-- Sales Grow 12%; EPS Up 47% --
PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--
Systemax Inc. (NYSE:SYX) today announced financial results for
the second quarter and six months ended June 30, 2010.
|
Performance Summary
(U.S. dollars in millions, except per share data)
|
|
Highlights
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
2010
|
|
|
2009
|
|
|
Sales
|
$
|
805.9
|
|
$
|
721.6
|
|
|
$
|
1,721.1
|
|
$
|
1,473.9
|
|
|
Gross profit
|
$
|
115.2
|
|
$
|
107.1
|
|
|
$
|
241.5
|
|
$
|
214.6
|
|
|
Gross margin
|
|
14.3
|
%
|
|
14.8
|
%
|
|
|
14.0
|
%
|
|
14.6
|
%
|
|
Operating income
|
$
|
16.0
|
|
$
|
8.7
|
|
|
$
|
36.4
|
|
$
|
23.7
|
|
|
Operating margin
|
|
2.0
|
%
|
|
1.2
|
%
|
|
|
2.1
|
%
|
|
1.6
|
%
|
|
Diluted earnings per share
|
$
|
0.25
|
|
$
|
0.17
|
|
|
$
|
0.56
|
|
$
|
0.41
|
|
Second Quarter 2010 Financial Highlights:
-
Consolidated sales grew 12% to a record $805.9 million in U.S.
dollars. On a constant currency basis and excluding WStore, sales grew
6%.
-
Diluted earnings per share (EPS) grew 47% to $0.25.
-
Business to business channel sales grew 35% to $417.4 million in U.S.
dollars. On a constant currency basis and excluding WStore, sales grew
22%.
-
Consumer channel sales declined 6% to $388.5 million in U.S. dollars.
Sales also declined 6% on a constant currency basis and excluding
WStore.
-
“Same store” business to business channel sales grew 21% while same
store consumer channel sales declined 11%.
Six Months 2010 Financial Highlights:
-
Consolidated sales grew 17% to a record $1.7 billion in U.S. dollars.
On a constant currency basis and excluding WStore results, sales grew
9%.
-
Diluted EPS grew 37% to $0.56.
-
Business to business channel sales grew 37% to $862.7 million in U.S.
dollars. On a constant currency basis and excluding WStore results,
sales grew 25%.
-
Consumer channel sales grew 2% to $858.4 million in U.S. dollars. On a
constant currency basis and excluding WStore results, sales declined
3%.
Richard Leeds, Chairman and Chief Executive Officer said, “Systemax’s
solid second quarter performance, with consolidated sales growth of 12%
and all-time record revenues, was once again led by our business to
business channels, which produced strong results as small- and mid-sized
businesses have started to return to more normalized spending. Our
consolidated results demonstrate the benefits of our business
diversification, one of the leading components of our long-term growth
strategy, and continue to buffer the challenging consumer spending
environment. Looking ahead, we remain focused on prudently building our
businesses and leveraging our robust brand portfolio.”
Gilbert Fiorentino, Chief Executive of Systemax’s Technology Products
Group said, “We are executing on our strategic initiatives and the B2B
channel continues to perform exceptionally well across geographies and
product categories. In particular, Europe delivered an outstanding
performance this quarter, with double digit increases on both the top
and bottom line and we expect to see additional momentum as we complete
the integration of WStore later this year. The consumer environment is
challenging; however, we remain optimistic given the unique position of
our brands and the growth opportunities we see to expand our presence on
the web and at retail. Through our recently launched strategic
initiative to co-brand two of our core retail businesses, CompUSA and
TigerDirect, we will improve cross promotion to our customers and
strengthen our multi-channel strategy.”
