Good day, and welcome to the Global Industrial Company Second Quarter 2024 Earnings 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 would now like to turn the conference over to Michael Smargiassi, Investor Relations. Please go ahead. Thank you, and welcome to the Global Industrial second quarter 2024 earnings call. Leading today's call will be Richard Leeds, Executive Chairman, and Tex Clark, Senior Vice President and Chief Financial Officer. Formal remarks will be followed by a question-and-answer session. During the call, we will reference both GAAP and organic metrics. Organic reflects the performance of Global Industrial's business exclusive of the May 19th, 2023, Indoff acquisition. 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 Richard. Thanks, Mike. Good afternoon, everyone, and thank you for joining us. Before turning to the financial results, I wanted to take a moment to comment on our CEO transition. Our nationwide CEO search is underway, and next week I will formally take on the additional role of interim CEO. This is a position I previously held for nearly 20 years and have remained actively engaged with the business in my role as Executive Chairman of the Board. I've worked closely with the senior management team, supporting their efforts during the past several years. On behalf of Global Industrial, I would like to thank Barry for his contributions and wish him well as he embarks on the next chapter in his career. Over the past several years, we have built a strong senior management team. They have both the Board's and my full confidence. I look forward to supporting their efforts as we continue to execute on our strategy. Turning to our financial performance, second quarter revenue improved 6.8% to approximately $348 million. On an organic basis, we delivered our fourth consecutive quarter of revenue growth, with revenue up 1.8%. We're pleased with the top-line performance, given the current market cycle and the soft demand environment, which is reflected in both industry forecasts as well as the PMI Index. During the quarter, we saw a continuation of cautious customer purchasing behavior with mixed revenue performance on a monthly basis. Our retention trends remain healthy. Gross margin was 35.2% in the quarter, an improvement on both a YoY and sequential quarter basis. We remain pleased with gross margin performance and have a strong track record of managing this key metric through various market disruptions over the past several years. Our bottom line performance reflects planned investments in key growth initiatives, specifically across customer experience, marketing, and sales functions to help drive engagement and strengthen our competitive position. This includes sales automation, and tools to enhance efficiency and growth in our managed sales organization, as well as further enhancements to customer experience. Delivering a positive customer experience leads directly to higher retention rates and elevated lifetime customer values. It's a true competitive advantage. I'm pleased to report that our customer satisfaction scores remain above 90% in the second quarter, highlighting the commitment of our associates and solid execution as validated by our customers. It's been a challenging environment the first six months of the year, and our focus remains on the things within our control. We continue to make investments that will strengthen our competitive position, help us capture market share, and drive long-term revenue performance. We have a strong leadership team are executing against our strategy, and as the environment improves, I believe we're well positioned to drive financial performance. With an exceptional balance sheet and healthy cash flow from operations, we continue to invest in our growth drivers and evaluate strategic opportunities. I will now turn the call over to Tex. Thank you, Richard. Second quarter revenue was $347.8 million, up 6.8% over Q2 of last year. Organic revenue was $307.4 million, up 1.8% YoY. Organic U.S. revenue was up 2.1%, and Canada revenue was down 1.1% in local currency. Our managed sales channels led our performance, and we continue to see strong growth in our enterprise business as it capitalizes on new account generation. Revenue benefited from volume improvement, while overall growth rates were impacted by modest pricing headwinds. Price volume has narrowed since the start of the year, and we are optimistic that price can continue to move towards neutral in the second half of 2024. Gross profit for the quarter was $122.5 million, up 8.5% from last year. Gross margin was 35.2%, up 50 basis points from the year ago period and 90 basis points on a sequential quarter basis. The YoY improvement was primarily achieved due to proactive price management as well as expanded private label balance of sales. Margin expanded in both our organic and Indoff businesses. Management of our margin profile remains a key area of focus. Performance will continue to reflect the impact of strategic promotion and freight actions as