Systemax Inc. (SYX) research, news, and more from GeoInvesting

Company description

Tue, 28 Mar 2017 16:19:41 GMT

Systemax Inc. operates as a direct marketer of brand name and private label products. Its Industrial Products Group segment sells a range of maintenance, repair, and operation products, including electrical and bulbs; fasteners and hardware; foodservice and appliances; furniture and office products; HVAC/R fans; janitorial and maintenance; material handling; medical and laboratory equipment; metalworking and cutting tools; motors and power transmission products; office and school supplies; outdoor and grounds maintenance products; packaging and supplies; plumbing supplies; pneumatics and hydraulics; raw materials and building supplies; safety and security products; storage and shelving products; tools and instruments; and vehicle maintenance, and workbench and shop desks in North America. The company’s EMEA Technology Products Group segment sells information and communication technology products, such as computers and mobile devices; computer parts and memory products; servers, and storage and backup products; computer components and accessories; networking and security products; software products; and electronics, and commercial and home networking products. This segment also offers consumer electronics comprising TV and video, audio, and GPS products; cameras and surveillance products; cell phones; video games and toys; and home and electronics accessories. The company offers its products primarily under the Global Industrial, MISCO, and Inmac Wstore brand names to for-profit businesses, educational organizations, and government entities through its relationship marketers, catalog mailings, and proprietary Internet Websites. Systemax Inc. was founded in 1949 and is headquartered in Port Washington, New York.

Comments & Business Outlook

Wed, 02 Aug 2017 15:21:50 GMT

SYX ($19.10) - Reported Q2 results this morning:

Consolidated sales increased 5.1% to $313.0 million in U.S. dollars. On a constant currency basis, average daily sales increased 8.4%.
Industrial Products Group ("IPG") sales grew 11.5% to $202.7 million in U.S. dollars. On a constant currency basis, average daily sales increased 11.7%.
European Technology Products Group ("ETG"), comprising France and the divested German Operations, sales decreased 4.1% to $110.3 million in U.S. dollars. On a constant currency basis, average daily sales increased 3.3%.
Consolidated operating income was $21.7 million compared to $5.4 million last year.
Net income per diluted share from continuing operations was $0.52.

You can read the company’s comprehensive results in this morning’s press release.

Research

Fri, 05 May 2017 14:31:22 GMT

SYX ($12.94) reported Q1 2017 results:

Sales of $302.5 million vs $286.8 million in the prior year
Non-GAAP EPS of $0.24 vs $0.12 in the prior year

Quotes from management:

"More than a year ago we commenced a strategy to exit our underperforming businesses and streamline our Company. With the sale of the remainder of our underperforming businesses in Europe in March 2017, we have substantially completed this initiative and successfully transformed Systemax. While certain wind down activities remain, Systemax is essentially a new company. The growth, potential and value of our profitable Industrial Products Group and France technology value added reseller businesses are highlighted in the results of our continuing operations. Industrial and France both delivered exceptional performance in the first quarter, generating double digit organic revenue growth and continuing operations leveraged to generate significant operating and net income gains."

In our March 28, 2017 email when the stock was trading at $9.85 we stated we were taking a closer look at the Company’s plans to streamline its operations to increase focus on its highly profitable North America industrial products and France IT Businesses. We stated our initial calculations equate to a new run rate for EPS of $1.00. Q1 2017 results so far echo our initial calculations.

Research

Tue, 28 Mar 2017 16:18:32 GMT

SYX ($9.85) - We are taking a closer look at yesterday’s news release that propelled shares 36% higher. Yesterday, SYX announced it had streamlined operations to increase focus on its highly profitable North America industrial products and France IT businesses.

“With the completion of this transaction, Systemax operates two highly successful, growing and profitable businesses: IPG, its North American MRO business operating primarily under the Global Industrial brand, and its France technology Value Added Reseller business operating primarily under the Inmac Wstore brand. During 2016 these ongoing businesses, inclusive of corporate charges, generated revenue of $1.1 billion and over $38 million in operating income. In 2016, IPG generated revenue of $715.6 million and operating income of $34.3 million, and the France business generated revenue of $417.2 million and operating income of $19.2 million.”

The Company had strong analyst growth forecast in EPS for 2017 and 2018 prior to this announcement of $0.55 for 2017 and $0.82 for 2018 (vs $0.22 in 2016). We will look into the details of the release further to try and determine if the analyst estimates have taken into account these strategic changes. Our initial calculations equate to a new annual run rate for EPS of $1.00.

The IPG business sells a wide array of maintenance, repair and operational (“MRO”) products which are marketed in North America.

The France business is its EMEA segment which sells products categorized as ICT and CE as well as related technical services such as configuration, implementation, network security, and other technical services.

Caveats:

Low margin business could constrain P/E multiple; Likely will keep P/E multiple between 10 and 15, which could still leave some room to the upside for the stock.