(Mark One) | |||||
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the fiscal year ended | |||||
or | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to |
(State or other jurisdiction of | (I.R.S. Employer | |||||||
incorporation or organization) | Identification No.) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||
The (NASDAQ Global Select Market) |
Large accelerated filer o | þ | |||||||
Non-accelerated filer o | Smaller reporting Company | |||||||
Emerging Growth Company |
Page # | ||||||||
Item 6. | [RESERVED] | |||||||
80 | ||||||||
Industry Category | Percentage of Lawson Revenue | |||||||
Manufacturing | 22% | |||||||
Automotive | 18% | |||||||
Government and Military | 14% | |||||||
Construction | 8% | |||||||
Equipment rental | 6% | |||||||
Transportation | 4% | |||||||
Agriculture | 3% | |||||||
Mining | 3% | |||||||
Other | 22% | |||||||
100% |
Product Category | Percentage of Lawson Revenue | |||||||
Fastening systems | 18% | |||||||
Fluid power | 15% | |||||||
Cutting tools and abrasives | 13% | |||||||
Specialty chemicals | 11% | |||||||
Electrical | 11% | |||||||
Aftermarket automotive supplies | 10% | |||||||
Safety | 4% | |||||||
Welding and metal repair | 1% | |||||||
Other | 17% | |||||||
100% |
Industry Category | Percentage of TestEquity Revenue | |||||||
Aerospace and defense | 30% | |||||||
Industrial electronics and electronics manufacturing | 26% | |||||||
Semi-conductor production | 8% | |||||||
Wireless and communications technology | 6% | |||||||
Education | 5% | |||||||
Other | 25% | |||||||
100% |
Product Category | Percentage of TestEquity Revenue | |||||||
Test & measurement | 65% | |||||||
Electronic production supplies | 32% | |||||||
Proprietary products | 3% | |||||||
100% |
Industry Category | Percentage of Gexpro Services Revenue | |||||||
Renewable energy | 27% | |||||||
Transportation | 19% | |||||||
Industrial power | 17% | |||||||
Technology | 14% | |||||||
Consumer and industrial | 14% | |||||||
Aerospace and defense | 9% | |||||||
100% |
Product Category | Percentage of Gexpro Services Revenue | |||||||
Hardware | 41% | |||||||
Fabrications | 22% | |||||||
Electrical | 21% | |||||||
Mechanical | 16% | |||||||
100% |
Name | Age | Year First Named to Present Office | Position | |||||||||||||||||
J. Bryan King | 51 | 2022 | Chairman, President and Chief Executive Officer | |||||||||||||||||
Ronald J. Knutson | 59 | 2014 | Executive Vice President, Chief Financial Officer and Treasurer | |||||||||||||||||
David S. Lambert | 49 | 2021 | Vice President, Controller and Chief Accounting Officer |
Number of Properties | |||||||||||||||||||||||
Lawson | TestEquity | Gexpro Services | All Other(1) | ||||||||||||||||||||
Offices | 2 | 4 | 3 | — | |||||||||||||||||||
Distribution centers/warehouses | 6 | 8 | 28 | — | |||||||||||||||||||
Branch locations | — | — | — | 14 | |||||||||||||||||||
Other (2) | 1 | — | — | — | |||||||||||||||||||
Total | 9 | 12 | 31 | 14 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||||||||||||
October 1 through October 31, 2022 | — | $ | — | — | $ | 7,572,000 | ||||||||||||||||||||
November 1 through November 30, 2022 | — | — | — | 7,572,000 | ||||||||||||||||||||||
December 1 through December 31, 2022 | — | — | — | 7,572,000 | ||||||||||||||||||||||
Total | — | — |
Year Ended December 31 | |||||||||||
(in thousands) | 2022(8) | 2021 | |||||||||
Operating income (loss) | $ | 41,786 | $ | 11,421 | |||||||
Depreciation and amortization | 45,186 | 18,683 | |||||||||
Stock-based compensation(1) | 2,448 | — | |||||||||
Severance costs(2) | 2,796 | 50 | |||||||||
Merger/integration costs(3) | 12,659 | 2,435 | |||||||||
Inventory net realizable value adjustment(4) | 1,737 | — | |||||||||
Inventory step-up(5) | 2,867 | 212 | |||||||||
Acquisition related costs(6) | 2,782 | 6,373 | |||||||||
Other non-recurring(7) | 1,597 | 243 | |||||||||
Adjusted EBITDA | $ | 113,858 | $ | 39,417 |
Year Ended December 31 | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Adjusted EBITDA | |||||||||||
Lawson(1) | $ | 30,584 | $ | — | |||||||
TestEquity | 34,736 | 16,107 | |||||||||
Gexpro Services | 43,206 | 23,310 | |||||||||
All Other(2) | 5,332 | — | |||||||||
Consolidated Adjusted EBITDA | $ | 113,858 | $ | 39,417 |
(in thousands) | Year Ended December 31, 2022 | Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||
Lawson Operating Income | GAAP Results(1) | Pre-Merger Results(2) | Adjusted Results(3) | GAAP Results(1) | Pre-Merger Results(4) | Adjusted Results(3) | |||||||||||||||||||||||||||||
Revenue | $ | 324,783 | $ | 104,902 | $ | 429,685 | $ | — | $ | 371,668 | $ | 371,668 | |||||||||||||||||||||||
Cost of goods sold | 154,030 | 49,371 | 203,401 | — | 171,193 | 171,193 | |||||||||||||||||||||||||||||
Gross profit | 170,753 | 55,531 | 226,284 | — | 200,475 | 200,475 | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | 164,217 | 44,435 | 208,652 | — | 192,283 | 192,283 | |||||||||||||||||||||||||||||
Operating income (loss) | $ | 6,536 | $ | 11,096 | $ | 17,632 | $ | — | $ | 8,192 | $ | 8,192 | |||||||||||||||||||||||
Lawson Adjusted EBITDA(5) | $ | 30,584 | $ | 8,042 | $ | 38,626 | $ | — | $ | 30,390 | $ | 30,390 | |||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
(Dollars in thousands) | Amount | % of Revenue | Amount | % of Revenue | |||||||||||||||||||
Revenue | |||||||||||||||||||||||
Lawson(1) | $ | 324,783 | 28.2 | % | $ | — | — | % | |||||||||||||||
TestEquity | 392,358 | 34.1 | % | 264,161 | 50.8 | % | |||||||||||||||||
Gexpro Services | 385,326 | 33.5 | % | 256,129 | 49.2 | % | |||||||||||||||||
All Other(2) | 48,955 | 4.3 | % | — | — | % | |||||||||||||||||
Total Revenue | 1,151,422 | 100.0 | % | 520,290 | 100.0 | % | |||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||
Lawson(1) | 154,030 | 13.4 | % | — | — | % | |||||||||||||||||
TestEquity | 302,980 | 26.3 | % | 206,971 | 39.8 | % | |||||||||||||||||
Gexpro Services | 272,462 | 23.7 | % | 183,041 | 35.2 | % | |||||||||||||||||
All Other(2) | 31,052 | 2.7 | % | — | — | % | |||||||||||||||||
Total Cost of goods sold | 760,524 | 66.1 | % | 390,012 | 75.0 | % | |||||||||||||||||
Gross profit | 390,898 | 33.9 | % | 130,278 | 25.0 | % | |||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Lawson(1) | 164,217 | 14.3 | % | — | — | % | |||||||||||||||||
TestEquity | 78,003 | 6.8 | % | 56,861 | 10.9 | % | |||||||||||||||||
Gexpro Services | 91,573 | 8.0 | % | 61,996 | 11.9 | % | |||||||||||||||||
All Other(2) | 15,319 | 1.3 | % | — | — | % | |||||||||||||||||
Total Selling, general and administrative expenses | 349,112 | 30.3 | % | 118,857 | 22.8 | % | |||||||||||||||||
Operating income (loss) | 41,786 | 3.6 | % | 11,421 | 2.2 | % | |||||||||||||||||
Interest expense | (24,301) | (2.1) | % | (16,737) | (3.2) | % | |||||||||||||||||
Loss on extinguishment of debt | (3,395) | (0.3) | % | — | — | % | |||||||||||||||||
Change in fair value of earnout liabilities | (483) | — | % | — | — | % | |||||||||||||||||
Other income (expense), net | (670) | (0.1) | % | 577 | 0.1 | % | |||||||||||||||||
Income (loss) before income taxes | 12,937 | 1.1 | % | (4,739) | (0.9) | % | |||||||||||||||||
Income tax expense (benefit) | 5,531 | 0.5 | % | 313 | 0.1 | % | |||||||||||||||||
Net income (loss) | $ | 7,406 | 0.6 | % | $ | (5,052) | (1.0) | % |
Year Ended December 31, | Change | ||||||||||||||||||||||
(Dollars in thousands) | 2022 | 2021 | Amount | % | |||||||||||||||||||
Revenue | $ | 324,783 | $ | — | $ | 324,783 | — | % | |||||||||||||||
Cost of goods sold | 154,030 | — | 154,030 | — | % | ||||||||||||||||||
Gross profit | 170,753 | — | 170,753 | — | % | ||||||||||||||||||
Selling, general and administrative expenses | 164,217 | — | 164,217 | — | % | ||||||||||||||||||
Operating income (loss) | $ | 6,536 | $ | — | $ | 6,536 | — | % | |||||||||||||||
Gross profit margin | 52.6 | % | — | % | |||||||||||||||||||
Adjusted EBITDA(1) | $ | 30,584 | $ | — | $ | 30,584 | — | % |
Year Ended December 31, | Adjusted Change | ||||||||||||||||||||||
(Dollars in thousands) | Adjusted 2022(1) | Adjusted 2021(1) | Amount | % | |||||||||||||||||||
Revenue | $ | 429,685 | $ | 371,668 | $ | 58,017 | 15.6% | ||||||||||||||||
Cost of goods sold | 203,401 | 171,193 | 32,208 | 18.8% | |||||||||||||||||||
Gross profit | 226,284 | 200,475 | 25,809 | 12.9% | |||||||||||||||||||
Selling, general and administrative expenses | 208,652 | 192,283 | 16,369 | 8.5% | |||||||||||||||||||
Operating income (loss) | $ | 17,632 | $ | 8,192 | $ | 9,440 | 115.2% | ||||||||||||||||
Gross profit margin | 52.7 | % | 53.9 | % | |||||||||||||||||||
Adjusted EBITDA(2) | $ | 38,626 | $ | 30,390 | $ | 8,236 | 27.1% |
Year Ended December 31, | Change | ||||||||||||||||||||||
(Dollars in thousands) | 2022 | 2021 | Amount | % | |||||||||||||||||||
Revenue | $ | 392,358 | $ | 264,161 | $ | 128,197 | 48.5 | % | |||||||||||||||
Cost of goods sold | 302,980 | 206,971 | 96,009 | 46.4 | % | ||||||||||||||||||
Gross profit | 89,378 | 57,190 | 32,188 | 56.3 | % | ||||||||||||||||||
Selling, general and administrative expenses | 78,003 | 56,861 | 21,142 | 37.2 | % | ||||||||||||||||||
Operating income (loss) | $ | 11,375 | $ | 329 | $ | 11,046 | N/M | ||||||||||||||||
Gross profit margin | 22.8 | % | 21.6 | % | |||||||||||||||||||
Adjusted EBITDA(1) | $ | 34,736 | $ | 16,107 | $ | 18,629 | 115.7 | % |
Year Ended December 31, | Change | ||||||||||||||||||||||
(Dollars in thousands) | 2022 | 2021 | Amount | % | |||||||||||||||||||
Revenue | $ | 385,326 | $ | 256,129 | $ | 129,197 | 50.4 | % | |||||||||||||||
Cost of goods sold | 272,462 | 183,041 | 89,421 | 48.9 | % | ||||||||||||||||||
Gross profit | 112,864 | 73,088 | 39,776 | 54.4 | % | ||||||||||||||||||
Selling, general and administrative expenses | 91,573 | 61,996 | 29,577 | 47.7 | % | ||||||||||||||||||
Operating income (loss) | $ | 21,291 | $ | 11,092 | $ | 10,199 | 91.9 | % | |||||||||||||||
Gross profit margin | 29.3 | % | 28.5 | % | |||||||||||||||||||
Adjusted EBITDA(1) | $ | 43,206 | $ | 23,310 | $ | 19,896 | 85.4 | % |
Year Ended December 31, | Change | ||||||||||||||||||||||
(Dollars in thousands) | 2022 | 2021 | Amount | % | |||||||||||||||||||
Interest expense | $ | (24,301) | $ | (16,737) | $ | (7,564) | 45.2 | % | |||||||||||||||
Loss on extinguishment of debt | $ | (3,395) | $ | — | $ | (3,395) | — | % | |||||||||||||||
Change in fair value of earnout liabilities | $ | (483) | $ | — | $ | (483) | — | % | |||||||||||||||
Other income (expense), net | $ | (670) | $ | 577 | $ | (1,247) | (216.1) | % | |||||||||||||||
Income tax expense (benefit) | $ | 5,531 | $ | 313 | $ | 5,218 | N/M |
(in thousands) | December 31, 2022 | December 31, 2021 | Change | ||||||||||||||
Net cash provided by (used in) operating activities | $ | (11,029) | $ | 10,320 | $ | (21,349) | |||||||||||
Net cash provided by (used in) investing activities | $ | (126,688) | $ | (41,376) | $ | (85,312) | |||||||||||
Net cash provided by (used in) financing activities | $ | 148,461 | $ | 34,668 | $ | 113,793 |
Page # | |||||
Report of Independent Registered Public Accounting Firm ( | |||||
Report of Independent Registered Public Accounting Firm ( | |||||
Consolidated Statements of Cash Flows for the Years ended December 31, 2022 and 2021 | |||||
December 31, | |||||||||||
2022 | 2021 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, less allowance for doubtful accounts of $ | |||||||||||
Inventories, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Rental equipment, net | |||||||||||
Goodwill | |||||||||||
Deferred tax asset | |||||||||||
Intangible assets, net | |||||||||||
Cash value of life insurance | |||||||||||
Right of use operating lease assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Current portion of long-term debt | |||||||||||
Current portion of lease obligation | |||||||||||
Related party payables | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, less current portion, net | |||||||||||
Security bonus plan | |||||||||||
Deferred compensation | |||||||||||
Lease obligation | |||||||||||
Deferred tax liability | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 15) | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Authorized - | |||||||||||
Common stock, $ | |||||||||||
Authorized - Issued - Outstanding - | |||||||||||
Capital in excess of par value | |||||||||||
Retained deficit | ( | ( | |||||||||
Treasury stock – | ( | ( | |||||||||
Accumulated other comprehensive (loss) income | ( | ||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | $ | |||||||||
Cost of goods sold | |||||||||||
Gross profit | |||||||||||
Selling, general and administrative expenses | |||||||||||
Operating income (loss) | |||||||||||
Interest expense | ( | ( | |||||||||
Loss on extinguishment of debt | ( | ||||||||||
Change in fair value of earnout liabilities | ( | ||||||||||
Other income (expense), net | ( | ||||||||||
Income (loss) before income taxes | ( | ||||||||||
Income tax expense (benefit) | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Basic income (loss) per share of common stock | $ | $ | ( | ||||||||
Diluted income (loss) per share of common stock | $ | $ | ( | ||||||||
Comprehensive income (loss) | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustment | ( | ||||||||||
Other | |||||||||||
Comprehensive income (loss) | $ | ( | $ | ( | |||||||
Common Stock | Capital in Excess of Par Value | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||
Outstanding Shares | $ | Retained Deficit | Treasury Stock | ||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Shares issued | ( | — | — | — | |||||||||||||||||||||||||||||||||||||
Equity consideration for purchase of business | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Capital contribution | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Tax withholdings related to net share settlements of stock-based compensation awards | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Shares issued | ( | — | — | — | |||||||||||||||||||||||||||||||||||||
Deemed consideration for reverse acquisition | — | — | — | ||||||||||||||||||||||||||||||||||||||
Reclassification of issuable shares from earnout derivative liability | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Fair value adjustment of stock-based compensation awards | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Tax withholdings related to net share settlements of stock-based compensation awards | ( | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Settlement of related party liability | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ( | $ |
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Operating activities | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of debt issue costs | |||||||||||
Extinguishment of debt | |||||||||||
Stock-based compensation | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Change in fair value of earnout liability | |||||||||||
Gain on sale of rental equipment | ( | ( | |||||||||
Bargain purchase option | ( | ||||||||||
Charge for step-up of acquired inventory | |||||||||||
Net realizable value and reserve adjustment for obsolete and excess inventory | |||||||||||
Bad debt expense | |||||||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventories | ( | ( | |||||||||
Prepaid expenses and other current assets | ( | ||||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Other changes in operating assets and liabilities | ( | ( | |||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Investing activities | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Business acquisitions, net of cash acquired | ( | ( | |||||||||
Purchases of rental equipment | ( | ( | |||||||||
Proceeds from sale of rental equipment | |||||||||||
Net cash provided by (used in) investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Proceeds from revolving lines of credit | |||||||||||
Payments on revolving lines of credit | ( | ( | |||||||||
Proceeds from term loans | |||||||||||
Payments on term loans | ( | ( | |||||||||
Deferred financing costs | ( | ||||||||||
Capital contribution | |||||||||||
Repurchase of common stock | ( | ||||||||||
Shares repurchased held in treasury | ( | ||||||||||
Payment of financing lease principal | ( | ||||||||||
Payment on seller's note | ( | ||||||||||
Net cash provided by (used in) financing activities | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ |
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Supplemental disclosure of cash flow information | |||||||||||
Net cash paid for income taxes | $ | $ | |||||||||
Net cash paid for interest | $ | $ | |||||||||
Non-cash activities: | |||||||||||
Fair value of common stock exchanged for reverse acquisition | $ | $ | |||||||||
Settlement of related party obligations | $ | $ | |||||||||
Equity consideration in relation to business acquisitions | $ | $ | |||||||||
Seller's note issued as purchase consideration | $ | $ |
(in thousands, except share data) | April 1, 2022 | |||||||
Number of DSG common shares | ||||||||
DSG closing price per common stock on March 31, 2022 | $ | |||||||
Fair value of shares exchanged | $ | |||||||
Other consideration(1) | ||||||||
Total consideration exchanged | $ |
(in thousands) | Merger Date | Measurement Period Adjustments | Final Purchase Price Allocation | |||||||||||||||||
Current assets | $ | $ | — | $ | ||||||||||||||||
Property, plant and equipment | ||||||||||||||||||||
Right of use assets | ||||||||||||||||||||
Other intangible assets | — | |||||||||||||||||||
Deferred tax liability, net of deferred tax asset | ( | ( | ||||||||||||||||||
Other assets | — | |||||||||||||||||||
Current liabilities | ( | ( | ( | |||||||||||||||||
Long-term obligations | ( | ( | ( | |||||||||||||||||
Lease and financing obligations | ( | ( | ||||||||||||||||||
Derivative earnout liability | ( | — | ( | |||||||||||||||||
Goodwill | ( | |||||||||||||||||||
Total consideration exchanged | $ | $ | — | $ | ||||||||||||||||
(in thousands) | Fair Value | Estimated Life (in years) | ||||||||||||
Customer relationships | $ | |||||||||||||
Trade names | ||||||||||||||
Total other intangible assets | $ |
Year Ended December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Revenue | $ | $ | |||||||||
Net income |
(in thousands) | Interworld Highway, LLC | Resolux | Frontier | National Test Equipment | Instrumex | |||||||||||||||||||||||||||||||||
Acquisition date | April 29, 2022 | January 3, 2022 | March 31, 2022 | June 1, 2022 | December 1, 2022 | Total | ||||||||||||||||||||||||||||||||
Current assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Property, plant and equipment | ||||||||||||||||||||||||||||||||||||||
Right of use assets | ||||||||||||||||||||||||||||||||||||||
Other intangible assets: | ||||||||||||||||||||||||||||||||||||||
Customer relationships | ||||||||||||||||||||||||||||||||||||||
Trade names | ||||||||||||||||||||||||||||||||||||||
Other assets | ||||||||||||||||||||||||||||||||||||||
Accounts payable | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
Current portion of long term debt | ( | ( | ||||||||||||||||||||||||||||||||||||
Accrued expenses and other liabilities | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||
Lease obligation | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||||||||||||||
Total purchase consideration exchanged, net of cash acquired | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Cash consideration | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Seller's notes | ||||||||||||||||||||||||||||||||||||||
Total purchase consideration exchanged, net of cash acquired | $ | $ | $ | $ | $ | $ |
(in thousands) | Omni | NEF | SIS | MCS | ||||||||||||||||||||||||||||
Acquisition date | June 8, 2021 | November 1, 2021 | December 31, 2021 | July 31, 2021 | Total | |||||||||||||||||||||||||||
Current assets | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Property, plant and equipment | ||||||||||||||||||||||||||||||||
Right of use assets | — | — | ||||||||||||||||||||||||||||||
Other intangible assets: | ||||||||||||||||||||||||||||||||
Customer relationships | ||||||||||||||||||||||||||||||||
Trade names | ||||||||||||||||||||||||||||||||
Other intangible assets | — | — | ||||||||||||||||||||||||||||||
Accounts payable | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
Accrued expenses and other liabilities | — | ( | — | ( | ( | |||||||||||||||||||||||||||
Lease obligation | — | ( | ( | ( | ||||||||||||||||||||||||||||
Goodwill | — | |||||||||||||||||||||||||||||||
Gain on bargain purchase | — | ( | — | — | ( | |||||||||||||||||||||||||||
Total purchase consideration exchanged, net of cash acquired | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Cash consideration | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Seller's notes | ||||||||||||||||||||||||||||||||
Shared based payments | ||||||||||||||||||||||||||||||||
Total purchase consideration exchanged, net of cash acquired | $ | $ | $ | $ | $ |
Year Ended December 31, 2022 | Year Ended December 31, 2021 | ||||||||||||||||||||||||||||||||||
(in thousands) | Lawson | Other Acquisitions | Total | Lawson | Other Acquisitions | Total | |||||||||||||||||||||||||||||
Revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Net Income | $ | $ | $ | $ | $ | ( | $ | ( |
Year Ended December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
United States | $ | $ | |||||||||
Canada | |||||||||||
Europe | |||||||||||
Pacific Rim | |||||||||||
Latin America | |||||||||||
Other | |||||||||||
Total revenue | $ | $ |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Inventories, gross | $ | $ | |||||||||
Reserve for obsolete and excess inventory | ( | ( | |||||||||
Inventories, net | $ | $ |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Balance at beginning of period | $ | ( | $ | ( | |||||||
Provision charged to expense (net) | ( | ( | |||||||||
Write-offs | |||||||||||
Balance at end of period | $ | ( | $ | ( |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Land | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Machinery and equipment | |||||||||||
Capitalized software | |||||||||||
Furniture and fixtures | |||||||||||
Vehicles | |||||||||||
Construction in progress(1) | |||||||||||
Total | |||||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Property, plant and equipment, net | $ | $ |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Rental equipment | $ | $ | |||||||||
Accumulated depreciation | ( | ( | |||||||||
Rental equipment, net | $ | $ |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Accrued compensation | $ | $ | |||||||||
Accrued customer rebates | |||||||||||
Accrued and withheld taxes, other than income taxes | |||||||||||
Accrued stock-based compensation | |||||||||||
Deferred revenue | |||||||||||
Accrued interest | |||||||||||
Accrued health benefits | |||||||||||
Accrued severance | |||||||||||
Accrued income taxes | |||||||||||
Other | |||||||||||
Total accrued expenses and other current liabilities | $ | $ |
(in thousands) | Lawson | TestEquity | Gexpro Services | All Other | Total | |||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Acquisitions(1) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | ||||||||||||||||||||||||||||||||
Acquisitions(1) | ||||||||||||||||||||||||||||||||
Impact of foreign exchange rates | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | |||||||||||||||||||||||||||||
Trade names | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Customer relationships | ( | ( | |||||||||||||||||||||||||||||||||
Other (1) | ( | ( | |||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | $ | ( | $ |
(in thousands) | Amortization | |||||||
