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Thank you, and welcome to the Systemax Fourth Quarter and Full Year 2017 Earnings Call.
Today's call will include formal remarks from Larry Reinhold, President and Chief Executive Officer; and Tex Clark, 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 the results, please contact The Plunkett Group or Systemax. Contact details can be found in the press release issued today and at 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 and under the risk factors 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 presenting the entire North American Technology Products Group, our divested European operations, and Afligo, our former rebates processing business as discontinued operations, as well as excluding certain recurring and nonrecurring adjustments from comparable GAAP measures, investors have an additional meaningful measurement of the company's performance. Further, unless otherwise specified, when discussing revenue changes, management will be referring to constant currency average daily sales results.
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 website and will be filed with the SEC in a Form 8-K.
This call is the property of and is copyrighted by Systemax Inc.
I will now turn the call over to Mr. Larry Reinhold.
Thanks, Mike. Good afternoon, everyone, and thank you for joining us today. 2017 was an exciting year here at Systemax as we further streamlined our operations, executed on our growth and optimization initiatives and delivered exceptional financial performance.
As we look back over the past few years, our strategic streamlining involved 4 divestitures of businesses, which generated almost $175 million in losses in 2015 and 2016 on a combined basis. We were able to exit these businesses with minimal transaction cost and in an accelerated time frame that exceeded our internal expectations. Simultaneously, we continued to organically grow both the top and bottom line of our North American Industrial Products Group and our France technology value-added reseller businesses. Today, these businesses are positioned among the leaders in their respective markets and are poised to deliver additional growth.
On a non-GAAP basis, our continuing operations generated more than $1.2 billion in revenue in 2017, an increase of almost 12% and generated improved operational leverage, with operating profit more than doubling to $75 million. With this impressive financial performance, strong cash flow generation and a solid balance sheet, our Board of Directors declared a special onetime cash dividend of $1.50 per share in December. In addition, our board has increased our regularly quarterly dividend by 10% to $0.11 per share.
Starting with our Industrial Products Group. 2017 was a home run for industrial, with sales increasing almost 11% to $792 million. The fourth quarter finished strong with sales also growing almost 11%, with growth coming from both new customer generation and the expansion of existing customer relationships. We delivered strong operating leverage across the business as both product and freight margins improved year-over-year and we lowered selling, distribution and administrative spend as a percentage of revenue. As a result, operating income in 2017 more than doubled to $71 million and full year operating margin grew 400 basis points to 9%. However, this annual result was comprised of quarterly results with significant variability throughout the year. Looking towards 2018, we believe that year-over-year profitability changes will be much more normalized while sequential variance is still likely given the impact of customer, product, channel and marketing mix on individual quarterly results.
Industrial's 2017 performance reflects the dedication and efforts of our management and associates over the past several years and the completion of a number of projects that will enhance the customer experience as well as drive long-term cost efficiencies. First, we completed the conversion of our legacy warehouse management system, which facilitated better fulfillment and service levels throughout our network and allowed us to more efficiently support increased sales volume. Second, we have invested in IT and data tools for our sales organization to better target, profile and service the almost 1,000 new business accounts that we generate every business day. Third, we have modernized our interactive voice response and overall telephony infrastructure to allow real-time and deep access to our rich customer data. This is driving improved customer experiences and the tangible reduction in service wait times. And finally, we completed numerous continuous improvement initiatives to drive operating and productivity efficiencies across the business.
As we enter 2018, industrial is well positioned for further success, and we are implementing additional initiatives to drive both top line sales as well as enhanced profitability throughout the year. This includes launching significant functionality enhancements to our e-commerce website, which will allow for a better customer experience; completing an engineered standards project in our distribution centers and other warehouse optimization projects, which will improve efficiencies as well as service levels; reorganizing our sales operations function under a newly hired executive to better leverage one of our most important assets, our sales force of over 400 customer-facing team members; and continued investment in product and technical expertise that will allow industrial to enhance both our core product lines as well as accelerate the growth of emerging categories. These efforts are focused on enhancing our scalable infrastructure and ensuring we are positioned to meet the growing needs of the business and our customers. Our team remains focused on driving long-term profitability, and we continue to evaluate strategic acquisitions that would be accretive to our growth.
Turning now to our French business. Our Inmac WStore IT value-added reseller business had another outstanding year. France generated almost USD 474 million in revenue for 2017 and extended its record of organic annual double-digit top line growth to 4 consecutive years. Revenue growth in 2017 was over 12% on a local currency average daily sales basis as the business continued its strong performance versus the overall market. France's outstanding top line performance allowed it to improve its ranking in a widely distributed industry publication to become the fifth largest IT reseller in the country. We showed strong profitability as operating margins increased substantially over last year, with operating income growing 28% to more than USD 25 million this year.
