Systemax(US:GIC)2025-10-28 22:00Financial Data and Key Metrics Changes - Revenue increased by 3.3% to $353.6 million in Q3 2025 compared to Q3 2024, marking the second consecutive quarter of revenue growth [4][9] - Gross margin improved by 160 basis points to 35.6% year-over-year, reflecting effective price capture and inventory management [5][10] - Operating income rose by 18.5% to $26.3 million, with an operating margin of 7.4% [12] Business Line Data and Key Metrics Changes - U.S. revenue grew by 2.9%, while Canadian revenue improved by 12.3% in local currency [9] - The company experienced growth in its largest strategic accounts, although there was a decline in smaller, more transactional customers [4][9] Market Data and Key Metrics Changes - Federal government spending saw a decline due to timing and budget uncertainty, impacting overall performance [10] - Despite challenges, growth continued into October, with positive trends in state and local government spending [20] Company Strategy and Development Direction - The company is reframing its go-to-market strategy to focus on key accounts and enhance customer relationships [6][14] - There is an emphasis on expanding product offerings and solutions to deepen existing customer relationships and increase market share [6][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market disruptions caused by tariffs and is focused on growth initiatives and potential strategic M&A [14] - The company anticipates continued year-over-year margin expansion in Q4, despite potential sequential margin pullback [11] Other Important Information - The company maintains a strong balance sheet with no debt and a current ratio of 2.2 to 1, along with $67.2 million in cash [13] - A quarterly dividend of $0.26 per share was declared [13] Q&A Session Summary Question: Impact of pricing on the quarter - Management indicated that pricing actions taken in August resulted in a mid-single digits price increase, expected to remain consistent or slightly higher in Q4 [17][18] Question: Growth in large strategic accounts - Strategic accounts showed continued momentum, with efforts to gain greater share of wallet and align services with customer needs [19] Question: Health of core SMB customers - Retention rates within the core business, including SMB and public sector customers, remain healthy, with expectations of reduced headwinds in Q4 [28] Question: Total addressable market opportunity - While no specific number was provided, management indicated that the total addressable market is significant, with double-digit growth potential across various dimensions [29][30] Question: SG&A expense growth - The increase in SG&A expenses is primarily attributed to variable compensation related to performance, contrasting with the previous year's decline [31][32]