All right, good afternoon, or good morning if you're on the West Coast, and thank you for joining us at the Sidoti & Company 2024 Investor Conference. My name is Anthony Lebiedzinski. I'm the equity research analyst that covers Global Industrial Company, ticker symbol GIC. It is my pleasure to introduce Tex Clark, the CFO of Global Industrial. In addition, we have Mike Smargiassi from Investor Relations as well. The format for today will be a management presentation for the first twenty or so minutes, and then we will open up for Q&A. For those in the audience who have questions, you can type your questions into the Q&A box at the bottom of your Zoom screen, and then I'll read the questions out loud. So with no further delay, Tex, the floor is yours. Thank you, Anthony. It's a pleasure to be here today at the Sidoti Small Cap Virtual Conference, and again, thank you all for joining us today, so as we move through the presentation, we'll tell you a little bit about Global Industrial. I'm happy to save some time at the end of today's presentation for Q&A, as Anthony mentioned. Okay, I just wanna present, obviously, our normal cautionary statement regarding forward-looking statements. I'm sure you've all seen this before, and I'd be remiss if I did not highlight this important notice, so let's take a brief glance at who Global Industrial is. Right now, on a trailing twelve-month basis, at the end of the second quarter, we are a value-added industrial distributor, generate approximately $1.35 billion in sales. We'd like to take note that that is now a full twelve-month period, where we do have both our Global Industrial organic business, as well as the Indoff acquisition that we completed last May. So we're now at a phase where our year-over-year comps are gonna be aligned with the full business that we currently operate. Again, we are a value-added distributor in the US, focused on distributing through a series of seven distribution centers in the US and Canada, as well as through a series of vendor direct fulfillment, drop-ship partners across the US. We have over 1,800 associates, 550 of those are customer-facing, through direct quota-bearing sales roles or through customer service associates. One thing that sets the Global Industrial apart, and a moat that we really built for ourselves, is that we focus on the big and bulky. We're looking at non-conveyable, non-conforming freight, heavy shipments through the LTL network, that differentiates us from some of the larger players in the space. One thing that we think about is that it is a large, fragmented market, generally ranked, depending on the industry metrics, somewhere in that 15th to 20th in terms of largest suppliers in a highly fragmented market. As a company, we'll talk a lot more later on in the presentation, but we focus on developing both our private brand sales through a number of key categories that you can see here, but also supporting our national brand partners that are very important to our overall strategy. And again, we operate in a large, fragmented business and do focus on returning share, capital to our shareholders through a dividend program. Let's talk a little bit about the business foundation. At the heart of what we do, we really tend to focus on our strategy that we call ACE. ACE stands for Accelerating the Customer Experience. One thing that we really think about and when we make decisions as a company, when we look at aligning our initiatives and we look at the decisions we make, is: how does that decision impact our customers? We know our customers have choices in a fragmented distribution market, and one of the areas to differentiate yourself is how do you treat that customer? How does our decision help improve that buying process for our customer, looking for that frictionless experience? So we'll talk about... Obviously, we'll talk about each of these in a lot more detail as we move through the presentation. But again, how do we deliver that personalized value proposition? Making sure you have the right products for the customer. You got to deliver it on time, undamaged, and meet the customer's expectations from the full end-to-end supply chain. That customer experience has to be smooth. We got to make sure your both pre-sales and post-sale support are great. Then again, one of my core areas of focus will be that cost efficiency. We need to make sure that, especially in a challenged market right now that we're operating within, we have to be very discretionary, really focused on the discretionary spending, at the same time, balancing the right investments in our sales and marketing efforts, to be able to grow the business over the long term. Really, we're focused on this and what we'll continue to move through and talk a little bit more. Again, when we talk about a fragmented customer base, one area that we look at is MDM and other industry metrics that show that there's 4,000 to 4,500 industrial distributors operating in the United States. When we think about our total addressable market within that small, medium business segment, which is really the core of what we do today in the SMB segment, very small market share today. What this just shows us is that we have an extensive ability to continue to grow in that market. The market has enough room for many participants, and how do you differentiate yourself as to how you actually work on growing share? Again, we do have a broad, diverse customer base. Some may say we're a little bit of a generalist overall, but large... largest vertical end market would be light manufacturing, followed by retail, wholesale, trade. Really, anyone that's building a distribution center to support their e-commerce operations or their fulfillment operations is a great customer for Global Industrial. We are focused on filling those DCs with the right