Q4 2025 Distribution Solutions Group Inc Earnings Call

March 5, 2026

Operator: Greetings. Welcome to the Distribution Solutions Group Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Sandy Martin. You may begin.

Speaker #2: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Sandy Martin.

Speaker #2: You may begin. Good morning and welcome to the Distribution Solution Group's fourth quarter and full year 2025 earnings call. Joining me on today's call are DSG's chairman and chief executive officer, Brian King, and executive vice president and chief financial officer, Ron Knutson.

Sandy Martin: Good morning and welcome to the Distribution Solutions Group's Q4 and full year 2025 Earnings Call. Joining me on today's call are DSG's Chairman and Chief Executive Officer, J. Bryan King, and Executive Vice President and Chief Financial Officer, Ron Knutson. In conjunction with today's call, we have provided a financial results slide deck posted on the company's IR website at investor.distributionsolutionsgroup.com. Please note that statements on this call and in today's press release contain forward-looking statements concerning goals, beliefs, expectations, strategies, plans, future operating results, and underlying assumptions subject to risks and uncertainties that could cause actual results to differ materially from those described. In addition, statements made during this call are based on the company's views as of today.

Speaker #2: In conjunction with today's call, we have provided a financial results slide deck posted on the company's IR website at investor.distributionsolutionsgroup.com. Please note that statements on this call and in today's press release contain forward-looking statements concerning goals, beliefs, expectations, strategies, plans, future operating results, and underlying assumptions subject to risks and uncertainties that could cause actual results to differ materially from those described.

Speaker #2: In addition, statements made during this call are based on the company's views as of today, the company anticipates that future developments may cause those views to change, and we may elect to update the forward-looking statements made today but we disclaim any obligation to do so.

Sandy Martin: The company anticipates that future developments may cause those views to change, and we may elect to update the forward-looking statements made today, but we disclaim any obligation to do so. Management will also refer to certain non-GAAP measures, and the reconciliation to the nearest GAAP measures are available at the end of our earnings release. The earnings release issued earlier today was posted on our investor relations website. A copy of the release has also been included in a current report on Form 8-K filed with the SEC. Lastly, this call is being webcast live on DSG's investor relations website, and a replay will be available through 19 March. I will now turn the call over to J. Bryan King. J. Bryan.

Speaker #2: Management will measures and the reconciliation to the nearest GAAP measures that are available at the end of our earnings release. The earnings release issued earlier today was posted on our investor relations website.

Speaker #2: A copy of the release has also been included in a current report on Form 8K filed with the SEC. Lastly, this call is being webcast live on DSG's investor relations website and a replay will be available through March 19th.

Speaker #2: I will now turn the call over to Brian King. Brian? Thanks, Sandy. Good morning, everyone, and thank you for joining us. As events unfold in the Middle East, we are actively assessing any potential implications for our business.

J. Bryan King: Thanks, Sandy. Good morning, everyone, and thank you for joining us. As events unfold in the Middle East, we are actively assessing any potential implications for our business, our customers, and impact on the broader supply chain. Our thoughts and prayers are with the military personnel and civilians who are in harm's way and with their families. We will continue to monitor the potential implications for global markets and are committed to operating with resilience, discipline, and care during this period of elevated uncertainty. We are not where we wanna be at the end of the quarter, but our confidence and vision for the future remains strong. 2025 was a critical, internally focused reinvestment, retooling, and digesting year for DSG, as well as one where we managed through some dynamic pricing, supply chain, and numerous one-time costs curveballs.

Bryan King: Thanks, Sandy. Good morning, everyone, and thank you for joining us. As events unfold in the Middle East, we are actively assessing any potential implications for our business, our customers, and impact on the broader supply chain. Our thoughts and prayers are with the military personnel and civilians who are in harm's way and with their families. We will continue to monitor the potential implications for global markets and are committed to operating with resilience, discipline, and care during this period of elevated uncertainty. We are not where we wanna be at the end of the quarter, but our confidence and vision for the future remains strong. 2025 was a critical, internally focused reinvestment, retooling, and digesting year for DSG, as well as one where we managed through some dynamic pricing, supply chain, and numerous one-time costs curveballs.

Speaker #2: Our customers, and impact on the broader supply chain. Our thoughts and prayers are with the military personnel, and civilians who are in harm's way, and with their families.

Speaker #2: We will continue to monitor the potential implications for global markets and are committed to operating with elevated uncertainty. We are not where we want to be at the end of the quarter, but our confidence and vision for the future remain strong.

Speaker #2: 2025 was a critical, internally focused, reinvestment, retooling, and digesting year for DSG. As well as one where we managed through some dynamic pricing and supply chain and numerous one-time costs curveballs.

J. Bryan King: While it was at time a dizzyingly dynamic year through our daily North Star commitment to staying focused on investing in the business with a lens on long-term value creation, our urgency to offset shifting rules in the marketplace sharpened our focus on core fundamentals of building a better DSG. Enhanced focus on execution tools and talent on timely accountability across the organization and made us prioritize not delaying targeted significant investments in capabilities and talent to position the company for long-term success. As a result, we go into 2026 with an enhanced perspective on our competitive positioning and long-term levers to drive performance across our North American and global platforms.

Bryan King: While it was at time a dizzyingly dynamic year through our daily North Star commitment to staying focused on investing in the business with a lens on long-term value creation, our urgency to offset shifting rules in the marketplace sharpened our focus on core fundamentals of building a better DSG. Enhanced focus on execution tools and talent on timely accountability across the organization and made us prioritize not delaying targeted significant investments in capabilities and talent to position the company for long-term success. As a result, we go into 2026 with an enhanced perspective on our competitive positioning and long-term levers to drive performance across our North American and global platforms.

Speaker #2: While it was at time a dizzyingly dynamic year, through our daily North Star of commitment to staying focused on investing in the business with a lens on long-term value creation, our urgency to offset shifting rules in the marketplace sharpened our focus on core fundamentals of building a better DSG.

Speaker #2: Enhanced focus on execution tools, and talent, on timely accountability across the organization, and made us prioritize not delaying targeted significant investments and capabilities and talent to position the company for long-term success.

Speaker #2: As a result, we go into 2026 with an enhanced perspective on our competitive positioning and long-term across our North American and global platforms. As I reflected, we navigated challenging headwinds in 2025, including a government shutdown, shifting demand environments, and macroeconomic pressures and emotions, including those driven by fluid tariffs where our to recapture margin still left us short.

J. Bryan King: As I reflected, we navigated challenging headwinds in 2025, including a government shutdown, shifting demand environment, and macroeconomic pressures and emotions. Including those driven by fluid tariff, where our diligent and largely effective efforts to recapture margin still left us short. Our financial results fell short of our expectations in Q4 and for the year, and we own that. However, besides progress in our transformative investments, we enjoyed consistent operational affirmations in the marketplace around our value-added lines of business. Our teams delivered important new business and wallet share wins in each vertical, held on to business on the back of service and capability, and made meaningful progress in our customer-facing capabilities and partnerships in 2025.

Bryan King: As I reflected, we navigated challenging headwinds in 2025, including a government shutdown, shifting demand environment, and macroeconomic pressures and emotions. Including those driven by fluid tariff, where our diligent and largely effective efforts to recapture margin still left us short. Our financial results fell short of our expectations in Q4 and for the year, and we own that. However, besides progress in our transformative investments, we enjoyed consistent operational affirmations in the marketplace around our value-added lines of business. Our teams delivered important new business and wallet share wins in each vertical, held on to business on the back of service and capability, and made meaningful progress in our customer-facing capabilities and partnerships in 2025.

Speaker #2: Our financial results fell short of our expectations in the fourth quarter, and for the year, and we own that. However, besides progress in our transformative investments, we enjoyed consistent operational affirmations in the marketplace, around our value-added lines of business, our teams delivered important new business, and wallet share wins in each vertical, held on to business on the back of service and capabilities, and made meaningful progress in our customer-facing capabilities and partnerships in 2025.

J. Bryan King: We leaned in on improved discipline, heightened institutional adaptability, and enhanced DSG's more broadly presented and refined value-added solutions as confirmed by the marketplace, all of which add up to real 2025 successes and maturity of the business that will make us stronger in the longer term. Turning to slide 4. For the full year, we delivered total revenue growth of 9.8% on 1 less selling day, resulting in $1.98 billion in annual revenue. Organic average daily sales grew by 3.6%, reflecting solid underlying execution. Cash flows in 2025 were strong. We generated $84 million of cash from operations on top of $56 million in 2024. Adjusted EBITDA finished at $175 million, short of our expectations. These results demonstrate our continued focus on cash generation, working capital efficiency, and profitability.

Bryan King: We leaned in on improved discipline, heightened institutional adaptability, and enhanced DSG's more broadly presented and refined value-added solutions as confirmed by the marketplace, all of which add up to real 2025 successes and maturity of the business that will make us stronger in the longer term. Turning to slide 4. For the full year, we delivered total revenue growth of 9.8% on 1 less selling day, resulting in $1.98 billion in annual revenue. Organic average daily sales grew by 3.6%, reflecting solid underlying execution. Cash flows in 2025 were strong. We generated $84 million of cash from operations on top of $56 million in 2024. Adjusted EBITDA finished at $175 million, short of our expectations. These results demonstrate our continued focus on cash generation, working capital efficiency, and profitability.

Speaker #2: We leaned in on improved discipline, heightened institutional adaptability, and enhanced DSG's more broadly presented and refined value-added solutions as confirmed by the marketplace, all of which add up to real 2025 successes and maturity of the business that will make us stronger in the longer term.

Speaker #2: Turning to slide four, for the full year, we delivered total revenue growth of $9.8% on one less selling day, resulting in $1.98 billion in annual revenue.

Speaker #2: Organic average daily sales grew by 3.6%, reflecting solid underlying execution. Cash flows in 2025 were strong. We generated $84 million of cash from operations on top of $56 million in 2024.

Speaker #2: Adjusted EBITDA finished at $175 million, short of our expectations. These results demonstrate our continued focus on cash generation, working capital efficiency, and profitability. Throughout the year, demand remained healthy across aerospace and defense, semiconductor-related technology, renewables, and, as the year progressed, industrial power.

J. Bryan King: Throughout the year, demand remained healthy across aerospace and defense, semiconductor-related technology, renewables, and as the year progressed, industrial power. During Q4, we began to see demand soften in renewables in North America, which we are actively managing by pivoting growth initiatives in that sector towards the strong renewables demand growth for DSG's improved presentation of capabilities in the global marketplace. Expanding our efforts on other end markets where we enjoy exceptional customer partnerships and strong secular and strengthening cyclical momentum, such as in industrial power, technology, and aerospace and defense. Our expanded platform capabilities and ability to support our historic customers and similarly discerning customers on a more global stage are supporting and expanding an accelerating set of dialogues. As we've discussed on previous calls, our financial results will not be linear. Q4 is a good example of that.

Bryan King: Throughout the year, demand remained healthy across aerospace and defense, semiconductor-related technology, renewables, and as the year progressed, industrial power. During Q4, we began to see demand soften in renewables in North America, which we are actively managing by pivoting growth initiatives in that sector towards the strong renewables demand growth for DSG's improved presentation of capabilities in the global marketplace. Expanding our efforts on other end markets where we enjoy exceptional customer partnerships and strong secular and strengthening cyclical momentum, such as in industrial power, technology, and aerospace and defense. Our expanded platform capabilities and ability to support our historic customers and similarly discerning customers on a more global stage are supporting and expanding an accelerating set of dialogues. As we've discussed on previous calls, our financial results will not be linear. Q4 is a good example of that.

Speaker #2: During the fourth quarter, we began to see demand soften in renewables in North America, which we are actively managing by pivoting growth initiatives in that sector towards the strong renewables demand growth for DSG's improved presentation of capabilities in the global marketplace, and expanding our efforts in other end-markets where we enjoy exceptional customer partnerships and strong secular and strengthening cyclical momentum, such as in industrial power, technology, and aerospace and defense.

Speaker #2: Our expanded platform capabilities and ability to support our historic customers and similarly discerning customers on a more global stage are supporting and expanding and accelerating set of dialogues.

Speaker #2: As we've discussed on previous calls, our financial results will not be linear. The fourth quarter is a good example of that. However, these results are certainly not indicative of our long-term plans or confidence in the future.

J. Bryan King: These results are certainly not indicative of our long-term plans or confidence in the future. While we anticipate some quarter-to-quarter challenges to balance earnings with our recent commitment to accelerate our talent recruitment, transitions, and accelerated investments, we are committed to making decisions that prioritize driving a stronger and more profitable DSG in the longer term for all of our committed stakeholders. Recognize, like in this quarter, that the timing of some of those decisions unintentionally lined up with some margin near-term pressure and taxed near-term earnings more than leadership expected. While we didn't want to delay investments and talent decisions to unnaturally smooth earnings at the expense of building a better company, our leadership team still expects much better profitability performance from our DSG platform of capabilities. Let's turn to slide 5 to discuss our business initiatives.

Bryan King: These results are certainly not indicative of our long-term plans or confidence in the future. While we anticipate some quarter-to-quarter challenges to balance earnings with our recent commitment to accelerate our talent recruitment, transitions, and accelerated investments, we are committed to making decisions that prioritize driving a stronger and more profitable DSG in the longer term for all of our committed stakeholders. Recognize, like in this quarter, that the timing of some of those decisions unintentionally lined up with some margin near-term pressure and taxed near-term earnings more than leadership expected. While we didn't want to delay investments and talent decisions to unnaturally smooth earnings at the expense of building a better company, our leadership team still expects much better profitability performance from our DSG platform of capabilities. Let's turn to slide 5 to discuss our business initiatives.

Speaker #2: While we anticipate some quarter-to-quarter challenges to balance earnings with our recent commitment to accelerate our talent recruitment, transitions, and accelerated investments, we are committed to making decisions that prioritize driving a stronger and more profitable DSG in the longer term for all of our committed stakeholders, but recognize, like in this quarter, that the timing of some of those decisions unintentionally lined up with some margin near-term pressure and tax near-term earnings more than leadership expected.

Speaker #2: While we didn't want to delay investments and talent decisions to unnaturally smooth earnings at the expense of building a better company, our leadership team still expects much better profitability performance from our DSG platform of capabilities.

Speaker #2: Let's turn to slide five to discuss our business initiatives. Juxpro Services delivered outstanding operating results in 2025, driven by the strength of the aerospace and defense technology and renewables in markets we serve, despite some fourth-quarter sales softness, full-year organic average daily sales increased 12.3%, with full-year ADS up 13%.

J. Bryan King: Jeppesen Pro Services delivered outstanding operating results in 2025, driven by the strength of the aerospace and defense, technology, and renewables end markets we serve. Despite some Q4 sales softness, full-year organic average daily sales increased 12.3%, with full-year ADS up 13%. We continue to invest in the technology and industrial power end markets, driven by expanding infrastructure needs and increasing AI-driven demand. Our order backlog and new business pipeline remains strong in both segments. While renewables slowed in North America in the second half of 2025, we shifted our investment focus towards global strategies with encouragement of exceptional partners across technology, industrial power, aerospace and defense, and the power generation cycle. We are seeing a meaningful growth opportunity in India, while Southeast Asia is progressing more gradually due to the timing of customer qualifications.

Bryan King: Jeppesen Pro Services delivered outstanding operating results in 2025, driven by the strength of the aerospace and defense, technology, and renewables end markets we serve. Despite some Q4 sales softness, full-year organic average daily sales increased 12.3%, with full-year ADS up 13%. We continue to invest in the technology and industrial power end markets, driven by expanding infrastructure needs and increasing AI-driven demand. Our order backlog and new business pipeline remains strong in both segments. While renewables slowed in North America in the second half of 2025, we shifted our investment focus towards global strategies with encouragement of exceptional partners across technology, industrial power, aerospace and defense, and the power generation cycle. We are seeing a meaningful growth opportunity in India, while Southeast Asia is progressing more gradually due to the timing of customer qualifications.

Speaker #2: We continued to invest in the technology and industrial power in markets, driven by expanding infrastructure needs and increasing AI-driven demand. Our order backlog and new business pipeline remain strong in both segments.

Speaker #2: While renewables slowed in North America in the second half of 2025, we shifted our investment focus towards global strategies, with encouragement of exceptional partners across technology, industrial power, aerospace, and defense, and the power generation cycle.

Speaker #2: We are seeing a meaningful growth opportunity in India, while Southeast Asia is progressing more gradually due to the timing of customer qualifications. Both regions remain relatively small today, but continue to show an excellent acceleration in prospective and current customer engagement across more of our proven value-added capabilities at DSG and Juxpro Services.

J. Bryan King: Both regions remain relatively small today, continue to show an excellent acceleration in prospective and current customer engagement across more of our proven value-added capabilities at DSG and Gexpro Services. Our European business remains strong, with increasing diversification across multiple verticals. Gexpro Services is also expanding its value-added service offerings using robotic automation and AI-enabled tools that enhance customer capabilities across VMI, kitting, manufacturing, and e-commerce solutions. Since bringing DSG together, Gexpro Services went from approximately $350 million in revenue to just under $500 million, mostly organically. Adjusted EBITDA has expanded from approximately $35 million to $64 million in 2025, with margins expanding nearly 300 basis points to 12.8%. This margin expansion reflects scale, broader geographic reach, enhanced value-added capabilities, and disciplined execution of operational efficiencies that leverage our cost structure.

Bryan King: Both regions remain relatively small today, continue to show an excellent acceleration in prospective and current customer engagement across more of our proven value-added capabilities at DSG and Gexpro Services. Our European business remains strong, with increasing diversification across multiple verticals. Gexpro Services is also expanding its value-added service offerings using robotic automation and AI-enabled tools that enhance customer capabilities across VMI, kitting, manufacturing, and e-commerce solutions. Since bringing DSG together, Gexpro Services went from approximately $350 million in revenue to just under $500 million, mostly organically. Adjusted EBITDA has expanded from approximately $35 million to $64 million in 2025, with margins expanding nearly 300 basis points to 12.8%. This margin expansion reflects scale, broader geographic reach, enhanced value-added capabilities, and disciplined execution of operational efficiencies that leverage our cost structure.

Speaker #2: Our European business remains strong. With increasing diversification across multiple verticals, Juxpro Services is also expanding its value-added service offerings using robotic automation and AI-enabled tools that enhance customer capabilities across VMI, kitting, manufacturing, and e-commerce solutions.

Speaker #2: Since bringing DSG together, Juxpro Services went from approximately $350 million in revenue to just under $500 million. Mostly organically. Adjusted EBITDA has expanded from approximately $35 million to $64 million in 2025, with margins expanding nearly 300 basis points to 12.8%.

Speaker #2: This margin expansion reflects scale, broader geographic reach, enhanced value-added capabilities, and disciplined execution of operational efficiencies that leverage our cost structure. As we confidently lean into further investment at Juxpro Services, we are balancing strong optimism around marketplace pull on us to support growth opportunities with an expectation to drive earnings growth while making the important long-term investments in capabilities, geographies, and talent to support performing for our customers at a level that adds to the reasons we are winning wallet share and new mandates.