part of our competitive pricing initiatives. In addition, ocean freight costs remain elevated and have accelerated in recent months. Higher cost inventory is flowing into our cost of sales, and this is something we continue to manage. Selling, distribution, and administrative spending for the quarter was $96.1 million, or 27.6% of net sales, an increase of 190 basis points from last year. SD&A primarily reflects planned investment in key sales and marketing growth initiatives, which generated negative leverage due to the softer customer demand environment, partially offset by a benefit associated with accounting for executive transition. We expect SD&A levels to moderate from Q2 levels in the second half of the year, but remain elevated when compared to the year ago quarterly periods as we continue to support our growth strategy. We remain disciplined in our control over general and discretionary cost management. Operating income from continuing operations was $26.4 million in the second quarter, and operating margin was 7.6%. Organic operating margin was 8.1%. Operating cash flow from continuing operations was $18.7 million in the quarter. Total depreciation and amortization expense in the quarter was $1.9 million, including approximately $0.8 million associated with the amortization of intangible assets related to the Indoff acquisition, while capital expenditures were $0.9 million. We expect 2024 capital expenditures in the range of $3 million-$5 million, which primarily includes maintenance-related investments of equipment within our distribution network. Let me now turn to our balance sheet. We have a strong and liquid balance sheet with a current ratio of 1.9 to 1. As of June 30th, we had $38.8 million in cash, no debt, and approximately $120.6 million of excess availability under our credit facility. We maintain significant flexibility to fully execute on our strategic plan and continue to fund our quarterly dividend. As a result, our Board of Directors declared a quarterly dividend of $0.25 per share of common stock. This concludes our prepared remarks today. Operator, please open the call for questions. I will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble. The first question comes from Ryan Merkel with William Blair. Please go ahead. Hey, guys. Thanks for taking the question. Hi, Ryan. How are you? Appreciate it. Good. Let's start off with revenue. You mentioned the end markets are a bit weak here. Are there certain customers, products or end markets that stand out as being particularly weak? Yeah, I think, Ryan, when we look at our business, again, we as you know, we have a very fragmented customer base as well as a very broad product set that we offer to our customers, and that diversification tends to help us actually in, in certain times. When we look at the actual customers that are our managed customers and are under our account management, as well as our enterprise larger customers, perform best in our, our portfolio this, this quarter. We actually saw a little bit softer business in some of those small, really, that small, medium business, the smaller customers and some of that e-commerce channel, had some of the softer performance in the period. From a product set, again, a mixed, mixed, segment within there. We actually had a pretty strong seasonal campaign with different types of the outdoor furniture, cooling HVAC. With a warmer season earlier in the year, we've actually had very strong performance with that in the second quarter. But really, it's been a fair amount of soft across the board we've seen with different customer buying decisions. Okay, makes sense. What about the outlook for the second half? I know you don't have much visibility. Are you seeing any green shoots, any signs that, you know, trends could get better, or is it pretty uncertain? Right now, I think there's still a fair amount of uncertainty. I mean, as we mentioned in just a few moments ago, with even within the quarter, our organic growth was 1.8%, but that even included some weeks up, some weeks down, and really some months up, some months down. So right now, I mean, it's one of those with a lot of fluctuations, it is a challenging market to forecast out what we're looking at. We know that there's a lot of key indicators in the market moving in different directions. So right now we're really focusing on those things that we can control and making sure we're best positioned for our customers when those buying decisions are prepared to be made. Okay. Yeah, I appreciate that. Last one for me. SD&A was above our model and, you know, outgrew revenues by quite a bit. Richard, you mentioned you're doing some planned investments. I'm just curious, are you thinking about trying to control costs in the second half, just given the uncertain revenue outlook, or should we still assume that you go ahead with these investments and the second half, SD&A expense is still pretty elevated? Yeah, and I'll jump in there again, Ryan. I think, I think SD&A is one area that we definitely highlighted that, as