The MRO products seller booked a 10.6% sales increase in fiscal 2017 in its Industrial Products Group, which includes its GlobalIndustrial.com website and offline sales.

Sales grew 8.1% in 2017 for Systemax Inc. But its industrial products segment, comprising the GlobalIindustrial.com e-commerce site and offline sales, led the way and accounted for more than half of the company’s $1.3 billion in sales.

Systemax, which sells computers and electronics products in a European division, scored its strongest sales last year with its Industrial Products Group’s maintenance, repair and operations products that companies use to manage their equipment and facilities, Larry Reinhold, president and CEO, told analysts on the company’s year-end earnings call Tuesday.

2017 was a home run for industrial, with sales increasing almost 11% to $792 million.
Larry Reinhold, CEO
Systemax Inc.

“2017 was a home run for industrial, with sales increasing almost 11% to $792 million,” Reinhold said, according to a transcript of the call from Seeking Alpha. “The fourth quarter finished strong with sales also growing almost 11% with growth coming from both new customer generation and the expansion of existing customer relationships. We delivered strong operating leverage across the business as both product and freight margins improved year-over-year and we lowered selling, distribution and administrative spend as a percentage of revenue.”

In its European Technology Products Group, Systemax sells computers and electronics products under the Misco brand through several e-commerce sites in the United Kingdom, France and other European countries.

Industrial Products Group growth resulted from initiatives over several years, Reinhold said, including:

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  • Completing “the conversion of our legacy warehouse management system, which facilitated better fulfillment and service levels throughout our network and allows us to more efficiently support increased sales volume;”
  • Investing in I.T. and data tools “for our sales organization to better target, profile and service the almost 1,000 new business accounts that we generate every business day;”
  • Modernizing “our interactive voice response and overall telephony infrastructure to allow real time and deep access to our rich customer data. This is driving improved customer experiences and the tangible reduction in service wait times.”

Initiatives in 2018 for the industrial segment include launching unnamed “significant functionality enhancements to our e-commerce website, which will allow for a better customer experience, and completing an engineered standards project in our distribution centers and other warehouse optimization projects, which will improve efficiencies as well as service levels,” Reinhold told analysts.

For the fourth quarter of fiscal 2017 ended Dec. 31, Systemax, No. 100 in the 2018 B2B E-Commerce 300, reported:

  • Total sales of $330.6 million, up 11.8% from $295.6 million.
  • Gross profit of $88.5 million, up 13.0% from $78.3 million, resulting in a gross profit margin of 26.8%, up from 26.5%.
  • Industrial Products Group sales of $194.5 million, up 10.6% from $175.8 million.
  • European Technology Products Group sales including France and the divested Germany operations, of $136.1 million, up 14.4% from $119.0 million.
  • Net income of $32.4 million, compared with net income of $11.5 million in Q4 of last year.

Systemax sold its European Technology Products Group, excluding its I.T. services business in France, in March 2017. That move enabled the distributor to refocus on its profitable Industrial Products Group in North America and France, the company said last year.

For the fiscal 2017 year ended Dec. 31, Systemax reported:

  • Total sales of $1.265 billion, up 8.1% from $1.170 billion.
  • Gross profit of $351.4 million, up 14.1% from $307.9 million, resulting in a gross profit margin of 27.8%, up from 26.3%.
  • Industrial Products Group sales of $791.8 million, up 10.6% from $715.6 million.
  • Europe Technology Products Group sales, including France and the divested Germany operations, of $473.6 million, up 5.0% from $451.1 million.
  • Net income of $76.1 million, compared with net income of $16.9 million in the same period last year.

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