Global Industrial Co (GIC) 2024 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to Global Industrial's Third Quarter 2024 Earnings Call. (Operator Instructions) At this time, I would like to turn the floor over to Mark Smargiassi of the Plunkett Group. Sir, please go ahead.

女士們、先生們，下午好，歡迎參加 Global Industrial 2024 年第三季財報電話會議。（操作員說明） 現在，我想將發言權交給 Plunkett Group 的 Mark Smargiassi。先生，請繼續。

Thank you, and welcome to the Global Industrial Third Quarter 2024 Earnings Call. Leading today's call will be Richard Leeds, Executive Chairman and Interim CEO; 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 年第三季財報電話會議。今天的電話會議將由執行董事長兼臨時執行長理查德·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。

Today's discussion may include certain forward-looking statements. 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.

今天的討論可能包括某些前瞻性陳述。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下描述的因素-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。

I will now turn the call over to Richard.

我現在將把電話轉給理查德。

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. Our third quarter performance reflects the weak demand environment and continued softness in our core SMB customer base. We saw a cautious customer purchasing behavior throughout the quarter. Revenue was down each month in the period and up 3.4% for the quarter, as compared to the year ago period.

謝謝，麥克。大家下午好，感謝您加入我們。我們第三季的業績反映了疲軟的需求環境和我們核心中小企業客戶群的持續疲軟。我們整個季度都看到客戶的購買行為謹慎。與去年同期相比，該季度營收逐月下降，但本季成長 3.4%。

Our strategic account business continues to perform well, delivering solid growth. In addition, retention rates and customer satisfaction across our customer base remains healthy.

我們的策略客戶業務持續表現良好，並實現穩健成長。此外，我們的客戶群的保留率和客戶滿意度仍然保持健康。

Gross margin was 34% in the quarter. An improvement on a year over year basis declined sequentially as we continue to face increased cost of sales primarily from ocean freight headwinds.

該季度毛利率為 34%。由於我們持續面臨主要來自海運不利因素的銷售成本增加，年比改善情況連續下降。

Bottom line performance reflects further investments in key growth initiatives, specifically across customer experience, web and a new CRM platform to help drive engagement and strengthen our competitive position.

底線績效反映了對關鍵成長計畫的進一步投資，特別是在客戶體驗、網路和新的 CRM 平台方面的投資，以幫助提高參與度並增強我們的競爭地位。

And reflecting on my observation since I returned to the CEO role, it's clear we have a talented team and a terrific business that has a strong foundation to drive long term growth.

回顧我重返執行長職位後的觀察，很明顯，我們擁有一支才華橫溢的團隊和出色的業務，為推動長期成長奠定了堅實的基礎。

However, we're at this point with recent results and have identified key areas for improvement. At times, we're truncated to every customer segment and are then doubling down on what we excel at and where we deliver exceptional value to the market.

然而，我們目前已經取得了最新成果，並確定了需要改進的關鍵領域。有時，我們會針對每個客戶群進行細分，然後在我們擅長的領域以及為市場提供卓越價值的領域加倍努力。

In addition, certain decisions have resulted in us over indexing on new customer acquisition segments that are more transactional and not aligned with the long-term B2B relationships we seek to build. We know what we need to do. We're addressing this with a renewed and sharper focus on serving the needs of our core customers and implementing a more unifying collaboration specifically between sales and marketing. Further, we're adjusting our process to identify, target, and nurture accounts with the highest lifetime value potential.

此外，某些決策導致我們過度索引新客戶獲取細分市場，這些客戶獲取細分市場更具交易性，且與我們尋求建立的長期 B2B 關係不符。我們知道我們需要做什麼。我們正在解決這個問題，重新更加專注於滿足核心客戶的需求，並在銷售和行銷之間實施更統一的協作。此外，我們正在調整流程，以識別、定位和培養具有最高終身價值潛力的客戶。

We believe this refined focus will allow us to better communicate our value proposition to the market, play to our established strengths, and engage core customer segments. We will also continue to enhance the customer experience by improving web shopping and highlighting our product knowledge, exclusive brands offering and end to end solution capabilities.

