Global Industrial (NYSE:GIC) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
View the webcast at https://event.choruscall.com/mediaframe/webcast.html?webcastid=vJvhoEof
Summary
Global Industrial Company reported a 10.2% increase in revenue for Q3 2026, with operating income up by 24.3%, showcasing strong sales growth and profitability.
The company is focused on a customer-centric B2B model, strengthening vertical expertise, and enhancing digital and e-procurement capabilities, leading to double-digit growth in industrial and retail verticals.
Despite external challenges such as elevated transportation costs and tariffs, the company maintains disciplined pricing and cost management, projecting stable gross margins similar to last year’s Q4.
A strong balance sheet with $119.2 million in cash and no debt supports potential strategic acquisitions to complement organic growth.
Management emphasized their commitment to returning capital to shareholders through dividends while maintaining financial flexibility for future growth opportunities.
Full Transcript
OPERATOR
Good afternoon, ladies and gentlemen, and welcome to Global Industrial third quarter 2026 earnings call. At this time, I would like to turn the call over to Mike Smajasi of The Plunkett Group. Please go ahead.
Mike Smajasi (Investor Relations)
Thank you, and welcome to the Global Industrial third quarter 2026 earnings call. Today’s call will include formal remarks from Anesa Chaibi, 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 earnings 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 Anesa.
Anesa Chaibi (Chief Executive Officer)
Thank you, Mike. Good afternoon, everyone, and thank you for joining us. I’m really excited about the progress we are making to take the company to the next level. We delivered another strong quarter with sustained sales growth, improved profitability, and continued progress executing our go-to-market strategy. We continue to build momentum across the business and see significant opportunities ahead. Revenue increased 10.2% and average daily sales grew an impressive 8.5%.
This marks our fourth consecutive quarter of high single-digit average daily sales growth. Our revenue growth, combined with solid operating leverage and disciplined execution, is driving improved profitability, resulting in a 24.3% increase in operating income. We continue to generate significant cash and today announced a quarterly dividend of $0.28 and a special cash dividend of $1.00 per share of common stock. These dividends reflect our commitment to returning capital to shareholders while still maintaining ample financial flexibility to execute on our future growth opportunities.
Over the past year, we have been repositioning Global Industrial toward a more customer-centric relationship B2B model. Our focus has been on developing deeper understanding of our customers, strengthening our vertical expertise, and better aligning our sales, marketing, and merchandising teams to serve our customers’ needs. We are seeing tangible results from our efforts. Growth continues to be led by our industrial and retail customer verticals, with strong double-digit performance among our largest strategic accounts.
Our vertical specialization is helping us identify larger opportunities and deliver more comprehensive solutions. This targeted approach is deepening customer relationships, expanding our participation in customer projects, and driving greater share of wallet. We are becoming more integrated into our customers’ day-to-day operations and becoming an extension of their teams. Importantly, these results reinforce our confidence in the strategy and the significant opportunity with our existing customer base.
Many of our customers operate multiple facilities and have purchasing needs across a broad range of industrial solutions and MRO products. We believe there is a substantial opportunity to expand our role as a trusted supplier, broaden the range of solutions and products we provide, and capture a larger portion of their spend. We also continue to enhance our digital and e-procurement capabilities, delivering double-digit revenue growth through these channels during this past quarter.
By integrating more closely into our customers’ purchasing processes and making it easier to do business with Global Industrial, we are driving more recurring purchasing activity and building stronger, resilient, longer-term customer relationships. Our focus on customer and supplier engagement was also evident at our recent national trade show in Dallas, which brought together more than 1,200 attendees with more than 500 customer and 460 supply partner representatives, making it one of our largest turnouts in the event’s history. The show provided an opportunity to showcase our broad offering of products and solutions, connect directly with customers, and explore new opportunities.
Just as important, we received direct feedback from many of our top customers, providing valuable insights into how we can support their businesses, improve efficiency, simplify purchasing, and keep their operations running strong. Overall, I’m proud of our performance and the continued progress we are making. Our go-to-market strategy is delivering results, our teams are executing well, and we believe we have a strong foundation to support long-term, sustainable, and profitable growth. I will now turn the call over to Tex to discuss our financials in more detail.
