4 unchanged sentences
PCAOB ID# 248 )
−Removed: Report of Independent Registered Public Accounting Firm ( BDO USA, P.C.
−Removed: Chicago, Illinois ;
−Removed: PCAOB ID# 243 )
Consolidated Balance Sheets as of December 31, 2025 and 2024
8 unchanged sentences
We have audited the accompanying consolidated balance sheets of Distribution Solutions Group, Inc.
−Removed: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and financial statement schedule included under Item 15(a)(1) (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
+Added: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule included under Item 15(a)(1) (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 5, 2026 expressed an unqualified opinion.
10 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical audit matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Business Acquisitions – Valuation of acquired Intangible Assets
−Removed: As described further in Note 3 to the financial statements, the Company acquired S&S Automotive Inc.
−Removed: (S&S Automotive) on May 1, 2024, and Source Atlantic Limited (Source Atlantic) on August 14, 2024, for a combined purchase price of approximately $183.2 million, net of cash acquired.
−Removed: The Company allocated the purchase price, on a preliminary basis, to the assets acquired and liabilities assumed based on their respective fair values, including identified intangible assets of $58.5 million.
−Removed: The principal considerations for our determination that the valuation of acquired customer relationships and trade names is a critical audit matter are (i) the significant judgment by management when determining assumptions used in the fair value measurement of acquired intangible assets and (ii) the high degree of auditor judgment and subjectivity in performing procedures and evaluating management’s significant assumptions relating to the projected forecasted information including revenue growth rates, weighted average costs of capital (WACC), and royalty rates.
−Removed: Our audit procedures related to the valuation of the acquired intangible assets included the following, among others:
−Removed: (i) we tested the design and operating effectiveness of the controls over the Company’s acquisition and valuation process, including review of the valuation models, significant assumptions used, and the completeness and accuracy of the underlying data used
−Removed: (ii) we reviewed the projected forecasted information including forecasted revenue growth rate by assessing the reasonableness of management’s forecasts compared to historical results and forecasted industry trends
−Removed: (iii) with the assistance of our valuation specialists, we assessed the assumptions and methodologies used in developing the WACC and royalty rates by developing a range of independent estimates and comparing those to the rates selected by management.
−Removed: We also involved our valuation specialists to validate the assumptions and methodologies used in valuing the intangible assets.
+Added: Critical audit matters
+Added: Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
+Added: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: We determined that there are no critical audit matters.
/s/ GRANT THORNTON LLP
2 unchanged sentences
March 5, 2026
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: Shareholders and Board of Directors
Distribution Solutions Group, Inc.
−Removed: Chicago, Illinois
−Removed: Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows and financial statement schedule listed in the accompanying index for the year ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”) of Distribution Solutions Group, Inc.
−Removed: (the “Company”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
−Removed: Basis for Opinion
−Removed: These consolidated financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: /s/ BDO USA, P.C.
−Removed: We served as the Company’s auditor from 2022 to 2023.
−Removed: Chicago, Illinois
−Removed: March 14, 2023, except for the effects of the Stock Split described in Notes 1 and 11, as to which the date is March 7, 2024, and Note 14, as to which the date is March 6, 2025
−Removed: Distribution Solutions Group, Inc.
Consolidated Balance Sheets
12 unchanged sentences
Deferred tax asset, net 1,196 136
−Removed: Intangible assets, net 269,763 253,834
+Added: Customer relationships intangibles, net 143,503 171,184
+Added: Trade names and other intangibles, net 82,552 98,579
Cash value of life insurance 21,567 19,916
30 unchanged sentences
Total liabilities and stockholders’ equity $ 1,748,621 $ 1,727,255
−Removed: (1) The accompanying Consolidated Financial Statements and notes thereto have been retroactively adjusted to reflect the two -for-one stock split completed in August 2023.
−Removed: See Note 1 – Nature of Operations and Basis of Presentation for details.
See notes to Consolidated Financial Statements
10 unchanged sentences
Interest expense ( 55,352 ) ( 55,145 ) ( 42,774 )
−Removed: Loss on extinguishment of debt — — ( 3,395 )
Change in fair value of earnout liabilities ( 1,000 ) ( 988 ) 758
28 unchanged sentences
Stock-based compensation — — 3,732 — — — 3,732
+Added: Stock-based compensation liability paid in shares — — 227 — — — 227
Shares issued 85,842 86 ( 86 ) — — — —
−Removed: Deemed consideration for reverse acquisition 18,240,334 18,240 333,251 — — — 351,491
−Removed: Reclassification of issuable shares from earnout derivative liability — — 43,624 — — — 43,624
−Removed: Fair value adjustment of stock-based compensation awards — — 1,910 — — — 1,910
+Added: Shares issued - earnout 3,400,000 3,400 ( 3,400 ) — — — —
+Added: Issuance of common stock in rights offering 4,444,444 4,444 94,025 — — — 98,469
+Added: Shares issued through employee share purchase plan 144,608 144 3,109 — — — 3,253
+Added: Compensation expense related to employee share purchase plan — — 427 — — — 427
Repurchases of common stock (2)
+Added: ( 138,725 ) ( 139 ) 139 — ( 3,619 ) — ( 3,619 )
Tax withholdings related to net share settlements of stock-based compensation awards ( 11,378 ) ( 11 ) 11 — ( 287 ) — ( 287 )
−Removed: Settlement of related party liability — — 5,276 — — — 5,276
−Removed: Other — ( 45 ) 44 — — — ( 1 )
+Added: — — 591 ( 4 ) ( 2 ) ( 120 ) 465
Balance at December 31, 2023 46,758,359 $ 46,758 $ 671,154 $ ( 34,707 ) $ ( 16,434 ) $ ( 5,170 ) $ 661,601
4 unchanged sentences
Shares issued 202,672 203 877 — — — 1,080
−Removed: Shares issued - earnout 3,400,000 3,400 ( 3,400 ) — — — —
−Removed: Issuance of common stock in rights offering 4,444,444 4,444 94,025 — — — 98,469
−Removed: Shares issued through employee share purchase plan 144,608 144 3,109 — — — 3,253
−Removed: Compensation expense related to employee share purchase plan — — 427 — — — 427
Repurchases of common stock (2)
+Added: ( 85,644 ) ( 86 ) 86 — ( 2,580 ) — ( 2,580 )
Tax withholdings related to net share settlements of stock-based compensation awards ( 18,630 ) ( 19 ) 19 — ( 617 ) — ( 617 )
−Removed: Other — — 591 ( 4 ) ( 2 ) ( 120 ) 465
Balance at December 31, 2024 46,856,757 $ 46,856 $ 677,473 $ ( 42,039 ) $ ( 19,631 ) $ ( 22,116 ) $ 640,543
2 unchanged sentences
Stock-based compensation — — 7,157 — — — 7,157
−Removed: Stock-based compensation liability paid in shares — — 870 — — — 870
Shares issued 122,022 122 755 — — — 877
Repurchases of common stock (2)
+Added: ( 776,924 ) ( 778 ) 778 — ( 23,753 ) — ( 23,753 )
Tax withholdings related to net share settlements of stock-based compensation awards ( 21,155 ) ( 21 ) 21 — ( 614 ) — ( 614 )
+Added: — 1 ( 1 ) — — — —
Balance at December 31, 2025 46,180,700 $ 46,180 $ 686,183 $ ( 33,694 ) $ ( 43,998 ) $ ( 5,324 ) $ 649,347
1 unchanged sentence
See Note 1 – Nature of Operations and Basis of Presentation for details.
+Added: (2) Includes adjustments for net excise tax liability.
+Added: (3) Adjustments for rounding.
See notes to Consolidated Financial Statements
9 unchanged sentences
Amortization of debt issuance costs 3,197 2,922 2,420
−Removed: Extinguishment of debt — — 3,395
Stock-based compensation 6,672 5,233 7,940
22 unchanged sentences
Proceeds from sale of rental equipment 12,749 5,124 5,990
+Added: Other ( 560 ) — —
Net cash provided by (used in) investing activities ( 29,492 ) ( 229,683 ) ( 278,523 )
9 unchanged sentences
Proceeds from employees for share purchases — — 3,253
+Added: Stock option exercises 877 — —
Payment of financing lease principal ( 600 ) ( 653 ) ( 515 )
Payment of earnout — — ( 1,000 )
−Removed: Payment on seller's note — — ( 9,757 )
Net cash provided by (used in) financing activities ( 64,266 ) 159,301 250,406
17 unchanged sentences
Non-cash activities:
−Removed: Fair value of common stock exchanged for reverse acquisition $ — $ — $ 351,491
−Removed: Settlement of related party obligations $ — $ — $ 5,276
Additions of property, plant and equipment included in accounts payable $ 490 $ 457 $ 361
1 unchanged sentence
Right of use assets obtained in exchange for operating lease liabilities $ 38,877 $ 14,515 $ 19,424
−Removed: Seller's note issued as purchase consideration $ — $ — $ 1,169
See notes to Consolidated Financial Statements
26 unchanged sentences
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 throu gh 35 branch loc ations.
−Removed: Combination with TestEquity and Gexpro S ervices
−Removed: On December 29, 2021, DSG entered into:
−Removed: • 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 Acquisition, LLC (“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”);
−Removed: • 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) 301 HW Opus Holdings, Inc., conducting business as Gexpro Services (“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”).
−Removed: At the closing of the Mergers, each outstanding share of TestEquity and Gexpro Services common stock outstanding immediately prior to the closing of the Mergers was converted into approximately 0.1809 shares and 0.3838 shares, respectively, of DSG common stock, based on the ratio of outstanding shares of each entity immediately prior to the Mergers to the number of shares of DSG common stock acquired in the Mergers.
−Removed: Completion of the TestEquity Merger
−Removed: On April 1, 2022 (the “Merger Date”), the TestEquity Merger was consummated pursuant to the TestEquity Merger Agreement.
−Removed: 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.
−Removed: 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:
−Removed: (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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Refer to Note 8 – Earnout Liabilities for information about the earnout derivative liability related to the TestEquity Holdback Shares.
−Removed: Completion of the Gexpro Services Merger
−Removed: On the Merger Date, the Gexpro Services Merger was consummated pursuant to the Gexpro Services Merger Agreement.
−Removed: 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.
−Removed: 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:
−Removed: (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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: On March 20, 2023, all 2,000,000 Gexpro Services Holdback Shares were issued under the earnout opportunities.
−Removed: 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.
−Removed: Refer to Note 8 – Earnout Liabilities for information about the earnout derivative liability related to the Gexpro Services Holdback Shares.
−Removed: Accounting for the Mergers
−Removed: 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.
−Removed: 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, Canada Branch Division and All Other are only included subsequent to the April 1, 2022 Merger Date.
Basis of Presentation and Consolidation
6 unchanged sentences
Refer to Note 11 – Stockholders’ Equity for additional information about the Stock Split.
−Removed: The Mergers were accounted for as a reverse merger under the acquisition method of accounting in accordance with the accounting guidance for reverse acquisitions as provided in Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”).
−Removed: Under this guidance, 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.
−Removed: This determination was primarily made as TestEquity and Gexpro Services were under the common control of an entity that owns a majority of the voting rights of the combined entity, and therefore, only DSG experienced a change in control.
−Removed: Accordingly, the consolidated financial statements for the year ended December 31, 2022 reflect the results of operations of TestEquity and Gexpro Services on a consolidated basis, and the results of operations of DSG’s legacy Lawson, Canada Branch Division and All Other are only included subsequent to the April 1, 2022 Merger Date.
−Removed: The combined operations of all three entities are included in the consolidated financial statements for the years ended December 31, 2024 and 2023.
−Removed: The financial statements as of December 31, 2024 and 2023 reflect the financial position of TestEquity, Gexpro Services and DSG’s legacy Lawson,
−Removed: Canada Branch Division and All Other on a consolidated basis.
Note 2 – Summary of Significant Accounting Policies
23 unchanged sentences
That portion of expected consideration is deferred until the time that those services have been provided and the related performance obligations have been satisfied.
