Global Industrial Co.
02/27/2026 | Press release | Distributed by Public on 02/27/2026 16:23
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Global Industrial Company, through its subsidiaries, is a value-added distributor and source for industrial equipment and supplies in North America going to market through a system of branded e-commerce websites and relationship marketers.
In April 2025, the Company completed the acquisition of an equipment service provider for approximately $4.3 million in cash. At closing, $0.3 million was held in escrow for settlement of potential obligations. The accounts acquired are included in the accompanying consolidated financial statements from the date of acquisition. This acquisition broadens the Company's value-added offerings in certain key equipment categories.
The Company acquired 100% of the outstanding equity interests of Indoff, a business-to-business direct marketer of material handling products, commercial interiors and business products with operations in North America, on May 19, 2023 for approximately $72.6 million in cash. The Indoff accounts are included in the accompanying consolidated financial statements from the date of acquisition. This acquisition expands the Company's presence in the maintenance, repair and operations ("MRO") market in North America.
See Note 4, Acquisition, of Notes to Consolidated Financial Statements for additional financial information regarding these acquisitions.
Continuing Operations
The Company specializes in providing maintenance, repair and operations solutions to businesses ranging from small to enterprise, and to the public sector. The Company is committed to its customer-centric strategy and uses industry expertise, products from its own Global Industrial Exclusive BrandsTM, and nationally known brands to provide customers with a breadth of offerings to meet their needs. These industrial and MRO products are manufactured by other companies. Some products are manufactured for us and sold as a white label product, and some are manufactured to our own design and marketed as private brand products under the trademarks: Global™, GlobalIndustrial.com™, Nexel™, Paramount™, Interion™ and Absocold™.
Operating Conditions
The market for the sale of industrial products in North America is highly fragmented and is characterized by multiple distribution channels. Industrial products distribution is working capital intensive, requiring us to incur significant costs associated with the warehousing of many products, including the costs of maintaining inventory, leasing warehouse space, inventory management systems and employing personnel to perform the associated tasks. We supplement our on-hand product availability by maintaining relationships with major distributors and manufacturers, utilizing a combination of stock and drop-shipment fulfillment.
The primary component of our operating expenses historically has been employee-related costs, which includes items such as wages, commissions, bonuses, employee benefits and equity-based compensation, as well as marketing expenses, primarily comprised of digital marketing spend, and occupancy related charges associated with our leased distribution and call center facilities. We continually assess our operations to ensure that they are efficient, aligned with market conditions and responsive to customer needs.
The discussion of our results of operations and financial condition that follows will provide information that will assist in understanding our financial statements, the factors that we believe may affect our future results and financial condition as well as information about how certain accounting policies and estimates affect the consolidated financial statements.
The Company has elected to omit discussion of the earliest year presented, December 31, 2023, in MD&A. This discussion can be found in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in Form 10-K for the year ended December 31, 2024, filed on February 26, 2025.
Business Outlook
2025 was a year of solid execution and significant progress for Global Industrial, with revenue growing 4.8% to $1.38 billion. We delivered strong margin performance, generated healthy cash flows and we continue to make progress on our strategic initiatives, which we believe will enable us to drive profitable top-line growth and scale the business in 2026 and beyond. This includes transforming our business model to become a more customer-centric organization along with reframing our go-to-market strategy to more effectively address our customer's needs.
Highlights from 2025 vs. 2024
The following discussion of our results of operations and financial condition will provide information that will assist in understanding our financial statements and information about how certain accounting principles and estimates affect the consolidated financial statements. This discussion should be read in conjunction with the consolidated financial statements included herein.
•Consolidated sales increased 4.8% to $1.38 billion in U.S. dollars compared to $1.32 billion last year and average daily sales increased 3.2% compared to prior year.
•Consolidated gross margin increased to 35.5 % compared to 34.3% last year.
•Consolidated operating income from continuing operations increased 21.2% to $97.6 million compared to $80.5 million last year.
