Delaware
(State or Other Jurisdiction
of Incorporation)
|
1-13792
(Commission
File Number)
|
11-3262067
(IRS Employer
Identification No.)
|
Exhibit Number
|
|
Description
|
99.1 | Press Release of Systemax Inc., dated August 6, 2013, regarding financial results for the second quarter ended June 30, 2013. |
99.1 | Press Release of Systemax Inc., dated August 6, 2013, regarding financial results for the second quarter ended June 30, 2013. |
Performance Summary
(U.S. dollars in millions, except per share data) |
||||||||||||||||
Highlights
|
Quarter Ended
June 30, |
Six Months Ended
June 30,
|
||||||||||||||
GAAP Results
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net sales
|
$
|
805.8
|
$
|
849.2
|
$
|
1,686.5
|
$
|
1,762.4
|
||||||||
Gross profit
|
$
|
117.1
|
$
|
118.0
|
$
|
239.7
|
$
|
248.7
|
||||||||
Gross margin
|
14.5
|
%
|
13.9
|
%
|
14.2
|
%
|
14.1
|
%
|
||||||||
Operating income (loss) from continuing operations
|
$
|
(6.8
|
)
|
$
|
(2.0
|
)
|
$
|
(15.5
|
)
|
$
|
8.8
|
|||||
Operating margin from continuing operations
|
(0.8
|
)%
|
(0.2
|
)%
|
(0.9
|
)%
|
0.5
|
%
|
||||||||
Net income (loss)
|
$
|
(6.1
|
)
|
$
|
(2.3
|
)
|
$
|
(12.4
|
)
|
$
|
4.8
|
|||||
Diluted net income (loss) per share
|
$
|
(0.16
|
)
|
$
|
(0.06
|
)
|
$
|
(0.34
|
)
|
$
|
0.13
|
|||||
Non-GAAP Results*
|
||||||||||||||||
Non-recurring and recurring adjustments, net
|
$
|
4.6
|
$
|
3.6
|
$
|
12.6
|
$
|
6.8
|
||||||||
Adjusted operating income (loss)
|
$
|
(2.2
|
)
|
$
|
1.6
|
$
|
(2.9
|
)
|
$
|
15.6
|
||||||
Adjusted operating margin
|
(0.3
|
)%
|
0.2
|
%
|
(0.2
|
)%
|
0.9
|
%
|
||||||||
Adjusted net income (loss)
|
$
|
(3.1
|
)
|
-
|
$
|
(3.9
|
)
|
$
|
9.3
|
|||||||
Adjusted diluted net income (loss) per share
|
$
|
(0.08
|
)
|
$
|
(0.00
|
)
|
$
|
(0.11
|
)
|
$
|
0.25
|
·
|
Consolidated sales declined 5.1% to $805.8 million in U.S. dollars. On a constant currency basis, sales declined 5.0%.
|
·
|
Business to business channel sales grew 1.3% to $527.6 million in U.S. dollars. On a constant currency basis, sales grew 1.5%.
|
·
|
Consumer channel sales declined 15.3% to $278.2 million in U.S. dollars. On a constant currency basis, sales declined 15.2%.
|
·
|
"Same store" business to business sales grew 1.5% and same store consumer sales declined 15.5% on a constant currency basis.
|
·
|
GAAP operating income declined to a loss of $6.8 million compared to a loss of $2.0 million last year. Non-GAAP operating income was a loss of $2.2 million compared to income of $1.6 million last year.
|
·
|
GAAP diluted net income per share declined to a loss of $0.16. Non-GAAP diluted net income per share declined to a loss of $0.08.
|
·
|
Consolidated sales declined 4.3% to $1.7 billion in U.S. dollars. On a constant currency basis, sales declined 4.2%.
|
·
|
Business to business channel sales grew 1.5% to $1.1 billion in U.S. dollars. On a constant currency basis, sales grew 1.7%.
|
·
|
Consumer channel sales declined 12.9% to $615.2 million in U.S. dollars. On a constant currency basis, sales declined 12.9%.
