PORT WASHINGTON, N.Y., Oct. 30, 2018 /PRNewswire/ -- Systemax Inc. (NYSE: SYX) today announced financial results for the third quarter ended September 30, 2018.
Third Quarter 2018 Financial Summary:
- Consolidated sales increased 15.4% to $235.8 million in U.S. dollars. On a constant currency basis, average daily sales increased 15.6%.
- Consolidated operating income grew 47.2% to $18.4 million compared to $12.5 million last year on a GAAP basis. On a Non-GAAP basis, consolidated operating income grew 45.2% to $19.6 million.
- Net income per diluted share from continuing operations grew 33.3% to $0.40. Non-GAAP net income per diluted share from continuing operations grew 69.6% to $0.39.
- Net income per diluted share from discontinued operations was $4.32, primarily related to the $160.0 million book gain recognized on the sale of the Company's France business and the inclusion of the 2018 France operating results in discontinued operations for the third quarter of 2018.
Nine Months 2018 Financial Summary:
- Consolidated sales increased 13.7% to $679.2 million in U.S. dollars. On a constant currency basis, average daily sales increased 13.7%.
- Consolidated operating income grew 38.6% to $47.8 million compared to $34.5 million last year on a GAAP basis. On a Non-GAAP basis, consolidated operating income grew 33.7% to $50.0 million.
- Net income per diluted share from continuing operations grew 11.4% to $0.98. Non-GAAP net income per diluted share from continuing operations grew 50.8% to $0.98.
- Net income per diluted share from discontinued operations was $4.59, primarily related to the $160.0 million book gain recognized on the sale of the Company's France business and the inclusion of the 2018 France operating results in discontinued operations in 2018.
Larry Reinhold, Chief Executive Officer, said, "In the third quarter, our Industrial Products Group delivered an all-time record performance. Sales increased over 15% organically compared to the third quarter of last year, and the rate of sales growth has accelerated for five consecutive quarters. Demand was robust across the business with solid performance in our managed sales channels, as well as continued generation of new customers through our leading e-commerce platform. Operating leverage remains healthy, with segment operating margin above 10% for the second consecutive quarter and expanded from the third quarter of last year. We saw no material impact on the business or profitability from tariffs in the quarter."
"The sale of our France business in August generated gross proceeds of almost $270 million dollars, before taxes and transaction costs, and marked the completion of the strategic restructuring of our operations. Today, we are focused on driving profitable growth within the Industrial Products Group, which is a healthy and high performing business that has delivered consistent double-digit organic revenue increases for many years. Industrial has significantly expanded its operations, improved its profitability dramatically, and has multiple growth opportunities in its future. It is uniquely positioned to serve the SMB market and we are making investments to further enhance its competitive position and expand the value we bring to customers. With strong cash flow generation and an exceptional balance sheet we have significant financial flexibility to capitalize on our growth opportunities, pursue strategic M&A and return capital to our shareholders."
At September 30, 2018, the Company had total working capital of $346.7 million, cash and cash equivalents of $302.8 million and excess availability under its credit facility of approximately $71.1 million. Our cash position reflects the repatriation of the cash generated from the sale of our France business less taxes and transaction costs associated with the sale most of which were paid in September. The Company's board of directors has declared a cash dividend of $0.11 per share to common stock shareholders of record at the close of business on November 12, 2018, payable on November 19, 2018. The Company anticipates continuing a regular quarterly dividend in the future.
Earnings Conference Call Details
Systemax Inc. will provide pre-recorded remarks on its third quarter 2018 results today, October 30, 2018 at 5:00 p.m. Eastern Time. A live webcast of the remarks will be available on the Company's website at www.systemax.com in the investor relations section. The webcast will also be archived on www.systemax.com for approximately 90 days.
About Systemax Inc.
Systemax Inc. (www.systemax.com ), through its operating subsidiaries, is a provider of industrial products in North America going to market through a system of branded e-Commerce websites and relationship marketers. The primary brand is Global Industrial.
This press release contains forward looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Additional written or oral forward looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. Statements contained in this press release that are not historical facts are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and 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. Forward looking statements may include, but are not limited to, projections or estimates of revenue, income or loss, exit costs, cash flow needs and capital expenditures, statements regarding future operations, expansion or restructuring plans, including our exit from and winding down of our sold NATG operations, financing needs, compliance with financial covenants in loan agreements, plans for acquisitions or sale of assets or businesses, plans relating to products or services of the Company, assessments of materiality, predictions of future events and the effects of pending and possible litigation, as well as assumptions relating to the foregoing. In addition, when used in this release, the words "anticipates," "believes," "estimates," "expects," "intends," and "plans" and variations thereof and similar expressions are intended to identify forward looking statements.
Other factors that may affect our future results of operations and financial condition include, but are not limited to, unanticipated developments in any one or more of the following areas, as well as other factors which may be detailed from time to time in our Securities and Exchange Commission filings: risks involved with e-commerce, including possible loss of business and customer dissatisfaction if outages or other computer-related problems should preclude customer access to our products and services; the Company's management information systems and other technology platforms supporting our sales, procurement and other operations are critical to our operations and disruptions or delays have occurred and could occur in the future, and if not timely addressed would have a material adverse effect on us; we could suffer a data security breach due to our e-commerce and data storage systems being hacked by those seeking to steal Company information, vendor, employee or customer personal information, or due to employee error, resulting in disruption to our operations, loss of information and privacy, legal claims and adverse material impact on our reputation and business; meeting credit card industry compliance standards in order to maintain our ability to accept credit cards; technological change has had and can continue to have a material effect on our product mix and results of operations; general economic conditions will continue to impact our business; extreme weather conditions could disrupt our product supply chain and our ability to ship or receive products, which would adversely impact sales; our international operations are subject to risks such as fluctuations in currency rates and foreign regulatory requirements, and our operations are subject to the impact of newly enacted U.S. and foreign tariffs, and political uncertainty; and managing various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights and price protection from our vendors.
The Plunkett Group
* 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 quarters ended on September 29, 2018 and September 30, 2017. The third quarter of both 2018 and 2017 included 13 weeks and the first nine months of both 2018 and 2017 included 39 weeks.
**On August 31, 2018, the Company closed on the sale of its France operations. Prior and current year results of these operations, along with the associated gain on the sale, have been classified as discontinued operations. On March 24, 2017, the Company closed on the sale of its European Technology Group businesses, other than its operations in France. Prior and current year results of these divested businesses, along with the associated loss on the sale recorded in 2017, have been classified as discontinued operations. On December 1, 2015 the Company closed on the sale of certain assets of its North American Technology Group ("NATG"). Pursuant to this transaction, the Company continues to wind down the remaining operations of NATG during 2018. Costs of the wind down in 2018 and 2017 are included in continuing and discontinued operations.
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SOURCE Systemax Inc.