Systemax Inc. (NYSE:SYX) today announced financial
results for the fourth quarter and full year ended December 31,
2009. The Company’s fourth quarter and full year 2009 included 13
and 52 weeks, respectively, compared to 14 and 53 weeks during
2008.
Fourth Quarter 2009 Financial Highlights:
- Consolidated sales grew 15% to
$938.2 million in U.S. dollars, an all-time record. Adjusting for
the impact of the number of weeks, sales grew 24%. On a constant
currency basis, sales grew 14%.
- Consumer channel sales grew 9%
to $537.6 million in U.S. dollars. Adjusting for the impact of the
number of weeks, sales grew 18%. On a constant currency basis,
sales grew 8%.
- Business to business channel
sales grew 25% to $400.6 million in U.S. dollars. Adjusting for the
impact of the number of weeks, sales grew 34%. On a constant
currency basis, sales grew 22%.
- “Same store” (as defined below)
consumer channel sales grew 12%; same store business to business
channel sales grew 11%.
- Diluted earnings per share (EPS)
grew 81% to $0.49. This included a gain of $1.8 million or $0.03
per diluted share, after tax, related to a favorable lawsuit
settlement.
Full Year 2009 Financial Highlights:
- Consolidated sales grew 4% to
$3.2 billion in U.S. dollars, an all-time record. Adjusting for the
impact of the number of weeks, sales grew 6%. On a constant
currency basis, sales grew 8%.
- Consumer channel sales grew 12%
to $1.8 billion in U.S. dollars. Adjusting for the impact of the
number of weeks, sales grew 15%. On a constant currency basis,
sales grew 14%.
- Business to business channel
sales were $1.3 billion in U.S. dollars, a 5% decline. Adjusting
for the impact of the number of weeks, sales declined 3%. On a
constant currency basis, sales increased 1%.
- Diluted EPS was $1.24 compared
to $1.40.
Performance Summary
(U.S dollars in millions,
except per share data)
Highlights Quarter Ended Dec 31, Full Year
Ended Dec 31, 2009
2008 2009
2008 Sales $ 938.2 $ 812.7
$ 3,166.0 $ 3,033.0 Gross profit $
132.9 $ 114.6 $ 460.2 $
458.6 Gross margin 14.2 % 14.1 %
14.5 % 15.1 % Operating income $ 30.3
$ 15.8 $ 73.4 $ 83.4
Operating margin 3.2 % 1.9 % 2.3
% 2.7 % Diluted earnings per share $ 0.49
$ 0.27 $ 1.24 $ 1.40
Richard Leeds, Chairman and Chief Executive Officer, said,
“Systemax posted all-time record sales, with over 24% growth in the
fourth quarter on an equivalent weeks basis. Our business to
business sales growth was the highest, driven by the impact of the
WStore acquisition which was completed in September 2009 and
modestly improving economic conditions in certain of the
geographies in which we sell. Our consumer channel sales benefited
from a robust holiday season that saw consumers shopping for lower
priced products such as netbook computers, digital cameras and
smaller flat screen televisions both online and at our retail
stores, as well as the Circuit City asset purchase which was
completed in May 2009. The market share growth strategy we have
followed since the beginning of the economic downturn is beginning
to pay off for us. Our diligent cost controls, coupled with the
strong top-line sales growth, resulted in our growing operating
income by 92% and diluted EPS by 81%. Looking ahead, we believe our
capacity to capture value and deliver it to customers through our
recognized brands, including TigerDirect, CompUSA, Circuit City,
MISCO, WStore and Global Industrial, positions us well for
2010.”
