Good afternoon, everyone. Next presenting today is going to be Distribution Solutions Group, DSGR is the ticker. With us from the company is Ron Knutson, who's the CFO. Ron is also the CFO of what you probably remember from here in Chicago, especially Lawson Products, which was one of the businesses that was merged into the multiple business here of Jexpro Services, services, test equity, and loss in products to create distribution solutions groups. So some of you may remember Ron, but if not, I'll turn it over to Ron to go from there.

Thanks. Thanks, Steven. And good afternoon, everybody. So with me also today is Brett Scarborough, Brett's VP of Strategy, Investor Relations on the DSG side, and Brett works really close. He's actually LKCM, which is our largest shareholder, owning 78%. So Brett plays a critical role both on the LKCM side as well as DSG, so he's here to help us out this afternoon as well. So I'm going to give just a high-level overview of DSG, and as Stephen mentioned, the bringing together of three organizations, Lawson Products on the MRO side, Jexpro Services on the OEM production side, and then Test Equity on the industrial technology side. What I would say is the common thread amongst all three of these companies and really DSG's overall value proposition to our customers is that we are a high-touch, high-value, very well-embedded with our customers and provide them not only the product but really the additional labor and services that they need. So we're not just a straight distribution organization. All we're worried about is distributing product. A big, big piece of our value to our customers is the additional support that we offer through them through VMI services, through sourcing services, through additional technical support, whether or not it's on the technology side or just on the product side, and really well embedded within the organization. Just some high-level stats, we're about a $2 billion organization on a combined basis in terms of revenues, earnings or adjusted EBITDA running right around 10%. when we brought the organization together three and a half years ago we were less than a billion dollars in revenue and we were about 90 million dollars in EBITDA this year we're on a run rate of about 195 million if you look at the trailing 12 so effectively in about three and a half years we've doubled the size of the business both through organic improvement of our of our operations and We'll talk a little bit about the three individual companies and how they go to the market, and then also our acquisition strategy, which is a big, big piece of our overall growth strategy. We service over 200,000 customers, and about 85% of our revenue is in North America. But one of the things that's really nice with DSG is we have really no customer concentration or no end market concentration either. So it's a great position to be in when we see any softening within any of our end markets to be able to leverage our relationships with a lot of other customers. so maybe before we jump it jump into a ton of detail kind of why why invest in DSG I've touched on a couple of these points we're a leading specialty distributor that's how we describe ourselves we go to market with a really strong product sourcing capabilities we work with over 10,000 suppliers we have in excess of a half a million SKUs that we can get out to our customers really and and and all of our companies have the ability to source products even though we may not stock them within our distribution centers as well comprehensive high-touch high-value distribution services so that can range anywhere from Lawson Products has about a thousand sales reps that are We're going out and visiting 70,000 customers, and effectively our customers are outsourcing the labor to Lawson to show up for 45 minutes a week. Lawson Products loves their products, but also operates at a gross margin, product margin, of around 70%. You don't see that within normal distributors, and the reason we're able to achieve that 70 is because the customers value the service and the offering and the knowledge that our sales reps take to our customers. A couple of areas that, and I'll touch on this later as well, a couple of areas that really places DSG in a really strong position from a macro perspective, I would say labor shortages. All three of our companies, all three of our verticals offer a lot of labor support to our to our customers we don't see that labor shortage getting easier we in fact see it getting tougher so to the extent that we can supplement our customers with with on-site labor you know we think that that's a really good solution for for our customers to outsource that to us on sourcing bringing production back to the u.s Again, that places really all three verticals in a really strong position, whether or not it's break-fix on the MRO side, whether or not it's OEM production on the Class C parts, or if it's industrial technology, which is really a test equity group, bringing a lot of those facilities and production back to the states places DSG in a really strong position. And then lastly, the IoT of everything. Everything we touched today has some type of technology slant to it. Test Equity Group, which is about an $800 million piece of our business, supports all of that production as well as some test and measurement equipment that places them in a great position to take advantage of that. Proven acquisition platform. We've made, technically we've made nine acquisitions. Since we brought DSG together, there's a couple more that closed right about at the same time that we brought DSG together. So you'll see we flip back and forth between 9 and 11 sometimes. But on the 9, we've deployed about $550 million of capital. About $100 million of that was through a rights offering, and the remainder of that was really through internal cash flow generation and debt on our balance sheet. And then driving mid to long term, EBITDA expansion, all three verticals have expansion opportunities from a margin standpoint in generating consistent, really strong cash flows. If we think about where or free cash flow generation, our CapEx is only about 1% of our revenue. So to my point earlier on $195 million of trailing 12 EBITDA, we're only putting back about $20 million back in from a CapEx perspective. So we really like the free cash flow generation of DSG. The other piece that kind of comes right along with that is why we like specialty distributors. And, you know, it's