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 October 29, 2013, regarding financial results for the third quarter ended September 30, 2013. |
99.1 | Press Release of Systemax Inc., dated October 29, 2013, regarding financial results for the third quarter ended September 30, 2013. |
Performance Summary
(U.S. dollars in millions, except per share data) |
||||||||||||||||
Highlights
|
Quarter Ended
September 30, |
Nine Months Ended
September 30,
|
||||||||||||||
GAAP Results
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net sales
|
$
|
791.8
|
$
|
847.0
|
$
|
2,478.3
|
$
|
2,609.4
|
||||||||
Gross profit
|
$
|
117.7
|
$
|
119.0
|
$
|
357.4
|
$
|
367.7
|
||||||||
Gross margin
|
14.9
|
%
|
14.0
|
%
|
14.4
|
%
|
14.1
|
%
|
||||||||
Operating income (loss) from continuing operations
|
$
|
(3.8
|
)
|
$
|
(1.9
|
)
|
$
|
(19.3
|
)
|
$
|
6.9
|
|||||
Operating margin from continuing operations
|
(0.5
|
)%
|
(0.2
|
)%
|
(0.8
|
)%
|
0.3
|
%
|
||||||||
Net income (loss)
|
$
|
(11.6
|
)
|
$
|
14.0
|
$
|
(24.0
|
)
|
$
|
18.8
|
||||||
Diluted net income (loss) per share
|
$
|
(0.31
|
)
|
$
|
0.38
|
$
|
(0.65
|
)
|
$
|
0.51
|
||||||
Non-GAAP Results*
|
||||||||||||||||
Adjusted operating income
|
$
|
3.0
|
$
|
1.5
|
$
|
0.1
|
$
|
17.1
|
||||||||
Non-recurring and recurring adjustments, net
|
$
|
6.8
|
$
|
3.4
|
$
|
19.4
|
$
|
10.2
|
||||||||
Adjusted operating margin
|
0.4
|
%
|
0.2
|
%
|
0.0
|
%
|
0.7
|
%
|
·
|
Consolidated sales decreased 6.5% to $791.8 million in U.S. dollars. On a constant currency basis, sales decreased 6.8%.
|
·
|
Business to business channel sales grew 0.2% to $528.3 million in U.S. dollars. On a constant currency basis, sales declined 0.5%. On a "same store" and constant currency basis, sales declined 0.5%.
|
·
|
Consumer channel sales declined 17.5% to $263.5 million in U.S. dollars. On a constant currency basis, sales declined 17.3%. On a "same store" and constant currency basis, sales declined 15.6%.
|
·
|
GAAP operating loss increased to a loss of $3.8 million compared to a loss of $1.9 million last year. Non-GAAP operating income grew to $3.0 million compared to $1.5 million last year.
|
·
|
GAAP diluted net loss per share was $0.31. Non-GAAP diluted net loss per share was $0.19.
|
·
|
Consolidated sales declined 5.0% to $2.5 billion in U.S. dollars. On a constant currency basis, sales also declined 5.0%.
|
·
|
Business to business channel sales increased 1.0% to $1.6 billion in U.S. dollars. On a constant currency basis, sales also grew 1.0%.
|
·
|
Consumer channel sales declined 14.4% to $0.9 billion in U.S. dollars. On a constant currency basis, sales declined 14.3%.
|
·
|
GAAP operating income declined to a loss of $19.3 million compared to income of $6.9 million last year. Non-GAAP operating income was $0.1 million compared to $17.1 million last year.
|
·
|
GAAP diluted net loss per share was $0.65. Non-GAAP diluted net loss per share was $0.30.
