Distribution Solutions Group, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The following information is presented in this item: Page # Report of Independent Registered Public Accounting Firm ( Grant Thornton, LLP ; Dallas, Texas ; PCAOB ID# 248 ) 41 Consolidated Balance Sheets as of December 31, 2025 and 2024 42 Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2025 , 2024 and 2023 43 Consolidated Statements of Changes in Stockholders’ Equity for the Years ended December 31, 2025 , 2024 and 2023 44 Consolidated Statements of Cash Flows for the Years ended December 31, 2025 , 2024 and 2023 45 Notes to Consolidated Financial Statements 47 40 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Distribution Solutions Group, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Distribution Solutions Group, Inc. (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”). 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. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters 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: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2023. Dallas, Texas March 5, 2026 41 Distribution Solutions Group, Inc. Consolidated Balance Sheets (Dollars in thousands, except share data) December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 61,753 $ 66,479 Restricted cash 13,573 15,247 Accounts receivable, less allowances of $ 6,472 and $ 2,416 , respectively 271,331 250,717 Inventories 353,374 348,226 Prepaid expenses and other current assets 46,893 31,505 Total current assets 746,924 712,174 Property, plant and equipment, net 126,605 125,524 Rental equipment, net 38,956 39,376 Goodwill 467,905 462,789 Deferred tax asset, net 1,196 136 Customer relationships intangibles, net 143,503 171,184 Trade names and other intangibles, net 82,552 98,579 Cash value of life insurance 21,567 19,916 Right of use operating lease assets 111,117 91,962 Other assets 8,296 5,615 Total assets $ 1,748,621 $ 1,727,255 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 151,234 $ 125,575 Current portion of long-term debt 35,470 40,476 Current portion of lease liabilities 20,624 18,951 Accrued expenses and other current liabilities 84,137 81,259 Total current liabilities 291,465 266,261 Long-term debt, less current portion, net 664,196 693,903 Lease liabilities 98,821 77,758 Deferred tax liability, net 20,147 22,265 Other liabilities 24,645 26,525 Total liabilities 1,099,274 1,086,712 Commitments and contingencies (Note 15) Stockholders’ equity: Preferred stock, $ 1 par value: Authorized - 500,000 shares, issued and outstanding - None — — Common stock, $ 1 par value: Authorized - 70,000,000 shares Issued - 47,860,312 and 47,738,290 shares, respectively Outstanding - 46,180,700 and 46,856,757 shares, respectively 46,180 46,856 Capital in excess of par value 686,183 677,473 Retained deficit ( 33,694 ) ( 42,039 ) Treasury stock - 1,679,612 and 881,533 shares, respectively ( 43,998 ) ( 19,631 ) Accumulated other comprehensive income (loss) ( 5,324 ) ( 22,116 ) Total stockholders’ equity 649,347 640,543 Total liabilities and stockholders’ equity $ 1,748,621 $ 1,727,255 See notes to Consolidated Financial Statements 42 Table of Contents Distribution Solutions Group, Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) (Dollars in thousands, except per share data) Year Ended December 31, 2025 2024 2023 Revenue $ 1,980,023 $ 1,804,104 $ 1,570,402 Cost of goods sold 1,317,985 1,190,329 1,018,527 Gross profit 662,038 613,775 551,875 Selling, general and administrative expenses 583,775 557,820 508,884 Operating income (loss) 78,263 55,955 42,991 Interest expense ( 55,352 ) ( 55,145 ) ( 42,774 ) Change in fair value of earnout liabilities ( 1,000 ) ( 988 ) 758 Other income (expense), net ( 2,500 ) ( 358 ) ( 2,982 ) Income (loss) before income taxes 19,411 ( 536 ) ( 2,007 ) Income tax expense (benefit) 11,066 6,796 6,960 Net income (loss) $ 8,345 $ ( 7,332 ) $ ( 8,967 ) Basic income (loss) per share of common stock (1) $ 0.18 $ ( 0.16 ) $ ( 0.20 ) Diluted income (loss) per share of common stock (1) $ 0.18 $ ( 0.16 ) $ ( 0.20 ) Comprehensive income (loss) Net income (loss) $ 8,345 $ ( 7,332 ) $ ( 8,967 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 16,792 ( 16,946 ) 4,906 Other — — ( 120 ) Comprehensive income (loss) $ 25,137 $ ( 24,278 ) $ ( 4,181 ) (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. See Note 1 – Nature of Operations and Basis of Presentation for details. See notes to Consolidated Financial Statements 43 Table of Contents Distribution Solutions Group, Inc. Consolidated Statements of Changes in Stockholders’ Equity (Dollars in thousands, except share data) Common Stock (1) Capital in Excess of Par Value (1) Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Outstanding Shares $ 1 Par Value Retained Deficit Treasury Stock Balance at January 1, 2023 38,833,568 $ 38,834 $ 572,379 $ ( 25,736 ) $ ( 12,526 ) $ ( 9,956 ) $ 562,995 Net income (loss) — — — ( 8,967 ) — — ( 8,967 ) Foreign currency translation adjustment — — — — — 4,906 4,906 Stock-based compensation — — 3,732 — — — 3,732 Stock-based compensation liability paid in shares — — 227 — — — 227 Shares issued 85,842 86 ( 86 ) — — — — Shares issued - earnout 3,400,000 3,400 ( 3,400 ) — — — — Issuance of common stock in rights offering 4,444,444 4,444 94,025 — — — 98,469 Shares issued through employee share purchase plan 144,608 144 3,109 — — — 3,253 Compensation expense related to employee share purchase plan — — 427 — — — 427 Repurchases of common stock (2) ( 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 ) Other (3) — — 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 Net income (loss) — — — ( 7,332 ) — — ( 7,332 ) Foreign currency translation adjustment — — — — — ( 16,946 ) ( 16,946 ) Stock-based compensation — — 4,467 — — — 4,467 Stock-based compensation liability paid in shares — — 870 — — — 870 Shares issued 202,672 203 877 — — — 1,080 Repurchases of common stock (2) ( 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 ) Balance at December 31, 2024 46,856,757 $ 46,856 $ 677,473 $ ( 42,039 ) $ ( 19,631 ) $ ( 22,116 ) $ 640,543 Net income (loss) — — — 8,345 — — 8,345 Foreign currency translation adjustment — — — — — 16,792 16,792 Stock-based compensation — — 7,157 — — — 7,157 Shares issued 122,022 122 755 — — — 877 Repurchases of common stock (2) ( 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 ) Other (3) — 1 ( 1 ) — — — — Balance at December 31, 2025 46,180,700 $ 46,180 $ 686,183 $ ( 33,694 ) $ ( 43,998 ) $ ( 5,324 ) $ 649,347 (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. See Note 1 – Nature of Operations and Basis of Presentation for details. (2) Includes adjustments for net excise tax liability. (3) Adjustments for rounding. See notes to Consolidated Financial Statements 44 Table of Contents Distribution Solutions Group, Inc. Consolidated Statements of Cash Flows (Dollars in thousands) Year Ended December 31, 2025 2024 2023 Operating activities Net income (loss) $ 8,345 $ ( 7,332 ) $ ( 8,967 ) Adjustments to reconcile to net cash used in operating activities: Depreciation and amortization 80,879 74,376 63,588 Amortization of debt issuance costs 3,197 2,922 2,420 Stock-based compensation 6,672 5,233 7,940 Compensation expense related to employee share purchases — — 427 Deferred income taxes ( 4,008 ) ( 6,649 ) ( 8,028 ) Change in fair value of earnout liabilities 1,000 988 ( 758 ) (Gain) loss on sale of rental equipment ( 4,867 ) ( 2,813 ) ( 2,675 ) (Gain) loss on sale of property, plant and equipment ( 708 ) ( 61 ) 294 Charge for step-up of acquired inventory — 2,882 3,582 Net realizable value adjustment and write-offs for obsolete and excess inventory 7,321 6,612 8,990 Bad debt expense 4,429 863 784 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable ( 21,437 ) ( 1,423 ) 18,020 Inventories ( 7,239 ) ( 9,227 ) ( 1,236 ) Prepaid expenses and other current assets ( 18,197 ) ( 869 ) 931 Accounts payable 23,602 11,338 3,048 Accrued expenses and other current liabilities 3,989 ( 21,254 ) 13,667 Other changes in operating assets and liabilities 871 867 259 Net cash provided by (used in) operating activities 83,849 56,453 102,286 Investing activities Purchases of property, plant and equipment ( 21,015 ) ( 13,684 ) ( 15,337 ) Proceeds from sale of property, plant and equipment 990 3,662 — Business acquisitions, net of cash acquired ( 2,176 ) ( 199,423 ) ( 259,835 ) Asset acquisitions — ( 15,853 ) — Purchases of rental equipment ( 19,480 ) ( 9,509 ) ( 9,341 ) Proceeds from sale of rental equipment 12,749 5,124 5,990 Other ( 560 ) — — Net cash provided by (used in) investing activities ( 29,492 ) ( 229,683 ) ( 278,523 ) Financing activities Proceeds from revolving lines of credit 264,757 211,599 180,982 Payments on revolving lines of credit ( 260,660 ) ( 213,634 ) ( 302,083 ) Proceeds from term loans 700,000 200,000 305,000 Payments on term loans ( 739,625 ) ( 32,750 ) ( 26,375 ) Deferred financing costs ( 4,648 ) ( 2,064 ) ( 3,419 ) Proceeds from rights offering, net of offering costs of $ 1,531 — — 98,469 Repurchase of common stock ( 23,753 ) ( 2,580 ) ( 3,619 ) Shares repurchased held in treasury ( 614 ) ( 617 ) ( 287 ) Proceeds from employees for share purchases — — 3,253 Stock option exercises 877 — — Payment of financing lease principal ( 600 ) ( 653 ) ( 515 ) Payment of earnout — — ( 1,000 ) Net cash provided by (used in) financing activities ( 64,266 ) 159,301 250,406 Effect of exchange rate changes on cash and cash equivalents 3,509 ( 3,971 ) 717 Increase (decrease) in cash, cash equivalents and restricted cash ( 6,400 ) ( 17,900 ) 74,886 Cash, cash equivalents and restricted cash at beginning of period 81,726 99,626 24,740 Cash, cash equivalents and restricted cash at end of period $ 75,326 $ 81,726 $ 99,626 Cash and cash equivalents $ 61,753 $ 66,479 $ 83,931 Restricted cash 13,573 15,247 15,695 Total cash, cash equivalents and restricted cash $ 75,326 $ 81,726 $ 99,626 See notes to Consolidated Financial Statements 45 Table of Contents Distribution Solutions Group, Inc. Consolidated Statements of Cash Flows (Continued) (Dollars in thousands) Year Ended December 31, 2025 2024 2023 Supplemental disclosure of cash flow information Net cash paid for income taxes $ 18,187 $ 15,259 $ 12,422 Net cash paid for interest $ 51,872 $ 52,905 $ 38,048 Net cash paid for interest on supply chain financing $ 2,725 $ 2,889 $ 2,581 Non-cash activities: Additions of property, plant and equipment included in accounts payable $ 490 $ 457 $ 361 Right of use assets obtained in exchange for finance lease liabilities $ 404 $ 821 $ 616 Right of use assets obtained in exchange for operating lease liabilities $ 38,877 $ 14,515 $ 19,424 See notes to Consolidated Financial Statements 46 Distribution Solutions Group, Inc. Notes to Consolidated Financial Statements Note 1 – Nature of Operations and Basis of Presentation Organization Distribution Solutions Group, Inc. (“DSG”), a Delaware corporation, is a global specialty distribution company providing value added distribution solutions to the maintenance, repair and operations (“MRO”), original equipment manufacturer (“OEM”) and industrial technology markets. Unless the context requires otherwise, references in this Annual Report on Form 10-K to “DSG”, the “Company”, “we”, “our” or “us” refer to Distribution Solutions Group, Inc., and all entities consolidated in the accompanying consolidated financial statements. Reportable Segments and Nature of Operations Change in Reportable Segments In connection with the Source Atlantic Transaction (as defined in Note 3 – Business and Asset Acquisitions) during the third quarter of 2024, the Company realigned its reportable segments to align with our business strategy and the manner in which our chief operating decision maker (“CODM”) assesses performance and strategic execution and makes decisions regarding the allocation of resources. Prior to the third quarter of 2024, the Company had three reportable segments: Lawson, TestEquity and Gexpro Services. The Company also had an “All Other” category which included unallocated DSG holding company costs that were not directly attributable to the ongoing operating activities of our reportable segments and included the results of the Bolt Supply House (“Bolt”) non-reportable segment. Beginning in the third quarter of 2024, the Company has four reporting segments: Lawson, TestEquity, Gexpro Services and Canada Branch Division. Canada Branch Division includes the results of Bolt and Source Atlantic (which we acquired during the third quarter of 2024 as described in Note 3 – Business and Asset Acquisitions). No changes were made to the Lawson, TestEquity and Gexpro Services reportable segments. The “All Other” category now includes only unallocated DSG holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments. The segment realignment had no impact on our financial condition or results of operations. Prior period segment results have been recast to reflect our new reportable segments. Additional information regarding DSG’s reportable segments is presented in Note 14 – Segment Information. Nature of Operations A summary of the nature of operations for our reportable segments is presented below . Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and governmental MRO marketplace. Lawson primarily distributes MRO products to its customers through a network of sales representatives and an inside sales channel throughout the United States and Canada. TestEquity is a distributor of test and measurement equipment and solutions, industrial and electronic production supplies, vendor managed inventory programs, and converting, fabrication and adhesive solutions from its leading manufacturer partners supporting the aerospace and defense, wireless and communication, semiconductors, industrial electronics and automotive, and electronics manufacturing industries. Gexpro Services is a global supply chain solutions provider, specializing in the development of mission critical production line management, aftermarket and field installation programs. 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. 47 Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and include the accounts and transactions of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. 2023 Stock Split On August 15, 2023, DSG announced that its Board of Directors approved and declared a two -for-one stock split (the “Stock Split”) which entitled each stockholder of record as of the close of business on August 25, 2023 to receive one additional share of DSG common stock for each share of DSG common stock then-held. The additional shares were distributed after the close of trading on August 31, 2023, and shares of DSG common stock began trading at the split-adjusted basis on September 1, 2023. Accordingly, all share and per share amounts have been retroactively adjusted to reflect the impact of the Stock Split for all periods presented herein. Refer to Note 11 – Stockholders’ Equity for additional information about the Stock Split. Note 2 – Summary of Significant Accounting Policies Revenue Recognition — Revenue from Contracts with Customers: Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring a product or providing a service. A majority of the Company’s revenue is short cycle in nature with shipments within one year of the order. A small portion of the Company’s revenue derives from contracts extending over one year and in some cases may have optional renewal terms if both parties agree to renew. The Company’s payment terms generally range between 10 to 120 days and vary by contract, the types of products sold and the volume of products sold, among other factors. Revenue includes product sales, services and billings for shipping charges, net of discounts, expected returns, rebates and sales tax. Estimates for rebates and expected returns is based on historical experience. The Company includes shipping costs billed to customers in Revenue and the related shipping costs in Cost of goods sold in the Consolidated Statements of Operations and Comprehensive Income (Loss). Performance Obligations : A m ajority of the Company’s contracts have a performance obligation which represents, in most cases, the product being sold to the customer. Some contracts include a second performance obligation to provide additional Vendor Managed Inventory (“VMI”) services primarily related to monitoring and stocking. Although the Company has identified that it offers some customers both a product and a service obligation, the customer only receives one invoice per transaction with no price allocation between these obligations. The Company does not price its offerings based on any allocation between these obligations. A portion of the Company’s contracts offer assurance-type warranties in connection with the sale of a product to the customer. Assurance-type warranties provide a customer with assurance that the related product will function as parties intended because it complies with the agreed-upon specifications. Such warranties are not significant and do not represent a separate performance obligation. Select contracts with customers include variable consideration primarily related to volume rebates if predetermined thresholds are met. The Company estimates variable consideration using the expected-value method considering all reasonably available information, including experience, current, historical, and forecasted. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Over 95 % of the Company’s performance obligations are recognized at a point in time, rather than over time, as the Company completes its performance obligations. Specifically, revenue is recognized when control transfers to the customer, typically upon shipment or receipt by the customer. Less than 5 % of the Company’s revenue is recognized over time and relates to services, in which the Company transfers control of a good or service over time and the customer simultaneously receives and consumes the benefits. That portion of expected consideration is deferred until the time that those services have been provided and the related performance obligations have been satisfied. For revenue recognized over time, the input method is utilized and is based on costs incurred relative to estimated total costs. 48 Table of Contents Contract Costs : The Company has adopted the practical expedient within ASC 340, Other Assets and Deferred Costs (“ASC 340”), to recognize incremental costs to obtain a contract, primarily employee related costs, as expense when incurred since the amortization period of the asset that the Company otherwise would have recognized is one year or less. Rental Revenue : The Company determines if a contract contains a lease at inception. A contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Lawson and TestEquity segments operate as a lessor and rent certain equipment to customers through leases classified as operating leases under ASC 842, Leases (“ASC 842”). Lease revenue is recognized on a straight-line basis over the life of each lease. 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. The carrying amount of the Company’s cash equivalents at December 31, 2025 and December 31, 2024 approximates fair value. Cash balances at individual banks may exceed the federally insured limit by the Federal Deposit Insurance Corporation (the “FDIC”). The Company has not experienced any material losses in such accounts. Allowance for Credit Losses — The Company evaluates the collectibility of accounts receivable based on a combination of factors. 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. 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. Inventories — Inventories principally consist of purchased finished products and manufactured electronic equipment offered for resale stated at the lower of cost or net realizable value using the first-in-first-out method for the Lawson segment and primarily the weighted average method for the TestEquity, Gexpro Services and Canada Branch Division segments. Most of our products are not exposed to the risk of obsolescence due to technology changes. However, some of our products do have a limited shelf life, and from time to time we add and remove items from our catalogs, brochures or website for marketing and other purposes. To reduce the cost basis of inventory to a lower of cost or net realizable value, a write-down is recorded for slow-moving and obsolete inventory based on historical experience and monitoring of current inventory activity. Estimates are used to determine the necessity of recording these write-downs based on periodic detailed analysis using both qualitative and quantitative factors. As part of this analysis, the Company considers several factors including the inventories’ length of time on hand, historical sales, product shelf life, product life cycle, product category and product obsolescence. In general, depending on the product category, we write-down inventory with low turnover at higher rates than inventory with higher turnover. Property, Plant and Equipment — Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is computed primarily by the straight-line method for buildings, machinery and equipment, furniture and fixtures and vehicles. The Company estimates useful lives of 10 to 40 years for buildings and improvements, the shorter of the useful life of the assets or term of the underlying leases for leasehold improvements, and 2 to 10 years for machinery and equipment, furniture and fixtures and vehicles. Capitalized software is amortized over estimated useful lives of 3 to 5 years using the straight-line method. The costs of repairs, maintenance and minor renewals are charged to expense as incurred. Amortization of financing leases is included in depreciation expense. When property, plant and equipment are retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in the income from operations. Rental Equipment — Rental equipment is stated at cost less accumulated depreciation and amortization. Expense is computed primarily by the straight-line method over an estimated useful life of 3 to 7 years. Upon sale or retirement of such assets, the related cost and accumulated depreciation are removed from the Consolidated Balance Sheets, and gains or losses 49 Table of Contents 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. Cash Value of Life Insurance — The Company invests funds in life insurance policies for certain current and former employees. The cash surrender value of the policies is invested in various investment instruments and is recorded as an asset in the Consolidated Balance Sheets. The Company records these policies at their contractual value. 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. 