J. Bryan King: As we confidently lean into further investment at Jeppesen Pro Services, we are balancing strong optimism around marketplace pull on us to support growth opportunities with an expectation to drive earnings growth while making the important long-term investments in capabilities, geographies, and talent to support performing for our customers at a level that adds to the reasons we are winning wallet share and new mandates. As a reminder, JexPro Services launching new customer programs requires upfront investment of significant time and margin, but results in exceptionally sticky customer engagements where we are critical to our customers, and our commitment to doing our job for them thoughtfully and exceptionally reaffirms the partnership between us and our customers.

Bryan King: As we confidently lean into further investment at Jeppesen Pro Services, we are balancing strong optimism around marketplace pull on us to support growth opportunities with an expectation to drive earnings growth while making the important long-term investments in capabilities, geographies, and talent to support performing for our customers at a level that adds to the reasons we are winning wallet share and new mandates. As a reminder, JexPro Services launching new customer programs requires upfront investment of significant time and margin, but results in exceptionally sticky customer engagements where we are critical to our customers, and our commitment to doing our job for them thoughtfully and exceptionally reaffirms the partnership between us and our customers.

Speaker #2: As a reminder, Juxpro Services launching new customer programs requires upfront investment of significant time and margin, but results in exceptionally sticky customer engagements where we are critical to our customers, and our commitment to doing our job for them thoughtfully and exceptionally reaffirms the partnership between us and our customers.

J. Bryan King: The upfront effort and investment can cause a bit of deleveraging of profits in any given quarter as programs ramp up or mature programs slow, like the shift we felt on the margin in the Q4 as new programs in global renewables come on, but domestic programs slow, or as we felt a year or so ago in technology. The great news is that the new business pipeline continues to expand even as mature programs may fluctuate based on each customer's program momentum. We also continue to win significant wallet share. We rarely lose programs. Expanding what Gexpro Services does as a part of DSG allows us to expand our engagement with our customers. Gexpro Services continues to be one of the most exciting growth levers for DSG.

Bryan King: The upfront effort and investment can cause a bit of deleveraging of profits in any given quarter as programs ramp up or mature programs slow, like the shift we felt on the margin in the Q4 as new programs in global renewables come on, but domestic programs slow, or as we felt a year or so ago in technology. The great news is that the new business pipeline continues to expand even as mature programs may fluctuate based on each customer's program momentum. We also continue to win significant wallet share. We rarely lose programs. Expanding what Gexpro Services does as a part of DSG allows us to expand our engagement with our customers. Gexpro Services continues to be one of the most exciting growth levers for DSG.

Speaker #2: The upfront effort and investment can cause a bit of de-leveraging of profits in any given quarter, as programs ramp up, or mature programs slow, like the shift we felt on the margin in the fourth quarter, as new programs and global renewables come on, but domestic programs slow.

Speaker #2: Or as we felt a year or so ago in technology. The great news is that the new business pipeline continues to expand, even as mature programs may fluctuate based on each customer's program momentum.

Speaker #2: We also continue to win significant wallet share. We rarely lose programs, and expanding what Juxpro Services does as a part of DSG allows us to expand our engagement with our customers.

Speaker #2: Juxpro Services continues to be one of the most exciting growth levers for DSG. Looking ahead, we are excited and focused on investing even more deliberately in additional organic and inorganic initiatives to sustain and extend the strong long-term momentum we see at Juxpro Services.

J. Bryan King: Looking ahead, we are excited and focused on investing even more deliberately in additional organic and inorganic initiatives to sustain and extend the strong long-term momentum we see at Gexpro Services. Next, Lawson Products. Average daily sales increased 2.7% in Q4, continuing the momentum from Q3 when average daily sales grew by 3%. Although new VMI installations and wallet share expansions led to organic sales growth throughout the second half of 2025, Lawson's smaller account local revenue continued to be challenged in Q4 as some of the sales force and selling tools transformation over the last couple of years have distracted our resources from doing the exceptional job our customers champion from our unique service model and that we expect.

Bryan King: Looking ahead, we are excited and focused on investing even more deliberately in additional organic and inorganic initiatives to sustain and extend the strong long-term momentum we see at Gexpro Services. Next, Lawson Products. Average daily sales increased 2.7% in Q4, continuing the momentum from Q3 when average daily sales grew by 3%. Although new VMI installations and wallet share expansions led to organic sales growth throughout the second half of 2025, Lawson's smaller account local revenue continued to be challenged in Q4 as some of the sales force and selling tools transformation over the last couple of years have distracted our resources from doing the exceptional job our customers champion from our unique service model and that we expect.

Speaker #2: Next, loss in products. Average daily sales increased 2.7% in the fourth quarter, continuing the momentum from the third quarter when average daily sales grew by 3%.

Speaker #2: Although new VMI installations and wallet share expansions led to organic sales growth throughout the second half of 2025, loss in smaller account local revenue continued to be challenged in the fourth quarter, as some of the sales force in selling tools transformation over the last couple of years have distracted our resources from doing the exceptional job our customers champion from our unique service model and that we expect.

J. Bryan King: Lots of focus and tools, teamed with additional investment in talent and process improvements, are focused on getting this right for our customers, sales team, and for DSG. EBITDA margins were negatively impacted by a slight customer mix shift, deliberate strategic investments, and an unexpectedly elevated healthcare benefit cost in the quarter and for the full year, which Ron will discuss in more detail in a moment. Recently, Lawson has made strategic investments in two leadership roles to strengthen the team through more capabilities and accountability. We brought on Jim Slomka as Chief Revenue Officer and Hilary Bryant as Chief People Officer.

Bryan King: Lots of focus and tools, teamed with additional investment in talent and process improvements, are focused on getting this right for our customers, sales team, and for DSG. EBITDA margins were negatively impacted by a slight customer mix shift, deliberate strategic investments, and an unexpectedly elevated healthcare benefit cost in the quarter and for the full year, which Ron will discuss in more detail in a moment. Recently, Lawson has made strategic investments in two leadership roles to strengthen the team through more capabilities and accountability. We brought on Jim Slomka as Chief Revenue Officer and Hilary Bryant as Chief People Officer.

Speaker #2: Lots of focus in tools, teamed with additional investment in talent and process improvements, are focused on getting this right for our customers, sales team, and for DSG.

Speaker #2: EBITDA margins were negatively impacted by a slight customer mix shift, deliberate strategic investments, and an unexpectedly elevated healthcare benefit cost in the quarter, and for the full year, which Ron will discuss in more detail in a moment.

Speaker #2: Recently, loss in his made strategic investments in two leadership roles to strengthen the team through more capabilities and accountability. We brought on Jim Slomka, as chief revenue officer, and Hillary Bryant, as chief people officer.

J. Bryan King: Jim joined Lawson in January 2026 and brings a proven track record of commercial transformation, having led sales and operations for a $1.8 billion omni-channel enterprise overseeing more than 2,000 sales professionals, delivering a 6-year sales CAGR of 8% and expanding gross margins by 300 basis points. He brings strong discipline around accountability, urgency, process, and commitments to a team-focused enthusiasm for excellence and winning, all consistent with being a former West Point athlete and officer. We are thrilled to welcome Jim to Lawson and DSG and are confident on the immediate impact he will have on the organization. Hillary brings deep global HR leadership experience, most recently managing a worldwide HR organization for a $1.4 billion industrial technologies company with approximately 4,000 employees.

Bryan King: Jim joined Lawson in January 2026 and brings a proven track record of commercial transformation, having led sales and operations for a $1.8 billion omni-channel enterprise overseeing more than 2,000 sales professionals, delivering a 6-year sales CAGR of 8% and expanding gross margins by 300 basis points. He brings strong discipline around accountability, urgency, process, and commitments to a team-focused enthusiasm for excellence and winning, all consistent with being a former West Point athlete and officer. We are thrilled to welcome Jim to Lawson and DSG and are confident on the immediate impact he will have on the organization. Hillary brings deep global HR leadership experience, most recently managing a worldwide HR organization for a $1.4 billion industrial technologies company with approximately 4,000 employees.

Speaker #2: Jim joined Lawson in January 2026 and brings a proven track record of commercial transformation, having led sales and operations for a $1.8 billion omnichannel enterprise, overseeing more than 2,000 sales professionals, delivering a six-year sales CAGR of 8%, and expanding gross margins by 300 basis points.

Speaker #2: He brings strong discipline around accountability, urgency, process, and commitments to a team focused enthusiasm for excellence and winning all consistent with being a former West Point athlete and officer.

Speaker #2: We are thrilled to welcome Jim to Lawson and DSG and are confident on the immediate impact he will have on the organization. Hillary brings deep global HR leadership experience, most recently managing as a worldwide HR organization for a $1.4 billion industrial technologies company with approximately 4,000 employees.

J. Bryan King: She offers a great complement to Jim, bringing a renewed discipline and energy to employee engagement and corporate culture while elevating a clear cadence around growth-focused expectation, urgency, and rewards. These important investments, alongside others that have also been recruited over the last years, put in place critical pieces to now have a stronger ensemble of experienced, been-there-done-that leadership and collectively add meaningfully to our sales and operating foundation as we pursue improved growth and execution in 2026. Turning to our 2026 growth priorities. We are focused on continuing to capture market share and expanding wallet share for our national accounts, including Lawson, Kent, and Government, while reestablishing our commitment to offering the highest level of consistent service out of our sales force for our customers.

Bryan King: She offers a great complement to Jim, bringing a renewed discipline and energy to employee engagement and corporate culture while elevating a clear cadence around growth-focused expectation, urgency, and rewards. These important investments, alongside others that have also been recruited over the last years, put in place critical pieces to now have a stronger ensemble of experienced, been-there-done-that leadership and collectively add meaningfully to our sales and operating foundation as we pursue improved growth and execution in 2026. Turning to our 2026 growth priorities. We are focused on continuing to capture market share and expanding wallet share for our national accounts, including Lawson, Kent, and Government, while reestablishing our commitment to offering the highest level of consistent service out of our sales force for our customers.

Speaker #2: She offers a great complement to Jim, bringing a renewed discipline and energy to employee engagement and corporate culture, while elevating a clear cadence around growth-focused expectation, urgency, and rewards. These important investments, alongside others that have also been recruited over the last years, put in place critical pieces to now have a stronger ensemble of experience, 'been there, done that' leadership, and collectively add meaningfully to our sales and operating foundation as we pursue improved growth and execution in 2026.

Speaker #2: Turning to our 2026 growth priorities, we are focused on continuing to capture market share and expanding wallet share for our national accounts, including Lawson, Kent, and government, while reestablishing our commitment to offering the highest level of consistent service out of our sales force for our customers. With that, a return to growth out of our smaller local accounts will be driven by their efforts and the investment we have made in them.

J. Bryan King: With that, a return to growth out of our smaller local accounts driven by their efforts and the investment we have made in them. A key leading indicator of our growth is in new VMI installations or internally what we refer to as ship-to locations, which we are currently ramping up after a challenging couple of years as we've been working through our sales force transformation. We continue to leverage technology to increase sales effectiveness and are improving the rigor and consistency of sales rep activity, supported by our CRM tool, enhanced training commitment for new FSRs, and a real focus on our DSMs' consistent cadence with our established FSRs around driving growth and consistency in the customer experience.

Bryan King: With that, a return to growth out of our smaller local accounts driven by their efforts and the investment we have made in them. A key leading indicator of our growth is in new VMI installations or internally what we refer to as ship-to locations, which we are currently ramping up after a challenging couple of years as we've been working through our sales force transformation. We continue to leverage technology to increase sales effectiveness and are improving the rigor and consistency of sales rep activity, supported by our CRM tool, enhanced training commitment for new FSRs, and a real focus on our DSMs' consistent cadence with our established FSRs around driving growth and consistency in the customer experience.

Speaker #2: A key leading indicator of our growth is in new VMI installations, or internally what we refer to as Shipto locations, which we are currently ramping up after a challenging couple of years as we've been working through our sales force transformation.

Speaker #2: We continue to leverage technology to increase sales effectiveness and are improving the rigor and consistency of sales rep activity supported by our CRM tool enhanced training commitment for new FSRs and a real focus on our DSMs consistent cadence with our established FSRs around driving growth and consistency in the customer experience.

J. Bryan King: We are also in the early stages of rolling out across our field customer-facing team a route optimization tool that we have been developing that will give them back expensive and frustrating transit time and more of an opportunity to serve and grow our customers. Although a smaller piece of our business, our e-commerce channel continues to deliver double-digit growth, and we are encouraged that more than 30% of customers purchasing through the site are new to Lawson. As we move forward, we remain focused on commercial excellence, the customer experience, and technology to accelerate growth and continuously improve how we serve our customers while also providing flexibility to our customers. Additionally, we are working more closely with our vendor partners to deliver solutions to our customers and to support our commercial team.

Bryan King: We are also in the early stages of rolling out across our field customer-facing team a route optimization tool that we have been developing that will give them back expensive and frustrating transit time and more of an opportunity to serve and grow our customers. Although a smaller piece of our business, our e-commerce channel continues to deliver double-digit growth, and we are encouraged that more than 30% of customers purchasing through the site are new to Lawson. As we move forward, we remain focused on commercial excellence, the customer experience, and technology to accelerate growth and continuously improve how we serve our customers while also providing flexibility to our customers. Additionally, we are working more closely with our vendor partners to deliver solutions to our customers and to support our commercial team.

Speaker #2: We are also in the early stages of rolling out across our field customer-facing team a route optimization tool that we have been developing that will give them back expensive and frustrating transit time and more of an opportunity to serve and grow our customers.

Speaker #2: Although a smaller piece of our business, our e-commerce channel continues to deliver double-digit growth, and we are encouraged that more than 30% of customers purchasing through the site are new to Lawson.

Speaker #2: As we move forward, we remain focused on commercial excellence, the customer experience, and technology to accelerate growth and continuously improve how we serve our customers while also providing flexibility to our customers.

Speaker #2: Additionally, we are working more closely with our customers and to support our commercial team. At our recent sales leadership meeting in February, approximately 50 vendors presented their products and services to our sales team.

J. Bryan King: At our recent sales leadership meeting in February, approximately 50 vendors presented their products and services to our sales team. We are working with a number of those channel partners to improve our product costs as we have in turn invested to support them and our customers with our significant recent investments in our selling and servicing capabilities. We expect some nice progress this year out of our sourcing partnerships. Moving on to the Canada Branch Division. The team made solid operational and synergy progress in Q4 and across the full year, despite macroeconomic headwinds and tariff-related uncertainty that pressured industrial end markets, especially in Canada, throughout 2025. As expected, Q4 revenue declined sequentially due to typical holiday season softness and weather, leading to operational deleverage. In 2025, we completed 4 facility consolidations, with the final consolidation expected by the end of Q1.

Bryan King: At our recent sales leadership meeting in February, approximately 50 vendors presented their products and services to our sales team. We are working with a number of those channel partners to improve our product costs as we have in turn invested to support them and our customers with our significant recent investments in our selling and servicing capabilities. We expect some nice progress this year out of our sourcing partnerships. Moving on to the Canada Branch Division. The team made solid operational and synergy progress in Q4 and across the full year, despite macroeconomic headwinds and tariff-related uncertainty that pressured industrial end markets, especially in Canada, throughout 2025. As expected, Q4 revenue declined sequentially due to typical holiday season softness and weather, leading to operational deleverage. In 2025, we completed 4 facility consolidations, with the final consolidation expected by the end of Q1.

Speaker #2: We are working with a number of those channel partners to improve our product costs, as we have, in turn, invested to support them and our customers with our significant recent investments in our selling and servicing capabilities.

Speaker #2: We expect some nice progress this year out of our sourcing partnerships. Moving on to the Canadian branch division, the team made solid operational and synergy progress in the fourth quarter and across the full year, despite macroeconomic headwinds and tariff-related uncertainty that pressured industrial and markets, especially in Canada, throughout 2025.

Speaker #2: As expected, fourth-quarter revenue declined sequentially due to typical holiday season softness and weather, leading to operational deleverage. In 2025, we completed four facility consolidations, with the final consolidation expected by the end of the first quarter.

J. Bryan King: As we discussed last quarter, because Source Atlantic's purchase price was largely tied to tangible assets, our first full year of transformation has meaningfully de-risked this investment for us, and we continue to believe this was a strong strategic acquisition to grow and scale our Canadian operations. Although the revenue headwind out of the gate has us a full year behind our ambitious profitability objectives our DSG team embraced when we acquired Source Atlantic in late 2024. More recently, the recruited Canadian leadership team reaffirmed that underwriting. While there is still significant profitability tuning work ahead, we are encouraged by our framework in expanding profitability, insights, and discipline that we are building, the team we put in place, and the path and significant progress they are demonstrating to us in the marketplace as the first year of ownership is now closed.

Bryan King: As we discussed last quarter, because Source Atlantic's purchase price was largely tied to tangible assets, our first full year of transformation has meaningfully de-risked this investment for us, and we continue to believe this was a strong strategic acquisition to grow and scale our Canadian operations. Although the revenue headwind out of the gate has us a full year behind our ambitious profitability objectives our DSG team embraced when we acquired Source Atlantic in late 2024. More recently, the recruited Canadian leadership team reaffirmed that underwriting. While there is still significant profitability tuning work ahead, we are encouraged by our framework in expanding profitability, insights, and discipline that we are building, the team we put in place, and the path and significant progress they are demonstrating to us in the marketplace as the first year of ownership is now closed.

Speaker #2: As we discussed last quarter, because Source Atlantic's purchase price was largely tied to tangible assets, our first full year of transformation has meaningfully de-risked this investment for us, and we continue to believe this was a strong strategic acquisition to grow and scale our Canadian operations. Although the revenue headwind out of the gate has us a full year behind our ambitious profitability objectives our DSG team embraced when we acquired Source Atlantic in late 2024, more recently, the recruited Canadian leadership team reaffirmed that underwriting.

Speaker #2: While there is still significant profitability tuning work ahead, we are encouraged by our framework in expanding profitability, insights, and discipline that we are building the team we put in place and the path and significant progress they are demonstrating to us and the marketplace as the first year of ownership has now closed.

J. Bryan King: At the TestEquity Group, we are investing at a renewed feverish pace in the long-term platform we can better see now in this vertical. A massive investment in additional leadership capabilities and tools were made in the business, especially during the last part of 2025. A shift was made concurrent with these investments around dialing up a more intense focus and intentional allocation of resources towards driving a structurally higher margin shift discipline out of a daily cadence around the vertical's growth priorities. Each team member owns specific accountability on discrete levers to impact that outcome. When we committed to these investments, we fully expected a J-curve recovery, with near-term transitions impacting performance, followed by improved revenue growth and profitability as our strategic initiatives take hold.

Bryan King: At the TestEquity Group, we are investing at a renewed feverish pace in the long-term platform we can better see now in this vertical. A massive investment in additional leadership capabilities and tools were made in the business, especially during the last part of 2025. A shift was made concurrent with these investments around dialing up a more intense focus and intentional allocation of resources towards driving a structurally higher margin shift discipline out of a daily cadence around the vertical's growth priorities. Each team member owns specific accountability on discrete levers to impact that outcome. When we committed to these investments, we fully expected a J-curve recovery, with near-term transitions impacting performance, followed by improved revenue growth and profitability as our strategic initiatives take hold.

Speaker #2: At the test equity group, we are investing at a renewed feverish pace in the long-term platform we can better see massive investment in additional leadership capabilities and tools were made in the business, especially during the last part of 2025.