|
Supplemental Channel Sales Summary*
(in millions)
|
||||||||||||||||||||||||||||||||||||||||
Channel
|
Quarter Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||||||||||
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
|||||||||||||||||||||||||||||||
Business to Business1
|
$
|
528.3
|
66.7
|
%
|
0.2
|
%
|
$
|
527.5
|
62.3
|
%
|
$
|
1,599.6
|
64.5
|
%
|
1.0
|
%
|
$
|
1,583.2
|
60.7
|
%
|
||||||||||||||||||||
Consumer 2
|
$
|
263.5
|
33.3
|
%
|
(17.5
|
)%
|
$
|
319.5
|
37.7
|
%
|
$
|
878.7
|
35.5
|
%
|
(14.4
|
)%
|
$
|
1,026.2
|
39.3
|
%
|
||||||||||||||||||||
Consolidated Sales
|
$
|
791.8
|
100
|
%
|
(6.5
|
)%
|
$
|
847.0
|
100
|
%
|
$
|
2,478.3
|
100
|
%
|
(5.0
|
)%
|
$
|
2,609.4
|
100
|
%
|
Supplemental "Same Store" Channel Growth1 – Q3 2013 vs. Q3 2012
|
|
Channel
|
Change
|
Business to Business
|
(0.5)%
|
Consumer
|
(15.6)%
|
Consolidated Sales
|
(6.1)%
|
Supplemental Product Category Sales Summary
(in millions)
|
||||||||||||||||||||||||||||||||||||||||
Product Category
|
Quarter Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||||||||||
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
|||||||||||||||||||||||||||||||
Computers
|
$
|
246.5
|
31.1
|
%
|
(2.0
|
)%
|
$
|
251.5
|
29.7
|
%
|
$
|
758.9
|
30.6
|
%
|
1.0
|
%
|
$
|
751.2
|
28.8
|
%
|
||||||||||||||||||||
Computer Accessories & Software
|
$
|
205.6
|
26.0
|
%
|
(12.3
|
)%
|
$
|
234.4
|
27.7
|
%
|
$
|
662.3
|
26.7
|
%
|
(9.4
|
)%
|
$
|
731.3
|
28.0
|
%
|
||||||||||||||||||||
Industrial Products
|
$
|
125.7
|
15.9
|
%
|
13.9
|
%
|
$
|
110.4
|
13.0
|
%
|
$
|
349.9
|
14.1
|
%
|
15.3
|
%
|
$
|
303.6
|
11.6
|
%
|
||||||||||||||||||||
Consumer Electronics
|
$
|
107.7
|
13.6
|
%
|
(16.8
|
)%
|
$
|
129.4
|
15.3
|
%
|
$
|
361.0
|
14.6
|
%
|
(18.6
|
)%
|
$
|
443.7
|
17.0
|
%
|
||||||||||||||||||||
Computer Components
|
$
|
83.3
|
10.5
|
%
|
(10.5
|
)%
|
$
|
93.1
|
11.0
|
%
|
$
|
277.1
|
11.2
|
%
|
(7.9
|
)%
|
$
|
300.9
|
11.6
|
%
|
||||||||||||||||||||
Other
|
$
|
23.0
|
2.9
|
%
|
(18.4
|
)%
|
$
|
28.2
|
3.3
|
%
|
$
|
69.1
|
2.8
|
%
|
(12.2
|
)%
|
$
|
78.7
|
3.0
|
%
|
||||||||||||||||||||
Consolidated Sales
|
$
|
791.8
|
100
|
%
|
(6.5
|
)%
|
$
|
847.0
|
100
|
%
|
$
|
2,478.3
|
100
|
%
|
(5.0
|
)%
|
$
|
2,609.4
|
100
|
%
|
Supplemental Business Unit Sales Summary
(in millions)
|
||||||||||||||||||||||||||||||||||||||||
Business Unit
|
Quarter Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||||||||||
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
2013
|
% of Sales
|
Change y/y
|
2012
|
% of Sales
|
|||||||||||||||||||||||||||||||
Technology Products
|
$
|
665.0
|
84.0
|
%
|
(9.6
|
)%
|
$
|
735.4
|
86.8
|
%
|
$
|
2,124.3
|
85.7
|
%
|
(7.7
|
)%
|
$
|
2,302.2
|
88.2
|
%
|
||||||||||||||||||||
Industrial Products
|
$
|
125.7
|
15.9
|
%
|
13.9
|
%
|
$
|
110.4
|
13.0
|
%
|
$
|
349.9
|
14.1
|
%
|
15.3
|
%
|
$
|
303.6
|
11.6
|
%
|
||||||||||||||||||||
Corporate and Other
|
$
|
1.1
|
0.1
|
%
|
(8.3
|
)%
|
$
|
1.2
|
0.2
|
%
|
$
|
4.1
|
0.2
|
%
|
13.9
|
%
|
$
|
3.6
|
0.2
|
%
|
||||||||||||||||||||
Consolidated Sales
|
$
|
791.8
|
100
|
%
|
(6.5
|
)%
|
$
|
847.0
|
100
|
%
|
$
|
2,478.3
|
100
|
%
|
(5.0
|
)%
|
$
|
2,609.4
|
100
|
%
|
Supplemental Business Unit GAAP Operating Income (Loss) Summary
(in millions)
|
||||||||||||||||||||||||||||||||
Business Unit