2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total | $ |
Year Ended December 31, | ||||||||||||||||||||
Lease Type | Classification | 2022 | 2021 | |||||||||||||||||
Operating Lease Expense (1) | Operating expenses | $ | $ | |||||||||||||||||
Financing Lease Amortization | Operating expenses | |||||||||||||||||||
Financing Lease Interest | Interest expense | |||||||||||||||||||
Financing Lease Expense | ||||||||||||||||||||
Net Lease Cost | $ | $ |
December 31, | ||||||||||||||
Lease Type | 2022 | 2021 | ||||||||||||
Total ROU operating lease assets (1) | $ | $ | ||||||||||||
Total ROU financing lease assets (2) | ||||||||||||||
Total lease assets | $ | $ | ||||||||||||
$ | $ | |||||||||||||
Total current lease obligations | $ | $ | ||||||||||||
$ | $ | |||||||||||||
Total long term lease obligation | $ | $ |
Maturity Date of Lease Liabilities | Operating Leases | Financing Leases | Total | |||||||||||||||||
Year one | $ | $ | $ | |||||||||||||||||
Year two | ||||||||||||||||||||
Year three | ||||||||||||||||||||
Year four | ||||||||||||||||||||
Year five | ||||||||||||||||||||
Subsequent years | ||||||||||||||||||||
Total lease payments | ||||||||||||||||||||
Less: Interest | ( | ( | ( | |||||||||||||||||
Present value of lease liabilities | $ | $ | $ |
Lease Type | Weighted Average Term in Years | Weighted Average Interest Rate | ||||||||||||
Operating Leases | ||||||||||||||
Financing Leases |
Year Ended December 31, | ||||||||||||||||||||
Cash Flow Source | Classification | 2022 | 2021 | |||||||||||||||||
Operating cash flows from operating leases | Operating activities | $ | ( | $ | ( | |||||||||||||||
Operating cash flows from financing leases | Operating activities | ( | ||||||||||||||||||
Financing cash flows from financing leases | Financing activities | ( |
(in thousands) | Amount | |||||||
Balance at December 31, 2021 | $ | |||||||
Initial recognition on Merger Date | ||||||||
( | ||||||||
Reclassifications to equity at fair value | ( | |||||||
Balance at December 31, 2022 | $ |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Senior secured revolving credit facility | $ | $ | |||||||||
Senior secured term loan | |||||||||||
Senior secured delayed draw term loan | |||||||||||
Other revolving line of credit | |||||||||||
Previous revolving credit facilities | |||||||||||
Previous term loans | |||||||||||
Total debt | |||||||||||
Less current portion of long-term debt | ( | ( | |||||||||
Less deferred financing costs | ( | ( | |||||||||
Total long-term debt | $ | $ |
Expected volatility | |||||
Risk-free rate of return | |||||
Expected term (in years) | |||||
Expected annual dividend | $ |
Number of SPRs | Weighted Average Exercise Price | ||||||||||
Outstanding on December 31, 2021 | $ | ||||||||||
Shares acquired concurrent with Mergers | |||||||||||
Exercised | ( | ||||||||||
Outstanding on December 31, 2022 | |||||||||||
Exercisable on December 31, 2022 |
Restricted Stock Awards | |||||
Outstanding on December 31, 2021 | |||||
Shares acquired concurrent with Mergers | |||||
Granted | |||||
Exchanged for common shares | ( | ||||
Outstanding on December 31, 2022 |
Number of Market Stock Units | Maximum Shares Potentially Issuable | ||||||||||
Outstanding on December 31, 2021 | |||||||||||
Shares acquired concurrent with Mergers | |||||||||||
Cancelled | ( | ( | |||||||||
Exchanged for common shares | ( | ( | |||||||||
Outstanding on December 31, 2022 |
Number of Stock Options | Weighted Average Exercise Price | ||||||||||
Outstanding on December 31, 2021 | $ | ||||||||||
Shares acquired concurrent with Mergers | |||||||||||
Granted | |||||||||||
Exercised | ( | ||||||||||
Outstanding on December 31, 2022 | |||||||||||
Exercisable on December 31, 2022 |
Expected volatility | |||||
Risk-free rate of return | |||||
Expected term (in years) | |||||
Expected annual dividend | $ |
Number of Performance Awards | Maximum Shares Potentially Issuable | ||||||||||
Outstanding on December 31, 2021 | |||||||||||
Shares acquired concurrent with Mergers | |||||||||||
Exercised | ( | ( | |||||||||
Outstanding on December 31, 2022 |
December 31, | |||||||||||
(in thousands, except share and per share data) | 2022 | 2021 | |||||||||
Basic income per share: | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Basic weighted average shares outstanding | |||||||||||
Basic income (loss) per share of common stock | $ | $ | ( | ||||||||
Diluted income per share: | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Basic weighted average shares outstanding | |||||||||||
Effect of dilutive securities | |||||||||||
Diluted weighted average shares outstanding | |||||||||||
Diluted income (loss) per share of common stock | $ | $ | ( | ||||||||
Anti-dilutive securities excluded from the calculation of diluted income per share |
Year Ended December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
United States | $ | $ | ( | ||||||||
Foreign | |||||||||||
Total | $ | $ | ( |
Year Ended December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Current income tax expense: | |||||||||||
U.S. federal | $ | $ | |||||||||
U.S. state | |||||||||||
Foreign | |||||||||||
Total | $ | $ | |||||||||
Deferred income tax expense (benefit): | |||||||||||
U.S. federal | $ | ( | $ | ( | |||||||
U.S. state | ( | ( | |||||||||
Foreign | ( | ( | |||||||||
Total | $ | ( | $ | ( | |||||||
Total income tax expense (benefit): | |||||||||||
U.S. federal | $ | $ | ( | ||||||||
U.S. state | |||||||||||
Foreign | |||||||||||
Total | $ | $ |
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Statutory Federal rate | % | % | |||||||||
Increase (decrease) resulting from: | |||||||||||
Change in valuation allowance - current period activity | ( | ||||||||||
Foreign rate differential | |||||||||||
Stock compensation | ( | ||||||||||
State and local taxes, net | ( | ||||||||||
Meals & entertainment | ( | ||||||||||
Change in uncertain tax positions | ( | ||||||||||
GILTI, Section 78, FDII, and Section 250 | ( | ||||||||||
Transaction costs | ( | ||||||||||
Earn Out Revaluation | |||||||||||
Other items, net | ( | ||||||||||
Provision for income taxes | % | ( | % |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Deferred tax assets: | |||||||||||
Federal & state NOL carryforward | $ | $ | |||||||||
Research & other credits | |||||||||||
Inventory reserve | |||||||||||
Transaction costs | |||||||||||
Reserves and accruals | |||||||||||
Stock based compensation | |||||||||||
Accrued benefits & bonuses | |||||||||||
Bad debt reserve | |||||||||||
Section 163(j) limitation carryforward | |||||||||||
ROU liabilities | |||||||||||
Deferred state income tax | |||||||||||
Deferred revenue | |||||||||||
Other | |||||||||||
Total deferred tax assets | |||||||||||
Deferred tax liabilities: | |||||||||||
Intangible assets and goodwill | |||||||||||
ROU asset | |||||||||||
Fixed assets | |||||||||||
Deferred state income tax | |||||||||||
Other | |||||||||||
Total deferred liabilities | |||||||||||
Net deferred tax liabilities before valuation allowance | ( | ||||||||||
Valuation allowance | ( | ( | |||||||||
Net deferred tax liabilities | $ | ( | $ | ( |
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Balance at beginning of year | $ | $ | |||||||||
Additions for tax positions of current year | |||||||||||
Additions for tax positions of prior years | |||||||||||
Reductions for tax positions of prior year | ( | ||||||||||
Lapse of statute of limitations | ( | ||||||||||
Balance at end of year | $ | $ |
Year Ended December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Revenue | |||||||||||
Lawson(1) | $ | $ | |||||||||
TestEquity | |||||||||||
Gexpro Services | |||||||||||
All Other(2) | |||||||||||
Total revenue | $ | $ | |||||||||
Operating income (loss) | |||||||||||
Lawson(1) | $ | $ | |||||||||
TestEquity | |||||||||||
Gexpro Services | |||||||||||
All Other(2) | |||||||||||
Total operating income (loss) | $ | $ | |||||||||
December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Long-lived assets by segment | |||||||||||
Lawson | $ | $ | |||||||||
TestEquity | |||||||||||
Gexpro Services | |||||||||||
All Other | |||||||||||
Total | $ | $ | |||||||||
Long-lived assets by geographic area | |||||||||||
United States | $ | $ | |||||||||
Canada | |||||||||||
Europe | |||||||||||
Pacific Rim | |||||||||||
Latin America | |||||||||||
Other | |||||||||||
Total | $ | $ |
Year Ended December 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
Capital expenditures | |||||||||||
Lawson(1) | $ | $ | |||||||||
TestEquity | |||||||||||
Gexpro Services | |||||||||||
All Other(2) | |||||||||||
Total | $ | $ | |||||||||
Depreciation and amortization | |||||||||||
Lawson(1) | $ | $ | |||||||||
TestEquity | |||||||||||
Gexpro Services | |||||||||||
All Other(2) | |||||||||||
Total | $ | $ |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) | ||||||||||||||
Equity compensation plans approved by stockholders | |||||||||||||||||
Stock options | 288,000 | 77.59 | |||||||||||||||
Other stock units (1) | 206,750 | N/A | |||||||||||||||
Equity compensation plans not approved by stockholders | — | — | — | ||||||||||||||
Total | 494,750 | $77.59 | 1,222,773 |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
101.SCH** | Inline XBRL Taxonomy Extension Schema Document | ||||
101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
104 | Cover Page Interactive File (embedded within the Inline XBRL document and contained in Exhibit 101) |
DISTRIBUTION SOLUTIONS GROUP, INC. | |||||||||||
(Registrant) | |||||||||||
Dated: | March 14, 2023 | /s/ J. Bryan King | |||||||||
J. Bryan King Chairman, President and Chief Executive Officer (principal executive officer) | |||||||||||
Dated: | March 14, 2023 | /s/ Ronald J. Knutson | |||||||||
Ronald J. Knutson Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer) | |||||||||||
Dated: | March 14, 2023 | /s/ David S. Lambert | |||||||||
David S. Lambert Vice President, Controller and Chief Accounting Officer (principal accounting officer) |
Signature | Title | Date | ||||||||||||
/s/ J. Bryan King | Chairman, President and Chief Executive Officer (principal executive officer) | March 14, 2023 | ||||||||||||
J. Bryan King | ||||||||||||||
/s/ Ronald J. Knutson | Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer) | March 14, 2023 | ||||||||||||
Ronald J. Knutson | ||||||||||||||
/s/ David S. Lambert | Vice President, Controller and Chief Accounting Officer (principal accounting officer) | March 14, 2023 | ||||||||||||
David S. Lambert | ||||||||||||||
/s/ Andrew B. Albert | Director | March 14, 2023 | ||||||||||||
Andrew B. Albert | ||||||||||||||
/s/ I. Steven Edelson | Director | March 14, 2023 | ||||||||||||
I. Steven Edelson | ||||||||||||||
/s/ Lee S. Hillman | Director | March 14, 2023 | ||||||||||||
Lee S. Hillman | ||||||||||||||
/s/ Mark F. Moon | Director | March 14, 2023 | ||||||||||||
Mark F. Moon | ||||||||||||||
/s/ Bianca A. Rhodes | Director | March 14, 2023 | ||||||||||||
Bianca A. Rhodes | ||||||||||||||
/s/ Robert S. Zamarripa | Director | March 14, 2023 | ||||||||||||
Robert S. Zamarripa |
Name | Jurisdiction of Incorporation | |||||||
301 HW Opus Holdings, Inc. (conducting business as Gexpro Services) | Delaware | |||||||
Gexpro Services Supply Chain Management (Shanghai) Co. Ltd. | China | |||||||
GS Holdings Canada Inc. | Canada | |||||||
GS Holdings Denmark ApS | Denmark | |||||||
GS Holdings RE LLC | Delaware | |||||||
GS Operating, LLC | Delaware | |||||||
GS Operating Holding Hungary Kft. | Hungary | |||||||
GS Operating Magyarország Általános Kereskedelmi és Szolgáltató Kft | Hungary | |||||||
GX Pro Opus, S. de R.L. de C.V. | Mexico | |||||||
Heads and Threads, Inc. | Illinois | |||||||
Instrumex | Germany | |||||||
Interworld Highway, LLC | Delaware | |||||||
Lawson Products, Inc. | Illinois | |||||||
Lawson Products Canada Inc. | Canada | |||||||
MCS Rentals Holdings Limited | United Kingdom | |||||||
MCS Test Group Limited | United Kingdom | |||||||
National Engineered Fasteners Inc. | Canada | |||||||
Resolux ApS | Denmark | |||||||
Resolux do Brazil Industria e Comercio Especializado em Energia Eolica Ltd. | Brazil | |||||||
Resolux GmbH | Germany | |||||||
Resolux Inc. | Iowa | |||||||
Resolux India Private Limited | India | |||||||
Resolux Turkey Ruzgar Turbinleri Elektrik Aksamlari Sanayi ve Ticaret Anonim Sirketi | Turkey | |||||||
Resolux Windpower Technology (Tianjin) Co. Ltd. | China | |||||||
TestEquity Acquisition LLC | Delaware | |||||||
TestEquity Acquisition Holdings, LLC | Delaware | |||||||
TestEquity de Mexico S. de R.L. de C.V. | Mexico | |||||||
TestEquity Inc. | Canada | |||||||
TestEquity LLC | Delaware | |||||||
The Bolt Supply House Ltd. | Canada |
Audit Information |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Auditor Information [Abstract] | ||
Auditor Name | BDO USA, LLP | Grant Thornton, LLP |
Auditor Location | Chicago, Illinois | Los Angeles, California |
Auditor Firm ID | 243 | 248 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, less allowance for doubtful accounts | $ 1,513 | $ 2,473 |
Preferred stock, par value in USD per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 500,000 | 0 |
Preferred stock, shares issued (in shares) | 500,000 | 0 |
Preferred stock, shares outstanding (in shares) | 500,000 | 0 |
Common stock, par value (in USD per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 35,000,000 | 35,000,000 |
Common stock, shares issued (in shares) | 19,730,362 | 10,542,333 |
Common stock, shares outstanding (in shares) | 19,416,784 | 10,294,824 |
Treasury stock (in shares) | 313,578 | 247,509 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Income Statement [Abstract] | ||
Revenue | $ 1,151,422 | $ 520,290 |
Cost of goods sold | 760,524 | 390,012 |
Gross profit | 390,898 | 130,278 |
Selling, general and administrative expenses | 349,112 | 118,857 |
Operating income (loss) | 41,786 | 11,421 |
Interest expense | (24,301) | (16,737) |
Loss on extinguishment of debt | (3,395) | 0 |
Change in fair value of earnout liabilities | (483) | 0 |
Other income (expense), net | (670) | 577 |
Income (loss) before income taxes | 12,937 | (4,739) |
Income tax expense (benefit) | 5,531 | 313 |
Net income (loss) | $ 7,406 | $ (5,052) |
Basic income (loss) per share of common stock (in USD per share) | $ 0.43 | $ (0.49) |
Diluted income per share of common stock (in USD per share) | $ 0.42 | $ (0.49) |
Comprehensive income (loss) | ||
Net income (loss) | $ 7,406 | $ (5,052) |
Foreign currency translation adjustment | (11,525) | 16 |
Other | 0 | 42 |
Comprehensive income (loss) | $ (4,119) | $ (4,994) |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Statement of Stockholders' Equity [Abstract] | |||
Common stock, par value (in USD per share) | $ 1 | $ 1 | $ 1 |
Nature of Operations and Basis of Presentation |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | Note 1 – Nature of Operations and Basis of Presentation Organization Effective May 5, 2022, Distribution Solutions Group, Inc. ("DSG"), a Delaware corporation, changed its corporate name from “Lawson Products, Inc.” to “Distribution Solutions Group, Inc.” DSG is a global specialty distribution company providing value added distribution solutions to the maintenance, repair and operations ("MRO"), original equipment manufacturer ("OEM") and industrial technology markets. DSG has three principal operating companies: Lawson Products, Inc. ("Lawson"), TestEquity Acquisition, LLC ("TestEquity") and 301 HW Opus Holdings, Inc., conducting business as Gexpro Services ("Gexpro Services"). The complementary distribution operations of Lawson, TestEquity and Gexpro Services were combined to create a specialty distribution company. A summary of the Mergers (as defined below), including the legal entities party to the transactions and the stock consideration, is presented below. Unless the context requires otherwise, references in this Annual Report on Form 10-K to “DSG”, the “Company”, "we", "our" or "us" refer to the holding company, Distribution Solutions Group, Inc., and all entities consolidated in the accompanying consolidated financial statements. Combination with TestEquity and Gexpro Services On December 29, 2021, DSG entered into an: • Agreement and Plan of Merger (the “TestEquity Merger Agreement”) by and among (i) LKCM TE Investors, LLC, a Delaware limited liability company (the “TestEquity Equityholder”), (ii) TestEquity Acquisition, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the TestEquity Equityholder (“TestEquity”), (iii) DSG and (iv) Tide Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of DSG (“Merger Sub 1”), pursuant to the terms and subject to the conditions of which the parties agreed, among other things, that Merger Sub 1 would merge with and into TestEquity, with TestEquity surviving the merger as a wholly-owned subsidiary of DSG (the “TestEquity Merger”); and • Agreement and Plan of Merger (the “Gexpro Services Merger Agreement” and, together with the TestEquity Merger Agreement, the “Merger Agreements”) by and among (i) 301 HW Opus Investors, LLC, a Delaware limited liability company (the “Gexpro Services Stockholder”), (ii) 301 HW Opus Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of the Gexpro Services Stockholder (“Gexpro Services”), (iii) DSG and (iv) Gulf Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of DSG (“Merger Sub 2”), pursuant to the terms and subject to the conditions of which the parties agreed, among other things, that Merger Sub 2 would merge with and into Gexpro Services, with Gexpro Services surviving the merger as a wholly-owned subsidiary of DSG (the “Gexpro Services Merger” and, together with the TestEquity Merger, the “Mergers”). Each outstanding share of TestEquity and Gexpro Services common stock outstanding immediately prior to the closing of the Mergers was converted into approximately 0.3618 shares and 0.7675 shares, respectively, of DSG common stock, based on the ratio of outstanding shares of each entity immediately prior to the Mergers to the number of shares of DSG common stock acquired in the Mergers. Completion of the TestEquity Merger On April 1, 2022, (the "Merger Date"), the TestEquity Merger was consummated pursuant to the TestEquity Merger Agreement. In accordance with and under the terms of the TestEquity Merger Agreement, at the closing of the TestEquity Merger, DSG: (i) issued to the TestEquity Equityholder 3,300,000 shares of DSG common stock, (ii) on behalf of TestEquity, paid certain indebtedness of TestEquity and (iii) on behalf of TestEquity, paid certain transaction expenses of TestEquity. The TestEquity Merger Agreement provides that an additional 700,000 shares of DSG common stock (the “TestEquity Holdback Shares”) may be issued to the TestEquity Equityholder or forfeited in accordance with two earnout provisions of the TestEquity Merger Agreement. The amount of TestEquity Holdback Shares issuable under the first earnout opportunity is based on, among other factors, the consummation of a certain additional acquisition by TestEquity during the period beginning after December 29, 2021 and ending 90 days after the Merger Date. If any TestEquity Holdback Shares remain after the calculation of the first earnout opportunity, there is a second earnout opportunity based on, among other factors, the increase in TestEquity EBITDA (as defined in the TestEquity Merger Agreement) in calendar year 2022 over calendar year 2021 subject to the calculations within the TestEquity Merger Agreement. As of December 31, 2022, 700,000 TestEquity Holdback Shares are expected to be issued under the first earnout opportunity due to the consummation of the certain additional acquisition as referenced in the TestEquity Merger Agreement and were remeasured at fair value immediately prior to and reclassified to equity at April 29, 2022 when the additional acquisition was consummated. Final issuance of the Test Equity Holdback Shares under the earnout opportunity is subject to customary terms and conditions as specified in the Test Equity Merger Agreement. Refer to Note 8 – Earnout Derivative Liability for information about the earnout derivative liability related to the TestEquity Holdback Shares. Completion of the Gexpro Services Merger On the Merger Date, the Gexpro Services Merger was consummated pursuant to the Gexpro Services Merger Agreement. In accordance with and under the terms of the Gexpro Services Merger Agreement, at the closing of the Gexpro Services Merger, DSG: (i) issued to the Gexpro Services Stockholder 7,000,000 shares of DSG common stock, (ii) on behalf of Gexpro Services, paid certain indebtedness of Gexpro Services and (iii) on behalf of Gexpro Services, paid certain specified transaction expenses of Gexpro Services. The Gexpro Services Merger Agreement provides that an additional 1,000,000 shares of DSG common stock (the “Gexpro Services Holdback Shares”) may be issued to the Gexpro Services Stockholder or forfeited in accordance with two earnout provisions of the Gexpro Services Merger Agreement. The amount of Gexpro Services Holdback Shares issuable under the first earnout opportunity is based on, among other factors, the consummation of one or more of three certain additional acquisitions by Gexpro Services during the period beginning after December 29, 2021 and ending 90 days after the Merger Date. If any Gexpro Services Holdback Shares remain after the calculation of the first earnout opportunity, there is a second earnout opportunity based on, among other factors, the increase in Gexpro Services EBITDA (as defined in the Gexpro Services Merger Agreement) in calendar year 2022 over calendar year 2021 subject to the calculations within the Gexpro Services Merger Agreement. As of April 1, 2022, approximately 538,000 Gexpro Services Holdback Shares were expected to be issued under the first earnout opportunity due to the consummation of the certain additional acquisitions which were completed prior to the Merger Date. As of December 31, 2022, an additional 462,000 Gexpro Services Holdback Shares are expected to be issued under the second earnout opportunity based on certain performance metrics as specified in the Gexpro Services Merger Agreement, and such additional shares were remeasured at fair value immediately prior to and reclassified to equity at December 31, 2022. Final issuance of the Gexpro Services Holdback Shares under the earnout opportunities is subject to customary terms and conditions as specified in the Gexpro Services Merger Agreement. Refer to Note 8 – Earnout Derivative Liability for information about the earnout derivative liability related to the Gexpro Services Holdback Shares. Accounting for the Mergers TestEquity and Gexpro Services were treated as a combined entity as the accounting acquirer for financial reporting purposes, and DSG was identified as the accounting acquiree. Accordingly, periods prior to the Merger Date reflect the results of operations and financial position of TestEquity and Gexpro Services on a consolidated basis, and the results of operations of DSG's legacy Lawson business are only included subsequent to the April 1, 2022 Merger Date. Nature of Operations A summary of the nature of operations for each of DSG's operating companies is presented below. Information regarding DSG's reportable segments is presented in Note 14 – Segment Information. Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and government maintenance, repair and operations market. TestEquity is a distributor of test and measurement equipment and solutions, electronic production supplies, and tool kits from its leading manufacturer partners supporting the technology, aerospace, defense, automotive, electronics, education, and medical industries. Gexpro Services is a global supply chain solutions provider, specializing in developing and implementing vendor managed inventory and kitting programs to high-specification manufacturing customers. Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and include the accounts and transactions of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Mergers were accounted for as a reverse merger under the acquisition method of accounting in accordance with the accounting guidance for reverse acquisitions as provided in Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"). Under this guidance, TestEquity and Gexpro Services were treated as a combined entity as the accounting acquirer for financial reporting purposes, and DSG was identified as the accounting acquiree. This determination was primarily made as TestEquity and Gexpro Services were under the common control of an entity that owns a majority of the voting rights of the combined entity, and therefore, only DSG experienced a change in control. Accordingly, the consolidated financial statements as of December 31, 2022 and December 31, 2021 and for the year ended December 31, 2022 and 2021 reflect the results of operations and financial position of TestEquity and Gexpro Services on a consolidated basis, and the results of operations of DSG's legacy Lawson business are only included subsequent to the April 1, 2022 Merger Date.