•Net income per diluted share from continuing operations increased 17.8% to $1.85 compared to $1.57 last year.
*Average daily sales is calculated based upon the number of selling days in each period, with Canadian sales converted to U.S. dollars using the current year's average exchange rate. There were 257 selling days in the U.S. in 2025 compared to 253 selling days in 2024 and in Canada, there were 254 selling days in 2025 compared to 250 selling days in 2024.
Results of Operations(1)
Key Performance Indicators (in millions):
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Years Ended December 31,
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Change | ||||||||||||||||||||||
| 2025 | 2024 | 2025 vs. 2024 | |||||||||||||||||||||
| Results of continuing operations: | |||||||||||||||||||||||
| Consolidated net sales | $ | 1,379.1 | $ | 1,315.9 | 4.8 | % | |||||||||||||||||
| Consolidated gross profit | $ | 490.2 | $ | 452.0 | 8.5 | % | |||||||||||||||||
| Consolidated gross margin | 35.5 | % | 34.3 | % | 1.2 | % | |||||||||||||||||
| Consolidated SD&A costs | $ | 392.6 | $ | 371.5 | 5.7 | % | |||||||||||||||||
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Consolidated SD&A costs as % of sales
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28.5 | % | 28.2 | % | 0.3 | % | |||||||||||||||||
| Consolidated operating income | $ | 97.6 | $ | 80.5 | 21.2 | % | |||||||||||||||||
| Consolidated operating margin from continuing operations: | 7.1 | % | 6.1 | % | 1.0 | % | |||||||||||||||||
| Effective income tax rate | 26.2 | % | 23.9 | % | 2.3 | % | |||||||||||||||||
| Net income from continuing operations | $ | 72.0 | $ | 60.7 | 18.6 | % | |||||||||||||||||
| Net margin from continuing operations | 5.2 | % | 4.6 | % | 0.6 | % | |||||||||||||||||
| Net income from discontinued operations, net of tax | $ | 0.1 | $ | 0.3 | NM | ||||||||||||||||||
NM=not meaningful
| 1 |
Global Industrial Company manages its business and reports using a 52-53 week fiscal year that ends at midnight on the Saturday closest to December 31. For clarity of presentation, fiscal years are described as if they ended on the last day of the respective calendar month. Fiscal years 2025 and 2024 ended on January 3, 2026 and December 28, 2024, respectively. The fiscal year ended 2025 included 53 weeks and 2024 included 52 weeks.
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Management's discussion and analysis that follows includes current operations.
NET SALES
The Company's net sales increased 4.8% to $1.38 billion compared to $1.32 billion in 2024, benefiting from price capture, strong sales from our largest strategic accounts and volume improvement in the second half of the year, partially offset by a reduction in our smaller and transactional customer sales. U.S. sales increased 4.7% in 2025 compared to 2024 and Canada sales increased 7.0%, 9.2% in local currency in 2025 compared to 2024.
There were 257 selling days in the U.S. in 2025 compared to 253 in 2024 and 254 selling days in Canada in 2025 compared to 250 selling days in 2024.
GROSS MARGIN
Gross margin is dependent on variables such as product mix including sourcing and category, trade policy inclusive of the imposition of tariffs, competition, pricing strategy, vendor volume rebates, freight pricing decisions including the use of free or other promotional freight plans, freight cost inflation including both domestic outbound freight as well as international inbound ocean freight, inventory valuation and obsolescence and other variables, any or all of which may result in fluctuations in gross margin.
Gross margin was 35.5% compared to 34.3% in the prior year, a 120 basis point improvement. The year over year improvement resulted strategic pricing management including the timing benefit from pre-tariff inventory flowing through cost of sales and overall freight management, including both inbound and outbound logistics as well as quality initiatives that reduced freight claims and customer returns. In the prior year, the Company's margin reflected modest price actions taken throughout the year to offset both the increased costs of inbound ocean transportation, as well as, higher parcel fulfillment costs.
