DISTRIBUTION SOLUTIONS GROUP, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the unaudited condensed
consolidated financial statements and related notes included in this Quarterly
Report on Form 10-Q, the TestEquity Acquisition, LLC and 301 HW Opus Holdings,
Inc. (conducting business as Gexpro Services) audited consolidated financial
statements and accompanying notes included in the Company's Form 8-K/A as filed
on June 15, 2022, and the Lawson Products, Inc. audited consolidated financial
statements and accompanying notes included in DSG's Annual Report on Form 10-K
filed for the year ended December 31, 2021.

References to “DSG”, the “Company”, “we”, “us” or “our” mean Distribution Solutions Group, Inc. and all entities consolidated in the accompanying unaudited condensed consolidated financial statements.

Insight

Organization and grouping of companies

Effective May 5, 2022, Distribution Solutions Group, Inc. ("DSG"), a Delaware
corporation formerly known as Lawson Products, Inc., changed its corporate name
from "Lawson Products, Inc." to "Distribution Solutions Group, Inc."
Distribution Solutions Group, Inc. is a specialty distribution company structure
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 in the Mergers for the purpose of creating a specialty
distribution company enabling each of Lawson, TestEquity and Gexpro Services to
maintain their respective high-touch, value-added service delivery models and
customer relationships in their specialty distribution businesses under the
leadership of their separate business unit management. The DSG leadership team
provides oversight to the separate leadership teams of each of the operating
companies. This structure enables the combined company to leverage best
practices, back-office resources and technologies across the three operating
companies to help drive cost synergies and efficiencies. The combined company
has the ability to utilize its combined financial resources to accelerate a
strategy of expansion through both business acquisitions and organic growth.

Refer to the section entitled "Organization" in Note 1 - Nature of Operations
and Basis of Presentation in Part 1. Financial Statements, which section is
incorporated herein by reference, for description of the TestEquity Merger and
Gexpro Services Merger consummated on April 1, 2022.

Our three main operating companies

Lawson

Lawson is a distributor of products and services to the industrial, commercial,
institutional, and governmental maintenance, repair and operations ("MRO")
marketplace. Lawson distributes MRO products to its customers through a network
of sales representatives throughout the U.S. and Canada.

Context and operations

Lawson delivers quality products to customers and offers them extensive product
knowledge, product application expertise and Vendor Managed Inventory ("VMI")
services. Lawson competes for business primarily by offering a value-added
service approach in which highly trained sales representatives manage the
product inventory for customers. The VMI model makes it less likely that
customers will run out of a product while optimizing their inventory levels.
Lawson ships products to its customers in all 50 states, Puerto Rico, Canada,
Mexico and the Caribbean.

Vision/Strategy – Lawson’s vision is to be our customers’ first choice for maintenance, repair and operations solutions that improve their operational performance. Lawson plans to achieve its vision by working closely with its customers to maintain and improve their operations by providing quality products, superior service and innovative solutions.

Sales Drivers – The North American MRO market is highly fragmented. Lawson competes with several national distributors as well as a large number of regional and local distributors. The MRO activity is impacted by the

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strength of the manufacturing sector of the U.S. economy which has been affected
by the COVID-19 pandemic. DSG believes that the Purchasing Managers Index
("PMI") published by the Institute for Supply Management is an indicative
measure of the relative strength of the economic environment of the industry in
which Lawson operates. The PMI is a composite index of economic activity in the
United States manufacturing sector. DSG believes that a measure of that index
above 50 generally indicates expansion of the manufacturing sector while a
measure below 50 generally represents contraction. The average monthly PMI was
54.8 in the second quarter of 2022 compared to 60.8 in the second quarter of
2021. Lawson's sales are also influenced by the number of sales representatives
and their productivity. Lawson plans to continue concentrating its efforts on
increasing the productivity and size of its sales team. Additionally, Lawson
drives revenue through the expansion of products sold to existing customers as
well as attracting new customers and additional ship-to locations. Lawson also
uses an inside sales team and an e-commerce site to generate sales.

