PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--
Systemax Inc. (NYSE: SYX) today announced financial
results for the first quarter ended March 31, 2012.
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Performance Summary
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(U.S. dollars in millions, except per share data)
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Highlights
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Quarter Ended
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March 31,
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2012
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2011
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Sales
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$913.6
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$ 929.9
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Gross profit
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$130.7
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$130.5
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Gross margin
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14.3%
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14.0%
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Operating income
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$10.6
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$18.6
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Operating margin
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1.2%
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2.0%
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Diluted earnings per share
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$0.19
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$0.36
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Special charges, net
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$1.9
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$0.5
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Special charges, net, per diluted share, after tax
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$0.03
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$0.01
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First Quarter 2012 Financial Highlights:
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Consolidated sales declined 2% to $913.6 million in U.S. dollars. On a
constant currency basis, sales declined 1%.
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Business to business channel sales grew 7% to $512.7 million in U.S.
dollars. On a constant currency basis, sales grew 8%.
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Consumer channel sales declined 11% to $400.9 million in U.S. dollars.
On a constant currency basis, sales declined 10%.
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“Same store” business to business sales grew 8% and same store
consumer sales declined 14% on a constant currency basis.
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Special charges incurred were approximately $1.9 million on a pre-tax
basis, or $0.03 per diluted share after tax, consisting of costs
associated with senior staffing changes in our North America
technology business, legal and professional fees related to the
previously disclosed investigation and settlement with a former
officer and director, and costs related to the planned closing and
relocation of one of our smaller distribution centers to a new,
significantly larger distribution and call center for our Industrial
Products business.
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Operating income decreased 43% to $10.6 million, primarily as a result
of performance in our North America technology business.
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Diluted earnings per share (EPS) was $0.19.
Richard Leeds, Chairman and Chief Executive Officer, commented, “On an
overall basis, I am disappointed in our results for the quarter. The
performance of our North America technology consumer business was below
our internal expectations and masks the strong performance in the rest
of the business. We are highly focused on re-establishing revenue growth
and improving profitability in this business. The highlight of the
quarter was our B2B operations. Our industrial products business grew
28%, which was its 8th consecutive quarter of organic revenue
growth exceeding 25%. Our technology B2B businesses in both Europe and
North America had another quarter of solid revenue growth.”
“Our efforts to improve margins showed mixed performance. We recorded
our fifth consecutive quarter of year over year gross margin improvement
and reduced operating costs across most of our businesses. However,
consolidated operating margin was significantly impacted by the results
of our North America technology business. With a strong balance sheet,
including cash balances of $111 million, a truly multi-channel and
web-centric model which is diversified by market, geography and channel,
Systemax remains well positioned for the future,” Leeds concluded.
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Channel
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Quarter Ended
March 31,
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2012
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% of
Sales
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Change y/y
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2011
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%
of Sales
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Business to business1
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$512.7
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56%
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7%
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$480.5
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52%
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Consumer2
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$400.9
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44%
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-11%
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$449.4
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48%
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Consolidated Sales
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$913.6
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100%
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-2%
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$929.9
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100%
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1
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Includes sales from managed business relationships, including
outbound call centers and extranets, and the entire Industrial
Products and Corporate segments
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2
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Includes sales from retail stores, consumer websites, inbound call
centers and television shopping
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Supplemental “Same Store” Channel Growth1
– Q1 2012 vs. Q1 2011
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Channel
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Change
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Business to business
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8%
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Consumer
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-14%
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Consolidated Sales
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-2%
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1
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Excludes revenue at retail stores, websites and call centers
operating for less than 14 full months as of the beginning of the
current comparison 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.