|
Supplemental Channel Sales Summary
(in millions)
|
|
Channel
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2010
|
|
2009
|
|
|
2010
|
|
2009
|
|
Consumer1
|
$
|
388.5
|
$
|
412.6
|
|
$
|
858.4
|
$
|
842.4
|
|
Business to business2
|
$
|
417.4
|
$
|
309.0
|
|
$
|
862.7
|
$
|
631.5
|
|
Consolidated Sales
|
$
|
805.9
|
$
|
721.6
|
|
$
|
1,721.1
|
$
|
1,473.9
|
1Includes sales from retail stores, consumer websites,
inbound call centers and television shopping
2Includes sales from managed business relationships,
including outbound call centers and extranets, and the entire Industrial
Products and Corporate segments
|
Supplemental “Same Store” Channel Growth3
– Q2 2010 vs Q2 2009
|
|
Channel
|
Change
|
|
Consumer
|
-11
|
%
|
|
Business to business
|
21
|
%
|
|
Consolidated sales
|
3
|
%
|
3Comprised of revenue at retail stores, websites and call
centers operating for at least 14 full months as of the beginning of the
period and computed on a constant currency basis. 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.
|
Supplemental Product Category Sales Summary
(in millions)
|
|
Product Category
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2010
|
|
2009
|
|
|
2010
|
|
2009
|
|
Computers
|
$
|
201.3
|
$
|
206.4
|
|
$
|
428.9
|
$
|
338.9
|
|
Consumer electronics
|
$
|
179.0
|
$
|
156.7
|
|
$
|
384.7
|
$
|
355.3
|
|
Computer components
|
$
|
123.2
|
$
|
116.4
|
|
$
|
270.4
|
$
|
262.2
|
|
Computer accessories & software
|
$
|
224.6
|
$
|
180.2
|
|
$
|
481.3
|
$
|
394.9
|
|
Industrial products
|
$
|
62.2
|
$
|
48.8
|
|
$
|
116.8
|
$
|
94.5
|
|
Other
|
$
|
15.6
|
$
|
13.1
|
|
$
|
39.0
|
$
|
28.1
|
|
Consolidated sales
|
$
|
805.9
|
$
|
721.6
|
|
$
|
1,721.1
|
$
|
1,473.9
|
|
Supplemental Business Unit Sales Summary
(in millions)
|
|
Business Unit
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
2010
|
2009
|
|
2010
|
2009
|
|
Technology Products
|
$743.1
|
$671.8
|
|
$1,603.2
|
$1,377.8
|
|
Industrial Products
|
$62.2
|
$48.8
|
|
$116.8
|
$94.5
|
|
Corporate and Other
|
$0.6
|
$1.0
|
|
$1.1
|
$1.6
|
|
Consolidated sales
|
$805.9
|
$721.6
|
|
$1,721.1
|
$1,473.9
|
Working capital as of June 30, 2010 was $271.6 million, including cash
and cash equivalents of $32.8 million. As of June 30, 2010, the Company
had availability under its credit facility of approximately $107.1
million and total cash and available liquidity of approximately $140.0
million. Short term debt totaled approximately $13.1 million at June 30,
2010 and included approximately $12.2 million in revolving debt assumed
as part of the WStore acquisition. The Company’s effective tax rate for
the first six months of 2009 was 37.3%, compared to 34.9% last year. The
lower rate in 2009 was the result of the reversal of tax reserves.