TestEquity

TestEquity is a leading distributor of test and measurement equipment and solutions, electronics production supplies and tool kits from its major manufacturing partners. TestEquity mainly operates through four brands,
TestEquity, Equipment, Jensen tools and Techni-Toolmainly focusing on
North America with a network of sales representatives across United States, Canada, Mexico and the UK.

Background and Operations - Based out of Moorpark, California, TestEquity is a
large, comprehensive provider of electronic test solutions in the United States
supporting the aerospace, defense, automotive, electronics, education, and
medical industries. TestEquity designs, rents and sells a full line of
high-quality environmental test chambers. In addition to a large array of test
and measurement products, TestEquity also offers calibration, refurbishment and
rental solutions and a wide array of refurbished products. TestEquity continues
to benefit from ubiquitous electronification of all types of products across
most industries including IOT, EV, and 5G.

Equipment, is a leading distributor of test and measurement supplies and electronics production in the United States. Go to market with an e-commerce focused strategy, Equipment offers a range of 200,000 products and 500 manufacturer brands, most of which overlap with the rest of the TestEquity
band.

Techni-Tool is one of the industry's largest solder, soldering equipment and
electronic production distributors. Techni-Tool offers a wide range of products
to support electronic production as well as compliance testing. In addition to
the approximately 80,000 of products offered, Techni-Tool also provides vendor
managed inventory solutions and dedicated technical support.

Jensen Tools, as a top distributor for the electronics MRO customer base, has
access to approximately 400 suppliers and over 70,000 products. Jensen Tools
offers private label Jensen branded hand tools that have been developed over
years of customer usage and manufactured to a specified and demanding tolerance
level and is viewed as a leader in the industry. Jensen Tools employs a
dedicated team of engineering, operational and sales professionals who focus on
designing and building quality tool kits for its customers.

Vision/Strategy - TestEquity intends to grow sales organically, pursue
acquisitions and continue to expand and improve its service offerings to its
customers. In particular, TestEquity strives to improve its digital experience,
with a consistent approach for all of its brands. TestEquity intends to seek to
increase its market share through continued expansion of product lines and
greater penetration of the eCommerce market, enabled through investment in key
digital talent and leverage of the existing TestEquity and TEquipment platforms.
TestEquity expects to benefit from its improved integrated organization and
processes, driving improved gross margin and financial operating leverage.

Sales Drivers - Across both the test and measurement and electronic production
supplies businesses the North American market is highly fragmented with
competitors ranging from large global distributors to national and regional
distributors. TestEquity believes that the PMI is an indicative measure of the
relative strength of the economic environment of the industry in which
TestEquity operates. The PMI index is a composite index of economic activity in
the United States manufacturing sector. TestEquity believes that a measure of
that index above 50 generally indicates expansion of the manufacturing sector
while a measure below 50 generally represents contraction. The average monthly
PMI was 54.8 in the second quarter of 2022 compared to 60.8 in the second
quarter of 2021.

TestEquity management focuses on the internal metric of Sales per Day ("SPD")
and Day Adjust Growth ("DAG"). The SPD calculates and compares TestEquity's
total sales divided by the number of selling days, adjusted for weekends and
holidays. A selling day generally represents a business day in which TestEquity
ships products to its customers. The DAG represents the percentage increase or
decrease in the SPD for a defined period of time.
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Specifically in respect of its Electronics Production Supplies business, the
current semi-conductor chip shortage, due in significant part to the COVID-19
pandemic, is negatively impacting TestEquity's business as such chips are key
elements to the electronic production process. TestEquity anticipates that
recovery of this important part of its customers' supply chain may not occur
until 2023.

Gexpro Services

Gexpro Services is a world-class global supply chain solutions provider,
specializing in the development of mission critical production line management,
aftermarket and field installation programs. Gexpro Services provides
comprehensive supply chain management solutions, including a full technology
suite offering of vendor managed inventory, kitting, global logistics
management, manufacturing localization and import expertise, value engineering
and quality assurance. Gexpro Services' end-to-end project management is
designed to support manufacturing OEMs with their engineered material
specifications, fulfillment, and quality requirements to improve their total
cost of ownership. Gexpro Services has manufacturing and supply chain operations
in over 32 Service Center sites across nine countries including key geographies
in North America, South America, Asia, Europe, and the Middle East. Gexpro
Services serves customers in six vertical markets, including renewables,
industrial power, consumer and industrial, technology, transportation, and
aerospace and defense.