Management of our margin profile remains a key area of focus for the Company. Performance will continue to reflect the impact of strategic promotion and freight actions as part of our competitive pricing initiatives, tariff related actions and ocean freight costs. The Company continues to anticipate that there may be increased margin variability in future periods given the timing dynamics of on-hand inventory, inflationary pressures associated with tariff related cost increases and our efforts to continue to diversify our supply chain as well as historical seasonality.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES ("SG&A")
Selling, general and administrative expenses totaled $392.6 million and $371.5 million for the years ended December 31, 2025 and 2024, respectively.
SG&A costs as a percentage of sales increased approximately 30 basis points in 2025 compared to 2024. Cost increases included total salary and related costs of approximately $20.4 million, of which approximately $9.7 million related to variable compensation with both selling commissions and bonus pool increasing compared to prior year and increased stock-based compensation expenses of approximately $4.6 million compared to prior year. Additional cost increases for net advertising spend of approximately $0.5 million was incurred offset by continued strong general and discretionary cost control. Prior year reflected a benefit associated with the reversal of executive stock compensation offset by approximately $0.7 million of recruitment costs associated with our CEO search.
OPERATING MARGIN
The Company's operating margin improved by 100 basis points in 2025 compared to 2024, driven by the sales increase, increased gross margin, continued strong general and discretionary cost control offset by increased variable compensation expense related to performance.
INTEREST AND OTHER EXPENSE, NET
Interest and other expense, net from continuing operations was $0.1 million for 2025 and $0.2 million for 2024. The Company also recorded foreign exchange income of approximately $0.1 million in 2025 and foreign exchange losses of approximately $0.5 million in 2024.
INCOME TAXES
The Company recorded net tax expense in continuing operations for 2025 of $25.6 million, or 26.2% related to its operations in the U.S, Canada and India, including tax expense for certain U.S. states. The increased tax expense in 2025 compared to 2024 is attributable to the higher taxable income in 2025 and a higher effective tax rate due to an increase in non-deductible executive compensation.
The Company recorded net tax expense in continuing operations for 2024 of $19.1 million, or 23.9%. Tax expense from continuing operations was primarily the result of pretax income in the U.S. and India operations, including tax expense for certain U.S. states. The tax rate in 2024 benefited from the reversal of previously non-deductible executive stock compensation of approximately $1.1 million related the departure of the CEO in August 2024.
Financial Condition, Liquidity and Capital Resources
Selected liquidity data (in millions):
| December 31, | |||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||
| Cash and cash equivalents | $ | 67.5 | $ | 44.6 | $ | 22.9 | |||||||||||
| Accounts receivable, net | $ | 139.6 | $ | 126.5 | $ | 13.1 | |||||||||||
| Inventories | $ | 174.6 | $ | 167.1 | $ | 7.5 | |||||||||||
| Prepaid expenses and other current assets | $ | 14.8 | $ | 14.4 | $ | 0.4 | |||||||||||
| Accounts payable | $ | 108.7 | $ | 106.5 | $ | 2.2 | |||||||||||
| Accrued expenses and other current liabilities | $ | 53.7 | $ | 47.8 | $ | 5.9 | |||||||||||
| Operating lease liabilities | $ | 16.1 | $ | 14.1 | $ | 2.0 | |||||||||||
| Working capital | $ | 218.0 | $ | 184.2 | $ | 33.8 | |||||||||||
Historical Cash Flows
| Year Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 77.7 | $ | 50.4 | ||||||||||
| Net cash provided by operating activities from discontinued operations | $ | 0.1 | $ | 0.3 | ||||||||||
| Net cash used in investing activities from continuing operations | $ | (7.1) | $ | (3.8) | ||||||||||
| Net cash used in financing activities from continuing operations | $ | (47.5) | $ | (36.7) | ||||||||||
| Effects of exchange rates on cash | $ | (0.3) | $ | 0.0 | ||||||||||
| Net increase in cash and cash equivalents | $ | 22.9 | $ | 10.2 | ||||||||||
Our primary liquidity needs are to support working capital requirements in our business, funding recently declared and any future dividends, funding capital expenditures and inventory purchases, continuing investment in upgrading and expanding our technological capabilities specifically related to additional functionality and enhanced navigation of our new web platform, continuing investment in sales, marketing, merchandising, customer service and upgrading our distribution footprint and funding acquisitions. We rely upon operating cash flow and our credit facility to meet these needs. We currently believe that current cash on hand and cash flow from operations will be sufficient to fund our working capital and other cash requirements for at least the next twelve months. We believe our current capital structure and cash resources are adequate for our internal growth initiatives. To the extent our growth initiatives expand, including major acquisitions, we would seek to raise additional capital. We believe that, if needed, we can access public or private funding alternatives to raise additional capital.