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. On January 1, 2013, the Company converted all of its Lawson U.S. independent sales representatives to employees. The security bonuses for those converted employees continue to vest, but their accounts are no longer credited with a percentage of net commissions. For financial reporting purposes, amounts are charged to operations over the vesting period. The security bonus plan is partially funded by an $ 8.7 million investment in the cash surrender value in life insurance of certain employees which is included as a component of Cash value of life insurance in the Consolidated Balance Sheets. As of December 31, 2025, the $ 7.4 million liability is primarily included in Other liabilities in the Consolidated Balance Sheets with the remaining portion included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. Deferred Compensation — The Company’s Executive Deferral Plan (“Deferral Plan”) allows certain executives to defer payment of a portion of their earned compensation. The deferred compensation is recorded in an account balance, which is a bookkeeping entry made by the Company to measure the amount due to the participant. The account balance is equal to the participant’s deferred compensation, adjusted for increases and/or decreases in the amount that the participant has designated to one or more bookkeeping portfolios that track the performance of certain mutual funds. The Company adjusts the deferred compensation liability to equal the contractual value of the participants’ account balances. These adjustments are the changes in contractual value of the individual plans and are recorded as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss). Stock-Based Compensation — Compensation based on the share value of DSG common stock is valued at its fair value at the grant date and the expense is recognized over the vesting period. Fair value is re-measured each reporting period for liability-classified awards that may be redeemable in cash. The Company accounts for forfeitures of stock-based compensation in the period in which they occur. Goodwill — The Company had $ 467.9 million of goodwill at December 31, 2025 and $ 462.8 million of goodwill at December 31, 2024. Goodwill represents the cost of business acquisitions in excess of the fair value of identifiable net tangible and intangible assets acquired. The Company reviews goodwill for potential impairment annually on October 1st, or when an event or other circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. The first step in the multi-step process to determine if goodwill has been impaired and to what degree is to review the relevant qualitative factors that could cause the fair value of the reporting unit to decrease below the carrying value of the reporting unit. The Company considers factors such as macroeconomic, industry and market conditions, cost factors, overall financial performance and other relevant factors that would affect the individual reporting units. If the Company determines that it is more likely than not that the fair value of the reporting unit is greater than the carrying value of the reporting unit, then no further impairment testing is needed. If the Company determines that it is more likely than not that the carrying value of the reporting unit is greater than the fair value of the reporting unit, the Company will move to the next step in the process. The Company will estimate the fair value of the reporting unit and compare it to the reporting unit’s carrying value. If the carrying value of the reporting unit exceeds its fair value, the Company will record an impairment of goodwill equal to the amount the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill previously recognized. Intangible Assets — The Company’s intangible assets primarily consist of trade names and customer relationships. Intangible assets are amortized over a weighted average of 8 to 15 year and 9 to 20 year estimated useful lives for trade names and customer relationships, respectively. The Company amortizes trade name intangible assets on a straight-line basis and customer relationship intangible assets on a basis consistent with their estimated economic benefit. 50 Table of Contents Impairment of Long-Lived Assets — The Company reviews its long-lived assets, including property, plant and equipment, right of use assets and definite life intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. Recoverability is measured by a comparison of the assets carrying amount to their expected future undiscounted net cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured based on the amount by which the carrying amount of the asset exceeds its fair value. No impairments occurred in 2025, 2024 or 2023 . Income Taxes — Deferred tax assets or liabilities reflect temporary differences between amounts of assets and liabilities for financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse. 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. The determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income, (3) the impact of tax planning strategies and (4) the ability to carry back deferred tax assets to offset prior taxable income. In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence, including past operating results, projections of future taxable income and the feasibility of ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Additionally, valuation allowances related to deferred tax assets can be impacted by changes to tax laws. Significant judgment is required in determining income tax provisions as well as deferred tax asset and liability balances, including the estimation of valuation allowances and the evaluation of uncertain tax positions. Earnings from the Company’s foreign subsidiaries are considered to be indefinitely reinvested. A distribution of these non-U.S. earnings in the form of dividends or otherwise would subject the Company to foreign withholding taxes and may subject the Company to U.S. federal and state taxes. The Company recognizes the benefit of tax positions when a benefit is more likely than not (i.e., greater than 50% likely) to be sustained on its technical merits. Recognized tax benefits are measured at the largest amount that is more likely than not to be sustained, based on cumulative probability, in final settlement of the position. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of Income tax expense (benefit) in the Consolidated Statements of Operations and Comprehensive Income (Loss). Leases — The Company determines if a contract contains a lease at inception. A contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the commencement date of a lease, the Company recognizes a liability to make lease payments and a right of use asset representing the right to use the underlying asset during the lease term. The Company includes options to extend or terminate a lease within the lease term when it is reasonably certain the option will be exercised. Leases are categorized as either operating or financing leases at commencement of the lease. Operating leases consist of office space, distribution and service centers, and branch locations. Financing leases primarily consist of equipment such as forklifts and copiers. The lease liability is measured at the present value of fixed lease payments over the lease term. The lease liability includes payments allocated to lease components, while payments allocated to non-lease components are expensed as incurred for all asset classes. The Company uses its incremental borrowing rate to discount the total cash payments to present value for each lease. The Company reviews each lease to determine if there is a more appropriate discount rate to apply. The initial measurement of the right of use asset includes the initial measurement of the lease liability, fixed lease payments made in advance of the lease commencement date and initial direct costs incurred by the Company and excludes lease incentives. Variable lease payments, such as payments based on an index rate or usage, are expensed as incurred and excluded from lease liabilities and right of use assets. Upon commencement of the lease, rent expense is recognized on a straight-line basis for each operating lease. Each financing lease right of use asset is amortized on a straight-line basis over the lease period. The Company has elected the practical expedient to exclude any short-term lease, defined as a lease with an initial term of 12 months or less, from the provisions of ASC 842. The short-term leases are not recorded in the consolidated balance sheets. The lease expense for short-term leases is recognized on a straight-line basis over the lease term. The Lawson and TestEquity segments operate as a lessor and rent certain equipment to customers through leases classified as operating leases. The leased equipment is recognized in Rental equipment, net in the Consolidated Balance Sheets and the leasing revenue is recognized on a straight-line basis. 51 Table of Contents Earnings per Share — Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding during the period. 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. 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. Contingently issuable shares are considered outstanding common shares and included in basic EPS as of the date that all necessary conditions have been satisfied (i.e., when issuance of the shares is no longer contingent). For diluted EPS, the contingently issuable shares should be included in the denominator of the diluted EPS calculation as of the beginning of the interim period in which the conditions are satisfied and the earnout arrangements have been resolved. 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. Foreign Currency — The accounts of foreign subsidiaries are measured using the local currency as the functional currency. All balance sheet am ounts are translated into U.S. dollars using the exchange rates in effect at the applicable period end. Components of income or loss are translated using the average exchange rate for each reporting period. Gains and losses resulting from changes in the exchange rates from translation of the subsidiary accounts in local currency to U.S. dollars are reported as a component of Accumulated other comprehensive income or loss in the Consolidated Balance Sheets. Gains and losses resulting from the effect of exchange rate changes on transactions denominated in currencies other than the functional currency are included as a component of net income or loss upon settlement of the transaction. Gains and losses resulting from foreign intercompany transactions are included as a component of net income or loss each reporting period unless the transactions are of a long-term-investment nature and settlement is not planned or anticipated in the foreseeable future, in which case the gains and losses are recorded as a component of Accumulated other comprehensive income or loss in the Consolidated Balance Sheets. 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). Treasury Stock — The Company accounts for treasury stock using the cost method and includes treasury stock as a component of stockholders’ equity. 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. The Company records the repurchase of shares of its common stock at cost on the settlement date of the transaction. 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. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer of DSG. For each reportable segment, the CODM uses segment operating income (loss) to evaluate financial performance and allocate resources (including employees and financial resources) in a way to manage and grow margins. The Company has determined it has five operating segments: (i) Lawson, (ii) Gexpro Services, (iii) TestEquity, (iv) Canada Branch Division and (v) All Other. The Company’s four reportable segments are (i) Lawson, (ii) Gexpro Services, (iii) TestEquity and (iv) Canada Branch Division. The reporting segments follow the same accounting policies used in the preparation of the Company’s consolidated financial statements. See Note 14 – Segment Information for further details. Acquisitions — When applicable, the Company accounts for the acquisition of a business in accordance with the guidance in ASC 805. The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair values. 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. While the Company uses its best estimates and 52 Table of Contents 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. When an acquisition does not meet the definition of a business combination, the Company accounts for the acquisition as an asset acquisition. In an asset acquisition, goodwill is not recognized, but rather, any difference in purchase consideration compared to the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets as of the acquisition date and any direct acquisition-related transaction costs are capitalized as part of the purchase consideration. Fair Value Measurements — The Company applies the guidance in ASC 820, Fair Value Measurements to account for financial assets and liabilities measured on a recurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below: Level 1 - Unadjusted quoted prices for identical assets and liabilities in active markets. Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 - Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability. The carrying amount of accounts receivable, accounts payable, accrued expenses and other working capital balances are considered a reasonable estimate of their fair value due to the short-term maturity of these instruments. 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. 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. 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. These reclassifications did not result in any changes to previously reported total assets, stockholder’s equity, or net income. Recent Accounting Pronouncements - Adopted From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update (“ASU”). 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. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to require greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid. The pronouncement is effective on a prospective basis with retrospective application permitted for annual periods beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-09 has been applied on a prospective basis to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. The Company adopted this guidance on January 1, 2025. The adoption had no material impact on the Company’s financial condition, results of operations or cash flows. Recent Accounting Pronoun cements - Not Yet Adopted 53 Table of Contents 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. 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): 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. In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): 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. The pronouncement is effective on a prospective basis for interim and annual reporting periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of the adoption on its financial statement disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): 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. 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. 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. The Company is currently evaluating the impact of the adoption on its financial statement disclosures. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. 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. 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. The Company is currently evaluating the impact of the adoption on its financial statement disclosures. Note 3 – Business and Asset Acquisitions DSG and its operating companies acquired businesses during 2024 and 2023. The acquisitions were accounted for under ASC 805, the acquisition method of accounting. For each acquisition, the allocation of consideration exchanged to the assets acquired and liabilities assumed was based on estimated acquisition-date fair values. 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 ConRes Test Equipment On November 18, 2024 , DSG acquired the assets of ConRes Test Equipment, (“ConRes TE” and the “ConRes TE Transaction” ), for a purchase price of approximately $ 17.0 million . These assets were acquired to expand TestEquity’s test equipment offerings and value-add service capabilities in all of our end markets. The results of operations from the assets acquired from ConRes TE are included within the TestEquity reportable segment. The acquisition was funded using DSG’s 54 Table of Contents cash on hand and its revolving credit facility. 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: ConRes TE (in thousands) November 18, 2024 Acquisition Date Inventory $ 789 Property, plant and equipment 16,211 Right of use assets 414 Lease liabilities ( 414 ) Total purchase consideration exchanged, net of cash acquired $ 17,000 Cash consideration $ 15,725 Deferred consideration (1) 1,275 Total purchase consideration exchanged, net of cash acquired $ 17,000 (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 On October 30, 2024, DSG acquired all of the issued and outstanding capital stock of Tech- Component Resources Pte LTD (“TCR” and the “TCR Transaction” ) for a purchase price of approximately $ 5.9 million , net of cash acquired of $ 1.9 million . TCR is a distributor of fasteners, mechanical components, and other industrial products in Southeast Asia. TCR was acquired to provide us with a strategic foothold in this growing region. The results of operations of TCR are included within 55 Table of Contents the Gexpro Services reportable segment. The acquisition was funded using DSG’s cash on hand and its revolving credit facility. 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) October 30, 2024 Acquisition Date Measurement Period Adjustments Adjusted Total Accounts receivable $ 923 $ ( 53 ) $ 870 Inventory 793 56 849 Other current assets 526 — 526 Property, plant and equipment 17 — 17 Right of use assets 5 — 5 Other intangible assets: Customer relationships 2,250 — 2,250 Trade names 1,000 — 1,000 Deferred tax liability, net of deferred tax asset ( 641 ) — ( 641 ) Accounts payable ( 295 ) 3 ( 292 ) Lease liabilities ( 5 ) — ( 5 ) Accrued expenses and other liabilities ( 65 ) ( 30 ) ( 95 ) Goodwill 1,372 168 1,540 Total purchase consideration exchanged, net of cash acquired $ 5,880 $ 144 $ 6,024 Cash consideration $ 4,925 144 5,069 Deferred consideration (1) 955 $ — $ 955 Total purchase consideration exchanged, net of cash acquired $ 5,880 $ 144 $ 6,024 (1) The Company paid $ 0.0 million of the TCR deferred consideration during the years ended December 31, 2025 and 2024 . 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. The adjustments resulted in a $ 0.2 million increase to goodwill. 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. 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 . Goodwill generated from the TCR Transaction is no t deductible for tax purposes and is primarily attributable to the benefits we expect to derive from expected synergies, including expanded product and service offerings and cross-selling opportunities. Source Atlantic On August 14, 2024, DSG acquired all of the issued and outstanding capital stock of Source Atlantic Limited (“Source Atlantic” and the “Source Atlantic Transaction”) for a purchase price of approximately $ 103.5 million, net of cash acquired of $ 4.4 million . Source Atlantic, headquartered in Saint John, New Brunswick, Canada, is a wholesale distributor of industrial MRO supplies, safety products, fasteners, and related value-add services for the Canadian MRO market. Source Atlantic has 21 branch locations across Canada with a heavy focus in Eastern Canada. Source Atlantic was acquired to expand DSG’s operating footprint in the Canadian market. The results of operations of Source Atlantic are included within the Canada Branch Division reportable segment. The acquisition was funded with borrowings under the Company’s Original Credit Agreement. Refer to Note 9 – Debt for information about the Original Credit Agreement . 56 Table of Contents 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 (in thousands) August 14, 2024 Acquisition Date Measurement Period Adjustments Adjusted Total Accounts receivable (1) $ 33,679 $ — $ 33,679 Inventory 28,427 ( 160 ) 28,267 Other current assets 1,846 — 1,846 Property, plant and equipment 21,217 182 21,399 Right of use assets 6,780 — 6,780 Other intangible assets: Customer relationships 11,035 1,242 12,277 Trade names 10,012 804 10,816 Deferred tax liability, net of deferred tax asset ( 10,314 ) ( 1,030 ) ( 11,344 ) Accounts payable ( 17,857 ) — ( 17,857 ) Lease liabilities ( 6,780 ) — ( 6,780 ) Accrued expenses and other liabilities ( 5,422 ) — ( 5,422 ) Goodwill 30,518 ( 727 ) 29,791 Total purchase consideration exchanged, net of cash acquired $ 103,141 $ 311 $ 103,452 Cash consideration $ 98,756 $ — $ 98,756 Deferred consideration (2) 4,385 311 4,696 Total purchase consideration exchanged, net of cash acquired $ 103,141 $ 311 $ 103,452 (1) Accounts receivable had an estimated fair value of $ 33.7 million and a gross contractual value of $ 34.3 million. The difference represents the Company’s best estimate of the contractual cash flows that will not be collected. (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. 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. 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. Goodwill generated from the Source Atlantic Transaction is not deductible for tax purposes and is primarily attributable to the benefits we expect to derive from expected synergies, including expanded product and service offerings and cross-selling opportunities. S&S Automotive On May 1, 2024, DSG acquired all of the issued and outstanding capital stock of S&S Automotive Inc. (“S&S Automotive” and the “S&S Automotive Transaction”), with a purchase price of approximately $ 80.1 million, net of cash acquired of $ 0.7 million. S&S Automotive is a distributor of automotive, industrial, and safety supplies primarily to the automotive dealership market based near Chicago in Woodridge, Illinois. S&S Automotive was acquired to expand Lawson’s services and products to the automotive end market. The results of operations of S&S Automotive are included within the Lawson reportable segment. The acquisition was funded using DSG’s cash on hand and its revolving credit facility. 57 Table of Contents 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 (in thousands) May 1, 2024 Acquisition Date Measurement Period Adjustments Adjusted Total Accounts receivable $ 4,100 $ — $ 4,100 Inventory 7,100 ( 203 ) 6,897 Other current assets 306 — 306 Property, plant and equipment 2,351 ( 223 ) 2,128 Right of use assets 7,581 — 7,581 Other intangible assets: Customer relationships 30,200 ( 6,700 ) 23,500 Trade names 12,200 ( 300 ) 11,900 Other assets 35 3 38 Accounts payable ( 1,120 ) — ( 1,120 ) Lease liabilities ( 7,604 ) — ( 7,604 ) Accrued expenses and other liabilities ( 1,989 ) — ( 1,989 ) Goodwill 26,892 7,423 34,315 Total purchase consideration exchanged, net of cash acquired $ 80,052 $ — $ 80,052 Cash consideration $ 78,659 $ — $ 78,659 Deferred consideration (1) 1,393 — 1,393 Total purchase consideration exchanged, net of cash acquired $ 80,052 $ — $ 80,052 (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 . 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. 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. As a result of the S&S Automotive Transaction, the Company recorded tax deductible goodwill of $ 34.3 million in 2024 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. Emergent Safety Supply On January 19, 2024, DSG acquired the assets of Safety Supply Illinois LLC, conducting business as Emergent Safety Supply (“ESS” and the “ESS Transaction”), with a purchase price of $ 9.9 million. ESS is a national distributor of safety products based near Chicago in Batavia, Illinois. ESS was acquired to expand Lawson’s safety product category. The results of operations of ESS are included within the Lawson reportable segment. The acquisition was funded using DSG’s cash on hand. 58 Table of Contents 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 (in thousands) January 19, 2024 Acquisition Date Measurement Period Adjustments Adjusted Total Accounts receivable $ 1,363 $ — $ 1,363 Inventory 1,399 — 1,399 Other current assets 10 — 10 Property, plant and equipment 228 — 228 Right of use assets 550 — 550 Other intangible assets: Customer relationships 2,700 100 2,800 Trade names 1,400 — 1,400 Other assets 11 — 11 Accounts payable ( 205 ) — ( 205 ) Lease liabilities ( 550 ) — ( 550 ) Accrued expenses and other liabilities ( 25 ) 11 ( 14 ) Goodwill 2,973 ( 111 ) 2,862 Total purchase consideration exchanged, net of cash acquired $ 9,854 $ — $ 9,854 Cash consideration $ 8,904 $ — $ 8,904 Deferred consideration (1) 950 — 950 Total purchase consideration exchanged, net of cash acquired $ 9,854 $ — $ 9,854 (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 . 