a business model that really differentiates us from many other distributors. You know, we are not out competing on price with Amazon or with anybody else that's solely looking for price is their way to win the customer. We feel like our capabilities, our technical knowledge, our ability to really be in front of our customers on multiple levels of platforms and our ability to source products is a real strength of DSG and really builds a nice competitive landscape for us or a competitive moat. that it's hard for others to replicate that. We believe that the consolidation and the acquisition of companies within this market, it's a pretty fragmented market. There are hundreds of acquisition opportunities. I mentioned that we've made nine so far within the first three and a half years. Typically, we will be paying in the, you know, high single digit as a multiple of EBITDA. We like to buy really good businesses that we see a path towards margin expansion and a reduction of the turns in terms of where we bought them at. And then I touched on this, you know, diversification across a lot of end markets, customer suppliers and markets geographies and we're resilient through a lot of business cycles even even you know if you look at you know what we've done in the last three and a half years you know I would describe the industrial distribution space is relatively flat I think ISM is has been down for 29 out of the last 31 months or something like that so even within that we've been able to really execute on a really nice platform that we've put together. I'm not going to touch too much on this. I think I already hit it pretty hard relative to the value-added capabilities, and I'll talk a little bit about this on each of the three businesses, but even as an example, one of the offerings that really, I think, puts Jexpro services apart from other competitors is about 70 percent of their products that they provide to our customers is spec to the customer's need. So what will happen there is a customer will come to us. They will say, we want you to handle all of the class C items, which could be 60% to 70% of the parts that may go into the production, but it may only be 5%, 6%, 8% of the cost. And so our customers look at that and say, look, they would rather focus on the larger dollar items from their own purchasing department, and they provide Jexpro services the specs. We go out, we find the manufacturer, we provide all the just-in-time delivery, we've got insight into the customer's production cycle, and we make sure that the product is there when they need it. So that's just one example of how in-depth we are within our customers and how well embedded we are within our customers. And then the human capital piece of it, I can't emphasize this enough, you know, our human capital, the sales individuals that we have on board, the thousand sales reps at Lawson or the technical individuals within the test equity group, you would think that selling solder is not a technical sale, but it is. You have to know all the dynamics of the different types of welding equipment and soldering and all the specifics around, you know, tapes and adhesives in terms of what can affix to what different types of products. So that's a real skill set that I would say goes across all three of the verticals for DSG. So again, I think I've hit on most of these items. Let me just pull out a couple of items here really quick. Strong, sticky role within the value chain of our customers. We have upwards of a 92% revenue retention. So once we are in with a customer, we retain that customer. And I would say even on the Jexpro services side, that number is closer to 98%. And certainly on the Lawson side within our larger accounts, it's a really high retention rate as well. It's rare that we look at some of our larger customers that we lose the business. I mentioned this, 10 plus industries, over 200,000 customers that we service, and about 10,000 different suppliers. When we brought the three companies together pre-merger, our EBITDA was running at about 8%, south of the $100 million that I mentioned previously. Trailing 12, as we look at it most recently, were about 9.5%. I always view that really more as about a 10%. A couple of the acquisitions that we've made recently, we knew were going to compress that a bit. In fact, one acquisition we made a year ago, Source Atlantic, up in eastern Canada, has compressed our margins over the last couple of quarters by about 60 bps. We're not concerned about that. We're not always going out trying to acquire companies that will be accretive to that percentage, but we certainly have a path where it will be creative. So we're looking for really good assets, and some may perform better than our 10%, and the last couple of larger ones that we've made have been less than 10%. But, again, they're really good assets and provide a longer-term, you know, value creation for DSG. And then, really, you know, we'll talk a little bit about our end markets. We have, you know, it's a dual-pronged growth strategy. It's both organic and it's acquisitions. And acquisitions plays a big, big part of our overall growth strategy. As you look at most of these businesses, you would say historically they've operated at GDP. We would say within our internal initiatives, within the organizations, within all three verticals, we believe it should be GDP plus a point or two. And we feel like, you know, a lot of the underlying macro changes, positions as well to be able to achieve that. This slide really just gives you a little bit of an overview of some of the end markets. Again, you can see here no concentration from a customer perspective or from an end market perspective. And then I think I touched on most of these items. You know, the value creation themes that we really lean into heavily are around the labor piece, the IOT piece, and then certainly the on-shoring and near-shoring activities that we believe are positioned for nice improvements as well. So let me spend just a couple of minutes. I know I went through that pretty quickly, but let me spend just a couple of minutes on each of the three verticals as we define them. It'll give you a little bit of an overview in terms of what the business does and some of the value there as well. So on the Lawson product side, again, you may know Lawson, Chicago-based business, 75, almost 75-year-old organization. VMI, vendor-managed inventory, so about 1,000 sales reps, a little less than that. Today