PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--
Systemax Inc. (NYSE: SYX) today announced financial results for the
first quarter ended March 31, 2009.
Financial highlights for the quarter ended March 31, 2009:
-- Consolidated net sales grew 4% to $752.3 million in U.S. dollars. On a
constant currency basis, sales would have grown 12%.
-- North American technology product sales grew 21% to $502.4 million in
U.S. dollars. On a constant currency basis, sales would have grown 24%.
-- European technology product sales were $203.9 million in U.S. dollars, a
19% decline. On a constant currency basis, sales would have been flat.
-- Gross profit reached $107.6 million and gross margin was 14.3%.
-- Operating income was $15.0 million and operating margin was 2.0%.
-- Net income was $8.7 million, or $0.23 per diluted share.
-- Cash and cash equivalents were $80.6 million.
Richard Leeds, Chairman and Chief Executive Officer, said, "Systemax's
solid first quarter performance was made possible by sticking to a
simple objective - delivering value to our customers. Despite the
prolonged economic downturn, Systemax has successfully grown market
share across our businesses, including TigerDirect, CompUSA and Misco.
On a constant currency basis, top line revenue grew 12% and, most
noteworthy, our North American technology products group revenues grew
24%. Our North American operations continue to benefit from the
successful addition of the CompUSA business. I am also pleased that, on
a constant currency basis, we did not have a sales decline in our
European technology products business, as our customer base in Europe is
more business to business than consumer."
Gilbert Fiorentino, Chief Executive of Systemax's Technology Products
Group said, "Market conditions are challenging, but we are growing share
and attracting customers. We are price-competitive and that's a
necessary ingredient of success in our business. This strategy enables
us to build a long-term and loyal customer base. In addition to building
our online presence, we also continue to make investments in the brick
and mortar side of our business. We are continuing to remodel our
CompUSA stores in the United States with our innovative new retail
shopping system, Retail 2.0, to bring the best of the Web to our retail
stores. The results of the Retail 2.0 initiative have been very
positive, with improvements in close rate and overall customer
satisfaction."
Commenting on other operations, Mr. Leeds concluded, "In the first
quarter our Industrial Products revenue was down 20% from the prior
year. The significant slowdown in purchasing by our U.S. business
customers that started midway through the fourth quarter of 2008 is
continuing in 2009. We have implemented cost reduction initiatives and
continue to closely monitor our costs in every area. In our Software
Solutions business, we have implemented further cost reduction
initiatives, trying to establish a sustainable business model. We are
closely monitoring the business and will take additional actions if
necessary."
"Finally, as previously announced, last month Systemax entered into a
"stalking horse" agreement related to the acquisition of Circuit City's
ecommerce business. An auction commenced last night and concluded early
this morning. Systemax's revised bid was selected as the highest or
otherwise best bid, subject to court approval," Mr. Leeds concluded.
Gross margin in the quarter was 14.3% versus 15.7% in 2008, primarily
the result of the strategic product price and freight discount
incentives offered in the Technology Products Group, as well as a mix
change from higher margin Industrial Product sales comprising a smaller
portion of consolidated sales. Working capital as of March 31, 2009 was
$262.6 million, including cash and cash equivalents of $80.6 million.
The Company has an undrawn credit facility of $120.0 million and total
cash and available liquidity of approximately $180.0 million.
Capitalized leases totaled $2.0 million at March 31, 2009 and the
Company has no other outstanding debt. Cash flow used in operations was
approximately $32.0 million, primarily reducing trade accounts payable
from the seasonal high fourth quarter and for strategic quarter end
inventory purchases. Capital expenditures aggregated $2.9 million. The
Company's effective tax rate was 39.5%, up from 36.1% last year
primarily the result of a higher percentage of taxable income in the
U.S. in 2009 where corporate tax rates for the Company are highest.
As a part of the two million share stock buyback program announced in
May 2008, during the first quarter the Company purchased 32,444 shares
for approximately $0.4 million, or an average price of $11.63 per share.
