Good morning, everyone. Thank you for joining us at the Sidoti September 2026 Investor Conference. My name is Anthony Lebiedzinski. I am an Equity Research Analyst here at Sidoti that covers Global Industrial Company, ticker symbol GIC. We are very pleased to have with us today Anesa Chaibi, the CEO of Global Industrial, along with Tex Clark, the CFO, and Mike Smargiassi from Investor Relations. The format for today will be a management presentation for the first 20 or so minutes, followed by Q&A. We will have a total of 30 minutes. For those of you in the audience who would like to ask a question, please type your question into the Q&A box at the bottom of your Zoom screen, and I will read the questions out loud. With no further delay, Anesa, the floor is yours.
Great. Thank you. Good morning, everyone, and thank you for joining us. As Anthony mentioned, Mike Smargiassi and Tex Clark are both with me and will be available to answer questions at the end. As is customary, this page reminds everyone about the precautions to consider on any provided forward-looking statements that may be stated, so I will not read it to you. We will move on. To give you an overview of Global Industrial, we are a leading industrial distributor, and actually, Industrial Distribution just put out their rankings just earlier this week, and we are ranked number 18. That gives you context of our size and scale. During the last 12 months, we delivered $1.4 billion in revenue, and we are very pleased with the top-line momentum in the first half of 2026, with average daily sales up 8.4%.
We are headquartered in Port Washington, New York, which is 20 miles outside of Manhattan, and we have a rich 77 year history. We have roughly 2,000-plus employees in the U.S., Canada, India, China, et cetera. Global Industrial is truly expert in big and bulky, and with our core products requiring LTL delivery, just to give you a sense of the size and scale. We provide a broad product offering consisting of both national and proprietary brands. This year, we have begun specializing our customer interactions to provide products and solutions to our customers for their everyday needs. Our national footprint consists of seven distribution centers in the U.S. and Canada, and we are able to reach roughly 90% of our customers within two days. Lastly, we have a robust e-procurement and e-commerce platform, and the majority of our transactions are online and digital.
When we look and turn to this page, when I arrived 19 months ago, I refreshed the mission, vision, and values of how I envisioned Global Industrial operating. These core principles are what guide our behavior and actions on a day-to-day basis. Most importantly, it aligns the company to enable growth going forward. At its core now, we act as one team to enable customer success by delivering value. We are on this journey to become more customer-centric and deliver exceptional value while giving back to the communities where we live and work. A recent example of this type of engagement is last month, we partnered with Richard Childress Racing to help raise awareness for K9s For Warriors and their important work in supporting first responders and veterans. We featured K9s on the Global Industrial-branded NASCAR and drove media engagement to provide national exposure for K9s' mission.
It's a great example of finding synergies across our partnerships and engaging partners and associates for a terrific cause. Lastly, we reframed our values, anchoring on driving success for our customers, our employees, and our shareholders. What's new or different in our approach? This represents success in 2026 and beyond has been guided by transforming into a more customer-centric organization. It's the foundation of our growth as we go forward. We're focused and realigned our team to deliver value to the customer through repositioning ourselves to provide a unique, personalized experience through specialization, offering the right solutions and products through product expansion, and providing exceptional end-to-end customer experiences with enhanced services and solutions. These actions have positioned us to capture greater share of wallet along with product category expansion to generate operating leverage from our current operations and investments.
We are having success so far, and this strategy is gaining momentum and is reflected in the strong average daily sales growth of the last three quarters. Turning to this slide, we participate in a large, highly fragmented market with more than 4,000 distributors. As I stated earlier, we're currently ranked at number 18. We're becoming more specialized in each industry vertical where we have some concentration. As you see above, we serve industrial, commercial, retail, public sector, healthcare, hospitality, and multifamily. We're becoming more focused on understanding our customers' unique needs and tailoring the experience that we offer to them. We have a broad and diversified customer base, with no customer being more or greater than 2% of our sales overall.
We have a significant opportunity to expand the total addressable market we pursue by just naturally expanding into adjacencies, product adjacencies, and/or verticals. By further penetrating the verticals that we serve will allow us to further gain greater share of wallet and the ability to identify new opportunities with our customers. We have a robust offering that we provide. We're well-positioned with a wide product assortment to capture that share. Our core categories where we have a long and rich history include, you can see on the left at the top 10 categories, for example, storage and shelving, material handling, janitorial maintenance, safety and security, et cetera. These 10 categories generate the majority of our revenue, and yet we still have significant expansion opportunity as we go forward.
