Global Industrial Company

Good day and welcome to the Global Industrial Company first quarter 2023 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 then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I'd now like to turn the conference over to Mike Smarjasi, Investor Relations. Please go ahead.

Thank you, and welcome to the Global Industrial First Quarter 2023 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 8-K. This call is the property of Global Industrial Company, I will now turn the call over to Barry.

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. First quarter performance reflects a continuation of the recent demand environment, with average daily sales declining 3.7%. Price was neutral in the period and volume remained muted, reflecting cautionary purchase behavior, specifically within our core small and medium business customer base. These trends have continued into the second quarter. we recorded strong growth from our largest accounts in the quarter. In addition, customer retention remained healthy overall, which we believe reflects the value of our one-to-one managed sales organization. We were very pleased with gross margin performance of 35.9%, a slight decline from sequential quarter results, but as expected, off from record results in the year-ago period. Product margin was solid and expanded each month as we moved through the quarter, reflecting a continuation of the benefit we are receiving from lower-cost inventory flowing into our cost of sales. Our focus on the customer continues to drive our strategy, and we made further progress on operational excellence and digital transformation initiatives during the quarter. Recent e-commerce sales performance on our new web platform has been below our expectations. We have identified a number of user experience changes that are increasing friction while navigating our e-commerce site. We aggressively worked to address these issues. In this regard, we recently completed navigation enhancements on the product experience to enhance shopability, and additional optimization efforts are ongoing. With the current customer environment focused on value and price, we believe we are well-positioned for the long term. Our position is centered on providing exceptional product and service solutions to customers, and through our leading exclusive brand assortment, strong national brand assortment, and our pricing analytics, we continue to provide significant value to customers while generating healthy gross margins. At the same time, we continue to make marketing investments to help increase customer acquisition and feed new business into our e-commerce and managed sales channels. In the quarter, we increased total marketing investment, and we expect to continue to make further target investments in an effort to support growth and market share gains. Looking forward, the customer demand environment remains challenged and our small and medium business base cautious. That said, we believe we have the tools and resources to navigate the current market conditions and remain committed to investing in key growth initiatives to drive our long-term success. Across the business, we are focused on delivering an exceptional customer experience, driving operational excellence, and proactively managing our cost structure. We believe we have a powerful customer growth model that allows us to efficiently migrate customers up our sales funnel while building deep and loyal relationships. Global Industrial's private brand offering, one-to-one managed sales team, operational flexibility, and the efforts of our associates allow us to deliver significant value to our customers. The industrial distribution market remains highly fragmented, and we continue to see numerous opportunities for growth. With an exceptional balance sheet, we remain well-positioned to execute on our strategy, invest in future growth, explore organic and strategic growth opportunities, and build long-term value for our stakeholders. I will now turn the call over to Tex.