|
·
|
GAAP operating income declined to a loss of $15.5 million compared to income of $8.8 million last year. Non-GAAP operating income was a loss of $2.9 million compared to income of $15.6 million last year.
|
·
|
GAAP diluted net income per share declined to a loss of $0.34. Non-GAAP diluted net income per share declined to a loss of $0.11.
|
·
|
North American & European Technology Restructuring: In the recent months we have closed three retail stores; one in the second quarter, and two more in July. Furthermore, we have decided to close an additional retail store in Chicago which should be closed within August. We continually evaluate the performance of our retail store operations and will take actions as necessary. Additionally, our new European shared services facility started initial operations during the second quarter. We are pleased with the early results and yesterday our board of directors approved the expansion of the support functions the center will provide to certain of our European businesses beyond what we originally projected last year. During the second quarter, one-time exit, severance and startup costs for the retail store closings and shared service center were $2.7 million, and we currently anticipate that additional one-time exit, severance and startup costs will aggregate between $19 and $20 million, pretax, during the second half of 2013 and through the end of 2014.
|
·
|
Global Industrial Marketplace: We have recently launched a new B2B marketplace on the GlobalIndustrial.com website. This new business expands our SKU and category offering to our customers in a business model where the company will earn a commission from sales of products from third party vendors to customers of Global Industrial," Leeds continued.
|
Supplemental Channel Sales Summary*
(in millions)
|
||||||||||||||||||||||||||||||||||||||||
Channel
|
Quarter Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
|||||||||||||||||||||||||||||||
Business to Business1
|
$
|
527.6
|
65.5
|
%
|
1.3
|
%
|
$
|
520.7
|
61.3
|
%
|
$
|
1,071.3
|
63.5
|
%
|
1.5
|
%
|
$
|
1,055.7
|
59.9
|
%
|
||||||||||||||||||||
Consumer 2
|
$
|
278.2
|
34.5
|
%
|
(15.3
|
)%
|
$
|
328.5
|
38.7
|
%
|
$
|
615.2
|
36.5
|
%
|
(12.9
|
)%
|
$
|
706.7
|
40.1
|
%
|
||||||||||||||||||||
Consolidated Sales
|
$
|
805.8
|
100
|
%
|
(5.1
|
)%
|
$
|
849.2
|
100
|
%
|
$
|
1,686.5
|
100
|
%
|
(4.3
|
)%
|
$
|
1,762.4
|
100
|
%
|
Supplemental "Same Store" Channel Growth1 – Q2 2013 vs. Q2 2012
|
|
Channel
|
Change
|
Business to Business
|
1.5%
|
Consumer
|
(15.5)%
|
Consolidated Sales
|
(5.1)%
|
Supplemental Product Category Sales Summary
(in millions)
|
||||||||||||||||||||||||||||||||||||||||
Product Category
|
Quarter Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
|||||||||||||||||||||||||||||||
Computers
|
$
|
237.4
|
29.5
|
%
|
(0.4
|
)%
|
$
|
238.3
|
28.1
|
%
|
$
|
512.5
|
30.4
|
%
|
2.6
|
%
|
$
|
499.7
|
28.3
|
%
|
||||||||||||||||||||
Computer Accessories & Software
|
$
|
217.7
|
27.0
|
%
|
(8.3
|
)%
|
$
|
237.5
|
28.0
|
%
|
$
|
456.7
|
27.1
|
%
|