Tex Clark (Senior Vice President, Chief Financial Officer)
Thank you, Anesa. Third quarter revenue was $389.5 million, an increase of 10.2% in the quarter. U.S. revenue improved 9.3%, and Canada delivered another exceptional performance with revenue up 28.3% in local currency. Growth continues to be led by our large strategic accounts and our industrial and retail verticals. Revenue primarily benefited from volume and mix gains as we recorded our fourth consecutive quarter of volume improvement, with pricing contributing approximately 2 percentage points towards growth.
Our demand profile was relatively consistent throughout the period, with year-over-year growth moderating slightly in September to 7%. In the early parts of Q4, growth has continued in line with the ADS growth from the third quarter. As we look through the end of 2026, it is important to highlight a significant difference in the number of selling days in Q4 this year compared to last year. The fourth quarter of 2026 will include only 61 selling days.
This compares to 66 selling days in the fourth quarter of 2025, during which we generated revenue of approximately $5.24 million per selling day. This reduction in selling days creates an 8% headwind to reported GAAP revenue growth, making average daily sales a more meaningful measure of our underlying business performance in the fourth quarter. Gross profit for the quarter was $138.9 million. Gross margin was 35.7%. Gross margin included 60 basis points of benefit from the recognition of previously received tariff refunds. We expect any remaining IIPA tariff refund benefits recognized in any individual future quarter to be immaterial. We continue to effectively manage our margin profile in a challenging environment, reflecting disciplined pricing and proactive cost management. Transportation costs remain elevated, with fuel increasing substantially during August and September after a brief sequential reduction early in the quarter.
Annual peak season parcel surcharges took effect the last week of the third quarter and will continue through mid-January. Ocean freight costs have also increased due to shipping disruptions, fuel, and weather-related impacts. In addition, Canadian tariffs on U.S.-sourced products are creating incremental cost pressures in our Canadian business. We expect these factors to remain headwinds in the fourth quarter and anticipate gross margins to be in line with the results realized in the fourth quarter of last year.
Selling, general and administrative spending for the quarter was $106.2 million, an improvement of 90 basis points as a percentage of sales, reflecting fixed-cost leverage on solid revenue growth. Operating income from continuing operations was $32.7 million; excluding the $2 million benefit of the tariff refund, operating income grew 16.7% and operating margin improved 50 basis points. We delivered operating cash flow from continuing operations of $44.5 million in the quarter.
Total depreciation and amortization expense in the quarter was $2 million, while capital expenditures were $1 million. We continue to expect 2026 capital expenditures in the range of $3 to $4 million, which primarily reflects maintenance-related investments in equipment within our distribution network. We currently expect a tax rate between 26% and 26.5% for the remainder of 2026. I will now turn to our balance sheet. We have a strong and liquid balance sheet. As of September 30th, we had approximately $119.2 million in cash, no debt, and over $119.8 million of excess availability under our credit facility. I will now turn it back over to Anesa for closing remarks.
Anesa Chaibi (Chief Executive Officer)
Thank you, Tex. Our go-to-market strategy is delivering results, as shown by our third quarter performance. We are strengthening customer relationships, winning large opportunities, and capturing greater share of wallet. Importantly, this performance is translating into improved operating leverage and profitability. We believe Global Industrial is well positioned for continued profitable growth. We have a differentiated go-to-market strategy, a growing base of strategic customer relationships, and significant opportunities to expand the total addressable market we pursue.
We also see potential opportunities to complement our organic growth through strategic acquisitions that would enhance our capabilities and market reach. Combined with our strong balance sheet, we believe we have a solid foundation for long-term value creation. We remain mindful of the broader macroeconomic environment, cost pressures, and other sources of volatility. We continue to proactively manage those uncontrollables while remaining focused on the areas within our control, executing on our strategy, and building on the progress we have made thus far. Against this backdrop, the Global Industrial team is executing well, and I’m pleased with our performance. I would like to thank all of our employees for their continued dedication, as well as our customers, supplier partners, and investors for their ongoing support.
Thank you for your continued interest in Global Industrial. Operator, please open the call up for questions.
