Global Industrial Company

Welcome to the Global Industrial Company Second 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. Now, 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 Second 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 Litwin.

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. Overall, we had a very productive second quarter as we continued to execute on our strategy and made further investments in growth initiatives. The big news in the second quarter was the addition of Endoff to the Global Industrial family in late May. exceptional, strategic, and cultural fit with our business. It diversifies our operations, broadens our reach to new customers and markets, strengthens our one-to-one selling approach, and provides core product alignment, specifically within material handling, indoor and outdoor furniture, and storage and shelving. In addition, it delivers new capabilities in project management and engineering that strengthen our value proposition. I've been very impressed with the Endoff team. The level of expertise they bring to the table really expands our skill set, and the depth and tenure of their customer relationships is impressive. We have made good progress on operational enhancements in sales, customer service, and logistics, as well as general coordination and support between the two businesses. We are excited by the addition of Endoff and are on track to drive our combined success. Turning to our financial performance, total revenue improved 2.3% in the quarter, which includes approximately six weeks of end-off results. Organic global industrial revenue was off 5.2%, reflecting price deflation and a continuation of the cautious purchasing behavior within our SMB customer base's manufacturing sector. Given improvements in our online shopping experience, web growth expanded throughout the quarter. Customer acquisition and retention are healthy, and we ended the quarter with modest volume trend improvement. We continue to be very pleased with our margin performance. Gross margin remains solid at 34.7% as we delivered modest improvement organically, offset by INDOF's lower margin profile. In the quarter, we've made further progress against our key pillars of our A strategy. We remain committed to making investments that strengthen our competitive position and enhance the value we bring to customers, which we believe will drive long-term growth. Within our e-commerce channel, digital transformation continues as we enhance the product shopping experience and optimize our digital marketing. This resulted in improved web sales performance as the quarter progressed, with e-commerce growing to more than 60% of total sales transactions. Our direct sales channel remains soft year over year, primarily on cautious purchase behavior within certain segments of our customer base and lower average order value. As we look to further accelerate customer acquisition and growth, we expect increased sales and marketing investment in the second half of the year as we implement targeted campaigns and engagement efforts. We also continue to optimize our value proposition, taking a strategic approach to pricing. Our goal is to ensure competitiveness in the market and pass along savings to customers where we can. We are making investments in pricing initiatives with a focus on maximizing total value, including freight and price product components. And while we are investing in our growth, we are also proactively managing our cost structure and driving efficiencies across our operations. For example, within our distribution network, we have seen productivity improvements resulting in lower total cost delivery speeds to the customer. These successes are great wins for both customers and global industrial. As you can see, our efforts center around the customer. One way we measure the impact of these initiatives is through our voice of customer surveys. They reflect the customer's experience and, in turn, the health of our business and progress against our age strategy. I'm pleased to report that recent surveys highlight improvements in customer satisfaction, which is a direct reflection of the efforts of our associates and the value we provide to customers. Finally, in October, we will be hosting our annual trade show in Memphis, Tennessee. This is always a terrific event that showcases our broad product assortment, strengthens our national vendor relationships, and is a great time to connect and listen to our customers. In closing, we remain focused on strengthening our business, driving operational excellence, and delivering an exceptional experience and value to our customers. We are making investments across our web, and direct sales channels to enhance our competitive position and long-term growth profile. While the macro market environment remains uncertain, we believe we are well positioned to drive our performance as customer sentiment improves. With strong cash flows and a strong balance sheet, we are confident in the resources we have to navigate current market conditions and execute on our organic and strategic growth opportunities. I will now turn the call over to Tex.