SYSTEMAX REPORTS RECORD FIRST QUARTER SALES
-- Sales Up 22%; EPS Up 35% to $0.31 --
PORT WASHINGTON, NY, May 11, 2010 – Systemax Inc. (NYSE:SYX) today announced financial results for the first quarter ended March 31, 2010.
First Quarter 2010 Financial Highlights:
| · | Consolidated sales grew 22% to $915.2 million in U.S. dollars. On a constant currency basis and excluding WStore results, sales grew 12%. |
· | Diluted earnings per share (EPS) grew 35% to $0.31. |
| · | Consumer channel sales grew 9% to $470.0 million in U.S. dollars. On a constant currency basis and excluding WStore results, sales grew 1%. |
| · | Business to business channel sales grew 38% to $445.2 million in U.S. dollars. On a constant currency basis and excluding WStore results, sales grew 27%. |
| · | “Same store” business to business channel sales grew 20% while consumer channel sales declined 1%. A moderate same store consumer channel sales increase in North America was offset by a decline in Europe. |
Performance Summary (U.S dollars in millions, except per share data) |
| Highlights | Quarter Ended March 31, |
| | 2010 | 2009 |
| Sales | $915.2 | $752.3 |
| Gross profit | $126.2 | $107.6 |
| Gross margin | 13.8% | 14.3% |
| Operating income | $20.4 | $15.0 |
| Operating margin | 2.2% | 2.0% |
| Diluted earnings per share | $0.31 | $0.23 |
“Systemax’s strong first quarter consolidated performance is a testament to the diversification we have built in our business, which is a key component of our long-term growth strategy, and the moderately improving economic climate. The 22 percent sales growth we reported this quarter was primarily driven by success in our business to business sales channels, specifically our European Technology Products Group and Industrial Products Group in North America. We also delivered a strong bottom line performance with operating income increasing 36 percent and diluted earnings per share up 35 percent, as we continue to benefit from our focus on cost controls. We remain confident in Systemax’s growth potential and in our ability to build value for our shareholders,” said Richard Leed s, Chairman and Chief Executive Officer.
Gilbert Fiorentino, Chief Executive of Systemax’s Technology Products Group said, “This quarter highlights the benefit of having a multi-channel strategy, with diversified revenue
streams, strong brands, and expanded product categories. Our Technology Products Group delivered an outstanding quarter with sales growth of 22 percent in U.S. dollars. Our business to business operations were the highlight of the quarter with strong sales growth in both North America and Europe. In North America we focus our B2B efforts primarily on small business, and we were pleased with the growth in this market. In our consumer channels we had moderate sales growth in North America, which was offset by a decline in Europe. We believe our European consumer sales channels represent a significant growth opportunity as our experience, strong customer service and establish brands uniquely position us in this segment.”
Supplemental Channel Sales Summary (in millions) |
| Channel | Quarter Ended March 31, |
| 2010 | 2009 |
Consumer1 | $470.0 | $429.8 |
Business to business2 | $445.2 | $322.5 |
| Consolidated sales | $915.2 | $752.3 |
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 segment
Supplemental “Same Store” Channel Growth3 – Q1 2010 vs Q1 2009 |
| Channel | Change |
| Consumer | -1% |
| Business to business | 20% |
| Consolidated sales | 10% |
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 March 31, |
| 2010 | 2009 |
| Computers | $227.6 | $132.5 |
| Consumer electronics | $205.7 | $198.5 |
| Computer components | $147.2 | $145.8 |
| Computer accessories & software | $256.8 | $214.7 |
| Industrial products | $54.5 | $45.7 |
| Other | $23.4 | $15.1 |
| Consolidated sales | $915.2 | $752.3 |
Supplemental Business Unit Sales Summary (in millions) |
| Business Unit | Quarter Ended March 31, |
| 2010 | 2009 |
| Technology Products – North America | $581.6 | $502.4 |
| Technology Products – Europe | $279.0 | $203.9 |
| Industrial Products | $54.5 | $45.6 |
| Software Solutions | $0.1 | $0.4 |
| Consolidated sales | $915.2 | $752.3 |
Working capital as of March 31, 2010 was $264.7 million, including cash and cash equivalents of $37.6 million. As of March 31, 2010, the Company had availability under its credit facility of approximately $105.0 million and total cash and available liquidity of over $140 million. Short term debt totaled approximately $16.6 million at March 31, 2010 and included approximately $13.4 million in revolving debt assumed as part of the WStore acquisition. The Company’s effective tax rate was 37.5%, compared to 39.5% last year. The lower rate in 2010 is the result of the Company having a higher percentage of its pretax income in countries with lower tax rates.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its first quarter 2010 results today, May 11, 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 72711364 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 May 18, 2010. It can be accessed by dialing 800-642-1687 (U.S. callers) or 706-645-9291 (Int’l callers), passcode 72711364. 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 operatio n 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.
