CNXN - Earnings call transcript Q1 2019

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Operator

Good afternoon and welcome to the First Quarter 2019 Connection Earnings Conference Call. My name is Rustin and I'll be your coordinator for today. [Operator Instructions] As a reminder, this conference call is the property of Connection and may not be recorded or rebroadcast without specific permission from the company.

On the call today are Tim McGrath, President and Chief Executive Officer; and Tom Baker, Senior Vice President and Chief Financial Officer. I will now turn the call over to the company.

Unidentified Company Representative

now safe will today's statement I call. you, read harbor our for Thank references conference to during not statements made Any or the historical may statements. statements fact call be forward-looking deemed be of are that remarks Reform and constitute safe Act plans harbor of management future of the under for prospects make the XXXX. forward-looking about Various company's that Private expectations, provisions purposes statements the may Securities Litigation including for time of Form the Commission, those file as XXst, annual by time. to with may in that these those which Exchange with in forward-looking as various is differ files important other documents a as report year results factors factors on ended December Actual risk well indicated the result discussed and company's the from section the commission XX-K materially statements Securities company XXXX, the the from of on

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

update date the even if the any you so as statements may do While as these company specifically to on change today. any obligation representing forward-looking elect and rely the statements company should of future, therefore estimates point subsequent forward-looking disclaims in to some at not views to

would XX-K website available the Tim like earnings section to and financial first the host, to all sir. and website made is being quarter at call, The www.connection.com. the at stated over both GAAP proceed, our Investor www.connection.com. website. release call release XXXX A turn this on Connection's The the on the company's CEO. available available webcast the otherwise I Please available our will SEC between at quarter Today's be two on unless references website reconciliation Please President is of to in During McGrath, now of Relations is and call comparisons measures non-GAAP against on discussed. be www.sec.gov and that being earnings in and the website. is first today's Form XXXX. also are will note

Tim McGrath

afternoon, achieved we markets in company's and results. and in am that as strong strong joining you margins net record and today mobility gross retail software Good quarter The financial by XX.X%. and and and our pleased growth year-over-year both in review performance income vertical increase sales XX.X% with net us announce to driven grew the happy margins thank health I for of the were care well income cloud in everyone, to migrations. including as quarter by first

manage $XXX.X months a X.X% sales In million in operating we XXst, continue $XXX.X compared XXXX, the Net million tightly our for expenses. X year ago. QX by to addition, ended to March to increased

ago. increased XX a partially cloud quarter. year the quarter of was Our profit million I'll margin to time by performance to hardware appreciate by to changes growth. million the X.X% and accounted you based compared mix. at positively Gross cloud same X.X% causing quarter, year on pressure average by than daily based To basis. products last increased that for downward Gross sales in this software, during proportion impacted the These quarter. greater was to in sales increase points the prior and creating Gross recognized our XX.X% our sales compared margins record $XX.X fully year product XX.X% to software QX software year sales by security while of offset increased are a prior due $XX.X compared a margin the basis net to remind on security

XX margin In $XXX.X our for a $XXX.X QX compared Business ago. by a Now performance to year to net basis discussion I'd XX.X% million like our detailed were segment, sales in X.X% increased the decrease to quarter. points provide of a representing Gross segment. million more of this Solutions segment by

compared Business sales Our net refresh The QX were to refreshes by from business, which to basis from grew institutions XX%. accessories, XX flat in Local in business, quarter In our respectively. by by during at points while sold This large software Segment for Public increased the strong increase million were Federal Enterprise benefited to a benefit XX% growth points of primarily Solutions expiration the and this an continued XX.X% drove solutions. and Sector segment $XXX.X sales XX%, the and Enterprise Sales XX% year decreased in to the X.X% increase of State including margins the X. compared XX.X%, Gross our networking year demand from Solutions a increased combination to mobility margin million, to and In to vertical Gross and the X.X%. segment benefit segment, XX%, million basis mix by X.X% government XX compared the an continues prior margins year, grew the markets project Government to educational to ago. and desk ago. which Windows of decreased the sales quarter. $XXX.X Solutions segment displays, environment. QX This by due a $XXX.X competitive to for category tops, at project

I migrations. performance, additional covered to gross over call In and continue now benefit addition, our based margin balance discuss and statement. income the to security from our software from cloud highlights we will Tom? cash flow turn statement, Tom sheet Having financial to and sales

Tom Baker

to $XX.X ago. Tim. a $XX.X SG&A from year quarter million million this increased Thanks

costs closing $XXX,XXX XX of the as our line associated internal facility. a exit commitment in However, sales the with of are of In statement. by managing points separate as income costs expenses. presented some charges associated reduction SG&A to year-over-year These percentage and a we've other with resources our decreased operating our our a demonstrating of restructuring of basis item QX, incurred

from increased income ago. this a operating million to XX.X% million quarter Our year $XX.X $XX.X

basic million $X.XX XX.X% compared last diluted the share $XX.X was Our increase of same rate were adjusted an period to increased XX.X% Earnings was XX%. the charges income for $X.XX from ago. per a to XX.X% restructuring and quarter $XX.X up $X.XX effective Net tax from Earnings per share the year. in other and year. million year for last

