As It Restructures, Systemax Loses More Revenue

As it continues to restructure its business amid falling sales, Systemax reported another quarter of declining revenue and gross profit, the Port Washington, N.Y.-based company announced Tuesday.

The seller of computers and computer supplies, as well as consumer electronics and industrial products, which has been hampered by margin pressures and retail store closures, is considering ’strategic alternatives as we continue to move forward with our (business-to-business) efforts,’ Chairman and CEO Richard Leeds said in the company’s third-quarter earnings call late Tuesday afternoon. He did not offer more specifics.

Systemax reported an 18-percent drop in revenue over the third quarter of 2014, plummeting from $825.4 million to $699.3 million. It was the company’s lowest quarterly revenue performance in more than five years.

[RELATED: Former Exec Accuses Systemax Of Gender Bias, Product Safety Violations]

Leeds cited poor performance in the company’s North American Technology division, which he said is not operating at full capacity due to the company’s realignment initiative, announced in March.

Systemax – No. 19 on CRN’s Solution Provider 500 list - reported a 14 percent drop in gross earnings, from $117.5 million in the third quarter of 2014 to $100.6 million. It also posted a net loss of $10.3 million, more than quadruple its $2.8 million loss in the third quarter of last year but substantially less than a $28.4 million loss in the second quarter.

In March, Systemax announced it would drop nearly all its commercial and retail business and begin a realignment, refocusing the business around its B2B solutions in North America.

"While we are making progress," Leeds said Tuesday, "the business has not yet reached an acceptable performance level."

He said Systemax has reduced its costs significantly and will continue to develop services offerings as it adjusts its marketing approach to its B2B audience.

The company reported one-time exit costs of $2.3 million from the restructuring, primarily the result of reevaluating lease agreements tied to the retail and distribution space it had occupied. But Leeds added that the costs of restructuring are under budget and on track to come in at less than what Systemax had initially planned.

On the positive side, Systemax reported a strong quarter in Europe, the Middle East and Africa (EMEA), and although the strength of the dollar harmed business results in the United Kingdom, Leeds said the new management team is focused on improving performance in that area.

The company also reported progress on the integration of business-to-business maintenance repair and operations company Plant Equipment Group (PEG) which Systemax acquired in December 2014. That integration remains on track, the company said in a statement.

Leeds said Systemax is taking steps across its operations to strengthen its competitive position and capitalize on growth opportunities. "We have a strong cash position" he said, "and we are committed to delivering additional value to our customers and shareholders."


Sponsored post