Global Industrial Co (GIC) 2024 Q2 法說會逐字稿

Good day and welcome to the Global Industrial Company second-quarter 2024 earnings call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Michael Smargiassi, Investor Relations. Please go ahead.

美好的一天，歡迎參加 Global Industrial Company 2024 年第二季財報電話會議。（操作員說明）請注意此事件正在被記錄。我現在想將會議交給投資者關係部門的 Michael Smargiassi。請繼續。

Thank you, and welcome to the Global Industrial second-quarter 2024 earnings call. Leading today's call will be Richard Leeds, Executive Chairman; and Tex Clark, Senior Vice President and Chief Financial Officer. Formal remarks will be followed by a question and answer session.

謝謝，歡迎參加全球工業 2024 年第二季財報電話會議。今天的電話會議將由執行主席理查德·利茲 (Richard Leeds) 主持。以及資深副總裁兼財務長 Tex Clark。正式發言後將進行問答環節。

During the call, we will reference both GAAP and organic metrics. Organic reflects the performance of Global Industrial's business, exclusive of May 19, 2023, Indoff acquisition. Today's discussion may include certain forward-looking statements.

在電話會議期間，我們將參考 GAAP 和有機指標。有機反映了 Global Industrial 業務的業績，不包括 2023 年 5 月 19 日對 Indoff 的收購。今天的討論可能包括某些前瞻性陳述。

It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward-looking statements caption and under risk factors in the company's annual report on Form 10-K and quarterly reports on Form 10-Q. The press release is available on the company's website and has been filed with the SEC on a Form 8-K. This call is the property of Global Industrial Company. I will now turn the call over to Richard.

應理解，由於多種因素，實際結果可能與預測結果有重大差異，包括前瞻性陳述標題下描述的因素以及公司 10-K 表格年度報告和 10 表格季度報告中風險因素中描述的因素-Q。該新聞稿可在公司網站上獲取，並已以 8-K 表格形式向 SEC 提交。此電話屬於 Global Industrial Company 的財產。我現在將把電話轉給理查德。

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. Before turning to the financial results, I wanted to take a moment to comment on our CEO transition. Our nationwide CEO search is underway, and next week, I will formally take on the additional role of Interim CEO.

謝謝，麥克。大家下午好，感謝您加入我們。在討論財務表現之前，我想花點時間評論一下我們執行長的過渡。我們正在全國範圍內尋找首席執行官，下週，我將正式擔任臨時首席執行官。

This is a position I previously held for nearly 20 years and have remained actively engaged with the business in my role as Executive Chairman of the Board. I've worked closely with the senior management team supporting their efforts during the past several years.

我先前已擔任該職位近 20 年，並在擔任董事會執行主席期間一直積極參與業務。在過去的幾年裡，我與高階管理團隊密切合作，支持他們的努力。

On behalf of Global Industrial, I would like to thank Barry for his contributions and wish him well as he embarks on the next chapter in his career. Over the past several years, we have built a strong senior management team. They have both the Board's and my full confidence. I look forward to supporting their efforts as we continue to execute on our strategy.

我謹代表全球工業感謝巴里所做的貢獻，並祝福他在開啟職業生涯的新篇章時一切順利。在過去的幾年裡，我們建立了一支強大的高階管理團隊。董事會和我對他們充滿信心。我期待著在我們繼續執行我們的策略時支持他們的努力。

Turning to our financial performance, second quarter revenue improved 6.8% to approximately $348 million. On an organic basis, we delivered our fourth consecutive quarter of revenue growth with revenue up 1.8%. We're pleased with the top line performance given the current market cycle and the soft demand environment, which is reflected in both industry forecast as well as the PMI index.

談到我們的財務業績，第二季營收成長了 6.8%，達到約 3.48 億美元。在有機基礎上，我們實現了連續第四個季度的營收成長，營收成長了 1.8%。考慮到當前的市場週期和疲軟的需求環境，我們對營收表現感到滿意，這在產業預測和 PMI 指數中都有體現。

During the quarter, we saw a continuation of cautious customer purchasing behavior with mixed revenue performance on a monthly basis. Our retention trends remain healthy. Gross margin was 35.2% in the quarter, an improvement on both a year-over-year and sequential quarter basis. We remain pleased with gross margin performance and have a strong track record of managing this key metric through various market disruptions over the past several years.

