Systemax(US:GIC)2025-10-28 22:02Financial 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% in Q3 2025, 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] - State and local government segments showed positive growth, with a recovery noted in federal spending towards the end of October [21] Company Strategy and Development Direction - The company is reframing its go-to-market strategy to focus on key accounts and enhance customer relationships [6][15] - There is an emphasis on expanding product offerings and solutions to deepen existing customer relationships and increase market share [6][32] 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 [15] - The company anticipates continued year-over-year margin expansion in Q4, despite potential sequential margin pullback due to historical trends [11] Other Important Information - The company maintains a strong balance sheet with a current ratio of 2.2 to 1, $67.2 million in cash, and no debt [13] - A quarterly dividend of $0.26 per share was declared [14] Q&A Session Summary Question: Impact of price changes on the quarter - Management indicated that pricing actions taken in August contributed to a mid-single-digit price increase, with expectations for consistency or slight increase in Q4 [17][18] Question: Growth in large strategic accounts - Management confirmed continued momentum in strategic accounts and efforts to better serve their needs, with plans to realign the organization for 2026 [19][20] Question: Health of core SMB customers - Management reported healthy retention rates among core customers, with a focus on servicing these businesses effectively [29][30] Question: Total addressable market opportunity - Management is evaluating the total addressable market and plans to share insights in the future, indicating double-digit TAMs in industrial distribution [32][33] Question: SG&A expense growth - The increase in SG&A expenses is primarily attributed to variable compensation related to improved performance compared to the previous year [34][35]