We're building out MRO and consumables that you see on the right-hand side, whether it's pack and ship or safety or tools and instruments and so forth, and it's really to expand our solutions and products beyond what we offer today in order to serve more of our customers' needs. Another key strength is our private label brands, which are made to exceed. We have a robust and longstanding experience with private label offerings. We started the private label business back in the 1980s and have more than 45 years of experience. We operate within a global supply chain, and these products represent 40% of sales with a margin premium. The products are designed to deliver differentiated value for our customers with the exceptional quality at an attractive price point. Overall, we consider this a core competency that provides strong point of differentiation along with the economics and profits overall.
A representative sample of some of these new recent product launches are shown here. As you can see, it ranges from, say, electric pallet jacks to recirculating water floor scrubbers, plastic guardrails, et cetera. We developed these products to enable customers to address their ongoing needs. We have a team of engineers, roughly 20+ engineers, that are converting customer feedback and challenges into differentiated new products that we bring to market on an ongoing basis. We are always striving to innovate and further enhance our proprietary brand offerings through product development and have a long-established track record of doing so. As you can see, our recent performance is shown here. Since arriving at Global Industrial, we have focused on accelerating our top-line performance.
With the strategic changes and realigned go-to-market, we have achieved high single-digit average daily sales results for the last three quarters, driven by price, but more importantly, by volume, as well as where we have captured and gained share, which reflects the execution against the strategy, and the strategy that we are taking to market is working for us. Our gross margins have been very stable in the mid 30s, and we are focused on driving operating leverage. I have been pleased with the team's ability to maintain and manage the margin profile despite having to navigate and mitigate tariffs, transportation costs, fuel costs, and all the other macroeconomic and geopolitical disruptions. Now turning to the position in the market. The overall evolving industry trends play very well to our strengths. Despite the rapidly changing marketplace, we have managed this very well with strong margin performance.
Whether it was the 2025 tariffs, shipping inflation, our ability to react quickly, driven by pricing discipline and analytics, is something that now we are very steeped in. We continue to leverage our strong supplier relationships and sourcing diversification for multiple product lines. We are fortunate to have a strong balance sheet that enables us to manage disruption and these macroeconomic shocks. We are laser-focused on the acceleration of our e-commerce for business-to-business, specifically e-procurement. This plays directly to our strengths, with more than 60% of transactions being taken online. This shift to digital and an expected elevated B2B customer expectations that are evolving online plays to our customer focus and the capabilities that we already possess. We are also embracing AI and automation deployment where it makes sense, and we are actively piloting AI in specific segments and functions within Global Industrial. So how are we delivering growth?
Over the course of the past year and a half, we have been shifting to better understand our customers and their ongoing needs. We have a comprehensive approach to our customers' relationships, which drive retention and expand share of wallet. We want to become a true partner and an extension of their team to deliver a solutions-oriented approach to their everyday needs. We are currently striving to remove friction out of the experience. We have an enhanced customer engagement that we take to market through unified marketing, sales, and merchandising, and the deployment of our new CRM to drive stickier customer relationships. By better understanding our customers, we can scale the company and deliver profitable growth. So how do we intend to do this? We have a multi-pronged approach for our go-to market, and we are becoming more focused on the identification and targeting across all these channels.
e-commerce remains our leading and largest channel. We continuously make adjustments to our digital marketing to improve return on investment. We have 200-plus inside sales representatives providing a one-to-one experience for our customers. Our group purchasing organization and our efforts there, launched in 2022, now is poised to achieve over $100 million in revenue this year due to organic growth. We've built a team and expanded our GPO relationships in both private and public sector, which we are excited about the overall opportunity and the potential. It really helps elevate the relationships to a more senior decision maker that is important for our success going forward. In 2026, we launched a small outside sales team, which is identifying and uncovering new opportunities that were previously underserved by us.
