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Date

Tuesday, July 29, 2025, at 5 p.m. ET

Call participants

  • Chief Executive Officer — Anesa Chaibi
  • Chief Financial Officer — Tex Clark

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Takeaways

  • Revenue: Reported revenue of $358.9 million increased 3.2% over Q2 of last year, with growth recorded each month during Q2 2025 and further acceleration to mid-single-digit growth in July 2025.
  • Gross margin: Gross margin was 37.1% for Q2 2025, up 190 basis points year-over-year and 220 basis points over the first quarter; cited as a quarterly record for operating income from continuing operations.
  • Operating income: Operating income reached $33.5 million for Q2 2025, also described as a company record.
  • Operating margin: 9.3%, reflecting improved profitability from strategic account growth and margin discipline.
  • Cash flow: Operating cash flow from continuing operations totaled $31.8 million for Q2 2025.
  • SD&A expenses: $99.5 million, up 3.5% year-over-year, but remained nearly unchanged as a percentage of sales at 27.7% due to cost controls and productivity gains.
  • U.S. and Canada revenue: U.S. segment revenue rose 3% in Q2 2025; Canadian local-currency revenue increased 7.4% in Q2 2025.
  • Largest account performance: Largest strategic accounts drove growth in Q2 2025, offsetting weakness among smallest, more transactional accounts due to limited promotional activities.
  • Pricing action: Modest price increases were realized in Q2 2025, partially offset by lower total volume.
  • Tariffs: Management highlighted a "highly fluid" tariff environment and "significant" cumulative impact; ongoing supplier diversification and cost actions noted.
  • Gross profit bridge: Clark said, "about half of that [margin expansion] is going to be that price timing. ... The other half ... transportation and some other areas that drove benefit."
  • Cash position and liquidity: Ended the quarter with $55.1 million in cash, no debt, and approximately $120 million in available credit facilities as of June 30.
  • Dividend: Quarterly dividend declared at $0.26 per share.
  • Acquisition: Closed a small acquisition (less than 1% of revenue) in the quarter, providing value-added services to a product line; with a $4.3 million purchase price.
  • Capital expenditures: Capital expenditures were $1.4 million for Q2 2025; with guidance of $2 million to $3 million for 2025 focused on distribution network maintenance.

Summary

Global Industrial (GIC 0.67%) management intends to drive further growth through specialization and a targeted go-to-market strategy centered on strategic and managed accounts. The company is piloting new organizational approaches to customer segmentation, aiming to deepen relationships and expand account penetration. Management plans to broaden product categories and enhance offerings to increase customer stickiness while continuing to focus on profitable growth. Strategic investments in the sales organization and technology are expected, with piloting and incremental launches underway to shape go-to-market structure for 2026. The company maintains flexibility for continued investment and strategic M&A due to its debt-free balance sheet and strong liquidity.

  • Clark said, "We have started to see that benefit that we recorded in Q2 already start to wane in Q3," indicating anticipated sequential margin headwinds as pre-tariff inventory effects fade.
  • Management plans additional pricing actions as tariff-impacted inventory cycles through cost of sales.
  • Cost discipline measures included moderating marketing outlays and achieving sales team productivity gains enabled by a new CRM system.
  • September's national trade show in Orlando will serve as a platform for engaging customers and vendors, showcasing proprietary brands and solutions.

Industry glossary

  • MRO (Maintenance, Repair, and Operations): A category of products and services used by companies to support facility operations, production, and general maintenance requirements.
  • FIFO (First-In, First-Out): An inventory accounting method where the earliest items purchased are the first to be used in cost of goods sold.
  • SD&A (Selling, Distribution, and Administrative Expense): Aggregate operating expenses encompassing sales, logistics, and overhead not directly tied to product cost.
  • CRM (Customer Relationship Management): A technology and process for managing company interactions with customers, sales prospects, and accounts to improve efficiency and service quality.
  • Strategic account: A high-value customer with whom the company pursues long-term, growth-oriented business relationships and targeted service approaches.
  • Credit facility: An arrangement with a lender (typically a bank) offering access to a specified line of credit for operational and strategic funding needs.

Full Conference Call Transcript

Anesa Chaibi: Thank you, Mike. Good afternoon, everyone, and thank you for joining us. We delivered an excellent second quarter performance with record profit, and I am pleased with the execution of the entire organization, specifically considering the market disruption and uncertainty from the current tariff environment. The team has done a great job mitigating the risk, enabling us to continue to serve our customers. In the quarter, revenue increased 3.2% to $358.9 million. We grew the top line each month during the period and have seen growth continue into July. Performance was driven by our largest strategic account, partially offset by a reduction in our smallest and more transactional customers.