|
Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Revenue Recognition — The majority of the Company’s revenue is generated through the sale of a broad range of specialized products and components, with revenue recognized upon transfer of control, title and risk of loss, which is generally upon shipment. Vendor Managed Inventory ("VMI") service revenue represents less than 5.0% of total revenue and is recognized as the services are performed. The Company offers VMI services only in conjunction with product sales. The Company does not bill product sales and services separately. A portion of selling expenses is allocated to cost of sales for reporting purposes based upon the estimated time spent on such services. A portion of service revenue and cost of service is deferred, as not all services are performed in the same period as billed. The Company includes shipping costs billed to customers in revenue and the related shipping costs in cost of goods and services. The Company accrues for returns based on historical evidence of return rates. The Company has adopted the practical expedient within ASC 340, Other Assets and Deferred Costs ("ASC 340") to recognize incremental costs to obtain a contract, primarily employee related costs, as expense when incurred since the amortization period of the asset that the Company otherwise would have recognized is one year or less. The Company also operates as a lessor and recognizes lease revenue on a straight-line basis over the life of each lease. The Company has adopted the practical expedient not to separate the non-lease components that would be within the scope of ASC 606, Revenue from Contracts with Customers ("ASC 606") from the associated lease component as the relevant criteria under ASC 842, Leases ("ASC 842") are met. Cash Equivalents — The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amount of the Company’s cash equivalents at December 31, 2022 and December 31, 2021 approximates fair value. Allowance for Doubtful Accounts — The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filings, substantial down-grading of credit ratings), a specific reserve for bad debts is recorded against amounts due to reduce the receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes reserves for bad debts based on the Company’s historical experience of bad debt write-offs as a percent of accounts receivable outstanding. If circumstances change (e.g., higher than expected defaults or an unexpected material adverse change in a major customer's ability to meet its financial obligations), the estimates of the recoverability of amounts due the Company could be revised. Inventories — Inventories principally consist of finished goods stated at the lower of cost or net realizable value using the first-in-first-out method for the Lawson segment and primarily the weighted average method for the TestEquity and Gexpro Services segments. To reduce the cost basis of inventory to a lower of cost or net realizable value, a reserve is recorded for slow-moving and obsolete inventory based on historical experience and monitoring of current inventory activity. Estimates are used to determine the necessity of recording these reserves based on periodic detailed analysis using both qualitative and quantitative factors. As part of this analysis, the Company considers several factors including the inventories length of time on hand, historical sales, product shelf life, product life cycle, product category and product obsolescence. Property, Plant and Equipment — Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is computed primarily by the straight-line method for buildings, machinery and equipment, furniture and fixtures and vehicles. The Company estimates useful lives of 10 to 40 years for buildings and improvements, the shorter of the useful life of the assets or term of the underlying leases for leasehold improvements, and 2 to 10 years for machinery and equipment, furniture and fixtures and vehicles. Capitalized software is amortized over estimated useful lives of 3 to 5 years using the straight-line method. The costs of repairs, maintenance and minor renewals are charged to expense as incurred. Amortization of financing and capital leases is included in depreciation expense. When property, plant and equipment are retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in the income from operations. Rental Equipment — Rental equipment is stated at cost less accumulated depreciation and amortization. Expense is computed primarily by the straight-line method over an estimated useful life of 3 to 7 years. Upon sale or retirement of such assets, the related cost and accumulated depreciation are removed from the Consolidated Balance Sheet, and gains or losses are reflected in operating income (loss) within the Consolidated Statements of Operations and Comprehensive Income (Loss). The costs of repairs, maintenance and minor renewals are charged to expense as incurred. Cash Value of Life Insurance — The Company invests funds in life insurance policies for certain current and former employees. The cash surrender value of the policies is invested in various investment instruments and is recorded as an asset in the Consolidated Balance Sheets. The Company records these policies at their contractual value. The change in the cash surrender value of the life insurance policies, which is recorded as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss), is the change in the policies' contractual values. Deferred Compensation — The Company’s Executive Deferral Plan (“Deferral Plan”) allows certain executives to defer payment of a portion of their earned compensation. The deferred compensation is recorded in an account balance, which is a bookkeeping entry made by the Company to measure the amount due to the participant. The account balance is equal to the participant’s deferred compensation, adjusted for increases and/or decreases in the amount that the participant has designated to one or more bookkeeping portfolios that track the performance of certain mutual funds. The Company adjusts the deferred compensation liability to equal the contractual value of the participants’ account balances. These adjustments are the changes in contractual value of the individual plans and are recorded as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss). Stock-Based Compensation — Compensation based on the share value of the Company’s common stock is valued at its fair value at the grant date and the expense is recognized over the vesting period. Fair value is re-measured each reporting period for liability-classified awards that may be redeemable in cash. The Company accounts for forfeitures of stock-based compensation in the period in which they occur. Goodwill — The Company had $348.0 million of goodwill at December 31, 2022 and $104.2 million of goodwill at December 31, 2021. Goodwill represents the cost of business acquisitions in excess of the fair value of identifiable net tangible and intangible assets acquired. The Company reviews goodwill for potential impairment annually on October 1st, or when an event or other circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. The first step in the multi-step process to determine if goodwill has been impaired and to what degree is to review the relevant qualitative factors that could cause the fair value of the reporting unit to decrease below the carrying value of the reporting unit. The Company considers factors such as macroeconomic, industry and market conditions, cost factors, overall financial performance and other relevant factors that would affect the individual reporting units. If the Company determines that it is more likely than not that the fair value of the reporting unit is greater than the carrying value of the reporting unit, then no further impairment testing is needed. If the Company determines that it is more likely than not that the carrying value of the reporting unit is greater than the fair value of the reporting unit, the Company will move to the next step in the process. The Company will estimate the fair value of the reporting unit and compare it to the reporting unit's carrying value. If the carrying value of the reporting unit exceeds its fair value, the Company will record an impairment of goodwill equal to the amount the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill previously recognized. Intangible Assets — The Company's intangible assets primarily consist of trade names and customer relationships. Intangible assets are amortized over a weighted average of 8 to 15 year and 9 to 20 year estimated useful lives for trade names and customer relationships, respectively. The Company amortizes trade name intangible assets on a straight-line basis and customer relationship intangible assets on a basis consistent with their estimated economic benefit. Impairment of Long-Lived Assets — The Company reviews its long-lived assets, including property, plant and equipment, right of use assets and definite life intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. Recoverability is measured by a comparison of the assets carrying amount to their expected future undiscounted net cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured based on the amount by which the carrying amount of the asset exceeds its fair value. No impairments occurred in 2022 or 2021. Income Taxes — Deferred tax assets or liabilities reflect temporary differences between amounts of assets and liabilities for financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is established to offset any deferred tax assets if, based upon the available evidence, it is more likely than not (i.e. greater than 50% likely) that some or all of the deferred tax assets will not be realized. The determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income, (3) the impact of tax planning strategies and (4) the ability to carry back deferred tax assets to offset prior taxable income. In assessing the need for a valuation allowance, we consider all available positive and negative evidence, including past operating results, projections of future taxable income and the feasibility of ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Additionally, valuation allowances related to deferred tax assets can be impacted by changes to tax laws. Significant judgment is required in determining income tax provisions as well as deferred tax asset and liability balances, including the estimation of valuation allowances and the evaluation of uncertain tax positions. Earnings from the Company's foreign subsidiaries are considered to be indefinitely reinvested. A distribution of these non-U.S. earnings in the form of dividends or otherwise would subject the Company to foreign withholding taxes and may subject the Company to U.S. federal and state taxes. The Company recognizes the benefit of tax positions when a benefit is more likely than not (i.e., greater than 50% likely) to be sustained on its technical merits. Recognized tax benefits are measured at the largest amount that is more likely than not to be sustained, based on cumulative probability, in final settlement of the position. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of Income tax expense (benefit) in the Consolidated Statements of Operations and Comprehensive Income (Loss). Leases — Leases are categorized as either operating or financing leases at commencement of the lease. For both classes of leases, a Right Of Use ("ROU") asset and corresponding lease liability are recognized at commencement of the lease. Operating leases consist of the Company headquarters, distribution and service centers, and Bolt branches. Financing leases consist of equipment such as forklifts and copiers. The value of the lease assets and liabilities are the present value of the total cash payments for each lease. The Company uses its incremental borrowing rate to discount the total cash payments to present value for each lease. The Company reviews each lease to determine if there is a more appropriate discount rate to apply. Upon commencement of the lease, rent expense is recognized on a straight line basis for each operating lease. Each financing lease ROU asset is amortized on a straight line basis over the lease period. TestEquity and the Lawson Partsmaster business have equipment leasing programs for customers. These leases are classified as operating leases. The leased equipment is recognized in Rental equipment, net in the Consolidated Balance Sheets and the leasing revenue is recognized on a straight line basis. Earnings per Share — Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of shares of common stock and, if dilutive, common stock equivalents outstanding during the period. Diluted earnings per share reflect the potential dilution from the exercise or conversion of outstanding performance awards, stock options, market stock units and restricted stock awards into common stock. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. Contingently issuable shares are considered outstanding common shares and included in basic EPS as of the date that all necessary conditions have been satisfied (i.e., when issuance of the shares is no longer contingent). For diluted EPS, the contingently issuable shares should be included in the denominator of the diluted EPS calculation as of the beginning of the interim period in which the conditions are satisfied and the earnout arrangements have been resolved. For the reverse acquisition period prior to April 1, 2022, the Company calculates the basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements by dividing the income of the accounting acquirer attributable to common shareholders in each of those periods by the accounting acquirer’s historical weighted-average number of common shares outstanding. The Company calculates the weighted-average number of common shares outstanding (the denominator of the EPS calculation), including the equity interests issued by the legal acquirer to effect the reverse acquisition, as the number of common shares outstanding from the beginning of that period to the acquisition date computed on the basis of the weighted-average number of common shares of the accounting acquirer outstanding during the period multiplied by an exchange ratio derived from the shares exchanged at the Merger Date. Foreign Currency — The accounts of foreign subsidiaries are measured using the local currency as the functional currency. All balance sheet amounts are translated into U.S. dollars using the exchange rates in effect at the applicable period end. Components of income or loss are translated using the average exchange rate for each reporting period. Gains and losses resulting from changes in the exchange rates from translation of the subsidiary accounts in local currency to U.S. dollars are reported as a component of Accumulated other comprehensive income or loss in the Consolidated Balance Sheets. Gains and losses resulting from the effect of exchange rate changes on transactions denominated in currencies other than the functional currency are included as a component of net income or loss upon settlement of the transaction. Gains and losses resulting from foreign intercompany transactions are included as a component of net income or loss each reporting period unless the transactions are of a long-term-investment nature and settlement is not planned or anticipated in the foreseeable future, in which case the gains and losses are recorded as a component of Accumulated other comprehensive income or loss in the Consolidated Balance Sheets. Foreign currency transaction losses of $0.9 million and $0.6 million were recorded for 2022 and 2021, respectively, as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss). Treasury Stock — The Company repurchased 54,089 shares of its common stock in 2022 and no shares of its common stock in 2021 through its previously announced stock repurchase plan. The Company repurchased 12,082 shares of its common stock in 2022 from employees upon the vesting of restricted stock to offset the income taxes owed by those employees. The Company accounts for treasury stock using the cost method and includes treasury stock as a component of stockholders’ equity. The cost of the common stock repurchased and held in treasury was $2.5 million in 2022. Segment Information — ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer of DSG. The CODM reviews the financial performance and the results of operations of the segments when making decisions about allocating resources and assessing performance of the Company. The Company has determined it has four operating segments: (i) Lawson, (ii) Gexpro Services, (iii) TestEquity and (iv) All Other. The Company’s three reportable segments include (i) Lawson, (ii) Gexpro Services and (iii) TestEquity. The Company’s CODM reviews the operating results of these reportable segments for the purpose of allocating resources and evaluating financial performance. There was no intersegment revenue. The reporting segments follow the same accounting policies used in the preparation of the Company’s consolidated financial statements. See Note 14 – Segment Information for further details. Acquisitions — The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions for the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Fair Value Measurements — The Company applies the guidance in ASC 820, Fair Value Measurements to account for financial assets and liabilities measured on a recurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below: Level 1 - Unadjusted quoted prices for identical assets and liabilities in active markets. Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 - Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management's best estimate of fair value and that are significant to the fair value of the asset or liability The carrying amount of accounts receivable, accounts payable, accrued expenses and other working capital balances are considered a reasonable estimate of their fair value due to the short-term maturity of these instruments. The carrying amount of debt is also considered to be a reasonable estimate of the fair value based on the nature of the debt and that the debt bears interest at the prevailing market rate for instruments with similar characteristics. The Company’s earnout derivative liability and debt are recorded at fair value on a recurring basis and were estimated using Level 3 inputs. Earnout Derivative Liability — The Company recorded an earnout derivative liability for the future contingent equity shares related to the TestEquity Holdback Shares and the Gexpro Services Holdback Shares provisions within the Merger Agreements. The contingently issuable shares are not indexed to Company common stock and, therefore, are accounted for as liability classified instruments in accordance with ASC 815-40, Contracts in Entity’s Own Equity, as the events that determine the number of contingently issuable shares required to be released or issued, as the case may be, include events that are not solely indexed to the fair value of Company common stock. The contingently issuable shares were initially measured at the Merger Date and were subsequently measured at each reporting date until settled, or when they met the criteria for equity classification. Changes in the fair value of the earnout derivative liability are recorded as a component of Change in fair value of earnout liability in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company reassesses the classification of these derivative liabilities for earnout arrangements each balance sheet date. If the contingencies are resolved for the issuable shares, the earnout derivative liability is reclassified from the liability to equity as of the date of the event that caused the contingencies to be met. The earnout derivative liability is measured at fair value immediately prior to the reclassification to equity. If the earnout derivative liability is reclassified from a liability to equity, gains or losses recorded to account for the liability at fair value during the period that the contract was classified as a liability are not reversed. The contingently issuable shares are included in the denominator of the basic earnings per share calculation as of the date that all necessary conditions have been satisfied (i.e., when issuance of the shares is no longer contingent). For diluted earnings per share, the contingently issuable shares are included in the denominator of the diluted earnings per share calculation as of the beginning of the interim period in which the conditions are satisfied and the earnout arrangements have been resolved. See Note 12 – Earnings Per Share for further information. Use of Estimates — Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported for service revenue, service cost, allowance for doubtful accounts, inventory reserves, goodwill and intangible assets valuation, stock-based compensation and income taxes in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Supplier Concentrations — During 2022 and 2021, TestEquity purchases of inventory from one unrelated supplier accounted for 10.3% and 20.1% of the Company's total inventory purchases, respectively. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the requirements for how an entity should measure credit losses on financial instruments. The pronouncement is effective for smaller reporting companies in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and the new guidance will be applied on a prospective basis. The Company is currently evaluating the effect of adopting this new standard and the impact on its financial position or results of operations. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an entity to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The pronouncement is effective in fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company is currently evaluating the effect of adopting this new standard and does not expect the adoption to have a material impact on its financial position or results of operations.
