CHICAGO, March 9, 2023 - Distribution Solutions Group, Inc. (NASDAQ:DSGR) ("DSG" or the "Company"), a premier, multi-platform distribution company providing high touch, value-added distribution solutions to the maintenance, repair & operations (MRO), original equipment manufacturer (OEM) and industrial technologies markets, today announced consolidated results for the fourth quarter and full year ended December 31, 2022. This press release is supplemented by an earnings slide deck appearing on the Company’s investor relations home page at www.distributionsolutionsgroup.com.

Note Regarding Reverse Merger Accounting

As a result of the April 1, 2022 strategic combination of Lawson Products, Gexpro Services and TestEquity, our financial results are reported under reverse merger accounting treatment as required by generally accepted accounting principles ("GAAP"). Accordingly, Lawson Products results are included only for the period following the April 1, 2022 merger closing date. GAAP results for the three and twelve months ended December 31, 2021 include the combined results of Gexpro Services and TestEquity, GAAP results for the three months ended December 31, 2022 include the results of Lawson Products, Gexpro Services and TestEquity and GAAP results for the year ended December 31, 2022 include the results of Lawson Products for the nine months after the April 1, 2022 merger closing date as well as the results of Gexpro Services and TestEquity for the full twelve months.

The following represents a summary of certain operating results (unaudited). See reconciliation of GAAP to non-GAAP measures in tables 2 and 3.

(1)Represents Lawson Products pre-merger revenue and operating income

Bryan King, CEO and Chairman of the Board, said, “We are pleased with fourth quarter results that exceeded expectations. Our continued topline growth and sequential improvement in margins further supports our strategic decision to combine Lawson Products, Gexpro Services and TestEquity. While macroeconomic uncertainties remain, we are laser-focused on driving greater returns on cash flow through a combination of organic growth, strategic acquisitions and operational efficiencies. We believe that our disciplined approach to capital allocation through our asset light model coupled with our strengthening balance sheet positions us to further generate meaningful returns and cash flow in 2023.

“Fourth quarter revenue grew to nearly $329 million, consisting of organic growth of 16.7% as well as revenue from acquisitions. Fourth quarter Adjusted EBITDA grew $16.3 million over a year ago to $34.0 million or 10.3% of adjusted revenue, with an expansion in margins over the third quarter on fewer selling days. On a full year basis, we realized strong comparable adjusted revenue growth of over 35% and adjusted margin expansion in terms of dollars and percentage.

I want to congratulate our leadership teams for successfully completing five acquisitions in 2022, as well as realizing sequential margin expansion as the year developed," concluded Mr. King.

Fourth Quarter Highlights (1)

•GAAP revenue was $328.9 million, an increase of $199.6 million or 154.5%, which included $60.2 million of additional revenue from companies acquired in 2021 and 2022 other than Lawson Products.

•Non-GAAP adjusted revenue, which in the fourth quarter of 2021 includes the pre-merger revenue of Lawson Products, increased approximately $97.6 million or 42.2% to $328.9 million. This improvement was driven by organic growth of 16.7% and revenue from companies acquired in 2021 and 2022 (other than Lawson Products).

•Reported operating income increased by $14.4 million from the prior year period to $12.7 million or 3.8% of GAAP revenue.

•Diluted loss per share was $0.10 for the quarter compared to a diluted loss per share of $0.47 in the year ago quarter. Non-GAAP diluted earnings per share was $0.25 in the fourth quarter 2022 compared to $0.15 for the same period a year ago.

•Non-GAAP adjusted EBITDA increased by $16.3 million from the prior year period to $34.0 million or 10.3% of non-GAAP adjusted revenue.

•In November, the Board authorized an increase of the existing share buy-back program from $7.5 million to $12.5 million. During 2022, the Company repurchased approximately 54,000 shares of its common stock for an aggregate price of $1.9 million on top of $3.0 million previously repurchased which leaves $7.6 million available under its expanded authorized share repurchase plan.

