GLOBAL INDUSTRIAL Co

Previous wording

•our ability to realize the expected benefits from acquisitions, including the recent Indoff acquisition, and other strategic transactions that we believe will either expand or complement our business in new or existing markets or further enhance the value and offerings we are able to provide to our existing or future potential customers;

Current wording

•our ability to realize the expected benefits from acquisitions, including the Indoff acquisition, and other strategic transactions that we believe will either expand or complement our business in new or existing markets or further enhance the value and offerings we are able to provide to our existing or future potential customers;

Previous wording

Global Industrial Company, through its subsidiaries, is a value-added distributor of hundreds of thousands of industrial and MRO products in North America going to market through a system of branded e-commerce websites and relationship marketers.

Current wording

Global Industrial Company, through its subsidiaries, is a value-added distributor and source for industrial equipment and supplies in North America going to market through a system of branded e-commerce websites and relationship marketers.

Previous wording

The Company sells a wide array of industrial and maintenance, repair and operations (“MRO”) products, including its own Global Industrial Exclusive Brands TM, which are marketed in North America. These industrial and MRO products are manufactured by other companies. Some products are manufactured for us and sold as a white label product, and some are manufactured to our own design and marketed as private brand products under the trademarks: Global TM, GlobalIndustrial.com TM, Nexel TM, Paramount TM, Interion TMand Absocold TM

Current wording

The Company specializes in providing maintenance, repair and operations (“MRO”) solutions to businesses ranging from small to enterprise, and to the public sector. The Company is committed to its customer-centric strategy and uses industry expertise, products from its own Global Industrial Exclusive Brands TM, and nationally known brands to provide customers with a breadth of offerings to meet their needs. These industrial and MRO products are manufactured by other companies. Some products are manufactured for us and sold as a white label product, and some are manufactured to our own design and marketed as private brand products under the trademarks: Global TM, GlobalIndustrial.com TM, Nexel TM, Paramount TM, Interion TMand Absocold TM

Previous wording

See Note 4, Revenue, of Notes to the Condensed Consolidated Financial Statements for additional financial information about our business' geographic operations.

Current wording

See Note 3, Revenue, of Notes to the Condensed Consolidated Financial Statements for financial information about our business' geographic operations.

Previous wording

The North American industrial products market is highly fragmented and we compete against companies operating through multiple distribution channels. Industrial products distribution is working capital intensive, requiring us to incur significant costs associated with the warehousing of many products, including the costs of maintaining inventory, leasing warehouse space, inventory management systems and employing personnel to perform the associated tasks. We supplement our on-hand product availability by maintaining relationships with major distributors and manufacturers, utilizing a combination of stock and drop-shipment fulfillment.

Current wording

The market for the sale of industrial products in North America is highly fragmented and is characterized by multiple distribution channels. Industrial products distribution is working capital intensive, requiring us to incur significant costs associated with the warehousing of many products, including the costs of maintaining inventory, leasing warehouse space, inventory management systems and employing personnel to perform the associated tasks. We supplement our on-hand product availability by maintaining relationships with major distributors and manufacturers, utilizing a combination of stock and drop-shipment fulfillment.

Previous wording

The Company's net sales in the third quarter of 2024 was down 3.4% as compared to the year ago period reflecting a continuation of the recent trend of a cautious demand environment within our core small and medium business customer base. Our strategic account business continues to perform well, delivering solid growth. In addition, retention rates and customer satisfaction, across our customer base, remained healthy. Gross margin in the third quarter of 2024 was 34.0%, a 120 basis point improvement from the prior year quarter results as we benefited from proactive price management. On a sequential quarter basis, this benefit was muted as gross margin was down 120 basis points, primarily as a result of elevated ocean freight costs. Management of our margin profile continues to remain a key area of focus. Performance will continue to reflect the impact of proactive promotion and freight actions as part of our competitive pricing initiatives. The Company may also experience margin variability in future periods due to the current economic environment, inflationary pressures primarily related to the increasing cost of ocean freight, and historical seasonality. Selling, distribution and administrative expenses ("SD&A") primarily reflects the fixed cost nature of the business, including variable compensation expense, increased healthcare costs and planned marketing investment. We currently expect SD&A expenses to be elevated in 2024 when compared to prior year due to planned investment in key sales and marketing growth initiatives, increased healthcare costs, as well as, integrating Indoff's operations into our overall internal controls over financial reporting and ongoing information technology ("IT") control remediation. We continue to maintain strong cost controls within discretionary spending, and will continue to evaluate additional steps to optimize our cost structure.