Background and Operations - Gexpro Services was formed in November 2019 and, in
February 2020, acquired the "Gexpro Services" business from French distributor
Rexel S.A. via a carve-out acquisition. Gexpro Services has now fully separated
its "Gexpro Services" operations from Rexel and operates as a stand-alone
organization with its own leadership team, operating activities, financial
systems and team members.

As a leading distributor and service provider in the OEM market, Gexpro Services has around 3,100 suppliers offering around 60,000 products. These products are inventoried and supplied by 32 locations in North America,
South America, Asia, Europeand the Middle East.

Vision/Strategy - Gexpro Services intends to grow organically through market
share expansion primarily through new production introduction, increased sales
of products and services to existing customers and expansion of its customer
base. Gexpro Services believes that its services benefit its customers by
helping them reduce their direct and indirect procurement costs and total cost
of ownership for high volume, low value Class C parts, and that its services can
help drive substantial cost savings for its customers. Additionally, Gexpro
Services intends to grow its business through strategic, accretive acquisitions,
and through continued improvement in service and product offerings to its
customers.

Sales Drivers - Gexpro Services believes that the PMI Index is an indicative
measure of the relative strength of the economic environment of the industry in
which Gexpro Services operates. The PMI index is a composite index of economic
activity in the United States manufacturing sector. Gexpro Services believes
that a measure of that index above 50 generally indicates expansion of the
manufacturing sector while a measure below 50 generally represents contraction.
The average monthly PMI was 54.8 in the second quarter of 2022 compared to 60.8
in the second quarter of 2021

Key Factors Affecting Our Results of Operations and Financial Condition

Supply chain disruptions

Along with the broader economy, we continue to be affected by rising supplier
costs caused by inflation and increased transportation and labor costs. This
results in challenges in acquiring and receiving inventory in a timely fashion
and fulfilling customer orders, which has offset some of the sales gains we
recorded in 2022 compared to 2021. The supply chain disruptions have also led to
higher product costs which have contributed to lower gross margins as a
percentage of sales compared to the prior year. We have instituted various price
increases during 2021 and 2022 in response to rising supplier costs, as well as
increased transportation and labor costs.

Impact of COVID-19 on human capital

The Company believes that its response to the COVID-19 pandemic demonstrated its
ability to focus on the safety of its team members while continuing to service
its customers. Lawson, TestEquity, and Gexpro Services were deemed essential
businesses early in the pandemic, which allowed them to continue to operate
their facilities. While there were some limitations on the ability to physically
visit customer locations, the Company continued to service various customers via
phone and electronic communication channels and other technological means, while
instituting procedures to help maintain
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compliance with applicable social distancing guidelines in respect of in-person
operations. The Company currently has the majority of its corporate workforce
working through a combination of in the office and remote settings and continues
to monitor local, state and federal COVID-19 requirements so that its business
operations and sales representative activities operate in accordance with these
rules.

Impact of COVID-19 on financial performance

Various events related to COVID-19 may impact revenue, product sourcing, sales
functions, and customers' ability to pay timely. While the overall business
environment has been recovering, the pandemic negatively impacted the Company's
financial performance in 2021. Specifically in respect of TestEquity, the
current semi-conductor chip shortage, due in significant part to the COVID-19
pandemic, is negatively impacting TestEquity's business as such chips are key
elements to the electronic production process. TestEquity anticipates that
recovery of this important part of its customers' supply chain may not occur
until 2023.

Cyber Security Incident

In February 2022, DSG became aware that its computer network was the subject of
a cyber incident potentially involving unlawful access. DSG engaged a
cybersecurity forensics firm to assist in the investigation of the incident and
to assist in securing its computer network.

