Distribution Solutions Group Inc. reported consolidated revenue of $517.96 million for the third quarter ended September 30, 2025, a 10.7% year‑over‑year increase that exceeded analyst estimates of $501.53 million.
Operating income rose to $23.62 million, while non‑GAAP adjusted EBITDA reached $48.46 million, representing a 9.4% margin—down 1.1 percentage points from the 10.5% margin reported in the same quarter last year. The margin decline was driven by higher employee‑related costs, particularly healthcare, and the inclusion of the 2024 Source Atlantic acquisition, which compressed adjusted EBITDA as a percentage of sales by approximately 11 basis points.
Cash flow from operations was $38.40 million. Total liquidity stood at $335.4 million, including $69.214 million in cash and cash equivalents. Share repurchases exceeded $20 million in the first nine months of 2025, underscoring management’s confidence in the business.
Segment revenue totals were $121.55 million for Lawson Products, $59.98 million for the Canada Branch Division, $130.53 million for Gexpro Services, and $206.48 million for TestEquity. All segments posted operating income gains, with Gexpro Services and the Canada Branch Division showing notable margin expansion.
Management reiterated a cautious outlook for the fourth quarter, citing ongoing macroeconomic headwinds such as inflation, tariffs, and higher interest rates. The company remains focused on executing its growth strategy, maintaining disciplined capital allocation, and preserving liquidity to support future acquisitions and shareholder returns.
The company’s free cash flow improved markedly, turning positive to $40.04 million in Q3 2025 from a negative $23.02 million in the same period last year. Total debt stood at $711.639 million, with interest expense of $42.408 million year‑to‑date, factors that continue to weigh on earnings.
Distribution Solutions Group’s Q3 results demonstrate robust revenue growth and strong operating cash flow, while margin compression reflects the impact of cost pressures and recent acquisitions. The company’s liquidity position remains solid, and its capital allocation strategy continues to support shareholder value.
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