Current wording

The Company generated revenue of $321.0 million, a decline of less than 1% from the year ago period. Results were led by our largest strategic accounts. Gross margin increased 60 basis points over the first quarter of 2024 to 34.9%, benefiting from proactive price management and overall freight cost management. Management of our margin profile continues to remain a key area of focus. Future performance will continue to reflect the impact of strategic promotion and freight actions as part of our competitive pricing initiatives, tariff related actions, and ocean freight costs. We anticipate that there may be increased volatility in our margin rates going forward given the timing dynamics of on-hand inventory, market inflation associated with tariff related cost increases and our efforts to continue to diversify our supply chain. In regards to recently enacted tariffs, our focus is on what we control – working closely with manufacturing and vendor partners, ensuring product availability, and providing customers with as much visibility as we can in a fluid environment. Selling, distribution and administrative expenses ("SD&A") primarily reflects the fixed cost nature of the business, including variable compensation expense, increased stock-based compensation expense and planned marketing investment. We expect SD&A expenses to be impacted by costs of integrating Indoff's operations into our overall internal controls over financial reporting and ongoing information technology ("IT") control remediation. We continue to maintain strong cost controls within discretionary spending, and will continue to evaluate additional steps to optimize our cost structure.

Previous wording

There were no material changes in the Company’s significant accounting policies during the third quarter ended September 30, 2024.

Current wording

There were no material changes in the Company’s significant accounting policies during the first quarter ended March 31, 2025.

Previous wording

•Consolidated gross margin increased to 34.5% compared to 34.3% last year. Excluding Indoff, gross margin was 36.1%, an 80 basis point improvement over prior year.

Current wording

•Consolidated gross margin increased to 34.9% compared to 34.3% last year.

Previous wording

•Consolidated operating income from continuing operations decreased 21.3% to $22.2 million compared to $28.2 million last year.

Current wording

•Consolidated operating income from continuing operations increased 4.6% to $18.2 million compared to $17.4 million last year.

Previous wording

•Net income per diluted share from continuing operations decreased 18.5% to $0.44 compared to $0.54 last year.

Current wording

•Net income per diluted share from continuing operations increased 2.9% to $0.35 compared to $0.34 last year.

Previous wording

There were 63 selling days in the U.S. in the third quarters of 2024 and 2023, respectively, and there were 191 selling days in the U.S. for the nine months ended 2024 and 2023, respectively. There were 62 selling days in Canada in the third quarters of 2024 and 2023, respectively, and there were 188 selling days in Canada for the nine months ended 2024 and 2023, respectively.

Current wording

There were 64 selling days in the U.S. in each of the first quarters of 2025 and 2024, respectively, and in Canada, there were 63 selling days and 62 selling days in the first quarter of 2025 and 2024, respectively.

Previous wording

Gross margin is dependent on variables such as product mix including sourcing and category, competition, pricing strategy, vendor volume rebates, freight pricing decisions including the use of free or other promotional freight plans, freight cost inflation including both domestic outbound freight as well as international inbound ocean freight, inventory valuation and obsolescence and other variables, any or all of which may result in fluctuations in gross margin.

Current wording

Gross margin is dependent on variables such as product mix including sourcing and category, trade policy inclusive of the imposition of tariffs, competition, pricing strategy, vendor volume rebates, freight pricing decisions including the use of free or other promotional freight plans, freight cost inflation including both domestic outbound freight as well as international inbound ocean freight, inventory valuation and obsolescence and other variables, any or all of which may result in fluctuations in gross margin.

Previous wording

Management of our margin profile remains a key focus for the Company. Performance will continue to reflect the impact of proactive promotion and freight actions as part of our competitive pricing initiatives, as well as, the impact of Indoff's lower gross margin profile on consolidated gross margin. The Company may also experience margin variability in future periods due to the current economic environment, inflationary pressures and historical seasonality.