我們相信，這種精細化的重點將使我們能夠更好地向市場傳達我們的價值主張，發揮我們的既定優勢，並吸引核心客戶群。我們還將透過改善網路購物並突顯我們的產品知識、獨家品牌產品和端到端解決方案能力，持續增強客戶體驗。

These are attributes that align with our more technically oriented customers and which we believe are key differentiators in our offering.

這些屬性與我們更注重技術的客戶一致，我們相信這些屬性是我們產品的關鍵差異化因素。

During the past several quarters, we have been building a new CRM environment. In the third quarter, we started the phase rollout of Salesforce and expect to go live in the near term.

在過去的幾個季度中，我們一直在建立新的 CRM 環境。第三季度，我們開始了Salesforce的階段性部署，預計近期上線。

We believe this new CRM will strengthen the Livery of our seamless customer experience, drive operational efficiencies, and provide a more unified picture of our customers' operations.

我們相信，這款新的 CRM 將增強我們無縫客戶體驗的魅力，提高營運效率，並提供更統一的客戶營運狀況。

We continue to enjoy strong customer satisfaction scores, and Salesforce is a market-leading tool to ensure we can continue to deliver an exceptional experience to our customers. In August, we held our annual Global Industrial National Trade Show in Las Vegas.

我們持續享有很高的客戶滿意度，Salesforce 是市場領先的工具，可確保我們能夠繼續為客戶提供卓越的體驗。八月，我們在拉斯維加斯舉辦了一年一度的全球工業全國貿易展。

This is a terrific event that brings together our customers and vendor partners. It showcased the broad product offering and solutions we bring to market and provides an excellent opportunity to gain direct insights from our customers. It takes an incredible amount of work to produce a successful show like this. I'd like to thank all of our associates for their efforts.

這是一次將我們的客戶和供應商合作夥伴聚集在一起的盛會。它展示了我們推向市場的廣泛產品和解決方案，並提供了從客戶那裡獲得直接見解的絕佳機會。製作這樣一場成功的演出需要大量的工作。我要感謝我們所有同事的努力。

Finally, I would like to welcome Lisa Armstrong to the senior management team. Lisa joined us as our CMO in August and brings exceptional expertise in B2B marketing. She is a proven executive. I'm excited to support her efforts to enhance our go to market strategy, drive brand awareness and strengthen connections with our customers.

最後，我謹歡迎麗莎·阿姆斯壯加入高階管理團隊。Lisa 於 8 月加入我們，擔任首席行銷官，她帶來了 B2B 行銷的卓越專業知識。她是一位久經考驗的高階主管。我很高興能夠支持她努力加強我們的市場策略、提高品牌知名度並加強與客戶的聯繫。

In conclusion, while the macro environment remains challenged, we continue to focus on the factors in our controls, including driving operational excellence and enhancing the customer experience.

總之，雖然宏觀環境仍面臨挑戰，但我們繼續專注於控制因素，包括推動卓越營運和增強客戶體驗。

I believe our efforts to focus on our core product offerings and our target customers will take a few quarters to gain traction. And as they do and the market environment proves we'll be in a strong position to drive financial performance. Maintain an exceptional balance sheet. We'll continue to invest in our growth drivers and evaluate strategic opportunities. I will now turn the call over to Tex.

我相信，我們專注於核心產品和目標客戶的努力將需要幾個季度才能獲得牽引力。正如他們所做的那樣，市場環境也證明我們將處於推動財務表現的有利地位。保持卓越的資產負債表。我們將繼續投資我們的成長動力並評估策略機會。我現在將把電話轉給特克斯。

Thank you, Richard. Third quarter revenue was $342.4 million, down 3.4% over Q3 of last year. U.S. revenue was down 3.4%, and Canada revenue was down 2.9% in local currency. Our revenue softness was broad-based across customer and markets. We continue to see strong growth in our enterprise business as it capitalizes on both new account generation and existing account penetration. Price was generally neutral in the third quarter, an improvement from the pricing headwinds we saw in the first half of the year. We currently expect continued price neutrality for the remainder of the year. We have seen the soft demand environment continue into the fourth quarter, and revenue is currently pacing down mid-single digits.

