Systemax Inc. (NYSE:SYX) today announced financial
results for the first quarter ended March 31, 2011.
Performance
Summary(U.S. dollars in millions, except per share
data)
Highlights Quarter EndedMarch 31,
2011 2010 Sales $929.9 $915.2
Gross Profit $130.5 $124.6 Gross Margin 14.0% 13.6%
Operating Income $18.6 $20.4 Operating Margin 2.0%
2.2% Diluted earnings per share $0.36 $0.31 One-time
charges, after tax, per diluted share $0.01 $-
First Quarter 2011 Financial Highlights:
- Consolidated sales grew 2% to $929.9
million in U.S. dollars. On a constant currency basis, sales grew
1%.
- Business to business channel sales grew
8% to $480.5 million in U.S. dollars. On a constant currency basis,
sales grew 7%.
- Consumer channel sales declined 4% to
$449.4 million in U.S. dollars. On a constant currency basis, sales
declined 5%.
- “Same store” business to business
channel sales grew 7%, while same store consumer channel sales
declined 8%.
- One-time charges were $0.5 million or
approximately $0.01 per diluted share after tax, for costs
primarily related to an internal whistleblower investigation.
- Diluted earnings per share (EPS) was
$0.36.
Richard Leeds, Chairman and Chief Executive Officer, said, “We
had a solid start to 2011 that underscores the channel, product and
geographic diversity that define Systemax. Our Technology Products
business to business operations continue to perform well,
particularly in Europe as the business climates in most of our
locations appear to have stabilized. In addition, the Industrial
Products group had another outstanding quarter, delivering strong
double digit growth from product expansion and other growth
initiatives. Consumer channel results were soft, reflecting the
choppy economic environment; however, we did see improvement in our
performance as we moved through the quarter. We are also beginning
to see encouraging signs from the strategic initiatives we have
underway to improve our margins performance. In fact, gross margins
for the first quarter improved on both a year ago and sequential
basis. Operating margins declined due to investments in business to
business operations, including the addition of sales heads and
costs related to new stores and the new distribution center for the
Technology Products segment. Overall we are well positioned with a
solid balance sheet, which provides us tremendous financial
flexibility and a deep management team that is committed to
building long-term value for our shareholders.”
Supplemental Channel Sales Summary
(in millions)
Channel Quarter Ended
March 31,
2011 2010
Business to business1
$480.5 $445.2
Consumer2
$449.4 $470.0
Consolidated Sales $929.9 $915.2
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 2011 vs Q1 2010
Channel Change Business to business 7% Consumer -8%
Consolidated Sales -0.4%
1
Comprised of revenue at retail stores, websites and call
centers operating for at least 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,
2011 2010 Computer accessories & software $270.6
$256.8 Computers $218.7 $227.6 Consumer electronics $205.6 $205.7
Computer components $142.5 $147.2 Industrial products $70.8 $54.5
Other $21.7 $23.4
Consolidated sales $929.9
$915.2 Supplemental Business Unit Sales Summary
(in millions)
Business Unit Quarter Ended
March 31,
2011 2010 Technology Products $858.3 $860.1
Industrial Products $70.8 $54.5 Corporate and Other $0.8 $0.6
Consolidated sales $929.9 $915.2
Working capital grew during the quarter by $19.2 million to
$320.1 million as of March 31, 2011, primarily due to net income
for the quarter. Cash and cash equivalents grew during the quarter
by $20.2 million to $112.3 million and as of March 31, 2011 the
Company had availability under its credit facility of approximately
$115.8 million and total cash and available liquidity of
approximately $228.0 million. Short and long-term debt totaled
approximately $24.0 million at March 31, 2011.
The Company’s effective tax rate for the quarter was 30.8%,
compared to 37.5% last year. The lower quarterly effective tax rate
was primarily due to a higher mix of taxable income in countries
with lower tax rates.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its first
quarter 2011 results today, May 10, 2011 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
64478513 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 17, 2011. It can be accessed by dialing
800-642-1687 (U.S. callers) or 706-645-9291 (Int’l callers),
passcode 64478513. 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 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.
SYSTEMAX INC.
Condensed Consolidated Statements of
Operations – Unaudited
(In thousands, except per share
amounts)
Quarter Ended March 31* 2011
2010 Net sales $929,867 $915,237 Cost of sales 799,369
790,636 Gross profit 130,498 124,601 Gross margin 14.0% 13.6%
Selling, general and administrative expenses 111,369 104,188
Reorganization and other charges 504 - Operating income 18,625
20,413 Operating margin 2.0% 2.2% Interest and other (income)
expense (979) 1,616 Income before income taxes 19,604 18,797
Provision for income taxes 6,038 7,046 Effective tax rate 30.8%
37.5% Net income $13,566 $11,751 Net margin 1.5% 1.3% Net
income per common share: Basic $0.37 $0.32 Diluted $0.36 $0.31
Weighted average shares: Basic 37,157 36,785 Diluted 37,708 37,471
SYSTEMAX INC.
Condensed Consolidated Balance Sheets (In thousands)
(Unaudited) March 31 December 31
2011
2010 Current assets: Cash and cash equivalents $112,284
$92,077 Accounts receivable, net 282,809 276,344 Inventories
373,874 370,375 Prepaid expenses and other current assets 22,628
26,441 Total current assets 791,595 765,237 Property, plant and
equipment, net 74,412 73,765 Goodwill, intangibles and other assets
55,135 55,098 Total assets $921,142 $894,100
Current liabilities: Short-term debt $17,220 $2,655 Accounts
payable and accrued expenses 454,311 461,710 Total current
liabilities 471,531 464,365 Long-term debt 6,777 7,386 Other
liabilities 14,273 13,081 Shareholders’ equity 428,561 409,268
Total liabilities and shareholders’ equity $921,142 $894,100
* 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 April 2, 2011. The first quarters of both 2011 and
2010 included 13 weeks.
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