Global Industrial Company Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Global Industrial Company (NYSE:GIC) reported its Q2 2024 financial results, showing sales growth of 6.8% to $347.8 million. The company's gross margin improved to 35.2% from 34.7% last year. However, operating income decreased 9.3% to $26.4 million, and net income per diluted share from continuing operations fell 7.1% to $0.52. The company's Board declared a $0.25 dividend. Excluding the Indoff acquisition, organic sales growth was 1.8%. The company noted a cautious customer purchasing environment but continues to invest in growth initiatives. Global Industrial had $38.8 million in cash and cash equivalents and $120.6 million in credit facility availability as of June 30, 2024.

Positive

• Sales increased 6.8% to $347.8 million
• Gross margin improved to 35.2% from 34.7% last year
• Organic sales growth of 1.8% excluding Indoff acquisition
• Board declared a $0.25 dividend
• Strong liquidity with $38.8 million in cash and $120.6 million in credit facility availability

Negative

• Operating income decreased 9.3% to $26.4 million
• Net income per diluted share from continuing operations fell 7.1% to $0.52
• Cautious customer purchasing behavior noted
• Operating margin declined to 7.6% from 8.9% last year

Insights

Financial Analyst

Global Industrial Company's Q2 2024 results present a mixed picture. While the company achieved 6.8% sales growth to $347.8 million, this was largely driven by the Indoff acquisition. Organic growth was a modest 1.8%, reflecting cautious customer behavior in a soft demand environment.

The gross margin improvement to 35.2% (or 36.8% excluding Indoff) is a positive sign, indicating better pricing power or cost management. However, the 9.3% decrease in operating income to $26.4 million and the decline in operating margin from 8.9% to 7.6% are concerning. This suggests that the company's investments in growth initiatives are pressuring profitability in the short term.

The 7.1% decrease in diluted EPS from continuing operations to $0.52 reflects these pressures. However, the company maintains a strong financial position with $38.8 million in cash and $120.6 million in credit availability, providing flexibility for future investments or potential economic headwinds.

The maintained quarterly dividend of $0.25 per share indicates management's confidence in the company's financial stability and commitment to shareholder returns. However, investors should monitor whether this level of payout is sustainable if profitability continues to decline.

Market Research Analyst

Global Industrial Company's performance reflects broader market trends in the industrial distribution sector. The modest organic growth of 1.8% aligns with the "soft demand environment" mentioned, suggesting a cyclical downturn or economic uncertainty affecting customer spending.

The company's strategy of investing in customer experience, marketing and sales during this period is noteworthy. While it's pressuring short-term profitability, it could position the company favorably for market share gains when demand recovers. The success of this strategy will depend on the effectiveness of these investments and the timing of market improvement.

The Indoff acquisition has significantly boosted top-line growth, contributing about 5% to the overall 6.8% sales increase. This highlights the importance of M&A in driving growth in a challenging organic environment. However, the lower margins from Indoff are diluting overall profitability, a factor investors should watch in future quarters.

The "mixed revenue performance on a monthly basis" suggests volatility in demand, which could make forecasting and inventory management challenging. This volatility, combined with cautious customer behavior, may persist in the near term, potentially impacting future results.

Sales of $347.8 Million, Increase 6.8%

Operating Income of $26.4 Million; Operating Margin 7.6%

Board Declares $0.25 Dividend

PORT WASHINGTON, NY / ACCESSWIRE / July 30, 2024 / Global Industrial Company (NYSE:GIC) today announced financial results for the second quarter ended June 30, 2024.

	Performance Summary* (U.S. dollars in millions, except per share data)
Highlights		Quarter Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net sales		$	347.8			$	325.8			$	671.2			$	599.6
Gross profit		$	122.5			$	112.9			$	233.4			$	211.3
Gross margin			35.2	%			34.7	%			34.8	%			35.2	%
Operating income from continuing operations		$	26.4			$	29.1			$	43.8			$	46.9
Operating margin			7.6	%			8.9	%			6.5	%			7.8	%
Net income from continuing operations		$	20.2			$	21.5			$	33.3			$	34.8
Net income per diluted share from continuing operations		$	0.52			$	0.56			$	0.86			$	0.91
Net income (loss) from discontinued operations		$	0.1			$	0.0			$	0.2			$	(0.1	)
Net income (loss) per diluted share from discontinued operations		$	0.00			$	0.00			$	0.01			$	0.00

*Global Industrial Company manages its business and reports using a 52-53 week fiscal year that ends at midnight on the Saturday closest to December 31. For clarity of presentation, fiscal years and quarters are described as if they ended on the last day of the respective calendar month. The actual fiscal quarters ended June 29, 2024 and July 1, 2023, respectively. The second quarters of both 2024 and 2023 included 13 weeks and the first six months of both 2024 and 2023 included 26 weeks.