−Removed: At December 31, 2024 and 2023, the deferred consideration for the service performance obligations that have not been satisfied was $ 3.7 million and $ 0.8 million and will be recognized within twelve months of the respective balance sheet date.
−Removed: Revenue recognized for the years ended December 31, 2024 and 2023 from amounts included in contract liabilities at the beginning of the respective periods was $ 0.8 million and $ 2.3 million, respectively.
For revenue recognized over time, the input method is utilized and is based on costs incurred relative to estimated total costs.
6 unchanged sentences
Lease revenue is recognized on a straight-line basis over the life of each lease.
−Removed: As there are trivial non-lease components, the Company has adopted the practical expedient not to separate the non-lease components
−Removed: that would be within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”) from the associated lease component as the relevant criteria under ASC 842 are met.
+Added: As there are trivial non-lease components, the Company has adopted the practical expedient not to separate the non-lease components that would be within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”) from the associated lease component as the relevant criteria under ASC 842 are met.
Cash, Cash Equivalents, and Restricted Cash — The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents.
4 unchanged sentences
In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filings, substantial down-grading of credit ratings), a specific reserve for bad debts is recorded against amounts due to reduce the receivable to the amount the Company reasonably believes will be collected.
−Removed: For all other customers, the Company recognizes reserves for bad debts based on current and forecasted probability of collection, economic conditions, historical experience of bad debt write-offs as a percent of accounts receivable outstanding, and other significant events that may impact the collectibility of accounts receivable.
+Added: For all other customers, the Company recognizes reserves for bad debts based on current and forecasted probability of collection, economic conditions, historical experience of bad debt write-offs as a percentage of accounts receivable outstanding, and other significant events that may impact the collectibility of accounts receivable.
Uncollected trade receivables are written off when identified to be unrecoverable.
15 unchanged sentences
Expense is computed primarily by the straight-line method over an estimated useful life of 3 to 7 years.
−Removed: Upon sale or retirement of such assets, the related cost and accumulated depreciation are removed from the Consolidated Balance Sheets, and gains or losses are reflected in operating income (loss) within the Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: Upon sale or retirement of such assets, the related cost and accumulated depreciation are removed from the Consolidated Balance Sheets, and gains or losses
+Added: are reflected in operating income (loss) within the Consolidated Statements of Operations and Comprehensive Income (Loss).
The costs of repairs, maintenance and minor renewals are charged to expense as incurred.
3 unchanged sentences
The change in the cash surrender value of the life insurance policies, which is recorded as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss), is the change in the policies’ contractual values.
−Removed: Security Bonus Plan — The Company has a security bonus plan which was previously created for the benefit of its Lawson independent sales representatives, under the terms of which participants are credited with a percentage of their
−Removed: annual net commissions.
+Added: Security Bonus Plan — The Company has a security bonus plan which was previously created for the benefit of its Lawson independent sales representatives, under the terms of which participants are credited with a percentage of their annual net commissions.
The aggregate amounts credited to participants’ accounts vest 25 % after five years , and an additional 5 % vests each year thereafter upon qualification for the plan.
31 unchanged sentences
Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse.
−Removed: A valuation allowance is established to offset any deferred tax assets if,
−Removed: based upon the available evidence, it is more likely than not (i.e.
+Added: A valuation allowance is established to offset any deferred tax assets if, based upon the available evidence, it is more likely than not (i.e.
greater than 50% likely) that some or all of the deferred tax assets will not be realized.
33 unchanged sentences
Diluted earnings per share is computed using the weighted-average number of shares of common stock and, if dilutive, common stock equivalents outstanding during the period.
−Removed: Diluted earnings per share reflect the potential dilution from the exercise or conversion of outstanding performance awards, stock options, market stock units and restricted stock awards into common stock.
+Added: Diluted earnings per share reflect the potential dilution from the exercise or conversion of outstanding performance awards, stock options, market stock units and restricted stock units into common stock.
The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method.
2 unchanged sentences
In accordance with ASC 260, Earnings per Share (“ASC 260”), the historical EPS was retrospectively adjusted to reflect the impact of the two -for-one stock split that occurred during 2023.
−Removed: For the reverse acquisition period prior to April 1, 2022, the Company calculates the basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements by dividing the income of the accounting acquirer attributable to common shareholders in each of those periods by the accounting acquirer’s historical weighted-average number of common shares outstanding.
−Removed: The Company calculates the weighted-average number of common shares outstanding (the denominator of the EPS calculation), including the equity interests issued by the legal acquirer to effect the reverse acquisition, as the number of common shares outstanding from the beginning of that period to the acquisition date computed on the basis of the weighted-average number of common shares of the accounting acquirer outstanding during the period multiplied by an exchange ratio derived from the shares exchanged at the Merger Date.
Foreign Currency — The accounts of foreign subsidiaries are measured using the local currency as the functional currency.
7 unchanged sentences
Foreign currency transaction losses of $ 3.0 million, $ 0.4 million and $ 1.5 million were recorded for 2025, 2024 and 2023 , respectively, as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss).
−Removed: Treasury Stock — The Company repurchased 85,644 shares of its common stock during 2024, 138,725 shares of its common stock during 2023 and 108,178 shares of its common stock during 2022 through its previously announced stock repurchase plan.
−Removed: The Company repurc hased 18,630 shares of its common stock i n 2024, 11,378 shares of its common stock in 2023 and 24,163 shares of its common stock in 2022 from employees upon the vesting of restricted stock to offset the income taxes owed by those employees.
−Removed: The Company accounts for treasury stock using the cost method and includes treasury stock as a component of stockholders’ equity.
−Removed: The cost of the common stock repurchased and held in treasury during 2024, 2023 and 2022 wa s $ 3.2 million, $ 3.9 million and $ 2.5 million, respectively.
+Added: Treasury Stock — The Company accounts for treasury stock using the cost method and includes treasury stock as a component of stockholders’ equity.
+Added: The cost of the common stock repurchased and held in treasury during 2025, 2024 and 2023 was $ 24.4 million, $ 3.2 million and $ 3.9 million, respectively.
+Added: The Company records the repurchase of shares of its common stock at cost on the settlement date of the transaction.
+Added: In accordance with the Inflation Reduction Act, as amended, the Company is subject to a 1% excise tax on the net repurchase of its stock, which is recorded as a direct cost of the transaction in the period of repurchase within treasury stock.
Segment Information — ASC 280, Segment Reporting , establishes standards for reporting information about operating segments.
10 unchanged sentences
Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.
−Removed: While the Company uses its best estimates and assumptions for the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date,
−Removed: the estimates are inherently uncertain and subject to refinement.
+Added: While the Company uses its best estimates and
+Added: assumptions for the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement.
As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.
10 unchanged sentences
The carrying amount of debt is also considered to be a reasonable estimate of the fair value based on the nature of the debt and that the debt bears interest at the prevailing market rate for instruments with similar characteristics.
−Removed: The Company’s earnout derivative liability and debt are recorded at fair value on a recurring basis and were estimated using Level 3 inputs.
−Removed: Earnout Derivative Liability — The Company recorded an earnout derivative liability for the future contingent equity shares related to the TestEquity Holdback Shares and the Gexpro Services Holdback Shares provisions within the Merger Agreements.
−Removed: The contingently issuable shares are not indexed to DSG common stock and, therefore, are accounted for as liability classified instruments in accordance with ASC 815-40 , Contracts in Entity’s Own Equity , as the events that determine the number of contingently issuable shares required to be released or issued, as the case may be, include events that are not solely indexed to the fair value of DSG common stock.
−Removed: The contingently issuable shares were initially measured at the Merger Date and were subsequently measured at each reporting date until settled, or when they met the criteria for equity classification.
−Removed: Changes in the fair value of the earnout derivative liability are recorded as a component of Change in fair value of earnout liability in the Consolidated Statements of Operations and Comprehensive Income (Loss).
−Removed: The Company reassesses the classification of these derivative liabilities for earnout arrangements each balance sheet date.
−Removed: If the contingencies are resolved for the issuable shares, the earnout derivative liability is reclassified from the liability to equity as of the date of the event that caused the contingencies to be met.
−Removed: The earnout derivative liability is measured at fair value immediately prior to the reclassification to equity.
−Removed: If the earnout derivative liability is reclassified from a liability to equity, gains or losses recorded to account for the liability at fair value during the period that the contract was classified as a liability are not reversed.
−Removed: The contingently issuable shares are included in the denominator of the basic earnings per share calculation as of the date that all necessary conditions have been satisfied (i.e., when issuance of the shares is no longer contingent).
−Removed: For diluted earnings per share, the contingently issuable shares are included in the denominator of the diluted earnings per share calculation as of the beginning of the interim period in which the conditions are satisfied and the earnout arrangements have been resolved.
−Removed: Use of Estimates — Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported for service
−Removed: revenue, service cost, allowance for credit losses, inventory write-offs, initial and on-going goodwill and intangible asset valuations, stock-based compensation and income taxes in the consolidated financial statements and accompanying notes.
+Added: Use of Estimates — Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported for service revenue, service cost, allowance for credit losses, inventory write-offs, initial and on-going goodwill and intangible asset valuations, stock-based compensation and income taxes in the consolidated financial statements and accompanying notes.
Actual results could differ from these estimates.
+Added: Reclassifications — Certain prior period amounts have been reclassified to conform to the current period presentation, primarily relating to the disaggregation of intangible assets on the consolidated balance sheet.
+Added: These reclassifications did not result in any changes to previously reported total assets, stockholder’s equity, or net income.
Recent Accounting Pronouncements - Adopted
−Removed: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.
−Removed: The pronouncement was effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
−Removed: The adoption of ASU 2023-07 has been applied retrospectively to all prior periods presented in the financial statements.
+Added: From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements.
+Added: The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update (“ASU”).
+Added: The Company does not discuss recent pronouncements that are not anticipated to have an impact on, or are unrelated to, its consolidated financial condition, results of operations, cash flows or disclosures.
+Added: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures to require greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid.
+Added: The pronouncement is effective on a prospective basis with retrospective application permitted for annual periods beginning after December 15, 2024, with early adoption permitted.
+Added: The adoption of ASU 2023-09 has been applied on a prospective basis to the current annual period.
+Added: Prior period disclosures have not been adjusted to reflect the new disclosure requirements.
The Company adopted this guidance on January 1, 2025.
1 unchanged sentence
Recent Accounting Pronoun cements - Not Yet Adopted
−Removed: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
−Removed: Improvements to Income Tax Disclosures to require greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid.
−Removed: The pronouncement is effective on a prospective basis for annual periods beginning after December 15, 2024, with early adoption permitted.
−Removed: The Company is currently evaluating the impact of the adoption on its financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220):
Reporting Comprehensive Income, which requires disclosure of disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements.
+Added: The FASB further clarified the effective date in January 2025 with the issuance of ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):
+Added: Clarifying the Effective Date.
The pronouncement is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.
The Company is currently evaluating the impact of the adoption on its financial statement disclosures.
+Added: In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326):
+Added: Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets.
+Added: The pronouncement is effective on a prospective basis for interim and annual reporting periods beginning after December 15, 2025, with early adoption permitted.
+Added: The Company is currently evaluating the impact of the adoption on its financial statement disclosures.
+Added: In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):
+Added: Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software costs by removing all references to prescriptive and sequential software development stages.
+Added: The new standard requires entities to consider whether significant development uncertainty has been resolved before starting to capitalize software costs and aligns disclosure requirements with ASC 360, Property, Plant, and Equipment.
+Added: The pronouncement is effective for interim and annual reporting periods beginning after December 15, 2027, and can be applied prospectively, retrospectively, or using a modified transition method, with early adoption permitted.
+Added: The Company is currently evaluating the impact of the adoption on its financial statement disclosures.
+Added: In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):
+Added: Narrow-Scope Improvements, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies.
+Added: Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP.
+Added: ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.
+Added: The pronouncement is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and can be applied prospectively or retrospectively, with early adoption permitted.
