Richard Leeds - Chairman and Chief Executive Officer Larry Reinhold - Executive Vice President and Chief Financial Officer Jenny Perales - Brainerd Communicators

Good afternoon and welcome to the Systemax event . All participants will be in listen-only mode. [Operator Instructions] I would now like to turn the conference over to Jenny Perales at Brainerd Communicators. Please go ahead.

Thank you, operator. Welcome to the Systemax third 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 question-and-answer session at the end of today's call. If you should have any questions on third 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 or the quarterly reports on Form 10-Q. We 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 a 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 Web site and will be filed with the SEC in a Form 8-K. This call is 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. Our results reflect another quarter of strong performance from our industrial products group, significant improvement in EMEA operating results offset by continuing challenging operating results in North American technology segment. Industrial had another terrific quarter as revenue increased 26.2% driven by the addition of the Plant Equipment Group or PEG, which we acquired in January, and solid organic growth which continues to outpace the general MRO industry. On a constant currency basis and excluding PEG, organic revenue growth was 10.2% while other public companies in the MRO space have all reported flat or negative growth. The integration of PEG is moving forward and on plan. This includes the integration of IT systems and our distribution centers which will improve efficiencies and allow us to improve our service levels in all areas of the country. During the quarter, we consolidated two smaller warehouses in Nevada into our new and larger Las Vegas distribution center and storage shipping in July. We now have large, full service distribution centers on a national scale. We are focus on ramping operations at the new Las Vegas location and optimizing performance across our entire distribution network. In the last month, we have also commenced a co-branding initiative which will allow us to transition PEG brands such as C&H into the global industrial family. We are excited about this effort which will allow us to further build our brand recognition in the market. With the execution of our integration activities, the build out of our distribution assets and the continued growth in the business, we believe we are well positioned for further success in the year ahead. In EMEA Technology, third quarter sales were flat on a constant currency basis. We delivered improved consolidated operating performance as France…

Thank you, Richard. Looking at our results on a consolidated basis, third quarter 2015 total sales were $699.3 million, down 15.3% compared to the third quarter of 2014. Currency movements had a significant negative effect in the quarter. Excluding the impact of currency changes, the closed retail stores and the acquisitions of PEG, sales declined 3.5%. 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 technology businesses. Turning to our reporting segments. The industrial product group's third quarter revenue grew 26.2% to $180.1 million, as we benefited from the continued growth across most product lines and the addition of PEG. On a constant currency basis and excluding PEG, industrial revenues increased 10.2%. GAAP operating margin declined 180 basis points driven primarily by a reduction in gross margin. Gross margin was negatively impacted by increased distribution costs associated with the new larger Las Vegas facility and reduced freight margin. Our new Las Vegas distribution center is very early in its ramp process and we anticipate industrial's overall reported gross margins will be negatively impacted until this facility is scaled to an efficient level over the next year. Longer term, we expect this facility will result in modestly improved gross margins from freight cost reductions to West Coast customers and improved efficiency at the other distribution centers. SG&A was essentially flat as a percentage of sales in the quarter. As we finish integrating PEG operations and optimize our distribution footprint, we believe we will see favorable leverage within the overall industrial products group Looking at our EMEA technology group segment. Revenue declined 13.4% to $241.8 million. Reported revenues were significantly impacted by the year-over-year strengthening of the dollar against European currencies, primarily the euro, and sales…

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.