(8.1
|
)%
|
$
|
496.9
|
28.2
|
%
|
||||||||||||||||||||
Industrial Products
|
$
|
118.6
|
14.7
|
%
|
15.3
|
%
|
$
|
102.9
|
12.1
|
%
|
$
|
224.2
|
13.3
|
%
|
16.0
|
%
|
$
|
193.2
|
11.0
|
%
|
||||||||||||||||||||
Consumer Electronics
|
$
|
117.9
|
14.6
|
%
|
(20.2
|
)%
|
$
|
147.7
|
17.4
|
%
|
$
|
253.3
|
15.0
|
%
|
(19.4
|
)%
|
$
|
314.3
|
17.8
|
%
|
||||||||||||||||||||
Computer Components
|
$
|
90.8
|
11.3
|
%
|
(8.7
|
)%
|
$
|
99.5
|
11.7
|
%
|
$
|
193.8
|
11.5
|
%
|
(6.7
|
)%
|
$
|
207.8
|
11.8
|
%
|
||||||||||||||||||||
Other
|
$
|
23.4
|
2.9
|
%
|
0.4
|
%
|
$
|
23.3
|
2.7
|
%
|
$
|
46.0
|
2.7
|
%
|
(8.9
|
)%
|
$
|
50.5
|
2.9
|
%
|
||||||||||||||||||||
Consolidated Sales
|
$
|
805.8
|
100
|
%
|
(5.1
|
)%
|
$
|
849.2
|
100
|
%
|
$
|
1,686.5
|
100
|
%
|
(4.3
|
)%
|
$
|
1,762.4
|
100
|
%
|
Supplemental Business Unit Sales Summary
(in millions)
|
||||||||||||||||||||||||||||||||||||||||
Business Unit
|
Quarter Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
|||||||||||||||||||||||||||||||
Technology Products
|
$
|
685.8
|
85.1
|
%
|
(8.0
|
)%
|
$
|
745.2
|
87.8
|
%
|
$
|
1,459.3
|
86.5
|
%
|
(6.9
|
)%
|
$
|
1,566.8
|
88.9
|
%
|
||||||||||||||||||||
Industrial Products
|
$
|
118.6
|
14.7
|
%
|
15.3
|
%
|
$
|
102.9
|
12.1
|
%
|
$
|
224.2
|
13.3
|
%
|
16.0
|
%
|
$
|
193.2
|
11.0
|
%
|
||||||||||||||||||||
Corporate and Other
|
$
|
1.4
|
0.2
|
%
|
27.3
|
%
|
$
|
1.1
|
0.1
|
%
|
$
|
3.0
|
0.2
|
%
|
25.0
|
%
|
$
|
2.4
|
0.1
|
%
|
||||||||||||||||||||
Consolidated Sales
|
$
|
805.8
|
100
|
%
|
(5.1
|
)%
|
$
|
849.2
|
100
|
%
|
$
|
1,686.5
|
100
|
%
|
(4.3
|
)%
|
$
|
1,762.4
|
100
|
%
|
Supplemental Business Unit GAAP Operating Income (Loss) Summary
(in millions)
|
||||||||||||||||||||||||||||||||
Business Unit
|
Quarter Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||
2013
|
Margin
|
2012
|
Margin
|
2013
|
Margin
|
2012
|
Margin
|
|||||||||||||||||||||||||
Technology Products
|
$
|
(12.2
|
)
|
(1.8
|
)%
|
$
|
(3.4
|
)
|
(0.5
|
)%
|
$
|
(23.5
|
)
|
(1.6
|
)%
|
$
|
5.4
|
0.3
|
%
|
|||||||||||||
Industrial Products
|
$
|
11.1
|
9.4
|
%
|
$
|
6.7
|
6.5
|
%
|
$
|
19.6
|
8.7
|
%
|
$
|
15.0
|
7.8
|
%
|
||||||||||||||||
Corporate and Other
|
$
|
(5.7
|
)
|
NM
|
$
|
(5.3
|
)
|
NM
|
$
|
(11.6
|
)
|
NM
|
$
|
(11.6
|
)
|
NM
|
||||||||||||||||
Consolidated Operating Income (Loss)
|
$
|
(6.8
|
)
|
(0.8
|
)%
|
$
|
(2.0
|
)
|
(0.2
|
)%
|
$
|
(15.5
|
)
|
(0.9
|
)%
|
$
|
8.8
|
0.5
|
%
|
|||||||||||||
|
||||||||||||||||||||||||||||||||
Non-GAAP Operating Income (Loss)*
|
||||||||||||||||||||||||||||||||
Technology Products
|
$
|
(7.9
|
)
|
(1.2
|
)%
|
$
|
(2.3
|
)
|
(0.3
|
)%
|
$
|
(12.0
|
)
|
(0.8
|
)%
|
$
|
8.8
|
0.6
|
%
|
|||||||||||||
Industrial Products
|
$
|
11.1
|
9.4
|
%
|
$
|
8.8
|
8.6
|
%
|
$
|
20.0
|
8.9
|
%
|
$
|
17.5
|
9.1
|
%
|
||||||||||||||||
Corporate and Other
|
$
|
(5.4
|
)
|
NM
|
$
|
(4.9
|
)
|
NM
|
$
|
(10.9
|
)
|
NM
|
$
|
(10.7
|
)
|
NM
|
||||||||||||||||
Consolidated Operating Income (Loss)
|
$
|
(2.2
|
)
|
(0.3
|
)%
|
$
|
1.6
|
0.2
|
%
|
$
|
(2.9
|
)
|
(0.2
|
)%
|
$
|
15.6
|
0.9
|
%
|
SYSTEMAX INC.