With this go-to-market strategy that I've highlighted, our overarching new strategy that we're going to market with, it's a reflection of, on this slide, depicted here so that this is the refinement of the overall strategy. It really is, in January of 2026, I realigned the sales, marketing, and merchandising teams around key industry verticals, which strengthened our value proposition for both existing and new customers. This refined strategy has three primary areas of focus. Specialization, really identifying target customers and tailoring that approach. Our expansion is really looking at adjacent maintenance, repair, and operating product categories, expanding the assortment to be able to take those to market as well to further penetrate those accounts and capture greater share of wallet.
Services is taking what we already provide from an assembly perspective and installation perspective for project-based opportunities, and really reinforcing that value add and that differentiation. We have made significant progress advancing the strategy, and we've delivered high single-digit growth the last three quarters, along with strong strategic account growth during the first half of 2026. It is designed to deepen customer integration and support sustainable organic growth. Now turning to the financial reviews, what you see depicted here is really we are focused. I'm sorry, I jumped a slide. We are a very capital-light, strong, free cash flow business. We have excellent cash flow generation, free cash flow generation, and we have a debt-free balance sheet, which provides significant flexibility for us. With that said, our capital allocation prioritization is as follows. We reinvest back into the business, which we continue to do on an ongoing basis.
We've refined our go-to-market strategy, and we've built out and will continue to build out our selling organization. We will expand the solution offerings that we take along with our products that we stock and intend to have in our warehouses. We continue to focus and enhance and grow our e-procurement capabilities, along with building the annuity streams from maintenance, repair, and operating products and consumables. I am personally spending quite a bit of my time focused on M&A. I believe it's an absolute growth lever for Global Industrial, but it needs to be strategic, and it needs to be accretive in a way that helps move us in the right direction along the strategy that we are executing. It really is truly a definite opportunity for us that we're leading into.
And lastly, not lastly, but we are returning cash to our shareholders on an ongoing basis, which is captured and depicted here. We have a longstanding history and track record of returning capital to shareholders. We have paid a quarterly dividend for 11 years and have increased each and every year that dividend. Lastly, we have repurchased 500,000 shares in the past 12 months and have 860,000 remaining under authorization.
Okay.
To wrap up, our long-term intention is to scale the company through organic growth and M&A. We believe that we are well-positioned to outperform the market. As we leverage our operations, we remain on a path to deliver continued improvements in profitability. I am really excited by both the short and long-term potential for Global Industrial. At this point, I want to thank you all for your interest in Global Industrial, and I am happy to take your questions along with Tex and Mike. Thank you very much.
Thanks very much, Anesa, for sharing the Global Industrial story. As a quick reminder to those in the audience, if you do have a question, please type your questions into the Q&A box and I will read the questions out loud. We already have a few here that came in. First, in terms of your GPO business, as you mentioned, Anesa, this was started about four years ago, this initiative. You are on pace to reach about $100+ million in annualized sales this year. Can you talk about what is the opportunity here? How large can that channel become over time?
Yeah. That is a great question, Tex. I do not know that we have ever quoted a number along those lines, but nevertheless, Anthony, I would say we are in the very early nascent stage of getting that, I guess, momentum built. We are doing a great job of deploying resources. When I first joined, a little less than 19 months ago, we had secured the group purchasing organization agreements and access. We just did not have enough hunters, if you will, or enough selling resources to go to capture those sales. That is really what we are starting to build and accelerate, and as we do that, I believe there is just significant runway to capture greater share. Could it double, triple? Absolutely. We are just, $100 million is not much in the GPO bucket, and we are really just getting started.
Yeah. The only thing I'd add to that, Anthony, is that there's additional GPOs we also are going after. But again, to that point, the penetration within the members of the existing. Remember, a GPO is a license to hunt. It's not a guaranteed sale. So being able to go in, build those relationships, we've seen very good success with the accounts we've signed up. But there's plenty of accounts to continue to go after. A lot of our GPO partners will share with us the total buying base, the TAM within their GPOs, and the other industrial suppliers that exist within them, and there's a tremendous amount of growth opportunity. It remains our fastest growing subset of customers in the business right now.
That's great to hear. Then just in terms of your outside sales force initiative, Anesa, you also mentioned that as well a little bit. Can you provide us an update as to what the learnings have been from that, and then what's the opportunity there? Are you looking to perhaps expand that sales rep effort?