謝謝你，理查。第三季營收為 3.424 億美元，比去年第三季下降 3.4%。以當地貨幣計算，美國營收下降 3.4%，加拿大營收下降 2.9%。我們的收入疲軟涉及整個客戶和市場。我們的企業業務繼續強勁成長，因為它利用了新帳戶的產生和現有帳戶的滲透。第三季價格整體呈中性，比我們上半年看到的定價逆風有所改善。我們目前預計今年剩餘時間價格將持續保持中立。我們看到疲軟的需求環境持續到第四季度，收入目前正在下降中個位數。

Gross profit for the quarter was $116.3 million, flat from last year. Gross margin was 34%, up 120 basis points from the year-ago period, as we benefited from proactive price management. On a sequential quarter basis, this benefit was muted as gross margin was down 120 basis points, primarily as a result of elevated ocean freight costs. 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. Selling distribution and administrative spending for the quarter was $94.1 million, or 27.5% of net sales, an increase of 270 basis points from last year.

該季度毛利為 1.163 億美元，與去年持平。由於積極的價格管理，毛利率為 34%，較去年同期成長 120 個基點。環比來看，這項效益減弱，毛利率下降了 120 個基點，這主要是由於海運成本上升所致。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。本季銷售分銷和管理支出為 9,410 萬美元，佔淨銷售額的 27.5%，比去年增加 270 個基點。

STNA primarily reflected planned investment in key sales and marketing growth initiatives, as well as significant CPC inflation. This generated negative leverage due to the soft top line results.

STNA 主要反映了對關鍵銷售和行銷成長計劃的計劃投資，以及顯著的 CPC 通膨。由於頂線業績疲軟，這產生了負槓桿。

In addition, we had a significant increase in healthcare costs, which exceeded $1 million in the quarter. We expect STNA level to remain elevated in 4Q, which will result in negative leverage due to the current revenue trends.

此外，我們的醫療保健成本大幅增加，本季超過 100 萬美元。我們預計第四季度 STNA 水準將保持在高位，鑑於當前的收入趨勢，這將導致負槓桿。

We remain disciplined in the control of our general and discretionary cost management.

我們在一般和可自由支配的成本管理方面保持嚴格的控制。

Operating income from continuing operations was $22.2 million in the third quarter, and operating margin was 6.5%.

第三季持續經營業務的營業收入為 2,220 萬美元，營業利益率為 6.5%。

Operating cash flow from continuing operations was $9.4 million in the quarter. Total depreciation and amortization expense in the quarter was $2 million, including approximately $0.8 million associated with the amortization of intangible assets related to the end-off acquisition, While capital expenditures were $0.9 million. We expect 2024 capital expenditures in the range of $3 to $5 million, which primarily includes maintenance-related investments and equipment within our distribution network.

本季持續經營業務產生的營運現金流為 940 萬美元。本季折舊和攤銷費用總額為 200 萬美元，其中包括與最終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。我們預計 2024 年的資本支出將在 300 至 500 萬美元之間，其中主要包括我們分銷網絡內與維護相關的投資和設備。

Let me now turn to our balance sheet. We have strong and liquid balance sheet with a current ratio of 2 to 1. As of September 30th. We had $38.9 million in cash, no debt, and approximately $121 million of excess availability under our credit facility.

現在讓我談談我們的資產負債表。我們擁有強勁且流動性強的資產負債表，流動比率為 2 比 1。截至 9 月 30 日。我們擁有 3,890 萬美元的現金，沒有債務，根據我們的信貸安排還有大約 1.21 億美元的超額可用資金。

We maintain 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 25 cents per share of common stock.

