Executive Summary

Q3 delivered modest top-line growth but missed Wall Street: revenue $353.6M (+3.3% YoY) and diluted EPS from continuing ops $0.48 vs S&P Global consensus of $357.0M and $0.58; both revenue and EPS were below consensus, driven by sequential margin normalization from a record Q2 and a mix shift away from smaller transactional customers . Estimates marked with asterisks are from S&P Global.*
Gross margin expanded 160 bps YoY to 35.6% on price capture, partly offset by less pre‑tariff inventory benefit vs Q2’s record 37.1%; operating income rose 18.5% YoY to $26.3M, operating margin 7.4% .
Demand was led by large strategic accounts and Canada (+12.3% LC), while federal spend timing and intentional pullback from low-value transactional customers weighed on volumes; management noted October growth above Q3’s 3.3% pace .
Outlook: management expects Q4 gross margin to expand YoY but pull back sequentially due to mix and seasonal freight; reiterated 2025 capex ≈$3M, tax rate ~26.4%, and declared a $0.26 dividend (maintained) .

What Went Well and What Went Wrong

What Went Well

Strategic accounts and Canada drove growth; Canada posted its second straight quarter of strong top‑line expansion and operating leverage, reflecting prior investments in distribution and procurement .
Price management and supplier actions supported margins; Q3 gross margin rose to 35.6% (+160 bps YoY) on price capture as tariffed inventory flowed through; management is targeting price/cost neutrality through active supplier diversification and pricing .
Solid cash generation and balance sheet strength: Q3 operating cash flow from continuing ops was $22.6M; cash $67.2M; no debt; ~ $120M excess revolver availability; board declared a $0.26 dividend .

Quote: “We delivered our second consecutive quarter of revenue growth and strong profitability… performance was once again driven by our largest strategic accounts” — CEO Anesa Chaibi .

What Went Wrong

Missed S&P Global consensus on both revenue and EPS as sequential margins normalized from a record Q2 (37.1% to 35.6%) and transactional volumes remained soft due to intentional go‑to‑market changes; EPS fell from $0.65 in Q2 to $0.48 in Q3 . Estimates from S&P Global.*
SG&A rose 6% YoY to $99.7M (28.2% of sales, +70 bps YoY), driven mainly by higher variable compensation tied to improved profitability vs last year .
Government order timing and tariff uncertainty pressured volumes and created pricing and cost complexity; additional reciprocal tariffs (steel/aluminum) in early August necessitated further price action in late August .

Financial Results

Core P&L (GAAP)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$321.0	$358.9	$353.6
Gross Margin (%)	34.9%	37.1%	35.6%
Operating Income ($M)	$18.2	$33.5	$26.3
Operating Margin (%)	5.7%	9.3%	7.4%
Net Income – Continuing Ops ($M)	$13.5	$25.1	$18.8
Diluted EPS – Continuing Ops ($)	$0.35	$0.65	$0.48

YoY highlights for Q3: Revenue +3.3%, gross margin +160 bps, operating income +18.5% . Sequentially, gross margin and operating margin pulled back from Q2’s record levels as expected .

Actual vs S&P Global Consensus (Q3 2025)

Metric	Actual	Consensus*	Surprise
Revenue ($M)	$353.6	$357.0*	Miss ($3.4M)
Diluted EPS – Continuing Ops ($)	$0.48	$0.58*	Miss ($0.10)

*Values retrieved from S&P Global.

KPIs and Balance Sheet

KPI	Q1 2025	Q2 2025	Q3 2025
Operating Cash Flow – Cont. Ops ($M)	$3.3	$31.8	$22.6
Cash & Equivalents ($M)	$39.0	$55.1	$67.2
Working Capital ($M)	$192.5	$206.7	$219.5
Inventory ($M)	$178.6	$171.2	$174.6
Dividend/Share ($)	$0.26	$0.26	$0.26

No segment revenue disclosure; management cited U.S. +2.9% and Canada +12.3% in local currency for Q3 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin	Q4 2025	n/a	Up YoY; sequential pullback vs Q3 due to mix and seasonal freight	New
Capex	FY 2025	n/a	≈ $3M	New
Effective Tax Rate	FY 2025	n/a	~26.4% (vs 23.7% in 2024)	New
Dividend	Quarterly	$0.26 (Q2)	$0.26 (Q3)	Maintained