+Added: The Company is currently evaluating the impact of the adoption on its financial statement disclosures.
Note 3 – Business and Asset Acquisitions
2 unchanged sentences
For each acquisition, the allocation of consideration exchanged to the assets acquired and liabilities assumed was based on estimated acquisition-date fair values.
−Removed: The final valuations will be completed within the one-year measurement period following the respective acquisition date, and any adjustments will be recorded in the period in which the adjustments are determined.
+Added: The final valuations were completed within the one-year measurement period following the respective acquisition date, and any adjustments were recorded in the period in which the adjustments were determined.
2024 Acquisitions
2 unchanged sentences
These assets were acquired to expand TestEquity’s test equipment offerings and value-add service capabilities in all of our end markets.
−Removed: The results of operations from the additional assets acquired from ConRes TE are included within the TestEquity reportable segment.
−Removed: The acquisition was funded using
−Removed: DSG’s cash on hand and its revolving credit facility.
−Removed: This acquisition was accounted for as an asset acquisition as substantially all of the fair value of the assets being acquired was concentrated in property, plant and equipment.
+Added: The results of operations from the assets acquired from ConRes TE are included within the TestEquity reportable segment.
+Added: The acquisition was funded using DSG’s
+Added: cash on hand and its revolving credit facility.
+Added: This acquisition was accounted for as an asset acquisition because substantially all of the fair value of the acquired assets were concentrated in property, plant and equipment.
The following table summarizes the allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed:
9 unchanged sentences
Total purchase consideration exchanged, net of cash acquired $ 17,000
−Removed: (1) The Company paid $ 0.0 million of the ConRes TE deferred consideration during the year ended December 31, 2024 .
+Added: (1) The Company paid $ 0.0 million of the ConRes TE deferred consideration during the years ended December 31, 2025 and 2024 .
Tech-Component Resources Pte Ltd
5 unchanged sentences
The acquisition was funded using DSG’s cash on hand and its revolving credit facility.
−Removed: The following table summarizes the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
+Added: The following table summarizes the allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
Tech-Component Resources Pte Ltd
(in thousands)
−Removed: October 30, 2024 Acquisition Date
+Added: October 30, 2024 Acquisition Date Measurement Period Adjustments Adjusted Total
Accounts receivable $ 923 $ ( 53 ) $ 870
14 unchanged sentences
Deferred consideration (1)
+Added: 955 $ — $ 955
Total purchase consideration exchanged, net of cash acquired $ 5,880 $ 144 $ 6,024
−Removed: (1) The Company paid $ 0.0 million of the TCR deferred consideration during the year ended December 31, 2024 .
−Removed: Certain estimated values for the TCR Transaction , including working capital and other liability adjustments, right of use assets, the valuation of intangibles and property, plant and equipment and income taxes are not yet finalized, and the preliminary purchase price allocation is subject to change as the Company completes its analysis of the fair value at the date of acquisition.
+Added: (1) The Company paid $ 0.0 million of the TCR deferred consideration during the years ended December 31, 2025 and 2024 .
+Added: Following the initial fair value measurement, the Company updated the purchase price allocation for TCR primarily related to the ongoing review of the opening balance sheet and revised certain assumptions used in estimating the fair value.
+Added: The adjustments resulted in a $ 0.2 million increase to goodwill.
+Added: Total purchase consideration, net of cash acquired increased due to working capital and other adjustments in accordance with the purchase agreement of $ 0.1 million.
+Added: The accounting for the TCR Transaction was completed during the third quarter of 2025.
The customer relationships and trade names intangible assets have estimated useful lives of ten years .
6 unchanged sentences
The results of operations of Source Atlantic are included within the Canada Branch Division reportable segment.
−Removed: The acquisition was funded with borrowings under the Company’s Amended Credit Agreement.
−Removed: Refer to Note 9 – Debt for information about the Amended Credit Agreement .
−Removed: The following table summarizes the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
+Added: The acquisition was funded with borrowings under the Company’s Original Credit Agreement.
+Added: Refer to Note 9 – Debt for information about the Original Credit Agreement .
+Added: The following table summarizes the allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
Source Atlantic
21 unchanged sentences
The difference represents the Company’s best estimate of the contractual cash flows that will not be collected.
−Removed: (2) The Company paid $ 0.0 million of the Source Atlantic deferred consideration during the year ended December 31, 2024.
−Removed: Certain estimated values for the Source Atlantic Transaction, including working capital and other liability adjustments, right of use assets, the valuation of intangibles and property, plant and equipment and income taxes are not yet finalized, and the preliminary purchase price allocation is subject to change as the Company completes its analysis of the fair value at the date of acquisition.
+Added: (2) The Company paid $ 1.0 million and $ 0.0 million of the Source Atlantic deferred consideration during the years ended December 31, 2025 and 2024 , respectively.
Following the initial fair value measurement, the Company updated the purchase price allocation for Source Atlantic primarily related to the ongoing review of the opening balance sheet and revised certain assumptions used in estimating the fair value.
The adjustments resulted in a $ 2.0 million increase to customer relationships and trade names and a $ 0.7 million decrease to goodwill.
+Added: Total purchase consideration, net of cash acquired increased due to working capital and other adjustments in accordance with the purchase agreement of $ 0.3 million.
+Added: The accounting for the Source Atlantic Transaction was completed during the second quarter of 2025.
The customer relationships and trade names intangible assets have estimated useful lives of 17 years and 8 years, respectively.
7 unchanged sentences
The acquisition was funded using DSG’s cash on hand and its revolving credit facility.
−Removed: The following table summarizes the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
+Added: The following table summarizes the allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
S&S Automotive
18 unchanged sentences
Total purchase consideration exchanged, net of cash acquired $ 80,052 $ — $ 80,052
−Removed: (1) The Company paid $ 0.9 million of the S&S Automotive deferred consideration during the year ended December 31, 2024 .
−Removed: Certain estimated values for the S&S Automotive Transaction, including working capital and other liability adjustments, right of use assets, the valuation of intangibles and property, plant and equipment and income taxes are not yet finalized, and the preliminary purchase price allocation is subject to change as the Company completes its analysis of the fair value at the date of acquisition.
+Added: (1) The Company paid $ 0.2 million and $ 0.9 million of the S&S Automotive deferred consideration during the years ended December 31, 2025 and 2024, respectively .
+Added: As of December 31, 2025, there is no deferred consideration remaining.
Following the initial fair value measurement, the Company updated the purchase price allocation for S&S Automotive primarily related to the ongoing review of the opening balance sheet and revised certain assumptions used in estimating the fair value.
The adjustments resulted in a $ 7.0 million decrease to customer relationships and trade names and a $ 7.4 million increase to goodwill.
+Added: The accounting for the S&S Automotive Transaction was completed during the first quarter of 2025.
The customer relationships and trade names intangible assets have estimated useful lives of 17 years and 8 years, respectively.
6 unchanged sentences
The acquisition was funded using DSG’s cash on hand.
−Removed: The following table summarizes the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
+Added: The following table summarizes the allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed, including the allocation to other intangible assets acquired:
Emergent Safety Supply
17 unchanged sentences
Total purchase consideration exchanged, net of cash acquired $ 9,854 $ — $ 9,854
−Removed: (1) The Company paid $ 0.2 million of the ESS deferred consideration during the year ended December 31, 2024 .
+Added: (1) The Company paid $ 0.8 million and $ 0.2 million of the ESS deferred consideration during the year ended December 31, 2025 and 2024, respectively .
+Added: As of December 31, 2025, there is no deferred consideration remaining.
Following the initial fair value measurement, the Company updated the purchase price allocation for ESS primarily related to the ongoing review of the opening balance sheet and revised certain assumptions used in estimating the fair value.
11 unchanged sentences
Under the Hisco Purchase Agreement, DSG became obligated to 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.
−Removed: Pursuant to the Hisco Purchase Agreement, the Company paid $ 1.8 million of the retention bonuses in 2023 and $ 34.6 million in 2024.
−Removed: The remaining balance of $ 1.1 million will be paid in 2025.
−Removed: Compensation expense is recorded over the service period for the
−Removed: retention bonuses as a component of Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss).
−Removed: Compensation expense inclusive of payroll taxes was $ 16.3 million for the year ended December 31, 2024 and $ 22.8 million for the year ended December 31, 2023.
−Removed: DSG funded the Hisco Transaction with borrowings under its Amended Credit Agreement and proceeds raised from the Rights Offering.
−Removed: Refer to Note 9 – Debt for information about the Amended Credit Agreement and Note 11 – Stockholders’ Equity for details on the Rights Offering.
+Added: Pursuant to the Hisco Purchase Agreement, the Company paid $ 1.8 million of the retention bonuses in 2023, $ 34.6 million in 2024 and the
+Added: remaining balance of $ 1.1 million in 2025.
+Added: Compensation expense was recorded over the service period for the retention bonuses as a component of Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: Compensation expense inclusive of payroll taxes was $ 0.0 million for the year ended December 31, 2025, $ 16.3 million for the year ended December 31, 2024 and $ 22.8 million for the year ended December 31, 2023.
+Added: DSG funded the Hisco Transaction with borrowings under its Original Credit Agreement and proceeds raised from the Rights Offering.
+Added: Refer to Note 9 – Debt for information about the Original Credit Agreement and Note 11 – Stockholders’ Equity for details on the Rights Offering.
The Hisco 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.
27 unchanged sentences
The difference represents the Company’s best estimate of the contractual cash flows that will not be collected.
−Removed: (2) The Company paid $ 7.2 million of the Hisco deferred consideration during 2024 and $ 7.8 million during 2023.
−Removed: As of December 31, 2024, there is no deferred consideration remaining.
+Added: (2) The Company paid $ 0.0 million of the Hisco deferred consideration during 2025, $ 7.2 million during 2024 and $ 7.8 million during 2023.
+Added: As of December 31, 2024, there was no deferred consideration remaining.
Following the initial fair value measurement, the Company updated the purchase price allocation for Hisco primarily related to the ongoing review of the opening balance sheet and contractual working capital adjustments and revised certain assumptions used in estimating the fair value of the contingent consideration.
3 unchanged sentences
As a result of the Hisco Transaction, the Company recorded tax deductible goodwill of $ 41.4 million in 2023 that may result in a tax benefit in future periods and is primarily attributable to the benefits we expect to derive from expected synergies, including expanded product and service offerings and cross-selling opportunities.
−Removed: 2022 Acquisitions
−Removed: Combination with TestEquity and Gexpro Services
−Removed: On April 1, 2022, the Mergers were completed via all-stock merger transactions.
−Removed: Pursuant to the Merger Agreements, DSG issued an aggregate of 20.6 million shares of DSG common stock to the former owners of TestEquity and Gexpro Services.
−Removed: On March 20, 2023, an additional 3.4 million shares of DSG common stock were issued.
−Removed: Refer to Note 1 – Nature of Operations and Basis of Presentation for further information regarding the Mergers.
−Removed: The Mergers were accounted for as a reverse merger under the acquisition method of accounting for business combinations, whereby TestEquity and Gexpro Services were identified as the accounting acquirers and were treated as a combined entity for financial reporting purposes, and DSG was identified as the accounting acquiree.
−Removed: Accordingly, under the acquisition method of accounting, the purchase price was allocated to DSG's tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated acquisition-date fair values.
−Removed: These estimates were determined through established and generally accepted valuation techniques.
−Removed: Allocation of Consideration Exchanged
−Removed: Under the acquisition method of accounting, the consideration exchanged was calculated as follows:
−Removed: (in thousands, except share data) April 1, 2022
−Removed: Number of DSG common shares 18,240,334
−Removed: DSG common stock closing price per share on March 31, 2022 $ 19.27
−Removed: Fair value of shares exchanged $ 351,491
−Removed: Other consideration (1)
−Removed: Total consideration exchanged $ 353,401
−Removed: (1) Fair value adjustment of stock-based compensation awards.
