GLOBAL INDUSTRIAL Co

Previous wording

•the imposition of tariffs and other trade barriers, as well as retaliatory trade measures, have caused us to raise the prices on certain of our products and seek alternate sources of supply, which could negatively impact our sales or disrupt our operations if we are not able to mitigate these measures;

Current wording

•we are exposed to market risks from changes in tariff rates and import shipping costs particularly on goods from China and other Asia-based suppliers. These dynamic market conditions may result in fluctuations in our income and cash flows. Recently enacted tariffs on imports and exports with respect to a number of countries in our supply chain and or our customer markets, have increased and may continue to increase our procurement costs, the impact of which will increase pressure on our margins as we sell through lower cost inventory. The imposition of these tariffs and other trade barriers, as well as reciprocal trade measures, have caused us to both raise the prices on certain of our products to mitigate increased procurement costs and to seek alternate sources of supply. Pricing actions we have taken and may continue to take to mitigate these increased procurement costs could have a material adverse impact on our income, cash flows and overall financial results;

Previous 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.

Current wording

The Company generated revenue of $358.9 million, an increase of 3.2% over the year ago period. Results were led by sales to our largest strategic accounts. Gross margin increased 190 basis points over the second quarter of 2024 to 37.1%, benefiting from proactive price management and overall freight cost management. We also benefited in the period from timing benefit associated with the flow through of cost of sales from products purchased prior to the imposition of new tariffs in 2025. Management of our margin profile remains a key area of focus. As we move through the current cycle, we have started to see the timing benefit of pre-tariff inventory decline and anticipate the need to further increase price to mitigate the additional tariff costs that we are incurring. While our goal is to manage to price and cost neutrality, there may be increased volatility in our margin rates given the timing dynamics of on-hand inventory, market inflation associated with tariff related cost increases and 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 first quarter ended March 31, 2025.

Current wording

There were no material changes in the Company’s significant accounting policies during the second quarter ended June 30, 2025.

Previous wording

Highlights from Q1 2025 compared to Q1 2024

Current wording

Highlights from Q2 2025 and Year to Date Q2 2025 compared to Q2 2024 and Year to Date Q2 2024

Previous wording

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

Current wording

•Net income per diluted share from continuing operations increased 25.0% to $0.65 compared to $0.52 last year.

Previous wording

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

Current wording

•Consolidated operating income from continuing operations increased 18.0% to $51.7 million compared to $43.8 million last year.

Previous 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.

Current wording

There were 64 selling days in the U.S. in each of the second quarters of 2025 and 2024, respectively, and there were 128 selling days in the U.S. for the six months ended June 30, 2025 and 2024, respectively. In Canada, there were 63 selling days in the second quarter of 2025 compared to 64 selling days in the second quarter of 2024. There were 126 selling days in Canada for the six months ended June 30, 2025 and 2024, respectively.

Previous 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.

Current wording

Management of our margin profile remains a key area of 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 and our efforts to continue to diversify our supply chain and historical seasonality.

Previous wording

For the three month period ended March 31, 2025, SD&A costs as a percentage of sales increased approximately 40 basis points compared to prior year. Cost increases included total salary and related costs of approximately $2.7 million, inclusive of $0.9 million of separation costs, variable compensation totaling $0.9 million and increased stock-based compensation expense of $0.9 million. These costs were partially offset by savings in net advertising spend of approximately $2.2 million.

Current wording

For the six months ended June 30, 2025, SD&A was 28.4% compared to prior year of 28.2%. Cost increases included total salary and related costs of approximately $7.0 million, of which approximately $3.0 million related to variable compensation with both selling commissions and bonus pool increasing compared to prior year and increased stock-based compensation expenses of approximately $3.3 million compared to prior year. Prior year stock-based compensation reflected a benefit of approximately $1.0 million associated with accounting for executive transitions. These costs were partially offset by savings in net advertising spend of approximately $1.8 million.

Previous wording

Operating margin for the three month period ended March 31, 2025 increased 30 basis points compared to the same period in 2024 due to increased gross margin, strong general and discretionary cost control and lower spending on marketing and selling expenses.

Current wording

Operating margin for the three and six months periods ended June 30, 2025 increased 170 basis points and 110 basis points, respectively, compared to the same period in 2024 due to increased gross margin, continued strong general and discretionary cost control and lower spending on marketing and selling expenses.

Previous 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.

Current wording

Interest and other (income) expense, net from continuing operations was $0.3 million income and $0.1 million expense for the three month periods ended June 30, 2025 and 2024, respectively, and $0.2 million income and $0.3 million expense for the six months ended June 30, 2025 and 2024, respectively. The fluctuations in the exchange rates contributed to the changes in the quarter and year to date.

Previous 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.

Current wording

For the three month period ended June 30, 2025 and 2024, the Company reported income taxes in continuing operations of approximately $8.7 million and $6.1 million, respectively, related to its U.S., Canada and India operations including tax expense for certain U.S. states. For the six month period ended June 30, 2025 and 2024, the Company reported income tax expense in continuing operations of $13.3 million and $10.2 million, respectively, related to its U.S., Canada and India operations including tax expense for certain U.S. states.

Previous 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.

Current wording

Our working capital increased $22.5 million primarily related to increased accounts receivable balances resulting from increased sales, higher cash balances and increased inventory balances. These increases were partially offset by increased accounts payable balances and accrued expenses and other current liabilities balances. Accounts receivable days outstanding were 39.0 in 2025 compared to 36.9 in 2024, inventory turns were 5.0 in 2025 compared to 5.5 in 2024 and accounts payable days outstanding were 47.7 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 $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.

Current wording

Net cash provided by operating activities from continuing operations was $35.1 million in 2025 compared to $25.0 million provided in 2024, attributable to cash generated from net income adjusted by other non-cash items which provided $46.4 million in 2025 compared to $39.5 million provided by these items in 2024 primarily due to higher net income in 2025 and by the current quarter's stock-based compensation expense. Changes in our working capital accounts in 2025 used $11.3 million in cash compared to $14.5 million used in 2024, primarily the result of the changes in accounts receivable, inventory, accounts payable, inventory and prepaid expenses and other assets balances. Net cash provided by operating activities from discontinued operations was $0.0 million and $0.2 million for the six months ended June 30, 2025 and 2024, respectively.

Previous 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.

Current wording

Net cash used in investing activities in 2025 totaled $5.6 million, with $4.0 million used for the equipment service provider acquisition and $1.6 million used for warehouse machinery and equipment for distribution facilities, computer equipment upgrades and molds. Net cash used in investing activities totaled $2.2 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 $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.

Current wording

Net cash used in financing activities totaled $18.9 million in 2025 primarily related to the regular quarterly dividends of $0.26 per common share which totaled approximately $20.1 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 $0.8 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 $18.5 million primarily related to the regular quarterly dividends of $0.25 per common share which totaled approximately $19.2 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 $1.4 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 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.

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 June 30, 2025, eligible collateral under the credit agreement was $125.0 million, total availability was approximately $122.1 million, total outstanding letters of credit was $1.7 million, and total excess availability was $120.4 million. The Company was in compliance with all of the covenants of the credit agreement as of June 30, 2025.

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 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.

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 June 30, 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 June 30, 2025 cash balances held in foreign subsidiaries totaled approximately $5.6 million. These balances are held in local country banks and are held primarily to support local working capital needs. The Company had over $170 million of liquidity (cash and undrawn line of credit) in the U.S. as of June 30, 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 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.

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 June 30, 2025 we were obligated for approximately $129.6 million under these non-cancelable leases. In 2025 we anticipate remaining cash expenditures of approximately $9.1 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.