Global Industrial Company (GIC) Earnings

Management highlights

CEO Anisa Chaibi mentioned being pleased with first quarter performance, strategic progress like refining value proposition, sales realignment into customer verticals, rollout of outside sales initiative with positive initial response, expansion of e - procurement and e - commerce capabilities, advancement of MRO and consumables expansion, and successful Modex Trade Show. CFO Tex Clark talked about first quarter revenue details, gross margin details, capital expenditures expectation, balance sheet strength, stock repurchase, dividend declaration, and second quarter fiscal calendar shift impact.

Guidance

Second quarter revenue growth in the mid to high single digits continues. Benefits from price appreciation are expected to moderate as we lap pricing actions taken in second quarter of 2025. Monitor macroeconomic and geopolitical environment including Middle East impact on costs and tariff landscape. Anticipate headwinds to margin performance in spring and summer due to elevated fuel prices. Expect 2026 capital expenditures in the range of $3 to $4 million. Continue to fund quarterly dividend.

Segment performance

First quarter revenue improved 9.2% with an average daily sales growth of 7.6% and operating income improving 13.2%. U.S. revenue was up 8.1%, and Canada revenue improved 24.4% in local currency. Revenue increased 24% in local currency in Canada for the third consecutive quarter of double - digit top - line growth. Performance benefited from price and volume, with gains across assigned accounts and e - commerce channels, and largest strategic accounts continued to grow at an accelerated pace.

Risks & headwinds

Monitor macroeconomic and geopolitical environment including developments in the Middle East and their impact on transportation and manufacturing costs, as well as evolving tariff landscape and potentially new Section 301 tariffs. Anticipate fuel prices remaining elevated in spring and summer impacting margin performance.

Analyst Q&A

• Q: Hi, everyone. Thanks for taking my questions. I wanted to start on sales and 2Q. Trends sound good so far, but I know the comps start to get tougher, particularly on price. As you allot those increases, you also have the 4th of July timing headwind. So how should we think about all of those moving pieces together?

  A: Yeah, think about just from a pure numbers perspective. When we think about that timing benefit, obviously, as we highlighted, the last two quarters, we actually have seen both price and volume contribute into that growth term, and that's one area that we continue to expect to see that volume increase as we move into that second quarter. And, obviously, we're at right now about four weeks into the second quarter, and obviously, as we mentioned, growth remains consistent with what we just reported in the first quarter. That pricing timing is one that obviously doesn't impact us sequentially, but we'll just see some of that year - over - year impact is going to be lessened as we started those price increases last year, soon after the tariff announcements in early April. And then finally, just to relate to the June headwind, if we think about it, we're moving that holiday one day up. A day of a holiday equals about 1.5% to 2% of the shipping days in a quarterly period. So I think I would just think about that as a rateable shift where we'll see a little bit of headwind in June, and that will be a pickup in July just based on pure timing of the holiday. Okay. And then on gross margin, you called out the 150 - bit headwind from the non - repeat of the price cost, and you also talked about a few things, namely fuel. Just help us think about how we should think about gross margins in the 2Q as well? A: On the numbers side, so yeah, you're right. So if we think about last year, as we've talked about in the past, an initial price increase In a FIFO inventory company, you're going to recognize that price capture before the FIFO costs work through. As you can imagine, we're well a year plus into these. The tariff arrangements that we're paying through, so the cost of goods is fully burdened with the tariff profile that we have in there. So that will be an ongoing review of the company. So I think that's one area. And then we also talked about the fuel. The fuel is one area that is growing up. That's an area that if we look at the national diesel averages, really that second and third week of March, we saw those starting to pick up. All of our fuel contracts are based upon standard language and standard multipliers based upon the national published average rates. And when those go up, obviously our main goal is how do we internalize that? How do we manage the cost for our customers? But at the same time, we'll pass some of that price through to our customers as need be as we really monitor that margin profile. But that really just goes into our overall pricing management and pricing strategy, too. But it is going to be that there are incremental costs that we've got to work through, and we do expect in the short term that we'll be headwinds to the margin rate.