Our working capital increased $33.8 million primarily related to higher cash, accounts receivable and inventory balances, partially offset by higher accounts payable, accrued expenses and other current liabilities balances. Accounts receivable days outstanding were 38.9 in 2025 compared to 37.7 in 2024. Inventory turns were 5.1 in 2025 compared to 5.2 in 2024 and accounts payable days outstanding were 46.3 in 2025 compared to 48.4 in 2024. We expect that future accounts receivable, inventory and accounts payable balances will fluctuate with net sales and the product mix of our net sales.
Operating Activities
Net cash provided by operating activities from continuing operations was $77.7 million attributable to cash generated from net income adjusted by other non-cash items which provided $88.6 million in 2025 compared to $72.7 million provided in 2024 primarily due to higher net income in 2025 and higher stock-based compensation expense. Changes in our working capital accounts used $10.9 million in 2025 compared to $22.3 million used in 2024, primarily the result of changes in inventory, accounts payable, accrued expenses, other current liabilities and other liabilities and accounts receivable balances. Net cash provided by operating activities from discontinued operations was $0.1 million in 2025 and $0.3 million in 2024.
Investing Activities
Net cash used in investing activities totaled $7.1 million and $3.8 million for 2025 and 2024, respectively. In 2025, $4.0 million was used for the acquisition of an equipment service provider and $3.1 million was used for warehouse machinery and equipment in our distribution facilities, and computer equipment upgrades and tooling. In 2024, investing activities was also used for warehouse machinery and equipment in our distribution facilities, leasehold improvements and computer equipment upgrades.
Financing Activities
Net cash used in financing activities was $47.5 million in 2025 and $36.7 million in 2024. In 2025, net cash used in financing activities primarily related to the regular quarterly dividend of $0.26 per common share which totaled $40.3 million. Offsetting these payments were proceeds of $2.7 million from the issuance of common stock from stock option exercises, offset by payments for payroll taxes through shares withheld, which totaled approximately $2.3 million and proceeds of $1.5 million from the issuance of common stock from our employee stock purchase plan. In addition, $9.1 million was used for the purchase of treasury stock. In 2024, net cash used in financing activities primarily related to the regular quarterly dividend of $0.25 per common share which totaled $38.4 million. Offsetting these payments, were proceeds of $1.8 million from the issuance of common stock from stock option exercises, offset by payments for payroll taxes through shares withheld of approximately $1.6 million and proceeds of $1.5 million from the issuance of common stock from our employee stock purchase plan.