Management also highlighted no debt and >$120M excess revolver capacity at Q3 quarter‑end .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q1)	Current Period (Q3)	Trend
Tariffs & Pricing	Q1: New tariffs disrupted supply chain; focus on mitigation . Q2: Record gross margin (37.1%) amid tariff uncertainty; price actions taken .	Additional tariffs (incl. steel/aluminum) in early Aug; further pricing in late Aug; target price/cost neutrality; Q4 margins up YoY but down seq .	Persistent headwind; active pricing/sourcing response
Customer Mix & Go‑to‑market	Q1: Intentional shift away from promotional/transactional customers; focus on strategic accounts . Q2: Growth each month; momentum in largest accounts .	Continued strategic account strength; transactional volume softness by design; October growth running above Q3 rate .	Mix improving toward higher‑value customers
Regional Performance	Q1: Not highlighted. Q2: Noted growth momentum .	Canada +12.3% LC with operating leverage; U.S. +2.9% .	Canada outperformance continuing
Technology/CRM	Q1/Q2: Not emphasized in releases.	New CRM deployment; process and tech rework to elevate customer service and efficiency .	Building tech stack to support scale
Government/Public Sector	Q1: Public sector healthy .	Federal timing headwinds in Q3; state/local positive; some recovery in October .	Mixed; timing noise easing
Capital Allocation	Q1/Q2: $0.26 dividend maintained .	Dividend maintained; evaluate strategic M&A; capex ≈$3M .	Balanced; optionality preserved

Management Commentary

Strategy: “We are reframing our go‑to‑market strategy… expanding the solutions and products we offer… enhancing our ability to serve customers… implementation of our new CRM” — CEO Anesa Chaibi .
Mix & geography: “U.S. revenue was up 2.9%, and Canada revenue improved 12.3% in local currency… Price was positive mid‑single digits… slight decline in total volume… order count growth in our largest and most strategic customers” — CFO Tex Clark .
Tariffs & pricing: “Additional tariffs… in early August… we took an additional pricing action in late August… goal is to manage price cost neutral” — CFO Tex Clark .
Outlook & capitalization: “We have a strong and liquid balance sheet… $67.2M in cash, no debt, and over $120M of excess availability… dividend of $0.26” — CFO Tex Clark .

Q&A Highlights

Pricing cadence: Mid‑single digit pricing (~just over 5%) benefited Q3, with similar or slightly higher expected in Q4 given August price action and tariff flow‑through; company remains flexible as tariff environment evolves .
Growth durability: Strategic accounts continue to gain share of wallet; October growth running higher than Q3’s reported +3.3% despite earlier federal timing headwinds; state/local demand positive .
Customer health: Core SMB/public sector/enterprise retention is healthy; softness confined to one‑time, lower‑value transactional customers due to strategic shift begun late 2024; those headwinds should wane on easier comps in Q4 .
Expenses: SG&A growth largely variable compensation normalization vs last year’s softer profit backdrop; otherwise cost control remains disciplined .

Estimates Context

Q3 2025 results vs S&P Global consensus: Revenue $353.6M vs $357.0M*, diluted EPS (cont. ops) $0.48 vs $0.58* — both misses. Only two covering estimates for revenue and EPS, underscoring thin coverage and potential for estimate volatility . Values retrieved from S&P Global.*
Implications: Given Q4 margin guidance (YoY up, sequential down) and ongoing tariff noise, sell‑side EPS may drift lower near term; however, management’s October commentary and strategic account momentum could support revenue run‑rate assumptions .

Key Takeaways for Investors

Core thesis: Mix upgrade toward strategic accounts plus disciplined pricing is lifting structural margins YoY even as sequential normalization from record Q2 pressures near‑term EPS .
Watch tariffs: Additional August tariffs required late‑quarter pricing; Q4 gross margin should expand YoY but ease sequentially due to mix/freight; price/cost neutrality is the target .
Demand signals: October growth tracked above Q3’s 3.3%, with state/local healthy and federal timing improving; Canada momentum continues .
Cost framework: SG&A increase is primarily variable comp normalization; underlying cost control remains tight .
Balance sheet & capital returns: No debt, $67.2M cash, >$120M revolver capacity; dividend held at $0.26, preserving optionality for organic growth and M&A .
Near‑term setup: Street models likely trim Q4/Q1 EPS on sequential margin commentary and tariff risk; potential upside lever is continued above‑trend growth in strategic accounts and Canada .
2026 positioning: New CRM and go‑to‑market realignment by industry verticals aim to expand TAM and share of wallet into 2026 .

References:

Q3 2025 8‑K press release and financials: .
Q3 2025 earnings call transcript: .
Q2 2025 8‑K press release and financials: .
Q1 2025 8‑K press release and financials: .

Estimates: Values retrieved from S&P Global.*

GLOBAL INDUSTRIAL Co (GIC)·Q3 2025 Earnings Summary