products to make their processes more efficient, at the same time, offering going beyond those traditional manufacturing, retail, wholesale to focus on other end markets. Some examples would be healthcare and hospitality, two areas that we are focused on servicing customers in a different way and becoming a new alternative supplier in some of those key areas. Having the right product set is another key feature of our ACE strategy. And when we think about our top ten categories, you can see on this chart, really storage and handling, material handling, sorry, storage and shelving, material handling, janitorial, maintenance. You can see these are all core categories. Things that are operating within that distribution environment or within that manufacturing center are core to what we do today. These are categories that have a robust mix of both national brand and private brand opportunities, and a wide subset of both a deep and wide product offering for those categories. But we're never done when we think about our product line expansion. This is an area that we've continued to focus on bringing new products to market. When we talk to our customers, when we look in the marketplace, what our customers are asking for, we're working on always developing new products to bring to market that can meet that can serve a need of our customer. Sometimes that need may be bringing a product that has a lower price point because we're able to private brand that, or it may be adding a new feature set to what our customers are asking for, something that makes it easier to use, make something more durable, something more reliable. If we can bring that to the feature set, help explain that value proposition to our customer, we see good success on bringing new products to market. Obviously, when we think about some of the new lines that we've recently expanded to, I've talked about the end markets for healthcare and hospitality. That also lends itself to bringing in some new products that help more fit into those spaces very nicely, and we also look at some other vehicles. One area that we've been focused on bringing is stock movers, other efficiency-related items for a distribution environment. Key areas also when we buy those products, working on those products from not only that drop-ship relationship all the way to our private brand supply chain, that we focus on bringing that in to service our customers at the best cost. We've talked a lot about private label, private brand today, but really, we think about we, we... Our tagline for our private label products is Made to Exceed. We primarily go to market as Global Industrial on our private brand lines, but we also have another, a number of brands out there: Nexel, Interion, Continental Dynamics. Brands on certain lines of product that we've developed over the years, but all those are built under the name Made to Exceed. We try to over-engineer products, bring extra features to products, things that we know, as mentioned, things that we know our customers are looking for to make it a more reliable and more efficient product in their use. We want it to hold up over the test of time. Approximately 50% of our organic business, so this will be excluding our Indoff business, has reached our private brand sales. That's been, when we think about those, that's been our fastest-growing sourcing channel, as well as a sourcing channel that does bring very competitive gross margins to the company. At the same time, offering a great total cost of ownership to our customers. Generally speaking, we've seen a 15%-20% or a 1,500-2,000 basis point margin premium over competitive national brand items. So as that mixes into our gross margin, that will help over time build the gross margin, but also help the company defend against pricing transparency and pricing pressure in the market. So as you can build that margin differential, that will help us even in a price competitive environment. Just wanted to highlight a handful of new products that we brought to market recently. Company, we want these are adjacent or are new products that we have within our group. Portable power stations. We know with disaster recovery and other areas out there, this is a very important product for a number of different end markets, both job sites as well as in that disaster recovery. We brought that to market recently. New pallet racking, really kind teardrop knockdown brings a more efficient shipping experience and fulfillment experience to our customer at the same time, offering a very attractive price point. Mentioned a few moments ago, utility vehicles and stock chasers, things that will help people move around a DC efficiently. New high-end wood lockers. I mean, these are our laminate lockers that really bring a new sense of class to the utilization and really will allow our lockers, which maybe have been historically more built for warehousing or schools, to those higher-end locations, such as gyms that have those nice lockers. Really bringing a new feature to our customers. So again, this is just a flavor of the products we're developing. We have a robust team here in the United States, as well as quality control offices around countries of origin, to really focus on bringing the right product to market, after we listen to our customer, understand what they need. Overall, if we look at kind of the trailing five years, CAGR from 2019 to 2023, was about 7.7%. Operating margin has expanded over that time. You will notice that you did see an operating margin drop from 2022 to 2023. Just want to highlight that does reflect the impact of Indoff. When we acquired Indoff business, that was a business that did come with a lower gross margin and operating margin profile, primarily associated with the nature of their business. Larger project-based sales, as well as a