Exhibit 99.1 GLOBAL INDUSTRIAL REPORTS FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS Fourth Quarter Sales of $320.1 Million, Up 22.9%; Operating Income of $21.4 Million and Operating Margin of 6.7% Full Year Sales of $1.27 Billion, Up 9.3%; Operating Income of $96.5 Million and Operating Margin of 7.6% Board Increases Dividend 25%; Declares $0.25 Dividend PORT WASHINGTON, NY, February 29, 2024 – Global Industrial Company (NYSE: GIC) today announced financial results for the fourth quarter ended Decemb ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Global Industrial Company's unaudited condensed consolidated financial statements and detailed notes on key accounting areas [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets | Metric | Sep 30, 2023 (Millions $) | Dec 31, 2022 (Millions $) | | :-------------------------------- | :------------------------ | :------------------------ | | **ASSETS:** | | | | Cash and cash equivalents | 34.3 | 28.5 | | Accounts receivable, net | 136.8 | 108.0 | | Inventories | 153.8 | 179.4 | | Total current assets | 337.9 | 325.7 | | Goodwill and intangible assets | 70.7 | 6.6 | | Total assets | 527.8 | 455.2 | | **LIABILITIES AND SHAREHOLDERS' EQUITY:** | | | | Accounts payable | 125.8 | 96.9 | | Accrued expenses and other current liabilities | 55.3 | 43.2 | | Total current liabilities | 195.0 | 153.1 | | Total liabilities | 281.6 | 244.8 | | Total shareholders' equity | 246.2 | 210.4 | | Total liabilities and shareholders' equity | 527.8 | 455.2 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations | Metric (Millions $) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | 354.6 | 298.5 | 954.2 | 905.6 | | Gross profit | 116.3 | 106.6 | 327.6 | 327.4 | | Operating income from continuing operations | 28.2 | 27.5 | 75.1 | 87.5 | | Net income from continuing operations | 20.7 | 20.3 | 55.5 | 64.7 | | Net income | 20.7 | 20.2 | 55.4 | 65.0 | | Net income per common share (Basic) | 0.54 | 0.53 | 1.45 | 1.71 | | Net income per common share (Diluted) | 0.54 | 0.53 | 1.44 | 1.70 | | Dividends declared | 0.20 | 0.18 | 0.60 | 0.54 | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income | Metric (Millions $) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | 20.7 | 20.2 | 55.4 | 65.0 | | Foreign currency translation | (0.3) | (0.8) | 0.0 | (1.1) | | Total comprehensive income | 20.4 | 19.4 | 55.4 | 63.9 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows | Metric (Millions $) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | 103.7 | 23.4 | | Net cash used in investing activities | (75.6) | (4.9) | | Net cash used in financing activities | (22.3) | (13.6) | | Net increase in cash | 5.8 | 4.6 | | Cash and cash equivalents – end of period | 34.3 | 20.0 | [Condensed Consolidated Statement of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Shareholders'%20Equity) Condensed Consolidated Statement of Shareholders' Equity | Metric (Millions $) | Balances, Jan 1, 2023 | Balances, Sep 30, 2023 | | :-------------------------------- | :-------------------- | :--------------------- | | Common Stock Amount | 0.4 | 0.4 | | Additional Paid-in Capital | 201.2 | 203.9 | | Treasury Stock | (19.5) | (18.8) | | Retained Earnings | 25.9 | 58.3 | | Accumulated Other Comprehensive Income | 2.4 | 2.4 | | Total Equity | 210.4 | 246.2 | - **Total shareholders' equity** increased from **$210.4 million** at January 1, 2023, to **$246.2 million** at September 30, 2023, driven by **net income** of **$55.4 million** and stock-based compensation, partially offset by **dividends** paid[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Basis of Presentation](index=11&type=section&id=1.%20Basis%20of%20Presentation) - **Global Industrial Company** is a value-added industrial distributor of over a **million** industrial and MRO products in North America, operating through e-commerce websites and relationship marketers[19](index=19&type=chunk) - On May 19, 2023, the Company acquired **100%** of Indoff LLC for approximately **$72.6 million** in cash, expanding its presence in the North American MRO market[20](index=20&type=chunk) - The financial statements are unaudited and prepared in accordance with GAAP for interim financial information, with certain disclosures condensed or omitted[18](index=18&type=chunk) [2. Acquisition](index=12&type=section&id=2.%20Acquisition) - The acquisition of Indoff LLC on May 19, 2023, for **$72.6 million** in cash, was accounted for as a business combination, with a preliminary fair value allocation resulting in **$35.1 million** in **goodwill**[27](index=27&type=chunk)[29](index=29&type=chunk) Indoff LLC Financial Contribution (Post-Acquisition) | Period | Revenue (Millions $) | Net Income (Millions $) | | :-------------------- | :------------------- | :-------------------- | | Three Months Ended Sep 30, 2023 | 46.4 | 1.9 | | Nine Months Ended Sep 30, 2023 | 70.3 | 2.7 | Goodwill and Intangible Assets (Millions $) | Asset Type | Sep 30, 2023 | Dec 31, 2022 | | :---------------------- | :----------- | :----------- | | Goodwill | 40.6 | 5.5 | | Definite-lived intangibles | 29.4 | 0.4 | | Indefinite-lived intangibles | 0.7 | 0.7 | | **Total** | **70.7** | **6.6** | - The acquisition resulted in **$30.3 million** of acquired **intangible assets**, primarily customer lists (**$24.1 million**) and trademarks (**$6.2 million**), which will be amortized over ten years[29](index=29&type=chunk)[33](index=33&type=chunk) [3. Revenue](index=15&type=section&id=3.%20Revenue) Net Sales by Geography (Millions $) | Geography | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | United States | 337.2 | 282.0 | 902.5 | 849.0 | | Canada | 17.4 | 16.5 | 51.7 | 56.6 | | **Consolidated** | **354.6** | **298.5** | **954.2** | **905.6** | - The Company disaggregates **revenue** by geography (United States and Canada) as it best reflects the impact of economic and industry factors on **revenue** and cash flows[34](index=34&type=chunk) [4. Credit Losses](index=16&type=section&id=4.%20Credit%20Losses) - The Company estimates **allowances for credit losses** on trade **accounts receivable** based on customer financial condition, historical loss experience, and economic forecasts[36](index=36&type=chunk) Rollforward of Allowances for Credit Losses (Millions $) | Metric | Sep 30, 2023 | | :-------------------------- | :----------- | | Balance at beginning of period | 2.3 | | Current period provision | 2.5 | | Write-offs | (2.0) | | Balance at end of period | 2.8 | [5. Leases](index=16&type=section&id=5.