−Removed: Due to the publicly traded nature of shares of DSG common stock, the equity issuance of shares of DSG common stock based on this value was considered to be a more reliable measurement of the fair market value of the transaction compared to the equity interests of the accounting acquirer.
−Removed: The allocation of consideration exchanged to other intangible assets acquired is as follows:
−Removed: (in thousands) Fair Value Estimated Life
−Removed: Customer relationships $ 76,050 19
−Removed: Trade names 43,010 8
−Removed: Total other intangible assets $ 119,060
−Removed: Purchases of Other Companies in 2022
−Removed: During the year ended December 31, 2022, TestEquity acquired Interworld Highway, LLC, National Test Equipment, and Instrumex, and Gexpro Services acquired Resolux ApS ("Resolux") and Frontier Technologies Brewton, LLC and Frontier Engineering and Manufacturing Technologies, Inc.
−Removed: ("Frontier").
−Removed: The consideration exchanged for these acquired businesses included various combinations of cash and sellers' notes.
−Removed: (in thousands) Interworld Highway, LLC Resolux Frontier National Test Equipment Instrumex
−Removed: Acquisition date April 29, 2022 January 3, 2022 March 31, 2022 June 1, 2022 December 1, 2022 Total
−Removed: Cash consideration $ 54,690 $ 30,755 $ 25,674 $ 6,023 $ 1,818 $ 118,960
−Removed: Seller's notes — — — 1,169 — 1,169
−Removed: Deferred consideration — — — — 474 474
−Removed: Total purchase consideration exchanged, net of cash acquired $ 54,690 $ 30,755 $ 25,674 $ 7,192 $ 2,292 $ 120,603
−Removed: The consideration for the Frontier acquisition includes a potential earn-out payment of up to $ 3.0 million based upon the achievement of certain milestones and relative thresholds during the earn out measurement period which ends on December 31, 2024.
−Removed: Refer to Note 8 – Earnout Liabilities for additional information on the earn-out.
Unaudited Pro Forma Information
−Removed: The following table presents estimated unaudited pro forma consolidated financial information for DSG as if the acquisitions disclosed above occurred on January 1, 2023 for the acquisition completed during 2024, January 1, 2022 for the acquisitions completed during 2023 and January 1, 2021 for the acquisitions completed during 2022.
+Added: The following table presents estimated unaudited pro forma consolidated financial information for DSG as if the acquisitions disclosed above occurred on January 1, 2023 for the acquisitions completed during 2024 and January 1, 2022 for the acquisition completed during 2023.
The unaudited pro forma information reflects adjustments including amortization on acquired intangible assets, interest expense, and the related tax effects.
3 unchanged sentences
Revenue $ 1,980,023 $ 1,941,457 $ 1,998,209
−Removed: Net income $ ( 13,722 ) $ ( 3,855 ) $ ( 6,264 )
+Added: Net income (loss) $ 8,345 $ ( 18,493 ) $ ( 3,855 )
Actual Results of Business Acquisitions
The following table presents actual results attributable to our acquisitions that were included in the consolidated financial statements for the years ended December 31, 2025, 2024 and 2023.
−Removed: The results for these acquisitions are only included subsequent to their respective acquisition dates provided above.
+Added: The results for each of the businesses acquired in these acquisitions are only included in the following table for the portion of the year of the respective acquisition that is subsequent to its respective acquisition date provided above.
Year Ended December 31,
2 unchanged sentences
Revenue $ — $ 111,566 $ 229,358
−Removed: Net income $ 4,095 $ ( 14,478 ) $ 23,953
+Added: Net income (loss) $ — $ 4,095 $ ( 14,478 )
The Company incurred transaction and integration costs related to completed and contemplated acquisitions of $ 0.2 million for the year ended December 31, 2025, $ 10.1 million for the year ended December 31, 2024, and $ 11.6 million for the year ended December 31, 2023, which are included in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss).
24 unchanged sentences
Revenue from operating leases $ 26,872 $ 17,519 $ 17,186
+Added: Contract Liabilities
+Added: Deferred consideration for the service performance obligations that have not been satisfied will be recognized within twelve months of the respective balance sheet date.
+Added: The table below summarizes our changes in contract liabilities for the periods presented.
+Added: Year Ended December 31,
+Added: (in thousands) 2025 2024 2023
+Added: Beginning balance
+Added: $ 3,727 $ 810 $ 2,313
+Added: 5,207 3,727 810
+Added: Revenue recognized
+Added: ( 3,727 ) ( 810 ) ( 2,313 )
+Added: Ending balance
+Added: $ 5,207 $ 3,727 $ 810
Note 5 – Supplemental Financial Statement Information
1 unchanged sentence
The Company has agreed to maintain restricted cash of $ 13.6 million under agreements with outside parties.
−Removed: During 2024, escrow accounts of $ 9.0 million were established in conjunction with certain business acquisitions, to be released upon meeting certain working capital and other post-closing requirements as of the one-year post-acquisition dates with a balance of $ 7.9 million at December 31, 2024 .
+Added: During 2024 and 2023, escrow accounts were established in conjunction with certain business acquisitions, to be released upon meeting certain working capital and other post-closing requirements as of the contractual post-acquisition dates with a balance of $ 5.1 million at December 31, 2025 .
The Company is restricted from withdrawing this balance without the prior consent of the sellers.
13 unchanged sentences
Property, plant and equipment, net $ 126,605 $ 125,524
−Removed: (1) Construction in progress primarily relates to upgrades to certain of the Company’s information technology systems and distribution facilities that we expect to place in service in the next 12 months.
+Added: (1) Construction in progress primarily relates to upgrades to certain of the Company’s information technology systems and distribution facilities that we expect to place in service in the next twelve months.
Depreciation expense for property, plant and equipment and amortization expense for capitalized software, which are included in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss), were as follows:
19 unchanged sentences
Accrued and withheld taxes, other than income taxes 10,263 10,178
−Removed: Deferred acquisition payments and accrued earnout liabilities 6,384 7,513
Accrued customer rebates 7,847 6,366
−Removed: Deferred revenue 3,727 810
+Added: Deferred acquisition payments and accrued earnout liabilities 6,021 6,384
+Added: Contract liabilities 5,207 3,727
Accrued severance and acquisition related retention bonus 1,966 2,864
−Removed: Accrued health benefits 2,234 1,728
Accrued interest 1,647 2,030
−Removed: Accrued stock-based compensation 1,960 5,573
+Added: Accrued health benefits 1,615 2,234
Accrued income taxes 793 1,703
+Added: Accrued stock-based compensation 326 1,960
Other 19,185 20,013
12 unchanged sentences
Acquisitions (1)
+Added: 37,177 ( 110 ) 1,372 28,942 67,381
Impact of foreign exchange rates ( 494 ) — ( 773 ) ( 3,250 ) ( 4,517 )
35 unchanged sentences
Sublease income (2)
+Added: ( 679 ) ( 425 ) —
Net lease cost $ 28,270 $ 24,253 $ 21,770
(1) Includes short-term lease expense, which is immaterial.
−Removed: (2) The Company subleases one of its leased properties with a remaining lease term of approximately 1.5 years that terminates on June 30, 2026.
+Added: (2) The Company subleases excess property to third-party tenants.
Sublease income is recognized on a straight-line basis over the sublease agreement and is recorded as an offset to operating lease expense.
23 unchanged sentences
Year Ended December 31,
−Removed: Operating Leases
−Removed: Finance Leases
−Removed: Operating Leases
−Removed: Finance Leases
−Removed: Weighted average remaining lease term
−Removed: 6.3 years 3.7 years 6.6 years 2.8 years
+Added: Operating Leases Finance Leases Operating Leases Finance Leases
+Added: Weighted average remaining lease term 6.0 years 3.2 years 6.3 years 3.7 years
Weighted average interest rate 7.5 % 7.1 % 7.6 % 7.3 %
−Removed: 7.6 % 7.3 % 7.8 % 7.1 %
The cash outflows of leasing activity for the years ended December 31, 2025, 2024 and 2023 were as follows (in thousands):
6 unchanged sentences
Note 8 – Earnout Liabilities
−Removed: Combination with TestEquity and Gexpro Services
−Removed: On the Merger Date, the Company recorded an earnout derivative liability for the two earnout provisions within the Merger Agreements.
−Removed: The Company estimated the initial fair value of the earnout derivative liability based on an aggregate of 2,324,000 additional shares available to be issued under the two earnout provisions of the Merger Agreements.
−Removed: The aggregate of 2,324,000 shares was comprised of 1,400,000 shares of DSG common stock that were contingently issuable to (or forfeitable by) the TestEquity Equityholder and 924,000 shares of DSG common stock that were contingently issuable to (or forfeitable by) the Gexpro Services Stockholder, in each case as of the Merger Date.
−Removed: The additional 1,076,000 shares that were potentially issuable as of the Merger Date under the earnouts were not recorded as an earnout derivative liability as the acquisition contingency for these shares was determined to have been met at the Merger Date.
−Removed: The Company’s earnout derivative liability was classified as a Level 3 instrument and was measured at fair value on a recurring basis.
−Removed: The fair value of the earnout derivative liability was measured using the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis for the year ended December 31, 2022.
−Removed: Inputs to that model included the expected time to liquidity, the risk-free interest rate over the term, expected volatility based on representative peer companies and the estimated fair value of the underlying class of common stock.
−Removed: The significant unobservable inputs used in the fair value measurement of the earnout derivative liability were the fair value of the underlying stock at the valuation date and the estimated term of the earnout arrangement periods.
−Removed: Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.
−Removed: The estimated aggregate fair value of the earnout derivative liability recorded on the April 1, 2022 Merger Date was $ 43.9 million, with an offsetting entry to additional paid-in capital.
−Removed: As of April 29, 2022 and December 31, 2022, 1,400,000 and 924,000 of the 2,324,000 shares, respectively, were reclassified to equity, as the contingencies had been determined to have been met.
−Removed: There was no remaining earnout derivative liability at December 31, 2022.
−Removed: Immediately prior to the reclassifications, the respective shares were remeasured to fair value.
−Removed: For the year ended December 31, 2022, the Company recorded income of $ 0.3 million as a component of Change in fair value of earnout liabilities in the Consolidated Statements of Operations and Comprehensive Income (Loss) due to changes in the fair value of the earnout derivative liability.
−Removed: As the remaining additional shares had been reclassified to equity as of December 31, 2022, there was no change in fair value for the year ended December 31, 2023 or 2024.
−Removed: See Fair Value Measurements in Note 2 – Summary of Significant Accounting Policies for further information.
−Removed: On March 20, 2023, all of the 3.4 million shares of DSG common stock available to be issued under the earnout provisions within the Merger Agreements were issued in accordance with the two earnout provisions within the Merger Agreements.
Hisco Acquisition
2 unchanged sentences
The fair value of the contingent consideration arrangement was classified as a Level 3 instrument and was determined using a probability-based scenario analysis approach.
−Removed: As of June 8, 2023 (the Hisco Transaction date), December 31, 2023 and December 31, 2024, the fair value of the earn-out was $ 0.1 million, $ 0.0 million and $ 0.0 million , respectively, with amounts recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
+Added: As of June 8, 2023 (the Hisco Transaction date), December 31, 2023, December 31, 2024 and December 31, 2025, the fair value of the earn-out was $ 0.1 million, $ 0.0 million, $ 0.0 million and $ 0.0 million, respectively, with amounts recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
As the performance targets were not achieved, no earn-out payment was made.
2 unchanged sentences
(“Frontier”).
−Removed: The consideration for the Frontier acquisition includes a potential earn-out payment of up to $ 3.0 million based upon the achievement of certain milestones and relative thresholds during the earn out measurement period which ends on December 31, 2024, with payments made annually beginning in 2023 and ending in 2025.
+Added: The consideration for the Frontier acquisition included a potential earn-out payment of up to $ 3.0 million based upon the achievement of certain milestones and relative thresholds during the earn out measurement period, which ended on December 31, 2024, with payments made annually beginning in 2023 and ending in 2025.
