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    GIC
    Earnings call· Jun 2026(Q2 FY26)

    GLOBAL INDUSTRIAL Q2 FY26 earnings call GIC

    Aug 4, 2026 Source

    Executive summary

    Global Industrial Q2 FY26 — Strong Broad-Based Growth Driven by Strategic B2B Repositioning

    Global Industrial delivered strong Q2 FY26 results, driven by its strategic repositioning towards a relationship-led B2B model. The company saw robust average daily sales growth, fueled by expanding GPO relationships and e-procurement capabilities, which are deepening customer integration and share of wallet. Despite gross margin pressures from elevated transportation costs and mix shifts, management remains focused on strategic execution, vertical expertise, and data-driven initiatives to sustain organic growth and market share gains.

    Highlights

    5

    • Second quarter revenue increased 7.7% or 9.3% on an average daily basis, marking the third consecutive quarter of high single-digit average daily sales growth.

    • GPO business reached meaningful scale with annualized sales on pace to hit $100 million this year.

    • Expanded e-procurement customer base with more than 50 new purchasing connections, bringing total digital connections to greater than 1,300 customers.

    • Overall digital business represents more than 60% of transaction volume.

    • Canadian team delivered an exceptional quarter with revenue increasing more than 30% in local currency, marking the fourth consecutive quarter of double-digit growth.

    Concerns

    3

    • Non-GAAP gross margin was 34.7%, down from a record 37.1% in Q2 FY25, impacted by inflation in transportation network (fuel surcharges) and product/channel mix.

    • Fuel costs remain volatile and transportation expense continues to be elevated, impacting gross margin.

    • Increased mix of larger orders, while profitable, provided a slight headwind on the gross margin line.

    Guidance & targets

    2
    CategoryTargetConfidence
    Capital expenditures
    $3 million to $4 million
    medium materiality
    High
    Effective tax rate
    26% and 26.5%
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    U.S.
    U.S. revenue growth in Q2 FY26.
    		—6.3%——
    Canada
    Exceptional quarter for the Canadian team, marking the fourth consecutive quarter of double-digit growth in local currency.
    Revenue in local currency: increased more than 30%Consecutive quarters of double-digit growth: 4Annual revenue (local currency): surpassed $100 million last year
    		—33.7%——

    Operational metrics

    16
    Revenue growth contribution from pricing
    4
    Q2 FY26

    Pricing contributed approximately 4 points of growth with the balance due to volume and mix.

    Revenue growth contribution from volume and mix
    5.3
    Q2 FY26

    Calculated as total average daily sales growth (9.3%) minus pricing contribution (4%).

    Non-GAAP gross profit
    $134.3
    Q2 FY26

    Excludes $26 million associated with IEEPA tariff refunds.

    Non-GAAP gross margin
    34.7down from 37.1% in Q2 FY25
    Q2 FY26

    More in line with historical performance; Q2 FY25 included 150 bps FIFO-related timing benefits. Impacted by transportation inflation and product/channel mix.

    Non-GAAP operating income
    $28.2
    Q2 FY26

    From continuing operations, excludes tariff refund benefit.

    Non-GAAP operating margin
    7.3
    Q2 FY26

    Excludes tariff refund benefit.

    Cash balance
    $86.7
    as of June 30, 2026

    Includes $15.3 million of tariff refunds received in Q2.

    Excess availability under credit facility
    $119
    as of June 30, 2026
    IEEPA tariff refunds received in Q2
    $15.3
    Q2 FY26

    Part of the $26 million total refund, reflected in quarter-end cash balance.

    IEEPA tariff refunds recorded as receivable
    $10.9
    as of June 30, 2026

    Received in early July.

    Shares repurchased
    160,000
    Q2 FY26

    Repurchased in the earlier part of Q3 at an average price just under $30.

    Total price of shares repurchased
    $4.7
    Q2 FY26
    Quarterly dividend per share
    $0.28
    Q2 FY26

    Declared by Board of Directors.

    SG&A as percentage of sales
    30improvement vs Q2 FY25
    Q2 FY26

    Selling, general and administrative spending for the quarter was $106.1 million.

    SG&A leverage excluding variable compensation
    70
    Q2 FY26

    Excluding variable performance-based compensation.

    Average order value increase
    10
    Q2 FY26

    Highlights strategic customer relationships and increasing participation in projects and GPOs.

    Industry KPIs

    4
    MetricValueDetails
    Daily sales rate9.3%
    End market growth mixLow double digits%
    Contract vs spot large customer mixAnnualized sales on pace to hit $100 millionUSD
    Digital vending managed inventory penetration60%

    Deals & partnerships

    1
    Customers via GPO relationshipsAccess to new customers through established contractual arrangements and engagement with sophisticated procurement buyers.Annualized sales on pace to hit $100 million this year

    GPO relationships provide industry specialization for public sector, health care, hospitality, and private sector manufacturing, aligning with customer vertical approach. Creates natural pathway into e-procurement systems.

