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GLOBAL INDUSTRIAL Co (GIC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was weak on the top line and margins versus last year and the prior quarter: net sales $302.3M (-5.6% YoY, -11.7% QoQ), gross margin 33.8% (flat YoY, -20 bps QoQ), operating margin 4.8% (down 190 bps YoY, down 170 bps QoQ), diluted EPS $0.27 (-32.5% YoY, -38.6% QoQ) .
  • Management cited persistent SMB softness, elevated ocean and parcel freight costs, and significant CPC inflation in paid search, offset by resilient large managed accounts and continued strong private brand mix (low-40% of sales in 2024) .
  • Cash and liquidity remain robust: $44.6M cash, no debt, current ratio ~2.1x; operating cash flow from continuing operations was $15.8M in Q4; the Board increased the quarterly dividend to $0.26 (+$0.01) .
  • No formal revenue/EPS guidance; commentary flagged Q1 2025 revenue pacing “in line with the fourth quarter” and SG&A remaining elevated due to CPC inflation; 2025 capex guided to $2–3M (down from 2024’s $3.8M actual) .
  • S&P Global consensus estimates for Q4 2024 were unavailable at time of request; result comparisons to Street cannot be confirmed. Expect focus on margin resilience, SMB demand recovery, and Salesforce CRM rollout milestones as stock drivers .

What Went Well and What Went Wrong

What Went Well

  • Large managed accounts continued to perform well, with private brands showing modest growth and representing low-40% of total 2024 sales, supporting margin profile .
  • Quality and customer experience initiatives delivered measurable results, including a 20% reduction in damage claims in 2024 and >60% digital order share, underpinning retention and satisfaction .
  • Gross margin held at 33.8% YoY in Q4, and would have expanded ~40 bps YoY excluding a prior-year LTL settlement benefit, evidencing pricing discipline amid freight inflation .
  • Quote: “We delivered top line growth in the first half of 2024 but results softened as we moved through the year…We remain very pleased with our gross margin performance and had good cash flow generation during the year, ending 2024 with more than $44 million in cash.” — Richard Leeds .

What Went Wrong

  • SMB demand remained weak; Q4 revenue declined 5.6% YoY and 11.7% QoQ; operating margin compressed to 4.8% due to negative operating leverage and elevated CPC costs .
  • CPC inflation pressured web traffic and acquisition effectiveness; SG&A rose to $87.8M (29% of sales), with management expecting SG&A to remain elevated in Q1 2025 .
  • Freight inflation (ocean inbound, parcel/LTL outbound) weighed on margins; sequential gross margin dipped to 33.8%, and management warned of continued volatility and trade-policy/tariff uncertainty .

Financial Results

Sequential Comparison (Q3 2024 → Q4 2024)

MetricQ3 2024Q4 2024
Net sales ($USD Millions)$342.4 $302.3
Diluted EPS from continuing operations ($)$0.44 $0.27
Gross margin (%)34.0% 33.8%
Operating margin (%)6.5% 4.8%
Operating income ($USD Millions)$22.2 $14.5
Gross profit ($USD Millions)$116.3 $102.3
SG&A ($USD Millions)$94.1 $87.8
Operating cash flow from continuing ops ($USD Millions)$9.6 $15.8

Year-over-Year (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Net sales ($USD Millions)$320.1 $302.3
Diluted EPS from continuing operations ($)$0.40 $0.27
Gross margin (%)33.8% 33.8%
Operating margin (%)6.7% 4.8%
Operating income ($USD Millions)$21.4 $14.5
Gross profit ($USD Millions)$108.2 $102.3
SG&A ($USD Millions)$86.8 $87.8

Balance Sheet Snapshot

Metric ($USD Millions)Dec 31, 2023Dec 31, 2024
Cash & cash equivalents$34.4 $44.6
Accounts receivable, net$130.7 $126.5
Inventories$150.8 $167.1
Current assets$329.8 $352.6
Current liabilities$174.2 $168.4
Shareholders’ equity$255.2 $281.1
Working capitalN/A$184.2

Geography & Channel KPIs (Q4 2024)

MetricQ4 2024
U.S. revenue YoY growth-5.9% (local trends for U.S.)
Canada revenue YoY growth (local currency)+4.1%
Digital/e-commerce share of orders (2024)>60% (annual)
Private brand share of total sales (2024)Low-40% range (annual)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
Dividend per shareQuarterly$0.25 (declared Oct 29, 2024) $0.26 (record 3/10/25; payable 3/17/25) Raised
CapexFY 20252024 actual $3.8M 2025 capex $2–3M Lowered vs 2024 actual
SG&A run-rateQ1 20252H’24 to “remain elevated” vs LY (Q2 call) Q1’25 SG&A “remain elevated” due to CPC inflation Maintained elevated
Severance expenseQ1 2025N/A~$1M expected in Q1’25 New item
Selling daysFY 2025N/A+4 extra selling days in Dec’25 (modest impact) New item
Revenue directionalQ1 2025Q3’24: Q4 revenue pacing down mid-single digits Q1’25 revenue pacing “in line with Q4” Maintained soft trend
LiquidityOngoingN/A$44.6M cash; ~$120.5M excess availability Stable