+Added: During the first quarter of 2025, a $ 2.0 million earn-out payment was made based on the achievement of certain milestones in 2024 and cumulatively during the earn-out period.
No earn-out payment was made in 2024 based on certain milestones not met in 2023.
During the first quarter of 2023, a $ 1.0 million earn-out payment was made based on the achievement of certain milestones in 2022.
−Removed: The fair value of the
−Removed: contingent consideration arrangement was classified as a Level 3 instrument and was determined using a probability-based scenario analysis approach.
−Removed: As of March 31, 2022 (the Frontier acquisition date), December 31, 2022, 2023 and 2024, the fair value of the earn-out was $ 0.9 million, $ 1.7 million, $ 0.0 million and $ 1.0 million, respectively, with amounts recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
−Removed: The Company recorded expense of $ 1.0 million, income of $ 0.7 million and expense of $ 0.8 million for changes in the fair value of the earn-out liability for the years ended December 31, 2024, 2023 and 2022 , respectively, as a component of Change in fair value of earnout liabilities in the Consolidated Statements of Operations and Comprehensive Income (Loss).
+Added: No additional earn-out payments will be made subsequent to the first quarter of 2025.
+Added: The fair value of the contingent consideration arrangement was classified as a Level 3 instrument and was determined using a probability-based scenario analysis approach.
+Added: As of March 31, 2022 (the Frontier acquisition date), December 31, 2022, 2023, 2024 and 2025, the fair value of the earn-out was $ 0.9 million, $ 1.7 million, $ 0.0 million, $ 1.0 million and $ 0.0 million, respectively, with amounts recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
+Added: The Company recorded expense of $ 1.0 million, expense of $ 1.0 million and income of $ 0.7 million for changes in the fair value of the earn-out liability for the years ended December 31, 2025, 2024 and 2023 , respectively, as a component of Change in fair value of earnout liabilities in the Consolidated Statements of Operations and Comprehensive Income (Loss).
Note 9 – Debt
10 unchanged sentences
Total long-term debt $ 664,196 $ 693,903
−Removed: On August 14, 2024, the Company entered into the Third Amendment to Amended and Restated Credit Agreement (the “Third Amendment”), which amended the previous credit agreement dated as of April 1, 2022 (as amended by the First Amendment dated June 8, 2023, the Second Amendment dated June 13, 2024 and the Third Amendment, the “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.
−Removed: The Third Amendment provided for an additional $ 200 million incremental term loan and an increase in the senior secured revolving credit facility from $ 200 million to $ 255 million.
−Removed: As amended, the Amended Credit Agreement provides for (i) a $ 255 million senior secured revolving credit facility, with a $ 25 million letter of credit sub-facility and a $ 10 million swingline loan sub-facility, (ii) a $ 250 million senior secured initial term loan facility, (iii) $ 505 million of incremental term loans, (iv) a $ 50 million senior secured delayed draw term loan facility and (v) the Company to increase the commitments thereunder from time to time by up to $ 300 million in the aggregate, subject to, among other things, the receipt of additional commitments from existing and/or new lenders and pro forma compliance with the certain financial covenants.
−Removed: The additional borrowings under the Third Amendment were used, among other things, to pay the purchase price, fees and other expenses incurred in connection with the acquisition of Source Atlantic.
−Removed: Refer to Note 3 – Business and Asset Acquisitions for further details about the acquisition of Source Atlantic.
+Added: On December 18, 2025, the Company entered into the Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”), which amended and restated the Amended and Restated Credit Agreement, dated as of April 1, 2022 (as it had been amended from time to time prior to the date of the Amended Credit Agreement, the “Original 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.
+Added: As amended, the Amended Credit Agreement provides for (i) a $ 400 million senior secured revolving credit facility, with a $ 25 million letter of credit sub-facility and a $ 10 million swingline loan sub-facility, (ii) a $ 700 million senior secured initial term loan facility and (iii) the Company to increase the commitments thereunder from time to time by up to $ 500 million in the aggregate, subject to, among other things, the receipt of additional commitments from existing and/or new lenders and pro forma compliance with certain financial covenants.
+Added: The Amended Credit Agreement requires that the proceeds of any revolving credit facility loans be used for working capital and general corporate purposes (including, without limitation, permitted acquisitions).
+Added: The Company used the proceeds from the initial term loan to repay the previous $ 709 million outstanding under the Original Credit Agreement.
The Company has unused outstanding letters of credit of $ 2.3 million as of December 31, 2025.
−Removed: Net of these letters of credit, there w as $ 253.0 million of borrowi ng availability under the revolving credit facility as of December 31, 2024.
−Removed: The Second Amendment dated June 13, 2024 replaced a specified benchmark interest rate for certain loans under the Amended Credit Agreement, whereby effective June 28, 2024, the CDOR Rate was replaced with the CORRA Rate (each as defined in the Amended Credit Agreement).
−Removed: The additional margin range did not change.
−Removed: As amended, loans under the Amended Credit Agreement bear interest, at the Company’s option, at a rate equal to (i) the Alternate Base Rate or the Canadian Prime Rate (each as defined in the Amended Credit Agreement), plus, in each case, an additional margin ranging from 0.0 % to 1.75 % per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended Credit Agreement or (ii) the Adjusted Term SOFR Rate (as defined in the Amended Credit Agreement) or the CORRA Rate, plus, in each case, an additional margin ranging from 1.0 % to 2.75 %
−Removed: per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended Credit Agreement.
−Removed: The Amended Credit Agreement requires that the proceeds of any revolving credit facility loans be used for working capital and general corporate purposes (including, without limitation, permitted acquisitions), and requires that the proceeds of any delayed draw term loan facility be used solely to finance the payment of consideration for acquisitions permitted under the Amended Credit Agreement, and for any fees, costs and expenses incurred in connection therewith.
−Removed: The Amended Credit Agreement requires the Company to pay certain closing fees, arrangement fees, administration fees, commitment fees, ticking fees and letter of credit fees.
−Removed: These fees are reported as a component of Interest expense in the Consolidated Statements of Operations and Comprehensive Income (Loss) and vary depending on the total net leverage ratio as defined in the Amended Credit Agreement.
+Added: Net of these letters of credit, there was $ 393.7 million of borrowing availability under the revolving credit facility as of December 31, 2025.
+Added: The loans under the Amended Credit Agreement bear interest, at the Company’s option, at a rate equal to (i) the Alternate Base Rate or the Canadian Prime Rate (each as defined in the Amended Credit Agreement), plus, in each case, an additional margin ranging from 0.00 % to 1.75 % per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended Credit Agreement or (ii) the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as defined in the Amended Credit Agreement), plus an additional margin ranging from 1.00 % to 2.75 % per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended Credit Agreement.
+Added: The Amended Credit Agreement further provides that the additional margin for the period from the Effective Date (as defined in the Amended Credit Agreement) until delivery of the Company’s financial statements and compliance certificate for the first full quarter ending after the Effective Date shall be 1.50 % per annum for Alternate Base Rate or Canadian Prime Rate loans and 2.50 % per annum for all other loans.
+Added: The effective interest rate on the senior secured revolving credit facility was 8.87 % in 2025.
+Added: The average effective interest rate on the term loan facilities prior to the December 18, 2025 refinancing was 6.86 % in 2025.
+Added: The effective interest rate on the senior secured initial term loan facility subsequent to the December 18, 2025 refinancing was 6.56 % in 2025.
+Added: The Amended Credit Agreement requires the Company to pay certain closing fees, arrangement fees, administration fees, commitment fees and letter of credit fees, including a commitment fee on the daily unused amount of the revolving credit facility that will accrue at a rate ranging from 0.15 % to 0.35 % per annum, depending on the total net leverage ratio of the Company.
+Added: These fees are reported as a component of Interest expense in the Consolidated Statements of Operations and
+Added: Comprehensive Income (Loss) and vary depending on the total net leverage ratio as defined in the Amended Credit Agreement.
Fees were nominal in 2025, 2024 and 2023.
−Removed: On August 14, 2024, the Company incurred deferred financing costs of $ 1.8 million associated with the Third Amendment.
−Removed: Deferred financing costs of $ 3.4 million were incurred during 2023 in connection with the First Amendment dated June 8, 2023, and deferred financing costs of $ 4.0 million were incurred during 2022 in connection with the previous credit agreement.
+Added: During the year ended December 31, 2025, the Company capitalized $ 4.6 million of deferred financing costs and expensed $ 3.1 million of legal fees and other third-party costs in accordance with the application of modification accounting within Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) in connection with the Amended Credit Agreement.
Deferred financing costs are amortized over the life of the debt instrument and reported as a component of Interest expense in the Consolidated Statements of Operations and Comprehensive Income (Loss).
Amortization of deferred financing costs was $ 3.2 million, $ 2.9 million, and $ 2.4 million for 2025, 2024 and 2023, respectively.
−Removed: As of December 31, 2024, total deferred financing costs net of accumulated amortization were $ 7.5 million of which $ 5.5 million are included in Long-term debt, less current portion, net (related to the senior secured term loan, senior secured delayed draw term loan and incremental term loans) and $ 2.0 million are included in Other assets (related to the senior secured revolving credit facility) in the Consolidated Balance Sheets.
−Removed: Each of the loans under the Amended Credit Agreement matures on April 1, 2027, at which time all outstanding loans, together with all accrued and unpaid interest, must be repaid and the revolving credit facility commitments will terminate.
+Added: As of December 31, 2025, total deferred financing costs net of accumulated amortization were $ 8.7 million of which $ 4.7 million are included in Long-term debt, less current portion, net (related to the senior secured term loan) and $ 4.0 million are included in Other assets (related to the senior secured revolving credit facility) in the Consolidated Balance Sheets.
+Added: Each of the loans under the Amended Credit Agreement mature on December 18, 2030, at which time all outstanding loans, together with all accrued and unpaid interest, must be repaid and the revolving credit facility commitments will terminate.
Future maturities of long-term debt are $ 35.0 million per year payable in equal quarterly installments during 2026, 2027, 2028 and 2029, with the remaining balance of $ 563.9 million due in 2030 upon maturity.
The Company is also required to prepay the term loans with the net cash proceeds from any disposition of certain assets (subject to reinvestment rights) or from the incurrence of any unpermitted debt.
−Removed: The Company may borrow, repay and reborrow the revolving loans until April 1, 2027, prepay any of the term loans, and terminate any of the commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions and the reimbursement of certain lender costs in the case of prepayments of certain types of loans.
+Added: The Company may borrow, repay and reborrow the revolving loans until December 18, 2030, prepay any of the term loans, and terminate any of the commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions and the reimbursement of certain lender costs in the case of prepayments of certain types of loans.
Subject to certain exceptions as set forth in the Amended Credit Agreement, the obligations of the Company and its U.S.
7 unchanged sentences
The Company was in compliance with all financial covenants as of December 31, 2025 .
−Removed: Previous Amendments and Credit Agreements
−Removed: The First Amendment to Amended and Restated Credit Agreement dated June 8, 2023 (the “First Amendment”) amended and replaced the previous credit agreement dated April 1, 2022 and provided for (i) a $ 200 million senior secured revolving credit facility, with a $ 25 million letter of credit sub-facility and a $ 10 million swingline loan sub-facility, (ii) a $ 250 million senior secured initial term loan facility, (iii) a $ 305 million incremental term loan, (iv) a $ 50 million senior secured delayed draw term loan facility and (v) the Company to increase the commitments thereunder from time to time by up to $ 200 million in the aggregate, subject to, among other things, the receipt of additional commitments from existing and/or new lenders and pro forma compliance with the financial covenants.
−Removed: On June 8, 2023 in connection with the Hisco Transaction, the Company borrowed $ 305 million under the incremental term loan as provided by the First Amendment.
−Removed: The borrowings were used, among other things, to partially fund the Hisco Transaction, to repay certain existing indebtedness of Hisco and to pay fees and expenses incurred in connection with the Hisco Transaction and the First Amendment.
