WSTG - Earnings call transcript Q4 2018 | Climb Global Solutions, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Wayside Technology Group Conference Call. At this time all participants are in the listen-only mode. Later, we will conduct the question-and-answer session. Please note that all callers are limited to one question each. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded. to host like Melanie today's now Caponigro. would introduce for your conference, I Ms. begin this conference you your Caponigro, may at time.

Melanie Caponigro

Thank you, quarter fourth Wayside to and good XXXX morning. earnings Welcome Technology's call.

is all President over materially. webcast being I including cautionary are approximately customary and X:XX at cause rebroadcast would quarter results Monday, at released and comment available uncertainties this considered time, DeWindt, the the earnings under with are this for certain language Litigation live, to February waysidetechnology.com/site/content/webcast. will remind webcast and that p.m. to The could call. Today's and turning I'll in you dispense that forward-looking waysidetechnology.com. Act Eastern statements Investor statements call questions a the Before Those answers, earnings Securities company's of is XXXX. XX, like comments differ subject at company's Relations Private earnings and at about for CEO, the and be fourth Reform release actual Steve the XXXX. risks call We the available website to made webcast conference to call,

Group filed uncertainties the information and statements. forward-looking these XX-Q in SEC. update XX-K does obligation no Additional our to concerning Wayside Forms contained is update any to and risks Technology and sees intend with not

directly and most earnings share. the All per Our presentation have SEC GAAP also non-GAAP reconciled rules. includes certain according non-GAAP with to financial non-GAAP billings, net non-GAAP measures including measures adjusted income gross been in measures comparable

to earnings You'll find SEC. Form the charts release X-K and furnished the in reconciliation we

over call to turn DeWindt. I Now, to would like the Steve

Steve DeWindt

quarter year-end to Thank you XXXX discuss morning operating good our joining for and everyone. us Melanie, results. today and fourth Thanks,

year that for was mixed had of this This transition year reflecting and quarter the company. one results

hard quarterly revenue annual to year-over-year. the side, revenue worked of of XX% operational and growth our sales net net year-over-year growth deliver positive XX% teams On and

the basis adjusted $XXX of half We dollar billings the company has non-GAAP cracked a the overall on million, greater first also closed time the than billion gross year that mark. with

margins gross XX.X% QX product to to by mix pressure On for competitive and to profit XX.X% down in last gross year-over-year. due X% squeezed were decreasing year compared the the our negative our year with dollars side, coming

As we've our to sales and investing increased our business operating expenses before, mentioned due field in personnel. development

net the the due was and separation in margin personnel for Our income year down to XX% additional declining expenses. investment

introducing and net in Waysides a fourth the include rate. channel. quarter XX% technology up due tax has lower for However, was the the by position year-over-year to IT into vendors factors new federal emerging focused on sales marketplace income always that

team technology building our the assist and team. on to initiative in sales and business financial began logistical as our The enthusiasm vendors have to of for position As we increasing shown you this may technology make have future. efforts the We're Both focusing now technical to press our reseller gives in segments product technological seen and approach. support. our reseller the from credence years support sales focusing vendors business signed have sales new successful. revenue of ourselves these several network bringing field With new development emerging our reseller their been as tools of The partners invest high-touch been our our with field throughout targeted has solidifying releases, into investments our in numbers to been network expanding national new has newer our mix. expertise, on by we In encouraged out well vendors leverage continuing having so sales year. channel. – many exciting in a experience, to team regional we we recent as development The are our do vendors personnel QX,

partners need. vendor on delivering focused is team Our and what our results on focusing

results We the maintaining of relationship established they seen distributors reducing some have with in us. but wonderful their number utilize, vendors

the for of continued our goal strategic boutique go-to towards distributor progress new to technology make We being vendors.

and company We consistent dividend continue have investors to a quarter. have profits growth strong a of IT some declared with The a have a gains and for to data This currently $X.XX and delivered past channel in has outstanding. current demand we continues again no hyperconverged, dividend to quarter storage, of our once that of remains opportunity through solutions than shared for returned networking historically sheet this balance management strong products. as yield show and with security, debt reseller a X% greater

inside execute systems. product well continue portfolio, and to expand costs delivery controlling to and we delivering our and focus IT reporting field with teams, on our add sales and As our our base customer

very feeling are to year. for We sharing calls. on forward outlook good progress our look this about We future the