|
||||||||||||||||
Condensed Consolidated Statements of Operations – Unaudited
|
||||||||||||||||
(In millions, except per share amounts)
|
||||||||||||||||
|
Quarter Ended
June 30*
|
Six Months Ended June 30*
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net sales
|
$
|
805.8
|
$
|
849.2
|
$
|
1,686.5
|
$
|
1,762.4
|
||||||||
Cost of sales
|
688.7
|
731.2
|
1,446.8
|
1,513.7
|
||||||||||||
Gross profit
|
117.1
|
118.0
|
239.7
|
248.7
|
||||||||||||
Gross margin
|
14.5
|
%
|
13.9
|
%
|
14.2
|
%
|
14.1
|
%
|
||||||||
Selling, general and administrative expenses
|
120.0
|
117.8
|
244.5
|
235.8
|
||||||||||||
Special charges, net
|
3.9
|
2.2
|
10.7
|
4.1
|
||||||||||||
Operating income (loss) from continuing operations
|
(6.8
|
)
|
(2.0
|
)
|
(15.5
|
)
|
8.8
|
|||||||||
Operating margin
|
(0.8
|
)%
|
(0.2
|
)%
|
(0.9
|
)%
|
0.5
|
%
|
||||||||
Interest and other (income) expense, net
|
0.3
|
1.6
|
0.8
|
1.6
|
||||||||||||
Income (loss) from continuing operations before income taxes
|
(7.1
|
)
|
(3.6
|
)
|
(16.3
|
)
|
7.2
|
|||||||||
(Benefit from) provision for income taxes
|
(1.0
|
)
|
(1.3
|
)
|
(3.9
|
)
|
2.2
|
|||||||||
Effective tax rate
|
14.1
|
%
|
36.1
|
%
|
23.9
|
%
|
30.6
|
%
|
||||||||
Income (loss) from continuing operations
|
(6.1
|
)
|
(2.3
|
)
|
(12.4
|
)
|
5.0
|
|||||||||
Discontinued operations
|
-
|
-
|
-
|
(0.2
|
)
|
|||||||||||
Net income (loss)
|
$
|
(6.1
|
)
|
$
|
(2.3
|
)
|
$
|
(12.4
|
)
|
$
|
4.8
|
|||||
Net margin
|
(0.8
|
)%
|
(0.3
|
)%
|
(0.7
|
)%
|
0.3
|
%
|
||||||||
|
||||||||||||||||
Net income (loss) per common share:
|
||||||||||||||||
Basic
|
$
|
(0.16
|
)
|
$
|
(0.06
|
)
|
$
|
(0.34
|
)
|
$
|
0.13
|
|||||
Diluted
|
$
|
(0.16
|
)
|
$
|
(0.06
|
)
|
$
|
(0.34
|
)
|
$
|
0.13
|
|||||
|
||||||||||||||||
Weighted average common and common equivalent shares:
|
||||||||||||||||
Basic
|
37.0
|
36.9
|
37.0
|
36.9
|
||||||||||||
Diluted
|
37.0
|
36.9
|
37.0
|
37.0
|
SYSTEMAX INC.
