PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--
Systemax Inc. (NYSE: SYX) today announced financial
results for the first quarter ended March 31, 2013.
|
Performance Summary
(U.S.
dollars in millions, except per share data)
|
|
Highlights
|
|
Quarter Ended
March 31,
|
|
GAAP Results
|
|
|
2013
|
|
|
|
2012
|
|
|
Sales
|
|
$
|
880.7
|
|
|
$
|
913.2
|
|
|
Gross profit
|
|
$
|
122.6
|
|
|
$
|
130.7
|
|
|
Gross margin
|
|
|
13.9
|
%
|
|
|
14.3
|
%
|
|
Operating income (loss) from continuing operations
|
|
$
|
(8.7
|
)
|
|
$
|
10.8
|
|
|
Operating margin from continuing operations
|
|
|
(1.0
|
)%
|
|
|
1.2
|
%
|
|
Net income (loss)
|
|
$
|
(6.3
|
)
|
|
$
|
7.1
|
|
|
Diluted net income (loss) per share
|
|
$
|
(0.17
|
)
|
|
$
|
0.19
|
|
|
Non-GAAP Results*
|
|
|
|
|
|
Non-recurring and recurring adjustments, net
|
|
$
|
8.0
|
|
|
$
|
3.2
|
|
|
Adjusted operating income (loss)
|
|
$
|
(0.7
|
)
|
|
$
|
14.0
|
|
|
Adjusted operating margin
|
|
|
(0.1
|
)%
|
|
|
1.5
|
%
|
|
Adjusted net income (loss)
|
|
$
|
(0.8
|
)
|
|
$
|
9.3
|
|
|
Adjusted diluted net income (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
* Management believes that by excluding certain recurring and
non-recurring adjustments above from comparable GAAP measures investors
have an additional meaningful measurement of the Company’s performance.
See accompanying GAAP reconciliation tables.
First Quarter 2013 Financial Highlights:
-
Consolidated sales declined 3.6% to $880.7 million in U.S. dollars. On
a constant currency basis, sales declined 3.4%.
-
Business to business channel sales grew 1.6% to $543.8 million in U.S.
dollars. On a constant currency basis, sales grew 2.0%.
-
Consumer channel sales declined 10.9% to $336.9 million in U.S.
dollars. On a constant currency basis, sales declined 10.9%.
-
“Same store” business to business sales grew 2.0% and same store
consumer sales declined 10.7% on a constant currency basis.
-
GAAP operating income declined to a loss of $8.7 million compared to
income of $10.8 million last year. Non-GAAP operating income was a
loss of $0.7 million compared to income of $14.0 million last year.
-
GAAP diluted net income per share declined to a loss of $0.17.
Non-GAAP diluted income per share declined to a loss of $0.02.
Richard Leeds, Chairman and Chief Executive Officer, said, “On an
overall basis, I am pleased that we substantially improved the
performance of the business from what we reported in the fourth quarter.
However, an operating loss, no matter how small, is still unacceptable
to us and we are working diligently to improve the business. Our balance
sheet and cash position remain extremely strong and this provides us the
resources to continue our operating improvement initiatives. Our
Industrial Products Group once again delivered a solid performance with
a revenue increase of 17%, driving topline growth in our B2B channel
overall. Our B2B technology operations in Europe and North America were
down modestly and our consumer operations continued to be soft, which
are reflected in our consolidated performance. In our Technology segment
we grew our computer sales while industry analysts reported broad
declines in the overall market. However these gains were more than
offset by declines in consumer electronics. On a sequential quarter
basis, we improved the bottom line of our Industrial Products business
and narrowed our operating loss in North American Technology as we have
started to see some benefits of our ongoing performance initiatives.”
“While the operating environment for our technology businesses remains
challenging, we are seeing growth opportunities within our B2B
businesses both in Europe and North America. We are focused on
optimizing our operations and strengthening our management and sales
teams to better position us to capitalize on our growth strategy. We are
taking proactive actions to improve our financial performance,
particularly in North American Technology where we are right sizing our
cost structure, stabilizing our performance and managing the business
with a different leadership team. We have a strong cash position and
will continue to make investments to drive our long-term performance,”
Leeds concluded.
At the end of the first quarter of 2013, the Company had working capital
of $351.6 million, cash and cash equivalents of $134.7 million, and
availability under its credit facility of $104.6 million. Short and
long-term debt totaled approximately $7.4 million at March 31, 2013.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to comment on first quarter
2013 results today, April 30, 2013 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, Global Industrial, MISCO and Inmac
Wstore.