Speaker #2: A shift was made concurrent with these investments around dialing up a more intense focus and intentional allocation of resources towards driving a structurally higher margin shift discipline out of a daily cadence around the vertical's growth priorities and each team member owns specific accountability on discrete levers to impact that outcome.

Speaker #2: When we committed to these investments, we fully expected a J-curve recovery with near-term transitions impacting performance followed by improved revenue growth and profitability as our strategic initiatives take hold.

J. Bryan King: For the full year, average daily sales increased 2%, and organic daily sales grew 1%, driven primarily by test and measurement, rentals, and chambers. In the Q4, revenue grew 0.9% on one additional selling day, supported by continued momentum in rental and refurb, chambers, and T-equip. While test and measurement end markets were under pressure in the Q4, we remain focused on disciplined execution of our growth and profitability prioritization initiatives and are beginning to see the tighter strategic lens and accelerated pacing around cadence and accountability at work.

Bryan King: For the full year, average daily sales increased 2%, and organic daily sales grew 1%, driven primarily by test and measurement, rentals, and chambers. In the Q4, revenue grew 0.9% on one additional selling day, supported by continued momentum in rental and refurb, chambers, and T-equip. While test and measurement end markets were under pressure in the Q4, we remain focused on disciplined execution of our growth and profitability prioritization initiatives and are beginning to see the tighter strategic lens and accelerated pacing around cadence and accountability at work.

Speaker #2: For the full year, average daily sales increased 2%, and organic daily sales grew 1%, driven primarily by test and measurement, rentals, and chambers. In the fourth quarter, revenue grew 0.9% on one additional selling day.

Speaker #2: Supported by continued momentum in rental and refurb, chambers, and tea equip. While test and measurement in markets were under pressure in the fourth quarter, we remain focused on disciplined execution of our growth and profitability prioritization initiatives.

Speaker #2: In our beginning to see the tighter strategic lens and accelerated pacing around cadence and accountability at work. The result is we are seeing the engagement deep into the organization take place.

J. Bryan King: The result is we are seeing engagement deep into the organization take place, and the affirming pipeline activity evolving towards our areas of most differentiated capabilities teamed with our higher margins and return on capital opportunities, including value-added solutions used in rental, test and measurement solutions, chambers, and accelerating the growth and mix around our most value-added elements of our electronic production supply offering to strengthen our margins and earnings. We are currently seeing some accelerating customer engagement building around our core test and measurement expertise, where we have reinforced with a renewed and discrete effort around rededicating resources focused on T&M customer solutions, selling improve our competitive moat at a time when we believe the marketplace has passed the trough and we are seeing acceleration. We also have major initiatives underway to simplify and unify the digital ecosystem.

Bryan King: The result is we are seeing engagement deep into the organization take place, and the affirming pipeline activity evolving towards our areas of most differentiated capabilities teamed with our higher margins and return on capital opportunities, including value-added solutions used in rental, test and measurement solutions, chambers, and accelerating the growth and mix around our most value-added elements of our electronic production supply offering to strengthen our margins and earnings. We are currently seeing some accelerating customer engagement building around our core test and measurement expertise, where we have reinforced with a renewed and discrete effort around rededicating resources focused on T&M customer solutions, selling improve our competitive moat at a time when we believe the marketplace has passed the trough and we are seeing acceleration. We also have major initiatives underway to simplify and unify the digital ecosystem.

Speaker #2: And the affirming pipeline activity, evolving towards our areas of most differentiated capabilities, teamed with our higher margins and return on capital opportunities, including value-added solutions used in rental, test and measurement solutions, chambers, and accelerating the growth and mix around our most value-added elements of our electronic production supply offering.

Speaker #2: To strengthen our margins and earnings. We are currently seeing some accelerating customer engagement building around our core test and measurement expertise where we have reinforced with a renewed and discrete effort around rededicating resources focused on T&M customer solutions, selling, improve our competitive moat, and a time when we believe the marketplace has passed the trough and we are seeing acceleration.

Speaker #2: We also have major initiatives underway to simplify and unify the digital ecosystem. Enhancing the customer experience through ERP consolidation, customer service, and e-commerce platform integration is foundational to our strategy.

J. Bryan King: Enhancing the customer experience through ERP consolidation, customer service, and e-commerce platform integration is foundational to our strategy, and we are actively leveraging AI applications to accelerate execution. At the same time, we are strengthening performance management, incentives, and accountability as we establish new key leadership roles. We're excited about the progress Barry is making to drive a much more disciplined approach to the portfolio of value-added capabilities and products offered across the TestEquity Group vertical. For the employees, we appreciate their support of this accelerated operational pace and accountability, including the shifting of time and resources towards more differentiated growth areas to drive these objectives around mix shift rather than only adding incremental costs in elevated areas of focus.

Bryan King: Enhancing the customer experience through ERP consolidation, customer service, and e-commerce platform integration is foundational to our strategy, and we are actively leveraging AI applications to accelerate execution. At the same time, we are strengthening performance management, incentives, and accountability as we establish new key leadership roles. We're excited about the progress Barry is making to drive a much more disciplined approach to the portfolio of value-added capabilities and products offered across the TestEquity Group vertical. For the employees, we appreciate their support of this accelerated operational pace and accountability, including the shifting of time and resources towards more differentiated growth areas to drive these objectives around mix shift rather than only adding incremental costs in elevated areas of focus.

Speaker #2: And we are actively leveraging AI applications to accelerate execution. At the same time, we are strengthening performance management, incentives, and accountability as we establish new key leadership roles.

Speaker #2: We're excited about the progress Barry is making to drive a much more disciplined approach to the portfolio value-added capabilities and products offered across the test equity group vertical.

Speaker #2: And for the employees, we appreciate their support of his accelerated operational pace and accountability including the shifting of time and resources towards more differentiated growth areas to drive his objectives around mix shift rather than only adding incremental costs and elevated areas of focus.

J. Bryan King: Looking ahead, we are actively increasing our account base and deepening penetration among our existing customers while using new product introductions and private label offerings to expand customer choice and enhance margins. Encouragingly, a growing backlog in January and February of 2026 signals momentum to come in 2026. We recognize that the full impact of these initiatives typically takes several quarters, but we are confident they will result in a structurally stronger, more competitive, materially higher margin TestEquity business over time. With that, I'll turn it over to Ron for details on our Q4 and full year financials. Ron?

Bryan King: Looking ahead, we are actively increasing our account base and deepening penetration among our existing customers while using new product introductions and private label offerings to expand customer choice and enhance margins. Encouragingly, a growing backlog in January and February of 2026 signals momentum to come in 2026. We recognize that the full impact of these initiatives typically takes several quarters, but we are confident they will result in a structurally stronger, more competitive, materially higher margin TestEquity business over time. With that, I'll turn it over to Ron for details on our Q4 and full year financials. Ron?

Speaker #2: Looking ahead, we are actively increasing our account base and deepening penetration among our existing customers, while using new product introductions and private label offerings to expand customer choice and enhance margins.

Speaker #2: Encouragingly, a growing backlog in January and February of 2026 signals momentum to come. In 2026, we recognize that the full impact of these initiatives typically takes several quarters, but we are confident they will result in a structurally stronger, more competitive materially higher margin test equity business over time.

Speaker #2: With that, I'll turn it over to Ron for details on our fourth-quarter and full-year financials. Ron? Thank you, Brian, and good morning, everyone. Turning to slide six and starting with our full-year results for 2025.

Ron Knutson: Thank you, Brian, and good morning, everyone. Turning to slide 6 and starting with our full year results for 2025. As Brian mentioned, consolidated revenues for the year were $1.98 billion, up 9.8% compared to 2024. Incremental revenue from our 2024 acquisitions was $121.5 million, and our organic average daily sales growth for the fiscal year was up 3.6% over 2024. For the year, adjusted EBITDA was $175.2 million or 8.9% of sales, and GAAP net income per diluted share was $0.18 for the year versus a GAAP net loss per diluted share of $0.16 a year ago. Non-GAAP adjusted EPS was $1.24 for the year, compared to $1.44 per share a year ago.

Speaker #2: As Brian mentioned, consolidated revenues for the year were $1.98 billion, up 9.8% compared to 2024. Incremental revenue from our 2024 acquisitions was $121.5 million, and our organic average daily sales growth for the fiscal year was up 3.6% over 2024.

Speaker #2: For the year, adjusted EBITDA was $175.2 million, or 8.9% of sales, and GAAP net income per diluted share was $0.18 for the year, versus a GAAP net loss per diluted share of $0.16 a year ago.

Speaker #2: Non-GAAP adjusted EPS was $1.24 for the year, compared to $1.44 per share a year ago. Full-year margins in 2025 were 80 bps lower than in 2024, primarily due to sales mix shifts, employee-related costs, and other investments.

Ron Knutson: Full year margins in 2025 were 80 bips lower than in 2024, primarily due to sales mix shifts, employee-related costs, and other investments. Q4 revenues were $482 million, up 0.2% versus a year ago, which translated into flat organic sales compared to Q4 2024. For the quarter, we generated adjusted EBITDA of $35.4 million, or 7.4% of sales. Each of our businesses experienced lower year-over-year EBITDA margins, primarily due to sales mix shifts, some incremental bad debt expense, and higher health employee-related costs, namely healthcare benefits. Cash flow from operations was strong, with $16.9 million for the quarter and $84 million for the full year on top of strong results in 2024.

Speaker #2: Fourth-quarter revenues were $482 million, up 0.2% versus a year ago. Which translated into flat organic sales compared to the fourth quarter of 2024. For the quarter, we generated adjusted EBITDA of $35.4 million or 7.4% of sales.

Speaker #2: Each of our businesses experienced lower year-over-year EBITDA margins primarily due to sales mix shifts, some bad incremental bad debt expense, and higher health employee-related costs, namely healthcare benefits.

Speaker #2: Cash flow from operations was strong, with $16.9 million for the quarter and $84 million for the full year on top of strong results in 2024.

Ron Knutson: Before I move on to the individual verticals, I wanted to comment briefly on the DSG consolidated margin for the full year and for the quarter. For the full year, adjusted EBITDA was 8.9% compared to 9.7% for the full year 2024. I would break the 80 bips compression into 2 buckets. The first is primarily longer-term people investments of approximately 20 bips. The remaining 70 bips was driven by timing items and non-recurring items such as healthcare costs, specific customer bad debt reserves, and some lower margin to win specific customers. From a timing perspective, many of these items hit in Q4, resulting in a larger impact on our Q4 margins of 7.4%. Longer term people investments impacted the quarter by approximately 25 bips.

Speaker #2: Before I move on to the individual verticals, I wanted to comment briefly on the DSG consolidated margin for the full year and for the quarter.

Speaker #2: For the full-year adjusted EBITDA was 8.9% compared to 9.7% for the full year 2024. I would break the 80 bip compression into two buckets.

Speaker #2: The first is primarily longer-term people investments of approximately 20 bips. The remaining 70 bips was driven by timing items and non-recurring items such as healthcare costs, specific customer bad debt reserves, and some lower margin to win specific customers.

Speaker #2: From a timing perspective, many of these items hit in the fourth quarter resulting in a larger impact on our fourth-quarter margins of 7.4%. Longer-term people investments impacted the quarter by approximately 25 bips.

Ron Knutson: Other items impacting the quarter that we would classify as timing or non-recurring include healthcare, approximately 40 bips, customer specific bad debt approximately 20 bips, recruiting and leadership startup approximately 25 bips, mix shifts within Gexpro Services approximately 25 bips, and timing benefits realized in Q4 2024, which was about 40 bips. Moving on to slide 7 and starting with Lawson. With Lawson, full year revenue increased $12 million. Average daily sales grew by 2.6%, and organic average daily sales declined by 1.2%, primarily due to lower military customer sales. Adjusted EBITDA for the year was $51.6 million, or 10.7% of revenues for the full year.

Speaker #2: Other items impacting the quarter that we would classify as timing or non-recurring include healthcare, approximately 40 bps; customer-specific bad debt, approximately 20 bps; recruiting and leadership startup, approximately 25 bps; mix shifts within Juxpro services, approximately 25 bps; and timing benefits realized in the fourth quarter of 2024, which was about 40 bps.

Speaker #2: Now moving on to slide seven. And starting with Lawson. With Lawson full-year revenue increased $12 million, average daily sales grew by 2.6%, and organic average daily sales declined by 1.2%.

Speaker #2: Primarily due to lower military customer sales. Adjusted EBITDA for the year was $51.6 million or 10.7% of revenues for the full year. For the quarter, Lawson's average daily sales were up 2.7%, and its adjusted EBITDA was 7.7 million or 6.7% of sales.

Ron Knutson: For the quarter, Lawson's average daily sales were up 2.7%, and its adjusted EBITDA was $7.7 million, or 6.7% of sales. In the Lawson base business, the margin compression from the prior year was primarily due to sales mix of about 60 bips, higher health employee related benefit costs of approximately 100 bips, and employee costs and timing of incentive accruals of approximately 110 bips. As Brian mentioned, Lawson's most significant sales initiatives focus on new VMI installations and increased share of wallet, which are leading indicators of revenue growth. We are continuing to accelerate the adoption of our CRM platform to improve sales rep productivity, grow the core business, and are currently in the early stages of route optimization planning. We are also expanding our e-commerce platform.

Speaker #2: In the Lawson-based business, the margin compression from the prior year was primarily due to sales mix of about 60 bips, higher health employee-related benefit costs of approximately 100 bips, and employee costs and timing of incentive accruals of approximately 110 bips.

Speaker #2: As Brian mentioned, Lawson's most significant sales initiatives focus on new VMI installations and increased share of wallet, which are leading indicators of revenue growth.

Speaker #2: We are continuing to accelerate the adoption of our CRM platform to improve sales rep productivity grow the core business, and are currently in the early stages of route optimization planning.

Speaker #2: We are also expanding our e-commerce platform. This is a cost-effective way to do business, and one-third of our customers on the site are new.

Ron Knutson: This is a cost-effective way to do business. One-third of our customers on the site are new. Although sales are still small on e-commerce, we experienced about an 18% revenue growth in Q4. Turning to slide 8. Full year sales for the Canadian segment were $221.4 million, up $96.3 million, primarily due to the Source Atlantic acquisition included for a partial year in 2024. Q4 sales for the Canadian segment in USD were $55.1 million, reflecting some seasonal softness. Market softness for projects in manufacturing end markets persisted mostly in Eastern Canada. However, current backlogs have increased meaningfully. Full year adjusted EBITDA was $15.6 million, or 7.1% of sales, while Q4 margins were 6.6%.

Speaker #2: Although sales are still small on e-commerce, we experienced about an 18% revenue growth in the fourth quarter. Turning to slide eight, full-year sales for the Canadian segment were $221.4 million in USD, up 96.3 million, primarily due to the source Atlantic acquisition included for a partial year in 2024.

Speaker #2: Fourth quarter sales for the Canadian segment in USD were $55.1 million, reflecting some seasonal softness. Market softness for projects in manufacturing and related markets persisted, mostly in Eastern Canada. However, current backlogs have increased meaningfully.

Speaker #2: Full-year adjusted EBITDA was $15.6 million or 7.1% of sales, while fourth quarter margins were 6.6%. Margins were compressed slightly, due to items such as first-year Sarbanes-Oxley compliance work.

Ron Knutson: Margins were compressed slightly due to items such as first year Sarbanes-Oxley compliance work. The Bolt supply standalone business drove sales by 7.8% in local currency and generated a 14% margin for the full year. We continue to make progress on planned synergies around gross margins and branch consolidations between Bolt and Source Atlantic. Turning to Gexpro Services on slide 9. Full year revenue was $496.7 million, representing organic average daily sales growth of 12.3% and total ADS growth of over 13%, driven primarily by end market strength in aerospace and defense technology, and renewables for most of the year. Recall that we highlighted tougher sales comps in Q4, which declined 1% on an average daily sales basis, generating $119.4 million.

Speaker #2: The bulk supply standalone business drove sales by 7.8% in local currency and generated a 14% margin for the full year. We continue to make progress on planned synergies around gross margins and branch consolidations between Bulk and Source Atlantic.

Speaker #2: Turning to Juxpro services on slide nine. Full-year revenue was $496.7 million representing organic average daily sales growth of 12.3%, and total ADS growth over 13%, driven primarily by end-market strength in aerospace and defense, technology, and renewables for most of the year.

Speaker #2: Recall that we highlighted tougher sales comps in the fourth quarter which declined 1% on an average daily sales basis generating $119.4 million. Full-year adjusted EBITDA was $63.7 million or 12.8% of sales.

Ron Knutson: Full year adjusted EBITDA was $63.7 million, or 12.8% of sales. For the quarter, margins pulled back to 11.7% from 13.3% a year ago on a lower Q4 sales base, a sales mix on lower renewables, and some strategic employee investments. Value creation initiatives for Gexpro Services continue to include DSG cross-selling, acquisition synergies, and expanded VMI kitting, manufacturing, and e-commerce offerings. Lastly, I'll turn to TestEquity Group on slide 10. Full-year sales were $783.2 million, with average daily sales growth of 2% driven primarily by test and measurement, rentals, and our chambers business. Organic average daily sales for the year were up 1%. Q4 sales were $192.9 million, with average daily sales up 0.9% versus a year ago.

Speaker #2: For the quarter, margins pulled back to 11.7% from 13.3% a year ago on a lower Q4 sales base, a sales mix on lower renewables, and some strategic employee investments.

Speaker #2: Value creation initiatives for Juxpro services continue to include DSG cross-selling, acquisition synergies, and expanded VMI kitting manufacturing and e-commerce offerings. Lastly, I'll turn to test equity group on slide 10.

Speaker #2: Full-year sales were $783.2 million, with average daily sales growth of 2%, driven primarily by test and measurement, rentals, and our Chambers business. Organic average daily sales for the year were up 1%.

Speaker #2: Fourth quarter sales were $192.9 million with average daily sales up 0.9% versus a year ago. Test equities adjusted EBITDA for the year was $51 million with adjusted EBITDA margins of 6.5% versus 7.3% for all of 2024.

Ron Knutson: TestEquity's adjusted EBITDA for the year was $51 million, with adjusted EBITDA margins of 6.5% versus 7.3% for all of 2024. Margins were pressured by a sales mix shift, higher bad debt expense, and higher employee-related expenses, including the build-out of the leadership team in non-recurring favorable items from a year ago. Q4 EBITDA margins were similar as full-year margins at 6.4% of sales. The new leadership team has aligned priorities through performance management, incentives, and accountability. Moving to page 11, we ended the year with total available liquidity of $469 million. For 2025, our free cash flow conversion, defined as adjusted EBITDA less working capital investment, less CapEx, was approximately 85%. In December 2025, we expanded our senior secured credit facility through 2030.

Speaker #2: Margins were pressured by a sales mix shift higher bad debt expense and higher employee-related expenses including the buildout of the leadership team and non-recurring favorable items from a year ago.

Speaker #2: Fourth quarter EBITDA margins were similar as full-year margins at 6.4% of sales. The new leadership team has aligned priorities through performance management, incentives, and accountability.

Speaker #2: Moving to page 11, we ended the year with total available liquidity of $469 million and for 2025, our free cash flow conversion defined as adjusted EBITDA less working capital investment, less CapEx was approximately 85%.

Speaker #2: In December 2025, we expanded our senior secured credit facility through 2030. The new facility includes 700 million of term debt and a $400 million revolving credit arrangement.

