Distribution Solutions Q1 revenue rises 3.8%, beats estimates

Overview

• US specialty distributor's Q1 revenue rose 3.8%, beating analyst expectations

• Adjusted EPS for Q1 beat analyst expectations

• Company completed acquisition of Eastern Valve & Control Specialties in Canada

Outlook

• Company did not provide specific guidance for the current quarter or full year

Result Drivers

• ORGANIC SALES GROWTH - Q1 revenue growth was primarily driven by 3.6% organic sales growth and daily sales improvement across all verticals

• MARGIN PRESSURE - Gross margin decreased due to customer and vertical sales mix shifts and higher tariff rates on inbound shipments, partially offset by pricing benefits

• ISOLATED EXPENSES & FEWER SELLING DAYS - Company said certain timing and isolated expenses, as well as fewer selling days, negatively impacted adjusted EBITDA margin by about 70bps

Company press release: ID:nBw7nMV5Na

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the industrial machinery & equipment peer group is "buy"

• Wall Street's median 12-month price target for Distribution Solutions Group Inc is $35.50, about 31.7% above its April 29 closing price of $26.95

• The stock recently traded at 21 times the next 12-month earnings vs. a P/E of 16 three months ago

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