Global Industrial Company Q2 FY2025 earnings call

• Record profitability in the second quarter with revenue growth, strong gross margin, and operating income. - Performance driven by largest strategic accounts, with growth continuing into July. - Focus on customer-centric transformation, including empowering teams for real-time decisions and reframing go-to-market strategy. - Growth strategy anchored in specialization (targeting key customers, reframing go-to-market) and expansion (broadening product categories for profitable growth). - Hosted ninth Annual National Trade Show in September to showcase product offerings.

Revenue for the second quarter was $358.9 million, an increase of 3.2% compared to the second quarter of 2024. U.S. revenue was up 3% and Canada revenue improved 7.4% in local currency. Gross margin was a record 37.1% for the second quarter, an increase of 190 basis points over the second quarter of 2024 and 220 basis points over the first quarter of 2025. Operating income improved over 26% to $33.5 million, with an operating margin of 9.3%. The largest strategic accounts drove performance, while there was a reduction in smaller, more transactional customers. Gross profit for the quarter was $133 million, with gross margin improvement due to price capture and favorable inventory valuation and transportation cost improvements.

• Anticipate sequential headwinds in gross margin in the third quarter but expect year-over-year gross margin expansion. - July sales growth accelerated, concentrated in largest strategic accounts. - Plan to make investments in the sales organization and evaluate strategic M&A for growth.

• Tariff environment remains highly fluid with significant cumulative impact. - Margin expansion may be temporary. - Need for continued supplier diversification and price management challenges.

Q: Could you break down the 200 basis points increase in gross margin year-over-year, specifying FIFO and other factors?

A: About half is price timing with COGS working through, and the other half is from favorable transportation and other cost benefits. Sequential headwinds expected in Q3 but year-over-year margin favorability still anticipated.

Q: On July commentary, is the acceleration market-driven, price-driven, or company-specific share gains?

A: Fairly broad-based growth, concentrated in largest strategic accounts, with intentional targeting and reduced promotional activities in Q2 impacting volume but driving more profitable growth.

Q: You mentioned smallest accounts were soft in Q2, did that change in July?

A: Still concentrated in largest customers, with intentionality and reduced promotional activities in Q2 impacting volume metrics but driving healthier customer mix.

Q: Where are the greatest near-term opportunities and what will take longer?

A: Operational elements to be more nimble and customer experience empowerment are near-term, while expanding assortment and TAM focus take longer.

Q: Appetite for additional acquisitions?

A: Strategic M&A opportunity exists with 0 debt, will be mindful and prudent, validating strategic direction through piloting and testing before aggressive pursuit.