Ron Knutson: The new facility includes $700 million of term debt and a $400 million revolving credit arrangement, an increase over the previous $255 million revolver. This puts us in a strong liquidity position to best drive shareholder returns through our capital allocation playbook. We ended the year with unrestricted and restricted cash totaling $75.3 million and net debt leverage of 3.5x. We continue to prioritize growth initiatives that enable cross-channel and collaborative selling across our customer base, expand our digital capabilities across our platform, and drive growth through an asset-light model. We invested $26.8 million in net CapEx, including rental equipment, and we plan to invest a similar amount of $25 to 30 million in 2026.

Speaker #2: An increase over the previous $255 million revolver. This puts us in a strong liquidity position to best drive shareholder returns through our capital allocation playbook.

Speaker #2: We ended the year with unrestricted and restricted cash totaling $75.3 million, and net debt leverage of 3.5 times. We continue to prioritize growth initiatives that enable cross-channel and collaborative selling across our customer base, expand our digital capabilities across our platform, and drive growth through an asset-light model.

Speaker #2: We invested $26.8 million in net CapEx including rental equipment, and and we plan to invest a similar amount of $25 to $30 million in 2026.

Ron Knutson: As we've highlighted in the past, we have invested nearly $450 million in M&A by acquiring 9 highly complementary businesses to expand our portfolio, leverage scale, and grow through product adjacency and services. We closely manage working capital across our businesses, and net working capital was $473.5 million. As we mentioned, DSG generated $84 million of cash from operations for the year, similar to 2024 before retention payments, and a testament to management's close monitoring of our working capital. Our strong cash generation in 2025 positioned us to be more active in share repurchases. In November 2025, the board authorized an increase to our existing stock repurchase program for an additional $30 million in shares of DSG's common stock, taking the total aggregate authorization amount to $67.5 million.

Speaker #2: As we've highlighted in the past, we have invested nearly $450 million in M&A by acquiring nine highly complementary businesses to expand our portfolio, leverage scale, and grow through product adjacency and services.

Speaker #2: We closely manage working capital across our businesses and networking capital was $473.5 million. As we mentioned, DSG generated $84 million of cash from cash from operations for the year similar to 2024 before retention payments.

Speaker #2: And a testament to management's close monitoring of our working capital. Our strong cash generation in 2025 positioned us to be more active in share repurchases.

Speaker #2: In November 2025, the board authorized an increase to our existing stock repurchase program for an additional $30 million in shares of DSG's common stock taking the total aggregate authorization amount to $67.5 million.

Ron Knutson: In 2025, we returned $23.5 million to our shareholders through opportunistic share repurchases and have approximately $33 million remaining in the authorized pool. I'll now turn the call back over to Brian.

Speaker #2: In 2025, we returned $23.5 million to our shareholders through opportunistic share repurchases and have approximately $30 million remaining in the authorized pool. I'll now turn the call back over to Brian.

J. Bryan King: Thank you, Ron. Despite external headwinds and periods of demand volatility in 2025, we have a clear line of sight on initiatives well underway to drive sales growth and structurally higher margins. We delivered total revenue growth of almost 10%, reaching just under $2 billion, supported by mid-single-digit organic growth despite the burden on profitability of macroeconomic and policy challenges and an ISM remaining below 50 for all of 2025 and our deliberate investments into the business in 2025. As we enter 2026, our focus is firmly on execution and demonstrating a return to improved profitability with our expected growth while balancing critical long-term value unlocking investments. Our revenue growth strategy prioritize high-margin businesses, strong and sustainable cash flow generation, disciplined capital allocation, and operational excellence.

Bryan King: Thank you, Ron. Despite external headwinds and periods of demand volatility in 2025, we have a clear line of sight on initiatives well underway to drive sales growth and structurally higher margins. We delivered total revenue growth of almost 10%, reaching just under $2 billion, supported by mid-single-digit organic growth despite the burden on profitability of macroeconomic and policy challenges and an ISM remaining below 50 for all of 2025 and our deliberate investments into the business in 2025. As we enter 2026, our focus is firmly on execution and demonstrating a return to improved profitability with our expected growth while balancing critical long-term value unlocking investments. Our revenue growth strategy prioritize high-margin businesses, strong and sustainable cash flow generation, disciplined capital allocation, and operational excellence.

Speaker #1: Thank you, Ron. Despite external headwinds and periods of demand volatility in 2025, we have a clear line of sight on initiatives well underway to drive sales growth and structurally higher margins.

Speaker #1: We delivered total revenue growth of almost 10%, reaching just under $2 billion, supported by mid-single-digit organic growth, despite the burden on profitability of macroeconomic and policy challenges and an ISM remaining below 50 for all of 2025 and our deliberate investments into the business in 2025.

Speaker #1: As As we enter 2026 , our focus is firmly on execution and demonstrating a return to improved profitability . With our expected growth .

Speaker #1: While balancing critical long term value unlocking investments . Our revenue growth strategy prioritized high margin businesses strong and sustainable cash flow generation , disciplined capital allocation and operational excellence .

J. Bryan King: We are investing to be a company that is easy to work with and for, leveraging digital and AI-enabled capabilities to respond faster to customer needs, improve operational efficiency, strengthen sales rigor, and capture margin opportunities. These efforts are supported by an accelerating level of data-driven insights that guide and improve decision-making and enable us to deliver our differentiated products and solutions while enhancing our customer experience. Operating across more than 50 countries, serving over 220,000 customers with approximately 760,000 unique products requires agility and focus. We remain nimble, ready to pivot when needed to sustain growth while focusing on delivering on improved profitability.

Bryan King: We are investing to be a company that is easy to work with and for, leveraging digital and AI-enabled capabilities to respond faster to customer needs, improve operational efficiency, strengthen sales rigor, and capture margin opportunities. These efforts are supported by an accelerating level of data-driven insights that guide and improve decision-making and enable us to deliver our differentiated products and solutions while enhancing our customer experience. Operating across more than 50 countries, serving over 220,000 customers with approximately 760,000 unique products requires agility and focus. We remain nimble, ready to pivot when needed to sustain growth while focusing on delivering on improved profitability.

Speaker #1: We are investing to be a company that is easy to work with and for leveraging digital and AI enabled capabilities to respond faster to customer needs , improve operational efficiency , strengthen sales rigor and capture margin opportunities .

Speaker #1: These efforts are supported by an accelerating level of data driven insights that guide and improve decision making and enable us to deliver our differentiated products and solutions while enhancing our customer experience .

Speaker #1: Operating across more than 50 countries , serving over 220,000 customers with approximately 760,000 unique products , requires agility and focus . We remain nimble , ready to pivot when needed to sustain growth while focusing on delivering on improved profitability .

J. Bryan King: Our leadership teams are renewing our confidence to shareholders and our colleagues that we are driving and expect growth with enhanced profitability and with a commitment to further tune capabilities and consistent service and culture that emphasizes from our field team around volume and revenue growth from both existing and new customers. I am confident in our enhanced leadership teams and our recent investments in them across all of our verticals, and their ability to execute on their re-underwritten priorities and value creation initiatives as they enjoy line of sight on building structurally higher margin and more defensible and growing businesses with a commitment to generate strong free cash flow and an aligned incentive structure around driving accelerating long-term value for our shareholders. Our teams remain highly aligned with the shareholders and each other, collaborating and competing together to continue to win more often.

Bryan King: Our leadership teams are renewing our confidence to shareholders and our colleagues that we are driving and expect growth with enhanced profitability and with a commitment to further tune capabilities and consistent service and culture that emphasizes from our field team around volume and revenue growth from both existing and new customers. I am confident in our enhanced leadership teams and our recent investments in them across all of our verticals, and their ability to execute on their re-underwritten priorities and value creation initiatives as they enjoy line of sight on building structurally higher margin and more defensible and growing businesses with a commitment to generate strong free cash flow and an aligned incentive structure around driving accelerating long-term value for our shareholders. Our teams remain highly aligned with the shareholders and each other, collaborating and competing together to continue to win more often.

Speaker #1: Our leadership teams are renewing our confidence to shareholders and our colleagues that we are driving and expect growth with enhanced profitability, and with a commitment to further tune capabilities and consistent service and culture.

Speaker #1: That emphasizes from our field team around volume and revenue growth from both existing and new customers . I am confident in our enhanced leadership teams and our recent investments in them across all of our verticals , and their ability to execute on their priorities and value creation initiatives as they enjoy line of sight on building structurally higher margin and more defensible and growing businesses with a commitment to generate strong free cash flow and an aligned incentive structure around driving accelerating long term value for our shareholders , our teams remain highly aligned with the shareholders and each other , collaborating and competing together to continue to win more often .

J. Bryan King: Each is accountable and appropriately incentivized to deliver results for our shareholders and for DSG and all of our colleagues. We will continue to evaluate acquisitions that strategically fit and enhance our long-term competitive position to win in our current focus areas and markets, or that complement them, as well as opportunities that can accelerate our growth and profitability objectives to enhance and accelerate driving long-term shareholder value. In addition to strengthening leadership within our verticals, after a thorough evaluation on ways to improve and enhance our corporate strategy and M&A capabilities, we recruited Sean Dwyer to lead DSG's efforts and dedicated team while working closely with the vertical leadership and our LKCM Headwater teams. Sean comes to us with a background in investment banking and experience leading similar efforts at large public companies. Through his public company roles, he has led over $30 billion in 36 transactions.

Bryan King: Each is accountable and appropriately incentivized to deliver results for our shareholders and for DSG and all of our colleagues. We will continue to evaluate acquisitions that strategically fit and enhance our long-term competitive position to win in our current focus areas and markets, or that complement them, as well as opportunities that can accelerate our growth and profitability objectives to enhance and accelerate driving long-term shareholder value. In addition to strengthening leadership within our verticals, after a thorough evaluation on ways to improve and enhance our corporate strategy and M&A capabilities, we recruited Sean Dwyer to lead DSG's efforts and dedicated team while working closely with the vertical leadership and our LKCM Headwater teams. Sean comes to us with a background in investment banking and experience leading similar efforts at large public companies. Through his public company roles, he has led over $30 billion in 36 transactions.

Speaker #1: Each is accountable and appropriately incentivized to deliver results for our shareholders and for DSG and all of our colleagues . We will continue to evaluate acquisitions at strategically fit and enhance our long term competitive position to win in our current focus areas and markets , or that complement them , as well as opportunities that can accelerate our growth and profitability objectives to enhance and accelerate driving long term shareholder value .

Speaker #1: In addition to strengthening leadership within our verticals , after a thorough evaluation on ways to improve and enhance our corporate strategy and M&A capabilities , we recruited Sean Dwyer to lead Dsg's efforts and dedicated team while working closely with the Vertical leadership and our LCM headquarter teams Sean comes to us with a background in investment banking and experience leading similar efforts at large public companies through his public company roles , he has led over $30 billion in 36 transactions It's great to have Sean on board to add structure , perspective and to collaboratively lead this critical component of Dsg's growth strategy .

J. Bryan King: It's great to have Sean on board to add structure, perspective, and to collaboratively lead this critical component of DSG's growth strategy. As we look ahead in 2026, we're excited about the added capabilities, discipline, and prioritization we've invested in across all our verticals. While most of this comes at a cost, we're confident in these investments and in the improved performance returns the investments will deliver. While the first couple of months of 2026 have seen sales growth, we expect the Q1 to remain under margin pressure as we continue to digest initiatives, and then we expect to see an improved margin expansion trajectory consistent with our longer-term objectives as we move into the middle of the year.

Bryan King: It's great to have Sean on board to add structure, perspective, and to collaboratively lead this critical component of DSG's growth strategy. As we look ahead in 2026, we're excited about the added capabilities, discipline, and prioritization we've invested in across all our verticals. While most of this comes at a cost, we're confident in these investments and in the improved performance returns the investments will deliver. While the first couple of months of 2026 have seen sales growth, we expect the Q1 to remain under margin pressure as we continue to digest initiatives, and then we expect to see an improved margin expansion trajectory consistent with our longer-term objectives as we move into the middle of the year.

Speaker #1: As we look ahead in 2026, we're excited about the added capabilities, discipline, and prioritization we have invested in across all our verticals.

Speaker #1: While most of this comes at a cost , we're confident in these investments and in the improved performance returns , the investments will deliver .

Speaker #1: While the first couple of months of 2026 have seen sales growth , we expect the first quarter to remain under margin pressure as we continue to digest initiatives and then we expect to see an improved margin expansion trajectory consistent with our longer term objectives as we move into the middle of the year .

J. Bryan King: I'm proud of the heavy lifting from our colleagues and what it accomplished in 2025. As I reflect on where we are versus the much smaller and less evolved DSG that we pulled together four years ago. We remain focused building a better DSG on its many commercial growth initiatives and ongoing process and structure optimization, and we celebrate working together to build a more valuable enterprise, one that consistently generates cash flow and long-term shareholder value. Finally, I wanna thank our employees for their dedication and hard work throughout the year. Your commitment and the strength of our culture have enabled meaningful progress across our strategic priorities. We will continue to push, test, and adapt as we improve long-term performance. I also wanna thank DSG's board, our shareholders, our shareholder partners, and the LKCM Headwater team as we continue advancing our specialty distribution model together.

Bryan King: I'm proud of the heavy lifting from our colleagues and what it accomplished in 2025. As I reflect on where we are versus the much smaller and less evolved DSG that we pulled together four years ago. We remain focused building a better DSG on its many commercial growth initiatives and ongoing process and structure optimization, and we celebrate working together to build a more valuable enterprise, one that consistently generates cash flow and long-term shareholder value. Finally, I wanna thank our employees for their dedication and hard work throughout the year. Your commitment and the strength of our culture have enabled meaningful progress across our strategic priorities. We will continue to push, test, and adapt as we improve long-term performance. I also wanna thank DSG's board, our shareholders, our shareholder partners, and the LKCM Headwater team as we continue advancing our specialty distribution model together.

Speaker #1: I'm proud of the heavy lifting from our colleagues and what it accomplished in 2025 . And as I reflect on where we are versus the much smaller and less evolved DSG that we pulled together four years ago , we remain focused building a better DSG on its many commercial growth initiatives and ongoing process , and structure optimization .

Speaker #1: And we celebrate working together to build a more valuable enterprise, consistently generating cash flow and long-term shareholder value. Finally, I want to thank our employees for their dedication and hard work throughout the year.

Speaker #1: Your commitment and the strength of our culture have enabled meaningful progress across our strategic priorities . We will continue to push , test and adapt as we improve long term performance I also want to thank Dsg's board , our shareholders , our shareholder partners and the Lkcm Headwater team .

Speaker #1: As we continue advancing our specialty distribution model together . And with that operator , will you please open the line for questions

J. Bryan King: With that, operator, will you please open the line for questions?

Bryan King: With that, operator, will you please open the line for questions?

Rachel Smith: Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your phone at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Your first question for today is from Amon Mall with Stephens Inc.

Operator: Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your phone at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Your first question for today is from Amon Mall with Stephens Inc.

Speaker #2: Certainly at this time , we will be conducting a question and answer session . If you would like to ask a question , please press star one on your phone at this time .

Speaker #2: A confirmation tone will indicate your line is in the question queue You may press star two . If you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys , one moment please .

Speaker #2: While we pull for questions Your first question for today is from Eamon Mall with Stephens .

J. Bryan King: Morning, Aman.

Bryan King: Morning, Aman.

[Analyst] (Stephens Inc.): Morning. Yeah. Good morning, Brian. How are you?

Tommy Moll: Morning. Yeah. Good morning, Brian. How are you?

Speaker #3: Morning

J. Bryan King: Morning, Tommy. I'm all right.

Bryan King: Morning, Tommy. I'm all right.

Speaker #4: Yeah . Good morning Brian , how are you ?

[Analyst] (Stephens Inc.): Thanks for the time. Brian, I wanna start on the comment you just made regarding the sales pacing year to date. I think I heard you say sales are up year-over-year in Jan and Feb. Maybe just can you confirm that? If you're able to give us the daily sales pacing and the number of selling days for the quarter, that'd be appreciated as well.

Tommy Moll: Thanks for the time. Brian, I wanna start on the comment you just made regarding the sales pacing year to date. I think I heard you say sales are up year-over-year in Jan and Feb. Maybe just can you confirm that? If you're able to give us the daily sales pacing and the number of selling days for the quarter, that'd be appreciated as well.

Speaker #5: Good morning Tom .

Speaker #3: All right

Speaker #4: Thanks for the time Brian I want to start on the comment . You just made regarding the sales , pacing , year to date .

Speaker #4: I think I heard you say sales are up year over year in January and February, so maybe just—can you confirm that?

Speaker #4: And if you're able to give us the daily sales , pacing and the number of selling days for the quarter , that would be appreciated as well

J. Bryan King: Yeah.

Bryan King: Yeah.

J. Bryan King: I'll let Ron do it. He's got them in front of him.

Bryan King: I'll let Ron do it. He's got them in front of him.

[Analyst] (Stephens Inc.): Yeah, Tommy. Yeah, good morning, Tommy. This is Ron Knutson.

Ron Knutson: Yeah, Tommy. Yeah, good morning, Tommy. This is Ron Knutson.

Speaker #5: Yeah .

Speaker #3: He's got him in front of him .

Speaker #5: Yeah . Tommy . Yeah . Good morning Tommy . This is Ron Knutson . So yeah .

J. Bryan King: It's Aman.

Bryan King: It's Aman.

[Analyst] (Stephens Inc.): Yeah.

Tommy Moll: Yeah.

J. Bryan King: It's Aman, Ron. It's Aman, it's on.

Bryan King: It's Aman, Ron. It's Aman, it's on.

Speaker #3: Just rod Damon that's on

[Analyst] (Stephens Inc.): Just to add some commentary around Bryan's notes relative to the first couple of months of the year. We have seen growth, you know, really, I would say I'd put it, you know, in the low single digits. You know, if we look at January, February, versus a year ago, you know, ADS so far for the first couple of months, you know, kind of flattish, versus Q4, but up against a year ago. We're seeing a little bit of pressure continue within our Canadian branch business that I think both Bryan and I commented on in our prepared remarks.

Ron Knutson: Just to add some commentary around Bryan's notes relative to the first couple of months of the year. We have seen growth, you know, really, I would say I'd put it, you know, in the low single digits. You know, if we look at January, February, versus a year ago, you know, ADS so far for the first couple of months, you know, kind of flattish, versus Q4, but up against a year ago. We're seeing a little bit of pressure continue within our Canadian branch business that I think both Bryan and I commented on in our prepared remarks.

Speaker #5: Just to just to add some some commentary around around Brian's notes relative to the first couple of months of the year . So we have seen growth .

Speaker #5: You know , really I would say I'd put it , you know , in the low single digits , you know , if we look at January , February versus versus a year ago , you know , adds so far for the first couple of months , you know , kind of flattish versus versus Q4 , but but up against a year ago , we're seeing a little bit of pressure continue within our Canadian branch business that Brian and I commented on in our prepared remarks .

[Analyst] (Stephens Inc.): The other verticals or the other, you know, three pieces of business are seeing some growth here in the first couple of months. You know, relative to, I think the second part of your question was relative to number of days and so forth as 2026 develops. On a quarter-over-quarter basis, it shifts a little bit just because of the kind of the weighting, and we've got Gexpro Services on a 4-4-5. Essentially it's relatively consistent. First quarter of 2026 has 63 selling days versus the first quarter of 2025 having 63 as well.

