Sales were higher but profits dropped as industrial products distributor Systemax Inc. continues to roll out its new business plan, which includes opening another distribution center near Dallas.
For the second quarter ended June 30, Systemax, an online distributor of maintenance, repair and operations (MRO) products based in Port Washington, New York, reported total revenue of $248.6 million, an increase of 7.5% from $231.2 million in the second quarter of 2018. Net income was $14.6 million compared with $18.2 million in the prior year.
For its industrial products group, Systemax already operates six distribution centers, totaling about 2 million square feet, according to the company’s latest annual report on file with the U.S. Securities and Exchange Commission.
The addition of a new distribution center comes at a time when Systemax is focusing entirely on the sales of industrial products and B2B ecommerce. The new distribution center in Dallas is now being stocked with inventory and expected to begin fulfilling and shipping orders sometime this fall, the company says.
“Within our distribution network, the new facility in Dallas is on plan to commence customer shipments early this fall,” Systemax CEO Barry Litwin told analysts on the company’s recent earnings call based on a transcript from SeekingAlpha.com. “The full Dallas management team is in place and completing their training—the facility will allow us to better service customers and provide additional capacity as we invest now to support future growth.”
Litwin says the Industrial Products Group—the company’s main operation since Systemax sold its France IT business last year for about $270 million—is positioned for continued growth with its focus on better customer service and an expanded distribution network.
“The way we operate the business is undergoing a fundamental change and we are already seeing the initial benefits,” Litwin told analysts. “These include improved service levels in our distribution network with sequential year-over-year gains in same-day shipping rates and a reduction in customer service calls, as we provide a greater end-to-end transaction transparency.”
The company says the opening of another distribution center will streamline its shipping and delivery capability. “This new facility is receiving product and is currently expected to commence customer shipments towards the end of Q3,” chief financial officer Tex Clark said on the earnings call. This additional distribution center will help drive serviceable improvements to our customers.”
For the first six months of the year, Systemax reported total revenue of $480.8 million, an increase of 8.4% from $443.4 million in the second quarter of 2018. Net income was $24.3 million compared with $32.8 million in the prior year.