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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 September 30, 2022
or

☐ | 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 October 28, 2022 was 37,957,390.

TABLE OF CONTENTS

Available Information |
Part I | Financial Information |
Item 1. | Financial Statements | 5
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32
Item 4. | Controls and Procedures | 33
Part II | Other Information |
Item 1. | Legal Proceedings | 34
Item 1A. | Risk Factors | 34
Item 6. | Exhibits | 35
| Signatures | 36

3

Table of Contents
Available Information
We maintain an internet website at https://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 on the SEC’s website (www.sec.gov). Unless otherwise specified, 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, among others, 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
•Conflict Minerals Disclosure
In accordance with the corporate governance rules of the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company website, https://investors.globalindustrial.com.
4

Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Global Industrial Company
Condensed Consolidated Balance Sheets
(In millions)

| September 30, 2022 |  | December 31, 2021
| (Unaudited) |  |
ASSETS: |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 20.0 |  |  | $ | 15.4 |
Accounts receivable, net | 127.3 |  |  | 106.8 |
Inventories | 189.4 |  |  | 172.8 |
Prepaid expenses and other current assets | 9.6 |  |  | 6.4 |
Total current assets | 346.3 |  |  | 301.4 |
Property, plant and equipment, net | 18.5 |  |  | 16.5 |
Operating lease right-of-use assets | 90.6 |  |  | 68.8 |
Deferred income taxes | 10.6 |  |  | 10.3 |
Goodwill, intangibles and other assets | 8.4 |  |  | 8.0 |
Total assets | $ | 474.4 |  |  | $ | 405.0 |
LIABILITIES AND SHAREHOLDERS’ EQUITY: |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 113.2 |  |  | $ | 114.4 |
Accrued expenses and other current liabilities | 45.1 |  |  | 50.5 |
Short-term debt | 10.0 |  |  | 4.5 |
Operating lease liabilities | 11.8 |  |  | 10.5 |
Total current liabilities | 180.1 |  |  | 179.9 |
Operating lease liabilities | 89.7 |  |  | 68.5 |
Other liabilities | 2.6 |  |  | 3.0 |
Total liabilities | 272.4 |  |  | 251.4 |
Commitments and contingencies |  |  |
Shareholders’ equity: |  |  |
Preferred stock | 0.0 |  |  | 0.0 |
Common stock | 0.4 |  |  | 0.4 |
Additional paid-in capital | 200.1 |  |  | 195.8 |
Treasury stock | (19.6) |  |  | (20.4) |
Retained earnings (deficit) | 18.9 |  |  | (25.5) |
Accumulated other comprehensive income | 2.2 |  |  | 3.3 |
Total shareholders’ equity | 202.0 |  | 153.6 |
Total liabilities and shareholders’ equity | $ | 474.4 |  |  | $ | 405.0 |

See Notes to Condensed Consolidated Financial Statements.
5

Table of Contents
Global Industrial Company
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except per share amounts)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Net sales | $ | 298.5 |  |  | $ | 277.4 |  |  | $ | 905.6 |  |  | $ | 801.1 |
Cost of sales | 191.9 |  |  | 175.4 |  |  | 578.2 |  |  | 523.8 |
Gross profit | 106.6 |  |  | 102.0 |  |  | 327.4 |  |  | 277.3 |
Selling, distribution & administrative expenses | 79.1 |  |  | 71.4 |  |  | 239.9 |  |  | 215.4 |
Operating income from continuing operations | 27.5 |  |  | 30.6 |  |  | 87.5 |  |  | 61.9 |
Interest and other expense, net | 0.6 |  |  | 0.2 |  |  | 1.3 |  |  | 0.4 |
Income from continuing operations before income taxes | 26.9 |  |  | 30.4 |  |  | 86.2 |  |  | 61.5 |
Provision for income taxes | 6.6 |  |  | 7.2 |  |  | 21.5 |  |  | 11.7 |
Net income from continuing operations | 20.3 |  |  | 23.2 |  |  | 64.7 |  |  | 49.8 |
Net (loss) income from discontinued operations, net of tax | (0.1) |  |  | (0.1) |  |  | 0.3 |  |  | 10.5 |
Net income | $ | 20.2 |  |  | $ | 23.1 |  |  | $ | 65.0 |  |  | $ | 60.3 |
Net income per common share from continuing operations: |  |  |  |  |  |  |
Basic | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.70 |  |  | $ | 1.31 |
Diluted | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.69 |  |  | $ | 1.31 |
Net (loss) income per common share from discontinued operations: |  |  |  |  |  |  |
Basic | $ | 0.00 |  |  | $ | 0.00 |  |  | $ | 0.01 |  |  | $ | 0.28 |
Diluted | $ | 0.00 |  |  | $ | 0.00 |  |  | $ | 0.01 |  |  | $ | 0.28 |
Net income per common share: |  |  |  |  |  |  |
Basic | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.71 |  |  | $ | 1.59 |
Diluted | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.70 |  |  | $ | 1.59 |
Weighted average common and common equivalent shares: |  |  |  |  |  |  |
Basic | 38.0 |  |  | 37.8 |  |  | 38.0 |  |  | 37.7 |
Diluted | 38.1 |  |  | 38.0 |  |  | 38.1 |  |  | 37.9 |
Dividends declared | $ | 0.18 |  |  | $ | 0.16 |  |  | $ | 0.54 |  |  | $ | 0.48 |

See Notes to Condensed Consolidated Financial Statements.
6

Table of Contents
Global Industrial Company
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In millions)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Net income | $ | 20.2 |  |  | $ | 23.1 |  |  | $ | 65.0 |  |  | $ | 60.3 |
Other comprehensive income: |  |  |  |  |  |  |
Foreign currency translation | (0.8) |  |  | (0.2) |  |  | (1.1) |  |  | 0.0 |
Total comprehensive income | $ | 19.4 |  |  | $ | 22.9 |  |  | $ | 63.9 |  |  | $ | 60.3 |

See Notes to Condensed Consolidated Financial Statements.
7

Table of Contents
Global Industrial Company
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)

