First-Quarter Sales Slow, but Income Solid

Only 64% of the b-to-b catalogers tracked grew their first-quarter sales, but 71% managed to boost their bottom line.

Consumer catalogers aren’t the only ones suffering from lackluster sales. During the first quarter of 2001, only 64% of the business-to-business catalogers tracked by investment bank Ulin & Holland for Catalog Age managed to improve upon last year’s first-quarter sales. In comparison, last year 77% of the b-to-bers enjoyed increased first-quarter revenue.

But on the income side of the ledger, the b-to-bers as a whole are performing better than they had a year ago. Seventy-one percent have boosted first-quarter net income or cut their net loss, whereas last year just 56% had.

CATALOG AGE SPOTLIGHT ON FINANCIALS

Connectivity Projects Boost Black Box

The Numbers: For the quarter ended March 31, networking products and services provider Black Box Corp. saw double-digit growth in both income and revenue. March 31 also marked the end of the Lawrence, PA-based company’s fiscal year, and its growth for the year was equally impressive. Annual income jumped 31%, to $64.2 million from $48.9 million. Meanwhile, annual revenue climbed 63%, from $508.3 million to $826.9 million. And Black Box doesn’t believe that the economic slowdown will hurt it much: The company expects to finish the current fiscal year with sales of at least $1 billion.

The Skinny: Sell them the product, then provide the service: Much of Black Box’s revenue growth resulted from sales of its technical services.

Sales Decline, but Systemax

Returns to Profitability

The Numbers: Despite a nearly 10% drop in first-quarter sales, Port Washington, NY-based computer and industrial products manufacturer/marketer Systemax managed to reverse last year’s first-quarter loss. For the three months ended March 31, Systemax earned $363,000 on $405.9 million in net sales. For the first quarter of 2000, the company had posted a net loss of $2.6 million on net sales of $448.9 million.

The Skinny: The company blamed the sales decline on the sluggish domestic computer market. Sales in Europe, on the other hand, grew 11% since last year.

Schein Shines Once Again

The Numbers: With a 7% rise in first-quarter net sales and a 24% jump in net income, medical, dental, and veterinary supplies cataloger Henry Schein got the year off to a healthy start. For the three months ended March 31, the Melville, NY-based company reported net income of $14.1 million on net sales of $593.9 million. For the first quarter of 2000, it had net income of $11.4 million on sales of $554.1 million. Henry Schein’s medical division benefited from the largest sales gain — more than 15% — to bring in $195.9 million in revenue for the quarter. On the down side, veterinary sales fell nearly 5%.

The Skinny: In addition to increasing its market share in the medical arena, Henry Schein reaped the rewards of last year’s cost-saving initiatives.

MSC Bests Sales and Income

The Numbers: First-quarter growth at industrial tools supplier MSC Industrial Direct wasn’t spectacular, but it was growth nonetheless. The Melville, NY-based cataloger boosted net sales 7%, to $211.5 million, and net income 5%, to $14.4 million.

The Skinny: With this statement, MSC chairman/CEO Mitchell Jacobson proves the winner of the Silk Purse/Sow’s Ear Award: “We have been able to capitalize on this economic weakness and the adverse effects on our customers by aggressively growing our sales force and expanding our prospecting for new customers.”

PC Connection Takes a Hit

The Numbers: First, the bad news: Merrimack, NH-based PC Connection saw first-quarter net sales drop 10%, to $301.8 million from $333.8 million last year. Now, the worst news: Including the one-time $851,000 charge related to reductions in nonsales staffing designed to cut operating costs, the computer cataloger’s net income plunged 66%, from $7.1 million to $2.4 million.

The Skinny: Blame it on what CEO Patricia Gallup in a statement called “a wait-and-see attitude toward IT spending as [customers] try to determine what their own demand, technology budgets, and staffing levels will be for the year.’

NEBS Sees Net Income Fall

The Numbers: Groton, MA-based New England Business Service (NEBS) doesn’t have much good news to report either. The business forms, supplies, and clothing cataloger cited weak economic conditions across all its channels as the culprit behind its 53% plummet in net income, from $7.5 million for the first quarter of 2000 to $3.5 million for the three months ended March 24. True, revenue grew 5%, to $123.2 million, but that’s due mainly to its PremiumWear catalog, which NEBS acquired in July 2000.

The Skinny: “NEBS hasn’t as yet trimmed its infrastructure enough to accommodate slow sales,” says Jim Adams, managing director of Ulin & Holland. But he adds that the company is now working to cut costs, by laying off staff among other tactics.

Transmation Measures a Profit

The Numbers: Test, measurement, and calibration equipment manufacturer/marketer Transmation climbed out of the red and into the black. For the quarter ended March 31, the Rochester, NY-based company posted net income of $655,092, compared to a loss of $52,684 the previous first quarter. And the turnaround came despite a 1% dip in sales, to $20.2 million.

The Skinny: During the past year, reviewed its core business processes with an eye to containing costs. Its efforts paid off with decreases in selling, general, and administrative expenses.

FINANCIAL REPORT

REVENUE $000 NET INCOME $000
12 Months Prior Current Quarter Improvement (Decline) 12 Months Prior Current Quarter Improvement (Decline) Info as of Quarter Ended P/E (as of 5/17/01)
BUSINESS-TO-BUSINESS Henry Schein 554,139 593,895 7% 11,398 14,132 24% 3/31/01 28.19
Moore Medical Corp. 29,517 32,249 9% (255) (1,097) (330%) 3/31/01 N/A
MSC Industrial 198,233 211,536 7% 13,613 14,350 5% 2/24/01 19.27
New England Business Service 117,367 123,179 5% 7,481 3,547 (53%) 3/24/01 11.11
Systemax 448,870 405,898 (10%) (2,552) 363 NM 3/31/01 N/A
Tessco Technologies 56,253 59,988 7% 1,444 220 (85%) 4/1/01 11.28
Transmation 20,350 20,171 (1%) (53) 655 NM 3/31/01 27.67
COMPUTER PRODUCTS Black Box Corp. 159,376 225,157 41% 14,330 17,106 19% 3/31/01 20.40
CDW Computer Centers 863,988 987,245 14% 35,291 40,476 15% 3/31/01 21.74
IdeaMall 237,137 198,351 (16%) (7,472) 1,232 NM 3/31/01 N/A
Insight Enterprises 467,303 557,503 19% 12,326 14,286 16% 3/31/01 17.99
PC Connection 333,799 301,775 (10%) 7,119 2,433 (66%) 3/31/01 13.93
Programmer’s Paradise 52,686 24,164 (54%) (699) (156) NM 3/31/01 N/A
Zones 126,306 161,169 28% (673) 104 NM 3/31/01 54.85
MARKET INDICES Dow Jones Industrial Average 24.23
Standard & Poor’s 500 Index 25.84
Notes: Price-to-earnings ratios are from various sources
NM = not meaningful NA = not available
Source: Ulin & Holland

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