The Company maintains a $125.0 million secured revolving credit facility with one financial institution, which has a five year term, maturing on October 19, 2026 and provides for borrowings in the United States. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and the inventory advance rate computed as the lesser of 65% or 85% of the net orderly liquidation value ("NOLV"). Borrowings are secured by substantially all of the Borrower's assets, as defined, including all accounts, accounts receivable, inventory and certain other assets, subject to limited exceptions, including the exclusion of certain foreign assets from the collateral. The interest rate under the amended and restated facility is computed at applicable market rates based on the Secured Overnight Financing Rate ("SOFR"), the Federal Reserve Bank of New York ("NYFRB") or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of December 31, 2025, eligible collateral under the credit agreement was $125.0 million, total availability was $122.1 million, total outstanding letters of credit was $1.6 million, total excess availability was $120.5 million and there were no outstanding borrowings. The Company was in compliance with all of the covenants of the credit agreement in place as of December 31, 2025.
Levels of earnings and cash flows are dependent on factors such as consolidated gross margin and selling, distribution and administrative costs, product mix and relative levels of domestic and foreign sales. Unusual gains or expense items, such as special (gains) charges and settlements, may impact earnings and are separately disclosed. We expect that past performance may not be indicative of future performance due to the competitive nature of our business where the need to adjust prices to gain or hold market share is prevalent.
Macroeconomic conditions, such as business and consumer sentiment, may affect our revenues, cash flows or financial condition. However, we do not believe that there is a direct correlation between any specific macroeconomic indicator and our revenues, cash flows or financial condition. We are not currently interest rate sensitive, as we have no outstanding debt.
The expenses and capital expenditures described above will require significant levels of liquidity, which we believe can be adequately funded from our currently available cash resources, cash flow from operations and borrowing under our current credit facility. In 2026 we anticipate capital expenditures to be in the range of $3.0 to $4.0 million, though at this time we are not contractually committed to incur these expenditures.
In the past we have engaged in opportunistic acquisitions, choosing to pay the purchase price in cash, and may do so in the future as favorable situations arise. However, a deep and prolonged period of reduced business spending could adversely impact our cash resources and force us to either forego future acquisition opportunities or to pay the purchase price using stock, debt or a combination of consideration which could have an adverse effect on our earnings. We believe that our cash balances and future cash flows from operations will be sufficient to fund our working capital and other cash requirements for at least the next twelve months.
We maintain our cash and cash equivalents in money market funds or their equivalent that have maturities of less than three months and in non-interest bearing accounts that partially offset banking fees. As of December 31, 2025, we had no investments with maturities of greater than three months. Accordingly, we do not believe that our cash balances have significant exposure to interest rate risk. At December 31, 2025 cash balances held in foreign subsidiaries totaled approximately $4.8 million. These balances are held in local country banks and are held primarily to support local working capital needs. The Company had in excess of $183 million of liquidity (cash and an undrawn line of credit) in the U.S. as of December 31, 2025.
Material Cash Requirements
We are obligated under non-cancelable operating and finance leases for the rental of our facilities and certain of our equipment which expire at various dates through 2034. As of December 31, 2025 we were obligated for approximately $123.7 million under these non-cancelable operating leases. In 2026 we anticipate cash expenditures of approximately $21.4 million for these operating leases. We have sublease agreements for unused space, as well as, excess space in facilities we are currently occupying, in the United States and Canada. In the event the sub lessee is unable to fulfill its obligations, we would be responsible for remaining rents due under the leases.
Our purchase and other obligations consist primarily of purchase commitments for certain employment, consulting and service agreements. As of December 31, 2025 we were obligated for approximately $30.8 million under these commitments. In 2026 we anticipate cash expenditures of approximately $7.7 million related to these commitments. In addition to the previously mentioned commitments, we had $1.6 million of standby letters of credit outstanding as of December 31, 2025.
We are party to certain litigation, the outcome of which we believe, based on discussions with legal counsel, will not have a material adverse effect on our consolidated financial statements.
