gic-20210630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 1-13792

Global Industrial Company

(Exact name of registrant as specified in its charter)


Delaware						11-3262067
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11 Harbor Park Drive

Port Washington, New York 11050

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (516) 608-7000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($.01 par value)	GIC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐						Accelerated filer ☒
Non-accelerated filer ☐						Smaller reporting company ☐
						Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock as of July 30, 2021 was 37,736,866.

TABLE OF CONTENTS


Available Information

Part I	Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31

Part II	Other Information
Item 1.	Legal Proceedings	32
Item 6.	Exhibits	33

	Signatures	34

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Available Information

We maintain an internet web site at investors.globalindustrial.com. We file reports with the Securities and Exchange Commission (“SEC”) and make available free of charge on or through this website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including all amendments to those reports. These are available as soon as is reasonably practicable after they are filed with the SEC. All reports mentioned above are also available from the SEC’s website (www.sec.gov). The information on our website is not part of this or any other report we file with, or furnish to, the SEC.

Our Board of Directors has adopted the following corporate governance documents with respect to the Company (the “Corporate Governance Documents”):

•Corporate Ethics Policy for officers, directors and employees

•Charter for the Audit Committee of the Board of Directors

•Charter for the Compensation Committee of the Board of Directors

•Charter for the Nominating/Corporate Governance Committee of the Board of Directors

•Corporate Governance Guidelines and Principles

In accordance with the corporate governance rules of the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company web site, investors.globalindustrial.com.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Global Industrial Company

Condensed Consolidated Balance Sheets

(In millions)


	June 30, 2021		December 31, 2020
	(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents	$	41.6	$	22.4
Accounts receivable, net	111.2		102.3
Inventories	131.4		132.3
Prepaid expenses and other current assets	8.1		6.8

Total current assets	292.3		263.8

Property, plant and equipment, net	16.8		16.6
Operating lease right-of-use assets	74.1		77.3
Deferred income taxes	10.3		7.6
Goodwill and intangibles	6.9		7.0
Other assets	2.4		2.6

Total assets	$	402.8	$	374.9

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	130.1	$	125.4

Accrued expenses and other current liabilities	50.1		50.7
Operating lease liabilities	10.1		10.3
Total current liabilities	190.3		186.4

Other liabilities	4.3		4.5
Operating lease liabilities	73.7		77.2
Total liabilities	268.3		268.1

Commitments and contingencies

Shareholders’ equity:
Preferred stock	0.0		0.0
Common stock	0.4		0.4
Additional paid-in capital	193.8		193.5
Treasury stock	(21.9)		(24.0)
Retained (deficit) earnings	(41.4)		(66.5)
Accumulated other comprehensive income	3.6		3.4
Total shareholders’ equity	134.5		106.8
Total liabilities and shareholders’ equity	$	402.8	$	374.9

See Notes to Condensed Consolidated Financial Statements.

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Global Industrial Company

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net sales	$	272.6	$	242.1	$	523.7	$	469.4
Cost of sales	174.6		157.3		348.4		307.9
Gross profit	98.0		84.8		175.3		161.5
Selling, distribution & administrative expenses	73.3		64.7		144.0		129.9

Operating income from continuing operations	24.7		20.1		31.3		31.6
Interest and other (income) expense, net	0.1		0.0		0.2		0.2

Income from continuing operations before income taxes	24.6		20.1		31.1		31.4
Provision for income taxes	3.5		4.8		4.5		7.8
Net income from continuing operations	21.1		15.3		26.6		23.6
Net income from discontinued operations	0.9		1.1		10.6		1.0
Net income	$	22.0	$	16.4	$	37.2	$	24.6

Net income per common share from continuing operations:
Basic	$	0.56	$	0.41	$	0.70	$	0.62
Diluted	$	0.55	$	0.40	$	0.70	$	0.62
Net income per common share from discontinued operations:
Basic	$	0.02	$	0.03	$	0.28	$	0.03
Diluted	$	0.02	$	0.03	$	0.28	$	0.03
Net income per common share:
Basic	$	0.58	$	0.44	$	0.98	$	0.65
Diluted	$	0.57	$	0.43	$	0.98	$	0.65

Weighted average common and common equivalent shares:
Basic	37.7		37.5		37.7		37.6
Diluted	37.9		37.6		37.9		37.8

Dividends declared	$	0.16	$	0.14	$	0.32	$	1.28

See Notes to Condensed Consolidated Financial Statements.