Ron Knutson: The other verticals or the other, you know, three pieces of business are seeing some growth here in the first couple of months. You know, relative to, I think the second part of your question was relative to number of days and so forth as 2026 develops. On a quarter-over-quarter basis, it shifts a little bit just because of the kind of the weighting, and we've got Gexpro Services on a 4-4-5. Essentially it's relatively consistent. First quarter of 2026 has 63 selling days versus the first quarter of 2025 having 63 as well.

Speaker #5: But the other the other verticals or the other three pieces of the business are are seeing , seeing some growth here in the first couple of months .

Speaker #5: You know , relative to , I think , the second part of your question was , was relative to of days . And so forth .

Speaker #5: Is , is 26 developed ? So on a on a quarter over quarter basis , it shifts a little bit . Just because of the kind of the weighting .

Speaker #5: And we've got extra services on a 455. But essentially, it's relatively consistent. First quarter of '26 has 63 selling days versus the first quarter of '25.

J. Bryan King: Aman, I just would add. Oh, is it Tommy?

Bryan King: Aman, I just would add. Oh, is it Tommy?

Speaker #5: Having 63 as well .

Speaker #3: And I just would add , oh , is it Tommy Who's he ? I thought I thought you said it was Eamon . I was like , wait a second .

[Analyst] (Stephens Inc.): Who's he?

Tommy Moll: Who's he?

J. Bryan King: I thought you said it was Aman. I was like, Wait a second. Tommy, one of the things I was referencing when I said that was that it was on the TestEquity vertical, and that we were seeing some backlog build there in orders and our, you know, kind of RFPs. Momentum and it's really around the test and measurement side, which we've seen as we've seen some messaging from the manufacturers about a little bit of accelerated activity in that space. I mean, January, quite, you know, transparently, I wasn't happy with the flow-through on profitability relative to how we budgeted or what I expected.

Bryan King: I thought you said it was Aman. I was like, Wait a second. Tommy, one of the things I was referencing when I said that was that it was on the TestEquity vertical, and that we were seeing some backlog build there in orders and our, you know, kind of RFPs. Momentum and it's really around the test and measurement side, which we've seen as we've seen some messaging from the manufacturers about a little bit of accelerated activity in that space. I mean, January, quite, you know, transparently, I wasn't happy with the flow-through on profitability relative to how we budgeted or what I expected.

Speaker #3: So Tommy what I one of the things I was referencing when I said that was , that we were it was on the test equity vertical and that was that .

Speaker #3: We were seeing some backlog build there in orders . And , you know , kind of RFPs . So momentum and it's really around the test and measurement side , which we've seen with as we've seen some messaging from the manufacturers about a little bit of accelerated activity in that space .

Speaker #3: I January quite , you know , transparently I wasn't happy with the flow through on profitability relative to how we budgeted or what I expected .

J. Bryan King: As Q4 came together in the first month of the year, while we saw some revenue lift, we still suffered some of the same challenges of adding expenses around leadership and otherwise in the first month. We're seeing improvement on that, we believe in February and expect that again in March so that the re-leveraging of our cost structure with the pickup in revenue. There just were some changeover expenses that, and some one times and some things that created noises in Q4 and in January.

Bryan King: As Q4 came together in the first month of the year, while we saw some revenue lift, we still suffered some of the same challenges of adding expenses around leadership and otherwise in the first month. We're seeing improvement on that, we believe in February and expect that again in March so that the re-leveraging of our cost structure with the pickup in revenue. There just were some changeover expenses that, and some one times and some things that created noises in Q4 and in January.

Speaker #3: And so, as the fourth quarter came together in the first month of the year, we saw some revenue lift. We still suffered some of the same challenges of adding expenses around leadership and otherwise. In the first month, we're seeing improvement on that.

Speaker #3: We believe in February and expect that again in March . So that the our cost structure , with the with the pickup in revenue .

Speaker #3: But there just were some changeover expenses that and and some one times and some things that created noises in the fourth quarter and in January

[Analyst] (Stephens Inc.): Yeah. Bryan, you anticipated my follow-up, which was on margin- You clarified your comment, maybe I could put a finer point on it here. If I go back to-

Tommy Moll: Yeah. Bryan, you anticipated my follow-up, which was on margin- You clarified your comment, maybe I could put a finer point on it here. If I go back to-

Speaker #4: Yeah . Brian , you anticipated my follow up , which was on margin . And you clarified your your comment , but maybe I could put a finer point on it here .

J. Bryan King: Yeah. I'm sorry.

Bryan King: Yeah. I'm sorry.

[Analyst] (Stephens Inc.): the numbers that Ron gave us in the prepared remarks, there were a series of one-timers in Q4. I just added up all those basis points, and it was about 150 basis points. My starting point on bridging was I just took the 7.4 you reported in Q4 plus 150, gets you 8.9% as an implied baseline to start to think about Q1. That would be up a little bit year-over-year, though.

Tommy Moll: the numbers that Ron gave us in the prepared remarks, there were a series of one-timers in Q4. I just added up all those basis points, and it was about 150 basis points. My starting point on bridging was I just took the 7.4 you reported in Q4 plus 150, gets you 8.9% as an implied baseline to start to think about Q1. That would be up a little bit year-over-year, though.

Speaker #4: If I go back to the the numbers that Ron gave us in the prepared remarks , there were a series of one timers in Q4 .

Speaker #4: I just added up all those basis points , and it was about 150 basis points . So my my starting point on bridging was I just took up the 7.4 .

Speaker #4: You reported in Q4, plus 150 gets you 8.9% as an implied baseline to start to think about the first quarter. That would be up a little bit year over year, though.

J. Bryan King: Yeah

Bryan King: Yeah

[Analyst] (Stephens Inc.): ... based on what you just said, that makes me think perhaps that's a bit too aggressive of a baseline. I don't know. It depends on the monthly assumptions, but anything you can do to tighten up expectations would help.

Tommy Moll: ... based on what you just said, that makes me think perhaps that's a bit too aggressive of a baseline. I don't know. It depends on the monthly assumptions, but anything you can do to tighten up expectations would help.

Speaker #4: And so , yeah , based on what you just said , that makes me think perhaps that's a bit too aggressive of a of a baseline .

J. Bryan King: Yeah, that number would be consistent with how margins flowed through for the year last year. When we look at it or when I look at it, Q1's still gonna have a little bit more margin degradation from our average last year, I think. Whereas the Q2 and Q3, we would expect that the EBITDA margin will be back towards above what last year's average was, if that's helpful.

Speaker #4: Maybe we'd be—I don't know—it depends on the monthly assumptions, but anything you can do.

Bryan King: Yeah, that number would be consistent with how margins flowed through for the year last year. When we look at it or when I look at it, Q1's still gonna have a little bit more margin degradation from our average last year, I think. Whereas the Q2 and Q3, we would expect that the EBITDA margin will be back towards above what last year's average was, if that's helpful.

Speaker #3: That number .

Speaker #4: Would be would .

Speaker #6: Help .

Speaker #3: Yeah , that number would be consistent with how margins flowed through for the year last year . When we look at it or when I look at it , the first quarter's still going to have a little bit more margin degradation from our average .

Speaker #3: Last year . I think , whereas the second and third quarters , we would expect that the EBITDA margin will be back towards above what last year's average was .

[Analyst] (Stephens Inc.): Yep.

Tommy Moll: Yep.

J. Bryan King: Is that right, Ron?

Bryan King: Is that right, Ron?

[Analyst] (Stephens Inc.): Very much.

Tommy Moll: Very much.

J. Bryan King: I'm looking at you, Ron.

Bryan King: I'm looking at you, Ron.

[Analyst] (Stephens Inc.): Yeah. Yeah. That, yeah, that is, that is right.

Ron Knutson: Yeah. Yeah. That, yeah, that is, that is right.

Speaker #3: If that makes if that's helpful . Yep . Is that right , Ron ?

J. Bryan King: You might be able to say that better.

Bryan King: You might be able to say that better.

[Analyst] (Stephens Inc.): Yeah. If, if I go back, Q1 of 2025, we were sitting at about 9%. Tommy, we typically, you know, we do get burdened with some other items that we didn't call out specifically in our, in our comments, you know, around some, you know, payroll taxes start over on us. You know, that typically, you know, drags our margins a little bit, even going from Q4 into Q1. The other area that I would point to is we do have some resetting of some incentive accruals and so forth. As you can imagine, you know, lower dollars in 25, based upon performance and we certainly budget to hit higher goals, you know, going into the next year.

Ron Knutson: Yeah. If, if I go back, Q1 of 2025, we were sitting at about 9%. Tommy, we typically, you know, we do get burdened with some other items that we didn't call out specifically in our, in our comments, you know, around some, you know, payroll taxes start over on us. You know, that typically, you know, drags our margins a little bit, even going from Q4 into Q1. The other area that I would point to is we do have some resetting of some incentive accruals and so forth. As you can imagine, you know, lower dollars in 25, based upon performance and we certainly budget to hit higher goals, you know, going into the next year.

Speaker #4: Very much .

Speaker #6: Looking at you , Ron .

Speaker #5: Yeah , yeah yeah .

Speaker #3: That is that is .

Speaker #6: Right .

Speaker #5: Yeah . If if I go back Q1 of 2025 , we were we were sitting at about 9% and , and Tommy , we typically you know , we do get burdened with some other items that we didn't call out specifically in our , in our comments .

Speaker #5: You know , around some , you know , payroll taxes start over on us . You know , that typically , you know , drags our margins a little bit , even going from from Q4 into Q1 .

Speaker #5: The other area that I would would point to is we do have some some resetting of of some incentive accruals . And so forth .

Speaker #5: As you as you can imagine , you know , lower dollars in in 25 , based upon performance and and we certainly budget to hit higher goals , you know , going into the going into the next year .

[Analyst] (Stephens Inc.): We'll have to reestablish, you know, some of those accruals as we work throughout the year as well. Those typically get spread, you know, pretty evenly throughout the year, until we, you know, start to reforecast to a greater degree, you know, later in the year. We do have some, what I would call, you know, kind of offsets, or, you know, negative items that'll probably push their way through here yet in Q1.

Ron Knutson: We'll have to reestablish, you know, some of those accruals as we work throughout the year as well. Those typically get spread, you know, pretty evenly throughout the year, until we, you know, start to reforecast to a greater degree, you know, later in the year. We do have some, what I would call, you know, kind of offsets, or, you know, negative items that'll probably push their way through here yet in Q1.

Speaker #5: So we'll have to reestablish , you know , some of those accruals as we as we work throughout the year as well . And those typically get spread , you know , pretty evenly throughout the year .

Speaker #5: And we , you know , start to reforecast to a greater degree . You know , later in the year . So so we do have some what I would call kind of offsets or , you know , negative items that'll that'll probably push our way through here .

J. Bryan King: I would say, Tommy, the exercise you did, which is the same one I did yesterday when I was preparing my remarks, by adding up Ron's remarks, which were prepared ahead of mine, and I did the same bridge you did, and then kind of tried to double-check it against looking at where we were for the quarter so far. Directionally, you're right on. I think it's just gonna be a little... Not quite. January is not indicating to me that we're gonna get to where the level you said.

Bryan King: I would say, Tommy, the exercise you did, which is the same one I did yesterday when I was preparing my remarks, by adding up Ron's remarks, which were prepared ahead of mine, and I did the same bridge you did, and then kind of tried to double-check it against looking at where we were for the quarter so far. Directionally, you're right on. I think it's just gonna be a little... Not quite. January is not indicating to me that we're gonna get to where the level you said.

Speaker #5: Yet in the first quarter .

Speaker #3: But , but I would say Tommy , the exercise you did , which is the same one I did yesterday when I was preparing my remarks by adding up Ron's remarks , which were prepared ahead of mine .

Speaker #3: And I did the same bridge you did . And and then kind of tried to double check it against looking at at where we were for quarter so far and directionally , you're right on .

Speaker #3: I think it's just going to be a little not quite . January is not indicating to me that we're going to get to where you the level you said

[Analyst] (Stephens Inc.): Understood. Shifting to some more strategic questions here on TestEquity.

Tommy Moll: Understood. Shifting to some more strategic questions here on TestEquity.

Speaker #4: Understood . Shifting to some more strategic questions here on test equity , you have new leadership there and you've talked before and again today about refining the customer value prop the go to market , centralizing some functions , etc.

J. Bryan King: Yep.

Bryan King: Yep.

[Analyst] (Stephens Inc.): You have new leadership there, and you've talked before and again today about refining the customer value prop, the go-to-market, centralizing some functions, et cetera. What can you share there about the progress to date and what's ahead in 2026?

Tommy Moll: You have new leadership there, and you've talked before and again today about refining the customer value prop, the go-to-market, centralizing some functions, et cetera. What can you share there about the progress to date and what's ahead in 2026?

J. Bryan King: Yeah. Look, the pacing on the team and the depth of our leadership bench is just very different than it has been. You know, part of that was, we, you know, adding Barry was critical, but it was not just adding Barry. Barry brought with him, you know, an ensemble of other executives, and we were able to really keep, you know, so many of the people that we had that were in, you know, had key institutional knowledge and that we had a lot of confidence around. We did double up, you know, some of our leadership expense. When I look at the total burden at the top of that company, it's different than it was 4 or 5 months ago.

Bryan King: Yeah. Look, the pacing on the team and the depth of our leadership bench is just very different than it has been. You know, part of that was, we, you know, adding Barry was critical, but it was not just adding Barry. Barry brought with him, you know, an ensemble of other executives, and we were able to really keep, you know, so many of the people that we had that were in, you know, had key institutional knowledge and that we had a lot of confidence around. We did double up, you know, some of our leadership expense. When I look at the total burden at the top of that company, it's different than it was 4 or 5 months ago.

Speaker #4: What can you share there about the progress to date, and what's ahead in 2026?

Speaker #3: And you know , part of that was that we , you know , adding Barry was critical . But it was not just adding Barry .

Speaker #3: Barry brought with him , you know , an ensemble of other executives . And we were able to really keep , you know , so many of the people that we had that were in , you know , had key institutional knowledge and that we had a lot of confidence around .

Speaker #3: So we did double up , you know , some of our leadership expense . When I look at the the total burden at the top of that company , it's different than it was 4 or 5 months ago .

J. Bryan King: With that has come a real, you know, high level of not only cadence is different and the pacing is different, but there's a high level of kind of drill down insight, which, you know, Russ and Mark had been doing last year, increasingly for us. After we made the ConRes acquisition, we were able to really get a lot more accountability around the efficiency in our rental and used business and our calibration strategy. Our chambers business has been taken off, so we've been trying to build out our chambers offering and portfolio and our inventory and stock. Then we've been working through kind of a more cohesive strategy around the total Test and Measurement go-to-market kind of value proposition to the customer.

Bryan King: With that has come a real, you know, high level of not only cadence is different and the pacing is different, but there's a high level of kind of drill down insight, which, you know, Russ and Mark had been doing last year, increasingly for us. After we made the ConRes acquisition, we were able to really get a lot more accountability around the efficiency in our rental and used business and our calibration strategy. Our chambers business has been taken off, so we've been trying to build out our chambers offering and portfolio and our inventory and stock. Then we've been working through kind of a more cohesive strategy around the total Test and Measurement go-to-market kind of value proposition to the customer.

Speaker #3: But with that has come a real , you know , high level of , of not only cadences different . And the pacing is different , but there's a high level of kind of drill down insight , which , you know , Russ and Mark had been doing last year increasingly for us after we made the Conners acquisition , you know , we were able to really get a lot more accountability around the efficiency in our rental and use business and our calibration strategy and , and our chambers business has been taken off .

Speaker #3: And so we've been trying to build out our chambers offering and portfolio and our inventory and stock . And then we've been working through kind of a more cohesive strategy around the total test measurement , go to market kind of value proposition to the customer .

J. Bryan King: It's not just as isolated to margins on new product. Then on top of that, we have a lot of smaller value-added capabilities that are inside of the TestEquity Group, some of which came with Hisco and some of which were ones that we'd acquired. By breaking them each apart and really drilling accountability and ownership on each of those verticals, we're able to see very different contribution margins amongst different ones. You know, of our EPS business, you know, we've got parts of it that are more commodity, that are volume, but our cost, our channel support to that is similar to our more discreet specialty parts of the same EPS business. The flow-through margin on those look quite a bit different.

Bryan King: It's not just as isolated to margins on new product. Then on top of that, we have a lot of smaller value-added capabilities that are inside of the TestEquity Group, some of which came with Hisco and some of which were ones that we'd acquired. By breaking them each apart and really drilling accountability and ownership on each of those verticals, we're able to see very different contribution margins amongst different ones. You know, of our EPS business, you know, we've got parts of it that are more commodity, that are volume, but our cost, our channel support to that is similar to our more discreet specialty parts of the same EPS business. The flow-through margin on those look quite a bit different.

Speaker #3: So it's not just as as isolated to margins on new product . And , and then on top of that , we have a lot of smaller value added capabilities that are inside of the test equity group , some of which came with Cisco and some of which were ones that we'd acquired .

Speaker #3: And so by breaking them each apart and really drilling accountability and ownership on each of those verticals , we're able to see very different contribution margins amongst different ones .

Speaker #3: And so , you know , our the , you know , of our EPs business , you know , we've got parts of it that are more commodity that are volume .

Speaker #3: But our cost , our , our , our channel support to that is similar to our more discrete specialty parts of the same EPs business .

J. Bryan King: The team is really, you know, re-energizing the sales force on how they're spending their time and how we're delivering our messaging the marketplace into our employees around where the levers are to pull a lot more attention and acceleration through the parts of the business that have very different structural contribution margins. That's just, you know, that energy and that focus kind of started, you know, 100 days ago, but it's trickling down through the organization more recently. We.

Bryan King: The team is really, you know, re-energizing the sales force on how they're spending their time and how we're delivering our messaging the marketplace into our employees around where the levers are to pull a lot more attention and acceleration through the parts of the business that have very different structural contribution margins. That's just, you know, that energy and that focus kind of started, you know, 100 days ago, but it's trickling down through the organization more recently. We.

Speaker #3: And so the flow through margin on those look quite a bit different . And so the team is really , you know , re-energizing the sales force on how they're spending their time and how we're delivering our messaging .

Speaker #3: The marketplace into our employees around where the levers are to , to to pull a lot more attention in , in acceleration through the , the , the parts of the business that have very different structural contribution margins .

Speaker #3: And that's just , you know , that that that energy and that focus kind of started , you know , a hundred days ago .

Speaker #3: But it's trickling down through the organization more recently , we , our chief commercial officer , who's been real important to the business , we made our president in Mexico for all of DSG so that we could start to really bring our our cadence together across all three of our verticals in Mexico so that we could have more cross-sell wins and drive total revenue growth .

J. Bryan King: Our chief commercial officer, who's been real important to the business, we made our president in Mexico for all of DSG so that we could start to really bring our cadence together across all three of our verticals in Mexico, so that we could have more cross-sell wins and drive total revenue growth. That's the business that he had built for Hisco. We added another chief commercial officer at the senior executive level to really focus on these lines of business efforts. You know, it, Barry's got a lot of confidence in all the specialty businesses that we have and how it all rolls together.

