E-commerce-oriented distribution group Systemax, which does business through several industrial products brands led primarily by Global Industrial, reported its 2020 first quarter financial results on Tuesday, showing a modest decline in year-over-year (YoY) sales.
The Port Washington, NY-based company posted total Q1 sales of $227 million, down 2.1 percent YoY, with daily sales up by that same amount, while sequential sales were up 2.3 percent from Q4 2019.
Q1 gross profit was $77 million on gross margin of 33.7 percent, compared to $80 million and 34.6 percent, respectively, a year earlier. Q1 operating profit was $11.5 millon on margin of 5.1 percent, compared to $13.2 million and 5.7 percent, respectively, a year earlier.
Systemax' total Q1 profit was $8.2 million, compared with $9.7 million a year earlier.
"Our first quarter results reflect the initial impact of COVID-19," said Barry Litwin, Systemax CEO. "Revenue for the quarter was down 2 percent, but up modestly through early March at which point we started to see the impact of business shutdowns and a shift in customer priorities into sourcing cleaning, personal protection equipment and other direct response COVID related items. Since mid-March, when shelter-in-place mandates began expanding across the country, total demand has increased year-over-year, driven by customer orders for highly consumable COVID response items. However, given the worldwide constrained availability of many of these products, our backlog has also increased substantially as we were unable to fulfill many of these orders which would have mitigated other softness in the market."
Litwin said that as a result of that backlog, Systemax recorded low double-digit revenue declines during the closing weeks of the quarter, which now appear to have stabilized at about 20 percent in April. Systemax expects it will be able to ship a portion of that backlog during Q2 as visibility into its supply chain and product lead times has improved.
On April 20, Global Industrial announced a comprehensive program to guide its customer's planning for the eventual re-opening and ongoing operations of businesses across the US. Global Industrial's R3 program (Restore the facility, Return to work and Rebound the business) provides customers guidance on room-by-room best practices for working in a post-COVID-19 world, including new solutions for cleaning and sanitizing requirements, indoor and outdoor maintenance, social distancing aids such as signage and separators, and how to reconfigure floor plans for everything from bathrooms and breakrooms to lobbies, common areas and supply closets.