Supplemental Channel Sales Summary
(in millions)
Channel Quarter Ended Dec 31, Full
Year Ended Dec 31, 2009
2008 2009 2008
Consumer1 $ 537.6 $ 491.3 $ 1,845.6 $
1,645.1 Business to business2 $ 400.6 $ 321.4
$ 1,320.4 $ 1,387.9
Consolidated sales
$ 938.2 $ 812.7 $
3,166.0 $ 3,033.0
1Includes sales from retail stores, consumer websites, inbound
call centers and television shopping
2Includes sales from managed business relationships, including
outbound call centers and extranets, and the entire Industrial
Products segment
Supplemental “Same Store” channel growth3 – Q4
2009 vs Q4 2008 Channel Change Consumer 12%
Business to business 11%
3Comprised of revenue at retail stores, websites and call
centers operating for at least 14 full months and adjusting for the
impact of the number of weeks in the quarter. The calculation of
the comparable store sales percentage change excludes the effect of
fluctuations in foreign currency exchange rates. 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 Dec 31,
Full Year Ended Dec 31, 2009
2008 2009 2008
Computers $ 208.4 $ 155.4 $ 730.8 $ 525.0
Consumer electronics $ 251.7 $ 217.7 $ 779.5 $
727.1 Computer components $ 145.9 $ 140.2 $ 538.2
$ 552.0 Computer accessories & software $ 257.0
$ 228.8 $ 852.1 $ 925.1 Industrial products $
49.6 $ 54.8 $ 196.1 $ 237.0 Other $ 25.6
$ 15.8 $ 69.3 $ 66.8
Consolidated sales
$ 938.2 $ 812.7 $
3,166.0 $ 3,033.0 Supplemental
Business Unit Sales Summary
(in millions)
Business Unit Quarter Ended Dec 31,
Full Year Ended Dec 31, 2009
2008 2009 2008
Technology Products – North America $ 618.7 $ 540.8 $
2,119.4 $ 1,854.9 Technology Products – Europe $
269.2 $ 216.9 $ 848.5 $ 940.6 Industrial Products
$ 49.6 $ 54.8 $ 196.1 $ 237.0 Software
Solutions $ 0.7 $ 0.2 $ 2.0 $ 0.5
Consolidated Sales $ 938.2
$ 812.7 $ 3,166.0 $
3,033.0
Working capital as of December 31, 2009 was $252.5 million,
including cash and cash equivalents of $58.3 million. Cash for the
year was impacted by the Circuit City asset purchase, the WStore
acquisition, the payment of the 2009 special dividend, higher
inventory levels to support a growing retail store base and
increasing sales volume from the Company’s e-commerce consumer
business, and higher accounts receivable from growth in open
account business to business sales. As of December 31, 2009, the
Company had an undrawn credit facility of $120.0 million and total
cash and available liquidity of over $150.0 million. Short term
debt totaled approximately $15.2 million at December 31, 2009 and
included approximately $14.2 million in revolving debt assumed as
part of the WStore acquisition as well as capitalized lease
obligations. The Company’s effective tax rate for the full year
2009 was 36.8%, essentially flat with last year. Included in the
2009 rate is a reversal of tax reserves of approximately $1.2
million as the result of statute expirations. Excluding this
reserve reversal, the Company’s 2009 effective tax rate would have
been 38.4%.
Earnings Conference Call Details
Systemax Inc. will host a teleconference to discuss its fourth
quarter and full year 2009 results today, March 8, 2010 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 58388671 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 March 15, 2010. It can be accessed
by dialing 800-642-1687 (U.S. callers) or 706-645-9291 (Int’l
callers), passcode 58388671. 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 Year Ended December 31*
December 31* 2009 2008
2009 2008 Net
sales $ 938,248 $ 812,710 $ 3,165,995 $ 3,032,961 Cost of sales
805,367 698,073 2,705,747
2,574,402 Gross profit 132,881 114,637 460,248
458,559 Gross margin 14.2 % 14.1 % 14.5 % 15.1 % Selling, general
and administrative expenses 102,548 98,843
386,857 375,192 Operating income
30,333 15,794 73,391 83,367 Operating margin 3.2 %
1.9 % 2.3 % 2.7 % Interest and other expense
(income), net 895 467 306
(376 ) Income before income taxes 29,438 15,327 73,085
83,743 Provision for income taxes 11,040 5,359 26,900 30,900
Effective tax rate 37.5 % 35.0 % 36.8 %
36.9 % Net income $ 18,398 $ 9,968 $ 46,185 $
52,843 Net margin 2.0 % 1.2 % 1.5 % 1.7 % Net income
per common share: Basic $ 0.50 $ 0.27 $ 1.26 1.43 Diluted $ 0.49 $
0.27 $ 1.24 1.40 Weighted average common and
common equivalent shares:
Basic 36,817 36,893 36,706 36,950 Diluted 37,432 37,497
37,343
37,705
SYSTEMAX INC.
Condensed Consolidated Balance Sheets - Unaudited (In
thousands)
December 31* 2009 2008
Current assets: Cash and cash equivalents $58,309 $115,967 Accounts
receivable, net 241,860 182,841 Inventories 365,725 290,594 Prepaid
expenses and other current assets 29,154 22,225 Total current
assets 695,048 611,627 Property, plant and equipment, net 65,598
48,465 Goodwill, intangibles and other assets 56,255 42,361 Total
assets $816,901 $702,453
Current liabilities: Short-term debt $15,197 $773 Accounts payable
and accrued expenses 427,307 357,762 Total current liabilities
442,504 358,535 Long-term debt 1,194 1,411 Other liabilities 8,518
8,552 Shareholders’ equity 364,685 333,955 Total liabilities and
shareholders’ equity $816,901 $702,453
* 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 year and quarter ended on January
2, 2010. The fourth quarter of 2009 and 2008 included 13 and 14
weeks, respectively, and the fiscal year 2009 and 2008 included 52
and 53 weeks, respectively.
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