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.
|
Supplemental Channel Sales, Product Category and Business Unit
Summary
|
|
|
|
Supplemental Channel Sales Summary*
(in millions)
|
|
Channel
|
|
Quarter Ended March 31,
|
|
|
|
2013
|
|
% of Sales
|
|
Change y/y
|
|
|
2012
|
|
% of Sales
|
|
Business to Business1
|
|
$
|
543.8
|
|
61.7
|
%
|
|
1.6
|
%
|
|
$
|
535.0
|
|
58.6
|
%
|
|
Consumer 2
|
|
$
|
336.9
|
|
38.3
|
%
|
|
(10.9
|
)%
|
|
$
|
378.2
|
|
41.4
|
%
|
|
Consolidated Sales
|
|
$
|
880.7
|
|
100.0
|
%
|
|
(3.6
|
)%
|
|
$
|
913.2
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
* Certain prior year results have been reclassified to match current
year presentation.
1 Includes sales from managed
business relationships, including outbound call centers and extranets,
and the entire Industrial Products and Corporate segments
2 Includes
sales from retail stores, consumer websites, inbound call centers and
television shopping
|
Supplemental “Same Store” Channel Growth1
– Q1 2013 vs. Q1 2012
|
|
Channel
|
|
Change
|
|
Business to Business
|
|
2.0
|
%
|
|
Consumer
|
|
(10.7
|
)%
|
|
Consolidated Sales
|
|
(3.3
|
)%
|
|
|
|
|
1 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.
|
Supplemental Product Category Sales Summary
(in millions)
|
|
Product Category
|
|
Quarter Ended March 31,
|
|
|
|
2013
|
|
% of Sales
|
|
Change y/y
|
|
|
2012
|
|
% of Sales
|
|
Computers
|
|
$
|
275.1
|
|
31.2
|
%
|
|
5.2
|
%
|
|
$
|
261.4
|
|
28.6
|
%
|
|
Computer Accessories & Software
|
|
$
|
239.0
|
|
27.1
|
%
|
|
(7.9
|
)%
|
|
$
|
259.4
|
|
28.4
|
%
|
|
Consumer Electronics
|
|
$
|
135.4
|
|
15.4
|
%
|
|
(18.7
|
)%
|
|
$
|
166.5
|
|
18.2
|
%
|
|
Industrial Products
|
|
$
|
105.6
|
|
12.0
|
%
|
|
16.8
|
%
|
|
$
|
90.4
|
|
9.9
|
%
|
|
Computer Components
|
|
$
|
103.0
|
|
11.7
|
%
|
|
(4.9
|
)%
|
|
$
|
108.3
|
|
11.9
|
%
|
|
Other
|
|
$
|
22.6
|
|
2.6
|
%
|
|
(16.9
|
)%
|
|
$
|
27.2
|
|
3.0
|
%
|
|
Consolidated Sales
|
|
$
|
880.7
|
|
100.0
|
%
|
|
(3.6
|
)%
|
|
$
|
913.2
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Business Unit Sales Summary
(in millions)
|
|
Business Unit
|
|
Quarter Ended March 31,
|
|
|
|
2013
|
|
% of Sales
|
|
Change y/y
|
|
|
2012
|
|
% of Sales
|
|
Technology Products
|
|
$
|
773.5
|
|
87.8
|
%
|
|
(5.8
|
)%
|
|
$
|
821.5
|
|
90.0
|
%
|
|
Industrial Products
|
|
$
|
105.6
|
|
12.0
|
%
|
|
16.8
|
%
|
|
$
|
90.4
|
|
9.9
|
%
|
|
Corporate and Other
|
|
$
|
1.6
|
|
0.2
|
%
|
|
23.1
|
%
|
|
$
|
1.3
|
|
0.1
|
%
|
|
Consolidated Sales
|
|
$
|
880.7
|
|
100.0
|
%
|
|
(3.6
|
)%
|
|
$
|
913.2
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Business Unit GAAP Operating Income (Loss) Summary
(in millions)
|
|
Business Unit
|
|
Quarter Ended March 31,
|
|
|
|
2013
|
|
|
Margin
|
|
|
2012
|
|
|
Margin
|
|
Technology Products
|
|
$
|
(11.3
|
)
|
|
(1.5
|
)%
|
|
$
|
8.8
|
|
|
1.1
|
%
|
|
Industrial Products
|
|
$
|
8.5
|
|
|
8.0
|
%
|
|
$
|
8.3
|
|
|
9.2
|
%
|
|
Corporate and Other
|
|
$
|
(5.9
|
)
|
|
NM
|
|
|
$
|
(6.3
|
)
|
|
NM
|
|
|
Consolidated Operating Income (Loss)
|
|
$
|
(8.7
|
)
|
|
(1.0
|
)%
|
|
$
|
10.8
|
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Income (Loss)*
|
|
Technology Products
|
|
$
|
(4.1
|
)
|
|
(0.5
|
)%
|
|
$
|
11.1
|
|
|
1.4
|
%
|
|
Industrial Products
|
|
$
|
8.9
|
|
|
8.4
|
%
|
|
$
|
8.7
|
|
|
9.6
|
%
|
|
Corporate and Other
|
|
$
|
(5.5
|
)
|
|
NM
|
|
|
|
($5.8
|
)
|
|
NM
|
|
|
Consolidated Operating Income (Loss)
|
|
$
|
(0.7
|
)
|
|
(0.1
|
)%
|
|
$
|
14.0
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
* Management believes that by excluding certain recurring and
non-recurring adjustments above from comparable GAAP measures investors
have an additional meaningful measurement of the Company’s performance.