我們保持高度的靈活性，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，我們的董事會宣布派發每股普通股 25 美分的季度股息。

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

我們今天準備好的演講到此結束。接線員，請打開電話提問。

Ladies and gentlemen, at this time, we will begin the question and answer session to ask a question. You may press star and then one to join the question queue.

女士們、先生們，此時我們將開始問答環節來提問。您可以按星號，然後按一加入問題佇列。

If you decide to withdraw your questions, you may press star and two.

如果您決定撤回問題，可以按星號和二號。

If you are using a speakerphone, we do ask you to please pick up the handset prior to pressing the keys to ensure the best sound quality.

如果您使用免持電話，我們要求您在按鍵之前拿起聽筒，以確保獲得最佳音質。

Once again, that is star and then 1 to join the question queue.

再一次，即star，然後1加入問題隊列。

Our first question today comes from Anthony Lebodzinski from Sidonian Company. Please go ahead with your question.

我們今天的第一個問題來自 Sidonian 公司的 Anthony Lebodzinski。請繼續你的問題。

Thank you, and good afternoon, and thanks for taking the questions. I guess in terms of the the weakness in your core customer segment, which is the SMB, just what are you generally seeing in terms of average order value and average order frequency? Are you seeing a decline in both or is one outweighing the other? Just wanted to get a little bit more color as to what's behind the weakness?

謝謝您，下午好，謝謝您提出問題。我想就您的核心客戶群（即中小企業）的弱點而言，您在平均訂單價值和平均訂單頻率方面通常看到什麼？您是否發現兩者都在下降，還是其中一個超過了另一個？只是想了解一下弱點背後的原因是什麼？

Sure, Anthony. So as we highlighted that we, we are still seeing very good customer satisfaction scores. And our customer retention rates, especially within our managed sales channels is still very strong, still very healthy where we expect it to be. But again, that order frequency as well as that AOV is down slightly. We're seeing some less large projects coming through as our customers seem to be holding back a bit on some of those larger opportunities that they're seeing forward. In terms of some of that softness, We are definitely seeing that maybe on the smaller end of the customer set. And we talked a little bit about those transactional type customers that they may be coming for one-time buying activities. And that manifests itself both on some of our web sales and some of that unassigned account business that we have within the portfolio that we've seen a little bit of greater softness in. And that did continue throughout throughout Q3 and has continued into the beginning of Q4.

當然，安東尼。因此，正如我們所強調的那樣，我們仍然看到非常好的客戶滿意度分數。我們的客戶保留率，特別是在我們管理的銷售管道內，仍然非常強勁，仍然非常健康，符合我們的預期。但訂單頻率和 AOV 再次略有下降。我們看到一些規模較小的專案正在實施，因為我們的客戶似乎對他們所看到的一些更大的機會有所保留。就某些軟性而言，我們肯定會在較小的客戶群中看到這一點。我們討論了一些交易型客戶，他們可能會來參加一次性購買活動。這體現在我們的一些網路銷售和我們在投資組合中的一些未分配帳戶業務上，我們已經看到了一些更大的疲軟。這種情況確實持續了整個第三季度，並持續到第四季初。

Thanks, Tex. And then, you know, in terms of the comment about the better communicating your value proposition, Are you looking to do more advertising? And if so, I mean, how should we think about the financial impact of that?

謝謝，特克斯。然後，您知道，就更好地傳達您的價值主張的評論而言，您是否打算做更多廣告？如果是這樣，我的意思是，我們應該如何考慮其財務影響？

This is Richard. So one of the things that we've done is we've improved our website so that we're able to highlight the benefits of our products for this competition. A lot of our private label products are superior to competitors. So we have a deficit on the website of highlighting that. We fixed that. And we're making sure that our pricing is spot on where it should be for all of our products, not just for the private label products. As for the advertising, we've done some reallocating to the marketing where we're looking to drive higher returns and have stickier customer relationships from targeting the ads to those customers that we think are going to deliver that. The CPCs have gone up, and as we navigate through that choppy waters of higher CPCs, we're just reallocating and following the data to what's going to drive higher customer retention and higher long-term customers.

