CNXN - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2017 Connection's Earnings Conference Call. My name is Kevin, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session.

As a reminder, this conference call is property of Connection and may not be recorded or rebroadcast without specific permission from the company.

is Schulze, President Financial Interim today Officer; Chief Officer. call Bill and Treasurer the Tim and McGrath, Executive On and Chief are Any conference facts, made references be not that may statements. statements historical statements forward-looking during deemed of or call the make may of for plans, Private statements the company's purposes Securities under XXXX. the of the Litigation management and that future constitute Act prospects, remarks about Various provisions Reform forward-looking the expectations, Safe Harbor files a the the year as time of to the Actual the by for Report differ these Commission, is and factors, results Commission those XXXX, various on which materially indicated time. including Exchange on statements may important company file as well those XX-K documents with Risk December from forward-looking Factors the other Securities company's Form result discussed ended in section of from with as XX, the that Annual

should upon subsequent addition, forward-looking today statements represent management's of any of view views relied not and date. representing In be any as

While would Please is Tim like date earnings to Connection's of elect I to sir. Web will to disclaims statements rely the forward-looking release representing on future, do in should forward-looking over the change, being subsequent site. ahead, therefore, company point turn so, call as you statements McGrath. the specifically is to obligation these and any Today's views now not to may be today. call if site. Web at The any the estimates and company the on some even as webcast available on go also update available

Tim McGrath

SMB third by growth Solutions X% in today Net joining grew QX led to our in and Enterprise segment. everyone afternoon quarter thank X% you. Thank for you in X% Solutions, sales us review results. company's Business financial and by of the Good

by impacted led which delays growth suppliers turn revenue negatively to 'XX and product customers, and QX X%. Harvey in to deliveries approximately in consolidated Irma, hurricanes revenue affected in was by which from Our

storage revenue data Our result was growth in and software. Enterprise in Solutions the of servers, in growth including products, center

had Solutions grew X% in in grew we products. and addition, desktops Sales mobility strong mobility XX% In sales in quarter, XX% grew this the for segment. Business

strong seeing Sector decreased for to XXX Solutions X% by devices. security Public in Sales million. We’re endpoint growth

Growth Our business slight was business. federal grew spending federal overall by deficit X%. by in our a offset SLED in

to As we by QX, million. quarter all In of X% note gross in XXXX stated, XX.X dollars to by quarter against unless are made our review by or increased sales being results, in in please XX.X our XXX.X part net sales margins. to otherwise third due Consolidated comparisons profit the third margin year-over-year quarter million. X.X% XX.X% lower to million QX that XXXX. consolidated decreased which segment This generally increased have Enterprise Gross decreased XX.X% XXXX. our from was

which we in a due XX.X In was year. and of SMB segments. GlobalServe the programs our acquired to availability from both last backend quarter months addition, SG&A saw year. SG&A that our of QX This sector three last slightly we this vendor for increased million to increase provide decline XX.X of million in funding public

to introduced You enable last the additional to to $X.XX million year. operating mixed environment. This XX.X spending this Net last mission-critical may disciplines were year. in to we to compared cost earnings discipline monitor recall QX. quarter business. compared growth in areas was We’ll share us of continue IT the for $X.XX per income our Diluted continue in expense will invest million XX.X

to to financial over the turn discuss our of the I’ll Now Bill call Bill? highlights. business our segments results Schulze and

Bill Schulze

in was which by government quarter. at programs Gross by the to to $X.XX XX customers, desktops decreased Solutions down mobility This year-over-year XX.X businesses X% to continue customers to increased for strong. Business by from was with to our Gross vendor for our dollars to XX margins share as in to you, basis by competitive as million. customarily in education year-end last changes increased Solutions rates selling which selling increased XX.X%, X%, government XXX Thank federal and actually be earlier. the sales X%. were points decreased the and by per year. margin improved government includes SMB discussed demand vendor and rate to for due million well X% however, points Sales Public last decreased funding state more Sales in adjusted quarter. and Sales last by Business was to in to will to in to by and Both decreased small Solutions, segment consistent XX-month as medium-sized Enterprise EBITDA was to strong. rate a profit XX.X% normalized product governments a million. X% Tim. QX XX.X% Gross local margins margins decreased while and Spending basis the compared Sales Enterprise. prior million. were programs education Solutions mix Earnings due trailing environment. a Sales federal due Sector serves channel XXX after year for changes year; to of increased XXX September $X.XX double-digit the year, record by

with flow was was XX continues XX outstanding positive the million. cash sales from quarter We of cash. a and have generated days On million we balance XX. basis, sheet XX year-to-date Days inventory in to Our operations ended be strong. turns

goal maximize Our shareholder flexibility. while maintaining to value is financial

dividends and We continue buybacks. and other M&A to opportunities such assess allocations capital as stock

to will million discuss the I current have still call repurchases. over we in Tim trends. previously reminder, market a back turn to now authorized share XX approximately As

