Global Industrial Company

Good afternoon, everyone, and welcome to Global Industrials' third quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Mike Smargiasi, Investor Relations. Sir, please go ahead.

Thank you, and welcome to the Global Industrial Third Quarter 2021 Earnings Call. Leading today's call will be Barry Litwin, Chief Executive Officer, and Tex Clark, Senior Vice President and Chief Financial Officer. Formal remarks will be followed by a question and answer session. 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 in a Form 8-K. This call is the property of and is copyrighted by Global Industrial Company. I will now turn the call over to Barry Litwin.

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. We delivered a solid third quarter performance and are very pleased with our execution across the business. Despite a modest decline in net sales, customer demand was strong and accelerated in the quarter, with continued growth in core product lines led by private labels. Continued constraints within the supply chain contributed to a significant increase in open orders, which negatively impacted top-line results in two ways. First, due to delays in order fulfillment times, our conversion of customer demand and net sales was much slower than our typical conversion cycle. Second, we believe that the combination of both extended lead times as well as the volatility of in-stock positions of key products caused customers to defer buying decisions and limited our ability to maximize sales. Gross margin set a new quarterly record of 36.8%, and we delivered over $30 million of operating income in the quarter, with operating margin of 11%, matching our quarterly margin record. This was a significant achievement in a difficult environment. Our operating performance reflects the efforts of our associates as they continue to execute on our ACE strategy and manage through supply chain challenges. This includes strong execution in a number of key areas, including price intelligence and analytics. Our enhanced pricing capabilities were essential to our top line and margin performance in the quarter. Investments in this area are providing timely insights that allow us to capture price in line with the market while continuing to deliver value to our customers. Also, private brand. We have seen continued growth in our global industrial and other private branded products. which deliver a high-quality and attractively priced offering to customers, as well as driving a higher composite gross margin. It also allows us to leverage more than 40 years of private brand experience to deliver product innovation while providing greater insight to our procurement process and control of our supply chain. Also, digital initiatives and new branding. Our continued investments in digital capabilities is generating a better online customer experience through our new search engine, taxonomy, and personalization. And our name change to global industrial companies, new logo, company awareness campaigns are helping drive brand recognition and casting a wider net to attract customers. Finally, our one-to-one managed selling organization under the leadership of Claudia Hughes is driving increased demand and advancing our selling strategy. As we move forward and look to 2022 and beyond, we are making further investments in the business to position us for sustainable growth, profitability, and success. We are continuing to invest in talent, and in September, we welcomed Alex Tomei to the newly created position of Chief Merchandising Officer, where he will be responsible for developing and driving merchandising strategy and operations. On the heels of this appointment, we introduced our Trash Talk e-connected trash cans and a floor care equipment line. We also recently launched a new GPO relationship and look forward to developing this new business development opportunity. Finally, next week, we will host our National Trade Show in Nashville, Tennessee, and look forward to showcasing our global product offering and extensive vendor relationships. In conclusion, there's a level of excitement across the company because the challenges of last year and a half have made us stronger, more creative, and more resilient, while elevating the value we bring to market. We are executing on our strategy and enhancing our ability to deliver an exceptional customer experience. There are signs that the general business environment remains healthy, as indicated by our demand for core product categories. While supply chain, labor, and freight disruptions continue, we are proactively managing these challenges and utilizing our operational flexibility and entrepreneurial approach to address them. and we have been very pleased with our ability to deliver strong margins in the current operating environment. We are investing strategically in the business, remain disciplined in our cost management, and believe we are well positioned for the future. I will now turn the call over to Tex.