在本季度，我們看到客戶購買行為持續謹慎，每月收入表現參差不齊。我們的保留趨勢保持健康。本季毛利率為 35.2%，年比和季比均有所改善。我們對毛利率表現仍然感到滿意，並且在過去幾年的各種市場混亂中管理這一關鍵指標方面擁有良好的記錄。

Our bottom line performance reflects planned investments in key growth initiatives, specifically across customer experience, marketing, and sales functions to help drive engagement and strengthen our competitive position. This includes sales automation and tools to enhance efficiency and growth and our managed sales organization as well as further enhancements to customer experience.

我們的底線業績反映了對關鍵成長計畫的計畫投資，特別是在客戶體驗、行銷和銷售職能方面的投資，以幫助提高參與度並增強我們的競爭地位。這包括銷售自動化和提高效率和成長的工具，以及我們管理的銷售組織以及進一步增強的客戶體驗。

Delivering a positive customer experience leads directly to higher retention rates and elevated lifetime customer values. It's a true competitive advantage. I'm pleased to report that our customer satisfaction scores remain above 90% in the second quarter, highlighting the commitment of our associates and solid execution has validated by our customers.

提供正面的客戶體驗可直接提高保留率和終身客戶價值。這才是真正的競爭優勢。我很高興地向大家報告，第二季度我們的客戶滿意度仍然保持在 90% 以上，這突顯了我們員工的承諾和可靠的執行力得到了客戶的認可。

It's been a challenging environment, the first six months of the year, and our focus remains on the things within our control. We continue to make investments that will strengthen our competitive position, help us capture market share and drive long term revenue performance.

今年前六個月是一個充滿挑戰的環境，我們的重點仍然是我們控制範圍內的事情。我們繼續進行投資，以增強我們的競爭地位，幫助我們佔領市場份額並推動長期收入表現。

We have a strong leadership team are executing against our strategy and as the environment improves, I believe we're well positioned to drive financial performance. With an exceptional balance sheet and healthy cash flow from operations, we continue to invest in our growth drivers and evaluate strategic opportunities.

我們擁有一支強大的領導團隊，正在執行我們的策略，隨著環境的改善，我相信我們有能力推動財務表現。憑藉出色的資產負債表和健康的營運現金流，我們繼續投資於成長動力並評估策略機會。

I will now turn the call over to Tex.

我現在將把電話轉給特克斯。

Thank you, Richard. Second quarter revenue was $347.8 million, up 6.8% over Q2 of last year. Organic revenue was $307.4 million, up 1.8% year over year. Organic US revenue was up 2.1% and Canada revenue was down 1.1% in local currency.

謝謝你，理查。第二季營收為 3.478 億美元，比去年第二季成長 6.8%。有機收入為 3.074 億美元，年增 1.8%。以當地貨幣計算，美國有機收入成長 2.1%，加拿大有機收入下降 1.1%。

Our managed sales channels led our performance, and we continued to see strong growth in our enterprise business as they capitalizes on new account generation. Revenue benefited from volume improvement while overall growth rates were impacted by modest pricing headwinds. Price volume has narrowed since the start of the year, and we are optimistic that price can continue to move towards neutral in the second half of 2024.

我們的託管銷售管道引領了我們的業績，並且我們的企業業務繼續強勁成長，因為他們利用了新客戶的產生。收入受益於銷售量的改善，而整體成長率則受到適度的定價阻力的影響。自年初以來價格成交量有所收窄，我們樂觀地認為 2024 年下半年價格將繼續走向中性。

Gross profit for the quarter was $122.5 million, up 8.5% from last year. Gross margin was 35.2%, up 50 basis points from the year ago period and 90 basis points on a sequential quarter basis. The year-over-year improvement was primarily achieved due to proactive price management as well as expanded private label balance of sale. Margin expanded in both our organic and Indoff businesses.

