SYX - Earnings call transcript Q2 2018 | Global Industrial Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to Systemax Inc.'s Second Quarter 2018 Earnings Call. At this time, I would like to turn the call over to Mike Smargiassi of The Plunkett Group.

Mike Smargiassi

Thank you, Rocco, and welcome to the Systemax Second 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.

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

any or the Systemax. have The please should Group Plunkett you questions results, on contact If Contact press and release can issued details be today at found systemax.com. in the statements. Today's discussion certain forward-looking may include could and It the report differ to should XX-Q. company's number including Statements annual the factors, quarterly on Form described of that Risk caption be actual and a materially those under reports projected understood on from due under Forward-looking XX-K those Form results Factors in non-GAAP metrics release. the are would included press highlight I like today's that in to additional, our The excluding entire performance. company's company discontinued believes North nonrecurring investors American that meaningful as European an comparable by recurring certain presenting Technology measurement the Products operations, from of Group divested well measures, adjustments as the France, excluding and operations as GAAP and have specified, when sales daily revenue discussing currency will changes, results. constant to be unless Further, otherwise referring average management include will call measures. non-GAAP certain This discussion a financial of these in a The release. to measures GAAP of company their provided comparable non-GAAP has today's financial directly measures reconciliation press most The be filed press SEC website and X-K. the Form on will available in the release with company's the is property the of is Systemax Inc. copyrighted is call This by and I now turn over the Mr. will to call Reinhold. Larry

Lawrence Reinhold

Thanks, you us for and everyone, today. Mike. joining afternoon, Good thank

declared $XXX.X our recognize On million like generated the I truly future. to strong well our operations and flow line margins quarter to would the both They another Industrial their $XX.X $X.XX declared constant financial increase bottom which per than quarter, Directors of an performance currency sales of in and of our special we have sheet. continuing quarter, and grow increases, of top dividend XXXX, revenue These $X have of and delivered basis, on Our continued revenue a of their success. of quarterly after a positioned returned today, onetime performance, today's both million our of non-GAAP businesses share and an per the Board are quarter second a dividend improvement businesses double-digit and XX.X%. dividend, operating balance our generation. of of financial is June, employees with a for our cash all cash will profit reflection share. regular are France in healthy average Including strong to $XXX the million, In direct in key and basis, XX.X% daily shareholders strength consolidated, more organically to Systemax for strong efforts.

transaction IT systems that We a the we an believe value approvals. the transaction at in the turning successful, million Inmac be we to Upon the entered like for a organic have recognizes additional revenue will Inmac business provide in cash. France, been growth to Before the business accepted We to basis margins repatriated of for on and receipt our value having enterprise this Germany's at market, and a on highly compounded success employees, in and conditions of liquid in a substantial, strategic believe has year the to proceeds from today, customers independent we customary business on to Inmac industrial the France annual will to that among the financial vendor integrator tax-efficient the and IT deliverables, it in outpaced equivalent sale to the its and XXXX. XX.X% from is since offer be a capital definitive acquisitions be we our AG, the our return received expect regulatory a process have our which USD in closing, in buyers, Wstore have of the for have would including of where MRO, currently revenue focuses Industrial growth closing XXXX. asset is local through delivered XXXX. that I made are since binding after in and best both strategic substantial French Industrial growth we would period industry. announced operations Bechtle will strategic operations the agreement business France XXX It America, WStore rate the alternatives built shareholders. business later Bechtle France sell XXXX North July, operations the supplies we This France evaluating capital bidding from largest IT markets currency, to for transaction an managed acquire We have its partners. good an In close to and to and review, home comment and had invest through offer served attractive And and WStore. business, irrevocable time. we

utilizes billion For will associates distribution more of more feet the employs X,XXX our line almost top quarter results than square current would at the the XX reference, million in geographies. Industrial million $XXX to continues, generated orders, organically dollars sales now and historical, across turn surpass America X center revenue and revenues Industrial the North in million $X rates, in grew for months, growth X processes next other double-digit If more than X trailing space for years. Industrial. than double-digit I

our we across channels. broad leverage end We segment our margin solid rate Demand we of and increased year quarter with reflect second delivered quarter offerings of markets, XX.X% XXXX and our are QX great robust multiple operating to last product remained XX% business, was sales and pleased growth the the accelerated an Sales of across that second customer generated. over diversified operating compared performance. another The the XXXX.