−Removed: Refer to Note 3 – Business and Asset Acquisitions for further details about the Hisco Transaction.
−Removed: During 2022, in conjunction with the Mergers, the Company paid off debt obligations under its previous credit agreements.
−Removed: A $ 3.4 million loss on the extinguishment of debt for unamortized deferred financing costs was recorded in 2022 in connection with the payoff of previous indebtedness.
−Removed: The extinguishment was recorded in Loss on extinguishment of debt in the Consolidated Statements of Operations and Comprehensive Income (Loss).
Note 10 – Stock-Based Compensation
−Removed: The Company recorded stock-based compensation expense of $ 5.2 million, $ 7.9 million and $ 2.4 million for the years ended December 31, 2024, 2023 and 2022, respectively, in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) and recognized a net tax benefit relating to stock-based compensation of $ 1.1 million, $ 0.9 million and $ 2.1 million, respectively .
−Removed: A portion of the Company’s stock-based awards are liability-classified.
−Removed: Accordingly, changes in the market value of DSG common stock may result in stock-based compensation expense or benefit in certain periods.
−Removed: A stock-based compensation liability of $ 2.0 million a s of December 31, 2024 and $ 5.6 million as of December 31, 2023 was included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
−Removed: Impact of Stock Split
−Removed: The equity compensation plans contain anti-dilution provisions whereby in the event of any change in the capitalization of the Company (including in the event of a stock split), the number and type of awards underlying outstanding stock-based compensation awards must be adjusted, as appropriate, in order to prevent dilution or enhancement of rights.
−Removed: The impact of these provisions resulted in a modification of all outstanding stock-based compensation awards upon the Stock Split.
−Removed: As the fair value of the awards immediately after the Stock Split did not change when compared to the fair value of such awards immediately prior to the Stock Split, no incremental compensation costs were recognized as a result of such modifications.
−Removed: In addition, there was no change to the vesting conditions or classification of each of the outstanding stock-based compensation awards.
Equity Compensation Plans
8 unchanged sentences
The SPR Plan is administered by the Compensation Committee of the Board of Directors.
+Added: Stock-based compensation expense, which is included in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss), were as follows:
+Added: Year Ended December 31,
+Added: (in thousands) 2025 2024 2023
+Added: Stock-based compensation expense
+Added: $ 6,672 $ 5,233 $ 7,940
+Added: Related income tax benefit
+Added: ( 992 ) ( 1,108 ) ( 863 )
+Added: Total stock-based compensation expense, net of tax
+Added: $ 5,680 $ 4,125 $ 7,077
+Added: The Company’s SPRs are liability-classified.
+Added: Accordingly, changes in the market value of DSG common stock may result in stock-based compensation expense or benefit in certain periods.
+Added: A stock-based compensation liability of $ 0.3 million as of December 31, 2025 and $ 2.0 million as of December 31, 2024 is included as a component of Accrued expenses and other current liabilities in the Consolidated Balance Sheets reflecting the estimated fair value of future pay-outs.
+Added: Stock Options
+Added: Stock options generally vest through the fifth anniversary from the grant date.
+Added: Each stock option can be exchanged for one share of DSG common stock at the stated exercise price.
+Added: Upon vesting, stock options are recognized as a component of equity.
+Added: Activity related to the Company’s stock options during the year ended December 31, 2025 was as follows:
+Added: Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value
+Added: (in thousands)
+Added: Outstanding on December 31, 2024 2,128,475 $ 40.43
+Added: Granted 422,500 48.82
+Added: Exercised ( 31,810 ) 27.50
+Added: Cancelled ( 204,226 ) 37.65
+Added: Outstanding on December 31, 2025 2,314,939 42.38 8.3 $ —
+Added: Exercisable on December 31, 2025 1,073,061 $ 39.69 8.1 $ —
+Added: Details related to the Company’s stock options were as follows:
+Added: Year Ended December 31,
+Added: (in thousands, except share and per share data)
+Added: 2025 2024 2023
+Added: Weighted average exercise price per share granted
+Added: $ 48.82 $ 45.79 $ 37.03
+Added: Intrinsic value - exercised
+Added: $ 94 $ 1,544 $ —
+Added: Cash received from options exercised
+Added: $ 877 $ 1,080 $ —
+Added: (in thousands, except share and per share data) December 31, 2025
+Added: Unrecognized compensation cost (1)
+Added: Unvested number of stock options
+Added: (1) Expected to be recognized over a weighted-average period of 2.3 years
+Added: The grant date fair value of the stock options issued was estimated using a Black-Scholes valuation model.
+Added: The weighted average fair value assumptions used in the model were as follows:
+Added: 2025 2024 2023
+Added: Expected volatility 45.5 % to 46.8 %
+Added: 45.2 % to 45.6 %
+Added: 45.2 % to 45.6 %
+Added: Risk-free rate of return 3.9 % to 4.5 %
+Added: 3.6 % to 4.2 %
+Added: 3.6 % to 4.5 %
+Added: Expected term (in years) 5.8 years
+Added: Expected annual dividend $ 0 $ 0 $ 0
+Added: The expected volatility was based on the historic volatility of the Company’s stock price commensurate with the expected life of the stock options.
+Added: The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the stock options.
+Added: The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method allowed by the SEC, which approximates our historical experience.
+Added: The estimated annual dividend was based on the recent dividend payout trend.
+Added: Restricted Stock Units
+Added: Restricted stock units (“RSUs”) generally vest over a one to five year period beginning on the first anniversary of the date of the grant.
+Added: Upon vesting, the vested RSUs are exchanged for an equal number of shares of DSG common stock.
+Added: The participants have no voting or dividend rights with the RSUs.
+Added: The RSUs are valued at the closing price of DSG common stock on the date of grant and the expense is recorded ratably over the vesting period.
+Added: Activity related to the Company’s RSUs during the year ended December 31, 2025 was as follows:
+Added: Restricted Stock Units
+Added: Weighted Average Grant Date Fair Value
+Added: Outstanding on December 31, 2024 162,149 $ 31.68
+Added: Granted 319,570 28.94
+Added: Cancelled — —
+Added: Exchanged for common shares ( 75,408 ) 32.07
+Added: Outstanding on December 31, 2025 406,311 $ 29.40
+Added: Details related to the Company’s RSUs were as follows:
+Added: Year Ended December 31,
+Added: (in thousands, except share and per share data) 2025 2024 2023
+Added: Weighted average grant date fair value per share
+Added: $ 28.94 $ 32.16 $ 21.86
+Added: Fair value of RSUs exchanged for shares of DSG common stock
+Added: $ 2,153 $ 1,449 $ 1,459
+Added: (in thousands)
+Added: December 31, 2025
+Added: Unrecognized compensation cost (1)
+Added: (1) Expected to be recognized over a weighted-average period of 1.9 years
Stock Performance Rights
2 unchanged sentences
Compensation expense is included in Selling, general and administrative expense in the Consolidated Statements of Operations and Comprehensive Income (Loss).
−Removed: The outstanding SPRs were granted with approximately a seven year life and vest over one to three years beginning on the first anniversary of the date of the grant.
+Added: The outstanding SPRs were granted with approximately a seven-year life and generally vest over one to three years beginning on the first anniversary of the date of the grant.
The SPRs are liability classified and included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
16 unchanged sentences
The estimated annual dividend was based on the recent dividend payout trend.
−Removed: A liability of $ 2.0 million as of December 31, 2024 and $ 4.9 million as of December 31, 2023 is included as a component of Accrued expenses and other liabilities in the Consolidated Balance Sheets reflecting the estimated fair value of future pay-outs.
Activity related to the Company’s SPRs during the year ended December 31, 2025 was as follows:
−Removed: Number of SPRs Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years)
−Removed: Aggregate Intrinsic Value
+Added: Number of SPRs Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value
(in thousands)
6 unchanged sentences
All SPRs for plan participants were fully vested prior to 2022, as such, there is no unrecognized compensation associated with any SPRs.
−Removed: Restricted Stock Awards
−Removed: Restricted stock awards (“RSAs”) generally vest over a one to five year period beginning on the first anniversary of the date of the grant.
−Removed: Upon vesting, the vested RSAs are exchanged for an equal number of shares of DSG common stock.
−Removed: The participants have no voting or dividend rights with the RSAs.
−Removed: The RSAs are valued at the closing price of DSG common stock on the date of grant and the expense is recorded ratably over the vesting period.
−Removed: Activity related to the Company’s RSAs during the year ended December 31, 2024 was as follows:
−Removed: Restricted Stock Awards Weighted Average Grant Date Fair Value
−Removed: Outstanding on December 31, 2023 98,216 $ 23.57
−Removed: Granted 141,325 32.16
−Removed: Cancelled ( 1,560 ) 25.28
−Removed: Exchanged for common shares ( 75,832 ) 24.09
−Removed: Outstanding on December 31, 2024 162,149 $ 31.68
−Removed: As of December 31, 2024, there was $ 3.7 million of total unrecognized compensation cost related to RSAs that will be recognized over a weighted average period of 2.5 years.
−Removed: The weighted average grant date fair value per share of awards granted during the year was $ 32.16 in 2024, $ 21.86 in 2023 and $ 18.75 in 2022.
−Removed: The fair value of RSAs exchanged for shares of DSG common stock was $ 1.4 million during 2024, $ 1.5 million during 2023, and $ 0.5 million during 2022 .
Market Stock Units
1 unchanged sentence
The value of the MSUs was determined using a geometric brownian motion model that, based on certain variables, generates a large number of random trials simulating the price of the DSG common stock over the measurement period.
−Removed: As of December 31, 2024 all MSUs are fully vested.
+Added: All MSUs were fully vested prior to 2022, and as such there is no unrecognized compensation associated with any MSUs.
The fair value of MSUs exchanged for shares of DSG common stock was $ 0.4 million during 2025, $ 0.7 million during 2024 and $ 0.6 million during 2023 .
6 unchanged sentences
Outstanding on December 31, 2025 93,396 130,287 $ 8.82
−Removed: Stock Options
−Removed: Stock options vest through the fifth anniversary from the grant date.
−Removed: Each stock option can be exchanged for one share of DSG common stock at the stated exercise price.
−Removed: Upon vesting, stock options are recognized as a component of equity.
−Removed: Activity related to the Company’s stock options during the year ended December 31, 2024 was as follows:
−Removed: Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years)
−Removed: Aggregate Intrinsic Value
−Removed: (in thousands)
−Removed: Outstanding on December 31, 2023 1,880,067 $ 37.53
−Removed: Granted 442,242 45.79
−Removed: Exercised ( 80,000 ) 13.50
−Removed: Cancelled ( 113,834 ) 32.41
−Removed: Outstanding on December 31, 2024 2,128,475 40.43 8.6 $ 3,252
−Removed: Exercisable on December 31, 2024 707,407 $ 38.62 7.9 $ 2,267
−Removed: The weighted average exercise price per stock option granted was $ 45.79 for 2024, $ 37.03 for 2023 and $ 42.88 for 2022 .
−Removed: Unrecognized compensation cost related to stock options as of December 31, 2024 was $ 12.3 million, which is expected to be recognized over a weighted-average p eriod of 2.3 years.
−Removed: T here were 1,421,068 unvested and 707,407 fully vested stock options outstanding on December 31, 2024 with a weighted average exercise price of $ 38.62 .
−Removed: The intrinsic value of stock options exercised was $ 1.5 million for 2024, $ 0.0 million for 2023 and $ 0.6 million for 2022 .
−Removed: Cash received from options exercised was $ 1.1 million and $ 0.2 million in 2024 and 2022, respectively.
−Removed: The tax benefit realized from stock options exercised was insignificant in 2024 and 2022.
−Removed: No options were exercised in 2023.
−Removed: The grant date fair value of the stock options issued was estimated using a Black-Scholes valuation model.