See accompanying GAAP reconciliation tables.
NM – not meaningful
|
SYSTEMAX INC.
|
|
Condensed Consolidated Statements of Operations – Unaudited
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31*
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
Net sales
|
|
$
|
880.7
|
|
|
$
|
913.2
|
|
|
Cost of sales
|
|
|
758.1
|
|
|
|
782.5
|
|
|
Gross profit
|
|
|
122.6
|
|
|
|
130.7
|
|
|
Gross margin
|
|
|
13.9
|
%
|
|
|
14.3
|
%
|
|
Selling, general and administrative expenses
|
|
|
125.2
|
|
|
|
118.0
|
|
|
Special charges (gains), net
|
|
|
6.1
|
|
|
|
1.9
|
|
|
Operating income (loss) from continuing operations
|
|
|
(8.7
|
)
|
|
|
10.8
|
|
|
Operating margin
|
|
|
(1.0
|
)%
|
|
|
1.2
|
%
|
|
Interest and other (income) expense, net
|
|
|
0.5
|
|
|
|
-
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(9.2
|
)
|
|
|
10.8
|
|
|
(Benefit from) provision for income taxes
|
|
|
(2.9
|
)
|
|
|
3.5
|
|
|
Effective tax rate
|
|
|
31.5
|
%
|
|
|
32.4
|
%
|
|
Income (loss) from continuing operations
|
|
|
(6.3
|
)
|
|
|
7.3
|
|
|
Discontinued operations
|
|
|
-
|
|
|
|
(0.2
|
)
|
|
Net income (loss)
|
|
$
|
(6.3
|
)
|
|
$
|
7.1
|
|
|
Net margin
|
|
|
(0.7
|
)%
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
Basic
|
|
$
|
(0.17
|
)
|
|
$
|
0.19
|
|
|
Diluted
|
|
$
|
(0.17
|
)
|
|
$
|
0.19
|
|
|
|
|
Weighted average common and
common equivalent shares:
|
|
Basic
|
|
|
37.0
|
|
|
|
36.8
|
|
|
Diluted
|
|
|
37.0
|
|
|
|
37.1
|
|
|
|
|
|
|
|
|
|
|
|
|
SYSTEMAX INC.
|
|
Condensed Consolidated Balance Sheets - Unaudited
|
|
(In millions)
|
|
|
|
|
|
|
|
|
March 31*
|
|
December 31*
|
|
|
|
2013
|
|
2012
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
134.7
|
|
$
|
150.7
|
|
Accounts receivable, net
|
|
|
295.4
|
|
|
297.4
|
|
Inventories
|
|
|
324.8
|
|
|
367.2
|
|
Prepaid expenses and other current assets
|
|
|
39.2
|
|
|
37.1
|
|
Total current assets
|
|
|
794.1
|
|
|
852.4
|
|
Property, plant and equipment, net
|
|
|
60.7
|
|
|
63.0
|
|
Goodwill, intangibles and other assets
|
|
|
46.0
|
|
|
46.9
|
|
Total assets
|
|
$
|
900.8
|
|
$
|
962.3
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term debt
|
|
$
|
2.6
|
|
$
|
2.8
|
|
Accounts payable and accrued expenses
|
|
|
439.9
|
|
|
488.8
|
|
Total current liabilities
|
|
|
442.5
|
|
|
491.6
|
|
Long-term debt
|
|
|
4.8
|
|
|
5.3
|
|
Other liabilities
|
|
|
19.7
|
|
|
19.1
|
|
Shareholders’ equity
|
|
|
433.8
|
|
|
446.3
|
|
Total liabilities and shareholders’ equity
|
|
$
|
900.8
|
|
$
|
962.3
|
|
|
|
|
|
|
|
|
* 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 30, 2013. The first quarters of
both 2013 and 2012 included 13 weeks.
|
SYSTEMAX INC.
