America, Asia, Europe, and the Middle East.

Gexpro Services serves customers in six vertical markets, including renewables, industrial power, consumer and industrial, technology, transportation, and aerospace and defense.

Background and Operations — Gexpro Services was formed in November 2019 and, in February 2020, acquired the “Gexpro Services” business from French distributor Rexel S.A.

Background and Operations — Gexpro Services was formed in November 2019 and, in February 2020, LKCM Headwater acquired the “Gexpro Services” business from French distributor Rexel S.A.

via a carve-out acquisition.

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Electrical 22%

Mechanical 16%

Fabrications 19%

Mechanical 12%

Approximately 63% of Gexpro Services’ suppliers are based in the United States, which helps limit the risk of increased freight and logistics costs;

however, many of these suppliers source their products from overseas.

Gexpro Services maintains

favorable and long-tenured relationships with approximately 2,800 suppliers, with the largest supplier representing approximately 3% of Gexpro Services’ total product purchases in 2023 while the top 10 suppliers represented approximately 19% of total product purchases in 2023.

Gexpro Services maintains favorable and long-tenured relationships with approximately 2,800 suppliers, with the largest supplier representing approximately 2% of Gexpro Services’ total product purchases in 2024 while the top 10 suppliers represented approximately 17% of total product purchases in 2024.

Human Capital Resources — Gexpro Services supports a culture of continuous improvement, integrity and diversity.

Gexpro Services prides itself on being a full value provider to its customers supported with a team committed to providing world-class customer service.

As of December 31, 2023 , Gexpro Services' workforce had 712 individuals, comprised of approximately 225 in sales and marketing, 417 in operation and distribution and 70 in management and administration.

As of December 31, 2024 , Gexpro Services’ workforce had approximately 740 individuals, comprised of approximately 240 in sales and marketing, 430 in operation and distribution and 70 in management and administration.

Canada Branch Division

Canada Branch Division is a wholesale distributor providing product and service solutions for the industrial, government, commercial and residential contractor markets for the Canadian MRO market.

Background and Operations — Canada Branch Division combines the operations of our Bolt Supply House (“Bolt”) and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, and related value-add services to the Canadian MRO market primarily through the sale of products to its walk-up customers throu gh 38 branch loc ations.

Strategic Focus — Canada Branch Division combines the operations of our Bolt and Source Atlantic subsidiaries, which distribute industrial MRO supplies, safety products, fasteners, power tools and related value-add services to the Canadian MRO market through the sale of products and services via warehouse shipments and to its walk-up customers through 38 branch locations.

Industry and Competition — The MRO market is comprised of companies that buy and stock products in bulk and supply these products to customers on an as needed basis.

The customer benefits from our knowledge and the convenience of purchasing smaller quantities from stock maintained by us.

There is a significant amount of competition within the Canadian MRO industry.

We encounter competition from regional and local distributors in Canada as well as international distributors and manufacturers.

Some competitors have greater financial and personnel resources, handle more extensive lines of merchandise, operate larger facilities and price some merchandise more competitively than we do.

Customers — During 2024, the Canada Branch Division segment sold products to over 40,400 distinct customers.

Canada Branch Division’s largest customer accounted for approximately 3% of consolidated revenue.

Approximately 100% of Canada Branch Division’ s revenue was generated in Canada.

Although seasonality is not significant, due to fewer selling days and less activity during the holiday season, revenue in the fourth quarter is historically lower than the first three quarters of the year.

Canada Branch Division’ s customers operate in a variety of industries.

Revenue percentages by customer end markets in 2024 were as follows:

Percentage of Canada Branch Division Revenue

Contractors 25%

Machining and manufacturing 24%

Mining and oil & gas 13%

Government and military 6%

Transportation 3%

Shipbuilding and repair 2%

Construction 1%

Engineering and consulting 1%

Canada Branch Division’s customers include a wide range of purchasers of industrial supply products from small independent contractors to large manufacturers, and governmental and military accounts.

Products — Canada Branch Division’s revenue percentages by product categories in 2024 were as follows:

Product Category Percentage of Canada Branch Division Revenue

Fasteners 24%

Tools and equipment 13%

Mobile valve 7%

Industrial - Other 6%

Cutting tools and abrasives 5%

Power transmission 3%

Engineering 3%

Canada Branch Division offers over 135,000 different products of which over 92,500 products are maintained in distribution centers and physical store branch locations.

Canada Branch Division strives to carry sufficient inventory to ensure product availability.

Accurate for ecasting of customer demand is essential to establish the proper level of inventory for each product.

Inventory levels need to be sufficient to meet customer demand while avoiding the costs of stocking excess items.

During 2024, Canada Branch Division purchased products from approximately 2,400 suppliers with the largest supplier representing approximately 18% of total product purchases in 2024.

Canada Branch Division maintains favorable and long-tenured relationships with approximately 2,400 suppliers.

The loss of one core supplier could affect operations by hindering the ability to provide full service to customers.

Human Capital Resources — Canada Branch Division supports a culture of continuous improvement, integrity and diversity and prides itself on its committed team that is driven to meet customers’ needs through quality service.

As of December 31, 2024 , Canada Branch Division’s workforce had approximately 710 individuals:

approximately 480 in operation and distribution, 90 in sales and marketing and 140 in management and administration.

Available Information

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The public can obtain copies of these materials by accessing the SEC’s website at http://www.sec.gov .

In addition, as soon as reasonably practicable after such materials are filed with, or furnished to, the SEC, we make copies of such materials available to the public free of charge through our website at www.distributionsolutionsgroup.com .

In addition, as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the SEC, we make copies of such materials available to the public free of charge through our website at www.distributionsolutionsgroup.com .

Information on our website is not incorporated by reference into this report.

We also make available on our website our Code of Ethics, Corporate Governance Principles and the charters of the committees of our Board of Directors.

We also make available on our website our Code of Business Conduct, Corporate Governance Principles and the charters of the committees of our Board of Directors.

Information About Our Executive Officers

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Lambert served as the Corporate Controller, and previously the Assistant Controller, of Univar Solutions, a chemical distribution company, publicly traded on the NYSE from June 2017 through June 2021.

Prior to that, Mr.

Lambert served as the Director of Corporate Accounting and Reporting of Donnelley Financial Solutions, a financial compliance company, publicly traded on the NYSE from September 2016 through June 2017.

Prior to these roles, Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business