Gross margin was a record 37.1% for the second quarter, an increase of 190 basis points over the second quarter of 2024 and 220 basis points over the first quarter of 2025. Operating income improved over 26% to $33.5 million, which represents a quarterly record for the company. Operating margin was 9.3%, and we also had strong cash flow generation in the quarter. Overall, our results reflect the benefits of modest price capture and the timing of FIFO inventory. While some of this margin expansion may be temporary, we believe it highlights our ability to proactively manage the business and focus on what we can control.

This includes ensuring product availability and providing the products our customers rely on us to deliver. As I noted on the last call, Global Industrial Company has an outstanding foundation for growth. With an exceptional platform and the ability to scale the business organically, we have an opportunity to broaden who we serve, expand existing account relationships, and accelerate our growth initiatives. During the past several months, we have gained alignment throughout the organization on how we can better position Global Industrial Company to grow and to pursue new opportunities. We will drive simplification in how we operate and create a sense of urgency within the organization to better serve the customer.

We are empowering our teams to make real-time decisions and continually challenging the way we work to find creative solutions to address customers' needs. At the core of our efforts will be the continued transformation of the business model to place the customer at the center of everything we do. Not just thinking about the customer in our actions, but realigning and building the organization and the solutions we provide around our customers. We need to make it easier for our customers to engage and do business with us, allowing us to deliver greater value to them and become an extension of their teams. Moving forward, our growth strategy will be anchored in specialization and expansion.

On specialization, we will become more focused in the identification and targeting of key customers and align sales and the broader organization to serve the specific needs of each type of customer. We will reframe our go-to-market strategy to become much more intentional in how we approach and attract new customers. We see significant opportunity to deepen existing relationships, gain greater share of wallet, and acquire new customers. On expansion, we will broaden the product categories we offer and enhance our overall offerings to ultimately improve our customer stickiness. We will do this focused on driving profitable growth. In summary, we were very pleased with our second quarter performance.

We have more work to do as we look to accelerate our success and mitigate the impacts of tariffs on our business and for our customers. As we become more intentional in how we go to market and operate the business, we believe we have the opportunity to open the aperture of the total addressable market that we pursue. There is a lot of positive activity across the company, and I am excited by what the future holds. We remain well-positioned to continue to invest in our growth initiatives and to evaluate strategic M&A. Finally, in September, we will host our ninth annual national trade show in Orlando, Florida.

This event allows us to showcase our extensive product offering of national proprietary brands, as well as the knowledge and solutions we bring to market. We look forward to connecting with our customers and vendor partners at the show. Now I will turn the call over to Tex.

Tex Clark: Thank you, Anesa. Second quarter revenue was $358.9 million, up 3.2% over Q2 of last year. US revenue was up 3%, and Canada revenue improved 7.4% in local currency. Sales grew each month during the quarter, and we have seen growth accelerate to mid-single digits through the first four weeks of July. Results were strongest amongst our largest strategic accounts, which continued to see good momentum and sales progress as they grew on both total dollar and order volume basis. Price was positive in the quarter and includes some initial pricing actions implemented in April.

This was partially offset by a decline in total volume, which reflects an intentional effort to limit certain promotional activities that previously targeted customer segments with historically lower retention rates and ultimately a lower lifetime value. The tariff environment remains highly fluid, and the cumulative impact of incremental tariffs remains significant. We continue to actively monitor the situation and are focused on supplier diversification, price management, and strategic cost negotiations. We concluded the second quarter with a healthy inventory position and continue to prioritize availability for our customers. We anticipate planning additional pricing actions as inventory affected by tariffs moves through our cost of sales. Gross profit for the quarter was $133 million.

Gross margin was 37.1%, up 190 basis points from the year-ago period and 220 basis points sequentially. Gross profit improvement reflects both price capture and temporary favorability of valuation, which flows through the cost of sales on a FIFO basis. In addition, our gross margin rate benefited from transportation and freight cost improvement in both our small parcel and LTL environments, as well as quality initiatives that reduce freight claims and customer returns. Management of our margin profile remains a key area of focus. As we move through the current cycle, we have started to see the timing benefit of pre-tariff inventory decline.

While our goal is to manage price cost neutral, we are seeing sequential headwinds in our margin rates, given the timing dynamics of on-hand inventory, market inflation associated with the tariff-related cost increases, and efforts to continue to diversify our supply chain. Selling, distribution, and administrative spending for the quarter was $99.5 million, an increase of 3.5% from last year. However, as a percentage of net sales, SD&A was 27.7%, nearly flat with last year. SD&A reflected strong general and discretionary cost control and modestly lower marketing expenses. These savings were partially offset by year-over-year increases in variable competition expenses, with both selling commissions and our bonus pool accrual increasing compared to last year.

