FORT WORTH, Texas - Distribution Solutions Group, Inc. (NASDAQ: DSGR), known as DSG, has announced the acquisition of Tech-Component Resources Pte Ltd (TCR), a Southeast Asian distributor of industrial products. The move, orchestrated by DSG's operating company Gexpro Services, aims to strengthen its presence in the region and support Original Equipment Manufacturer (OEM) customers.
The acquisition is a strategic step for Gexpro Services to increase its market share and service capabilities in Southeast Asia. CEO Robert Connors highlighted the deal's potential to enhance customer value with a diversified selection of offerings. TCR, which operates out of Singapore and Malaysia, is expected to benefit from Gexpro Services' global supply chain solutions.
Koh Kee Hun, General Manager of TCR, expressed enthusiasm for the growth opportunities that the partnership with DSG offers. He anticipates advantages for TCR's customers, suppliers, and employees from the expanded product and service offerings and geographic reach.
DSG's CEO and Chairman Bryan King described the acquisition as a lower-risk strategy to meet customer demands and to strengthen the company's position in the semiconductor and manufacturing industries. The transaction, funded through DSG's existing cash reserves, is expected to close in the fourth quarter of 2024, pending customary closing conditions. It is not anticipated to materially impact DSG's financial reporting.
DSG, a multi-platform specialty distribution company, serves various end markets with approximately 4,300 employees and multiple distribution and service centers across the globe. The acquisition of TCR aligns with DSG's growth objectives and is projected to enhance shareholder value without significant financial materiality.
This expansion reflects DSG's commitment to providing comprehensive distribution solutions to the MRO, OEM, and industrial technologies markets. The information regarding this acquisition is based on a press release statement.
In other recent news, Distribution Solutions Group (DSG) announced record consolidated sales of $440 million in their Q2 2024 earnings call, reflecting a 16.3% increase year-over-year. The company also disclosed its plans for the acquisition of Source Atlantic to broaden its market presence in Canada. DSG's EBITDA margins improved, and the firm is targeting low double-digit EBITDA margins for the combined entity of Bolt and Source Atlantic in the next 12 to 18 months.
DSG is optimistic about its growth trajectory despite the macroeconomic environment. The company aims to achieve over $3.3 billion in revenue and over $450 million in EBITDA with 13-14% margins within the next five years. Organic sales, however, declined by 5.7% compared to the previous year.
DSG's CEO, Bryan King, expressed confidence in the company's potential for growth and shareholder value creation, emphasizing the importance of strategic acquisitions and the expansion of capabilities to better serve customers. The acquisition of Source Atlantic is expected to positively impact the company's long-term consolidated margin. DSG also plans to hire new sales members to foster growth in 2025 and 2026.
InvestingPro Insights
As Distribution Solutions Group, Inc. (DSG) embraces its strategic expansion into Southeast Asia with the acquisition of Tech-Component Resources Pte Ltd, the company's financial metrics offer insights into its market position and future prospects. According to InvestingPro, DSG's market capitalization stands at $1.78 billion, demonstrating its substantial size within the specialty distribution industry.
The company's aggressive growth strategy is underscored by a significant revenue growth rate of 21.22% over the last twelve months as of Q2 2024. This growth momentum is further highlighted by a strong return over the last three months, with a 26.87% price total return. These figures suggest that DSG's market strategies, including acquisitions like TCR, are resonating positively with investors and could potentially enhance shareholder value in the long term.
Despite not paying dividends, DSG's focus on capital appreciation is evident. The company is trading near its 52-week high, at 98.17% of the peak price, reflecting investor confidence and a robust market performance. An InvestingPro Tip indicates that analysts predict the company will be profitable this year, which could signal a turning point for DSG as it continues to invest in growth and operational efficiency.
For those interested in an in-depth analysis, InvestingPro offers additional insights and tips for DSG. Currently, there are 10 more InvestingPro Tips available that could provide valuable information for investors looking at DSG's financial health and market potential. To explore these tips, visit https://www.investing.com/pro/DSGR.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.