Good afternoon, ladies and gentlemen, and welcome to Systemax Inc.'s First Quarter 2012 Earnings Teleconference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, May 1, 2012. At this time, I would like to turn the call over to Mike Smargiassi from Brainerd Communicators. Please go ahead.

Thank you, Mary. Welcome to the Systemax First Quarter 2012 Earnings Conference Call. I'm here today with Richard Leeds, Chairman and Chief Executive Officer of Systemax; and Larry Reinhold, Executive Vice President and Chief Financial Officer. This 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 caption forward-looking statements in the company's annual report on Form 10-K. This call is the property of and is copyrighted by Systemax Inc. I will now turn the call over to Mr. Richard Leeds.

Good afternoon, and thank you for joining us for today's first quarter 2012 earnings call. Let me start off by reiterating what we said in our press release. I am disappointed with our overall results for the quarter. The performance of our North American technology consumer business was below our expectations and masked the strong performance of the rest of our business units. As a result, our consolidated revenues and operating margin were down. We are focused on reestablishing revenue growth and improving profitability in our consumer business. The highlights in the quarter continue to be our B2B operations, which delivered another quarter of solid growth. Within our B2B businesses, the Industrial Products Group produced another exceptional quarter, with sales increasing 28% over the prior year. In fact, 6 of industrial's top 10 best-selling days in the company's 60-plus year history occurred during the first quarter of 2012. This performance is supported by e-commerce growth, with all product categories growing nicely. As well, both our European and North American technology B2B businesses recorded strong revenue growth. Our consumer business remains soft, with weakness in the TV home shopping channel being the single largest factor in our top line, as it was last quarter. Revenue from our web and retail store channels also declined in the quarter. From a product category perspective, we saw strong sales of computers, including desktops, laptops and tablets. However, this was more than offset by declines in consumer electronics and computer components. We believe most of our competitors also experienced sales declines during the quarter as the overall markets for these categories are down. We have been undertaking a number of strategic initiatives to improve our consumer performance and drive additional growth in our B2B operations that we expect to start taking hold as we move…

Thank you, Richard. Our first quarter 2012 consolidated sales were $913.6 million, a decline of 2% and essentially flat on a constant currently basis compared to the first quarter of 2011. Results for the quarter were driven by strong growth in our B2B operations, offset by challenges in our consumer business. Turning first to our channels. First quarter B2B channel sales were $512.7 million, growing 7% or 8% on a constant currency basis. B2B same-store sales on a constant currency basis also increased 8% year-over-year. Our consumer's net sales were $400.9 million, a decrease of 11% and 10% on a constant currency basis compared to the prior year. Consumer same-store sales on a constant currency basis decreased 14% year-over-year. On a geographical basis, North America sales were $615.1 million, down 5% or 4% on a constant currency basis. European sales were $298.5 million, were up 5% or 7% on a constant currency basis. Turning to our reporting segments, the Technology Products Group sales declined 4% year-over-year to $821.9 million, or down 3% on a constant currency basis, while operating income was $8.8 million or $10.4 million, excluding special charges. Our Industrial Products Group sales increased to $90.4 million, up 28% compared to the prior year. Industrial's operating income was $8.2 million or $8.5 million, excluding special charges. Looking at each of our reporting segments' performance during the quarter, the European Technology Products Group delivered strong revenue growth, driven by the U.K. and France, while the performance of countries like Spain and Italy continue to reflect difficult local economic environments. Bottom line results were also strong, with an increase in operating income, also driven by the U.K. and France. We were able to grow the profitability of this segment by managing our SG&A, which was down about 40 basis points. We…

[Operator Instructions] And we have a question from Anthony Lebiedzinski from Sidoti.

First, on the home shopping channel, so this is the second consecutive quarter that you have mentioned this. So are you purely at the mercy of what they decided to air and you have no control with that or, I mean, can you explain as to what your plan is to get that business moving in a better direction?

It's a combination of factors. One is that we have to have product to offer to them that they want to air. So -- I mean, that really has been the challenge of having that. And we are, yes we are subject to their desire to air the product, but we also have to make sure that we have products that they're going to want to air. So it's kind of a combination of both of those things.

And is it because of the lack of newness in TVs that -- or I mean why, why do you think that's the case?

It has been primarily TVs, yes. And -- I mean, this is -- in selling them, they have certain desired outcomes from their airtime. And we have to kind of match what they are looking for, and we have to have products that -- like I said before, that they want to sell. So it's a combination of both.

Okay. And as far as the web business, is that purely a function of just a more competitive landscape or do you think there are other factors that are taking place over here?

Well, one is, I think we could have done better ourselves, okay, and as I said, I'm disappointed in our performance. We could have done better ourselves. And the second thing is, right now, the market is having a downturn for us, as a whole. And so, as a ramp up takes place for when the Windows 8 launch, as new products come out. But if I had to blame this on really on one thing for the quarter in the consumer business, it's ourselves. Our other businesses, our B2B -- our B2B businesses did really well. Industrial in Europe did really well, and so we need to focus back on this consumer business and get ourselves moving in the right direction again.

When I look at your SG&A expenses, they increased 5.7% on a year-over-year basis. Can you just talk about the factors that drove that increase in expenses?

Well, there's -- Anthony, there's a number of obviously, like anything, there's a number of individual things that drove it. We certainly mentioned that the single biggest factor in the margin was the revenue decline, which could take the G&A cost out of...

Just asking. I'm just asking about the SG&A expense dollars.

So there's 2 primary things. We did add sales heads as primarily in B2B, but we did add sales heads. And the second thing is we did experience a lower amount of vendor funding of advertising, for co-op advertising. So those were probably the 2 largest factors that drove the absolute SG&A number higher, and I think the vendor funding reflects the current market out there.

Is there -- was there any timing issue, in terms of vendor financing or do you think this was just something you just won't get back?

There's always a timing issue with the way these programs work. So probably, there's a number of them that didn't get quite done in the quarter, and they got to be done in order to count them, but -- so it's a combination of both.

Okay. And also, can you give us an update on your, where you are with private label, and also, you guys have talked about improving your product assortment planning. Where do these initiatives stand now and what's the outlook for the next few quarters?

So on private label, we've -- this is an ongoing process of taking the products that are -- that we have identified that should be a private label products, finding the right factories to make them, and then waiting -- and then negotiating with the factories, then waiting for the products to come in. So we have a number of products in the pipeline, both from the beginning stages of the pipeline and through the end stages of the pipeline. And we're continuing to have that to come in and for that number of products to grow. I don't actually have any numbers off hand that I can give you. But I mean, our plans for that are rather high, and we're going -- just going through this process, and it takes time. It's not like you can snap your fingers and have the product appear. So it's taking time. And for adding products, that's going to -- yes, that's definitely part of our strategy in the technology business, the same way it was in the industrial business. I mean, the industrial business, we grew the product offering 60% year-over-year, and we need to do that same thing in our -- in the North American consumer business. So just grow the product offering, and it’s going to -- that's going to be an ongoing process, the same way it's an ongoing process in our industrial business.

I show no further questions in the queue, and would like to turn the conference back to Mr. Richard Leeds for closing remarks.

Thank you, everybody. We look forward to talking to you next quarter.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may all disconnect at this time.