OPERATOR
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you’re using a speakerphone, please pick up the 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. Your first question today comes from Michael Francis with William Blair. Please go ahead.
Michael Francis (Analyst)
Anesa, Tex, good quarter here. Wanted to start with gross margins. You talked about a lot of sort of negative takes there, but at the same time your gross margin, next to tariff refund, seems to have held up better than a lot of your distribution peers. So I would love to know what you would credit that margin holding up for and how we should think about the drivers. I know you ran through them, but maybe if you could put any sort of numbers around any of the drivers going forward, that would be great as well.
Anesa Chaibi (Chief Executive Officer)
Okay, yeah. Go ahead, Tex. Why don’t you take it and I’ll add in anything.
Tex Clark (Senior Vice President, Chief Financial Officer)
Yeah, absolutely, Michael. So as we think about it, yeah, we definitely were pleased with our margin performance in the quarter at 35.7% as reported, and then again, excluding any of that one-time gain, just as that flow-through continued, at 35.1%. So a nice sequential gross margin improvement from Q2 to Q3. As the quarter progressed, we actually exited the quarter with a little bit lower gross margin in September, and we look forward to those Q4 gross margin headwinds that we had just highlighted.
Some of those things, as mentioned again, typically every season our parcel business is subject to the peak season surcharges that UPS and other carriers implement that typically run from late September through mid-January. That’s something that we’ll continue to see. We know that that comes in every year. We absorbed some of that, we passed some of that through, but we know that’s always a margin headwind. A recent change in the market would have been the recent uptick in terms of the ocean costs as well.
As you know, we import a fair amount of product, primarily our private brand goods. Those ocean freight costs are inflated right now. We’ve seen that tick up over the last many weeks, and right now we anticipate that staying elevated for at least the short term. So that mixes into our cost of sales and impacts gross margin pressure. And then finally, let me just talk to fuel. I think we all know about the cost of diesel in the U.S. right now. And when we look at the quarter, early in the period in July, there was actually that slight downtick in diesel prices late June into July, which helped our margins early in the quarter. But as we saw, those accelerated substantially in August and September, which provides a lot of pressure onto our gross margin line given our heavy LTL nature and large, big and bulky products that do ship cross-country.
So all those are headwinds, and that’s why we kind of think about where our Q4 margin may look more similar to last year’s gross margin, which came in at about 34.5% last year in the fourth quarter, given some of these headwinds we’re seeing.
Anesa Chaibi (Chief Executive Officer)
Yeah. The only thing I would add, Michael, is we have pricing discipline now built into the way that we’re approaching all of these uncontrollables, if you will. And so that consistency is what we’re seeing pull through and enable us to deliver on how we’re executing and delivering on our profitability profile.
Michael Francis (Analyst)
That’s good to hear. One more thing here into the balance sheet. Inventory days are lowest since COVID — I think it’s been that way the past few quarters. What’s allowing you to do this, especially in an inflationary environment, and should we expect to see inventory days continue to moderate, or are you at a comfortable level today?
Tex Clark (Senior Vice President, Chief Financial Officer)
Yeah, I think right now when we look at our inventory, typically as we get towards the end of the third quarter, we tend to see that inventory continue to reduce as we sell through that seasonal inventory — the outdoor furniture, the HVAC products that are so prevalent in the summer quarters of Q2 and Q3 — and then before we ramp back inventory towards the end of the year, pre-Lunar New Year, as we go through it. When we think about our growth profile, we’ve also been seeing, again, as we continue to expand into a broader mix of customers, we’ve seen our mix of products also change, where they’re supplemented by both our national brand products as well as private brand products, and then again supplemented by drop-ship sell-through as well, which helps improve that days inventory outstanding.
So right now, I think, again, we were pleased with our overall inventory turn profile as we head into the end of the quarter. But I would expect us to really focus on availability for our customers and investing in inventory. It’s an area that, again, our liquid balance sheet really allows us to make sure that we have the right product at the right time for our customers. And that’s one thing that we will absolutely continue to invest in.
Michael Francis (Analyst)
All right, that’s all good to hear. I’ll pass it back.
OPERATOR
Great, thank you. Your next question comes from Anthony Lemendinsky with Sidoti & Company. Please go ahead.