|
Quarter Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||
2013
|
Margin
|
2012
|
Margin
|
2013
|
Margin
|
2012
|
Margin
|
|||||||||||||||||||||||||
Technology Products
|
$
|
(9.9
|
)
|
(1.5
|
)%
|
$
|
(3.8
|
)
|
(0.5
|
)%
|
$
|
(33.4
|
)
|
(1.6
|
)%
|
$
|
1.6
|
0.1
|
%
|
|||||||||||||
Industrial Products
|
$
|
10.8
|
8.6
|
%
|
$
|
7.6
|
6.9
|
%
|
$
|
30.4
|
8.7
|
%
|
$
|
22.9
|
7.5
|
%
|
||||||||||||||||
Corporate and Other
|
$
|
(4.7
|
)
|
NM
|
$
|
(5.7
|
)
|
NM
|
$
|
(16.3
|
)
|
NM
|
$
|
(17.6
|
)
|
NM
|
||||||||||||||||
Consolidated Operating Income (Loss)
|
$
|
(3.8
|
)
|
(0.5
|
)%
|
$
|
(1.9
|
)
|
(0.2
|
)%
|
$
|
(19.3
|
)
|
(0.8
|
)%
|
$
|
6.9
|
0.3
|
%
|
|||||||||||||
|
||||||||||||||||||||||||||||||||
Non-GAAP Operating Income (Loss)*
|
||||||||||||||||||||||||||||||||
Technology Products
|
$
|
(3.5
|
)
|
(0.5
|
)%
|
$
|
(1.1
|
)
|
(0.2
|
)%
|
$
|
(15.5
|
)
|
(0.7
|
)%
|
$
|
7.7
|
0.3
|
%
|
|||||||||||||
Industrial Products
|
$
|
10.9
|
8.7
|
%
|
$
|
7.8
|
7.1
|
%
|
$
|
30.9
|
8.8
|
%
|
$
|
25.6
|
8.4
|
%
|
||||||||||||||||
Corporate and Other
|
$
|
(4.4
|
)
|
NM
|
$
|
(5.2
|
)
|
NM
|
$
|
(15.3
|
)
|
NM
|
$
|
(16.2
|
)
|
NM
|
||||||||||||||||
Consolidated Operating Income
|
$
|
3.0
|
0.4
|
%
|
$
|
1.5
|
0.2
|
%
|
$
|
0.1
|
0.0
|
%
|
$
|
17.1
|
0.7
|
%
|
SYSTEMAX INC.
|
||||||||||||||||
Condensed Consolidated Statements of Operations – Unaudited
|
||||||||||||||||
(In millions, except per share amounts)
|
||||||||||||||||
|
||||||||||||||||
|
Quarter Ended
|
Nine Months Ended
|
||||||||||||||
|
September 30*
|
September 30*
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net sales
|
$
|
791.8
|
$
|
847.0
|
$
|
2,478.3
|
$
|
2,609.4
|
||||||||
Cost of sales
|
674.1
|
728.0
|
2,120.9
|
2,241.7
|
||||||||||||
Gross profit
|
117.7
|
119.0
|
357.4
|
367.7
|
||||||||||||
Gross margin
|
14.9
|
%
|
14.0
|
%
|
14.4
|
%
|
14.1
|
%
|
||||||||
Selling, general and administrative expenses
|
115.7
|
118.9
|
360.2
|
354.7
|
||||||||||||
Special charges (gains), net
|
5.8
|
2.0
|
16.5
|
6.1
|
||||||||||||
Operating income (loss) from continuing operations
|
(3.8
|
)
|
(1.9
|
)
|
(19.3
|
)
|
6.9
|
|||||||||
Operating margin
|
(0.5
|
)%
|
(0.2
|
)%
|
(0.8
|
)%
|
0.3
|
%
|
||||||||
Interest and other (income) expense, net
|
(0.6
|
)
|
0.2
|
0.2
|
1.8
|
|||||||||||
Income (loss) from continuing operations before income taxes
|
(3.2
|
)
|
(2.1
|
)
|
(19.5
|
)
|
5.1
|
|||||||||
(Benefit from) provision for income taxes
|
8.4
|
(16.1
|
)
|
4.5
|
(13.9
|
)
|
||||||||||
|
||||||||||||||||
Income (loss) from continuing operations
|
(11.6
|
)
|
14.0
|
(24.0
|
)
|
19.0
|
||||||||||
Discontinued Operations
|
-
|
-
|
-
|
(0.2
|
)
|
|||||||||||
Net Income ( loss)
|
$
|
(11.6
|
)
|
$
|
14.0
|
$
|
(24.0
|
)
|
$
|
18.8
|
||||||
Net margin
|
(1.5
|
)%
|
1.7
|
%
|
(1.0
|
)%
|
0.7
|
%
|
||||||||
|
||||||||||||||||
|
||||||||||||||||
Net Income (loss) per common share:
|
||||||||||||||||
Basic
|
$
|
(0.31
|
)
|
$
|
0.38
|
$
|
(0.65
|
)
|
$
|
0.51
|
||||||
Diluted
|
$
|
(0.31
|
)
|
$
|
0.38
|
$
|
(0.65
|
)
|
$
|
0.51
|
||||||
|
||||||||||||||||
Weighted average common and
common equivalent shares:
|
||||||||||||||||
Basic
|
37.0
|
37.0
|
37.0
|
36.9
|
||||||||||||
Diluted
|
37.0
|
37.0
|
37.0
|
37.0
|
||||||||||||
|
||||||||||||||||
|
SYSTEMAX INC.