該季度毛利為 1.225 億美元，比去年增長 8.5%。毛利率為 35.2%，較去年同期成長 50 個基點，較上季成長 90 個基點。同比改善主要歸功於積極的價格管理以及自有品牌銷售餘額的擴大。我們的有機業務和 Indoff 業務的利潤率均有所擴大。

Management of our margin profile remains a key area of focus. Performance will continue to reflect the impact of strategic promotion and freight actions as part of our competitive pricing initiatives. In addition, ocean freight costs remain elevated and have accelerated in recent months. Higher cost inventory is flowing into our cost of sales, and this is something we continue to manage.

我們的利潤狀況管理仍然是一個重點領域。作為我們競爭性定價計畫的一部分，業績將繼續反映策略促銷和貨運運作的影響。此外，海運成本仍然居高不下，並且近幾個月來有所加速。較高成本的庫存正在流入我們的銷售成本，這是我們繼續管理的事情。

Selling, distribution, and administrative spending for the quarter was $96.1 million or 27.6% of net sales, an increase of 190 basis points from last year. SD&A primarily reflects planned investment in key sales and marketing growth initiatives, which generated negative leverage due to the softer customer demand environment, partially offset by a benefit associated with accounting for executive transition.

該季度的銷售、分銷和管理支出為 9,610 萬美元，佔淨銷售額的 27.6%，比去年增加了 190 個基點。SD&A 主要反映了對關鍵銷售和行銷成長計畫的計畫投資，由於客戶需求環境疲軟，這些計畫產生了負槓桿，但部分被與高階主管過渡會計相關的收益所抵消。

We expect SD&A levels to moderate from 2Q levels in the second half of the year, but remain elevated when compared to the year ago quarterly periods as we continue to support our growth strategy. We remain disciplined in our control of our general and discretionary cost management.

我們預計下半年 SD&A 水準將較第二季水準放緩，但由於我們繼續支持我們的成長策略，與去年同期相比仍處於較高水準。我們仍然嚴格控制一般和酌情成本管理。

Operating income from continuing operations was $26.4 million in the second quarter, and operating margin was 7.6%. Organic operating margin was 8.1%. Operating cash flow from continuing operations was $18.7 million in the quarter. Total depreciation and amortization expense in the quarter was $1.9 million, including approximately $0.8 million associated with the amortization of intangible assets related to the Indoff acquisition, while capital expenditures were $0.9 million.

第二季持續經營業務的營業收入為 2,640 萬美元，營業利益率為 7.6%。有機營業利益率為 8.1%。本季持續經營業務產生的營運現金流為 1,870 萬美元。本季折舊和攤銷費用總額為 190 萬美元，其中包括與 Indoff 收購相關的無形資產攤銷相關的約 80 萬美元，而資本支出為 90 萬美元。

We expect 2024 capital expenditures in the range of $3 million to $5 million, which primarily includes maintenance related investments of equipment within our distribution network.

我們預計 2024 年的資本支出將在 300 萬至 500 萬美元之間，其中主要包括我們分銷網絡內設備維護相關的投資。

Let me now turn to our balance sheet. We have a strong and liquid balance sheet with a current ratio of 1.9 to 1. As of June 30, we had $38.8 million in cash, no debt and approximately $120.6 million of excess availability under our credit facility.

現在讓我談談我們的資產負債表。我們擁有強大且流動性強的資產負債表，流動比率為 1.9 比 1。截至 6 月 30 日，我們的信貸安排下擁有 3,880 萬美元的現金、無債務以及約 1.206 億美元的超額可用資金。

We maintained significant flexibility to fully execute on our strategic plan and continue to fund our quarterly dividend. As a result, our Board of Directors declared a quarterly dividend of $0.25 per share of common stock. This concludes the prepared remarks today. Operator, please open the call for questions.

我們保持了極大的靈活性，以充分執行我們的策略計劃並繼續為我們的季度股息提供資金。因此，我們的董事會宣布季度股息為每股普通股 0.25 美元。今天準備好的發言到此結束。接線員，請打開電話提問。

(Operator Instructions) Ryan Merkel, William Blair.