Yeah. I would say we're in the very early stages of that. It's been launched now formally since the beginning of 2026. We piloted it in the last, what? Last quarter of last year. But at this point, we only have less than two dozen feet on the street, if you will, or outside selling representatives. There's a learning curve on what we sell and how we take it to market, and they've done a nice job of stepping in. They actually are knocking on new doors, if you will, and introducing Global Industrial to customers that potentially have never heard of us or knew that we existed. So the pipeline is tremendous. Now it's a matter of getting all of that to come together and sync up. I expect that we'll invest more as we go.
But only having a little under two dozen feet on the street, we've got a long way to go to further penetrate and capture all that there is to be had. So we're really honing in on what we've done from the first half learnings, is we're further refining where we're having them target. In many cases, just having them call on even some of our existing strategic accounts that we already have that we're under-penetrated in. Having them show up every day or every other day or once a week is starting to pay dividends for us. So again, early stages, but we're further refining it, and as we see more success and more demand for being able to call on those locations, we'll add and make that investment in selling resources going forward.
Mm-hmm. Gotcha. Thanks. Just sticking to the top line, just looking at your Canadian business, I know it is fairly small in the big scheme of things. Roughly 5% of overall revenue, but nevertheless, pretty impressive numbers that you have been able to put up there. A roughly 34% increase in local currency revenue that we saw in the second quarter. What is driving that growth, and can you talk to the sustainability of that going forward?
Yeah, great question. What I will share is we have a very strong leader that knows what good looks like and came into the business, I think, a year before I joined. He has done a very nice job of building out his team. Global Industrial as a whole has found a way to realign and make sure that we are supporting them so that we enable their growth. More importantly, they are starting from a very small base of not being known in the marketplace, providing quality brands and proprietary brands that they are taking to market, and they have had just significant success. They have just great fundamentals in place. So they are a small portion of our overall sales and profits, but nevertheless, I think a very meaningful growth lever for us.
Just to give you an order of magnitude, it is along the lines of what we quoted on the GPO side in Canadian dollars. So it gives us a lot of runway to really accelerate that growth. The team is continuing to perform, at this point, despite the animosity between the U.S. and Canada that is occurring right now on that landscape.
Right. Yes, for sure. One of your other initiatives has been to really drive more complementary products, like MRO and the consumables. Can you perhaps share more details as to what portion of your revenue is coming from that, and again, what is the opportunity? One of the examples I know you have shared in the past, Anesa, is the shrink wrap machine and the shrink wrap. Maybe talk to us about what are some of the other things that you are looking to do in terms of bringing in more complementary products, expanding your product offering. Maybe speak also to the margin profile of some of these newer categories.
Yeah. Tex, do you want to speak to kind of the percentage of sales or what have you? I'll speak to how we're looking at the expansion of the categories. Are you good with that?
Absolutely, Anthony. Historically, as you mentioned, we've been that big and bulky supplier, that light capital durable type good. Right now, the way we internally measure that, again, it's really going to be the broader MRO consumable parts, and some of the other areas, is just again, just about over 10% of revenue today. So again, 90% of kind of that durable capital, 10% in more of that MRO space in the business today, the way we internally measure that. That's an area, so again, that just continues to show you that it's starting from a smaller base, more opportunity to expand. The only thing I'll touch on is the margin profile, and let Anesa get a little bit more into the strategy would be, right now, again, typically those will lend themselves to be more national brands that we're sourcing today.
As we continue to sell more and grow that business through both our web channels as well as our sales channels, we're going to continue to focus on buying better, driving the cost down over time, and looking at the overall margin profile as a portfolio of goods. Clearly as this grows, this is not cannibalizing other sales within the portfolio. So this will be all additive to the overall GP dollars that we're generating. Again, while there could be some short-term in that business profile of lower margin profile compared to the broader subset, our goal as an organization is to look at the total set of products we're selling and kind of maintain and grow gross margins over time.
Yep, I agree with what Tex had just highlighted, Anthony. I guess what I would say to that is, as we start to grow and scale, whether it's national brands or proprietary or just broader categories, there'll be a mix shift in the profile in the business, which is not unexpected, but nevertheless, it is with intentionality. Then what we can do is be very intentional on what we choose to overlay or emphasize at a given, say, enterprise account or strategic account or GPOs or what have you. Back to the other portion of your question, we piloted a number of different categories as we were starting to really prepare for the product expansion. We've always sold a lot of the items, but they were more hit or miss and more opportunistic.