we exited Q1, that we were executing on certain key initiatives. And while we do believe that, that our absolute SD&A will moderate down from the second quarter performance, we do still anticipate being up YoY. We want to make sure we're investing in those key areas that are long-term in nature and helping position the company and helping position our customers in the right way. So again, we do plan to continue to plan on investing in those sales and marketing initiatives, but again, it will be more moderated in the second half. Okay. All right, thanks. Pass it on. The next question comes from Anthony Lebiedzinski with Sidoti & Company. Please go ahead. Good afternoon, gentlemen, and thank you for taking the question. So, I guess, you know, first, just to follow up on the monthly trends, if you guys could give some color. You—I think, Tex, you mentioned some weeks or some months were up and so some down. So, any way to give, you know, more color as to how that—how the quarter progressed? ... No, and it really was, Anthony. It was. We saw up and down. I mean, it was week to week. We had saw some weeks up, some weeks down. So, if we were up in the beginning and down in the end, I would highlight that, but it really was fluctuating quite a bit throughout the period. And that really continued into the early weeks of July, where we've actually seen that it's currently fluctuating down a bit. So it's an area that we, we've seen some of those ups and downs, and we're just trying to make sure that we're positioned as best as we can be. Got you. Okay. Yeah, thanks for that, Tex. And then, you know, in terms of the gross margin, so, it was up nicely versus a year ago. You know, I know. Can you just go over maybe, you know, a little bit more details as to what drove that, and then how sustainable are those improvements? I know you mentioned ocean freight costs on the rise, but how should we think about the, also the gross margin outlook for the balance of the year? Yeah, I mean, our gross margin is always a little bit seasonal, based upon kind of the mix of sales and the mix of categories that ultimately make up our sales in a period. We think we did a really good job. There was no one-time items in that gross margin improvement in the quarter. It's really through a combination of pricing initiatives, as well as continuing to focus on our private brand goods. And those traditionally will bring a little bit higher gross margin for the business, as you know. So it's an area that we, we are confident that we'll continue to be able to, to manage, gross margin, but we have to make sure that we're, we're paying attention to the market and addressing any changes that we see in the competitive set as well, when the time is right. So it's an area that we, we are confident in our ability to continue to maintain margin. The one big unknown, as you highlighted, was that ocean freight cost. Earlier in the year, we thought it was gonna be a little bit more transitory. But we've seen is that's actually sustained and accelerating some of those increases in the ocean freight market. While that's not unique to Global Industrial, it's an area that does mix into our cost of sales and is something that we have to manage. But again, we have teams really focused on making sure our pricing is right in the market, and we've been able to do that while increasing our gross margin profile year over year. Got you. Okay. And then, just to, follow up, as far as the gross margin at Indoff, can you speak to that as far as that improvement? And then, like, as far as the introduction of private label products, how is that going? How is that being received at Indoff, and did you see that as an opportunity, for you guys to, benefit from that as they gain... As those sales reps get more exposure to your own private label products? Yeah, it's an ongoing initiative. I mean, so as we highlighted, we saw improvement in the gross margin profile at both our Indoff subsidiary as well as the core Global Industrial business. So that was something nice to see. While Indoff still does remain, still does maintain a lower margin profile than Global Industrial, we did see those improvements. And part of that is the introduction of our sourcing from Global Industrial, especially our private brand, into their sales partners. So it's something that we're continuing to focus on, and we're arming them with the right tools to be able to sell that product and continue to cross-train with their partners. So it's something that we'll continue to push. But again, remember, they have a shorter history with our products. We've been doing this a long time at Global Industrial, but they still fit very well into what Indoff is looking to accomplish, and we're confident that we'll be able to grow that over time. Got it. Well, thank you very much, and best of luck. Thank you. Thank you. Ladies and gentlemen, this will conclude today's question and answer session, as well as call. Thank you for attending today's presentation. You may now disconnect your lines.