Systemax(US:GIC)2022-02-16 01:18Financial Data and Key Metrics Changes - Revenue for Q4 2021 was $262 million, a decline of 4.3% compared to Q4 2020, primarily due to five fewer selling days in the current quarter [16] - Full-year revenue grew to $1.06 billion, with average daily sales improving by 5% and a two-year compounded annual growth rate of 6% [4] - Gross profit for Q4 was $97 million, up 4.2% from the previous year, with a record gross margin of 37%, an improvement of 300 basis points year-over-year [19][20] - Operating income for Q4 was $26.1 million, a 23.7% improvement from the prior year, with an operating margin of 10% [23] Business Line Data and Key Metrics Changes - Managed sales channels drove growth, with e-commerce orders comprising 56% of total transactions in 2021, an increase of 800 basis points since 2019 [18] - Private brand offerings increased to over 45% of total sales for the full year, reflecting strong growth in core product lines [17] Market Data and Key Metrics Changes - U.S. average daily sales increased by 3.8%, while Canadian average daily sales declined by 3.3% in local currency, impacted by strong PPE sales in the previous year [16] - The two-year growth improved from 8% in Q1 to 18% in Q4, indicating a positive trend in market performance [17] Company Strategy and Development Direction - The company is focused on expanding market share through investments in sales, marketing, private brand, digital transformation, and distribution [10][15] - Plans to enhance public sector sales and develop strategic account management for larger accounts were outlined [10][11] - A new website platform is being developed to improve customer experience across digital channels [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about normalizing supply chain challenges in 2022, while acknowledging ongoing inflationary pressures [6][14] - The company aims to continue innovating and strengthening its competitive position despite external challenges [14][15] Other Important Information - A special dividend of $1 per share was paid in December, and the quarterly recurring dividend was increased for the sixth consecutive year, now at $0.18 per share [7][27] - The company maintains a strong balance sheet with a current ratio of 1.7 to 1, over $15 million in cash, and approximately $4.5 million in debt [26] Q&A Session Summary Question: Impact of elevated open orders on top line - Management noted that open orders have doubled since the beginning of 2021 but have flattened in recent months, indicating potential for improved sales as supply chain conditions normalize [30][31] Question: Demand perspective in Q1 - Management reported a healthy demand environment, particularly for core products, with expectations for continued strength in the market [32][33] Question: Inventory increase and competitive advantage - The increase in inventory value was attributed to inflation and extended lead times, which provide a competitive advantage through better stock availability [34][36] Question: Total addressable market in public sector - The public sector is described as a massive and fragmented market, with the company making investments to scale faster in this area [38] Question: Future gross and operating margins - Management expects to maintain and potentially improve gross margins through private label strategies and pricing intelligence [39][42] Question: Private label penetration goals - There is no specific top-end goal for private label penetration, but management aims to increase it incrementally across various categories [44] Question: Evaluation of acquisitions - The company continues to monitor the market for strategic acquisition opportunities, although no acquisitions have been made recently [46][47]