Because of the nature of the information that may have been compromised, DSG was
required to notify the parties whose information was potentially compromised of
the incident as well as various governmental agencies and has taken other
actions, such as offering credit monitoring services. DSG has not incurred
material costs and, at this time, is unable to estimate the total cost of any
remediation that may be required.

Significant Accounting Policies and Use of Estimates

We have disclosed our significant accounting policies in Note 2 – Summary of significant accounting policies to the unaudited condensed consolidated financial statements. You will find below information on the accounts requiring more significant estimates.

Inventory Reserves - 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 and TestEquity segments and weighted average for the Gexpro
Services segment. Most of our products are not exposed to the risk of
obsolescence due to technology changes. However, some of our products do have a
limited shelf life, and from time to time we add and remove items from our
catalogs, brochures or website for marketing and other purposes.

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. In general,
depending on the product category, we reserve inventory with low turnover at
higher rates than inventory with higher turnover.

At June 30, 2022, our inventory reserve was $9.2 million, equal to approximately
3.5% of our gross inventory. A hypothetical change of one percent to our reserve
as a percent of total inventory would have affected our cost of goods sold by
$2.5 million.

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. 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.

Impairment of goodwill – Good will represents the cost of business acquisitions in excess of the fair value of net identifiable property, plant and equipment and intangible assets acquired. The Company reviews goodwill annually for potential impairment on
October 1stor when an event or other circumstances change and it is more likely than not to reduce the fair value of the asset below its carrying amount.

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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.

Business Combinations - We allocate the purchase price paid for assets acquired
and liabilities assumed in connection with our acquisitions based on their
estimated fair values at the time of acquisition. This allocation involves a
number of assumptions, estimates, and judgments in determining the fair value,
as of the acquisition date, of the following:
•intangible assets, including the valuation methodology, estimations of future
cash flows, discount rates, recurring revenues attributed to customer
relationships, and our assumed market segment share, as well as the estimated
useful life of intangible assets;
•deferred tax assets and liabilities, uncertain tax positions, and tax-related
valuation allowances;
•inventory; property, plant and equipment; pre-existing liabilities or legal
claims; and
•goodwill as measured as the excess of consideration transferred over the net of
the acquisition date fair values of the assets acquired and the liabilities
assumed.
Our assumptions and estimates are based upon comparable market data and
information obtained from our management and the management of the acquired
companies. We allocate goodwill to the reporting units of the business that are
expected to benefit from the business combination.

Valuation of Earnout Derivative Liability - 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 is
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.

Revenue Recognition - For reporting purposes, the Lawson segment has two
separate performance obligations including products and vendor managed inventory
services. The allocation of product and service revenue as well as the
estimation of service costs requires judgments and assumptions including the
standalone selling prices, the period of time that it takes for the service
obligation to be fulfilled and the amount of time spent on vendor managed
inventory services during the sales process. Changes in various assumptions
could increase or decrease the allocation of service revenue and related costs;
however, would not materially impact total reported revenues or reported
operating income.

Factors Affecting Comparability with Prior Periods

Our results of operations are not directly comparable to prior results for the
periods presented due to the Mergers that were completed on April 1, 2022. 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 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
unaudited condensed consolidated financial statements as of June 30, 2022 and
December 31, 2021 and for the three and six months ended June 30, 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 included only subsequent, and not prior, to the April
1, 2022 Merger Date.

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Non-GAAP Financial Measures

The Company's management believes that certain non-GAAP financial measures may
provide users of this financial information with additional meaningful
comparisons between current results and results in prior operating periods.
Management believes that these non-GAAP financial measures can provide
additional meaningful reflection of underlying trends of the business because
they provide a comparison of historical information that excludes certain
infrequently occurring, seasonal or non-operational items that impact the
overall comparability. These non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Company's reported results
prepared in accordance with GAAP.