Condensed Consolidated Balance Sheets - Unaudited
(In millions)
|
||||||||
|
||||||||
|
||||||||
|
June 30*
|
December 31*
|
||||||
2013
|
2012
|
|||||||
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
138.6
|
$
|
150.7
|
||||
Accounts receivable, net
|
280.1
|
297.4
|
||||||
Inventories
|
291.7
|
367.2
|
||||||
Prepaid expenses and other current assets
|
41.5
|
37.1
|
||||||
Total current assets
|
751.9
|
852.4
|
||||||
Property, plant and equipment, net
|
60.4
|
63.0
|
||||||
Goodwill, intangibles and other assets
|
44.5
|
46.9
|
||||||
Total assets
|
$
|
856.8
|
$
|
962.3
|
||||
|
||||||||
Current liabilities:
|
||||||||
Short-term debt
|
$
|
2.6
|
$
|
2.8
|
||||
Accounts payable and accrued expenses
|
402.1
|
488.8
|
||||||
Total current liabilities
|
404.7
|
491.6
|
||||||
Long-term debt
|
4.2
|
5.3
|
||||||
Other liabilities
|
20.3
|
19.1
|
||||||
Shareholders' equity
|
427.6
|
446.3
|
||||||
Total liabilities and shareholders' equity
|
$
|
856.8
|
$
|
962.3
|
||||
|
SYSTEMAX INC.
|
||||||||||||||||
Reconciliation of Segment GAAP Operating Income (loss) to Non-GAAP Operating Income (loss) - Unaudited
|
||||||||||||||||
(In millions)
|
||||||||||||||||
|
Quarter Ended
|
Six Months Ended
|
||||||||||||||
|
June 30*
|
June 30*
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Technology Products
|
$
|
(12.2
|
)
|
$
|
(3.4
|
)
|
$
|
(23.5
|
)
|
$
|
5.4
|
|||||
Industrial Products
|
11.1
|
6.7
|
19.6
|
15.0
|
||||||||||||
Corporate And Other
|
(5.7
|
)
|
(5.3
|
)
|
(11.6
|
)
|
(11.6
|
)
|
||||||||
GAAP Operating income (loss)
|
(6.8
|
)
|
(2.0
|
)
|
(15.5
|
)
|
8.8
|
|||||||||
Non-GAAP adjustments:
|
||||||||||||||||
Technology Products:
|
||||||||||||||||
Severance and other reorganization related charges(1)
|
3.8
|
0.1
|
10.4
|
1.2
|
||||||||||||
Litigation costs (2)
|
0.2
|
0.3
|
0.3
|
0.8
|
||||||||||||
Stock based compensation
|
0.0
|
0.5
|
0.3
|
0.9
|
||||||||||||
Intangible asset amortization
|
0.3
|
0.2
|
0.5
|
0.5
|
||||||||||||
Total Non-GAAP Adj. Technology Products
|
4.3
|
1.1
|
11.5
|
3.4
|
||||||||||||
Industrial Products:
|
||||||||||||||||
New facility startup costs (3)
|
(0.1
|
)
|
1.9
|
(0.0
|
)
|
2.2
|
||||||||||
Stock based compensation
|
0.1
|
0.2
|
0.4
|
0.3
|
||||||||||||
Total Non-GAAP Adj. Industrial Products
|
(0.0
|
)
|
2.1
|
0.4
|
2.5
|
|||||||||||
Corporate and Other:
|
||||||||||||||||
Stock based compensation
|
0.3
|
0.4
|
0.7
|
0.9
|
||||||||||||
|
||||||||||||||||
Technology Products
|
(7.9
|
)
|
(2.3
|
)
|
(12.0
|
)
|
8.8
|
|||||||||
Industrial Products
|
11.1
|
8.8
|
20.0
|
17.5
|
||||||||||||
Corporate And Other
|
(5.4
|
)
|
(4.9
|
)
|
(10.9
|
)
|
(10.7
|
)
|
||||||||
Non-GAAP Operating income (loss)*
|
$
|
(2.2
|
)
|
$
|
1.6
|
$
|
(2.9
|
)
|
$
|
15.6
|
||||||
|
||||||||||||||||
(1) Second quarter 2013 includes costs associated with the planned closure of underperforming retail stores of $1.5M, additional costs associated with the exit of our PC Manufacturing business of $0.8M, start up costs related to the opening of a shared service center for our European Technology business of $1.1M, and other severance and reorganization related charges.