| Nine Months Ended September 30,
| 2022 |  | 2021
Cash flows from operating activities: |  |  |
Net income from continuing operations | $ | 64.7 |  |  | $ | 49.8 |
Adjustments to reconcile net income from continuing operations to net cash provided by (used in) operating activities: |  |  |
Depreciation and amortization | 2.8 |  |  | 2.8 |
Provision for credit losses | 1.8 |  |  | 1.8 |
Stock-based compensation | 3.4 |  |  | 2.0 |
Benefit from deferred taxes | (0.6) |  |  | (2.4) |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | (23.1) |  |  | (19.1) |
Inventories | (17.1) |  |  | (9.1) |
Prepaid expenses and other assets | (2.1) |  |  | (0.2) |
Income taxes payable | (6.5) |  |  | 2.3 |
Accounts payable | (0.6) |  |  | 11.3 |
Accrued expenses, other current liabilities and other liabilities | 0.8 |  |  | 0.1 |
Net cash provided by operating activities from continuing operations | 23.5 |  |  | 39.3 |
Net cash (used in) provided by operating activities from discontinued operations | (0.1) |  |  | 11.6 |
Net cash provided by operating activities | 23.4 |  |  | 50.9 |
Cash flows from investing activities: |  |  |
Purchases of property, plant and equipment | (4.9) |  |  | (3.4) |
Net cash used in investing activities | (4.9) |  |  | (3.4) |
Cash flows from financing activities: |  |  |
Proceeds from short-term borrowings | 114.5 |  |  | 19.6 |
Repayment of short-term borrowings | (109.0) |  |  | (19.6) |
Dividends paid | (20.8) |  |  | (18.6) |
Proceeds from issuance of common stock | 0.7 |  |  | 3.8 |
Payment of payroll taxes on stock-based compensation through shares withheld | (0.4) |  |  | (2.5) |
Proceeds from the issuance of common stock from employee stock purchase plan | 1.4 |  |  | 1.1 |
Net cash used in financing activities | (13.6) |  |  | (16.2) |
Effects of exchange rates on cash | (0.3) |  |  | (0.1) |
Net increase in cash | 4.6 |  |  | 31.2 |
Cash, cash equivalents and restricted cash – beginning of period | 15.4 |  |  | 24.0 |
Cash, cash equivalents and restricted cash – end of period | $ | 20.0 |  |  | $ | 55.2 |

8

Table of Contents

Supplemental disclosures: |  |  |
Reconciliation of cash, cash equivalents and restricted cash: |  |  |
Cash and cash equivalents | $ | 20.0 |  |  | $ | 54.1 |
Restricted cash (1) | 0.0 |  |  | 1.1 |
Cash, cash equivalents and restricted cash | $ | 20.0 |  |  | $ | 55.2 |
(1)The Company had restricted cash collateralizing letters of credit outstanding of $0 and $1.1 million, at September 30, 2022 and 2021, respectively, which is recorded in Goodwill, intangibles and 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 | $ | 32.9 |  |  | $ | 2.6 |

See Notes to Condensed Consolidated Financial Statements.
9

Table of Contents
Global Industrial Company
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)
(In millions, except share data in thousands)

| 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, 2022 | 37,854 |  |  | $ | 0.4 |  |  | $ | 195.8 |  |  | $ | (20.4) |  |  | $ | (25.5) |  |  | $ | 3.3 |  |  | $ | 153.6 |
Stock-based compensation expense |  |  |  |  | 1.0 |  |  |  |  |  |  |  |  | 1.0 |
Issuance of restricted stock | 22 |  |  |  |  | (0.4) |  |  | 0.4 |  |  |  |  |  |  | 0.0 |
Stock withheld for employee taxes | (11) |  |  |  |  |  |  | (0.4) |  |  |  |  |  |  | (0.4) |
Proceeds from issuance of common stock | 29 |  |  |  |  | 0.1 |  |  | 0.6 |  |  |  |  |  |  | 0.7 |
Issuance of shares under employee stock purchase plan | 23 |  |  |  |  | 0.6 |  |  |  |  |  |  |  |  | 0.6 |
Dividends |  |  |  |  |  |  |  |  | (6.8) |  |  |  |  | (6.8) |
Change in cumulative translation adjustment |  |  |  |  |  |  |  |  |  |  | 0.1 |  |  | 0.1 |
Net income |  |  |  |  |  |  |  |  | 22.0 |  |  |  |  | 22.0 |
Balances, March 31, 2022 | 37,917 |  |  | $ | 0.4 |  |  | $ | 197.1 |  |  | $ | (19.8) |  |  | $ | (10.3) |  |  | $ | 3.4 |  |  | $ | 170.8 |
Stock-based compensation expense |  |  |  |  | 1.4 |  |  |  |  |  |  |  |  | $ | 1.4 |
Issuance of restricted stock | 10 |  |  |  |  | (0.2) |  |  | 0.2 |  |  |  |  |  |  | 0.0 |
Proceeds from issuance of common stock | 1 |  |  |  | 0.0 |  | 0.0 |  |  |  |  |  | 0.0 |
Dividends |  |  |  |  |  |  |  |  | (6.9) |  |  |  |  | (6.9) |
Change in cumulative translation adjustment |  |  |  |  |  |  |  |  |  |  | (0.4) |  |  | (0.4) |
Net income |  |  |  |  |  |  |  |  | 22.8 |  |  |  |  | 22.8 |
Balances, June 30, 2022 | 37,928 |  |  | $ | 0.4 |  |  | $ | 198.3 |  |  | $ | (19.6) |  |  | $ | 5.6 |  |  | $ | 3.0 |  |  | $ | 187.7 |
Stock-based compensation expense |  |  |  |  | 1.0 |  |  |  |  |  |  |  |  | 1.0 |
Issuance of shares under employee stock purchase plan | 30 |  |  |  |  | 0.8 |  |  |  |  |  |  |  |  | 0.8 |
Dividends |  |  |  |  |  |  |  |  | (6.9) |  |  |  |  | (6.9) |
Change in cumulative translation adjustment |  |  |  |  |  |  |  |  |  |  | (0.8) |  |  | (0.8) |
Net income |  |  |  |  |  |  |  |  | 20.2 |  |  |  |  | 20.2 |
Balances, September 30, 2022 | 37,958 |  |  | $ | 0.4 |  |  | $ | 200.1 |  |  | $ | (19.6) |  |  | $ | 18.9 |  |  | $ | 2.2 |  |  | $ | 202.0 |

10

Table of Contents

| 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 |
Stock-based compensation expense |  |  |  |  | 0.6 |  |  |  |  |  |  |  |  | 0.6 |
Issuance of restricted stock | 3 |  |  |  |  |  |  |  |  |  |  |  | 0.0 |
Stock withheld for employee taxes | (13) |  |  |  |  |  |  | (0.5) |  |  |  |  |  |  | (0.5) |
Proceeds from issuance of common stock | 61 |  |  |  |  |  |  | 1.3 |  |  |  |  |  |  | 1.3 |
Issuance of shares under employee stock purchase plan | 26 |  |  |  |  | 0.6 |  |  |  |  |  |  |  |  | 0.6 |
Dividends |  |  |  |  |  |  |  |  | (6.1) |  |  |  |  | (6.1) |
Change in cumulative translation adjustment |  |  |  |  |  |  |  |  |  |  | (0.2) |  |  | (0.2) |
Net income |  |  |  |  |  |  |  |  | 23.1 |  |  |  |  | 23.1 |
Balances, September 30, 2021 | 37,814 |  |  | $ | 0.4 |  |  | $ | 195.0 |  |  | $ | (21.1) |  |  | $ | (24.4) |  |  | $ | 3.4 |  |  | $ | 153.3 |