|
Business Acquisitions |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions | Note 3 – Business Acquisitions Completion of Mergers On April 1, 2022, the Mergers were completed via all-stock merger transactions. Pursuant to the Merger Agreements, DSG issued an aggregate of 10.3 million shares of DSG common stock to the former owners of TestEquity and Gexpro Services. An additional 1.7 million shares of DSG common stock remain potentially issuable upon meeting the conditions of certain earnout provisions. Refer to Note 1 – Nature of Operations and Basis of Presentation for further information regarding the Mergers. The business combination of Lawson, TestEquity and Gexpro Services combines three value added complementary distribution businesses. Lawson is a distributor of products and services to the industrial, commercial, institutional, and governmental MRO marketplace. TestEquity is a distributor of parts and services to the industrial, commercial, institutional and governmental electronics manufacturing and test and measurement market. Gexpro Services is a provider of supply chain solutions, specializing in developing and implementing VMI and kitting programs to high-specification manufacturing customers. Gexpro Services provides critical products and services to customers throughout the lifecycle of highly technical OEM products. Refer to Note 1 – Nature of Operations and Basis of Presentation for more information on the nature of operations for these businesses. The Mergers were accounted for as a reverse merger under the acquisition method of accounting for business combinations, whereby TestEquity and Gexpro Services were identified as the accounting acquirers and were treated as a combined entity for financial reporting purposes, and DSG was identified as the accounting acquiree. Accordingly, under the acquisition method of accounting, the purchase price was allocated to DSG's tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated acquisition-date fair values. These estimates were determined through established and generally accepted valuation techniques. Allocation of Consideration Exchanged Under the acquisition method of accounting, the consideration exchanged was calculated as follows:
(1) Fair value adjustment of stock-based compensation awards. Due to the publicly traded nature of shares of DSG common stock, the equity issuance of shares of DSG common stock based on this value was considered to be a more reliable measurement of the fair market value of the transaction compared to the equity interests of the accounting acquirer. The allocation of consideration exchanged to the tangible and identifiable intangible assets acquired and liabilities assumed was based on estimated fair values as of the Merger Date. The accounting for the Mergers was complete as of December 31, 2022. Goodwill generated from the Mergers is not deductible for tax purposes. During 2022, the Company recorded measurement period adjustments that resulted in a $8.4 million net decrease to goodwill. The measurement period adjustments were associated with adjustments to the fair value of certain property, plant and equipment, changes in estimates related to leases and changes in the deferred tax liability related to intangible assets. The following table summarizes the allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed at the Merger Date and after applying measurement period adjustments:
The allocation of consideration exchanged to other intangible assets acquired is as follows:
The Company incurred transaction costs related to the Mergers of $12.7 million for 2022 and $2.4 million for 2021 which are included in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss). Unaudited Pro Forma Information The following table presents estimated unaudited pro forma consolidated financial information for DSG as if the Mergers and other acquisitions disclosed below occurred on January 1, 2021 for the 2022 acquisitions and January 1, 2020 for the 2021 acquisitions. The unaudited pro forma information reflects adjustments including amortization on acquired intangible assets, interest expense, and the related tax effects. This information is presented for informational purposes only and is not necessarily indicative of future results or the results that would have occurred had the Mergers been completed on the date indicated.
Other Acquisitions TestEquity and Gexpro Services acquired other businesses during 2022 and 2021. The consideration exchanged for the acquired businesses included various combinations of cash, sellers notes, and forms of share based payments. The acquisitions were accounted for under ASC 805, the acquisition method of accounting. For each acquisition, the allocation of consideration exchanged to the assets acquired and liabilities assumed was based on estimated acquisition-date fair values. Certain estimated values for the acquisitions, including the valuation of intangibles, contingent consideration, and income taxes (including deferred taxes and associated valuation allowances), are not yet finalized, and the preliminary purchase price allocations are subject to change as the Company completes its analysis of the fair value at the date of acquisition. The final valuations will be completed within the one-year measurement periods following the respective acquisition dates, and any adjustments will be recorded in the period in which the adjustments are determined. During 2022, TestEquity acquired Interworld Highway, LLC, National Test Equipment, and Instrumex, and Gexpro Services acquired Resolux ApS ("Resolux") and Frontier Technologies Brewton, LLC and Frontier Engineering and Manufacturing Technologies, Inc. ("Frontier"). The accounting for the Interworld Highway, LLC, Resolux and Frontier acquisitions was complete as of December 31, 2022. The purchase consideration for each business acquired and the allocation of the consideration exchanged to the estimated fair values of assets acquired and liabilities assumed is summarized below:
Following the initial fair value measurement, the Company updated the purchase price allocations as follows: •Resolux was adjusted for changes in the deferred tax liability related to intangible assets. The adjustments to these balances resulted in a $3.8 million increase to goodwill. •Frontier was adjusted for the valuation of intangible assets, working capital, accrued expenses and other liabilities. The adjustments to these balances resulted in a $1.2 million increase to goodwill and $0.5 million increase to the total purchase consideration, net of cash acquired. •National Test Equipment was adjusted to reflect changes in working capital, accrued expenses and other liabilities. The adjustments to these balances resulted in a $0.3 million decrease to goodwill. The consideration for the Frontier acquisition includes a potential earn-out payment up to $3.0 million based upon the achievement of certain milestones and relative thresholds during the earn out measurement period which ends on December 31, 2024. The fair value of the contingent consideration arrangement was classified within Level 3 and was determined using a probability-based scenario analysis approach. As of March 31, 2022 and December 31, 2022, the fair value of the earn-out was $0.9 million and $1.7 million, respectively, with amounts recorded in Accrued expenses and other current liabilities and Other liabilities in the Consolidated Balance Sheets. Changes in the fair value of the earn-out are recorded as a component of Change in fair value of earnout liability in the Consolidated Statements of Operations and Comprehensive Income (Loss). During 2021, TestEquity acquired MCS Test Group Limited ("MCS"), and Gexpro Services acquired Omni Fasteners Inc. ("Omni"), National Engineered Fasteners ("NEF") and State Industrial Supply ("SIS"). These acquisitions were provisionally accounted for as of December 31, 2021. The accounting was completed during the year ended December 31, 2022. The purchase consideration for each business acquired during 2021 and the allocation of the consideration exchanged to the estimated fair values of assets acquired and liabilities assumed is summarized below:
A gain on bargain purchase related to the acquisition of NEF was recognized within in the Consolidated Statements of Operations and Comprehensive Income (Loss) in the fourth quarter of 2021. The gain of $1.4 million was calculated as the excess of net assets recognized over the consideration transferred. The bargain purchase was primarily attributable to owners that were highly motivated to sell. The Company incurred transaction costs related to the other closed acquisitions listed above and other potential future acquisitions of $2.8 million for 2022 and $6.4 million for 2021. As a result of acquisitions completed, the Company recorded tax deductible goodwill of $53.6 million in 2022 and $5.6 million in 2021 that may result in a tax benefit in future periods. Other Acquisitions Pro Forma Information - The pro forma information for other acquisitions was included in the estimated unaudited pro forma consolidated financial information for DSG, which is presented above under Pro Forma Information. Actual Results of Business Acquisitions The following table presents actual results attributable to our business combinations that were included in the consolidated financial statements for the years ended December 31, 2022 and 2021. The 2022 and 2021 results only reflect the results attributable to the acquisitions completed in those respective years. The results of DSG's legacy Lawson business are included only subsequent to the April 1, 2022 Merger Date, and the results for other acquisitions are only included subsequent to their respective acquisition dates provided above.
|
Revenue Recognition |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Note 4 – Revenue Recognition Under the definition of a contract as defined by ASC 606, the Company considers contracts to be created at the time an order to purchase product and services is agreed upon regardless of whether there is a written contract. Revenue from customers is recognized when obligations under the terms of a contract are satisfied; this generally occurs with the delivery of products or services. Revenue from customers is measured as the amount of consideration the Company expects to receive in exchange for the delivery of goods or services. Contracts may last from one month to one year or more and may have renewal terms that extend indefinitely at the option of either party. Price is typically based on market conditions, competition, changes in the industry and product availability. Volumes fluctuate primarily as a result of customer demand and product availability. Consistent with the way the Company manages its businesses, the Company refers to sales under service agreements, which includes both goods (such as parts, equipment and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of the Company’s operations. The Company has no significant financing components in its contracts with customers. The Company records revenue net of certain taxes, such as sales taxes, that are assessed by governmental authorities on the Company’s customers. The Company also operates as a lessor and recognizes lease revenue on a straight-line basis over the life of each lease. The Company has adopted the practical expedient not to separate the non-lease components that would be within the scope of ASC 606 from the associated lease component as the relevant criteria under ASC 842 are met. The Company does not incur significant costs to obtain contracts. Incidental items that are immaterial in the context of the contract are recognized as expenses. Sales of products and services to customers are invoiced and settled on a monthly basis. ASC 606 requires an entity to present a contract liability in instances where the customer is entitled to a volume rebate based on purchases made during the period. The Company is not usually subject to obligations for warranties, rebates, returns or refunds except in the case of rebates for select customers if predetermined purchase thresholds are met as discussed for the TestEquity segment below. The Company does not typically receive payment in advance of satisfying its obligations under the terms of its sales contracts with customers; therefore, liabilities related to such payment are not significant to the Company. Accounts receivable represents the Company’s unconditional right to receive consideration from its customers. Lawson Segment The Lawson segment has two distinct performance obligations offered to its customers: a product performance obligation and a service performance obligation, and accordingly, two separate revenue streams. Although Lawson has identified that it offers its customers both a product and a service obligation, the customer only receives one invoice per transaction with no price allocation between these obligations. Lawson does not price its offerings based on any allocation between these obligations. Lawson generates revenue primarily from the sale of MRO products to its customers. Revenue related to product sales is recognized at the time that control of the product has been transferred to the customer; either at the time the product is shipped or the time the product has been received by the customer. Lawson does not commit to long-term contracts to sell customers a certain minimum quantity of products. Lawson offers a VMI service proposition to its customers. A portion of these services, primarily related to stocking of product and maintenance of the MRO inventory, is provided over a short period of time after control of the purchased product has been transferred to the customer. Since certain obligations pursuant to the VMI service agreement have not been provided at the time the control of the product transfers to the customer, that portion of expected consideration is deferred until the time that those services have been provided and the related performance obligations have been satisfied. TestEquity Segment TestEquity’s contracts with customers generally represent a single performance obligation to sell its products. Revenue from contracts with customers reflects the transaction prices for contracts reduced by variable consideration. TestEquity provides a rebate to select customers if predetermined purchase thresholds are met. The rebate consideration is not in exchange for a distinct good or service. Variable consideration is estimated using the expected-value method considering all reasonably available information, including TestEquity’s historical experience and current expectations, and is reflected in the transaction price when sales are recorded. Sales returns are generally accepted by TestEquity, however, sales returns are not material to the Company’s operations. TestEquity provides an assurance type warranty which is not sold separately and does not represent a separate performance obligation. TestEquity generates revenue from contracts with customers through the sale of new and used electronic test and measurement products. Typically, TestEquity has a purchase order or master service agreement with the customer that specifies the goods and/or services to be provided. TestEquity generally invoices customers as goods are shipped. Fees are typically due and payable 30 days after date of shipment. Generally, customers gain control of the goods upon providing the product to the carrier, or when services are completed. For the majority of transactions, TestEquity recognizes revenue at the time of shipment, when control passes to the customer. For consigned inventory, revenue is recognized when inventory is removed from TestEquity’s stock location and control passes to the customer. Gexpro Services Segment Gexpro Services’ contracts with customers generally represent a single performance obligation to sell its products. Revenue from sales of Gexpro Services’ products are recognized upon transfer of control to the customer, which is typically when the product has been shipped from its distribution facilities. The transaction price is the amount of consideration to which Gexpro Services expects to be entitled in exchange for transferring goods to the customer. Revenue is recorded based on the transaction price, which includes fixed consideration and an estimate of variable consideration such as, early payment/volume discounts and rebates. The amount of variable consideration included in the transaction price is constrained and is included only to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Gexpro Services’ products are marketed and sold primarily to original equipment manufacturers globally. Sales of products are subject to economic conditions and may fluctuate based on changes in the industry, trade policies and financial markets. Payment terms on invoiced amounts range from 10 to 120 days. In instances where the timing of revenue recognition differs from the timing of the right to invoice, the Company has determined that a significant financing component does not exist. Disaggregated consolidated revenue by geographic area (based on the location to which the product is shipped to):
Rental Revenue TestEquity rents new and used electronic test and measurement equipment to customers in many industries. These leases are classified as operating leases under ASC 842. Rental equipment is included in Rental equipment, net in the Consolidated Balance Sheet, and rental revenue is included in Revenue in the Consolidated Statements of Operations and Comprehensive Income (Loss). The TestEquity rental program generated revenue of $13.8 million and $13.7 million during 2022 and 2021, respectively. The unearned rental revenue related to customer prepayments on equipment leases of $0.3 million at December 31, 2022 and $0.5 million at December 31, 2021 was included in Accrued expenses and other current liabilities in the Consolidated Balance Sheet and is expected to be earned in its entirety during the next twelve months. Lawson leases parts washer machines to customers through its Torrents leasing program. These leases are classified as operating leases under ASC 842. The leased machines are included in Rental equipment, net, in the Consolidated Balance Sheet, and the leasing revenue is recognized on a straight-line basis. The Torrents machine leasing program generated $3.9 million of revenue during 2022. The unearned rental revenue, which was included as a component of Accrued expenses and other current liabilities in the Consolidated Balance Sheet, was nominal at December 31, 2022 and is expected to be earned during the next twelve months.
|
Supplemental Financial Statement Information |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial statements Information | Note 5 – Supplemental Financial Statement Information Inventories, net Inventories, net, consisting of purchased goods and manufactured electronic equipment offered for resale, were as follows:
Changes in the reserve for obsolete and excess inventory were as follows:
Property, Plant and Equipment, net Components of property, plant and equipment, net were as follows:
(1) Construction in progress primarily relates to upgrades to certain of the Company's distribution facilities that we expect to place in service in the next 12 months. Depreciation expense for property, plant, and equipment was $6.5 million in 2022 and $1.2 million in 2021. Amortization expense for capitalized software was $1.6 million in 2022 and $0.7 million in 2021. Rental Equipment, net Rental equipment, net consisted of the following:
Depreciation expense included in cost of sales for rental equipment was $8.0 million and $6.3 million for 2022 and 2021, respectively. Refer to Note 4 – Revenue Recognition for a discussion on the Company's activities as lessor. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following:
Security Bonus Plan The Company has a security bonus plan which was previously created for the benefit of its Lawson independent sales representatives, under the terms of which participants are credited with a percentage of their annual net commissions. The aggregate amounts credited to participants’ accounts vest 25% after five years, and an additional 5% vests each year thereafter upon qualification for the plan. On January 1, 2013, the Company converted all of its U.S. independent sales representatives to employees. The security bonuses for those converted employees continue to vest, but their accounts are no longer credited with a percentage of net commissions. For financial reporting purposes, amounts are charged to operations over the vesting period. Expenses incurred for the security bonus plan were $0.1 million for the year ended December 31, 2022. The security bonus plan is partially funded by an $8.0 million investment in the cash surrender value in life insurance of certain employees which is included as a component of Cash value of life insurance in the Consolidated Balance Sheet. As of December 31, 2022, the $9.7 million liability is included in the Security bonus plan in the Consolidated Balance Sheet.