（操作員指示）瑞安·默克爾、威廉·布萊爾。

Hey, guys. Thanks for taking the question.

嘿，夥計們。感謝您提出問題。

Hi Ryan, how are you (inaudible) ?

嗨瑞安，你好嗎（聽不清楚）？

Good. Let's start off with revenue. You mentioned the end markets are a bit weak here. Are there certain customers, products or end markets that stand out as being particularly weak?

好的。讓我們從收入開始。您提到終端市場有點疲軟。是否有某些客戶、產品或終端市場特別疲軟？

Yeah, I think, Ryan, when we look at our business, again, we as you know, we have a very fragmented customer base as well as a very broad product set that we offer to our customers. And that diversification tends to help us actually in certain times.

是的，我想，瑞安，當我們再次審視我們的業務時，正如你所知，我們擁有非常分散的客戶群，以及我們為客戶提供的非常廣泛的產品集。這種多元化往往在某些時候實際上對我們有幫助。

When we look at the actual customers, our managed customers and under our account management as well as our enterprise larger customers performed best in our portfolio this quarter. We actually saw a little bit softer business in some of those small, really small medium business, smaller customers and some of that e-commerce channel had some of the softer performance in the period.

當我們查看實際客戶時，我們的託管客戶和帳戶管理下的客戶以及我們的企業大型客戶在本季度的投資組合中表現最佳。實際上，我們看到一些小型、真正的中小型企業、較小的客戶以及一些電子商務管道在此期間的業績有些疲軟。

From a product set, again, a mixed segment within there, we actually had a pretty strong seasonal campaign with different types of outer furniture, cooling, HVAC. With a warmer season earlier in the year, we've actually had very strong performance for that in the second quarter. But really, it's been a fair amount of soft across the board we've seen with different customer buying decisions.

從產品組合來看，我們實際上有一個相當強大的季節性活動，涉及不同類型的外部家具、冷卻、暖通空調。由於今年早些時候氣候變暖，我們在第二季度的表現實際上非常強勁。但實際上，我們在不同的客戶購買決策中看到了相當多的軟性。

Okay, makes sense. And what about the outlook for the second half? I know you don't have much visibility. Are you seeing any green shoots? Any signs that trends to get better or is it pretty uncertain?

好吧，有道理。那麼下半年的前景如何呢？我知道你的知名度不高。你看到任何綠芽了嗎？有任何跡象表明趨勢會好轉還是相當不確定？

Right now I think there's some -- there's still a fair amount of uncertainty. I mean, as we mentioned in just a few moments ago, with even within the quarter, our organic growth was 1.8%, but that even included some weeks up, some weeks down, and really some months up, some months down.

現在我認為仍然存在相當多的不確定性。我的意思是，正如我們剛才提到的，即使在本季度內，我們的有機成長率也達到1.8%，但這甚至包括幾週的上漲、幾週的下跌，甚至包括幾個月的上漲、幾個月的下跌。

So right now I mean, it's one of those with a lot of fluctuations, it is a challenging market to forecast out what we're looking at. We know that there's a lot of key indicators in the market moving in different directions. And so right now, we're really focusing on those things that we can control and making sure we're best positioned for our customers when those buying decisions are prepared to be made.

所以現在我的意思是，這是一個波動很大的市場之一，預測我們正在關注的情況是一個具有挑戰性的市場。我們知道市場上有許多關鍵指標朝著不同的方向發展。因此，現在，我們真正關注的是我們可以控制的事情，並確保在準備做出購買決定時為客戶提供最佳的定位。

Okay. Yeah, I appreciate that. Last one for me. SG&A was above our model and outgrew revenues by quite a bit. Richard, you mentioned you're doing some planned investments. I'm just curious, are you thinking about trying to control costs in the second half, just given the uncertain revenue outlook? Or should we still assume that you go ahead with these investments and the second half, SG&A expense is still pretty elevated?