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, collectively 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 of more than a million industrial and maintenance, repair and operation ("MRO") products in North America going to market through a system of branded e-commerce websites and relationship marketers. Global Industrial Company operates and is internally managed in one reportable business segment. The Company sells a wide array of industrial and 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 consist of 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 nine month periods ended September 30, 2022, discontinued operations incurred a net loss of $0.1 million and net income of $0.3 million, respectively (see Note 4, Discontinued Operations). For the three and nine month periods ended September 30, 2021, discontinued operations incurred a net loss of $0.1 million and net income of $10.5 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 September 30, 2022 and the results of operations for the three and nine month periods ended September 30, 2022 and 2021, statements of comprehensive income for the three and nine month periods ended September 30, 2022 and 2021, cash flows for the nine month periods ended September 30, 2022 and 2021 and changes in shareholders’ equity for the three and nine month periods ended September 30, 2022 and 2021. The December 31, 2021 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, 2021.
These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2021 and for the year then ended included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The results for the nine month period ended September 30, 2022 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 third quarters ended on October 1, 2022 and October 2, 2021, respectively. The third quarters of both 2022 and 2021 included 13 weeks and the first nine months of both 2022 and 2021 included 39 weeks.
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.
There were no accounting pronouncements issued in the quarter or with future effective dates that are either applicable or are expected to have a material impact on the Company's Condensed Consolidated Financial Statements.
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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 nine months ended September 30, 2022 and 2021, respectively (in millions):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Net sales: |  |  |  |  |  |  |
United States | $ | 282.0 |  |  | $ | 260.9 |  |  | $ | 849.0 |  |  | $ | 748.0 |
Canada | 16.5 |  |  | 16.5 |  |  | 56.6 |  |  | 53.1 |
Consolidated | $ | 298.5 |  |  | $ | 277.4 |  |  | $ | 905.6 |  |  | $ | 801.1 |

The Company will record a contract liability in cases where customers pay in advance of the Company's satisfaction of its performance obligation. The Company did not have any material unsatisfied performance obligations or liabilities as of September 30, 2022 and December 31, 2021.
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3.Credit Losses
The Company’s trade accounts receivable is one portfolio comprising of commercial businesses as well as public sector organizations operating in the U.S. and, to a lesser extent, Canada. The Company develops its allowances for credit losses, which represent an estimate of expected losses over the remaining contractual life of its receivables, considering customer financial condition, historical loss experience with its customers, current market economic conditions and forecasts of future economic conditions when appropriate. When the Company becomes aware of a customer's inability to meet its financial obligation, a specific reserve is recorded to reduce the receivable to the expected amount to be collected. For the balance of its trade receivables, the Company uses a loss rate method to estimate its credit loss reserve. Historical loss experience rates are calculated using receivable write-offs over a trailing twelve-month period and comparing that to the average receivable balances over the same period. That rate is applied to the current accounts receivable portfolio, excluding accounts that have been specifically reserved. Any write-offs incurred are recorded against the established reserves.
The Company grants credit to commercial business customers using an electronic application process that evaluates the customer's detailed credit report, reference responses, availability under credit facilities, existing liens, tenure of management and business history, among other factors. Credit terms are typically net 30 days payment required with larger businesses eligible for up to net 90 day terms, if qualified.
The following is a rollforward of the allowances for credit losses related to trade accounts receivable for September 30, 2022 (in millions):

|  | September 30, 2022
Balance at beginning of period |  | $ | 2.5 |
Current period provision |  | 1.8 |
Write-offs - trade accounts receivable |  | (1.4) |
Balance at end of period |  | $ | 2.9 |

The following is a rollforward of the allowances for credit losses related to trade receivables for the year ended December 31, 2021 (in millions):

|  | December 31, 2021
Balance at beginning of period |  | $ | 1.7 |
Current period provision |  | 2.8 |
Write-offs - trade accounts receivable |  | (2.0) |
Balance at end of period |  | $ | 2.5 |

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4.Discontinued Operations
In the third quarter ended September 30, 2022, the Company's discontinued operations recorded net loss of approximately $0.1 million. For the nine months ended September 30, 2022, the Company's discontinued operations recorded net income of approximately $0.3 million primarily related to the resolution of certain liabilities. The Company expects that total additional exit charges related to discontinued operations after this quarter may aggregate up to $0.5 million.
In the third quarter ended September 30, 2021, the Company's discontinued operations recorded a net loss of approximately $0.1 million primarily related to professional fees, facility costs and tax benefits. For the nine months ended September 30, 2021, the Company's discontinued operations recorded net income of $10.5 million, primarily related to approximately $15.0 million in restitution receipts, approximately $2.4 million in benefit related to resolution of payable accounts offset by approximately $3.6 million of professional fees and facility costs. Discontinued operations also recorded approximately $3.3 million for the provision for income taxes.
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5. Leases
The Company has operating and finance leases for office and warehouse facilities, headquarters, call centers, machinery and certain computer and communications equipment which provide the right to use the underlying assets in exchange for agreed upon lease payments, determined by the payment schedule contained in each lease. The Company’s lease portfolio consists primarily of operating leases which expire at various dates through 2032. In the second quarter of 2022, the Company recorded a Right of Use ("ROU") asset and related lease liability of $32.9 million related to a new distribution facility in Canada consisting of approximately 334,000 square feet. This lease has a 10 year term unless terminated earlier as provided in the lease. The Company has sublet approximately 127,000 square feet of this facility. The sublease is for a five year term, unless terminated earlier as provided in the agreement.
The Company's operating lease costs, included in continuing operations, was $4.3 million and $3.6 million for the three months ended September 30, 2022 and 2021, respectively, and $11.2 million and $10.5 million for the nine months ended September 30, 2022 and 2021, respectively. The Company recorded sublease income related to the Canadian facility sublease of approximately $0.4 million for the quarter and nine months ended September 30, 2022.
Information relating to operating leases for continuing and discontinued operations updated for the Canadian lease as of September 30, 2022 and December 31, 2021 :

|  | Nine Months Ended September 30, |  | Year Ended December 31, |
|  | 2022 |  | 2021 |
Weighted Average Remaining Lease Term |  |  |  |  |
Operating leases |  | 8.3 years |  | 8.1 years |
Weighted Average Discount Rate |  |  |  |  |
Operating leases |  | 5.3 | % |  | 5.2 | % |
ROU assets obtained in exchange for operating lease obligations (in millions) |  | $ | 32.9 |  |  | $ | 2.6 |  |

Maturities of lease liabilities were as follows (in millions):

Year Ending December 31 |  |  | Operating Leases |  |
2022 (adjusted for nine months of payments) |  |  | $ | 4.1 |  |  |
2023 |  |  | 17.3 |  |  |
2024 |  |  | 16.3 |  |  |
2025 |  |  | 15.3 |  |  |
2026 |  |  | 13.5 |  |  |
2027 |  |  | 11.3 |  |  |
Thereafter |  |  | 51.4 |  |  |
Total lease payments |  |  | 129.2 |  |  |
Less: interest |  |  | (27.7) |  |  |
Total present value of lease liabilities |  |  | $ | 101.5 |  |  |