Excluding these reserve reversals, the Company’s effective tax rate in
2009 was 39.3%. This lower effective tax rate this year is primarily the
result of a higher percentage of taxable income outside the U.S. in 2010
where corporate tax rates for the Company are typically lower.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its second quarter
2010 results today, August 10, 2010 at 5:00 p.m. Eastern Time. To access
the teleconference, please dial 877-881-2609 (U.S. callers) or
970-315-0463 (Int’l callers) and reference passcode 91650185 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 August 17,
2010. It can be accessed by dialing 800-642-1687 (U.S. callers) or
706-645-9291 (Int’l callers), passcode 91650185. 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 components
and 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
|
|
Six Months Ended
|
|
|
June 30*
|
|
June 30*
|
|
|
|
2010
|
|
|
|
2009
|
|
|
|
2010
|
|
|
|
2009
|
|
|
Net sales
|
$
|
805,875
|
|
|
$
|
721,599
|
|
|
$
|
1,721,112
|
|
|
$
|
1,473,867
|
|
|
Cost of sales
|
|
690,653
|
|
|
|
614,545
|
|
|
|
1,479,649
|
|
|
|
1,259,263
|
|
|
Gross profit
|
|
115,222
|
|
|
|
107,054
|
|
|
|
241,463
|
|
|
|
214,604
|
|
|
Gross margin
|
|
14.3
|
%
|
|
|
14.8
|
%
|
|
|
14.0
|
%
|
|
|
14.6
|
%
|
|
Selling, general and administrative expenses
|
|
99,238
|
|
|
|
98,385
|
|
|
|
205,103
|
|
|
|
190,915
|
|
|
Operating income
|
|
15,984
|
|
|
|
8,669
|
|
|
|
36,360
|
|
|
|
23,689
|
|
|
Operating margin
|
|
2.0
|
%
|
|
|
1.2
|
%
|
|
|
2.1
|
%
|
|
|
1.6
|
%
|
|
Interest and other (income) expense, net
|
|
966
|
|
|
|
(291
|
)
|
|
|
2,545
|
|
|
|
363
|
|
|
Income before income taxes
|
|
15,018
|
|
|
|
8,960
|
|
|
|
33,815
|
|
|
|
23,326
|
|
|
Provision for income taxes
|
|
5,568
|
|
|
|
2,469
|
|
|
|
12,614
|
|
|
|
8,137
|
|
|
Effective tax rate
|
|
37.1
|
%
|
|
|
27.6
|
%
|
|
|
37.3
|
%
|
|
|
34.9
|
%
|
|
Net income
|
$
|
9,450
|
|
|
$
|
6,491
|
|
|
$
|
21,201
|
|
|
$
|
15,189
|
|
|
Net margin
|
|
1.2
|
%
|
|
|
0.9
|
%
|
|
|
1.2
|
%
|
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.26
|
|
|
$
|
0.18
|
|
|
$
|
0.57
|
|
|
$
|
0.41
|
|
|
Diluted
|
$
|
0.25
|
|
|
$
|
0.17
|
|
|
$
|
0.56
|
|
|
$
|
0.41
|
|
|
|
|
Weighted average common and
common equivalent shares:
|
|
Basic
|
|
36,967
|
|
|
|
36,683
|
|
|
|
36,876
|
|
|
|
36,652
|
|
|
Diluted
|
|
37,726
|
|
|
|
37,340
|
|
|
|
37,605
|
|
|
|
37,308
|
|
|
SYSTEMAX INC.
|
|
Condensed Consolidated Balance Sheets - Unaudited
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
June 30*
|
|
|
December 31*
|
|
|
|
2010
|
|
|
|
2009
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
32,783
|
|
|
$
|
58,309
|
|
Accounts receivable, net
|
|
235,646
|
|
|
|
241,860
|
|
Inventories
|
|
380,487
|
|
|
|
365,725
|
|
Prepaid expenses and other current assets
|
|
27,900
|
|
|
|
26,692
|
|
Total current assets
|
|
676,816
|
|
|
|
692,586
|
|
Property, plant and equipment, net
|
|
62,622
|
|
|
|
65,598
|
|
Goodwill, intangibles and other assets
|
|
58,106
|
|
|
|
58,717
|
|
Total assets
|
$
|
797,544
|
|
|
$
|
816,901
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term debt
|
$
|
13,052
|
|
|
$
|
15,197
|
|
Accounts payable and accrued expenses
|
|
392,199
|
|
|
|
427,307
|
|
Total current liabilities
|
|
405,251
|
|
|
|
442,504
|
|
Capitalized lease obligations
|
|
793
|
|
|
|
1,194
|
|
Other liabilities
|
|
9,571
|
|
|
|
8,518
|
|
Shareholders’ equity
|
|
381,929
|
|
|
|
364,685
|
|
Total liabilities and shareholders’ equity
|
$
|
797,544
|
|
|
$
|
816,901
|
* 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 second quarter ended on July 3, 2010. The second quarters
of both 2010 and 2009 included 13 weeks and the six month periods both
included 26 weeks.
Source: Systemax Inc.
Contact:
INVESTOR/ MEDIA CONTACTS:
Brainerd Communicators, Inc.
Mike
Smargiassi / Nancy Zachary
212-986-6667
[email protected]
[email protected]