syx-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 1-13792

Systemax Inc.

(Exact name of registrant as specified in its charter)


Delaware						11-3262067
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11 Harbor Park Drive

Port Washington, New York 11050

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (516) 608-7000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($.01 par value)	SYX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐						Accelerated filer ☒
Non-accelerated filer ☐						Smaller reporting company ☐
						Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock as of April 30, 2021 was 37,719,099.

TABLE OF CONTENTS


Available Information

Part I	Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29

Part II	Other Information
Item 1.	Legal Proceedings	30
Item 6.	Exhibits	31

	Signatures	32


	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents	$	36.9	$	22.4
Accounts receivable, net	104.7		102.3
Inventories	134.7		132.3
Prepaid expenses and other current assets	6.6		6.8

Total current assets	282.9		263.8

Property, plant and equipment, net	16.6		16.6
Operating lease right-of-use assets	75.3		77.3
Deferred income taxes	7.0		7.6
Goodwill and intangibles	7.0		7.0
Other assets	2.7		2.6

Total assets	$	391.5	$	374.9

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	142.2	$	125.4

Accrued expenses and other current liabilities	42.6		50.7
Operating lease liabilities	9.8		10.3
Total current liabilities	194.6		186.4

Other liabilities	4.5		4.5
Operating lease liabilities	75.0		77.2
Total liabilities	274.1		268.1

Commitments and contingencies

Shareholders’ equity:
Preferred stock	0.0		0.0
Common stock	0.4		0.4
Additional paid-in capital	193.1		193.5
Treasury stock	(22.3)		(24.0)
Retained (deficit) earnings	(57.3)		(66.5)
Accumulated other comprehensive income	3.5		3.4
Total shareholders’ equity	117.4		106.8
Total liabilities and shareholders’ equity	$	391.5	$	374.9


	Three Months Ended March 31,
	2021		2020
Net sales	$	251.1	$	227.3
Cost of sales	173.8		150.6
Gross profit	77.3		76.7
Selling, distribution & administrative expenses	70.7		65.2

Operating income from continuing operations	6.6		11.5
Interest and other (income) expense, net	0.1		0.2

Income from continuing operations before income taxes	6.5		11.3
Provision for income taxes	1.0		3.0
Net income from continuing operations	5.5		8.3
Net income (loss) from discontinued operations	9.7		(0.1)
Net income	$	15.2	$	8.2

Net income per common share from continuing operations:
Basic	$	0.15	$	0.21
Diluted	$	0.14	$	0.21
Net income (loss) per common share from discontinued operations:
Basic	$	0.26	$	0.00
Diluted	$	0.25	$	0.00
Net income per common share:
Basic	$	0.41	$	0.21
Diluted	$	0.39	$	0.21

Weighted average common and common equivalent shares:
Basic	37.7		37.7
Diluted	37.9		37.9

Dividends declared	$	0.16	$	1.14


Supplemental disclosures:
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	36.9	$	64.1
Restricted cash (1)	1.6		0.0
Cash, cash equivalents and restricted cash	$	38.5	$	64.1

(1)The Company has restricted cash collateralizing letters of credit outstanding of $1.6 million, which are recorded in Other assets in the accompanying Condensed Consolidated Balance Sheets.

Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	0.7	$	0.0


	Common Stock
	Number of Shares Outstanding	Amount		Additional Paid-in Capital		Treasury Stock		Retained (Deficit) Earnings		Accumulated Other Comprehensive Income (Loss)		Total Equity
Balances, January 1, 2021	37,552	$	0.4	$	193.5	$	(24.0)	$	(66.5)	$	3.4	$	106.8
Stock-based compensation expense				0.4								0.4
Issuance of restricted stock	65			(1.1)		1.1						0.0
Stock withheld for employee taxes	(47)					(1.9)						(1.9)
Proceeds from issuance of common stock	119			(0.2)		2.5						2.3
Issuance of shares under employee stock purchase plan	29			0.5								0.5
Dividends								(6.0)				(6.0)