Average daily sales is calculated based upon the number of selling days in each period, with Canadian sales converted to US dollars using the current year's average exchange rate. There were 64 selling days in the U.S. in the second quarters of 2024 and 2023, respectively, and there were 128 selling days in the U.S. for the six months ended 2024 and 2023, respectively. There were 64 selling days in Canada in the second quarter of 2024 and 63 selling days in the second quarter of 2023. There were 126 selling days in Canada for the six months ended 2024 and 2023, respectively.

Second Quarter 2024 Financial Summary:

• Consolidated sales increased 6.8% to $347.8 million compared to $325.8 million last year. Excluding Indoff, acquired on May 19, 2023, sales increased 1.8% in the quarter and 1.7% on an average daily sales basis.

• Consolidated gross margin increased to 35.2% compared to 34.7% last year. Excluding Indoff, gross margin was 36.8%, a 110 basis point improvement over prior year.

• Consolidated operating income from continuing operations decreased 9.3% to $26.4 million compared to $29.1 million last year. Excluding Indoff, operating income was $24.9 million, a decrease of 11.1%.

• Net income per diluted share from continuing operations decreased 7.1% to $0.52 compared to $0.56 last year.

Year to Date Q2 2024 Financial Summary:

• Consolidated sales increased 11.9% to $671.2 million compared to $599.6 million last year. Excluding Indoff, acquired on May 19, 2023, sales increased 3.0%.

• Consolidated gross margin declined to 34.8% compared to 35.2% last year. Excluding Indoff, gross margin was 36.3%, a 50 basis point improvement over prior year.

• Consolidated operating income from continuing operations decreased 6.6% to $43.8 million compared to $46.9 million last year. Excluding Indoff, operating income was $41.0 million, a decrease of 10.5%.

• Net income per diluted share from continuing operations decreased 5.5% to $0.86 compared to $0.91 last year.

Richard Leeds, Executive Chairman of the Board, said, "Second quarter revenue improved 6.8% and on an organic basis revenue was up 1.8%. We were pleased with top line results given the current market cycle and the soft demand environment. During the quarter we saw a continuation of cautious customer purchasing behavior and mixed revenue performance on a monthly basis. Gross margin improved on both a prior year and sequential quarter basis, while our bottom-line reflected planned investments in key growth initiatives across customer experience, marketing and sales."

"We continue to make investments that are intended to strengthen our competitive position, help us capture market share and enhance revenue growth. With a strong leadership team, and solid execution against our strategy, we believe we are well positioned to drive long-term financial performance and build value for our stockholders."

At June 30, 2024, the Company had total working capital of $171.1 million, cash and cash equivalents of $38.8 million, and excess availability under its credit facility of approximately $120.6 million. Operating cash flow provided by continuing operations in the quarter was $18.7 million. The Company's Board of Directors has declared a cash dividend of $0.25 per share to common stock shareholders of record at the close of business on August 12, 2024, payable on August 19, 2024.

Earnings Conference Call Details

Global Industrial Company will host a conference call and question and answer session on its second quarter 2024 results today, July 30, 2024 at 5:00 p.m. Eastern Time. A live webcast of the remarks will be available on the Company's website at https://investors.globalindustrial.com in the events section. The webcast will also be archived on the website for approximately 90 days.

About Global Industrial Company

Global Industrial Company (NYSE:GIC), through its operating subsidiaries, is a value-added distributor. For 75 years, Global Industrial has gone the extra mile for its customers, currently offering hundreds of thousands of industrial and MRO products needed to run businesses and facilities. Global Industrial is committed to its customer-centric strategy, and utilizes a team of subject matter experts, products from its Global Industrial Exclusive Brands^™ and national vendor relationships to help customers succeed. Global Industrial, "We Can Supply That^®".

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. Any such statements that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management's estimates, assumptions and projections and are not guarantees of future performance. When used in this release, the words "anticipates," "believes," "estimates," "expects," "intends," and "plans" and variations thereof and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this report are based on the Company's beliefs and expectations as of the date of this report and are subject to risks and uncertainties which may have a significant impact on the Company's business, operating results or financial condition. Investors are cautioned that these forward-looking statements are inherently uncertain and undue reliance should not be placed on them. Important risk factors that may affect our future results of operations and financial condition are detailed from time to time in our Securities and Exchange Commission filings. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events, except as may be required by applicable law.