INVESTOR/ MEDIA CONTACTS:
Denise Roche / Nancy Zachary
Brainerd Communicators, Inc.
212-986-6667
roche@braincomm.com
nancy@braincomm.com
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SYSTEMAX INC. Condensed Consolidated Statements of Operations – Unaudited (In thousands, except per share amounts) | |
| | | Quarter Ended | |
| | | March 31* | |
| | | 2010 | | | 2009 | |
| Net sales | | $ | 915,237 | | | $ | 752,268 | |
| Cost of sales | | | 788,996 | | | | 644,718 | |
| Gross profit | | | 126,241 | | | | 107,550 | |
| Gross margin | | | 13.8 | % | | | 14.3 | % |
| Selling, general and administrative expenses | | | 105,865 | | | | 92,530 | |
| Operating income | | | 20,376 | | | | 15,020 | |
| Operating margin | | | 2.2 | % | | | 2.0 | % |
| Interest and other expense | | | 1,579 | | | | 654 | |
| Income before income taxes | | | 18,797 | | | | 14,366 | |
| Provision for income taxes | | | 7,046 | | | | 5,668 | |
| Effective tax rate | | | 37.5 | % | | | 39.5 | % |
| Net income | | $ | 11,751 | | | $ | 8,698 | |
| Net margin | | | 1.3 | % | | | 1.2 | % |
| | | | | | | | | |
| Net income per common share: | | | | | | | | |
| Basic | | $ | 0.32 | | | $ | 0.24 | |
| Diluted | | $ | 0.31 | | | $ | 0.23 | |
| Basic | | | 36,785 | | | | 36,621 | |
| Diluted | | | 37,471 | | | | 37,273 | |
| | | | | | | | | |
| SYSTEMAX INC. | |
| Condensed Consolidated Balance Sheets - Unaudited | |
| (In thousands) | |
| | | | | | | |
| | | March 31* | | | December 31,* | |
| | | 2010 | | | 2009 | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 37,571 | | | $ | 58,309 | |
| Accounts receivable, net | | | 241,398 | | | | 241,860 | |
| Inventories | | | 366,967 | | | | 365,725 | |
| Prepaid expenses and other current assets | | | 23,881 | | | | 26,692 | |
| Total current assets | | | 669,817 | | | | 692,586 | |
| Property, plant and equipment, net | | | 64,772 | | | | 65,598 | |
| Goodwill, intangibles and other assets | | | 55,668 | | | | 58,717 | |
| Total assets | | $ | 790,257 | | | $ | 816,901 | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Short-term debt | | $ | 16,637 | | | $ | 15,197 | |
| Accounts payable and accrued expenses | | | 388,462 | | | | 427,307 | |
| Total current liabilities | | | 405,099 | | | | 442,504 | |
| Capitalized lease obligations | | | 991 | | | | 1,194 | |
| Other liabilities | | | 8,999 | | | | 8,518 | |
| Shareholders’ equity | | | 375,168 | | | | 364,685 | |
| Total liabilities and shareholders’ equity | | $ | 790,257 | | | $ | 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 first quarter ended on April 3, 2010. The first quarter of 2010 and 2009 included 13 weeks.