primarily drop-ship model. So just a different cost structure, which did have a lower margin profile, still very accretive to the business, but again, it did bring the composite margin of Global Industrial Company down modestly. We'll continue to work to elevate those over time. Let's just talk about how we're positioned. I mean, we've talked a lot about a broad and diverse, customer base, very fragmented, number of suppliers in the market. So we really got to understand what's impacting industrial distributors and how are we positioned to meet those needs? So again, we know e-commerce is something that is incredibly important, to our customers. We have to offer a robust, frictionless buying experience online, something we're continuously developing. Today, roughly 60% of our transaction count is happening online and something that we're continuing to focus on. How to expand that, to really allow our sales teams, more opportunity to focus on value add. With more transactions happening online, we're really focusing on how we can expand that. We know that, again, Amazon is always increasing the... Amazon does really good at what they do in terms of customer expectations, fulfillment, delivery. Those are areas that we got to make sure that we're continuing to keep up and growing in those areas. But overall, it's a business that data is at the heart of what we're doing, and turning our data into business intelligence is something that we continue to focus on. Oftentimes, that manifests itself in pricing environments, and something that we understand that in a highly competitive environment with lots of cost inputs that are highly volatile in today's market is we have to have that right pricing engine. So things that we continue to focus on to make sure that we're providing the right service to our customers at the right time.... Overall, we know that there's again a lot of choices out there. There's a handful of large distributors to the left, but there's a very long tail of suppliers, small regional players to the right in this segment. Lots of customers have lots of options, and making sure that we're the right providing the right service is always a core focus of Global Industrial. SMB, small medium business, has been a focus area for a long time for Global Industrial. We know that smaller distributors are handling that on a regional basis, but oftentimes they may need five, six, seven, eight small suppliers that are providing niche products or single category products to fulfill their needs. We're able to help be a one-stop shop for their, those SMB customers, offering that, that full shop. Our large national players, oftentimes, they, they're very, very good in the enterprise space, really control a lot of those industries, but at times, the SMB space is a lack of focus in that those, we believe we've filled that gap. We talked a little bit on the opening slide about the big and bulky products. Again, we are a heavy, heavy utilization of an LTL network, non-conveyable, non-conforming freight. We're not shipping out perfect squares, perfect boxes, because everything from racks to pallet jacks to bollard covers, those are a different pick-pack-process ship than a high, high velocity, highly automated environment. We believe we do that very well and continues to offer a moat around what we do. Private brand has been a focus of the business since the early eighties, and something we'll continue to do, really lends itself well. Something that, again, a lot of the smaller distributors do not have access to. But we, we've continued to focus on e-commerce, digital marketing, and then project management. All areas that we know we bring to market, really help us service our customers, solve our customers' problems. At times, that's just not a core competency of many of the smaller distributors, and regional players out there, where we believe the most opportunity to gain market share does remain. Again, if we think about that, that growth model, so again, you may ask, "How do, how does Global Industrial go about finding customers?" So initially, for a long time, we wanted to, first thing we had to do is we had to really reset that, that internal culture and say: How do we build that customer? How do we make our decisions? How do we understand what we're doing, that, that we can build that customer-focused culture? That took a lot of, a lot of work inside, really thinking about the actions we're taking and understanding why we're taking those. Does that make the customer experience better? And frankly, it's, it's measuring what the customer is expecting. Voice of customer surveys, customer satisfaction scores that we're really monitoring on a regular basis. But once we get that in place, then we got to think about how do we acquire those customers? Both through online shopping, we know discovery oftentimes starts on Google, but moving through the other GPO customer-focused GPO purchasing opportunities to really bring new customers in through that channel as well. Once you get that customer, you gotta build those campaigns. You gotta work with your marketing teams to really build and retention plans and loyalty amongst those customers. Once we see those customers and really profile those customers, we have a very robust one-to-one selling model, allowing our account managers and sales partners in the field or in our call centers, to really manage those relationships and help building more category share of wallet. And then ultimately, what we see, growth in both top line and the margin profile of those businesses. Again, we have a broad-based e-commerce channel. It typically starts with either kind of combination of focusing on growth through SEO, direct search, as well as paid search. All those are our areas that we're able to gain new customers, and then start again