While marketing CPC inflation remains, we continue to drive efficiencies in our investment and have seen some nice productivity and efficiency gains within our sales teams as we continue the implementation of our new CRM. Operating income from continuing operations was a record $33.5 million, an increase of 26.9% in the second quarter, and operating margin was 9.3%. Our operating cash flow from continuing operations was $31.8 million. In the quarter, we closed on the purchase of a small services company that provides a value-additive service wrapper extension to one of our product lines. This company represents less than 1% of total revenue.

Total depreciation and amortization expense in the quarter was $1.9 million, including approximately $0.8 million associated with the amortization of intangible assets, while capital expenditures were $1.4 million. Cash flow from investing activities includes the $4.3 million purchase price of the previously mentioned service business. We continue to expect 2025 capital expenditures in the range of $2 million to $3 million, which primarily reflects maintenance-related investments in equipment within our distribution network. Let me now turn to our balance sheet. We have a strong and liquid balance sheet with a current ratio of 2.1 to 1. As of June 30th, we had $55.1 million in cash, no debt, and approximately $120 million of excess availability under the credit facility.

We maintain significant flexibility to fully execute on our strategic plan and continue to fund our quarterly dividend. As a result, our board of directors declared a quarterly dividend of $0.26 per share of common stock. This concludes our prepared remarks today. Operator, please open the call for questions.

Operator: Our first question comes from Ryan Merkel with William Blair. Please go ahead.

Ryan Merkel: I wanted to start with a big surprise, which was gross margin. And could you help us with the bridge, the 200 basis points increase year over year? How much of that was FIFO and then how much of it was freight and the other things that you talked about?

Tex Clark: Ryan, thank you for the question. I'll go ahead and jump in there. So when we think about that expansion, a lot of times I like to look back at what we saw in the back half of 2021 and leading into 2022 when we were going through a similar inflationary environment with the cost of ocean freight going up, and we saw a similar ramp-up. When we think about that 200 basis points of expansion, about half of that is going to be that price timing that we looked at with pricing with our COGS working through.

The other half of that is going to be things like we mentioned where we were seeing favorable cost in transportation and some other areas that drove benefit into our gross profit. So, again, we have started to see that benefit that we recorded in the second quarter already start to wane in the third quarter, so we would expect some sequential headwinds into the third quarter. But again, we still think we'll be able to manage our gross margin favorably on a year-over-year basis.

Ryan Merkel: And on that last point, Tex, about 100 basis points, do you think, you know, comes off as we think about the second half?

Tex Clark: Yeah. I mean, I think that's a fair way to look at it. Obviously, there's still some unknowns out there as tariff rates are continuing to change and mix could change. We'll be continuing to look at market-based pricing. But, yeah, I think that's a fair assessment of where we're seeing today.

Anesa Chaibi: Yeah. Ryan, this is Anesa. Just to chime in real quick, I would just say we have numerous initiatives that are in flight, and we're watching it very closely. So we'll read and react as we go through, but I would say that Tex is spot on with what we anticipate at this juncture.

Ryan Merkel: Okay. So just in my own words, 37's a little punchy on its own. Don't expect to continue that, but you do expect year-over-year expansion to continue.

Tex Clark: Yep. Absolutely. That's fair. Yep.

Ryan Merkel: My next question was just on the July commentary up mid-single digits. I mean, it's a date of acceleration. This might be hard to answer, but was that market-driven? Is that price? Is that company-specific share gains?

Tex Clark: Yeah. Anesa, do you want to chime in on there? Go ahead. Go ahead. Go ahead, Tex. That's fine. Yeah. I'm sorry. I'm sorry. Yeah. I mean, when we look at it, Ryan, we're seeing it fairly broad-based. So we're seeing good growth across different customer segments. Both our managed customers and our strategic customers. But the biggest growth has been the strategic accounts we've been putting the most effort to really target those customers and be very intentional with how we're servicing those customers. So it's been fairly strong growth, saw growth each month in the quarter during the second quarter, and that has accelerated into the early part of the third quarter.

It's four weeks in at this point.

Anesa Chaibi: Yeah. So it's on all fronts, Ryan, and, you know, we've got some things that we're piloting right now strategically on go-to-market that are premature at this point, but starting to see some incremental positive momentum. But we'll be in a better position to speak to it when the next time we have our subsequent third-quarter call.

Ryan Merkel: Okay. Maybe one more if I need to. It's a two-parter too. You mentioned being more intentional about attracting new customers. To be a little bit more specific, what do you mean by intentional? And then am I reading this right, or is it new the new customers that you want? Are you going to be shifting more to the strategic accounts? Or are you equally trying to get, you know, small and medium businesses as well?