%20Leases) - The Company holds **operating** and finance **leases** for facilities and equipment, with **operating lease costs** of **$4.3 million** for Q3 2023 and **$12.7 million** for the nine months ended September 30, 2023[39](index=39&type=chunk)[41](index=41&type=chunk) - **ROU assets** and related **lease liabilities** of **$0.8 million** were recorded as part of the Indoff acquisition, covering administrative offices and a distribution center[40](index=40&type=chunk) Lease Liabilities Maturities (Millions $) | Year Ending Dec 31 | Operating Leases | | :------------------- | :--------------- | | 2023 (remainder) | 4.7 | | 2024 | 18.9 | | 2025 | 17.7 | | 2026 | 15.5 | | 2027 | 11.8 | | 2028 | 11.9 | | Thereafter | 40.6 | | Total lease payments | 121.1 | | Less: interest | (23.1) | | Total present value of lease liabilities | 98.0 | [6. Net Income (Loss) per Common Share](index=18&type=section&id=6.%20Net%20Income%20(Loss)%20per%20Common%20Share) - **Basic** and diluted **net income per common share** are calculated using the two-class method due to outstanding restricted stock with dividend participation rights[43](index=43&type=chunk) Net Income Per Share from Continuing Operations | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic EPS | $0.54 | $0.53 | $1.45 | $1.70 | | Diluted EPS | $0.54 | $0.53 | $1.44 | $1.69 | | Weighted average shares outstanding (Basic) | 38.1 | 38.0 | 38.1 | 38.0 | | Weighted average shares outstanding (Diluted) | 38.2 | 38.1 | 38.2 | 38.1 | [7. Credit Facilities and Short-term Debt](index=21&type=section&id=7.%20Credit%20Facilities%20and%20Short-term%20Debt) - The Company maintains a **$125.0 million** secured revolving **credit facility** maturing October 19, 2026, with no outstanding borrowings as of September 30, 2023[47](index=47&type=chunk) - As of September 30, 2023, the Company had **$108.9 million** in **total excess availability** under its **credit facility** and was in compliance with all covenants[47](index=47&type=chunk) [8. Fair Value Measurements](index=21&type=section&id=8.%20Fair%20Value%20Measurements) - The Company's financial instruments, including cash, **accounts receivable**, debt, and **accounts payable**, are considered to have **fair values** representative of their carrying amounts due to their short-term or variable **interest rate** nature[50](index=50&type=chunk) - **Goodwill** and indefinite-lived **intangible assets** are measured for impairment annually in the fourth quarter by comparing the Company's fair market value to its carrying value[51](index=51&type=chunk) [9. Legal Proceedings](index=23&type=section&id=9.%20Legal%20Proceedings) - The Company is involved in various lawsuits, claims, and investigations in the ordinary course of business, including commercial, employment, tax, and intellectual property matters[54](index=54&type=chunk) - Management does not expect the outcome of these matters to have a material adverse effect on its financial position or results of operations, and accruals are established for probable and estimable losses[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, liquidity, and future outlook, including the Indoff acquisition impact [Forward-Looking Statements and Risk Factors](index=24&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) - The report contains forward-looking statements based on management's estimates and assumptions, subject to **risks** and uncertainties that could significantly impact business, operating results, or financial condition[56](index=56&type=chunk)[57](index=57&type=chunk) - Key **risk factors** include general economic conditions (inflation, **interest rates**), global political/economic conditions, supply chain disruptions, tariffs, freight costs, extreme weather, labor shortages, competition, e-commerce **risks**, data security breaches, inventory management, and litigation[58](index=58&type=chunk)[61](index=61&type=chunk) [Overview](index=25&type=section&id=Overview) - **Global Industrial Company** is a value-added industrial distributor of over a **million** industrial and MRO products in North America, utilizing branded e-commerce websites and relationship marketers[60](index=60&type=chunk) - The Company markets its own Global Industrial Exclusive Brands, including white label and private brand products under trademarks like Global, Nexel, Paramount, Interion, and Absocold[61](index=61&type=chunk) - The acquisition of Indoff LLC on May 19, 2023, for **$72.6 million**, expanded the Company's presence in the MRO market[62](index=62&type=chunk) [Operating Conditions](index=26&type=section&id=Operating%20Conditions) - The North American industrial products market is highly fragmented and competitive, requiring significant **working capital** for warehousing, inventory, and distribution[64](index=64&type=chunk) - Primary operating expenses include employee-related costs (wages, commissions, benefits, equity-based compensation), marketing expenses (digital marketing), and occupancy charges for leased facilities[65](index=65&type=chunk) [Business Outlook](index=26&type=section&id=Business%20Outlook) - Q3 2023 **consolidated net sales** increased by **18.8%** to **$354.6 million**, including Indoff. Excluding Indoff, sales grew **3.2%** due to volume improvement offsetting price deflation[67](index=67&type=chunk) - **Gross margin** in Q3 2023 declined to **32.8%** (down **290 basis points** YoY), with Indoff's contribution mix accounting for **170 basis points** of the decline[67](index=67&type=chunk) - **Selling, distribution & administrative expenses (SD&A)** increased due to planned sales and marketing investment, but was partially offset by cost control measures and reduced variable compensation[67](index=67&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Key accounting policies requiring significant management judgment include **revenue** recognition, inventory valuation, and valuation of **intangible assets** acquired through business combinations[68](index=68&type=chunk) - There were no material changes in the Company's significant accounting policies during the third quarter ended September 30, 2023[69](index=69&type=chunk) [Highlights from Q3 2023 and Year to Date Q3 2023](index=28&type=section&id=Highlights%20from%20Q3%202023%20and%20Year%20to%20Date%20Q3%202023) Q3 2023 Summary | Metric | Value | Change YoY (Excl. Indoff) | | :------------------------------------------ | :---------- | :------------------------ | | Consolidated sales | $354.6 million | +3.2% | | Consolidated gross margin | 32.8% | -120 bps | | Consolidated operating income | $28.2 million | -6.5% | | Net income per diluted share | $0.54 | +1.9% | Year to Date Q3 2023 Summary | Metric | Value | Change YoY (Excl. Indoff) | | :------------------------------------------ | :---------- | :------------------------ | | Consolidated sales | $954.2 million | -2.4% | | Consolidated gross margin | 34.3% | -90 bps | | Consolidated operating income | $75.1 million | -18.3% | | Net income per diluted share | $1.44 | -14.8% | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) [NET SALES](index=30&type=section&id=NET%20SALES) - **Consolidated