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6.Net Income (Loss) per Common Share
Net income (loss) per common share - basic was calculated based upon the weighted average number of common shares outstanding during the respective periods presented using the two-class method of computing earnings per share. The two-class method was used as the Company has outstanding restricted stock with rights to dividend participation for unvested shares. Undistributed net income is allocated between common shares outstanding and participating securities to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. Undistributed net losses are not allocated to our participating securities as these participating securities do not have a contractual obligation to share in losses. Net income (loss) per common share - diluted was calculated based upon the weighted average number of common shares outstanding and included the equivalent shares for dilutive options outstanding during the respective periods, including unvested options. The dilutive effect of outstanding options and restricted stock issued by the Company is reflected in net income per share - diluted using the treasury stock method. Under the treasury stock method, options will only have a dilutive effect when the average market price of common stock during the period exceeds the exercise price of the options.
The following table presents the computation of basic and diluted net income (loss) per share under the two-class method for the three and nine months ended September 30, 2022 and 2021 (in millions, except for per share amounts):
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|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2022 |  | 2021 |  | 2022 |  | 2021
Net income from continuing operations |  | $ | 20.3 |  |  | $ | 23.2 |  |  | 64.7 |  |  | 49.8 |
Less: Distributed net income available to participating securities |  | 0.0 |  |  | 0.0 |  |  | (0.1) |  |  | (0.1) |
Less: Undistributed net income available to participating securities |  | (0.1) |  |  | (0.1) |  |  | (0.2) |  |  | (0.1) |
Numerator for basic net income per share: |  |  |  |  |  |  |  |
Undistributed and distributed net income available to common shareholders |  | $ | 20.2 |  |  | $ | 23.1 |  |  | $ | 64.4 |  |  | $ | 49.6 |
Add: Undistributed net income allocated to participating securities |  | 0.1 |  |  | 0.1 |  |  | 0.2 |  |  | 0.1 |
Less: Undistributed net income reallocated to participating securities |  | (0.1) |  |  | (0.1) |  |  | (0.2) |  |  | (0.1) |
Numerator for diluted net income per share: |  |  |  |  |  |  |  |
Undistributed and distributed net income available to common shareholders |  | $ | 20.2 |  |  | $ | 23.1 |  |  | 64.4 |  |  | 49.6 |
Denominator: |  |  |  |  |  |  |  |
Weighted average shares outstanding for basic net income per share |  | 38.0 |  |  | 37.8 |  |  | 38.0 |  | 37.7
Effect of dilutive securities |  | 0.1 |  |  | 0.2 |  |  | 0.1 |  | 0.2
Weighted average shares outstanding for diluted net income per share |  | 38.1 |  |  | 38.0 |  |  | 38.1 |  | 37.9 |
Net income per share from continuing operations: |  |  |  |  |  |  |  |
Basic |  | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.70 |  |  | $ | 1.31 |
Diluted |  | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.69 |  |  | $ | 1.31 |
Net (loss) income from discontinued operations |  | $ | (0.1) |  |  | $ | (0.1) |  |  | $ | 0.3 |  |  | $ | 10.5 |
Less: Undistributed net income available to participating securities |  | 0.0 |  |  | 0.0 |  |  | 0.0 |  |  | (0.1) |
Numerator for basic net (loss) income per share: |  |  |  |  |  |  |  |
Undistributed and distributed net (loss) income available to common shareholders |  | $ | (0.1) |  |  | $ | (0.1) |  |  | $ | 0.3 |  |  | $ | 10.4 |
Add: Undistributed net income allocated to participating securities |  | 0.0 |  |  | 0.0 |  |  | 0.0 |  |  | 0.1 |
Less: Undistributed net income reallocated to participating securities |  | 0.0 |  |  | 0.0 |  |  | 0.0 |  |  | (0.1) |
Numerator for diluted net (loss) income per share: |  |  |  |  |  |  |  |
Undistributed and distributed net (loss) income available to common shareholders |  | $ | (0.1) |  |  | $ | (0.1) |  |  | $ | 0.3 |  |  | $ | 10.4 |
Net (loss) income per share from discontinued operations: |  |  |  |  |  |  |  |
Basic |  | $ | 0.00 |  |  | $ | 0.00 |  |  | $ | 0.01 |  |  | $ | 0.28 |
Diluted |  | $ | 0.00 |  |  | $ | 0.00 |  |  | $ | 0.01 |  |  | $ | 0.28 |
Net income per share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.71 |  |  | $ | 1.59 |
Diluted |  | $ | 0.53 |  |  | $ | 0.61 |  |  | $ | 1.70 |  |  | $ | 1.59 |
Potentially dilutive securities |  | 0.1 |  |  | 0.1 |  |  | 0.1 |  |  | 0.1 |

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Potentially dilutive securities attributable to outstanding stock options, restricted stock units, and performance share units are excluded from the calculation of diluted earnings per share when the combined exercise price and average unamortized fair value are greater than the average market price of Global Industrial Company's common stock during the period, and their inclusion would be anti-dilutive.
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7.Credit Facilities and Short-term Debt
The Company maintains a $75.0 million secured revolving credit facility with one financial institution. This facility 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 60% 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 September 30, 2022, eligible collateral under the credit agreement was $75.0 million, total availability was $72.3 million, total outstanding letters of credit was $1.5 million, total outstanding borrowings was $10.0 million and total excess availability was $60.8 million. The Company was in compliance with all of the covenants of the credit agreement as of September 30, 2022.
8.Fair Value Measurements
Fair value accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value standards establish the fair value hierarchy to prioritize the inputs used in valuation techniques. There are three levels to the fair value hierarchy (Level 1 is the highest priority and Level 3 is the lowest priority):

Level 1 - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - | Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly.
Level 3 - | Unobservable inputs which are supported by little or no market activity.