Let Officer. off me now Mike to hand our Chief Vesey, Financial

Mike Vesey

increased million $XX.X quarter XX% compared Thanks, fourth million for to the $XX.X Overall, Steve. sheet our I'll liquidity. to review discuss results then net sales for financial our quarter and the balance quarter sales $XX.X for Lifeboat Distribution were sales to to the were while net for quarter quarter XX% down million. XX% the $X.X the fourth up for net last TechXtend year. million

flow, in discussed traction basis. cash leveraging and of about lifeboat by our recruitment is The approximately $X past, accounts does vendor our initial the business, added TechXtend XX% which some of existing organizations. quarter-to-quarter of provide sales the fluctuate on sales incremental timing of to efforts for on reflects the infrastructure. have we incremental field our million expansion in expenses based but from flow in deal January consistent in began growth annualized and tends an XXXX These more As and expansion

drag While increased million as a going market the X% profit a critical prior this a their as share $XXX year. and gross earnings Overall, build basis. non-GAAP on gross it million on feel on investment adjusted to pipelines, to basis the teams we was in our increase from forward billings in XXXX $XXX.X a investment

profit Distribution of for Customers but resulted effective from January X, or at declined quarter net adopted with factors. year. gross decreased As the compared compared quarter to ASC impacted primarily profit Contracts significant for portion calls, sales to we fourth no profit mentioned as profit in discussed sales by last percentages. same and had $X.X income, change of as remains sales basis margin XXX period reported million XXX, million, year. million XX.X% last a of the adoption in net was margin XX.X% prior business points gross a new XXXX. with compared cost reflecting operating gross TechXtend. standard in at revenue accounting Gross in for to The The the impact on while the Revenue year, profit increased $X.X our the being decreased of Gross same our to lower gross consistent the margin percentage $XXX,XXX quarter by two last profit TechXtend quarter the the quarter fourth last $X.X year XX% or before, to

gross First, that sales, Accounting of on the sales a new products on basis. And which net a Standard. Revenue mix gross of reported recorded were cost second under change and in product on basis the between margins lower

typically percentage of of two sales items gross of the each. reflecting that is are weighting ASC composite high categories XXX, margin revenue gross the a product the cost mix margin and profit margin. the product issue, XXX% net of GAAP in reported a net are Regarding a in basis, as our recorded margin based under The on gross of relative single that digit or related a composite sales items of the percentage is recorded on

a accounted of X.X% During margin sales to X.X% is an gross net of from basis on which maintenance in Percentage gross were generally security compared distribution X.X%, for other our This lower our XXX% for margin on decline. a product quarter-over-quarter. reseller recorded the This sales were overall sales products the reported sold on attributable declined rest revenues XXXX or – X.X% lifeboat basis mainly quarter the quarter half channel higher decline distribution profit of as products, percentage percentage decline year. gross fourth the our approximately products than XXX in point are approximately being gross to of effective from same segment. last a mix margins net of through in of which the and change accounted sales. to The net

margin sales our compared mainly was business a development due to percentage general million XX.X% gross XXXX sales December and XXXX. during the at was prior result expenses Pretax in the the year million $X.X resulting million to selling, of $XXX,XXX carry profit $X.X as quarter in correspondingly lower personnel lower increase million as XX.X% gross for Total field well. to quarter a by as TechXtend. ended sales net income they the administrative to increased primarily compared $X.X the the XXXX for in XX, quarter $X.X to of for organizations. However, were costs The incremental SG&A compared expenses line in and XXXX. cost investment same higher below the of quarter from

tax well that rates and one-time rate taxes for Tax reflects XX.X% the to XXXX as as law XXXX XXXX, acted XX, adjustments. for Cuts For quarter the in new rate The related fourth some the income company's compared XX.X% the in the in quarter the of income federal provision tax of prior and part tax the $XXX,XXX to to the effective were Jobs of recorded of fourth XXXX, ended year. compared tax three change in $X.X charges tax as the December year. company effective The state prior new recorded Act adoption and of the was million months a

reflects in state rate limitations Our expenses XX.X%, impact tax second for for recorded effective states Section and the of the mix quarter full the adopting IRS XXXX is separation of which expenses XXX(m) XXXX. additional tax on statutes year also economic

for compared million XXXX. same income period the net result to the share of Diluted share XX, $X.X $X.XX $X.X per for XXXX a was income As $X.XX quarter XXXX same XXXX. for in the in was million compared diluted ended ended period the quarter per income for XX, December December to

million For was XXXX, million, down in from XXXX. $X.X $X.X the full net year income

prior CEO, The change well. However, this year in December charges change diluted in adjusted full basis, XXXX. income $X.X net per the of a for on XXXX million the non-GAAP increase approximately million on excluding dilute was to income non-GAAP $X.X year. for the tax basis GAAP a to current to separation the XXXX share from separation per XX, compared share diluted ended for Again year. laws X% expenses, X.X% for $X.XX, increased former the in CEO our a period over income was year-over-year as same $X.XX contributed EPS in $X.XX