|
|
Reconciliation of Segment GAAP Operating Income (loss) to
Non-GAAP Operating Income (loss) - Unaudited
|
|
(In millions)
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31*
|
|
|
|
2013
|
|
|
|
2012
|
|
|
Technology Products
|
|
$(11.3
|
)
|
|
$
|
8.8
|
|
|
Industrial Products
|
|
8.5
|
|
|
|
8.3
|
|
|
Corporate And Other
|
|
(5.9
|
)
|
|
|
(6.3
|
)
|
|
GAAP Operating income (loss)
|
|
(8.7
|
)
|
|
|
10.8
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
Technology Products:
|
|
|
|
|
|
Severance and other reorganization related charges
|
|
5.9
|
|
|
|
1.1
|
|
|
Litigation costs (1)
|
|
0.1
|
|
|
|
0.5
|
|
|
New facility startup costs (2)
|
|
0.7
|
|
|
|
-
|
|
|
Stock based compensation
|
|
0.3
|
|
|
|
0.4
|
|
|
Intangible asset amortization
|
|
0.2
|
|
|
|
0.3
|
|
|
Total Non-GAAP Adj. Technology Products
|
|
7.2
|
|
|
|
2.3
|
|
|
Industrial Products:
|
|
|
|
|
|
New facility startup costs (3)
|
|
0.1
|
|
|
|
0.3
|
|
|
Stock based compensation
|
|
0.3
|
|
|
|
0.1
|
|
|
Total Non-GAAP Adj. Industrial Products
|
|
0.4
|
|
|
|
0.4
|
|
|
Corporate and Other:
|
|
|
|
|
|
Stock based compensation
|
|
0.4
|
|
|
|
0.5
|
|
|
Total Non-GAAP Adj. Technology Products
|
|
0.4
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
Technology Products
|
|
(4.1
|
)
|
|
|
11.1
|
|
|
Industrial Products
|
|
8.9
|
|
|
|
8.7
|
|
|
Corporate And Other
|
|
(5.5
|
)
|
|
|
(5.8
|
)
|
|
Non-GAAP Operating income (loss)*
|
|
$(0.7
|
)
|
|
$
|
14.0
|
|
|
|
|
|
|
|
|
|
|
|
* Management believes that by excluding the adjustments above from
GAAP Operating Income, investors have an additional meaningful
measurement of the Company’s operating results.
|
|
(1) Includes legal costs related to the investigations of former
officers and employees, net.
|
|
(2) Includes start up costs related to the opening of a shared
services center for our European Technology business.
|
|
(3) Includes the costs related to the closing and relocation of one
of our smaller distribution centers to a new, significantly larger
distribution center and call center for our Industrial Products
business.
|
|
|
|
SYSTEMAX INC.
|
|
Reconciliation of GAAP Net Income (loss) to Non-GAAP Net Income
(loss) - Unaudited
|
|
(In millions)
|
|
|
|
Quarter Ended
|
|
|
|
March 31*
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
Net income (loss)
|
|
$
|
(6.3
|
)
|
|
$
|
7.1
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
Non-recurring
|
|
|
|
|
|
Severance and other reorganization related charges(1)
|
|
|
5.9
|
|
|
|
1.1
|
|
|
New facility start up costs (2)
|
|
|
0.8
|
|
|
|
0.3
|
|
|
Litigation costs (3)
|
|
|
0.1
|
|
|
|
0.5
|
|
|
Income tax effect (4)
|
|
|
(2.1
|
)
|
|
|
(0.6
|
)
|
|
Total non- recurring adjustments, net of tax
|
|
|
4.7
|
|
|
|
1.3
|
|
|
Recurring
|
|
|
|
|
|
Stock based compensation
|
|
|
1.0
|
|
|
|
1.0
|
|
|
Intangible asset amortization
|
|
|
0.2
|
|
|
|
0.3
|
|
|
Income tax effect(4)
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
Total recurring adjustments
|
|
|
0.8
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
Non-GAAP net income*
|
|
$
|
(0.8
|
)
|
|
$
|
9.3
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
(0.17
|
)
|
|
$
|
0.19
|
|
|
Non-GAAP Diluted earnings per share*
|
|
$
|
(0.02
|
)
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
* Management believes that by excluding the adjustments above from
GAAP net income investors have an additional meaningful measurement
of the Company’s net income.
|
|
(1) Includes $2.0M in charges related severance and reorganization
in our North America Technology business related to our previously
announced leadership changes as well as $4M in charges for ongoing
restructuring within our European Technology business related to the
opening of a shared services center.
|
|
(2) Q1 2013 charges include costs associated with the opening of a
shared services center for our European Technology business while Q1
2012 charges includes costs related to the closing and relocation of
one of our smaller distribution centers to a new, significantly
larger distribution and call center for our Industrial Products
business.
|
|
(3) Includes legal costs related to the investigations of former
officers and employees, net.
|
|
(4) Effective Tax Rate of 31.5% and 32.4% used in Q1 2013 and Q1
2012 respectively.
|
|
|
Investor/Media:
Mike Smargiassi / Nancy Zakhary
Brainerd
Communicators, Inc.
212-986-6667
[email protected]
[email protected]
Source: Systemax Inc.