Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide insights into the daily sales trends observed in Q1 and any changes in April? A: Unidentified_7: Compared to a year ago, April's sales trends are slightly tempered but relatively flat sequentially from Q1. There are no major movements, though the number of selling days can impact the average daily sales (ADS) numbers. Lawson is facing tougher comps in the first half of the year, while Jex Pro Services is up against easier comps. Unidentified_6 added that while there was interest in test and measurement equipment, purchase orders have been slower to release.
Q: Could you elaborate on the challenges and progress with Lawson's sales force transformation and military sales? A: Unidentified_7: Military sales were flat, contributing to about 40% of the year-over-year decline. Lawson's sequential sales have improved month-to-month, with strategic and core accounts showing positive trends. The sales force transformation involves investments in CRM, technical sales specialists, and more. The goal is to reach 1,000 sales reps by the second half of 2025, focusing on new territories, which are more challenging but expected to yield long-term value.
Q: How is the M&A pipeline shaping up in the current environment, and how does it affect valuations? A: Unidentified_6: The current environment creates more opportunities in the M&A pipeline. While there are several opportunities being considered, the focus is on integrating recent acquisitions and understanding new policies from Washington. There's no urgency to add complexity, but if the right opportunity arises, DSG would consider it. Currently, buying back stock is seen as the most attractive option.
Q: Are there any signs of reshoring or onshoring of manufacturing that could benefit DSG in the long term? A: Unidentified_6: There are opportunities arising from the current environment, especially for a company with strong sourcing capabilities like DSG. The murkiness in trade patterns and manufacturing shifts could allow DSG to play a more important role for customers and potentially increase profitability. The company has been preparing for such shifts since the first Trump administration.
Q: What is the path to achieving a 20% return on invested capital (ROIC), and how does DSG plan to manage the numerator and denominator? A: Unidentified_4: The focus is on improving the numerator by achieving synergies from acquisitions and managing working capital efficiently. Unidentified_6 added that there are four levers: cost synergies, sourcing improvements, market normalization, and organic revenue growth. While working capital management is crucial, the primary focus is on increasing profitability through these levers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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