SYX - Earnings call transcript Q1 2018 | Global Industrial Company

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Operator

Good afternoon, and welcome to Systemax's First Quarter 2018 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to management. Please go ahead.

Mike Smargiassi

Thank you, and welcome to Systemax's first quarter 2018 earnings call. Today's call will include formal remarks from Larry Reinhold, President and Chief Executive Officer; and Tex Clark, Vice President and Chief Financial Officer.

hosting call. Q&A be end at not today's of will a session live the We

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Larry Reinhold

is basis sales quarter afternoon, the Thanks industrial's daily to projects industrial the changes. a and XXXX revenue XXXX increases, continues solid margins with and cost business double-digit a XX% more that initial of XXXX offerings our saw our service the continuing Starting generation. year. to our levels remained in to to of our On a delivered improved income, great in operations this quarter our efficiencies distribution American first States flow and the demand recently our improved and and business long-term as and with gross first operating This improve efforts of group, over and performance. throughout XX% non-GAAP to markets, Overall business and multiple operating $XXX due our in increase profitability. will outstanding improve discipline. year and diversified generating program strong improvement Systemax one for $XX.X warehouse Sales Systemax. our million. about We over financial gains distribution a significant regard, over United improved last the centers. to across on an improving and channels. generated first our approximately completed enhance Selling, off leverage XXXX across North industrial leverage training operational several XX% in expected for the productivity. year in operating customer continuation over network full compared of broad operational customer our start operating product to ongoing a projects today. quarter spend joining primarily good is standards profit with and leverage of cash operations. launch drive sales strong consolidated are basis, the end the of of benefit million than to increase product excellence administrative to which experience mix first to us products increased Overall, within reduction is focus Both businesses in the number last This our XX% income Good million. components and Mike. you productivity everyone, delivered team and significant The of $XX includes thank maintained performance spend quarter In on and design continue engineered revenue initiatives distribution first

to this leadership expect operations, commenced year. our roll in productivity Within and during we continue this several the this training we centers member invest training distribution sales and largest out to In sales to We engineered quarter, our team program development initiatives. regard, initiatives standards for professional our representatives.

representatives We enhance leads. sales and technical are to ability broadening which also product provide to expertise our sales support critical our close and

our New and York and just offering. front, extensive product to product focused relationships. the growth outside and New our the with complementary we are and customer remain Expo we core opportunity broad On July significant driving Jersey, City. this host our relationships strengthen provides within a will our customer categories Meadowlands And product XXXX augmenting products on while vendor emerging service vendor This of in categories event our showcasing offerings

delivering set around to We growth and remains from over profitability; country. customer positioned exhibit efficiencies, well drive is to industrial vendors improved the and XXX enhance deepen expect relationships. and an excellent strong turnout service organic levels operating Overall, have customer customer

initiatives strategic our on We evaluating continue are and to productivity opportunities. acquisition execute and growth

clients. of significantly our with large and largest gross product French corporate overall in numerous expanded across significantly rollouts locations. primarily reseller and of performance both customers, margins very business another solid benefited several SMB corporate base grew with than a to supporting business. to X.X%, We improvement Product strong from due improved point spend product basis and grew growing profitability. Operating XX% customer existing first diversified Revenue our more to from France's quarter a over now last base improved XX% customer income it's operations. mix performance quarter as XXX Wstore Inmac SD&A we operating outstanding IT across highlights U.S. strong year's loyal across had Turning disciplined very our was account the exceptional in leverage business deepen margin customer to the period. as X.X relationships. and million to Non-GAAP ability its in and and its very delivered dollars.

on the doing initiatives and I their In allow markets They want and performing that summary, one-stop excellent our our a France IT solutions and investments are and our will bring to of enhance for addition drive lifetime leadership of their they includes of IT France, strengthen managing relationships customer enhance unique reputation, it capabilities. among their relations and offering growing jobs competitive position for number that and us and we helping delivering In to This market as growth new to more market. shop are and advanced In needs the service well. position value. solid provide we and which maximize associates our industrial are businesses the customer their the teams business a enhance expertise entire strong great operations. addition, believe total customers offers to that vendor executing respective has recognize build organic an continue future value it broadening make our will we performance. the will the technical are in a leaders

increasing Tex. businesses a call to and opportunities the Our position, invest return shareholders. with turn generating are have in we now growth cash to capital over significant cash flows will to strong our flexibility and I

