PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--
Systemax Inc. (NYSE:SYX) today announced financial results for
the third quarter and nine months ended September 30, 2009.
Financial highlights for the quarter ended September 30, 2009:
-
Consolidated sales grew 2% to $753.9 million in U.S. dollars. On a
constant currency basis, sales grew 6%.
-
Consumer sales grew 10% to $426.2 million in U.S. dollars. On a
constant currency basis, sales grew 12%.
-
"Same store" consumer sales grew 6%.
-
Business to business sales were $327.7 million in U.S. dollars, a 7%
decline. On a constant currency basis, sales declined 1%.
-
One-time pre-tax charges were $1.0 million, or approximately $0.02 per
diluted share after tax, for costs related to the WStore acquisition
and exiting the Hosted Software business.
-
Diluted earnings per share grew 13% to $0.34.
Performance Summary
(U.S. dollars in millions, except per share data)
Highlights Quarter Ended Sept 30, Nine Months Ended Sept 30,
2009 2008 2009 2008
Sales $753.9 $739.5 $2,227.7 $2,220.3
Gross profit $112.8 $115.4 $327.4 $343.9
Gross margin 15.0% 15.6% 14.7% 15.5%
Operating income $19.4 $20.4 $43.1 $67.6
Operating margin 2.6% 2.8% 1.9% 3.0%
Diluted earnings per share $0.34 $0.30 $0.74 $1.14
One time charges, pre-tax $1.0 - $7.3 $0.8
One-time charges, after $0.02 - $0.12 $0.01
tax, per diluted share
Richard Leeds, Chairman and Chief Executive Officer, said, "Systemax
posted solid overall third quarter results, growing top line sales on a
U.S. dollar basis as well as on a constant currency basis. We did see
some erosion in overall gross margin, resulting from the continued
impact of discounted shipping and product mix changes; however gross
margin for the quarter was up sequentially. We carefully controlled our
operating costs, despite headcount growth for new retail stores and
one-time charges, which resulted in strong bottom line earnings growth."
Channel sales for the three and nine months ended September 30, 2009:
Channel Sales Summary
(in millions)
Quarter Ended Sept 30, Nine Months Ended Sept 30
Channel
2009 2008 2009 2008
Consumer1 $426.2 $389.2 $1,310.3 $1,154.4
Business to business2 $327.7 $350.3 $917.4 $1,065.9
Consolidated sales $753.9 $739.5 $2,227.7 $2,220.3
1Includes sales from retail stores, consumer websites,
printed catalogs and television shopping
2Includes sales from managed business relationships,
including outbound call centers and extranets
Comparable "same store" channel sales growth for the three months
ended September 30, 2009 versus the three months ended September 30,
2008:
Channel3 Change
Consumer 6.0%
Business to business -4.0%
3Comprised of revenue at retail stores, websites and call
centers operating for at least 14 full months. The calculation of the
comparable store sales percentage change excludes the effect of
fluctuations in foreign currency exchange rates. The method of
calculating comparable store and channel sales varies across the retail
and direct marketing industry. As a result, Systemax's method of
calculating comparable sales may not be the same as other companies'
methods.
Richard Leeds continued, "Our consumer channels in North America
reported our strongest results. We are broadening our reach in the
consumer electronics market, both through our retail stores and our
e-Commerce websites. CompUSA recently opened two new brick and mortar
stores, with another planned to open later this month. We have also
signed leases for stores in several new markets that will open in the
coming months, and we are continuing the conversion of our existing
stores to our proprietary Retail 2.0 format. Circuit City has
successfully reactivated many of its former customers, and sales from
CircuitCity.com contributed to our overall sales growth. We remain very
optimistic about the long-term possibilities for this valuable asset. As
in the past, TigerDirect continues to be a market leader in the online
retailing of computer and consumer electronics."
"Our business to business channel operations - including MISCO in
Western Europe and Global Industrial in the U.S. - are still generally
impacted by the worldwide economic slowdown; however, we are now
cautiously optimistic that we have seen the bottom. We continue making
prudent investments to improve our positioning while carefully
controlling our costs. During the quarter we completed the acquisition
of WStore Europe, a B2B supplier of IT products with operations in
France and in the United Kingdom, significantly strengthening our
presence in those markets. In our Industrial business, we recently
deployed an entirely new ecommerce website (www.globalindustrial.com)
that we believe is generationally more advanced than the sites of any
other company in the sector."