Our adjusted the than million terms $XX.X months. income XX use million its requires share. for all XX,XXX for before liability and the $XX.X balance an right $XXX.X year of QX standard, cash million ended QX, assets million from increased on an of year. taxes, corresponding We average We amortization, depreciation shares trailing a prior which from equivalents during XX-month increase adopted at or EBITDA lessees leasing of QX lease per company to the $X.X repurchased and earnings ago. sheet XX% cash of $XX.X adjusted representing recognize with a $XX.XX cost In and new longer leases with million to

activities asset of flow of right liability $XX.X period was by a million quarter ago. and the changes and used we Investing million As Cash change our of a million driven the impact the primarily of $XX.X special the the purchases that result repurchases. of of in year primarily $XX.X on The upgrade previously The declared working financing dividend on $X.X January the quarter aforementioned stock company of company. $XX.X X, the million result, million no ERP capitalization $X.X our was lease consisting for a were had recorded capital. million from for for payment the of adoption QX of of earnings same during XXXX. is use cash XXXX the $X.X versus This for system and of of process. equipment operations million activities million in timing $X.X

million have for we of remaining repurchase March stock existing our $XX.X XXst, XXXX, As repurchases under stock program.

$X.X capitalized system which during Moving was upgrade is we progress. our to capital to expenditures, fund mainly currently used million, QX in that ERP

including market total We Tim over to million in the of back the to $X our current three turn six I for capitalized be will range $X this the call expect remaining to next to to trends. costs discuss now spends months. project million

Tim McGrath

customers our a our in our We'll and and to matter the technologies. health categories. we market in experienced growth The products I'm on of Tom. to success large transforming in pleased IT continue experts our to is lowest acceptance contributor and our for in did continue secure is and with measured care. business. typically Customer's Segment QX. We vertical growth evolve these in and lumpiness sales. our transform improve have Based major optimistic We're by Thanks, our in significant productivity, technology as refresh. see enhance retail in advanced subject quarter systems market order in customers growth innovation. vertical their some Enterprise are project to customers using in businesses. timing and product and enabled assist continued QX the to to opportunities their we was performance help rollouts, about invest Solutions empower solution ways many

with continue modern We a deliver by product project clients' These ebb QX, our competitive projects helping environment, and IT project see rollouts of driven types these our technology. large skewed customers today's business part of strong on to create that need. will In solutions our we based rollout. growth flow are In usually advantages mix.

remain gain strong entertain that in long your believe We'll strategies and questions. We and shareholder well business market us place term is increase Our forecast share and intact. the team that to our now have our position we Operator? value.

Operator

from first question [Operator Our Tindle James. of Adam from Raymond line the Instructions] comes

Madison Suhr

segment growth start think that on Can was on about you This in weakness that of afternoon. should wanted driving market how Madison the then just about profitability Good talk strong. and a from the in and about Enterprise? growth heard We competitor I is what's to for forward? Adam. Enterprise pretty Revenue talking going we

Tim McGrath

about in in project client categories no that the probably QX, as prior benefited so edge are particular. quarters the really when categories thanks started of stems dependent toward that Yes, that we data and more and in that we that upgrades, we mentioned our those for think center large now there's mobility moving out projects were components. is it And and us. Madison, software Enterprise joining from Business, rollout doubt from

in So in categories, of edge strong business. in addition part growth to the of also accessories that the those saw some we

continue got We that feel that good lot a we confident of growth. QX, growth. for going to Enterprise, we're drivers about forward So we've think pretty see of going the to

driving year you that based it's Microsoft's on know, the Enterprise. end. of all growth pure project some X, Windows for As just some the refresh, and refreshing, see customers still are We expiration good software, upgrading

Madison Suhr

Tom, one could. then And for helpful. that's if Okay, I

to and playbook historically the a cash in the position the the year. then end business So of special dividend pay at has the net run

the you capital how CFO, right think As and business? capital do allocation the for structure about

Tom Baker

we Yes, the I the long will those think of projects allocate going term. for look the for investment we're shareholders capital are going in to front that most opportunities in us at we to have sit think and back, we benefit

we're going last time took As adjust down year, you dividend noticed accordingly little investment We, as to some we and we bit. by. special a goes did

Operator

[Operator like back am no at Instructions] time. questions showing would I this to the Tim further call I turn now to McGrath.

Tim McGrath

customers, operator. the also thank your support are you, this dedicated their continued all listening shareholders Thank of a efforts. are to great time thank to to like all all their and our interest who vendor for and appreciated. Have coworkers of, partners of I in for evening. and I'd you our afternoon, like call Connection

Operator

participation Ladies your have for and gentlemen, this wonderful concludes today's a day. conference. you Thank and

may You disconnect. all

PC Connection (CNXN) 5 May 192019 Q1 Earnings call transcript