|
||||||||
Condensed Consolidated Balance Sheets- Unaudited
|
||||||||
(In millions)
|
||||||||
|
(Unaudited)
|
|||||||
|
September 30
|
December 31
|
||||||
|
2013
|
2012
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
173.3
|
$
|
150.7
|
||||
Accounts receivable, net
|
287.7
|
297.4
|
||||||
Inventories
|
284.6
|
367.2
|
||||||
Prepaid expenses and other current assets
|
42.2
|
37.1
|
||||||
Total current assets
|
787.8
|
852.4
|
||||||
Property, plant and equipment, net
|
59.3
|
63.0
|
||||||
Goodwill, intangibles and other assets
|
44.9
|
46.9
|
||||||
Total assets
|
$
|
892.0
|
$
|
962.3
|
||||
|
||||||||
Current liabilities:
|
||||||||
Short-term debt
|
$
|
2.5
|
$
|
2.8
|
||||
Accounts payable and accrued expenses
|
440.0
|
488.8
|
||||||
Total current liabilities
|
442.5
|
491.6
|
||||||
Long-term debt
|
3.5
|
5.3
|
||||||
Other liabilities
|
22.5
|
19.1
|
||||||
Shareholders' equity
|
423.5
|
446.3
|
||||||
Total liabilities and shareholders' equity
|
$
|
892.0
|
$
|
962.3
|
||||
|
SYSTEMAX INC.
|
||||||||||||||||
Reconciliation of Segment GAAP Operating Income (loss) to Non-GAAP Operating Income (loss) - Unaudited
|
||||||||||||||||
(In millions)
|
||||||||||||||||
|
Quarter Ended
|
Nine Months Ended
|
||||||||||||||
|
September 30*
|
September 30*
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Technology Products
|
$
|
(9.9
|
)
|
$
|
(3.8
|
)
|
$
|
(33.4
|
)
|
$
|
1.6
|
|||||
Industrial Products
|
10.8
|
7.6
|
30.4
|
22.9
|
||||||||||||
Corporate And Other
|
(4.7
|
)
|
(5.7
|
)
|
(16.3
|
)
|
(17.6
|
)
|
||||||||
GAAP Operating income (loss)
|
(3.8
|
)
|
(1.9
|
)
|
(19.3
|
)
|
6.9
|
|||||||||
Non-GAAP adjustments:
|
||||||||||||||||
Technology Products:
|
||||||||||||||||
Asset Impairment Charges
|
-
|
1.7
|
-
|
1.7
|
||||||||||||
Severance and other reorganization related charges(1)
|
5.6
|
0.2
|
16.0
|
1.4
|
||||||||||||
Litigation costs (2)
|
0.2
|
0.1
|
0.5
|
0.9
|
||||||||||||
Stock based compensation
|
0.1
|
0.5
|
0.4
|
1.4
|
||||||||||||
Intangible asset amortization
|
0.5
|
0.2
|
1.0
|
0.7
|
||||||||||||
Total Non-GAAP Adj. Technology Products
|
6.4
|
2.7
|
17.9
|
6.1
|
||||||||||||
Industrial Products:
|
||||||||||||||||
New facility startup costs
|
-
|
-
|
-
|
2.2
|
||||||||||||
Stock based compensation
|
0.1
|
0.2
|
0.5
|
0.5
|
||||||||||||
Total Non-GAAP Adj. Industrial Products
|
0.1
|
0.2
|
0.5
|
2.7
|
||||||||||||
Corporate and Other:
|
||||||||||||||||
Stock based compensation
|
0.3
|
0.5
|
1.0
|
1.4
|
||||||||||||
|
||||||||||||||||
Technology Products
|
(3.5
|
)
|
(1.1
|
)
|
(15.5
|
)
|
7.7
|
|||||||||
Industrial Products
|
10.9
|
7.8
|
30.9
|
25.6
|
||||||||||||
Corporate And Other
|
(4.4
|
)
|
(5.2
|
)
|
(15.3
|
)
|
(16.2
|
)
|
||||||||
Non-GAAP Operating income*
|
$
|
3.0
|
$
|
1.5
|
$
|
0.1
|
$
|
17.1
|
||||||||
|
||||||||||||||||
(1) Third quarter 2013 includes costs associated with the planned closure of underperforming retail stores of $5.3M and $0.3M of additional severances and continued recruitment costs in Europe related to the expansion of our European Shared Service Center. Nine month costs in 2013 includes those recognized in the third quarter as well as $6.1M of additional costs related to start up and severance related to our European Shared Services Center, $2.2M in severance expense related to leadership changes in our North American Technology segment, and other costs associated with the exit of our PC Manufacturing business and underperforming retail stores.