|
Goodwill and Intangible Assets |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Note 6 – Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill by segment were as follows:
(1) Refer to Note 3 – Business Acquisitions for information related to measurement period adjustments. Intangible Assets The gross carrying and accumulated amortization for definite-lived intangible assets were as follows:
(1) Other primarily consists of non-compete agreements. Amortization expense for definite-lived intangible assets was $29.1 million in 2022 and $10.4 million in 2021. Amortization expense related to intangible assets was recorded in Selling, general and administrative expenses. The remaining weighted-average useful lives of intangible assets as of December 31, 2022 was 4.2 years for trade names and 4.9 years for customer relationships. The estimated aggregate amortization expense for each of the next five years and thereafter are as follows:
|
Leases |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 7 – Leases The Company leases property used for warehousing, distribution centers, office space, branch locations, equipment and vehicles. The expenses generated by leasing activity for the years ended December 31, 2022 and 2021 were as follows (in thousands):
(1) Includes short term lease expense, which is immaterial. The value of net assets and liabilities generated by leasing activity as of December 31, 2022 and December 31, 2021 were as follows (in thousands):
(1) Operating lease assets were recorded net of accumulated amortization of $14.8 million as of December 31, 2022 and $4.3 million as of December 31, 2021. (2) Financing lease assets were recorded net of accumulated amortization as a component of in the Consolidated Balance Sheet of $0.9 million as of December 31, 2022 and $0.0 million as of December 31, 2021. The value of lease liabilities generated by leasing activities as of December 31, 2022 were as follows (in thousands):
The weighted average lease terms and interest rates of leases held as of December 31, 2022 were as follows:
The cash outflows of leasing activity for the years ended December 31, 2022 and 2021were as follows (in thousands):
Refer to Note 4 – Revenue Recognition for a discussion on the Company's activities as lessor.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 7 – Leases The Company leases property used for warehousing, distribution centers, office space, branch locations, equipment and vehicles. The expenses generated by leasing activity for the years ended December 31, 2022 and 2021 were as follows (in thousands):
(1) Includes short term lease expense, which is immaterial. The value of net assets and liabilities generated by leasing activity as of December 31, 2022 and December 31, 2021 were as follows (in thousands):
(1) Operating lease assets were recorded net of accumulated amortization of $14.8 million as of December 31, 2022 and $4.3 million as of December 31, 2021. (2) Financing lease assets were recorded net of accumulated amortization as a component of in the Consolidated Balance Sheet of $0.9 million as of December 31, 2022 and $0.0 million as of December 31, 2021. The value of lease liabilities generated by leasing activities as of December 31, 2022 were as follows (in thousands):
The weighted average lease terms and interest rates of leases held as of December 31, 2022 were as follows:
The cash outflows of leasing activity for the years ended December 31, 2022 and 2021were as follows (in thousands):
Refer to Note 4 – Revenue Recognition for a discussion on the Company's activities as lessor.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 7 – Leases The Company leases property used for warehousing, distribution centers, office space, branch locations, equipment and vehicles. The expenses generated by leasing activity for the years ended December 31, 2022 and 2021 were as follows (in thousands):
(1) Includes short term lease expense, which is immaterial. The value of net assets and liabilities generated by leasing activity as of December 31, 2022 and December 31, 2021 were as follows (in thousands):
(1) Operating lease assets were recorded net of accumulated amortization of $14.8 million as of December 31, 2022 and $4.3 million as of December 31, 2021. (2) Financing lease assets were recorded net of accumulated amortization as a component of in the Consolidated Balance Sheet of $0.9 million as of December 31, 2022 and $0.0 million as of December 31, 2021. The value of lease liabilities generated by leasing activities as of December 31, 2022 were as follows (in thousands):
The weighted average lease terms and interest rates of leases held as of December 31, 2022 were as follows:
The cash outflows of leasing activity for the years ended December 31, 2022 and 2021were as follows (in thousands):
Refer to Note 4 – Revenue Recognition for a discussion on the Company's activities as lessor.
|
Earnout Derivative Liability |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnout Derivative Liability | Note 8 – Earnout Derivative Liability On the Merger Date, the Company recorded an earnout derivative liability for the two earnout provisions within the Merger Agreements. The Company estimated the fair value of the earnout derivative liability based on an aggregate of 1,162,000 additional shares available to be issued under the two earnout provisions of the Merger Agreements. The aggregate of 1,162,000 shares is comprised of 700,000 shares of DSG common stock that are contingently issuable to (or forfeitable by) the TestEquity Equityholder and 462,000 shares of DSG common stock that are contingently issuable to (or forfeitable by) the Gexpro Services Stockholder. The additional 538,000 shares of the remaining potential shares of the earnout were not recorded as an earnout derivative liability as the acquisition contingency for these shares was met at the Merger Date. The Company's earnout derivative liability is classified as a Level 3 instrument and is measured at fair value on a recurring basis. The fair value of the earnout derivative liability was measured using the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis for the year ended December 31, 2022. Inputs to that model include the expected time to liquidity, the risk-free interest rate over the term, expected volatility based on representative peer companies and the estimated fair value of the underlying class of common stock. The significant unobservable inputs used in the fair value measurement of the earnout derivative liability are the fair value of the underlying stock at the valuation date and the estimated term of the earnout arrangement periods. Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement. The estimated aggregate fair value of the earnout derivative liability recorded on the Merger Date was $43.9 million, with an offsetting entry to additional paid-in capital. As of April 29, 2022 and December 31, 2022, 700,000 and 462,000 of the 1,162,000 shares, respectively, were reclassified to equity, as the contingencies had been met. Immediately prior to reclassifications, the respective shares were remeasured to fair value. For the year ended December 31, 2022, the Company recorded income of $0.3 million as a component of Change in fair value of earnout liability in the Consolidated Statements of Operations and Comprehensive Income (Loss) due to changes in the fair value of the earnout derivative liability. See Fair Value Measurements in Note 2 – Summary of Significant Accounting Policies for further information. The change in the fair value of the earnout derivative liability was as follows:
|
Debt |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Note 9 – Debt The Company's outstanding long-term debt was comprised of the following:
Amended and Restated Credit Agreement - April 1, 2022 On April 1, 2022 (the "Closing Date"), DSG and certain of its subsidiaries entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) by and among DSG, certain subsidiaries of DSG as borrowers or guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. Pursuant to the Amended and Restated Credit Agreement, the Company's previous credit agreement was amended and restated in its entirety. The Amended and Restated Credit Agreement provides for (i) a $200 million senior secured revolving credit facility, with a $25 million letter of credit sub-facility and a $10 million swingline loan sub-facility, (ii) a $250 million senior secured initial term loan facility and (iii) a $50 million senior secured delayed draw term loan facility. In addition, the Amended and Restated Credit Agreement permits the Company to increase the commitments under the Amended and Restated Credit Agreement from time to time by up to $200 million in the aggregate, subject to, among other things, the receipt of additional commitments from existing and/or new lenders and pro forma compliance with the financial covenants in the Amended and Restated Credit Agreement. The revolving credit facility is available to be drawn in U.S. dollars, Canadian dollars and any other additional currencies that may be agreed. On April 1, 2022, in connection with the Mergers, the Company borrowed $250.0 million of initial term loan facility loans and approximately $86.0 million of revolving credit facility loans under the Amended and Restated Credit Agreement. These borrowings were used to 1) repay all obligations and refinance the Company's previous credit agreement, 2) repay certain existing indebtedness of TestEquity and Gexpro Services and their respective subsidiaries, 3) pay fees and expenses in connection with the Mergers, and 4) finance the working capital needs and general corporate purposes of the Company. A $2.8 million loss on the extinguishment of debt for remaining unamortized deferred financing costs associated with the previous indebtedness was recorded in the second quarter of 2022 in connection with the payoff. The extinguishment is recorded in Loss on extinguishment of debt in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Amended and Restated Credit Agreement requires that the proceeds of any revolving credit facility loans be used for working capital and general corporate purposes (including, without limitation, permitted acquisitions), and requires that the proceeds of any delayed draw term loan facility be used solely to finance the payment of consideration for (i) the potential acquisition by TestEquity of a certain business that had been previously identified to DSG as a potential acquisition candidate by TestEquity prior to the date of the TestEquity Merger Agreement and (ii) other acquisitions permitted under the Amended and Restated Credit Agreement, and for any fees, costs and expenses incurred in connection therewith. On April 29, 2022, the Company borrowed the $50.0 million available under the delayed draw term loan facility to finance the acquisition of Interworld Highway, LLC. As of December 31, 2022, there were $243.8 million of term loan facility loans outstanding, $50.0 million of delayed draw term loans outstanding and approximately $122.0 million of revolving credit facility loans outstanding under the Amended and Restated Credit Agreement. Net of outstanding letters of credit, there was $77.0 million of borrowing availability under the revolving credit facility as of December 31, 2022. The weighted average interest rate on the outstanding facilities from April 1, 2022 through December 31, 2022 was 5.1%. The loans under the Amended and Restated Credit Agreement bear interest, at the Company’s option, at a rate equal to (i) the Alternate Base Rate or the Canadian Prime Rate (each as defined in the Amended and Restated Credit Agreement), plus, in each case, an additional margin ranging from 0.0% to 1.75% per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended and Restated Credit Agreement or (ii) the Adjusted Term SOFR Rate or the CDOR Rate (each as defined in the Amended and Restated Credit Agreement), plus, in each case, an additional margin ranging from 1.0% to 2.75% per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended and Restated Credit Agreement. Certain closing fees, arrangement fees, administration fees, commitment fees and letter of credit fees are payable to the lenders and the agents under the Amended and Restated Credit Agreement, including a commitment fee on the daily unused amount of the revolving credit facility that will accrue at a rate ranging from 0.15% to 0.35% per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended and Restated Credit Agreement. In addition, the Amended and Restated Credit Agreement provides that the delayed draw term loan facility shall accrue a ticking fee at a rate ranging from 0.15% to 0.35% per annum, depending on the total net leverage ratio of the Company and its restricted subsidiaries as of the most recent determination date under the Amended and Restated Credit Agreement, and that such ticking fee shall be payable during the period from the Closing Date to the date on which the lenders’ delayed draw term loan facility commitments terminate. The fees outlined above are reported as interest expense and vary depending on the total net leverage ratio as defined in the Amended and Restated Credit Agreement. Fees from the Closing Date through December 31, 2022 were $0.4 million. In connection with the Amended and Restated Credit Agreement, deferred financing costs of $4.0 million were incurred. Deferred financing costs are amortized over the life of the debt instrument and reported as interest expense. As of December 31, 2022, deferred financing costs net of accumulated amortization were $8.0 million of which $4.9 million were included in Long-term debt, less current portion, net (related to the senior secured term loan and senior secured delayed draw term loan) and $3.1 million were included in Other assets (related to the senior secured revolving credit facility) in the Consolidated Balance Sheets. Each of the loans under the Amended and Restated Credit Agreement matures on April 1, 2027, at which time all outstanding loans, together with all accrued and unpaid interest, must be repaid and the revolving credit facility commitments will terminate. The Company is required to repay principal on the term loans each quarter in the following amounts (subject to potential adjustment): (i) $3,125,000, in the case of the initial term loan facility, and (ii) an amount equal to 1.25% of the funded delayed draw term loan facility, in the case of the delayed draw term loan facility. The Company is also required to prepay the term loans with the net cash proceeds from any disposition of certain assets (subject to reinvestment rights) or from the incurrence of any unpermitted debt. The Company may borrow, repay and reborrow the revolving loans until April 1, 2027, prepay any of the term loans, and terminate any of the commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions and the reimbursement of certain lender costs in the case of prepayments of certain types of loans. Subject to certain exceptions as set forth in the Amended and Restated Credit Agreement, the obligations of the Company and its U.S. subsidiaries under the Amended and Restated Credit Agreement are guaranteed by the Company and certain of the Company’s U.S. subsidiaries and the obligations of each of the Company’s Canadian subsidiaries under the Amended and Restated Credit Agreement are guaranteed by the Company and certain of its U.S. and Canadian subsidiaries. Subject to certain exceptions as set forth in the Amended and Restated Credit Agreement, the obligations under the Amended and Restated Credit Agreement are secured by a first priority security interest in and lien on substantially all assets of the Company, each other borrower and each guarantor. The Amended and Restated Credit Agreement contains various affirmative covenants, including financial maintenance covenants requiring the Company to maintain compliance with a consolidated minimum interest coverage ratio and a maximum total net leverage ratio, each determined in accordance with the terms of the Amended and Restated Credit Agreement. The Company was in compliance with all affirmative and financial covenants as of December 31, 2022. The Amended and Restated Credit Agreement contains various events of default (subject to exceptions, thresholds and grace periods as set forth in the Amended and Restated Credit Agreement). Under certain circumstances, a default interest rate will apply on all obligations at a rate equal to 2.0% per annum above the applicable interest rate. Previous Credit Agreements Gexpro Services - January 3, 2022 Gexpro Services Credit Agreement On January 3, 2022, Gexpro Services entered into a credit agreement ("2022 Gexpro Services Credit Agreement") with a financial institution under which Gexpro Services obtained an initial $137 million term loan ("2022 Gexpro Services Term Loan"), a $25 million revolving line of credit ("2022 Gexpro Services Revolver") and a delayed $83 million term loan ("2022 Gexpro Services Delayed Term Loan"). The proceeds of the 2022 Gexpro Services Term Loan and 2022 Gexpro Services Delayed Term Loan were used to fund the Resolux acquisition, repay all borrowings under the 2020 Gexpro Services Credit Agreements (as defined below) and seller’s promissory note from SIS acquisition (refer to Note 3 – Business Acquisitions for further details of these acquisitions). In connection with the 2022 Gexpro Services Credit Agreement, deferred financing costs of $7.4 million were incurred. Gexpro Services - February 24, 2020 Gexpro Services Term Loan Credit Agreement On February 24, 2020, Gexpro Services entered into a credit agreement ("2020 Gexpro Services Term Loan Credit Agreement") under which Gexpro Services obtained a $60 million term loan ("2020 Gexpro Services Term Loan"). Also on February 24, 2020, Gexpro Services entered into a credit agreement ("2020 Gexpro Services Revolver Credit Agreement" and together with the 2020 Gexpro Services Term Loan Credit Agreement, "2020 Gexpro Services Credit Agreements") under which Gexpro Services obtained a $15 million revolving line of credit ("2020 Gexpro Services Revolver"). Availability of the 2020 Gexpro Services Revolver was reduced by issued and outstanding letters of credit, which were limited to $38.5 million. As of December 31, 2021, there were $0.7 million outstanding letters of credit and $37.7 million outstanding on the 2020 Gexpro Services Revolver. A loss on debt extinguishment of $0.6 million was recorded on January 3, 2022 in connection with the January 3, 2022 Gexpro Services Credit Agreements. TestEquity - 2017 TestEquity Credit Agreement On April 28, 2017, TestEquity entered into a credit agreement ("2017 TestEquity Credit Agreement") with a financial institution under which TestEquity obtained a $101 million term loan ("2017 TestEquity Term Loan") and a $15.0 million revolving line of credit ("2017 TestEquity Revolver"). Availability of the 2017 TestEquity Revolver was reduced by issued and outstanding letters of credit, which were limited to $2.0 million. There were no outstanding letters of credit as of December 31, 2021 and $1.0 million outstanding on the revolving line of credit. A loss on debt extinguishment of $0.2 million was recorded on April 1, 2022 in connection with the April 1, 2022 Amended and Restated Credit Agreement executed in connection with the consummation of the Mergers.
|
Stock-Based Compensation |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Note 10 – Stock-Based Compensation The Company recorded stock-based compensation expense of $2.4 million for the year ended December 31, 2022. A portion of the Company's stock-based awards are liability-classified. Accordingly, changes in the market value of the Company's common stock may result in a stock-based benefit in certain periods. A stock-based compensation liability of $3.3 million as of December 31, 2022 was included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. All Lawson stock-based equity compensation awards that were issued and outstanding prior to the Merger Date were treated like they were acquired concurrent with the Mergers in accordance with the acquisition method of accounting for reverse acquisitions. Refer to Note 1 – Nature of Operations and Basis of Presentation for additional information about the Mergers. No stock-based compensation expense was recorded during 2021 and there was no stock-based compensation liability as of December 31, 2021. There were no shares related to stock-based compensation outstanding prior to the Merger Date. Equity Compensation Plans On October 17, 2022, the Board of Directors approved and adopted the Distribution Solutions Group, Inc. Equity Compensation Plan, as amended and restated, effective October 17, 2022, and as amended November 10, 2022 (the “Amended and Restated Equity Plan”). The Amended and Restated Equity Plan provides for the grant of nonqualified and incentive stock options, stock awards and stock units to officers and employees of the Company. The Amended and Restated Equity Plan also provides for the grant of option rights and restricted stock to non-employee directors. Non-employee directors are limited to grants of no more than 30,000 shares of common stock in any calendar year and other than non-employee directors are limited to grants of no more than 250,000 shares of common stock in any calendar year. The Amended and Restated Equity Plan is administered by the Compensation Committee of the Board of Directors, or its designee, which as administrator of the plan, has the authority to select plan participants, grant awards, and determine the terms and conditions of the awards. As of December 31, 2022, the Company had approximately 1,222,773 shares of common stock still available under the Amended and Restated Equity Plan. The Company also has a Stock Performance Rights Plan (“SPR Plan”) that provides for the issuance of Stock Performance Rights (“SPRs”) that allow non-employee directors, officers and key employees to receive cash awards, subject to certain restrictions, equal to the appreciation of the Company's common stock. The SPR Plan is administered by the Compensation Committee of the Board of Directors. Stock Performance Rights SPRs entitle the recipient to receive a cash payment equal to the excess of the market value of Company common stock over the SPR exercise price when the SPRs are surrendered. Expense, equal to the fair market value of the SPR at the date of grant and remeasured each reporting period, is recorded ratably over the vesting period. Compensation expense is included in Selling, general and administrative expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). The outstanding SPRs were granted with approximately a seven year life and vest over to three years beginning on the first anniversary of the date of the grant. The SPRs are liability classified and included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. On December 31, 2022, the SPRs outstanding were re-measured at fair value using the Black-Scholes valuation model. This model requires the input of subjective assumptions that may have a significant impact on the fair value estimate. The weighted-average fair value of SPRs outstanding as of December 31, 2022 was $15.30 per SPR using the following assumptions:
The expected volatility was based on the historic volatility of the Company's stock price commensurate with the expected life of the SPR. The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the SPR. The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method allowed by the SEC, which approximates our historical experience. The estimated annual dividend was based on the recent dividend payout trend. Compensation expense of $0.8 million was recorded in Selling, general and administrative expense for the year ended December 31, 2022. Cash in the amount of $5.2 million was paid for SPR exercises in 2022. A liability of $2.7 million reflecting the estimated fair value of future pay-outs is included as a component of Accrued expenses and other liabilities in the Consolidated Balance Sheets. Activity related to the Company’s SPRs during the year ended December 31, 2022 was as follows:
The SPRs outstanding had an intrinsic value of $2.2 million as of December 31, 2022. All SPRs for plan participants were fully vested prior to the Mergers, as such, there is no unrecognized compensation associated with any SPRs. At December 31, 2022, the weighted average remaining contractual term was 2.1 years for all outstanding SPRs. Restricted Stock Awards Restricted stock awards ("RSAs") generally vest over a to three year period beginning on the first anniversary of the date of the grant. Upon vesting, the vested restricted stock awards are exchanged for an equal number of the Company’s common stock. The participants have no voting or dividend rights with the restricted stock awards. The restricted stock awards are valued at the closing price of the common stock on the date of grant and the expense is recorded ratably over the vesting period. Compensation expense of $0.8 million related to the RSAs was recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) for 2022. Activity related to the Company’s RSAs during the year ended December 31, 2022 was as follows:
As of December 31, 2022, there was $1.1 million of total unrecognized compensation cost related to RSAs that will be recognized over a weighted average period of 1.2 years. The awards granted in 2022 had a weighted average grant date fair value of $37.49 per share. Market Stock Units Market Stock Units ("MSUs") are exchangeable for between 0% to 150% of the Company's common shares at the end of the vesting period based on the trailing 60-day average closing price of the Company's common stock. The value of the MSUs was determined using a geometric brownian motion model that, based on certain variables, generates a large number of random trials simulating the price of the Company common stock over the measurement period. Expense of $0.3 million related to MSUs was recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) during the year ended December 31, 2022. Activity related to the Company’s MSUs during 2022 was as follows:
Stock Options Stock options vest through the fifth anniversary from the grant date. Each option can be exchanged for one share of the Company's common stock at the stated exercise price. Upon vesting, stock options are recognized as a component of equity. Activity related to the Company’s stock options during the year ended December 31, 2022 was as follows:
Compensation expense of $0.3 million was recorded in Selling, general and administrative expense for the year ended December 31, 2022. Unrecognized compensation related to stock options as of December 31, 2022 was $2.0 million, which is expected to be recognized over a weighted-average period of 2.7 years. There were 248,000 unvested and 40,000 fully vested stock options outstanding on December 31, 2022 with a weighted average exercise price of $27.01. The grant date fair value of the stock options issued for the year ended December 31, 2022 was estimated using a Black-Scholes valuation model. The weighted average fair value assumptions used in the model were as follows:
The expected volatility was based on the historic volatility of the Company's stock price commensurate with the expected life of the stock options. The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the stock options. The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method allowed by the SEC, which approximates our historical experience. The estimated annual dividend was based on the recent dividend payout trend. Performance Awards Performance Awards ("PAs") are exchangeable for between 0% to 150% of the Company's common shares, or the equivalent amount in cash, based upon the achievement of certain financial performance metrics at the end of the vesting period. The PAs are liability classified and included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. Expense of $0.2 million related to the PAs was recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) for 2022. Unrecognized compensation related to PAs as of December 31, 2022 was $0.2 million, which is expected to be recognized over a weighted-average period of 1.0 year. Activity related to the Company’s PAs during the year ended December 31, 2022 was as follows:
|
Stock Repurchase Program |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Disclosure of Repurchase Agreements [Abstract] | |
Stock Repurchase Program | Note 11 – Stock Repurchase Program In 2019, the Board of Directors authorized a program pursuant to which the Company was authorized to repurchase up to $7.5 million of Company common stock from time to time in open market transactions, privately negotiated transactions or by other methods. On November 2, 2022, the Board of Directors increased the existing repurchase program from $7.5 million to $12.5 million. During 2022, the Company repurchased 54,089 shares of Company common stock at an average cost of 35.86 per share for a total cost of $1.9 million. No shares were repurchased during the year ended December 31, 2021. The remaining availability for stock repurchases under the program was $7.6 million at December 31, 2022.