we're sitting at about 930 sales reps. Our sales reps go into a customer's location. We place real estate within our customer's location, so bins and cabinets. And our sales reps will visit 70,000 customers. They'll make four or five visits a day. They will put product away that it was shipped to our customers from last week. They will do an informal inventory and actually place the order on behalf of the customer. In many situations, the customer doesn't even know they placed an order until the product shows up. That's how well embedded we are within our customers. It is a high relationship, high trust. You know, our real motto or what we're delivering on is when the mechanic reaches into the bin, we want to make sure that the part is there. You know, the fastest way for our customers to be frustrated is either, one, we've not anticipated that demand, or secondly, that we're overstocking the bins. These are consumable Class C parts with an average piece price across Lawson of $1.22. So it can be a hydraulic fitting, it can be a drill bit, it can be nuts, washers, electrical components. Lawson has 12 product categories that we sell. and and the revenue number you see here at the 703 that does include the canadian operations as well which would include bolt supply which is on the western part of canada and then the acquisition of source atlantic which we made a year ago in eastern canada on jexpro services here revenues of about 25% of DSG's revenue, about $480 million, trailing 12 revenues, described a little bit about, you know, how they go to market. They provide really classy parts into the manufacturing process, about 1,800 to 2,000 customers, so much larger customer than what Lawson has, and really well-embedded, really good relationships, we typically will support our customers wherever they go. And so we are in a position to be able to pick up additional volume through their growth. Again, our value proposition at Jex Pro Services is that we take all of those Class C items that the customer doesn't necessarily want to deal with, and we deal with them. We go out, we find the manufacturer, we make sure it shows up in time, we've got insight into their production cycle, and we make sure that it's there on a JIT basis and also offer VMI services to make sure that that product is on hand. Six diverse end markets here, renewables, technology, aerospace and defense, industrial power, consumer-run industrials, and transportation. Jexpro has a great ability to be able to reallocate resources to grow the business depending upon which of those end markets is growing or if any of those are tightening up. And I would say if you look at Jexpro, really strong performance over the last year, over the last, you know, four to five quarters. They've got really good insight into where these end markets are heading and are positioned very well to take advantage of that, you know, in the short and long term. Jexpro Services continues to invest on the people side, even though their margins are in the 14% range. They continue to make really, really good smart investments to be able to expand their base of business on a relatively fixed cost structure, which allows a nice operating leverage on the Jexpro side. And then the test equity group makes up about 40% of DSG's revenue, about $800 million in total. That business really was, so the legacy test equity business was about a $400 million business. We acquired Hisco, Houston Industrial Supply Company, in June of 2023, basically doubled the size of this vertical within DSG. About 20% of test equities revenue is on the test and measurement side, and 80% being electronic production supplies that would support the manufacturing, anything industrial technology-wise. On the test and measurement side, oscilloscopes, they are either desktop or handheld units that can measure wattage, voltage, noise interference, really anything that needs to be tested in the electronic production environment. The test and measurement equipment can do that, and we both sell that equipment as well as lease it. On the electronic production supplies, those are items that are going into, I mentioned earlier, solder, or tapes, adhesives, specialty tools, anything that really fits into the production environment of anything technology. So you can see that there's a nice connection point between those two. very technical type of sales and so you know really strong sales team there that are able to go into customers and specifically recommend exactly what they need from a from a free cash flow perspective and for how we think about cash flow you know we continue to reinvest in the in the business whether or not it's through internal initiatives such as expanding the loss and sales force or hiring you know key individuals into the jex pro services team to expand their business we are you know continuing to put dollars back in the business either from an internal organic initiative or through mna i commented earlier about what we've done on the mna side and then when it makes sense we also purchase shares back the first couple of quarters of this year we've bought back about 20 million dollars worth of our shares so we think that's a good return of our of our capital as well as we sit today we've got about a 1.1 billion dollar credit facility we ended the second quarter with really with nothing drawn under our revolver which is 255 of the 1.1 and we were sitting with about 60 million dollars of cash so we've got you know the balance sheet is really strong, and we continue to throw off positive cash flow. Let me touch base really quick on the M&A side, and then we'll open it up for any questions. As I mentioned, you know, nine acquisitions, what we're not doing is we're not buying turnaround businesses. We like to buy really good assets, those that have typically have been around for some period of time. Of the nine acquisitions that we've made, none of those nine have been through a bank process. They've all been identified either through our M&A team, through support of the LKCM team, or individually within each of the verticals. Each vertical has their own CEO, their own CFO, their own management teams. We run those verticals separately. and what I always describe is we're protecting the commercial side of the business because we go to market differently and we have different types of buyers that are buying those services. So we really like nice assets that if you look back historically, we've paid kind of