$XX.X to million liquidity balance $XXX,XXX stockholders' period facility. in the a capital and strong last We equity equivalents the and sheet, to at approximately working during at quarter million under million last we was the the credit end XXXX of and outstanding million compared manage balance the dividends to at of compared of our paid at onto Moving XXXX $X.X million Total sheet no borrowings cash of position the the $XX.X with the end end cash and XX, million continue $XX.X including $XX December $XX.X stood at compared year. year. million of to $XX.X end as of

in In record per included receivable us available $X.X March On million, addition, payable long-term future working approximately to declared XX, balances sources quarterly on XX, common not board capital $X.XX its which of directors X, liquidity. are shareholders our of February of XXXX, share XXXX. are if March of of stock as a XXXX the dividend to

net quarter laws. a the for and XX% the of income up EPS So our tax in result about were corporate as new primarily summary,

the down TechXtend primarily a quarter for pretax income was Our due slightly business. to soft

at solid include However, which field related expansion and vendor the Lifeboat, was for to recruitment future our and we growth. teams top-line our our believe us at position sales growth XX% of costs results will

equity our which our income, net strengthen annual in form cash and to a expenses non-GAAP continue the excludes of Steve? position approximately of while XX% We dividend. separation returning

Steve DeWindt

These pleased Thanks of Mike. focused forward up that questions. pursuit operator, very And let's are strategy a team's with our in goals. paying and efforts off. for it efforts overall I'm with open energetic moving with our

Operator

Instructions] [Operator our the question first [indiscernible]. of Thank you. line And comes from

open. now line Your is

Unidentified Analyst

Hi, good morning.

do looking is growth and out great has made cap great, especially as market quarter. or basis? there fairly growth? realize acquiring there foresee all, I I coming acquire are that your soft to stock yield. companies could there companies fairly of undervalued, speaking But out the Are is small, my your of given you part the there inorganic question any but an you on believe be First

Steve DeWindt

this one. me with let start So,

something that One of throughout this various focused my on. inorganic growth, since my companies, at been have career topics, has favorite I

frankly something If this since has at. wholesale I IT both you we And look within the had distribution growth main looking But are a has on is and do make the right at and definitely business right in we industry, internally sure by channel needed other players are it focus mixture always got doing inorganic in activity. organic we organic do first to been strengthen development the of to resources. thought to thing the our that we're making areas the focused we that and lineup that we was structuring sure growth things needed vendor adding here,

you plenty to that? also are on and make look we've of there you with the up will of channel. tell We done that kind out relationships shoring the what opportunities do just there the anything needed to want then beginning focus to sure out getting opportunities. there. resellers to see some on ones. need two have the in now new And to to sales field things, larger we add are that tightening they're exists and Mike, I right And of We focus hiring And we a that team. done those with

Mike Vesey

do No, I of adjacent if it's or call – accretive to shareholders, pay buybacks our and strategy then accretive done certainly in capital we past. the – it said. we whether to reinvest to Are need would in be should form to to with to additional to in opportunities market our investments in businesses the or first our the capital – if business build M&A., well which have then either company. there find the be dividend we capital, is so. cap available find of none to our organically of choice would business want is the board make But, strategy evaluate And allocation return our you think through to our excess we

Operator

[indiscernible]. line And [Operator of Thank you. Instructions] our question the next from comes

Your line is open. now

Unidentified Analyst

– nice stamp see Nice, own guys. on nice I business. far quarter the put Hi, so you're your to and starting

that do I'll questions, continue? think one consistent have So put now of growth it you established of will a couple of the question. that as you I sort How revenue have

Steve DeWindt

I I growth, Thanks a Peter. continue – we than product in are tad margins. more in Consistency nurture say and within that hot it's I that these to there's would easier, question there areas. make just forecastable we always revenue say won't to think areas industry, no new the sure that's vendors are need but growth this that is that

to are development reason the that finding be well vendors and people quite able area arena are of technology strong and done confident I and us that I'm very of to continue have from with that been, then very passed have new So time, number biggest Peter and growth that focusing the are because we've the invested on. they along past entire for new to in these benefit wooing that's seeing being have go other the couple a about has areas create the success sort and technologies blessed we've we have growth fore. to they to bringing as their think, of searching, them be with the newer qualifying focused been out And to on to us find well. in it. alliances we of find out, years, these are written single to done security that by and into need quite new there. a business pulled ability our the spending along people feeling And, who well popularity will new There vendors

is that resellers. creating The alliances quite with we've other area well strong frankly done in very

we've new and months, channel the technologies. products shifted well in then mix resellers that out XX look their identifying being go-to bit in you the some a quite the of who has If for stronger there sell we at of in our providing done that last to,

Operator

you. Thank

Steve DeWindt

do want add Mike, anything? to you

Mike Vesey

Yeah, transactional is up and you of TechXtend down know from goes that more so as Peter business a quarter-to-quarter.