|
Earnings Per Share |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 12 – Earnings Per Share As a result of the Mergers discussed in Note 1 – Nature of Operations and Basis of Presentation, all historical per share data and number of shares and numbers of equity awards were retroactively adjusted. The following table provides the computation of basic and diluted earnings per share:
|
Income Taxes |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 13 – Income Taxes Income from operations before income taxes consisted of the following:
Provision (benefit) for income taxes from operations consisted of the following:
The reconciliation between the effective income tax rates and the statutory federal rates for operations are as follows:
The effective tax rate for the year ended December 31, 2022 was 42.8% compared to a (6.6)% effective tax rate for the year ended December 31, 2021. The change in the year over year effective tax rate was primarily due to changes in the valuation allowance and merger costs incurred during 2022, and the creation of a consolidated group for federal income tax purposes as a result of the completion of the Mergers referenced in Note 3 – Business Acquisitions. Relative to the U.S. statutory rate, the effective tax rate for the year ended December 31, 2022 was impacted by state taxes, foreign operations and liabilities and transaction expenses related to the Mergers. At December 31, 2022, the Company had $24.2 million of U.S. federal net operating loss carryforwards which are subject to expiration beginning in 2026 and $28.7 million of various state net operating loss carryforwards which expire at varying dates between 2023 and 2034. Deferred income tax assets and liabilities contain the following temporary differences:
Earnings from the Company's foreign subsidiaries are considered to be indefinitely reinvested. A distribution of these non-U.S. earnings in the form of dividends or otherwise would subject the company to foreign withholding taxes and may subject the Company to U.S. federal and state taxes. Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested profits is not feasible primarily due the Company's legal entity structure and the complexity of U.S. tax laws. Global Intangible Low Taxed Income (GILTI) is a deemed amount of income derived from controlled foreign corporations (CFCs) in which a U.S. person is a 10% direct or indirect shareholder. The Company owns numerous CFCs, which are subject to GILTI inclusion. However, because several of the CFCs operate in countries with a high tax rate, notably Canada, Denmark and Mexico, it was determined that a Section 954 High Tax Exception to GILTI inclusions is appropriate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
Segment Information |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Note 14 – Segment Information As a result of the Mergers described in Note 1 – Nature of Operations and Basis of Presentation, the Company evaluated its operational, reporting and management structures and identified three reportable segments based on the nature of the products and services and type of customer for those products and services. A description of our reportable segments is as follows: •Lawson is a distributor of specialty products and services to the industrial, commercial, institutional and government maintenance, repair and operations market. •TestEquity is a distributor of test and measurement equipment and solutions, electronic production supplies, and tool kits from its leading manufacturer partners supporting the technology, aerospace, defense, automotive, electronics, education, and medical industries. •Gexpro Services is a global supply chain solutions provider, specializing in developing and implementing vendor managed inventory and kitting programs to high-specification manufacturing customers. The Company also identified an “All Other” category which includes unallocated DSG holding company costs that are not directly attributable to the ongoing operating activities of our reportable segments and includes the inconsequential results of the Bolt Supply House ("Bolt") non-reportable segment. Revenue within the All Other category represent the results of Bolt. Bolt generates revenue primarily from the sale of MRO products to its walk-up customers and service to its customers through their 14 branch locations. Bolt does not provide VMI services for its customers or provide services in addition to product sales to customers. Revenue is recognized at the time that control of the product has been transferred to the customer which is either upon delivery or shipment depending on the terms of the contract. Financial information for the Company's segments is presented below.
(1) Includes the operating results of Lawson only subsequent to the Merger Date of April 1, 2022 and not Lawson operating results prior to the Mergers. (2) Includes the operating results of All Other only subsequent to the Merger Date of April 1, 2022 and not All Other operating results prior to the Mergers. Long-lived assets, which includes property and equipment, rental equipment, goodwill, intangibles, right of use assets, and other assets, were as follows:
Refer to Note 4 – Revenue Recognition for disaggregated revenue by geographic area. Capital expenditures and depreciation and amortization by segment were as follows:
(1) Includes Lawson's activities only subsequent to the Merger Date of April 1, 2022 and not prior to the Mergers. (2) Includes the activities of All Other only subsequent to the Merger Date of April 1, 2022 and not prior to the Mergers.
|
Commitments and Contingencies |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 15 – Commitments and Contingencies Shareholder Lawsuits In February 2022, three purported DSG stockholders made demands pursuant to Section 220 of the Delaware General Corporation Law to inspect certain books and records of DSG (collectively, the “Books and Records Demands”). One stated purpose of the Books and Records Demands was to investigate questions of director disinterestedness and independence and the alleged possibility of wrongdoing, mismanagement and/or material non-disclosure related to the Special Committee’s and the DSG board of directors’ approval of the Mergers. On March 16, 2022, one of the purported DSG stockholders who previously made a Books and Records Demand filed a lawsuit entitled Robert Garfield v. Lawson Products, Inc., Case No. 2022-0252, in the Court of Chancery of the State of Delaware against DSG (the “Garfield Action”). On March 22, 2022, another of the purported DSG stockholders who previously made a Books and Records Demand filed a lawsuit entitled Jeffrey Edelman v. Lawson Products, Inc., Case No. 2022-0270, in the Court of Chancery of the State of Delaware against DSG (the “Edelman Action”). The Garfield Action and the Edelman Action, which were consolidated and re-captioned as Lawson Products, Inc. Section 220 Litigation, Case No. 2022-0270, are collectively referred to as the “Books and Records Actions.” The Books and Records Actions sought to compel inspection of certain books and records of DSG to investigate questions of director disinterestedness and independence and the alleged possibility of wrongdoing, mismanagement and/or material non-disclosure related to the Special Committee’s and the DSG board of directors’ approval of the Mergers. Following briefing, the Delaware Court of Chancery held a trial on July 14, 2022 to adjudicate the Books and Records Actions. At the conclusion of the trial, the Court ruled orally that the stockholders’ demands would be granted only in one respect (production of documents sufficient to show the identities of any guarantors of debt of the acquired companies) and the Court denied the remainder of the stockholders’ requests. The Court’s ruling was memorialized in an order issued on July 20, 2022. Thereafter, DSG produced excerpts of certain documents as required by the Court's ruling and subsequent order. On October 3, 2022, the plaintiffs in the Books and Records Actions filed a shareholder derivative action (the “Derivative Action”) entitled Jeffrey Edelman and Robert Garfield v. John Bryan King et al., Case No. 2022-0886, in the Court of Chancery of the State of Delaware. The Derivative Action names as defendants J. Bryan King, Lee S. Hillman, Bianca A. Rhodes, Mark F. Moon, Andrew B. Albert, I. Steven Edelson and Ronald J. Knutson (collectively, “Director and Officer Defendants”), and LKCM Headwater Investments II, L.P., LKCM Headwater II Sidecar Partnership, L.P., Headwater Lawson Investors, LLC, PDLP Lawson, LLC, LKCM Investment Partnership, L.P., LKCM Micro-Cap Partnership, L.P., LKCM Core Discipline, L.P. and Luther King Capital Management Corporation (collectively, the “LKCM Defendants”). Purporting to act on behalf of DSG, in the Derivative Action the plaintiffs allege, among other things, various claims of alleged breach of fiduciary duty against the Director and Officer Defendants and the LKCM Defendants in connection with the Mergers. The Derivative Action seeks, among other things, money damages, equitable relief and the costs of the Derivative Action, including reasonable attorneys’, accountants’ and experts’ fees. On October 24, 2022, the plaintiffs voluntarily dismissed PDLP Lawson, LLC and LKCM Investment Partnership, L.P. from the Derivative Action without prejudice. DSG disagrees with and intends to vigorously defend against the Derivative Action. The Derivative Action could result in additional costs to DSG, including costs associated with the indemnification of directors and officers. At this time, DSG is unable to predict the ultimate outcome of the Derivative Action or, if the outcome is adverse, to reasonably estimate an amount or range of reasonably possible loss, if any, associated with the Derivative Action. Accordingly, no amounts have been recorded in the consolidated financial statements for these matters. No assurance can be given that additional lawsuits will not be filed against DSG and/or its directors and officers and/or other persons or entities in connection with the Mergers. Environmental Matter In 2012, it was determined a Company owned site in Decatur, Alabama, contained hazardous substances in the soil and groundwater as a result of historical operations prior to the Company's ownership. The Company retained an environmental consulting firm to further investigate the contamination, prepare a remediation plan, and enroll the site in the Alabama Department of Environmental Management (“ADEM”) voluntary cleanup program. A remediation plan was approved by ADEM in 2018. The plan consists of chemical injections throughout the affected area, as well as subsequent monitoring of the area. The injection process was completed in the first quarter of 2019 and the environmental consulting firm is monitoring the affected area. At December 31, 2022 the Company had less than $0.1 million accrued for potential monitoring costs included in in the Consolidated Balance Sheets. The costs for future monitoring are not significant and have been fully accrued. The Company does not expect to capitalize any amounts related to the remediation plan. Defined Contribution Plan The Company provides a 401(k) defined contribution plan to allow employees a pre-tax investment vehicle to save for retirement. The Company made contributions to the 401(k) plan of $5.5 million and $1.7 million for the years ended December 31, 2022 and 2021, respectively. Purchase Commitments The Company enters into inventory purchase commitments with third parties in the ordinary course of business. As of December 31, 2022, we had contractual commitments to purchase approximately $168 million of product from our suppliers and contractors which is expected to be paid in the next twelve months.
|
Related Party Transactions |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 16 – Related Party Transactions Management Services Agreements Prior to the Mergers, a subsidiary of TestEquity was party to a management agreement with Luther King Capital Management Corporation (“LKCM”) for certain advisory and consulting services (the “TestEquity Management Agreement”), and a subsidiary of Gexpro Services was party to a management agreement with LKCM for certain advisory and consulting services (the “Gexpro Services Management Agreement”). In connection with the closing of the Mergers on April 1, 2022, (i) all of the TestEquity subsidiary’s rights, liabilities and obligations under the TestEquity Management Agreement were novated to, transferred to and assumed by the TestEquity Equityholder, and LKCM released the TestEquity subsidiary from all obligations and claims under the TestEquity Management Agreement, and (ii) all of the Gexpro Services subsidiary’s rights, liabilities and obligations under the Gexpro Services Management Agreement were novated to, transferred to and assumed by the Gexpro Services Stockholder, and LKCM released the Gexpro Services subsidiary from all obligations and claims under the Gexpro Services Management Agreement (collectively, the “Novations”). During the first three months of 2022, expense of $0.5 million was recorded within Selling, general and administrative expenses within the Consolidated Statements of Operations and Comprehensive Income (Loss), reflecting expenses accrued under these management agreements from January 1, 2022 through the April 1, 2022 Merger Date. As of December 31, 2021, $4.8 million was included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets in connection with these management agreements. As of April 1, 2022, the prior obligation of $5.3 million was effectively settled in connection with the Mergers and considered to be a deemed equity contribution by LKCM recorded to additional paid in capital. As a result of the Novations, no additional expense under these management agreements has been incurred subsequent to the Mergers. Consulting Services Subsequent to the Mergers, individuals employed by LKCM Headwater Operations, LLC, a related party of Luther King Capital Management Corporation (“LKCM”), have provided the Company with certain consulting services in order to identify cost savings, revenue enhancements and operational synergies of the combined companies. As of December 31, 2022 expense of $0.2 million was recorded within Selling, general and administrative expenses within the Consolidated Statements of Operations and Comprehensive Income (Loss), reflecting expenses accrued for these consulting services. TestEquity and Gexpro Services Mergers Immediately prior to the Mergers, entities affiliated with Luther King Capital Management Corporation (“LKCM”) and J. Bryan King (the Chairman of the DSG board of directors), including private investment partnerships for which LKCM serves as investment manager, owned a majority of the ownership interests in the TestEquity Equityholder (which in turn owned all of the outstanding equity interests of TestEquity as of immediately prior to the completion of the TestEquity Merger). As of the Merger Date, Mr. King was a director of the TestEquity Equityholder. In addition, as of the Merger Date, Mark F. Moon (a member of the DSG board of directors) was a director of, and held a direct or indirect equity interest in, the TestEquity Equityholder. Immediately prior to the Mergers, entities affiliated with LKCM and Mr. King, including private investment partnerships for which LKCM serves as investment manager, owned a majority of the ownership interests in the Gexpro Services Stockholder (which in turn owned all of the then outstanding stock of Gexpro Services). Immediately prior to the Mergers, entities affiliated with LKCM and Mr. King owned approximately 48% of the shares of DSG common stock then outstanding. As a result of and after the consummation of the Mergers, entities affiliated with LKCM and J. Bryan King (the Chairman of the DSG board of directors) owned in the aggregate approximately 14,640,000 shares of DSG common stock as of the Merger Date, which shares represented approximately 75% of the shares of DSG common stock then outstanding after giving effect to the issuance of shares as of the Merger Date in connection with the consummation of the Mergers. Such aggregate share amount does not include any of the up to 700,000 additional shares of DSG common stock or any of the up to 1,000,000 additional shares of DSG common stock potentially issuable to the TestEquity Equityholder and the Gexpro Services Stockholder, respectively, in accordance with the earnout provisions of the TestEquity Merger Agreement and the Gexpro Services Merger Agreement, respectively, summarized in Note 1 – Nature of Operations and Basis of Presentation.
|
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and include the accounts and transactions of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Mergers were accounted for as a reverse merger under the acquisition method of accounting in accordance with the accounting guidance for reverse acquisitions as provided in Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"). Under this guidance, TestEquity and Gexpro Services were treated as a combined entity as the accounting acquirer for financial reporting purposes, and DSG was identified as the accounting acquiree. This determination was primarily made as TestEquity and Gexpro Services were under the common control of an entity that owns a majority of the voting rights of the combined entity, and therefore, only DSG experienced a change in control. Accordingly, the consolidated financial statements as of December 31, 2022 and December 31, 2021 and for the year ended December 31, 2022 and 2021 reflect the results of operations and financial position of TestEquity and Gexpro Services on a consolidated basis, and the results of operations of DSG's legacy Lawson business are only included subsequent to the April 1, 2022 Merger Date.
|
Revenue Recognition | Revenue Recognition — The majority of the Company’s revenue is generated through the sale of a broad range of specialized products and components, with revenue recognized upon transfer of control, title and risk of loss, which is generally upon shipment. Vendor Managed Inventory ("VMI") service revenue represents less than 5.0% of total revenue and is recognized as the services are performed. The Company offers VMI services only in conjunction with product sales. The Company does not bill product sales and services separately. A portion of selling expenses is allocated to cost of sales for reporting purposes based upon the estimated time spent on such services. A portion of service revenue and cost of service is deferred, as not all services are performed in the same period as billed. The Company includes shipping costs billed to customers in revenue and the related shipping costs in cost of goods and services. The Company accrues for returns based on historical evidence of return rates. The Company has adopted the practical expedient within ASC 340, Other Assets and Deferred Costs ("ASC 340") to recognize incremental costs to obtain a contract, primarily employee related costs, as expense when incurred since the amortization period of the asset that the Company otherwise would have recognized is one year or less. The Company also operates as a lessor and recognizes lease revenue on a straight-line basis over the life of each lease. The Company has adopted the practical expedient not to separate the non-lease components that would be within the scope of ASC 606, Revenue from Contracts with Customers ("ASC 606") from the associated lease component as the relevant criteria under ASC 842, Leases ("ASC 842") are met. |
Cash Equivalents | Cash Equivalents — The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amount of the Company’s cash equivalents at December 31, 2022 and December 31, 2021 approximates fair value. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts — The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filings, substantial down-grading of credit ratings), a specific reserve for bad debts is recorded against amounts due to reduce the receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes reserves for bad debts based on the Company’s historical experience of bad debt write-offs as a percent of accounts receivable outstanding. If circumstances change (e.g., higher than expected defaults or an unexpected material adverse change in a major customer's ability to meet its financial obligations), the estimates of the recoverability of amounts due the Company could be revised. |
Inventories | Inventories — Inventories principally consist of finished goods stated at the lower of cost or net realizable value using the first-in-first-out method for the Lawson segment and primarily the weighted average method for the TestEquity and Gexpro Services segments. To reduce the cost basis of inventory to a lower of cost or net realizable value, a reserve is recorded for slow-moving and obsolete inventory based on historical experience and monitoring of current inventory activity. Estimates are used to determine the necessity of recording these reserves based on periodic detailed analysis using both qualitative and quantitative factors. As part of this analysis, the Company considers several factors including the inventories length of time on hand, historical sales, product shelf life, product life cycle, product category and product obsolescence. |
Property, Plant and Equipment | Property, Plant and Equipment — Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is computed primarily by the straight-line method for buildings, machinery and equipment, furniture and fixtures and vehicles. The Company estimates useful lives of 10 to 40 years for buildings and improvements, the shorter of the useful life of the assets or term of the underlying leases for leasehold improvements, and 2 to 10 years for machinery and equipment, furniture and fixtures and vehicles. Capitalized software is amortized over estimated useful lives of 3 to 5 years using the straight-line method. The costs of repairs, maintenance and minor renewals are charged to expense as incurred. Amortization of financing and capital leases is included in depreciation expense. When property, plant and equipment are retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in the income from operations. Rental Equipment — Rental equipment is stated at cost less accumulated depreciation and amortization. Expense is computed primarily by the straight-line method over an estimated useful life of 3 to 7 years. Upon sale or retirement of such assets, the related cost and accumulated depreciation are removed from the Consolidated Balance Sheet, and gains or losses are reflected in operating income (loss) within the Consolidated Statements of Operations and Comprehensive Income (Loss). The costs of repairs, maintenance and minor renewals are charged to expense as incurred.