Bryan King: Our chief commercial officer, who's been real important to the business, we made our president in Mexico for all of DSG so that we could start to really bring our cadence together across all three of our verticals in Mexico, so that we could have more cross-sell wins and drive total revenue growth. That's the business that he had built for Hisco. We added another chief commercial officer at the senior executive level to really focus on these lines of business efforts. You know, it, Barry's got a lot of confidence in all the specialty businesses that we have and how it all rolls together.

Speaker #3: That's the business that he had built for Hisco. And then we added another chief commercial officer at the senior executive level to really focus on these lines of business efforts.

Speaker #3: And so , you know , it , Barry's got a lot of confidence in all the specialty businesses that we have and how it all rolls together .

J. Bryan King: Some of the profitability that is inside of that business has been masked by some of the areas that have been whipping around or where we've, you know, either had too high cost to serve relative to the contribution margin and not enough focus on the areas with our sales force on the much higher contribution margin opportunities. We're seeing that shift.

Bryan King: Some of the profitability that is inside of that business has been masked by some of the areas that have been whipping around or where we've, you know, either had too high cost to serve relative to the contribution margin and not enough focus on the areas with our sales force on the much higher contribution margin opportunities. We're seeing that shift.

Speaker #3: And some of the profitability that is inside of that business has been masked by some of the areas that have been whipping around, or where we've, you know, either had too high costs to serve relative to the contribution margin and not enough focus in some areas with our sales force on the much higher contribution margin opportunities.

[Analyst] (Stephens Inc.): Brian, Ron, I'll turn it back and appreciate the insight.

Tommy Moll: Brian, Ron, I'll turn it back and appreciate the insight.

Speaker #3: And we're seeing that shift. So,

J. Bryan King: Thank you, Tommy. Appreciate your time.

Bryan King: Thank you, Tommy. Appreciate your time.

Speaker #4: Brian . Ron , I'll turn it back and appreciate the insight .

[Analyst] (Stephens Inc.): Thanks, bud.

Tommy Moll: Thanks, bud.

Rachel Smith: Your next question for today is from Ken Newman with KeyBank.

Operator: Your next question for today is from Ken Newman with KeyBank.

Speaker #3: Thank you . Tom , appreciate your time

Speaker #2: Your next question for today is from Ken Newman with KeyBanc.

[Analyst] (Stephens Inc.): Hi, Ken.

Bryan King: Hi, Ken.

[Analyst] (Stephens Inc.): Hey, good morning, guys.

[Analyst] (KeyBanc): Hey, good morning, guys.

[Analyst] (Stephens Inc.): Good morning, Ken.

Tommy Moll: Good morning, Ken.

[Analyst] (Stephens Inc.): Hey, Katie on for Ken.

[Analyst] (KeyBanc): Hey, Katie on for Ken.

[Analyst] (Stephens Inc.): Oh, hey, Katie.

Bryan King: Oh, hey, Katie.

J. Bryan King: Hi, Katie.

Ron Knutson: Hi, Katie.

Speaker #6: Hi , Ken . Good morning guys . Hey , Ken . Katie .

[Analyst] (Stephens Inc.): I was wondering if we could start on tariffs and if you're anticipating any material impacts from the recent news and how you're thinking about price cost as we go into 2026?

[Analyst] (KeyBanc): I was wondering if we could start on tariffs and if you're anticipating any material impacts from the recent news and how you're thinking about price cost as we go into 2026?

Speaker #5: Oh hey , Katie .

Speaker #6: Hi , Katie .

Speaker #7: I was wondering if we could start on tariffs. And if you're anticipating any material impacts from the recent news, and how you're thinking about price costs as we go into 2026.

J. Bryan King: Yeah.

Bryan King: Yeah.

[Analyst] (Stephens Inc.): Why don't you start that off, and...

Bryan King: Why don't you start that off, and...

[Analyst] (Stephens Inc.): Yeah, I'll start it off. I know we've talked about, you know, tariffs in the past, you know, relative to, you know, the value of the imports that we do and so forth, and our ability, you know, to be able to pass along, you know, the majority of those, you know, from a customer relationship standpoint. I think your question is probably more pointed towards the recent news and so forth. I would say probably too early to tell yet in terms of, you know, what direct impact, you know, that may or may not have on DSG. Certainly we're evaluating, you know, the situation, you know, trying to stay really current with it as others are as well.

Ron Knutson: Yeah, I'll start it off. I know we've talked about, you know, tariffs in the past, you know, relative to, you know, the value of the imports that we do and so forth, and our ability, you know, to be able to pass along, you know, the majority of those, you know, from a customer relationship standpoint. I think your question is probably more pointed towards the recent news and so forth. I would say probably too early to tell yet in terms of, you know, what direct impact, you know, that may or may not have on DSG. Certainly we're evaluating, you know, the situation, you know, trying to stay really current with it as others are as well.

Speaker #3: You start .

Speaker #6: That off .

Speaker #5: Yeah , I'll start . Yeah , I'll start it off . I know , I know , we've talked about , you know , tariffs in the past .

Speaker #5: You know , relative to , you know , the value of the imports that we that we do . And so forth . And in our .

Speaker #8: Ability .

Speaker #5: Ability you know , to to be able to pass along , you know , the majority of those , you know , from a , from a customer relationship standpoint .

Speaker #5: I think your question is probably more pointed towards the recent news and so forth . And I would say probably too early to tell yet in terms of , you know , what what direct impact , you know , that may or may not have on on DSG certainly we're evaluating , you know , the situation , you know , trying to trying to stay really current with it as other others are as well .

[Analyst] (Stephens Inc.): You know, at this point, we're, you know, moving the business forward, you know, assuming that, you know, a lot of these costs that have come through to us, you know, the last, you know, call it 12 to 18 months, will probably continue to be out there until we get some further direction on where this may end up.

Ron Knutson: You know, at this point, we're, you know, moving the business forward, you know, assuming that, you know, a lot of these costs that have come through to us, you know, the last, you know, call it 12 to 18 months, will probably continue to be out there until we get some further direction on where this may end up.

Speaker #5: You know , at this point we're , you know , moving the business forward . You know , assuming that that , you know , a lot of these costs that have come through to us , you know , over the last , you know , call it 12 to 18 months , will will probably continue to be out there until until we get some further , further direction on where this where this may end up .

J. Bryan King: Katie, we've got a consulting firm that we use, are using across our portfolio companies at LKCM Headwater. We have some businesses that have been much more significantly impacted than DSG, but it's allowed us to be informed, you know, across ways and levers that we should pull and also how to, you know, navigate or engage on those SCOTUS recent rulings. We ended up leaving some dollars on the table last year for sure, but our team did a great job of managing both pricing as well as sourcing costs and where we source things across DSG. Much of it was mitigated by the end of the year.

Bryan King: Katie, we've got a consulting firm that we use, are using across our portfolio companies at LKCM Headwater. We have some businesses that have been much more significantly impacted than DSG, but it's allowed us to be informed, you know, across ways and levers that we should pull and also how to, you know, navigate or engage on those SCOTUS recent rulings. We ended up leaving some dollars on the table last year for sure, but our team did a great job of managing both pricing as well as sourcing costs and where we source things across DSG. Much of it was mitigated by the end of the year.

Speaker #3: Katie , we've we've got a consulting firm that we use are using across our portfolio companies at LCM , headwater and we have some businesses that have been much more significantly impacted than , than DSG .

Speaker #3: But it's allowed us to be informed , you know , across ways and levers that we should pull . And also how to , you know , navigate or or engage on the recent ruling .

Speaker #3: So we ended up leaving some dollars on the table last year, for sure. But our team did a great job of managing both pricing as well as sourcing costs, and where we source things across DSG.

J. Bryan King: That doesn't, you know, we did end up with certainly a drag on earnings, or much of it was mitigated as we looked out prospectively for this year by actions that were taken throughout last year. Now we've got to kind of look and see whether or not there's any additional moves that we need to make or whether or not there's gonna be additional shifting in where the tariff burdens are gonna be, and whether or not that's gonna inform any of our sourcing decisions this year, our pricing decisions this year, or whether or not we're contesting or protesting that we believe that we should get any refund. Right now it's really early to try and know how that's gonna work.

Bryan King: That doesn't, you know, we did end up with certainly a drag on earnings, or much of it was mitigated as we looked out prospectively for this year by actions that were taken throughout last year. Now we've got to kind of look and see whether or not there's any additional moves that we need to make or whether or not there's gonna be additional shifting in where the tariff burdens are gonna be, and whether or not that's gonna inform any of our sourcing decisions this year, our pricing decisions this year, or whether or not we're contesting or protesting that we believe that we should get any refund. Right now it's really early to try and know how that's gonna work.

Speaker #3: And so much of it was mitigated by the end of the year . And but that didn't , you know , we we did end up with certainly a drag on earnings or much of it was mitigated as we looked out prospectively for this year by actions that were taken throughout last year .

Speaker #3: Now we've got to kind of look and see whether or not there's any additional moves that we need to make or whether or not there's going to be additional shifting and where the tariff burdens are going to be and whether or not that's going to inform any of our sourcing decisions .

Speaker #3: This year , our pricing decisions this year , or whether or not we're contesting or protesting that we believe that we should get any refund .

Speaker #3: So right now, it's really early to try and know how that's going to work.

[Analyst] (Stephens Inc.): Okay. That's helpful. Just revisiting Tommy's question a little bit on some trends that we've seen year to date. Any other color that you're able to provide on the segments? Maybe for Lawson specifically, you know, how are you thinking about these mixed impacts within that segment, and should those normalize as we move through the year?

[Analyst] (KeyBanc): Okay. That's helpful. Just revisiting Tommy's question a little bit on some trends that we've seen year to date. Any other color that you're able to provide on the segments? Maybe for Lawson specifically, you know, how are you thinking about these mixed impacts within that segment, and should those normalize as we move through the year?

Speaker #6: Okay .

Speaker #7: That's helpful . And then just revisiting Tommy's question a little bit on some trends that we've seen year to date . Any other color that you're able to provide on this segments .

Speaker #7: And then maybe for Lawson specifically, you know, how are you thinking about these mixed impacts within that segment? And should those normalize as we move through the year?

J. Bryan King: The, you know, I, I'll start with Gexpro Services. That one's pretty easy. You know, Gexpro Services has got several key end markets that are spooling up. The power generation space has obviously gotten a lot of attention. It's a key area for that business and its, and its legacy or its history, coming out of GE. It's, it'll enjoy some leverage there to the positive. The aerospace and defense vertical is very important to it. We know what's going on around the world. You know, there's, you know, we expect a firm year there with growth. The domestic renewables business, you know, we're about two-thirds domestic, one-third international historically. The domestic business is down.

Bryan King: The, you know, I, I'll start with Gexpro Services. That one's pretty easy. You know, Gexpro Services has got several key end markets that are spooling up. The power generation space has obviously gotten a lot of attention. It's a key area for that business and its, and its legacy or its history, coming out of GE. It's, it'll enjoy some leverage there to the positive. The aerospace and defense vertical is very important to it. We know what's going on around the world. You know, there's, you know, we expect a firm year there with growth. The domestic renewables business, you know, we're about two-thirds domestic, one-third international historically. The domestic business is down.

Speaker #6: The .

Speaker #3: You know , I I'll start with Jack's Pro Services . That was pretty easy . You know , Jack's Pro Services got several key end markets that are spooling up the power generation space has obviously gotten a lot of attention .

Speaker #3: It's a key area for that business . And it's and it's legacy or it's history coming out of GE . So it's it'll enjoy some leverage there to the positive .

Speaker #3: The aerospace and defense vertical is very important to it . We know what's going on around the world . And so you know there's you know we expect a firm year there with growth .

Speaker #3: The domestic renewables business you know we're about two thirds domestic , one third international historically the domestic business is down . We really started to see it tick down in the fourth quarter .

J. Bryan King: We really started to see it tick down in Q4, kind of mid Q4, I guess, that trend is continuing. At the same time, as we're seeing, you know, countries like India, where we had $4 million of revenue on renewables, is kind of tracking towards... That's two years ago, kind of 2024, I think we were $4 million is what I remember looking at, and this year will be 14. We're backfilling, you know, with our capabilities, with our manufacturing or vendor partners and some of the renewable developers, you know, programs around the world, that are backfilling but not entirely backfilling.

Bryan King: We really started to see it tick down in Q4, kind of mid Q4, I guess, that trend is continuing. At the same time, as we're seeing, you know, countries like India, where we had $4 million of revenue on renewables, is kind of tracking towards... That's two years ago, kind of 2024, I think we were $4 million is what I remember looking at, and this year will be 14. We're backfilling, you know, with our capabilities, with our manufacturing or vendor partners and some of the renewable developers, you know, programs around the world, that are backfilling but not entirely backfilling.

Speaker #3: Kind of mid fourth quarter I guess . And that trend is continuing at the same time as we're seeing , you know , countries like India where we had $4 million of revenue on renewables is kind of tracking towards and that's two years ago , kind of 2024 , I think we were 4 million .

Speaker #3: That's what I remember looking at . And this year will be 14 . So we're backfilling , you know , with our capabilities , with our manufacturing or vendor partners and some of the , the , the renewable developers , , programs around the world that are backfilling , but not entirely backfilling .

J. Bryan King: There's also some different contribution margin dynamics as you spool up new relationships like JetPro, as I alluded to, relative to, you know, the contribution margin on a more mature vertical or customer engagement. As we're taking on more opportunities at JetPro Services, which is happening more broadly than just renewables, there's some launch costs that are associated with that. We do believe that JetPro Services margins that we've seen throughout last year are consistent with how we think that business is kind of gonna continue to operate. We don't expect a, you know, a significant deterioration in the EBITDA margin at JetPro Services this year at all. We think it's kind of operating without a lot of headroom up this year, but operating at a level that we think is about consistent with where we expect it'll be this year.

Bryan King: There's also some different contribution margin dynamics as you spool up new relationships like JetPro, as I alluded to, relative to, you know, the contribution margin on a more mature vertical or customer engagement. As we're taking on more opportunities at JetPro Services, which is happening more broadly than just renewables, there's some launch costs that are associated with that. We do believe that JetPro Services margins that we've seen throughout last year are consistent with how we think that business is kind of gonna continue to operate. We don't expect a, you know, a significant deterioration in the EBITDA margin at JetPro Services this year at all. We think it's kind of operating without a lot of headroom up this year, but operating at a level that we think is about consistent with where we expect it'll be this year.

Speaker #3: also some different contribution margin dynamics , as you spool up , new relationships such as pro , as I alluded to relative to , you know , the contribution margin on a more mature vertical or customer engagement .

Speaker #3: So as we're taking on more opportunities at pro services , which is happening more broadly than just renewables , there's some launch costs that are associated with that .

Speaker #3: We do believe that service margins that we've seen throughout last year are consistent with how we think that business is kind of going to continue to operate.

Speaker #3: So we don't expect to , you know , a significant deterioration in EBITDA margin at this year at all . And we think it's kind of operating without a lot of headroom up this year .

J. Bryan King: On the TestEquity side, as I alluded to earlier, we're seeing strong interest in the test and measurement equipment. Our apps business is continuing to see some softness. Our electronic production supplies, you know, one of the key areas is our electronic or tech manufacturing. Ron, help me with that. I'm kinda starting to remember how, what, how we call that vertical. The, you know, that has been an area that's been really soft for us and we'd seen some firmness in it last year. I can't remember where our backlog looks right now there. It's the biggest part of TestEquity Group's apps business.

Bryan King: On the TestEquity side, as I alluded to earlier, we're seeing strong interest in the test and measurement equipment. Our apps business is continuing to see some softness. Our electronic production supplies, you know, one of the key areas is our electronic or tech manufacturing. Ron, help me with that. I'm kinda starting to remember how, what, how we call that vertical. The, you know, that has been an area that's been really soft for us and we'd seen some firmness in it last year. I can't remember where our backlog looks right now there. It's the biggest part of TestEquity Group's apps business.

Speaker #3: But operating at a level that we think is about consistent with where we expect it will be this year . On the test and equity side or test equity side , we're , as I alluded to earlier , we're seeing strong interest in the test and measurement equipment .

Speaker #3: Our apps business is continuing to see some softness . Our electronic production supplies , you know , one of the key areas is our electronic manufacturer electronic electronic or manufacturing .

Speaker #3: Ron helped me with that . Is that starting to remember how we call that vertical ? But the you know , that that has been an area that has been really soft for us and we've seen some firmness in it .

Speaker #3: Last year , I , I can't remember where our backlog looks right now . There , but it's the biggest part of of test equity groups business .

J. Bryan King: The chambers business is very strong. The rental and used market is getting more attention or focus for us 'cause it has a lot higher contribution margin, and it's been, you know, it was a source of strength last year and with renewed strength. Some of that's focus and some of that's the acceleration in demand in the end markets on the test and measurement side. What else, Ron? Lawson?

Bryan King: The chambers business is very strong. The rental and used market is getting more attention or focus for us 'cause it has a lot higher contribution margin, and it's been, you know, it was a source of strength last year and with renewed strength. Some of that's focus and some of that's the acceleration in demand in the end markets on the test and measurement side. What else, Ron? Lawson?

Speaker #3: The chamber's business is , is very strong . The rental and and used market is getting more attention and focus for us because it has a lot higher contribution margin .

Speaker #3: And it's been , you know , it was a source of of strength last year . And with renewed strength and some of that's focused and some of that's the the acceleration in demand in the , in , in markets on the test and measurement side , what else ?

[Analyst] (Stephens Inc.): Yeah.

Ron Knutson: Yeah.

J. Bryan King: That it?

Bryan King: That it?

[Analyst] (Stephens Inc.): Yeah, relative to Lawson, you know, what I would say around that is, we continue to see an increase in our what we call ship-to or VMI installations, in particular in our larger locations, you know, within strategic relationships, and within our Kent Automotive business. I would say a renewed focus on the core or local business, where, you know, historically, if you look at the last couple of years, that's where the most pressure has been seen. We've seen, I would say, kind of flattening out in ship-to's there.

Ron Knutson: Yeah, relative to Lawson, you know, what I would say around that is, we continue to see an increase in our what we call ship-to or VMI installations, in particular in our larger locations, you know, within strategic relationships, and within our Kent Automotive business. I would say a renewed focus on the core or local business, where, you know, historically, if you look at the last couple of years, that's where the most pressure has been seen. We've seen, I would say, kind of flattening out in ship-to's there.

Speaker #3: Ron Lawson .

Speaker #6: Yeah , yeah

Speaker #5: Yeah , yeah . Relative to Lawson and you know what I , what I would say around that is we continue to see an increase in our , in our what we call ship two or VMI installations in particular in the , in the in our larger locations , you know within , strategic relationships and and within our within our Kent automotive business , I would say a renewed on on the core or local business where , you know , historically , if you look at the last couple of years , that's where the most pressure has been seen .

[Analyst] (Stephens Inc.): As Bryan mentioned, we had our sales leadership meeting in mid-February and a ton of focus being put on reallocating resources to be able to grow that piece of the business, which makes up that local business, we call it core as well, is about 45% of Lawson's total revenue. Again, Lawson is seen on an overall basis, some increase here, you know, moving from, you know, January, February.

