Mike Smargiassi - Managing Director, Brainerd Communicators Richard Leeds - Chairman and Chief Executive Officer Larry Reinhold - Chief Financial Officer

Good day, ladies and gentlemen, and welcome to the Systemax Inc. First Quarter 2015 Earnings Call. At this time, I would like to turn the call over to Mike Smargiassi of Brainerd Communicators. Please go ahead.

Thank you, Abigail. Welcome to the Systemax first quarter 2015 earnings call. Today’s call has been prerecorded and will include formal remarks from Richard Leeds, Chairman and Chief Executive Officer of Systemax; and Larry Reinhold, Executive Vice President and Chief Financial Officer. We will not be hosting a live Q&A session at the end of today’s call. If you should have any questions on first quarter results, please contact Brainerd Communicators or Systemax. Contact details can be found on the press release issued today and at www.systemax.com. Today’s discussion may include certain forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the Forward-looking Statements caption in the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. I would like to highlight the non-GAAP metrics that are included in today’s press release. The company believes that by excluding certain reoccurring and non-reoccurring adjustments from comparable GAAP measures, investors have an additional meaningful measurement of the company’s performance. As a result, this call will include the discussion of certain non-GAAP financial measures. The company has provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in today’s press release. The press release is available on the company’s website and will be filed with the SEC and our Form 8-K. This call is the property of, and is copyrighted by Systemax Inc. I would now like to turn the call over to Mr. Richard Leeds.

Good afternoon and thank you for joining us today. It’s been a very active few weeks since we announced our strategic decision to focus our North America Technology Group on the B2B marketplace. We’ve made significant progress in our efforts to realign our operations and accelerate our services to business and public sector customers. We have more work to do and we’ll provide an update of where we stand in a moment. Our results in the first quarter reflect continued solid performance from Industrial Products Group. EMEA Technology sales were negatively impacted by currency exchange and less than stellar execution in the UK, offsetting continued strong performance in France. North American Technology results reflect the impact of our in-progress restructuring actions, as well as the continuation of the challenging market trends that led us to our decision to implement the strategic changes. I would now like to review our three business units starting with the Industrial Products Group. Industrial delivered another solid quarter with revenue growing 23% as we benefited from continued organic growth and the acquisition of the Plant Equipment Group, which includes C&H in the U.S. and Mexico and Avenue Industrial Supply in Canada. On a constant currency basis and excluding PEG, revenue improved to 11%. We’ve been pleased with the initial performance of PEG and customer and vendor reactions have been positive. We continue to make progress merging knowledge bases and talent within the Global Industrial and PEG operation. Our goal is to increase depth and support as we broaden our product offering and sales initiatives. Integration and distribution centers and back-office operations are starting, so that all industrial companies will be able to offer enhanced service levels across the United States, Canada, and Mexico at lower-cost. As we look to improve efficiencies and better serve our…

Thank you, Richard. As a result of our recent decision to exit retail operations and solely focus on the B2B marketplace, in this quarter we are no longer providing revenue breakup by channel as it is not meaningful. Looking at our results on a consolidated basis, first quarter 2015 total sales were $785.8 million, down 10.0% compared to the first quarter of 2014. On a constant currency basis and excluding the acquisitions of Misco Solutions and PEG sales declined 9.2%. Our consolidated sales performance was led by solid growth in our industrial products group which was more than offset by declines in our North America and EMEA Technology businesses. Turning to our reporting segments, the industrial product groups, first quarter revenue grew 23.1% to $158.9 million as we benefited from solid growth across most product lines and the addition of PEG. On a constant currency basis and excluding PEG, industrial revenues increased 10.8%. GAAP operating margin declined to 140 basis points driven by reduction in gross margin percent, partially offset by positive operating leverage within SG&A. Gross margin was negatively impacted by capacity constraints within industrial’s current distribution network, a mix shift with domestically sourced products growing faster than our imported private label products, a mix shift in revenue between our e-commerce and outbound selling channels and higher sales discounting. We anticipate that the larger Las Vegas distribution center will improve gross margin in the long-term, when it is fully operational and scaled to an efficient level. However, we anticipate that while it is ramping up, overall gross margins will be impacted. Partially offsetting these gross margin declines were lower spending on SG&A as a percent of sales, particularly advertising spend. Looking at our EMEA Technology Group segment, revenue declined 15.6% to $272.6 million. Reported revenues were significantly impacted by…

Ladies and gentlemen, thank you for participating in today’s program. This does conclude the call. You may all disconnect.

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