好的。是的，我很欣賞這一點。最後一張給我。SG&A 高於我們的模型，並且遠遠超出了收入的成長。理查德，您提到您正在進行一些計劃投資。我只是好奇，鑑於收入前景不確定，您是否正在考慮下半年控製成本？或者我們仍然應該假設您繼續進行這些投資，而下半年，SG&A 費用仍然相當高？

Yeah, I'll jump in here again ,Ryan. I think SG&A is one area that we definitely highlighted that as we exit Q1 that we were executing on certain key initiatives, and while we do believe that our absolute SG&A will moderate down from the second quarter performance, we do still anticipate being up year over year.

是的，我會再次跳到這裡，瑞安。我認為SG&A 是我們明確強調的一個領域，當我們退出第一季時，我們正在執行某些關鍵舉措，雖然我們確實相信我們的絕對SG&A 將比第二季度的表現有所下降，但我們仍然預計會同比增長年。

We want to make sure we're investing in those key areas that are long term in nature and helping position the company and helping position our customers in the right way. So we do plan to continue to plan on investing in sales and marketing initiatives. But again, it will be more moderated in the second half.

我們希望確保我們投資於那些具有長期性質的關鍵領域，並幫助公司定位並幫助我們的客戶以正確的方式定位。因此，我們確實計劃繼續計劃投資於銷售和行銷活動。但同樣，下半年情況會更加溫和。

Okay. All right. Thanks, pass it on.

好的。好的。謝謝，轉寄吧

Anthony Lebiedzinski, Sidoti & Company.

安東尼‧萊別津斯基 (Anthony Lebiedzinski)，西多蒂公司 (Sidoti & Company)。

Hey, good afternoon, gentlemen, and thank you for taking the questions. So I guess first just to follow up on the monthly trends, if you guys could give some colors. I think Tex, you mentioned some weeks or some months were up and some down. So any way to give more color as to how that -- how the quarter progressed?

嘿，先生們下午好，感謝您提出問題。所以我想先跟進每個月的趨勢，如果你們能給一些顏色的話。我想特克斯，你提到過幾週或幾個月的情況是上升的，有些是下降的。那麼，有什麼方法可以更詳細地說明這一季度的進展嗎？

No, it really was, Anthony. We saw up and down. I mean it was week to week, we had saw some weeks up, some weeks down. So if we were up in the beginning and down at the end, I would highlight that, but it really was fluctuating quite a bit throughout the period.

不，確實如此，安東尼。我們看到了上、下。我的意思是，一周又一周，我們看到了一些週的上升，一些週的下降。因此，如果我們在開始時上漲並在結束時下跌，我會強調這一點，但在整個期間確實波動很大。

And that really continued into the early weeks of July where we've actually seen that of currently fluctuating down a bit. So it's an area that we've seen some of those ups and downs, and we're just trying to make sure that we're positioned as best as we can be.

這種情況一直持續到 7 月初，我們實際上看到目前的波動有所下降。因此，我們在這個領域經歷了一些起伏，我們只是盡力確保我們處於最佳位置。

Got you. Okay, thanks for that, Tex. And then in terms of the gross margin, so it was up nicely versus a year ago. Can you just go over maybe a little bit more details as to what drove that? And then how sustainable are those improvements? I know you mentioned the ocean freight costs on the rise, but how should we think about also the gross margin outlook for the balance of the year?

明白你了。好的，謝謝你，特克斯。然後就毛利率而言，與一年前相比有了很大的提高。您能否再詳細介紹一下是什麼推動了這一情況？那麼這些改進的可持續性如何？我知道您提到海運費上漲，但我們應該如何考慮今年剩餘時間的毛利率前景？

Yeah. I mean, our gross margin is always a little bit seasonal based on kind of the mix of sales and mix of categories that we -- that ultimately make up our sales in a period. We think we did a really good job. There was no one-time items in that gross margin improvement in the quarters. It's right through a combination of pricing initiatives as well as continue to focus on our private brand goods.

