Earnings call transcript Q4 2022

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Operator

Good day and welcome to Global Industrial Company Fourth Quarter 2022 Earnings Call. [Operator Instructions] I would like to turn the call over to Mike Smargiassi of The Investor Relations. Please go ahead.

Mike Smargiassi

Thank you, and welcome to the Global Industrial Fourth Quarter 2022 Earnings Call. Leading today's call will be Barry Litwin, Chief Executive Officer; and Tex Clark, Senior Vice President and Chief Financial Officer.

followed question-and-answer be will remarks by session. a Formal

factors, forward-looking should differ reports forward-looking be discussion number from may the that statements quarterly It annual certain include of a Risk to could Today's caption understood and under Factors and statements. actual XX-Q. report projected on due on those XX-K under Form including described those in the materially company's results Form

on been is Industrial release company's on Form filed is with call available SEC Company. Global has press The website the the the a of This X-K. and property

to I Litwin. will now turn the call over Barry

Barry Litwin

Thanks, performance Mike. year us. for and total as well for delivered on operating you outstanding Overall, as Industrial for and we executed revenue, as Good joining afternoon, and everyone, Global our gross an financial XXXX margin. record was strategy thank a

full additional in total margin For XX.X%. points $XXX growth and revenue, to to resulting organic improved $X.XX the over bringing X.X% billion. Gross growth basis revenue contributed million year, XX in

We operating X% generated income, and from operating basis margin point over a XXXX. XX.X% of improvement XX $XXX delivered an a increase million of

With recurring the seventh for in strong year. announced today consecutive dividend the the in financial an increase we performance quarterly XXXX

second digit and of with to XXXX. half off while increases in benefit price the taken diminishing XXXX started of mid as late reflected revenue price increased gains year strong a double the headwinds the impact economic we left

volume price we muted XXXX. a from was across As flat And trend sales modestly year to and channels. this have continue comparisons revenue ago result, fourth Demand categories quarter the with seen period. into was off

basis and confident in to our as the gross of a in our management cycle. sequential we profile basis proactive in remain the with pleased on very margin current recorded XX a improvement were quarter ability the manage point We margin

executed for number up Looking on the initiatives and we believe successfully us XXXX we back of well set that a beyond. last year, on

enhance technology great market and in We productivity acquisition made focused and a strengthened accounts our hospitality we what see. start expanded team new in the are efforts about customer and as we we're These tools excited and launched added First, a verticals organization to investments engine and enterprise we healthcare. to off managed sales on performance.

customer focused relationships, our deepening on and of capturing expanding lineup Moving retention, share items. exclusive through forward. acquisition our and We're existing branded

We marketing Second, our marketing our activate allowed our which weakened to across show leadership. to copywriting integrated supply everything trade branding that against from executed do fully brand NASCAR us we website, sponsorship. campaign, emails, and our has

market and think speaks one provide. today I have we exciting truly the and products one to our that of customers in the and we brands most solutions

During with the repositioned Exceed. exclusive as private brands year, the industrial tagline the we global offering brand Made to also

product the with brand we're with continues exclusive to to we a As shift our market availability focus well-positioned value believe winning and offering. price from

Recently, campaign on economic message we customers with launched and one and a focused environment marketing operational the the performance. drive operational efficiencies is current aligns our company we enhance see that efficiency, efforts new to within our and from a timely given that

new a elevate to experience drive customer continue with of designed launch website we Third, the to the personalization.

to platform We now further with optimizing this digital enhancements new experience. the are shopping improve

customer side, customer optimize at From committed to service to across self loyalty company every to options, On the service and are training customer have delivering we service experience. we satisfaction the star the touchpoint. expanding of initiatives service reps five

supply Fourth, distribution chain. and

orders teams year. reduced exceptional merchandising improved back the and times availability, delivered operations during and Our lead