net sales** increased **18.8%** in Q3 2023 to **$354.6 million**, driven by the full quarter impact of Indoff. Excluding Indoff, sales increased **3.2%** due to volume improvement[79](index=79&type=chunk) - For the nine months ended September 30, 2023, **consolidated net sales** increased **5.4%** to **$954.2 million**. Excluding Indoff, sales declined **2.4%**[76](index=76&type=chunk)[79](index=79&type=chunk) - U.S. sales increased **19.6%** in Q3 2023 and **6.3%** for the nine months ended September 30, 2023. Canada sales (local currency) increased **8.2%** in Q3 2023 but decreased **4.2%** for the nine months[79](index=79&type=chunk) [GROSS MARGIN](index=30&type=section&id=GROSS%20MARGIN) - **Gross margin** declined by **290 basis points** to **32.8%** in Q3 2023, primarily due to Indoff's lower **gross margin** profile[82](index=82&type=chunk) - Excluding Indoff, Q3 **gross margin** declined **120 basis points** to **34.5%**, reflecting planned proactive promotion, freight actions, and sell-through of high-cost inventory[82](index=82&type=chunk) - For the nine months ended September 30, 2023, **gross margin** was **34.3%**, a **190 basis point** decline YoY. Excluding Indoff, the decline was **90 basis points**[82](index=82&type=chunk) [SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES ("SD&A")](index=30&type=section&id=SELLING,%20DISTRIBUTION%20AND%20ADMINISTRATIVE%20EXPENSES%20(%22SD%26A%22)) - **SD&A** costs as a percentage of sales improved by **170 basis points** in Q3 2023, driven by cost control measures and reduced variable compensation, despite increased marketing investment[83](index=83&type=chunk) - Q3 2023 **SD&A** included approximately **$7.6 million** related to Indoff, including **$0.7 million** in **intangible asset** amortization[83](index=83&type=chunk) - For the nine months ended September 30, 2023, **SD&A** costs as a percentage of sales remained flat, with **$11.6 million** related to Indoff and **$6.4 million** in planned marketing spend[83](index=83&type=chunk) [OPERATING MARGIN](index=30&type=section&id=OPERATING%20MARGIN) - **Operating margin** for Q3 2023 declined **120 basis points** YoY, primarily due to the **gross margin** decline, partially offset by **SD&A** savings[84](index=84&type=chunk) - **Operating margin** for the nine months ended September 30, 2023, declined **180 basis points** YoY, attributed to sales declines in Q1/Q2, **gross margin** decline, and severance-related costs[85](index=85&type=chunk) [INTEREST AND OTHER EXPENSE, NET](index=31&type=section&id=INTEREST%20AND%20OTHER%20EXPENSE,%20NET) Interest and Other Expense, Net (Millions $) | Period | 2023 | 2022 | | :------------------------------ | :--- | :--- | | Three Months Ended Sep 30 | 0.7 | 0.6 | | Nine Months Ended Sep 30 | 1.2 | 1.3 | [INCOME TAXES](index=31&type=section&id=INCOME%20TAXES) Provision for Income Taxes (Millions $) | Period | 2023 | 2022 | | :------------------------------ | :--- | :--- | | Three Months Ended Sep 30 | 6.8 | 6.6 | | Nine Months Ended Sep 30 | 18.4 | 21.5 | [Financial Condition, Liquidity and Capital Resources](index=31&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) Selected Liquidity Data (Millions $) | Metric | Sep 30, 2023 | Dec 31, 2022 | $ Change | | :-------------------------------- | :----------- | :----------- | :------- | | Cash and cash equivalents | 34.3 | 28.5 | 5.8 | | Accounts receivable, net | 136.8 | 108.0 | 28.8 | | Inventories | 153.8 | 179.4 | (25.6) | | Accounts payable | 125.8 | 96.9 | 28.9 | | Working capital | 142.9 | 172.6 | (29.7) | Historical Cash Flows (Millions $) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | 103.7 | 23.4 | | Net cash used in investing activities | (75.6) | (4.9) | | Net cash used in financing activities | (22.3) | (13.6) | | Net increase in cash and cash equivalents | 5.8 | 4.6 | - The Company believes current **cash on hand**, **operating cash flow**, and **credit facility** availability will be sufficient to fund **working capital** and other **cash requirements** for at least the next twelve months[89](index=89&type=chunk) [Operating Activities](index=32&type=section&id=Operating%20Activities) - **Net cash provided by operating activities from continuing operations** significantly increased to **$103.8 million** in 2023 from **$23.5 million** in 2022, primarily due to favorable changes in **working capital accounts**[92](index=92&type=chunk) [Investing Activities](index=32&type=section&id=Investing%20Activities) - **Net cash used in investing activities** totaled **$75.6 million** in 2023, with **$72.6 million** allocated to the Indoff acquisition and **$3.3 million** for property, plant, and equipment[93](index=93&type=chunk) [Financing Activities](index=32&type=section&id=Financing%20Activities) - **Net cash used in financing activities** was **$22.3 million** in 2023, primarily for **$23.0 million** in **dividends** and net repayments of short-term borrowings, partially offset by proceeds from stock issuance[94](index=94&type=chunk) - The Company declared regular quarterly **dividends** of **$0.20 per common share** in 2023, up from **$0.18 per share** in 2022[10](index=10&type=chunk)[94](index=94&type=chunk) [Material Cash Requirements](index=33&type=section&id=Material%20Cash%20Requirements) - As of September 30, 2023, the Company had **$98.0 million** in **non-cancelable operating and finance lease obligations**, with an anticipated **$4.7 million** in remaining cash expenditures for 2023[101](index=101&type=chunk) - The Company anticipates **capital expenditures** in the range of **$5.0 to $6.0 million** for 2023[98](index=98&type=chunk) - The Company had over **$138 million** of **liquidity** (**cash** and undrawn line of **credit**) in the U.S. as of September 30, 2023[100](index=100&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, primarily from interest rates and foreign currency exchange rates - The Company is exposed to **market risks** from changes in U.S. and international **interest rates** and **currency exchange rates** (principally Canadian dollars)[103](index=103&type=chunk) - The Company has limited involvement with derivative financial instruments and does not use them for trading purposes; as of September 30, 2023, there were no outstanding option or forward exchange contracts[104](index=104&type=chunk) - As of September 30, 2023, the Company had no outstanding variable rate debt under its **credit facility**, and a hypothetical one **percentage point** change in **interest rates** is not expected to materially affect its financial position[105](index=105&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, their effectiveness, and changes in internal control over financial reporting - The Company's CEO and CFO concluded that **disclosure controls and procedures** were effective as