understanding what the potential of those customers are. We support that with a one-to-one selling organization of 200 inside sales reps, bring that subject matter expertise and full account management features to our customers. So they're gonna be the point of contact for customers, not just waiting for that phone to ring, but really calling our customers and helping identify opportunities and problems that they can help solve. As part of the Indoff acquisition we just talked about, really helps bring a brand-new experience to the organization, a broad-based outside sales model. They have project management expertise, can do engineering services, and really have that on-site engagement, where you're walking the floor with the customer. You can identify new opportunities that you may not be able to pick up through an indirect calling model. And then finally, again, when we talked about a little bit, is the group purchasing organizations, large customers, a path into the large enterprise place. And while we're not trying to displace the largest suppliers in those GPOs or these other purchasing organizations, there's a great fit of our products that will be able to fulfill. We know those customers have needs, and we found customers want diversity. They want to have options when they're supplying. We believe that we can provide more secondary supplier support for many of these large customers that purchase through these channels, and it's an area that we've been focusing on in recent periods to grow the business. Again, we talked about again how this sales model ultimately leads to growing those premium customers. How can we grow margin, share of wallet? One area where we see when customers buy more product or more diverse product from Global Industrial, we build that lifetime value of that customer by being able to offer different products. We are a durable, light capital mix of products primarily. We do have a consumable subset of the products, really accessories and other areas that we offer that are adjacent to those fixed materials. But we know, as you may not be buying one of those durable products every day, but if you gain the trust in the relationship with Global Industrial, we're gonna offer different products that you'll need the next day. So really, how do you get that second order, that third order, and expand that share of wallet? And what we find is when you move that chain up, as expected, your lifetime value increases greatly. So again, this model is how do we continue to service the customer to get them to keep coming back? That's the ultimate goal of the organization. So highly quickly, our financial profile. Looking at our cash flow from operations was quite robust in 2023. That was primarily associated with a couple of different moving parts, but again, as inventory costs came down after some of the supply chain disruption, a lot of companies we built large inventory position during the heavy disruptions of 2021 and 2022, began destocking a bit in 2023, like any good distribution model should be working capital positive, and you're able to sell down inventory, and so we were successful with getting our inventory back to a more normalized historical level. See, on the balance sheet, we do currently maintain zero debt, had cash of just under $40 million in the last quarter, turning our inventory a little bit over five times a year, with good AR and APD metrics, driving a great cash conversion cycle for the business. It's something we continue to focus on, operating with this type of working capital model for our distribution business. We think about what we do with that cash that the capital that we build and the cash that we acquire. Obviously, investing for growth is a key focus area for the business. Focusing on e-commerce acquisitions, customer acquisition, technology for our sales, that will help support how we get to our customers and how we service our customers. Strategic M&A is an absolute part of our strategy and something we're actively looking for. As mentioned, we did acquire a business last May, and something that we're actively looking at at all times, to really say, "We are a buyer." We wanna look for opportunities that are adjacent to what we're doing within the geographic and product footprint. They can either bring a new product set, new customer set to the company, but always it has to be at that right valuation for the company to deploy capital towards M&A, and then finally, obviously, a return to capital is always important for us. We initiated a recurring dividend, something that will continue to grow over time. We've had special dividends from time to time, and while we do have an authorized buyback in place, it's something that has been used a little bit less than dividends in our company. Just looking at that dividend profile, we began that recurring quarterly dividend in twenty fifteen. We've increased our dividend each year for the last nine years, and currently our dividend yield is just over 3%, with a payout ratio of the mid-40s%, what we tend to focus on. Currently, dividend is $0.25 per quarter, and again, that's something that we have increased for many straight years. Again, overall, we do have approximately 1.5 million shares authorized for buyback if we chose to operate that. That's something that, again, as you can see, the last time we did acquire shares in the open market on a buyback was 2019, but again, remains authorized and is a tool for our board to consider when thinking about total shareholder return. Again, final kind of financial roadmap as a business. While we don't give formal guidance as a company, we do think about, again, focusing on revenue growth faster than market. We believe that through organic growth, as well as some M&A opportunities or bolt-on M&A opportunities, we should be growing 500 basis