Canada, direct continued new growth. imports the center into In and Toronto provide us more addition, directly stuck in our our allows we to opened customers a products shipment receive of distribution for to that foster

year, us value to deliver which stocking customers. much a enhance Overall, service we're position to and better this levels help will off

damages, as efforts help focus us a number shipping will domestic for will to minimize and same planned volume saving, to and pass initiatives increase on savings capture and quality We well freight fully of including ocean as XXXX, more have that our a day shipping customers.

fall, responsible later the reflects and board, We the our commitment team the forward Finally, ESG executive I'm universal year. proud of to inaugural the of our our stewardship. updating on associates of report mission which release to you last of look this progress

In closing, for to and have plan a for clear we we on. XXXX believe vision a execute team game strong our

continue excited productivity to While the management uncertainty we optimistic for growth. cost intelligence operational company-wide pricing are economic leverage. support optimization. see core This business help outlook, strategy the areas customer our we of that margin a strategic on focus analytics, and and about drive the includes invest and remains in in centric and opportunities We'll and

to I we operational continued show nimbleness drive our have have excellence. the been ability to impressed and demonstrated by

With flow sheet from an our we and strategic remain to stakeholders. long invest execute operations well-positioned M&A our strong cash balance on exceptional evaluate opportunities our term value growth and for in drivers, strategy, build

over Tex. to call I will the now turn

Tex Clark

Friday before X.X% sales X.X% low our revenue improved Canada X.X% down Fourth the $XXX.X limited QX Year's on of on local was volume results. daily in the down U.S. included New sales The Thank fell off however and the day in while had day impact was approximately Average would to historically over revenue I year. you holiday note quarter million, extra day revenue and were a quarter Barry. X.X%. last currency. one

in XXXX. in area during an opportunity late neutral throughout pricing focus of to brand was has contrast private recognized volume The the been XXXX. benefit most and Price and offering XXXX quarter of

of was represented year. QX total sector approximately the For rebound the volume Public close it year, was sales. quarter fiscal the XX% robust federal in from full nice the of which and

winter soft, into much seen sales winter Demand have And a consistent for was the U.S. continuation was we mild XXXX. and throughout the category of quarter. of seasonal relatively the XQ of a start reflecting heating The trends

margin from XX on from year lower last points environment benefited margin sequential basis In XX%, customers year. gross Overall, the Gross competitive. sell realization points and X.X% XXX be Gross was through, profit cycle quarter pricing perceive increase business guarded the in strong $XX.X we the basis, price which off year. decisions quarter, buying prior fully the of FIFO their of have waned. was delivered and down we ago the we record a both quarter to million but for inventory an early in remaining cost from as basis

the will Maintaining We our comparisons environment. also first we quarter of focus face team. margin strong margin to shown believe ability the profile challenges in But of through XXXX. of an the the current have remains key our manage

seen benefits We supply chain early lower ocean have some from costs.

environment. a select we However, we throughout through work inventory costs dynamic total higher expect pricing the as landed year with and variability manage

to cost are fulfillment as brands achievable a and drive term higher gains leverage long and balance of We margin profile we of believe private fixed base. free that drive our continue sales, optimizer

cost incremental well investment and search primarily when the support our planned last investments distribution Canada $X.X the fixed and to new expansion our or reflects remain spending quarter marketing the points of to top verticals, DC year. costs Selling, sales, in approximately of customers an $XX.X our basis the in was products. as mind network, for of as including administrative million million XXX business, SD&A XX.X% increase from in nature net of of

full million increased We the to compared primarily of which XXXX. year also related results compensation, $X.X recorded strong incremental to as compensation expense reflects variable

by million. force, right to our size steps $X which a continue controls and annualized in costs reduce strong cost We in reduction structure, will approximately cost maintain January to including took

We approximately quarter. expect in onetime million to $X.X the severance a record expense of first

income in from million operations was continuing operating Operating $XX.X margin quarter and was fourth the X.X%.