Change in cumulative translation adjustment										0.1		0.1
Net income								15.2				15.2
Balances, March 31, 2021	37,718	$	0.4	$	193.1	$	(22.3)	$	(57.3)	$	3.5	$	117.4


	March 31, 2021
Balance at beginning of period	$	1.7
Current period provision	0.4
Write-offs - trade accounts receivable	(0.6)

Balance at end of period	$	1.5


	December 31, 2020
Balance at beginning of period	$	6.8
Current period provision	1.2
Write-offs - trade accounts receivable	(0.7)
Write-offs - notes and other receivables*	(5.6)

Balance at end of period	$	1.7


	Accrued exit costs
Balance January 1, 2021	$	2.8
Charged to expense	0.0
Paid or otherwise settled	(0.1)
Balance March 31, 2021	$	2.7


	Accrued exit costs
Balance January 1, 2020	$	2.8
Charged to expense	0.4
Paid or otherwise settled	(0.4)
Balance December 31, 2020	$	2.8


Level 1 -			Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 -			Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly.
Level 3 -			Unobservable inputs which are supported by little or no market activity


	Three Months Ended March 31,
	2021	2020	% Change
Net sales of continuing operations:



Consolidated net sales	$251.1	$227.3	10.5%
Consolidated gross profit	$77.3	$76.7	0.8%
Consolidated gross margin	30.8%	33.7%	(2.9)%
Consolidated SD&A costs	$70.7	$65.2	8.4%
Consolidated SD&A costs as a % of net sales	28.2%	28.7%	(0.5)%
Operating income from continuing operations:




Consolidated operating income	$6.6	$11.5	(42.6)%




Consolidated operating margin from continuing operations	2.6%	5.1%	(2.5)%
Effective income tax rate	15.4%	26.5%	(11.1)%
Net income from continuing operations	$5.5	$8.3	(33.7)%
Net margin from continuing operations	2.2%	3.7%	(1.5)%
Net income per diluted share from continuing operations	$0.14	$0.21	(33.3)%
Net income (loss) from discontinued operations	$9.7	$(0.1)	NM


1			Systemax manages its business and reports using a 52-53 week fiscal year that ends at midnight on the Saturday closest to December 31. For clarity of presentation, fiscal years and quarters are described as if they ended on the last day of the respective calendar month. The actual fiscal quarter ended on April 3, 2021 and March 28, 2020. The first quarter of both 2021 and 2020 included 13 weeks.


31.1			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1			Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2			Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			XBRL Taxonomy Extension Label Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	SYSTEMAX INC.

Date: May 7, 2021	By:	/s/ Barry Litwin
		Barry Litwin
		President and Chief Executive Officer


	SYSTEMAX INC.

Date: May 7, 2021	By:	/s/ Thomas Clark
		Thomas Clark
		Senior Vice President and Chief Financial Officer


	March 31, 2021		December 31, 2020		$ Change
Cash and cash equivalents	$	36.9	$	22.4	$	14.5
Accounts receivable, net	$	104.7	$	102.3	$	2.4
Inventories	$	134.7	$	132.3	$	2.4
Prepaid expenses and other current assets	$	6.6	$	6.8	$	(0.2)
Accounts payable	$	142.2	$	125.4	$	16.8

Accrued expenses and other current liabilities	$	42.6	$	50.7	$	(8.1)
Operating lease liabilities	$	9.8	$	10.3	$	(0.5)
Working capital	$	88.3	$	77.4	$	10.9


	Three Ended March 31,
	2021		2020
Net cash provided by operating activities from continuing operations	$	8.9	$	13.7
Net cash provided by (used in) operating activities from discontinued operations	$	12.0	$	(0.1)
Net cash used in investing activities from continuing operations	$	(0.9)	$	(0.3)

Net cash used in financing activities from continuing operations	$	(5.5)	$	(46.3)

Effects of exchange rates on cash	$	0.0	$	(0.1)
Net increase (decrease) in cash and cash equivalents	$	14.5	$	(33.1)

SEC Form 10-Q filed by Systemax Inc.