points faster than the market over the midterm. Scenario that we've seen, we've successfully completed in the past, but it's an area that we're continuing to focus on going forward. Ultimately, by growing at those type of levels, we should be able to drive that operating income growth, and then ultimately maximize the total shareholder return, given the profile of the business. As we grow our earnings, should see that in a continued expansion of our dividend policy, we should maximize the overall TSR for the business, and something that we're focused on a regular basis. With that, I kinda wanna wrap up my formal remarks today, but open to... Anthony, please open for questions. Yes. Thank you very much, Tex, for the terrific overview of Global Industrial Company. As a quick reminder for those in the audience, if you do have a question, please type those into the Q&A box, and I'll read those questions out loud. I guess I'll first just kind of kick things off with a question of my own. So I guess as far as, you know, the current kind of choppy demand environment, how should we think about volume versus pricing trends, and what are you seeing from the competition? Absolutely. So I mean, again, I think we've used the term inconsistent, slightly volatile periods when we've looked at our last quarter results. While we were up 1.8% organically in the second quarter, we saw periods within that, weeks and months, some were up, some were down. So it's been a choppy, and I like your term, choppy customer demand environment. So always when we think about that and when we've managed the business. Apologies, I should have put that on mute. I'm sorry, Anthony, I had to disrupt you. Can you repeat that question? No problem at all. You know, I was just asking about the, you know, the fact that, you know, we're in a... still in a choppy demand environment. So the question is really like, you know, how should we think about volume versus- Sure. - pricing? Thank you. Absolutely. So again, this is an area that, again, we've had a lot of volatility within the different cost inputs into our business, where we had significant cost increase on the containers to procure products, especially in our private brand space. So we saw costs come up, and generally, over the last three or four quarters, we've actually been in a negative price environment. So price has been slightly negative, volume has been up. So that's an area that we're working to get that back to neutral. We believe that we will be able to accomplish that in the second quarter, where pricing shouldn't be as much of a headwind as it was. That was primarily passing cost savings back through to our customers as the container costs had come down, and we were working through those lower cost inventory levels. Really it's been helping maintaining margin, but at the same time, being able to pass through cost savings that we've seen. We'll continue to monitor that. If costs go up, we'll work with our pricing team to understand how that's moving up. But I think, again, the key metrics internally that we look at are customer satisfaction and customer retention. Both remain very robust and quite good. Areas we're seeing that even though it's a soft demand environment, we may be seeing smaller order sizes or deferred purchase decisions, we're not seeing customer defection. That gives us good confidence that, as long as we continue to service our customers and work on acquiring customers, even in a softer environment, it's the right investment for the midterm, for the company. ... Gotcha. All right, and hopefully, the Fed rate cuts that began today, hopefully that will help with order frequency and order sizes, so- Absolutely. Shouldn't hurt. You're absolutely right. Sure. Okay, very good. Okay, and I know you had a slide earlier about the competitive landscape, where you compared yourself versus smaller distributors and versus, you know, larger distributors. You know, but yeah, I guess in terms of pricing, you know, I would guess that you're comparable to the big guys, but I guess the area where you could really differentiate yourself is your, in your private label products. Is that fair to say? It is, and I mean, a lot of times, when we think about our pricing, our goal is always to be price competitive. We also start with a transparent pricing model in our business. Because e-commerce and customer acquisition through paid search and paid channels is so important to business, if you're gonna be investing in those type of customer acquisition channels, you gotta make sure you have an attractive price point when customers are shopping for you. So that's an area that's really within the DNA of our business, so making sure we have that competitive price point. So that's something that we always focus on. We have a robust team of pricing analysts, as well as technology that we use to really understand where the competitive set is and how that's moving from, I'd say, from day to day, from week to week, to understand if changes need to be happening, especially in an environment where we see so many of those cost inputs moving somewhat materially from time period to period. So ultimately, something that we think is something we're gonna continue to invest in. The private brand offers a great price point, great total cost of ownership for our customers, but at the same time, we gotta offer that national brand because some customers will have that spec'd into their needs or be standardized on a certain one. So we wanna make sure we offer both a good, robust offering, and that's when we see our best categories have a really robust offering of both private brand and national brand, both wide and deep assortment. So again, being able to offer that private brand also sometimes impacts the ability for cross-shopping, and while as a functional