in the high single-digit multiples standpoint. Again, we're not overly concerned if they're going to compress our overall margins a bit as long as we've got a path to identify the synergies and a path for it to be accretive to us. And you can see here, I mean, we look at everything from product offerings to geographic coverage and markets, service capabilities, calibration, for example, on the test and measurement side through, in fact, we picked up some of those capabilities through a recent acquisition we made in November of last year. really quick on the on the financial highlights coming off a really strong quarter you'll see we had total revenue growth of over 14 percent about three three point three percent of that was organic the other were the acquisitions that closed in 2024 you'll see a nice jump up in our overall EBITDA from 42.8 on a sequential basis up to almost 49 million dollars all of that is organic so that's that's a really nice movement in the right direction typically our second and third quarters are our strongest quarters so we would expect a lift there generally and we were able to to certainly achieve that in the in the quarter and then you'll see a nice overall revenue growth there as well over the last over the last five quarters from a from a capital allocation standpoint, I think I hit on this a little bit. Our overall leverage right now sits at about three and a half. When we brought the three businesses together, we were at three and a half as well. So we've been able to grow the business, make all the acquisitions, and keep the leverage point at about three and a half times. Publicly, we've said we're comfortable in that three to four times. If we were to stop making acquisitions, we would delever very quickly, But that's not our intention. Our intention is to use the balance sheet and to reinvest the capital into the M&A process. Just really briefly on the alignment that you would find within DSG, I would describe us as a very highly aligned organization. I mentioned when I introduced Brett, Luther King Capital, Headwater, they own about 78 percent of the shares of DSG most you know it happened through not only purchasing shares in the open market on Lawson but also through the combination of test equity and Jexpro services which were 100 percent owned by LKCM Headwater so effectively when they contributed the equity they were awarded more shares in return for that equity of the of the three companies. Mentioned each of the three verticals have separate CEOs, separate management teams. We've got Cesaro Lanusa on Lawson, Bob Connors on Jax Pro Services, and Barry Litwin, who just joined us about six weeks ago on the test equity group. And then certainly Brian King, who leads up the LKCM headwater piece, is the CEO and chairman, has really been involved on the Lawson side going back to probably 2012 or 2013 when LKCM started purchasing shares in the open market. So knows distribution extremely well, which is, I would say, an area that LKCM continues to highly invest in on their headwater operations, or headwater, LKCM headwater side. So let me, we've got about five or six minutes left. Why don't I just open it up for questions, and we'll take it from there. Yes. Yeah. So right now, we believe that there's enough M&A activity. The pipeline is pretty strong right now. We feel like the markets within those three verticals are fragmented enough where most of our acquisition is focused within those three verticals. it's it's not to say that we'll never add a fourth leg to the stool but but right now um there's plenty of opportunity within within those three um and then on the integration side it it somewhat depends um you know of the nine that we've acquired a few of those we've 100 integrated into our existing just because it it just the businesses are so similar um and there's others that we're still operating separately source Atlantic for example we're integrating that with bolt supply which is in the western part of Canada but we're not probably going to fully integrate it within the loss inside so you know I mentioned earlier about you know we were very protective of how we go to market from a commercial perspective and certainly we want to be able to you know have the right systems and integration process hisco though for example which i mentioned earlier as well we have fully integrated that into the test equity group so it's a little it's a little kind of half and half i would probably say other questions yeah yeah

yeah yeah yeah so so this investment is the most important investment we have at lkcm headwater and so yes we have a lot of other distribution investments um but if we come across an asset that fits in dsg it's going to go in dsg because it's if it's a creative and it creates value it's

it's a worth it's worth a lot more to us in dsg yeah so um what i would so we we have um what I would say is pretty strong pricing capabilities with within DSG so as I think about the amount of product that we're directly importing it's in the single digits relative to our total cost to get sold and our total purchases we certainly have domestic suppliers that are importing product that find our way they find their way in as well um but we've you know we've said publicly and and we've been able to work with our customers um from a pricing standpoint and also from a sourcing perspective so we don't believe that you know inflation typically is good for uh for distribution and we've seen that in the past we saw that in 2022 we don't see tariffs as you know an issue relative to compressing our margins and in fact it you know it actually gives us an opportunity to to strengthen our relationships with a lot of our customers I didn't mention this but on the Lawson side 40 percent of what Lawson sells is private label, highly engineered product. So if we're experiencing higher tariff rates that are coming through on import products within Lawson, most of that private label is manufactured here in the States. It's an opportunity for us to go to our customers with a different solution there, which is, and when I say private label, when you think about good, better, or best, it's at the good level. Typically, private label is at the best level from a quality standpoint. point. Ours are highly engineered products, so it actually offers us the ability to go at our customers, you know, with a different source. Anything else? It doesn't look like it. Okay. Thanks, everybody. Appreciate your time.