|
||||||||||||||||
(2) Includes legal costs related to the investigations of former officers and employees, net.
|
||||||||||||||||
SYSTEMAX INC.
|
||||||||||||||||
Reconciliation of GAAP Net Income (loss) to Non-GAAP Net Income (loss) – Unaudited
|
||||||||||||||||
(In millions)
|
||||||||||||||||
|
Quarter Ended
|
Nine Months Ended
|
||||||||||||||
|
September 30*
|
September 30*
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net income (loss)
|
$
|
(11.6
|
)
|
$
|
14.0
|
$
|
(24.0
|
)
|
$
|
18.8
|
||||||
Non-GAAP adjustments:
|
||||||||||||||||
Non-recurring
|
||||||||||||||||
Asset impairment charges
|
-
|
1.7
|
-
|
1.7
|
||||||||||||
Severance and other reorganization related charges (1)
|
5.6
|
0.2
|
16.0
|
1.4
|
||||||||||||
New facility startup costs
|
-
|
-
|
-
|
2.2
|
||||||||||||
Litigation costs (2)
|
0.2
|
0.1
|
0.5
|
0.9
|
||||||||||||
Valuation Allowance Change
|
-
|
(15.1
|
)
|
-
|
(15.1
|
)
|
||||||||||
Income tax effect (3)
|
(2.0
|
)
|
(0.7
|
)
|
(5.5
|
)
|
(2.1
|
)
|
||||||||
Total non- recurring adjustments, net of tax
|
3.8
|
(13.8
|
)
|
11.0
|
(11.0
|
)
|
||||||||||
Recurring
|
||||||||||||||||
Stock based compensation
|
0.5
|
1.2
|
1.9
|
3.3
|
||||||||||||
Intangible asset amortization
|
0.5
|
0.2
|
1.0
|
0.7
|
||||||||||||
Income tax effect(3)
|
(0.4
|
)
|
(0.5
|
)
|
(1.0
|
)
|
(1.5
|
)
|
||||||||
Total recurring adjustments
|
0.6
|
0.9
|
1.9
|
2.5
|
||||||||||||
|
||||||||||||||||
Non-GAAP net income (loss)*
|
$
|
(7.2
|
)
|
$
|
1.1
|
$
|
(11.1
|
)
|
$
|
10.3
|
||||||
|
||||||||||||||||
Diluted earnings (loss) per share
|
$
|
(0.31
|
)
|
$
|
0.38
|
$
|
(0.65
|
)
|
$
|
0.51
|
||||||
Non-GAAP Diluted earnings (loss) per share*
|
$
|
(0.19
|
)
|
$
|
0.03
|
$
|
(0.30
|
)
|
$
|
0.28
|
||||||
|
(1) Third quarter 2013 includes costs associated with the planned closure of underperforming retail stores of $5.3M and $0.3M of additional severances and continued recruitment costs in Europe related to the expansion of our European Shared Service Center. Nine month costs in 2013 includes those recognized in the third quarter as well as $6.1M of additional costs related to start up and severance related to our European Shared Services Center, $2.2M in severance expense related to leadership changes in our North American Technology segment, and other costs associated with the exit of our PC Manufacturing business and underperforming retail stores.
|
(2) Includes legal costs related to the investigations of former officers and employees, net.
|
(3) Effective tax rates of 35% (assumed) are used in third quarter 2013 and 2012.
|