alternative, it's something that we can again make strong margin on but be a great price point to our customers at the same time. Gotcha. And then, just to follow up, we had a question come in about just the overall private label product, the goal. I mean, right now, it's about half of your business. Do you have an objective as to, you know, where you think that will ultimately land, as far as percentage of overall revenue? Sure, let me just clarify that a little bit. Then, the 50% that we've talked about, that is on the historical Global Industrial business. So with Indoff- Right ... mixing into the consolidated sales, and they were essentially coming from a starting point of almost no private label. They had a small private label. Right. Very small. So again, we'll after this year, we'll have a full year of kind of one full period. We'll update and reset that 50% to kind of the consolidated business. But with that point, if we focus on that organic business, again, while we haven't published a goal of 60% or 70% or 80%, we see that there's runway to continue to build more private brand. It's something that we look at, not just as a holistic number. It's really a sum of the parts. We look at each category, look at where our penetration is within a category, and identify within those categories where it can go. That will then, kind of looking at the arithmetic of that, is how that will ultimately roll up. I think the key takeaway is that the private label development is an ongoing process, almost a continuous improvement process of the business, where we're constantly bringing new products to market after we've got that competitive intelligence says there's demand for it. Remember, our supply chain tends to start with a drop-ship product, moves to a stocking position, and then ultimately, to a private brand solution. And so again, we're continuing to harness that data, not only from our own sales history, but from what we hear from our customers, what we learn at our trade shows, what we learn at industry trade shows of what's coming up in the market. So the ability to continue to expand private brand is something that we think is there's still a good amount of runway there. By no means do we think we're done penetrating our overall mix. Again, we just haven't published an explicit figure, Anthony, but definitely we think there's a good amount of runway to continue growing the composite mix of private brand at Global Industrial Company. That's good to hear. And then switching gears to acquisitions, when you guys look at acquisitions, are there potentially larger, kind of more needle-moving deals out there that you're looking to do? Or is it more of like the tuck-in acquisitions, you know, just you know... How should we think about that? Yeah, I mean, it's a fair point, Anthony. I mean, I think when we think about what Indoff was doing, about $175 million in sales, obviously, our purchase price there was $70 million. Clearly, our balance sheet would have supported larger deals. But I think, I mean, when we think about deals, we're looking at both. There could be those tuck-ins, bolt-ons that just bring a category expansions, really accelerates, maybe a category expansion plan, where we can find a robust niche seller of a product line that has great subject matter expertise in-house, will bring value to Global Industrial customers day one. At the same time, looking at other kind of broad line distributors that may maybe move the needle a little bit bigger. So again, we don't limit ourselves in what we're looking for, but again, I think our sweet spot would be in that kind of sub-$200 million-$250 million revenue target source. Mm-hmm. Understood, okay, and then, you know, lastly, given the, we're pretty much out of time, but, you know, last question I do want to ask is: You know, do you guys have any, you know, long-term operating margin targets? Just wondering if you could, you know, share anything with us as to how to think about the, you know, runway for profitability going forward. Yeah, great question. When we think about our business, I mean, operating margin expansion is gonna be predicated on a few key items. One is, revenue growth is obviously a key component of that. We need to be growing faster than kind of normal cost inflation and personnel inflation to be able to start driving that operating leverage, at the same time, investing in the right customer acquisition channels. So in any kind of downward cycle, it's always a little bit harder to grow that bottom line or build operating leverage. But again, we do have kind of internally focused goals. We don't issue public long-term goals for that. But again, continued expansion in operating margin is something that we'll look at. Clearly, there's a little bit of a reset in our operating margin profile as an overall business, given the Indoff acquisition and how that blends in, as that did have a little bit lower margin profile. So again, like I said, very accretive to the business, but a little bit lower margin profile. Expanding both operating income dollars, as well as that operating margin, is something that is a key pillar of what we're trying to talk about. Think about that fifth pillar on the ACE strategy is both kind of cost efficiencies and really driving financial productivity of the business that allows us to invest in the right areas. Expanding the bottom line is an absolute focus of the company. Again, that's really gonna be more of that kind of midterm goal than any quarter-to-quarter performance. All right, well, that's great to hear, and we're out of time, unfortunately, but certainly wanted to thank you again, Tex and Mike, for sharing the Global Industrial story. Thank you, also, everyone participating as well. Hope you have a productive rest of your day. Thanks very much. Thank you, Anthony.