Current wording

Management of our margin profile remains a key focus for the Company. Performance will continue to reflect the impact of strategic promotion and freight actions as part of our competitive pricing initiatives, tariff related actions and ocean freight costs. The Company anticipates that there may be increased margin variability in future periods given the timing dynamics of on-hand inventory, inflationary pressures associated with tariff related cost increases, our efforts to continue to diversify our supply chain and historical seasonality.

Previous wording

Management currently expects SD&A expenses to be elevated compared to the year ago period as planned investment in key sales and marketing growth initiatives are implemented and increased audit and remediation costs are incurred.

Current wording

Management currently expects SD&A expenses to be elevated compared to the year ago period as planned investment in key sales and marketing growth initiatives are implemented.

Previous wording

Interest and other expense, net from continuing operations for the three month periods ended September 30, 2024 and 2023, was $0.0 million and $0.7 million respectively, and for the nine months ended September 30, 2024 and 2023, interest and other expense, net from continuing operations was $0.3 million and $1.2 million, respectively. The higher costs in the prior year reflect the outstanding loan balance utilized to partially fund the Indoff acquisition in May 2023.

Current wording

Interest and other expense, net from continuing operations was $0.1 million and $0.2 million for the three month periods ended March 31, 2025 and 2024.

Previous wording

For the three month period ended September 30, 2024 and 2023, the Company reported income taxes in continuing operations of approximately $5.4 million and $6.8 million, respectively, and for the nine month period ended September 30, 2024 and 2023, the Company reported income taxes in continuing operation of $15.6 million and $18.4 million, respectively, related to its U.S., Canada and India operations including tax expense for certain U.S. states. The decrease in the Company's effective tax rate for 2024 was due to a higher tax benefit of approximately $0.5 million related to stock-based compensation.

Current wording

For the three month period ended March 31, 2024, the Company reported income taxes in continuing operations of approximately $4.1 million related to its U.S., Canada and India operations including tax expense for certain U.S. states. Tax expense in the first quarter of 2024 reflects a benefit of approximately $0.2 million related to stock option and award activity.

Previous wording

Our working capital increased $25.3 million primarily related to increased inventory balances, increased accounts receivable and cash and cash equivalent balances offset by increased accounts payable, accrued expenses and other current liabilities. Accounts receivable days outstanding were 37.5 in 2024 compared to 37.4 in 2023, inventory turns were 5.4 in 2024 compared to 4.8 in 2023 and accounts payable days outstanding were 48.2 in 2024 compared to 51.2 in 2023. We expect that future accounts receivable, inventory and accounts payable balances will fluctuate with net sales and the product mix of our net sales.

Current wording

Our working capital increased $8.3 million primarily related to inventory balances as we purchased summer seasonal products earlier in the year and increased accounts receivable balances. These increases were offset by increased accounts payable balances, accrued expenses and other current liabilities balances and reduced cash and cash equivalents, prepaid expenses and other current assets balances. Accounts receivable days outstanding were 38.4 in 2025 compared to 37.4 in 2024, inventory turns were 5.0 in 2025 compared to 5.5 in 2024 and accounts payable days outstanding were 48.9 in 2025 compared to 48.8 in 2024. We expect that future accounts receivable, inventory and accounts payable balances will fluctuate with net sales and the product mix of our net sales.

Previous wording

Net cash provided by operating activities from continuing operations was $34.6 million compared to $103.8 million provided in 2023, attributable to changes in our working capital accounts which used $24.2 million in cash in 2024 compared to $39.3 million provided in 2023, primarily the result of the changes in inventory, accounts payable and accounts receivable balances. Cash generated from net income adjusted by other non-cash items, provided $58.8 million in 2024 compared to $64.5 million provided by these items in 2023 primarily due to increased amortization of intangible assets offset by the current quarter's stock-based compensation expense adjustment related to executive transition generated in the nine months ended September 30, 2024 compared to 2023. Net cash provided by operating activities from discontinued operations was $0.2 million for the nine months ended September 30, 2024 and $0.1 million was used in the nine months ended September 30, 2023.