to difficult exceptional operating comparison had performance. As we a year-ago an margin faced the quarter, previously discussed, which

with internal line results gross we the and year basis, operating quarter the and on on Second improvement of margins. were our margin sequential quarter first in a expectations, from showed both

of labor-management both are out. to standards implantation drive the to make across well network, as rolled as progress. profitability our which initiatives sales efforts, distribution enhanced optimization line include Our Warehouse top being continue

U.S. this initiative our have of completed distribution improved We seen centers and X in productivity. have

We more will DCs in the this complete during XXXX. initiative U.S. of remainder X

and entire and sales group approximately and leadership drive U.S.- We customer-facing completed levels. for to account-support sales training of service members efficiencies Canadian-managed also recently the realigned team sales force the and XXX

attendees Finally, and we week, to our hosted specialists emerging and first than product to and end-market value Meadowlands, support had National we the almost Last Customer Jersey product in around present additional States. City. York from and differentiate and technical bring XXX categories expertise customers. the existing the New outside We Vendor further added Expo we just X,XXX to more United New vendors

customer highlight the also both efforts of and customer and depth broaden series expo, great event we a to expertise its part is that technical our to a of this relationships. year's and During hosted an drive of provide. global important success our The events vendors designed engagement was

we a improvement benefited last margin we a our grew basis was Turning quarter, from and year's customer IT on almost growth XX% point operating business. daily X.X%, strong as profitability. as revenue currency to from now solid sales Inmac reseller performance WStore base. French strong basis, Revenue across continue second another XX the average leverage. operating with deliver Non-GAAP had to quarter, local outstanding

commitment service. in and continues the result, teams strong associate operating from customer excellent improved a management market, benefit terrific France XX%. approximately to reputation a to As In its income and its is bottom growth, positioned a continued performance. for Industrial our showing delivering double-digit is leverage, organic which operating summary, well success. business It exceptionally driving improved terrific and that's is line performing

than of margins sale strong be on and growth continued higher business performance, our France. growth generated which in our has focused France, delivered the a will in IT With revenue Industrial's Systemax business and historically operations

our to We we are and profitability. to long-term optimize making operations, investments bring the customers enhance drive value

We call growth are including over to to now Tex. flows significant strong on strategic capitalize the maintain opportunities, I generating M&A. financial turn will cash and flexibility our

Thomas Clark

days I France, the address second of detail. our operations Canada our in quarters the this same XXXX compared in performance number X will second to quarter in the selling and Larry. of you, XXXX now the Thank and U.S. year additional last. in day financial had quarter segment while the had second Both more selling

by expectations double-digit sixth most Industrial reflect gross Turning year-ago sequentially to quarter from This XXX mix. basis benefit gross was driven for percentage million, of line increase and spending a it's improved a Gross fixed quarter to primarily cost margin Industrial's million, year. revenue X.X% of operating XX.X% profit compared SD&A our strength consecutive Non-GAAP generating XXXX. stated last improvement $XX.X second within growth Consolidated over with margin XX.X%. from offset an and the our points growth XX%. we XX.X% which declined consolidated $XX Industrial quarter results, over to while growth delivered functions. a to improved freight driven driven first last $XX.X June, increased XX a was France, across year. as quarter, margin and gross in growth last XXX the the for structure, points accelerated and year's administrative May the basis U.S. with from basis operating of consolidated of basis did million, points QX Margin performance. cost double-digit points XX margin our Selling, and as for non-GAAP anticipate. The year-over-year, $XX.X was previously improved by gains million was reflecting leverage and financial to across cost partially quarter rate XX.X%. decreased year, percentage profit spend. in $XX.X improvement the by quarter was performance. basis line product of sales the XX.X%, of Canada Industrial, operating both from Canadian increased primarily margin Industrial's XX.X% profit the sales, shift largely distribution top leverage of for our both the reported and quarter in second and in XX point in is an of with operations. year-over-year quarter, performance marketing revenue increased second second of last lower million revenue quarter, in with In gains, by quarter the Starting income key margin

