Systemax Reports First Quarter 2006 Results Net Income Increases to $17.6 Million from $2.6 Million
30 August 2006 - 6:51AM
Business Wire
Systemax Inc. (NYSE:SYX), a leading distributor and manufacturer of
PC hardware, related computer products and industrial products in
North America and Europe, today announced results for the quarter
ended March 31, 2006. Net sales for the quarter increased 6.9% to
$574.9 million compared to $537.9 million in the year-ago quarter.
Income from operations increased more than four-fold to $20.9
million from $5.2 million in the first quarter of 2005. Richard
Leeds, Chairman and Chief Executive Officer said, "I am pleased to
report this excellent increase in operating income, which resulted
from a combination of increased sales and improved gross margins.
We are also benefiting from the cost cutting, streamlining and
restructuring actions that we have taken during the last two years.
We have successfully reduced and managed our selling, general and
administrative expenses from 16.5% of net sales in 2002 to our
current rate of 12.2% for the first quarter of 2006." Net income
was $17.6 million or $.48 per diluted share compared to $2.6
million or $.07 per diluted share in the year ago period. Net
income in 2006 would have been $.36 per diluted share excluding a
gain of $4.3 million, or $.12 per diluted share after tax, from the
sale of a warehouse facility. Gilbert Fiorentino, CEO of Tiger
Direct, commented that Systemax remains focused on controlling its
costs and growing the business. He added, "North American sales
grew 10.7% during the first quarter of 2006 with Tiger's increased
e-commerce sales and expanded product offerings leading the way.
European sales decreased marginally in U.S. dollars but increased
11.1% in constant dollars compared to the year-ago quarter. Our
gross profit margin increased to 15.8% from 14.8% last year as a
result of a favorable product mix, reduced warehouse costs and
increased vendor rebates." Steven Goldschein, Chief Financial
Officer, noted that the Company's reporting of its 2006 quarterly
results has been delayed due to the longer-than-expected 2005
year-end closing process. The Company filed its 2005 quarterly
reports on Form 10-Q and annual report on Form 10-K earlier today.
The Company currently anticipates reporting its second quarter
results in approximately six weeks. Systemax Inc.
(www.systemax.com) employs a system of branded e-commerce web
sites, direct mail catalogs and relationship marketers to sell PC
hardware, related computer products, consumer electronics products
and industrial products in North America and Europe. Systemax is a
Fortune 1000 company. -0- *T SYSTEMAX INC. Condensed Consolidated
Statements of Operations (In thousands, except per share and share
amounts) Three Months Ended March 31, ----------------------------
2006 2005 -------------- ------------- Net sales $574,908 $537,908
Cost of sales 484,145 458,133 -------------- ------------- Gross
profit 90,763 79,775 Selling, general and administrative expenses
69,885 72,643 Restructuring and other charges 1,975 --------------
------------- Income from operations 20,878 5,157 Other
non-operating (income) expense, net (6,638) 6 Interest (income)
expense, net 15 565 -------------- ------------- Income before
income taxes 27,501 4,586 Provision for income taxes 9,944 1,948
-------------- ------------- Net income $17,557 $2,638
============== ============= Net income per common share: Basic
$.51 $.08 ============== ============= Diluted $.48 $.07
============== ============= Weighted average common and common
equivalent shares: Basic 34,761,878 34,472,352 ==============
============= Diluted 36,553,096 35,364,412 ==============
============= SYSTEMAX INC. Condensed Consolidated Balance Sheets
(In thousands) As of As of March 31, December 2006 31, 2005
---------- ---------- CURRENT ASSETS: Cash and cash equivalents
$49,564 $70,925 Accounts receivable, net 148,700 143,001
Inventories 242,711 189,502 Prepaid expenses and other current
assets 28,141 27,704 ---------- ---------- Total Current Assets
469,116 431,132 Property, plant and equipment, net 46,781 57,259
Other assets 15,990 16,153 ---------- ---------- TOTAL $531,887
$504,544 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Short-term borrowings including current
portions of long-term debt $23,416 $26,773 Accounts payable and
accrued expenses 253,463 234,555 ---------- ---------- Total
Current Liabilities 276,879 261,328 Long-term debt 507 8,028 Other
liabilities 2,209 2,346 Shareholders' equity 252,292 232,842
---------- ---------- TOTAL $531,887 $504,544 ========== ==========
*T 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.
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