On February 29, 2024, Global Industrial Co (GIC, Financial) released its 8-K filing, detailing the financial outcomes for the fourth quarter and the full fiscal year of 2023. The company, a leading value-added industrial distributor, reported a significant increase in sales, though it faced margin pressures throughout the year.
Fourth Quarter Financial Highlights
The fourth quarter saw a substantial increase in sales, which rose by 22.9% to $320.1 million compared to the same period last year. This increase was partly attributed to the acquisition of Indoff on May 19, 2023. Excluding Indoff, sales still grew by 5.1%. However, gross margin dipped to 33.8% from 36.0% in the previous year, reflecting a 10 basis point reduction when excluding Indoff.
Operating income from continuing operations rose by 20.9% to $21.4 million, with operating margin slightly decreasing to 6.7%. Net income from continuing operations increased to $15.2 million, or $0.40 per diluted share, marking a 14.3% rise from the previous year's $0.35.
Annual Financial Performance
For the full year, GIC's sales increased by 9.3% to $1.27 billion, with the Indoff acquisition contributing positively to the revenue stream. However, excluding Indoff, there was a slight decline in sales by 0.7%. The annual gross margin contracted to 34.2% from 36.1% in the previous year, with a more pronounced decrease in operating income of 8.3% to $96.5 million.
The net income per diluted share from continuing operations for the year was $1.84, a decrease from the previous year's $2.04. This decline reflects the challenges faced by the company, including margin pressures and the competitive market environment.
Strategic Focus and Dividend Increase
Barry Litwin, CEO of Global Industrial Co, emphasized the company's strategic focus on their ACE strategy and the record revenue achieved through the Indoff acquisition. Despite a soft start to the year, the company saw improved demand and pricing pressures easing in the second half, leading to solid results.
"In 2024, we are committed to making the investments that will drive our future performance. Initiatives across the business are designed to elevate Global Industrial’s position as an indispensable business partner, enhance the buying experience, expand our Global Industrial Exclusive Brands™ products, and highlight the value we bring every day to our customers. These efforts will position us to strengthen our competitive position, drive operational efficiencies, and capture share," said Litwin.
Reflecting confidence in the company's cash flow generation, the Board of Directors has increased the quarterly dividend by 25% to $0.25 per share, marking the 8th consecutive annual increase.
Liquidity and Capital Resources
At the end of 2023, GIC reported a healthy liquidity position with $155.6 million in total working capital, $34.4 million in cash and cash equivalents, and excess availability under its credit facility of approximately $101.2 million. The operating cash flow generated by continuing operations in the quarter was approximately $8.2 million.
The company's balance sheet remains robust, with a strong cash position and a solid foundation for future growth. The announced dividend is payable on March 18, 2024, to shareholders of record as of March 11, 2024.
Global Industrial Co's performance in the fourth quarter and full year 2023 demonstrates its resilience and strategic agility in a challenging market. With a focus on investment and growth, GIC is poised to continue its trajectory of delivering value to its stakeholders.
Explore the complete 8-K earnings release (here) from Global Industrial Co for further details.
