Highlights

  • Distribution Solutions Group entered a merger agreement on July 15, 2026 under which each eligible share converts into $35.00 in cash.
  • Second quarter 2026 revenue was $557,734 thousand, compared with $502,437 thousand, and net income was $8,494 thousand, or $0.18 per diluted share.
  • Outstanding borrowings were $733.8 million at June 30, 2026, and cash and cash equivalents were $66.9 million.
  • LKCM Headwater and its affiliates beneficially owned approximately 78.6% of the outstanding shares at June 30, 2026.

Distribution Solutions Group, Inc. (NASDAQ: DSGR) shares were trading at USD 35.03 on October 27, 2026, up 0.04%, with a relative volume at time of 2.14. The specialty distribution company completed the Eastern Valve acquisition on March 9, 2026, entered a merger agreement on July 15, 2026, and filed its quarterly report for the quarter ended June 30, 2026 on August 6, 2026.

Distribution Solutions Group, also called DSG, is incorporated in Delaware and lists its principal executive offices in Fort Worth, Texas. It is a multi-platform specialty distribution company serving maintenance, repair and operations (MRO), original equipment manufacturer (OEM) and industrial technologies markets. It reports four segments: Lawson, TestEquity, Gexpro Services and Canada Branch Division. Its fiscal year ends December 31.

Pending Merger

On July 15, 2026, DSG agreed to merge with Eclipse Acquisitions Merger Sub, Inc., an entity affiliated with LKCM Headwater Investments, LLC, J. Bryan King and their affiliates. Mr. King is DSG's Chief Executive Officer and Chairman. Each outstanding share, other than specified excluded shares and shares with appraisal rights, will convert into the right to receive $35.00 in cash, without interest. DSG would become privately held and its common stock would be delisted from Nasdaq.

A special committee of disinterested directors unanimously recommended the transaction. Closing is subject to adoption by a majority of outstanding shares, approval by a majority of votes cast by disinterested stockholders, expiration of the Hart-Scott-Rodino waiting period and the absence of any injunction. It is not subject to a financing condition, and either party may terminate if the merger has not closed by December 31, 2026. DSG would pay Parent a termination fee of approximately $9.3 million in specified circumstances, and Parent would pay DSG a reverse termination fee of approximately $22.2 million in others.

Second Quarter Results

Revenue for the three months ended June 30, 2026 was $557,734 thousand, compared with $502,437 thousand. The company attributed the increase of $55.3 million to organic revenue growth of $51.2 million, or 10.2%, and $4.1 million from Eastern Valve. Gross profit was $180,136 thousand, compared with $170,084 thousand.

Operating income was $27,868 thousand, compared with $26,826 thousand. Net income was $8,494 thousand, or $0.18 per diluted share, compared with $5,003 thousand, or $0.11. Adjusted EBITDA, a non-GAAP measure, was $53,933 thousand.

By segment, Lawson revenue was $125,498 thousand, and its gross profit margin was 51.3%, compared with 55.2%, which the company attributed to a sales mix shift toward lower margin customers and higher vendor costs and tariff rates. TestEquity revenue was $228,994 thousand, up 17.4%. Gexpro Services revenue was $140,146 thousand, up 9.7%, and Canada Branch Division revenue was $63,717 thousand.

Cash Flow, Debt and Liquidity

Net cash provided by operating activities was $1.6 million for the six months, compared with $28.5 million. At June 30, 2026, DSG had $66.9 million of cash and cash equivalents, $733.8 million of outstanding borrowings under its Amended Credit Agreement and $344.7 million of borrowing availability under its revolving credit facility, net of letters of credit. It stated that it was in compliance with its financial covenants.

In connection with the merger agreement, DSG amended its credit agreement to permit revolving loans to be used to finance the merger. The merger agreement caps revolving borrowings, other than for certain contemplated acquisitions, at $100.0 million outstanding between signing and closing.

Risks, Operating Environment and Outlook

The filing states that if the merger is not completed, DSG's stock price may decline to the extent it reflects an assumption that the merger will be completed. It also cites "no-shop" restrictions on soliciting other proposals. DSG noted that it continues to be affected by inflation, tariffs, and transportation and labor costs, and that it instituted price increases during 2025 and 2026.

DSG does not provide numerical guidance in the filing.