−Removed: The weighted average fair value assumptions used in the model were as follows:
−Removed: 2024 2023 2022
−Removed: Expected volatility 45.2 % to 45.6 %
−Removed: 45.2 % to 45.6 %
−Removed: 43.7 % to 44.6 %
−Removed: Risk-free rate of return 3.6 % to 4.2 %
−Removed: 3.6 % to 4.5 %
−Removed: 2.7 % to 3.1 %
−Removed: Expected term (in years) 6.5 years
−Removed: Expected annual dividend $ 0 $ 0 $ 0
−Removed: The expected volatility was based on the historic volatility of the Company’s stock price commensurate with the expected life of the stock options.
−Removed: The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the stock options.
−Removed: The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method allowed by the SEC, which approximates our historical experience.
−Removed: The estimated annual dividend was based on the recent dividend payout trend.
−Removed: Performance Awards
−Removed: Performance Awards (“PAs”) are exchangeable for between 0 % to 150 % of DSG common shares, or the equivalent amount in cash, based upon the achievement of certain financial performance metrics at the end of the vesting period.
−Removed: The PAs are liability classified and included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
−Removed: The intrinsic value of PAs exercised was $ 0.9 million during 2024, $ 0.2 million during 2023 and $ 0.1 million during 2022 .
−Removed: There was no unrecognized compensation cost related to PAs as of December 31, 2024.
−Removed: Activity related to the Company’s PAs during the year ended December 31, 2024 was as follows:
−Removed: Number of Performance Awards Maximum Shares Potentially Issuable Weighted Average Grant Date Fair Value
−Removed: Outstanding on December 31, 2023 26,080 39,120 $ 25.70
−Removed: Granted — — —
−Removed: Exercised ( 26,080 ) ( 39,120 ) 25.70
−Removed: Cancelled — — —
−Removed: Outstanding on December 31, 2024 — — $ —
+Added: Impact of Stock Split
+Added: The equity compensation plans contain anti-dilution provisions whereby in the event of any change in the capitalization of the Company (including in the event of a stock split), the number and type of awards underlying outstanding stock-based compensation awards must be adjusted, as appropriate, in order to prevent dilution or enhancement of rights.
+Added: The impact of these provisions resulted in a modification of all outstanding stock-based compensation awards upon the Stock Split.
+Added: As the fair value of the awards immediately after the Stock Split did not change when compared to the fair value of such awards immediately prior to the Stock Split, no incremental compensation costs were recognized as a result of such modifications.
+Added: In addition, there was no change to the vesting conditions or classification of each of the outstanding stock-based compensation awards.
Note 11 – Stockholders’ Equity
8 unchanged sentences
Net proceeds were approximately $ 98.5 million after transaction costs of $ 1.5 million related to the issuance of DSG common stock for the Rights Offering, which were recorded against Capital in excess of par value in the Consolidated Balance Sheets.
−Removed: DSG used the proceeds from the Rights Offering, in combination with borrowings under the Amended Credit Agreement, to fund the Hisco Transaction.
+Added: DSG used the proceeds from the Rights Offering, in combination with borrowings under the Original Credit Agreement, to fund the Hisco Transaction.
Stock Repurchase Program
−Removed: Under an existing stock repurchase program authorized by the Board of Directors, the Company may repurchase its common stock from time to time in open market transactions, privately negotiated transactions or by other methods.
−Removed: During 2024, 2023 and 2022, the Company repurchased 85,644 , 138,725 and 108,178 shares of DSG common stock at an average cost of $ 30.13 , $ 26.09 and $ 17.93 per share for a total cost of $ 2.6 million, $ 3.6 million and $ 1.9 million, respectively.
−Removed: T he remaining availability for stock repurchases under the program was $ 26.4 million at December 31, 2024.
+Added: Under an existing stock repurchase program authorized by the Board of Directors, the Company may repurchase DSG common stock from time to time in open market transactions, privately negotiated transactions or by other methods.
+Added: During 2025, 2024 and 2023, the Company repurchased 776,924 , 85,644 and 138,725 shares of DSG common stock under the repurchase program at an average cost of $ 30.26 , $ 30.13 and $ 26.09 per share for a total cost of $ 23.5 million, $ 2.6 million and $ 3.6 million, respectively.
+Added: In November 2025, the Board authorized a $ 30.0 million increase to the Company’s existing stock repurchase program for shares of DSG common stock.
+Added: As a result of the additional authorization, the aggregate repurchase authorization under the Company’s repurchase program for shares of DSG common stock increased from $ 37.5 million to $ 67.5 million.
+Added: T he remaining availability for stock repurchases under the stock repurchase program was $ 32.9 million at December 31, 2025.
Note 12 – Earnings Per Share
−Removed: As a result of the Stock Split and Mergers discussed in Note 1 – Nature of Operations and Basis of Presentation , all historical per share data, number of shares and numbers of equity awards were retroactively adjusted.
+Added: As a result of the Stock Split discussed in Note 1 – Nature of Operations and Basis of Presentation , all historical per share data, number of shares and numbers of equity awards were retroactively adjusted.
The following table provides the computation of basic and diluted earnings per share:
10 unchanged sentences
Diluted income (loss) per share of common stock $ 0.18 $ ( 0.16 ) $ ( 0.20 )
−Removed: Anti-dilutive securities excluded from the calculation of diluted income per share 810,397 424,934 496,000
+Added: The securities that were excluded from the calculation of diluted earnings per share because their inclusion would be anti-dilutive were as follows:
+Added: 2025 2024 2023
+Added: Stock options 1,489,204 1,681,845 1,721,266
+Added: Other stock-based awards 1,432 241,015 383,411
Note 13 – Income Taxes
5 unchanged sentences
Total $ 19,411 $ ( 536 ) $ ( 2,007 )
+Added: Income taxes paid, net of refunds received consisted of the following:
+Added: Year Ended December 31,
+Added: (in thousands) 2025
+Added: federal $ 4,897
+Added: state and local $ 2,874
+Added: Canada $ 4,966
+Added: Hungary 1,191
+Added: Other foreign jurisdictions 1,579
+Added: Total foreign $ 10,416
+Added: Total income taxes paid $ 18,187
Provision (benefit) for income taxes from operations consisted of the following:
16 unchanged sentences
Total $ 11,066 $ 6,796 $ 6,960
−Removed: The reconciliation between the effective income tax rates and the statutory federal rates for operations are as follows:
+Added: The Company adopted ASU 2023-09, Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures on a prospective basis beginning with the year ended December 31, 2025.
+Added: The reconciliation between the effective income tax rate and the statutory federal rate for operations for the year ended December 31, 2025 (subsequent to the January 1, 2025 prospective adoption of ASU 2023-09) is as follows:
Year Ended December 31,
−Removed: 2024 2023 2022
+Added: (in thousands) 2025
Statutory federal rate $ 4,076 21.00 %
+Added: State income taxes, net of federal effect (1)
+Added: Change in valuation allowance 2,330 12.00
+Added: Nontaxable or nondeductible items
+Added: Meals and entertainment 249 1.28
+Added: Other nontaxable or nondeductible items 239 1.23
+Added: Branch income 980 5.05
+Added: Other cross-border tax laws 17 0.09
+Added: Worldwide changes in UTB 52 0.27
+Added: Other 244 1.25
+Added: Foreign Tax Effects
+Added: Tax rate differential 430 2.22
+Added: Adjustment to income taxes payable 290 1.50
+Added: Other Canada 227 1.18
+Added: Tax rate differential 675 3.48
+Added: Adjustment to income taxes payable ( 511 ) ( 2.63 )
+Added: Other Mexico 112 0.58
+Added: Adjustment to income taxes payable ( 386 ) ( 1.99 )
+Added: Other Turkey ( 11 ) ( 0.06 )
+Added: Tax rate differential ( 560 ) ( 2.89 )
+Added: Adjustment to income taxes payable 781 4.02
+Added: Other Hungary ( 44 ) ( 0.23 )
+Added: Provision to return adjustments 476 2.45
+Added: Adjustment to income taxes payable 692 3.57
+Added: Other Denmark 56 0.29
+Added: Unrealized gains 212 1.09
+Added: Adjustment to income taxes payable ( 338 ) ( 1.74 )
+Added: Other Brazil ( 14 ) ( 0.07 )
+Added: Provision to return adjustments 461 2.38
+Added: Adjustment to income taxes payable ( 717 ) ( 3.69 )
+Added: Other India ( 20 ) ( 0.10 )
+Added: Other foreign jurisdictions 187 0.94
+Added: Total $ 11,066 57.01 %
+Added: (1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Illinois, New York, Pennsylvania, Florida, and Colorado.
+Added: The reconciliation between the effective income tax rates and the statutory federal rates for operations for the years ended December 31, 2024 and 2023 (prior to the January 1, 2025 prospective adoption of ASU 2023-09) are as follows:
+Added: Year Ended December 31,
+Added: Statutory federal rate 21.0 % 21.0 %
Increase (decrease) resulting from:
Change in valuation allowance - current period activity ( 1,196.4 ) ( 380.7 )
−Removed: Change in valuation allowance - reversal — — —
Foreign rate differential ( 63.2 ) 6.2
9 unchanged sentences
Branch income ( 275.2 ) ( 81.6 )
−Removed: Earn out revaluation — — 0.8
Change in deferred balances 263.4 79.4
1 unchanged sentence
Provision for income taxes ( 1,267.9 ) % ( 346.8 ) %
−Removed: The effective tax rate for the year ended December 31, 2024 was ( 1,267.9 )% compared to a ( 346.8 )% effective tax rate for the year ended December 31, 2023.
−Removed: The change in the year-over-year effective tax rate was primarily due to state taxes, foreign operations, transaction costs and changes in the valuation allowance on the Company’s 163(j) interest expense limitation deferred tax asset.
−Removed: The effective tax rate for the year ended December 31, 2023 was ( 346.8 )% compared to a 42.8 % effective tax rate for the year ended December 31, 2022.
−Removed: The change in the year-over-year effective tax rate was primarily due to an increase in the partial valuation allowance against the Company's excess interest expense carryforward balance, state taxes, foreign income and a pre-tax loss in 2023 .
−Removed: Relative to the U.S.
−Removed: statutory rate, the effective tax rate for the year ended December 31, 2023 was impacted by the items listed above.
Deferred income tax assets and liabilities contain the following temporary differences:
2 unchanged sentences
Federal & state NOL carryforward $ 13,547 $ 9,943
−Removed: Inventory reserve 10,269 8,815
−Removed: Transaction costs 1,523 673
+Added: Deferred revenue 181 135
Stock based compensation 3,829 3,113
+Added: Inventory adjustments 10,817 10,269
Accrued benefits & bonuses 7,575 7,821
Bad debt reserve 1,447 546
+Added: Capitalized transaction costs 1,886 1,523
Section 163(j) limitation carryforward 21,313 20,422
Right of use liabilities 27,499 21,476
−Removed: Deferred state income tax 452 —
−Removed: Deferred revenue 135 77
Investment in foreign subsidiaries 285 —
Other 5,281 5,952
−Removed: Total deferred tax assets 81,652 75,132
+Added: Deferred state income tax 176 452
+Added: Total gross deferred tax assets 93,836 81,652
+Added: Valuation allowance ( 19,279 ) ( 14,868 )
+Added: Total net deferred tax assets 74,557 66,784
Deferred tax liabilities:
−Removed: Intangible assets and goodwill 45,360 44,057
−Removed: Right of use assets 20,449 18,264
+Added: Other intangibles 34,573 45,360
Fixed assets 30,407 21,685
−Removed: Deferred state income tax — 17
+Added: Right of use assets 26,201 20,449
Other 2,327 1,419
−Removed: Total deferred tax liabilities 88,913 84,906
−Removed: Net deferred tax liabilities before valuation allowance ( 7,261 ) ( 9,774 )
−Removed: Valuation allowance ( 14,868 ) ( 8,457 )
+Added: Total gross deferred tax liabilities 93,508 88,913
Net deferred tax liabilities $ ( 18,951 ) $ ( 22,129 )
14 unchanged sentences
However, because several of the CFCs operate in countries with a high tax rate, notably Canada, Denmark and Mexico, it was determined that a Section 954 High Tax Exception to GILTI inclusions is appropriate.