of September 30, 2023[107](index=107&type=chunk) - The assessment of **internal controls** for Indoff LLC, which represented approximately **5%** of consolidated **total assets** and **7%** of **net sales**, was omitted from the evaluation due to its recent acquisition[107](index=107&type=chunk) - There have been no material changes in the Company's **internal controls over financial reporting** during the quarter ended September 30, 2023[110](index=110&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, evaluated the effectiveness of **disclosure controls and procedures** as of September 30, 2023, concluding they are effective[107](index=107&type=chunk) - The assessment excluded Indoff LLC's **internal controls over financial reporting** due to its recent acquisition on May 19, 2023[107](index=107&type=chunk) [Changes in Internal Control Over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in **internal controls over financial reporting** occurred during the quarter ended September 30, 2023[110](index=110&type=chunk) - The Company is integrating Indoff LLC's operations into its overall system of **internal control over financial reporting** and will make appropriate changes as needed[110](index=110&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the Condensed Consolidated Financial Statements for a detailed description of the Company's legal proceedings - For information regarding **legal proceedings**, refer to Note 9, **Legal Proceedings**, of the Notes to Condensed Consolidated Financial Statements[112](index=112&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section indicates no material changes to the Company's risk factors and directs readers to the 2022 Annual Report on Form 10-K - There were no material changes to the Company's **risk factors** during the third quarter ended September 30, 2023[114](index=114&type=chunk) - For information regarding **risk factors**, refer to Item 1A. "**Risk Factors**" of the Company's 2022 Annual Report on Form 10-K[113](index=113&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, the Indoff LLC Securities Purchase Agreement, and XBRL documents - **Exhibits** include certifications from the CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act) and the Securities Purchase Agreement for Indoff LLC[116](index=116&type=chunk) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, and Presentation Linkbase Documents are also filed as **exhibits**[116](index=116&type=chunk) [Signatures](index=38&type=section&id=Signatures) This section contains the duly authorized signatures of Global Industrial Company's President and CEO, Barry Litwin, and SVP and CFO, Thomas Clark - The report is signed by Barry Litwin, President and Chief Executive Officer, and Thomas Clark, Senior Vice President and Chief Financial Officer, on October 31, 2023[120](index=120&type=chunk)[123](index=123&type=chunk)

Financial Performance - Total revenue for Q2 2023 was $325.8 million, an increase of 2.3% year-over-year, while organic revenue was $301.9 million, down 5.2% [18][8] - Gross profit for the quarter was $112.9 million, flat compared to last year, with a gross margin of 34.7%, down 80 basis points year-over-year [19][20] - Operating income from continuing operations was $29.1 million, with an operating margin of 8.9% [23] Business Line Performance - Organic U.S. revenue declined by 5.2%, while organic revenue in Canada was approximately flat in local currency, showing significant improvement from Q1 [18] - E-commerce sales grew to over 60% of total sales transactions, driven by enhancements in the online shopping experience [10][8] - Direct sales channel remained soft year-over-year due to cautious purchasing behavior and lower average order value [11] Market Performance - Price deflation was noted in the range of low to mid-single digits, contrasting with neutral pricing in Q1 and a benefit in the previous year [18] - The manufacturing segment faced challenges, with cautious behavior observed among small and medium-sized businesses [35] Company Strategy and Industry Competition - The acquisition of Indoff in late May 2023 is expected to diversify operations and broaden customer reach, enhancing the company's value proposition [6][7] - The company is focused on strengthening its competitive position through investments in sales and marketing, particularly targeting customer acquisition [11][15] - Management is actively working on cross-selling and private brand opportunities to enhance the margin profile of the Indoff business [23][42] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in navigating current market conditions, citing strong cash flows and a solid balance sheet [15][25] - There is an expectation of continued variability in gross margins throughout 2023 due to seasonality and inventory management [21] - Customer sentiment is anticipated to improve, which may positively impact performance in the latter half of the year [15] Other Important Information - The company declared a quarterly dividend of $0.20 per share of common stock [26] - Strong cash flow from continuing operations was reported at $37 million for the quarter [24] Q&A Session Summary Question: Can you quantify the price deflation impact on the organic sales decline? - Management indicated that low single digits contributed to the organic sales decline, with competitive pricing and lower container costs being significant factors [33][34] Question: How is the enterprise customer segment performing? - Management noted that while the manufacturing segment is challenged, they are continuing to invest in sales and marketing to drive growth in larger customer segments [35] Question: What improvements have been seen in customer trends? - Management highlighted improvements in e-commerce performance and noted that some customers are beginning to transact after cautious behavior earlier in the year [36] Question: Is price deflation across all merchandise categories? - Management confirmed that price deflation is observed across many core product categories, driven by competitive pricing and cost reductions [39][41] Question: What synergy opportunities exist with the Indoff acquisition? - Management expressed satisfaction with the integration process and highlighted opportunities for private label expansion and cross-selling to enhance margins [42] Question: How much visibility is there into Indoff's project-based business? - Management acknowledged that the project-based nature of Indoff's business can lead to variability, but they are gaining better visibility as integration progresses [44][45]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Global Industrial Company (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 11-3262067 (I.R.S. Employer Identification No.) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ...