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. The adjustments resulted in a $ 0.1 million increase to customer relationships and a $ 0.1 million decrease to goodwill. The accounting for the ESS Transaction was completed during the fourth quarter of 2024. The customer relationships and trade names intangible assets have estimated useful lives of 16 years and 8 years, respectively. As a result of the ESS Transaction, the Company recorded tax deductible goodwill of $ 2.9 million in 2024 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. 2023 Acquisition HIS Company, Inc. On June 8, 2023, DSG acquired all of the issued and outstanding capital stock of HIS Company, Inc., a Texas corporation (“Hisco” and the “Hisco Transaction”), a distributor of specialty products serving industrial technology applications, pursuant to a Stock Purchase Agreement dated March 30, 2023 (the “Hisco Purchase Agreement”). In connection with this transaction, DSG combined the operations of TestEquity and Hisco, further expanding the product and service offerings at TestEquity, as well as all of our operating businesses under DSG. The results of operations of Hisco are included within the TestEquity reportable segment. The total purchase consideration exchanged for the Hisco Transaction was $ 267.2 million, net of cash acquired of $ 12.2 million, with a potential additional earn-out payment subject to Hisco achieving certain performance targets. Refer to Note 8 – Earnout Liabilities for additional information on the earn-out. 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. 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 59 Table of Contents remaining balance of $ 1.1 million in 2025. 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). 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. DSG funded the Hisco Transaction with borrowings under its Original Credit Agreement and proceeds raised from the Rights Offering. 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. During 2023, the Company issued 144,608 shares of DSG common stock to the eligible Hisco employees and received approximately $ 3.3 million. During 2023, approximately $ 0.4 million was recorded as compensation expense for the discount between the prevailing market price of the DSG common stock on the date of purchase and the purchase price of $ 22.50 per share as a component of Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss). 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: Hisco (in thousands) June 8, 2023 Acquisition Date Measurement Period Adjustments Adjusted Total Accounts receivable (1) $ 66,792 $ ( 2,269 ) $ 64,523 Inventory 61,300 ( 645 ) 60,655 Other current assets 3,858 350 4,208 Property, plant and equipment 48,326 — 48,326 Right of use assets 21,102 1,188 22,290 Other intangible assets: Customer relationships 41,800 ( 1,800 ) 40,000 Trade names 25,600 ( 300 ) 25,300 Deferred tax liability, net of deferred tax asset ( 2,544 ) 81 ( 2,463 ) Other assets 2,495 — 2,495 Accounts payable ( 16,689 ) — ( 16,689 ) Lease liabilities ( 22,372 ) 293 ( 22,079 ) Accrued expenses and other liabilities ( 8,961 ) ( 289 ) ( 9,250 ) Goodwill 49,718 122 49,840 Total purchase consideration exchanged, net of cash acquired $ 270,425 $ ( 3,269 ) $ 267,156 Cash consideration $ 252,007 $ — $ 252,007 Deferred consideration (2) 12,418 2,631 15,049 Contingent consideration 6,000 ( 5,900 ) 100 Total purchase consideration exchanged, net of cash acquired $ 270,425 $ ( 3,269 ) $ 267,156 (1) Accounts receivable had an estimated fair value of $ 64.5 million and a gross contractual value of $ 66.8 million. The difference represents the Company’s best estimate of the contractual cash flows that will not be collected. (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. 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. The adjustments to these balances resulted in a $ 0.1 million increase to goodwill and a $ 3.3 million decrease to the total purchase consideration, net of cash acquired. The accounting for the Hisco Transaction was completed during the second quarter of 2024. 60 Table of Contents The customer relationships and trade names intangible assets have estimated useful lives of 12 years and 8 years, respectively. 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. Unaudited Pro Forma Information 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. This information is presented for informational purposes only and is not necessarily indicative of future results or the results that would have occurred had the acquisitions been completed on the date indicated. Year Ended December 31, (in thousands) 2025 2024 2023 Revenue $ 1,980,023 $ 1,941,457 $ 1,998,209 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. 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, (in thousands) 2025 2024 2023 Revenue $ — $ 111,566 $ 229,358 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). 61 Table of Contents Note 4 – Revenue Recognition Disaggregation of Revenue The Company’s revenue is primarily comprised of product sales to customers. The Company has disaggregated revenue by geographic area and by segment as it most reasonably depicts the amount, timing and uncertainty of revenue and cash flows generated from our contracts with customers. Disaggregated consolidated revenue by geographic area (based on the location to which the product is shipped to): Year Ended December 31, (in thousands) 2025 2024 2023 United States $ 1,459,885 $ 1,389,754 $ 1,253,401 Canada 293,004 192,213 141,125 Europe 64,711 58,144 79,643 Pacific Rim 32,247 20,584 13,515 Latin America 117,833 131,345 74,577 Other 14,726 14,006 9,841 Intersegment revenue elimination ( 2,383 ) ( 1,942 ) ( 1,700 ) Total revenue $ 1,980,023 $ 1,804,104 $ 1,570,402 See Note 14 – Segment Information for disaggregation of revenue by segment. Rental Revenue TestEquity rents new and used electronic test and measurement equipment to customers in multiple industries. Lawso n leases parts washer machines to customers. This leased equipment is included in Rental equipment, net in the Consolidated Balance Sheets, and rental revenue is included in Revenue in the Consolidated Statements of Operations and Comprehensive Income (Loss) . The unearned rental revenue related to customer prepayments on equipment leases was nominal at December 31, 2025 and December 31, 2024 . Rental revenue from operating leases: Year Ended December 31, (in thousands) 2025 2024 2023 Revenue from operating leases $ 26,872 $ 17,519 $ 17,186 Contract Liabilities Deferred consideration for the service performance obligations that have not been satisfied will be recognized within twelve months of the respective balance sheet date. The table below summarizes our changes in contract liabilities for the periods presented. Year Ended December 31, (in thousands) 2025 2024 2023 Beginning balance $ 3,727 $ 810 $ 2,313 Additions 5,207 3,727 810 Revenue recognized ( 3,727 ) ( 810 ) ( 2,313 ) Ending balance $ 5,207 $ 3,727 $ 810 62 Table of Contents Note 5 – Supplemental Financial Statement Information Restricted Cash The Company has agreed to maintain restricted cash of $ 13.6 million under agreements with outside parties. 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. The remaining restricted cash balance of $ 8.5 million represents collateral for certain borrowings under the Amended Credit Agreement, and the Company is restricted from withdrawing this balance without the prior consent of the respective lenders. Property, Plant and Equipment, net Components of property, plant and equipment, net were as follows: December 31, (in thousands) 2025 2024 Land $ 16,566 $ 16,187 Buildings and improvements 67,508 63,935 Machinery and equipment 62,750 55,890 Capitalized software 21,492 12,295 Furniture and fixtures 12,275 13,251 Vehicles 6,720 5,716 Construction in progress (1) 8,112 6,284 Total 195,423 173,558 Accumulated depreciation and amortization ( 68,818 ) ( 48,034 ) Property, plant and equipment, net $ 126,605 $ 125,524 (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: Year Ended December 31, (in thousands) 2025 2024 2023 Depreciation expense for property, plant and equipment $ 18,623 $ 16,125 $ 13,052 Amortization expense for capitalized software $ 4,151 $ 3,287 $ 2,642 Rental Equipment, net Rental equipment, net consisted of the following: December 31, (in thousands) 2025 2024 Rental equipment $ 68,401 $ 64,160 Accumulated depreciation ( 29,445 ) ( 24,784 ) Rental equipment, net $ 38,956 $ 39,376 Depreciation expense for rental equipment, which is included in Cost of goods sold in the Consolidated Statements of Operations and Comprehensive Income (Loss), was as follows: 63 Table of Contents Year Ended December 31, (in thousands) 2025 2024 2023 Depreciation expense for rental equipment $ 11,620 $ 7,481 $ 7,631 Refer to Note 4 – Revenue Recognition for a discussion on the Company’s activities as lessor. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: December 31, (in thousands) 2025 2024 Accrued compensation $ 29,267 $ 23,800 Accrued and withheld taxes, other than income taxes 10,263 10,178 Accrued customer rebates 7,847 6,366 Deferred acquisition payments and accrued earnout liabilities 6,021 6,384 Contract liabilities 5,207 3,727 Accrued severance and acquisition related retention bonus 1,966 2,864 Accrued interest 1,647 2,030 Accrued health benefits 1,615 2,234 Accrued income taxes 793 1,703 Accrued stock-based compensation 326 1,960 Other 19,185 20,013 Total accrued expenses and other current liabilities $ 84,137 $ 81,259 Other Liabilities Other liabilities consisted of the following: December 31, (in thousands) 2025 2024 Security bonus plan $ 7,165 $ 7,536 Deferred compensation 12,589 11,455 Other 4,891 7,534 Total other liabilities $ 24,645 $ 26,525 64 Table of Contents Note 6 – Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill by segment were as follows: (in thousands) Lawson TestEquity Gexpro Services Canada Branch Division Total Balance at December 31, 2023 $ 155,915 $ 164,990 $ 55,743 $ 23,277 $ 399,925 Acquisitions (1) 37,177 ( 110 ) 1,372 28,942 67,381 Impact of foreign exchange rates ( 494 ) — ( 773 ) ( 3,250 ) ( 4,517 ) Balance at December 31, 2024 192,598 164,880 56,342 48,969 462,789 Acquisitions (1) — — 168 849 1,017 Impact of foreign exchange rates 277 — 1,464 2,358 4,099 Balance at December 31, 2025 $ 192,875 $ 164,880 $ 57,974 $ 52,176 $ 467,905 (1) Refer to Note 3 – Business and Asset Acquisitions for information related to measurement period adjustments. Intangible Assets The gross carrying amount and accumulated amortization for definite-lived intangible assets were as follows: December 31, 2025 December 31, 2024 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Trade names $ 141,637 $ ( 60,640 ) $ 80,997 $ 141,654 $ ( 45,386 ) $ 96,268 Customer relationships 274,844 ( 131,341 ) 143,503 272,051 ( 100,867 ) 171,184 Other (1) 7,894 ( 6,339 ) 1,555 8,310 ( 5,999 ) 2,311 Total $ 424,375 $ ( 198,320 ) $ 226,055 $ 422,015 $ ( 152,252 ) $ 269,763 (1) Other primarily consists of non-compete agreements. Amortization expense for definite-lived intangible assets is included in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) as follows: Year Ended December 31, (in thousands) 2025 2024 2023 Amortization expense for intangible assets $ 46,485 $ 47,483 $ 40,263 The remaining weighted-average useful lives of intangible assets as of December 31, 2025 was 3.2 years for trade names and 5.0 years for customer relationships. The estimated aggregate amortization expense for each of the next five years and thereafter are as follows: (in thousands) Amortization 2026 $ 43,666 2027 38,585 2028 34,297 2029 30,791 2030 21,036 Thereafter 57,680 Total $ 226,055 65 Note 7 – Leases The Company leases property used for warehousing, distribution