Fort Worth, TX-based Distribution Solutions Group reported 3Q26 sales growth of 10.7% on Nov. 5, three days after announcing the appointment of Shawn O’Neal as its first Chief Transformation Officer.

Sales totaled $573.6 million, up 2.8% from 2Q26. Organic sales increased 9.2% year-over-year, compared with 10.2% growth in 2Q, and rose 2.2% sequentially. Acquisitions contributed $7.8 million in incremental quarterly revenue.

Net income increased to $8.9 million from $6.5 million a year earlier. Operating income rose 6.9% to $25.2 million, but declined 9.4% sequentially.

Adjusted EBITDA increased 17.3% year-over-year to $56.8 million. Its margin reached 9.9%, compared with 9.4% a year earlier and 9.7% in 2Q. Gross margin declined to 32.0% from 32.9% a year earlier and 32.3% sequentially, reflecting customer mix and higher inbound tariffs, partly offset by pricing.

By business unit in 3Q26, TestEquity led organic average daily sales growth at 17.4% year-over-year, followed by Gexpro Services at 7.1% and Lawson Products at 4.1%. Canada Branch’s organic daily sales declined 1.7%, or 0.2% in constant currency.

Transformation Leadership

Announced Nov. 2, O’Neal’s appointment supports DSG’s plans to expand its use of data, analytics and AI. O’Neal brings more than 25 years of leadership experience, most recently as Global Chief Business Operations Officer at Gain Theory, where he oversaw business operations, technology development and AI-enabled transformation. He previously spent 13 years at Unilever, including as Global Vice President of Data & Analytics.

Recent Acquisitions

On Oct. 26, DSG completed its acquisition of GradeEight Holdings — parent of Winzer Corporation and FastServ Supply — for approximately $145 million, subject to customary adjustments.

The MRO distributor has approximately 190 associates and 270 franchisees. Winzer operates through a national franchise network, while FastServ operates storefronts in Texas and Arkansas. The deal was funded with existing cash and credit availability.

That followed DSG’s Sept. 2 announcement of its acquisition of American Fasteners Corp. — a South Florida distributor with approximately $39 million in annual revenue and three locations. Serving construction and related markets, the business expands DSG’s regional presence and reach into Latin America and the Caribbean. It contributed $3.8 million to DSG’s 3Q sales.

Financing and Planned Privatization

On Oct. 7, DSG announced that an LKCM Headwater-controlled entity priced an $800 million offering of 10% senior notes due 2032, increased from $700 million.

Proceeds are intended to help fund LKCM Headwater’s proposed acquisition of DSG’s remaining publicly held shares for $35 each, repay debt and support other corporate purposes, including acquisitions.

LKCM Headwater and its affiliates already own approximately 79% of DSG. The transaction remained subject to shareholder approval and other closing conditions as of Nov. 5. Upon completion, DSG would become privately held and delist from Nasdaq.