Distribution Solutions Group (DSGR) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $496.0 million, up 3.8% year-over-year, driven by 3.6% organic sales growth and the Eastern Valve acquisition.

• Adjusted EBITDA was $37.8 million (7.6% margin), down from $42.8 million (9.0%) in Q1 2025, impacted by sales mix, investments, and higher employee costs.

• Net income declined to $0.4 million from $3.3 million in Q1 2025, reflecting margin pressures and higher SG&A expenses.

• Non-GAAP adjusted diluted EPS was $0.24, compared to $0.31 in Q1 2025 and $0.18 in Q4 2025.

• A take-private proposal was received from the controlling shareholder group at $29.50 per share; a special committee is reviewing it.

Financial highlights

• Gross profit margin declined to 32.9% from 34.3% year-over-year, mainly due to sales mix and higher tariffs.

• Adjusted operating income was $29.1 million, down from $34.4 million year-over-year but up from $26.5 million sequentially.

• Diluted net earnings per share was $0.01, down from $0.07 in the prior year quarter.

• Total liquidity at quarter-end was $415 million, including $65 million in cash and $350 million in available credit.

• Cash used in operations was $20.4 million; net capital expenditures were $5.6 million.

Outlook and guidance

• Management expects continued organic and acquisition-driven growth, leveraging digital and cross-selling initiatives.

• Margin pressures are expected to persist, but sequential improvement and positive momentum are noted.

• Adjusted EBITDA margin would have been 8.3% excluding timing and isolated expenses.

• Capital expenditures for 2026 are projected at $25–30 million.

• Liquidity is considered sufficient for the next twelve months.