Global Industrial Company (NYSE:GIC) Q1 2023 Earnings Conference Call May 2, 2023 5:00 PM ET Company Participants Barry Litwin - Chief Executive Officer Tex Clark - Senior Vice President, Chief Financial Officer Mike Smargiassi - Investor Relations Conference Call Participants Anthony Lebiedzinski - Sidoti Operator Good day! And welcome to Global Industrial Company First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note, this event is ...

Financial Performance - Consolidated net sales decreased by 5.1% to $273.8 million compared to $288.6 million in the previous year[58] - Consolidated gross margin declined to 35.9% for Q1 2023, down from 37.4% in Q1 2022[58] - Consolidated operating income from continuing operations decreased by 39.7% to $17.8 million compared to $29.5 million last year[58] - Net income per diluted share from continuing operations decreased by 38.6% to $0.35 compared to $0.57 last year[58] - Average daily sales declined by 3.7% in the first quarter, reflecting a soft demand environment[51] - Sales in the United States were down 3.7%, while sales in Canada decreased by 17.3% in local currency[51] - Net sales decreased by 5.1% in Q1 2023 compared to Q1 2022, with U.S. sales down 3.7% and Canada sales down 17.3% in local currency[62] - Gross margin declined by 150 basis points in Q1 2023 compared to Q1 2022, influenced by lower price realization and inventory costs[65] - Operating margin declined by 370 basis points in Q1 2023 compared to Q1 2022, driven by decreased sales and lower gross margin[67] Expenses and Costs - Consolidated selling, distribution, and administrative costs increased by 2.9% to $80.6 million[59] - Selling, distribution, and administrative expenses (SD&A) as a percentage of sales increased by 230 basis points in Q1 2023 compared to Q1 2022, reflecting increased marketing efforts and salary costs[66] Cash Flow and Liquidity - Net cash provided by operating activities from continuing operations was $28.5 million in Q1 2023, a significant increase from a cash outflow of $14.0 million in Q1 2022[71] - Cash and cash equivalents increased to $48.2 million as of March 31, 2023, up from $28.5 million at the end of 2022[70] - The company had over $160 million of liquidity (cash and undrawn line of credit) in the U.S. as of March 31, 2023[82] - The company maintains a $125.0 million secured revolving credit facility, with total availability of $118.0 million as of March 31, 2023[76] - Accounts receivable days outstanding were 38.3 in 2023 compared to 37.8 in 2022, indicating a slight increase in collection time[72] Management and Internal Controls - The Company's management, including the CEO and CFO, concluded that the disclosure controls and procedures are effective as of March 31, 2023[88] - The internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting in accordance with generally accepted accounting principles[89] - There have been no changes in the Company's internal controls over financial reporting during the quarterly period ended March 31, 2023, that materially affected the internal control[91] Future Outlook - The company expects continued margin variability due to the current economic environment and inflationary pressures[51] - The company anticipates capital expenditures in the range of $6.0 to $8.0 million for 2023, focusing on technological upgrades and distribution facilities[80] Customer Metrics - Customer retention remained healthy, reflecting the value of the company's managed sales organization[51]

Part I [Business](index=7&type=section&id=Item%201.%20Business) Global Industrial is a North American value-added distributor of over one million MRO products, leveraging e-commerce and relationship marketing - The company is a value-added industrial distributor of over a million industrial and MRO products in North America, marketing through e-commerce and relationship marketers[18](index=18&type=chunk) - The company's core strategy is "Accelerating our Customers Experience" (ACE), which aims to build customer loyalty through personalized sales, product, and service experiences[20](index=20&type=chunk) [Products](index=7&type=section&id=Item%201.%20Business%20-%20Products) The company offers over one million industrial and MRO products, including leading brand names and its strategic, higher-margin private brand line - Offers over **one million brand name and private brand products**, with access to over **1.7 million products** in its database[21](index=21&type=chunk) - Markets its own private brand products under trademarks including Global™, GlobalIndustrial.com™, Nexel™, Paramount™, and Interion™[19](index=19&type=chunk) [Sales and Marketing](index=8&type=section&id=Item%201.%20Business%20-%20Sales%20and%20Marketing) The company employs a multi-faceted direct marketing system, including e-commerce and a relationship marketing sales force, targeting diverse customer segments - Operates multiple e-commerce sites, including www.globalindustrial.com and www.globalindustrial.ca, launching a new site in 2022 to enhance personalization[24](index=24&type=chunk) - In 2022, the company initiated its "We Can Supply That®" branding campaign and repositioned its private brand as "Global Industrial Exclusive Brands™"[28](index=28&type=chunk) - The relationship marketing sales force includes specialized account managers for public sector, commercial, and strategic enterprise accounts, supported by various sales experts[23](index=23&type=chunk) [Customer Service, Order Fulfillment and Support](index=9&type=section&id=Item%201.%20Business%20-%20Customer%20Service%2C%20Order%20Fulfillment%20and%20Support) Order fulfillment combines distribution centers and drop-shipping, with over 57% of 2022 transactions electronic, supported by enhanced customer service - Electronic orders (internet, EDI, etc.) represented over **57% of the transaction count** for the year ended December 31, 2022, up from 56% in 2021[31](index=31&type=chunk) - The company utilizes a network of **five large distribution centers in the U.S. and two distribution facilities in Canada** for in-stock items[32](index=32&type=chunk) [Competition and Other Market Factors](index=9&type=section&id=Item%201.%20Business%20-%20Competition%20and%20Other%20Market%20Factors) The highly fragmented North American industrial products market presents intense competition from large MRO distributors, retailers, and direct manufacturers - The company faces competition from large diversified MRO distributors such as Uline Inc, Grainger Inc., MSC Industrial Direct Inc., Fastenal Inc., and other large retailers, including Amazon[35](index=35&type=chunk)[36](index=36&type=chunk) [Human Capital Resources](index=11&type=section&id=Item%201.%20Business%20-%20Human%20Capital%20Resources) As of December 2022, Global Industrial employed approximately 1,650 associates, primarily in North America, with a diverse workforce across key functions Employee Distribution by Function (as of Dec 31, 2022) | Function | Percentage of Associates | | :--- | :--- | | Customer Facing (Sales, Service, etc.) | ~39% | | Distribution, Logistics, Fulfillment | ~37% | | Administrative (IT, HR, Finance, etc.) | ~24% | - As of December 31, 2022, the company employed approximately **1,650 associates**, with **1,420 in North America** and 230 in Asia[37](index=37&type=chunk) - In the U.S., the workforce is **44% female and 56% male**, with minorities making up **55% of the workforce**[38](index=38&type=chunk) [Seasonality](index=11&type=section&id=Item%201.