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Systemax Reports Third Quarter Financial Results

Systemax Inc. (NYSE: SYX) today announced financial results for the third quarter and nine months ended September 30, 2011.
 

Performance Summary
(U.S. dollars in millions, except per share data)
Highlights     Quarter Ended     Nine Months Ended
      September 30,     September 30,
      2011   2010     2011   2010
Sales     $ 901.2     $ 862.7       $ 2,703.3     $ 2,583.8  
Gross profit     $ 131.3     $ 115.3       $ 390.8     $ 353.3  
Gross margin       14.6 %     13.4 %       14.5 %     13.7 %
Operating income     $ 19.1     $ 12.1       $ 59.6     $ 48.6  
Operating margin       2.1 %     1.4 %       2.2 %     1.9 %
Diluted earnings per share     $ 0.29     $ 0.23       $ 1.07     $ 0.79  
Special (gains) charges, net     $ 0.4     $ 2.9       $ (6.2 )   $ 3.2  
Special (gains) charges, net, per diluted share, after tax     $ 0.01     $ 0.05       $ (0.11 )   $ 0.05  
   

Third Quarter 2011 Financial Highlights:
  • Consolidated sales grew 4% to a record $901.2 million in U.S. dollars. On a constant currency basis, sales grew 2%.
  • Business to business channel sales grew 17% to $508.2 million in U.S. dollars. On a constant currency basis, sales grew 12%.
  • Consumer channel sales declined 8% to $393.0 million in U.S. dollars. On a constant currency basis, sales declined 9%.
  • “Same store” business to business sales grew 9% and same store consumer sales declined 11% on a constant currency basis.
  • Special charges incurred were approximately $0.4 million on a pre-tax basis, or $0.01 per diluted share after tax, consisting of legal and professional fees, related to the previously disclosed investigation and settlement with a former officer and director.
  • Operating income grew 58% to $19.1 million.
  • Diluted earnings per share (EPS) grew 26% to $0.29.

Nine Months 2011 Financial Highlights:
  • Consolidated sales grew 5% to a record $2.7 billion in U.S. dollars. On a constant currency basis, sales grew 2%.
  • Business to business channel sales grew 13% to $1.5 billion in U.S. dollars. On a constant currency basis, sales grew 10%.
  • Consumer channel sales declined 4% to $1.2 billion in U.S. dollars. On a constant currency basis, sales declined 5%.
  • The Company recorded special gains, net of legal and professional fees, of $6.2 million on a pre-tax basis, or approximately $0.11 per diluted share after tax, related to the previously disclosed investigation and settlement with a former officer and director.
  • Operating income grew 23% to $59.6 million.
  • Diluted EPS grew 35% to $1.07.

Richard Leeds, Chairman and Chief Executive Officer, said, “I am pleased with our top line performance, which continues to be driven by our business-to-business channels and specifically our Industrial Products group, which posted a 28% revenue increase. Our retail stores delivered another solid quarterly performance; however, our consumer related sales remain challenging, particularly on the web. During the quarter we effected decisions to increase gross margins, which contributed to our 120 basis point improvement in consolidated gross margin. We also remain focused on improving our operating cost structure and are pleased with the initial results of our initiatives, which are just starting to flow through our results and contributed to our 70 basis point improvement in consolidated operating margin. Our efforts in this regard are ongoing and focused on driving inventory efficiencies, the optimization of our distribution centers and information technology investments.

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