In total, the Company has repurchased 507,745 shares of common stock
since announcing the program for $6.2 million, or an average price of
$12.21 per share.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its first quarter
2009 results today, Tuesday, May 12, 2009 at 5:00 p.m. Eastern Time. To
access the teleconference, please dial 877-852-6561 (U.S. callers) or
719-325-4754 (Int'l callers) and reference passcode 8642179 ten minutes
prior to the start time. The teleconferencing will also be available via
live webcast on the Company's Web site at www.systemax.com.
A replay of the conference call will be available through Tuesday, May
19, 2009. It can be accessed by dialing 888-203-1112 (U.S. callers) or
719-457-0820 (Int'l callers), passcode 8642179. The webcast will also be
archived on www.systemax.com
for 30 days.
About Systemax Inc.
Systemax Inc. (www.systemax.com),
a Fortune 1000 company, sells personal computers, computer supplies and
accessories, consumer electronics and industrial products through
branded e-commerce web sites, direct mail catalogs, relationship
marketers and retail stores in North America and Europe. The primary
brands are TigerDirect, CompUSA, Misco and Global Industrial. It also
manufactures and sells computers and accessories under the Systemax and
Ultra brands and develops and markets ProfitCenter Software, a web-based
application for multichannel direct marketing companies.
Forward-Looking Statements
This press release contains forward-looking statements about the
Company's performance. These statements are based on management's
estimates, assumptions and projections and are not guarantees of future
performance. The Company assumes no obligation to update these
statements. Actual results may differ materially from results expressed
or implied in these statements as the result of risks, uncertainties and
other factors including, but not limited to: (a) unanticipated
variations in sales volume, (b) economic conditions and exchange rates,
(c) actions by competitors, (d) the continuation of key vendor
relationships, (e) the ability to maintain satisfactory loan agreements
with lenders, (f) risks associated with the delivery of merchandise to
customers utilizing common carriers, (g) the operation of the Company's
management information systems, and (h) unanticipated legal and
administrative proceedings. Please refer to "Risk Factors" and the
Forward Looking Statements sections contained in the Company's Form 10-K
for a more detailed explanation of the inherent limitations in such
forward-looking statements.
SYSTEMAX INC.
Condensed Consolidated Statements of Operations - Unaudited
(In thousands, except per share amounts)
Quarter Ended
March 31*,
2009 2008
Net sales $752,268 $724,737
Cost of sales 644,718 610,988
Gross profit 107,550 113,749
Gross margin 14.3% 15.7%
Selling, general and administrative expenses 92,530 87,713
Operating income 15,020 26,036
Operating margin 2.0% 3.6%
Interest, foreign exchange and other expense (income), net 654 (2,225)
Income before income taxes 14,366 28,261
Provision for income taxes 5,668 10,200
Effective tax rate 39.5% 36.1%
Net income $8,698 $18,061
Net margin 1.2% 2.5%
Net income per common share:
Basic $.24 $.49
Diluted $.23 $.48
Weighted average shares outstanding:
Basic 36,621 36,806
Diluted 37,273 37,628
SYSTEMAX INC.
Condensed Consolidated Balance Sheets
(In thousands)
March 31*, December 31*,
2009 2008
(Unaudited)
Current assets:
Cash and cash equivalents $80,627 $115,967
Accounts receivable, net 171,090 182,532
Inventories, net 309,871 290,594
Prepaid expenses and other current assets 25,986 23,090
Total current assets 587,574 612,183
Property, plant and equipment, net 48,943 48,465
Goodwill, intangibles and other assets 40,855 42,615
Total assets $677,372 $703,263
Current liabilities:
Current portion of capitalized lease obligations $748 $773
Accounts payable and accrued expenses 324,177 358,318
Total current liabilities 324,925 359,091
Capitalized lease obligations, net of current portion 1,216 1,411
Other liabilities 8,565 8,806
Shareholders' equity 342,666 333,955
Total liabilities and shareholders' equity $677,372 $703,263
* Systemax 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 three month periods and quarters ended on April 4, 2009
and March 29, 2008. The first quarters of both 2009 and 2008 included 13
weeks.
Source: Systemax Inc.
Contact: Brainerd Communicators, Inc.
Denise Roche / Bill Douglass
212-986-6667
[email protected]
[email protected]