Systemax Inc. (NYSE:SYX) today announced financial
results for the fourth quarter and full year ended December 31,
2008.
Financial highlights for the quarter ended December 31,
2008:
- Consolidated net sales grew 6%
to a record $812.7 million in U.S. dollars. Excluding the effect of
exchange rate changes, sales would have grown 11%.
- North American technology
product sales grew 18% to a record $540.7 million in U.S. dollars.
Excluding the effect of exchange rate changes, sales would have
grown over 19%.
- European technology product
sales were $216.9 million in U.S. dollars, a 14% decline. Excluding
the effect of exchange rate changes, sales would have declined by
only 2%.
- Gross profit reached a record
$116.9 million and gross margin was 14.4%.
- Operating income was $15.8
million and operating margin was 1.9%.
- Net income was $10.0 million, or
$0.27 per diluted share.
- Cash and cash equivalents grew
over 58% to $116 million during the quarter; undrawn line of credit
remains at $120 million; total debt outstanding is $2.2 million and
represents capital leases.
- Common stock repurchases were
246,900 shares for $2.4 million or an average price of $9.67 per
share.
Financial highlights for the year ended December 31,
2008:
- Net sales grew 9% to a record
$3.0 billion, driven by growth in both technology products and
industrial products. Excluding the effect of exchange rate changes,
sales would have grown 8%.
- North American technology
product sales grew 14% to a record $1.9 billion in U.S. dollars.
Excluding exchange rate changes, sales would have grown 14%.
- European technology product
sales grew 1% to a record $940.6 million in U.S. dollars. Excluding
exchange rate changes, sales would have been flat.
- Gross profit reached a record
$464.1 million and gross margin was 15.3%.
- Operating income was $83.4
million and operating margin was 2.7%.
- Net income was $52.8 million, or
$1.41 per diluted share.
- Common stock repurchases were
475,301 shares for $5.8 million or an average price of $12.25 per
share.
Richard Leeds, Chairman and Chief Executive Officer, said,
�Systemax reported solid financial results despite the challenging
economic climate, which significantly impacted spending on
information technology and industrial products, in both the
business to business and consumer markets. Fourth quarter
Technology Products revenues grew over 6%. We are particularly
pleased with performance in North America, which delivered a very
strong quarter with over 19% growth, excluding exchange rate
changes, driven primarily by our successful CompUSA business. Our
ability to move quickly and flexibly to capture value in the retail
delivery chain and deliver it to consumers through our recognized
businesses, including TigerDirect and CompUSA, helped drive this
impressive top-line growth.�
Gilbert Fiorentino, Chief Executive of Systemax�s Technology
Products business said, �During the quarter, we selectively lowered
prices and offered special freight incentives to attract new
customers, grow market share and position the Company for continued
growth when the business environment improves. While this had a
short-term impact on gross margins, we believe it will position us
very well with a larger customer base when consumer spending
returns.�
�In addition to freight and margin concessions, we have been
making aggressive investments in the retail side of our business as
well as the web and technology infrastructure to capture market.
While the addition of CompUSA�s retail operations increased our
spend in selling, general and administrative expenses, the
enhancements we have made to our online and in-store operations
continue to drive results, both in terms of revenue growth and
positive customer feedback. We continue to roll-out our Retail 2.0
initiative, turning our brick and mortar locations into a
destination for customers to test our products, research and
compare prices and make educated buying decisions. By empowering
consumers with information and self-service capability while
offering superior value and selection, we believe we have a formula
that will help us weather the economic slump while positioning us
for long-term growth opportunities,� said Mr. Fiorentino.
Commenting on other operations, Mr. Leeds concluded, �While
fourth quarter Industrial Products revenues were down slightly,
revenues for the full year increased 5%, driven by the addition of
over 100,000 new customers and 17,000 products to our revamped
website. We continue to reorganize and refocus our Software
Solutions business, lowering our cost structure as we work to
launch new customer sites with our ProfitCenter software.�
Working capital as of December 31, 2008 was $250.6 million,
including cash and cash equivalents of $116.0 million. The Company
has an undrawn credit facility of $120.0 million and total cash and
available liquidity of approximately $219.5 million. Cash flow from
operations for the full year of 2008 was approximately $82.4
million. Inventories increased nearly 13% to $282.2 million, as
compared to $250.2 million at December 31, 2007. Inventories were
up over 2% from the third quarter of 2008. Capital expenditures for
the full year 2008 aggregated $17.1 million and the Company
expended $30.6 million for CompUSA. The Company paid a dividend of
$37.1 million during the second quarter. The Company�s effective
tax rate was 36.9% for the full year, up from 30.5% last year,
principally the result of higher taxable income in the United
Kingdom in 2008.
As a part of the two million share stock buyback program
announced in May 2008, during the fourth quarter the Company
purchased 246,900 shares, for approximately $2.4 million or an
average price $9.67 per share. In total, the Company repurchased
475,301 shares of common stock during 2008 for $5.8 million or an
average price of $12.25 per share.