Ron Knutson: As Bryan mentioned, we had our sales leadership meeting in mid-February and a ton of focus being put on reallocating resources to be able to grow that piece of the business, which makes up that local business, we call it core as well, is about 45% of Lawson's total revenue. Again, Lawson is seen on an overall basis, some increase here, you know, moving from, you know, January, February.

Speaker #5: And we've seen , I would say , kind of flattening out in , in , in ship twos . There . But as Brian mentioned , we we had our sales leadership meeting in mid-February and a ton of focus being put on reallocating resources to be able to , to grow that piece of the business , which makes up that local business , we call it core as is about 45% of of lost its total revenue .

Speaker #5: So again , Lawson is seen on a on an overall basis . Some some increase here . You know , moving from you know , January , February and we've got we've got great insight into number of locations .

[Analyst] (Stephens Inc.): We've got great insight into number of locations and, you know, around specific customer wins, and the accountability that Brian and I have mentioned around making sure that those sites get installed on a monthly basis. With Jim coming on board here in January, a renewed focus around that, making sure that we hit those numbers as well.

Ron Knutson: We've got great insight into number of locations and, you know, around specific customer wins, and the accountability that Brian and I have mentioned around making sure that those sites get installed on a monthly basis. With Jim coming on board here in January, a renewed focus around that, making sure that we hit those numbers as well.

Speaker #5: And you know around specific customer wins and the accountability that that Brian and I have mentioned around making sure that those sites get installed on a monthly basis with , with Jim's with Jim coming on board here in January , a renewed focus around that , making sure that we hit hit those numbers as well

J. Bryan King: Got it. That's it for me. Thanks.

[Analyst] (KeyBanc): Got it. That's it for me. Thanks.

[Analyst] (Stephens Inc.): Thanks, Katie.

Ron Knutson: Thanks, Katie.

Rachel Smith: Your next question for today is from Kevin Steinke with Barrington Research.

Operator: Your next question for today is from Kevin Steinke with Barrington Research.

Speaker #7: Got it . That's it for me . Thanks .

Speaker #5: Thanks , Katie

Kevin Steinke: Great. Thank you, and good morning.

Speaker #2: Your next question for today is from Kevin Steinke with Barrington Research.

[Analyst] (Stephens Inc.): Good morning, Kevin.

Ron Knutson: Good morning, Kevin.

J. Bryan King: Hey, Kevin.

Bryan King: Hey, Kevin.

Kevin Steinke: Hey, just wanted to follow up on the earlier margin discussion. I believe in response to one of the earlier questions, you mentioned that you thought the Q2 and Q3 adjusted EBITDA margin could be above the full year 2025 average of 8.9%. You're thinking kind of a, you know, nine-ish, is appropriate for, you know, Q2 and Q3?

Speaker #9: Great. Thank you, and good morning.

Speaker #6: Kevin

Speaker #5: Hey Kevin .

Speaker #9: Hey, just wanted to follow up on the earlier margin discussion. I believe in response to one of the earlier questions, you mentioned that you thought the second and third quarter adjusted EBITDA margin could be above the full-year 2025 average of 8.9%.

Speaker #9: So you're thinking kind of a , you know , nine ish is appropriate for , you know , second and third quarters .

J. Bryan King: I think we believe it's gonna be relevered up higher than that, Ron.

Bryan King: I think we believe it's gonna be relevered up higher than that, Ron.

Kevin Steinke: Okay.

J. Bryan King: I think that I'm trying to remember where we are around there, but it's, if you look at last year, our Q2 and Q3 EBITDA margins were above that 8-9. I think we expect that it'll be consistent with that or above. Can you remember? Is that right, Ron?

Speaker #3: I think I think we believe it's going to be up higher than that . Ron . But I don't think I think that I'm trying to remember where we are on there .

Bryan King: I think that I'm trying to remember where we are around there, but it's, if you look at last year, our Q2 and Q3 EBITDA margins were above that 8-9. I think we expect that it'll be consistent with that or above. Can you remember? Is that right, Ron?

Speaker #3: But it's if you look at last year , our second and third quarter EBITDA margins were above that eight , nine . And and I think we expect that it'll be consistent with that or above .

[Analyst] (Stephens Inc.): Yeah. I think where we're gonna see probably the most pressure, as we've commented on, is really here in Q1. Then you're correct, Bryan, you know, relative to Q2 and Q3 would be an acceleration, you know, north of what we posted for the full year. Typically that, you know, that's not unusual. I mean, typically, you know, for us, Q2 and Q3 are typically the strongest quarters. In fact, you know, even that, you know, that uplift, you know, generally starts in March. March can be one, it's a longer month in terms of selling days, so we get some additional operating leverage there.

Ron Knutson: Yeah. I think where we're gonna see probably the most pressure, as we've commented on, is really here in Q1. Then you're correct, Bryan, you know, relative to Q2 and Q3 would be an acceleration, you know, north of what we posted for the full year. Typically that, you know, that's not unusual. I mean, typically, you know, for us, Q2 and Q3 are typically the strongest quarters. In fact, you know, even that, you know, that uplift, you know, generally starts in March. March can be one, it's a longer month in terms of selling days, so we get some additional operating leverage there.

Speaker #3: Can you remember . Is that right Ron .

Speaker #5: Yeah . Yeah I think where we're going to see probably the most pressure as we commented on is , is really here in the first quarter .

Speaker #5: And then you're correct , Brian , you know , relative to second and third , would would be an acceleration . You know , north of of what we posted for the full year .

Speaker #5: And , and typically that , you know , that's not , that's not unusual . I mean typically , you know for us the second and third quarters are typically the strongest quarters .

Speaker #5: And in fact , you know , even even that , you know , that uplift , you know , generally starts in in March , you know , March can be one it's a longer it's a longer month in terms of selling days .

[Analyst] (Stephens Inc.): Typically, you know, Q3, if you look back historically, Q2 and Q3 are typically the strongest uplift in sales as well as overall margin percentages.

Ron Knutson: Typically, you know, Q3, if you look back historically, Q2 and Q3 are typically the strongest uplift in sales as well as overall margin percentages.

Speaker #5: So we get some additional operating leverage . There . And then typically , you know , Q3 if you look back historically , Q3 and I'm sorry , Q2 and Q3 are typically the strongest uplift in sales as well as overall margin percentages .

J. Bryan King: I just looked back at it, and last year's Q2 was 9.7 and Q3 was 9.4. versus the 9 last year in Q1 and the 7.4-

Bryan King: I just looked back at it, and last year's Q2 was 9.7 and Q3 was 9.4. versus the 9 last year in Q1 and the 7.4-

Speaker #3: I just look back at it in last year's Q2 was nine seven and Q3 was 9.4 . So versus the the nine last year in the first quarter and the seven four that we posted in the fourth quarter .

[Analyst] (Stephens Inc.): Right

Ron Knutson: Right

J. Bryan King: -that we posted in the Q4. that's-

Bryan King: -that we posted in the Q4. that's-

[Analyst] (Stephens Inc.): Yeah

J. Bryan King: kind of gives you some sense of how the quarters fit in together. I think we've got a good number of selling days. Is it in Q2, Ron, or is it March?

Ron Knutson: Yeah

Bryan King: kind of gives you some sense of how the quarters fit in together. I think we've got a good number of selling days. Is it in Q2, Ron, or is it March?

Speaker #3: So that kind of gives you some sense of how the quarters fit in together. And I think we've got a good number of selling days.

[Analyst] (Stephens Inc.): Yeah.

Ron Knutson: Yeah.

J. Bryan King: I'm trying to remember.

Bryan King: I'm trying to remember.

[Analyst] (Stephens Inc.): Yeah. In March, there's, I think it's either 22 or 23 days in the month of March. Q2 and Q3 both have 64 selling days.

Ron Knutson: Yeah. In March, there's, I think it's either 22 or 23 days in the month of March. Q2 and Q3 both have 64 selling days.

Speaker #3: And is it in the second quarter , Ron , or is it is it March . I'm trying .

Speaker #6: To remember . Yeah .

Speaker #5: There's yeah there's six . Yeah . March . There's I think it's either 22 or 23 days in the month of March . And then , and then Q2 and Q3 both have 64 selling days

Kevin Steinke: Okay, great. Got it. Yeah, that's helpful. Appreciate it. I wanted to also follow up on Lawson. You mentioned there some continuing challenges just in the small, you know, the small account side there. Maybe, you know, some loss of focus as you've gone through this transition period. You know, I know you've been experimenting with various things there, I think, that's to serve the small account customer base and with inside sales force or maybe some service reps who do the unpacking. Are those the sort of things you would still wanna continue to work on? Yeah, I know you also mentioned e-commerce. Is it just more kinda getting the actual sales rep back on site more frequently? I don't...

Speaker #9: Okay , great . Yeah . Yeah . That's helpful . Appreciate it . I wanted to also follow up on Lawson . You mentioned there some continuing challenges just in the small , you know , the small account side there , maybe some loss of focus as you you've gone through this transition period .

Speaker #9: But I know you've you've been experimenting with various things there . I think that serve the small account customer base . And with inside sales or maybe some service reps who do the unpacking , I are those the sort of things you would still want to continue to , to work on ?

Speaker #9: Yeah , I know you also mentioned e-commerce or is it just more kind of getting the actual sales rep back on site More frequently ?

Kevin Steinke: Any more thoughts on kinda how you kind of are approaching that dynamic?

J. Bryan King: You just kinda watered through all of them, which is great.

Speaker #9: Any more thoughts on kind of how you you kind of are approaching that you just .

Bryan King: You just kinda watered through all of them, which is great.

[Analyst] (Stephens Inc.): I know. That's what I was gonna say, Bryan. All of the above.

Ron Knutson: I know. That's what I was gonna say, Bryan. All of the above.

J. Bryan King: Ron and I are laughing because, you know, you're right. Yes. I would say that the shift to some tiny customers to the that were too small to service with the cost to serve of having a rep go see them, because their order flow dynamics and the size they're invoicing was too small to, you know, have somebody there unpacking and managing stuff. I think our inside sales group and our e-commerce efforts have really helped that. I think that our revenue there is not where we've really lost volumes.

Bryan King: Ron and I are laughing because, you know, you're right. Yes. I would say that the shift to some tiny customers to the that were too small to service with the cost to serve of having a rep go see them, because their order flow dynamics and the size they're invoicing was too small to, you know, have somebody there unpacking and managing stuff. I think our inside sales group and our e-commerce efforts have really helped that. I think that our revenue there is not where we've really lost volumes.

Speaker #6: You just . you just .

Speaker #3: You just kind of wandered through all of them, which is great.

Speaker #5: That's what I was going to say , Brian .

Speaker #6: Ron and I are .

Speaker #3: Are laughing because we are smiling because , you know , you're right . Yes . So I would say that the the shift to some tiny customers to the , to that we're too small to service with the cost to serve of having a rep go see him because their order , dynamic order flow dynamics in the size of their invoicing was too small to , you know , have somebody there unpacking and and managing stuff .

Speaker #3: I think our inside sales group and our , our e-commerce efforts have really helped that . So I think that our revenue there is not where we've really lost volumes .

J. Bryan King: We may have lost some ship-to locations. I think, Ron, if I remember correctly, we've actually seen pretty good traction out of that total effort. Even though we may have had some small ship-tos, those are not the ones that we're missing. We had, you know, with the compression of our sales force that we did of two years ago, as we were getting set for the new sales force initiatives that we were putting in place and the technology tools, and the way that we're trying to drive productivity out of our teams. We, you know, we certainly saw with that some of our smaller core customers not get the level of service that we would expect.

Bryan King: We may have lost some ship-to locations. I think, Ron, if I remember correctly, we've actually seen pretty good traction out of that total effort. Even though we may have had some small ship-tos, those are not the ones that we're missing. We had, you know, with the compression of our sales force that we did of two years ago, as we were getting set for the new sales force initiatives that we were putting in place and the technology tools, and the way that we're trying to drive productivity out of our teams. We, you know, we certainly saw with that some of our smaller core customers not get the level of service that we would expect.

Speaker #3: We may have lost some ship to locations , but I think Ron , if I remember correctly , we've actually seen pretty good traction out of that total effort , even though we may have had some small ship tows .

Speaker #3: Those are not the ones that we're missing . We had , you know , with the with the compression of our sales force that we did two years ago as we were getting set for the new sales initiatives that we were putting in place and the technology tools and the way that we're trying to drive productivity out of our , our teams , we you know , we certainly saw with that some of our smaller core customers , not get the level of service that we would expect .

J. Bryan King: We had less salespeople, as you might imagine, the salespeople that we had covered the bigger customers or the strategic accounts, the national accounts that we were trying to make sure we were doing a great job for across the country first. That caused a natural, you know, trend of losing some of our ship-to locations that just had less volume in them. You know, a real concern on our part at the leadership level on whether or not our salespeople were with that compression and then with the, you know, distraction of a lot more strategic and new national accounts, were spending as much time focused on the smaller street business that they used to, you know, make a lot of their money on.

Bryan King: We had less salespeople, as you might imagine, the salespeople that we had covered the bigger customers or the strategic accounts, the national accounts that we were trying to make sure we were doing a great job for across the country first. That caused a natural, you know, trend of losing some of our ship-to locations that just had less volume in them. You know, a real concern on our part at the leadership level on whether or not our salespeople were with that compression and then with the, you know, distraction of a lot more strategic and new national accounts, were spending as much time focused on the smaller street business that they used to, you know, make a lot of their money on.

Speaker #3: We had less salespeople . And as you might imagine , the the salespeople that we had covered , the bigger customers or the strategic accounts , the national accounts that we were trying to make sure we were doing a great job for across the country first .

Speaker #3: And so so that caused a natural , you know , trend of losing some of our ship , to locations that just had less volume in them .

Speaker #3: And , you know , a real concern on on our part at the leadership level , on whether or not our salespeople were with that and then with the , you know , distraction of a lot more strategic and new national accounts , we're spending as much time focused on the smaller street business that they used to , you know , make a lot of their money on .

J. Bryan King: Ron and Michael DeCata started the national account or strategic account initiative about a decade ago, and it's grown to where it's as large as a part of our business as our street business is from zero. We're feeding our salespeople, you know, those national accounts. In some ways, that maybe was creating some behavioral challenges that we didn't appreciate until we got more insights out of the CRM. Now with, you know, kind of, the insights that better data analytics are allowing us to see and how we're keeping up with some of those smaller accounts.

Bryan King: Ron and Michael DeCata started the national account or strategic account initiative about a decade ago, and it's grown to where it's as large as a part of our business as our street business is from zero. We're feeding our salespeople, you know, those national accounts. In some ways, that maybe was creating some behavioral challenges that we didn't appreciate until we got more insights out of the CRM. Now with, you know, kind of, the insights that better data analytics are allowing us to see and how we're keeping up with some of those smaller accounts.

Speaker #3: So Ron and Mike started the national account or strategic account initiative about a decade ago , and it's grown to where it's as large in our as a part of a part of our business as our street business is from zero .

Speaker #3: And so we're feeding our salespeople , you know , those national accounts . And in some ways . That may be was creating some behavioral challenges that we didn't appreciate until we got more insights out of the CRM .

Speaker #3: And now you know, kind of the insights that better data analytics are allowing us to see, and how we're keeping up with some of those smaller accounts. And also, we went out in the market and did a bunch of feedback surveys that we needed to have at my level, and at our investment team level, to be able to triangulate with our leadership team what we were hearing in the market from a lot of those smaller accounts.

J. Bryan King: Also, we went out in the market and did a bunch of feedback surveys that we needed to have at my level and our investment team level to be able to triangulate with our leadership team what we were hearing in the market from a lot of the smaller accounts. Now we've got a very proactive initiative around it, and we're seeing a re-lift back in those base accounts, at least the ship-to number. But it's been after several years of significant declines in locations. you know, you don't see it in the top line as much because you're picking up the strategic accounts and you're getting more volume through those bigger relationships.

Bryan King: Also, we went out in the market and did a bunch of feedback surveys that we needed to have at my level and our investment team level to be able to triangulate with our leadership team what we were hearing in the market from a lot of the smaller accounts. Now we've got a very proactive initiative around it, and we're seeing a re-lift back in those base accounts, at least the ship-to number. But it's been after several years of significant declines in locations. you know, you don't see it in the top line as much because you're picking up the strategic accounts and you're getting more volume through those bigger relationships.

Speaker #3: And so now we've got a very proactive initiative around it , and we're seeing a real lift back in those base accounts , at least the ship two number .

Speaker #3: But it's been after several years of , of of significant declines in locations . And so , you know , you don't see it in the top line as much because you're picking up the strategic accounts and you're getting more volume through those bigger relationships .

J. Bryan King: When you get down at the profitability level on a mix shift basis, especially if your cost to serve from a commission perspective or a cost for your salesperson is the same, you know, we get a more premium pricing out of the smaller accounts than what we do out of the bigger accounts, so that you're giving up some gross or some product margin. You're losing some flow through contribution margin that if you just kinda held pat on that, would've significantly changed the, you know, the total top line revenue growth and the profitability of the business. All that was at the same time as we were investing significant amount of dollars into the company and into the sales force.

Bryan King: When you get down at the profitability level on a mix shift basis, especially if your cost to serve from a commission perspective or a cost for your salesperson is the same, you know, we get a more premium pricing out of the smaller accounts than what we do out of the bigger accounts, so that you're giving up some gross or some product margin. You're losing some flow through contribution margin that if you just kinda held pat on that, would've significantly changed the, you know, the total top line revenue growth and the profitability of the business. All that was at the same time as we were investing significant amount of dollars into the company and into the sales force.

Speaker #3: But when you get down at the profitability level , on a mix shift basis , especially if your cost of serve from a commission perspective or a cost for your salesperson is the same , you know you're , you know , that we get a more premium pricing out of the smaller accounts than what we do out of the bigger accounts , so that you're giving up some gross or some product margin , and then your losing some flow through contribution margin that if you just kind of held pat on that would have significantly changed the , you know , the , the , the total top line revenue growth and the profitability of the business , all that was at the same time as we were investing significant amount of dollars into the company and into the sales force .

J. Bryan King: You, you saw, you know, if you look go back 2 years on Lawson, you know, you've seen, you know, we've got less revenue today on our MRO business than we had 2 years ago. We've got more today than we had last year. That, you know, most of that decrease really came out of those smaller accounts and the flow through on that at the same time as you were investing in paying your sales force more, offering them more tools, and putting dollars back into it, caused a delevering dynamic at the same time as we were making a deliberate investment. There was a swing in profitability there that we felt in Q4 more acutely than we had in the prior Q4.

Bryan King: You, you saw, you know, if you look go back 2 years on Lawson, you know, you've seen, you know, we've got less revenue today on our MRO business than we had 2 years ago. We've got more today than we had last year. That, you know, most of that decrease really came out of those smaller accounts and the flow through on that at the same time as you were investing in paying your sales force more, offering them more tools, and putting dollars back into it, caused a delevering dynamic at the same time as we were making a deliberate investment. There was a swing in profitability there that we felt in Q4 more acutely than we had in the prior Q4.

Speaker #3: So you you saw , you know , if you look , go back two years on loss and , you know , you've seen , you know , we've got less revenue today on our MRO business than we had two years ago .

Speaker #3: We've got more today than we had last year . But that , you know , most of that decrease really came out of those smaller accounts .

Speaker #3: And and the flow through on that . At the same time as you were investing in paying your sales force more , offering them more tools and putting dollars back into it caused a delevering dynamic at the same time as we were making a deliberate investment .