Anesa Chaibi: Yeah. No. Thank you for the question. The intentionality is just really aligning ourselves and putting the customer at the center of what we do, and that is a pivot and a shift for us. But really trying to understand what the customer needs are across various industry segments and sectors. We're getting very smart on understanding the behavior of our customers along those lines. And then the second part of your question is, you know, I would say that Global Industrial Company in the past targeted customers that were more price-sensitive or really looking for applying coupons and discounting and what have you.

And it's just being very intentional on who we're targeting, where we're going to look for growth opportunities, and then kind of doubling down and investing in those arenas.

Ryan Merkel: Got it. Alright. I'll pass it on. Best of luck.

Tex Clark: Thank you, Ryan. Thank you.

Operator: Our next question comes from Anthony Lebiedzinski with Sidoti and Company. Please go ahead.

Anthony Lebiedzinski: Good afternoon and thank you for taking the questions. It's really nice to see this strong profitability in the quarter. So first, just wanted to go back to your comments about the fact that you saw your smallest accounts, the smallest accounts are, as SMB clients, kind of being softer in the quarter. Just wondering if that changed in July as you've seen an

Tex Clark: Yeah. Anthony, how are you doing? It's Tex. I'll take that one. Again, thanks for joining us today. So I think that's one area that, again, as we've gone into July, we've seen again, fairly broad-based growth, but, again, still concentrated in those largest customers that we tend to serve. When we think about some of that intentionality and some of that targeted marketing is, obviously, we pulled back some promotional activities in the second quarter, which, again, in the past were a little bit higher proportion of our mix, our customer mix. And while that did impact some volume, it resulted in profitable growth in a healthier customer mix for ourselves.

Anthony Lebiedzinski: Gotcha. Okay. Yeah. Thanks for that. And then, Anesa, you spoke about having more of a sense of urgency in terms of just driving the business forward. Where would you say are the greatest kind of, you know, near-term opportunities, and where would you say it's something that will take longer to achieve in terms of you just wanted to go back to the comment where you talked about having that greater sense of urgency?

Anesa Chaibi: Yes. No. That's a great question, Anthony. Thank you for it. What I mean by that is I would say there are some operational elements that will enable us to be more nimble, more flexible, and more responsive to our customers. I would say on the customer experience side, being empowered more so to be able to make real-time decisions. If a customer calls in and needs some assistance and so forth. So that's what I was referring to and implying.

Anthony Lebiedzinski: Got it. Okay. And then as you look to grow the business, can you also speak to the addressable market opportunity that you referenced in the press release?

Anesa Chaibi: Yeah. I guess I don't have a specific number in mind if that's what you're asking relative to the TAM, but I believe that there is just a tremendous opportunity. And I think during one of our last meetings, we had discussed that briefly. But I would say we have been doing intentionally coming out of the taking the market, and that's also enabled us and enhanced our growth and some of the momentum we're seeing as well. So it's really honing in on that. Again, back to the specialization comment, it's understanding the customer at a more intimate level to then align the organization to be able to serve it and to be able to fulfill what they're expecting.

Infrastructure with operational type of industrial equipment will broaden to industrial equipment and supplies, MRO in a broader sense and so forth. But we're in the nascent stage of that as we're looking to further expand the assortment, the progression, and everything that we take to market.

Anthony Lebiedzinski: So as you look to execute this strategy to be more intentional and more specialized, do you think you have a do you think you'll need to grow your sales team or other parts of the business in terms of people? Or do you think you have the right group of people to execute this strategy?

Anesa Chaibi: Yeah. I believe we will need to make some investments, and yes, we will need to look at how we go to market on the sales side. So there will be investments in the sales organization. That's really what we're doing right now currently to do some piloting, some testing, and we'll be launching some things incrementally in various markets. So that we can quickly learn and then determine just what we'll do differently going into 2026.

Anthony Lebiedzinski: Gotcha. Okay. Alright. And then, you know, you made a small acquisition that you talked about. What is your appetite for additional acquisitions going forward?

Anesa Chaibi: Yeah. Yeah. No. Great question. You know, as Tex highlighted, we have zero debt or minimal debt if at all. And so the opportunity for strategic M&A is absolutely available to us. We're going to be very mindful and prudent. And as we go through some of the piloting and testing that we're doing right now real-time, the back half of this year, I think that will help provide clarity on the strategic direction that we want to take. I already have some perspective at this point, but I want to validate a few things before really aggressively going after it.

But that opportunity is there for us to scale and grow, especially along the lines of some of the broad, you know, being able to go after some broader MRO capabilities and to live up to the fulfillment expectations of customer base depending on the segment or the industry or the vertical.

Anthony Lebiedzinski: Understood. Well, thank you very much, and best of luck.

Anesa Chaibi: Thank you. Thank you.

Operator: This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.