centers, office space, branch locations, equipment and vehicles. The components of lease cost were as follows (in thousands): Year Ended December 31, Lease Type Classification 2025 2024 2023 Operating lease expense (1) Operating expenses $ 28,264 $ 23,958 $ 21,131 Financing lease amortization Operating expenses 582 612 546 Financing lease interest Interest expense 103 108 93 Financing lease expense 685 720 639 Sublease income (2) ( 679 ) ( 425 ) — Net lease cost $ 28,270 $ 24,253 $ 21,770 (1) Includes short-term lease expense, which is immaterial. (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. The value of net assets and liabilities related to our operating and finance leases as of December 31, 2025 and December 31, 2024 was as follows (in thousands): December 31, Lease Type 2025 2024 Total right of use operating lease assets $ 111,117 $ 91,962 Total right of use financing lease assets 1,573 1,702 Total lease assets $ 112,690 $ 93,664 Total current operating lease obligation $ 20,030 $ 18,413 Total current financing lease obligation 594 538 Total current lease obligation $ 20,624 $ 18,951 Total long-term operating lease obligation $ 98,022 $ 76,759 Total long-term financing lease obligation 799 999 Total long-term lease obligation $ 98,821 $ 77,758 The value of lease liabilities related to our operating and finance leases and sublease income as of December 31, 2025 was as follows (in thousands): Maturity Date of Lease Liabilities Operating Leases Financing Leases Total Sublease Income 2026 $ 27,236 $ 668 $ 27,904 $ 368 2027 25,990 418 26,408 43 2028 23,326 280 23,606 44 2029 19,606 120 19,726 45 2030 12,939 47 12,986 30 Thereafter 42,793 — 42,793 — Total lease payments 151,890 1,533 153,423 530 Less: Interest ( 33,838 ) ( 140 ) ( 33,978 ) — Present value of lease liabilities $ 118,052 $ 1,393 $ 119,445 $ 530 66 The weighted average lease terms and interest rates of leases held as of December 31, 2025 and 2024 were as follows: Year Ended December 31, 2025 2024 Operating Leases Finance Leases Operating Leases Finance Leases 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 % The cash outflows of leasing activity for the years ended December 31, 2025, 2024 and 2023 were as follows (in thousands): Year Ended December 31, Cash Flow Source Classification 2025 2024 2023 Operating cash flows from operating leases Operating activities $ ( 26,743 ) $ ( 21,980 ) $ ( 15,516 ) Operating cash flows from financing leases Operating activities $ ( 104 ) $ ( 111 ) $ ( 242 ) Financing cash flows from financing leases Financing activities $ ( 600 ) $ ( 653 ) $ ( 515 ) Refer to Note 4 – Revenue Recognition for a discussion on the Company’s activities as lessor. Note 8 – Earnout Liabilities Hisco Acquisition The Hisco Transaction included a potential earn-out payment of up to $ 12.6 million, subject to Hisco achieving certain performance targets. The earn-out payment was to be calculated based on the gross profit of Hisco and its affiliates for the twelve months ended October 31, 2023, subject to certain adjustments and exclusions set forth in the Hisco Purchase Agreement. 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. 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. Frontier Acquisition On March 31, 2022, Gexpro Services acquired Frontier Technologies Brewton, LLC and Frontier Engineering and Manufacturing Technologies, Inc. (“Frontier”). 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. 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. No additional earn-out payments will be made subsequent to the first quarter of 2025. 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. 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. 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). 67 Table of Contents Note 9 – Debt The Company’s outstanding long-term debt was comprised of the following: December 31, (in thousands) 2025 2024 Senior secured revolving credit facility $ 3,948 $ — Senior secured term loan 700,000 215,625 Senior secured delayed draw term loan — 44,375 Incremental term loans — 479,625 Other revolving line of credit 470 226 Total debt 704,418 739,851 Less: current portion of long-term debt ( 35,470 ) ( 40,476 ) Less: deferred financing costs ( 4,752 ) ( 5,472 ) Total long-term debt $ 664,196 $ 693,903 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. 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. 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). 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. Net of these letters of credit, there was $ 393.7 million of borrowing availability under the revolving credit facility as of December 31, 2025. 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. 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. The effective interest rate on the senior secured revolving credit facility was 8.87 % in 2025. The average effective interest rate on the term loan facilities prior to the December 18, 2025 refinancing was 6.86 % in 2025. The effective interest rate on the senior secured initial term loan facility subsequent to the December 18, 2025 refinancing was 6.56 % in 2025. 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. These fees are reported as a component of Interest expense in the Consolidated Statements of Operations and 68 Table of Contents 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. 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. 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. 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. 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. subsidiaries under the Amended Credit Agreement are guaranteed by the Company and certain of the Company’s U.S. subsidiaries and the obligations of each of the Company’s Canadian subsidiaries under the Amended Credit Agreement are guaranteed by the Company and certain of its U.S. and Canadian subsidiaries. Subject to certain exceptions as set forth in the Amended Credit Agreement, the obligations under the Amended Credit Agreement are secured by a first priority security interest in and lien on substantially all assets of the Company, each other borrower and each guarantor. The Amended Credit Agreement contains various covenants, including financial maintenance covenants requiring the Company to maintain compliance with a consolidated minimum interest coverage ratio and a maximum total net leverage ratio, each determined in accordance with the terms of the Amended Credit Agreement. The Amended Credit Agreement contains various events of default (subject to exceptions, thresholds and grace periods as set forth in the Amended Credit Agreement). Under certain circumstances, a default interest rate will apply on all obligations at a rate equal to 2.0 % per annum above the applicable interest rate. The Company was in compliance with all financial covenants as of December 31, 2025 . Note 10 – Stock-Based Compensation Equity Compensation Plans On October 17, 2022, the Board of Directors approved and adopted the Distribution Solutions Group, Inc. Equity Compensation Plan, as amended and restated, effective October 17, 2022, and as amended November 10, 2022 (the “Amended and Restated Equity Plan”). The Amended and Restated Equity Plan provides for the grant of nonqualified and incentive stock options, stock awards and stock units to officers and employees of the Company. The Amended and Restated Equity Plan also provides for the grant of option rights and restricted stock to non-employee directors. Non-employee directors are limited to grants of no more than 60,000 shares of common stock in any calendar year and other than non-employee directors are limited to grants of no more than 500,000 shares of common stock in any calendar year. The Amended and Restated Equity Plan is administered by the Compensation Committee of the Board of Directors, or its designee, which as administrator of the plan, has the authority to select plan participants, grant awards, and determine the terms and conditions of the awards. As of December 31, 2025, the Company had approximately 141,000 shares of common stock still available under the Amended and Restated Equity Plan. 69 Table of Contents The Company also has a Stock Performance Rights Plan (“SPR Plan”) that provides for the issuance of Stock Performance Rights (“SPRs”) that allow non-employee directors, officers and key employees to receive cash awards, subject to certain restrictions, equal to the appreciation of DSG common stock. The SPR Plan is administered by the Compensation Committee of the Board of Directors. 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: Year Ended December 31, (in thousands) 2025 2024 2023 Stock-based compensation expense $ 6,672 $ 5,233 $ 7,940 Related income tax benefit ( 992 ) ( 1,108 ) ( 863 ) Total stock-based compensation expense, net of tax $ 5,680 $ 4,125 $ 7,077 The Company’s SPRs are liability-classified. Accordingly, changes in the market value of DSG common stock may result in stock-based compensation expense or benefit in certain periods. 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. Stock Options Stock options generally vest through the fifth anniversary from the grant date. Each stock option can be exchanged for one share of DSG common stock at the stated exercise price. Upon vesting, stock options are recognized as a component of equity. Activity related to the Company’s stock options during the year ended December 31, 2025 was as follows: Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding on December 31, 2024 2,128,475 $ 40.43 Granted 422,500 48.82 Exercised ( 31,810 ) 27.50 Cancelled ( 204,226 ) 37.65 Outstanding on December 31, 2025 2,314,939 42.38 8.3 $ — Exercisable on December 31, 2025 1,073,061 $ 39.69 8.1 $ — Details related to the Company’s stock options were as follows: Year Ended December 31, (in thousands, except share and per share data) 2025 2024 2023 Weighted average exercise price per share granted $ 48.82 $ 45.79 $ 37.03 Intrinsic value - exercised $ 94 $ 1,544 $ — Cash received from options exercised $ 877 $ 1,080 $ — (in thousands, except share and per share data) December 31, 2025 Unrecognized compensation cost (1) $ 12,429 Unvested number of stock options 1,241,878 (1) Expected to be recognized over a weighted-average period of 2.3 years The grant date fair value of the stock options issued was estimated using a Black-Scholes valuation model. The weighted average fair value assumptions used in the model were as follows: 70 Table of Contents December 31, 2025 2024 2023 Expected volatility 45.5 % to 46.8 % 45.2 % to 45.6 % 45.2 % to 45.6 % Risk-free rate of return 3.9 % to 4.5 % 3.6 % to 4.2 % 3.6 % to 4.5 % Expected term (in years) 5.8 years 6.5 years 6.2 years Expected annual dividend $ 0 $ 0 $ 0 The expected volatility was based on the historic volatility of the Company’s stock price commensurate with the expected life of the stock options. The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the stock options. 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. The estimated annual dividend was based on the recent dividend payout trend. Restricted Stock Units Restricted stock units (“RSUs”) generally vest over a one to five year period beginning on the first anniversary of the date of the grant. Upon vesting, the vested RSUs are exchanged for an equal number of shares of DSG common stock. The participants have no voting or dividend rights with the RSUs. 