Current wording

Net cash provided by operating activities from continuing operations was $3.3 million in 2025 compared to $6.3 million provided in 2024, attributable to changes in our working capital accounts which used $14.6 million in cash compared to $10.7 million used in 2024, primarily the result of the changes in accounts receivable, accounts payable, inventory and accrued expenses, other current liabilities and other liabilities balances. Cash generated from net income adjusted by other non-cash items, provided $17.9 million in 2025 compared to $17.0 million provided by these items in 2024 primarily due to increased stock-based compensation expense generated in the three months ended March 31, 2025 compared to 2024. Net cash provided by operating activities from discontinued operations was $0.1 million for the three months ended March 31, 2025 and 2024.

Previous wording

Net cash used in investing activities totaled $3.1 million for warehouse machinery and equipment for distribution facilities, leasehold improvements, and computer equipment upgrades. Net cash used in investing activities in 2023 totaled $75.6 million, $72.6 million of which was used for the purchase of Indoff, offset by $0.3 million of cash acquired, with the balance of $3.3 million used for warehouse machinery and equipment for our U.S warehouses and new Canadian distribution center, leasehold improvements, computer equipment upgrades and molds.

Current wording

Net cash used in investing activities in 2025 totaled $0.2 million used for warehouse machinery and equipment for distribution facilities, computer equipment upgrades and molds. Net cash used in investing activities totaled $1.3 million in 2024 was used for warehouse machinery and equipment for distribution facilities, leasehold improvements, and computer equipment upgrades.

Previous wording

Net cash used in financing activities totaled $27.1 million in 2024 primarily related to the regular quarterly dividends of $0.25 per common share which totaled approximately $28.8 million. Proceeds from stock option exercises totaled $1.8 million, offset by payments for payroll taxes through shares withheld, which totaled $1.6 million and proceeds from the issuance of common stock from the employee stock purchase plan totaled $1.5 million. Net cash used in financing activities in 2023 totaled $22.3 million primarily related to the quarterly dividends of $.20 per share which totaled approximately $23.0 million combined with repayments of short-term borrowings of approximately $51.2 million, majority of which was utilized to fund the Indoff acquisition, offset by the proceeds of short-term borrowings of approximately $50.6 million. Proceeds from the issuance of common stock from our employee stock purchase plan totaled $1.4 million and proceeds from the issuance of common stock from stock option exercises totaled $0.4 million, offset by payments for payroll taxes through shares withheld which totaled $0.5 million.

Current wording

Net cash used in financing activities totaled $8.8 million in 2025 primarily related to the regular quarterly dividends of $0.26 per common share which totaled approximately $10.1 million. Offsetting these payments were proceeds of $1.2 million from the issuance of common stock from stock option exercises, offset by payments for payroll taxes through shares withheld, which totaled $0.7 million and proceeds of $0.8 million from the issuance of common stock from our employee stock purchase plan. In 2024, net cash used in financing activities totaled $9.6 million primarily related to the regular quarterly dividends of $0.25 per common share which totaled approximately $9.6 million. Offsetting these payments were proceeds of $0.8 million from the issuance of common stock from our employee stock purchase plan and proceeds of $0.7 million from the issuance of common stock from stock option exercises, offset by payments for payroll taxes through shares withheld which totaled $1.5 million.

Previous wording

The Company maintains a $125.0 million secured revolving credit facility with one financial institution, which has a five year term, maturing on October 19, 2026 and provides for borrowings in the United States. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and the inventory advance rate computed as the lesser of 65% or 85% of the net orderly liquidation value (“NOLV”). Borrowings are secured by substantially all of the Borrower’s assets, as defined, including all accounts, accounts receivable, inventory and certain other assets, subject to limited exceptions, including the exclusion of certain foreign assets from the collateral. The interest rate under the amended and restated facility is computed at applicable market rates based on the Secured Overnight Financing Rate (“SOFR”), the Federal Reserve Bank of New York (“NYFRB”) or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of September 30, 2024, eligible collateral under the credit agreement was $125.0 million, total availability was $122.2 million, total outstanding letters of credit was $1.6 million, and total excess availability was $120.6 million. The Company was in compliance with all of the covenants of the credit agreement as of September 30, 2024.

