Distribution Solutions Group Inc. reported higher sales in 2025 but said profitability fell short of expectations late in the year as the specialty distributor increased investments in leadership, technology, and operational capabilities.

The Fort Worth, Texas-based distributor — whose businesses include Lawson Products, Gexpro Services and TestEquity — reported full-year revenue of $1.98 billion, up 9.8% from $1.80 billion in 2024. The company reported net income of $8.3 million, compared with a net loss of $7.3 million the previous year.

In the fourth quarter, revenue totaled $481.6 million, up 0.2% from $480.5 million in the same quarter a year earlier. The company reported a net loss of $6.4 million, compared with a $25.9 million loss in the year-ago quarter, according to the company’s earnings release.

Company leaders said much of 2025 was focused on repositioning the organization for long-term growth.

“2025 was a critical internally focused reinvestment, retooling and digesting year for Distribution Solutions Group,” CEO J. Bryan King said during the company’s earnings call discussing the results.

King said the company invested in new leadership, expanded capabilities and operational improvements even as demand conditions shifted across some end markets.

“While it was a dynamic year, our urgency to offset shifting rules in the marketplace sharpened our focus on the core fundamentals of building a better Distribution Solutions Group,” he said on the call.

King also told analysts the company is monitoring global developments that could affect supply chains.

“As events unfold in the Middle East, we are actively assessing any potential implications for our business, our customers and the broader supply chain,” King said during the earnings call.

He said the company is focused on operating with “resilience and discipline” amid geopolitical and economic uncertainty.

Executives said demand remained strong during 2025 in several industrial markets, including aerospace and defense, semiconductor-related technology, and power infrastructure.

However, demand weakened late in the year in renewable energy markets in North America.

“During the fourth quarter, we began to see demand soften in renewables in North America,” King said on the earnings call.

The company said it is shifting some of its focus toward international renewable energy projects and other growth sectors such as aerospace, defense, and industrial power.

One of the company’s fastest-growing businesses in 2025 was Gexpro Services, which provides supply-chain services and production support to manufacturers.

The segment reported $496.7 million in revenue for 2025, with organic average daily sales growth of 12.3%, according to the company’s earnings report.

King said the business is expanding globally and gaining traction in regions such as India and Southeast Asia.

“We are seeing a meaningful growth opportunity in India, while Southeast Asia is progressing more gradually due to the timing of customer qualifications,” King said during the earnings call.

Executives said Lawson Products, DSG’s industrial and maintenance supply business, continued to grow but is rebuilding momentum among smaller local accounts.

“Some of the Salesforce and selling tools transformation over the last couple of years distracted our resources from doing the exceptional job our customers expect from our service model,” King said.

To strengthen the business, Lawson recently hired Jim Slunka as chief revenue officer and Hillary Bryant as chief people officer, King said during the call.

The company is also expanding its digital channel.

CFO Ron Knutson said ecommerce sales continue to grow quickly.

“Although sales are still small on ecommerce, we experienced about an 18% revenue growth in the fourth quarter,” Knutson told analysts on the call.

Distribution Solutions Group is also reshaping the strategy of TestEquity Group, which sells test and measurement equipment and electronic production supplies.

The company added new leadership in 2025 and is emphasizing higher-margin services such as equipment rentals, calibration services, and environmental testing chambers.

“When we committed to these investments, we fully expected a J-curve recovery, with near-term transitions impacting performance followed by improved revenue growth and profitability as our strategic initiatives take hold,” King said during the call.

TestEquity reported $783.2 million in revenue for 2025, with average daily sales growth of 2%.

Executives said the company has seen modest sales growth so far in 2026.

Knutson said January and February sales were up in the low single digits compared with a year earlier, though some weakness remains in the company’s Canadian operations.

“The other three pieces of the business are seeing some growth here in the first couple of months,” Knutson said during the earnings call.

Executives also addressed questions about tariffs and trade policy during the call.

Knutson said the company has been able to pass tariff-related costs on to customers but said it is still evaluating recent developments.

“It’s probably too early to tell yet in terms of what direct impact that may or may not have on Distribution Solutions Group,” Knutson said.

Distribution Solutions Group ended the year with $469 million in available liquidity and expanded its credit facility in December to support future acquisitions and growth initiatives.

King said the company plans to continue pursuing acquisitions that strengthen its specialty distribution businesses.

“We will continue to evaluate acquisitions that strategically fit and enhance our long-term competitive position,” King said on the earnings call.

Despite the challenges in the fourth quarter, King said the company expects performance to improve later in 2026 as investments made during the past year begin to produce results.

“As we enter 2026, our focus is firmly on execution and demonstrating a return to improved profitability,” he said.

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