We've been very intentional in selling safety, and safety is very margin-rich with product lines. Very intentional with the packaging and supplies by default of having all the material handling capabilities. Being able to add that, too. We're also challenging ourselves to have maintenance repair replacement parts for the products that we sell that have our own proprietary brands. It's a mix of all these things in addition to national branded tools and various items that we're taking to market, just being very intentional and running campaigns and partnering with our vendor base to be able to take those to market, reinforce it, educate the sales team, and just kind of build upon that momentum. We've had some definite success across the board, across the various categories and then some.
Mm-hmm. Switching gears to the cost side of the business here, can you speak to the impact of higher diesel prices have had on your cost structure, and how confident are you that you'll be able to pass on these costs without impacting your profit margins?
Yeah. That's a very excellent question. We have been mitigating the risk, whether it was tariffs, whether it is the diesel fuel portion. The other piece that has kicked up at this point, real-time in a significant way, is just container costs. All of those factor into our overarching cost, and we've been able to successfully pass through the majority of that. We've also been in an environment, so despite that back pressure, we've been growing. So that should give us good leverage to be able to negotiate with our supply base as well to say, "Okay, we've benefited, you've benefited, and we all need to move in this direction. So how do we reposition this?" We've just been constantly touching it.
The pricing discipline that we have in-house and the analytics that we have, we're constantly benchmarking ourselves against the competition and really evolving and deciding how do we need to show up in the marketplace and to be able to sustain the growth that we're enjoying right now.
Mm-hmm. Got you. Okay. I will try to combine a couple of questions here as it relates to balance sheet and potential M&A here. So obviously you have a strong balance sheet, roughly $87 million in cash, no debt. As you look at the M&A opportunities, would you be willing to take on some debt to possibly finance that? And if so, is there a target debt ratio that you would have in mind? So maybe you could just speak to the balance sheet and M&A opportunities, and I will have one more question after that if we can squeeze that in.
Okay. Tex, do you want to take that?
Yeah, absolutely.
I can speak to it too, but go ahead.
Yeah. Anthony, as you can look at, obviously our balance sheet being as clean as it is, no debt, strong cash, and strong cash generation, it gives us that flexibility. Yes, I think this is one area that our board has come out and we've looked at saying, leveraging the balance sheet to buy the right strategic asset is absolutely something they're willing to do. Part of that is trust in the management team to execute on that and finding the right strategic asset. But again, it has to match our profile, really be down the strike zone of what we're looking to do. While we don't have a published target debt ratio, we've been zero for effectively ever. I think, again, thinking about that 2x-3x leverage would be kind of that max where we'd want to go.
But it would have to be tied to the right type of acquisition.
Got you. Okay, and then last question here, given the time constraints. Just in terms of the share buybacks, as you look at the potential future share repurchases, does the liquidity of the stock put a limit on your buybacks? And just overall, as far as the large share ownership by the Leeds family, is that something you guys take into account as far as that's concerned? Are the buybacks mostly just for options dilution? Just a question that we have here from someone.
Yeah, and I'll jump in on that as well, Anthony. I think the buybacks, if we think about our buybacks over the past few years since we initiated that authorization, has really been when it's opportunistic, when we believe that there's the right value in the stock. After last third quarter last year when the stock price pulled back quite substantially, we said, "Listen," we were at a lower level, thought it was the right choice to buy back shares. While we of course look at the overall dilution impact of that, there's not a direct strategy that says, "All right, if we have X number of options, X number of shares issued, that we need to buy back the same number." It's really been, again, really looking at the value and making sure we're utilizing that opportunity or that balance sheet when we believe the value is appropriate.
Understood. Okay. We are already two minutes over our allotted time here. Wanted to thank you again, Anesa, Tex, and Mike for sharing the Global Industrial story. Also, thank you everyone asking very thoughtful questions as well. With that, we will wrap it up, and have a productive day at the conference. Thank you again.
Great. Thank you.
Thank you, Anesa.
Have a good day. Bye.
Take care. Thank you.