+Added: As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the “change in valuation allowance” line of the rate reconciliation.
+Added: The following table presents a reconciliation of the total change in the valuation allowance:
+Added: Year Ended December 31,
+Added: (in thousands) 2025
+Added: Beginning balance $ ( 14,868 )
+Added: Changes to income tax expense ( 4,411 )
+Added: Changes to OCI —
+Added: Changes to goodwill —
+Added: Ending balance $ ( 19,279 )
+Added: Undistributed earnings of our foreign subsidiaries are considered to be permanently reinvested and accordingly, no deferred U.S.
+Added: income taxes have been provided thereon.
+Added: Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to U.S.
+Added: At the present time it is not practicable to estimate the amount of U.S.
+Added: income taxes that might be payable if these earnings were repatriated.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
+Added: Year Ended December 31,
(in thousands) 2025 2024 2023
Balance at beginning of year $ 2,362 $ 2,734 $ 3,027
−Removed: Additions for tax positions of current year 595 — 191
−Removed: Additions for tax positions of prior years — 503 3,741
−Removed: Reductions for tax positions of prior year ( 152 ) — ( 238 )
−Removed: Lapse of statute of limitations ( 815 ) ( 796 ) ( 667 )
+Added: Gross increase - tax positions in prior periods — — 503
+Added: Gross decrease - tax positions in prior periods — ( 152 ) —
+Added: Gross increase - tax position in current period 826 595 —
+Added: Lapses in statutes of limitations ( 644 ) ( 815 ) ( 796 )
Balance at end of year $ 2,544 $ 2,362 $ 2,734
4 unchanged sentences
The total amount accrued for interest and penalties in the liability for uncertain tax positions was $ 0.5 million, $ 1.1 million and $ 0.8 million as of December 31, 2025, 2024 and 2023, respectively.
−Removed: It is reasonably possible that the amount of unrecognized tax benefits will change in the next twelve months;
−Removed: however, the Company does not expect the change to have a material impact on the Consolidated Statements of Operations and Comprehensive Income (Loss) or the Consolidated Balance Sheets.
Interest and penalties are recognized over uncertain tax positions that arose from income tax matters in Canada.
−Removed: The Company has substantially concluded all Canadian income tax matters through the year ended December 31, 2016.
+Added: The Company has substantially concluded all Canadian income tax matters through the year ended 2017.
Years 2018 through present are open and subject to examination.
54 unchanged sentences
Interest expense $ ( 55,352 ) $ ( 55,145 ) $ ( 42,774 )
−Removed: Loss on extinguishment of debt — — ( 3,395 )
Change in fair value of earnout liabilities ( 1,000 ) ( 988 ) 758
1 unchanged sentence
Income (loss) before income taxes $ 19,411 $ ( 536 ) $ ( 2,007 )
−Removed: (1) Includes the operating results of Lawson, Canada Branch Division and All Other only subsequent to the Merger Date of April 1, 2022.
Segment revenue includes revenue from sales to external customers and intersegment revenue from sales transactions between segments.
15 unchanged sentences
Revenue $ 468,711 $ 641,768 $ 405,733 $ 55,890 $ ( 1,700 ) $ 1,570,402
−Removed: (1) Includes the operating results of Lawson, Canada Branch Division and All Other only subsequent to the Merger Date of April 1, 2022.
Total assets by segment and long-lived assets by geographic area were as follows:
33 unchanged sentences
Total $ 80,879 $ 74,376 $ 63,588
−Removed: (1) Includes the activities of Lawson, Canada Branch Division and All Other only subsequent to the Merger Date of April 1, 2022.
Note 15 – Commitments and Contingencies
−Removed: Cyber Incident Litigation
−Removed: On February 10, 2022, DSG disclosed that its computer network was the subject of a cyber incident potentially involving unauthorized access to certain confidential information (the “Cyber Incident”).
−Removed: On April 4, 2023, a putative class action lawsuit (the “Cyber Incident Suit”) was filed against DSG entitled Lardone Davis, on behalf of himself and all others similarly situated, v.
−Removed: Lawson Products, Inc., Case No.
−Removed: 1:23-cv-02118, in the United States District Court for the Northern District of Illinois, Eastern Division.
−Removed: The plaintiff in this case, who purports to represent the class of individuals harmed by alleged actions and/or omissions by DSG in connection with the Cyber Incident, asserts a variety of common law and statutory claims seeking monetary damages, injunctive relief and other related relief related to the potential unauthorized access by third parties to personal identifiable information and protected health information.
−Removed: DSG disagrees with and intends to vigorously defend against the Cyber Incident Suit.
−Removed: The Cyber Incident Suit could result in additional costs and losses to DSG, although, at this time, DSG is unable to reasonably estimate the amount or range of reasonably possible losses, if any, that might result from adverse judgments, settlements, fines, penalties or other resolution of these proceedings based on the early stage of this proceeding, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and the lack of resolution of significant factual and legal issues.
−Removed: Accordingly, no amounts have been recorded in the consolidated financial statements for the Cyber Incident Suit.
−Removed: No assurance can be given that additional lawsuits will not be filed against DSG and/or its directors and officers and/or other persons or entities in connection with the Cyber Incident.
−Removed: Environmental Matter
−Removed: In 2012, it was determined that a Company owned site in Decatur, Alabama, contained hazardous substances in the soil and groundwater as a result of historical operations prior to the Company’s ownership.
−Removed: The Company retained an environmental consulting firm to further investigate the contamination, prepare a remediation plan, and enroll the site in the Alabama Department of Environmental Management (“ADEM”) voluntary cleanup program.
−Removed: A remediation plan was approved by ADEM in 2018.
−Removed: The plan consists of chemical injections throughout the affected area, as well as subsequent monitoring of the area.
−Removed: The injection process was completed in the first quarter of 2019 and the environmental consulting firm is monitoring the affected area.
−Removed: At December 31, 2024 the Company had approximately $ 0.1 million accrued for potential monitoring costs included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
−Removed: The costs for future monitoring are not significant and have been fully accrued.
−Removed: The Company does not expect to capitalize any amounts related to the remediation plan.
+Added: From time to time, the Company is a party to various legal proceedings that have arisen in the ordinary course of business.
+Added: The Company records accruals for loss contingencies when losses are probable and reasonably estimable.
+Added: The Company is not currently aware of any litigation matters or loss contingencies that would reasonably be expected to have a material adverse effect on our business, financial position, results of operations or cash flows.
Defined Contribution Plan
2 unchanged sentences
Note 16 – Related Party Transactions
−Removed: Management Services Agreements
−Removed: Prior to the Mergers, a subsidiary of TestEquity was party to a management agreement with Luther King Capital Management Corporation (“LKCM”) for certain advisory and consulting services (the “TestEquity Management Agreement”), and a subsidiary of Gexpro Services was party to a management agreement with LKCM for certain advisory and consulting services (the “Gexpro Services Management Agreement”).
−Removed: In connection with the closing of the Mergers on April 1, 2022, (i) all of the TestEquity subsidiary’s rights, liabilities and obligations under the TestEquity Management Agreement were novated to, transferred to and assumed by the TestEquity Equityholder, and LKCM released the TestEquity subsidiary from all obligations and claims under the TestEquity Management Agreement, and (ii) all of the Gexpro Services subsidiary’s rights, liabilities and obligations under the Gexpro Services Management Agreement were novated to, transferred to and assumed by the Gexpro Services Stockholder, and LKCM released the Gexpro Services subsidiary from all obligations and claims under the Gexpro Services Management Agreement (collectively, the “Novations”).
−Removed: During the first three months of 2022, expense of $ 0.5 million was recorded within Selling, general and administrative expenses within the Consolidated Statements of Operations and Comprehensive Income (Loss), reflecting expenses accrued under these management agreements from January 1, 2022 through the April 1, 2022 Merger Date.
−Removed: As of April 1, 2022, the prior obligation of $ 5.3 million was effectively settled and considered to be a deemed equity contribution by LKCM recorded to additional paid in capital.
−Removed: As a result of the Novations, no additional expense under these management agreements has been incurred subsequent to the Mergers.
Consulting Services
6 unchanged sentences
LKCM, entities affiliated with LKCM and J.
−Removed: Bryan King (President and Chief Executive Officer of DSG and Chairman of the DSG Board of Directors), including private investment partnerships for which LKCM serves as investment manager, beneficially owned in the aggregate approximately 36.4 million shares of DSG common stock as of December 31, 2024, representing approximately 77.6 % of the outstanding shares of DSG common stock as of December 31, 2024.
−Removed: TestEquity and Gexpro Services Mergers
−Removed: Immediately prior to the Mergers, entities affiliated with LKCM and J.
−Removed: Bryan King, including private investment partnerships for which LKCM serves as investment manager, owned a majority of the ownership interests in the TestEquity Equityholder (which in turn owned all of the outstanding equity interests of TestEquity as of immediately prior to the completion of the TestEquity Merger).
−Removed: As of the Merger Date, Mr.
−Removed: King was a director of the TestEquity Equityholder.
−Removed: addition, as of the Merger Date, Mark F.
−Removed: Moon (a member of the DSG Board of Directors) was a director of, and held a direct or indirect equity interest in, the TestEquity Equityholder.
−Removed: Immediately prior to the Mergers, entities affiliated with LKCM and Mr.
−Removed: King, including private investment partnerships for which LKCM serves as investment manager, owned a majority of the ownership interests in the Gexpro Services Stockholder (which in turn owned all of the then outstanding stock of Gexpro Services).
−Removed: Immediately prior to the Mergers, entities affiliated with LKCM and Mr.
−Removed: King beneficially owned approximately 48 % of the then-outstanding shares of DSG common stock.
−Removed: As a result of the issuance of 20.6 million shares at the closing of the Mergers and the issuance of the additional 3.4 million shares in accordance with the earnout provisions of the TestEquity Merger Agreement and the Gexpro Services Merger Agreement on March 20, 2023, entities affiliated with LKCM and Mr.
−Removed: King beneficially owned in the aggregate approximately 32.6 million shares of DSG common stock representing approximately 77.4 % of the outstanding shares of DSG common stock as of March 31, 2023.
+Added: Bryan King (President and Chief Executive Officer of DSG and Chairman of the DSG Board of Directors), including private investment partnerships for which LKCM serves as investment manager,
+Added: beneficially owned in the aggregate approximately 36.4 million shares of DSG common stock as of December 31, 2025, representing approximately 78.7 % of the outstanding shares of DSG common stock as of December 31, 2025.
Rights Offering
3 unchanged sentences
King beneficially owned in the aggregate approximately 36.4 million shares of DSG common stock as of June 1, 2023, representing approximately 78.7 % of the outstanding shares of DSG common stock as of December 31, 2025 .
−Removed: Board of Directors
−Removed: Bradley Wallace, who became a director of the Company upon his election at the Company’s 2023 annual stockholders meeting on May 19, 2023, is a Founding Partner of LKCM Headwater Investments, the private capital investment group of LKCM.
−Removed: Lawson Products, Inc.
+Added: Distribution Solutions Group , Inc.
Schedule II - Valuation and Qualifying Accounts
−Removed: The roll forward of valuation accounts were as follows:
−Removed: (Dollars in thousands)
−Removed: Description Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period
+Added: The roll forward of valuation accounts were as follows (in thousands):
+Added: Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period
Valuation allowance for deferred tax assets:
−Removed: Year ended December 31, 2024 $ 8,457 $ 6,411 $ — $ 14,868
−Removed: Year ended December 31, 2023 $ 815 $ 7,642 $ — $ 8,457
−Removed: Year ended December 31, 2022 $ 638 $ 177 $ — $ 815
+Added: Period ended December 31, 2025 $ 14,868 $ 4,411 $ — $ 19,279
+Added: Period ended December 31, 2024 $ 8,457 $ 6,411 $ — $ 14,868
+Added: Period ended December 31, 2023 $ 815 $ 7,642 $ — $ 8,457
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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.