Tax contingencies are related to uncertain tax positions taken on income tax returns that may result in additional tax, interest and penalties being paid to taxing authorities. As of December 31, 2025, the Company had no material uncertain tax positions.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 1, Basis of Presentation, of Notes to Consolidated Financial Statements included in Item 15 of this Form 10-K. Certain accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty, and as a result, actual results could differ materially from those estimates. These judgments are based on historical experience, observation of trends in the industry, information provided by customers, forecasts of future economic conditions and information available from other outside sources, as appropriate. Management believes that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements of the Company accurately reflect management's best estimate of the consolidated results of operations, financial position and cash flows of the Company for the years presented. We identify below a number of policies that entail significant judgments or estimates, the assumptions and/or judgments used to determine those estimates and the potential effects on reported financial results if actual results differ materially from these estimates.
Revenue Recognition
The Company recognizes revenue from contracts with its customers utilizing the following steps:
•Identifying the contract with the customer
▪Identifying the performance obligations under the contract
▪Determining the transaction price
▪Allocating transaction price to performance obligations, if necessary
▪Recognizing revenue as performance obligations are satisfied
The Company's invoice, and the terms and conditions of sale contained therein, constitutes the evidence of an arrangement and is a contract with the customer. The performance obligations are generally delivery of the products listed on the invoice and the transaction price for each product is listed. Allocation of transaction price is generally not needed. Performance obligations are satisfied, and revenue is recognized upon the shipment of goods from one of the Company's distribution centers or drop shippers for most contracts or in certain cases revenue will be recognized upon delivery and acceptance by the customer. Customer acceptance occurs when the customer accepts the shipment. The Company's standard terms, provided on its invoices as well as on its websites, are included in communications with the customer and have standard payment terms of 30 days. Certain customers may have extended payment terms that have been pre-approved by the Company's credit department, but generally none extend longer than 90 days.
Provisions for sales returns and allowances are estimated based on historical data and are recorded concurrently with the recognition of revenue. These provisions are reviewed and adjusted periodically by the Company. Revenue is presented net of sales taxes collected from customers and remitted to government authorities. Revenue is reduced for any early payment discounts or volume incentive rebates offered to customers.
The Company's revenue is shown as "Net sales" in the accompanying Consolidated Statements of Operations and is measured as the determined transaction price, net of any variable consideration consisting primarily of rights to return product. The Company has elected to treat shipping and handling revenues as activities to fulfill its performance obligation. Billings for freight and shipping and handling are recorded in net sales and costs of freight and shipping and handling are recorded in cost of sales in the accompanying Consolidated Statements of Operations.
The Company will record a contract liability in cases where customers pay in advance of the Company satisfying its performance obligation which typically occurs within a year of receipt. The Company had approximately $3.0 million of contract liabilities as of December 31, 2025 and $4.1 million as of December 31, 2024, and was recorded as deferred revenue in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets..
The Company offers customers rights to return product within a certain time, usually 30 days. The Company estimates its sales returns liability quarterly based upon its historical returns rates as a percentage of historical sales for the trailing twelve-month period. The total accrued sales returns liability was approximately $1.7 million at December 31, 2025 and $1.9 million at December 31, 2024, and was recorded as a refund liability in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets.
Inventory Valuation
We value our inventories at the lower of cost or net realizable value; cost being determined on the first-in, first-out method or average cost method. Excess and obsolete or unmarketable merchandise are written down based on historical experience, assumptions about future product demand and market conditions. If market conditions are less favorable than projected or if technological developments result in accelerated obsolescence, additional write-downs may be required. While obsolescence and resultant markdowns have been within expectations, there can be no guarantee that we will continue to experience the same level of markdowns we have in the past. The Company estimates the net realizable value of its inventory by considering factors such as inventory levels, historical write-off information, market conditions, estimated direct selling costs and physical condition of the inventory.
Our inventory reserve estimates for the years ended December 31, 2025 and 2024 were not materially different than our actual experience. However, if in the future our estimates are materially different than our actual experience, we could have a material loss adjustment.
Recent Accounting Pronouncements
For information about recent accounting pronouncements, see Note 2, Summary of Significant Accounting Policies, of Notes to Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplemental Data, of this Annual Report on Form 10-K.
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