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Global Industrial Company

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	22.0	$	16.4	$	37.2	$	24.6
Other comprehensive income:
Foreign currency translation	0.1		0.0		0.2		(0.2)
Total comprehensive income	$	22.1	$	16.4	$	37.4	$	24.4

See Notes to Condensed Consolidated Financial Statements.

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Global Industrial Company

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)


	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income from continuing operations	$	26.6	$	23.6
Adjustments to reconcile net income from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization	1.9		2.1

Provision for credit losses	1.2		0.9
Stock-based compensation	1.4		1.8
Benefit from deferred taxes	(2.7)		(0.1)

Changes in operating assets and liabilities:
Accounts receivable	(10.0)		(23.2)
Inventories	1.1		(20.1)
Prepaid expenses and other assets	(1.4)		(2.4)
Income taxes payable	(3.3)		8.1
Accounts payable	6.6		14.9
Accrued expenses, other current liabilities and other liabilities	(0.9)		7.8
Net cash provided by operating activities from continuing operations	20.5		13.4
Net cash provided by operating activities from discontinued operations	11.8		1.0
Net cash provided by operating activities	32.3		14.4

Cash flows from investing activities:
Purchases of property, plant and equipment	(2.1)		(0.4)



Net cash used in investing activities	(2.1)		(0.4)

Cash flows from financing activities:
Proceeds from short-term borrowings	19.6		0.0
Repayment of short-term borrowings	(19.6)		0.0
Dividends paid	(12.5)		(48.6)
Proceeds from issuance of common stock	2.5		0.3
Payment of payroll taxes on stock-based compensation through shares withheld	(2.0)		(0.3)
Proceeds from the issuance of common stock from employee stock purchase plan	0.5		0.4

Purchase of treasury shares	0.0		(4.8)
Net cash used in financing activities	(11.5)		(53.0)

Effects of exchange rates on cash	0.0		(0.1)

Net increase (decrease) in cash	18.7		(39.1)
Cash, cash equivalents and restricted cash– beginning of period	24.0		97.2
Cash, cash equivalents and restricted cash – end of period	$	42.7	$	58.1

See Notes to Condensed Consolidated Financial Statements.

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Supplemental disclosures:
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	41.6	$	58.1
Restricted cash (1)	1.1		0.0
Cash, cash equivalents and restricted cash	$	42.7	$	58.1

(1)The Company has restricted cash collateralizing letters of credit outstanding of $1.1 million, which are recorded in Other assets in the accompanying Condensed Consolidated Balance Sheets.

Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2.6	$	4.1

See Notes to Condensed Consolidated Financial Statements.

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Global Industrial Company

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

(In millions)


	Common Stock
	Number of Shares Outstanding	Amount		Additional Paid-in Capital		Treasury Stock		Retained (Deficit) Earnings		Accumulated Other Comprehensive Income (Loss)		Total Equity
Balances, January 1, 2021	37,552	$	0.4	$	193.5	$	(24.0)	$	(66.5)	$	3.4	$	106.8
Stock-based compensation expense				0.4								0.4
Issuance of restricted stock	65			(1.1)		1.1						0.0
Stock withheld for employee taxes	(47)					(1.9)						(1.9)
Proceeds from issuance of common stock	119			(0.2)		2.5						2.3
Issuance of shares under employee stock purchase plan	29			0.5								0.5
Dividends								(6.0)				(6.0)


Change in cumulative translation adjustment										0.1		0.1
Net income								15.2				15.2
Balances, March 31, 2021	37,718	$	0.4	$	193.1	$	(22.3)	$	(57.3)	$	3.5	$	117.4
Stock-based compensation expense				1.0								$	1.0
Issuance of restricted stock	8			(0.1)		0.1						0.0
Stock withheld for employee taxes	(4)					(0.1)						(0.1)
Proceeds from issuance of common stock	15			(0.2)		0.4						0.2

Dividends								(6.1)				(6.1)

Change in cumulative translation adjustment										0.1		0.1
Net income								$	22.0			22.0
Balances, June 30, 2021	37,737	$	0.4	$	193.8	$	(21.9)	$	(41.4)	$	3.6	$	134.5

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	Common Stock
	Number of Shares Outstanding	Amount		Additional Paid-in Capital		Treasury Stock		Retained (Deficit) Earnings		Accumulated Other Comprehensive Income (Loss)		Total Equity
Balances, January 1, 2020	37,679	$	0.4	$	189.7	$	(20.4)	$	2.8	$	3.0	$	175.5
Stock-based compensation expense				1.0								1.0
Issuance of restricted stock	36			(0.6)		0.6						0.0
Stock withheld for employee taxes	(15)					(0.3)						(0.3)
Proceeds from issuance of common stock	30			(0.2)		0.5						0.3
Issuance of shares under employee stock purchase plan	23			0.4								0.4
Dividends								(43.3)				(43.3)
Purchase of treasury shares	(233)					(3.9)						(3.9)