Tim McGrath

hypercompetitive environment. In quarter, continued see demand we the third Bill. to a Thanks,

supplier this base, will business We’re shifting make of our approach the adjustments strength believe customer our better our model. with us our to real-time and we enable to community leverage and

help our in customers and to investing We’re drive on order of also focused we’re outcomes. advanced areas our their complex business technologies in business

We security and business portfolio model our technology and believe capabilities continues security relevant assessments. of is cloud, the have business We’ve than We our for believe through Our future. more disruptive. more solutions customers products our tools. balance well help sales as software we enhanced automated our positioned to suppliers, grow virtualization, ever customers, that’s us and our including navigate and expanded that complex more

goal is Our sustained to continue deliver consistent performance. to and

strategies productivity. we the entertain markets, shareholder We’ll We’re and and gain retail we addition manufacturing, in value. encouraged by your believe team growth in in in software to strong vertical place Connection our and We and and position Kevin? the growth have increase finance now well that saw share market workforce questions.

Operator

[Operator Instructions].

open. James. line Tindle is Adam Adam, your Raymond from comes question first Our with

ask You question. your can

phone please the your you is could line. muted, If un-mute

Unidentified Analyst

Hi. Can me? hear you

Operator

we Yes, can hear you now.

Unidentified Analyst

filling for Joe in is This Adam.

we’ll think an that. of improvement? have outlook about What’s lot been is about it talking A your Sorry your vendor when do incentives, competitors that as on see you well.

going shift and looking when what’s program like you be that vendor So do will a environment forward? think

Tim McGrath

Thanks, Joe.

it’s it more those optimistic us what or value that So to that help to predict it’s and the in our is confident backend to return cetera. much I customer a to et relationships supplier are And we difficult I’d board together really say going strong, pretty us this we’re little and knows about and that But that we strong is seeing newer regular working newer our model. cases are but improve our I some with cloud-based and we’re that environment. have shifted proposition other base think we’re think In working they subscriptions, toward programs technology to shift seasonal through cases are rates. across

Unidentified Analyst

specifically, going are embracing believe Thanks vendors vendors and transactional for more, you if transactional out are or clarity. you be that and to is came the Dell other example, the that it the your about channel with Do they’re think embracing the have channel an said great. said working Okay, similar increase For things. More more? in what’s channel feel exclusively and they do that? products there’s purely

Tim McGrath

I’ll lot that efficient and begin a relationship that customer the Bill you the and vendors and in often certainly Joe, can is engine there’s growth realize channel chime help the we them. to But are very start a so think I for about out. with, there

So vendor interest think channel strong our in is value we proposition is we clearly community. our pretty think our for the vendor and strong

the consolidation, lot changes are There’s a of happening. we together, about of future. so And a lot optimistic

I think well. as an opportunity that presents

community we’re overall, vendor investing be that channel. confident our supplier and and will growing So with the

So that assessment. certainly would agree with

device do proposition customers But with the The pent-up velocity of newer or in think productivity the hardware upgrade. with Windows, demand upgrades. Intel I are is value and combined really the through offering. of notebook good strong we there’s that the workforce has some Many in and products, are Windows momentum and technologies of also going endpoint a desktops, that XX, In I as for combinations value family terms to I think the seeing in mobility, mentioned security.

demand and is our our proposition. that all So value strong for

token, On in the we’re interested same very side. advanced the technology

server Overall, segments growth. we’re our NetCom focused Some of very and and services software and solutions. had on

we that a growth engine for do future. So the as see

we’re market its the up takes. flows what with and think now as right dealing a I down is little and with bit puts

Unidentified Analyst

thorough. Thanks. that. Thank you I your That time. appreciate was very for

Tim McGrath

Thank you.