(1) See reconciliation of GAAP to non-GAAP measures in tables 2 and 4.

Full Year Highlights (2)

•GAAP revenue was $1.15 billion, an increase of $631.1 million or 121.3%. The increase was driven by the inclusion of Lawson Products revenue of $324.8 million following the April 1, 2022 merger closing date and $203.6 million of additional revenue from companies acquired in 2021 and 2022 (other than Lawson Products).

•Non-GAAP adjusted revenue was $1.27 billion, which in 2022 and 2021 includes the pre-merger revenue of Lawson Products, increased approximately $331.3 million or 35.3%. This improvement was driven by organic growth of 13.8% and revenue from companies acquired in 2021 and 2022 (other than Lawson Products).

•Reported operating income increased by $30.4 million from the prior year period to $41.8 million or 3.6% of GAAP revenue.

•Diluted earnings per share was $0.42 for the year compared to a loss per diluted share of $0.49 in the year ago period.

•Non-GAAP adjusted EBITDA increased by $47.8 million from the prior year period to $123.0 million or 9.7% of non-GAAP adjusted revenue.

•The Company ended the year with $24.6 million of cash on hand and $77.0 million of availability under its credit facility with net debt leverage of 3.1x. Net capital expenditures were $11.3 million during 2022.

(2) See reconciliation of GAAP to non-GAAP measures in table 3.

The following represents a summary of certain operating results for each reportable segment (unaudited). See reconciliation of GAAP to non-GAAP measures in table 2.

(1)Represents Lawson Products and The Bolt Supply House pre-merger revenue and operating income

Conference Call

Distribution Solutions Group, Inc. will conduct a conference call with investors to discuss fourth quarter 2022 results at 9:00 a.m. Eastern Time on March 9, 2023. The conference call is available by direct dial at 1-888-506-0062 in the U.S. or 1-973-528-0011 from outside of the U.S. The participant access code is 228752. A replay of the conference call will be available by telephone approximately two hours after completion of the call through March 23, 2023. Callers can access the replay by dialing 1-877-481-4010 in the U.S. or 1-919-882-2331 outside the U.S. The PIN access number for the replay is 47406. A streaming audio of the call and an archived replay will also be available on the investor relations page of Distribution Solutions Group’s website. Presentations may be supplemented by a series of slides appearing on the company’s investor relations home page at www.distributionsolutionsgroup.com.

About Distribution Solutions Group, Inc.

Distribution Solutions Group (“DSG”) is a leading, multi-platform specialty distribution company providing high touch, value-added distribution solutions to the maintenance, repair & operations (MRO), the original equipment manufacturer (OEM) and the industrial technologies markets. DSG was formed through the strategic combination of Lawson Products, a leader in MRO distribution of C-parts, Gexpro Services, a leading global supply chain services provider to manufacturing customers, and TestEquity, a leader in electronic test & measurement solutions.

Through its collective businesses, DSG is dedicated to helping customers lower their total cost of operation by increasing productivity and efficiency with the right products, expert technical support and fast, reliable delivery to be a one-stop solution provider. DSG serves approximately 110,000 customers in several diverse end markets supported by approximately 3,100 dedicated employees and strong vendor partnerships. DSG ships from strategically located distribution and service centers to customers in North America, Europe, Asia, South America and the Middle East.