%20Business%20-%20Seasonality) Sales exhibit seasonality, with higher results in Q2 and Q3 driven by seasonal product lines and education/government customer buying cycles - Sales and operating margin tend to be moderately higher in the second and third quarters compared to the first and fourth quarters due to seasonal product lines (e.g., HVAC, snow removal) and customer buying cycles (e.g., education, government)[41](index=41&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including economic downturns, supply chain disruptions, tariffs, IT failures, and concentrated voting power impacting financial performance - Economic conditions, pandemics (like COVID-19), and geopolitical instability (like the Russia-Ukraine conflict) can disrupt global supply chains, particularly for products sourced from China, potentially leading to delayed or lost sales[46](index=46&type=chunk)[47](index=47&type=chunk)[52](index=52&type=chunk) - The imposition of tariffs on goods from China has increased procurement costs, which the company has sought to mitigate by raising prices and finding alternative suppliers, actions that carry their own risks[51](index=51&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - The business is heavily reliant on its information systems, where a data security breach, system failure, or disruption could compromise sensitive information, disrupt operations, and lead to liability and reputational damage[72](index=72&type=chunk)[73](index=73&type=chunk)[78](index=78&type=chunk) - The Leeds family controls approximately **66.4% of the voting power**, allowing them to determine the outcome of most stockholder matters and classifying the company as a "controlled company" under NYSE rules[82](index=82&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[89](index=89&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) Global Industrial operates numerous leased facilities, including seven North American distribution centers totaling 2.7 million square feet, for its operations - All of the company's facilities, including headquarters, administrative offices, call centers, and distribution centers, are leased[90](index=90&type=chunk) - As of December 31, 2022, the company operates **seven distribution centers in North America**, aggregating approximately **2.7 million square feet**[91](index=91&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings information is detailed in Note 15, "Commitments, Contingencies and Other Matters," within the Consolidated Financial Statements - A description of the Company's legal proceedings is available in Note 15 of the Notes to Consolidated Financial Statements[95](index=95&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[96](index=96&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Global Industrial's common stock trades on NYSE under "GIC"; the company increased its quarterly dividend to $0.20 in 2023 and has 1.375 million shares available for repurchase 2022 Quarterly Stock Price and Dividends | Quarter | High Price | Low Price | Dividends per Share | | :--- | :--- | :--- | :--- | | First | $40.56 | $29.25 | $0.18 | | Second | $36.28 | $30.46 | $0.18 | | Third | $36.29 | $26.38 | $0.18 | | Fourth | $31.74 | $22.54 | $0.18 | - In February 2023, the Board of Directors declared a quarterly cash dividend of **$0.20 per share**, an increase from the $0.18 paid in 2022[100](index=100&type=chunk) - No shares were repurchased during 2022 and 2021, leaving approximately **1,375,000 shares** available under the existing share repurchase program[104](index=104&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2022, Global Industrial achieved 9.7% sales growth to $1.17 billion and 19.5% operating income growth to $105.2 million, with gross margin improving to 36.1% Financial Highlights 2022 vs. 2021 (in millions) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Consolidated Net Sales | $1,166.1 M | $1,063.1 M | 9.7% | | Consolidated Gross Profit | $421.2 M | $374.3 M | 12.5% | | Gross Margin | 36.1% | 35.2% | +0.9 ppt | | Consolidated Operating Income | $105.2 M | $88.0 M | 19.5% | | Operating Margin | 9.0% | 8.3% | +0.7 ppt | | Net Income from Continuing Ops | $78.1 M | $70.1 M | 11.4% | - The company's private brand offering represented approximately **50% of total sales** in 2022[122](index=122&type=chunk) - While sales grew by double digits in the first half of 2022, growth moderated in the second half due to a softened demand environment, a trend that continued into early 2023[123](index=123&type=chunk) [Results of Operations](index=25&type=section&id=Item%207.%20MD%26A%20-%20Results%20of%20Operations) Fiscal 2022 net sales rose 9.7% to $1.17 billion, driven by managed sales and private brands, resulting in a 90 basis point gross margin expansion - Net sales increased **9.7% to $1.17 billion** in 2022, with U.S. sales growing **10.1%** and Canada sales increasing **7.7% in local currency**[122](index=122&type=chunk) - Gross margin improved to **36.1% from 35.2%** in 2021, mainly due to the normalization of freight costs and a higher mix of private brand sales[125](index=125&type=chunk) - SD&A expenses rose to **$316.0 million**, a **10.4% increase**, driven by higher salary and compensation costs (**$13.6 million**), increased marketing investment (**$7.2 million**), and costs for the new Canadian distribution center (**$2.2 million**)[127](index=127&type=chunk)[128](index=128&type=chunk) - Net income from discontinued operations was **$0.7 million** in 2022, a significant decrease from **$33.2 million** in 2021, which included large one-time benefits from the resolution of certain liabilities[129](index=129&type=chunk)[130](index=130&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=27&type=section&id=Item%207.%20MD%26A%20-%20Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company's financial condition remains solid, with working capital increasing to $172.6 million and liquidity enhanced by a $125 million credit facility Cash Flow Summary (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $50.2 | $49.8 | | Net cash used in investing activities | $(7.1) | $(3.4) | | Net cash used in financing activities | $(29.7) | $(55.0) | - In November 2022, the company amended its credit agreement, increasing its secured revolving credit facility to **$125.0 million from $75.0 million**[143](index=143&type=chunk)[275](index=275&type=chunk) - As of December 31, 2022, the company had total excess availability of **$111.7 million** under its credit facility[143](index=143&type=chunk)[275](index=275&type=chunk) - Anticipated capital expenditures for 2023 are projected to be between **$6.0 million and $8.0 million**[146](index=146&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=Item%207.