    Risks & headwinds

    4
    Inflation in transportation networkQ2 FY26, expected to continue into Q3 FY26

    Increased fuel surcharges; impacted Q2 FY26 non-GAAP gross margin of 34.7%.

    Mitigation: Partially passed through to customers, company absorbed other portions; pricing, sales, and merchandising teams focused on mitigating effects.

    Product and channel mix shiftQ2 FY26

    Lower contribution from seasonal cooling category compared to prior year; increased mix of larger orders provided a slight headwind on gross margin.

    Mitigation: Larger orders are profitable and accretive to overall business; management focuses on overall margin profile.

    Macroeconomic environment volatilityOngoing

    External macroeconomic environment, geopolitical conditions, transportation costs, and other sources of volatility.

    Mitigation: Proactively managing these factors while focusing on controllable areas like deepening customer relationships and strengthening vertical expertise.

    Trade policy changesOngoing

    Future changes to trade policy could impact gross margins.

    Mitigation: Continuously monitoring and observing changes to trade policy.

    What to watch in Q3 FY26

    4

    Gross margin trajectory

    next quarter
    Current34.7% (non-GAAP Q2 FY26)
    TargetStability or improvement from current levels

    Why it matters

    Gross margin was impacted by transportation costs and mix shifts; monitoring its stability is key to profitability.

    I think it's probably something that we can project to be in line with where we're at going forward⏳. Last year, we were getting the benefit in Q2 and Q3 really of those pricing actions before the tariffs fully came into impact. We saw that margin rate decline a little bit into that fourth quarter last year then. So again, right now, we don't expect as many of those pricing actions. But again, it's something that we'll have to continue to monitor and observe what's happening out there with changes to trade policy, with changes to fuel.

    Q&A highlights

    6

    Asked for the specific puts and takes contributing to the gross margin decline (ex-tariff refunds) from Q2 FY25 to Q2 FY26, particularly regarding higher transportation costs.

    Management attributed the decline primarily to continued inflation in the transportation network (fuel surcharges), which was partially absorbed, and a shift in mix towards larger orders that, while profitable, had a slightly lower gross margin rate.

    “I think what we're seeing is the number one impact in the period was that continued inflation within our transportation network, both LTL and UPS or parcel-related charges saw those increased fuel surcharges that we had. And while some of that was passed through to customers, other portions of that was absorbed by the company, which impacted that gross margin.”

    asked by Michael Francis · answered by Thomas Clark

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Repositioning and B2B Model Evolution

    Global Industrial is actively repositioning towards a deeper relationship-led B2B model, aiming to become a preferred supplier by integrating into customer purchasing processes. This shift focuses on strengthening the value proposition, improving retention, and increasing share of wallet, with significant runway remaining for further evolution in 2026 and beyond. The company is building out capabilities to support a full customer experience, including sales representatives, product specialists, and integrated digital platforms.

    02

    GPO and E-Procurement Expansion

    The company's GPO business has reached meaningful scale, on pace for $100 million in annualized sales, providing access to new customers and sophisticated procurement buyers. E-procurement capabilities are also expanding, with over 50 new purchasing connections in H1 2026, bringing total digital connections to over 1,300 customers. The overall digital business now represents more than 60% of transaction volume, enhancing ease of use and customer retention.

    03

    Sales Organization Specialization and Vertical Expertise

    Global Industrial is enhancing its sales organization with inside and field-based resources, national account support, and vertical expertise. This specialization allows for more relevant conversations, identification of additional product applications, and delivery of complete solutions. This approach is translating into larger orders, stronger performance from strategic customers, and purchases across multiple core product categories.

    04

    Gross Margin Dynamics and Tariff Refunds

    Non-GAAP gross margin for Q2 FY26 was 34.7%, down from 37.1% in Q2 FY25. This decline was primarily due to continued inflation in transportation costs (fuel surcharges) and product/channel mix, including a lower contribution from seasonal cooling. The company recorded approximately $26 million in IEEPA tariff refunds, with $21 million recognized in cost of sales and $4 million reducing inventory, which was excluded from non-GAAP results.

    05

    Strong Cash Position and Capital Allocation

    The company ended Q2 FY26 with $86.7 million in cash and no debt, reflecting strong cash conversion and the receipt of tariff refunds. Management continues to focus on a capital allocation strategy that includes investing in the business, share repurchases (160,000 shares for $4.7 million in Q2), and consistent dividends. The company is also actively exploring M&A opportunities to accelerate its go-to-market strategy.

    06

    Canadian Business Performance

    The Canadian team delivered an exceptional quarter, with revenue increasing over 30% in local currency, marking the fourth consecutive quarter of double-digit growth. This performance highlights the expanding scale and significant long-term potential of the Canadian business, which surpassed $100 million in annual revenue in local currency last year and continues to demonstrate its growth trajectory.

    AI-generated summary of the company’s earnings call. Not investment advice.