Global Industrial Company

Good afternoon, ladies and gentlemen, and welcome to the Global Industrials Second Quarter 2022 Earnings Call. At this time, I would like to turn the conference over to Mike Smarjasi of the Plunkett Group. Please go ahead, sir.

Thank you, and welcome to the Global Industrial Second 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. 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 on a Form 8K. This call is the property of Global Industrial Company. I will now turn the call over to Barry Litwin.

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. Second quarter performance reflects the continued implementation of our ACE strategy and strong execution by the Global Industrial team. Revenue reached a quarterly record of over 318 million, growing nearly 17% with solid demand throughout the quarter. Gross margins remain healthy, but pulled back from the record performance in the first quarter of this year, reflecting the impact of freight fuel surcharges, certain promotional activities on excess and seasonal stock, as well as the flow-through of some higher-cost inventory. In terms of our bottom-line performance, we delivered solid operating leverage and generated over $30 million in operating income, a 23% increase from the year-ago quarter. and operating margin improved 50 basis points to 9.6% from Q2 of 2021. Overall, we were very pleased with our second quarter performance as we made further progress on key digital, sales, marketing, customer, and distribution initiatives. We believe these investments will strengthen our competitive position and help us drive growth and capture additional market share in the highly fragmented industrial distribution marketplace. We remain focused on new business development, which is reflected by our expansion into additional end markets and sales channels. This includes our entry into larger government and private sector accounts and recent entry into the healthcare vertical. These efforts allow us to establish new customer relationships while leveraging Global Industrial's core product offering and sales organization. Our one-to-one managed sales team continues to drive our growth, and we are making investments in tools and technology to empower our team. putting the right data in their hands to improve efficiencies and enhance their value as a resource and partner to our customers. Recently, we commenced the launch of a new digital e-commerce platform, which we are rolling out to customers in a phased approach. This new user interface and customer experience highlights our digital leadership and puts a spotlight on the solutions and resources we provide. It's been a tremendous undertaking, drawing on talent from across the company to deliver a better experience for our customers. It includes easier mobile navigation, personalized recommendations, auto-reorder functionality, faster checkout, and the addition of pertinent knowledge center content to product category pages, to name just a few of the new features. In June, we held Global Industrials National Trade Show in New Orleans. It was a tremendous success and provided an important opportunity to interact face-to-face with customers and our vendor partners. One of the key takeaways for me personally was direct customer feedback around the value our subject matter experts provide and praise for our sales team's ability to address questions and help solve problems. This highlights the direct impact of the customer-focused ACE initiative, the investments we're making, and the value our associates deliver every day. As we enter the second half of the year, we remain focused on driving operational excellence, furthering our digital transformation, and investing in private brand, logistics, and our peoples. We believe we are well positioned to continue to deepen relationships with our customers and capitalize on our growth initiatives. While there remains a good deal of uncertainty around the economy, we have tremendous flexibility in our operations and have proven our ability to react quickly and proactively manage the business during the past several years. From tariffs to the pandemic and supply chain issues, we have addressed each one of these challenges head on, and as a result, we've become a stronger company. I'm pleased with the progress we have made this year, excited for the numerous opportunities we have in front of us, and believe we remain well positioned to drive strong bottom line performance and value for our stakeholders over the long term. I'll now turn the call over to Tex.