For more information on Distribution Solutions Group please visit www.distributionsolutionsgroup.com.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. The terms “aim,” “anticipate,” “believe,” “contemplates,” “continues,” “could,”

“ensure,” “estimate,” “expect,” “forecasts,” “if,” “intend,” “likely,” “may,” “might,” “objective,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “probable,” “project,” “shall,” “should,” “strategy,” “will,” “would,” and other words and terms of similar meaning and expression are intended to identify forward-looking statements. Forward-looking statements can also be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks, uncertainties and assumptions, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. DSG can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and DSG cautions readers not to place undue reliance on such statements, which speak only as of the date made. DSG undertakes no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Certain risks associated with DSG’s business are also discussed from time to time in the reports DSG files with the SEC, including DSG’s Annual Report on Form 10-K, DSG’s Quarterly Reports on Form 10-Q and DSG’s Current Reports on Form 8-K. In addition, the following factors, among others, could cause actual outcomes and results to differ materially from those discussed in the forward-looking statements: (i) whether or not the terms of the earnout provisions in either of the merger agreements will be satisfied such that DSG would be required to issue additional shares of common stock in connection with the mergers; (ii) unanticipated difficulties or expenditures relating to the mergers; (iii) the risk that stockholder litigation in connection with the mergers results in significant costs of defense, indemnification and liability; and (iv) any problems arising in combining the businesses of Lawson Products, TestEquity and Gexpro Services, which may result in the combined company not operating as effectively and efficiently as expected.

(Dollars in thousands, except share data)

(Unaudited)

(Dollars in thousands, except per share data)

(Unaudited)

(Dollars in thousands)

(Unaudited)

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, the Company's management believes that certain non-GAAP financial measures may provide users of this financial information with additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that includes for the three months ended December 31, 2021 and the years ended December 31, 2022 and 2021 certain results of pre-merger Lawson Products and excludes for all periods certain non-operational items that impact the overall comparability. See Tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended December 31, 2022 and 2021 and the years ended December 31, 2022 and 2021. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.

(1)Represents Lawson Products pre-merger revenue and operating income

(2)Merger transaction costs related to the negotiation, review and execution of the merger agreements relating to the business combination of Lawson Products, TestEquity and Gexpro Services and subsequent integration costs

(3)Expense primarily for stock-based compensation (benefit), of which a portion varies with the Company’s stock price

(4)Includes severance expense for actions taken in 2022 and 2021, not related to a formal restructuring plan

(5)Expense for acquisition related costs, unrelated to the business combination of Lawson Products, TestEquity and Gexpro Services

(6)Inventory net realizable value adjustment recorded to reduce inventory related to discontinued products where the anticipated net realizable value was lower than the cost reflected in the Company's records

(7)Inventory fair value step-up adjustments resulting from the reverse merger acquisition accounting for Lawson Products and acquisition accounting for additional acquisitions completed by Gexpro Services

(8)Other non-recurring costs consists of sales force optimization and other non-recurring items

(1)Represents Lawson Products pre-merger revenue and operating income

(2)Merger transaction costs related to the negotiation, review and execution of the merger agreements relating to the business combination of Lawson Products, TestEquity and Gexpro Services and subsequent integration costs

(3)Expense primarily for stock-based compensation (benefit), of which a portion varies with the Company’s stock price

(4)Includes severance expense for actions taken in 2022 and 2021, not related to a formal restructuring plan

(5)Expense for acquisition related costs, unrelated to the business combination of Lawson Products, TestEquity and Gexpro Services

(6)Inventory net realizable value adjustment recorded to reduce inventory related to discontinued products where the anticipated net realizable value was lower than the cost reflected in the Company's records

(7)Inventory fair value step-up adjustments resulting from the reverse merger acquisition accounting for Lawson Products and acquisition accounting for additional acquisitions completed by Gexpro Services

(8)Other non-recurring costs consists of sales force optimization and other non-recurring items

(1)Tax effected at full year tax rate of 42.8% and (6.6)% for the twelve months ended December 31, 2022 and 2021, respectively.

(2)Pretax adjustments to diluted EPS calculated on 19.408 million and 10.253 million diluted shares for the fourth quarter of 2022 and 2021, respectively.

Distribution Solutions Group, Inc.

Ronald J. Knutson

Executive Vice President and Chief Financial Officer

773-304-5665

Three Part Advisors, LLC

Steven Hooser or Sandy Martin

214-872-2710