Financial instruments consist primarily of investments in cash, trade accounts receivable, outstanding debt and accounts payable. The Company determines the fair value of financial instruments based on interest rates available to the Company. At September 30, 2022 and December 31, 2021, the carrying amounts of cash, accounts receivable, outstanding debt and accounts payable are considered to be representative of their respective fair values due to their short-term nature. Cash is classified as Level 1 within the fair value hierarchy.
The fair value with respect to goodwill, definite and indefinite-lived intangible assets are measured in connection with the Company’s annual impairment testing. The Company operates in one reporting unit and in the fourth quarter of each year performs a quantitative assessment of its goodwill by comparing the Company's fair market value, or market capitalization, to the carrying value of the Company, including goodwill, to determine if impairment exists. Any excess of the carrying amount over fair value would be charged to impairment expense.
Long-lived assets are assets used in the Company’s operations and include leasehold improvements, warehouse and similar property used to generate sales and cash flows. If indicators of impairment are identified, long-lived assets are tested for impairment utilizing a recoverability test. The recoverability test compares the carrying value of an asset group to the undiscounted cash flows directly attributable to the asset group over the life of the primary asset. If the undiscounted cash flows of an asset group is less than the carrying value of the asset group, the fair value of the asset group is then measured. If the fair value is also determined to be less than the carrying value of the asset group, the asset group is impaired.
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9.Legal Proceedings
The Company and its subsidiaries are from time to time involved in various lawsuits, claims, investigations and proceedings which may include commercial, employment, tax, customs and trade, customer, vendor, personal injury, creditors rights and health and safety law matters, which are handled and defended in the ordinary course of business. In addition, the Company is from time to time subjected to various assertions, claims, proceedings and requests for damages and/or indemnification concerning sales channel practices and intellectual property matters, including patent infringement suits involving technologies that are incorporated in a broad spectrum of products the Company sells or that are incorporated in the Company’s e-commerce sales channels, as well as trademark/copyright infringement claims. The Company is also audited by (or has initiated voluntary disclosure agreements with) various U.S. federal and state authorities, as well as Canadian authorities, concerning potential income tax and/or sales tax. These matters are in various stages of investigation, negotiation and/or litigation.
Although the Company does not expect, based on currently available information, that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial position or results of operations, the ultimate outcome is inherently unpredictable. Therefore, judgments could be rendered or settlements entered, that could adversely affect the Company’s operating results or cash flows in a particular period. The Company regularly assesses all of its material litigation and threatened litigation as to the probability of ultimately incurring a liability and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable and estimable. In this regard, the Company establishes accrual estimates for its various lawsuits, claims, investigations and proceedings when it is probable that an asset has been impaired or a liability incurred at the date of the financial statements and the loss can be reasonably estimated. At September 30, 2022 the Company has established accruals for certain of its various lawsuits, claims, investigations and proceedings based upon estimates of the most likely outcome in a range of loss or the minimum amounts in a range of loss if no amount within a range is a more likely estimate. The Company does not believe that at September 30, 2022 any reasonably possible losses in excess of the amounts accrued would be material to the financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements and Risk Factors.
This report contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. Any such statements that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management’s estimates, assumptions and projections and are not guarantees of future performance. Forward-looking statements may include, but are not limited to statements regarding: i) projections or estimates of revenue, income or loss, exit costs, cash flow needs and capital expenditures; ii) fluctuations in general economic conditions, including effects of rising inflation; iii) future operations, such as risks regarding strategic business initiatives, plans relating to new distribution facilities, plans for utilizing alternative sources of supply in response to government tariff and trade actions and/or due to supply chain disruptions arising from the Coronavirus pandemic, war, geopolitical conflicts and plans for new products or services; iv) plans for acquisition or sale of businesses, including expansion or restructuring plans; v) financing needs, and compliance with financial covenants in loan agreements; vi) assessments of materiality; vii) predictions of future events and the effects of pending and possible litigation; and viii) assumptions relating to the foregoing. In addition, when used in this report, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” and “plans” and variations thereof and similar expressions are intended to identify forward-looking statements.
Forward-looking statements in this report are based on the Company’s beliefs and expectations as of the date of this report and are subject to risks and uncertainties which may have a significant impact on the Company’s business, operating results or financial condition. Investors are cautioned that these forward-looking statements are inherently uncertain and undue reliance should not be placed on them. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events.
Other factors that may affect our future results of operations and financial condition include, but are not limited to, unanticipated developments in any one or more of the following areas, as well as other factors which may be detailed from time to time in our Securities and Exchange Commission filings:
•general economic conditions, such as customer inventory levels, consumer prices and inflation, interest rates, borrowing ability and economic conditions in the manufacturing and/or distribution industries generally, as well as government spending levels will continue to impact our business;
•delays in the timely availability of products from our suppliers has in the past and could in the future delay receipt of needed product, resulting in delayed or lost sales;
•global supply chains and the timely availability of products, particularly products, or product components used in domestic manufacturing, imported from China and other Asian nations as well as from other countries, have been, and in the future could continue to be adversely affected by allocation restrictions of difficult to source products by our vendors;
•quarantines, factory slowdowns or shutdowns, border closings and travel restrictions resulting from the Coronavirus pandemic have in the past and could in the future adversely affect the timely availability of products, resulting in delayed or lost sales;
•the imposition of tariffs and other trade barriers, as well as retaliatory trade measures, have caused us to raise the prices on certain of our products and seek alternate sources of supply, which could negatively impact our sales or disrupt our operations if we are not able to mitigate these measures;
•our use of alternate sources of supply, such as utilizing new vendors in additional countries, entails various risks, such as identifying, vetting and managing new business relationships, reliance on new vendors and maintaining quality control over their products, and protecting our intellectual property rights;
•increases in freight and shipping costs, including fuel costs, could affect our margins to the extent the increases cannot be passed along to customers, as has occurred in the past;
•extreme weather conditions have delayed or disrupted global product supply chains and have affected our ability to timely receive and ship products, which have and could adversely impact sales;
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•other critical factors affecting the shipping and distribution of products imported to the United States by us or our domestic vendors, such as a global shortage in availability of shipping containers, shipping port congestion, and pandemic related labor shortages, have in the past and could in the future adversely affect the timely availability of products, resulting in delayed or lost sales, as well as adversely affecting our margins;
•our reliance on common carrier delivery services for shipping inventoried merchandise to customers;
•our reliance on drop ship deliveries directly to customers by our product vendors for products we do not hold in inventory;
•our ability to maintain available capacity in our distribution operations for stocked inventory and to enable on time shipment and deliveries, such as by timely implementing additional temporary or permanent distribution resources, whether in the form of additional facilities we operate or by outsourcing certain functions to third-party distribution and logistics partners;
•we compete with other companies for recruiting, training, integrating and retaining talented and experienced employees, particularly in markets where we and they have central distribution facilities; and this aspect of competition is aggravated by the current tight labor market in the U.S. for such jobs and at a time this market is undergoing competitive changes due to the Coronavirus pandemic;