Current wording

The Company maintains a $125.0 million secured revolving credit facility with one financial institution, which has a five year term, maturing on October 19, 2026 and provides for borrowings in the United States. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and the inventory advance rate computed as the lesser of 65% or 85% of the net orderly liquidation value (“NOLV”). Borrowings are secured by substantially all of the Borrower’s assets, as defined, including all accounts, accounts receivable, inventory and certain other assets, subject to limited exceptions, including the exclusion of certain foreign assets from the collateral. The interest rate under the amended and restated facility is computed at applicable market rates based on the Secured Overnight Financing Rate (“SOFR”), the Federal Reserve Bank of New York (“NYFRB”) or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of March 31, 2025, eligible collateral under the credit agreement was $125.0 million, total availability was approximately $122.2 million, total outstanding letters of credit was $1.7 million, and total excess availability was $120.5 million. The Company was in compliance with all of the covenants of the credit agreement as of March 31, 2025.

Previous wording

The expenses and capital expenditures described above will require significant levels of liquidity, which we believe can be adequately funded from our currently available cash resources, cash flow from operations and borrowing under our current credit facility. In 2024 we anticipate capital expenditures in the range of $3.0 to $5.0 million, though at this time we are not contractually committed to incur these expenditures.

Current wording

The expenses and capital expenditures described above will require significant levels of liquidity, which we believe can be adequately funded from our currently available cash resources, cash flow from operations and borrowing under our current credit facility. In 2025 we anticipate capital expenditures in the range of $2.0 to $3.0 million, though at this time we are not contractually committed to incur these expenditures.

Previous wording

We maintain our cash and cash equivalents in money market funds or their equivalents that have maturities of less than three months and in non-interest bearing accounts that partially offset banking fees. As of September 30, 2024, we had no investments with maturities of greater than three months. Accordingly, we do not believe that our cash balances have significant exposure to interest rate risk. At September 30, 2024 cash balances held in foreign subsidiaries totaled approximately $4.0 million. These balances are held in local country banks and are held primarily to support local working capital needs. The Company had over $156 million of liquidity (cash and undrawn line of credit) in the U.S. as of September 30, 2024.

Current wording

We maintain our cash and cash equivalents in money market funds or their equivalents that have maturities of less than three months and in non-interest bearing accounts that partially offset banking fees. As of March 31, 2025, we had no investments with maturities of greater than three months. Accordingly, we do not believe that our cash balances have significant exposure to interest rate risk. At March 31, 2025 cash balances held in foreign subsidiaries totaled approximately $3.1 million. These balances are held in local country banks and are held primarily to support local working capital needs. The Company had over $156 million of liquidity (cash and undrawn line of credit) in the U.S. as of March 31, 2025.

Previous wording

We are obligated under non-cancelable operating and finance leases for the rental of our facilities and certain of our equipment which expires at various dates through 2032. As of September 30, 2024 we were obligated for approximately $104.9 million under these non-cancelable leases. In 2024 we anticipate remaining cash expenditures of approximately $4.8 million for these operating leases. We have sublease agreements for unused space, as well as excess space in facilities we are currently occupying in the United States and Canada. In the event the sub lessee is unable to fulfill its obligations, we would be responsible for remaining rents due under the leases.

Current wording

We are obligated under non-cancelable operating and finance leases for the rental of our facilities and certain of our equipment which expires at various dates through 2034. As of March 31, 2025 we were obligated for approximately $80.2 million under these non-cancelable leases. In 2025 we anticipate remaining cash expenditures of approximately $13.7 million for these operating leases. We have sublease agreements for unused space, as well as excess space in facilities we are currently occupying in the United States and Canada. In the event the sub lessee is unable to fulfill its obligations, we would be responsible for remaining rents due under the leases.

Previous wording

Our purchase and other obligations consist primarily of purchase commitments for certain employment, consulting and service agreements. In addition to the previously mentioned commitments, at September 30, 2024, we had $1.6 million of standby letters of credit outstanding.

Current wording

Our purchase and other obligations consist primarily of purchase commitments for certain employment, consulting and service agreements. In addition to the previously mentioned commitments, at March 31, 2025, we had $1.7 million of standby letters of credit outstanding.