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
SMB demand softnessQ2: SMB weaker; transactional e-comm softness Continues; fourth quarter weakest; volatility persists Deteriorated
Managed/enterprise accountsQ2/Q3: strong growth and resilience Continued strength; largest accounts performing well Stable/positive
Pricing & gross marginQ2/Q3: proactive price mgmt; YoY margin up; freight headwinds Q4 GM 33.8%; flat YoY; would be +~40 bps ex prior LTL settlement Resilient ex one-time
Freight & tariffsQ2/Q3: ocean costs elevated; tariff-ready Ocean/parcel elevated; diversified sourcing; plan to pass-through if needed Ongoing risk managed
Digital marketing CPCQ3: significant CPC inflation; negative leverage Continued CPC inflation; SG&A elevated; moderation planned Persistent headwind
CRM/technology (Salesforce)Q2: phased rollout underway Sales live end-2024; marketing & CS modules to go live summer 2025 Execution progressing
E-procurement/API, punchoutQ3: elevating digital capabilities Focus on e-enabled platforms in 2025 Building

Management Commentary

  • Strategic focus: “We continued to execute on our customer centric strategy and made measurable progress elevating the customer experience…strong retention rates…significant improvement in quality metrics across our supply chain.” — Richard Leeds .
  • Freight/tariff preparedness: “We effectively managed through the tariffs of 2019 and extreme ocean freight inflation…more diversified supply chain…anticipate negotiating cost savings and pass-through pricing” — Tex Clark .
  • Operational investments: “We recently went live with Salesforce for our U.S. sales team…new CRM will drive operational efficiencies and a unified perspective of the customer” — Richard Leeds .
  • Liquidity & capital allocation: “We had…more than $44 million in cash…Board declared a quarterly dividend of $0.26 per share” — Tex Clark .
  • New CEO perspective: “Global Industrial must…optimize its customer acquisition and sales approach and capture share in the fragmented industrial distribution market” — Anesa Chaibi .

Q&A Highlights

  • Demand and post-election: Revenue remained volatile; soft start to 2025; positive sentiment but overall pacing in line with Q4 .
  • Customer mix: Larger accounts show improving budget dynamics; SMB remains sticky; retention and satisfaction good but need to “reignite” smaller customer channel .
  • Salesforce timeline: Sales fully live by end-2024; marketing and customer service modules targeted for summer 2025; benefits expected to accrue through 2025 .
  • Inventory & tariffs: No preemptive tariff buys; inventory increased valuation partly from higher inbound ocean transit costs; diversified sourcing and pricing tools in place to manage potential tariffs .
  • Gross margin outlook: Confidence in managing price/cost; private brands support margin; transportation costs remain key variable .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at time of request; comparisons to Wall Street consensus cannot be provided. Values retrieved from S&P Global were not accessible due to provider limits.
  • Given actuals (revenue -5.6% YoY; EPS $0.27), Street models may reassess SMB demand trajectory, SG&A run-rate/CPC inflation, and freight cost assumptions; management’s “Q1 pacing in line with Q4” may weigh on near-term top-line expectations .

Key Takeaways for Investors

  • Top line weakness concentrated in SMB; large managed accounts resilient. Near-term performance hinges on SMB demand recovery and CPC normalization .
  • Margin resilience continues despite freight inflation; private brands and pricing discipline are offsets, but transportation costs remain a swing factor .
  • Salesforce rollout is a 2025 catalyst for sales/marketing efficiency and better LTV targeting; watch summer 2025 milestones .
  • Liquidity and capital returns intact: $44.6M cash, no debt, dividend raised to $0.26; supports downside protection while growth initiatives execute .
  • 2025 capex guided down to $2–3M, highlighting maintenance focus and disciplined spend amid soft demand .
  • Macro/trade-policy watch items: Ocean freight, tariffs, and CPC inflation; management indicates diversified sourcing and pricing capabilities to mitigate .
  • Near-term stock narrative likely driven by demand tone checks (Q1 pacing), margin management versus freight/CPC, and early CRM benefits; absent formal guidance or available Street comps, qualitative execution updates will be critical .