Operator

from comes question Partners. Capital next Our Gibson William with ROTH

William Gibson

you. Thank

I due You weak. talked Is that? to mentioning verticals healthcare, which about stays what’s uncertainty assume that behind without strong political your or

Tim McGrath

weak vertical, is Good you. course public say excluding to largest from it hear of Bill. that our wouldn’t Thanks, I in sector.

medical bit to them The grow caused would healthcare pushed But administration vertical a its exactly bit is the X% about year. what electronic Trump little through largest little right. in is know, have a in I at space quarter that pause the also But and environment. regulatory changes environment many records regulatory and our So We own as also are that use our CIOs future. and of us. public does you vertical. the last sector this has from did out trend been think in you reverse delayed reflect have The for mean meaningful a for with our been that on the subsidiary

are that So on positive all we on bullish space caused forward. going has very vertical pause. and this But the of a

William Gibson

least assessments. the follow have under what, agency healthcare? IT a a And have? firm that would regarding Good. came budgets that believe Was finance or up they to growth then say, in from government where security At I

Tim McGrath

needs. offering and we speak across the assessments, for I growth very board. When been proprietary been customers process security there, popular that we were security it’s us. their assessment assess have referencing security were I’ll a think when a really been – and referencing for has optimization we a security Bill, helping And driving We’ve us.

been of all that’s our across So markets.

William Gibson

you. Thank

Tim McGrath

Thank Bill. you,

Operator

Instructions]. [Operator

from comes Company. question Lebiedzinski & next with Our Sidoti Anthony

Anthony Lebiedzinski

the thank and you the and talked finance that over rates questions. the growth verticals afternoon you could about? Good for go perhaps you Tim, for manufacturing, taking retail

Bill Schulze

in actual those dollar helpful to that our as disclose don’t you, idea an Anthony? you but those we be values give growth rates Would can areas So of we verticals. for

Anthony Lebiedzinski

Yes.

Bill Schulze

for year-over-year quarter was retail is a somewhere and the that healthcare, with us. $XX the go between all in general, It’s on And really. we’ll rate. In million the But rate in low-double financials of manufacturing growth rates these quarterly three million our business for anyway and are digits Anthony, growth and largest XX except a approximately pretty same. significant that million, were about XXX

Anthony Lebiedzinski

helpful. fourth far because as the earlier Okay. what quarter? and And is far get That’s so Have able been with far also hurricanes. your back you in as said sales consistent that lost the comment the your as as also of in you very already to this prerelease

Tim McGrath

That’s a Thanks. Anthony. good question,

in sure that’s we still driving the with of been to We a or of customers dealing I’m lose hospital lot of to water water dealing We’ve Many didn’t rebuilding our of that. make damage. proud any damage. a we’re process hard say. large got orders are those So with recover

we shift QX. as in to that recovery ready ready, But And certainly we’re we’re say on their their they infrastructure. we for of just overall, will It’s confident and confident are that pretty with so majority certainty based go the tough time pretty to get will.

Anthony Lebiedzinski

then right. by hypercompetitive competitiveness? of year, since looking you You times start it’s there. been the just so out level have Okay, the surprised mentioned more back, And few of that all the a

it far this and one you environment more vendor the or surprised programs, is for by So between both factors? equally year changes sales so been which competitive the in have

Tim McGrath

are think connected. both they I So

consumption strategically change, often sort with there’s out see think pause. But for you of you shifting, in If at opportunity does models And sort of us. and that meet real a a macroeconomic view, look there’s a demand supply equilibrium. when

of our you helping look growth, hybrid on-prem storage, time. customers an at an if all So a solution, or And likely evaluate infrastructure off-prem we’re takes server solution. that

a of lot there’s So there. shifting a of change lot and

slight pullback, takes and multiple suppliers that pullback, a that, we is our it same delivery also tend are ways causes addition but In are bidders that to time. from new also of that belt our pullback, product. competition And some and see they hypercompetitive decrease seeing environment a and tighten. customers our to if methods receive of only we’re there same changing want sort tend When a innovative offering to not to then

I of have that optimistic forces through I’m So mentioned together. to think sort both work I that. as we we’re coming But going

Anthony Lebiedzinski

Okay. much. That’s you very very Thank helpful.

Tim McGrath

Thank you.

Bill Schulze

Thank you, Anthony.

Operator

turn I’m at our showing questions over not to I’d back like the And to any host. this further time. call

Tim McGrath

Thanks, like And I’d thank and everyone like afternoon. the for coworkers our to thank also vendor Kevin. customers, of listening to their I’d this our for continued shareholders to all partners and our their support our efforts. dedicated call

appreciated. interest Have and Connection time great in are Your a evening.

Operator

Ladies and does conclude presentation. gentlemen, this today’s

have wonderful and day. a disconnect now may You

PC Connection (CNXN) 26 Oct 172017 Q3 Earnings call transcript