Anthony Lemendinsky (Analyst)
Thank you. Good afternoon, everyone. Thanks for taking the questions, and it’s really nice to see the very solid Q3 results. So just going back to the third quarter progression, I think, Tex, you mentioned that sales moderated a bit in September, but it sounds like Q4 to date those have picked up. Any particular reason you think you saw some sales deceleration and then an uptick in October? Anything you can put your finger on as to what prompted that?
Tex Clark (Senior Vice President, Chief Financial Officer)
Yeah, and I’ll take that first, Anthony. I think, as we look through the quarter, it was fairly consistent performance throughout the course of July, August, September. In the third quarter, we did exit about 7% growth in September, which then has improved subsequently into the early parts of Q4. Obviously we’re only about four weeks into the quarter at this point, but we have seen that accelerate back towards that average daily growth rate that we reported for the quarter.
So modest increase, but it’s been fairly stable. And again, just highlighting that we’ve had this consistent growth of that 7%, 8%, 9% range for the last four quarters. So we’ve seen that continued trend.
Anthony Lemendinsky (Analyst)
Gotcha. Okay, thanks for that. All right. And then just thinking about longer term as far as your ability to sustain the sales momentum. I know, Anesa, you talked about just gaining deeper share of wallet with your customers, and maybe if you could just speak to that a little bit. I think one interesting comment you made is that you’re making it easier for your customers to do business with you. So as we kind of look forward here, what other actions are you taking to drive deeper wallet share?
Anesa Chaibi (Chief Executive Officer)
Yeah, no, great, great question, Anthony. Thank you for it. We are very much looking at digitizing quite a bit of our connectivity with our customers. And e-procurement is an area where that has been a major focus and priority for this year. And as we have enabled that, customers have the ability to immediately be connected to us, if you will, through their specific portal. And with that said, they’re placing orders, and we’re capturing that share and penetrating those accounts more.
So where in the past, not having that connectivity was an extra step for them to reach out and place an order with us. So we’re kind of bridging that gap, if you will, along with just really honing in on better understanding. As we’ve specialized our go-to-market strategy with our sales team and realigned them, they now have a better understanding of what the industrial customers have or want or need, along with commercial customers or retail or public sector, healthcare, et cetera. And so we’re being very intentional in the way that we’re going to market, and we’re benefiting from that, and our customers are benefiting from better understanding what we can provide to them in an efficient and effective way.
So I believe that’s really what’s contributing to the momentum and the success. And I think what we’ve put in as the groundwork in this past year will enable us to sustain that growth going into next year and beyond.
Anthony Lemendinsky (Analyst)
Thanks for that. And then you had very good SG&A expense leverage in Q3. Maybe if you could just kind of walk us through components of the SG&A year over year that you saw, and how do we think about your ability to keep controlling your SG&A effectively going forward?
Tex Clark (Senior Vice President, Chief Financial Officer)
Yeah, Anthony, I’ll take that one. Thank you for the question. I think the biggest takeaway when we think about SG&A is that we look across our business at our fixed cost base, and when revenue grows and we can accelerate that growth, we’re able to deliver those results down to the bottom line and drive operating leverage. So I think the biggest single benefit to the period was overall hitting that revenue growth — getting up to that $389 million of revenue, 10% plus on a GAAP basis — and we’re able to drive that growth and then overall leverage our fixed cost.
That’s an area that we look at. Typically, if you look at our sequential trends within SG&A, you have higher revenue in Q2 and Q3, a little bit better SG&A leverage, and then in a little lower sales in Q1 and Q4, that SG&A ratio tends to increase in those periods — again, just simply taking that fixed cost basis against the lower sales volume. So overall, again, it was primarily fixed-cost leverage. But again, there’s absolutely a continued priority in the business to monitor costs and make sure that we’re driving efficiencies wherever we can.
Anesa Chaibi (Chief Executive Officer)
Yeah. Or managing our costs everywhere that we can.
Anthony Lemendinsky (Analyst)
Got it. Understood. Well, thank you very much and best of luck.
OPERATOR
Thank you. This concludes our question-and-answer session and our conference for today. Thank you for participating. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
Recent Comments