million. amortization depreciation cash were During of and continuing $X.X Total $XX.X million, operations was $X.X expenditures million. generated the from expense while quarter, flow the quarter we in capital

capital which range equipment We expect and includes maintenance expenditures of $X XXXX to within $X million related in the network. distribution primarily investments our million,

our now me Let sheet. to turn balance

balance strong X. of current a sheet with a have ratio X.X and liquid We to

XX, minimal December of had As $XX in over cash million we debt. and

and facility normalized quarter to costs we The inventory in $XX availability have needs, million the by total excess facility. levels decrease of million credit and under reflects expanded inventory the improvement currently $XXX.X as our During working moderate. capital debt continued million position our landed $XXX

continue fund fully strategic quarterly We flexibility on and our our dividend. to to maintain to significant plan, execute

This a dividend. result, of our a previous $X.XX from board of our XX.X% share As dividend an of common declared quarterly reflects quarterly of stock. directors per increase

prepared call for open questions. our the today. please concludes This Operator, remarks

Operator

answer We Our Instructions] now question with Merkel begin William Ryan question from session. [Operator Blair. comes first will the ahead. and go Please

Ryan Merkel

the Hey, thanks taking for questions. good afternoon and

Barry Litwin

Ryan. Hey

Ryan Merkel

accounts to more ask a chance Any in question wanted on either details, be end non-managed would Thanks. the market? I helpful. little or that fourth quarter. the a and sales can managed products provide And for by you

Barry Litwin

Yes, Ryan, I'll you revenue. QX bit relative there to of a little insight give

look in benefit price we the So think really we And if period. in on back, wane you I cycle. certainly the probably captured price saw early benefit

be of versus of couple SMB question things for think found your a more basis kind on appeared during to we've us some cautious large mix, think customer that little one, period of the a there's to seen. accounts bit national I the we the I

So pertains but it heavy, of still continuing that fairly you to one business. enterprise some trend diversify base as talked, kind saw. we a was we're as to know, we've overall And our we SMB customer the business, of are based

throughout had opening. softness pressure was we and in us whether that factor some particularly category winter private strong mild as the to the be other really around some really mentioned know it's That The brand fairly well. heating. of we a U.S. that And seasonal around for as tends been the

Ryan Merkel

Got it.

Okay.

digits single to start getting here. low and into confirm down want is just aren't if sales demand whole said at just the heard confirm you think I I've lot that worse right I 'XX. a

Barry Litwin

-- I I Yes, mean, our think

Tex Clark

Go ahead Barry.

Barry Litwin

We've a same still And more some we've the our demand environment seen being pricing remains QX. across think I of right fairly little around cover, approach competitive. type sales think right Quick seen and now continues the muted bit certainly customers I guarded certainly into sales trend as channels. now categories

Ryan Merkel

it. Got

curious Okay. giving just 'XX. you're your But market I Last outlook one for me. MRO guidance what the for know here. not is

you're larger think single thinking digits, are curious low down of how players I thinking the some 'XX? about but

Barry Litwin

we around went indicators. around industry better MDM, that follow towards performance But I and in some mean, obviously and relative we're Yes, I market. PMI some at. well. the of year. tone a mean, we approach of optimistic certainly with the the look we an certainly, economy we investments of sales kind Right stats I same start I I look put in think to to of at half fairly cautious industry we're initiatives taking terms place. looking mean, hopeful what the to mean, in at that in we I the as the the itself index now, the back tend see I'm we MRO think

term long at that confident in we see are particularly So the have our last fairly private you to expansion. this year significant help drive ISM place the we overall of brand and same a year still a But growth, initiatives in change between could amount around and category time.

And And this to sales and new to help on we're driving good, some benefit and sales solid that year, to terms our of markets. new certainly some through year, us into continue one last in certainly, certainly going channels customers. invest to the newer our one organization to exploit mentioned insight continuing has some relationships

Ryan Merkel

all]. [That’s Thanks.

