Systemax(GIC) - 2024 Q3 - Quarterly Report

Financial Performance - Consolidated sales decreased 3.4% to $342.4 million compared to$354.6 million last year[85] - Consolidated operating income from continuing operations decreased 21.3% to $22.2 million compared to$28.2 million last year[85] - Net income per diluted share from continuing operations decreased 18.5% to $0.44 compared to$0.54 last year[85] - Consolidated net sales decreased by 3.4% to $342.4 million for the three months ended September 30, 2024, while increasing by 6.2$1,013.6 million for the nine months[92] - Operating income from continuing operations decreased by 21.3% to $22.2 million for the three months and by 12.1$66.0 million for the nine months[100] - Net income from continuing operations fell by 18.8% to $16.8 million for the three months and by 9.7$50.1 million for the nine months, with net income margin remaining at 4.9%[100] Gross Margin - Consolidated gross margin increased to 34.0%, a 120 basis point improvement from the prior year quarter results[79] - Gross margin improved by 120 basis points to 34.0% for the third quarter of 2024 and by 20 basis points to 34.5% for the nine months[95] - Year-to-date consolidated gross margin increased to 34.5% compared to 34.3% last year[86] - Excluding Indoff, year-to-date gross margin was 36.1%, an 80 basis point improvement over the prior year[86] Expenses - Selling, distribution, and administrative (SD&A) costs increased by 6.8% to $94.1 million for the three months and by 12.4$283.7 million for the nine months, with SD&A as a percentage of net sales rising to 27.5%[97][98] - The Company expects elevated selling, distribution and administrative expenses in 2024 due to planned investments and integration of Indoff[79] Cash Flow and Liquidity - Cash and cash equivalents increased by $4.5 million to$38.9 million as of September 30, 2024, compared to $34.4 million at the end of 2023[104] - Net cash provided by operating activities from continuing operations was$34.6 million for the nine months ended September 30, 2024, down from $103.8 million in 2023[108] - Net cash used in investing activities totaled$3.1 million for warehouse machinery and equipment, significantly lower than $75.6 million in 2023, which included the purchase of Indoff[109] - Net cash used in financing activities totaled$27.1 million in 2024, primarily for quarterly dividends of $0.25 per share, totaling approximately$28.8 million[110] - As of September 30, 2024, the company had over $156 million of liquidity, including cash and undrawn lines of credit in the U.S.[117] - The company expects that its cash balances and future cash flows will be sufficient to fund working capital and other cash requirements for at least the next twelve months[116] Capital Expenditures and Debt - The company anticipates capital expenditures in the range of$3.0 to $5.0 million for 2024[115] - The company was obligated for approximately$104.9 million under non-cancelable operating and finance leases as of September 30, 2024[118] - The company had no outstanding debt under its variable rate credit facility as of September 30, 2024[123] - Total outstanding letters of credit amounted to $1.6 million as of September 30, 2024[112] - The company maintains a$125.0 million secured revolving credit facility, with total availability of $122.2 million as of September 30, 2024[112] Acquisition and Integration - Excluding Indoff, acquired on May 19, 2023, year-to-date sales increased 0.7%[86] - Indoff LLC represented approximately 7% and 12% of the company's consolidated total assets and net sales, respectively, at September 30, 2024[127] - The company is actively implementing changes to strengthen its internal controls over financial reporting following the acquisition of Indoff LLC[131] Management Focus - Management continues to focus on margin profile management amid inflationary pressures and elevated ocean freight costs[79]