Investor/Media Contacts:
Mike Smargiassi
The Plunkett Group
212-739-6729
mike@theplunkettgroup.com

GLOBAL INDUSTRIAL COMPANY
Condensed Consolidated Statements of Operations - Unaudited
(In millions, except per share amounts)

		Quarter Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net sales		$	347.8			$	325.8			$	671.2			$	599.6
Cost of sales			225.3				212.9				437.8				388.3
Gross profit			122.5				112.9				233.4				211.3
Gross margin			35.2	%			34.7	%			34.8	%			35.2	%
Selling, distribution and administrative expenses			96.1				83.8				189.6				164.4
Operating income from continuing operations			26.4				29.1				43.8				46.9
Operating margin			7.6	%			8.9	%			6.5	%			7.8	%
Interest and other expense, net			0.1				0.3				0.3				0.5
Income from continuing operations before income taxes			26.3				28.8				43.5				46.4
Provision for income taxes			6.1				7.3				10.2				11.6
Net income from continuing operations			20.2				21.5				33.3				34.8
Net income (loss) from discontinued operations			0.1				0.0				0.2				(0.1	)
Net income		$	20.3			$	21.5			$	33.5			$	34.7
Net income per common share from continuing operations:
Basic		$	0.52			$	0.56			$	0.87			$	0.91
Diluted		$	0.52			$	0.56			$	0.86			$	0.91
Net income (loss) per common share from discontinued operations:
Basic		$	0.00			$	0.00			$	0.01			$	0.00
Diluted		$	0.00			$	0.00			$	0.01			$	0.00
Net income per common share:
Basic		$	0.52			$	0.56			$	0.88			$	0.91
Diluted		$	0.52			$	0.56			$	0.87			$	0.91
Weighted average common and common equivalent shares:
Basic			38.2				38.1				38.2				38.1
Diluted			38.4				38.2				38.4				38.2

GLOBAL INDUSTRIAL COMPANY
Condensed Consolidated Balance Sheets - Unaudited
(In millions)

		June 30,				December 31,
		2024				2023
Current assets:
Cash and cash equivalents		$	38.8			$	34.4
Accounts receivable, net			142.8				130.7
Inventories			172.9				150.8
Prepaid expenses and other current assets			12.4				13.9
Total current assets			366.9				329.8
Property, plant and equipment, net			19.9				20.0
Operating lease right-of-use assets			77.4				84.4
Goodwill and intangibles			67.3				69.3
Other assets			11.0				9.9
Total assets		$	542.5			$	513.4
Current liabilities:
Accounts payable and accrued expenses		$	181.6			$	160.1
Operating lease liabilities			14.2				14.1
Total current liabilities			195.8				174.2
Operating lease liabilities			73.9				81.4
Other liabilities			2.4				2.6
Shareholders' equity			270.4				255.2
Total liabilities and shareholders' equity		$	542.5			$	513.4

GLOBAL INDUSTRIAL COMPANY
Condensed Consolidated Statements of Cash Flows - Unaudited
(In millions)

		Six Months Ended June 30,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations		$	33.3			$	34.8
Adjustments to reconcile net income from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization			3.8				2.6
Stock-based compensation			0.6				1.2
(Benefit) provision for deferred taxes			(0.1	)			0.1
Change in working capital			(14.5	)			25.4
Other, net			1.9				1.4
Net cash provided by operating activities from continuing operations			25.0				65.5
Net cash provided by (used in) operating activities from discontinued operations			0.2				(0.2	)
Net cash provided by operating activities			25.2				65.3
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment			(2.2	)			(1.4	)
Purchase of Indoff LLC, net of cash acquired			0.0				(72.3	)
Net cash used in investing activities			(2.2	)			(73.7	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of short-term borrowings			0.0				39.7
Dividends paid			(19.2	)			(15.3	)
Stock-based compensation share issuances, net			0.7				0.5
Net cash (used in) provided by financing activities			(18.5	)			24.9
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(0.1	)			(0.1	)
NET INCREASE IN CASH			4.4				16.4
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD			34.4				28.5
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	38.8			$	44.9

SOURCE: Global Industrial Company

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FAQ

What was Global Industrial's (GIC) revenue for Q2 2024?

Global Industrial Company reported revenue of $347.8 million for Q2 2024, representing a 6.8% increase from the same period last year.

How did Global Industrial's (GIC) earnings per share change in Q2 2024?

Global Industrial's net income per diluted share from continuing operations decreased 7.1% to $0.52 in Q2 2024, compared to $0.56 in Q2 2023.

What dividend did Global Industrial (GIC) declare for Q2 2024?

Global Industrial's Board of Directors declared a cash dividend of $0.25 per share to common stock shareholders of record as of August 12, 2024, payable on August 19, 2024.

How much cash and credit availability did Global Industrial (GIC) have as of June 30, 2024?

As of June 30, 2024, Global Industrial had $38.8 million in cash and cash equivalents, and approximately $120.6 million in excess availability under its credit facility.