News Details

-- Sales Grow 7% in Fourth Quarter and 13% in Full Year --

-- Double Digit Increases in Business-to-Business Channel Sales in Both Periods --

-- WStore Integration Completed --

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)-- Systemax Inc. (NYSE:SYX) today announced financial results for the fourth quarter and full year ended December 31, 2010.

Fourth Quarter 2010 Financial Highlights:

• Consolidated sales grew 7% to a record $1.0 billion in U.S. dollars. On a constant currency basis, sales grew 8%.
• Business to business channel sales grew 12% to $472.3 million in U.S. dollars. On a constant currency basis, sales grew 15%.
• Consumer channel sales grew 3% to $533.9 million in U.S. dollars. On a constant currency basis, sales also grew 3%.
• “Same store” business to business channel sales grew 15%, while same store consumer channel sales declined 1%.
• One-time charges were $1.1 million, or approximately $0.02 per diluted share after tax, for costs related primarily to the WStore integration.
• Diluted earnings per share (EPS) was $0.34.

Full Year 2010 Financial Highlights:

• Consolidated sales grew 13% to a record $3.6 billion in U.S. dollars. On a constant currency basis and excluding WStore, sales grew 9%.
• Business to business channel sales grew 26% to $1.8 billion in U.S. dollars. On a constant currency basis and excluding WStore, sales grew 18%.
• Consumer channel sales grew 3% to $1.8 billion in U.S. dollars. On a constant currency basis and excluding WStore, sales grew 2%.
• One-time charges were $4.3 million or approximately $0.07 per diluted share after tax, for costs related primarily to the WStore integration.
• Diluted EPS was $1.13.

Richard Leeds, Chairman and Chief Executive Officer said, “Overall we are pleased with our top line performance as we continue to benefit from our diversified multi-channel strategy. We generated very strong sales within our business-to-business operations, with double digit increases for both the quarter and the full year. Consumer channel sales, while up modestly on a consolidated basis, remain challenged but should improve as the economy continues to recover and new products are introduced by our vendors. We are not content with our bottom line performance and it remains a key focus area for our management team. We are committed to taking steps to improve margins by driving efficiencies across our operations. The ramp-up of our new distribution center in Georgia as well as the completion of the WStore integration should both contribute in that regard in 2011.”

Gilbert Fiorentino, Chief Executive of Systemax’s Technology Products Group said, “Our technology products business continues to benefit from the broad based recovery in the IT cycle. We recorded solid top line growth across our geographic footprint with double digit increases in our computer category, led by sales of full feature laptop computers. We are optimistic that the introduction of a broader offering of tablet computers and the launch of expanded wireless offerings in our brick and mortar stores will drive additional traffic to our websites and stores. We are executing on a number of initiatives across our distribution channels and will continue to prudently expand our businesses.”

Working capital grew during the quarter by $21.3 million to $300.9 million as of December 31, 2010, primarily due to earnings and proceeds from the issuance of long-term debt associated with the new distribution center. Cash and cash equivalents grew during the quarter by $61.6 million to $92.1 million as of December 31, 2010, due to decreased inventory levels, increased days accounts payable outstanding and other working capital management actions. As of December 31, 2010, the Company had availability under its credit facility of approximately $115.9 million and total cash and available liquidity of approximately $208.0 million. Short and long-term debt totaled approximately $10.0 million at December 31, 2010.

The Company’s effective tax rate for the quarter was 31.1%, compared to 37.5% last year. The 2010 effective tax rate was favorably impacted by the reversal of valuation allowances of approximately $0.5 million. Excluding this reversal, the effective tax rate would have been 33.8%. The lower quarterly effective tax rate was primarily due to a higher mix of taxable income in countries with lower tax rates. The Company’s effective tax rate for the full year of 2010 was 35.6% compared to 36.8% last year. The 2010 and 2009 effective tax rates were favorably impacted by the reversal of valuation allowances of approximately $0.5 million and $0.9 million, respectively. Excluding these reversals, the effective tax rate for 2010 and 2009 would have been 36.3% and 38.0%, respectively. This lower annual effective tax rate was primarily due to a higher mix of taxable income in countries with lower tax rates.

Earnings Conference Call Details

Systemax Inc. will host a teleconference to discuss its fourth quarter and full year 2010 results today, March 15, 2011 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 45529982 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 March 22, 2011. It can be accessed by dialing 800-642-1687 (U.S. callers) or 706-645-9291 (Int’l callers), passcode 45529982. 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 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 year and quarter ended on January 1, 2011. The fourth quarters of both 2010 and 2009 included 13 weeks and the fiscal years both included 52 weeks.

Source: Systemax Inc.

Investor/ Media:

Brainerd Communicators, Inc.

Mike Smargiassi / Nancy Zachary, 212-986-6667

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