這是理查德.因此，我們所做的事情之一就是改進了我們的網站，以便我們能夠突出我們的產品在本次比賽中的優勢。我們的許多自有品牌產品都優於競爭對手。因此，我們在網站上缺乏強調這一點的能力。我們解決了這個問題。我們確保所有產品的定價都符合其應有的水平，而不僅僅是自有品牌產品。至於廣告，我們已經對行銷進行了一些重新分配，我們希望透過將廣告定位到我們認為將提供廣告的客戶來獲得更高的回報並建立更黏性的客戶關係。每次點擊費用已經上升，當我們在更高的每次點擊費用的波濤洶湧的水域中航行時，我們只是重新分配和追蹤數據，以推動更高的客戶保留率和更多的長期客戶。

All right, thanks, Richard. And then, you know, as far as, you know, the growth initiatives that you referenced in the press release as well as in your prepared remarks, I guess which ones do you think will be the most impactful near term and which of the initiatives will take longer term to play out?

好的，謝謝，理查。然後，就您在新聞稿以及準備好的發言中提到的成長舉措而言，我猜您認為哪些是近期最具影響力的舉措，哪些舉措是最有影響力的需要更長時間才能發揮作用？

Sure. So, you know, as we discussed, we're implementing Salesforce and Salesforce marketing. So that initiative is probably going to take us through the middle of next year to get Salesforce marketing up and running. That initiative, I think, is going to drive a lot of benefit for our sales reps where right now they're dealing on a relationship selling with not the best tools that are out there. Once we get Salesforce and Salesforce marketing up, they're going to have state-of-the-art tools, and I think that's really going to drive try that.

當然。所以，您知道，正如我們所討論的，我們正在實施 Salesforce 和 Salesforce 行銷。因此，這項計劃可能有助於我們在明年年中啟動並運行 Salesforce 行銷。我認為，這項措施將為我們的銷售代表帶來許多好處，因為他們目前正在處理的銷售關係並不是最好的工具。一旦我們啟動 Salesforce 和 Salesforce 行銷，他們將擁有最先進的工具，我認為這確實會推動我們嘗試。

Okay. Well, thank you very much and the best of luck.

好的。嗯，非常感謝你，祝你好運。

Thank you.

謝謝。

Thank you.

謝謝。

And our next question comes from Michael Francis from William Blair. Please go ahead with your question.

我們的下一個問題來自威廉布萊爾的邁克爾弗朗西斯。請繼續你的問題。

Hi, guys. Thanks for taking my questions. I'm on for Ryan today. First one to piggyback off that question on the growth initiatives. Is that something that you've decided to do a little more with the market being soft? Or is this something that you've been doing for a while and you just wanted to highlight more on this call?

嗨，大家好。感謝您回答我的問題。我今天替瑞安上場。第一個將這個問題與成長計劃聯繫起來的人。在市場疲軟的情況下，您是否決定多做一些事情？或者這是您已經做了一段時間的事情，您只是想在這次電話會議上強調更多？

Yeah, I think it's a reflection. We've been going down the path of arming our sales force with those right tools. For the better part, we began the implementation and discovery of that process throughout the course of this year. It wasn't a direct reflection of the results that we've seen in recent periods, but I think it trends well with kind of the way we see the market right now and making sure we're best situated for those managed customers. We have seen some of the midsize and larger customers be more resilient during this time. and giving our sales team and our managed sales account managers the best tools available to be able to target those customers, to be there where they want, and have that full 360-degree view of that customer experience will allow them to really drive better results. So it's something that the timeline has been merging with kind of the current results, but we've been working on phased rollouts, and we'll be going live with some of those modules very quickly. And as Richard said, as we get into the early and mid part of next year, we should be fully implemented with both our sales and our marketing technology enhancements.