Change in cumulative translation adjustment										(0.2)		(0.2)
Net income								8.2				8.2

Balances, March 31, 2020	37,520	$	0.4	$	190.3	$	(23.5)	$	(32.3)	$	2.8	$	137.7
Stock-based compensation expense				0.8								0.8
Issuance of restricted stock	5			(0.1)		0.1						0.0



Dividends								(5.3)				(5.3)
Purchase of treasury shares	(50)					(0.9)						(0.9)


Net income								16.4				16.4
Balances, June 30, 2020	37,475	$	0.4	$	191.0	$	(24.3)	$	(21.2)	$	2.8	$	148.7

See Notes to Condensed Consolidated Financial Statements.

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Global Industrial Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

1.Basis of Presentation

The accompanying condensed consolidated financial statements of Global Industrial Company, formerly known as Systemax Inc., with its subsidiaries, (the "Company") are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America are not required in these interim financial statements and have been condensed or omitted. All significant intercompany accounts and transactions have been eliminated in consolidation.

Global Industrial Company, through its operating subsidiaries, is a value-added industrial distributor. Global Industrial Company operates and is internally managed in one reportable business segment. The Company sells a wide array of industrial and maintenance, repair and operations ("MRO") products, markets the Company has served since 1949. Because of the large number of products and product categories the Company offers, providing information on the amount of revenue derived from transactions with external customers for each product or groupings of product is impractical.

The Company's discontinued operations include its former North American Technology Group business, which was sold in December 2015 and has been winding down its operations since then. For the three and six month periods ended June 30, 2021, net income from discontinued operations totaled $0.9 million and $10.6 million, respectively (see Note 4, Discontinued Operations and Special (Gains) Charges). For the three and six month periods ended June 30, 2020, net income from discontinued operations totaled $1.1 million and $1.0 million, respectively.

In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the financial position of the Company as of June 30, 2021 and the results of operations for the three and six month periods ended June 30, 2021 and 2020, statements of comprehensive income (loss) for the three and six month periods ended June 30, 2021 and 2020, cash flows for the six month periods ended June 30, 2021 and 2020 and changes in shareholders’ equity for the three and six month periods ended June 30, 2021 and 2020. The December 31, 2020 Condensed Consolidated Balance Sheet has been derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2020 and for the year then ended included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The results for the six month period ended June 30, 2021 are not necessarily indicative of the results for the entire year.

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 herein, fiscal years and quarters are referred to as if they ended on the traditional calendar month. The actual fiscal second quarter ended on July 3, 2021 and June 27, 2020. The second quarters of both 2021 and 2020 included 13 weeks and the first six months of both 2021 and 2020 included 26 weeks.

Related Party Transactions

For the six months ended June 30, 2021, the Company recorded approximately $3.0 million in professional fee expense from a law firm which employs an immediate family member of one of the Company's Vice Chairmen. These fees were contingent fees paid upon receipt of $15.0 million in restitution received in the Company's discontinued operations. Amounts outstanding at June 30, 2021 were de minimis and are recorded in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

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Recent Accounting Pronouncements

Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities issue numerous pronouncements, most of which are not applicable to the Company’s current or reasonably foreseeable operating structure.

On January 1, 2021 the Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates. The adoption of this ASU did not have a material impact on the Company's financial position or results of operations.

On January 1, 2021, the Company adopted ASU 2020-10, Codification Improvements. This ASU amends a variety of topics in the Codification to improve consistency and clarify the guidance. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The adoption of this ASU did not have a material impact on the Company's financial position or results of operations.

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2.Revenue

Disaggregation of Revenues

The Company believes its presentation of revenue by geography most reasonably depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic and industry factors, including fluctuations in exchange rates between the U.S. and Canada. The following table presents the Company's revenue, from continuing operations, by geography for the three and six months ended June 30, 2021 and 2020, respectively (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net sales:
United States	$	253.6	$	226.0	$	487.1	$	441.3
Canada	19.0		16.1		36.6		28.1
Consolidated	$	272.6	$	242.1	$	523.7	$	469.4

The Company will record a contract liability in cases where customers pay in advance of the Company satisfying its performance obligation. The Company did not have any material unsatisfied performance obligations or liabilities as of June 30, 2021 and December 31, 2020.

SEC Form 10-Q filed by Global Industrial Company