|
Cash Value of Life Insurance | Cash Value of Life Insurance — The Company invests funds in life insurance policies for certain current and former employees. The cash surrender value of the policies is invested in various investment instruments and is recorded as an asset in the Consolidated Balance Sheets. The Company records these policies at their contractual value. The change in the cash surrender value of the life insurance policies, which is recorded as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss), is the change in the policies' contractual values. |
Deferred Compensation | Deferred Compensation — The Company’s Executive Deferral Plan (“Deferral Plan”) allows certain executives to defer payment of a portion of their earned compensation. The deferred compensation is recorded in an account balance, which is a bookkeeping entry made by the Company to measure the amount due to the participant. The account balance is equal to the participant’s deferred compensation, adjusted for increases and/or decreases in the amount that the participant has designated to one or more bookkeeping portfolios that track the performance of certain mutual funds. The Company adjusts the deferred compensation liability to equal the contractual value of the participants’ account balances. These adjustments are the changes in contractual value of the individual plans and are recorded as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss). |
Stock-Based Compensation | Stock-Based Compensation — Compensation based on the share value of the Company’s common stock is valued at its fair value at the grant date and the expense is recognized over the vesting period. Fair value is re-measured each reporting period for liability-classified awards that may be redeemable in cash. The Company accounts for forfeitures of stock-based compensation in the period in which they occur. |
Goodwill | Goodwill — The Company had $348.0 million of goodwill at December 31, 2022 and $104.2 million of goodwill at December 31, 2021. Goodwill represents the cost of business acquisitions in excess of the fair value of identifiable net tangible and intangible assets acquired. The Company reviews goodwill for potential impairment annually on October 1st, or when an event or other circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. The first step in the multi-step process to determine if goodwill has been impaired and to what degree is to review the relevant qualitative factors that could cause the fair value of the reporting unit to decrease below the carrying value of the reporting unit. The Company considers factors such as macroeconomic, industry and market conditions, cost factors, overall financial performance and other relevant factors that would affect the individual reporting units. If the Company determines that it is more likely than not that the fair value of the reporting unit is greater than the carrying value of the reporting unit, then no further impairment testing is needed. If the Company determines that it is more likely than not that the carrying value of the reporting unit is greater than the fair value of the reporting unit, the Company will move to the next step in the process. The Company will estimate the fair value of the reporting unit and compare it to the reporting unit's carrying value. If the carrying value of the reporting unit exceeds its fair value, the Company will record an impairment of goodwill equal to the amount the carrying value of the reporting unit exceeds its fair value, up to the total amount of goodwill previously recognized.
|
Intangible Assets | Intangible Assets — The Company's intangible assets primarily consist of trade names and customer relationships. Intangible assets are amortized over a weighted average of 8 to 15 year and 9 to 20 year estimated useful lives for trade names and customer relationships, respectively. The Company amortizes trade name intangible assets on a straight-line basis and customer relationship intangible assets on a basis consistent with their estimated economic benefit. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets — The Company reviews its long-lived assets, including property, plant and equipment, right of use assets and definite life intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. Recoverability is measured by a comparison of the assets carrying amount to their expected future undiscounted net cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured based on the amount by which the carrying amount of the asset exceeds its fair value. |
Income Taxes | Income Taxes — Deferred tax assets or liabilities reflect temporary differences between amounts of assets and liabilities for financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is established to offset any deferred tax assets if, based upon the available evidence, it is more likely than not (i.e. greater than 50% likely) that some or all of the deferred tax assets will not be realized. The determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income, (3) the impact of tax planning strategies and (4) the ability to carry back deferred tax assets to offset prior taxable income. In assessing the need for a valuation allowance, we consider all available positive and negative evidence, including past operating results, projections of future taxable income and the feasibility of ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Additionally, valuation allowances related to deferred tax assets can be impacted by changes to tax laws. Significant judgment is required in determining income tax provisions as well as deferred tax asset and liability balances, including the estimation of valuation allowances and the evaluation of uncertain tax positions.Earnings from the Company's foreign subsidiaries are considered to be indefinitely reinvested. A distribution of these non-U.S. earnings in the form of dividends or otherwise would subject the Company to foreign withholding taxes and may subject the Company to U.S. federal and state taxes.The Company recognizes the benefit of tax positions when a benefit is more likely than not (i.e., greater than 50% likely) to be sustained on its technical merits. Recognized tax benefits are measured at the largest amount that is more likely than not to be sustained, based on cumulative probability, in final settlement of the position. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of Income tax expense (benefit) in the Consolidated Statements of Operations and Comprehensive Income (Loss). |
Leases | Leases — Leases are categorized as either operating or financing leases at commencement of the lease. For both classes of leases, a Right Of Use ("ROU") asset and corresponding lease liability are recognized at commencement of the lease. Operating leases consist of the Company headquarters, distribution and service centers, and Bolt branches. Financing leases consist of equipment such as forklifts and copiers. The value of the lease assets and liabilities are the present value of the total cash payments for each lease. The Company uses its incremental borrowing rate to discount the total cash payments to present value for each lease. The Company reviews each lease to determine if there is a more appropriate discount rate to apply. Upon commencement of the lease, rent expense is recognized on a straight line basis for each operating lease. Each financing lease ROU asset is amortized on a straight line basis over the lease period. TestEquity and the Lawson Partsmaster business have equipment leasing programs for customers. These leases are classified as operating leases. The leased equipment is recognized in Rental equipment, net in the Consolidated Balance Sheets and the leasing revenue is recognized on a straight line basis. |
Earnings Per Share | Earnings per Share — Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of shares of common stock and, if dilutive, common stock equivalents outstanding during the period. Diluted earnings per share reflect the potential dilution from the exercise or conversion of outstanding performance awards, stock options, market stock units and restricted stock awards into common stock. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. Contingently issuable shares are considered outstanding common shares and included in basic EPS as of the date that all necessary conditions have been satisfied (i.e., when issuance of the shares is no longer contingent). For diluted EPS, the contingently issuable shares should be included in the denominator of the diluted EPS calculation as of the beginning of the interim period in which the conditions are satisfied and the earnout arrangements have been resolved. For the reverse acquisition period prior to April 1, 2022, the Company calculates the basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements by dividing the income of the accounting acquirer attributable to common shareholders in each of those periods by the accounting acquirer’s historical weighted-average number of common shares outstanding. The Company calculates the weighted-average number of common shares outstanding (the denominator of the EPS calculation), including the equity interests issued by the legal acquirer to effect the reverse acquisition, as the number of common shares outstanding from the beginning of that period to the acquisition date computed on the basis of the weighted-average number of common shares of the accounting acquirer outstanding during the period multiplied by an exchange ratio derived from the shares exchanged at the Merger Date.
|
Foreign Currency | Foreign Currency — The accounts of foreign subsidiaries are measured using the local currency as the functional currency. All balance sheet amounts are translated into U.S. dollars using the exchange rates in effect at the applicable period end. Components of income or loss are translated using the average exchange rate for each reporting period. Gains and losses resulting from changes in the exchange rates from translation of the subsidiary accounts in local currency to U.S. dollars are reported as a component of Accumulated other comprehensive income or loss in the Consolidated Balance Sheets. Gains and losses resulting from the effect of exchange rate changes on transactions denominated in currencies other than the functional currency are included as a component of net income or loss upon settlement of the transaction. Gains and losses resulting from foreign intercompany transactions are included as a component of net income or loss each reporting period unless the transactions are of a long-term-investment nature and settlement is not planned or anticipated in the foreseeable future, in which case the gains and losses are recorded as a component of Accumulated other comprehensive income or loss in the Consolidated Balance Sheets. Foreign currency transaction losses of $0.9 million and $0.6 million were recorded for 2022 and 2021, respectively, as a component of Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income (Loss).
|
Treasury Stock | Treasury Stock — The Company repurchased 54,089 shares of its common stock in 2022 and no shares of its common stock in 2021 through its previously announced stock repurchase plan. The Company repurchased 12,082 shares of its common stock in 2022 from employees upon the vesting of restricted stock to offset the income taxes owed by those employees. The Company accounts for treasury stock using the cost method and includes treasury stock as a component of stockholders’ equity. |
Segment Information | Segment Information — ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer of DSG. The CODM reviews the financial performance and the results of operations of the segments when making decisions about allocating resources and assessing performance of the Company. The Company has determined it has four operating segments: (i) Lawson, (ii) Gexpro Services, (iii) TestEquity and (iv) All Other. The Company’s three reportable segments include (i) Lawson, (ii) Gexpro Services and (iii) TestEquity. The Company’s CODM reviews the operating results of these reportable segments for the purpose of allocating resources and evaluating financial performance. There was no intersegment revenue. The reporting segments follow the same accounting policies used in the preparation of the Company’s consolidated financial statements. See Note 14 – Segment Information for further details.
|
Acquisitions | Acquisitions — The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions for the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. |
Fair Value Measurements | Fair Value Measurements — The Company applies the guidance in ASC 820, Fair Value Measurements to account for financial assets and liabilities measured on a recurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below: Level 1 - Unadjusted quoted prices for identical assets and liabilities in active markets. Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 - Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management's best estimate of fair value and that are significant to the fair value of the asset or liability The carrying amount of accounts receivable, accounts payable, accrued expenses and other working capital balances are considered a reasonable estimate of their fair value due to the short-term maturity of these instruments. The carrying amount of debt is also considered to be a reasonable estimate of the fair value based on the nature of the debt and that the debt bears interest at the prevailing market rate for instruments with similar characteristics. The Company’s earnout derivative liability and debt are recorded at fair value on a recurring basis and were estimated using Level 3 inputs.
|
Earnout Derivative Liability | Earnout Derivative Liability — The Company recorded an earnout derivative liability for the future contingent equity shares related to the TestEquity Holdback Shares and the Gexpro Services Holdback Shares provisions within the Merger Agreements. The contingently issuable shares are not indexed to Company common stock and, therefore, are accounted for as liability classified instruments in accordance with ASC 815-40, Contracts in Entity’s Own Equity, as the events that determine the number of contingently issuable shares required to be released or issued, as the case may be, include events that are not solely indexed to the fair value of Company common stock. The contingently issuable shares were initially measured at the Merger Date and were subsequently measured at each reporting date until settled, or when they met the criteria for equity classification. Changes in the fair value of the earnout derivative liability are recorded as a component of Change in fair value of earnout liability in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company reassesses the classification of these derivative liabilities for earnout arrangements each balance sheet date. If the contingencies are resolved for the issuable shares, the earnout derivative liability is reclassified from the liability to equity as of the date of the event that caused the contingencies to be met. The earnout derivative liability is measured at fair value immediately prior to the reclassification to equity. If the earnout derivative liability is reclassified from a liability to equity, gains or losses recorded to account for the liability at fair value during the period that the contract was classified as a liability are not reversed. The contingently issuable shares are included in the denominator of the basic earnings per share calculation as of the date that all necessary conditions have been satisfied (i.e., when issuance of the shares is no longer contingent). For diluted earnings per share, the contingently issuable shares are included in the denominator of the diluted earnings per share calculation as of the beginning of the interim period in which the conditions are satisfied and the earnout arrangements have been resolved. See Note 12 – Earnings Per Share for further information.
|
Use of Estimates | Use of Estimates — Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported for service revenue, service cost, allowance for doubtful accounts, inventory reserves, goodwill and intangible assets valuation, stock-based compensation and income taxes in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. |
Supplier Concentrations | Supplier Concentrations — During 2022 and 2021, TestEquity purchases of inventory from one unrelated supplier accounted for 10.3% and 20.1% of the Company's total inventory purchases, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the requirements for how an entity should measure credit losses on financial instruments. The pronouncement is effective for smaller reporting companies in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and the new guidance will be applied on a prospective basis. The Company is currently evaluating the effect of adopting this new standard and the impact on its financial position or results of operations. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an entity to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The pronouncement is effective in fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company is currently evaluating the effect of adopting this new standard and does not expect the adoption to have a material impact on its financial position or results of operations.
|
Business Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | Under the acquisition method of accounting, the consideration exchanged was calculated as follows:
(1) Fair value adjustment of stock-based compensation awards.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed at the Merger Date and after applying measurement period adjustments:
The purchase consideration for each business acquired during 2021 and the allocation of the consideration exchanged to the estimated fair values of assets acquired and liabilities assumed is summarized below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The allocation of consideration exchanged to other intangible assets acquired is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition Pro Forma Information | The following table presents estimated unaudited pro forma consolidated financial information for DSG as if the Mergers and other acquisitions disclosed below occurred on January 1, 2021 for the 2022 acquisitions and January 1, 2020 for the 2021 acquisitions. The unaudited pro forma information reflects adjustments including amortization on acquired intangible assets, interest expense, and the related tax effects. This information is presented for informational purposes only and is not necessarily indicative of future results or the results that would have occurred had the Mergers been completed on the date indicated.
The following table presents actual results attributable to our business combinations that were included in the consolidated financial statements for the years ended December 31, 2022 and 2021. The 2022 and 2021 results only reflect the results attributable to the acquisitions completed in those respective years. The results of DSG's legacy Lawson business are included only subsequent to the April 1, 2022 Merger Date, and the results for other acquisitions are only included subsequent to their respective acquisition dates provided above.
|
Revenue Recognition (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Disaggregated consolidated revenue by geographic area (based on the location to which the product is shipped to):
|
Supplemental Financial Statement Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories, net, consisting of purchased goods and manufactured electronic equipment offered for resale, were as follows:
Changes in the reserve for obsolete and excess inventory were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property, Plant and Equipment | Components of property, plant and equipment, net were as follows:
(1) Construction in progress primarily relates to upgrades to certain of the Company's distribution facilities that we expect to place in service in the next 12 months. Rental equipment, net consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other current liabilities consisted of the following:
|
Goodwill and Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill Activity Related to Acquisitions | Changes in the carrying amount of goodwill by segment were as follows:
(1) Refer to Note 3 – Business Acquisitions for information related to measurement period adjustments.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Carrying Amount and Accumulated Amortization by Intangible Asset Class | The gross carrying and accumulated amortization for definite-lived intangible assets were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Aggregate Amortization Expense for Next Five Years | The estimated aggregate amortization expense for each of the next five years and thereafter are as follows:
|
Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Cost | The expenses generated by leasing activity for the years ended December 31, 2022 and 2021 were as follows (in thousands):
(1) Includes short term lease expense, which is immaterial. The weighted average lease terms and interest rates of leases held as of December 31, 2022 were as follows:
The cash outflows of leasing activity for the years ended December 31, 2022 and 2021were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease Assets and Liabilities | The value of net assets and liabilities generated by leasing activity as of December 31, 2022 and December 31, 2021 were as follows (in thousands):
(1) Operating lease assets were recorded net of accumulated amortization of $14.8 million as of December 31, 2022 and $4.3 million as of December 31, 2021. (2) Financing lease assets were recorded net of accumulated amortization as a component of in the Consolidated Balance Sheet of $0.9 million as of December 31, 2022 and $0.0 million as of December 31, 2021.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value of Lease Liabilities | The value of lease liabilities generated by leasing activities as of December 31, 2022 were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value of Lease Liabilities | The value of lease liabilities generated by leasing activities as of December 31, 2022 were as follows (in thousands):
|
Earnout Derivative Liability (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The change in the fair value of the earnout derivative liability was as follows:
|
Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt Instruments | The Company's outstanding long-term debt was comprised of the following:
|
Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation Assumptions | The weighted-average fair value of SPRs outstanding as of December 31, 2022 was $15.30 per SPR using the following assumptions:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity Related to SPRs | Activity related to the Company’s SPRs during the year ended December 31, 2022 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity Related to RSAs | Activity related to the Company’s RSAs during the year ended December 31, 2022 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSU Rollforward | Activity related to the Company’s MSUs during 2022 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Performance Shares, Activity | Activity related to the Company’s PAs during the year ended December 31, 2022 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Option, Activity | Upon vesting, stock options are recognized as a component of equity. Activity related to the Company’s stock options during the year ended December 31, 2022 was as follows:
|
Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table provides the computation of basic and diluted earnings per share:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Continuing Operations Before Income Taxes | Income from operations before income taxes consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Provision (Benefit) for Income Taxes | Provision (benefit) for income taxes from operations consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation Between Effective Income Tax Rate and Statutory Federal Rate | The reconciliation between the effective income tax rates and the statutory federal rates for operations are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Tax Assets and Liabilities | Deferred income tax assets and liabilities contain the following temporary differences:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Information for the Company's Reportable Segments | Financial information for the Company's segments is presented below.
(1) Includes the operating results of Lawson only subsequent to the Merger Date of April 1, 2022 and not Lawson operating results prior to the Mergers. (2) Includes the operating results of All Other only subsequent to the Merger Date of April 1, 2022 and not All Other operating results prior to the Mergers. Long-lived assets, which includes property and equipment, rental equipment, goodwill, intangibles, right of use assets, and other assets, were as follows:
Refer to Note 4 – Revenue Recognition for disaggregated revenue by geographic area. Capital expenditures and depreciation and amortization by segment were as follows:
(1) Includes Lawson's activities only subsequent to the Merger Date of April 1, 2022 and not prior to the Mergers. (2) Includes the activities of All Other only subsequent to the Merger Date of April 1, 2022 and not prior to the Mergers.
