GLOBAL INDUSTRIAL Co Q1 FY2025 earnings call

• Revenue was $321 million, down 0.7% year-over-year. Excluding holiday impact, revenue would have been up low single digits. - Gross margin increased 60 basis points, operating income improved 4.6%. - Anesa Chaibi has spent time visiting locations, impressed by culture and engagement. - Developing account-based marketing program and CRM implementation on track for summer. - Actively managing tariffs, focusing on supplier relationships and logistics, with inventory in good position. - Diversifying supply chain for exclusive brand products, though direct imports from China remain significant.

In the first quarter, Global Industrial generated revenue of $321 million, a decline of less than 1%. U.S. revenue was off 0.3%, and Canada revenue was down 2.5% in local currency but approximately 9% in U.S. dollars due to exchange rate headwinds. Gross profit for the quarter was $112.1 million, with gross margin at 34.9%, up 60 basis points from the year-ago period. Revenue excluding the New Year's holiday impact would have been up low single digits, and strength by Indoff in large strategic accounts enhanced results.

• Expect 2025 capital expenditures in the range of $2 million to $3 million. - Board declared a quarterly dividend of $0.26 per share of common stock. - Anticipate continued efforts in account-based marketing, CRM implementation, and supply chain diversification to drive growth.

• Tariffs enacted in April have disrupted the business and supply chain, impacting price and demand dynamics. - Continued uncertainty around tariff levels and potential changes, which could affect margins and supply chain strategies. - Macro-economic uncertainties that may impact customer purchasing decisions.

Q: Can you provide more color on the impact of Indoff and SMB clients?

A: Indoff continued good growth in large customer segments with standard size projects. SMB clients also accelerated and improved moving into March and April.

Q: How to think about SD&A expenses going forward?

A: SD&A expenses were barely up, with focus on cost control and leveraging revenue improvement for better leverage on fixed costs.

Q: Comment on tariffs and pricing/gross margins going forward?

A: Actively managing tariffs, with some pricing actions taken, and monitoring inventory position. Fluid situation with tariffs being a wild card.

Q: Shifting sourcing out of China and goals?

A: Sourcing from China is still a major source but diversifying, though takes time to find quality partners.

Q: Impact of 150% tariffs from China on pricing?

A: Significant price increases may be needed, but need to consider portfolio blend. Actively working on managing this.

Q: Balance sheet and M&A?

A: Balance sheet is strong, with M&A being a lever for growth, and actively looking at potential opportunities.