Non-GAAP Adjusted EBITDA

Management believes Adjusted EBITDA is an important measure of the Company's
operating performance. We define Adjusted EBITDA as operating income plus
depreciation and amortization, costs related to the execution of the Mergers,
stock-based compensation, severance costs, amortization of fair value step-up
resulting from the Mergers, acquisition related costs, and other non-recurring
items. The following table provides our calculation of Adjusted EBITDA for the
three and six months ended June 30, 2022 and 2021:

Non-GAAP Operating Profit to Adjusted EBITDA Reconciliation (unaudited)

                                                     Three Months Ended June 30,                   Six Months Ended June 30,
(in thousands)                                       2022(7)                 2021                2022(7)                 2021
Operating income                                $        4,113          $  

5,468 $7,101 $7,721
Depreciation and amortization

                           14,746                4,466                 22,335                8,921

Stock-based compensation(1)                              4,013                    -                  4,013                    -
Severance costs(2)                                         953                   17                  1,409                   20
Merger transaction costs(3)                              5,790                  367                  7,232                  527

Inventory step-up(4)                                     1,622                    -                  1,622                    -
Acquisition related costs(5)                               334                  806                  1,337                1,035
Other non-recurring(6)                                      82                   20                    106                  130
Adjusted EBITDA                                 $       31,653          $    11,144          $      45,155          $    18,354

(1) Charge mainly related to stock-based compensation, part of which varies according to the Company’s share price.

(2) Includes severance pay related to measures taken in 2022 and 2021.

(3) Merger transaction costs related to the negotiation, review and execution of merger agreements relating to the mergers.

(4) Lawson inventory fair value upward adjustment resulting from reverse M&A accounting.

(5) Charge for acquisition-related costs, unrelated to the Mergers.

(6) Other non-recurring costs include acquisition integration costs and other non-recurring items.

(7) Includes results of operations of Lawson subsequent to, but not prior to, the
April 1, 2022 Date of merger in accordance with GAAP accounting guidelines for reverse acquisitions.

Management uses operating income and Adjusted EBITDA to evaluate the performance
of its reportable segments. See Note 19 - Segment Information of our unaudited
condensed consolidated financial statements within Part I. Item 1. Financial
Information for additional information about our reportable segments. The
following table provides Adjusted EBITDA by reportable segment:
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                                        Three Months Ended June 30,                   Six Months Ended June 30,
(in thousands)                           2022                   2021                  2022                  2021
Adjusted EBITDA
Lawson(1)                          $        9,405          $         -          $       9,405          $         -
TestEquity                                  8,647                3,680                 14,138                5,938
Gexpro Services                            11,915                7,464                 19,926               12,416
All Other                                   1,686                    -                  1,686                    -
Consolidated Adjusted EBITDA       $       31,653          $    11,144          $      45,155          $    18,354

(1)Includes results of operations of Lawson subsequent to, but not prior to, the
April 1, 2022 Date of merger in accordance with GAAP accounting guidelines for reverse acquisitions.

Additional Information – Lawson Non-GAAP Adjusted Operating Income and Non-GAAP Adjusted EBITDA

For management to discuss Lawson's operating results on a comparable basis,
Lawson's historical, pre-merger components of operating income have been
provided separately in the table below. In addition, Lawson's GAAP results of
operations were adjusted to include the results prior to the Merger Date in
order to reflect the total operating activities attributable to Lawson for each
period presented. Management believes this historical information provides the
most meaningful basis of comparison for Lawson's operations, is more useful in
identifying current business trends, and is important for the user of our
financial statements in understanding Lawson's business. Refer to Note 1 -
Nature of Operations and Basis of Presentation and Note 3 - Business
Acquisitions within Part I. Item 1. Financial Information of the unaudited
condensed consolidated financial statements for information about the Mergers.

These amounts are not considered to be prepared in accordance with GAAP, have
not been prepared as pro forma results under applicable regulations, may not
reflect the actual results we would have achieved had the Mergers occurred at
the beginning of 2021, and should not be viewed as a substitute for the results
of operations presented in accordance with GAAP. Lawson's historical operating
results prior to the Mergers were obtained from the unaudited condensed
consolidated financial statements included in DSG's Form 10-Q filed for the
quarterly periods ended June 30, 2021 and March 31, 2022.