|
Summary of Significant Accounting Policies - Revenue Recognition (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
VMI | Product Concentration Risk | Revenue from Contract with Customer, Product and Service Benchmark | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 5.00% |
Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Accounting Policies [Abstract] | |||
Goodwill | $ 348,048 | $ 104,211 | $ 93,003 |
Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Impairment of long-lived assets | $ 0 | $ 0 |
Trade names | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 8 years | |
Trade names | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 15 years | |
Customer relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 9 years | |
Customer relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 20 years |
Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Accounting Policies [Abstract] | ||
Realized and unrealized foreign currency transaction losses | $ 0.9 | $ 0.6 |
Summary of Significant Accounting Policies - Treasury Stock (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Equity, Class of Treasury Stock [Line Items] | ||
Treasury stock acquired (in shares) | 54,089 | 0 |
Tax withholdings related to net share settlements of stock-based compensation awards | $ 520 | $ 0 |
Repurchase of common stock | 1,940 | |
Tax withholdings related to net share settlements of stock-based compensation awards | (520) | $ 0 |
Treasury Stock | ||
Equity, Class of Treasury Stock [Line Items] | ||
Repurchase of common stock | $ 2,500 | |
Common Stock | ||
Equity, Class of Treasury Stock [Line Items] | ||
Treasury stock acquired (in shares) | 54,089 | |
Tax withholdings related to net share settlements of stock-based compensation awards | $ 10 | |
Repurchase of common stock | $ 54 | |
Tax withholdings related to net share settlements of stock-based compensation awards (in shares) | (12,082) | (23,629) |
Tax withholdings related to net share settlements of stock-based compensation awards | $ (10) |
Summary of Significant Accounting Policies - Segment Information (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022
USD ($)
segment
reportable_segment
|
Dec. 31, 2021
USD ($)
|
|
Accounting Policies [Abstract] | ||
Number of operating segments | segment | 4 | |
Number of reportable segments | reportable_segment | 3 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 1,151,422 | $ 520,290 |
Intersegment Eliminations | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 0 |
Summary of Significant Accounting Policies - Supplier Concentrations (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Supplier Concentration Risk | Inventory benchmark | Largest Supplier | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10.30% | 20.10% |
Business Acquisitions - Initial Purchase Price Allocation (Details) - Lawson - USD ($) $ / shares in Units, $ in Thousands |
Apr. 01, 2022 |
Mar. 31, 2022 |
---|---|---|
Business Acquisition [Line Items] | ||
Number of DSG common shares exchanged (in shares) | 9,120,167 | |
DSG closing price per common stock on March 31, 2022 (in USD per share) | $ 38.54 | |
Fair value of shares exchanged | $ 351,491 | |
Other consideration | 1,910 | |
Total consideration exchanged | $ 353,401 |
Business Acquisitions - Intangible Assets Acquired (Details) - Lawson - TestEquity And Gexpro $ in Thousands |
Apr. 01, 2022
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Fair Value | $ 119,060 |
Customer relationships | |
Business Acquisition [Line Items] | |
Fair Value | $ 76,050 |
Estimated Life (in years) | 19 years |
Trade names | |
Business Acquisition [Line Items] | |
Fair Value | $ 43,010 |
Estimated Life (in years) | 8 years |
Business Acquisitions - Pro Forma Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Business Acquisition [Line Items] | ||
Revenue | $ 524,955 | $ 10,847 |
Net Income | 23,953 | (391) |
Lawson | ||
Business Acquisition [Line Items] | ||
Revenue | 373,738 | 0 |
Net Income | 15,283 | 0 |
Lawson | TestEquity And Gexpro | ||
Business Acquisition [Line Items] | ||
Revenue | 1,321,978 | 1,158,798 |
Net income | 20,943 | 369 |
Other Acquisitions | ||
Business Acquisition [Line Items] | ||
Revenue | 151,217 | 10,847 |
Net Income | $ 8,670 | $ (391) |
Revenue Recognition - Narrative (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022
USD ($)
revenueStream
|
Dec. 31, 2021
USD ($)
|
|
Disaggregation of Revenue [Line Items] | ||
Number of revenue streams | revenueStream | 2 | |
Deferred revenue | $ 2,313 | $ 485 |
Revenue | 1,151,422 | 520,290 |
Rental equipment, net | 27,139 | 24,727 |
Right of use operating lease assets | 46,755 | 19,662 |
Rental Program | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | 300 | 500 |
Revenue | 13,800 | $ 13,700 |
Parts Washer Leasing Program | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue | 0 | |
Revenue | $ 3,900 | |
TestEquity | ||
Disaggregation of Revenue [Line Items] | ||
Payment terms (in days) | 30 days | |
Gexpro Services | Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Payment terms (in days) | 10 days | |
Gexpro Services | Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Payment terms (in days) | 120 days |
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 1,151,422 | $ 520,290 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 932,418 | 457,094 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 118,722 | 14,706 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 51,631 | 25,257 |
Pacific Rim | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 10,768 | 15,155 |
Latin America | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 34,202 | 6,150 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 3,681 | $ 1,928 |
Supplemental Financial Statement Information - Schedule of Inventory (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Components of inventories | |||
Inventories, gross | $ 275,072 | $ 140,544 | |
Reserve for obsolete and excess inventory | (10,698) | (7,827) | $ (7,895) |
Inventories, net | $ 264,374 | $ 132,717 |
Supplemental Financial Statement Information - Rollforward of Inventory Reserves (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Inventory Reserves Rollforward [Roll Forward] | ||
Beginning balance | $ (7,827) | $ (7,895) |
Provision charged to expense (net) | (6,547) | (1,224) |
Write-offs | 3,676 | 1,292 |
Ending balance | $ (10,698) | $ (7,827) |
Supplemental Financial Statement Information - Rental Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items] | ||
Rental equipment, net | $ 27,139 | $ 24,727 |
Rental equipment | ||
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items] | ||
Rental equipment | 63,184 | 45,774 |
Accumulated depreciation | (36,045) | (21,047) |
Rental equipment, net | 27,139 | 24,727 |
Depreciation | $ 8,000 | $ 6,300 |
Supplemental Financial Statement Information - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Condensed Financial Information Disclosure [Abstract] | ||
Accrued stock-based compensation | $ 3,340 | $ 0 |
Accrued and withheld taxes, other than income taxes | 24,169 | 5,997 |
Accrued and withheld taxes, other than income taxes | 4,885 | 880 |
Accrued income taxes | 731 | 4,170 |
Accrued customer rebates | 5,053 | 2,657 |
Accrued interest | 852 | 0 |
Accrued interest | 1,775 | 1,515 |
Deferred revenue | 2,313 | 485 |
Accrued compensation | 1,306 | 59 |
Other | 18,253 | 7,363 |
Total accrued expenses and other current liabilities | $ 62,677 | $ 23,126 |
Supplemental Financial Statement Information - Security Bonus Plan (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Retirement and Security Bonus Plans | ||
Cash surrender value in life insurance of certain employees | $ 8,000 | |
Total liability | 652,615 | $ 325,591 |
Current liabilities | $ 169,479 | $ 214,943 |
Deferred Bonus | ||
Retirement and Security Bonus Plans | ||
Initial vesting percentage (as a percent) | 25.00% | |
Minimum vesting period (in years) | 5 years | |
Annual vesting percentage after initial period (as a percent) | 5.00% | |
Expense recognized | $ 100 | |
Total liability | $ 9,700 |
Goodwill and Intangible Assets - Carrying Amount of Intangible Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 293,181 | $ 132,777 |
Accumulated Amortization | (65,187) | (36,169) |
Net Carrying Value | 227,994 | 96,608 |
Amortization expense | 29,100 | 10,400 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 92,286 | 36,345 |
Accumulated Amortization | (17,401) | (8,356) |
Net Carrying Value | $ 74,885 | $ 27,989 |
Estimated life (in years) | 4 years 2 months 12 days | 4 years 10 months 24 days |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 192,934 | $ 89,062 |
Accumulated Amortization | (44,481) | (25,423) |
Net Carrying Value | 148,453 | 63,639 |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 7,961 | 7,370 |
Accumulated Amortization | (3,305) | (2,390) |
Net Carrying Value | $ 4,656 | $ 4,980 |
Goodwill and Intangible Assets - Maturity of Intangible Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2023 | $ 35,061 | |
2024 | 34,560 | |
2025 | 31,173 | |
2026 | 28,487 | |
2027 | 24,031 | |
Thereafter | 74,682 | |
Net Carrying Value | $ 227,994 | $ 96,608 |
Leases - Net Lease Cost (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Leases [Abstract] | ||
Consolidated Operating Lease Expense | $ 15,151 | $ 6,157 |
Financing Lease Amortization | 466 | 197 |
Financing Lease Interest | 41 | 11 |
Financing Lease Expense | 507 | 208 |
Net Lease Cost | $ 15,658 | $ 6,365 |
Leases - Value of Lease Liabilities (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
|
---|---|
Operating Leases | |
Year one | $ 13,063 |
Year two | 11,220 |
Year three | 10,316 |
Year four | 6,977 |
Year five | 5,261 |
Subsequent years | 12,355 |
Total lease payments | 59,192 |
Less: Interest | (10,814) |
Present value of lease liabilities | 48,378 |
Financing Leases | |
Year one | 605 |
Year two | 434 |
Year three | 271 |
Year four | 196 |
Year five | 71 |
Subsequent years | 0 |
Total lease payments | 1,577 |
Less: Interest | (163) |
Present value of lease liabilities | 1,414 |
Total | |
Year one | 13,668 |
Year two | 11,654 |
Year three | 10,587 |
Year four | 7,173 |
Year five | 5,332 |
Subsequent years | 12,355 |
Total lease payments | 60,769 |
Less: Interest | (10,977) |
Present value of lease liabilities | $ 49,792 |
Leases - Leases Weighted-Average Lease Terms and Interest Rates (Details) |
Dec. 31, 2022 |
---|---|
Leases [Abstract] | |
Operating Leases, Weighted Average Term (in years) | 5 years 7 months 6 days |
Operating Leases, Weighted Average Interest Rate (as percent) | 7.10% |
Finance Leases, Weighted Average Term (in years) | 3 years 1 month 6 days |
Finance Leases, Weighted Average Interest Rate (as percent) | 6.60% |
Leases - Cash Outflows of the Leasing Activity (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Leases [Abstract] | ||
Operating cash flows from operating leases | $ (12,149) | $ (6,381) |
Operating cash flows from financing leases | (184) | 0 |
Financing cash flows from financing leases | $ (429) | $ 0 |
Earnout Derivative Liability - Narrative (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 29, 2022
shares
|
Apr. 01, 2022
earnoutProvision
shares
|
Dec. 31, 2022
USD ($)
shares
|
|
Business Acquisition [Line Items] | |||
Change in fair value | $ | $ (276) | ||
Lawson | |||
Business Acquisition [Line Items] | |||
Number of earnout provisions | earnoutProvision | 2 | ||
Number of shares authorized (in shares) | (9,120,167) | ||
Lawson | Maximum | |||
Business Acquisition [Line Items] | |||
Number of shares authorized (in shares) | (1,162,000) | ||
Lawson | TestEquity and Gexpro Services Shareholders | |||
Business Acquisition [Line Items] | |||
Number of shares authorized (in shares) | (538,000) | ||
Lawson | TestEquity Equityholder | |||
Business Acquisition [Line Items] | |||
Number of shares authorized (in shares) | (700,000) | ||
Lawson | Gexpro Services Stockholder | |||
Business Acquisition [Line Items] | |||
Number of shares authorized (in shares) | (700,000) | (462,000) |
Earnout Derivative Liability - Schedule of Earnout Liability (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 0 |
Initial recognition on Merger Date | $ 43,900 |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Net income (loss) |
Change in fair value | $ (276) |
Reclassifications to equity at fair value | (43,624) |
Ending balance | $ 0 |
Stock-Based Compensation - Schedule of Restricted Stock Awards (Details) - Restricted stock awards |
12 Months Ended |
---|---|
Dec. 31, 2022
shares
| |
Restricted Stock Awards | |
Outstanding at beginning of period (in shares) | 0 |
Shares acquired concurrent with Mergers (in shares) | 63,429 |
Granted (in shares) | 14,504 |
Exchanged for common shares (in shares) | (21,346) |
Outstanding at end of period (in shares) | 56,587 |
Stock-Based Compensation - Schedule of Market Stock Units (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022
shares
| |
Number of Market Stock Units | |
Outstanding at beginning of period (in shares) | 0 |
Shares acquired concurrent with Mergers (in shares) | 118,057 |
Cancelled (in shares) | (17,109) |
Exchanged for stock (in shares) | (19,480) |
Outstanding at end of period (in shares) | 81,468 |
Maximum | |
Number of Market Stock Units | |
Outstanding at beginning of period (in shares) | 0 |
Shares acquired concurrent with Mergers (in shares) | 168,156 |
Cancelled (in shares) | (25,664) |
Exchanged for stock (in shares) | (25,199) |
Outstanding at end of period (in shares) | 117,293 |
Stock-Based Compensation - Summary of Stock Options (Details) |
12 Months Ended |
---|---|
Dec. 31, 2022
$ / shares
shares
| |
Number of Stock Options | |
Outstanding on December 31, 2021 | shares | 0 |
Shares acquired concurrent with Mergers (in shares) | shares | 80,000 |
Granted (in shares) | shares | 248,000 |
Exercised (in shares) | shares | (40,000) |
Outstanding on December 31, 2022 | shares | 288,000 |
Exercisable on December 31, 2022 | shares | 40,000 |
Weighted Average Exercise Price | |
Outstanding on December 31, 2021 | $ / shares | $ 0 |
Shares acquired concurrent with Mergers (in USD per share) | $ / shares | 27.70 |
Granted (in USD per share) | $ / shares | 85.75 |
Exercised (in USD per share) | $ / shares | 41.38 |
Outstanding on December 31, 2022 | $ / shares | 77.59 |
Exercisable (in USD per share) | $ / shares | $ 27.01 |
Stock-Based Compensation - Performance Awards (Details) - PAs |
12 Months Ended |
---|---|
Dec. 31, 2022
shares
| |
Number of Performance Awards | |
Outstanding at beginning of period (in shares) | 0 |
Shares acquired concurrent with Mergers (in shares) | 23,341 |
Exercised (in shares) | (1,428) |
Outstanding at end of period (in shares) | 21,913 |
Maximum | |
Number of Performance Awards | |
Outstanding at beginning of period (in shares) | 0 |
Shares acquired concurrent with Mergers (in shares) | 35,012 |
Exercised (in shares) | (2,142) |
Outstanding at end of period (in shares) | 32,870 |
Stock Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Nov. 02, 2022 |
Jun. 30, 2019 |
|
Disclosure of Repurchase Agreements [Abstract] | ||||
Stock repurchase program, authorized amount | $ 12,500 | $ 7,500 | ||
Treasury stock acquired (in shares) | 54,089 | 0 | ||
Treasury stock acquired (in USD per share) | $ 35.86 | |||
Repurchase of common stock | $ 1,940 | |||
Available under stock plan | $ 7,600 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Basic income per share: | ||
Net income (loss) | $ 7,406 | $ (5,052) |
Basic weighted average shares outstanding (in shares) | 17,145,935 | 10,246,294 |
Basic income (loss) per share of common stock (in USD per share) | $ 0.43 | $ (0.49) |
Diluted income per share: | ||
Net income (loss) | $ 7,406 | $ (5,052) |
Basic weighted average shares outstanding (in shares) | 17,145,935 | 10,246,294 |
Effect of dilutive securities outstanding (in shares) | 397,361 | 0 |
Diluted weighted average shares outstanding (in shares) | 17,543,296 | 10,246,294 |
Diluted income per share of common stock (in USD per share) | $ 0.42 | $ (0.49) |
Stock options excluded from computation of diluted earnings per share ( in shares) | 248,000 | 313,355 |
Income Taxes - Components of Income Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Income (loss) from continuing operations before income taxes | ||
United States | $ 910 | $ (6,548) |
Foreign | 12,027 | 1,809 |
Income (loss) before income taxes | $ 12,937 | $ (4,739) |
Income Taxes - Provision (Benefit) for Income taxes from Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Current income tax expense: | ||
U.S. federal | $ 4,011 | $ 3,106 |
U.S. state | 869 | 806 |
Foreign | 3,057 | 400 |
Total | 7,937 | 4,312 |
Deferred income tax expense (benefit): | ||
U.S. federal | (947) | (3,324) |
U.S. state | (73) | (529) |
Foreign | (1,386) | (146) |
Total | (2,406) | (3,999) |
Total income tax expense (benefit): | ||
U.S. federal | 3,063 | (218) |
U.S. state | 796 | 277 |
Foreign | 1,672 | 254 |
Total | $ 5,531 | $ 313 |
Income Taxes - Reconciliation of Effective Tax Rate (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | ||
Statutory Federal rate | 21.00% | 21.00% |
Increase (decrease) resulting from: | ||
Change in valuation allowance | 1.30% | (5.50%) |
Foreign rate differential | 4.00% | 3.80% |
Stock compensation | (0.50%) | 0.00% |
State and local taxes, net | 4.50% | (4.60%) |
Meals & entertainment | 1.40% | (0.70%) |
Change in uncertain tax positions | (2.90%) | 0.00% |
GILTI, Section 78, FDII, and Section 250 | 3.20% | (3.30%) |
Transaction costs | 8.30% | (16.10%) |
Earn Out Revaluation | 0.80% | 0.00% |
Other items, net | 1.70% | (1.20%) |
Provision for income taxes | 42.80% | (6.60%) |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Income Tax Disclosure [Abstract] | ||
US federal net operating loss carryforwards | $ 24.2 | |
Various state net operating loss carryforwards | 28.7 | |
Tax deductible goodwill | 53.6 | $ 5.6 |
Income Tax Contingency [Line Items] | ||
Unrecognized tax benefits, including interest and net operating losses | $ 3.0 | $ 0.0 |
Provision for income taxes | 42.80% | (6.60%) |
Unrecognized Tax Benefit, Deferred Tax Assets | $ 2.4 | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 0.8 |
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Deferred tax assets: | ||
Federal & state NOL carryforward | $ 8,218 | $ 8,646 |
Research & other credits | 0 | 281 |
Inventory reserve | 6,990 | 4,059 |
Transaction costs | 1,620 | 1,179 |
Reserves and accruals | 0 | 464 |
Stock based compensation | 2,531 | 510 |
Accrued benefits & bonuses | 7,074 | 1,218 |
Bad debt reserve | 496 | 726 |
Section 163(j) limitation carryforward | 7,692 | 5,232 |
ROU liabilities | 11,947 | 5,410 |
Deferred state income tax | 745 | 93 |
Deferred revenue | 86 | 124 |
Other | 2,822 | 81 |
Total deferred tax assets | 50,221 | 28,023 |
Deferred tax liabilities: | ||
Intangible assets and goodwill | 45,951 | 16,006 |
ROU asset | 11,295 | 5,117 |
Fixed assets | 15,617 | 6,685 |
Deferred state income tax | 0 | 119 |
Other | 188 | 0 |
Total deferred liabilities | 73,051 | 27,927 |
Net deferred tax liabilities before valuation allowance | (22,830) | 96 |
Valuation allowance | (815) | (638) |
Net deferred tax liabilities | $ (23,645) | $ (542) |
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance at beginning of year | $ 0 | $ 0 |
Additions for tax positions of current year | 191 | 0 |
Additions for tax positions of prior years | 3,741 | 0 |
Reductions for tax positions of prior year | (238) | 0 |
Lapse of statute of limitations | (667) | 0 |
Balance at end of year | $ 3,027 | $ 0 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Accrued environmental matter costs | $ 0.1 | |
Purchase commitment | $ 168.0 | |
Environmental Loss Contingency, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
401k Employer matching contributions | $ 5.5 | $ 1.7 |
!U
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M_[ 0!1$T0!\?CH\'("GI\.#EW"?
M%.UEC7I9(\<7'^'KE;1"#JKWYWJEC:*R_SND5 N
MQS ;A03@<6%_7=X( Y#7R
M65#WCJIME>HY]N$A8AZ6YM[\>)QH,_GG1T-Q?2#_C;KZG*'(ZT3,AP@\AP$A
M=8#XM,<_M!]R;1V:=S+2B$F9!4,Y,BR&3?LRQ.TM<,Z9=&+]R?FC04,3RS58
MT/0_KVU"M1*%[;@]5-'3P8,<\BNUHZ.1 UKOO4?@.A)+&O8]-<:A.$QP>W0K
MZYZU69L!>_06W ;=)(@%4K>I):\I6X5I-V>VT"/3^WMPL8:RZ,M25V/1U<36
M%LV!)3 $-60SI^'#C4GA7G&Q
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MC50'%318
N_4XJD+H9\[V[OW[3KT=Y&Y"6OAVB1AD@A]^8C#\6
M-3XS,D^3U7(G+)%68>+]4@>K9-79
83($D3=*EC
MXYA(9R=%J:>O046D?"QC&OD[34JX@!B%E9OX:#3W2*@9)[S1D8JP:]*^XQ'-
M;A9^$WB7VAJ.ZEP3)/%[YLGYK?!E8ZC$8O#N81JN2D0N9)EBOJ'33^ >:Y#6
MHL%2?KOS/&[Q?\]Q>>!W0)]AE#$=?#!F4MT1)]ULAYT*))//@&
MMA1)?]%4LZDJ=8"WA0\*&.7HIH8R#>]=&"9B<@I#0<#\2PZ+^/08>T'W$B5)
M,)E('D5Q0'QI1%,QN78"0@23A.]8QED0QIFG_A'G!.$T>%G)G:RN5I;$:.U#
M9XDY":A_<_KRWQ#UDL^WJ#@[O6J6:&I=@BK_HDK),W9T0)HW),/*:+)Q+T;2
ML"J*5;OJ<4F
-V7G.;)E,M:O@N_J"ROR;%:H9:OOR[VAI62&B5D,,='#_N.'[\DQQ_
MMUS/\7N.WW/\GN/W'+_G^#W'[SE^S_%[CM]S_%_+\9..XR<_R?%WR_4