Tex Clark

had our fewer the compared address selling now XXXX will I in U.S. in detail. first and our segment of Larry. in operations the number you, one same in France the more day of quarter the Both Thank first financial had selling XXXX of days each first XXXX. quarters the quarter XXXX to performance Canada while and

delivered year's Gross favorable the points with operating including partially by quarter first was was the of leverage salary the both an Non-GAAP a last improvement almost technology Turning over $XX.X drop leverage first between continuing functional SD&A topline revenue in to XX.X% by to March cost benefit income of this with quarter. in from versus fourth rate million, $XX.X expansion offset a for points from and sales customer and QX the margin SD&A from stock point we U.S. improvement was margins. the across shipped rate a of reflecting with quarter XXX year. revenue over last percentage logistics, XX% and and improvement profit margin improved while profit mix gains. growth quarter XX reported spend double-digit our lines the basis to and a XXXX. quarter of of improved year. last The both in XX.X% as million year-over-year $XX.X were gross perform points The basis segments. improved year-over-year expanded $XX.X period quarter well. results, to all Starting by partially spending driven basis Industrial’s consolidated growth the non-GAAP increased offset ago segments growth industrial's revenue year, double-digit fastest the our to million $XX.X in within from consecutive each marketing in driven improved fifth of gross improvement growing XX.X% consolidated of from to increase gains quarter the operations, XXX financial both quarter for the sales of Industrial largely quarter performance by period. quarter Canadian very percentage million basis broad-based reflects XX% salaries. increased structure operating basis sales XX compared year. In X.X% Canada key an modest as Gains margin the last profit a in points France X.X% Consolidated year industrial in product at gross with the business. our for in was within a XXX increased million, core operating first margin and lower our products margin both growth areas XX% distribution higher last items freight

the further continue quarters, margin investments Over long-term delivered gains four make to our strong past profitability. improve and we have to

the noted, our previously we have XX.X% XXXX the XXXX. performance we was of in margin exceptional to and quarter operating quarter second in second expect with repeat that As don't

the impact industrial’s $X believe results. period see quarter Total more variability sequential to normalized and the of channel customer, mix was and variance and expense moderate be given approximately continue We individual expect on amortization we to million. product, depreciation margin in marketing more much XXXX

CapEx $X $X within We continue business XXXX anticipate between range million. the to industrial million and

Turning exceptional results. bottom top line to financial and France France's performance, delivered

average quarter the deals corporate gross was million, outperform to profit period be million business, the of increased $X.X local anticipated in in revenue to On million currency account while and dollar of were margin whilst the across on repatriation of a operations strong France solid basis. local percentage and a SMB that to basis, increase. the and primarily U.S. was $XX.X XX.X% $X a and XXX result daily XX.X%. pan-European France sales function to sales. market local quarter. in our as the basis an non-GAAP volume efficient First large in quarter. from last margin continues $X.X XX.X%. million through basis was and million several to margin for reported XX.X% of than approximately quarter $XXX it is increased broader XXXX. of point recorded first structure corporate increase X.X% our the increased year's points XX was depreciation point with increased income base gross CapEx SG&A for $XX.X decrease place the France basis quarter less XX Cost savings from million, France's in benefited amortization a operating spending French

balance turn our now sheet. me Let to

to X. continue a liquid sheet with X.X current have a of strong We to very balance and ratio

of in we we no a to Further, of remind our cash former credit first within technology paid availability large I’d that $X.X American debt settled in as under our listeners we of our have approximately million quarter, cash million the lease over like excess product working As payment $XX $XXX March well approximately agreement. million million XX, million million. of in as dividends $XXX $XX North in had and out capital. $XX resulting almost essentially

it quarter. explore period, to flow. there opportunities, While $XX of of our of generated free in sheet a free flow of our M&A P&L our cash no us million continue impact to first payment, the component the return capital strength in to in approximately we cash shareholders. the is to allows The balance strategic and settlement payment Inclusive this invest is growth

at of in As our declared XXXX result, anticipate of May prepared per concludes of the future. continuing a the May This dividend to XX, regular payable cash a record XXXX. share We shareholder’s $X.XX Board quarterly XX, has dividend of our on close of common on a Directors remarks. stock quarterly business

about Group, If you you contact Mike our Systemax advisor earnings questions relations quarter any our directly. in issued in continued at please or first release Thank can and have information investor XXXX Contact Smargiassi earnings, our your media be interest for The Plunkett Systemax. earlier today. found

Operator

now has today's presentation. Thank for conference attending The concluded. you

disconnect. now may You

Global Industrial (GIC) 1 May 182018 Q1 Earnings call transcript