%20MD%26A%20-%20Critical%20Accounting%20Policies%20and%20Estimates) Management identifies Revenue Recognition and Inventory Valuation as critical accounting policies due to significant judgments and estimates involved - Revenue is recognized when performance obligations are satisfied, generally upon shipment of goods, and is presented net of estimated sales returns and allowances[155](index=155&type=chunk)[156](index=156&type=chunk) - Inventories are valued at the lower of cost (determined by FIFO method) or net realizable value, with write-downs for excess and obsolete merchandise based on historical experience and assumptions about future demand[160](index=160&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include foreign currency exchange rate fluctuations, mainly from Canadian operations, and interest rate changes on variable-rate debt - The company is exposed to currency exchange rate risk, principally with the Canadian Dollar, where a **10% change in foreign exchange rates in 2022** would have fluctuated sales by approximately **$7.2 million**[164](index=164&type=chunk) - Interest rate risk is primarily related to variable-rate debt, but with only **$0.6 million outstanding** as of December 31, 2022, a hypothetical **1% change in interest rates** is not expected to have a material effect[165](index=165&type=chunk) [Financial Statements and Supplementary Data](index=31&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's audited consolidated financial statements for fiscal year 2022 and the independent auditor's report - The information required by this item is incorporated by reference to the Consolidated Financial Statements filed with the report, as detailed in Item 15[167](index=167&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with an unqualified auditor opinion - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of December 31, 2022[169](index=169&type=chunk) - Management concluded that the Company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO 2013 framework[172](index=172&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2022[173](index=173&type=chunk)[176](index=176&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, and Other Matters](index=34&type=section&id=Items%2010-14) Information for Items 10 through 14, covering governance, compensation, security ownership, and related party transactions, is incorporated by reference from the 2023 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Company's Proxy Statement for the 2023 Annual Meeting of Stockholders[184](index=184&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=34&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section presents the company's consolidated financial statements, the independent auditor's report, and a comprehensive list of all exhibits filed with the Form 10-K [Consolidated Financial Statements](index=39&type=section&id=Consolidated%20Financial%20Statements) The audited financial statements present the company's financial position, results of operations, and cash flows for the fiscal years ended December 31, 2022 and 2021 Consolidated Balance Sheet Data (in millions) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | $325.7 | $301.4 | | Total Assets | $455.2 | $405.0 | | **Liabilities & Equity** | | | | Total Current Liabilities | $153.1 | $179.9 | | Total Liabilities | $244.8 | $251.4 | | Total Shareholders' Equity | $210.4 | $153.6 | Consolidated Statement of Operations Data (in millions) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Sales | $1,166.1 | $1,063.1 | | Gross Profit | $421.2 | $374.3 | | Operating Income from Continuing Ops | $105.2 | $88.0 | | Net Income from Continuing Ops | $78.1 | $70.1 | | Net Income | $78.8 | $103.3 | Consolidated Cash Flow Data (in millions) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $50.2 | $49.8 | | Net cash used in investing activities | $(7.1) | $(3.4) | | Net cash used in financing activities | $(29.7) | $(55.0) | | Net increase (decrease) in cash | $13.1 | $(8.6) |

Financial Data and Key Metrics Changes - In 2022, the company achieved total revenue of $1.17 billion, reflecting a 9.7% growth driven by organic growth contributing over $100 million [23][35] - Gross margin improved by 90 basis points to 36.1% for the full year, although Q4 gross margin was 36%, down 100 basis points year-over-year [23][58] - Operating income increased by 19.5% to over $105 million, with an operating margin of 9%, a 70 basis point improvement from 2021 [35] Business Line Data and Key Metrics Changes - The private brand offering represented approximately 50% of total sales for the year, indicating a focus on exclusive brands [41] - The heating and winter seasonal category was soft due to a mild winter, impacting demand [30][63] - Average daily sales in Q4 were down 2.2%, with revenue in Canada improving approximately 2.5% in local currency [29][57] Market Data and Key Metrics Changes - U.S. revenue decreased by 0.2% in Q4, while Canadian revenue showed a slight improvement [57] - Demand trends have been muted across categories and sales channels, continuing into 2023 [24][19] - The company noted that customers are being more guarded in their buying decisions due to a competitive pricing environment [58][19] Company Strategy and Development Direction - The company is focused on capturing market share through customer acquisition, retention, and expanding exclusive branded items [25] - A new marketing campaign aimed at operational efficiency has been launched, aligning with customer needs [37] - The company plans to invest in strategic areas such as pricing intelligence, productivity, and margin optimization [55] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the MRO market for 2023, anticipating better performance in the latter half of the year [12][13] - The company is confident in its ability to manage through current challenges and maintain its margin profile [42] - There is an expectation of variability in margins throughout the year as the company works through inventory with higher landed costs [42] Other Important Information - The company announced a quarterly dividend increase of 11.1% to $0.20 per share, marking the seventh consecutive year of dividend increases [44] - A reduction in force was implemented to right-size the cost structure, expected to reduce annualized costs by approximately $6 million [31] Q&A Session Summary Question: Can you provide details on Q4 sales by products or end market? - Management noted that price benefits waned in Q4, with small and medium-sized businesses appearing more cautious compared to large national accounts [50] Question: What is the outlook for the MRO market in 2023? - Management indicated a cautious tone but remains hopeful for better performance in the second half of the year, driven by sales initiatives and investments [12][13] Question: How should we think about inventory management? - The company does not have specific inventory targets but aims to normalize inventory levels as supply chain costs decrease [7]