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Supplemental Product Category Sales
Summary
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(in millions)
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Product Category
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Quarter Ended
March 31,
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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Computers
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$262.2
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29%
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20%
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$218.7
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24%
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Computer accessories & software
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$259.6
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28%
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-4%
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$270.6
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29%
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Consumer electronics
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$167.0
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18%
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-19%
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$205.6
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22%
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Computer components
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$108.5
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12%
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-24%
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$142.5
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15%
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Industrial products
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$90.4
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10%
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28%
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$70.8
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8%
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Other
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$25.9
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3%
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19%
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$21.7
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2%
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Consolidated Sales
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$913.6
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100%
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-2%
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$929.9
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100%
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Supplemental Business Unit Sales Summary
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(in millions)
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Business Unit
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Quarter Ended
March 31,
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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Technology Products
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$821.9
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90%
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-4%
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$858.3
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92%
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Industrial Products
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$90.4
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10%
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28%
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$70.8
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8%
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Corporate and Other
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$1.3
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-%
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63%
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$0.8
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-%
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Consolidated Sales
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$913.6
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100%
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-2%
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$929.9
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100%
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In the first quarter of 2012 working capital grew by $14.4 million to
$369.1 million, and cash and cash equivalents increased by $13.7 million
to $111.0 million at March 31, 2012. The Company had availability under
its credit facility of approximately $110.4 million and total cash and
available liquidity of approximately $221.4 million at March 31, 2012.
Short and long-term debt totaled approximately $9.1 million at March 31,
2012.
The Company’s effective tax rate for the first quarter was 32.6%
compared to 30.8% in the first quarter of 2011. The higher tax rate is
the result of higher projected taxable income in jurisdictions with
higher tax rates in 2012 as compared to 2011.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its first quarter
2012 results today, May 1, 2012 at 5:00 p.m. Eastern Time. A live
webcast of the teleconference will be available on the Company’s website
at www.systemax.com
in the investor relations section. 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 websites, 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.
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SYSTEMAX INC.
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Condensed Consolidated Statements of Operations – Unaudited
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(In thousands, except per share amounts)
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Quarter Ended
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March 31*
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2012
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2011
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Net sales
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$913,578
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$929,867
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Cost of sales
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782,924
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799,369
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Gross profit
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130,654
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130,498
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Gross margin
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14.3%
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14.0%
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Selling, general and administrative expenses
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118,225
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111,369
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Special charges
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1,865
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504
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Operating income
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10,564
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18,625
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Operating margin
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1.2%
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2.0%
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Interest and other (income) expense, net
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52
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(979)
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Income before income taxes
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10,512
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19,604
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Provision for income taxes
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3,429
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6,038
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Effective tax rate
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32.6%
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30.8%
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Net income
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$7,083
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$13,566
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Net margin
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0.8%
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1.5%
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Net income per common share:
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Basic
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$0.19
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$0.37
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Diluted
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$0.19
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$0.36
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Weighted average common and
common equivalent shares:
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Basic
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36,836
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37,157
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Diluted
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37,051
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37,708
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SYSTEMAX INC.
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Condensed Consolidated Balance Sheets
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(In thousands)
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March 31*
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December 31*
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2012
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2011
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Current assets:
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Cash and cash equivalents
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$110,987
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$97,254
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Accounts receivable, net
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281,536
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268,980
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Inventories
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387,222
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372,244
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Prepaid expenses and other current assets
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41,237
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38,678
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Total current assets
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820,982
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777,156
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Property, plant and equipment, net
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69,259
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70,699
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Goodwill, intangibles and other assets
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66,518
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66,695
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Total assets
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$956,759
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$914,550
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Current liabilities:
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Short-term debt
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$2,588
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$2,552
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Accounts payable, accrued expenses, and other current liabilities
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449,331
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419,900
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Total current liabilities
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451,919
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422,452
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Long-term debt
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6,561
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7,133
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Other liabilities
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31,541
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30,673
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Shareholders’ equity
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466,738
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454,292
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Total liabilities and shareholders’ equity
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$956,759
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$914,550
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* 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 quarter ended on March 31, 2012. The first quarters of
both 2012 and 2011 included 13 weeks.
Investor/Media Contacts:
Brainerd Communicators, Inc.
Dianne
Pascarella / Nancy Zakhary
212-986-6667
[email protected]
[email protected]
Source: Systemax Inc.