|
||||||||||||||||
(2) Includes legal costs related to the investigations of former officers and employees, net.
|
||||||||||||||||
(3) Includes the costs related to the closing and relocation of one of our smaller distribution centers to a new, significantly larger distribution center and call center for our Industrial Products business.
|
SYSTEMAX INC.
|
||||||||||||||||
Reconciliation of GAAP Net Income (loss) to Non-GAAP Net Income (loss) – Unaudited
|
||||||||||||||||
(In millions)
|
||||||||||||||||
|
Quarter Ended
|
Six Months Ended
|
||||||||||||||
|
June 30*
|
June 30*
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net income (loss)
|
$
|
(6.1
|
)
|
$
|
(2.3
|
)
|
$
|
(12.4
|
)
|
$
|
4.8
|
|||||
Non-GAAP adjustments:
|
||||||||||||||||
Non-recurring
|
||||||||||||||||
Severance and other reorganization related charges (1)
|
3.8
|
0.1
|
10.4
|
1.2
|
||||||||||||
New facility startup costs (2)
|
(0.1
|
)
|
1.9
|
0.0
|
2.2
|
|||||||||||
Litigation costs (3)
|
0.2
|
0.3
|
0.3
|
0.8
|
||||||||||||
Income tax effect (4)
|
(1.4
|
)
|
(0.8
|
)
|
(3.5
|
)
|
(1.4
|
)
|
||||||||
Total non- recurring adjustments, net of tax
|
2.5
|
1.5
|
7.2
|
2.8
|
||||||||||||
Recurring
|
||||||||||||||||
Stock based compensation
|
0.4
|
1.1
|
1.4
|
2.1
|
||||||||||||
Intangible asset amortization
|
0.3
|
0.2
|
0.5
|
0.5
|
||||||||||||
Income tax effect(4)
|
(0.2
|
)
|
(0.5
|
)
|
(0.6
|
)
|
(0.9
|
)
|
||||||||
Total recurring adjustments
|
0.5
|
0.8
|
1.3
|
1.7
|
||||||||||||
|
||||||||||||||||
Non-GAAP net income*
|
$
|
(3.1
|
)
|
$
|
0.0
|
$
|
(3.9
|
)
|
$
|
9.3
|
||||||
|
||||||||||||||||
Diluted earnings per share
|
$
|
(0.16
|
)
|
$
|
(0.06
|
)
|
$
|
(0.34
|
)
|
$
|
0.13
|
|||||
Non-GAAP Diluted earnings per share*
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
(0.11
|
)
|
$
|
0.25
|
(1)Second quarter 2013 includes costs associated with the planned closure of underperforming retail stores of $1.5M, additional costs associated with the exit of our PC Manufacturing business of $0.8M, start up costs related to the opening of a shared service center for our European Technology business of $1.1M, and other severance and reorganization related charges.
(2)Includes costs associated with the movement of a distribution center in our Industrial Products Group to New Jersey.
|
(3)Includes legal costs related to the investigations of former officers and employees, net.
|
(4)Effective tax rates of 35% (normalized) and 36% are used in second quarter 2013 and 2012 respectively. For the six month period ended June 2013 and 2012 effective tax rates of 33% (normalized) and 34% are used, respectively.
|