• Q: Good afternoon, and thanks for taking the questions. Nice quarter, certainly. So you've talked for a while a bit about seeing better results in your largest and most strategic accounts. So as we think about your core S&B accounts, can you comment what you're seeing from those accounts and Have you seen that performance gap narrow or widen, or has it been kind of more or less consistent? I'm just wondering if you could comment on that?

  A: Thanks, Anthony. Thanks for the question. I guess the SMB customers, we have, as I stated during our beginning of the call, was We've realigned our organization and kind of the way that we face out to the customer and our small and medium customers are very important to us as well. And what we've done is realigned across various verticals so that we can better understand and specialize and tailor that experience. We've seen some decent growth across the board. The larger accounts we call out just by the sheer size and scale, but the small accounts we're starting to build stronger relationships I alluded to the e - procurement, punch - out sites, and so forth, and we've started to gain some momentum across the board. And the more that we can do to be tethered to those customers, you know, it creates a bit of an annuity stream, and we're starting to see some momentum there as well.

• Q: And then, you know, realize that Canada is far smaller than the core U.S. market, but, you know, certainly very strong performance there. Uh, you know, what's driving that and how sustainable do you think that is?

  A: Um, actually we have a fantastic team. Uh, we hired a leader, uh, right before I started and he's done a nice job of realigning their go to market. In essence, the way to think about it is Canada is a smaller microcosm of the broader global industrial business. And I would say the market dynamics there are strong for us to take share. And what he's been able to do is to, we've made the right investments, enabled them to be relatively self - sustaining. And as they've done that, they've seen that momentum and growth build. And I have a lot of confidence in that team, as you've seen me call them out a few times just in my tenure, which is a little bit over a year and a few months.

• Q: So as you look to further reposition the business, are there any notable problems new products or product categories that uh you may want to enter in into i know you talked about mro but you know just overall just maybe help us understand as to like maybe the magnitude of magnitude of the the expanded product selection that we could see at some point whether it's this year or next year uh how do we think about that and kind of the margin profile of some of these newer product categories that you you might be looking to get into?

  A: Another great question. Thank you, Anthony. You know, it is MRO. It's natural adjacent categories for what we do. We're not going to go too far afield and kind of beyond what our core business is. However, as we've started to mix in those capabilities and taking to market those types of products, we've seen incremental growth in customers where we've been able to drive greater share of wallet and penetration. And, you know, what we're starting to see is that We're going, you know, out to the customer to explain that now we carry, you know, whether it's consumables, whether it's MRO, and so forth. And what we're really looking at holistically from a merchandising perspective is making sure we have the right positioning of the products. So in essence, a good, better, best offering. Some of that will include our proprietary brands. Others will be national brands. Others will be a mix of both as we go to market. So, you know, we're in the early phases of that, but that realignment that we did coming out of last year is positioned as well, and we're starting to see that gain some traction. And the items, you know, I had shared I think late last year, possibly fourth quarter, we had partnered with some select vendor partners to get into MRO and consumables and what have you, and we've been able to sustain that. And they're still partnering with us today, providing those products to our customers via drop ship, et cetera. And then we'll be making decisions. Is that something that is sustained and executing in that manner? Is that something that we make investment and bring it into our warehouses? But that's something we're working through right now.

• Q: And just a quick follow - up, as far as your private label product penetration, where is it right now?

  A: I'll jump in and take that, Anissa. So, Anthony, this is an area that we look at, and it's fairly stable, but we've actually seen some enhanced growth through our national brands. We talked a little bit about some of the mix of large projects that we saw in the first quarter, and that's been an area of really some of our largest strategic accounts had spec projects and things on the national brands. We actually saw a faster growth rate in the first quarter on the national brand side, but this is an area that we're really balancing them because they – they complement each other very well. So it's going to be a continued push of not just trying to grow one channel or the other or one source and the other. I think we have the opportunity to make sure that we have the right product mix, but also make sure we partner with our vendor partners out there that will allow us to serve the customers the way they want to be served and to make sure we offer the products that our customers are looking for.