•we expect to pursue acquisitions and other strategic transactions that we believe will either expand or complement our business in new or existing markets or further enhance the value and offerings we are able to provide to our existing or future potential customers;
•the maintenance, repair and operation ("MRO") and industrial equipment industry are consolidating as customers are increasingly aware of the total costs of fulfillment and the need to have consistent sources of supply at multiple locations. This consolidation has and will continue to cause the industry to become more competitive as greater economies of scale are achieved by competitors, or as competitors with new lower cost business models are able to operate with lower prices;
•risks involved with e-commerce, including possible loss of business and customer dissatisfaction if outages or other computer-related problems should preclude customer access to our products and services;
•our information systems and other technology platforms supporting our sales, procurement and other operations are critical to our operations and disruptions or delays have occurred and could occur in the future, and if not timely addressed could have a material adverse effect on us;
•a data security breach due to our e-commerce, data storage or other information systems being hacked by those seeking to steal Company, vendor, employee or customer information, or due to employee error, resulting in disruption to our operations, litigation and/or loss of reputation or business;
•managing various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights from our vendors;
•meeting credit card industry compliance standards in order to maintain our ability to accept credit cards;
•rising interest rates, increased borrowing costs or limited credit availability, could impact both our and our customers’ ability to fund purchases and conduct operations in the ordinary course;
•pending or threatened litigation and investigations, and other government actions, such as anti-dumping, unclaimed property, or trade and customs actions by U.S. or foreign governmental authorities, have occurred in the past and although had no material impact to our business, there can be no assurance that such events would not have such impact on our business and results of operation.
Should one or more of the risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. Statements in this report, particularly in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Notes to Condensed Consolidated Financial Statements, as well as information under the heading “Risk Factors” in our Annual Report on Form 10-K for fiscal year 2021, describe certain factors, among others, that could contribute to or cause such differences.
Overview
Global Industrial Company, through its subsidiaries, is a value-added industrial distributor of more than a million industrial and MRO products in North America going to market through a system of branded e-commerce websites and relationship marketers.
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Continuing Operations
The Company sells a wide array of industrial and MRO products, which are marketed in North America. 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 TM, GlobalIndustrial.com TM, Nexel TM, Paramount TM and Interion TM..
See Note 2 to the condensed consolidated financial statements for additional financial information about our business' geographic operations.
Discontinued Operations
As disclosed above, the operating results of discontinued operations in the accompanying financial statements are from the NATG business sold in 2015.
Operating Conditions
The North American industrial products market is highly fragmented and we compete against 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. This discussion should be read in conjunction with the condensed consolidated financial statements included herein and in conjunction with the audited financial statements as of December 31, 2021 and the other information provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The Company's net sales improved in the third quarter with revenue increasing 7.6% to over $298 million. Sales performance was led by an 8.1% increase in sales in the United States and 3.9%, in local currency, in Canada. During the quarter, our one-to-one managed sales channel led our growth and we saw further growth in the Global Industrial private brand offering, which continues to increase as a percentage of total sales. As we moved through the quarter the demand environment softened, a trend that has continued as customers have generally taken a more guarded approach to buying decisions given the broader uncertainty in the market. Gross margin increased 20 basis points sequentially in the quarter but decreased 110 basis points from the prior year. Margin performance reflected the continued impact of promotional pricing on excess and seasonal stock, as well as the flow through of some higher cost inventory. In addition, we had a very strong comparative to the third quarter of 2021, which benefited from price rationalization and the lower cost inventory sell through with increasing selling prices. Selling, distribution and administrative ("SD&A") management remained disciplined and reflects investments in the expansion of our Canada distribution network, including approximately $0.8 million in ramp up costs incurred in the third quarter, as well as e-commerce and other technology enhancements, and increased marketing efforts. Additionally, we improved in our debt position over the second quarter of 2022, reflecting decreased working capital needs as inventory levels normalize. We currently expect inventory levels to further reduce in the fourth quarter.
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Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements included in Item 15 of the Company’s 2021 Annual Report on 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 has identified revenue recognition, allowances for credit losses, inventory valuation and income taxes as policies that entail significant judgments or estimates. 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.
There were no material changes in the Company’s significant accounting policies during the third quarter and nine month period ended September 30, 2022.
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. See Note 1 of Notes to Condensed Consolidated Financial Statements, Recent Accounting Pronouncements.
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Highlights from Q3 2022 and Year to Date Q3 2022
The discussion of our results of operations and financial conditions that follows will provide information that will assist in understanding our financial statements and information about how certain accounting principles and estimates affect the condensed consolidated financial statements included herein.
Third Quarter 2022 Summary:
•Consolidated sales increased 7.6% to $298.5 million for the third quarter of 2022 compared to $277.4 million last year. Sales also increased 7.6% on an average daily sales basis for the third quarter ended September 30, 2022. 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 63 selling days in the U.S. and Canada in each of the third quarters of 2022 and 2021, respectively.
•Consolidated gross margin declined to 35.7% for the third quarter of 2022 compared to 36.8% last year.
•Consolidated operating income from continuing operations decreased 10.1% to $27.5 million for the third quarter of 2022 compared to $30.6 million last year.
•Net income per diluted share from continuing operations decreased 13.1% to $0.53 for the third quarter of 2022 compared to $0.61 last year.
Year to Date Q3 2022 Summary:
•Consolidated sales increased 13.0% to $905.6 million for the nine months ended September 30, 2022 compared to $801.1 million last year. Sales also increased 13.0% on an average daily sales basis for the nine months ended September 30, 2022. There were 192 selling days in the U.S. and 189 selling days in Canada for the nine months ended 2022 and 2021, respectively.
•Consolidated gross margin increased to 36.2% for the nine months ended September 30, 2022 compared to 34.6% last year.
•Consolidated operating income from continuing operations increased 41.4% to $87.5 million for the nine months ended September 30, 2022 compared to $61.9 million last year.
•Net income per diluted share from continuing operations increased 29.0% to $1.69 for the nine months ended September 30, 2022 compared to $1.31 last year.
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Results of Operations
Three and Nine Months Ended September 30, 2022 compared to the Three and Nine Months Ended September 30, 2021
Key Performance Indicators* (in millions except for percentages and per share amounts):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | % Change |  | 2022 |  | 2021 |  | % Change
Net sales of continuing operations: |  |  |  |  |  |  |  |  |  |  |
Consolidated net sales | $298.5 |  | $277.4 |  | 7.6% |  | $905.6 |  | $801.1 |  | 13.0%
Consolidated gross profit | $106.6 |  | $102.0 |  | 4.5% |  | $327.4 |  | $277.3 |  | 18.1%
Consolidated gross margin | 35.7% |  | 36.8% |  | (1.1)% |  | 36.2% |  | 34.6% |  | 1.6%
Consolidated SD&A costs | $79.1 |  | $71.4 |  | 10.8% |  | $239.9 |  | $215.4 |  | 11.4%
Consolidated SD&A costs as a % of net sales | 26.5% |  | 25.7% |  | 0.8% |  | 26.5% |  | 26.9% |  | (0.4)%
Operating income from continuing operations: |  |  |  |  |  |  |  |  |  |  |
Consolidated operating income | $27.5 |  | $30.6 |  | (10.1)% |  | $87.5 |  | $61.9 |  | 41.4%
Consolidated operating margin from continuing operations | 9.2% |  | 11.0% |  | (1.8)% |  | 9.7% |  | 7.7% |  | 2.0%
Effective income tax rate | 24.5% |  | 23.7% |  | 0.8% |  | 24.9% |  | 19.0% |  | 5.9%
Net income from continuing operations | $20.3 |  | $23.2 |  | (12.5)% |  | $64.7 |  | $49.8 |  | 29.9%
Net income margin from continuing operations | 6.8% |  | 8.4% |  | (1.6)% |  | 7.1% |  | 6.2% |  | 0.9%
Net income per diluted share from continuing operations | $0.53 |  | $0.61 |  | (13.1)% |  | $1.69 |  | $1.31 |  | 29.0%
Net (loss) income from discontinued operations | $(0.1) |  | $(0.1) |  | 0.0% |  | $0.3 |  | 10.5 |  | (97.1)%
Net (loss) income per diluted share from discontinued operations | $0.00 |  | $0.00 |  | NM |  | 0.01 |  | 0.28 |  | (96.4)%