Lawson Non-GAAP Adjusted Results - Calculation of Supplemental Information
(Unaudited)

(in thousands)                               Three Months Ended June 30, 2022                                  Three Months Ended June 30, 2021
                                                          Pre-Merger             Adjusted               GAAP              Pre-Merger             Adjusted
Lawson Operating Income        GAAP Results(1)            Results(2)            Results(3)           Results(1)           Results(4)            Results(3)

Revenue                       $       107,334          $            -          $  107,334          $         -          $     94,861          $    94,861
Cost of goods sold                     50,552                       -              50,552                    -                44,960               44,960
Gross profit                           56,782                       -              56,782                    -                49,901               49,901
Selling, general and
administrative expenses                59,344                       -              59,344                    -                47,458               47,458
Operating (loss) income       $        (2,562)         $            -          $   (2,562)         $         -          $      2,443          $     2,443

Lawson Adjusted EBITDA(5)     $         9,405          $            -          $    9,405          $         -          $      7,779          $     7,779

(1) Operating income prepared in accordance with GAAP, which includes the results of operations of Lawson since the April 1, 2022 Date of merger until June 30, 2022.

(2) All Lawson operating results for the three months ended June 30, 2022 happened after the April 1, 2022 Date of merger.

(3) Lawson operating results adjusted for period-to-period comparability. These non-GAAP results represent Lawson’s total operating activities for the three months ended June 30, 2022 and 2021, regardless of merger date (reflects pre- and post-merger results).

(4)Lawson's results of operations for the three months ended June 30, 2021,
which occurred prior to the April 1, 2022 Merger Date and were not included in
GAAP operating results under reverse merger acquisition accounting. See Note 1-
Nature of Operations and Basis of Presentation and Note 3 - Business
Acquisitions within Part I. Item 1. Financial Information of the unaudited
condensed consolidated financial statements.

(5) Refer to the Non-GAAP Adjusted EBITDA section above for a reconciliation of GAAP results as Adjusted EBITDA and Operating Income.

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(in thousands)                            Six Months Ended June 30, 2022                                 Six Months Ended June 30, 2021
                                                      Pre-Merger           Adjusted               GAAP              Pre-Merger           Adjusted
Lawson Operating Income      GAAP Results(1)          Results(2)          Results(3)           Results(1)           Results(4)          Results(3)

Revenue                     $    107,334            $   104,902          $  212,236          $         -          $   188,191          $  188,191
Cost of goods sold                50,552                 49,371              99,923                    -               87,882              87,882
Gross profit                      56,782                 55,531             112,313                    -              100,309             100,309
Selling, general and
administrative expenses           59,344                 44,435             103,779                    -               93,610              93,610
Operating (loss) income     $     (2,562)           $    11,096          $    8,534          $         -          $     6,699          $    6,699

Lawson Adjusted EBITDA(5)   $      9,405            $     8,042          $   17,447          $         -          $    16,267          $   16,267


(1)Operating income prepared in accordance with GAAP, which includes Lawson's
results of operations from the April 1, 2022 Merger Date through the six months
ended June 30, 2022.

(2)Lawson's results of operations for the three months ended March 31, 2022,
which occurred prior to the April 1, 2022 Merger Date and were excluded from
GAAP operating results under reverse merger acquisition accounting.

(3) Lawson operating results adjusted for period-to-period comparability. These non-GAAP results represent Lawson’s total operating activities for the six months ended June 30, 2022 and 2021, regardless of merger date (reflects pre- and post-merger results).

(4)Lawson operating results for the six months ended June 30, 2021which happened before the April 1, 2022 merger date and were excluded from GAAP operating results under reverse M&A accounting. See Note 1 – Nature of transactions and method of presentation and Note 3 – Business acquisitions in Part I. Item 1. Financial information of the unaudited condensed consolidated financial statements.

(5) Refer to the Non-GAAP Adjusted EBITDA section above for a reconciliation of GAAP results as Adjusted EBITDA and Operating Income.

Composition of operating results

The following results of operations for the three and six months ended June 30,
2022 and 2021 include the accounts of the TestEquity and Gexpro Services
combined entity, as the accounting acquirer. The results of Lawson have been
included only subsequent, and not prior to, to the April 1, 2022 Merger Date.

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