You while. much Lifeboat haven't more bought And consistent. much in that is a

I think your question was about consistency.

growing. we that at look market a keep market market we're other a the share when thing mind in is large it and we The with in small is

is think market contracting. So the don't we

in in Micro we we're some So with to with And the the that market ability players the for those for are, last always we it market at the companies market up the guys for the shown top-line the growth market whether the Lifeboat, And into compete we all win new and continue. Focus know, able historical very the you against of that go and vendors biggest choices historical the – question the we're growth and share, quarter, the to industry. a other announced in there's large coming look business. fact the small have vendors win opportunities a and been the to is over big Imperva, vendors time those for real

terms for I are of Lifeboat, at growth consistent all we in think continued there. the So think the of potential factors necessary

Operator

question line Instructions]. our follow Thank you. of from the question And is next [Operator a up

now open. is line Your

Unidentified Analyst

Yeah, great you've results. had

spoken. You the this for year? couple a year year? your last obviously conferences. for plans are are at I What very your saw What well plans investor relations are know this balance of you I of

Steve DeWindt

we as couple were so year. you out in conferences a noticed, last Yeah, of

continue we'll the community try analyst We conferences. follow-ups get think then try we'll that awareness awareness additional market way. I And after always and through to the have kind to and of conferences. in coverage create create

certainly to strong a a around visible. think no I big do certain step what And consistently we're from to us, the in be a relations, standpoint anything terms because awareness of the for we profitable, of So but investor been company outbound outside make ordinary that's extent a do is we don't for intend tells ourselves sheet. that balance our itself, story technology there'll while more

that And party third us. and able kind just strategy, pick So, beyond develop as with then and of is simple you to get you record some up hopefully to if story support us. for analyst our a part one coverage track step of telling awareness and the that work know, creating we're

our that's and that's plan – our, So hope. our our

takes bit on course, wheels time it effectively little of the that. Of a get moving all to

Mike Vesey

to expect at we average presenting a about quarter on be at once And Great. a a minimum. conference

Unidentified Analyst

You tell a the story. get and it keep putting make you'll and we up attention obviously to will good lot easier numbers

Steve DeWindt

Thanks, Great. Anthony.

Operator

Thank you. is [Operator Instructions] from our [indiscernible]. question line the And next question follow-up of a

is line now Your open.

Unidentified Analyst

good sort little make charges I are is statement And convoluted – the charges your a forward? less that the one, How statement? was more all the with is idea finished be credits. and up, it what as think thing this that a a income one-time that would the So and of follow And is agreement. separation now what ultimate costs, the much income impact net-net did to going

Mike Vesey

Yeah, the hey, income But was to It's impact was the net as the $X.X income million, anymore $X do okay, – EPS said level EPS not charge our operating and then the $X.XX. on $X.XX have and Peter. I we'll at the at it's expenses. the separation best was net level million and

net $X.X that income million it So pretax million you income, way. $X.XX want $X EPS, to at look if

Steve DeWindt

one-time And then ongoing. are

Mike Vesey

It's all time. one

all for So the year proved for this that charges are event.

Operator

that you. remarks. no continue please any further with At this time questions, are Thank further

Steve DeWindt

appreciate that we given, must Mike, that smokes, days. have given to itself at now. do our have got $XX.XX, loyalty shareholders I'm reaction two I been our for by the stockholders currently see that last to all. people I people you the so don't. have we've in pleased in have. of the It's been further, in that support looking the Holy the time. say right anything a thank Well, it And we've all long We've you been trading lot very interest stock with a and shareholders. sure the company me is fascinating

Mike Vesey

No, sir.

Steve DeWindt

talking forward Okay very you we much next then and look quarter. thank you to to

Operator

concludes today's gentlemen, this conference and call. Ladies

you You for time participation. disconnect your this at thank may and

Climb Global Solutions (CLMB) 26 Feb 192018 Q4 Earnings call transcript