*excludes discontinued operations (See Note 4 of Notes to Condensed Consolidated Financial Statements).
NM-not meaningful

* | 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 and quarters are described as if they ended on the last day of the respective calendar month. The actual fiscal quarters ended on October 1, 2022 and October 2, 2021, respectively, and the third quarters of both 2022 and 2021 each included 13 weeks and the first nine months of both 2022 and 2021 included 39 weeks. Average daily sales is calculated based upon the number of selling days in each period, with Canadian sales converted to US dollars using the current year's average exchange rate. There were 63 selling days in the U.S. and Canada in each of the third quarters of 2022 and 2021, respectively. There were 192 selling days in the U.S. and 189 selling days in Canada for the nine months ended 2022 and 2021, respectively.

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Management’s discussion and analysis that follows will include current operations and discontinued operations.
NET SALES
The Company's net sales increased 7.6% during the quarter ended September 30, 2022 and 13.0% for the nine months ended September 30, 2022 as compared to the same periods in 2021. The Company's sales reflect leading performance by our managed sales group and, in addition, our private brand offering continued to increase as a percentage of total sales. U.S. sales increased 8.1% for the quarter and 13.5% for the first nine months of 2022 compared to the same periods in 2021. Canada sales, in local currency, were up 3.9% and 9.3% for the quarter and first nine months of 2022, respectively. In USD, Canada sales were flat for the quarter and increased 6.6% for the first nine months of 2022. Consolidated average daily sales increased 7.6% during the quarter and increased 13.0% for the nine months of 2022.
There were 63 selling days in the U.S. and Canada in each of the third quarters of 2022 and 2021, respectively, and there were 192 selling days in the U.S. and 189 selling days in Canada for the nine months of 2022 and 2021, respectively.
GROSS MARGIN
Gross margin is dependent on variables such as product mix including sourcing and category, 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. The Company expects to see continued margin variability due to the current economic environment, inflationary pressures on both transportation and raw material costs, and pricing pressures caused by inflated inventory levels.
Gross margin declined by 110 basis points in the third quarter of 2022 compared to the third quarter of 2021 reflecting the impact of freight fuel surcharges, certain promotional activities, as well as the flow through of some higher cost inventory, which were partially offset by the continued increase in our private brand sales mix. Gross margin increased 160 basis points for the nine months ended September 30, 2022, driven by the continued normalization of freight margins as compared to the transitory costs incurred in the first nine months of 2021 related to the transition to a new less-than-truckload ("LTL") freight partner, partially offset by freight fuel surcharges incurred in 2022. Other contributing factors to our increased gross margin for the nine months ended September 30, 2022 include higher margin private brands capturing a larger share of our sales mix and a reduction in inventory adjustments as compared to the same period last year which included a write-down of certain personal protection equipment products.
SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES (“SD&A”)
For the three month period ended September 30, 2022, SD&A costs as a percentage of sales increased 80 basis points compared to the same period in 2021. This increase reflects investments in the expansion of our Canadian distribution network, e-commerce and other technological enhancements and increased marketing efforts. In the third quarter of 2022, the significant cost increases include increased salary and related costs of approximately $2.8 million, increased internet advertising spend of approximately $1.9 million related to our increased marketing efforts, ramp up costs related to our new Canadian distribution center of approximately $0.8 million, increased consulting fees of approximately $0.8 million related to the continued investment in upgrading and expanding our technological capabilities specifically related to our e-commerce shopping experience and sales force productivity offset by cost saving in temporary help and recruitment of $0.7 million. For the nine months ended September 30, 2022, SD&A as a percentage of sales decreased 40 basis points compared to the same period in 2021. This improved SD&A leverage reflects targeted SD&A discipline and fixed cost leverage resulting from the sales growth in the year. For the nine months ended September 30, 2022, the significant cost increases include approximately $12.1 million of increased salary and related costs, of which approximately $2.8 million related to higher variable compensation directly related to the Company's financial performance, increased sales commissions of approximately $2.3 million due to the continued growth in sales, increased internet advertising costs of approximately $5.4 million, ramp up costs related to our new Canadian distribution center of approximately $1.1 million, increased consulting and professional fees of approximately $0.8 million, increased insurance costs of approximately $0.4 million and increased net trade show costs of approximately $0.2 million.
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DISCONTINUED OPERATIONS
In the third quarter ended September 30, 2022, the Company's discontinued operations recorded net loss of approximately $0.1 million. For the nine months ended September 30, 2022, the Company's discontinued operations recorded net income of approximately $0.3 million primarily related to the resolution of certain liabilities. The Company expects that total additional exit charges related to discontinued operations after this quarter may aggregate up to $0.5 million.
In the third quarter ended September 30, 2021, the Company's discontinued operations recorded a net loss of approximately $0.1 million primarily related to professional fees, facility costs and tax benefits. For the nine months ended September 30, 2021, the Company's discontinued operations received approximately $15.0 million in restitution receipts, recorded approximately $2.4 million in benefit related to resolution of payable accounts offset by approximately $3.6 million of professional fees and facility costs. Discontinued operations also recorded approximately $3.3 million for the provision for income taxes.
OPERATING MARGIN
Operating margin for the three and nine month periods ended September 30, 2022 declined 190 basis points and improved 190 basis points, respectively, compared to the same periods in 2021. As discussed above, the three month decrease was driven by investments in the expansion of our Canadian distribution center, as well as e-commerce and other technological enhancements, continued normalization of freight margins offset by freight fuel surcharges, certain promotional activities, flow through of some higher cost inventory, favorable product margins as our higher margin private brands captured a larger share of our sales mix, and SD&A leverage. As discussed above, the nine month increase was driven by continued normalization of freight margins and higher margin private brands capturing a larger share of our sales mix offset by freight fuel surcharges, certain promotional activities, flow through of some higher cost inventory and SD&A leverage.
INTEREST AND OTHER EXPENSE, NET
Interest and other expense, net from continuing operations was $0.6 million in the third quarter of 2022 compared to $0.2 million in the third quarter of 2021 and for the nine months ended September 30, 2022 and 2021, interest and other expense, net from continuing operations was $1.3 million and $0.4 million, respectively. Increased costs in 2022 reflect the higher interest rate environment, increased loan balances and foreign exchange losses.
INCOME TAXES
For the three and nine month periods ended September 30, 2022, the Company reported income taxes in continuing operations of approximately $6.6 million and $21.5 million, respectively, related to its U.S., Canada and India operations including tax expense for certain U.S. states.
In the three month period ended September 30, 2021, the Company reported income taxes in continuing operations of approximately $7.2 million. In the nine month period ended September 30, 2021, the Company reported income taxes in continuing operations of approximately $11.7 million. The nine month 2021 tax rate was benefited by the reversal of valuation allowances against the Company's Canadian net operating loss carryforward and other deferred tax assets of approximately $3.4 million, or $0.09 per diluted share, which was recorded in the second quarter of 2021, as well as excess benefits from stock option exercises of approximately $0.6 million. The Company reversed these valuation allowances as it believed it was more likely than not that the net operating loss carryforward and deferred tax assets of its Canadian subsidiary would be realized.
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Financial Condition, Liquidity and Capital Resources
The following tables present selected liquidity data and historical cash flows (in millions):
Selected liquidity data

| September 30, 2022 |  | December 31, 2021 |  | $ Change
Cash and cash equivalents | $ | 20.0 |  |  | $ | 15.4 |  |  | $ | 4.6 |
Accounts receivable, net | $ | 127.3 |  |  | $ | 106.8 |  |  | $ | 20.5 |
Inventories | $ | 189.4 |  |  | $ | 172.8 |  |  | $ | 16.6 |
Prepaid expenses and other current assets | $ | 9.6 |  |  | $ | 6.4 |  |  | $ | 3.2 |
Accounts payable | $ | 113.2 |  |  | $ | 114.4 |  |  | $ | (1.2) |
Accrued expenses and other current liabilities | $ | 45.1 |  |  | $ | 50.5 |  |  | $ | (5.4) |
Short-term debt | $ | 10.0 |  |  | $ | 4.5 |  |  | $ | 5.5 |
Operating lease liabilities | $ | 11.8 |  |  | $ | 10.5 |  |  | $ | 1.3 |
Working capital | $ | 166.2 |  |  | $ | 121.5 |  |  | $ | 44.7 |