Speaker #3: And so there was a swing in profitability there that that we felt in the fourth quarter , more acutely than we had in the prior fourth quarter .

J. Bryan King: We knew what we were doing, we also knew that there was gonna be a J-curve as we were investing back in the sales force after that compression period, of getting, you know, those sellers back out there into those territories that were either open or had been, you know, consolidated. It's. Go ahead, Ron Knutson. You live this very much daily at Lawson Products.

Bryan King: We knew what we were doing, we also knew that there was gonna be a J-curve as we were investing back in the sales force after that compression period, of getting, you know, those sellers back out there into those territories that were either open or had been, you know, consolidated. It's. Go ahead, Ron Knutson. You live this very much daily at Lawson Products.

Speaker #3: We knew what we were doing , but we also knew that there was going to be a a j-curve as we were investing back in the sales force after the that compression period of getting those sellers back out there into those territories that were either open or had been , you know , consolidated So it's go ahead , Ron , you live .

[Analyst] (Stephens Inc.): Yeah, Kevin, the only thing I would add to Bryan's comments, one is, you know, our strategic business, really sticky business. You know, we've got great customer relationships, you know, servicing, you know, multi-site locations, so drives, you know, really solid, sticky gross margin dollars back to us. So we love that part of the business and, you know, continues to, we continue to expand it and continue to make, you know, investments there to win new accounts as well. You know, relative to the core, the core local customers, if we do look at, you know, ship-to's over the last year or so, you know, it really been, I would say, kind of flattish.

Ron Knutson: Yeah, Kevin, the only thing I would add to Bryan's comments, one is, you know, our strategic business, really sticky business. You know, we've got great customer relationships, you know, servicing, you know, multi-site locations, so drives, you know, really solid, sticky gross margin dollars back to us. So we love that part of the business and, you know, continues to, we continue to expand it and continue to make, you know, investments there to win new accounts as well. You know, relative to the core, the core local customers, if we do look at, you know, ship-to's over the last year or so, you know, it really been, I would say, kind of flattish.

Speaker #6: This very much daily at Lawson .

Speaker #5: The only thing I would add to Brian's comments , one is , you know , our our strategic business really sticky business . You know , we've got great customer relationships .

Speaker #5: You know , servicing , you know , multi-site locations . So drives , you know , really solid , sticky gross margin dollars back to us .

Speaker #5: So we love that part of the business . And you know continues to we continue to expand it and continue to make make investments there to to win new accounts as well .

Speaker #5: You know , relative to the core , the core local customers . If I if we do look at , you know , ship twos over the last year or so , you know , we've really been I would say kind of flattish .

[Analyst] (Stephens Inc.): Most of that decrease that we experienced within our core local customer counts, you know, took place, you know, prior to the beginning of 2025. Now it's about, as I mentioned, you know, they're about 45% of our total revenue. You know, to Bryan's point, it's putting, you know, some headwinds against the total sales growth that we see. Now it's a renewed focus on making sure that we can get, you know, that 45% of our revenue customer base growing again.

Ron Knutson: Most of that decrease that we experienced within our core local customer counts, you know, took place, you know, prior to the beginning of 2025. Now it's about, as I mentioned, you know, they're about 45% of our total revenue. You know, to Bryan's point, it's putting, you know, some headwinds against the total sales growth that we see. Now it's a renewed focus on making sure that we can get, you know, that 45% of our revenue customer base growing again.

Speaker #5: And so most of that decrease that , that , that we experienced within our , within our core local customer count , you know , took place , you know , prior to the beginning of 2025 .

Speaker #5: So but but now it's about , as I mentioned , you know , they make you know , they're about 45% of our total revenue , you know , to Brian's point , it's it's putting , you know , you know , some some headwinds against the total sales growth that we see .

Speaker #5: And now it's a renewed focus on making sure that that we can get , you know , that 45% of our revenue , customer base growing again .

[Analyst] (Stephens Inc.): There's change in incentives and focus and even at the sales leadership meeting that I mentioned a couple of weeks ago, a lot of focus around where that business historically had been, where we sit today, and where we need to take it in the future with our sales leaders.

Ron Knutson: There's change in incentives and focus and even at the sales leadership meeting that I mentioned a couple of weeks ago, a lot of focus around where that business historically had been, where we sit today, and where we need to take it in the future with our sales leaders.

Speaker #5: So and there's change in incentives and focus . And even at the at the sales leadership meeting that I mentioned a couple of weeks ago , a lot of focus around where that business historically had been , where we sit today , and where we need to take it in the future with our with our sales leaders .

J. Bryan King: I'd add I wanna add two things here because I think you asked it, the breadth and the complexity of the question you asked was great, but I wanna hit, make sure I hit these other points. You asked about other support services or capabilities that we put in the field. We definitely have made a real investment. We're working on it in some key markets, but we're adding some service reps and some focused, you know, new account sellers, if you will, or, you know, re-engagement sellers.

Bryan King: I'd add I wanna add two things here because I think you asked it, the breadth and the complexity of the question you asked was great, but I wanna hit, make sure I hit these other points. You asked about other support services or capabilities that we put in the field. We definitely have made a real investment. We're working on it in some key markets, but we're adding some service reps and some focused, you know, new account sellers, if you will, or, you know, re-engagement sellers.

Speaker #6: I .

Speaker #3: I want to add two things there , because I think you asked it the the breadth and the complexity of the question you asked was great , but I want to make sure I hit these other points .

Speaker #3: You asked about other support services or or capabilities that we put in the field . So we definitely have made a real investment .

Speaker #3: We're working on it in some key markets , but we're adding some service reps and some some focused , you know , new account sellers , if you will , or , you know , reengagement sellers .

J. Bryan King: Not the Field Sales Reps that we've got historically, but to support those Field Sales Reps so that they have the time to get back in front of some of these customers that they've not spent as much time in front of by having these service reps support them on some of our, their higher volume relationships so that they aren't having to go by and see the account twice. If you think about the way that we often serve our, even our high volume customers, like those national accounts, you know, where they're going in and they're scanning the bins, they're putting in an order, and then they're coming back a couple of days later, and they're breaking open boxes, and they're reorganizing and reloading all those cabinets.

Bryan King: Not the Field Sales Reps that we've got historically, but to support those Field Sales Reps so that they have the time to get back in front of some of these customers that they've not spent as much time in front of by having these service reps support them on some of our, their higher volume relationships so that they aren't having to go by and see the account twice. If you think about the way that we often serve our, even our high volume customers, like those national accounts, you know, where they're going in and they're scanning the bins, they're putting in an order, and then they're coming back a couple of days later, and they're breaking open boxes, and they're reorganizing and reloading all those cabinets.

Speaker #3: So not the the field sales reps that we've got historically . But to support those field sales reps . So that they have the time to get back in front of some of these customers that they've not spent as much time in front of .

Speaker #3: By having these service reps support them on some of their higher-volume relationships so that they aren't having to go by and see the account twice.

Speaker #3: So if you think about the way that we often serve our even our high volume customers like those national accounts , you know , they're going in and they're they're scanning the bins , they're putting in an order , and then they're coming back a couple days later and they're breaking open boxes and they're reorganizing and reloading all those cabinets .

J. Bryan King: That's that, you know, labor component that we sell as part of our value-added, our critical part of our value proposition to our customers. By having a service tech, you know, do a route and efficiently go by those customers and help take one of those stops out, then we're opening up the opportunity for those sales reps to spend more time back in the field, servicing those customers that maybe were either smaller on the street level or some of the national accounts that we're adding, that need, you know, kind of early touch points high or making sure that we're getting more wallet share out of them and getting them stood up on their initial kind of building out of their program.

Bryan King: That's that, you know, labor component that we sell as part of our value-added, our critical part of our value proposition to our customers. By having a service tech, you know, do a route and efficiently go by those customers and help take one of those stops out, then we're opening up the opportunity for those sales reps to spend more time back in the field, servicing those customers that maybe were either smaller on the street level or some of the national accounts that we're adding, that need, you know, kind of early touch points high or making sure that we're getting more wallet share out of them and getting them stood up on their initial kind of building out of their program.

Speaker #3: And so that that , you know , labor component that we sell as part of our value added , our critical part of our of our value proposition to our customers by having a service tech , you know , do a root and efficiently go buy those customers and , and help take one of those stops out .

Speaker #3: Then we're opening up the opportunity for those sales reps to spend more time back in the field servicing those customers that maybe were either smaller on the street level or some of the national accounts that we're adding that need , you know , kind of early touch it , touch points , high or making sure that we're getting more wallet share out of

J. Bryan King: That's a real focus right now of the business. It's definitely been a cost center. I mean, we've layered that cost in, but it's something that we are seeing strong early indications that that's a model that we wanna continue to lean into to support our FSRs. It allows our FSRs, it allows them to make more money, because it gets their total, you know, total revenue that they can have flow through them up. We think it does a much better job of servicing the customer at a higher level.

Speaker #6: Them .

Speaker #3: And getting them stood up on their initial kind of building out of their their program . So that's been a that's a real focus right now .

Bryan King: That's a real focus right now of the business. It's definitely been a cost center. I mean, we've layered that cost in, but it's something that we are seeing strong early indications that that's a model that we wanna continue to lean into to support our FSRs. It allows our FSRs, it allows them to make more money, because it gets their total, you know, total revenue that they can have flow through them up. We think it does a much better job of servicing the customer at a higher level.

Speaker #3: The business , it's definitely been a cost center . I mean , we've layered that cost in . But it's it's something that we are seeing strong early indications that that's a model that we want to continue to lean into , to support our FSR .

Speaker #3: It allows our FSR . We're not changing . It allows them to make more money because it gets their total , you know , total revenue that they can have flow through them up .

J. Bryan King: What our marketplace surveys have told us is that our customers felt like that too often our sales rep, if they were a smaller account, they just weren't getting the attention or they were being effectively fired by us, not by them. There's a, you know, it was a real message, it was consistent that we heard, where they were asking for us to come back out and service them again and to give them that consistency of service, that they wanted from us. That, you know, maybe over this transition period with our sales force, we haven't as consistently given to the smaller accounts.

Bryan King: What our marketplace surveys have told us is that our customers felt like that too often our sales rep, if they were a smaller account, they just weren't getting the attention or they were being effectively fired by us, not by them. There's a, you know, it was a real message, it was consistent that we heard, where they were asking for us to come back out and service them again and to give them that consistency of service, that they wanted from us. That, you know, maybe over this transition period with our sales force, we haven't as consistently given to the smaller accounts.

Speaker #3: And we think it does a much better job of servicing the customer at a higher level . What our marketplace surveys have told us is that our customers felt like that too often .

Speaker #3: Our sales rep , if they were a smaller account , they just weren't getting the attention or they were being effectively fired by us , not by them .

Speaker #3: And so there's a you know , it was a real message that was consistent , that we heard where they were asking for us to come back out and service them again , and to give them that consistency of service that they wanted from us and that , you know , maybe over this transition period with our sales force , we haven't as consistently given to the smaller accounts .

J. Bryan King: That's, you know, that's been a drag of several percentage points of growth a year, the last several years at least, that we've been making up with our national sales effort. Maybe two years ago, till last, so 2023 to 2024, it was a bigger drag because we had that compression with our sales force. We probably fought, you know, single digit, mid single digits, drag on our growth last year out of that a little bit as well. Is that fair, Ron? You know the numbers. Maybe not quite.

Bryan King: That's, you know, that's been a drag of several percentage points of growth a year, the last several years at least, that we've been making up with our national sales effort. Maybe two years ago, till last, so 2023 to 2024, it was a bigger drag because we had that compression with our sales force. We probably fought, you know, single digit, mid single digits, drag on our growth last year out of that a little bit as well. Is that fair, Ron? You know the numbers. Maybe not quite.

Speaker #3: And so that's , you know , that's been a drag of several percentage points of growth a year . The last several years , at least , that we've been making up with our national sales effort .

Speaker #3: And maybe two years ago to to last year . So 2023 to 24 , it was a bigger drag because we had that compression with our sales force .

Speaker #3: And then we probably fought , you know , single digit , mid-single digits , drag on our growth last year out of that a little bit as well .

Kevin Steinke: Yes, yes.

Ron Knutson: Yes, yes.

J. Bryan King: That and that and in military.

Bryan King: That and that and in military.

Kevin Steinke: Yes.

Ron Knutson: Yes.

J. Bryan King: I ought to caveat that. The military was the other area that we saw a real shift in buying behavior that we're trying to work on reengaging 'cause they have been historically a really good end market for us. We're still engaged with them, but their behavior shifted significantly in dollar spend over the last year and a half.

Bryan King: I ought to caveat that. The military was the other area that we saw a real shift in buying behavior that we're trying to work on reengaging 'cause they have been historically a really good end market for us. We're still engaged with them, but their behavior shifted significantly in dollar spend over the last year and a half.

Speaker #3: Is that fair , Ron ? You know the numbers . Maybe not quite that much . That and that and and military out of caveat that because military was the other area that we saw a real shift in buying behaviour that we're trying to work on re-engaging because they have been historically a really good in market for us .

Speaker #3: And we're still engaged with them . But their behavior shifted significantly in dollar spend over the last year and a half

Kevin Steinke: It sounds good. Well, thank you for all the color on that. Appreciate it. I just wanna lastly ask about the M&A pipeline, given your strong liquidity and the extension and expansion of your credit facility. Looks like you'd be set up to explore and maybe execute on some M&A opportunities.

Speaker #9: Yeah , it sounds good . Well , thank you for all the color on that . Appreciate it . I just want to lastly ask about the M&A pipeline .

Speaker #9: Given your strong liquidity and the extension and expansion of your credit facility, looks like you'd be set up to explore and maybe execute on some M&A opportunities.

J. Bryan King: Yeah, we look, we highlighted that Sean joined us, you know, maybe 100 days ago or less. He's been a critical addition to our team. We spent, you know, the better part of the last year and a half, really evaluating our, you know, business development, our M&A and corporate strategy part of our effort. We had, you know, have a really strong team and colleague that used to work at Headwater that's been on the Gexpro Services side and then, you know, helping lead that effort the last several years. We brought in Sean to, you know, add some additional muscle memory to how to build out a team there.

Bryan King: Yeah, we look, we highlighted that Sean joined us, you know, maybe 100 days ago or less. He's been a critical addition to our team. We spent, you know, the better part of the last year and a half, really evaluating our, you know, business development, our M&A and corporate strategy part of our effort. We had, you know, have a really strong team and colleague that used to work at Headwater that's been on the Gexpro Services side and then, you know, helping lead that effort the last several years. We brought in Sean to, you know, add some additional muscle memory to how to build out a team there.

Speaker #3: Yeah . Look , we highlighted that Sean joined us , you know , maybe 100 days ago or less . He's been a critical addition to our team .

Speaker #3: We spent , you know , the better part of the last year , year and a half really evaluating our our , you know , business development or M&A and corporate strategy .

Speaker #3: Part of our of our effort , our we had , you know , have a really strong team colleague that worked used to work at headwater that's been on the services side .

Speaker #3: And then you know helping lead that effort the last several years . We brought in Shaun to , you know , add some additional muscle memory to how to build out an team .

J. Bryan King: He's significantly increased the funnel in just 100 days. He's gotten a lot of buy-in from the vertical leaders and from our team about where we wanna spend our time and effort. We had a few things last year that were high priorities for us that we had hoped to get done that didn't get done. I'd say that none of them are off the table, but, you know, we just weren't able to get them over the goal line. They've been high priorities for some period of time.

Bryan King: He's significantly increased the funnel in just 100 days. He's gotten a lot of buy-in from the vertical leaders and from our team about where we wanna spend our time and effort. We had a few things last year that were high priorities for us that we had hoped to get done that didn't get done. I'd say that none of them are off the table, but, you know, we just weren't able to get them over the goal line. They've been high priorities for some period of time.

Speaker #3: There . Hes significantly increased the funnel in just 100 days . He's gotten a lot of buy in from the vertical leaders and from our team about where we want to spend our time and effort .

Speaker #3: We had a few things last year that were high priorities for us that we had hoped to get done , that didn't get done .

Speaker #3: I'd say that none of them are off the table, but they're, you know, but we just weren't able to get them over the goal line.

J. Bryan King: We have, you know, some things that we are focused on right now that are smaller tuck-in acquisitions that significantly bolster some areas of either strength or focus that we've got in a few of our vertical or a couple of our verticals. We would expect that there'll be some small tuck-in acquisitions that we'll be able to get over the goal line over the first half of this year.

Bryan King: We have, you know, some things that we are focused on right now that are smaller tuck-in acquisitions that significantly bolster some areas of either strength or focus that we've got in a few of our vertical or a couple of our verticals. We would expect that there'll be some small tuck-in acquisitions that we'll be able to get over the goal line over the first half of this year.

Speaker #3: They've been high priorities for some period of time . And then we have , you know , some things that that we are focused on right now that are smaller tuck in acquisitions that significantly bolster some areas of either strength or focus that we've got in in a few of our vertical or a couple of our verticals .

Speaker #3: And we would expect that there'll be some small tuck-in acquisitions that we'll be able to get over the goal line over the first half of this year.

Kevin Steinke: Okay, sounds good.

J. Bryan King: The ones that I'm thinking of, there's 3 of them that, you know, we have prioritized. All 3 of those will add significantly to the margin constructive of those 3 verticals. They're small. These are tuck-ins.

Bryan King: The ones that I'm thinking of, there's 3 of them that, you know, we have prioritized. All 3 of those will add significantly to the margin constructive of those 3 verticals. They're small. These are tuck-ins.

Speaker #9: Okay . Sounds good . Thanks .

Speaker #6: And those are .

Speaker #3: Those are important to driving accretive . The ones that I'm thinking of . There's three of them that you know that that that we have prioritized all three of those will add significantly to the margin constructive Of those three verticals But they're small .

Kevin Steinke: Got it. Understood. Well, thanks again for all the insight. I'll turn it back over.

Speaker #3: They're not . These are tuck ins

J. Bryan King: Thank you for your time and your thoughtful questions.

Bryan King: Thank you for your time and your thoughtful questions.

Kevin Steinke: Thanks, Kevin.

Ron Knutson: Thanks, Kevin.

Speaker #9: Got it . Understood . Well , thanks again for all the insight . I'll turn it back over .

Rachel Smith: We have reached the end of the question and answer session. I will now turn the call over to Brian King for closing remarks.

Operator: We have reached the end of the question and answer session. I will now turn the call over to Brian King for closing remarks.

Speaker #6: You for .

Speaker #3: Your time and your thoughtful questions .

Speaker #5: Thanks , Kevin

J. Bryan King: Appreciate everybody's engagement and your time this morning. We look forward to stronger quarters in the future and I appreciate everybody continuing to be supportive and engage with us. Have a great next several months.

Bryan King: Appreciate everybody's engagement and your time this morning. We look forward to stronger quarters in the future and I appreciate everybody continuing to be supportive and engage with us. Have a great next several months.

Speaker #2: We have reached the end of the question and answer session , and I will now turn the call over to Brian King for closing remarks .

Speaker #3: I appreciate everybody's engagement and your time this morning. We look forward to stronger quarters in the future, and I appreciate everybody continuing to be supportive and engaged with us.

Rachel Smith: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Speaker #3: Have a great next several months.

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