Financial Data and Key Metrics Changes - Third quarter revenue reached nearly $300 million, growing 7.6% over the same quarter last year [6][17] - Gross margin increased modestly on a sequential basis to 35.7%, but was down from a record performance last year [6][18] - Gross profit for the quarter was $106.6 million, up 4.5% from last year [18] - Selling, distribution, and administrative spending was $79.1 million, or 26.5% of net sales, an increase of 80 basis points from last year [22] - Operating income from continuing operations was $27.5 million, with an operating margin of 9.2% [23] - The company maintained a strong balance sheet with a current ratio of 1.9:1, $20 million in cash, and $10 million of debt [25] Business Line Data and Key Metrics Changes - U.S. revenue increased over 8%, while revenue in Canada improved approximately 4% in local currency [17] - The private brand offering increased as a percentage of total sales, contributing to margin maintenance despite price pressures [17][45] Market Data and Key Metrics Changes - The demand environment softened as customers adopted a more guarded approach to buying decisions [18][42] - The company noted that while ocean freight costs have moderated, they remain elevated compared to historical levels [20] Company Strategy and Development Direction - The company is investing in growth and productivity initiatives, including sales, marketing, digital transformation, and pricing analytics [8][14] - Expansion of customer relationships in hospitality and healthcare markets is a key growth initiative [9] - The launch of a new digital e-commerce site aims to enhance customer experience and drive sales [13][46] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the current outlook but emphasized ongoing investments to adapt to changing market conditions [8][14] - There is a focus on operational excellence and maintaining a customer-centric approach [15] - Management believes that long-term margin gains are achievable through a higher balance of private brand sales and optimized operations [21] Other Important Information - The company declared a quarterly dividend of $0.18 per share and anticipates continuing regular dividends in the future [26] - Capital expenditures for 2022 are expected to be in the range of $6 million to $7 million, including the new Canada distribution center [24] Q&A Session Summary Question: Can you provide additional color on the monthly cadence and product category performance? - Management noted a softening demand environment through Q3, with strong growth in core lines and private brand assortment [30][31] Question: What drove the year-over-year gross margin decline? - The decline was attributed to differential FIFO inventory levels last year and the impact of promotional pricing on excess stock [32][34] Question: Which initiatives will be most impactful in adapting to the current market? - Key initiatives include pricing analytics and maintaining close customer relationships through the sales team [35][36] Question: What are the findings from customer survey data? - There is a global caution around market conditions, but improvements in supply chain satisfaction have been noted [39] Question: Was there a significant drop in demand in August and September? - Management confirmed a guarded approach from customers, with a focus on spending through the year [42] Question: Can you quantify the growth rates between private label sales and other products? - Private brand sales are the fastest-growing segment, contributing significantly to margin maintenance [44][45] Question: What are the expectations for the new e-commerce site? - The site has received positive feedback, and enhancements are ongoing to improve user experience [46][47] Question: Have discussions with potential acquisition targets intensified? - Management continues to scan the market for acquisition opportunities but did not comment on specific valuations [49]

Financial Performance - Consolidated sales increased 7.6% to $298.5 million for Q3 2022 compared to $277.4 million last year[59] - Consolidated gross margin declined to 35.7% for Q3 2022 compared to 36.8% last year[68] - Consolidated operating income from continuing operations decreased 10.1% to $27.5 million for Q3 2022 compared to $30.6 million last year[68] - Net income per diluted share from continuing operations decreased 13.1% to $0.53 for Q3 2022 compared to $0.61 last year[68] - Consolidated sales increased 13.0% to $905.6 million for the nine months ended September 30, 2022 compared to $801.1 million last year[68] - Consolidated gross margin increased to 36.2% for the nine months ended September 30, 2022 compared to 34.6% last year[68] - Consolidated operating income from continuing operations increased 41.4% to $87.5 million for the nine months ended September 30, 2022 compared to $61.9 million last year[68] - Net income per diluted share from continuing operations increased 29.0% to $1.69 for the nine months ended September 30, 2022 compared to $1.31 last year[68] Market Conditions - The demand environment softened as customers adopted a more guarded approach to buying decisions due to broader market uncertainty[59] Investments and Costs - Investments in the expansion of the Canada distribution network included approximately $0.8 million in ramp-up costs incurred in Q3 2022[59] - Selling, distribution, and administrative (SD&A) costs increased by 10.8% to $79.1 million for the third quarter, reflecting investments in the Canadian distribution network and e-commerce enhancements[78] Cash Flow and Liquidity - Cash and cash equivalents increased by $4.6 million to $20.0 million as of September 30, 2022, compared to $15.4 million at the end of 2021[86] - Working capital increased by $44.7 million to $166.2 million, primarily due to increased inventory and accounts receivable[88] - Net cash provided by operating activities from continuing operations was $23.5 million in 2022, down from $39.3 million in 2021, primarily due to a $48.6 million cash usage in working capital accounts compared to $14.7 million in 2021[90] - Cash generated from net income adjusted by other non-cash items was $72.1 million in 2022, an increase from $54.0 million in 2021, attributed to higher net income for the nine months ended September 30, 2022[90] - Net cash used in investing activities totaled $4.9 million in 2022, up from $3.4 million in 2021, mainly for warehouse machinery and equipment related to the new Canadian distribution center[91] - Net cash used in financing activities was $13.6 million in 2022, primarily due to a quarterly dividend of $0.18 per share totaling approximately $20.8 million, partially offset by $5.5 million from short-term borrowings[92] - The company maintains a $75.0 million secured revolving credit facility, with total outstanding borrowings of $10.0 million and total excess availability of $60.8 million as of September 30, 2022[93] - The company had approximately $76 million of liquidity (cash and undrawn line of credit) in the U.S. as of September 30, 2022[98] Obligations and Expenditures - Obligations under non-cancelable operating leases totaled approximately $101.5 million as of September 30, 2022, with remaining cash expenditures anticipated at $4.1 million for 2022[99] - The company had $1.5 million of standby letters of credit outstanding as of September 30, 2022[100] - Anticipated capital expenditures for 2022 are in the range of $6.0 to $7.0 million, with no contractual commitments at this time[96] Interest and Tax - Interest and other expense, net from continuing operations rose to $0.6 million for the third quarter of 2022, compared to $0.2 million in the same period of 2021[82] - The effective income tax rate increased to 24.5% for the third quarter of 2022, compared to 23.7% in the same period of 2021[74] - The company does not expect a material effect on financial position from a hypothetical one percentage point change in average interest rates, given $10.0 million outstanding under variable rate credit facilities[103]