Operator

[Operator go Anthony comes ahead. Instructions] next Sidoti Please question from Company. & with The Lebiedzinski

Anthony Lebiedzinski

thank afternoon. Good taking And for you the questions.

margin, you the QX in various how you gross to think talked Can as about of margins we should on kind puts of Barry, over optimization. like great. first, can be to regards gross So And the sense us and a That'd margin? takes the give the the balance focusing for year? you about go margin gross for

Tex Clark

Barry, Good just afternoon. hey, in that just quickly absolutely Yes, real reconcile Anthony. to to me jump

saw costs QX think XX.X% again, like QX in when again, we margin margin us. sequential overall did improvement drove that, still higher moves early mentioned, look last also some related always we were for through were in year we had in we QX the to allowed price rates, primarily saw absolutely the this QX we better at of transportation able about in profile some entrenched we made, selling year-over-year seasonal are that which inventory the we they for higher little gross some So inflation prior full to prices, we thought ocean but margins, year trend increases bit isn't as We capture in to QX but saw. those basis, and in gross than because year. a XX% were the But of we that were a that QX pretty was had XX% fully we working landed really from we when normalized a significant

QX benefited really XX that both QX, in where and margins XXXX and QX. QX we plus So saw percent each

to the back answers end. will we because your pass move the through want costs through and strong dynamics through take some ocean market of the as organization, give So some sure and we'll time to be to in obviously not along but to that freight that does see settings we're while through down, some work continued if year. domestic we're different ocean year-over-year of that the and had advantage our we've Barry to while anything you obviously I we that more. in mentioned. the course pricing if seen manage did And public able coming then us benefit of the take get decline inventory throughout both that our freight jump mean, all that question to turns confidence we that sequential with inventory lower that the and the higher will to that that a able join increase also customers again, from cost to I'm are be working

Barry Litwin

No.

those think covered. well were I definitely

Tex Clark

Okay.

Anthony Lebiedzinski

want goal Terrific. there second How about turns? amount year mind work should we down we for we far dollar about right. of as down. think end the the to management? you I as looked, by a those as looking from year? Or peak. And think as inventories assume the just as get you're in inventory then quarter All they're how to progresses, but inventories far to certainly maybe is mean, I inventory should know I as the

Tex Clark

that well. I'll take again Yes, as Barry

as based on our rates numbers. and Well, what need. inventory. product things deliver on such overall don't levels inventory internally overall goals to have need our goal set for for So bill customers stocking have on a what we we specific target to We they time

that that their our lower well they the in kind as both lead in here in movements the safety overall Given of allowed of as us we seasonal And from chain way suppliers XXXX. while that That's the that the allowed is as are down, of chain disruption into expect throughout normalize out to the stock times, time XXXX. anticipate to we not to us improve requirements come levels move that supply supply have time terms we costs as will our States. overseas and material continue market buys some domestic in from to would inventory XXXX we have expense have do inventory to happen while may any

Anthony Lebiedzinski

for overall, Got me you've question far the since last is anything a acquisitions? few it, what been thanks. It's for as done years And as just is your appetite M&A.

Just could wondering that, if on you comment that great. would be

Barry Litwin

Anthony know fairly kind around question, that great policy our keep and M&A we in I been opportunities. certainly to open of consistent to ourselves and Yes, we've continue

all that at strengthen strength category Looking make channels, us. can sense us, businesses to either add customers, selling for

most right looking certainly been to mentioned, fit, trying for have we right time. try the most importantly for as obviously to looking I the We're find in businesses to the As market and some company. the valuation

to continue that continue we'll and so So to it address our strategy certainly do forward. in is to going

you asking question. appreciate the So

Anthony Lebiedzinski

Well, much, thank very and you luck. it. of best Got

Tex Clark

you Thank Anthony.

Operator

session. and also The question today's Thank presentation. attending answer conference concluded. you has our now for concludes This

You may all now disconnect.

Global Industrial (GIC) 21 Feb 232022 Q4 Earnings call transcript