Global Industrial Company

Good day and welcome to the Global Industrial Company fourth quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists 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 then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mike Smarjewasi of Investor Relations. Please go ahead.

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. 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 other 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. Overall, 2022 was an outstanding year for Global Industrial as we executed against our A strategy and delivered a record financial performance for total revenue as well as gross and operating margins. For the full year, organic growth contributed over $100 million in additional revenue, resulting in 9.7 percent growth and bringing total revenue to $1.17 billion. Gross margin improved 90 basis points to 36.1 percent. We generated over $105 million of operating income, an increase of 19.5 percent, and delivered a 9 percent operating margin, a 70-point basis improvement from 2021. With the strong financial performance in 2022, today we announced an increase in the quarterly recurring dividend for the seventh consecutive year. 2022 started off with strong double-digit revenue gains, while the second half of the year reflected the impact of increased economic headwinds and a diminishing price benefit as we lapped price increases taken in mid to late 2021. As a result, fourth quarter revenue was off modestly with flat price to volume comparisons from the year-ago period. Demand was muted across categories and sales channels, and we have seen this trend continue into 2023. We were very pleased with the proactive management of gross margin in the quarter as we recorded a 30 basis point improvement on a sequential basis and remain confident in our ability to manage our margin profile in the current cycle. Looking back on the last year, we successfully executed on a number of initiatives that we believe set us up well for 2023 and beyond. First, we strengthened our managed sales organization as we expanded the team and made investments in tools and technology to enhance productivity and performance. We added a new customer acquisition engine focused on enterprise accounts and launched market verticals in hospitality and healthcare. These efforts are off to a great start and we're excited about what we see. Moving forward, we're focused on capturing share through customer acquisition and retention deepening our existing relationships, and expanding our lineup of exclusive branded items. Second, marketing leadership. We executed against our fully integrated brand marketing campaign, which has allowed us to activate our We Can Supply That branding across everything we do, from our website, emails, trade show, and copywriting to our NASCAR sponsorships. I think we have one of the most exciting brands in the market today and one that truly speaks to our customers and the products and solutions we provide. During the year, we also repositioned the private brand offering as global industrial exclusive brands with the tagline made to exceed. As the market continues to shift from winning with product availability to a price and value focus, we believe we're well positioned with our exclusive brand offering. Recently, we launched a new marketing campaign focused on operational efficiencies. a message that is timely given the current economic environment and one that aligns with the efforts we see from our customers and within our company to drive efficiencies and enhance operational performance. Third, we continue to elevate the customer experience with the launch of a new website designed to drive personalization. We are now optimizing this new platform with enhancements to further improve the digital shopping experience. On the service side, We have initiatives across the company to optimize satisfaction and loyalty at every customer touchpoint. From the training of customer service reps to expanding self-service options, we are committed to delivering five-star customer service experience. Fourth, distribution and supply chain. Our operations and merchandising teams delivered exceptional availability, reduced back orders, and improved lead times during the year. In addition, we opened a new distribution center in Toronto, that allows us to receive direct imports into Canada, provide for the shipment of more products stocked directly to our customers, and foster our continued growth. Overall, we're off to a much better stocking position this year, which will help us enhance service levels and deliver value to customers. We have a number of initiatives planned for 2023, including a focus on shipping quality that will minimize damages, as well as efforts to increase same-day shipping volume and fully capture ocean and domestic freight savings, and will help us pass more savings to our customers. Finally, I'm proud of the release of our inaugural ESG report last fall, which reflects the universal commitment of the board, executive team, and our associates to the mission of responsible stewardship. We look forward to updating you on our progress later this year. In closing, we believe we have a strong game plan for 2023, and a clear vision for our team to execute on. While uncertainty remains in the economic outlook, we're optimistic and excited about the opportunities we see for growth. We'll continue to invest in core strategic areas of the business that support our customer-centric strategy and help drive operational leverage. This includes pricing intelligence and analytics, productivity and cost management, and a company-wide focus on margin optimizations. I have been impressed by the nimbleness we have demonstrated and continue to show our ability to drive operational excellence. With strong cash flow from operations and an exceptional balance sheet, we remain well-positioned to execute on our strategy, invest in our growth drivers, evaluate strategic M&A opportunities, and build long-term value for our stakeholders. I will now turn the call over to Tex.