Supplemental product category sales for the three and nine months
ended September 30, 2009:
Product Category Sales Summary
(in millions)
Quarter Ended Sept 30, Nine Months Ended Sept 30,
Product Category
2009 2008 2009 2008
Computers $183.5 $141.5 $559.1 $369.6
Consumer electronics $172.6 $161.5 $521.2 $509.4
Computer components $130.1 $132.1 $363.7 $411.8
Computer accessories & $200.2 $225.6 $431.1 $696.3
software
Industrial products $52.0 $63.2 $146.5 $182.2
Other $15.5 $15.6 $206.1 $51.0
Consolidated sales $753.9 $739.5 $2,227.7 $2,220.3
Business unit sales for the three and nine months ended September 30,
2009:
Business Unit Sales Summary
(in millions)
Quarter Ended Sept. 30, Nine Months Ended Sept. 30,
Business Unit
2009 2008 2009 2008
Technology Products - $500.0 $448.9 $1,500.7 $1,314.1
North America
Technology Products - $201.8 $227.2 $579.3 $723.7
Europe
Industrial Products $52.0 $63.2 $146.5 $182.2
Software Solutions $0.1 $0.2 $1.2 $0.3
Consolidated Sales $753.9 $739.5 $2,227.7 $2,220.3
Working capital as of September 30, 2009 was $256.8 million, including
cash and cash equivalents of $102.1 million. The Company has an undrawn
credit facility of $120.0 million and total cash and available liquidity
of approximately $199.0 million. Short term debt totaled approximately
$18.8 million at September 30, 2009 and included approximately $17.1
million in revolving debt assumed as part of the WStore acquisition as
well as capitalized lease obligations. Cash flow provided by operations
for the first nine months of 2009 was approximately $14.2 million and
capital expenditures were $13.7 million. The Company's effective tax
rate for the first nine months of 2009 was 36.3%, down from 37.3% last
year. Included in the 2009 rate is a reversal of tax reserves of
approximately $1.0 million as the result of statute expirations.
Excluding this reserve reversal, the Company's effective tax rate in
2009 was 38.7%. This higher effective tax rate this year is primarily
the result of a higher percentage of taxable income in the U.S. where
corporate tax rates for the Company are typically highest.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its third quarter
and the first nine months of 2009 results today, Tuesday, November 10,
2009 at 5:00 p.m. Eastern Time. To access the teleconference, please
dial 877-604-9673 (U.S. callers) or 719-325-4790 (Int'l callers) and
reference passcode 7435037 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,
November 17, 2009. It can be accessed by dialing 888-203-1112 (U.S.
callers) or 719-457-0820 (Int'l callers), passcode 7435037. The webcast
will also be archived on www.systemax.com
for approximately 90 days.
About Systemax Inc.
Systemax Inc. (http://www.systemax.com),
a Fortune 1000 company, sells personal computers, computer supplies,
consumer electronics and industrial products through a system of branded
e-Commerce web sites, retail stores, relationship marketers and direct
mail catalogs in North America and Europe. The primary brands are
TigerDirect, CompUSA, Circuit City, MISCO, WStore and Global Industrial.
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 Nine Months Ended
September 30* September 30*
2009 2008 2009 2008
Net sales $753,880 $739,479 $2,227,747 $2,220,251
Cost of sales 641,117 624,060 1,900,380 1,876,329
Gross profit 112,763 115,419 327,367 343,922
Gross margin 15.0% 15.6% 14.7% 15.5%
Selling, general and administrative 93,394 94,997 284,309 276,349
expenses
Operating income 19,369 20,422 43,058 67,573
Operating margin 2.6% 2.8% 1.9% 3.0%
Interest and other (income) (952) 1,782 (589) (843)
expense, net
Income before income taxes 20,321 18,640 43,647 68,416
Provision for income taxes 7,723 7,367 15,860 25,541
Effective tax rate 38.0% 39.5% 36.3% 37.3%
Net income $12,598 $11,273 $27,787 $42,875
Net margin 1.7% 1.5% 1.3% 1.9%
Net income per common share:
Basic $.34 $0.30 $.76 $1.16
Diluted $.34 $0.30 $.74 $1.14
Weighted average common and
common equivalent shares:
Basic 36,703 37,079 36,669 36,972
Diluted 37,319 37,801 37,310 37,774
SYSTEMAX INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30* December 31
2009 2008
Current assets:
Cash and cash equivalents $102,117 $115,967
Accounts receivable, net 213,170 182,532
Inventories 315,977 290,594
Prepaid expenses and other current assets 28,574 22,225
Total current assets 659,838 611,318
Property, plant and equipment, net 63,046 48,465
Goodwill, intangibles and other assets 60,660 42,361
Total assets $783,544 $702,144
Current liabilities:
Short-term debt $18,770 $773
Accounts payable and accrued expenses 384,222 357,453
Total current liabilities 402,992 358,226
Long-term debt 1,233 1,411
Other liabilities 7,986 8,552
Shareholders' equity 371,333 333,955
Total liabilities and shareholders' equity $783,544 $702,144
* 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 nine month period and quarter ended on October 3, 2009.
The third quarters of both 2009 and 2008 included 13 weeks and the nine
month periods both included 39 weeks.
Source: Systemax Inc.
Contact: Investors / Media:
Brainerd Communicators, Inc.
Denise Roche / Bill Douglass
212-986-6667
[email protected]
[email protected]