是的，我認為這是一種反思。我們一直在用這些正確的工具武裝我們的銷售團隊。更重要的是，我們在今年全年開始實施和發現這個流程。這並不是我們最近一段時間所看到的結果的直接反映，但我認為它的趨勢與我們目前看待市場的方式一致，並確保我們為那些託管客戶提供了最佳的定位。我們發現一些中型和大型客戶在此期間表現得更有彈性。為我們的銷售團隊和管理銷售客戶經理提供最好的工具，使他們能夠瞄準這些客戶，到達他們想要的地方，並擁有360 度全方位的客戶體驗視圖，這將使他們真正取得更好的成果。因此，時間軸已經與當前的結果相結合，但我們一直在努力分階段推出，並且我們很快就會啟用其中一些模組。正如理查德所說，當我們進入明年年初和中期時，我們應該全面實施我們的銷售和行銷技術增強。

Okay. And then on the SG&A number, obviously appreciate the color there on the ramp since last year. Is there anything you can do to sort of throttle that back? Should conditions stay soft? I know you've got a lot of the initiatives you're talking about. Is there any sort of cost that might roll off there at some point?

好的。然後在 SG&A 數字上，顯然可以欣賞自去年以來坡道上的顏色。你能做些什麼來抑制這種情況嗎？情況是否應該保持疲軟？我知道您有很多正在談論的舉措。是否有任何成本可能會在某個時候下降？

Sure. I mean, if we think about a couple of the areas when we talk about cost, one, that CPC inflation is one that, as Richard highlighted in his remarks, that we've seen some higher costs in acquiring new customers. And that really, again, shows up through our web channels. That's an area that, as we reallocate some of those resources, we believe that we can get a better return on those dollars. And that's really, again, as Rich mentioned, on product prioritization and customer targeting through the digital marketing different efforts that we have. So we anticipate that can improve, but it's a test and learn approach. I mean, we're following the data and seeing where that moves. Otherwise, obviously, we are focused on cost controls and all discretionary spending and some of that on an ordinary basis. And obviously, especially in these downtimes, that we are managing down. But overall, again, there is a fixed cost nature to our business between baseline salaries as well as occupancy costs and other key fixed costs that are just naturally going to be, they're going to trend as they do and that will, at times, lead to negative leverage when the top line is soft. So, again, we are throttling back to spending where we can in the short term, but knowing that, obviously, we need to get that revenue line turning in the right direction, which we are taking some key actions to turn around.

當然。我的意思是，如果我們在談論成本時考慮幾個方面，其中之一就是每次點擊費用通膨，正如理查德在他的演講中強調的那樣，我們在獲取新客戶方面看到了一些更高的成本。這確實再次透過我們的網路管道顯現出來。在這個領域，當我們重新分配其中一些資源時，我們相信我們可以從這些資金中獲得更好的回報。正如里奇所提到的，這確實是透過我們所做的數位行銷不同努力來確定產品優先順序和客戶定位。所以我們預計這可以改進，但這是一種測試和學習的方法。我的意思是，我們正在追蹤數據並觀察其變化。否則，顯然，我們將重點放在成本控制和所有可自由支配支出以及其中一些常規支出。顯然，尤其是在這些停工期間，我們正在進行管理。但總的來說，我們的業務在基線工資、入住成本和其他關鍵固定成本之間存在固定成本性質，這些成本自然會發生，它們會隨著趨勢的變化而變化，有時也會發生變化。當頂線疲軟時導致負槓桿。因此，我們再次在短期內盡可能地減少支出，但我們知道，顯然，我們需要讓收入線轉向正確的方向，我們正在採取一些關鍵行動來扭轉這一局面。

All right. That's all I had. Appreciate it.

好的。這就是我所擁有的一切。欣賞它。

Thank you.

謝謝。

And ladies and gentlemen, at this time, we'll conclude today's question and answer session as well as today's conference call. (Operator Instructions) We do thank you for joining the presentation. You may now disconnect your lines.

女士們、先生們，此時我們將結束今天的問答環節以及今天的電話會議。（操作員說明）我們非常感謝您參加演示。現在您可以斷開線路。