是的。我的意思是，我們的毛利率總是有點季節性，這取決於我們最終構成一段期間內銷售的銷售組合和類別組合。我們認為我們做得非常好。本季毛利率的改善不存在一次性項目。這是透過結合定價舉措以及繼續關注我們的自有品牌商品來實現的。

And those certainly will bring a little bit higher gross margin for the business as you know. So it's an area that we are confident that we'll continue to be able to manage gross margin, but we have to make sure that we're paying attention to the market and addressing any changes that we see in the competitive set as well and when the time is right. So it's an area that we are confident in our ability to continue to maintain margin.

如您所知，這些肯定會為該業務帶來更高的毛利率。因此，我們有信心在這個領域繼續能夠管理毛利率，但我們必須確保我們專注於市場並解決我們在競爭環境中看到的任何變化，當時機成熟時。因此，我們對繼續保持利潤率的能力充滿信心。

The one big unknown, as you highlighted it was that ocean freight cost. Earlier in the year, we thought it was going to be a little bit more transitory. But we've seen is that it's actually sustained and accelerating some of those increases in the ocean freight market while that's not unique to Global Industrial.

正如您所強調的，最大的未知數是海運成本。今年早些時候，我們認為這會稍微短暫。但我們看到的是，它實際上持續並加速了海運市場的一些成長，而這並不是 Global Industrial 獨有的。

It's an area that does mix into our cost of sales and it's something that we have to manage. But we have teams really focused on making sure our pricing is right in the market, and we've been able to do that while increasing our gross margin profile year over year.

這是一個確實融入我們銷售成本的領域，也是我們必須管理的部分。但我們的團隊真正專注於確保我們的定價在市場上是正確的，並且我們能夠做到這一點，同時毛利率逐年提高。

Got you. Okay. And then just a follow-up. As far as the gross margin that Indoff, can you speak to that as far as that improvement? And then like as far as the introduction of private label products, how is that going? How is that being received at Indoff? And did you see that as an opportunity for you guys to benefit from that as they gain as those sales reps get more exposure to your own private label products?

明白你了。好的。然後只是後續行動。至於 Indoff 的毛利率，您能談談改善嗎？至於自有品牌產品的推出，進展如何？Indoff 的反應如何？您是否認為這是一個讓您受益的機會，因為隨著這些銷售代表更多地接觸您自己的自有品牌產品，他們也從中受益？

Yeah, it's an ongoing initiative. I mean, so as we highlighted, we saw improvement in the gross margin profile at both our Indoff subsidiary as well as the core Global Industrial business. So that was something nice to see while we -- Indoff does remain -- still does maintain a lower margin profile than Global Industrial. We did see those improvements.

是的，這是一項持續的舉措。我的意思是，正如我們所強調的那樣，我們看到 Indoff 子公司以及核心全球工業業務的毛利率狀況都有所改善。因此，這是一件很高興看到的事情，而我們——Indoff 確實仍然存在——仍然保持著比全球工業公司更低的利潤率。我們確實看到了這些改進。

And part of that is the introduction of our sourcing from Global Industrial, especially our private brand into their sales partner. So something that we're continuing to focus on. And we're arming them with the right tools to be able to sell that product and continue to cross train with their partners.

其中一部分是將我們從 Global Industrial 的採購，特別是我們的自有品牌引入他們的銷售合作夥伴。這是我們繼續關注的事情。我們為他們配備了正確的工具，以便能夠銷售該產品並繼續與他們的合作夥伴進行交叉培訓。

So it's something that we'll continue to push. But again, remember, they have a shorter history with our products. We've been doing this a long time at Global Industrial, but they still fit very well into what the Indoff is looking to accomplish, and we're confident that we'll be able to grow that over time.

所以這是我們將繼續推動的事情。但再次請記住，他們使用我們產品的歷史較短。我們在 Global Industrial 已經這樣做了很長時間，但它們仍然非常適合 Indoff 想要實現的目標，我們相信隨著時間的推移，我們將能夠實現這一目標。

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

知道了。嗯，非常感謝你，祝你好運。謝謝。

Thank you.

謝謝。

Ladies and gentlemen, this will conclude today's question and answer session as well as call. Thank you for attending today's presentation. You may now disconnect your lines.

女士們先生們，今天的問答環節和電話會議到此結束。感謝您參加今天的演講。現在您可以斷開線路。