Historical Cash Flows

| Nine Months Ended September 30, |
| 2022 |  | 2021 |
Net cash provided by operating activities from continuing operations | $ | 23.5 |  |  | $ | 39.3 |  |
Net cash (used in) provided by operating activities from discontinued operations | $ | (0.1) |  |  | $ | 11.6 |  |
Net cash used in investing activities from continuing operations | $ | (4.9) |  |  | $ | (3.4) |  |
Net cash used in financing activities from continuing operations | $ | (13.6) |  |  | $ | (16.2) |  |
Effects of exchange rates on cash | $ | (0.3) |  |  | $ | (0.1) |  |
Net increase in cash and cash equivalents | $ | 4.6 |  |  | $ | 31.2 |  |

Our primary liquidity needs are to support working capital requirements in our business, including inflationary cost pressure within inventory, funding recently declared and any future dividends, funding capital expenditures and inventory purchases related to our new distribution center in Canada, debt repayment, continuing investment in upgrading and expanding our technological capabilities and information technology infrastructure specifically related to our e-commerce shopping experience and sales force productivity and automation, continuing investment in upgrading our distribution facilities and funding acquisitions. We rely principally upon operating cash flow to meet these needs. We currently believe that current cash on hand, cash flow from operations and our availability under our credit facility 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 $44.7 million primarily related to increased inventory balances, accounts receivable, reduced accounts payable, accrued expenses and other current liabilities partially offset by increased short-term debts payable balances. Accounts receivable days outstanding were 38.1 in 2022 compared to 37.2 in 2021, inventory turns were 3.8 in 2022 compared to 5.2 in 2021 and accounts payable days outstanding were 58.8 in 2022 compared to 68.9 in 2021. We expect that future accounts receivable, inventory and accounts payable balances will fluctuate with net sales and the product mix of our net sales.
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Operating Activities
Net cash provided by operating activities from continuing operations was $23.5 million compared to $39.3 million provided in 2021, attributable to changes in our working capital accounts which used $48.6 million in cash compared to $14.7 million used in 2021, primarily the result of the changes in inventory, accounts receivable, income tax payable and trade accounts payable balances. Cash generated from net income adjusted by other non-cash items, provided $72.1 million in 2022 compared to $54.0 million provided by these items in 2021 primarily due to higher net income generated in the nine months ended September 30, 2022. Net cash used in operating activities from discontinued operations was $0.1 million for the nine months ended September 30, 2022 and net cash provided by operating activities from discontinued operations was $11.6 million for the nine months ended September 30, 2021.
Investing Activities
Net cash used in investing activities totaled $4.9 million and was used for warehouse machinery and equipment, primarily related to our new Canadian distribution center, leasehold improvements, computer equipment and software. Net cash used in investing activities in 2021 totaled $3.4 million primarily for warehouse machinery and equipment related to our New Jersey distribution center and for other distribution center locations, as well as, leasehold improvements.
Financing Activities
Net cash used in financing activities totaled $13.6 million in 2022 primarily related to the regular quarterly dividend of $0.18 per common share which totaled approximately $20.8 million, partially offset by the net proceeds from short-term borrowings of $5.5 million. Proceeds from the issuance of common stock from employee stock purchase plan totaled $1.4 million and proceeds from the issuance of common stock from stock option exercises, net of payments for payroll taxes through shares withheld, totaled $0.3 million. Net cash used in financing activities in 2021 totaled $16.2 million primarily related to the regular quarterly dividend of $0.16 per common share, which totaled $18.6 million. Proceeds from the issuance of common stock from stock option exercises totaled $3.8 million, offset by payments of payroll taxes on stock-based compensation through shares withheld of $2.5 million and proceeds from the issuance of common stock from our employee stock purchase plan totaled $1.1 million.
The Company maintains a $75.0 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 60% 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 September 30, 2022, eligible collateral under the credit agreement was $75.0 million, total availability was $72.3 million, total outstanding letters of credit was $1.5 million, total outstanding borrowings was $10.0 million and total excess availability was $60.8 million. The Company was in compliance with all of the covenants of the credit agreement as of September 30, 2022.
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.
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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 2022 we anticipate capital expenditures in the range of $6.0 to $7.0 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 and availability under our credit facility 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 equivalents that have maturities of less than three months and in non-interest bearing accounts that partially offset banking fees. As of September 30, 2022, 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 September 30, 2022 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 approximately $76 million of liquidity (cash and undrawn line of credit) in the U.S. as of September 30, 2022.
Material Cash Requirements
We are obligated under non-cancelable operating leases for the rental of our facilities and certain of our equipment which expires at various dates through 2032. As of September 30, 2022 we were obligated for approximately $101.5 million under these non-cancelable leases. In 2022 we anticipate remaining cash expenditures of approximately $4.1 million for these operating leases. We have sublease agreements for unused space we lease 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. In addition to the previously mentioned commitments, at September 30, 2022, we had $1.5 million of standby letters of credit outstanding.
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 condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, which include changes in U.S. and international interest rates as well as changes in currency exchange rates (principally Canadian dollars) as measured against the U.S. dollar and each other.
The translation of the financial statements of our operations outside of the United States is impacted by movements in foreign currency exchange rates. Changes in currency exchange rates as measured against the U.S. dollar may positively or negatively affect income statement, balance sheet and cash flows as expressed in U.S. dollars. We have limited involvement with derivative financial instruments and do not use them for trading purposes. We may enter into foreign currency options or forward exchange contracts aimed at limiting in part the impact of certain currency fluctuations, but as of September 30, 2022 we had no outstanding option or forward exchange contracts.
Our exposure to market risk for changes in interest rates relates primarily to our variable rate debt. Our variable rate debt consists of short-term borrowings under our credit facilities. As of September 30, 2022, $10.0 million was outstanding under our variable rate credit facility. A hypothetical change in average interest rates of one percentage point is not expected to have a material effect on our financial position, results of operations or cash flows.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2022. Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.
The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
Management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting during the quarterly period ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
For a description of the Company's legal proceedings, see Note 9, Legal Proceedings, of Notes to Condensed Consolidated Financial Statements.
Item 1A. Risk Factors
For information regarding Risk Factors related to the economy, our industries, our Company and our business, see Item 1A. "Risk Factors" of the Company's 2021 Annual Report on Form 10-K.
There were no material changes to the Company’s risk factors during the third quarter and nine months ended September 30, 2022.
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Item 6. Exhibits

31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH | XBRL Taxonomy Extension Schema Document
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB | XBRL Taxonomy Extension Label Linkbase Document
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| GLOBAL INDUSTRIAL COMPANY
Date: November 1, 2022 | By: | /s/ Barry Litwin
|  | Barry Litwin
|  | President and Chief Executive Officer

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| GLOBAL INDUSTRIAL COMPANY
Date: November 1, 2022 | By: | /s/ Thomas Clark
|  | Thomas Clark
|  | Senior Vice President and Chief Financial Officer

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