The fourth quarter of 2008 included 14 weeks versus 13 weeks in
2007. Average sales per day during the quarter were $8.3 million
compared to $8.5 million in 2007. The full year 2008 included 53
weeks versus 52 weeks in 2007. Average sales per day during 2008
were $8.2 million compared to $7.7 million in 2007.
Board of Directors Appointment
The Company announced today that Larry Reinhold has been
appointed to the Company�s Board of Directors. Mr. Reinhold, 49,
has served as the Company�s Executive Vice President and Chief
Financial Officer since January 2007. Prior to joining the Company,
Mr. Reinhold served as Executive Vice President and Chief Financial
Officer of Greatbatch, a NYSE medical technology company; as
Executive Vice President and Chief Financial Officer of Critical
Path, a NASDAQ software company; and as a partner with
PricewaterhouseCoopers. He holds a BS in accounting and an MBA from
San Diego State University.
Commenting on the appointment Richard Leeds said, �Larry has
been a valuable addition to our senior management team at Systemax.
We look forward to continuing to benefit from his extensive
financial expertise and operational experience.�
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its fourth
quarter and full year 2008 results today, Tuesday, March 3, 2009 at
5:00 p.m. Eastern Time. To access the teleconference, please dial
877-741-4251 (U.S. callers) or 719-325-4773 (Int�l callers) and
reference passcode 8193145 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 Tuesday, March 10, 2009. It can be
accessed by dialing 888-203-1112 (U.S. callers) or 719-457-0820
(Int�l callers), passcode 8193145. The webcast will also be
archived on www.systemax.com for 30 days.
About Systemax Inc.
Systemax Inc. (www.systemax.com), a Fortune 1000 company, sells
personal computers, computer supplies and accessories, consumer
electronics and industrial products through branded e-commerce web
sites, direct mail catalogs, relationship marketers and retail
stores in North America and Europe. The primary brands are
TigerDirect, CompUSA, Misco and Global Industrial. It also
manufactures and sells computers and accessories under the Systemax
and Ultra brands and develops and markets ProfitCenter Software, a
web-based application for multichannel direct marketing
companies.
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 Year Ended December 31,* December
31,* �
2008 � �
2007 � �
2008 � �
2007 � Net sales $ 812,710 $ 769,334 $ 3,032,961 $ 2,779,875
Cost of sales � 695,762 � � 649,678 � � 2,568,816 � � 2,353,574 �
Gross profit 116,948 119,656 464,145 426,301 Gross margin 14.4 %
15.6 % 15.3 % 15.3 % Selling, general and administrative expenses �
101,154 � � 92,150 � � 380,778 � � 332,359 � Operating income
15,794 27,506 83,367 93,942 Operating margin 1.9 % 3.6 % 2.7 % 3.4
% Other (income) expense, net � 467 � � (2,294 ) � (376 ) � (6,081
) Income before income taxes 15, 327 29,800 83,743 100,023
Provision for income taxes 5,359 5,620 30,900 30,542 Effective tax
rate � 35.0 % � 18.9 % � 36.9 % � 30.5 % Net income $ 9,968 � $
24,180 � $ 52,843 � $ 69,481 � Net margin 1.2 % 3.1 % 1.7 % 2.5 % �
Net income per common share: Basic $ .27 $ .67 $ 1.45 $ 1.93
Diluted $ .27 $ .64 $ 1.41 $ 1.84 � Weighted average common and
common equivalent shares:
Basic 36,393 36,089 36,450 35,968 Diluted 37,191 37,753 37,411
37,688
SYSTEMAX INC.
Condensed Consolidated Balance Sheets (In thousands) �
(Unaudited) �
December 31*, �
2008 �
2007
Current assets: Cash and cash equivalents $ 115,967 $ 128,021
Accounts receivable, net 190,909 207,460 Inventories 282,217
250,222 Prepaid expenses and other current assets � 23,090 � 23,262
Total current assets 612,183 608,965 Property, plant and equipment,
net 48,465 47,580 Goodwill, intangibles and other assets � 42,615 �
19,802 Total assets $ 703,263 $ 676,347 � Current liabilities:
Short-term debt $ 773 $ 4,302 Accounts payable and accrued expenses
� 360,846 � 330,310 Total current liabilities 361,619 334,612
Long-term debt 1,411 254 Other liabilities 6,278 5,646
Shareholders� equity � 333,955 � 335,835 Total liabilities and
shareholders� equity $ 703,263 $ 676,347
* 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. Certain reclassifications have been made to prior
year amounts to conform with the current year presentation. The
actual fiscal twelve month period and quarter ended on January 3,
2009. The fourth quarters of 2008 and 2007 included 14 and 13
weeks, respectively, and the full year 2008 and 2007 included 53
and 52 weeks, respectively.
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