France continues to benefit from excellent customer and vendor relationships, and it has successfully positioned itself as a one-stop shop for both its core SMB customers and a growing base of large corporate clients. Internal investments have been centered around broadening technical and solutions expertise in order to meet the service needs of the IT marketplace and the capitalizing growth opportunities in emerging technologies. Inmac has a strong reputation in the market, which was highlighted by its customer expo, which took place in late November, and it's the largest event of its type in France. At the expo, Inmac hosted more than 1,000 customers and 120 vendors, providing a highly visible platform for the business and a great kickoff for the 2018 sales years. As a result of these efforts, France has a growing value-added products and services offering, which is creating stickier customer relationships and strengthening its reputation as a solutions provider to the market.
In summary, we had an outstanding 2017. Our industrial and France businesses are highly successful, well-managed, valuable assets that are positioned for continued success. We are executing on a number of growth and productivity initiatives at both of these businesses, which we expect will further enhance our competitive position and drive long-term profitability. Our growing cash flows and strong cash position provides significant flexibility to execute on our strategic plan and return capital to shareholders in the year ahead.
I will now turn the call over to Tex.
Thank you, Larry. I will now address our segment financial performance in more detail. As mentioned previously, my comments will primarily be directed to non-GAAP results. Both the 2017 and 2016 fourth quarters had the same number of selling days for industrial and France.
Turning to our results. Fourth quarter consolidated revenue reflects solid top line growth in both industrial and France, while consolidated gross profit improved almost 14% year-over-year, with gross margin expansion in both segments. Consolidated SD&A improved almost 100 basis points as a percentage of sales, driven by improved advertising efficiency in our Industrial Products Group and lower spend in our corporate segment due to the reversal of certain executive bonus accruals in the period, partially offset by increased salary cost in France related to increased statutory profit sharing, which in previous years have been lowered due to the utilization of local net operating losses. Non-GAAP operating profit was $20 million, an increase of 46%, and margin increased 140 basis points to 6% compared to last year's fourth quarter.
Starting with industrial's financial performance. In the fourth quarter, industrial returned to double-digit growth, with revenue increasing 10.6%. In our Canadian operations, we delivered 22.1% growth, the fourth consecutive quarter of double-digit gains, while the U.S. business grew 10%. Revenue growth was broad-based across customer segments, with our core product line growing at a rapid pace. Industrial's gross profit for the quarter increased to $65.3 million from $57.6 million last year. Gross margin improved 80 basis points from the year ago quarter, reflecting both a favorable sales mix between higher margin stock products versus drop-shipped items as well as an improved freight margin as we more effectively utilize our nationwide distribution network.
Selling, distribution and administrative spending for the quarter was $50.6 million, a 120 basis point improvement as a percentage of sales from last year. We delivered improved leverage across major cost functions, led primarily by an improved ROI at our digital marketing spend as well as a continued realization of salary savings from actions taken earlier in 2017. These savings were partially offset by increased variable compensation resulting from the outstanding financial performance of the business. Industrial's non-GAAP operating income for the quarter was $14.7 million, and margin improved to 7.6%, an improvement of 200 basis points from last year. Total depreciation and amortization expense in the quarter was $1 million. Looking towards 2018, we anticipate CapEx within the industrial business to range between $4 million and $6 million.
Turning to France's financial performance. Fourth quarter revenue increased 14.4% to $136.1 million on a USD reported basis. On a local currency basis, sales increased 6%. France continues to outperform the local market and faced a very difficult comparison from the year ago quarter, which benefited from a multimillion dollar public sector project which did not repeat in Q4 of '17. France gross profit for the quarter increased to $23.2 million, while its gross margin increased modestly to 17%, its best gross margin performance of the year.
SD&A spending was $15.3 million, a 90 basis point improvement as a percentage of sales. The primary reason for the year-to-year increase was increased salary and related spend associated with statutory profit sharing, which had been lower than previous years related to the utilization of local NOLs in the computation of those values. We anticipate 2018 levels of this expense line item to normalize towards the level of expense in 2017. France's non-GAAP operating income for the quarter was $7.9 million, and margin was 5.8%. Overall France's profitability remains very strong, and the fourth quarter was our highest operating margin of the year. France recorded approximately $0.1 million of depreciation and amortization in the period, while CapEx is anticipated to be less than $1 million in 2018.
Let me now turn to our balance sheet. We continue to have a very strong and liquid balance sheet with a current ratio of 1.6:1. As of December 31, we had approximately $184 million in cash, essentially no debt and over $178 million of working capital. I will note that our cash position at year-end does not reflect the payment of our special dividend of $1.50 per share, which in total was approximately $56 million and was paid on January 12, 2018. Further, we have approximately $70 million of our available -- of availability under our $75 million credit agreement.
The strength of our balance sheet allows us to continue to invest in our growth opportunities, explore strategic M&A and return capital to shareholders. As a result, our Board of Directors has declared an increased quarterly cash dividend of $0.11 per share of common stock to shareholders of record at the close of business on March 9, 2018, payable on March 16, 2018. We anticipate continuing a regular quarterly dividend in the future.
This concludes our prepared remarks. If you have any questions about fourth quarter 2017 earnings, please contact Mike Smargiassi at The Plunkett Group, our investor and media relations adviser, or Systemax directly. Contact information can be found on the earnings release issued earlier today.
Thank you for your continued interest in Systemax.