operating was gains margin We showed with performance, internal in from first expectations the line which our are pleased quarter. with and solid sequential our

operating have quarter we did was that in margin of a year. the we XXXX repeat noted, expect of performance second exceptional, and not previously As this

continued believe variability be much will We margin long-term and Industrial's our make normalized. profitability more to XXXX to investments improve further

mix and on channel impact Total million. marketing period We a more given expense individual $X.X results. customer, expect was quarter depreciation approximately to moderate product, in amortization sequential see the the and variance of

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

basis We of a $XXX And corporate closing would rate first effective results. approximately remaining recognizing working normalized as performance, the and on compared transaction top report and forma environment. footnote. June adjustments. tax and include a after financials been The debt-free third include operated subject transaction, On XXXX France on using results. income between pretax within week, tax and to book agreement we million approvals next quarter to close forma France's our sale. XX% resulting is million financial another to of hand I U.S. on exchange current will XXXX, note pro assuming a net and rates, million. rate funding operations basis, $XXX In delivered we the this million, denominated and cash inclusive other issued the reviewing expect line adjustments, expenses, shareholders is in customary normalized financial bottom of cash an to of that being approximately equity event available transaction from France its effective XX, business sale discontinued Before enterprise would and on have sell our $XXX is subsequent higher gain in rate will regulatory our XX-Q estimate closed approximately expected operation quarter we pro After the would had the capital of this the have France of as our half later total $XXX XXXX, and tax million basis million. would XX% in that a The a been been value, value have $XXX $XXX income a in of XXXX. to France between on tax a to on it's cash-free, exceptional anticipate

common increased increased Second past each quarters. for of XX.X%, gross project, quarter a France's large USD-reported quarter were an percentage as our result of large million, corporate was businesses expenses decreased the markets. basis and transition, public gross sale France while business margins, well to spend in of government of single-digit performance $XX.X was for end the points sales. SMB, million, decrease million XX the of the a as general cost workforce. efficiencies XX SD&A sector in of France $X.X X.X%, million, a gross a margin and elimination the primarily basis its Cost deals continuation as evident profit $X services the XX-basis-point driven incurring, the quarter other point certain the of was type. revenue European discipline which operating CapEx businesses quarter basis. had following local the -- increased attributable the recorded last to margin million for improvement period, the The currency was primarily to the by year. to be approximately to spending million XXXX. robust XX.X%. while On decline across a amortization $XX.X the of XX.X% and $X.X of and was completion depreciation the than in in margin in less non-GAAP a income is anticipated France's was basis, Strength its daily sales many $XXX.X largely of on average from and

Let sheet. balance turn now to our me

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

availability return As our our is resulting $XX strategic capital. agreement. share, shareholders approximately would million have approximately the and was of of in $XX Further, cash shareholders. we to essentially we per balance growth The cash, to our sheet and special that of funded the which of continue excess $XX million under M&A balance approximately quarter at XX, allows total in million after of debt to credit our explore opportunities, us over second million of June end working the capital note $XXX in paid million $XX I had and on was invest XXXX. $X X, to July strength we no dividend

$X.XX dividend prepared future. dividend of our stock, concludes our of of cash and As the a common result, quarterly share in Board regular declared Directors quarterly has anticipate continuing per we a remarks. This a

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

End of Q&A

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

disconnect. You may now

Global Industrial (GIC) 31 Jul 182018 Q2 Earnings call transcript