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. Activity related to the Company’s RSUs during the year ended December 31, 2025 was as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding on December 31, 2024 162,149 $ 31.68 Granted 319,570 28.94 Cancelled — — Exchanged for common shares ( 75,408 ) 32.07 Outstanding on December 31, 2025 406,311 $ 29.40 Details related to the Company’s RSUs were as follows: Year Ended December 31, (in thousands, except share and per share data) 2025 2024 2023 Weighted average grant date fair value per share $ 28.94 $ 32.16 $ 21.86 Fair value of RSUs exchanged for shares of DSG common stock $ 2,153 $ 1,449 $ 1,459 (in thousands) December 31, 2025 Unrecognized compensation cost (1) $ 9,289 (1) Expected to be recognized over a weighted-average period of 1.9 years Stock Performance Rights SPRs entitle the recipient to receive a cash payment equal to the excess of the market value of DSG common stock over the SPR exercise price when the SPRs are surrendered. Expense, equal to the fair market value of the SPR at the date of grant and remeasured each reporting period, is recorded ratably over the vesting period. Compensation expense is included in Selling, general and administrative expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). 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. 71 Table of Contents The fair value of the outstanding SPRs was estimated using a Black-Scholes valuation model. This model requires the input of subjective assumptions that may have a significant impact on the fair value estimate. The weighted-average fair value of SPRs outstanding as of December 31, 2025, 2024 and 2023 was $ 15.51 , $ 20.80 and $ 18.37 per SPR, respectively. The weighted average fair value assumptions used in the model were as follows: December 31, 2025 2024 2023 Expected volatility 37.7 % to 37.7 % 36.9 % to 38.0 % 41.1 % to 45.9 % Risk-free rate of return 3.5 % to 3.5 % 4.2 % to 4.2 % 4.5 % to 5.3 % Expected term (in years) 0.5 to 0.5 0.5 to 1.0 0.3 to 1.5 Expected annual dividend $ 0 $ 0 $ 0 The expected volatility was based on the historic volatility of the Company’s stock price commensurate with the expected life of the SPR. The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the SPR. 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. The estimated annual dividend was based on the recent dividend payout trend. Activity related to the Company’s SPRs during the year ended December 31, 2025 was as follows: Number of SPRs Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding on December 31, 2024 92,540 $ 20.80 Granted — — Exercised ( 65,786 ) 30.38 Cancelled — — Outstanding on December 31, 2025 26,754 15.51 1.0 $ 318 Exercisable on December 31, 2025 26,754 $ 15.51 1.0 $ 318 The intrinsic value of SPRs exercised was $ 1.2 million for 2025, $ 3.5 million for 2024 and $ 1.7 million for 2023. All SPRs for plan participants were fully vested prior to 2022, as such, there is no unrecognized compensation associated with any SPRs. Market Stock Units Market Stock Units (“MSUs”) are exchangeable for between 0 % to 150 % of the DSG common shares at the end of the vesting period based on the trailing 60 -day average closing price of DSG common stock. 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. 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 . Activity related to the Company’s MSUs during 2025 was as follows: Number of Market Stock Units Maximum Shares Potentially Issuable Weighted Average Grant Date Fair Value Outstanding on December 31, 2024 103,266 145,091 $ 17.45 Granted — — — Cancelled — — — Exchanged for common shares ( 9,870 ) ( 14,804 ) 7.78 Outstanding on December 31, 2025 93,396 130,287 $ 8.82 72 Table of Contents Impact of Stock Split 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. The impact of these provisions resulted in a modification of all outstanding stock-based compensation awards upon the Stock Split. 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. 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 Stock Split On August 15, 2023, DSG announced that its Board of Directors approved and declared the Stock Split which entitled each stockholder of record as of the close of business on August 25, 2023, to receive one additional share of DSG common stock for each share of DSG common stock then-held. The additional shares were distributed after the close of trading on August 31, 2023, and shares of DSG common stock began trading at the split-adjusted basis on September 1, 2023. Accordingly, all share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the Stock Split. Stockholders’ equity has been retroactively adjusted, where applicable, to give effect to the Stock Split for all periods presented by reclassifying the par value of the additional shares issued in connection with the Stock Split to Common stock from Capital in excess of par value in the Consolidated Balance Sheets . In order to implement the Stock Split, on August 31, 2023, DSG filed a Third Amended and Restated Certificate of Incorporation of DSG with the Secretary of State of the State of Delaware to increase the number of authorized shares of DSG common stock from 35,000,000 to 70,000,000 , which became effective on that date. The Stock Split did not change the $ 1.00 par value of DSG common stock. Rights Offering The Company completed a subscription rights offering on May 9, 2023 (the “Rights Offering”), that raised gross proceeds of approximately $ 100.0 million and resulted in the issuance of 4,444,444 shares of DSG common stock at a purchase price of $ 22.50 per share. 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. 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 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. 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. 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. 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. T he remaining availability for stock repurchases under the stock repurchase program was $ 32.9 million at December 31, 2025. 73 Table of Contents Note 12 – Earnings Per Share 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: December 31, (in thousands, except share and per share data) 2025 2024 2023 Basic income per share: Net income (loss) $ 8,345 $ ( 7,332 ) $ ( 8,967 ) Basic weighted average shares outstanding 46,364,229 46,811,354 44,868,862 Basic income (loss) per share of common stock $ 0.18 $ ( 0.16 ) $ ( 0.20 ) Diluted income per share: Net income (loss) $ 8,345 $ ( 7,332 ) $ ( 8,967 ) Basic weighted average shares outstanding 46,364,229 46,811,354 44,868,862 Effect of dilutive securities 802,240 — — Diluted weighted average shares outstanding 47,166,469 46,811,354 44,868,862 Diluted income (loss) per share of common stock $ 0.18 $ ( 0.16 ) $ ( 0.20 ) The securities that were excluded from the calculation of diluted earnings per share because their inclusion would be anti-dilutive were as follows: December 31, 2025 2024 2023 Stock options 1,489,204 1,681,845 1,721,266 Other stock-based awards 1,432 241,015 383,411 Note 13 – Income Taxes Income (loss) from operations before income taxes consisted of the following: Year Ended December 31, (in thousands) 2025 2024 2023 United States $ ( 1,552 ) $ ( 23,598 ) $ ( 24,949 ) Foreign 20,963 23,062 22,942 Total $ 19,411 $ ( 536 ) $ ( 2,007 ) 74 Table of Contents Income taxes paid, net of refunds received consisted of the following: Year Ended December 31, (in thousands) 2025 U.S. federal $ 4,897 U.S. state and local $ 2,874 Foreign Canada $ 4,966 Mexico 2,680 Hungary 1,191 Other foreign jurisdictions 1,579 Total foreign $ 10,416 Total income taxes paid $ 18,187 Provision (benefit) for income taxes from operations consisted of the following: Year Ended December 31, (in thousands) 2025 2024 2023 Current income tax expense: U.S. federal $ 3,569 $ 3,035 $ 4,961 U.S. state 2,432 2,633 2,388 Foreign 9,073 7,777 7,639 Total $ 15,074 $ 13,445 $ 14,988 Deferred income tax expense (benefit): U.S. federal $ ( 72 ) $ ( 3,554 ) $ ( 8,101 ) U.S. state ( 1,317 ) ( 1,603 ) 1,232 Foreign ( 2,619 ) ( 1,492 ) ( 1,159 ) Total $ ( 4,008 ) $ ( 6,649 ) $ ( 8,028 ) Total income tax expense (benefit): U.S. federal $ 3,497 $ ( 519 ) $ ( 3,141 ) U.S. state 1,115 1,030 3,620 Foreign 6,454 6,285 6,481 Total $ 11,066 $ 6,796 $ 6,960 The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures on a prospective basis beginning with the year ended December 31, 2025. 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: 75 Table of Contents Year Ended December 31, (in thousands) 2025 Statutory federal rate $ 4,076 21.00 % State income taxes, net of federal effect (1) 881 4.54 Change in valuation allowance 2,330 12.00 Nontaxable or nondeductible items Meals and entertainment 249 1.28 Other nontaxable or nondeductible items 239 1.23 Branch income 980 5.05 Other cross-border tax laws 17 0.09 Worldwide changes in UTB 52 0.27 Other 244 1.25 Foreign Tax Effects Canada Tax rate differential 430 2.22 Adjustment to income taxes payable 290 1.50 Other Canada 227 1.18 Mexico Tax rate differential 675 3.48 Adjustment to income taxes payable ( 511 ) ( 2.63 ) Other Mexico 112 0.58 Turkey Adjustment to income taxes payable ( 386 ) ( 1.99 ) Other Turkey ( 11 ) ( 0.06 ) Hungary Tax rate differential ( 560 ) ( 2.89 ) Adjustment to income taxes payable 781 4.02 Other Hungary ( 44 ) ( 0.23 ) Denmark Provision to return adjustments 476 2.45 Adjustment to income taxes payable 692 3.57 Other Denmark 56 0.29 Brazil Unrealized gains 212 1.09 Adjustment to income taxes payable ( 338 ) ( 1.74 ) Other Brazil ( 14 ) ( 0.07 ) India Provision to return adjustments 461 2.38 Adjustment to income taxes payable ( 717 ) ( 3.69 ) Other India ( 20 ) ( 0.10 ) Other foreign jurisdictions 187 0.94 Total $ 11,066 57.01 % (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. 76 Table of Contents 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: Year Ended December 31, 2024 2023 Statutory federal rate 21.0 % 21.0 % Increase (decrease) resulting from: Change in valuation allowance - current period activity ( 1,196.4 ) ( 380.7 ) Foreign rate differential ( 63.2 ) 6.2 Stock compensation 81.6 ( 5.0 ) Compensation deduction limitation — ( 7.0 ) State and local taxes, net 178.4 67.1 Life insurance ( 14.1 ) ( 3.4 ) Meals & entertainment ( 65.2 ) ( 17.3 ) Change in uncertain tax positions 46.0 18.1 Provision to return differences ( 78.5 ) ( 45.3 ) GILTI, Section 78, FDII, and Section 250 ( 8.5 ) — Transaction costs ( 157.4 ) — Branch income ( 275.2 ) ( 81.6 ) Change in deferred balances 263.4 79.4 Other items, net 0.2 1.7 Provision for income taxes ( 1,267.9 ) % ( 346.8 ) % 77 Table of Contents Deferred income tax assets and liabilities contain the following temporary differences: December 31, (in thousands) 2025 2024 Deferred tax assets: Federal & state NOL carryforward $ 13,547 $ 9,943 Deferred revenue 181 135 Stock based compensation 3,829 3,113 Inventory adjustments 10,817 10,269 Accrued benefits & bonuses 7,575 7,821 Bad debt reserve 1,447 546 Capitalized transaction costs 1,886 1,523 Section 163(j) limitation carryforward 21,313 20,422 Right of use liabilities 27,499 21,476 Investment in foreign subsidiaries 285 — Other 5,281 5,952 Deferred state income tax 176 452 Total gross deferred tax assets 93,836 81,652 Valuation allowance ( 19,279 ) ( 14,868 ) Total net deferred tax assets 74,557 66,784 Deferred tax liabilities: Other intangibles 34,573 45,360 Fixed assets 30,407 21,685 Right of use assets 26,201 20,449 Other 2,327 1,419 Total gross deferred tax liabilities 93,508 88,913 Net deferred tax liabilities $ ( 18,951 ) $ ( 22,129 ) At December 31, 2025, the Company had $ 21.4 million of U.S. federal net operating loss carryforwards (“NOLs”) that do not expire, and $ 85.2 million of state NOLs that expire between 2026 and 2037. At December 31, 2025 the Company had a total valuation allowance of $ 19.3 million. At December 31, 2024, the valuation allowance was $ 14.9 million. The change in the valuation allowance during 2025 was primarily related to establishing a valuation allowance against the deferred tax asset for Section 163(j) limited interest expense. The Company does not expect that its future taxable income will be sufficient to realize these existing deferred tax assets. Earnings from the Company’s foreign subsidiaries are considered to be indefinitely reinvested. A distribution of these non-U.S. earnings in the form of dividends or otherwise would subject the company to foreign withholding taxes and may subject the Company to U.S. federal and state taxes. Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested profits is not feasible primarily due the Company’s legal entity structure and the complexity of U.S. tax laws. Global Intangible Low Taxed Income (GILTI) is a deemed amount of income derived from controlled foreign corporations (CFCs) in which a U.S. person is a 10% direct or indirect shareholder. The Company owns numerous CFCs, which are subject to GILTI inclusion. 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. 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. The following table presents a reconciliation of the total change in the valuation allowance: 78 Table of Contents Year Ended December 31, (in thousands) 2025 Beginning balance $ ( 14,868 ) Changes to income tax expense ( 4,411 ) Changes to OCI — Changes to goodwill — Ending balance $ ( 19,279 ) Undistributed earnings of our foreign subsidiaries are considered to be permanently reinvested and accordingly, no deferred U.S. income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to U.S. income tax. At the present time it is not practicable to estimate the amount of U.S. 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: Year Ended December 31, (in thousands) 2025 2024 2023 Balance at beginning of year $ 2,362 $ 2,734 $ 3,027 Gross increase - tax positions in prior periods — — 503 Gross decrease - tax positions in prior periods — ( 152 ) — Gross increase - tax position in current period 826 595 — Lapses in statutes of limitations ( 644 ) ( 815 ) ( 796 ) Balance at end of year $ 2,544 $ 2,362 $ 2,734 The recognition of the unrecognized tax benefits would have a favorable effect on the effective tax rate. The unrecognized tax benefits as of December 31, 2025 included $ 0.5 million of tax benefits that, if recognized, would impact the effective tax rate in future periods. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. The unrecognized tax benefits are recorded as a component of Other Liabilities in the Consolidated Balance Sheets. 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. Interest and penalties are recognized over uncertain tax positions that arose from income tax matters in Canada. 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. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. As of December 31, 2025, the Company was subject to U.S. federal income tax examinations for the years 2022 through 2024 and income tax examinations from various other jurisdictions for the years 2018 through 2024. Note 14 – Segment Information As a result of the Source Atlantic acquisition in the third quarter of 2024, discussed in Note 3 – Business and Asset Acquisitions, the Company realigned its reportable segments to align with its business strategy and the manner in which the CODM assesses performance and strategic execution and makes decisions regarding the allocation of resources. The Company’s CODM is the Chief Executive Officer of DSG. For each reportable segment, the CODM uses segment operating income (loss) to allocate resources (including employees and financial resources) in a way to manage and grow margins. Beginning in the third quarter of 2024, the Company has four reporting segments: Lawson, TestEquity, Gexpro Services and Canada Branch Division. Canada Branch Division includes the results of the Bolt and Source Atlantic subsidiaries. No changes were made to the Lawson, TestEquity and Gexpro Services reportable segments. For additional details about our segment realignment in the third quarter of 2024, see Note 1 – Nature of Operations and Basis of Presentation. The segment realignment had no impact on our financial condition or results of operations. Prior period segment results have been recast to reflect our new reportable segments. A description of our reportable segments is as follows: 79 Table of Contents Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and governmental MRO marketplace. Lawson primarily distributes MRO products to its customers through a network of sales representatives and an inside sales channel throughout the United States and Canada. TestEquity is a distributor of test and measurement equipment and solutions, industrial and electronic production supplies, vendor managed inventory programs, and converting, fabrication and adhesive solutions from its leading manufacturer partners supporting the aerospace and defense, wireless and communication, semiconductors, industrial electronics and automotive, and electronics manufacturing industries. Gexpro Services is a global supply chain solutions provider, specializing in the development of mission critical production line management, aftermarket and field installation programs. 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. The Company also has an “All Other” category which includes unallocated DSG holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments. There is no revenue associated with the All Other category. 80 Table of Contents Financial information for the Company’s segments and reconciliations of that information to the consolidated financial statements is presented below. Year Ended December 31, (in thousands) 2025 2024 2023 Revenue Lawson $ 481,088 $ 469,044 $ 468,711 TestEquity 783,237 771,180 641,768 Gexpro Services 496,655 440,723 405,733 Canada Branch Division 221,426 125,099 55,890 Intersegment revenue elimination ( 2,383 ) ( 1,942 ) ( 1,700 ) Total revenue $ 1,980,023 $ 1,804,104 $ 1,570,402 Cost of goods sold Lawson $ 217,058 $ 211,784 $ 203,251 TestEquity 613,707 595,368 499,916 Gexpro Services 341,685 302,228 284,664 Canada Branch Division 147,910 82,897 32,396 Intersegment cost of goods sold elimination ( 2,375 ) ( 1,948 ) ( 1,700 ) Total cost of goods sold $ 1,317,985 $ 1,190,329 $ 1,018,527 Selling, general and administrative expenses Lawson $ 245,267 $ 242,705 $ 232,962 TestEquity 155,125 171,845 158,317 Gexpro Services 106,159 101,962 94,069 Canada Branch Division 65,802 36,178 17,763 All Other 11,422 5,130 5,773 Total operating expenses $ 583,775 $ 557,820 $ 508,884 Operating income (loss) Lawson $ 18,763 $ 14,555 $ 32,498 TestEquity 14,405 3,967 ( 16,465 ) Gexpro Services 48,811 36,533 27,000 Canada Branch Division 7,714 6,024 5,731 All Other ( 11,430 ) ( 5,124 ) ( 5,773 ) Total operating income (loss) $ 78,263 $ 55,955 $ 42,991 Reconciliation to income (loss) before income taxes Interest expense $ ( 55,352 ) $ ( 55,145 ) $ ( 42,774 ) Change in fair value of earnout liabilities ( 1,000 ) ( 988 ) 758 Other income (expense), net ( 2,500 ) ( 358 ) ( 2,982 ) Income (loss) before income taxes $ 19,411 $ ( 536 ) $ ( 2,007 ) Segment revenue includes revenue from sales to external customers and intersegment revenue from sales transactions between segments. The Company accounts for intersegment sales similar to third party transactions that are conducted on an arm’s-length basis and reflect current market prices. Intersegment revenue is eliminated in consolidation. Segment revenue and the elimination of intersegment revenue was as follows: 81 Table of Contents (in thousands) Lawson TestEquity Gexpro Services Canada Branch Division Elimination Total Year Ended December 31, 2025 Revenue from external customers $ 480,768 $ 782,367 $ 495,495 $ 221,393 $ — $ 1,980,023 Intersegment revenue 320 870 1,160 33 ( 2,383 ) — Revenue $ 481,088 $ 783,237 $ 496,655 $ 221,426 $ ( 2,383 ) $ 1,980,023 Year Ended December 31, 2024 Revenue from external customers $ 468,976 $ 770,866 $ 439,163 $ 125,099 $ — $ 1,804,104 Intersegment revenue 68 314 1,560 — ( 1,942 ) — Revenue $ 469,044 $ 771,180 $ 440,723 $ 125,099 $ ( 1,942 ) $ 1,804,104 Year Ended December 31, 2023 Revenue from external customers $ 468,379 $ 641,643 $ 404,490 $ 55,890 $ — $ 1,570,402 Intersegment revenue 332 125 1,243 — ( 1,700 ) — Revenue $ 468,711 $ 641,768 $ 405,733 $ 55,890 $ ( 1,700 ) $ 1,570,402 Total assets by segment and long-lived assets by geographic area were as follows: December 31, (in thousands) 2025 2024 Total assets by segment Lawson $ 548,169 $ 524,077 TestEquity 624,829 654,315 Gexpro Services 351,552 331,811 Canada Branch Division 210,625 199,362 All Other 13,446 17,690 Total $ 1,748,621 $ 1,727,255 Long-lived assets by geographic area (1) United States $ 796,554 $ 818,100 Canada 142,183 138,218 Europe 31,006 30,345 Pacific Rim 5,967 4,751 Latin America 3,224 3,615 Total $ 978,934 $ 995,029 (1) Long-lived assets include property, plant and equipment, rental equipment, goodwill, intangibles, right of use operating lease assets, and other assets . Refer to Note 4 – Revenue Recognition for disaggregated revenue by geographic area. 82 Table of Contents Capital expenditures and depreciation and amortization by segment were as follows: Year Ended December 31, (in thousands) 2025 2024 2023 Capital expenditures Lawson $ 9,459 $ 5,163 $ 6,626 TestEquity 25,103 12,692 2,955 Gexpro Services 3,830 4,269 5,053 Canada Branch Division 2,103 1,069 703 All Other — — — Total $ 40,495 $ 23,193 $ 15,337 Depreciation and amortization Lawson $ 27,074 $ 24,349 $ 19,532 TestEquity 33,032 30,799 26,002 Gexpro Services 14,128 15,489 15,986 Canada Branch Division 6,645 3,739 2,068 All Other — — — Total $ 80,879 $ 74,376 $ 63,588 Note 15 – Commitments and Contingencies From time to time, the Company is a party to various legal proceedings that have arisen in the ordinary course of business. The Company records accruals for loss contingencies when losses are probable and reasonably estimable. 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 The Company provides a 401(k) defined contribution plan to allow employees a pre-tax investment vehicle to save for retirement. The Company made contributions to the 401(k) plan of $ 9.4 million, $ 7.5 million and $ 7.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. Note 16 – Related Party Transactions Consulting Services Individuals employed by LKCM Headwater Operations, LLC, a related party of LKCM, have provided the Company with certain consulting services for interim executive management in addition to assisting in identifying cost savings, revenue enhancements and operational synergies of the combined companies. For the years ended December 31, 2025, 2024 and 2023, expense of $ 1.1 million, $ 1.2 million and $ 0.6 million, respectively, was recorded in Selling, general and administrative expenses within the Consolidated Statements of Operations and Comprehensive Income (Loss), reflecting expenses incurred for these consulting services. Principal Executive Office Lease In connection with the Company’s headquarters move to Fort Worth, Texas in 2023, the Company has been utilizing office space in a building that is leased by LKCM. The Company is not charged any rent or other amounts for the use of the office space. Significant Shareholder LKCM, entities affiliated with LKCM and J. 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, 83 Table of Contents 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 Certain entities affiliated with LKCM and J. Bryan King exercised their basic subscription rights and over-subscription rights in the Rights Offering and purchased approximately 3.6 million additional shares of DSG common stock at a purchase price of $ 22.50 per share. Following the completion of the Rights Offering on May 30, 2023, entities affiliated with LKCM and Mr. 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 . 84 Table of Contents Distribution Solutions Group , Inc. Schedule II - Valuation and Qualifying Accounts The roll forward of valuation accounts were as follows (in thousands): Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period Valuation allowance for deferred tax assets: Period ended December 31, 2025 $ 14,868 $ 4,411 $ — $ 19,279 Period ended December 31, 2024 $ 8,457 $ 6,411 $ — $ 14,868 Period ended December 31, 2023 $ 815 $ 7,642 $ — $ 8,457 85 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 86 Table of Contents